Filed Pursuant to Rule 424(b)(3)
Registration No. 333-121976
4,100,000 SHARES
PROSPECTUS
61,859,070 SHARES
LIFEPOINT, INC.
COMMON STOCK
____________
The stockholders named beginning on page 11 are selling up to 61,859,070 shares
of our common stock.
Our common stock is listed on the American Stock Exchange under the symbol
"LFP." On January 6, 2005, the last sale price of our common stock as reported
on the American Stock Exchange was $0.28.
____________
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES OF
OUR COMMON STOCK ONLY IF YOU CAN SUSTAIN A COMPLETE LOSS OF YOUR INVESTMENT. SEE
"RISK FACTORS" BEGINNING ON PAGE 4 FOR FACTORS THAT YOU SHOULD CONSIDER BEFORE
INVESTING IN THE SHARES OF OUR COMMON STOCK.
____________
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS.
____________
THE DATE OF THIS PROSPECTUS IS JANUARY 31, 2005.
TABLE OF CONTENTS
PAGE
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LIFEPOINT, INC. 3
RISK FACTORS 4
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS 10
USE OF PROCEEDS 11
SELLING STOCKHOLDERS 11
PLAN OF DISTRIBUTION 19
LEGAL MATTERS 20
EXPERTS 20
WHERE TO FIND ADDITIONAL INFORMATION 20
2
The terms "LifePoint," "Company," "we," "our," "ours" and "us" refer
to LifePoint, Inc. and our consolidated subsidiaries, unless the context
requires otherwise, and not to the selling stockholders. All references to
"common stock" refer to our common stock, $.001 par value per share.
LIFEPOINT, INC.
We are a medical technology company that developed, manufactures and
markets the LifePoint(R) IMPACT(R) Test System - a rapid diagnostic testing and
screening device for use in workplace, home health care, ambulance, pharmacy and
law enforcement settings. Our patented and proprietary technologies for the use
of saliva as a non-invasive, blood-comparable test specimen, used in conjunction
with the flow immunosensor technology licensed from the United States Navy (the
"USN"), has allowed us to develop and market a broadly applicable, non-invasive,
rapid, on-site diagnostic test system.
In February 2004,, we re-launched the IMPACT Test System for sale to
the international and domestic forensic markets. The IMPACT Test System is a
proprietary test system that generates almost immediate, diagnostic results for
a broad variety of substances by non-invasively testing saliva, including
alcohol and the following commonly used drugs of abuse: cocaine, opiates (such
as heroin and morphine), phencyclidine (PCP), amphetamine (including
methamphetamine and ecstasy), and tetrahydrocannabinol (THC, marijuana)
(collectively the "Drugs of Abuse").
We were initially marketing the product in the United States in
markets not regulated by the Food and Drug Administration (the "FDA"), such as
law enforcement and criminal justice testing, and in Europe and certain Asian
countries where no FDA clearance is required. In November 2004, we received
510(k) clearance from the FDA to market the LifePoint(R) IMPACT(R) Test System
in conjunction with the opiate test (morphine and heroin) for use in medical
markets. We will now be able to commence marketing of the product in the United
States FDA regulated markets, such as medical markets.
We anticipate that our saliva based drugs of abuse and alcohol test
will become evidential in the law enforcement market. However, we expect that
tests may be performed on a non-evidential basis in some portions of the
industrial marketplace where confirmation testing is required by regulation. If
a drug of abuse is detected in the initial test, in some markets, the sample may
need to be forwarded to a laboratory, where a confirmatory analysis will be
performed. Usually gas chromatography/mass spectrometry ("GC/MS") is employed
for the confirmatory test. On February 25, 2002, we reported that we had
established a relationship with Quest Diagnostics, a leader in employee testing
in the United States, to perform GC/MS confirmation testing on saliva samples
when requested by some of the IMPACT Test System customers. This relationship
enables us to provide a quick, low-cost, easy to implement laboratory
secondary/confirmation testing service on saliva samples that have been
collected automatically and non-invasively by the IMPACT Test System. Quest
Diagnostics has developed new protocols and procedures to provide confirmation
testing at the low levels of sensitivity required from a saliva sample using the
LifePoint Saliva Collection Device. This capability provides our customers with
the ability to meet the requirements for testing federally regulated
safety-sensitive employees.
Our marketing analysis has indicated a greater market potential for a
saliva-based test for drugs of abuse and alcohol via a completely automated,
integrated transportable instrument, which generates a lab-quality result, by
law enforcement agencies, occupational health clinics, hospitals and other
medical facilities than for a urine sample, tested either at a laboratory or
on-site. However, the use of this product in other potential markets that are
testing for recent drug use (over the last two to five days) or "lifestyle
testing," such as pre-employment testing, may be somewhat limited with our
initial product.
3
RISK FACTORS
BEFORE YOU INVEST IN OUR COMMON STOCK BY PURCHASING SHARES FROM A
SELLING STOCKHOLDER NAMED IN THIS PROSPECTUS, YOU SHOULD BE AWARE THAT THERE ARE
VARIOUS RISKS. WE HAVE DESCRIBED BELOW ALL OF THE RISKS WHICH WE DEEM MATERIAL
TO YOUR INVESTMENT DECISION. A LIST OF THE NAMED SELLING STOCKHOLDERS MAY BE
FOUND IN THIS PROSPECTUS IN THE TABLE BEGINNING ON PAGE 11. YOU SHOULD CONSIDER
CAREFULLY THESE RISK FACTORS, TOGETHER WITH ALL OF THE OTHER INFORMATION
INCLUDED IN THIS PROSPECTUS AND IN THE PERIODIC REPORTS WE HAVE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF 1934,
BEFORE YOU DECIDE TO PURCHASE ANY SHARES OF OUR COMMON STOCK. FOR INFORMATION AS
TO HOW YOU MAY RECEIVE COPIES OF OUR PERIODIC REPORTS, WE DIRECT YOUR ATTENTION
TO THE SECTION CAPTIONED "WHERE TO FIND ADDITIONAL INFORMATION" IN THIS
PROSPECTUS.
RISKS RELATED TO OUR OPERATIONS:
WE WILL HAVE A NEED FOR SIGNIFICANT AMOUNT OF CAPITAL IN THE FUTURE AND THERE IS
NO GUARANTEE THAT WE WILL BE ABLE TO OBTAIN THE AMOUNTS WE NEED.
We recently completed an offering of Series E preferred stock, which
provided sufficient funds to meet our near-term needs. However, if our business
goals are not met, including certain sales revenues, we may need to raise
additional funds in the future.
We have operated at a loss, and expect that to continue for some time
in the future. Our plans for continuing product refinement and development,
further develop the distribution network, expand our direct sales effort, and to
continue to scale-up our manufacturing capacity prior to transfer to an OEM
manufacturer will involve substantial costs. The extent of these costs will
depend on many factors, including some of the following:
o The progress and breadth of additional product development;
o The costs involved with manufacturing scale-up and
manufacturing capacity;
o The costs involved with the transfer of manufacturing to an
OEM manufacturer;
o Timing and product trial acceptance by customers and
distributors, all of which directly influence cost and product
sales;
o The costs involved in completing the regulatory process to get
the remainder of our current chemistry tests and future tests
to be developed approved, including the number, size, and
timing of necessary clinical trials;
o The costs involved in patenting our technologies and defending
them;
o The cost of marketing, selling and distributing the IMPACT
Test System; and
o Competition for our products and our ability, and that of our
distributors, to commercialize our product.
In the past, we have raised funds by public and private sale of our
stock, and we are likely to try to do this in the future to raise needed funds.
Sale of our stock to new private or public investors usually results in existing
stockholders becoming "diluted." The greater the number of shares sold, the
greater the dilution. A high degree of dilution can make it difficult for the
price of our stock to rise rapidly, among other things. Dilution also lessens a
stockholder's voting power.
We may not be able to raise sufficient capital needed to fund
operations, or we may not be able to raise capital under terms that are
favorable to us.
OPERATIONAL LOSSES ARE EXPECTED TO CONTINUE AT LEAST ANOTHER THREE QUARTERS
FOLLOWING THE QUARTER ENDED SEPTEMBER 30, 2004.
From the date we were incorporated on October 8, 1992 through September
30, 2004, we have incurred net losses of $77,640,594. In February 2004, we
re-launched marketing of the IMPACT Test System, our first product, to the
international law enforcement market, one of three initial worldwide target
markets. There was no governmental approval required as a prerequisite to market
to these potential users of our product. However, as indicated elsewhere in this
section "Risk Factors," there are certain legal challenges that we must overcome
to make our product fully acceptable in this market.
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One of our initial target markets is the industrial market - companies
that currently test employees for drugs and alcohol. In November 2000, the FDA
announced its intention to be consistent in its regulation of drugs of abuse
screening tests used in the home, work place, insurance and sports settings. The
FDA published draft guidance for public comment in April 2004. Should the FDA
enforce such regulations, despite our efforts and those of others to dissuade
the FDA from doing so, such regulations might delay the start of marketing to
the industrial market in the United States until we comply. However, in
anticipation of such adoption, we have been collecting the additional field data
which management believes, based on discussions with the FDA, and the draft
guidelines, this agency would require approving our entry into the industrial
market in the United States. We have submitted for industrial workplace
clearance from the FDA under the proposed guidelines simultaneously with seeking
its approval of use of our product for medical purposes. In addition, we have
commenced efforts to market our product through distributors to law enforcement
agencies and medical users in Europe and select Pacific Rim countries such as
Australia prior to obtaining FDA approval for use in the United States. This
program could offset any loss in early revenues due to the delay, if it occurs,
in our marketing to the industrial market in the United States.
We may not meet the market launch schedules described in the preceding
two paragraphs. In addition, the FDA or a foreign government may not grant
clearance for the sale of all of our tests for routine screening and/or
diagnostic operations. Furthermore, the clearance process may take longer than
projected. Even if we do meet our schedule and although we have generated
revenues, profitability cannot be predicted.
WE WILL BE INCREASING THE DEMANDS ON OUR LIMITED RESOURCES AS WE TRANSITIONS
EFFORTS FROM RESEARCH AND DEVELOPMENT TO PRODUCTION AND SALES.
We currently have limited financial and personnel resources. We have
begun to transition from a research and development focused organization to a
production and sales organization. To successfully manage this transition, we
will be required to grow the size and scope of our operations, maintain and
enhance financial and accounting systems and controls, hire and integrate new
personnel and manage expanded operations. There can be no assurance that we will
be able to identify, hire and train qualified individuals as we transition and
expand. The failure to manage these changes successfully could have a material
adverse effect on the quality of our products and technology, the ability to
retain customers and key personnel and on operating results and financial
condition.
TRANSITION TO AN OPERATIONAL COMPANY MAY STRAIN MANAGERIAL, OPERATIONAL AND
FINANCIAL RESOURCES.
We expect to encounter the risks and difficulties frequently
encountered by companies that have recently made a transition from research and
development activities to commercial production and marketing. We have set forth
below certain of these risks and difficulties in this section "Risk Factors."
For example, the transition from a development stage company to a commercial
company may strain managerial, operational and financial resources. If our
product achieves market acceptance, then we will need to increase the number of
employees, significantly increase manufacturing capability and enhance operating
systems and practices. We may not be able to effectively do so or otherwise
manage future growth.
OUR BUSINESS IS SUBJECT TO CHANGING REGULATION OF CORPORATE GOVERNANCE AND
PUBLIC DISCLOSURE THAT HAS INCREASED BOTH ITS COSTS AND THE RISK OF
NONCOMPLIANCE.
Because our common stock is publicly traded, we are subject to certain
rules and regulations of federal, state and financial market exchange entities
charged with the protection of investors and the oversight of companies whose
securities are publicly traded. These entities, including the Public Company
Accounting Oversight Board, the SEC and the American Stock Exchange, have
recently issued new requirements and regulations and continue developing
additional regulations and requirements in response to recent corporate scandals
and laws enacted by Congress, most notably the Sarbanes-Oxley Act of 2002. Our
efforts to comply with these new regulations have resulted in, and are likely to
continue resulting in, increased general and administrative expenses and
diversion of management time and attention from revenue-generating activities to
compliance activities.
In particular, our efforts to prepare to comply with Section 404 of the
Sarbanes-Oxley Act and related regulations for fiscal years ending on or after
July 15, 2005 regarding management's required assessment of our internal
controls over financial reporting and our independent auditors' attestation of
that assessment will require the commitment of significant financial and
managerial resources. Although we believe that ongoing efforts to assess our
internal controls over financial reporting will enable us to provide the
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required report, and our independent auditors to provide the required
attestation, under Section 404, we can give no assurance that such efforts will
be completed on a timely and successful basis to enable our management and
independent auditors to provide the required report and attestation in order to
comply with SEC rules.
Moreover, because the new and changed laws, regulations and standards
are subject to varying interpretations in many cases due to their lack of
specificity, their application in practice may evolve over time as new guidance
is provided by regulatory and governing bodies. This evolution may result in
continuing uncertainty regarding compliance matters and additional costs
necessitated by ongoing revisions to our disclosure and governance practices.
THE IMPACT TEST SYSTEM MAY HAVE A LENGTHY SALES CYCLE IN SOME MARKETS AND
CUSTOMERS MAY DECIDE TO CANCEL OR CHANGE THEIR PRODUCT PLANS, WHICH COULD CAUSE
US TO LOSE ANTICIPATED SALES.
Based on the early stages of product sales and the new technology
represented by our product, customers test and evaluate the product extensively
prior to ordering the product. In some markets, customers may need three to six
months or longer to test and evaluate the product prior to ordering. Due to this
lengthy sales cycle at some customers, we have and may continue to experience
delays from the time it increases our operating expenses and our investments in
inventory until the time that revenues are generated for these products. It is
possible that we may never generate any revenues from these products after
incurring such expenditures. The delays inherent in the lengthy sales cycle in
some markets increase the risk that a customer will decide to cancel or change
its product plans. Such a cancellation or change in plans by a customer could
cause us to lose sales that had previously been anticipated. In addition, our
business, financial condition and results of operations could be materially and
adversely affected if significant customers curtail, reduces or delay orders.
THROUGH THE EARLY STAGES OF PRODUCT RELEASE, OUR AVERAGE PRODUCT CYCLES HAVE
TENDED TO BE SHORT AND, AS A RESULT, WE MAY HOLD EXCESS OR OBSOLETE INVENTORY
WHICH COULD ADVERSELY AFFECT OUR OPERATING RESULTS.
While our sales cycles in our initial markets have been long, average
product life cycles have been short as a result of the rapidly changing product
designs made based on customer feedback. As a result, the resources devoted to
product sales and marketing may not generate material revenues, and from time to
time, we may need to write off excess and obsolete inventory. If we incur
significant marketing and inventory expenses in the future that are not
recoverable, and we are not able to compensate for those expenses, our operating
results could be adversely affected. In addition, if products are sold at
reduced prices in anticipation of cost reductions and we still have higher cost
products in inventory, operating results would be harmed.
UNEXPECTED PROBLEMS AS TO HOW OUR PRODUCT FUNCTIONS CAN DELAY RECEIPT OF
REVENUES AND COULD ADVERSELY IMPACT OUR ABILITY TO CONTINUE AS A GOING CONCERN.
We experienced delays in marketing our product because of unanticipated
performance problems that had arisen first in our testing in our research and
development facility and later at market trial and customer sites in 2002.
Accordingly, when a product performance problem surfaced, we had no choice
except to make product improvements and modifications. We also had to delay
completion of the field-testing necessary to furnish the data for some of the
FDA submissions, and with it, delayed clearance by the FDA due to the loss of
critical financing.
By delaying the time of product production, these product problems
delayed receipt of revenues. They also increased our need for additional
financing. Any future delays in obtaining revenues will increase our need for
additional financing. And with the past delays, and future delays, if any, in
receiving revenues, our opportunity to achieve profitability was, and will be,
also delayed and could potentially adversely impact our ability to continue as a
going concern.
WE WILL FACE COMPETITION FROM NEW AND EXISTING DIAGNOSTIC TEST SYSTEMS.
We have begun to compete with many companies of varying size that
already exist or may be founded in the future. Substantially all of their
current tests available either use urine or blood samples as a specimen to test
for drugs of abuse or use breath, saliva, or blood samples to test for alcohol.
In addition, we recognize that other products performing on-site testing for
drugs in blood or saliva may be developed and introduced into the market in the
future.
6
Four companies, Avitar, Inc. ("Avitar"), OraSure Technologies, Inc.
("OraSure"), Varian, Inc. ("Varian"), formerly known as AnSys, Brannan Medical
("Brannan") and Cozart Bioscience Ltd. ("Cozart"), market oral screening drugs
of abuse devices. The type of technology used by these companies is called
lateral flow membrane technology, which is the process by which a specimen flows
across a treated test strip (membrane) and which produces colored test result on
a portion of the test strip. Home pregnancy tests are a good example of lateral
flow membrane technology. This type of test is less sensitive than the flow
immunosensor technology and cannot provide quantifiable results, but only
qualitative, yes/no answers. While we believe this type of technology is not
sensitive enough to detect certain drugs at levels that are found in saliva, we
recognize that other products performing on-site testing for drugs in blood or
saliva may be developed and introduced into the market in the future.
We also face as competitors BioSite Diagnostics Inc., Syva Company (a
division of Dade International Inc.), Varian Inc. and at least five other major
diagnostic and/or pharmaceutical companies. All of these competitors currently
use urine as the specimen for on-site drug testing. Almost all of these
prospective competitors have substantially greater financial resources than we
have to develop and market their products.
With respect to breath testing for the presence of alcohol, we will
compete with CMI, Inc., Intoximeters, Inc., Draeger Safety, Inc., and other
small manufacturers.
Furthermore, because of the time frame it has taken us to bring its
product to market, our competition may have developed name recognition among
customers that will handicap future marketing efforts.
FAILURE TO COMPLY WITH THE SUBSTANTIAL GOVERNMENTAL REGULATION TO WHICH THE
COMPANY IS SUBJECT MAY ADVERSELY AFFECT ITS BUSINESS.
The FDA announced its intention to regulate marketing to the industrial
market in the United States. If the FDA determines to regulate the industrial
market in the United States, this may further delay the receipt of revenues by
us in this market. If we cannot obtain a waiver from Clinical Laboratory
Improvement Act of 1988 ("CLIA") regulation, the cost of running the IMPACT TEST
SYSTEM in FDA regulated medical markets could be higher for potential customers.
We may not be able to obtain a waiver from CLIA regulation or FDA approval on a
timely basis, if at all. If we do not obtain such waiver and approvals, our
business will be adversely affected.
WE MAY NOT BE ABLE TO EXPAND MANUFACTURING OPERATIONS ADEQUATELY OR AS QUICKLY
AS REQUIRED TO MEET EXPECTED ORDERS.
We first began our manufacturing process in January 2001. However, we
have not as yet made any significant deliveries of our product. Accordingly, we
have not as yet demonstrated the ability to manufacture our product at the
capacity necessary to support expected commercial sales. In addition, we may not
be able to manufacture cost effectively on a large scale.
We expect to conduct all manufacturing of the Saliva Test Module's
(STM) at our own facility for at least another six to nine months. We are now
reviewing the possibility of engaging an outside manufacturer for the final
assembly of the STMs as part of our overall strategy to reduce costs. However,
the chemistry portion of the STM is a proprietary technology and process
developed by us and, accordingly we plan to continue to manufacture the
chemistry portion of the STM for both intellectual property protection and
proprietary know how. In addition, we intend to continue to assemble the IMPACT
Test System for at least another six to nine months or more. If our facility or
the equipment in our facility is significantly damaged or destroyed, we may not
be able to quickly restore manufacturing capacity. We plan to engage an outside
manufacturer of instruments to final assemble the current instrument in
conjunction with our own in-house assembly. Our current timetable for transfer
of some of the final assembly of the current instrument is no sooner than the
quarter ending December 31, 2005. We could, accordingly, turn over instrument
assembly to a number of qualified outside instrument assembly suppliers in the
event of such problems at our facility. Accordingly, any capable electronics
manufacturer would have the capability to produce this type of equipment. We
have identified several potential electronic manufacturers as potential
alternatives to our initial outside supplier should we so require.
LEGAL PRECEDENT HAS NOT YET BEEN ESTABLISHED FOR UPHOLDING THE RESULTS OF OUR
DIAGNOSTIC TEST SYSTEM.
The legal precedents for performing drug and alcohol testing in both
law enforcement and the industrial workplace have been well established. Blood
and urine testing are the currently accepted standard samples for drugs. Blood,
breath and saliva are the currently accepted standard samples for alcohol.
However, several saliva-based drug tests are beginning to be used. Our
technology may not be admissible in court and accepted by the market.
7
State laws are being revised on an ongoing basis to allow law
enforcement officers to use saliva as a specimen for testing for drivers under
the influence of drugs or alcohol. Currently, saliva and other bodily substance
testing for DUI testing with consent is permitted in all states. However, such
testing will be subject to a variety of factors. Saliva or other bodily
substances for DUI testing for drugs or alcohol is specifically permitted in 24
states, but specifically excluded in only six. Additional efforts will be needed
to change the laws in these states which have not adopted saliva as a test
specimen for DUI testing. We cannot give assurance as to when and if this
legislation will be adopted in the other states.
Lastly, the National Highway and Traffic Safety Administration must
approve alcohol test products for Department of Transportation use, either as a
screening method or an evidentiary method. We believe that our product meets the
requirements of an evidentiary product. However, because we have not yet
submitted our product for approval, we cannot guarantee acceptance by this
governmental agency.
OUR EFFORTS TO LEGALLY PROTECT OUR PRODUCT MAY NOT BE SUCCESSFUL.
We will be dependent on our patents and trade secret law to legally
protect the uniqueness of our testing product. However, if we institute legal
action against those companies that we believe may have improperly used our
technology, we may find ourselves in long and costly litigation. This result
would increase costs of operations and thus adversely affect our results of
operations.
In addition, should it be successfully claimed that we have infringed
on the technology of another company, we may not be able to obtain permission to
use those rights on commercially reasonable terms. Moreover, in such event a
company could bring legal action and we may find ourselves in long and costly
litigation.
WE MAY BE SUED FOR PRODUCT LIABILITY RESULTING FROM THE USE OF ITS DIAGNOSTIC
PRODUCT.
We may be held liable if the IMPACT Test System causes injury of any
type. We have obtained product liability insurance to cover this potential
liability. We believe that the amount of our current coverage is adequate for
the potential risks in these areas. However, assuming a judgment is obtained
against us, our insurance may not cover the potential liabilities. Our policy
limits may be exceeded. If we are required at a later date to increase the
coverage, we may obtain the desired coverage, but only at a higher cost.
OUR INCREASING EFFORTS TO MARKET PRODUCTS OUTSIDE THE UNITED STATES MAY BE
AFFECTED BY REGULATORY, CULTURAL OR OTHER RESTRAINTS.
We have commenced efforts to market our product through distributors in
countries outside the United States, starting with certain of the Eastern and
Western European and Asian countries. In addition to economic and political
issues, we may encounter a number of factors that can slow or impede our
international sales, or substantially increase the costs of international sales,
including the following:
o We do not believe that our compliance with the current
regulations for marketing our product in European countries
will be a problem. However, new regulations (including customs
regulations) can be adopted by these countries which may slow,
limit or prevent the marketing of our product. In addition,
other countries in which we attempt, through distributors, to
market our product may require compliance with regulations
different from those of the European market.
o Cultural and political differences may make it difficult to
effectively obtain market acceptances in particular countries.
o Although our distribution agreements provide for payment in
U.S. dollars, exchange rates, currency fluctuations, tariffs
and other barriers and extended payment terms could affect our
distributors' ability to perform and, accordingly, impact our
revenues.
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o Although we made an effort to satisfy ourselves as to the
credit-worthiness of our distributors, the credit-worthiness
of the foreign entities to which we sell may be less certain
and their accounts receivable collections may be more
difficult.
THE FOLLOWING RISK FACTORS RELATE TO OWNERSHIP OF OUR CAPITAL STOCK:
WE DO NOT ANTICIPATE PAYING DIVIDENDS ON COMMON STOCK IN THE FORESEEABLE FUTURE.
We intend to retain future earnings, if any, to fund our operations and
expand our business. In addition, the expected continuing operational losses and
our Series E and Series D preferred stock will limit legally our ability to pay
dividends on our common stock. Accordingly, we do not anticipate paying cash
dividends on shares of our common stock in the foreseeable future.
OUR BOARD'S RIGHT TO AUTHORIZE ADDITIONAL SHARES OF PREFERRED STOCK COULD
ADVERSELY IMPACT THE RIGHTS OF HOLDERS OF OUR COMMON STOCK.
Our board of directors currently has the right, with respect to the
authorized shares of preferred stock not designated as the Company's Series E
and Series D preferred stock, to authorize the issuance of one or more
additional series of our preferred stock with such voting, dividend and other
rights as our directors determine. Such action can be taken by our board without
the approval of the holders of our common stock. The sole limitation is that the
rights of the holders of any new series of preferred stock must be junior to
those of the holders of the Series E and Series D preferred stock with respect
to dividends, upon redemption and upon liquidation. Accordingly, the holders of
any new series of preferred stock could be granted voting rights that reduce the
voting power of the holders of common stock. For example, the preferred holders
could be granted the right to vote on a merger as a separate class even if the
merger would not have an adverse effect on their rights. This right, if granted,
would give them a veto with respect to any merger proposal. Or they could be
granted 20 votes per share while voting as a single class with the holders of
the common stock, thereby diluting the voting power of the holders of common
stock. In addition, the holders of any new series of preferred stock could be
given the option to be redeemed in cash in the event of a merger. This would
make an acquisition of us less attractive to a potential acquirer. Thus, the
board could authorize the issuance of shares of the new series of preferred
stock in order to defeat a proposal for the acquisition of us which a majority
of our then holders of common stock otherwise favor.
OUR CERTIFICATE OF INCORPORATION CONTAINS CERTAIN ANTI-TAKEOVER PROVISIONS,
WHICH COULD FRUSTRATE A TAKEOVER ATTEMPT AND LIMIT YOUR ABILITY TO REALIZE ANY
CHANGE OF CONTROL PREMIUM ON SHARES OF OUR COMMON STOCK.
There are two provisions in our certificate of incorporation or bylaws
which could be used by us as an anti-takeover device. Our certificate of
incorporation provides for a classified board -- one third of our directors to
be elected each year. Accordingly, at least two successive annual elections will
ordinarily be required to replace a majority of the directors in order to effect
a change in management. Thus, the classification of the directors may frustrate
a takeover attempt which a majority of our then holders of common stock
otherwise favor.
In addition, we are obligated to comply with the procedures of Section
203 of the Delaware corporate statute, which may discourage certain potential
acquirers which are unwilling to comply with its provisions. Section 203
prohibits us from entering into a business combination (for example, a merger or
consolidation or sale of assets of the corporation having an aggregate market
value equal to 10% or more of all of our assets) for a period of three years
after a stockholder becomes an "interested stockholder." An interested
stockholder is defined as being the owner of 15% or more of the outstanding
voting shares of the corporation. There are exceptions to its applicability
including our board of directors approving either the business combination or
the transaction which resulted in the stockholder becoming an interested
stockholder. At a minimum, we believe such statutory requirements may require
the potential acquirer to negotiate the terms with our directors.
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WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE A STATEMENT THAT DIFFERS FROM WHAT IS
IN THIS PROSPECTUS. IF ANY PERSON DOES MAKE A STATEMENT THAT DIFFERS FROM WHAT
IS IN THIS PROSPECTUS, YOU SHOULD NOT RELY ON IT. THIS PROSPECTUS IS NOT AN
OFFER TO SELL, NOR IS IT SEEKING AN OFFER TO BUY, THESE SECURITIES IN ANY STATE
WHERE THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION IN THIS PROSPECTUS IS
COMPLETE AND ACCURATE AS OF ITS DATE, BUT THE INFORMATION MAY CHANGE AFTER THAT
DATE.
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FORWARD-LOOKING STATEMENTS
This prospectus contains and incorporates by reference forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements are subject to a number of risks, uncertainties and assumptions about
us, including, among other things, those set forth elsewhere in this prospectus
under the heading "Risk Factors." You can identify these forward-looking
statements by forward-looking words such as "believe," "may," "could," "will,"
"estimate," "continue," "anticipate," "intend," "seek," "plan," "expect,"
"should," "would" and similar expressions used in this prospectus.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks and uncertainties, the forward-looking events and
circumstances discussed in this prospectus may not occur and actual results
could differ materially from those anticipated or implied in the forward-looking
statements.
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USE OF PROCEEDS
We are registering the shares of our common stock offered by this
prospectus for the account of the selling stockholders identified in the section
of this prospectus entitled "Selling Stockholders." All of the net proceeds from
the sale of our common stock by this prospectus will go to the selling
stockholders who offer and sell their shares of our common stock. We will not
receive any part of the proceeds from the sale of these securities.
SELLING STOCKHOLDERS
The selling stockholders are offering pursuant to this prospectus, as
indicated in the following table, an aggregate of 61,859,070 shares of our
common stock.
The following table sets forth for each selling stockholder, as of the
date of this prospectus:
o the name of the selling stockholder,
o the number and percentage of shares of our common stock
beneficially owned as of December 31, 2004,
o the number of shares of our common stock to be offered
pursuant to this prospectus, and
o the number and percentage of shares of our common stock to be
beneficially owned following the offering pursuant to this
prospectus, assuming all of the shares to be offered pursuant
to this prospectus are sold.
During the past three years, none of the selling stockholders had any
position, office or other material relationship with us, except as a stockholder
and except that Linda Masterson, who was our president and chief executive
officer, Tom Foley, who was our vice president of research and development, and
Nuno Brandolini, who is a director, are selling stockholders.
The following table assumes that the selling stockholders will sell all
of the shares offered under this prospectus. However, because the selling
stockholders may offer from time to time all or some of their shares under this
prospectus, or in another permitted manner, no assurances can be given as to the
actual number of shares that will be sold by the selling stockholders or that
will be held by the selling stockholders after completion of such sales.
Information concerning the selling stockholders may change from time to time and
changed information will be presented in a supplement to this prospectus if and
when necessary and required.
The percentages of beneficial ownership reported in the following table
are based upon 97,040,860 shares of our common stock which were outstanding on
December 31, 2004. The number of shares shown in the column entitled "Shares
Beneficially Owned Before Offering" is determined under rules promulgated by the
SEC. No holder of preferred stock or warrants issued in connection with the
Series E preferred stock financing is entitled to convert any shares of such
preferred stock into, or exercise any such warrants for, common stock, or
dispose of any shares of such preferred stock or any portion of any such
warrants if it would result in the holder or any of its affiliates together
beneficially owning more than 4.99% of the outstanding shares of our common
stock, except with respect to stockholders who previously waived this provision
prior to it becoming binding upon them. Therefore, while included in the number
of shares offered in the table below, shares which the selling stockholder is
prevented from acquiring as a result of these provisions are not shown as
beneficially owned by virtue of such limitation. As a result, the number of
shares that each selling stockholder may sell pursuant to this prospectus may
exceed the number of shares such holder beneficially owned prior to the
offering, as determined pursuant to the rules promulgated by the SEC.
Each of the following symbols as used in the selling stockholder table
shall have the meaning assigned to it as indicated below:
11
- ------------ -------------------------------------------------------------------
Symbol Meaning
- ------------ -------------------------------------------------------------------
OS Shares of our common stock beneficially owned by the stockholders
acquired other than in connection with the Series C or Series D
Preferred stock transactions.
- ------------ -------------------------------------------------------------------
OW Shares of our common stock issuable upon exercise of our investor
warrants acquired other than in connection with the Series C or
Series D Preferred stock transactions.
- ------------ -------------------------------------------------------------------
CS Shares of common stock issued upon the conversion of our Series C
preferred stock at the original conversion price of $3.00 per
share.
- ------------ -------------------------------------------------------------------
CW Shares of common stock issuable upon exercise of our investor
warrants issued in connection with the Series C private placement.
- ------------ -------------------------------------------------------------------
CP Shares of common stock issued upon redemption of premium on our
Series C preferred stock.
- ------------ -------------------------------------------------------------------
CA Shares of common stock issued to the Series C preferred stock
holders who, by virtue of their participation in the Series D
preferred stock placement, had their conversion price reset to
$0.30 per
share.
- ------------ -------------------------------------------------------------------
DS Shares of common stock issuable upon the conversion of our Series D
preferred stock at the original conversion price of $0.30 per
share.
- ------------ -------------------------------------------------------------------
DW Shares of common stock issuable upon exercise of our investor
warrants issued in connection with the Series D private placement.
- ------------ -------------------------------------------------------------------
DP Shares of common stock estimated to be issuable upon redemption of
premium on our Series D preferred stock.
- ------------ -------------------------------------------------------------------
DA Shares of common stock issuable to the Series D preferred stock
holders who, by virtue of the Series E preferred stock placement,
had their conversion price reset to $0.20 per share.
- ------------ -------------------------------------------------------------------
DD Shares of stock issuable to the Series D preferred stockholders
who, by virtue of the Series E preferred stock placement, had their
Series D Dividend conversion price reset to $0.20 for Series D
Dividends to be issued.
- ------------ -------------------------------------------------------------------
ES Shares of common stock issuable upon the conversion of our Series E
preferred stock at the original conversion price of $0.20 per
share.
- ------------ -------------------------------------------------------------------
EW Shares of common stock issuable upon exercise of our investor
warrants issued in connection with the Series E private placement.
- ------------ -------------------------------------------------------------------
EP Shares of common stock estimated to be issuable upon redemption of
premium on our Series E preferred stock.
- ------------ -------------------------------------------------------------------
NO Shares of our common stock issuable upon exercise of our investor
warrants originally acquired in connection with our two debt
transactions.
- ------------ -------------------------------------------------------------------
ND Shares of common stock issuable to the debt holders who, by
agreement with the Series D preferred investors, have agreed to
convert their debt into shares of the Series D preferred stock.
- ------------ -------------------------------------------------------------------
NW Shares of common stock issuable upon exercise of our investor
warrants issued to the debt holders who, by agreement with the
Series D preferred investors, have agreed to convert their debt
into shares of the Series D preferred stock.
- ------------ -------------------------------------------------------------------
NP Shares of common stock estimated to be issuable upon redemption of
premium on our Series D preferred stock.
- ------------ -------------------------------------------------------------------
PW Shares of common stock issuable upon exercise of placement agent
warrants.
- ------------ -------------------------------------------------------------------
SO Fully vested employee stock options.
- ------------ -------------------------------------------------------------------
TS The total of all of the foregoing shares of our common stock.
- ------------ -------------------------------------------------------------------
W Warrants issued to employees.
- ------------ -------------------------------------------------------------------
12
Where a particular symbol is not shown, then the stockholder does not own shares
falling into that category. In addition, because a stockholder may convert his,
her or its shares of our Series C and Series D preferred stock prior to the
respective maturity date, the stockholder may not receive all of the shares
shown in the table for the symbols CP and DP. If this occurs, the stockholder's
total shown in the table for the symbol TS would also be reduced.
TABLE OF SELLING STOCKHOLDERS
Beneficial ownership
before offering Beneficial ownership
(with limitations) Shares after offering
Name of selling stockholder Symbol number % Offered number %
- ---------------------------------------------------------------------------- ------------------------------------------------
St. Cloud Investments Ltd. (1) DD 527,922 527,922 -
2525 Michigan Ave., #5 OS 956,845 956,845
Santa Monica, CA 90404 OW 87,500 87,500
CS 15,545,772 15,545,772
CW 1,037,017 1,037,017
DS 14,395,000 14,395,000
DW 19,191,414 19,191,414
ES 5,500,000 5,500,000 -
EW 5,500,000 5,500,000 -
EP 884,133 884,133 -
DA 4,799,293 4,799,293 -
------------------ --------------------------------------
Total 68,424,896 45.9% 17,211,348 51,213,548 38.9%
Lagunitas Partners Capital, L.P. (2) DD 165,033 165,033 -
50 Osgood Place - PH DS 2,999,700 2,999,700
San Francisco, CA 94133 DW 5,999,400 5,999,400
DP 540,000 540,000
ES 3,000,000 3,000,000 -
EW 3,000,000 3,000,000 -
EP 482,255 482,255 -
DA 1,500,300 1,500,300 -
------------------ --------------------------------------
Total 17,686,688 15.4% 8,147,588 9,539,100 9.0%
New England Partners Capital, L.P. (3) DD 52,260 52,260 -
One Boston Place, Ste 2100 OS 26,666 26,666
Boston, MA 02108 CW 333,424 333,424
CA 2,999,909 2,999,909
DS 950,001 950,001
DW 3,333,000 3,333,000
DA 475,095 475,095 -
------------------ --------------------------------------
Total 8,170,355 7.8% 527,355 7,643,000 7.3%
Gruber & McBaine International (4) DD 55,011 55,011 -
50 Osgood Place - PH DS 999,900 999,900
San Francisco, CA 94133 DW 1,999,800 1,999,800
DP 180,000 180,000
ES 1,000,000 1,000,000 -
EW 1,000,000 1,000,000 -
EP 160,752 160,752 -
DA 500,100 500,100 -
------------------ --------------------------------------
Total 5,895,563 5.7% 2,715,863 3,179,700 3.2%
13
Beneficial ownership
before offering Beneficial ownership
(with limitations) Shares after offering
Name of selling stockholder Symbol number % Offered number %
- ---------------------------------------------------------------------------- ------------------------------------------------
J. Patterson McBaine (5) DD 27,506 27,506 -
50 Osgood Place - PH DS 499,950 499,950
San Francisco, CA 94133 DW 999,900 999,900
DP 90,000 90,000
ES 500,000 500,000 -
EW 500,000 500,000 -
EP 80,376 80,376 -
DA 250,050 250,050 -
------------------ --------------------------------------
Total 2,947,782 2.9% 1,357,932 1,589,850 1.6%
Jon D. & Linda W. Gruber (6) DD 27,506 27,506 -
50 Osgood Place - PH DS 499,950 499,950
San Francisco, CA 94133 DW 999,900 999,900
DP 90,000 90,000
ES 500,000 500,000 -
EW 500,000 500,000 -
EP 80,376 80,376 -
DA 250,050 250,050 -
------------------ --------------------------------------
Total 2,947,782 2.9% 1,357,932 1,589,850 1.6%
Stifel Nicolaus Cust A. Ray Cercle
IRA (7) DD 3,301 3,301 -
501 N. Broadway OS 133,131 133,131
St. Louis, MO 63102 CS 131,658 131,658
DS 59,994 59,994
DA 30,006 30,006 -
------------------ --------------------------------------
Total 358,090 0.4% 33,307 324,783 0.3%
H&B Wilson Interests, Ltd. (8) DD 6,418 6,418 -
2001 Kirby Drive, Ste. 712 OS 117,255 117,255
Houston, TX 77019 CS 23,340 23,340
CW 23,340 23,340
CP 23,333 23,333
CA 209,993 209,993
DS 116,655 116,655
DW 233,310 233,310
DP 21,000 21,000
DA 58,345 58,345 -
------------------ --------------------------------------
Total 832,989 0.9% 64,763 768,226 0.8%
14
Beneficial ownership
before offering Beneficial ownership
(with limitations) Shares after offering
Name of selling stockholder Symbol number % Offered number %
- ---------------------------------------------------------------------------- ------------------------------------------------
The Michael S. McCord GST Trust (9) DD 3,301 3,301 -
2001 Kirby Drive, Ste. 701 OW 12,500 12,500
Houston, TX 77019 CW 11,670 11,670
DS 59,994 59,994
DW 119,988 119,988
DA 30,006 30,006 -
------------------ --------------------------------------
Total 237,459 0.2% 33,307 204,152 0.2%
Scorpion Capital Partners (10) DD 5,684 5,684 -
245 Fifth Ave, 25th Floor OS 11,501 11,501
New York, NY 10016 CS 20,423 20,423
CW 20,423 20,423
CP 20,417 20,417
CA 183,744 183,744
DS 103,323 103,323
DW 206,646 206,646
DP 18,600 18,600
DA 51,677 51,677 -
------------------ --------------------------------------
Total 642,438 0.7% 57,361 585,077 0.6%
Stephens Investment Management (11) ES 5,000,000 5,000,000 -
One Sansome Street, Ste. 2900 EW 500,000 5,000,000 -
San Francisco, CA 94104 EP 803,757 803,757 -
------------------ --------------------------------------
Total 6,303,757 10.0% 10,803,757 - nil
Alpha Capital Aktiengesellschaft (12) DW 1,849,800 1,849,800
c/o LH Financial
160 Central Park South, Ste. 2701 ES 1,500,000 1,500,000 -
New York, NY 10019 EW 1,500,000 1,500,000 -
EP 241,127 241,127 -
------------------ --------------------------------------
Total 5,090,927 5.0% 3,241,127 1,849,800 1.9%
GreenLight (Switzerland) SA (13) ES 1,000,000 1,000,000 -
84, av. Louis-Casai EW 1,000,000 1,000,000 -
CH 1216 Cointrin, Geneva, Switzerland EP 160,752 160,752 -
------------------ --------------------------------------
Total 2,160,752 2.2% 2,160,752 - nil
Enable Growth Partners L.P. (14) ES 1,000,000 1,000,000 -
One Ferry Building, Ste. 255 EW 1,000,000 1,000,000 -
San Francisco, CA 94111 EP 160,752 160,752 -
------------------ --------------------------------------
Total 2,160,752 2.2% 2,160,752 - nil
15
Beneficial ownership
before offering Beneficial ownership
(with limitations) Shares after offering
Name of selling stockholder Symbol number % Offered number %
- ---------------------------------------------------------------------------- ------------------------------------------------
Bluegrass Growth Fund, Ltd (15) ES 500,000 500,000 -
122E 42nd Street EW 500,000 500,000 -
New York, NY 10168 EP 80,376 80,376 -
------------------ --------------------------------------
Total 1,080,376 1.1% 1,080,376 - nil
Bluegrass Growth Fund, LP (15) ES 500,000 500,000 -
122E 42nd Street EW 500,000 500,000 -
New York, NY 10168 EP 80,376 80,376 -
------------------ --------------------------------------
Total 1,080,376 1.1% 1,080,376 - nil
General Conference Corporation of
SDA (16) OS 5,522,516 - 5,522,516
12501 Old Columbia Pike OW 740,000 740,000
Silver Spring, MD 20904 CW 333,424 333,424
DW 1,500,000 1,500,000
NW 18,078,192 18,078,192
PW 25,000 25,000
DA 4,520,904 4,520,904 -
DS 9,039,096 9,039,096
NP 1,627,037 - 1,627,037
------------------ --------------------------------------
Total 41,883,468 31.4% 5,018,203 36,865,265 28.7%
DD 497,299 497,299 -
Jonathan J. Pallin Revocable Trust
(17) OS 1,640,200 - 1,640,200
4132 Chevy Chase Drive DA 2,573,848 2,573,848 -
La Canada, CA 91011 DS 5,146,152 - 5,146,152
DW 10,292,304 10,292,304
NW 920,000 920,000
NP 926,307 - 926,307
------------------ --------------------------------------
Total 21,781,934 18.6% 2,856,971 18,924,963 16.6%
DD 283,123 283,123 -
Think Equity (18) PW 1,200,000 1.2% 1,200,000 - nil
28 W. 44th Street
Suite 1200
New York, NY 10036
Linda H. Masterson (19) W 2,017,014 500,000 1,517,014
SO 2,322,840 - 2,322,840
------------------ ---------------- ----------------
4,339,854 4.3% 500,000 3,839,854 1.6%
16
Beneficial ownership
before offering Beneficial ownership
(with limitations) Shares after offering
Name of selling stockholder Symbol number % Offered number %
- ---------------------------------------------------------------------------- ------------------------------------------------
Tom Foley (20) W 392,000 0.3% 250,000 142,000 nil
------------------ ---------------- ----------------
195,618,238 61,859,070 138,259,168
================== ================ ================
1.) Due to his position as the majority holder of the stock of St.
Cloud Investments, Mr. Pierre Caland may, be deemed to be the
beneficial owner of the shares owned directly by SCI. SCI has
the sole power to vote and dispose of the shares. Mr. Caland,
in his capacity as the majority holder of the stock of SCI,
may be deemed to share power to vote or direct the vote and to
dispose or to direct the disposition of the shares and
warrants.
2.) Gruber & McBaine Cap. Mgmt. ("GMCM"), as the general partner
of this stockholder, has the sole voting and investment powers
with respect to the shares of our common stock reported in the
table for this stockholder. Accordingly, GMCM maybe deemed the
beneficial owner of these shares as a result of possessing
these powers. However, GMCM disclaims such beneficial
ownership of these shares. Jon D Gruber & J Patterson McBaine
as managing members, along with Eric B. Swergold of GMCM have
the power to act on its behalf.
3.) NEP Capital LLC ("NEP Capital"), as the general partner of
this stockholder, has the sole voting and investment powers
with respect to the shares of our common stock reported in the
table for this stockholder. Accordingly, NEP Capital may be
deemed the beneficial owner of these shares as a result of
possessing these powers. However, NEP Capital disclaims such
beneficial ownership of these shares. There are six
independent members of NEP Capital. The six independent
members of NEP Capital are: David Dullum, Robert Hanks, John
Rousseau, Edwin Snape, Chris Young, and Todd Fitzpatrick.
Accordingly, no person or "group" (as that term is defined in
Section 13(d) of the Securities Exchange Act of 1934 or
Regulation 13D-G controls NEP Capital.
4.) Gruber & McBaine Cap. Mgmt. ("GMCM"), as attorney in fact of
this stockholder, has the sole voting and investment powers
with respect to the shares of common stock reported in the
table for this stockholder. Accordingly, GMCM may be deemed
the beneficial owner of these shares as a result of possessing
these powers. However, GMCM disclaims such beneficial
ownership of these shares. Jon D Gruber & J Patterson McBaine
as managing members, along with Eric B. Swergold of GMCM have
the power to act on its behalf.
5.) J. Patterson McBaine has sole voting and investment powers
with respect to the shares of our common stock reported in the
table for this stockholder. Accordingly, he may be deemed the
beneficial owner of these shares.
6.) Jon D. and Linda W. Gruber have sole voting and investment
powers with respect to the shares of our common stock reported
in the table for this stockholder. Accordingly, he may be
deemed the beneficial owner of these shares.
7.) Mr. A. Ray Cecrle is the beneficial owner.
17
8.) Herman T. Wilson, Jr. is the general partner of this
stockholder. As such, he has sole voting and investment powers
with respect to the shares of our common stock reported in the
table for this stockholder. Accordingly, he may be deemed a
beneficial owner of these shares as a result of possessing
these powers.
9.) Michael S. McCord is the beneficial owners of the shares in
the Michael S. McCord GST Trust.
10.) Each of Nuno Brandolini and Kevin McCarthy are directors of
this stockholder As such, they have shared voting and
investment powers with respect to the shares of our common
stock reported in the table for this stockholder. Accordingly,
they may be deemed the beneficial owners of these shares as a
result of possessing these powers. However, each disclaims
being the sole beneficial owner of these shares.
11.) Stephens Investment Mgmt. ("SIM"), as the general partner of
this stockholder, has the sole voting and investment powers
with respect to the shares of our common stock reported in the
table for this stockholder. Accordingly, SIM may be deemed the
beneficial owner of these shares as a result of possessing
these powers. However, However, SIM disclaims such beneficial
ownership of these shares. P. Bart Stephens & W. Bradford
Stephens as managing members have the power to act on its
behalf.
12.) Mr. Konrad Ackerman and Mr. Rainer Posch are beneficial
owners.
13.) Mel Craw and Maxi Brezzi, in their capacity as managers of
GreenLight (Switzerland) SA, the investment advisor to
Crescent International Ltd., have voting control and
investment discretion over the shares owned by Crescent
International Ltd. Messrs. Craw and Brezzi disclaim beneficial
ownership of such shares.
14.) Enable Capital Management ("ECM"), as the general partner of
this stockholder, has the sole voting and investment powers
with respect to the shares of our common stock reported in the
table for this stockholder. Accordingly, ECM may be deemed the
beneficial owner of these shares as a result of possessing
these powers. However, ECM disclaims such beneficial ownership
of these shares. Mitchell Levine as managing member, along
with Brendan O'Neil and Adam Epstein as principals of ECM have
the power to act on its behalf.
15.) Brian Shatz has voting control and investment decision over
securities held by Bluegrass Growth Fund LP and Bluegrass
Growth Fund LTD. Mr. Shatz disclaims beneficial ownership of
the shares held by Bluegrass Growth Fund LP and Bluegrass
Growth Fund LTD.
16.) GCC is the beneficial owner of 41,264,292 shares of Common
Stock, which represents beneficial ownership of 42.88% of that
class of securities based on 96,231,196 shares of LifePoint
Common Stock issued and outstanding as of November 10, 2004,
as indicated in LifePoint's Quarterly Report on Form 10-Q
filed with the SEC on November 15, 2004. The 41,264,292 shares
of Common Stock beneficially held consist of (i) 5,522,516
shares of Common Stock; (ii) 15,065,160 shares of Common Stock
issuable upon conversion of currently convertible shares of
Series D Convertible Preferred Stock; (iii) 20,626,616 shares
of Common Stock underlying currently exercisable Warrants; and
(iv) 50,000 shares of Common Stock underlying currently
exercisable Warrants held by Gencon Insurance Company of
Vermont, a wholly owned subsidiary of GCC. GCC has the sole
power to vote or to direct the vote and to dispose or to
direct the disposition of 41,214,292 shares of Common Stock,
and has shared power to vote or to direct the vote and to
dispose or to direct the disposition of 50,000 shares of
Common Stock. (Data from General Conference Corporation of
Seventh-day Adventists Schedule 13-D Filing dated December 29,
2004).
17.) Jonathan J. Pallin is the trustee of the Jonathan J. Pallin
Revocable Trust As such, he has sole voting and investment
powers with respect to the shares of our common stock reported
in the table for this stockholder. Accordingly, he may be
deemed a beneficial owner of these shares as a result of
possessing such powers.
18
18.) ThinkEquity Partners LLC is a Delaware limited liability
company. ThinkEquity Partners LLC is the selling stockholder.
As such, all voting and investment powers with respect to the
shares of our common stock reported in the table, would be
made by the Executive Committee of ThinkEquity Partners LLC.
Accordingly, ThinkEquity Partners LLC is deemed the beneficial
owner of these shares as a result of possessing such powers.
19.) Linda H. Masterson has sole voting and investment powers with
respect to the shares of our common stock reported in the
table for this stockholder. Accordingly, she may be deemed the
beneficial owner of these shares.
20.) Tom Foley has sole voting and investment powers with respect
to the shares of our common stock reported in the table for
this stockholder. Accordingly, he may be deemed the beneficial
owner of these shares.
PLAN OF DISTRIBUTION
The selling stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock pursuant to this prospectus on any stock exchange, market or
trading facility on which the shares are traded or in private transactions.
These sales may be at fixed or negotiated prices. The selling stockholders may
use any one or more of the following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell
the shares as an agent but may position and resell a portion
of the block as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the selling stockholders to sell
a specified number of such shares at a stipulated price per
share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law
The selling stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, if available, rather than under this prospectus.
Broker-dealers engaged by the selling stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. Each of the selling stockholders does not expect these commissions
and discounts from such selling stockholder to exceed what is customary in the
types of transactions involved.
The selling stockholders may from time to time pledge or grant a
security interest in some or all of the shares of common stock or warrants owned
by them and, if they default in the performance of their secured obligations,
the pledgees or secured parties may offer and sell the shares of common stock
from time to time under this prospectus, or under an amendment to this
prospectus under Rule 424(b)(3) or other applicable provision of the Securities
Act of 1933 amending the list of selling stockholders to include the pledgee,
transferee or other successors in interest as selling stockholders under this
prospectus.
The selling stockholders also may transfer the shares of common stock
in other circumstances, in which case the transferees, 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
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933 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 shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act of 1933. Each of the selling
stockholders has informed us that they do not have any agreement or
understanding, directly or indirectly, with any person to distribute the common
stock.
We are required to pay all fees and expenses incident to the
registration of the shares. We have agreed to indemnify the selling stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act of 1933. .
20
LEGAL MATTERS
The legality of our common stock offered by this prospectus will be
passed upon by Latham & Watkins LLP, San Diego, California.
EXPERTS
Singer Lewak Greenbaum & Goldstein LLP have audited our financial
statements included in our Annual Report on Form 10-K for the year ended March
31, 2004, as set forth in their report which is incorporated by reference in
this prospectus and elsewhere in the registration statement. Our financial
statements are incorporated by reference in reliance on Singer Lewak Greenbaum &
Goldstein LLP's report, given on their authority as experts in accounting and
auditing. Ernst & Young, LLP, our predecessor independent auditors, have audited
our financial statements included in our Annual Report on Form 10-K/A, Amendment
#2, for the year ended March 31, 2003, as set forth in their report (which
contains an explanatory paragraph describing conditions that raise substantial
doubt about our ability to continue as a going concern as described therein in
Note 1 to the financial statements), which is incorporated by reference in this
prospectus and elsewhere in the registration statement. Our financial statements
are incorporated by reference in reliance on Ernst & Young LLP's report, given
on their authority as experts in accounting and auditing.
WHERE TO FIND ADDITIONAL INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy materials we have filed
with the SEC 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 operation of our Public Reference Room. Our SEC filings also
are available to the public on the SEC's Internet site at www.sec.gov. In
addition, you may obtain a copy of our SEC filings at no cost by writing or
telephoning our Chief Financial Officer at:
LifePoint, Inc.
1205 South Dupont Street
Ontario, California 91761
(909) 418-3000
The SEC allows us to "incorporate by reference" in this prospectus
information we file with the SEC, which means that we may disclose important
information in this prospectus by referring you to the document that contains
the information. The information incorporated by reference is considered to be a
part of this prospectus, and later information filed with the SEC will update
and supersede this information. We incorporate by reference the documents listed
below and any future filings we make with the SEC under Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, until the offering of
securities covered by this prospectus is completed:
o Our Annual Report on Form 10-K for the fiscal year ended March
31, 2004;
o Our Quarterly Reports on Form 10-Q for the quarters ended June
30 and September 30, 2004; and
o Our Current Reports on Form 8-K filed on June 30, 2004,
November 22, 2004, November 30, 2004 and December 1, 2004.
All documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date this Registration Statement is filed
with the SEC and prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold shall be deemed to be incorporated by reference
in this Registration Statement and to be a part of it from the respective dates
of filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
21
We have filed with the SEC a Registration Statement on Form S-3 under
the Securities Act of 1933 relating to the securities that may be offered by
this prospectus. This prospectus is a part of that Registration Statement, but
does not contain all of the information in the Registration Statement. For more
detail concerning us and any securities offered by this prospectus, you may
examine the Registration Statement and the exhibits filed with it at the offices
of the SEC.
You should rely only on the information provided or incorporated by
reference in this prospectus or in the applicable supplement to this prospectus.
You should not assume that the information in this prospectus and the applicable
supplement is accurate as of any date other than the date on the front cover of
the document.
22
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NO DEALER, SALESPERSON OR OTHER
PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR
REPRESENTATIONS IN CONNECTION LIFEPOINT, INC.
WITH THIS OFFERING OTHER THAN
THOSE CONTAINED IN THIS
PROSPECTUS. IF ANY SUCH
INFORMATION OR REPRESENTATIONS
IS GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY US.
THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY
THE SECURITIES OFFERED HEREBY TO 61,859,070
ANY PERSON IN ANY STATE OR OTHER SHARES
JURISDICTION IN WHICH SUCH OFFER OF COMMON STOCK
OR SOLICITATION WOULD BE ($.001 PAR VALUE)
UNLAWFUL. NEITHER THE DELIVERY OFFERED BY
OF THIS PROSPECTUS NOR ANY SALE SELLING STOCKHOLDERS
MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
____________
____________
PROSPECTUS
____________
JANUARY 31, 2005
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