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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 22, 2001.
REGISTRATION NO. 333-_________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ESCALON MEDICAL CORP.
(Exact name of registrant as specified in its charter)
Delaware 33-0272839
---------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
351 East Conestoga Road
Wayne, Pennsylvania 19087
(610) 688-6830
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Richard J. DePiano
Chairman and Chief Executive Officer
Escalon Medical Corp.
351 East Conestoga Road
Wayne, Pennsylvania 19087
(610) 688-6830
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Kathleen M. Shay, Esquire
Duane Morris
One Liberty Place
Philadelphia, PA 19103-7396
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
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If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration number of the earlier
effective registration statement for the same offering. [ ] _________
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule
434 under the Securities Act of 1933, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Proposed
Proposed maximum
Title of securities Amount to be maximum offering aggregate Amount of
to be registered registered price per share offering price registration fee
Common Stock, 50,000 shares $ 1.96 $ 98,000 (1) $ 24.50
$.01 par value
(1) Pursuant to Rule 457 (c) of the Securities Act of 1933, the proposed
maximum offering price per share and the proposed maximum aggregate
offering price have been computed on the basis of $ 1.96 per share, the
average of the high and low sales prices of the common stock of the Company
on the Nasdaq SmallCap Market on August 21, 2001.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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SUBJECT TO COMPLETION, DATED AUGUST 22, 2001
PROSPECTUS
50,000 Shares
ESCALON MEDICAL CORP.
Common Stock
This prospectus relates to up to 50,000 shares of our common stock that
may be sold from time to time by the selling stockholder named in this
prospectus, or by pledges, donees, transferees or other successors in interest
to the selling stockholder, at public or private sale at prevailing market
prices, prices related to prevailing market prices, negotiated prices or fixed
prices (and, in the case of sales through brokers, upon payment of normal
brokerage commissions). The selling stockholder acquired these shares in a
private transaction. See "Selling Stockholder." Escalon is not selling any
shares in this offering and will not receive any of the proceeds from the sale
of the shares offered under this prospectus by the selling stockholder.
Our common stock is quoted on the Nasdaq SmallCap Market under the
symbol "ESMC." The last reported sale price of the common stock on the Nasdaq
SmallCap Market on August 21, 2001 was $ 1.95 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 1 OF
THIS PROSPECTUS BEFORE PURCHASING ANY OF THE SECURITIES BEING OFFERED BY THIS
PROSPECTUS.
This prospectus does not constitute an offer to sell securities in any
jurisdiction to any person to whom it is unlawful to make such offer in such
jurisdiction.
No person has been authorized by the Company to give any information or
to make any representations, other than as contained in this prospectus, and, if
given or made, such information or representations must not be relied upon.
Neither delivery of this prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof.
The date of this prospectus is August 22, 2001.
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TABLE OF CONTENTS
PAGE
RISK FACTORS............................................................ 1
INFORMATION ABOUT ESCALON............................................... 8
SELLING STOCKHOLDER..................................................... 8
PLAN OF DISTRIBUTION.................................................... 9
USE OF PROCEEDS......................................................... 10
LEGAL MATTERS........................................................... 10
EXPERTS................................................................. 11
WHERE YOU CAN FIND MORE INFORMATION..................................... 11
INCORPORATION BY REFERENCE.............................................. 11
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in, or incorporated by reference in, this
prospectus are forward-looking in nature. These statements can be identified by
the use of forward-looking words such as "believes," "expects," "may," "will,"
"should," "intends," "plans" or "anticipates," or the negative thereof or
comparable terminology, or by discussions of strategy. You are cautioned that
our business and operations are subject to a variety of risks and uncertainties
and, consequently, our actual results may materially differ from those projected
by any forward-looking statements. Certain of such risks and uncertainties are
discussed below under the heading "Risk Factors." We make no commitment to
revise or update any forward-looking statements in order to reflect events or
circumstances after the date any such statement is made.
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RISK FACTORS
This offering involves a high degree of risk. You should carefully
consider the risks described below and the other information contained in this
prospectus before deciding to invest in shares of our common stock.
WE HAVE SUSTAINED LOSSES IN THE PAST AND MAY CONTINUE TO DO SO.
We have incurred substantial losses that have depleted our cash and
reduced our stockholders' equity to an accumulated deficit of $40,187,843 at
March 31, 2001. Although we are currently generating positive cash flow from our
operations, we cannot assure you that we will continue to do so. Our cash
resources are limited. Working capital at March 31, 2001 amounted to
$(3,306,403), because our credit facility of approximately 4,800,000 is
classified as a current liability.
If revenue from sales or royalties or new funds from debt or equity
instruments or strategic alliances are insufficient to maintain the current and
planned expenditure rate, it will be necessary to curtail our operations until
we implement an appropriate solution. See "Risk Factors - There is no assurance
future capital will be available to us; additional capital will dilute the
holdings of our stockholders."
THERE IS NO ASSURANCE FUTURE CAPITAL WILL BE AVAILABLE TO US; ADDITIONAL CAPITAL
WILL DILUTE THE HOLDINGS OF OUR STOCKHOLDERS.
We will require additional capital to maintain the current and planned
expenditure rate. We cannot assure that additional financing may be available,
or if available, that it will be available on terms favorable to our
stockholders. If funds are not available to satisfy our short-term and
long-operating requirements, we may limit our operations until an appropriate
solution is implemented, suspend our operations in their entirety or, under
certain circumstances, seek protection from creditors.
Our stockholders have no preemptive rights. If we:
- commence a subsequent public or private offering of common stock,
convertible debt or preferred stock; or
- issue securities upon exercise of warrants to consultants or other
parties providing goods or services to us in lieu of or in
addition to cash consideration,
any stockholders who do not participate in any future stock issuance, will
experience dilution of their equity investment. At this time, we cannot
determine the potential dilution to our stockholders.
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OUR PRODUCTS ARE SUBJECT TO STRINGENT ONGOING REGULATION BY THE FDA AND SIMILAR
HEALTH AUTHORITIES, AND IF THE FDA'S APPROVALS OR CLEARANCES OF OUR PRODUCTS ARE
RESTRICTED OR REVOKED WE COULD FACE DELAYS THAT WOULD IMPAIR OUR ABILITY TO
GENERATE FUNDS FROM OPERATIONS.
The FDA and similar health authorities in foreign countries extensively
regulate our activities. We must obtain either 510(k) clearances or pre-market
approvals and new drug application approvals prior to marketing a product in the
United States. Foreign regulation also requires that we obtain other approvals
from foreign government agencies prior to the sale of products in those
countries. Also, we may be required to obtain FDA approval before exporting a
product or device that has not received FDA marketing clearance or approval.
We have received the necessary FDA approvals for all of our products
that we currently market. Any restrictions on or revocation of the FDA approvals
and clearances that we have obtained, however, would prevent the continued
marketing of the impacted products and other devices. These restrictions or
revocations could result from the discovery of previously unknown problems with
the product. Consequently, FDA revocation would impair our ability to generate
funds from operations.
The FDA and comparable agencies in state and local jurisdictions and in
foreign countries impose substantial requirements upon the manufacturing and
marketing of pharmaceutical and medical device equipment and related disposable,
including the obligation to adhere to the FDA's Good Manufacturing Practice
regulations. Compliance with these regulations require time-consuming detailed
validation of manufacturing and quality control processes, FDA periodic
inspections and other procedures. If the FDA finds any deficiencies in the
validation processes, for example, the FDA may impose restrictions on marketing
the affected until such deficiencies are corrected.
We have received CE (European Community) Mark of approval on several of
our products that allow us to sell the products in the countries comprising the
European Community. In addition to the CE Mark, however, some foreign countries
may require separate individual foreign regulatory clearances. We cannot assure
that we will be able to obtain regulatory clearances for other products in the
United States or foreign markets.
The process for obtaining regulatory clearances and approvals and
underlying clinical studies for any new products or devices and for multiple
indications for existing products is lengthy and will require substantial
commitments of our financial resources and our management's time and effort. Any
delay in obtaining clearances or approvals or any change in existing regulatory
requirements would materially adversely affect our business.
Our failure to comply with applicable regulations would subject us to
fines, delays or suspensions of approvals or clearances, seizures or recalls of
products, operating restrictions, injunctions or civil or criminal penalties,
which would affect adversely our business, financial condition and results of
operations.
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MARKET ACCEPTANCE OF OUR PRODUCTS IS UNCLEAR.
Our business and financial condition will depend upon the market
acceptance of our products. We cannot assure you that our products will achieve
market acceptance. Market acceptance depends upon a number of factors:
- the cost to produce the products;
- the receipt of regulatory approvals for multiple indications;
- the establishment and demonstration of the clinical safety and
efficacy of our products; and
- the advantages of our products over those marketed by our
competitors.
Any failure to achieve significant market acceptance of our products
will have a material adverse effect on our business.
OUR PRODUCTS EMPLOY PROPRIETARY TECHNOLOGY, AND THIS TECHNOLOGY MAY INFRINGE ON
THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.
We hold or have rights to several United States and foreign patents for
our products. Other parties, however, hold patents relating to similar products
and technologies. We believe that we are not infringing on any patents held by
others. However, if patents held by others were adjudged valid and interpreted
broadly in an adversarial proceeding, the court or agency could deem them to
cover one or more aspects of our products or other procedures. Any claims for
patent infringement or claims by us for patent enforcement would consume time,
result in costly litigation, divert technical and management personnel or
require us to develop non-infringing technology or enter into royalty or
licensing agreements. We cannot be certain that we will not be subject to one or
more claims for patent infringement, that we would prevail in any such action or
that our patents will afford protection against competitors with similar
technology.
If a court determines that any of our products, particularly our
ultrasound diagnostic systems, infringes, directly or indirectly, a patent in a
particular market, the court may enjoin us from making, using and selling the
product. Furthermore, we may be required to pay damages or obtain a
royalty-bearing license, if available, on acceptable terms.
CONTINUING LITIGATION COULD ADVERSELY AFFECT OUR BUSINESS AND FINANCIAL
CONDITION.
A lawsuit, to which we are no longer a party, asserts claims under
Section 10(b) of the Securities Exchange Act of 1934 and common law against us,
named officers and directors. In an effort to curtail its legal expenses related
to this litigation, while continuing to deny any wrongdoing, we reached an
agreement, subject to final court approval, to settle this action on our behalf
and on behalf of our former officers and directors. Our directors and officers
insurance carrier has agreed to fund a significant portion of the settlement
amount. Should the settlement
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not be approved by the court, we will continue to incur significant legal
expenses related to this litigation.
LACK OF AVAILABILITY OF KEY SYSTEM COMPONENTS COULD RESULT IN DELAYS, INCREASED
COSTS OR COSTLY REDESIGN OF OUR PRODUCT.
Although some of the parts and components used to manufacture our
products are available from multiple sources, we currently purchase most of our
components from single sources in an effort to obtain volume discounts. Lack of
availability of any of these parts and components could result in production
delays, increased costs, or costly redesign of our products. We continually
evaluate ways to minimize any impact to our business from any potential part or
component shortage through inventory stockpiling and design changes to afford
opportunities for multiple sources of supply for these essential components. Any
loss of availability of an essential component could result in a material
adverse change to our business, financial condition and results of operations.
Some of our suppliers are also subject to the FDA's Good Manufacturing Practice
regulations. Failure of these suppliers to comply with these regulations could
result in the delay or limitation of the supply of parts or components to us,
which would adversely affect our financial condition and results of operations.
THE SUCCESS OF COMPETITIVE PRODUCTS COULD HAVE AN ADVERSE EFFECT ON OUR
BUSINESS.
We face intense competition in the medical device and pharmaceutical
markets, which are characterized by rapidly changing technology, short product
life cycles, cyclical oversupply and rapid price erosion. Many of our
competitors have substantially greater financial, technical, marketing,
distribution and other resources. Our ability to compete depends on:
- the use rate of our products by our customers;
- the receipt and maintenance of required regulatory approvals from
the FDA and other regulatory agencies;
- our ability to protect our intellectual property; and
- general market and economic conditions.
We cannot assure you that we will be able to compete effectively in
this competitive environment.
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OUR MANUFACTURING CAPACITY MAY BE ADVERSELY AFFECTED BY LIMITATIONS IN RETAINING
AND ATTRACTING QUALIFIED WORKERS AND THE SIZE OF OUR FACILITIES.
Our work force is comprised of skilled workers who have acquired
various skills employed in our manufacturing. These employees are sought after
in the intense competition in the medical device and pharmaceutical
manufacturing markets. Several of our employee have enjoyed long careers within
our Company, but there is no guarantee such employees will remain with us in the
future.
OUR ABILITY TO MARKET AND SELL OUR PRODUCTS MAY BE ADVERSELY AFFECTED BY
LIMITATIONS ON REIMBURSEMENTS BY GOVERNMENT PROGRAMS, PRIVATE INSURANCE PLANS
AND OTHER THIRD PARTY PAYORS.
Our customers bill various third party payors, including government
programs and private insurance plans, for the health care services provided to
their patients. Third party payors may reimburse the customer, usually at a
fixed rate based on the procedure performed, or may deny reimbursement if they
determine that the use of our products was elective, unnecessary, inappropriate,
not cost-effective, experimental or used for a non-approved indication. Third
party payors may deny reimbursement notwithstanding FDA approval or clearance of
a product and may challenge the prices charged for the medical products and
services. Our ability to sell our products on a profitable basis may be
adversely impacted by denials of reimbursement or limitations on reimbursement,
compared with reimbursement available for competitive products and procedures.
New legislation that further reduces reimbursements under the capital cost
pass-through system utilized in connection with the Medicare program could also
adversely affect the marketing of our products.
FUTURE LEGISLATION OR CHANGES IN GOVERNMENT PROGRAMS MAY ADVERSELY AFFECT THE
MARKET FOR OUR PRODUCTS.
In the past several years, the federal government and Congress have
made proposals to change aspects of the delivery and financing of health care
services. We cannot predict what form any future legislation may take or its
effect on our business. Legislation that sets price limits and utilization
controls may adversely affect the rate of growth of ophthalmic and vascular
access product markets. If any future health care legislation were to adversely
impact those markets, our product marketing could also suffer, which could
adversely impact our business.
WE MAY BECOME INVOLVED IN PRODUCT LIABILITY LITIGATION, WHICH MAY SUBJECT US TO
LIABILITY AND DIVERT MANAGEMENT ATTENTION.
The testing and marketing of our ophthalmology products, vascular
access products and pharmaceutical products entail an inherent risk of product
liability, resulting in claims based upon injuries or alleged injuries
associated with a defect in the product's performance. Some of these injuries
may not become evident for a number of years. Although we are not currently
involved in any product liability litigation, we may be a party to litigation in
the future as a result of an alleged claim. Litigation, regardless of the merits
of the claim or outcome, could consume a great deal of our time and money and
would divert management time and attention away from
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our core business. We maintain product liability insurance coverage, including
$2,000,000 in commercial general liability protection and a $5,000,000 umbrella
excess liability protection policy. A successful product liability claim in
excess of any insurance coverage may adversely impact our financial condition
and results of operations. We cannot assure you that product liability insurance
coverage will continue to be available to us in the future on reasonable terms
or at all.
WE ARE DEPENDENT ON OUR MANAGEMENT AND KEY PERSONNEL TO SUCCEED.
Our principal executive officers and technical personnel have extensive
experience with our products, our research and development efforts, the
development of marketing and sales programs and the necessary support services
to be provided to our customers. Also, we compete with other companies,
universities, research entities and other organizations to attract and retain
qualified personnel. The loss of the services of any of our executive officers
or other technical personnel, or our failure to attract and retain other skilled
and experienced personnel, could have a material adverse effect on our ability
to manufacture, sell and market our products.
WE HAVE NOT PAID CASH DIVIDENDS.
We have not paid any cash dividends on our common stock and do not
anticipate paying any cash dividends in the foreseeable future.
OUR QUARTERLY RESULTS FLUCTUATE FROM QUARTER TO QUARTER.
We have experienced quarterly fluctuations in operating results and
anticipate continued fluctuations in the future. A number of factors contribute
to these fluctuations:
- changes in the mix of products sold;
- the timing and expense of new product introductions by us or our
competitors;
- the cancellation or delays in the purchase of our products;
- the gain or loss of significant customers;
- fluctuations in customer demand for our products; and
- competitive pressures on prices at which we can sell our products.
We set spending levels in advance of each quarter based, in part, on
our expectations of product orders and shipments during that quarter. A
shortfall in revenue, therefore, in any particular quarter as compared to our
plan could have a material adverse effect on our results of operations and cash
flows.
OUR CHARTER DOCUMENTS AND DELAWARE LAW MAY INHIBIT A TAKEOVER.
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Certain provisions of Delaware law and our By-laws could delay or
impede the removal of incumbent directors and could make it more difficult for a
third party to acquire, or could discourage a third party from attempting to
acquire, control of the Company. These provisions could limit the price that
certain investors might be willing to pay in the future for shares of our common
stock. Our Board of Directors is divided into three classes, with directors in
each class elected for three-year terms. The By-laws impose various procedural
and other requirements that could make it more difficult for stockholders to
effect certain corporate actions. Our Board of Directors may issue shares of
preferred stock without stockholder approval on such terms and conditions, and
having such rights, privileges and preferences, as the Board may determine. The
rights of the holders of common stock will be subject to, and may be adversely
affected by, the rights of the holders of any preferred stock that may be issued
in the future. The Company has no current plans to issue any shares of preferred
stock.
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INFORMATION ABOUT ESCALON
We operate in the health care market specializing in the development,
manufacture, marketing and distribution of ophthalmic medical devices,
pharmaceutical and vascular access products.
In February 1996, we acquired substantially all of the assets and
certain liabilities of Escalon Ophthalmics, Inc., a developer and distributor of
ophthalmic surgical products. Prior to this acquisition, we devoted
substantially all of our resources to research and development of ultrafast
laser systems designed for treatment of ophthalmic disorders. As a result of the
acquisition of Escalon Ophthalmics, we changed our market focus and are no
longer developing laser technology. In October 1997, we licensed our
intellectual laser properties to a newly formed company, IntraLase Corporation,
in return for an equity interest and future royalties on product sales.
IntraLase has the responsibility of funding and developing laser technology.
In January 1999, we acquired the vascular access product line from
Radiance Medical Systems, Inc. The vascular access products use doppler
technology to aid medical personnel in locating arteries and veins. Currently,
this product line concentrates on the cardiac catheterization market. We
considered this acquisition the first step in a plan to diversity our line of
niche medical products. In January 2000, we purchased Sonomed, Inc., a privately
held manufacturer of ophthalmic ultrasound diagnostic equipment. In April 2000,
we established our wholly owned subsidiary, Escalon Digital Vision, Inc., which
entered into a joint venture with MegaVision to develop and market a digital
camera back for ophthalmic photography.
We initially were incorporated in California in 1987 and reincorporated
in Delaware in 1999. Our principal executive offices are located at 351 East
Conestoga Road, Wayne, Pennsylvania 19087, and our telephone number is (610)
688-6830.
SELLING STOCKHOLDER
The shares covered by this prospectus may be offered by the selling
stockholder from time to time. The selling stockholder is Radiance Medical
Systems, Inc.
On January 21, 1999, we acquired the assets of the vascular access
product line of Radiance for a purchase price of $2,104,442.19 in cash. We also
agreed to pay royalties to Radiance based on future sales of products of the
vascular access business for a period of five years after the closing of the
acquisition, with a guaranteed minimum royalty of $300,000 per year.
In February 2001, we renegotiated our agreement with Radiance. Pursuant
to an amendment to the agreement, our obligation to make the remaining minimum
royalty payments terminated, and we (1) paid Radiance $17,558 in cash, (2)
delivered to Radiance a short-term note in the amount of $64,884, with interest
at the prime rate plus 1%, with interest only payable quarterly beginning on May
31, 2001 and the principal and interest payable in full on January 15,
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2002, (3) delivered to Radiance a term note in the amount of $717,558, with
interest at the prime rate plus 1%, with interest only payable quarterly
beginning on May 31, 2001 through January 15, 2002 and principal and interest
payable in eleven quarterly installments beginning on April 15, 2002, and (4)
issued to Radiance 50,000 shares of our common stock valued at $100,000. We also
agreed to use our best efforts to register for resale the 50,000 shares of our
common stock issued to Radiance pursuant to the amendment on Form S-3 under the
Securities Act of 1933. We have filed the Registration Statement to register the
shares and fulfill our obligations to Radiance.
The selling stockholder has not had any material relationship within
the past three years with the Company or any of its predecessors or affiliates,
except for the transactions described in the preceding paragraphs and except
that Jeffrey O'Donnell, a director of the Company since 1999, formerly served as
president of Radiance from 1997 to 1999 and currently still serves as a director
of Radiance.
The 50,000 shares of our common stock issued under the amendment are
the only shares of our common stock owned by the selling stockholder. These
shares constitute less than 1% of our outstanding common stock. All of these
shares may be offered under this prospectus.
Pledgees, donees or transferees of or other successors in interest to
the selling stockholder, if any, will be identified in a supplement to this
prospectus. If the number of shares of common stock transferred is material, the
new holders of the shares transferred will also be identified in a
post-effective amendment to the Registration Statement.
This prospectus also covers any additional shares of common stock that
become issuable in connection with the shares being registered by reason of any
stock dividend, stock split, recapitalization or other similar transactions
effected without the receipt of consideration that results in an increase in the
number of outstanding shares of our common stock.
PLAN OF DISTRIBUTION
We have been advised that the distribution of the shares by the selling
stockholder, or by pledgees, donees or transferees of or other successors in
interest to the selling stockholder, may be effected from time to time in one or
more transactions (which may involve block transactions) on the Nasdaq SmallCap
Market or such other exchange or market in which our common stock may from time
to time be trading, in negotiated transactions or in a combination of any such
transactions. These transactions may be effected by the selling stockholder at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices, at negotiated prices or at fixed prices.
The selling stockholder may effect these transactions by selling shares
to or through broker-dealers, including purchases by a broker-dealer as
principal and resale by such broker-dealer for its account pursuant to this
prospectus. These broker-dealers will receive compensation in the form of
discounts or commissions from the selling stockholder and may receive
commissions from the purchasers of shares for whom such broker-dealers may
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act as agents (which discounts or commissions from the selling stockholder or
the purchasers, if in excess of those customary for the types of transactions
involved, will be disclosed in a supplemental prospectus). This prospectus may
also be used by transferees of the selling stockholder, including broker-dealers
or other transferees who borrow or purchase the shares to settle or close out
short sales of common stock. The selling stockholder will act independently of
us in making decisions with respect to the timing, manner and size of each sale
or non-sale related transfer. We will not receive any of the proceeds of this
offering.
Any broker-dealer that participates with the selling stockholder in the
distribution of the shares may be deemed to be an "underwriter" within the
meaning of the Securities Act of 1933, and any commissions or discounts received
by such broker-dealer and any profit on the resale of shares by such
broker-dealer may be deemed to be underwriting discounts and commissions under
the Securities Act of 1933. We know of no existing arrangements between the
selling stockholder and any underwriter, broker-dealer or other agent relating
to the sale or distribution of the shares. No underwriter, broker-dealer or
agent has been engaged by us in connection with the distribution of the shares.
In connection with sales of the shares or otherwise, the selling
stockholder may enter into hedging transactions with broker-dealers, which may
in turn engage in short sales of our common stock in the course of hedging the
positions they assume. The selling stockholder may also sell common stock short
and deliver common stock to close out short positions, or loan or pledge common
stock to broker-dealers that in turn may sell such securities.
The respective costs and expenses of the registration of the shares,
except for underwriting or selling discounts or commissions, will be paid by
Escalon pursuant to the February 2001 amendment. These costs and expenses borne
by us will include, without limitation, all registration and filing fees, legal
and accounting fees, printing expenses and costs of special audits incident to
or required by the registration of the shares. The selling stockholder will pay
all underwriting discounts and selling commissions, if any. We have agreed to
indemnify the selling stockholder against certain liabilities, including certain
liabilities under the Securities Act of 1933.
USE OF PROCEEDS
We will not receive any of the proceeds from the resale of the shares
offered under the prospectus by the selling stockholder.
LEGAL MATTERS
The validity of the issuance of the shares offered under the prospectus
has been passed upon for Escalon by Duane Morris, Philadelphia, Pennsylvania.
Attorneys of Duane Morris who have recently provided substantive legal services
to Escalon owned 51,063 shares of our common stock as of July 12, 2001.
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EXPERTS
The financial statements appearing in our Annual Report on Form 10-K
for the year ended June 30, 2000, have been audited by Parente Randolph LLC,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statement, and other information with the SEC.
Such reports, proxy statement, and other information can be read and copied at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
Public Reference Room. The SEC maintains an internet site at http://www.sec.gov
that contains reports, proxy and information statements and other information
regarding issuers that file electronically with the SEC, including our company.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the documents that we
file with the SEC. This means that we can disclose important information to you
by referring to you to those documents. Any information we incorporate in this
manner is considered part of this prospectus. Any information we file with the
SEC after the date of this prospectus and until this offering is completed will
automatically update and supersede the information contained in this prospectus.
We incorporate by reference the following documents that we have filed
with the SEC and any filings that we will make with the SEC in the future under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
this offering is completed.
(a) Our Annual Report on Form 10-K for the fiscal year ended June 30,
2000;
(b) Our Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2000;
(c) Our Quarterly Report on Form 10-Q for the fiscal quarter ended
December 31, 2000;
(d) Our Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2001;
(e) Our Current Report on Form 8-K dated January 19, 2000 as amended on
March 21, 2000 and June 22, 2000;
(f) The Definitive Proxy Statement filed under Section 14 of the
Exchange Act in connection with the stockholders meeting held on November 21,
2001; and
(g) The description of our common stock set forth under the caption
"Approval of the Reincorporation of the Company from California to Delaware" in
the Company's
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proxy statement filed with the SEC pursuant to Section 14(a) of the Exchange Act
on October 12, 1999.
All documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date of this prospectus and prior to the filing of
a post-effective amendment that indicates that all securities offered have been
sold or that deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this prospectus and to be a part hereof from
the date of filing of such documents. Any statement incorporated in this
prospectus shall be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this prospectus or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference in this prospectus modifies or supersedes such statement and any
statement contained in this prospectus shall be deemed to be modified or
superseded for all purposes to the extent that a statement contained in any
subsequently filed document that is deemed to be incorporated by reference
modifies or supersedes such statement.
We will provide without charge to each person to whom this prospectus
is delivered, upon the request of such person, a copy of any or all of the
documents incorporated in this prospectus by reference, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
herein). Such requests should be addressed to: Richard J. DePiano, Chairman and
Chief Executive Officer, Escalon Medical Corp., 351 East Conestoga Road, Wayne,
PA 19087, (610) 688-6830.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Registration fee.................................. $ 24.50
Legal fees and expenses........................... 5,000.00*
Accountants' fees and expenses.................... 400.00
Miscellaneous.....................................
----------
Total................................... $ 5,424.50*
==========
*Estimated.
The Company will bear all of the foregoing expenses.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
empowers a Delaware 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,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, 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 action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he 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 reasonable cause to believe that his conduct was unlawful.
In the case of an action or suit by or in the right of the corporation
to procure a judgment in its favor, Section 145 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 reason of the fact
that he is or was acting 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 a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that indemnification is not permitted
in respect of
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any claim, issue or matter as to which such person is adjudged to be liable to
the corporation unless and only to the extent that the Court of Chancery of the
State of Delaware or the court in which such action or suit was brought
determines upon application that, despite the adjudication of liability but in
view of all 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 deems proper.
Section 145 further provides: that a Delaware corporation is required
to indemnify a director, officer, employee or agent against expenses (including
attorneys' fees) actually and reasonably incurred by him in defense of any
action, suit or proceeding referred to above or in defense of any claim, issue
or matter therein to the extent that such person has been successful on the
merits or otherwise; that the indemnification provided for by Section 145 shall
not be deemed exclusive of any other rights to which the indemnified party may
be entitled; that the indemnification provided for by Section 145 shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of such person's heirs, executors and administrators; and empowers the
corporation to purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of the corporation against any
liability asserted against him and 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 liability under Section 145. A Delaware
corporation may provide indemnification only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct. Such determination is to be made (i) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion or (iii) by the stockholders.
Article 6 of the Company's By-Laws provides for indemnification of
directors and officers of the Company to the fullest extent permitted by the
General Corporation Law of the State of Delaware, as presently or hereafter in
effect.
The Company provides liability insurance for each director and officer
for certain losses arising from claims or charges made against them while acting
in their capacities as directors or officers of the Company up to an aggregate
of $5,000,000 inclusive of defense costs, expenses and charges.
Additionally, Article 10 of the Company's Certificate of Incorporation
limits the liability of the Company's directors to the fullest extent permitted
by Section 102(b)(7) of the General Corporation Law of the State of Delaware, as
the same may be amended and supplemented. Section 102(b)(7) permits the
certificate of incorporation of a Delaware corporation to include a provision
eliminating or limiting the personal liability of a director of a corporation to
the corporation or its stockholders for monetary damages for breach of his
fiduciary duty as a director; provided, however, that the provision may not
eliminate or limit the liability of a director for (i) any breach of the
director's duty of loyalty to the
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corporation or its stockholders; (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (iii) the
unlawful payment of dividends or unlawful purchase or redemption of stock under
Section 174 of the General Corporation Law of the State of Delaware; or (iv) any
transaction from which the director derived an improper personal benefit.
ITEM 16. EXHIBITS.
4.1 Certificate of Incorporation of the Company (incorporated herein by
reference to Exhibit B to the Company's Definitive Proxy Statement on
Schedule 14A, as filed by the Company with the SEC on October 12,
1999).
4.2 By-Laws of the Company (incorporated herein by reference to Exhibit C
to the Company's Definitive Proxy Statement on Schedule 14A, as filed
by the Company with the SEC on October 12, 1999).
4.3 Assets Sale and Purchase Agreement dated as of January 21, 1999 between
the Company and Radiance Medical Systems, Inc. (incorporated by
reference to Exhibit No. 10.9 filed under the Company's year ended June
30, 1999 Report on Form 10-K.
4.4 Amendment and Supplement to Assets Sale and Purchase Agreement and
Release dated as of February 28, 2001 between the Company and Radiance
Medical Systems, Inc. (incorporated by reference to Exhibit No. 10.15
filed under the Company's quarterly period ended March 31, 2001 Report
on Form 10-Q.
5.1 Opinion of Duane, Morris & Heckscher.
23.1 Consent of Duane, Morris & Heckscher (included in their opinion filed
as Exhibit 5.1).
23.2 Consent of Parente Randolph LLC.
24.1 Power of Attorney (see page II-6).
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) to file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
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(ii) to reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most recent
post-effective amendment hereto) which individually or in the aggregate,
represent a fundamental change in the information set forth in this 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 the undertakings set forth in paragraphs (i) and (ii)
above shall not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or 15(d) of the Exchange Act that
are incorporated by reference in this Registration Statement;
(b) 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; and
(c) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned registrant hereby further 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
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 of 1933 may be permitted to directors, officers and controlling persons of
the registrant, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
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SIGNATURES
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 Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Wayne, Pennsylvania on August 22, 2001.
ESCALON MEDICAL CORP.
By: /s/
------------------------------------
Richard J. DePiano,
Chairman and Chief Executive Officer
Know all men by these presents, that each person whose signature
appears below constitutes and appoints Richard J. DePiano and Harry M. Rimmer,
and each or both of them, as such person's true and lawful attorneys-in-fact and
agents, with full power of substitution, for him, and in his name, place and
stead, in any and all capacities to sign any or all amendments or post-effective
amendments to this Registration Statement, as well as any related registration
statement, or amendment thereto, filed pursuant to Rule 462 promulgated under
the Securities Act of 1933, 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 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 he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them or their substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Chairman, Chief Executive Officer Aug. 22, 2001
- ---------------------------------------- and Director
Richard J. DePiano (principal executive officer)
/s/ Vice President, Finance and
- ---------------------------------------- Administration and Secretary
Harry M. Rimmer (principal financial and accounting Aug. 22, 2001
Officer)
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/s/ Director Aug. 22, 2001
- ----------------------------------------
Anthony Coppola
/s/ Director Aug. 22, 2001
- ----------------------------------------
William L.G. Kwan
/s/ Director Aug. 22, 2001
- ----------------------------------------
Jeffrey O'Donnell
/s/ Director Aug. 22, 2001
- ----------------------------------------
Fred G. Choate
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EXHIBIT INDEX
(Pursuant to Item 601 of Regulation S-K)
EXHIBIT NO. EXHIBIT
4.1 Certificate of Incorporation of the Company (incorporated
herein by reference to Exhibit B to the Company's Definitive
Proxy Statement on Schedule 14A, as filed by the Company with
the SEC on October 12, 1999).
4.2 By-Laws of the Company (incorporated herein by reference to
Exhibit C to the Company's Definitive Proxy Statement on
Schedule 14A, as filed by the Company with the SEC on October
12, 1999).
4.3 Assets Sale and Purchase Agreement dated as of January 21,
1999 between the Company and Radiance Medical Systems, Inc.
(incorporated by reference to Exhibit No. 10.9 filed under the
Company's year ended June 30, 1999 Report on Form 10-K.
4.4 Amendment and Supplement to Assets Sale and Purchase Agreement
and Release dated as of February 28, 2001 between the Company
and Radiance Medical Systems, Inc. (incorporated by reference
to Exhibit No. 10.15 filed under the Company's quarterly
period ended March 31, 2001 Report on Form 10-Q.
5.1 Opinion of Duane, Morris & Heckscher.
23.1 Consent of Duane, Morris & Heckscher (included in their
opinion filed as Exhibit 5.1).
23.2 Consent of Parente Randolph LLC.
24.1 Power of Attorney (see page II-6).