SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
WASATCH PHARMACEUTICAL, INC.
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(Exact name of registrant as specified in its charter)
UTAH 84-0854009
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Dave Giles
310 East 4500 South, Suite 450 310 East 4500 South, Suite 450
Murray, Utah 84107 Murray, Utah 84107
(801) 263-3949 (801) 263-3949
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(Address and telephone number of (Name, address and telephone
Registrant's Principal Executive Offices) number of agent for service)
STOCK PURCHASE OPTION FOR K. JOHN GUSTAT
STOCK PURCHASE OPTION FOR BRYAN KOS
(Full Title of the Plan)
Copies of all communications to:
Marcus A. Sanders, Esq.
Law Offices of
782 20th Street
Oakland CA 94612
(510) 834-1023
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered(1) Share (2) Price Fee
- ----------- ---------- ---------- ---------- ------------
Common Stock,
$0.001 par
value 5,700,000 $ 0.36 $ 2,097,600 $513.00
(1) INCLUDES AN INDETERMINATE NUMBER OF ADDITIONAL SHARES THAT MAY BE ISSUED
PURSUANT TO THE ABOVE NON-QUALIFIED STOCK OPTION PLAN AS A RESULT OF ANY FUTURE
STOCK SPLIT, STOCK DIVIDEND OR SIMILAR ADJUSTMENT.
(2) ESTIMATED PURSUANT TO RULE 457(c) SOLELY FOR PURPOSE OF CALCULATING THE
AMOUNT OF THE REGISTRATION FEE, BASED UPON THE AVERAGE OF THE BID AND ASK PRICES
REPORTED ON DECEMBER 29, 2000, AS REPORTED ON THE OTC BULLETIN BOARD.
The following reoffer prospectus is included herein pursuant to General
Instruction C to Form S-8 to be used in connection with the resale of the
securities registered pursuant to this Registration Statement.
5,700,000 SHARES
WASATCH PHARMACEUTICAL, INC.
COMMON STOCK
The selling stockholders identified in this prospectus are offering
these shares of common stock. The selling stockholders are consultants of
WASATCH PHARMACEUTICAL, INC. (Hereinafter, "Wasatch") and Wasatch's Board of
Directors issued the shares to the selling stockholders in connection with
employee compensation arrangements. None of the selling stockholders are
affiliates of the Company. An affiliate is, in summary, any director, executive
officer or controlling shareholder of the Company.
The selling stockholders may offer their shares of common stock through
public or private transactions, in the over-the-counter markets, on any
exchanges on which Wasatch's common stock is traded at the time of sale, at
prevailing market prices or at privately negotiated prices. The shares may be
sold directly or through agents or broker-dealers acting as principal or agent,
or in block trades or through one or more underwriters on a firm commitment or
best efforts basis. The selling stockholders may engage underwriters, brokers,
dealers or agents, who may receive commissions or discounts from the selling
stockholders. Wasatch will pay substantially all of the expenses incident to the
registration of the shares, except for sales commissions and other seller's
compensation applicable to sales of the shares.
The selling stockholders and any underwriters, agents or broker-dealers
that participate with the selling stockholders in the distribution of the common
stock may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, and any commissions received by them and any profit on the resale
of the common stock may be deemed to be underwriting commissions or discount
under the Securities Act.
Wasatch's common stock is traded on the on the NNOTC Bulletin Board
currently under the symbol "WSPH." The company was originally organized under
the laws of the State of Utah, as Ceron Oil Company, on March 25, 1980. On
February 6, 1981, pursuant to a merger transaction, the Company became successor
to Folio One Productions, Ltd. ("Folio"), a publicly held, Delaware Corporation,
that changed its name to Ceron Resources Corporation. Until the acquisition of
Medisys Research Group, Inc. ("Medisys") on December 29, 1995, the Company was
only involved in the oil and gas industry. In 1985, the Company plugged and
abandoned its oil and gas wells, due to the depletion of reserves and the
economic conditions in the industry. Since that time, the Company's income from
the oil and gas industry has been limited to sublease income of its office
spaces and de minimis film royalties.
On December 29, 1995, the Company acquired all of the issued and
outstanding shares of Medisys Research Group, Inc., ("Medisys") a Utah
corporation, by issuing shares of its Common Stock. On January 16, 1996, the
Company merged into Wasatch Pharmaceutical, Inc., a Utah corporation. The merger
changed the Company's domicile from Delaware to Utah, changed the name to
Wasatch Pharmaceutical and changed the Common Stock par value to $0.001.
On November 26, 1996, the Company's oil and gas division commenced when
the Company exchanged 2,000,000 shares of its Common Stock for an interest 25%
interest in the net profits derived from 50 oil and gas wells located in West
Virginia. The manager/operator planned to enhance the wells' limited production
by utilizing improved technology and re-completion methods to rework wells.
After one year, well production failed to improve. The Company entered into an
agreement, on February 8, 1998, to exchange its title in the West Virginia wells
for the co-owner to return 1,800,000 shares of the Company's Common Stock and a
release from all obligations. The Company is not currently and has no intention
of becoming involved in the oil and gas industry.
The principal executive offices are located at 310 East 4500 South,
Suite 450, Murray, UT. 84107,(801)263-3949.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 7 FOR A DISCUSSION OF THESE RISKS.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------------
The date of this prospectus is January 2, 2001.
TABLE OF CONTENTS
Page
About this Prospectus............................ 1
Forward-Looking Statements....................... 1
Wasatch.......................................... 2
Risk Factors..................................... 7
Use of Proceeds.................................. 12
Selling Stockholders............................. 12
Plan of Distribution............................. 14
Legal Matters.................................... 16
Experts.......................................... 16
Where You Can Find More Information.............. 16
Incorporation of Certain Documents By Reference.. 16
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OF
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE UNDER THIS PROSPECTUS
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN OUR AFFAIRS SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED IN
THIS PROSPECTUS IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
ABOUT THIS PROSPECTUS
Unless the context otherwise requires, the terms "we," "our," "us,"
"the company" and "Wasatch" refer to Wasatch Pharmaceutical, Inc., a Utah
corporation.
The registration statement that contains this prospectus, including the
exhibits to the registration statement, contains additional information about
the company and the securities offered under this prospectus. That registration
statement can be read at the Securities and Exchange Commission's website or at
the SEC's offices mentioned under the heading "Where You Can Find More
Information."
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. We may also make
forward-looking statements in reports filed with the SEC that we incorporate by
reference into this prospectus as well as in any accompanying prospectus.
Statements that are not historical facts, including statements about our beliefs
and expectations, are forward-looking statements. Forward-looking statements
include statements preceded by, followed by or that include the words
"believes," "expects," "anticipates," "plans," estimates" or similar
expressions. These statements are based on beliefs and assumptions of our
management and on information currently available to our management.
Forward-looking statements are not guarantees of performance. They
involve risks, uncertainties and assumptions. We caution you that a number of
important factors could cause actual results to differ materially from those
contained in any forward-looking statement. Many of these factors are beyond our
ability to control or predict. Such factors include, but are not limited to, the
following:
- the level of expected net losses in our business;
- fluctuations in our quarterly operating results;
- the level of acceptance of our pricing model;
- our ability to set pricing at appropriate levels;
- customer responses to our products and services;
- our ability to develop call solutions for our customers or enter into
strategic relationships;
- the continued development of Call Centers;
- potential security breaches or breakdowns of the system;
- our inability to manage our growth;
- our ability to attract and retain qualified personnel;
- potential misappropriations of our technology;
- our ability to identify and successfully complete and integrate
acquisitions;
- rapid technological changes in our industry;
- adverse changes in governmental regulations;
- high levels of competition in our markets;
- our ability to obtain additional financing as needed; and
- adverse changes in the telecommunications industry or the U.S.
economy generally.
We believe these forward-looking statements are reasonable; however,
you should not unduly rely on any forward-looking statements, which are based on
current expectations. Further, forward-looking statements speak only as of the
date they are made, and we undertake no obligation to update publicly any of
them in light of new information or future events.
WASATCH PHARMACEUTICAL, INC.
The Company's predecessor was originally incorporated under the laws of
the State of Utah as Ceron Oil Company on March 25, 1980. On February 6, 1981,
Ceron Oil merged with Folio One Productions, Ltd. ("Folio"), an inactive,
publicly held, Delaware Corporation. At the time of the merger, the Company
changed its name to Ceron Resources Corporation.
From Ceron's inception, until its acquisition of Medisys on December
29, 1995, the company's operations were attributable to the oil and gas
industry. In December 1985, the Ceron plugged and abandoned its two oil and gas
wells because of depleted reserves and the overall economic conditions of the
industry. In the period from 1985 to 1995, Ceron's business activities,
including the acquisition, development and promotion of oil and gas properties,
were conducted on a limited basis. The Company focused primarily on maintaining
its assets. The Company derived its primary assets from subleases of its office
spaces and de minimis film royalties.
On December 29, 1995, Ceron acquired all of the issued and outstanding
shares of Medisys, a Utah corporation, issuing shares of its Common Stock. On
January 16, 1996, Ceron completed a business reorganization with Wasatch
Pharmaceutical, Inc., a Utah corporation. The purpose of the reorganization was
to change the corporate domicile from Delaware to Utah, change the name to
Wasatch Pharmaceutical, Inc., and change the par value of its Common Stock to
$0.001.
The Company is organized under the laws of the State of Utah and
commenced its current skin care developmental phase in 1994. Since 1994, the
Company skin care operations consisted of two wholly owned subsidiaries: Medisys
Research Group, Inc. ("Medisys") and American Institute of Skin Care, Inc.
("AISC"). The Company's revenues derive from the operation of AISC clinics in
Midvale and Provo, Utah.
Medisys is a research and development company in the field of
dermatology. Medisys began its research in 1989, as continuation of the research
started, by Gary V. Heesch (currently CEO of the Company), in the early 1980's,
at a predecessor company, Dermacare Pharmaceutical, Inc. ("Dermacare"). Most of
Medisys' research was devoted to developing the "Skin Fresh Methodology"
(Hereinafter, ""Skin Fresh") for the treatment of acne, eczema, psoriasis,
contact dermatitis, seborrhea, and other less serious skin disorders. The "Skin
Fresh" treatment program avoids the use of prescription drugs taken internally,
and includes a regimen and the topical application of FDA approved antibiotics.
In 1989, Dermacare discontinued its operations and assigned its the rights to
"Skin Fresh" to Medisys in exchange for a 5% royalty paid to Dermacare's former
shareholders.
Through clinical studies and test marketing in doctors' offices,
Medisys' management observed that for the most successful results occurred in
uniform and consistent clinical surrounding, as opposed to sales of prescription
drug kits at pharmacies. Medisys' management also discovered that for a patient
to achieve total or near total clearing of the acne or eczema condition, the
treatments should be continuously supervised. For this reason, the Company
incorporated a wholly owned subsidiary, the American Institute of Skin Care,
Inc. ("AISC") to operate clinics and to provide the best treatment option for
its patients.
DERMATOLOGY OPERATIONS
Medysis Research Group, Inc.
Medisys was incorporated in September 1989. Medisys is a research and
development company in the field of dermatology. Gary V. Heesch (the founder and
current CEO of the Company) initiated the research while at Dermacare
Pharmaceutical, Inc. (Hereinafter, "Dermacare"). Dermacare began its research,
in the early 1980's. In 1989, Dermacare discontinued its operations, and
assigned all of its rights to the technology developed by its research to
Medisys, in exchange for a royalty equal to five percent (5%) of future product
sales. These royalties are paid to Dermacare's former shareholders.
The Company devoted a substantial portion of its research to developing
the "Skin Fresh" methodology for the treatment of acne, eczema, psoriasis,
contact dermatitis, seborrhea, and other less serious skin disorders. The
treatment allows the patient to avoid using prescription drugs that are taken
internally. The "Skin Fresh" treatment includes a cleaning regimen, and the
topical application of FDA approved antibiotics. The Company commenced clinical
studies in 1983 and has continuing favorable results until the present, using
the "Skin Fresh" treatment.
Medisys developed an additional family of products, including
cleansers, astringents, and lotions that are sold, as part of the "Skin Fresh"
treatment regimen. The products are manufactured in an FDA approved, independent
laboratory in California. In addition, Medisys may offer skin care products such
as soaps and cosmetics.
Medisys' research and development on other products has been limited
because of the Company's limited financial resources. As funds become available,
Medisys intends to conduct additional research in the field of dermatology and
other related medical fields. Medisys will, where possible, market its
technology and products through the AISC clinics, and other channels. Although
the Company may choose to market its technology through licensing agreements,
Medisys is not currently pursuing licensing arrangements.
American Institute of Skin Care
Through clinical studies and test marketing in doctors' offices,
Medisys' management observed that for the most successful results occurred in
uniform and consistent clinical surrounding, as opposed to sales of prescription
drug kits at pharmacies. Medisys' management also discovered that for a patient
to achieve total or near total clearing of the acne or eczema condition, the
treatments should be continuously supervised. For this reason, the Company
incorporated a wholly owned subsidiary, the American Institute of Skin Care,
Inc. ("AISC") to operate clinics and to provide the best treatment option for
its patients.
AISC operates the clinics and sell products related to this technology.
AISC has used the technology in the prototype clinics for the past five years.
AISC and Medisys' Management believes that the "Skin Fresh" technology is
effective in its present form, and does not need significant additional
development.
AISC opened three prototype clinics to treat patients, to train a staff
of medical and support personnel, and to develop administrative procedures. In
February 1994, the Company opened its first clinic in Salt Lake City, Utah. In
November 1994, the Company opened its second clinic in Provo, Utah. A third
clinic was opened in Idaho but closed in the same year it opened, 1994. While
operating the prototype clinics, each clinic used various advertising mediums to
test the effectiveness of the different advertising mediums. A national
advertising company supervised these tests and used the results to develop a
comprehensive advertising and public relations plan for the Company.
AISC currently operates the two Utah clinics. As capital becomes
available for the expansion, AISC plans to open and operate up to 300 clinics
using the "Skin Fresh " methodology. AISC is also developing the means to market
its products and treat patients over the "Internet" in a "virtual clinic"
environ. The Company intends to establish its clinics in urban centers, under
the supervision of a licensed physician.
AISC treats acne, eczema, psoriasis, contact dermatitis, seborrhea, and
other less serious skin disorders using topical lotions and externally applied
antibiotics. As opposed to most traditional treatments, the "Skin Fresh"
treatment does not rely on expensive, harsh prescription drugs taken internally.
In the clinics, medical assistants do most of the treatment follow-up.
Physicians are used for the initial exam and when medically necessary. A
patient's medical costs for the AISC "Skin Fresh" treatment are significantly
lower than the costs for traditional M.D. dermatological treatments programs.
Most patients' skin problems are effectively cleared in two to three months of
treatment. The combination of our success rate, experience in the clinics, and
the cost savings over traditional treatment programs should give the "Skin
Fresh" treatment and products an advantage in the medical marketplace.
Patients suffering from acne, eczema, psoriasis, contact dermatitis,
seborrhea, and the other skin disorders "Skin Fresh" effectively treats, account
for over 70% of the patients that seek medical treatment from dermatologists in
the United States. Additionally, Management believes that a potentially larger
market exists, with the Company's recent development of a skin rejuvenation
treatment. The skin rejuvenation treatment can, also, be administered through
the skin care clinics and Internet service centers.
A key element to successful Internet and clinic operations requires an
aggressive advertising campaign targeting physician referral programs, and
working closely with HMO's and health insurance companies to make the clinics
contract providers. Internet marketing allows the Company to target its intended
demographics.
MARKET POSITION AND COMPETITION
The global markets for the treatment of skin diseases are large and
reoccurring, most experts believe the off shore world market is equal to two
times the United States market.
Although acne appears to concentrate itself in the teenage population,
it can and has afflicted many for a lifetime. As one age group grows out of the
acne phase, another group replaces them. The National Center of the Treatment of
Disease estimated that 60% of the teenagers in the US are affected to some
degree by acne. As a part of the total population base, that group percentage is
only 10%, but when translated into treatable patients, it amounts to
approximately thirty million people with only 10% seeking professional medical
attention according to The Department of Health, Education, and Welfare.
Eczema affects a smaller portion of the total population: about 4%.
Further, it is estimated that approximately 85% of that number will seek the
treatment of a physician (AMA statistics show that 12,000,000 people have the
disease and approximately 10,400,000 will seek medical treatment.) The chronic
stages of eczema can begin shortly after birth and last a lifetime. The disease
can exhibit many non-specifics in its diagnosis. The medical profession has
adopted the term atopic dermatitis to describe this broad range of skin
conditions including eczema, psoriasis, contact dermatitis, and moll scum.
For psoriasis, the Wasatch methodology offers a therapy, which
eradicates the symptoms in approximately 70% of patients, treated. The potential
patient population in the United States is over five million.
The potential population in the United States affected by these skin conditions:
ACNE 27,000,000
ATOPIC DERMATITUS 17,250,000
PSORIASIS 5,500,000
The products that Wasatch is presently marketing target these three
disease categories for physician-assisted service. Although the original Wasatch
research was for acne only, it was not too long into the clinical trials that
the benefits for eczema and other skin problems were observed. With the
introduction of AISC medical clinics, additional skin disorders such psoriasis;
folliculitis, molluscum, cold sores, chronic athlete's foot, and contact
dermatitis were found to respond to the treatment. Outstanding results have been
achieved with the large-scale treatment of these skin conditions.
Currently, the "Skin Fresh" technology is only available at the
Company's clinics, because the treatment requires a physician's diagnosis of the
skin disorder and a prescription for a topical antibiotic that is part of the
treatment regimen. In the clinics, the patients learn the treatment regimen and
are monitored in frequent follow up visits to insure strict compliance. The
Company believes that a higher success rate occurs when the patient follows the
treatment regimen closely.
The Clinic's primary competitors are primary care physicians, who treat
common skin disorders, and licensed dermatologists. Dermatologists have existing
practices and receive referrals from various primary care physicians. Since the
Company's technology represents an alternative treatment, the medical community
and the public at large must be educated about the benefits of the "Skin Fresh"
technology. Until the Company's technology becomes accepted and the benefits of
the safer and more cost effective method of treating skin disorders becomes more
widely understood, the Company must compete with the professional reputations of
dermatologists and physicians and the larger financial resources of the medical
community.
The Company is developing an Internet marketing program and a strategy
to introduce over-the-counter products through retail outlets. Competition will
come from large pharmaceutical companies, with large and sophisticated
distribution channels, and fully developed marketing strategies.
The Company management believes the key to its success is to introduce
the "Skin Fresh" Technology into the market place with an aggressive advertising
campaign that targets a physician referral program, working closely with HMO's
and insurance companies to become a contract provider and through emphasizing
the appropriate Internet demographic.
STRATEGY
The Wasatch goal is to build a leading worldwide specialty
pharmaceutical company in the skin care and preservation business. We intend to
achieve this goal by:
a. Implementing the management belief that the most successful treatment
regimen for the aforementioned skin disorders is through uniform and
consistent clinical type supervision as opposed to the sale of self-
administered prescription or over the counter drugs from a pharmacy.
b. Expanding the clinic network based upon the development experience of
the two prototype clinics and the Company's ability to attract and
motivate experienced management personnel. AISC intends to have 11 to
14 clinics operating in the next two years, using the "Skin Fresh
Methodology" and through the "Internet." The clinics will be patterned
after the prototype clinics, and opened in large metropolitan areas
under the supervision of a licensed physician.
c. Developing an Internet business in the following five phase program -
Phase I - Business to Consumer: Patients will be able to
research Wasatch's products, obtain information about skin
diseases, and learn about treatment on the web site. The web
site is currently available.
Phase II - Provider Directory: Patients will be able to enter
their location and will be provided with a list of
Dermatologist and other skin care specialist in their area.
Phase III - Business to Business: The Wasatch Internet program
will provide research and information to physicians,
hospitals, HMOs and insurance companies. An automated system
will be included to aid in the processing and sharing of
information with HMOs and insurance companies.
Phase IV - OTC Products: Currently in the final stages of the
FDA approval process, several new Wasatch products will be
available without a prescription. Consumers and patients will
be able purchase products on-line as well as receive training
and instruction on how to use the products,
Phase V - Wasatch's web site will become a means to deliver
research information, educational programs and products to the
global marketplace.
RECENT CHANGE IN CAPITAL STRUCTURE
On June 22, 2000, the Company held a Special Meeting of the Board of
Director ("Special Director's Meeting"). At the Special Director's Meeting, the
Directors, pursuant to the Utah Corporation's Code, approved a reverse split of
each of the issued and outstanding of Common Stock of this Corporation into one
half share (1/2) share of Common Stock. In conjunction with the reverse split,
the total number of common shares that the Company is authorized to issue shall
be 100,000,000 common shares after giving effect to the reverse stock split. The
total number of shares of preferred stock that the Corporation is authorized to
issue is 1,000,000 shares.
As of the date of this Prospectus there are 23,675,517 shares of Common
Stock issued and outstanding. There are a total of 49,258 shares of preferred
stock issued and outstanding.
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE
OF RISK. IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS OFFERING
MEMORANDUM, PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK
FACTORS, AS WELL AS THOSE DISCUSSED ELSEWHERE IN THIS PROSPECTUS.
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS
AND UNCERTAINTIES. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED
IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING
THOSE SET FORTH BELOW, AND ELSEWHERE IN THIS PROSPECTUS.
HISTORY OF OPERATING LOSSES; ANTICIPATED FUTURE LOSSES
To date, we have engaged primarily in research, development and
clinical testing. The Company has recorded net losses in every year since its
inception. The accumulated deficit as of September 30, 2000 was approximately
$6,628,596 at which time the Company anticipated its cash and cash equivalents
were sufficient to fund operating expenses for the next nine months. The Company
anticipates continued losses from operations due to expenditures required to
support its growth. There can be no assurance that the Company will be able to
achieve profitability, or that, if achieved, profitability will be sustained.
The Company expects to incur significant increases in operating
expenses in the foreseeable future. The Company intends to substantially
increase its operating expenses for the foreseeable future as the Company:
increases its sales and marketing activities, including expanding its direct and
channel sales and telesales forces; increase its research and development
activities; and expand its general and administrative support activities.
Accordingly, the Company will be required to significantly increase its
revenues in order to maintain profitability. These expenses will be incurred
before the Company generates any revenues by this increased spending. If the
Company does not significantly increase revenues from these efforts, its
business and operating results would be negatively impacted.
UNCERTAINTY OF MARKET ACCEPTANCE "SKIN FRESH" THERAPY
The Company believes that its profitability and growth will depend upon
broad acceptance of the "Skin Fresh" medical treatment in the markets targeted
by the Company. There can be no assurance that patients or physicians will
accept the "Skin Fresh" medical treatment as an alternative to existing methods
of treating acne, eczema, contact dermatitis and other common skin disorders. To
date, "Skin Fresh" has not achieved sufficient market acceptance for the Company
to sustain profitable operations, and there can be no assurance that the "Skin
Fresh" treatment will obtain sufficient market acceptance to achieve profitable
operations. The acceptance of "Skin Fresh" may be affected adversely by its
cost, concerns relating to its efficacy, the effectiveness of alternative
methods of treating skin disorders, the possibility of unknown side effects and
the current lack of third-party reimbursement for the procedure. Market
acceptance could also be affected by the ability of the Company and other
participants in the market to build more clinics, to train the clinical staff,
other physicians who treat common skin disorders and licensed dermatologists in
the procedure. Promotional efforts by suppliers of competitive products or
procedures that are alternatives, may also adversely affect market acceptance.
There would be a material adverse effect on the Company's business, financial
condition and results of operations, if "Skin Fresh" fails to gain broad market
acceptance.
DEPENDENCE ON STRATEGIC ALLIANCES
The Company's future performance depends in part on the success of its
marketing strategy. Failure to develop strategic relationships could harm the
Company's business. The Company's current or potential collaborative
relationships with medical treatment groups (HMO's or PPO's) and insurance
companies may not prove to be beneficial in the future, and they may not be
sustained. The Company also may not be able to enter into successful new
strategic relationships in the future, which could have a material adverse
effect on the Company's business, operating results and financial condition. The
Company could lose sales opportunities if it fails to work effectively with
these parties. Moreover, management expects that maintaining and enhancing these
and other relationships will become a more meaningful part of the Company's
business strategy in the future. However, many of the Company's current partners
are either actual or potential competitors. In addition, the Company may not be
able to maintain these existing relationships, due to the fact that these
relationships are informal or, if written, are terminable with little or no
notice.
HIGHLY COMPETITIVE INDUSTRY
The ""Skin Fresh"" technology is used to treat acne, eczema, contact
dermatitis and other common skin disorders. Approximately 10% of those that
suffer from acne seek medical treatment, while the majority use over-the-counter
medications or simply live with the problem. With other common skin disorders, a
much higher percentage seek medical attention, usually from a dermatologist. At
the present time, the ""Skin Fresh"" technology is available only through the
Company's two prototype clinics because it requires a doctor to diagnose the
skin disorder and to prescribe a topical antibiotic that is part of the
treatment regimen. In the clinics, the patients learn the treatment regimen and
are monitored in frequent follow up visits to insure strict compliance. The
Company believes that a high success rate results when the patient follows the
treatment regimen very closely.
Substantially expanding the Company's penetration of the skin treatment
market places is a formidable task considering the number of competitors in that
space. The Company is competing against vendors who have significantly larger,
well-developed distribution channels and significantly greater resources for
sales development.
The clinic operation's primary competitors are primary care physicians
who treat common skin disorders and licensed dermatologists who have existing
practices and receive referrals from various primary care physicians. Since the
Company's technology represents an alternative treatment, the medical community
and the public at large must be educated about the benefits of the "Skin Fresh"
technology. Until this technology becomes more medically accepted and the
benefits of providing a safer and more cost effective method of treating these
skin disorders become more widely understood, the Company must compete with the
reputations, technical expertise and large financial resources of the medical
community. The procedures offered by the Company's Clinic operation also compete
with other present forms of treatment. The Company expects that companies that
may develop new products to directly compete with the Company.
RISK OF OBSOLESCENCE
The market in which the Company sells pharmaceuticals is highly
competitive and subject to rapid technological change. Competitors include major
pharmaceutical companies, many of which have considerably greater financial,
technical, clinical, marketing and other resources and experience than the
Company. The markets in which the Company competes and intends to compete are
undergoing, and are expected to continue to undergo, significant technological
change, and the Company expects competition to intensify as technological
advances in such fields are made. There can be no assurance that developments by
others will not render the products or technologies of the Company obsolete or
uncompetitive.
GOVERNMENT REGULATIONS
Because a physician is involved, the clinic operations are subject to
local, state and federal laws concerning medical practices. The FDA regulates
the Company's prescription drugs and all of the prescription drugs currently
used in the existing treatment program are FDA approved. The Company has made
application to the FDA for approval of five over-the-counter products. The
Company anticipates that these products would be sold through retail outlets and
through the Internet marketing program. However, there is no assurance the
products will be approved and if they are approved they may not be completed
until 2001. Product approvals by the United States Food and Drug Administration
(the "FDA") and comparable foreign regulatory authorities may be withdrawn if
compliance with regulatory standards is not maintained or if problems relating
to the products are experienced after initial approval.
The Company's pharmaceutical operation is subject to extensive
regulation by governmental authorities in the United States and other countries,
which regulate the testing, approval, manufacture, labeling, marketing and sale
of pharmaceutical products. The Company will need to spend a substantial amount
of money to comply on an ongoing basis with the regulations of the extensive
government, FDA and other government agencies. The costs of complying with
governmental regulations and any restrictions that government agencies might
impose could have a significant impact on our business. As the Company increases
production and manufacturing of prescription topical antibiotic and possibly the
over the counter prescription, these costs may increase.
UNCERTAINITY OF THE HEATH CARE INDUSTRY
The health care industry is subject to changing political, economic and
regulatory influences that may affect the procurement practices and operation of
health care organizations. Changes in current health care financing and
reimbursement systems could result in the need for unplanned product
enhancements, in delays or cancellations of orders or revocation of endorsement
of the Company's products by hospital associations or other customers. Any such
occurrence could have a material adverse effect on the Company's business,
financial condition and results of operations.
In the United States and elsewhere, demand for health care treatments
and pharmaceuticals depends on the consumers' ability to be reimbursed for the
cost of the treatments and pharmaceuticals by third-party payors, such as
government agencies, health maintenance organizations and private insurers.
Medicaid and other third-party payors are increasingly challenging the prices
charged for medical services. They are also attempting to contain costs by
limiting their coverage of, and the amount they will reimburse for health care
products and treatment. We cannot be certain that insurers will provide coverage
for our products and treatments in the future. Without adequate coverage and
reimbursement, consumer demand for our products and treatment may be minimized
and the Company's sales would be lower than projected.
LACK OF LONG-TERM FOLLOW-UP DATA; UNDETERMINED MEDICAL RISKS
Although clinical studies conducted to date have demonstrated no
significant adverse reactions to "Skin Fresh" treatments; there can be no
assurance that long-term follow-up data will not reveal additional complications
that may have a material adverse effect on acceptance of the "Skin Fresh"
treatments which, in turn, could have a material adverse effect on the Company's
business, financial conditions and results of operations. Concern over the
safety of "Skin Fresh" treatment could in turn adversely affect market
acceptance of "Skin Fresh" treatment or result in adverse regulatory action,
including product recalls, any of which could have a material adverse effect on
the Company's business, financial condition and results of operations.
PRODUCT LIABILITY AND PROFESSIONAL LIABILITY
Inherent in the health care and pharmaceutical industry is the
potentially significant risk of physical injury to patients which could result
in product liability or other claims based upon injuries or alleged injuries
associated with a defect in the product's and/or physician's performance, which
may not become evident for a number of years. Although the Company has not
experienced a product liability claim in the past six years of selling products
through the clinics, the possibility still remains that the operation of the
clinics and sale of medications may result in claims against the Company by
patients who allege they were injured as a result of medical treatment. The
Company has "umbrella" product and professional liability insurance in the
amounts of $1,000,000 (aggregate and per occurrence), but primarily relies and
intends to continue to rely on physicians' professional liability insurance
policies and manufacturers' insurance policies for product liability coverage.
The Company requires its clinical physicians to maintain certain levels of
professional liability insurance, and the agreements between the Company and the
physicians to contain certain cross indemnification provisions. There can be no
assurance, however, that all of the physicians will carry sufficient insurance
and a partially or completely uninsured successful claim against the Company
could have a material adverse effect on the Company's business, financial
condition and results of operations.
The Company's business will suffer if its products or treatment
contains imperfections or errors in judgment. All Company products are
manufactured in FDA approved facilities. Despite testing and quality control,
the Company cannot be certain that imperfections will not be found in the
Company's products as commercial shipment of Company's products increase. If new
or existing customers have difficulty adjusting to the Company's products or
require significant amounts of customer support, the Company's operating margins
could be harmed. Although the Company's products have been field tested on
hundreds of patients, there is the possibility that the Company could face
possible claims and higher development costs if its treatment products contain
undetected inappropriate materials or if the Company fails to meet customers'
expectations. In addition, a product liability claim, whether or not successful,
could harm the Company's business by increasing the Company's costs and
distracting the Company's management.
MANAGEMENT OF GROWTH
There can be no assurance that the Company's revenue growth can be
sustained. To accommodate its growth, the Company will need to implement a
variety of new or expanded business and financial systems, procedures and
controls, including the improvement of its accounting, marketing and other
internal management systems. There can be no assurance that the implementation
of such systems, procedures and controls can be completed successfully, or
without disruption of the Company's operations. Continued expansion of the
Company could significantly strain the Company's management, financial and other
resources. In addition, the Company has hired and will be required to hire in
the future substantial number of new employees, particularly personnel to
support its clinical and pharmaceutical sales operations. There can be no
assurance that the Company's systems, procedures, controls and staffing will be
adequate to support the Company's operations. Failure to manage the Company's
growth effectively could have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company's future success will depend on its ability to continue to
enhance its current products and to develop and introduce new products on a
timely basis that keep pace with technology and satisfy increasingly
sophisticated customer requirements. Rapid technical change, frequent new
product introductions and enhancements, uncertain product life cycles, changes
in customer demands and evolving industry standards characterize the market for
the Company's products and services. The introduction of products embodying new
technologies and the emergence of new industry standards can render the
Company's existing products obsolete and unmarketable. As a result of the
complexities inherent in today's medical environments, new products and product
enhancements can require long development and testing periods. As a result,
significant delays in the general availability of such new releases or
significant problems in the implementation of such medicines and treatment
processes could have a material adverse effect on the Company's business,
operating results and financial condition. The Company may not be successful in:
- developing and marketing, on a timely and cost-effective
basis, new products or new product enhancements that respond
to changes in technology, evolving industry standards or
customer requirements;
- avoiding difficulties that could delay or prevent the
successful development, introduction or marketing of these
products; or
- achieving market acceptance for the Company's new products and
product enhancements.
If the Company fails to release new products, its business may suffer
one or more of the following consequences:
- customer dissatisfaction;
- negative publicity;
- loss of revenues; or
- slower market acceptance.
DEPENDENCE UPON MANAGEMENT AND THE COMPANY'S ABLE TO ATTRACT AND RETAIN
SUFFICIENT PERSONNEL.
The future success of the Company is dependent in part on its ability
to recruit and retain certain key personnel, including Gary Heesch, Chief
Executive Officer and Chairman of the Board. The loss of the services of certain
members of management, or other key personnel, could have a material adverse
effect on the Company. The Company intends to purchase key-man insurance
policies with the Company as beneficiary ranging from $1 million to $2 million
on certain members of management, but there can be no assurance that the
benefits under these policies will be sufficient to compensate the Company for
the loss of the services of any of such persons.
The success of the development of the Company's Internet marketing
program is dependent to a significant degree on key management, consultants and
technical personnel. The Company's success also depends on its ability to
attract, motivate and retain highly skilled, managerial, sales and marketing,
and technical personnel, including software programmers and systems architects
skilled in the computer languages. Competition for such personnel in the
software and information services industries is intense. The loss of key
personnel, or the inability to hire or retain qualified personnel, could have a
material adverse effect on our results of operations, financial condition or
business.
The Company must hire additional medical staff at the Clinics,
including licensed physicians. To retain such staff is difficult in today's
competitive marketplace. The Company cannot be sure that it will succeed in its
hiring and retention efforts. The Company competes with other medical and heath
care companies and research and academic institutions for experienced medical
staff and licensed physicians. Many of these companies and institutions have
greater resources than the Company has and thus may be in a better position to
attract desirable candidates.
The Company must also hire additional managers as the business grows,
that are able to address the needs for regulatory, manufacturing, distribution,
sales and marketing capabilities. If the Company is not able to hire managers
with these skills, or develop expertise in these areas, the Company's business
prospects could suffer.
MANAGEMENT EXERCISES SIGNIFICANT CONTROL
The Company's management group and directors will own and control
approximately 16.5 % of the shares of Company's Common Stock and therefore be
able to significantly influence the management and affairs of the Company and
have the ability to control all matters requiring stockholder approval.
FUTURE CAPITAL NEEDS, UNCERTAINTY OF ADDITIONAL FUNDING
The Company's operation to date consumed substantial amounts of cash.
The negative cash flow from operations is expected to continue and may
accelerate in the foreseeable future. The rate at which the Company expends its
resources is variable and may accelerate, depending on many factors, many of
which are outside the control of the Company, including the continued progress
of the Company's research and development of new product candidates; the cost,
the timing, and outcome of further regulatory approvals; the expenses of
establishing a sales and marketing force, the timing and cost of establishing or
procuring additional requisite production and other manufacturing capacities,
the cost; if any, the cost of preparing, filing, prosecuting, maintaining,
defending and enforcing patent claims; and the status of competitive products
and the availability of other financing.
The Company anticipates that it will require additional financing to
fund the Company's operations. Future financing may result in the issuance of
debt, preferred stock and Common Stock securities, in dilution to the holders of
the Common Stock. Any such financing, if required, may not be available on
satisfactory terms or at all. There can be no assurance that additional
investments or financing will be available as needed to support the development
of the products. Failure to obtain such capital on a timely basis could result
in lost business opportunities, or the financial failure of our company.
DEPENDANCE ON A LIMITED NUMBER OF SUPPLIERS FOR MATERIALS USED IN MANUFACTURING
THE COMPANY'S PRODUCT; RISK OF INTERRUPTION
The Company's products currently contain components manufactured by
third-party vendors. The Company incorporates components into some of its
products and any significant interruption in the availability of these third
party products or defects in these products could harm the Company's business.
Some of these materials are available only from limited sources. In the event of
a reduction in, interruption of, or degradation in the quality of the supply of
any of our required materials, or an increase in the cost of obtaining those
materials, the Company would be forced to locate an alternative source. Any
significant interruption in the availability of these third-party products or
defects in these products could harm the Company's business unless and until the
Company can secure an alternative source. If no alternative source were
available or if an alternative source were not available on a timely basis or at
a reasonable cost or otherwise on acceptable terms, the Company's ability to
manufacture one or more of our products would be delayed or halted, in which
case the Company could lose sales and customers, and the business would be
significantly harmed as a result.
THE COMPANY HAS LIMITED MANUFACTURING EXPERIENCE
The Company lacks experience in large-scale manufacturing, which could
hamper its ability to manufacture the existing products or new products
developed. The Company has two options to address this issue. First, the Company
can expand its internal ability to manufacture products. Second, the Company
continues to contract with third parties to manufacture for products based upon
the Company's technology. If the Company is unable to expand its own
manufacturing capability or maintain a contract with suitable manufacturers, on
acceptable terms and in a timely manner, the Company may become unable to meet
its demands for existing products and could be delayed in introducing new
products to the market. Failure to meet the demands for existing products or
delays in introducing new products will harm the Company's financial condition.
POTENTIAL ADVERSE IMPACT OF SHARES OF STOCK ELIGIBLE FOR FUTURE SALE
Sales of a large amount of shares of Common Stock in the public market
could adversely affect the market price of the Common Stock. Such sales also
might make it more difficult for the Company to sell equity securities or
equity-related securities in the future at a time and price that the Company
deems appropriate.
Prior to registration of the shares in this Prospectus, the Company
will have outstanding an aggregate of 23,675,517 shares of Common Stock
outstanding. All shares of Common Stock included in this Prospectus will be
freely tradable without restrictions under the securities act. There are
13,291,950 outstanding shares held by existing shareholders that are restricted
securities as that term is defined in Rule 144 under the Securities Act
(Hereinafter, the "Restricted Shares"). Restricted Shares may be sold in the
public market only if registered or if they qualify for an exemption from
registration under Rules 144 or 701, promulgated under the Securities Act. There
are 993,676 formerly Restricted Shares which are available eligible for sale
because the two-year holding period has expired.
As of the date of this Prospectus, the Company is preparing to file a
registration statement to register 1,250,000 shares of common stock to be issued
to Aspen Capital Resources. In the same registration statement the Company
intends to register 9,067,654 class A warrants and 9,067,654 class B warrants
issued to the Companies shareholders. Assuming all of these warrants are
exercised, the holders will receive 18,135,308 freely tradable shares of common
stock.
AVAILABILITY OF COMMON AND PREFERRED STOCK FOR ISSUANCE
The Corporation can issue two classes of shares, designated as
Preferred Stock ("Preferred Stock") and Common Stock ("Common Stock"). The total
number of shares of capital stock that the Company is authorized to issue is
101,000,000. The total number of shares of Common Stock that the Corporation is
authorized to issue is 100,000,000 shares at $0.001 par value. The total number
of shares of Preferred Stock that the Corporation is authorized to issue is
1,000,000 shares. The Board of Directors have the broad power to issue shares of
stock and to establish the rights and preferences of any series of preferred
stock, without seeking approval of the shareholders.
VOLATILITY OF STOCK PRICE
The market price of the Common Stock has historically been subject to
price volatility. The market prices for securities of companies engaged in
pharmaceutical development have been volatile. Such volatility may recur in the
future due to overall market conditions or specific factors of the
pharmaceutical industry such as the Company's ability to effectively penetrate
the market, new technological innovations and products, changes in government
regulations, developments with respect to patent or proprietary rights, public
concerns with regard to safety and efficacy of various medical procedures, the
issuance of new or changed stock market analyst reports and recommendations, the
Company's ability to meet analysts' projections and fluctuations in the
Company's financial results. In addition, the Common Stock could experience
extreme fluctuations in market price that are wholly unrelated to the operating
performance of the Company.
On December 26, 2000, the Company's Common Stock was quoted on the OTC
Electronic Bulletin Board at the price of $0.365. The following sets for the
quarterly fluctuations in the reported bid prices for the period from January 1,
1997 through September 30, 2000.
High Bid Low Bid
Fiscal Year Ending December 31, 1997
First Quarter $2.50 $ .625
Second Quarter $3.75 $ .625
Third Quarter $3.375 $ .875
Fourth Quarter $1.125 $ .130
Fiscal Year Ending December 31, 1998
First Quarter $ .219 $ .125
Second Quarter $ .375 $ .170
Third Quarter $ .410 $ .130
Fourth Quarter $ .260 $ .110
Fiscal Year Ending December 31, 1999
First Quarter $ .320 $ .110
Second Quarter $2.060 $ .320
Third Quarter $1.450 $ .430
Fourth Quarter $ .812 $ .520
Fiscal Year Ending December 31, 2000
First Quarter $1.875 $ .550
Second Quarter $1.062 $ .531
Third Quarter $ .968 $ .250
APPLICATION OF PENNY STOCK RULES COMMON STOCK
The Securities and Exchange Commission has adopted regulations that
generally define "penny stock" to be any equity security that has a market price
(as defined) less than $5.00 per share or exercise price of less than $5.00 per
share, subject to certain exceptions. The Company's Common Stock may be subject
to the penny stock rules under the Securities Exchange Act of 1934, as amended,
unless an exemption from such rules is available. Broker-dealers making a market
in the Common Stock may be required to provide disclosure to their customers
regarding the risks associated with the Common Stock, the suitability for the
customer of an investment in the Common Stock, the duties of the broker-dealer
to the customer and information regarding bid and ask prices for the Common
Stock and the amount and description of any compensation the broker-dealer would
receive in connection with a transaction in the Common Stock. The application of
these rules will likely result in fewer market makers making a market of the
Common Stock and further restrict the liquidity of the Common Stock.
SECURITIES LAW ISSUES
The Company has raised substantial amounts of capital in private
placements from time to time. The securities offered in such private placements
were not registered with the Securities and Exchange Commission or any state
agency in reliance upon exemptions from such registration requirements. Such
exemptions are highly technical in nature and if the Company inadvertently
failed to comply with the requirements of any of such exemption, investors would
have the right to rescind their purchase of the securities or sue for damages.
If one or more investors successfully rescinded the purchase or institute such
suit, the Company could face severe financial demands that could material and
adversely affect our financial position.
ABSENCE OF COMMON STOCK DIVIDENDS
The Company has not declared or paid dividends, and does not anticipate
paying any cash dividends on our Common Stock in the foreseeable future. Any
payment of cash dividends on our Common Stock in the future will be dependent
upon the financial condition, results of operations, current and anticipated
cash requirements, plans for expansion, as well as other factors that the Board
of Directors deems relevant.
UNCERTAINTY OF PATENTS, TRADE SECRETS AND PROPRIETARY TECHNOLOGY
The pharmaceutical industry is characterized by a large number of
patent filings. A substantial number of patents have been issued to other
pharmaceutical companies. Competitors, therefore, may have filed applications
for or have been issued patents and may obtain additional patents and
proprietary rights related to products or processes competitive with or similar
to those of the Company. Competitors, with far greater resources, may obtain
patents that interfere with the Company's ability to develop or market product
it originated. Since patent applications are secret until patents are issued, in
the United States, or published, in other countries, the Company cannot be sure
that it is first to file any patent application. Further, the laws of certain
foreign countries do not provide the protection to intellectual property
provided in the United States, and may limit the Company's ability to market its
products overseas. The Company cannot give any assurance that the scope of the
rights that may be granted to the Company's products are broad enough to fully
protect those rights from infringement.
Litigation regarding intellectual property is common because there can
be no assurance that any registration or any patent application will
significantly protect an owner's rights to intellectual property. Litigation or
regulatory proceedings, therefore, may be necessary to protect the Company's
intellectual property rights. Such litigation and regulatory proceedings are
very expensive, can be a significant drain on the Company's resources, diverts
resources from product development, and involves substantial commitments of
management time. There is no assurance that the Company will have the financial
resources to defend the Company's intellectual property rights from infringement
or claims of invalidity. Failure to successfully defend the Company's rights
with respect to its intellectual property can have a materially adverse effect
on the Company's business, financial condition and results of competitors, many
of which have far greater resources than the Company, will not apply for and
obtain patents that will interfere with the Company's ability to develop or
market product ideas that it originated.
The Company's brochures that describe the treatment regimen have been
copyrighted. The Company has prepared and filed United States trademarks
applications for some of its trademarks including SILHOUETTE OF A FACE, WASATCH
PHARMACEUTICAL, AMERICAN INSTITUTE OF SKIN CARE and MEDYSIS. The formulas for
the products are maintained as trade secrets with the appropriate internal
controls and security. There are no patents or patents pending for the Company's
products.
The Company relies upon un-patented proprietary technology and there is
no assurance that other companies will not independently develop substantially
equivalent proprietary information and techniques or otherwise gain access to or
disclose the Company's proprietary technology. The Company will use its best
efforts to protect such information and techniques; however, no assurance can be
given that such efforts will be successful. The failure to protect the
intellectual property could cause the Company to lose substantial revenues and
to fail to reach its financial potential over the long term.
The Company also relies on business trade secrets, know-how and other
proprietary information. If this information were disclosed to competitors, the
business would suffer. The Company protects this information, in part, by
entering into confidentiality agreements with licensees, employees and
consultants, which prohibit these parties from disclosing our confidential
information. Despite these agreements, the Company cannot be sure that the
agreements will provide adequate protection for its trade secrets, know-how and
other proprietary information or that the information shared with others during
the course of the Company's business will remain confidential. Nor can the
Company be certain that the Company would have sufficient legal remedies to
correct or be compensated for unauthorized disclosures or sufficient resources
to seek redress.
The Company continues to license rights from Medisys. Medisys is a
research and development company in the field of dermatology. Medisys began its
research in 1989, as continuation of the research started, by Gary V. Heesch
(currently CEO of the Company). Since access to these rights is necessary for
the Company's business, it must comply with these license agreements. The
business could be harmed if Company breaches any of these license agreements,
lose the right to use this licensed technology, or is unable to renew the
existing licenses on acceptable terms or get additional licenses on acceptable
terms.
The Company must not infringe on the intellectual property rights of
others. If the Company infringes upon the rights of others it may be exposed to
the following risks:
- The Company could be required to alter its products, treatments or
processes.
- The Company could be required to obtain additional licenses.
- The Company could lose customers that are reluctant to continue using
its products.
- The Company could be forced to abandon it product development work
with respect to these products.
- The Company could be required to monetary pay damages.
The Company cannot be sure that it could alter its products or
processes or obtain a license at a reasonable cost, if at all. The business may
be damaged if the Company could not make the necessary alterations or obtain a
necessary license on acceptable terms. In addition, the Company may need to
litigate the scope and validity of intellectual property rights held by others.
. Such litigation and regulatory proceedings are very expensive, can be a
significant drain on the Company's resources, diverts resources from product
development, and involves substantial commitments of management time. There is
no assurance that the Company will have the financial resources to defend a
claim that the Company infringed on the intellectual property rights of its
competitors. Failure to successfully defend the Company's a claim of an alleged
infringement upon the intellectual property rights of a third party can have a
materially adverse effect on the Company's business, financial condition and
results of competitors, many of which have far greater resources than the
Company.
ACQUISITIONS OF COMPANIES OR TECHNOLOGIES MAY RESULT IN DISRUPTIONS OF THE
COMPANY'S BUSINESS
The Company expects to make acquisitions of complementary companies,
products or technologies, although the Company currently lacks adequate working
capital or financial resources to effect acquisitions requiring cash and given
the uncertainty involving the Company's outstanding Common Stock it may
encounter difficulty in effecting transactions utilizing its equity as purchase
consideration. Currently, the company has not identified any acquisition
candidates and no acquisitions are contemplated. If the Company makes any
acquisitions, it will be required to assimilate the operations, products and
personnel of the acquired businesses and train, retain and motivate key
personnel from the acquired businesses. Management may be unable to maintain
uniform standards, controls, procedures and policies if it fails in these
efforts.
The Company may have to incur debt or issue equity securities to pay
for any future acquisitions. The issuance of equity securities for any
acquisition could substantially dilute the Company's shareholders. In addition,
profitability may suffer because of acquisition-related costs or amortization
costs for acquired goodwill and other intangible assets. If management is unable
to fully integrate acquired businesses, products or technologies with existing
operations, the Company may not receive the intended benefits of acquisition.
REQUIREMENTS OF CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION IN CONNECTION
SALE OF THE COMMON SHARES
The Company will be able to issue the securities and the Selling
Shareholders will be sell the securities offered hereby, shares of Common Stock
issued upon the conversion of the Debentures and exercise of the Warrants, only
if (i) there is a current prospectus relating to the securities offered hereby
under an effective registration statement filed with the Securities and Exchange
Commission, and (ii) such Common Stock is then qualified for sale or exempt
under applicable state securities laws of the jurisdictions in which the Common
Shares may be sold. There can be no assurance, however that the Company will be
successful in maintaining a current registration statement.
After the registration statement becomes effective, it may require
updating by the filing of a post-effective amendment. A post-effective amendment
is required under the Securities Act of 1933 (i) anytime after nine (9) months
subsequent to the Effective Date when any information contained in the
prospectus is over sixteen (16) months old; (ii) when facts or events have
occurred which represent a fundamental change in the information contained in
the registration statement; or (iii) when any material change occurs in the
information relating to the plan or distribution of the securities registered by
such registration statement. The Prospectus forming a part of this Registration
Statement will remain current within the meaning of the Securities Act for not
more than nine (9) months following the date of this Prospectus, or until
September 29, 2001, assuming a post-effective amendment is not filed by the
Company. The Company intends to qualify the sale of the Common Stock in all
states requiring qualification. In those states where the certain exemptions
under that certain state securities ("Blue Sky") laws may permit the Common
Stock to be transferred to purchasers in the state, the Company will not be
required to qualify the shares prior their sale in that state.
NEED FOR ADDITIONAL FINANCING
The Company's cash flow may be affected by a number of factors,
including acceptance and sales of its services and products, the timing of
purchase orders, the seasonality of its business, and payment terms extended to
its purchasers. The Company anticipates that these factors may have a
significant effect on its cash flow. There can be no assurance, that the
Company's cash flow from operations and credit facilities, as augmented by the
proceeds of this Offering, will be sufficient to meet its long-term needs, and
additional sources of funds may be required in future periods for the Company to
implement its long-term growth strategy. There can be no assurance that there
will be additional sources of funds available to meet any such future
requirements.
FOR ALL OF THE AFORESAID REASONS AND OTHERS SET FORTH HEREIN, THE PURCHASE OF
SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. ANY PERSON CONSIDERING
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY SHOULD BE AWARE OF THESE RISKS
FACTORS AND OTHER FACTORS SET FORTH IN THIS PROSPECTUS. ONLY PERSONS WHO CAN
AFFORD TO ABSORB A TOTAL LOSS OF THEIR INVESTMENT IN THE COMPANY AND HAVE NO
NEED FOR A RETURN ON THEIR INVESTMENT SHOULD PURCHASE THE SECURITIES.
USE OF PROCEEDS
The proceeds from the sale of the common stock offered pursuant to this
prospectus are solely for the account of the selling stockholders identified in
this prospectus. The Company will not receive any proceeds from the sale of the
shares by the selling stockholders.
SELLING STOCKHOLDERS
The Company issued the shares of common stock offered for resale by
this prospectus to the selling shareholders upon the exercise of warrants each
selling shareholder received for services each individual selling shareholder
rendered to the Company pursuant to consulting services agreements with the
Company.
The table below sets forth information known to us with respect to
beneficial ownership of the common stock as of December 26, 2000 by each selling
stockholder. The table below assumes that the selling stockholders exercise all
of their options. Since each stockholder may choose not to sell his shares, we
are unable to state the exact number of shares that actually will be sold.
Information with respect to "beneficial ownership" shown below is based
on information supplied by the respective beneficial owner. For purposes of
calculating the percentage beneficially owned, the shares of common stock deemed
outstanding include:
- the shares outstanding as of December 26, 2000; and
- the shares issuable by the Company pursuant to the exercise of the
options held by the respective selling shareholders that may be exercised within
60 days following the date of this prospectus ("Presently Exercisable Shares").
Presently Exercisable Shares are deemed to be outstanding and to be
beneficially owned by the person holding the securities for the purpose of
computing the percentage ownership of that person but are not treated as
outstanding for the purpose of computing the percentage ownership of any other
person. The mailing address of each beneficial owner is c/o Wasatch
Pharmaceutical, Inc. 310 East 4500 South, Suite 450, Murray, UT. 84107,(801)
566-9688.
================================================================================
(1) (2) (3) (4)
================================================================================
PERCENTAGE OF
NUMBER OF COMMON NUMBER OF COMMON BENEFICIAL
NAME OF BENEICIAL SHARES OWNED PRIOR SHARES OWNED AFTER OWNERSHIP AFTER
OWNER TO EXERCISE EXERCISE EXERCISE
================================================================================
K. John Gustat -0- 4,100,000 14.76%
Bryan Kos -0- 1,600,000 6.33%
PLAN OF DISTRIBUTION
This prospectus relates to the offer and sale from time to time by the
selling stockholders of shares of common stock received by them as part of their
compensation. The Company has registered the shares of common stock for resale,
but registration of these shares does not necessarily mean that the selling
stockholders will offer or sell the shares.
OFFER AND SALE OF SHARES
Any of the selling stockholders may from time to time, in one or more
transactions, sell all or a portion of the common stock in such transactions at
prices then prevailing or related to the then current market price or at
negotiated prices. The offering price of the shares from time to time will be
determined by the selling stockholders and, at the time of such determination,
may be higher or lower than the market price of the shares on the NNOTC Bulletin
Board or any exchange on which the shares are traded.
In connection with an underwritten offering, underwriters or agents may
receive compensation in the form of discounts, concessions or commissions from a
selling stockholder or from purchasers of shares for whom they may act as
agents, and underwriters may sell shares to or through dealers, and such dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions from the purchasers for whom they may
act as agents.
Under agreements that may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of shares may be entitled
to indemnification by the Company against certain liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments which such underwriters, dealers or agents may be required to make in
respect thereof.
The shares may be sold directly or through broker-dealers acting as
principal or agent, or pursuant to a distribution by one of more underwriters on
a firm commitment or best-efforts basis.
The selling stockholders may offer and sell their shares of common
stock in the following manner:
- on the NNOTC Bulletin Board or exchanges on which the common stock is
listed at the time of sale;
- in the over-the-counter market or otherwise at prices and at terms
then prevailing or at prices related to the then current market price;
- in an underwritten offerings;
- in a privately negotiated transaction, including transfers pursuant
to pledges, gifts and donations;
- in a block trade in which the broker or dealer so engaged will
attempt to sell the shares as agent, but may position and resell a portion of
the block as principal to facilitate the transaction;
- a broker or dealer may purchase as principal and resell such shares
for its own account pursuant to this prospectus;
- an exchange distribution in accordance with the rules of the
exchange; or
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers.
The selling stockholder may accept and, together with any agent of the
selling stockholder, reject in whole or in part any proposed purchase of the
shares of common stock offered by this prospectus. The Company will not receive
any proceeds from the offering of shares by the selling stockholders.
SUPPLEMENTAL PROSPECTUS REGARDING SALES
To the extent required, the Company will set forth in a prospectus
supplement accompanying this prospectus, or, if appropriate, in a post-effective
amendment, the following information: (1) the amount of the shares of common
stock to be sold; (2) purchase prices; (3) public offering prices; (4) the names
of any agents, dealers or underwriters; and (5) any applicable commissions or
discounts with respect to a particular offer.
COMPLIANCE WITH FOREIGN AND STATE SECURITIES LAWS
The Company has not registered or qualified the shares of common stock
offered by this prospectus under the laws of any country, other than the United
States. In certain states, the selling stockholders may not offer or sell their
shares of common stock unless
(1) the Company has registered or qualified such shares for sale in such
states or
(2) the Company has complied with an available exemption from registration
or qualification.
Also, in certain states, to comply with such state securities laws, the
selling stockholders can offer and sell their shares of common stock only
through registered or licensed brokers or dealers.
PAYMENT OF EXPENSES
The Company will pay substantially all of the expenses related to the
registration of the shares of common stock offered by this prospectus.
The selling stockholders will pay any sales commissions or other
seller's compensation applicable to these transactions.
LEGAL MATTERS
The validity of the issuance of the shares of the common stock offered
by this prospectus will be passed upon for the Company by Marcus A. Sanders,
Esq. Mr. Sanders, who has provided advice with respect to this matter, owns no
shares of Wasatch Pharmaceutical stock. Mr. Sanders is not an "affiliate" of the
Company and does not have any interest in the registrant.
EXPERTS
The consolidated financial statements of Wasatch Pharmaceutical and its
subsidiaries incorporated by reference in this prospectus have been audited by
Thomas Leger & Co., L.L.P., 1235 North Loop West, Suite 907, Houston, TX 77008,
independent certified public accountants, to the extent and for the periods as
set forth in their reports incorporated herein by reference, and are
incorporated herein in reliance upon such reports given upon the authority of
said firm as experts in accounting and auditing.
Thomas Leger & Co., L.L.P., audited the Company's consolidated
financial statements for the year-end December 31, 1999.
WHERE YOU CAN FIND MORE INFORMATION
The Company files annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission.
You may read and copy any document the Company files at the SEC's public
reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549, or at
its Regional Offices located at 7 World Trade Center, Suite 1300, New York, New
York 10048, and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and copies of such materials can be obtained from the Public Reference Section
of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. You may call the SEC at 1-800-732-0330 for further information on the
operation of such public reference rooms. You also can request copies of such
documents, upon payment of a duplicating fee, by writing to the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549, or obtain copies of such documents from
the SEC's web site at http://www.sec.gov.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows the Company to "incorporate by reference" the
information that the Company files with the SEC, which means that the Company
can disclose important information to you by referring you to those documents.
The information we incorporate by reference is considered to be part of this
prospectus and information that we file later with the SEC automatically will
update and supersede such information. We incorporate by reference the documents
listed below and any future filings we make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended. These
documents contain important business information about the Company and its
financial condition.
1. Annual Report on Form 10-KSB for the year ended December 31, 1999,
filed on March 31, 2000;
2. Quarterly Report on Form 10QSB for the nine months ended September
30,2000;
3. Registration Statement on Form 8-A, with respect to a description of
the Company's common stock, as filed with the SEC on July 30, 1997.
On request, the Company will provide, at no cost to each person who
receives a copy of this prospectus, a copy of any or all of the documents
incorporated by reference into this prospectus. We will not provide exhibits to
any of such documents, however, unless such exhibits are specifically
incorporated by reference into this prospectus. Written or telephonic requests
for such copies should be addressed to Wasatch Pharmaceutical principal
executive offices, attention: Dave Giles, Corporate Secretary, 310 East 4500
South, Suite 450, Murray, UT. 84107,(801) 566-9688.
You should rely only on the information provided or incorporated by
reference in this prospectus or any related supplement. We have not authorized
anyone else to provide you with different information. We will not make an offer
of these shares in any state that prohibits such an offer. You should not assume
that the information in this prospectus or any supplement is accurate as of any
date other than the date on the cover page of such documents.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company's indemnification policy covering officers and directors,
as contained in the by-laws, provides that the Company may indemnify at its
officers or directors for costs reasonably incurred in connection with civil,
criminal, administrative and investigative proceedings. The Company may purchase
indemnification insurance for officers and directors.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
PART I.
INFORMATION REQUIRED IN SECTION 10 (A) PROSPECTUS
The documents containing information specified in this Part I are being
separately provided to the participants covered by the Plan, as specified by
Rule 428(b) (1).
PART II.
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
hereby incorporated by reference:
1) The Company's Annual Report on Form 10-KSB for the year ended
December 31, 1999.
2) All reports filed by the Company with the Commission pursuant to
section 13(a) or 15(d) of the Exchange Act since December 31, 1999.
All reports and other documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 12, or 15(d) of the Exchange Act prior to the filing of
any post-effective amendment which indicates that all securities covered by this
Prospectus have been sold or which deregisters all such securities then
remaining unsold shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of the filing of such reports and documents.
ITEM 4. DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized to issue 100,000,000 shares of common stock,
par value $0.001 per share (the "Common Stock"). The holders of the Common Stock
are entitled to one vote per share on each matter submitted to a vote at any
meeting of shareholders. Shares of Common Stock do not carry cumulative voting
rights and, therefore, a majority of the shares of outstanding Common Stock will
be able to elect the entire board of directors and, if they do so, minority
shareholders would not be able to elect any persons to the board of directors.
The Company's articles of incorporation and bylaws provide that a majority of
the issued and outstanding shares of the Company shall constitute a quorum for
shareholders' meetings, except with respect to certain matters for which a
different percentage quorum is required by statute.
Shareholders of the Company have no preemptive rights to acquire
additional shares of Common Stock or other securities. The Common Stock is not
subject to redemption and carries no subscription or conversion rights. In the
event of liquidation of the Company, the shares of Common Stock are entitled to
share equally in corporate assets after satisfaction of all liabilities and
payment of any preferences on preferred stock.
Holders of Common Stock are entitled to receive such dividends as the
board of directors may from time to time declare out of funds legally available
for the payment of dividends.
The board of directors has the authority to issue the authorized but
unissued shares of Common Stock without action by the shareholders. The issuance
of such shares would reduce the percentage ownership held by persons purchasing
Common Stock in this offering and may dilute the book value of the then existing
shareholders.
Preferred Stock
The Company's Articles of Incorporation authorize 1,000,000 shares of
Preferred Stock, par value $0.001 per share (the "Preferred Stock"). Preferred
Stock may be issued in one or more series or classes, with each series or class
having the rights and privileges respecting voting rights, preferences as to
dividends and liquidation, conversion rights, and other rights of such series as
determined by the board of directors at the time of issuance.
The Company has authorized up to 300,000 shares of Class A Series
Preferred Stock that entitle the holder to a per-share annual dividend equal to
20% of the Company's net income divided by 300,000, times the number of shares
of preferred stock outstanding (3.28% of net income base on 49,258 shares of the
Class A Preferred Stock outstanding at September 30, 2000). Dividends are
required to be paid to the extent that there is net income and that there are
funds legally available for such payment. To the extent funds are not legally
available in net income years, the payment of the dividend calculated shall be
deferred until such time as there shall be funds legally available for such
payment. The Class A Series Preferred Stock is redeemable at the option of the
Company at $2.00 per share plus accrued and unpaid dividends. There were no
accrued and unpaid dividends at September 30, 2000.
Registrar and Transfer Agent
The registrar and transfer agent of the Company's securities is
Standard Registrar & Transfer Co., 12528 South 1840 East, Draper, Utah 84020,
801-571-8844.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL
No expert or counsel for the Company named in this registration
statement as having prepared or certified any part hereof, or as giving an
opinion as to the validity of the securities being registered was employed on a
contingency basis, or has or is to receive, in connection with the offering, a
substantial interest in the Company or its subsidiaries. In addition no such
expert or counsel is connected with the Company or its subsidiaries as a
promoter, managing underwriter, voting trustee, director, officer, or employee.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The following is a brief summary of certain indemnification provisions
of the Company's articles of incorporation and the Utah Revised Business
Corporation Act. This summary is qualified in its entirety by reference to the
text thereof.
Section 16-10a-901 through 909 of the Utah Revised Business Corporation
Act, as amended (the "Corporation Act"), permits a Utah corporation to indemnify
its directors and officers for certain of their acts. More specifically,
Sections 16-10a-902 and 16-10a-907 of the Corporation Act grant authority to any
corporation to indemnify directors and officers against any judgments, fines,
amounts paid in settlement and reasonable expenses, including attorney's fees,
by reason of his or her having been a corporate director or officer. Such
provision is limited to instances where the director or officer acted in good
faith and in a manner he or she reasonable believed to be in or not opposed to
the best interests of the corporation, or, in criminal proceedings, he or she
had no reasonable cause to believe his or her conduct was unlawful. Such
sections confer on the director or officer an absolute right to indemnification
for expenses, including attorney's fees, actually and reasonably incurred by him
or her to the extent he or she is successful on the merits or otherwise defense
of any claim, issue, or matter.
The corporation may not indemnify a director if the director is
adjudged liable to the corporation or deemed to have derived an improper
personal benefit in an action in which the director is adjudged liable. Section
16 10a-906 of the Corporation Act expressly makes indemnification contingent
upon a determination that indemnification is proper in the circumstances. Such
determination must be made by the board of directors acting through a quorum of
disinterested directors, or by the board of directors acting on the advice of
independent legal counsel, or by the shareholders. Further, Section 16-10a 904
of the Corporation Act permits a corporation to pay attorney's fees and other
litigation expenses on behalf of a director or office in advance of the final
disposition of the action upon receipt of an undertaking by or on behalf of such
director or officer to repay such expenses to the corporation if its is
ultimately determined that he or she is not entitled to be indemnified by the
corporation or to the extent the expenses so advanced by the corporation exceed
the indemnification to which he or she is entitled. Such indemnification
provisions do not exclude other indemnification rights to which a director or
officer may be entitled under the corporation's certificate or articles of
incorporation, bylaws, an agreement, a vote of shareholders, or otherwise. The
corporation may also purchase and maintain insurance to provide indemnification.
The foregoing discussion of indemnification merely summarizes certain
aspects of the indemnification provisions of the Corporation Act and is limited
by reference to the above discussed section of the Corporation Act.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to members of the board of directors, officers, employees,
or persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
No restricted securities are being reoffered or resold pursuant to this
registration statement.
ITEM 8. EXHIBITS
Exhibits.
Copies of the following documents are included as exhibits to this
registration statement pursuant to item 601 of regulation S-K.
SEC
Exhibit Reference
No. No. Description Location
- -------- --------- ----------- --------
3.01 3 Articles of Incorporation Incorporated
by Reference*
3.02 3 Bylaws Incorporated
by Reference*
4.01 4 K. John Gustat Stock Option Plan This Filing
4.02 4 Bryan Kos Stock Option Plan This Filing
5.01 5 and 23 Letter opinion, including consent
and 23.01 of Marcus Sanders,
Attorney and Counselor at Law,
regarding legality of Common Stock
to be issued pursuant to options
granted under the Plan. This Filing
23.02 23 Consent of Thomas Leger & Co., L.L.P.
independent certified public
accountants, for Wasatch
Pharmaceutical, Inc., for the year
ended December 31, 1999 This Filing
25.01 25 Powers of Attorney See Signature
Page
* Incorporated by reference from the Company's registration statement on form
S-1 filed with the Commission, SEC file No. 2-35700.
ITEM 9. UNDERTAKINGS
REGULATION S-K
Post-Effective Amendments - Item 512(a)
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement, to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
Filings Incorporating Subsequent Exchange Act Documents by Reference - Item
512(b)
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended , each
filing of the Registrant's annual report pursuant to section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(a) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Filing of Registration Statement on Form S-8 - Item 512(h)
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction, the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the city of Salt Lake City, State of Utah, on the 29th day
of December, 2000.
WASATCH PHARMACEUTICAL, INC.
By /S/ Gary V. Heesch, President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Gary V. Heesch, with power of
substitution, as his attorney-in-fact for him, in all capacities, to sign any
amendments to this registration statement and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said
attorney-in-fact or his substitutes may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
- ---------- ----- ----
/S/ Gary V. Heesch Chairman of the Board January 2, 2001
Directors and President
/S/ Craig Heesch Director January 2, 2001
/S/ Robert Arbon Director January 2, 2001