As filed with the Securities and Exchange Commission on April 3, 2002
Registration No. 333-76374
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
HESKA CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
--------------------
DELAWARE 77-0192527
(STATE OR OTHER (I.R.S. EMPLOYER
JURISDICTION OF IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
1613 PROSPECT PARKWAY
FORT COLLINS, COLORADO
80525
(970) 493-7272
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------------
ROBERT B. GRIEVE, PH.D.
CHIEF EXECUTIVE OFFICER
AND
CHAIRMAN OF THE BOARD
HESKA CORPORATION
1613 PROSPECT PARKWAY
FORT COLLINS, COLORADO
80525
(970) 493-7272
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
--------------------
Copies to:
KAREN A. DEMPSEY, ESQ.
WILSON SONSINI GOODRICH &
ROSATI
PROFESSIONAL CORPORATION
ONE MARKET
SPEAR STREET TOWER, SUITE
3300
SAN FRANCISCO, CALIFORNIA
94105
(415) 947-2000
FAX: (415) 947-2099
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
================================================================================
PROSPECTUS
(Subject to Completion, dated April 3, 2002)
7,792,768 Shares
[ LOGO ]
HESKA CORPORATION
Common Stock
----------------
The Shareholders named on page 12 may sell up to 7,792,768 shares of our
Common Stock under this prospectus from time to time.
Our Common Stock is listed on the Nasdaq National Market under the symbol
"HSKA." On April 2, 2002, the closing price for our Common Stock was $1.15 per
share.
----------------
INVESTING IN OUR COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 2.
----------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
----------------
THE DATE OF THIS PROSPECTUS IS _________, 2002.
TABLE OF CONTENTS
PAGE
----
Heska Corporation 1
Risk Factors 2
Forward-Looking Statements 10
Use of Proceeds 10
Selling Stockholders 11
Plan Of Distribution 12
Legal Matters 14
Experts 16
Where You Can Find More Information 16
No person has been authorized to give any information or to make any
representations other than those contained in this prospectus in
connection with the offering made hereby, and if given or made, such
information or representations must not be relied upon as having been
authorized by Heska Corporation (referred to in this prospectus as
"Heska," the "Company", the "Registrant", "we" and "our"), any selling
stockholder or by any other person. Neither the delivery of this
prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that information herein is correct as of any
time subsequent to the date hereof. This prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any
security other than the securities covered by this prospectus, nor
does it constitute an offer to or solicitation of any person in any
jurisdiction in which such offer or solicitation may not lawfully be
made.
HESKA CORPORATION
We discover, develop, manufacture and market companion animal health
products, principally for dogs, cats and horses. We employ approximately 80
scientists, of whom over one quarter hold doctoral degrees, with expertise in
several disciplines including microbiology, immunology, genetics, biochemistry,
molecular biology, parasitology and veterinary medicine. This scientific
expertise is focused on the development of a broad range of pharmaceutical,
vaccine and diagnostic products for companion animals. We also sell veterinary
diagnostic and patient monitoring instruments and offer diagnostic services to
veterinarians in the United States and Europe, principally for companion
animals. In addition to manufacturing companion animal health products for
marketing and sale by Heska, our Diamond Animal Health subsidiary manufactures
food animal vaccines and other food animal products that are marketed by other
animal health companies. Our principal executive offices are located at 1613
Prospect Parkway, Fort Collins, Colorado 80525 and our telephone number is (970)
493-7272.
RISK FACTORS
Our future operating results may vary substantially from period to period
due to a number of factors, many of which are beyond our control. The following
discussion highlights these factors and the possible impact of these factors on
future results of operations. You should carefully consider these factors
before making an investment decision. If any of the following factors actually
occur, our business, financial condition or results of operations could be
harmed. In that case, the price of our common stock could decline, and you
could experience losses on your investment.
WE ANTICIPATE FUTURE LOSSES AND MAY NOT BE ABLE TO ACHIEVE PROFITABILITY IN THE
FUTURE.
We have incurred net losses since our inception in 1988 and, as of December
31, 2001, we had an accumulated deficit of $193.2 million. We anticipate that we
will continue to incur additional operating losses in the near term. These
losses have resulted principally from expenses incurred in our research and
development programs and from sales and marketing and general and administrative
expenses. Even if we achieve profitability, we may not be able to sustain or
increase profitability on a quarterly or annual basis. If we cannot achieve or
sustain profitability, we may not be able to fund our expected cash needs or
continue our operations.
WE ARE NOT GENERATING POSITIVE CASH FLOW AND MAY NEED ADDITIONAL CAPITAL IN THE
FUTURE AND ANY REQUIRED CAPITAL MAY NOT BE AVAILABLE ON ACCEPTABLE TERMS OR AT
ALL.
We have incurred negative cash flow from operations since inception in
1988. For the year ended December 31, 2001, we had total revenues of $48.3
million but a net loss of $18.7 million, and therefore we are not profitable.
Our financial plan for 2002 indicates that our cash on hand, together with up to
$9.1 million of borrowings expected to be available under our revolving line of
credit should be sufficient to fund our operations through 2002 and into 2003.
However, our actual results may differ from this plan, and we may need to raise
additional capital in the future.
We recently amended our credit agreement with our lender to obtain a waiver
of certain covenants under our revolving line of credit as of December 31, 2001,
set the financial covenants for 2002 and extend the maturity date of the loans
an additional year to May 31, 2003. If our lender imposes loan covenants or
other credit requirements that would prevent us from accessing the full amount
of our line of credit, we would need to raise additional capital to fund any
shortfall from our borrowings expected to be available under the revolving line
of credit. We anticipate that any additional capital would be raised through
one or more of the following:
* obtaining new loans secured by unencumbered assets;
* sale of various products or marketing rights;
* licensing technology;
* sale of various assets; and
* sale of additional equity or debt securities.
Additional capital may not be available on acceptable terms, if at all. The
public markets may remain unreceptive to equity financings, and we may not be
able to obtain additional private equity financing. Furthermore, amounts we
expect to be available under our existing revolving credit facility may not be
available, and other lenders could refuse to provide us with additional debt
financing. Furthermore, any additional equity financing would likely be dilutive
to stockholders, and additional debt financing, if available, may include
restrictive covenants which may limit our currently planned operations and
strategies. If adequate funds are not available, we may be required to curtail
our operations significantly and reduce discretionary spending to extend the
currently available cash resources, or to obtain funds by entering into
collaborative agreements or other arrangements on unfavorable terms, all of
which would likely have a material adverse effect on our business, financial
condition and our ability to continue as a going concern.
WE MUST MAINTAIN VARIOUS FINANCIAL AND OTHER COVENANTS UNDER OUR REVOLVING LINE
OF CREDIT AGREEMENT.
Under our revolving line of credit agreement with Wells Fargo Business
Credit, we are required to comply with various financial and non-financial
covenants, and we have made various representations and warranties. Among the
financial covenants are requirements for monthly minimum book net worth, minimum
quarterly net income and minimum cash balances or liquidity levels. We have
obtained modifications and a waiver of these covenants in the past.
Failure to comply with any of the covenants, representations or warranties
could result in our being in default under the loan and could cause all
outstanding amounts to become immediately due and payable or impact our ability
to borrow under the agreement. All amounts due under the credit facility mature
on May 31, 2003. We intend to rely on available borrowings under the credit
agreement to fund our operations through 2002 and into 2003. If we are unable
to borrow funds under this agreement, we will need to raise additional capital
to fund our cash needs and continue our operations.
WE HAVE LIMITED RESOURCES TO DEVOTE TO PRODUCT DEVELOPMENT AND
COMMERCIALIZATION. IF WE ARE NOT ABLE TO DEVOTE ADEQUATE RESOURCES TO PRODUCT
DEVELOPMENT AND COMMERCIALIZATION, WE MAY NOT BE ABLE TO DEVELOP OUR PRODUCTS.
Our strategy is to develop a broad range of products addressing companion
animal healthcare. We believe that our revenue growth and profitability, if any,
will substantially depend upon our ability to:
* improve market acceptance of our current products;
* complete development of new products; and
* successfully introduce and commercialize new products.
We have introduced some of our products only recently and many of our
products are still under development. Among our recently introduced products are
SOLO STEP(R) CH Batch Test Strips for testing heartworm infection in dogs,
E.R.D.-Screen(TM) Urine Test for detecting albumin in canine urine,
ALLERCEPT(TM) E-Screen(TM) Test for assessing allergies in dogs, and
SPOTCHEM(TM) EZ, a compact system for measuring animal blood chemistry. We
currently have under development or in preliminary clinical trials a number of
products, including a gene based therapy for canine cancer. Because we have
limited resources to devote to product development and commercialization, any
delay in the development of one product or reallocation of resources to product
development efforts that prove unsuccessful may delay or jeopardize the
development of our other product candidates. If we fail to develop new products
and bring them to market, our ability to generate revenues will decrease.
In addition, our products may not achieve satisfactory market acceptance,
and we may not successfully commercialize them on a timely basis, or at all. If
our products do not achieve a significant level of market acceptance, demand for
our products will not develop as expected and it is unlikely that we ever will
become profitable.
WE MUST OBTAIN AND MAINTAIN COSTLY REGULATORY APPROVALS IN ORDER TO MARKET OUR
PRODUCTS.
Many of the products we develop and market are subject to extensive
regulation by one or more of the United States Department of Agriculture, or
USDA, the Food and Drug Administration, or FDA, the Environmental Protection
Agency, or EPA, and foreign regulatory authorities. These regulations govern,
among other things, the development, testing, manufacturing, labeling, storage,
premarket approval, advertising, promotion, sale and distribution of our
products. Satisfaction of these requirements can take several years and time
needed to satisfy them may vary substantially, based on the type, complexity and
novelty of the product. Our Flu AVERT I.N. Vaccine, SOLO STEP CH, SOLO STEP FH,
SOLO STEP Batch Test Strips, and Bivalent and Trivalent Intranasal/Intraocular
Vaccines each have received regulatory approval in the United States by the
USDA. In addition, the Flu AVERT I.N. Vaccine has been approved in Canada by
the Canadian Food Inspection Agency, or CFIA. SOLO STEP CH and SOLO STEP Batch
Strips are pending approval by the CFIA. SOLO STEP CH has also been approved by
the Japanese Ministry of Agriculture, Forestry and Fisheries. U.S. regulatory
approval by the USDA currently is pending for the Feline ImmuCheck Assay, Canine
Cancer Gene Therapy, Giardia+Crypto-Screen Fecal Test and Trivalent
Intranasal/Intraocular Vaccine - Second Generation products.
The effect of government regulation may be to delay or to prevent marketing
of our products for a considerable period of time and to impose costly
procedures upon our activities. We have experienced in the past, and may
experience in the future, difficulties that could delay or prevent us from
obtaining the regulatory approval or license necessary to introduce or market
our products. For example, the Flu AVERTT I.N. vaccine for equine influenza was
not approved until six months after the date on which we expected approval.
This delay caused us to miss the initial primary selling season for equine
influenza vaccines, and we believe it delayed the initial market acceptance of
this product. Regulatory approval of our products may also impose limitations on
the indicated or intended uses for which our products may be marketed.
Among the conditions for certain regulatory approvals is the requirement
that our manufacturing facilities or those of our third party manufacturers
conform to current Good Manufacturing Practices or other manufacturing
regulations, which include requirements relating to quality control and quality
assurance as well as maintenance of records and documentation. The USDA, FDA
and foreign regulatory authorities strictly enforce manufacturing regulatory
requirements through periodic inspections. If any regulatory authority
determines that our manufacturing facilities or those of our third party
manufacturers do not conform to appropriate manufacturing requirements, we or
the manufacturers of our products may be subject to sanctions, including warning
letters, product recalls or seizures, injunctions, refusal to permit products to
be imported into or exported out of the United States, refusals of regulatory
authorities to grant approval or to allow us to enter into government supply
contracts, withdrawals of previously approved marketing applications, civil
fines and criminal prosecutions.
FACTORS BEYOND OUR CONTROL MAY CAUSE OUR OPERATING RESULTS TO FLUCTUATE, AND
SINCE MANY OF OUR EXPENSES ARE FIXED, THIS FLUCTUATION COULD CAUSE OUR STOCK
PRICE TO DECLINE.
We believe that our future operating results will fluctuate on a quarterly
basis due to a variety of factors, including:
* results from our Diamond Animal Health subsidiary;
* the introduction of new products by us or by our competitors;
* our recent change in distribution strategy;
* market acceptance of our current or new products;
* regulatory and other delays in product development;
* product recalls;
* competition and pricing pressures from competitive products;
* manufacturing delays;
* shipment problems;
* product seasonality; and
* changes in the mix of products sold.
We have high operating expenses for personnel, new product development and
marketing. Many of these expenses are fixed in the short term. If any of the
factors listed above cause our revenues to decline, our operating results could
be substantially harmed.
Our operating results in some quarters may not meet the expectations of
stock market analysts and investors. In that case, our stock price probably
would decline.
OUR LARGEST CUSTOMER ACCOUNTED FOR OVER 15% OF OUR REVENUES FOR THE PREVIOUS
TWO YEARS, AND THE LOSS OF THAT CUSTOMER OR OTHER CUSTOMERS COULD HARM OUR
OPERATING RESULTS.
We currently derive a substantial portion of our revenues from sales by our
subsidiary Diamond, which manufactures several of our products and products for
other companies in the animal health industry. Revenues from one contract
between Diamond and Agri Laboratories, Ltd., comprised approximately 16% of our
total revenues in 2001 and 17% of our total revenues in 2000. That contract
expires in 2004 and is automatically renewed unless either party does not wish
to renew. We are currently in negotiations with Agri Laboratories to modify and
extend this agreement, but there is no assurance we will be successful. If Agri
Laboratories does not continue to purchase from Diamond and if we fail to
replace the lost revenue with revenues from other customers, our business could
be substantially harmed. In addition, sales from our next three largest
customers accounted for an aggregate of approximately 12% of our revenues in
2001. If we are unable to maintain our relationships with one or more of these
customers, our sales may decline.
WE OPERATE IN A HIGHLY COMPETITIVE INDUSTRY, WHICH COULD RENDER OUR PRODUCTS
OBSOLETE OR SUBSTANTIALLY LIMIT THE VOLUME OF PRODUCTS THAT WE SELL. THIS WOULD
LIMIT OUR ABILITY TO COMPETE AND ACHIEVE PROFITABILITY.
We compete with independent animal health companies and major
pharmaceutical companies that have animal health divisions. Companies with a
significant presence in the animal health market, such as Wyeth (formerly
American Home Products), Bayer AG, IDEXX Laboratories, Inc., Intervet
International B.V., Merial Ltd., Novartis AG, Pfizer Inc., Pharmacia Corporation
and Schering Plough Corporation, have developed or are developing products that
compete with our products or would compete with them if developed. These
competitors may have substantially greater financial, technical, research and
other resources and larger, better-established marketing, sales, distribution
and service organizations than us. In addition, we believe that IDEXX prohibits
its distributors from selling its competitors' products, including our SOLO STEP
heartworm diagnostic products and medical diagnostic instruments. Our
competitors frequently offer broader product lines and have greater name
recognition than we do. Our competitors may develop or market technologies or
products that are more effective or commercially attractive than our current or
future products or that would render our technologies and products obsolete.
Further, additional competition could come from new entrants to the animal
healthcare market. Moreover, we may not have the financial resources, technical
expertise or marketing, distribution or support capabilities to compete
successfully. If we fail to compete successfully, our ability to achieve
profitability will be limited.
WE MAY BE UNABLE TO SUCCESSFULLY MARKET AND DISTRIBUTE OUR PRODUCTS AND HAVE
RECENTLY MODIFIED OUR DISTRIBUTION STRATEGY.
The market for companion animal healthcare products is highly fragmented,
with discount stores and specialty pet stores accounting for a substantial
percentage of sales of certain products. Because our proprietary products are
available only by prescription and our medical instruments require technical
training, we sell our companion animal health products only to veterinarians.
Therefore, we may fail to reach a substantial segment of the potential market.
We currently market our products in the United States to veterinarians
through approximately 20 independent third party distributors and through a
direct sales force. Nearly one-half of these domestic distributors carry the
full line of our pharmaceutical, vaccine, diagnostic and instrumentation
products. We have recently begun to rely on distributors for a greater portion
of our sales and therefore need to increase our training efforts directed at the
sales personnel of our distributors. To be successful, we will have to continue
to develop and train our direct sales force as well as sales personnel of our
distributors and rely on other arrangements with third parties to market,
distribute and sell our products. In addition, most of our distributor
agreements can be terminated on 60 days' notice and IDEXX, our largest
competitor, prohibits its distributors from selling competitors' products,
including ours. For example, one of our largest distributors recently informed
us that they would no longer carry our heartworm diagnostic products or our
chemistry or hematology instruments because they wish to carry products from one
of our competitors.
We may not successfully develop and maintain marketing, distribution or
sales capabilities, and we may not be able to make arrangements with third
parties to perform these activities on satisfactory terms. If our marketing and
distribution strategy is unsuccessful, our ability to sell our products will be
negatively impacted and our revenues will decrease. Furthermore, the recent
change in our distribution strategy and our expected increase in sales from
distributors and decrease in direct sales may have a negative impact on our
gross margins.
WE HAVE GRANTED THIRD PARTIES SUBSTANTIAL MARKETING RIGHTS TO CERTAIN OF OUR
EXISTING PRODUCTS AS WELL AS PRODUCTS UNDER DEVELOPMENT. IF THE THIRD PARTIES
ARE NOT SUCCESSFUL IN MARKETING OUR PRODUCTS OUR SALES MAY NOT INCREASE.
Our agreements with our corporate marketing partners generally contain no
minimum purchase requirements in order for them to maintain their exclusive or
co-exclusive marketing rights. Currently, Novartis Agro K.K. markets and
distributes SOLO STEP CH in Japan, and Novartis Animal Health Canada, Inc.
distributes our Flu AVERT I.N. Vaccine in Canada. In addition, we have entered
into agreements with Novartis, Ralston Purina and Eisai Inc. to market or co-
market certain of the products we are currently developing. Also, Nestle Purina
Petcare has exclusive rights to license our technology for nutritional
applications for dogs and cats. One or more of these marketing partners may not
devote sufficient resources to marketing our products. Furthermore, there is
nothing to prevent these partners from pursuing alternative technologies or
products that may compete with our products. In the future, third party
marketing assistance may not be available on reasonable terms, if at all. If any
of these events occur, we may not be able to commercialize our products and our
sales will decline.
WE MAY FACE COSTLY INTELLECTUAL PROPERTY DISPUTES.
Our ability to compete effectively will depend in part on our ability to
develop and maintain proprietary aspects of our technology and either to operate
without infringing the proprietary rights of others or to obtain rights to
technology owned by third parties. We have United States and foreign-issued
patents and are currently prosecuting patent applications in the United States
and with various foreign countries. Our pending patent applications may not
result in the issuance of any patents or any issued patents that will offer
protection against competitors with similar technology. Patents we receive may
be challenged, invalidated or circumvented in the future or the rights created
by those patents may not provide a competitive advantage. We also rely on trade
secrets, technical know-how and continuing invention to develop and maintain our
competitive position. Others may independently develop substantially equivalent
proprietary information and techniques or otherwise gain access to our trade
secrets.
The biotechnology and pharmaceutical industries have been characterized by
extensive litigation relating to patents and other intellectual property rights.
In 1998, Synbiotics Corporation filed a lawsuit against us alleging infringement
of a Synbiotics patent relating to heartworm diagnostic technology, and this
litigation remains ongoing. We may become subject to additional patent
infringement claims and litigation in the United States or other countries or
interference proceedings conducted in the United States Patent and Trademark
Office, or USPTO, to determine the priority of inventions. The defense and
prosecution of intellectual property suits, USPTO interference proceedings, and
related legal and administrative proceedings are costly, time-consuming and
distracting. We may also need to pursue litigation to enforce any patents issued
to us or our collaborative partners, to protect trade secrets or know-how owned
by us or our collaborative partners, or to determine the enforceability, scope
and validity of the proprietary rights of others. Any litigation or interference
proceeding will result in substantial expense to us and significant diversion of
the efforts of our technical and management personnel. Any adverse determination
in litigation or interference proceedings could subject us to significant
liabilities to third parties. Further, as a result of litigation or other
proceedings, we may be required to seek licenses from third parties which may
not be available on commercially reasonable terms, if at all.
OUR TECHNOLOGY AND THAT OF OUR COLLABORATORS MAY BECOME THE SUBJECT OF LEGAL
ACTION.
We license technology from a number of third parties, including Quidel
Corporation, Genzyme Corporation, Diagnostic Chemicals, Ltd., Valentis, Inc.,
Corixa Corporation, Roche, New England Biolabs, Inc. and Hybritech Inc., as
well as a number of research institutions and universities. The majority of
these license agreements impose due diligence or milestone obligations on us,
and in some cases impose minimum royalty and/or sales obligations on us, in
order for us to maintain our rights under these agreements. Our products may
incorporate technologies that are the subject of patents issued to, and patent
applications filed by, others. As is typical in our industry, from time to time
we and our collaborators have received, and may in the future receive, notices
from third parties claiming infringement and invitations to take licenses under
third party patents. It is our policy that when we receive such notices, we
conduct investigations of the claims they assert. With respect to the notices we
have received to date, we believe, after due investigation, that we have
meritorious defenses to the infringement claims asserted. Any legal action
against us or our collaborators may require us or our collaborators to obtain
one or more licenses in order to market or manufacture affected products or
services. However, we or our collaborators may not be able to obtain licenses
for technology patented by others on commercially reasonable terms, we may not
be able to develop alternative approaches if unable to obtain licenses, or
current and future licenses may not be adequate for the operation of our
businesses. Failure to obtain necessary licenses or to identify and implement
alternative approaches could prevent us and our collaborators from
commercializing our products under development and could substantially harm our
business.
WE HAVE LIMITED MANUFACTURING EXPERIENCE AND CAPACITY AND RELY
SUBSTANTIALLY ON THIRD-PARTY MANUFACTURERS. THE LOSS OF ANY THIRD-PARTY
MANUFACTURERS COULD LIMIT OUR ABILITY TO LAUNCH OUR PRODUCTS IN A TIMELY MANNER,
OR AT ALL.
To be successful, we must manufacture, or contract for the manufacture of,
our current and future products in compliance with regulatory requirements, in
sufficient quantities and on a timely basis, while maintaining product quality
and acceptable manufacturing costs. In order to increase our manufacturing
capacity, we acquired Diamond in April 1996.
We currently rely on third parties to manufacture those products we do not
manufacture at our Diamond facility. We currently have supply agreements with
Quidel Corporation for various manufacturing services relating to our point-of-
care diagnostic tests, with Centaq, Inc. for the manufacture of our own allergy
immunotherapy treatment products and with various manufacturers for the supply
of our veterinary diagnostic and patient monitoring instruments. Our
manufacturing strategy presents the following risks:
* Delays in the scale-up to quantities needed for product development could
delay regulatory submissions and commercialization of our products in
development;
* Our manufacturing facilities and those of some of our third party
manufacturers are subject to ongoing periodic unannounced inspection by
regulatory authorities, including the FDA, USDA and other federal and
state agencies for compliance with strictly enforced Good Manufacturing
Practices regulations and similar foreign standards, and we do not have
control over our third party manufacturers' compliance with these
regulations and standards;
* If we need to change to other commercial manufacturing contractors for
certain of our products, additional regulatory licenses or approvals
must be obtained for these contractors prior to our use. This would
require new testing and compliance inspections. Any new manufacturer
would have to be educated in, or develop substantially equivalent
processes necessary for the production of our products;
* If market demand for our products increases suddenly, our current
manufacturers might not be able to fulfill our commercial needs,
which would require us to seek new manufacturing arrangements and may
result in substantial delays in meeting market demand; and
* We may not have intellectual property rights, or may have to share
intellectual property rights, to any improvements in the manufacturing
processes or new manufacturing processes for our products.
Any of these factors could delay commercialization of our products under
development, interfere with current sales, entail higher costs and result in our
being unable to effectively sell our products.
Our agreements with various suppliers of the veterinary medical instruments
require us to meet minimum annual sales levels to maintain our position as the
exclusive distributor of these instruments. We may not meet these minimum sales
levels in the future, and maintain exclusivity over the distribution and sale of
these products. If we are not the exclusive distributor of these products,
competition may increase.
WE DEPEND ON PARTNERS IN OUR RESEARCH AND DEVELOPMENT ACTIVITIES. IF OUR CURRENT
PARTNERSHIPS AND COLLABORATIONS ARE NOT SUCCESSFUL, WE MAY NOT BE ABLE TO
DEVELOP OUR TECHNOLOGIES OR PRODUCTS.
For several of our proposed products, we are dependent on collaborative
partners to successfully and timely perform research and development activities
on our behalf. For example, we jointly developed several point-of-care
diagnostic products with Quidel Corporation, and Quidel manufactures these
products. We license DNA delivery and manufacturing technology from Valentis
Inc. and distribute chemistry analyzers for Arkray, Inc. We also have worked
with i-Stat Corporation to develop portable clinical analyzers for dogs and
Diagnostic Chemicals, Ltd. to develop the E.R.D.-SCREEN Urine Test, and we are
working with 3-Dimensional Pharmaceuticals, Inc. to develop pharmaceutical
products. One or more of our collaborative partners may not complete research
and development activities on our behalf in a timely fashion, or at all. If our
collaborative partners fail to complete research and development activities, or
fail to complete them in a timely fashion, our ability to develop technologies
and products will be impacted negatively and our revenues will decline.
WE DEPEND ON KEY PERSONNEL FOR OUR FUTURE SUCCESS. IF WE LOSE OUR KEY PERSONNEL
OR ARE UNABLE TO ATTRACT AND RETAIN ADDITIONAL PERSONNEL, WE MAY BE UNABLE TO
ACHIEVE OUR GOALS.
Our future success is substantially dependent on the efforts of our senior
management and scientific team, particularly Dr. Robert B. Grieve, our Chairman
and Chief Executive Officer. The loss of the services of members of our senior
management or scientific staff may significantly delay or prevent the
achievement of product development and other business objectives. Because of the
specialized scientific nature of our business, we depend substantially on our
ability to attract and retain qualified scientific and technical personnel.
There is intense competition among major pharmaceutical and chemical companies,
specialized biotechnology firms and universities and other research institutions
for qualified personnel in the areas of our activities. Although we have an
employment agreement with Dr. Grieve, he is an at-will employee, which means
that either party may terminate his employment at any time without prior notice.
If we lose the services of, or fail to recruit, key scientific and technical
personnel, the growth of our business could be substantially impaired. We do not
maintain key person life insurance for any of our key personnel.
WE MAY FACE PRODUCT RETURNS AND PRODUCT LIABILITY LITIGATION AND THE EXTENT OF
OUR INSURANCE COVERAGE IS LIMITED. IF WE BECOME SUBJECT TO PRODUCT LIABILITY
CLAIMS RESULTING FROM DEFECTS IN OUR PRODUCTS, WE MAY FAIL TO ACHIEVE MARKET
ACCEPTANCE OF OUR PRODUCTS AND OUR SALES COULD DECLINE.
The testing, manufacturing and marketing of our current products as well as
those currently under development entail an inherent risk of product liability
claims and associated adverse publicity. Following the introduction of a
product, adverse side effects may be discovered. Adverse publicity regarding
such effects could affect sales of our other products for an indeterminate time
period. To date, we have not experienced any material product liability claims,
but any claim arising in the future could substantially harm our business.
Potential product liability claims may exceed the amount of our insurance
coverage or may be excluded from coverage under the terms of the policy. We may
not be able to continue to obtain adequate insurance at a reasonable cost, if at
all. In the event that we are held liable for a claim against which we are not
indemnified or for damages exceeding the $10 million limit of our insurance
coverage or which results in significant adverse publicity against us, we may
lose revenue and fail to achieve market acceptance.
WE MAY BE HELD LIABLE FOR THE RELEASE OF HAZARDOUS MATERIALS, WHICH COULD RESULT
IN EXTENSIVE CLEAN UP COSTS OR OTHERWISE HARM OUR BUSINESS.
Our products and development programs involve the controlled use of
hazardous and biohazardous materials, including chemicals, infectious disease
agents and various radioactive compounds. Although we believe that our safety
procedures for handling and disposing of such materials comply with the
standards prescribed by applicable local, state and federal regulations, we
cannot eliminate the risk of accidental contamination or injury from these
materials. In the event of such an accident, we could be held liable for any
fines, penalties, remediation costs or other damages that result. Our liability
for the release of hazardous materials could exceed our resources, which could
lead to a shutdown of our operations. In addition, we may incur substantial
costs to comply with environmental regulations as we expand our manufacturing
capacity.
WE EXPECT TO EXPERIENCE VOLATILITY IN OUR STOCK PRICE, WHICH MAY AFFECT OUR
ABILITY TO RAISE CAPITAL IN THE FUTURE OR MAKE IT DIFFICULT FOR INVESTORS TO
SELL THEIR SHARES.
The securities markets have experienced significant price and volume
fluctuations and the market prices of securities of many public biotechnology
companies have in the past been, and can in the future be expected to be,
especially volatile. For example, in the last twelve months our closing stock
price has ranged from a low of $0.50 to a high of $1.50. Fluctuations in the
trading price or liquidity of our common stock may adversely affect our ability
to raise capital through future equity financings. Factors that may have a
significant impact on the market price and marketability of our common stock
include:
* announcements of technological innovations or new products by us or by our
competitors;
* our quarterly operating results;
* releases of reports by securities analysts;
* developments or disputes concerning patents or proprietary rights;
* regulatory developments;
* developments in our relationships with collaborative partners;
* changes in regulatory policies;
* litigation;
* economic and other external factors; and
* general market conditions.
In the past, following periods of volatility in the market price of a
company's securities, securities class action litigation has often been
instituted. If a securities class action suit is filed against us, we would
incur substantial legal fees and our management's attention and resources would
be diverted from operating our business in order to respond to the litigation.
IF WE FAIL TO MEET NASDAQ NATIONAL MARKET LISTING REQUIREMENTS, OUR COMMON STOCK
MAY BE DELISTED AND BECOME ILLIQUID.
Our common stock is currently listed on the Nasdaq National Market. Nasdaq
has requirements we must meet in order to remain listed on the Nasdaq National
Market. If we continue to experience losses from our operations or we are unable
to raise additional funds as needed, we might not be able to maintain the
standards for continued quotation on the Nasdaq National Market, including a
minimum bid price requirement of $1.00. During the year ended December 31, 2001,
our minimum bid price at times fell below $1.00 and on April 2, 2002, our
closing price was $1.15. If the minimum bid price of our common stock were to
drop below $1.00 and remain below $1.00 for 30 consecutive trading days, or if
we were unable to continue to meet Nasdaq's standards for any other reason, our
common stock could be delisted from the Nasdaq National Market.
If as a result of the application of these listing requirements, our common
stock were delisted from the Nasdaq National Market, our stock would become
harder to buy and sell. Further, our stock could be subject to what are known as
the "penny stock" rules. The penny stock rules place additional requirements on
broker-dealers who sell or make a market in such securities. Consequently, if we
were removed from the Nasdaq National Market, the ability or willingness of
broker-dealers to sell or make a market in our common stock might decline. As a
result, the ability for investors to resell shares of our common stock could be
adversely affected.
THE REGISTRATION OF THE SHARES SOLD IN THIS OFFERING WILL INCREASE THE
NUMBER OF SHARES AVAILABLE FOR RESALE IN THE PUBLIC MARKET.
The sale into the public market of the common stock sold in this offering
could adversely affect the market price of our common stock. Most of our shares
of common stock outstanding are eligible for immediate and unrestricted sale in
the public market at any time. Once the registration statement of which this
prospectus forms a part is declared effective, the 7,792,768 shares of common
stock covered by this prospectus will be eligible for immediate and unrestricted
resale into the public market. The presence of these additional shares of common
stock in the public market may further depress our stock price.
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated herein by reference contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Exchange Act. Words such as
"anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates,"
variations of such words and similar expressions are intended to identify such
forward- looking statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and assumptions that
are difficult to predict. Therefore, actual results could differ materially
from those expressed or forecasted in any such forward-looking statements as a
result of certain factors, including those set forth in "Risk Factors," as well
as those noted in the documents incorporated herein by reference. In connection
with forward-looking statements that appear in these disclosures, investors
should carefully review the factors set forth in this prospectus under "Risk
Factors."
USE OF PROCEEDS
Heska will not receive any of the proceeds from the sale of the shares
offered by this prospectus. All proceeds from the sale of the shares offered
hereby will be for the account of the selling stockholders, as described below.
See "Selling Stockholders" and "Plan of Distribution."
SELLING STOCKHOLDERS
The following table sets forth as of March 26, 2002, the name of each of the
selling stockholders, the number of shares of common stock that each selling
stockholder owns, the number of shares of common stock owned by each selling
stockholder that may be offered for sale from time to time by this prospectus,
and the number of shares of common stock to be held by each selling stockholder
assuming the sale of all the common stock offered hereby.
Some of the selling stockholders may distribute their shares, from time to
time, to their limited and/or general partners, who may sell shares pursuant to
this prospectus. Each selling stockholder may also transfer shares owned by him
by gift, and upon any such transfer the donee would have the same right of sale
as the selling stockholder.
The shares being offered by the selling stockholders were acquired in
connection with a private placement on December 18, 2001. Except as set forth
below, none of the selling stockholders has had a material relationship with us
within the past three years other than as a result of the ownership of our
common stock. We may amend or supplement this prospectus from time to time to
update the disclosure set forth herein.
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO NUMBER OF SHARES OWNED AFTER
NAME OF SELLING STOCKHOLDER OFFERING(1) BEING OFFERED OFFERING(1)(2)
--------------------------------------------- ------------------------ --------------- ---------------------
NUMBER PERCENT NUMBER PERCENT
----------- ----------- ----------- ---------
State of Wisconsin Investment Board(3) 9,490,182 19.84% 1,818,182 7,672,000 16.04%
Charter Ventures II, L.P.(4) 8,414,717 17.59% 2,207,793 6,206,924 12.97%
Lombard Odier & Cie(5) 3,911,851 8.18% 649,351 3,262,500 6.82%
FSVK Investment Inc. 259,741 * 259,741 0 *
Rhino Capital LLC 259,741 * 259,741 0 *
A. Carey Zesiger(6) 32,000 * 26,000 6,000 *
Alexa Zesiger Carver(6) 32,000 * 26,000 6,000 *
Albert L. Zesiger(6) 352,000 * 130,000 222,000 *
Asphalt Green, Inc.(6) 32,000 * 32,000 0 *
Barrie Ramsay Zesiger(6) 250,000 * 117,000 133,000 *
David Zesiger(6) 31,000 * 19,000 12,000 *
HBL Charitable Unitrust(6) 70,000 * 32,000 38,000 *
Psychology Associates(6) 90,000 * 32,000 58,000 *
Lazar Foundation(6) 115,000 * 52,000 63,000 *
Peter Looram(6) 138,000 * 65,000 73,000 *
Mary C. Anderson(6)(7) 142,000 * 65,000 77,000 *
Murray Capital, LLC(6) 70,000 * 32,000 38,000 *
NFIB Corporate Account(6) 314,000 * 162,000 152,000 *
Nicola Zesiger Mullen(6) 39,000 * 32,000 7,000 *
Norwalk Employees' Pension Plan(6) 479,000 1.00% 221,000 258,000 *
Public Employee Retirement System of Idaho(6) 2,174,960 4.55% 1,038,960 1,135,000 2.37%
City of Stamford Firemen's Pension Fund(6) 320,000 * 182,000 138,000 *
Theeuwes Family Trust, Felix Theeuwes Trustee(6) 143,000 * 66,000 77,000 *
Alan B. & Joanne K. Vidinsky 1993 Trust(6) 66,000 * 66,000 0 *
Wells Family LLC(6) 433,000 * 202,000 231,000 *
______________________________
* Represents less than 1% of our common stock.
(1) Based on 47,845,112 shares outstanding as of March 26, 2002.
(2) Assumes that each selling stockholder sells all shares registered under
this registration statement. However, to our knowledge, there are no
agreements, arrangements or understandings with respect to the sale of any
of our common stock, and each selling stockholder may decide not to sell his
shares that are registered under this registration statement.
(3) Based upon information derived from a Schedule 13G filed on February 12,
2002 by State of Wisconsin Investment Board pursuant to Section 13G of the
Securities Exchange Act of 1934 and the rules promulgated thereunder,
reporting its beneficial ownership of our common stock. According to the
Schedule 13G, State of Wisconsin Investment Board has sole power to vote and
dispose of 9,490,182 shares.
(4) Based upon information derived from a Schedule 13D filed on January 9, 2002
by Charter Venture Capital pursuant to Section 13D of the Securities
Exchange Act of 1934 and the rules promulgated thereunder, reporting its
beneficial ownership of our common stock. According to the Schedule 13D,
this represents 3,386,510 shares and options to purchase 1,000 shares of our
common stock held by Charter Ventures and 5,026,207 shares and options to
purchase 1,000 shares of our common stock held by Charter Ventures II, L.P.
Mr. A. Barr Dolan, one of our directors, is a general partner of each of
Charter Ventures and Charter Ventures II, L.P., and may be deemed a
beneficial owner of the shares held by such entities because of shared
voting power with respect to such shares. Mr. Dolan disclaims beneficial
ownership except to the extent of his proportionate share therein.
(5) Based upon information derived from a Schedule 13G filed on February 14,
2002 by Lombard Odier & Cie pursuant to Section 13G of the Securities
Exchange Act of 1934 and the rules promulgated thereunder, reporting its
beneficial ownership of our common stock. According to the Schedule 13G,
the shares are held for the benefit of Lombard Odier Nutrition Fund, over
which Lombard Odier & Cie and Lombard Odier Fund Managers S.A. share voting
and dispositive power.
(6) Zesiger Capital Group LLC acted as the agent and attorney-in-fact for this
selling stockholder in connection with the stockholder's acquisition from us
of the shares offered by this selling stockholder under this prospectus.
Zesiger Capital Group LLC is an investment adviser registered with the
Securities and Exchange Commission under the Investment Advisers Act of
1940. This selling stockholder is an advisory client of Zesiger Capital
Group LLC, and the shares offered by this selling stockholder under this
prospectus are held in a discretionary client account managed by Zesiger
Capital Group LLC. Zesiger Capital Group LLC disclaims beneficial ownership
of these shares.
(7) Includes 77,000 shares owned by Ms. Anderson individually and 65,000 shares
offered under this prospectus by the Mary C. Anderson Revocable Trust dtd
7/6/99, for which Ms. Anderson is the trustee.
PLAN OF DISTRIBUTION
We are registering 7,792,768 shares of Common Stock, par value of $0.001 per
share on behalf of certain selling stockholders. We will receive no proceeds
from this offering. The shares may be offered by certain of our stockholders or
by pledgees, donees, transferees or other successors in interest that receive
such shares as a gift, partnership distribution or other non-sale related
transfer. We originally issued the shares in connection with the Share Purchase
Agreement between Heska and the selling stockholders, dated December 13, 2001.
We are registering the shares pursuant to the Share Purchase Agreement. The
shares were issued pursuant to exemptions from the registration requirements of
the Securities Act, provided by Section 4(2) thereof.
The selling stockholders will act independently of Heska in making decisions
with respect to the timing, manner and size of each sale. The selling
stockholders may sell the shares on the Nasdaq National Market, or otherwise, at
prices and under terms then prevailing or at prices related to the then current
market price, at varying prices or at negotiated prices. The shares may be sold,
without limitation, by one or more of the following means of distribution:
* a block trade in which the broker-dealer so engaged will attempt to sell
such shares as agent, but may position and resell a portion of the block as
principal to facilitate the transaction;
* purchases by a broker-dealer as principal and resale by such broker-dealer
for its own account pursuant to this prospectus;
* an over-the-counter distribution in accordance with the rules of the Nasdaq
National Market;
* ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
* in privately negotiated transactions. To the extent required, this
prospectus may be amended and supplemented from time to time to describe a
specific plan of distribution.
In connection with distributions of the shares or otherwise, the selling
stockholders may enter into hedging transactions with broker-dealers or other
financial institutions. In connection with such transactions, broker-dealers or
other financial institutions may engage in short sales of the shares in the
course of hedging the positions they assume with selling stockholders. The
selling stockholders may also sell the shares short and redeliver the shares to
close out such short positions. The selling stockholders may also enter into
option or other transactions with broker-dealers or other financial institutions
which require the delivery to such broker-dealer or other financial institution
of the shares, which shares such broker-dealer or other financial institution
may resell or otherwise transfer pursuant to this prospectus (as supplemented or
amended to reflect such transaction). The selling stockholders may also pledge
the shares to a broker-dealer or other financial institution, and, upon a
default, such broker-dealer or other financial institution, may effect sales of
the pledged shares pursuant to this prospectus (as supplemented or amended to
reflect such transaction). In addition, any shares that qualify for sale
pursuant to Rule 144 may, at the option of the holder thereof, be sold under
Rule 144 rather than pursuant to this prospectus.
Any broker-dealer participating in such transactions as agent may receive
commissions from the selling stockholders and/or purchasers of the shares (and,
if it acts as agent for the purchaser of such shares, from such purchaser).
Usual and customary brokerage fees will be paid by the selling stockholders.
Broker-dealers may agree with the selling stockholders to sell a specified
number of shares at a stipulated price per share, and, to the extent such a
broker-dealer is unable to do so acting as agent for the selling stockholders,
to purchase as principal any unsold shares at the price required to fulfill the
broker-dealer commitment to the selling stockholders. Broker-dealers who acquire
shares as principal may thereafter resell such shares from time to time in
transactions (which may involve cross and block transactions and which may
involve sales to and through other broker-dealers, including transactions of the
nature described above) in the over-the-counter market, in negotiated
transactions or otherwise at market prices prevailing at the time of sale or at
negotiated prices, and in connection with such resales, may pay to or receive
from the purchasers of such shares commissions computed as described above.
Such broker-dealers and any other participating broker-dealers or the selling
stockholders may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act in connection with such sales and any such
commission, discount or concession may be deemed to be underwriting discounts or
commissions under the Securities Act. Because the selling stockholders may be
deemed to be an underwriter under Section 2(11) of the Securities Act, the
selling stockholders will be subject to the prospectus delivery requirements of
the Securities Act.
To comply with the securities laws of certain states, if applicable, the
shares will be sold in such jurisdictions only through registered or licensed
brokers or dealers. In addition, in certain states the shares may not be sold
unless they have been registered or qualified for sale in the applicable state
or an exemption from the registration or qualification requirement is available
and is complied with.
Under applicable rules and regulations under the Exchange Act, any persons
engaged in the distribution of the shares may not simultaneously engage in
market making activities with respect to our common stock for a period of two
business days prior to the commencement of such distribution. In addition and
without limiting the foregoing, each selling stockholder will be subject to
applicable provisions of the Exchange Act and the associated rules and
regulations thereunder, including, without limitation, Regulation M, which
provisions may limit the timing of purchases and sales of shares of our common
stock by the selling stockholders. We will make copies of this prospectus
available to the selling stockholders and have informed them of the need for
delivery of copies of this prospectus to purchasers at or prior to the time of
any sale of the shares. We assume no obligation to so deliver copies of this
prospectus or any related prospectus supplement.
At the time a particular offer of shares is made, if required, a prospectus
supplement will be distributed that will set forth the number of shares being
offered and the terms of the offering, including the name of any underwriter,
dealer or agent, the purchase price paid by any underwriter, any discount,
commission and other item constituting compensation, any discount, commission or
concession allowed or reallowed or paid to any dealer, and the proposed selling
price to the public.
The selling stockholders will be responsible for any fees, disbursements and
expenses of any counsel for the selling stockholders. We will bear all other
expenses incurred in connection with the registration of the shares, including
printer's and accounting fees and the fees, disbursements and expenses of
counsel for us up to a certain amount. Commissions and discounts, if any,
attributable to the sales of the shares will be borne by the selling
stockholders. The selling stockholders may agree to indemnify any broker-dealer
that participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the Securities Act. We will
indemnify the selling stockholders against claims arising out of any untrue
statement of a material fact contained in this Registration Statement or any
omission to state therein a material fact necessary in order to make the
statement made therein not misleading.
We have undertaken to keep a Registration Statement of which this prospectus
constitutes a part effective until the earlier of the disposition of the
securities offered hereby or two years measured from the effective date of this
Registration Statement. After such period, if we choose not to maintain the
effectiveness of the Registration Statement of which this prospectus constitutes
a part, the securities issuable offered hereby may not be sold, pledged,
transferred or assigned, except in a transaction which is exempt under the
provisions of the Securities Act or pursuant to an effective registration
statement thereunder.
LEGAL MATTERS
Certain legal matters relating to the validity of the securities offered
hereby will be passed upon for us by Wilson Sonsini Goodrich & Rosati,
Professional Corporation, San Francisco, California.
EXPERTS
The financial statements incorporated by reference in this prospectus have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file at the SEC's Public Reference Rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. The Public Reference Room in
Washington, D.C. is located at 450 Fifth Street, N.W. Please call the SEC at 1-
800-SEC-0330 for further information on the public conference rooms. Our SEC
filings are also available to the public from the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Section
13a, 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until our
offering is completed.
(1) Our Annual Report on Form 10-K, for the year ended December 31, 2001;
(2) Our Proxy Statement filed with the Securities and Exchange Commission
on March 28, 2002; and
(3) The description of our Common Stock contained in our Registration
Statement on Form 8-A, filed with the Securities and Exchange
Commission on April 24, 1997, and any further amendment or report
filed hereafter for the purpose of updating any such description.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Heska Corporation
1613 Prospect Parkway
Fort Collins, Colorado 80525
(970) 493-7272
You should rely only on the information incorporated by reference or
provided in this prospectus or the prospectus supplement. We have authorized no
one to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus or the prospectus supplement is
accurate as of any date other than the date on the front of the document.
PROSPECTIVE INVESTORS MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS. NEITHER HESKA NOR ANY SELLING STOCKHOLDERS HAS AUTHORIZED ANYONE TO
PROVIDE PROSPECTIVE INVESTORS WITH INFORMATION DIFFERENT FROM THAT CONTAINED IN
THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT SEEKING AN
OFFER TO BUY THE SHARES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF THE DELIVERY OF THIS
PROSPECTUS OR ANY SALE OF THE SHARES.
HESKA CORPORATION
7,792,768 SHARES
COMMON STOCK
PROSPECTUS
_____________, 2002
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The Company will pay all expenses incident to the offering and sale to the
public of the shares being registered other than any commissions and discounts
of underwriters, dealers or agents and any transfer taxes. Such expenses are set
forth in the following table. All of the amounts shown are estimates except for
the Securities and Exchange Commission registration fee.
SEC Registration Fee $ 2,440
Accounting fees and expenses 15,000
Legal fees and expenses 100,000
Miscellaneous 5,560
---------
Total $ 123,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law allows for the
indemnification of officers, directors and any corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act. Our certificate of incorporation and our bylaws provide for
indemnification of our directors, officers, employees and other agents to the
extent and under the circumstances permitted by the Delaware General Corporation
Law. We have also entered into agreements with our directors and executive
officers that require Heska, among other things, to indemnify them against
certain liabilities that may arise by reason of their status or service as
directors and executive officers to the fullest extent permitted by Delaware
law. We have also purchased directors and officers liability insurance, which
provides coverage against certain liabilities including liabilities under the
Securities Act.
ITEM 16. EXHIBITS
EXHIBIT INDEX
EXHIBIT
NUMBER NOTES DESCRIPTION
-------- -------- -----------------------------------------------------
5.1 * Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation
10.1 * Share Purchase Agreement dated December 13, 2001
(incorporated by reference to the Current Report on
Form 8-K filed by the Registrant on December 20, 2001)
23.1 * Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP, independent accountants
24.1 * Power of Attorney (contained on Page II-4)
*Previously filed.
ITEM 17. UNDERTAKINGS
(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:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more
than a 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in the
periodic reports filed by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act") that are incorporated by reference into this 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.
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Exchange Act that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) 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
Securities and Exchange 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 Securities Act and
will be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) for purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule
430A and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this Registration Statement as of the
time it was declared effective.
(2) for the purpose of determining liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Fort Collins, State of Colorado, on April 3,
2002.
HESKA CORPORATION
By: /s/ Robert B. Grieve
---------------------------
Robert B. Grieve
Chief Executive Officer and
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed below by the following persons on
behalf of the Registrant on April 3, 2002.
SIGNATURE TITLE
------------------------------------------ --------------------------------------------
Chief Executive Officer (Principal Executive
/s/ Robert B. Grieve Officer) and Chairman of the Board
------------------------------------------
Robert B. Grieve
Chief Financial Officer (Principal Financial
/s/ Ronald L. Hendrick and Accounting Officer)
------------------------------------------
Ronald L. Hendrick
Director
*
------------------------------------------
William A. Aylesworth
Director
*
------------------------------------------
A. Barr Dolan
Director
*
------------------------------------------
G. Irwin Gordon
Director
*
------------------------------------------
Lyle A. Hohnke
Director
*
------------------------------------------
Edith W. Martin
Director
*
------------------------------------------
John F. Sasen, Sr.
* Director
------------------------------------------
Lynnor B. Stevenson
* /s/ Robert B. Grieve
------------------------------------------
Robert B. Grieve
Attorney-in-fact
INDEX TO EXHIBITS
EXHIBIT
NUMBER NOTES DESCRIPTION
-------- -------- -----------------------------------------------------
5.1 * Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation
10.1 * Share Purchase Agreement dated December 13, 2001
(incorporated by reference to the Current Report on
Form 8-K filed by the Registrant on December 20, 2001)
23.1 * Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP, independent accountants
24.1 * Power of Attorney (contained on Page II-4)
* Previously filed.
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Amendment No. 2 to the Form S-3 registration statement of
our report dated February 1, 2002, except with respect to the matter discussed
in Note 15, as to which the date is March 13, 2002, included in Heska
Corporation and Subsidiaries Form 10-K for the year ended December 31, 2001 and
all references to our Firm included in or made part of this registration
statement.
/s/ ARTHUR ANDERSEN LLP
Denver, Colorado
April 2, 2002