on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this
shall thereafter become effective in accordance with Section 8(a) of the Securities Act
Commission, acting pursuant to said Section 8(a), may determine.
Neither the Securities and Exchange Commission
or the SEC.Neither the SEC,nor any state securities commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracyadequacy or adequacyaccuracy of this prospectus. Any representation to the contrary is a criminal offense.
This prospectus is dated , 2015.
THE DATE OF THIS PROSPECTUS IS July 23, 2018.
In this prospectus, unless we indicate otherwise, “we,” “us,” “our,” “the Company” and “MELA” refer to MELA Sciences, Inc.
This prospectus contains references to our United States registered trademarks: MELA®, MELA Sciences®, MelaFind®, MELARecord®,VTRAC®, XTRAC® and XTRAC VELOCITY®. All other trademarks, tradenames and service marks appearing in this prospectus are the property of their respective owners.
INFORMATION CONTAINED IN THIS PROSPECTUS
You should rely only on the information contained
inor incorporated by reference into this prospectus. We have not,
and the selling securityholders have not, authorized
any other personanyone to provide you with
additional or different information.
This prospectus may only be usedThese securities are not being offered in any jurisdiction where
itthe offer is
legal to sell these securities. Thenot permitted. You should assume that the information in this prospectus is accurate
only as of the date on the front
cover. You should not assumeof the document and that
any information we have incorporated by reference is accurate only as of the
information containeddate of the documents incorporated by reference, regardless of the time of delivery of this prospectus or of any sale of our Common Stock. Unless the context otherwise requires, references to "we," "our," "us," or the "Company" in this prospectus
is accurate as of any other date.This prospectus does not constitute an offer to sell, or a solicitation of an offer to purchase, the securities offered by this prospectus in any jurisdiction to or from any person to whom or from whom it is unlawful to make an offer or solicitation of an offer in that jurisdiction.
mean STRATA Skin Sciences, Inc., together with its subsidiaries. PROSPECTUS SUMMARY
This summary highlights certain information appearing elsewhere in this
The following is only a summary. We urge you to read the entire prospectus,
and in the documents we incorporate by reference. This summary is not complete and does not contain all the information that may be important to you in deciding whether to invest in our securities. After you read this summary, you should read and consider carefullyincluding the more detailed
information andconsolidated financial statements, notes to the consolidated financial statements and
related notes that we include in and/other information included herein or
incorporateincorporated by reference
into this prospectus, especiallyfrom our other filings with the
section entitled ‘‘Risk Factors’’ before making an investment decision. If you investU.S. Securities and Exchange Commission, or SEC. Investing in our securities
you are assuming a high degree of risk.Ourinvolves risks. Therefore, please carefully consider the information provided under the heading "Risk Factors" starting on page 4.
Overview
The Company
We are is a medical technology company dedicated to developingfocused on the therapeutic and commercializing innovative products foraesthetic dermatology market. The Company's sales include the diagnosis and treatment of serious dermatological disorders. In June 2015 we completed the acquisition of the XTRAC excimerfollowing products: XTRAC® laser and the VTRACVTRAC® excimer lamp from PhotoMedex, Inc., products approved forsystems utilized in the treatment of psioriasis,psoriasis, vitiligo and various other skin disorders for which there are no cures. conditions; and the STRATAPEN™ MicroSystems, a micropigmentation device.
The
purchase price was $42.5 million plus the assumption of certain business-related liabilities. These products generated $30.6 million in revenues in 2014 and achieved year-over-year growth of 41% with a gross margin of 60.1%. We intend to use this business to finance our combined operations, to provide us the capability with which to continue to commercialize our legacy product, the MelaFind® system, or MelaFind, and to become a platform on which to transform MELA into a leading medical dermatology company.XTRAC device is an ultraviolet light excimer laser system utilized to treat psoriasis, vitiligo and other skin diseases. The XTRAC device received FDA clearance from the U.S. Food and Drug Administration (the "FDA") in 2000 and has since become a widely recognized treatment among dermatologists. The devicesystem delivers targeted 308nm ultraviolet B, or UVB, light to affected areas of skin. Askin, leading to psoriasis clearing and vitiligo repigmentation, following a series of treatments can result in clearing of psoriasis plaque or vitiligo repigmentation.treatments. As of March 31, 2015,June 30, 2018, there were 640 installed746 XTRAC systems placed in dermatologists' offices in the United States up from 527 atunder the endCompany's recurring revenue model. Under the recurring revenue model, the XTRAC system is placed in a physician's office and fees are charged on a per procedure basis or a fee is charged on a periodic basis not to exceed an agreed upon number of March 2014.procedures. The XTRAC is endorsed by the National Psoriasis Foundation, and itssystem's use for psoriasis is covered by nearly all major insurance companies, including Medicare. The VTRAC Excimer Lamp system, offered internationally in addition to the XTRAC system, provides targeted therapeutic efficacy demonstrated by excimer technology with the simplicity of design and reliability of a lamp system. There are approximately 7.5 million people in the United States and up to 125 million people worldwide suffering from psoriasis, and 1% to 2% of the world’sworld's population suffers from vitiligo. In 2014,2017, over 300,000335,000 XTRAC laser treatments were performed on approximately 19,00021,000 patients in the United States.
During 2017, the Company entered into an agreement to license the exclusive US distribution rights for the Ellipse family of products, Nordlys, from Ellipse A/S, the Danish manufacturer, through August 9, 2020. The
financial resultslicense fee amounted to approximately $355,000 over the initial term of the
XTRAC and VTRAC businesses will be included in our results of operations beginning June 23, 2015. The assetsagreement with a present value as of the
businesses purchased and liabilities assumed will be consolidated as of June 23, 2015 and will be reported in our second quarter financial statements at June 30, 2015.We anticipate that the acquisitioneffective date of the XTRAC and VTRAC businesses will help to facilitate the commercializationagreement of MelaFind,$286,000. Effective March 31, 2018, as well as the further design and development of this technology. MelaFind is a non-invasive, point-of-care (i.e., in the doctor’s office) instrument to aid in the detection of melanoma. MelaFind provides information to assist in the managementresult of the patient’s disease, including information usefulchange in management (See Recent Developments), the dermatologist’s biopsy decision. We anticipateCompany had determined that it will require several years of continued effort beforeno longer continue to market the success of our strategyNordlys and the distribution rights agreement was terminated effective May 31, 2018.
Recent Developments
Equity Financing Agreements
On March 30, 2018, the Company entered into the Agreements pursuant to commercialize MelaFind can be assessed. We expectwhich the insurance reimbursement processCompany issued 15,893,745 (including 153,004 shares issued pursuant to
take several years to complete.To finance the purchaseRetained Risk (defined below) provision of the XTRACAgreements) shares of Common Stock to a group of investors led by Accelmed for gross proceeds of approximately $17.0 million at a per share price of $1.08. The following descriptions of the Agreements and VTRAC businesses, we entered into a securities purchase agreement with institutional investorsthe Leak-Out Agreements (as defined below) are not complete and are subject to and qualified in their entirety by reference to the Agreements and the Leak-Out Agreements, respectively, copies of which are filed as exhibits hereto and are incorporated herein by reference.
Accelmed Stock Purchase Agreement
The Company issued 12,112,627 shares (including 75,590 shares of Common Stock issued pursuant to the Retained Risk provision of the Accelmed SPA) of Common Stock to Accelmed for gross proceeds of approximately $13.0 million, pursuant to the Accelmed SPA. Pursuant to the Accelmed SPA, the Company reimbursed Accelmed for its legal, consulting, due diligence and certain costs related to the transaction, including the reasonable legal fees, disbursements and related charges of $500,000 at closing. The Accelmed SPA also requires that the Company
indemnify Accelmed for certain items identified in Accelmed SPA. Pursuant to the Accelmed SPA, if the Company incurs losses related to certain tax obligations, legal fees, insurance premiums or fees to any placement agents, financial or investment advisors or brokers in connection with transactions contemplated by the Accelmed SPA (each a private placement. We sold $10.0"Retained Risk"), then the Company is required to issue additional shares of Common Stock as compensation for such loses to Accelmed.
Broadfin and Sabby Stock Purchase Agreements
In connection with the Accelmed investment, the Company entered into the Broadfin SPA and Sabby SPA on March 30, 2018, each for $1.0 million aggregate principal amountwith two sets of Notes bearing interest at 9% per year, withcurrent stockholders, Broadfin and Sabby. Upon closing of these transactions, Sabby and Broadfin received 949,953 shares and 967,685 shares respectively (including a maturity datecombined total of 65,786 shares of Common Stock issued under the Retained Risk provisions of the earlier of 30 days after the Company obtains stockholder approval of stock issuances under the DebenturesBroadfin SPA and the Warrants or November 30, 2015. The PurchasersSabby SPA) of the Notes were issued WarrantsCompany's Common Stock at a price per share of $1.08.
In further consideration of entering into the Sabby SPA and Broadfin SPA, Sabby and Broadfin, each entered into separate agreements restricting their abilities to purchase an aggregate of 3.0 million shares of common stock, having an exercise price of $0.75 per share. We also issued $32.5 million aggregate principal amount of Debentures that, subject to certain ownership limitationssell their holdings (each, a "Leak-Out Agreement" and stockholder approval conditions, will be convertible into 43,333,333 shares of common stock at an initial conversion price of $0.75 per share. The Debentures bear interest attogether, the rate of 2.25% per year, and, unless previously converted, will mature on the five-year anniversary of the date of issuance. Our obligations under the Notes and Debentures are secured by a first priority lien on all of our assets."Leak-Out Agreements"). Under the terms of each of the Debentures andrespective Leak-Out Agreements, the Warrants,stockholder has agreed that until May 29, 2021, the issuancesstockholder shall not sell, dispose or otherwise transfer, directly or indirectly, (including, without limitation, any sales, short sales, swaps or any derivative transactions that would be equivalent to any sales or short positions) any shares of Common Stock of the Company held by the stockholder or issuable to the stockholder upon conversion of shares of the commonCompany's Series C Preferred Stock, $0.10 per share (the "Preferred Stock") held by the stockholder, (a) if prior to April 1, 2019, at a price per share less than $1.296, subject to adjustment for reverse and forward stock includingsplits and the Shares, upon conversionlike, or (b) thereafter, at a price per share reflecting less than the price set forth on the schedule in the Leak-Out Agreements, subject to adjustment for reverse and forward stock splits and the like, unless, (1) in the case of either clauses (a) or (b), otherwise approved by the Company's Board of Directors, (2) in the case of either clause (b), under a shelf prospectus or such other controlled offering as may be agreed to by the Principal Stockholders (as defined in the Sabby SPA and Broadfin SPA, as applicable) or (3) in the case of either clauses (a) or (b), in a sale pursuant to which any other stockholder(s) of the Debentures and upon exerciseCompany are offered the same terms of sale, including in a merger, consolidation, transfer or conversion involving the Warrants are subjectCompany or any of its subsidiaries.
Pursuant to the Stockholder Approval Requirement. Effective uponBroadfin SPA and Sabby SPA, if the dateCompany incurs losses related to a Retained Risk, the Stockholder Approval RequirementCompany is satisfied,required to issue additional shares of which we provide no assurance, we haveCommon Stock as compensation for such loses to Broadfin and Sabby, respectively.
Subscription Agreements
The Company also
agreed to reprice outstanding Warrants held by certain investors to reduce the exercise price to $0.75 per share.Historically, we have not generated significant revenues and as a result we have experienced recurring losses from operations. For the year ended December 31, 2014 and the three months ended March 31, 2015 our net losses amounted to approximately $14.1 million and $7.3 million, respectively. In their opinion issuedentered into two separate subscription agreements in connection with the auditAccelmed investment: (i) a subscription agreement with Gohan Investments, Ltd. for $1.0 million to purchase 931,740 shares (including 5,814 shares of our 2014 financial statements, our independent registered public accountants expressed substantial doubt about our abilityCommon Stock issued under the Retained Risk provisions) of Common Stock at $1.08 per share; and (ii) a subscription agreement with Dr. Dolev Rafaeli for $1.0 million to continuepurchase 931,740 (including 5,814 shares issued under the Retained Risk provisions) shares of Common Stock at $1.08 per share upon closing under the Accelmed SPA.
Pursuant to the subscription agreements, if the Company incurs losses related to a Retained Risk, the Company is required to issue additional shares of Common Stock as compensation for such loses to Gohan Investments, Ltd. and Dr. Dolev Rafaeli.
Change of Control
The closing of the transactions contemplated by Agreements (the "Transactions") and the issuance of shares of Common Stock to the purchasers resulted in a going concern.change of control of the Company and a change in management and composition of the Company's Board of Directors. Following the completion of our acquisitionTransactions, Accelmed controls a majority of the XTRACoutstanding shares of the Company's Common Stock. As of June 12, 2018, Accelmed holds (a) approximately 41%
of the issued and
VTRAC businesses, we believe that our cash asoutstanding voting stock of
March 31, 2015the Company and (b) approximately 36% of
$8.2 million combined with our anticipated revenues from the
saleCompany's issued and outstanding capital stock, assuming the conversion of
our products will be sufficient to cover our operations forall outstanding shares of the
foreseeable future.CorporateCompany's Series C Preferred Stock (but excluding the exercise of outstanding stock options and warrants).
We were incorporated in the State of New York in 1989Delaware under the name Electro-Optical"Electro-Optical Sciences, Inc. and subsequently reincorporated under the laws of the State of Delaware inon September 3, 1997. In April 2010, we changed our name to MELA Sciences, Inc. Our principal executive offices are located at 100 Lakeside Drive, Suite 100, Horsham, Pennsylvania 19044. Our telephone number is (215) 619-3200. Our619-3200 and our website address is www.melasciences.com. Thewww.strataskinsciences.com. References in this prospectus to our website address does not constitute incorporation by reference of the information contained on the website.
Investing in our
website is notsecurities involves a
parthigh degree of
risk. You should carefully review and consider the following risk and all other information, documents or reports included or incorporated by reference in this prospectus and
should not be relied upon. We have included our website address in this document as an inactive textual reference only.RISK FACTORS
Investing in our common stock involves risk. Before deciding whether to invest in our common stock, you should consider carefullyif applicable, any prospectus supplement or other offering materials, including the risks and uncertainties described below. You should also consider the risks, uncertainties and assumptions discussed under the heading “Risk Factors” included"Risk Factors" in our most recent annual reportAnnual Report on Form 10-K, as revised or supplementedfiled with the Securities and Exchange Commission ("SEC"), which is incorporated by reference, in this prospectus, and any updates to those risk factors included from time to time in our most recent quarterly report on Form 10-Qperiodic and our current reports on Form 8-K, each of which is on filefiled with the SEC and is incorporated herein by reference in this prospectus, before making any decision to invest in shares of our Common Stock. The risks and uncertainties described below are not the only ones facing our Company. Additional risks and uncertainties of which we are unaware, or that we currently deem immaterial, also may be amended, supplemented or superseded from time to time by other reports we file with the SEC in the future including any applicable prospectus supplement. There may be other unknown or unpredictable economic, business, competitive, regulatory or otherbecome important factors that could have material adverse effects on our future results.affect us. If any of the events discussed in these risks actuallyrisk factors occurs, our business, business prospects, financial condition or results of operations, financial condition and cash flows could be seriouslymaterially harmed. This could causeIf that were to happen, the trading price of our common stock toCommon Stock could decline, resulting in a loss ofand you could lose all or part of your investment. Please
Risks Related to our Financial Condition and Capital Requirements
We have incurred losses for a number of years, and anticipate that we will incur continued losses for the foreseeable future.
Since 1999, we have primarily financed our operations through the sale of our equity securities and have devoted substantially all of our resources to research, development and commercialization of MelaFind, which we discontinued during the year ended December 31, 2017. Our net loss for the year ended December 31, 2017 was approximately $18.8 million, and as of December 31, 2017, we had an accumulated deficit of approximately $229.4 million. Our profitability has been negatively impacted by interest expense related to the June 2015 financing as well as the $11.8 million loss on the extinguishment of debentures in 2017. Our losses, among other things, have had and will continue to have an adverse effect on our stockholders' equity. Since the closing of our acquisition of the XTRAC and VTRAC products in June 2015, we began to recognize revenues of those products, which, together with the proceeds of our financing in May 2018, we expect will provide sufficient cash flow to fund our current operations for the foreseeable future.
Risks Related to our Business Operations
Our laser treatments of psoriasis, vitiligo, atopic dermatitis and leukoderma and any of our future products or services may fail to gain market acceptance, which could adversely affect our competitive position.
We have generated limited worldwide commercial distribution for our products. In the United States, our XTRAC systems are installed at physician offices at no upfront charge to the physician and we are paid on a per-usage method where we retain ownership of the system. We cannot assure you that our products and services will find acceptance in the marketplace to permit us to generate a substantial increase in our revenues.
We also
read carefullyface a risk that other companies in the
section below titled “Special Note Regarding Forward-Looking Statements.”market for dermatological products and services may be able to provide dermatologists a higher overall return on investment and therefore compromise our ability to increase our base of users and ensure they engage in optimal usage of our products. If, for example, such other companies have products (such as Botox or topical creams for disease management) that require less time commitment from the dermatologist and yield an attractive return on a dermatologist's time and investment, we may find that our efforts to increase our base of users are hindered.
Current Procedural Terminology ("CPT") codes for all procedures are subject to continued reevaluation. Should the Center for Medicaid Services reduce reimbursement for the CPT codes for XTRAC treatment we may see a decline in our recurring revenue business as well as a decline in new XTRAC installations.
Whether a treatment may be delegated and, if so, to whom and to what extent, are matters that may vary state by state, as these matters are within the province of the state medical boards. In states that may be more restrictive in such delegation, a physician may decline to adopt the XTRAC system into his or her practice, because there are too many constraints and complexities and finding other outlets for the physician's time and staff time to be more remunerative. There can be no assurance that we will be successful in persuading such medical boards that a liberal standard for delegation is appropriate for the XTRAC system, based on its design for ease and safety of use. If we
are not successful, we may find that even if a geographic region has wide insurance reimbursement, the region's physicians may decline to adopt the XTRAC system into their practices.
We therefore cannot assure you that the marketplace will be receptive to our excimer laser technology over competing products, services and therapies or that a cure will not be found for the underlying diseases we are focused on treating that makes our product obsolete. Failure of our products to achieve market acceptance could have a material adverse effect on our business, financial condition and results of operations.
The success of our products depends on third-party reimbursement of patients' costs, which could result in potentially reduced prices or reduced demand and adversely affect our revenues and business operations.
Our ability to market our products successfully, especially XTRAC treatments, depends in large part on the extent to which various third parties are willing to reimburse patients or providers for the costs of medical procedures utilizing such products. These third parties include government authorities, private health insurers and other organizations, such as health maintenance organizations, whose patterns of reimbursement may change as a result of new standards for reimbursement determined by these third parties or because of the programs and policies enacted under the Patient Protection and Affordable Care Act of 2010 ("ACA"). For the most part, aesthetic and cosmetic treatments for many usages of STRATAPEN are not covered by insurance and patients pay out of pocket for these treatments.
Third-party payors are systematically challenging the prices charged for medical products and services. They may deny reimbursement if they determine that a prescribed device is not used in accordance with cost-effective treatment methods as determined by the payor, or is experimental, unnecessary or inappropriate. Further, although third parties may approve reimbursement, such approvals may be under terms and conditions that discourage use of the XTRAC system. Accordingly, if less costly drugs or other treatments are available, third-party payors may not authorize or may limit reimbursement for the use of our products, even if our products are safer or more effective than the alternatives.
In addition, medical insurance policies and treatment coverage have been and may be affected by the parameters of the ACA or successor policies enacted by the new administration. While the ACA's stated purpose is to expand access to coverage, it also mandates certain requirements regarding the types and limitations of insurance coverage. There can be no guarantee that the changes in coverage under the ACA will not affect the type and level of reimbursement for our products.
Although we have received reimbursement approvals from a majority of private healthcare plans for the XTRAC system, we cannot give assurance that these private plans will continue to adopt or maintain favorable reimbursement policies or accept the XTRAC system in its clinical role as a second-line therapy in the treatment of psoriasis. Additionally, third-party payors may require further clinical studies or changes to our pricing structure and revenue model before authorizing or continuing reimbursement.
As of March 22, 2018, we estimate, based on published coverage policies and on payment practices of private and Medicare insurance plans, that more than 90% of the insured population in the U.S. is covered by insurance coverage or payment policies that reimburse physicians for using the XTRAC system for treatment of psoriasis. We can give no assurance that health insurers will not adversely modify their reimbursement policies for the use of the XTRAC system in the future.
Any failure in our customer education efforts could significantly reduce product marketing.
It is important to the success of our marketing efforts to educate physicians and technicians how to properly use our products. We rely on physicians to spend their time and money to participate in our pre-installation educational sessions. Moreover, if physicians and technicians use our products improperly, they may have unsatisfactory patient outcomes or, in the case of the XTRAC system, cause patient injury, which may give rise to negative publicity or lawsuits against us, any of which could have a material adverse effect on our reputation, revenues and results of operations.
If revenue from a significant customer declines, we may have difficulty replacing the lost revenue, which would negatively affect our results and operations.
In our international business, we depend for a material portion of our sales in the international arena on several key sub-distributors, and especially on The Lotus Global Group, Inc., doing business as GlobalMed Technologies Co., or GlobalMed, which is our master distributor over the XTRAC and VTRAC products. If we lose
GlobalMed or one of these sub-distributors, our sales of phototherapy products are likely to suffer in the short term, which could have a negative effect on our revenues and results of operations.
If we fail to manage our sales and marketing force or to market and distribute our products effectively, we may experience diminished revenues and profits.
There are significant risks involved in building and managing our sales and marketing force and marketing our products, including our ability:
| • | to hire, as needed, a sufficient number of qualified sales and marketing personnel with the aptitude, skills and understanding to market our products; |
| • | to adequately train our sales and marketing force in the use and benefits of all our products and services, thereby making them more effective promoters; |
| • | to manage our sales and marketing force and our ancillary channels (e.g., telesales) such that variable and semi-fixed expenses grow at a lesser rate than our revenues; and |
| • | to set the prices and other terms and conditions for treatments using the XTRAC system in a complex legal environment so that they will be accepted as attractive skin health and appropriate alternatives to conventional modalities and treatments. |
To increase acceptance and utilization of our products, we may have to expand our sales and marketing programs in the U.S. While we may be able to draw on currently available personnel within our organization to meet this need, we also expect that we will have to increase the number of representatives devoted to the sales and marketing programs and to broaden, through such representatives, the talents we have at our disposal. In some cases, we may look outside our organization for assistance in marketing our products.
We are not the manufacturer of some of our products and sell those products through contractual agreements.
Our STRATAPEN line of products are purchased by us and resold to end users under a distribution agreement. In order to retain this line, we need to achieve certain minimum sales. We cannot assure you that we will continue to achieve a level of sales required to maintain the rights to sell this product.
We are reliant on a limited number of suppliers for production of our products.
Production of our products requires specific component parts obtained from our suppliers. While we believe that we could find alternate suppliers, in the event that our current suppliers fail to meet our needs, a change in suppliers or any significant delay in our ability to have access to such resources could have a material adverse effect on our delivery schedules, business, operating results and financial condition. Moreover, in the event we can no longer utilize this supplier or acquire this resource and must identify a new supplier or substitute a different resource, such change may trigger an obligation for us to comply with additional FDA regulatory requirements including, but not limited to, pre-marketing authorization and Quality System Requirements ("QSR").
Our failure to respond to rapid changes in technology and our applications in the medical devices industry or the development of a cure for skin conditions treated by our products could make our treatment system obsolete.
The medical device industry is subject to rapid and substantial technological development and product innovations. To be successful, we must respond to new developments in technology, new applications of existing technology and new treatment methods. Our financial condition and operating results could be adversely affected if we fail to be responsive on a timely and effective basis to competitors' new devices, applications, treatments or price strategies. For example, the development of a cure for psoriasis, vitiligo, atopic dermatitis or leukoderma would eliminate the need for our XTRAC system for these diseases and would require us to focus on other uses of our technology, which could have a material adverse effect on our business and prospects.
As we develop new products or improve our existing products, we may accelerate the economic obsolescence of the existing, unimproved products and their components. The obsolete products and related components may have little to no resale value, leading to an increase in the reserves we have against our inventory. Likewise, there is a risk that the new products or improved existing products may not achieve market acceptance and therefore may also lead to an increase in the reserves against our inventory.
On March 13, 2017 we notified the FDA that, as of September 30, 2017, we will no longer service the MelaFind device. As the device is subject to both FDA requirements and requirements of certain foreign countries in
which the device is still in use, we cannot assure you that a government agency may not make a demand that we either continue to provide support or recall devices still in use and thereby increase our costs and expenses.
We may become subject to product liability lawsuits whether due to misuse of our products by customers or physicians, or otherwise, and other damages imposed on us may exceed our insurance coverage, or we may be subject to claims that are not covered by insurance.
We may be subject to product liability claims from time to time. Our products are highly complex and some are used to treat delicate skin conditions on and near a patient's face. In addition, the clinical testing, manufacturing, marketing and use of certain of our products and procedures may also expose us to product liability, FDA regulatory and/or legal actions, or other claims. If a physician elects to apply an off-label use and the use leads to injury, we may be involved in costly litigation. In addition, the fact that we train technicians whom we do not supervise in the use of our XTRAC system during patient treatment may expose us to third-party claims if those doing the training are accused of providing inadequate training. We presently maintain liability insurance with coverage limits of at least $5,000,000 per occurrence and $5,000,000 in the aggregate, but product liability insurance is expensive and we might not be able to obtain product liability insurance in the future on acceptable terms or in sufficient amounts to protect us, if at all. A successful claim brought against us in excess of our insurance coverage could have a material adverse effect on our business, results of operations and financial condition. In addition, continuing insurance coverage may also not be available at an acceptable cost, if at all. Therefore, we may not be able to obtain insurance coverage that will be adequate to satisfy a liability that may arise. Regardless of merit or eventual outcome, product liability claims may result in decreased demand for a product, injury to its reputation, withdrawal of clinical trial volunteers and loss of revenues. As a result, regardless of whether we are insured, a product liability claim or product recall may result in losses that could result in the FDA taking legal or regulatory enforcement action against us and or our products including recall, and could have a material adverse effect upon our business, financial condition and results of operations.
We must comply with complex statutes prohibiting fraud and abuse, and both we and physicians utilizing our products could be subject to significant penalties for noncompliance.
There are extensive federal and state laws and regulations prohibiting fraud and abuse in the healthcare industry that can result in significant criminal and civil penalties. These federal laws include:
| • | the anti-kickback statute which prohibits certain business practices and relationships, including the payment or receipt of remuneration for the referral of patients whose care will be paid by Medicare or other federal healthcare programs, as modified by the ACA; |
| • | the physician self-referral prohibition, commonly referred to as the Stark Law; |
| • | the anti-inducement law, which prohibits providers from offering anything to a Medicare or Medicaid beneficiary to induce that beneficiary to use items or services covered by either program; the Civil False Claims Act, which prohibits any person from knowingly presenting or causing to be presented false or fraudulent claims for payment by the federal government, including the Medicare and Medicaid programs and; |
| • | the Civil Monetary Penalties Law, which authorizes U.S. Department of Health and Human Services to impose civil penalties administratively for fraudulent or abusive acts. Sanctions for violating these federal laws include criminal and civil penalties that range from punitive sanctions, damage assessments, monetary penalties, imprisonment, denial of Medicare and Medicaid payments, or exclusion from the Medicare and Medicaid programs, or both. |
As federal and state budget pressures continue, federal and state administrative agencies may also continue to escalate investigation and enforcement efforts to root out waste and to control fraud and abuse in governmental healthcare programs. Private enforcement of healthcare fraud has also increased, due in large part to amendments to the Civil False Claims Act in 1986 that were designed to encourage private persons to sue on behalf of the government. A violation of any of these federal and state fraud and abuse laws and regulations could have a material adverse effect on our liquidity and financial condition. An investigation into the use of our products by physicians may dissuade physicians from either purchasing or using our products and could have a material adverse effect on our revenues.
If the effectiveness and safety of our devices are not supported by long-term data, and the level of acceptance of our products by dermatologists does not increase or is not maintained, our revenues could decline.
Our products may not be accepted in the market if we do not produce clinical data supported by the independent efforts of clinicians. We received clearance from the FDA for the use of the XTRAC system to treat psoriasis based upon our study of a limited number of patients. Safety and efficacy data presented to the FDA for the XTRAC system was based on studies on these patients. For the treatment of vitiligo, atopic dermatitis and leukoderma, we have received clearance from the FDA for the use of the XTRAC system based primarily on a showing of substantial equivalence to other previously cleared predicate devices. However, we may discover that physicians will expect clinical data on such treatments with the XTRAC system. We also may find that data from longer-term psoriasis patient follow-up studies may be inconsistent with those indicated by our relatively short-term data. If longer-term patient studies or clinical experience indicate that treatment with the XTRAC system does not provide patients with sustained benefits or that treatment with our product is less effective or less safe than our current data suggests, our revenues could decline. In addition, the FDA could then bring legal or regulatory enforcement actions against us and/or our products including, but not limited to, recalls or requirements for pre-market 510(k) authorizations. We can give no assurance that our data will be substantiated in studies involving more patients. In such a case, we may never achieve significant revenues or profitability.
Our failure to obtain or maintain necessary FDA clearances or approvals, or equivalents thereof in the U.S. and relevant foreign markets, could hurt our ability to distribute and market our products.
In both our U.S. and foreign markets, we are affected by extensive laws, governmental regulations, administrative determinations, court decisions and similar constraints. Such laws, regulations and other constraints may exist at the federal, state or local levels in the U.S. and at analogous levels of government in foreign jurisdictions. In addition, the formulation, manufacturing, packaging, labeling, distribution, importation, sale and storage of our products are subject to extensive regulation by various federal agencies, including, but not limited to, the FDA and the FTC, State Attorneys General in the U.S., as well as by various other federal, state, local and international regulatory authorities in the countries in which its products are manufactured, distributed or sold. If we or our manufacturers fail to comply with those regulations, we could become subject to significant penalties or claims, which could harm our results of operations or our ability to conduct our business. In addition, the adoption of new regulations or changes in the interpretations of existing regulations may result in significant compliance costs or discontinuation of product sales and may impair the marketing of our products, resulting in significant loss of net sales. Our failure to comply with federal or state regulations, or with regulations in foreign markets that cover our product claims and advertising, including direct claims and advertising by us, may result in enforcement actions and imposition of penalties or otherwise harm the distribution and sale of its products. Further, our businesses are subject to laws governing our accounting, tax and import and export activities. Failure to comply with these requirements could result in legal and/or financial consequences that might adversely affect our sales and profitability. Each medical device that we wish to market in the U.S. must first receive either 510(k) clearance or Premarket Approval ("PMA") from the FDA unless an exemption applies. Either process can be lengthy and expensive. The FDA's 510(k) clearance process may take from three to twelve months, or longer, and may or may not require human clinical data. The PMA process is much more costly and lengthy. It may take from eleven months to three years, or even longer, and will likely require significant supporting human clinical data. Delays in obtaining regulatory clearance or approval could adversely affect our revenues and profitability. Although we have obtained a PMA for the MelaFind system to aid in the diagnosis of melanoma and 510(k) clearances for our XTRAC system for use in treating psoriasis, vitiligo, atopic dermatitis and leukoderma, these approvals and clearances may be subject to revocation if post-marketing data demonstrates safety issues or lack of effectiveness. Similar clearance processes may apply in foreign countries. Further, more stringent regulatory requirements or safety and quality standards may be issued in the future with an adverse effect on our business. We have ceased manufacturing and marketing MelaFind but must still maintain records for FDA and foreign regulatory purposes.
If required, clinical trials necessary to support a 510(k) notice or PMA application will be expensive and will require the enrollment of large numbers of patients, and suitable patients may be difficult to identify and recruit. Delays or failures in our clinical trials will prevent us from commercializing any modified or new products and will adversely affect our business, operating results and prospects.
We have filed a 510(k) application for our Multi-Micro Dose™ tip accessory for our XTRAC excimer laser.
For this product and if we acquire or develop a product that requires us to initiate and complete clinical trials necessary to support a 510(k) notice or a PMA application, this process will be time-consuming and expensive and the outcome uncertain. Moreover, the results of early clinical trials are not necessarily predictive of future results, and any product we advance into clinical trials may not have favorable results in early or later clinical trials.
Conducting successful clinical studies will require the enrollment of large numbers of patients, and suitable patients may be difficult to identify and recruit. Patient enrollment in clinical trials and completion of patient participation and follow-up depend on many factors, including the size of the patient population, the nature of the trial protocol, the attractiveness of, or the discomforts and risks associated with, the treatments received by patients enrolled as subjects, the availability of appropriate clinical trial investigators, support staff, and proximity of patients to clinical sites and ability to comply with the eligibility and exclusion criteria for participation in the clinical trial and patient compliance. For example, patients may be discouraged from enrolling in our clinical trials if the trial protocol requires them to undergo extensive post-treatment procedures or follow-up to assess the safety and effectiveness of our products or if they determine that the treatments received under the trial protocols are not attractive or involve unacceptable risks or discomforts. Patients may also not participate in our clinical trials if they choose to participate in contemporaneous clinical trials of competitive products. In addition, patients participating in clinical trials may die before completion of the trial or suffer adverse medical events unrelated to investigational products.
Development of sufficient and appropriate clinical protocols to demonstrate safety and efficacy may be required and we may not adequately develop such protocols to support clearance and approval. Further, the FDA may require us to submit data on a greater number of patients than we originally anticipated and/or for a longer follow-up period or change the data collection requirements or data analysis for any clinical trials. Delays in patient enrollment or failure of patients to continue to participate in a clinical trial may cause an increase in costs and delays in the approval and attempted commercialization of our products or result in the failure of the clinical trial. The FDA may not consider our data adequate to demonstrate safety and efficacy. Such increased costs and delays or failures could adversely affect our business, operating results and prospects.
Our medical device operations are subject to pervasive and continuing FDA regulatory requirements.
Medical devices regulated by the FDA are subject to "general controls" which include: registration with the FDA; listing commercially distributed products with the FDA; complying with good manufacturing practices under the quality system regulations; filing reports with the FDA and keeping records relative to certain types of adverse events associated with devices under the medical device reporting regulation; assuring that device labeling complies with device labeling requirements; reporting certain device field removals and corrections to the FDA; and obtaining premarket notification 510(k) clearance for devices prior to marketing. Some devices known as "510(k)-exempt" can be marketed without prior marketing clearance or approval from the FDA. In addition to the "general controls," some Class II medical devices are also subject to "special controls," including adherence to a particular guidance document and compliance with the performance standard. Instead of obtaining 510(k) clearance, some Class III devices are subject to PMA. In general, obtaining PMA to achieve marketing authorization from the FDA is a more onerous process than seeking 510(k) clearance.
Many medical devices, such as medical lasers, are also regulated by the FDA as "electronic products." In general, manufacturers and marketers of "electronic products" are subject to certain FDA regulatory requirements intended to ensure the radiological safety of the products. These requirements include, but are not limited to, filing certain reports with the FDA about the products and defects/safety issues related to the products as well as complying with radiological performance standards.
The medical device industry is now experiencing greater scrutiny and regulation by federal, state and foreign governmental authorities. Companies in our industry are subject to more frequent and more intensive reviews and investigations, often involving the marketing, business practices, and product quality management including standards for device recalls and product labeling. Such reviews and investigations may result in civil and criminal proceedings; the imposition of substantial fines and penalties; the receipt of warning letters, untitled letters, demands for recalls or the seizure of our products; the requirement to enter into corporate integrity agreements, stipulated judgments or other administrative remedies, and result in our incurring substantial unanticipated costs and the diversion of key personnel and management's attention from their regular duties, any of which may have an adverse effect on our financial condition, results of operations and liquidity, and may result in greater and continuing governmental scrutiny of our business in the future.
We must also have the appropriate FDA clearances and/or approvals from other governmental entities in order to lawfully market devices and or/drugs. The FDA, federal, state or foreign governments and agencies may disagree that we have such clearance and/or approvals for all of our products and may take action to prevent the marketing and sale of such devices until such disagreements have been resolved.
Additionally, federal, state and foreign governments and entities have enacted laws and issued regulations and other standards requiring increased visibility and transparency of our interactions with healthcare providers. For example, the U.S. Physician Payment Sunshine Act requires us to disclose payments and other transfers of value to all U.S. physicians and U.S. teaching hospitals at the U.S. federal level made. Failure to comply with these legal and regulatory requirements could impact our business, and we have had and will continue to spend substantial time and financial resources to develop and implement enhanced structures, policies, systems and processes to comply with these legal and regulatory requirements, which may also impact our business.
Healthcare policy changes may have a material adverse effect on us.
Healthcare costs have risen significantly over the past decade. As a result, there have been and continue to be proposals by federal, state and foreign governments and regulators as well as third-party insurance providers to limit the growth of these costs. Among these proposals are regulations that could impose limitations on the prices we will be able to charge for our products, the amounts of reimbursement available for our products from governmental agencies or third-party payors, requirements regarding the usage of comparative studies, technology assessments and healthcare delivery structure reforms to determine the effectiveness and select the products and therapies used for treatment of patients. While we believe our products provide favorable clinical outcomes, value and cost efficiency, the resources necessary to demonstrate this value to our customers, patients, payors, and regulators is significant and may require longer periods of time and effort in which to obtain acceptance of our products. There is no assurance that our efforts will be successful, and these limitations could have a material adverse effect on our financial position and results of operations.
These changes and additional proposed changes in the future could adversely affect the demand for our products as well as the way in which we conduct our business. For example, the ACA was enacted into law in the U.S. in March 2010. The law imposed on medical device manufacturers a 2.3 percent excise tax on U.S. sales of Class I, II and III medical devices, which includes certain products marketed and sold by us, as well as requiring research into the effectiveness of treatment modalities and instituting changes to the reimbursement and payment systems for patient treatments. In addition, governments and regulatory agencies continue to study and propose changes to the laws governing the clearance or approval, manufacture and marketing of medical devices, which could adversely affect our business and results of operations.
FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our products. The FDA is currently exploring ways to modify its 510(k) clearance process. In addition, due to changes at the FDA in general, it has become increasingly more difficult to obtain 510(k) clearance as data requirements have increased. It is impossible to predict whether legislative changes will be enacted or FDA regulations, guidance or interpretations changed, and what the impact of such changes, if any, may be. However, any changes could make it more difficult for us to maintain or attain clearance or approval to develop and commercialize our products and technologies.
Various healthcare reform proposals have also emerged at the state level. We cannot predict what healthcare initiatives, if any, will be implemented at the federal or state level, or the effect any future legislation or regulation will have on us. However, an expansion in government's role in the U.S. healthcare industry may lower reimbursements for our products, reduce medical procedure volumes and adversely affect our business, possibly materially. In addition, if the excise taxes contained in the House or Senate health reform bills are enacted into law, our operating expenses resulting from such an excise tax and results of operations would be materially and adversely affected.
Our market acceptance in international markets requires regulatory approvals from foreign governments and may depend on third party reimbursement of participants' cost.
We have introduced our XTRAC and VTRAC products into markets in more than 30 countries in Europe, the Middle East, Asia, Australia, South Africa and parts of Central and South America through distributors. We cannot be certain that our salesforce and distributor network will be successful in marketing our products in these or other countries or that our distributors will purchase XTRAC or VTRAC systems beyond their current contractual obligations or in accordance with our expectations.
Even if we obtain and maintain the necessary foreign regulatory registrations or approvals, market acceptance of our products in international markets may be dependent, in part, upon the availability of reimbursement within applicable healthcare payment systems. Reimbursement and healthcare payment systems in international markets vary significantly by country, and include both government-sponsored healthcare and private insurance. We may seek international reimbursement approvals for our products, but we cannot assure you that any such approvals will be obtained in a timely manner, if at all. Failure to receive international reimbursement approvals in any given market could have a material adverse effect on the acceptance or growth of our products in that market or others.
We may become subject to claims of infringement or misappropriation of the intellectual property rights of others, which could prohibit us from shipping affected products, require us to obtain licenses from third parties or to develop non-infringing alternatives, and subject us to substantial monetary damages and injunctive relief. Our patents may also be subject to challenge on validity grounds, and our patent applications may be rejected.
Third parties could, in the future, assert infringement or misappropriation claims against us with respect to our current or future products. Whether a product infringes a patent involves complex legal and factual issues, the determination of which is often uncertain. Therefore, we cannot be certain that we have not infringed the intellectual property rights of such third parties. Our potential competitors may assert that some aspect of our products infringes their patents. There also may be existing patents of which we are unaware that one or more components of our products may inadvertently infringe.
Any infringement or misappropriation claim could cause us to incur significant costs, could place significant strain on our financial resources, divert management's attention from our business and harm our reputation. If the relevant patents were upheld as valid and enforceable and we were found to infringe, we could be prohibited from selling our product unless we could obtain licenses to use the technology covered by the patent or are able to design around the patent. We may be unable to obtain a license on terms acceptable to us, if at all, and we may not be able to redesign the affected product to avoid infringement.
A court could order us to pay compensatory damages for such infringement, plus prejudgment interest and could, in addition, treble the compensatory damages and award attorney fees. These damages could be substantial and could harm our reputation, business, financial condition and operating results. Depending on the nature of the relief ordered by the court, we could become liable for additional damages to third parties.
We rely on our patents, patent applications and other intellectual property rights to give us a competitive advantage. Whether a patent is valid, or whether a patent application should be granted, is a complex matter of science and law. Therefore we cannot be certain that, if challenged, our patents, patent applications and/or other intellectual property rights would be upheld. If one or more of those patents, patent applications and other intellectual property rights are invalidated, rejected or found unenforceable, those outcomes could reduce or eliminate any competitive advantage we might otherwise have had.
We may become involved in lawsuits to protect or enforce our patents or other intellectual property rights, which could be expensive, time consuming and unsuccessful and have a material adverse effect on the success of our business.
Competitors may infringe our patents or the patents of any of our future licensors. If we or one of our licensing partners were to initiate legal proceedings against a third party to enforce a patent covering one of our product candidates, the defendant could counterclaim that the patent covering our product candidate is invalid and/or unenforceable. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, non-obviousness, adequate written description, clarity or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the U.S. Patent and Trademark Office (the "USPTO"), or made a misleading statement, during prosecution. The outcome following legal assertions of invalidity and unenforceability is unpredictable.
exclude third parties from making and selling similar or competitive products. Similarly, if we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have asserted trademark infringement has superior rights to the marks in question. In this case, we could ultimately be forced to cease use of such trademarks.
Even if we were to establish infringement of our patent rights by a third party, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could adversely affect the market price of our common stock. Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they are concluded and can involve substantial expenses. Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings. Interference or derivation proceedings provoked by third parties or brought by us or declared by the USPTO may be necessary to determine the priority or inventorship of inventions with respect to our patents or patent applications or those of any of our future licensors. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Our defense of litigation, interference proceedings, or derivation proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. In addition, the uncertainties associated with litigation and administrative proceedings could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our research programs, license necessary technology from third parties or enter into development partnerships that would help us bring our product candidates to market.
We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws and regulations and could face substantial penalties if we are unable to fully comply with such laws.
While we do not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, many healthcare laws and regulations apply to our business. For example, we could be subject to healthcare fraud and abuse and patient privacy regulation and enforcement by both the federal government and the states in which we conduct our business. The healthcare laws and regulations that may affect our ability to operate include:
| | • | the federal healthcare programs' Anti-Kickback Law, as modified by the ACA, which prohibits, among other things, persons or entities from soliciting, receiving, offering or providing remuneration, directly or indirectly, in return for or to induce either the referral of an individual for, or the purchase order or recommendation of, any item or service for which payment may be made under a federal healthcare program such as the Medicare and Medicaid programs; |
| | • | federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent, or are for items or services not provided as claimed and which may apply to entities like us to the extent that our interactions with customers may affect their billing or coding practices; |
| | • | the federal Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), which established new federal crimes for knowingly and willfully executing a scheme to defraud any healthcare benefit program or making false statements in connection with the delivery of or payment for healthcare benefits, items or services, as well as leading to regulations imposing certain requirements relating to the privacy, security and transmission of individually identifiable health information; and |
| | • | state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers, and state laws governing the privacy of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. |
The medical device industry has been under heightened scrutiny as the subject of government investigations and regulatory or legal enforcement actions involving manufacturers who allegedly offered unlawful inducements to potential or existing customers in an attempt to procure their business, including arrangements with physician consultants. If our operations or arrangements are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from the Medicare and Medicaid programs and the curtailment or restructuring of its operations. Any penalties, damages, fines, exclusions, curtailment or restructuring of our operations could adversely affect our ability to operate our business and our financial results. The risk of us being found in violation of these laws is increased by the fact that many of these laws are broad and their provisions are open to a variety of interpretations. Any action against us for violation of these laws, even if we successfully defend against that action and the underlying alleged violations, could cause us to incur significant legal expenses and divert our management's attention from the operation of our business. If the physicians or other providers or entities with whom we do business are found to be non-compliant with applicable laws, they may be subject to sanctions, which could also have a negative impact on our business.
If we or our third-party manufacturers or suppliers fail to comply with the FDA's Quality System Regulation or any applicable state equivalent, our manufacturing operations could be interrupted and our potential product sales and operating results could suffer.
We and some of our third-party manufacturers and suppliers are required to comply with some or all of the FDA's Current Good Manufacturing Practices or its QSR, which delineates the design controls, document controls, purchasing controls, identification and traceability, production and process controls, acceptance activities, nonconforming product requirements, corrective and preventive action requirements, labeling and packaging controls, handling, storage, distribution and installation requirements, records requirements, servicing requirements, and statistical techniques potentially applicable to the production of our medical devices. We and our manufacturers and suppliers are also subject to the regulations of foreign jurisdictions regarding the manufacturing process if we market its products overseas. The FDA enforces the QSR through periodic and announced or unannounced inspections of manufacturing facilities. Our facilities have been inspected by the FDA and other regulatory authorities, and we anticipate that we and certain of our third-party manufacturers and suppliers will be subject to additional future inspections. If our facilities or those of our manufacturers or suppliers are found to be in non-compliance or fail to take satisfactory corrective action in response to adverse QSR inspectional findings, FDA could take legal or regulatory enforcement actions against us and/or our products, including but not limited to the cessation of sales or the recall of distributed products, which could impair our ability to produce our products in a cost-effective and timely manner in order to meet our customers' demands. We may also be required to bear other costs or take other actions that may have a negative impact on our future sales and our ability to generate profits.
Current regulations depend heavily on administrative interpretation. If the FDA does not believe that we are in substantial compliance with applicable FDA regulations, the agency could take legal or regulatory enforcement actions against us and/or our products. We are also subject to periodic inspections by the FDA, other governmental regulatory agencies, as well as certain third-party regulatory groups. Future interpretations made by the FDA or other regulatory bodies made during the course of these inspections may vary from current interpretations and may adversely affect our business and prospects. The FDA's and foreign regulatory agencies' statutes, regulations, or policies may change, and additional government regulation or statutes may be enacted, which could increase post-approval regulatory requirements, or delay, suspend, prevent marketing of any cleared / approved products or necessitate the recall of distributed products. We cannot predict the likelihood, nature or extent of adverse governmental regulation that might arise from future legislative or administrative action, either in the U.S. or abroad.
The medical device industry has been under heightened FDA scrutiny as the subject of government investigations and enforcement actions. If our operations and activities are found to be in violation of any FDA laws or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines and other legal and/or agency enforcement actions. Any penalties, damages, fines, or curtailment or restructuring of our operations or activities could adversely affect our ability to operate our business and our financial results. The risk of us being found in violation of FDA laws is increased by the fact that many of these laws are broad and their provisions are open to a variety of interpretations. Any action against us for violation of these laws, even if we successfully defend ourselves against that action and its underlying allegations, could cause us to incur significant legal expenses and divert management's attention from the operation of our business. Where there is a dispute with a federal or state governmental agency that cannot be resolved to the mutual satisfaction of all
relevant parties, we may determine that the costs, both real and contingent, are not justified by the commercial returns to us from maintaining the dispute or the product.
Various claims, design features or performance characteristics of our medical devices, that we regarded as permitted by the FDA without marketing clearance or approval, may be challenged by the FDA or state regulators. The FDA or state regulatory authorities may find that certain claims, design features or performance characteristics, in order to be made or included in the products, may have to be supported by further studies and marketing clearances or approvals, which could be lengthy, costly and possibly unobtainable.
If we fail to comply with ongoing regulatory requirements, or if we experience unanticipated problems with products, these products could be subject to restrictions or withdrawal from the market.
We are also subject to similar state requirements and licenses. Failure by us to comply with statutes and regulations administered by the FDA and other regulatory bodies, discovery of previously unknown problems with our products (including unanticipated adverse events or adverse events of unanticipated severity or frequency), manufacturing problems, or failure to comply with regulatory requirements, or failure to adequately respond to any FDA observations concerning these issues, could result in, among other things, any of the following actions:
| • | warning letters or untitled letters issued by the FDA; |
| • | fines, civil penalties, injunctions and criminal prosecution; |
| • | unanticipated expenditures to address or defend such actions; |
| • | delays in clearing or approving, or refusal to clear or approve, our products; |
| • | withdrawal or suspension of clearance or approval of our products by the FDA or other regulatory bodies; |
| • | product recall or seizure; |
| • | orders for physician or customer notification or device repair, replacement or refund; |
| • | interruption of production; and |
| • | operating restrictions. |
If any of these actions were to occur, it would harm our reputation and adversely affect our business, financial condition and results of operations.
Our medical products may in the future be subject to product recalls that could harm our reputation, business and financial results.
The FDA has the authority to require the recall of commercialized medical device products in the event of material deficiencies or defects in design or manufacture. In the case of the FDA, the authority to require a recall must be based on an FDA finding that there is a reasonable probability that the device would cause serious injury or death. Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found. A government-mandated or voluntary recall by us or one of our distributors could occur as a result of component failures, manufacturing errors, design or labeling defects or other deficiencies and issues. Recalls of any of our products would divert managerial and financial resources and have an adverse effect on our financial condition and results of operations. The FDA requires that certain classifications of recalls be reported to the FDA within ten working days after the recall is initiated. Companies are required to maintain certain records of recalls, even if they are not reportable to the FDA. We may initiate voluntary recalls involving our products in the future that we determine do not require notification of the FDA. If the FDA disagrees with our determinations, they could require us to report those actions as recalls. A future recall announcement could harm our reputation with customers and negatively affect its sales. In addition, the FDA could take enforcement action for failing to report the recalls when they were conducted.
If any of our medical products cause or contribute to a death or a serious injury, or malfunction in certain ways, we will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions.
Under the FDA medical device reporting regulations, medical device manufacturers are required to report to the FDA information that a device has or may have caused or contributed to a death or serious injury or has malfunctioned in a way that would likely cause or contribute to death or serious injury if the malfunction of the
device or one of our similar devices were to recur. If we fail to report these events to the FDA within the required timeframes, or at all, the FDA could take enforcement action against us. Any such adverse event involving our products also could result in future voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection or enforcement action. Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require our time and capital, distract management from operating our business, and may harm our reputation and financial results.
We may acquire other assets or businesses, or form collaborations or make investments in other companies or technologies that could harm our operating results, dilute our stockholders' ownership, increase our debt or cause us to incur significant expense.
As part of our business strategy, we may pursue acquisitions of assets, including preclinical, clinical or commercial stage products or product candidates, or businesses, or strategic alliances and collaborations, to expand our existing technologies and operations. We may not identify or complete these transactions in a timely manner, on a cost-effective basis, or at all, and we may not realize the anticipated benefits of any such transaction, any of which could have a detrimental effect on our financial condition, results of operations and cash flows. We have limited experience with acquiring other companies, products or product candidates, and limited experience with forming strategic alliances and collaborations. We may not be able to find suitable acquisition candidates, and if we make any acquisitions, we may not be able to integrate these acquisitions successfully into our existing business and we may incur additional debt or assume unknown or contingent liabilities in connection therewith. Integration of an acquired company or assets may also disrupt ongoing operations, require the hiring of additional personnel and the implementation of additional internal systems and infrastructure, especially the acquisition of commercial assets, and require management resources that would otherwise focus on developing our existing business. We may not be able to find suitable strategic alliances or collaboration partners or identify other investment opportunities, and we may experience losses related to any such investments.
To finance any acquisitions or collaborations, we may choose to issue debt or equity securities as consideration. Any such issuance of shares would dilute the ownership of our stockholders. If the price of our common stock is low or volatile, we may not be able to acquire other assets or companies or fund a transaction using our stock as consideration. Alternatively, it may be necessary for us to raise additional funds for acquisitions through public or private financings. Additional funds may not be available on terms that are favorable to us, or at all.
We may not be able to successfully integrate newly acquired businesses, joint ventures and other partnerships into our operations or achieve expected profitability from our acquisitions.
If we cannot successfully integrate acquisitions, joint ventures and other partnerships on a timely basis, we may be unable to generate sufficient revenue to offset acquisition costs, we may incur costs in excess of what we anticipate, and our expectations of future results of operations, including certain cost savings and synergies, may not be achieved. Acquisitions involve substantial risks, including:
| • | unforeseen difficulties in integrating operations, technologies, services, accounting and personnel; |
| • | diversion of financial and management resources from existing operations; |
| • | unforeseen difficulties related to entering geographic regions where we do not have prior experience; |
| • | risks relating to obtaining sufficient equity or debt financing; |
| • | potential loss of customers. |
In addition, if we finance acquisitions by issuing equity securities or securities convertible into equity securities, our existing stockholders' interests would be diluted, which, in turn, could adversely impact the market price of our stock. Moreover, we could finance an acquisition with debt, resulting in higher leverage and interest costs.
If our actual liability for sales and use taxes is different from our accrued liability, it could have a material impact on our financial condition.
Included in accrued sales taxes and regulatory fees are certain estimated sales and use taxes and related penalties and interest to taxing authorities. We use estimates when accruing our sales and use tax liability, including interest and penalties. All of our tax positions are subject to audit. While we believe all of our estimates and assumptions are reasonable and will be sustained upon audit, actual liabilities and credits may differ significantly. If
so, it may materially impact our financial condition, negatively if we underestimated our liability or positively if we overestimated our liability.
We may be subject to disruptions or failures in our information technology systems and network infrastructures, including through cyber-attacks or other third party breaches that could have a material adverse effect on our business.
We rely on the efficient and uninterrupted operation of complex information technology systems and network infrastructures to operate our business. We also hold data in various data center facilities upon which our business depends. A disruption, infiltration or failure of our information technology systems or any of our data centers as a result of software or hardware malfunctions, system implementations or upgrades, computer viruses, third-party security breaches, employee error, theft or misuse, malfeasance, power disruptions, natural disasters or accidents could cause breaches of data security, loss of intellectual property and critical data and the release and misappropriation of sensitive competitive information.
Further, data maintained in digital form is subject to risk of cyber-attacks, which are increasing in frequency and sophistication. Cyber-attacks could include the deployment of harmful malware and other means to affect service reliability and threaten data confidentiality, integrity and availability. Despite our efforts to monitor and safeguard our systems to prevent data compromise, the possibility of a future data compromise cannot be eliminated entirely, and risks associated with intrusion, tampering, and theft remain. In addition, we do not have insurance coverage with respect to system failures or cyber-attacks.
While we have implemented a number of protective measures, including firewalls, antivirus, patches, data encryption, log monitors, routine back-ups with offsite retention of storage media, system audits, data partitioning, routine password modifications and disaster recovery procedures, such measures may not be adequate or implemented properly to prevent or fully address the adverse effect of such events. If our systems were to fail or we are unable to successfully expand the capacity of these systems, or we are unable to integrate new technologies into our existing systems, our operations and financial results could suffer.
We have also outsourced significant elements of our information technology infrastructure and as a result we depend on third parties who are responsible for maintaining significant elements of our information technology systems and infrastructure and who may or could have access to our confidential information. The size and complexity of our information technology systems, and those of our third party vendors, make such systems potentially vulnerable to service interruptions and security breaches from inadvertent or intentional actions by its employees, partners or vendors. These systems are also vulnerable to attacks by malicious third parties, and may be susceptible to intentional or accidental physical damage to the infrastructure maintained by us or by third parties. A breach of our security measures or the accidental loss, inadvertent disclosure, unapproved dissemination, misappropriation or misuse of trade secrets, proprietary information, or other confidential information, whether as a result of theft, hacking, fraud, trickery or other forms of deception, or for any other cause, could enable others to produce competing products, use our proprietary technology or information, and/or adversely affect our business. Further, any such interruption, security breach, loss or disclosure of confidential information could result in financial, legal, business, and reputational harm to us and could have a material adverse effect on our business, results of operations and financial condition.
Risks Relating to the
Private Placement Transaction
The DebenturesDecember 30, 2015 Financing (the "Refinancing")
If we fail to abide by the terms and conditions of the Refinancing, the secured lenders have the right to proceed against our intellectual property and other assets pursuant to their first priority security interest.
On December 30, 2015, we entered into a $12.0 million credit facility pursuant to a Credit and Security Agreement (the "Security Agreement") and related financing documents with MidCap Financial Trust ("MidCap") and the
Notes contain covenants that could limit our financing options and liquidity position, which would limit our abilitylenders listed in the loan documents. We have drawn down the full $12.0 million available to
grow our business.The Debentures and the Notes contain certain covenants and representations limiting our ability to incur additional indebtedness, other than specified permitted indebtedness, and from entering into or creating any liens on our assets, other than certain permitted liens.us. Our obligations under the Notes and Debenturescredit facility are secured by a first priority lien on all of our assets, except forassets. Our commitments under the Security Agreement require that we maintain our listing on a second liennationally recognized stock exchange and that we meet certain rolling 12-month revenue milestones. We have amended the Security Agreement four times, and pursuant to the fourth amendment the terms have been amended to impose less restrictive covenants on our intellectual property. These restrictions may limit our abilityus and to obtain additional financing, withstand downturns in our business or take advantagelower prepayment and exit fees and from the proceeds of business opportunities. Moreover, additional debtthe financing we may seek may contain terms that include more restrictive covenants, may require repayment onpaid MidCap $3.0 million in principal and an accelerated schedule or may impose other obligations that limit our ability to grow our business, acquire needed assets, or take other actions we might otherwise consider appropriate or desirable.
additional amount in associated fees. Our failure to avoid events of default as definedabide by our on-going obligations under the loan documents could result in the Debentures and the Notes could require uslender seeking to redeem such Debentures and Notes at a premium.
��
The Debentures and the Notes provide that, upon the occurrence of an “Event of Default,” the interest rateforeclose on the Debentures and the Notes increases to 12%. Events of Default under the Debentures and the Notes include, among other things: (1) suspension or removal from the Nasdaq Capital Market or other permissible trading market for specified time periods; (2) failure to pay principal, interest, late charges and other amounts due under the Debentures or the Notes; (3) certain events of bankruptcy or insolvency of our company; (4) failure to make payment with respect to any indebtedness in excess of $150,000 to any third party, or the occurrence of a default or event of default under certain agreements binding our company; and (5) our failure to satisfy the Stockholder Approval Requirement by November 30, 2015.
Our ability to avoid such Events of Default may be affected by changes in our business condition or results of our operations, or other events beyond our control. If we were to experience an Event of Default and the holders elected to have us redeem their Debentures and Notes, we may not have sufficient resources to do so, and we may have to seek additional debt or equity financing to cover the costs of redeeming the Debentures and the Notes. Any additional debt or equity financing that we may need may not be available on terms favorable to us, or at all.
Issuance of shares of our common stock upon the exercise of options or warrants and upon conversion of convertible debentures will dilute the ownership interest of our existing stockholders and could adversely affect the market price of our common stock.
The exercise of outstanding stock options and warrants and conversions of outstanding convertible debentures, including the Debentures and the Warrants, and the sales of stock issuable pursuant to them would reduce a stockholder's percentage voting and ownership interest. The exercise, or potential exercise, of these options and warrants and the conversion, or potential conversion, of the debentures could adversely affect the market price of our common stock and the terms on which we could obtain additional financing. The ownership interest of our existing stockholders may be further diluted through adjustments to certain outstanding Warrants and Debentures under the terms of their anti-dilution provisions.
We may become obligated to pay liquidated damages if we fail to file, obtain effectiveness and maintain effectiveness of a registration statement under a registration rights agreement we entered into with the Selling Stockholders.
We have granted to the Purchasers resale registration rights with respect to the shares of common stock underlying the Debentures and the Warrants pursuant to the terms of a registration rights agreement. In addition to the registration rights, the Selling Stockholders are entitled to receive liquidated damages upon the occurrence of a number of events relating to filing, becoming effective and maintaining an effective registration statement covering the shares underlying the Debentures and the Warrants. The liquidated damages will be payable upon the occurrence of each of those events and each monthly anniversary thereof until cured. The amount of liquidated damages payable is equal to 2.0% of the aggregate purchase price paid by each Purchaser, provided, however, the maximum aggregate liquidated damages payable to a Purchaser shall be 12% of the aggregate subscription amount paid by such Purchaser pursuant to the Purchase Agreement. The liquidated damages shall accrue interest at a rate of 12% per annum (or such lesser maximum amount that is permitted to be paid by applicable law), accruing on a daily basis for each event until such event is cured.
Risks Relating to Our Common Stock
An active trading market
As a result of a financing in June 2015 we incurred significant debt in the form of convertible preferred stock. In order to repay the underlying debt and help make our stock more liquid, we entered into an exchange agreement with holders of the debt and issued them a new class of preferred shares. These preferred shares present significant dilution risk for our shareholders.
On September 20, 2017, we announced the closing of an exchange transaction pursuant to the Securities Exchange Agreement (the "Exchange Agreement") dated as of June 7, 2017 between us and holders of our 2.25% Senior Series A Secured Convertible Debentures due June 30, 2021 and 4% Senior Secured Convertible Debentures due July 30, 2021 (collectively, the "Debentures"). In closing the exchange transaction under the Exchange Agreement, the holders of the Debentures exchanged the Debentures, having an aggregate principal amount of approximately $40.5 million, into 40,482 shares (the "Preferred Shares") of our newly created Series C Convertible Preferred Stock. The Preferred Shares are convertible into a total of approximately 15,049,000 shares of our common stock. Each Preferred Share has a stated value of $1,000 and is convertible into shares of common stock
may not be sustained ifat a conversion price equal to $2.69. We included the Exchange Agreement as an exhibit to our
Form 8-K current report, which was filed with the SEC on June 7, 2017. We relied upon the exemption from registration under the Securities Act of 1933 (the "Securities Act") afforded by Section 3(a)(9) of the Securities Act, i.e., the exchange of the Debentures for the Preferred Shares in which no commission or other remuneration was paid or given directly or indirectly for soliciting such exchange. In connection with the closing under the Exchange Agreement, on September 20, 2017, we filed a Certificate of Designations with the Delaware Secretary of State setting forth the rights, preferences and privileges of the Company's Series C Convertible Preferred Stock. As of June 27, 2018, Preferred Shares that are convertible into approximately 3.8 million shares of common stock
is delisted from Nasdaq.Currently,remain outstanding.
Our largest stockholder, Accelmed, has the ability to control or significantly influence all matters submitted to our common stock tradesstockholders for approval.
As of June 12, 2018, Accelmed beneficially owns approximately 41% of our outstanding voting stock. As a result, Accelmed would be able to control or significantly influence all matters submitted to our stockholders for approval, as well as our management and affairs. For example, Accelmed would control or significantly influence the election of directors and approval of any merger, consolidation or sale of all or substantially all of our assets. This concentration of voting power could delay or prevent an acquisition of us on the Nasdaq Capital Market. terms that other stockholders may desire.
If we fail to maintain compliance with any Nasdaq listing requirements, wethe adequacy of our internal controls, our ability to provide accurate financial statements could be delisted. If that wereimpaired and any failure to occur, sellingmaintain our common stock could be more difficult because smaller quantities of shares would likely be bought and sold, transactions could be delayed, and security analysts’ coverage of us may be reduced. Furthermore, while we believe that our common stock would trade on the OTC Bulletin Board, we would lose various advantages attendant to listing on a national securities exchange, including but not limited to, eligibility to register the sale or resale of our shares on Form S-3 and the automatic exemption from registration under state securities laws for exchange listed securities, whichinternal controls could have a negativean adverse effect on our abilitystock price.
The Sarbanes-Oxley Act of 2002 ("SOX"), as well as rules implemented by the SEC, the Public Company Accounting Oversight Board and the Nasdaq Stock Market, have required changes in the corporate governance practices of public companies. Monitoring compliance with the existing rules and implementing changes required by these rules is expensive and may increase our legal and financial compliance costs, divert management attention from operations and strategic opportunities, and make legal, accounting and administrative activities more time-consuming. Since 2008, we have retained a consultant experienced in SOX that assists us in the process of instituting changes to
raise funds.
our internal procedures to satisfy the requirements of SOX. We have evaluated our internal control systems in order to allow us to report on our internal controls, as required by Section 404 of the SOX. As a small company with limited capital and human resources, we may need to divert management's time and attention away from our business in order to ensure continued compliance with these regulatory requirements. We may require new information technologies systems, the auditing of our internal controls, and compliance training for our directors, officers and personnel. Such efforts may entail a significant expense. If we fail to maintain the adequacy of our internal controls as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of SOX. Any failure to maintain the adequacy of our internal controls could have an adverse effect on timely and accurate financial reporting and the trading price of our common stock.
Our stock price may be volatile, meaning purchasers of our common stock could incur substantial losses.
Our stock price has been and is likely to continue to be volatile. The stock market in general and the market for medical technology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. The following factors, in addition to other risk factors described in this section and general market and economic conditions, may have a significant impact on the market price of our common stock:
| ·• | failure of any of our products to achieve or continue to have commercial success; | |
| ·• | the timing of regulatory approval for our future products; | |
| ·• | adverse regulatory determinations with respect to our existing products; | |
| • | results of our research and development efforts and our clinical trials; | |
| ·• | the announcement of new products or product enhancements by us or our competitors; | |
| ·• | regulatory developments in the United StatesU.S. and foreign countries; | |
| ·• | our ability to manufacture our products to commercial standards; | |
| ·• | developments concerning our clinical collaborators, suppliers or marketing partners; | |
| ·• | changes in financial estimates or recommendations by securities analysts; |
| ·• | public concern over our products; |
| ·• | developments or disputes concerning patents or other intellectual property rights; |
| ·• | product liability claims and litigation against us or our competitors; |
| ·• | the departure of key personnel; |
| ·• | the strength of our balance sheet; |
| ·• | variations in our financial results or those of companies that are perceived to be similar to us; |
| ·• | changes in the structure of third-party reimbursement in the United StatesU.S. and other countries; |
| ·• | changes in accounting principles or practices; |
| ·• | general economic, industry and market conditions; and |
| ·• | future sales of our common stock. |
A decline in the market price of our common stock could cause you to lose some or all of your investment, limit your ability to sell your shares of stock and may adversely impact our ability to attract and retain employees and raise capital. In addition, stockholders have, and may in the future, initiate securities class action lawsuits if the market price of our stock drops significantly. Whether or not meritorious, litigation brought against us could result in substantial costs and could divert the time and attention of our management. Our insurance to cover claims of this sort may not be adequate.
Our charter documents and Delaware law may inhibit a takeover that stockholders consider favorable and could also limit the market price of our stock.
Provisions of our restated certificate of incorporation and bylaws and applicable provisions of Delaware law may make it more difficult for or prevent a third party from acquiring control of us without the approval of our board of directors. These provisions:
| ·• | limit who may call a special meeting of stockholders; |
| ·• | establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon at stockholder meetings; |
| ·• | do not permit cumulative voting in the election of our directors, which would otherwise permit less than a majority of stockholders to elect directors; |
| ·• | prohibit stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders; and |
| ·• | provide our board of directors the ability to designate the terms of and issue a new series of preferred stock without stockholder approval. |
In addition, Section 203 of the Delaware General Corporation Law generally limits our ability to engage in any business combination with certain persons who own 15% or more of our outstanding voting stock or any of our associates or affiliates who at any time in the past three years have owned 15% or more of our outstanding voting stock.
Further, our bylaws provide that any transaction between us and Accelmed or its affiliates must be approved by either (i) the vote of the holders of a majority of shares of our Non-Affiliated Stock (defined as the voting stock not held by Accelmed or its affiliates) or (ii) by an independent committee of the Board of Directors.
These provisions may have the effect of entrenching our management team and may deprive you of the opportunity to sell your shares to potential acquirers at a premium over prevailing prices. This potential inability to obtain a control premium could reduce the price of our common stock.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The
This prospectus contains forward-looking statements containedwithin the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that involve substantial risks and uncertainties. You can identify these statements by the fact that they do not relate strictly to historic or incorporated by referencecurrent facts. They use words, such as "anticipate," "could," "continue," "contemplate," "estimate," "expect," "will," "may," "potential," "intend," "plan," "believe," and other words and terms of similar meaning. These include statements, among others, relating to the sufficiency of our financial resources, our planned future actions, and expected outcomes, our products under development, our intellectual property position, our plans with respect to funding operations, projected expense levels, and the outcome of contingencies.
Any or all of our forward-looking statements in this prospectusreport may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Consequently, no forward-looking statement can be guaranteed. Actual results may vary materially from those set forth in forward-looking statements. The uncertainties that may cause differences include, but are not historical factslimited to: uncertainty of forecasts of future business performance, consumer trends and macro-economic conditions; uncertainty of our estimates regarding the sufficiency of our cash resources, expenses, capital requirements and needs for additional financing and our ability to obtain additional financing; our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others; our ability to obtain and maintain regulatory approvals of our products; anticipated results of existing or future litigation; and descriptions or assumptions underlying or related to any of the above items.
We will not update forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law. You are forward-looking. These statements are made pursuantadvised to consult any further disclosures we make in our reports to the safe harbor provisions ofSEC, including our reports on Forms 10-K, 10-Q and 8-K. Our filings list various important factors that could cause actual results to differ materially from expected results. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation,You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.
We are not selling any securities in this offering and we will not receive any of the proceeds from the sale of shares of our expectations regarding sales, earnings or other future financial performance and liquidity, conduct and completion of clinical trials, product introductions, entry into new geographic regions, and general optimism about future operations or operating results. Some of these statements can be identified Common Stock by the useselling securityholders. The selling securityholders will receive all of forward-looking terminology such as “prospects,” “outlook,” “believes,” “estimates,” “intends,” “may,” “will,” “should,” “anticipates,” “expects”the proceeds from any sales of the shares of our Common Stock offered hereby. However, we will incur expenses in connection with the registration of the shares of our Common Stock offered hereby, including legal and accounting fees.
The shares of Common Stock being offered by the selling securityholders are those issued to the selling securityholders pursuant to the Agreements. We are registering 120% of 15,893,745 shares (or 19,072,494 shares) of Common Stock. The shares of Common Stock were issued by the Company to accredited investors pursuant to or “plans,” orin connection with the negative orAgreements.
The table below lists the selling securityholders and other
variationinformation regarding the beneficial ownership (as determined under Section 13(d) of
these or similar words, orthe Exchange Act and the rules and regulations thereunder) of the shares of Common Stock held by
discussioneach of
trends and conditions, strategy or risks and uncertainties.These forward-looking expectations arethe selling securityholders. The second column lists the number of shares of Common Stock beneficially owned by the selling securityholders, based on current assumptions withintheir respective ownership of shares of Common Stock, as of June 12, 2018. The percentage of shares beneficially owned prior to the bounds of management’s knowledgeoffering is based on 28,493,119 shares of our business and operations and which management believes are reasonable. These assumptions are subjectCommon Stock outstanding as of June 12, 2018. The number of shares in the column "Maximum Number of Shares of Common Stock to risks and uncertainties, and actual results could differ materially from expectations becausebe Sold Pursuant to this Prospectus" represents all of issues and uncertainties such as those listedthe shares that the selling securityholder may offer under the caption “Risk Factors” and elsewhere in this prospectus and does not take into account any limitations in documents incorporated intothe Agreements.
The selling securityholders may sell all, some or none of their shares in this prospectusoffering. See "Plan of Distribution."
| Name of Selling Security Holder | Shares of Common Stock Beneficially Owned Prior to Offering | Maximum Number of Shares of Common Stock to be Sold Pursuant to this Prospectus | Shares of Common Stock Beneficially Owned After Offering (1) | Percentage of Shares of Common Stock Beneficially Owned After Offering (1) |
Accelmed Growth Partners L.P. (2) | 12,112,627 | 12,112,627 | - | * |
Broadfin Healthcare Master Fund, Ltd. (3) | 5,227,172 | 967,685 | 4,259,487 | 13.01% |
Sabby Healthcare Master Fund, Ltd. (4) | 2,436,823 | 236,443 | 2,200,380 | 7.47% |
Sabby Volatility Warrant Master Fund, Ltd. (5) | 964,933 | 713,510 | 251,423 | * |
Gohan Investments, Ltd. (6) | 931,740 | 931,740 | - | * |
Dr. Dolev Rafaeli (7) | 931,740 | 931,740 | - | * |
(1) Assumes the sale of the maximum number of shares of Common Stock to be sold pursuant to this prospectus.
(2) The business address of Accelmed Growth Partners L.P. ("Accelmed") is 6 Hachochlim Street, 6th floor, Herzliya Pituach L3 46120 Israel. Accelmed Growth Partners GP ("Accelmed GP"), the General Partner of Accelmed, and Uri Geiger, the Managing Director of Accelmed Growth Partners Management Ltd., which among others, shouldis the management company of Accelmed, each have voting and investment control of the securities held by Accelmed. Each of Accelmed GP and Uri Geiger disclaim beneficial ownership over the securities owned by Accelmed except to the extent of their respective pecuniary interest therein. Accelmed holds 12,112,627 shares of common stock.
(3) The business address of Broadfin Healthcare Master Fund, Ltd. ("Broadfin") is 20 Genesis Close Ansbacher House, Second Floor, P.O. Box 1344, Grand Cayman KY1-1108, Cayman Islands and the business address of each of Broadfin Capital, LLC and Kevin Kotler is 300 Park Avenue, 25th Floor, New York, New York 10022. Broadfin, Broadfin Capital, LLC and Kevin Kotler have shared voting and investment control of the securities held by Broadfin. Broadfin holds the following securities: 967,685 shares of common stock, (ii) 553,656 shares of common stock issuable upon the exercise of warrants held by Broadfin and (iii) 3,705,831 shares of common stock issuable
upon conversion of 9,968.82 shares of Series C Preferred Stock. The ownership of Broadfin is subject to a 9.99% ownership blocker, pursuant to which shares of our common stock may not be consideredissued pursuant to the conversion of Series C Preferred Stock, to the extent such issuance would cause Broadfin to beneficially own more than 9.99% of our outstanding common stock. The share ownership numbers and percentages for Broadfin in evaluating our future financial performance. All subsequent writtenthe table above does not reflect this 9.99% blocker.
(4) The business address of Sabby Healthcare Master Fund Ltd. ("Sabby HMF") is c/o Sabby Management LLC, 10 Mountainview Road, Suite 205, Upper Saddle River, NJ 07458. Sabby Management, LLC serves as the investment manager of Sabby HMF. Hal Mintz is the manager of Sabby Management, LLC and oral forward-looking statements attributablehas voting and investment control of the securities held by Sabby HMF. Each of Sabby Management, LLC and Hal Mintz disclaims beneficial ownership over the securities beneficially owned by Sabby HMF except to us or persons acting on our behalfthe extent of their respective pecuniary interest therein. Sabby HMF holds the following securities: (i) 1,467,515 shares of common stock and (ii) 969,308 shares of common stock issuable upon the exercise of warrants held by Sabby HMF.
(5) The business address of Sabby Volatility Warrant Master Fund Ltd. ("Sabby VWMF") is c/o Sabby Management LLC, 10 Mountainview Road, Suite 205, Upper Saddle River, NJ 07458. Sabby Management, LLC serves as the investment manager of Sabby VWMF. Hal Mintz is the manager of Sabby Management, LLC and has voting and investment control of the securities held by Sabby VWMF. Each of Sabby Management, LLC and Hal Mintz disclaims beneficial ownership over the securities beneficially owned by Sabby VWMF except to the extent of their respective pecuniary interest therein. Sabby VWMF holds the following securities: (i) 713,510 shares of common stock and (ii) 251,423 shares of common stock issuable upon the exercise of warrants held by Sabby VWMF.
(6) The business address of Gohan Investments, Ltd. ("Gohan") is 66 Pinkas St. #161 Tel Aviv 62157, Israel. Yoav Ben Dror is the principal of Gohan and has voting and investment control of the securities held by Gohan. Ben Dror disclaims beneficial ownership over the securities beneficially owned by Gohan except to the extent of his pecuniary interest therein. Gohan holds 931,740 shares of common stock.
(7) Dr. Rafaeli's address is 5 Lambs Lane, Cresskill, New Jersey 07626. Dr. Rafeli holds 931,740 shares of common stock.
We are
expressly qualified in their entiretyregistering the shares of Common Stock that were issued pursuant to the Agreements to permit the resale of these shares of Common Stock by the
cautionary statements inholders of such shares of Common Stock from time to time after the date of this prospectus.
Readers are advised to consult any further disclosures we may make on related subjects in subsequent reports filed with the SEC.Additional information on factors that may affect our business and financial results can be found in our filings with the SEC. All forward-looking statements should be considered in light of these risks and uncertainties. We assume no responsibility to update forward-looking statements made in this prospectus.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale by the selling stockholders of the securities byshares of Common Stock. We will bear all fees and expenses incident to our obligation to register the Selling Stockholders.
SELLING STOCKHOLDERS
This prospectus relates to the possible resale by the Selling Stockholders of up to 2,992,259 Shares that we
The selling stockholders may
issue upon conversion ofsell all or a portion of the
Debentures that we issued to the Selling Stockholders. We are filing the registration statement,shares of
which this prospectus forms a part,Common Stock beneficially owned by them and
are registering the Shares pursuant to the provisions of the registration rights agreement (the “Registration Rights Agreement”) we entered into with the Purchasers on June 22, 2015. Each Selling Stockholder mayoffered hereby from time to time
offer and sell pursuant to this prospectus anydirectly or
all of the Shares that it acquires upon conversion of a portion of its respective Debentures.The following table presents information regarding the Selling Stockholders, and the Shares that they may offer and sell from time to time under this prospectus. This table is prepared based on information supplied to us by the Selling Stockholders. As used in this prospectus, the term “Selling Stockholder” includes any donees, pledges, transfereesthrough one or other successors in interest selling Shares received after the date of this prospectus from a Selling Stockholder as a gift, pledge,more underwriters, broker-dealers or other non-sale related transfer. The number of Shares in the column “Number of Shares Being Offered” represents all of the Shares that the Selling Stockholders may offer under this prospectus. The Selling Stockholders may sell some, all or none of its respective Shares. We do not know how long any selling stockholder will hold their respective Shares before selling them, and we currently have no agreements, arrangements or understandings with any Selling Stockholder regarding the sale of any of the Shares.
Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The percentage of shares of common stock beneficially owned after the offering shown in the table below is based on an aggregate of 8,996,686 shares of our common stock outstanding on June 30, 2015.
| Selling Stockholder | | Shares
Owned Prior to the
Offering | | | Number of
Shares Being
Offered(1) | | | Shares Owned
After the Offering | | | Percentage of
Ownership After
the Offering | |
| | | | | | | | | | | | | |
Broadfin Healthcare Master Fund,
LTD(2) | | | 383,615 | (3) | | | 1,381,043 | | | | 383,615 | (3) | | | 9.99 | % |
| | | | | | | | | | | | | | | | | |
| Sabby Healthcare Master Fund Ltd.(4) | | | 225,128 | (5) | | | 1,104,834 | | | | 225,128 | (5) | | | 9.99 | % |
| | | | | | | | | | | | | | | | | |
| Sabby Volatility Warrant Master Fund Ltd.(6) | | | 279,331 | (7) | | | 460,347 | | | | 279,331 | (7) | | | 9.99 | % |
| | | | | | | | | | | | | | | | | |
| Intracoastal Capital, LLC(8) | | | 104,515 | (9) | | | 46,035 | | | | 58,480 | (9) | | | 4.99 | % |
(1) | Assumes that $2,244,194 aggregate principal of Debentures are converted to Shares, in full without regard to any conversion limitations contained therein; provided, however, that the issuance of the Shares is subject to the Stockholder Approval Requirement. |
| |
(2) | The business address of Broadfin Healthcare Master Fund, LTD (“Broadfin”) is 20 Genesis Close Ansbacher House, Second Floor, P.O. Box 1344, Grand Cayman KY1-1108, Cayman Islands and the business address of each of Broadfin Capital, LLC and Kevin Kotler is 237 Park Avenue, 9th Floor, New York, NY 10017. Broadfin, Broadfin Capital, LLC and Kevin Kotler have shared voting and investment control of the securities held by Broadfin. |
(3) | Broadfin holds the following securities: (i) 383,615 shares of common stock; (ii) warrants to purchase 1,559,454 shares of common stock at $2.45 per share; (iii) warrants to purchase 1,267,849 shares of common stock at $2.45 per share; (iv) warrants to purchase 432,433 shares of common stock at $7.40 per share; and (v) 1,267,849 shares of common stock issuable upon conversion of $3,252,033 principal amount of 4% convertible debentures issued in July 2014. In addition, subject to the Stockholder Approval Requirement, (a) 20,000,000 shares of common stock issuable upon conversion of $15,000,000 principal amount of Debentures, including 1,381,043 Shares covered by this prospectus, and (b) Warrants to purchase 1,500,000 shares of common stock at an exercise price of $.75 per share. The conversion of all debentures and the exercise of all warrants referenced in this footnote are subject to a 9.99% blocker. This information is based upon a Selling Stockholder Notice and Questionnaire provided by Broadfin on July 14, 2015. |
| |
(4) | The business address of Sabby Healthcare Master Fund Ltd. (“Sabby HMF”) is c/o Sabby Management LLC, 10 Mountainview Road, Suite 205, Upper Saddle River, NJ 07458. Sabby Management, LLC serves as the investment manager of Sabby HMF. Hal Mintz is the manager of Sabby Management, LLC and has voting and investment control of the securities held by Sabby HMF. Each of Sabby Management, LLC and Hal Mintz disclaims beneficial ownership over the securities beneficially owned by Sabby HMF except to the extent of their respective pecuniary interest therein. |
| |
(5) | Sabby HMF holds the following securities: (i) 225,128 shares of common stock; (ii) warrants to purchase 514,285 shares of common stock at $8.50 per share; (iii) warrants to purchase 2,183,603 shares of common stock at $2.45 per share; (iv) warrants to purchase 2,339,181 shares of common stock at $2.45 per share; (v) warrants to purchase 648,648 shares of common stock at $7.40 per share; (vi) 2,339,182 shares upon conversion of $6,000,000 of Series B convertible preferred stock and (vii) 2,183,603 shares of common stock issuable upon conversion of $5,600,941 principal amount of 4% convertible debentures issued in July 2014. In addition, subject to the Stockholder Approval Requirement, (a) 16,000,000 shares of common stock issuable upon conversion of $12,000,000 principal amount of Debentures, including 1,104,834Shares covered by this prospectus, and (b) warrants to purchase 1,500,000 shares of common stock at an exercise price of $.75 per share. The conversion of all debentures and the exercise of all warrants referenced in this footnote are subject to a 9.99% blocker. This information is based upon a Selling Stockholder Notice and Questionnaire provided by Sabby HMF on July 16, 2015. |
| |
(6) | The business address of Sabby Volatility Warrant Master Fund Ltd. (“Sabby VWMF”) is c/o Sabby Management LLC, 10 Mountainview Road, Suite 205, Upper Saddle River, NJ 07458. Sabby Management, LLC serves as the investment manager of Sabby VWMF. Hal Mintz is the manager of Sabby Management, LLC and has voting and investment control of the securities held by Sabby VWMF. Each of Sabby Management, LLC and Hal Mintz disclaims beneficial ownership over the securities beneficially owned by Sabby VWMF except to the extent of their respective pecuniary interest therein. |
| |
(7) | Sabby VWMF holds the following securities: (i) 279,331 shares of common stock; (ii) warrants to purchase 171,428 shares of common stock at $8.50 per share; (iii) warrants to purchase 837,048 shares of common stock at $2.45 per share; (iv) warrants to purchase 896,686 shares of common stock at $2.45 per share ; (v) warrants to purchase 248,648 shares of common stock at $7.40 per share; (vi) 196,687 shares upon conversion of $504,500 of Series B convertible preferred stock and (vii) 837,048 shares of common stock issuable upon conversion of $2,147,028 principal amount of 4% convertible debentures issued in July 2014. In addition, subject to the Stockholder Approval Requirement, 6,666,667 shares of common stock issuable upon conversion of $5,000,000 principal amount of Debentures, including 460,347 Shares covered by this prospectus. The conversion of all debentures and the exercise of all warrants referenced in this footnote are subject to a 9.99% blocker. This information is based upon a Selling Stockholder Notice and Questionnaire provided by Sabby VWMF on July 16, 2015. |
| |
(8) | The business address of Intracoastal Capital, LLC (“Intracoastal”) is 245 Palm Trail, Delray Beach, FL 33483. Mitchell P. Kopin and Daniel B Asher, each of whom are managers of Intracoastal, have shared voting control and investment discretion over these securities that are held by Intracoastal, which are described in footnote (9) below, and may be deemed to have beneficial ownership of such securities. Mr. Kopin is the president, the sole member and the sole member of the Board of Directors of Cranshire Capital Advisors, LLC (“CCA”), which is the investment manager of Cranshire Capital Master Fund, Ltd. (“Cranshire Master Fund”), As the owner of voting control over CCA, Mr. Kopin and CCA may be deemed to have beneficial ownership of the securities held by Cranshire Master Fund, which are described in footnote (9) below. Mr. Asher, who is a manager of Intracoastal, is also a control person of a broker-dealer. As a result of such common control, Intracoastal may be deemed to be an affiliate of a broker-dealer. Intracoastal acquired the shares of common stock being registered hereunder in the ordinary course of business, and at the time of the acquisition of the shares of common stock and warrants described herein, Intracoastal did not have any arrangements or understandings with any person to distribute such securities. |
(9) | Intracoastal holds warrants to purchase 58,480 shares of common stock at $2.45 per share. In addition, subject to the Stockholder Approval Requirement, Intracoastal holds 666,667 shares of common stock issuable upon conversion of $500,000 principal amount of Debentures, including 46,035 Shares covered by this prospectus. Mr. Kopin may also be deemed to own the following securities held by Cranshire Master Fund: (i) warrants to purchase 331,394 shares of common stock at $2.45 per share and (ii) 39,966 shares issuable upon conversion $102,513 principal amount of 4% convertible debentures issued in July 2014. The conversion of all debentures and the exercise of all warrants referenced in this footnote are subject to a 4.99% blocker. This information is based upon a Selling Stockholder Notice and Questionnaire provided by Intracoastal on July 20, 2015. |
Relationships with Selling Stockholders
On October 29, 2013, we entered into a securities purchase agreement with certain funds managed by Sabby Management, LLC in connection with a $6.0 million registered offering of our common stock, pursuant to which we issued 422,819 shares of our common stock, fully paid Series B prefunded warrants to purchase up to 434,325 shares of our common stock and additional warrants to purchase up to 685,715 shares of our common stock at an exercise price of $8.50 per share. The offering closed on October 31, 2013.
On February 5, 2014, pursuant to a securities purchase agreement, dated as of January 31, 2014, with certain funds managed by Sabby Management, LLC and Broadfin Capital, LLC, we sold (i) an aggregate of 12,300 shares of Series A Convertible Preferred Stock, par value $0.10 and a stated value of $1,000 per share, convertible into approximately 1.5 million shares of common stock at an initial conversion price of $8.40, and (ii) warrants to purchase up to approximately 1.3 million shares of common stock for aggregate gross proceeds of $12.3 million. The warrants have an exercise price of $7.40 per share, are immediately exercisable and have a term of five years.
As part of the February 2014 financing, we entered into an agreement granting to Broadfin the right to designate one director to our Board of Directors, so as long as Broadfin retained 30% of its investment in the Series A Preferred Stock (oragents. If the shares of common stock underlyingCommon Stock are sold through underwriters or broker-dealers, the Preferred Stock)selling stockholders will be responsible for underwriting discounts or held any warrants. Samuel Navarro, Managing Partner at Gravitas Healthcare, LLC, a firm which provides strategic advisory services to medical technology companies, was appointed to serve on our Board of Directors in March 2014 pursuant to this designation right. On March 31, 2014, Broadfin and we agreed to terminate this designation right. Notwithstanding this termination, our Board of Directors determined that having Mr. Navarro on the Board of Directors would be in our best interests and those of our stockholders, and therefore decided to include Mr. Navarro on the slate of directors to be nominated for election at the 2014 annual meeting of stockholders.
In July 2014, we raised additional net proceeds of approximately $13.8 million through the issuance of 4% senior secured convertible debentures due July 2019 and 6.2 million warrants expiring five years from the date of issuance from certain funds managed by Sabby Management, LLC and Broadfin Capital, LLC and other investors.commissions or agent's commissions. The debentures were convertible at any time into an aggregate of approximately 5.8 million shares of our common stock at a price of $2.565 per share. Our obligations under the debentures are secured by a first priority lien on all of our intellectual property. In connection with the transaction, we also exchanged 12,300 shares of Series B PreferredCommon Stock convertible at any time into an aggregate of approximately 4.8 million shares of common stock at a conversion price of $2.565 per share, for all of our outstanding Series A Preferred Stock that was issuedmay be sold in February 2014. We also issued warrants to purchase common stock at an exercise price of $2.45 per share, with 4.8 million warrants expiring in eighteen months from the date of issuance. In September 2014, we amended the registration statement related to the Series A Preferred Stock to deregister those shares that would have been issuable upon conversion of the Series A Preferred Stock. We entered into a registration rights agreement with the investors pursuant to which we were obligated to file a registration statement to register the resale of the shares of common stock issuable upon conversion of the Series B Preferred Stock and Debentures and upon exercise of the warrants. That registration statement was declared effective in October 2014.
On June 22, 2015, we entered into a securities purchase agreement with the Purchasers in connection with a private placement. We sold $10.0 million aggregate principal amount of Notes bearing interest at 9% per year, with a maturity date of the earlier of 30 days after the Company obtains stockholder approval of stock issuances under the Debentures and the Warrants or November 30, 2015. The Purchasers of the Notes were issued Warrants to purchase an aggregate of 3.0 million shares of common stock, having an exercise price of $0.75 per share. We also issued $32.5 million aggregate principal amount of Debentures that, subject to certain ownership limitations and stockholder approval conditions, will be convertible into 43,333,333 shares of common stock at an initial conversion price of $0.75 per share. The Debentures bear interest at the rate of 2.25% per year, and, unless previously converted, will mature on the five-year anniversary of the date of issuance. Our obligations under the Notes and Debentures are secured by a first priority lien on all of our assets, except for a second lien on our intellectual property. Under the terms of the Debentures and the Warrants, the issuances of shares of the common stock, including the Shares, upon conversion of the Debentures and upon exercise of the Warrants are subject to the Stockholder Approval Requirement. Effective upon the date the Stockholder Approval Requirement is satisfied, of which we provide no assurance, we have also agreed to reprice outstanding Warrants held by certain investors to reduce the exercise price to $0.75 per share.
In connection with this financing, we also granted to the Purchasers resale registration rights with respect to the shares of common stock underlying the Debentures and the Warrants pursuant to the terms of the Registration Rights Agreement. In addition to the registration rights, the Selling Stockholders are entitled to receive liquidated damages upon the occurrence of a number of events relating to filing, becoming effective and maintaining an effective registration statement covering the shares underlying the Debentures and the Warrants, including a failure to file a resale registration statement by no later than July 22, 2015, and a failure to have such resale registration statement declared effective by the SEC by no later than October 20, 2015. The liquidated damages will be payable upon the occurrence of each of those events and each monthly anniversary thereof until cured. The amount of liquidated damages payable is equal to 2.0% of the aggregate purchase price paid by each Purchaser, provided, however, the maximum aggregate liquidated damages payable to a Purchaser shall be 12% of the aggregate subscription amount paid by such Purchaser pursuant to the Purchase Agreement. The liquidated damages shall accrue interest at a rate of 12% per annum (or such lesser maximum amount that is permitted to be paid by applicable law), accruing on a daily basis for each event until such event is cured.
The Registration Rights Agreement requires us to file one or more registration statements for alltransactions at fixed prices, at prevailing market prices at the time of the securities that may be issued upon conversion of the Debentures and exercise of the Warrants issued to the Purchasers. Pursuant to the applicable transaction documents, however, no Purchaser may exercise its conversion/exercise rights for that number of shares of common stock which, together with all other shares owned by it and its affiliates would result in more than 9.99% of our issued and outstanding shares of common stock calculated on the basis of the then outstanding shares. Under the terms of the Debentures and the Warrants, the issuances of shares of the common stock upon conversion of the Debentures and upon exercise of the Warrants are subject the Stockholder Approval Requirement.
The term “Stockholder Approval Requirement,” as used in this prospectus, is subject to the condition that until the later of (i) six months after the initial issue date of the Debentures and the Warrants (December 22, 2015), or (ii) such later date that the Company no longer seeks stockholder approvalsale, at varying prices determined at the requesttime of the holders of the Debenturessale, or the Warrants, the holders will have the right to convert the Debentures and exercise the Warrants so that in the aggregate the total number of shares of common stock of the Company issuable upon such conversions or exercises, in the aggregate amongst all holders, will not exceed 1,622,612 shares.
PLAN OF DISTRIBUTION
Each Selling Stockholder of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the Nasdaq Stock Market or any other stock exchange, market or trading facility on which the securities are traded or in private transactions.at negotiated prices. These sales may be at fixedeffected in transactions, which may involve crosses or negotiated prices. A Selling Stockholder may use anyblock transactions, pursuant to one or more of the following methods when selling securities:
methods:
| · | on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale; |
| · | in the over-the-counter market; |
| · | in transactions otherwise than on these exchanges or systems or in the over-the-counter market; |
| · | through the writing of options, whether such options are listed on an options exchange or otherwise; |
| · | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| · | block trades in which the brokerbroker-dealer will attempt to sell the securitiesshares as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| · | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| · | an exchange distribution in accordance with the rules of the applicable exchange; |
| · | privately negotiated transactions; |
| · | settlement of short sales; |
| · | in transactions through sales pursuant to Rule 144; |
| · | broker-dealers thatmay agree with the Selling Stockholdersselling securityholders to sell a specified number of such securitiesshares at a stipulated price per security;share; |
| · | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
| · | a combination of any such methods of sale; orand |
| · | any other method permitted pursuant to applicable law. |
The Selling Stockholders may also sell securities under Rule 144 under
If the
Securities Actselling stockholders effect such transactions by selling shares of
1933, as amended (the “Securities Act ”), if available, rather than under this prospectus.Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealersCommon Stock to participate in sales. Broker-dealersor through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or discountscommissions from the Selling Stockholders (or, if any broker-dealer actsselling stockholders or commissions from purchasers of the shares of Common Stock for whom they may act as agent for the purchaser of securities, from the purchaser) in amountsor to be negotiated, but, exceptwhom they may sell as set forth in a supplementprincipal (which discounts, concessions or commissions as to this Prospectus, in the case of an agency transaction notparticular underwriters, broker-dealers or agents may be in excess of athose customary brokerage commission in compliance with the Financial Industry Regulatory Authority (“FINRA”) Rule 2440; and in the casetypes of a principal transaction a markup or markdown in compliance with FINRA IM-2440.
transactions involved). In connection with the salesales of the securitiesshares of Common Stock or interests therein,otherwise, the Selling Stockholdersselling stockholders may enter into hedging transactions with broker-dealers, or other financial institutions, which may in turn engage in short sales of the securitiesshares of Common Stock in the course of hedging thein positions they assume. The Selling Stockholdersselling stockholders may also sell securitiesshares of Common Stock short and deliver these securitiesshares of Common Stock covered by this prospectus to close out their short positions orand to return borrowed shares in connection with such short sales. The selling stockholders may also loan or pledge the securitiesshares of Common Stock to broker-dealers that in turn may sell these securities. such shares.
The
Selling Stockholdersselling stockholders may
also enter into optionpledge or
other transactions with broker-dealersgrant a security interest in some or
other financial institutionsall of the shares of Common Stock owned by them and, if they default in the performance of their secured obligations, the pledgees or
create one or more derivative securities which requiresecured parties may offer and sell the
deliveryshares of Common Stock from time to
such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may reselltime pursuant to this prospectus
(as supplemented or
amendedany amendment to
reflect such transaction).this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act, amending, if necessary, the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The Selling Stockholdersselling stockholders also may transfer and donate the shares of Common Stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
The selling stockholders and any
broker-dealers or agents that are involvedbroker-dealer participating in
selling the
securitiesdistribution of the shares of Common Stock may be deemed to be
“underwriters”"underwriters" within the meaning of the Securities Act,
in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any
profit on the resale of the securities purchased by themcommission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act.
Each Selling Stockholder has informedAt the
Company that it does not havetime a particular offering of the shares of Common Stock is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of shares of Common Stock being offered and the terms of the offering, including the name or names of any
writtenbroker-dealers or
oral agreement or understanding, directly or indirectly, withagents, any
person to distribute the securities. In no event shall any broker-dealer receive fees,discounts, commissions and
markups which, inother terms constituting compensation from the
aggregate, would exceed eight percent (8%).The Company is requiredselling stockholders and any discounts, commissions or concessions allowed or re-allowed or paid to pay certain fees and expenses incurred bybroker-dealers.
Under the
Company incident tosecurities laws of some states, the
registrationshares of
the securities. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.Because Selling Stockholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities ActCommon Stock may be sold under Rule 144 rather than under this prospectus. The Selling Stockholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale securities by the Selling Stockholders.
We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be soldsuch states only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states,dealers.
There can be no assurance that any selling stockholder will sell any or all of the resale securities covered hereby may not be sold unless they have beenshares of Common Stock registered or qualified for sale in the applicable state or an exemption frompursuant to the registration or qualification requirement is availablestatement, of which this prospectus forms a part.
The selling stockholders and
is complied with.Under applicable rules and regulations under the Exchange Act, any other person engagedparticipating in thesuch distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the common stockshares of Common Stock by the Selling Stockholders orselling stockholders and any other participating person. All of the foregoing may affect the marketability of the shares of Common Stock.
We will
make copiespay all expenses of
this prospectus availablethe registration of the shares of Common Stock pursuant to the
Selling StockholdersRegistration Rights Agreement, estimated to be $31,845.38 in total, including, without limitation, SEC filing fees and
have informed themexpenses of
the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with
Rule 172state securities or "blue sky" laws; provided, however, that a selling stockholder will pay all underwriting discounts and selling commissions, if any. We will indemnify the selling stockholders against liabilities, including some liabilities under the Securities
Act).Act, in accordance with the Registration Rights Agreement, or the selling stockholders will be entitled to contribution. We may be indemnified by the selling stockholders against liabilities, including liabilities under the Securities Act, that may arise from any written information furnished to us by the selling stockholder specifically for use in this prospectus, in accordance with the Registration Rights Agreement, or we may be entitled to contribution.
Once sold under the registration statement, of which this prospectus forms a part, the shares of Common Stock will be freely tradable in the hands of persons other than our affiliates.
The validity of the
Shares offered herebysecurities we are offering will be passed upon
for us by
Duane Morris LLP, Philadelphia, Pennsylvania.Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., New York, New York.
The
financial statementsconsolidated balance sheets of
MELASTRATA Skin Sciences, Inc.
and Subsidiary as of December 31,
20142017 and
2013,2016, and the related
consolidated statements of operations
stockholders’and comprehensive loss, changes in stockholders' equity, and cash flows for each of the years then ended, have been audited by EisnerAmper LLP, independent registered public accounting firm, as stated in their report which is incorporated
herein by
reference, which report contained an explanatory paragraph about the existence of substantial doubt concerning the Company’s ability to continue as a going concern.reference. Such financial statements have been incorporated
herein by reference in reliance on the report of such firm given upon their authority as experts in accounting and auditing.
The financial statements of XTRAC/VTRAC division (a carve-out of PhotoMedex, Inc.) as of December 31, 2014 and 2013, and for each of the two years then ended, incorporated in this prospectus by reference from our Current Report on Form 8-K dated June 23, 2015, have been audited by Fahn Kanne & Co. Grant Thornton Israel, independent certified public accountants, as stated in their report which is incorporated herein by reference. Such financial statements have been incorporated herein by reference in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
Federal securities laws require us to file information with the SEC concerning our business
We are a public company and
operations. Accordingly, we file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document we file at the
SEC’s public reference rooms, including those locatedSEC's Public Reference Room at
Station Place, 100 F Street, N.E., Washington, D.C. 20549.
You can request copies of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for
furthermore information
on public reference rooms.about the operation of the Public Reference Room. Our SEC filings are also available to the public
fromat the
SEC’sSEC's web site at
http://www.sec.gov.Wewww.sec.gov, and on our web site at www.strataskinsciences.com. The information contained on our web site is not included or incorporated by reference into this prospectus. In addition, our Common Stock is listed for trading on The Nasdaq Capital Market under the symbol "SSKN."
This prospectus is only part of a Registration Statement on Form S-3 that we have filed with the SEC
a registration statement on Form S-3 under the Securities Act,
with respect to the securities being offering under this prospectus. This prospectus, which is a part of that registration statement, does not include all theand therefore omits certain information contained in the
registration statementRegistration Statement. We have also filed exhibits and
its exhibits. For further informationschedules with
respect to our Companythe Registration Statement that are excluded from this prospectus, and
the securities, you should
consultrefer to the
registration statement and its exhibits. Statements contained in this prospectus concerning the provisionsapplicable exhibit or schedule for a complete description of any
documents are summaries of those documents, and we refer youstatement referring to
the document filed with the SEC for more information. The registration statement and any
of its amendments, including exhibits filed as a part of the registration statementcontract or
an amendment to the registration statement, are available for inspection and copying as described above.other document. You may:
| · | inspect a copy of the Registration Statement, including the exhibits and schedules, without charge at the Public Reference Room, |
| · | obtain a copy from the SEC upon payment of the fees prescribed by the SEC, or |
| · | obtain a copy from the SEC's web site or our web site. |
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to “incorporate"incorporate by reference” certainreference" the information we file with them in this prospectus. Thisit, which means that we can disclose important information to you by referring you to the other information we have filed with the SEC.those documents. The information that we incorporateincorporated by reference is considered to be part of this prospectus. Information thatprospectus and information we file later with the SEC will automatically update and supersede this information. Further, all filings we make under the Exchange Act prior to the termination of the offering shall be deemed to be incorporatedWe incorporate by reference into this prospectus. The followingprospectus the documents filedlisted below and any future filings made by us with the SEC and any future filings under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (File No. 000-51481) made(1) after the date of this prospectus and prior to the time that we sell all of the securities offered by this prospectus or the earlier termination of the offering, and (2) after the date of the initial registration statement of which this offeringprospectus forms a part and prior to the effectiveness of the registration statement (except in each case the information contained in such documents to the extent "furnished" and not "filed"). The documents we are incorporatedincorporating by reference as of their respective dates of filing are (unless otherwise indicated the File No. for each of the below filings is 001-51481):
| · | our | Our Annual Report on Form 10-K for the year ended December 31, 2014,2017, filed with the SEC on March 30, 2015, as amended on Form 10-K/A for the year ended December 31, 2014, filed with the SEC on April 28, 2015;2, 2018; |
| | | |
| · | our | Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015,2018, filed with the SEC on May 14, 2015;15, 2018; |
| | | |
| · | our | Our Current Reports on Form 8-K filed on March 10, 2015, JuneApril 2, 2018 (Accession No. 0001051514-18-000008), May 15, 2018, May 23, 20152018 and July 21, 2015;May 29, 2018 (except for such information furnished under Item 7.01 and the exhibits furnished thereto); and |
| | | |
| · | the | The description of our common stocksecurities contained in our registration statementRegistration Statement on Form 8-A filed with the SEC on August 8, 2005 pursuant to Section 12(g) of the Exchange Act, and any amendmentsamendment or reportsreport filed with the SEC for the purposepurposes of updating such description. |
In addition, all reports and other documents filed by us pursuant to the Exchange Act after the date of the initial registration
Any statement
and prior to effectiveness of the registration statement shall becontained in this prospectus or in a document incorporated or deemed to be incorporated by reference into this
prospectus.This prospectus may contain information that updates, modifieswill be deemed to be modified or is contrary to information in one or more of the documents incorporated by reference in this prospectus. Reports we file with the SEC after the datesuperseded for purposes of this prospectus may also contain informationto the extent that updates, modifies or is contrary to informationa statement contained in this prospectus or in documents incorporated by reference in this prospectus. Investors should review these reports as they may disclose a change in our business, prospectus, financial condition orany other affairs after the date of this prospectus.
We will also provide paper copies of our filings free of charge upon written or oral request. You can request a free copy of the above filings or any filings subsequently filed document that is deemed to be incorporated by reference into this prospectus modifies or supersedes the statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
You may request, orally or in writing, a copy of these documents, which will be provided to you at no cost, by
writing or calling us at:MELAcontacting STRATA Skin Sciences, Inc.
, 100 Lakeside Drive, Suite 100,
Horsham, Pennsylvania, 19044
Attention: Michael R. Stewart
Investor Relations. The Company can be reached via telephone at (215) 619-3200
WE HAVE NOT AUTHORIZED ANY DEALER, SALES PERSON OR OTHER PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER OF THESE SECURITIES IN ANY STATE WHERE AN OFFER IS NOT PERMITTED. THE INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF THE DATE OF THIS PROSPECTUS AND YOU SHOULD NOT ASSUME THAT THIS PROSPECTUS IS ACCURATE AS OF ANY OTHER DATE.
619-3200.
STRATA Skin Sciences, Inc.
19,072,494 Shares
of Common Stock
PROSPECTUS
PROSPECTUS
July 23, 2018
, 2015
INFORMATION NOT REQUIRED IN PROSPECTUS
| Item 14.14. | Other Expenses of Issuance and Distribution. |
The following table sets forth the
costs andCompany's estimates (other than the SEC registration fee) of the expenses
payable by MELA in connection with the issuance and distribution of the
shares of common stocksecurities being registered.
The selling stockholder will not bear any portion of such expenses. All such expenses are estimated except for the SEC registration fee.| SEC registration fee | | $ | 415.50 | |
| | | | | |
| Legal fees and expenses(1) | | | 25,000.00 | |
| | | | | |
| Accounting fees and expenses(1) | | | 15,000.00 | |
| | | | | |
| Printing and miscellaneous expenses(1) | | | 1,584.50 | |
| | | | | |
| TOTAL(1) | | $ | 42,000.00 | |
| Item | (1) | Estimated.Amount |
| SEC registration fee | | $ | | | 4,345.38 |
| Legal fees and expenses | | $ | | | 20,000.00 |
| Accounting fees and expenses | | $ | | | 7,500.00 |
| Printing fees | | $ | | | 0 |
| Miscellaneous fees and expenses | | $ | | | 0 |
| Total | | $ | | | 31,845.38 |
| Item 15.15. | Indemnification of Directors and Officers. |
Our amended and restated certificate
Subsection (a) of
incorporation includes provisions that eliminate, to the fullest extent permitted by the Delaware General Corporation Law (the “DGCL”), the personal liability of our directors to us or our stockholders for monetary damages for breach of fiduciary duty as a director. Our amended and restated bylaws require us to indemnify our directors and officers to the fullest extent permitted by the DGCL. Pursuant to these provisions, we have entered into indemnity agreements with our directors and officers.Pursuant to Section 145 of the DGCL,General Corporation Law of Delaware (the "DGCL") empowers a corporation generally has the power to indemnify its present and former directors, officers, employees and agents against expenses incurred by them in connection with any suit to which they are,person who was or areis a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of theirthe fact that he is or was a director, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such positions so long as theyaction, suit or proceeding if he acted in good faith and in a manner that theyhe reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe theirhis conduct was unlawful.
These provisions do not eliminate
Subsection (b) of Section 145 of the dutyDGCL empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of care,the corporation to procure a judgment in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in appropriate circumstances, equitable remedies, such as injunctive or other forms of non-monetary relief, may remain available under Delaware law. Each director will continuea manner he reasonably believed to be subjectin or not opposed to the best interests of the corporation and except that no indemnification may be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
Section 145 of the DGCL further provides that to the extent a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in the defense of any action, suit or proceeding referred to in subsections (a) and (b) or in the defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith; that indemnification or advancement of expenses provided for by Section 145 shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and empowers the corporation to purchase and maintain insurance on behalf of a director, officer, employee or agent of the corporation against any liability asserted against him or incurred by him in any such capacity or arising out of his status as such whether or not the corporation would have the power to indemnify him against such liabilities under Section 145.
Reference is also made to Section 102(b)(7) of the DGCL, which enables a corporation in its certificate of incorporation to eliminate or limit the personal liability of a director for monetary damages for violations of a
director's fiduciary duty, except for liability (i) for any breach of the director’sdirector's duty of loyalty to usthe corporation or ourits stockholders, (ii) for acts or omissions not in good faith or involvingwhich involve intentional misconduct or a knowing violationsviolation of law, for unlawful payments of dividends or unlawful stock repurchases or redemptions(iii) under Section 174 of the DGCL (providing for liability of directors for unlawful payment of dividends or unlawful stock purchases or redemptions) or (iv) for any transaction from which the director derived an improper personal benefit. These provisions also generally do
Our certificate of incorporation, as amended, provides that to the fullest extent permitted by the DGCL, a director shall not
affectbe personally liable to the Company or its stockholders for monetary damages for monetary damages for breach of fiduciary duty as a
director’s responsibilities underdirector. The Company may indemnify to the fullest extent permitted by law any person made or threatened to be made a party to an action or proceeding, by reason of the fact that he, his testator or intestate is or was a director, officer or employee of the Company or serves or served at any other
laws, suchenterprise as
a director, officer or employee at the
federal securities laws.Insofar as indemnification forrequest of the Company. Article V of our amended and restated by-laws provides that we shall indemnify our directors and officers, or former directors and officers, against any and all expenses and liabilities, arising underto the Securities Act may befullest extent permitted by the DGCL.
We have entered into agreements to indemnify our directors and officers. These agreements, among other things, will indemnify and advance expenses to our directors
and officers
for all expenses, including, but not limited to, attorney's fees, witness fees, damages, judgments, fines, penalties and
controlling persons pursuantsettlement amounts incurred by any such person in any action or proceeding, including any action by us arising out of such person's services as our director or officer, or any other company or enterprise to
which the
foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable.person provides services at our request.
(a) Exhibits.
Exhibit
No.
No. | | Description |
| | |
| | | |
3.1 | | Fifth Amended |
| | | |
3.2 | | Certificate |
| | | |
3.3 | | Certificate |
| | | |
3.5 | | Certificate |
| | | |
3.6 | | Fourth Amended and Restated By-laws |
| | | |
4.1 | | |
| | | |
4.2 | | Form |
| 23.1* | | |
| | | |
5.123.2* | | Opinion |
| | | |
10.1 | * | Form of Securities Purchase Agreement. (Incorporated by reference to Exhibit 10.1 contained in our Current Report on Form 8-K (File No. 000-51481), filed on June 23, 2015.) |
| | |
10.2 | | Form of Registration Rights Agreement. (Incorporated by reference to Exhibit 10.2 contained in our Current Report on Form 8-K (File No. 000-51481), filed on June 23, 2015.) |
| | |
10.3 | | Form of Security Agreement. (Incorporated by reference to Exhibit 10.3 contained in our Current Report on Form 8-K (File No. 000-51481), filed on June 23, 2015.) |
| | |
23.1 | | Consent of Duane Morris LLP (to be included in Exhibit 5.1, to be filed by amendment) |
| | |
23.2 | | Consent of Independent Registered Public Accounting Firm (filed herewith) |
| | |
23.3 | | Consent of Independent Certified Public Accountants (filed herewith) |
| | |
24.1 | | Powers of Attorney (included in signature pages)Filed herewith. |
| | (a) | The undersigned registrant hereby undertakes: |
| Item 17.(1) | Undertakings.To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: |
We hereby undertake:
(1)
| (i) | To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
| (ii) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:(i) to include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and
|
| (iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
Provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement
(or the most recent post-effective amendment thereof) which, individuallyis on Form S–3 (§239.13 of this chapter) or
in the aggregate, represent a fundamental change in the information set forth inForm F–3 (§239.33 of this
registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered)chapter) and
any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and(iii) to include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement;
provided, however, that paragraphs (i), (ii) and (iii) above do not apply if the information required to be included in a post-effective amendment by those clausesparagraphs is contained in reports filed with or furnished to the SECCommission by usthe registrant pursuant to Sectionsection 13 or Sectionsection 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in thisthe registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) (§230.424(b) of this chapter) that is part of the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act, to any purchaser:
(i) If we are relying on Rule 430B:
(A) Each prospectus filed by us pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which the prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
| | (2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| (3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| (4) | That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: |
| (i) | If the registrant is relying on Rule 430B (§230.430B of this chapter): |
| (A) | Each prospectus filed by the registrant pursuant to Rule 424(b)(3) (§230.424(b)(3) of this chapter) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and |
| (B) | Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) (§230.424(b)(2), (b)(5), or (b)(7) of this chapter) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) (§230.415(a)(1)(i), (vii), or (x) of this chapter) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as
of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or |
| (ii) | If the registrant is subject to Rule 430C (§230.430C of this chapter), each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A (§230.430A of this chapter), shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
| (5) | That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: |
The undersigned registrant undertakes that in a primary offering of
our securities
of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications,
wethe undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of ours relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of us or used or referred to by us;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about us or our securities provided by or on behalf of us; and
(iv) Any other communication that is an offer in the offering made by us to the purchaser.
(6) That, for purposes of determining any liability under the Securities Act, each filing of our annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the provisions described in Item 15 above, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by a director, officer or controlling person of us in the successful defense of any action, suit or proceeding, is asserted by such director, officer or controlling person in connection with the securities being registered, that we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
| | (i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (§230.424 of this chapter); |
| (ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
| (iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
| (iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
| (b) | The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
(c) | Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. |
Pursuant to the requirements of the Securities Act
of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on
this Form S-3 and has duly caused this
registration statementRegistration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Horsham,
Commonwealth of Pennsylvania on
the 23rd day of July,
22, 2015.2018.
| | MELASTRATA SKIN SCIENCES, INC. |
| | | |
| | By: | /s/ Michael R. StewartDolev Rafaeli |
| | | Michael R. StewartDolev Rafaeli |
| | | President and Chief Executive Officer (Principal Executive Officer) |
Know all men by these present,
KNOW ALL MEN BY THESE PRESENTS, that each
person whose signature appears belowof the undersigned directors and officers of STRATA Skin Sciences, Inc. constitutes and appoints
Michael R. Stewart and Robert W. Cook, and eachDolev Rafaeli his or
either of them, as such person’sher true and lawful
attorneys-in-factattorney-in-fact and
agents,agent, with full
powerpowers of substitution
and re-substitution, for
such person,him or her and in
such person’shis or her name, place and stead, in any and all capacities, to sign any or all amendments
or(including post-effective
amendmentsamendments) to this
Registration Statement,registration statement and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents,
with full power to act alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as
such personhe or she might or could do in person,
and hereby ratifying and confirming all that
the said
attorneys-in-factattorney-in-fact and
agents,agent, or
any of themhis substitute or
their substitutes,substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act
the registration statementof 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
| Signature | | Title | | Date |
| | | | | |
/s/ Michael R. StewartDolev Rafaeli | | President and Chief Executive Officer and Director | | July 22, 201523, 2018 |
Michael R. StewartDolev Rafaeli | | (principal executive officer)Principal Executive Officer) | | |
| | | | | |
/s/ Robert W. CookMatthew C. Hill | | Chief Financial Officer Secretary and | | July 22, 201523, 2018 |
Robert W. CookMatthew C. Hill | | Treasurer (principal financial(Principal Financial Officer and accounting officer)Principal Accounting Officer) | | |
| | | | | |
/s/ Jeffrey O’DonnellUri Geiger | | Director, Chairman of the Board of Directors | | July 22, 201523, 2018 |
Jeffrey O’DonnellUri Geiger | | | | |
| | | | | |
/s/ Samuel E. NavarroDavid N. Gill | | Director | | July 22, 201523, 2018 |
Samuel E. NavarroDavid N. Gill | | | | |
| | | | | |
/s/ David K. StoneLuAnn Via | | Director | | July 22, 201523, 2018 |
David K. StoneLuAnn Via | | | | |
| | | | | |
/s/ Kathryn SwintekNachum Shamir | | Director | | July 22, 201523, 2018 |
Kathryn SwintekNachum Shamir | | | | |
| | | | | |
/s/ LuAnn ViaSamuel Rubinstein | | Director | | July 22, 201523, 2018 |
LuAnn ViaSamuel Rubinstein | | | | |
| | | | |
/s/ Samuel E. Navarro | | Director | | July 23, 2018 |
| Samuel E. Navarro | | | | |