As filed with the Securities and Exchange Commission on April 27, 2006
Registration No. 333-___________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
AMERICAN BIO MEDICA CORPORATION
(Exact name of registrant as specified in its charter)
New York 14-1702188
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
122 Smith Road 12106
Kinderhook, New York (Zip Code)
(Address of principal executive offices)
800-227-1243
Stan Cipkowski
Chief Executive Officer
122 Smith Road
Kinderhook, New York 12106
(800)-227-1243
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Richard L. Burstein, Esq.
Tuczinski, Cavalier, Burstein & Collura, P.C.
54 State Street, Suite 803
Albany, New York 12207
(518)-463-3990
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At such
time or times after the Registration Statement becomes effective as the selling
shareholder may determine.
If the only securities being registered on this form are to be 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, please check the following box. |X|
If this form is to be 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 this Form is a registration statement pursuant to General Instruction
I.D. or a post-effective amendment thereto that shall become effective upon
filing with the Commission pursuant to Rule 462(e) under the Securities Act,
check the following box. |_|
If this Form is a post-effective amendment to a registration statement
filed pursuant to General Instruction I.D. filed to register additional
securities or additional classes of securities pursuant to Rule 413(b) under the
Securities Act, 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 OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
CALCULATION OF REGISTRATION FEE
---------------------------------------------------------------------------------------------------------------------
Proposed
maximum Maximum
Title of each class offering price aggregate Amount of
of securities to be registered Amount to be registered per share offering price registration fee
---------------------------------------------------------------------------------------------------------------------
Common Shares, par value $.01 400,000 shares $0.98(1) $392,000(1) $42
per share
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended, on
the basis of the average of the high and low sales prices for such common
shares on April 25, 2006 as reported on the Nasdaq SmallCap Market.
PROSPECTUS
AMERICAN BIO MEDICA CORPORATION
400,000 COMMON SHARES
This is an offering of up to 400,000 common shares, par value $0.01 a
share, of American Bio Medica Corporation, all of which are common shares
issuable upon the exercise of warrants. All of these securities are being
offered by the Selling Shareholder identified on page 12.
The last reported sale price of the common shares, which are listed on The
Nasdaq SmallCap Market under the symbol "ABMC," was $1.00 per share on April 25,
2006. Our headquarters are located at 122 Smith Road, Kinderhook, New York
12106. Our telephone number is (800) 227-1243.
THE SHARES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS FOR INFORMATION THAT YOU SHOULD
CONSIDER BEFORE PURCHASING THESE SECURITIES.
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 April 27, 2006.
1
TABLE OF CONTENTS
Page
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PROSPECTUS SUMMARY 2
THE COMPANY 2
THE OFFERING 3
RISK FACTORS 4
USE OF PROCEEDS 11
SELLING SHAREHOLDERS 12
PLAN OF DISTRIBUTION 12
LEGAL MATTERS 13
EXPERTS 13
WHERE YOU CAN FIND ADDITIONAL INFORMATION 13
--------------------------------------------------------------------------------
PROSPECTUS SUMMARY
This summary highlights our business and other selected information
contained elsewhere in the prospectus. This summary does not contain all of the
information that you should consider before making an investment decision. You
should read the entire prospectus carefully, including our financial statements
and other information incorporated by reference in this prospectus, before
deciding to invest.
THE COMPANY
We develop, manufacture and market biomedical technologies and products
intended for the immediate, point of collection screening for drugs of abuse.
Our Rapid Drug Screen(R), Rapid One(R), Rapid TEC(R), RDS(R) InCup(R) and Rapid
TOX(TM) are urine-based kits, and our OralStat(R) is an oral fluid based kit.
All of our test kits are easy to use, cost-effective, highly accurate and
reliable tests for the presence of drugs of abuse in individuals. We own several
patents that are used in our product lines. We also market the Rapid Reader(TM),
a compact, portable device that, when connected to any computer, interprets the
results of an ABMC drug screen, and sends the results to a data management
system, enabling the test administrator to easily manage their drug testing
program. We manufacture all of our point of collection drug test kits however we
do not manufacture the Rapid Reader.
We can produce various configurations and combinations of drug test kits
for our customers, which can include one to twelve drugs per test kit depending
on the product the customer chooses. Our products can contain tests that detect
the following fourteen classes of drugs: cocaine, THC (marijuana), opiates
(available at either 300 ng/ml or 2000 ng/ml), amphetamine, PCP,
benzodiazepines, methamphetamines, barbiturates, tricyclic antidepressants,
methadone, oxycodone, MDMA (Ecstasy), propoxyphene and buprenorphine.
Our point of collection test kits are competitively priced and accurate.
We also believe that our products are easier to use than most other competitive
products. Controlled tests conducted by an independent laboratory, American
Medical Laboratories, compared the results obtained when using our test kits
with the results produced by EMIT II, an enzyme immunoassay laboratory test, and
found greater than 99% correlation of results.
2
Our tests require marketing clearance from the Food and Drug
Administration, or FDA. We have received 510(k) clearance for our 9 panel Rapid
Drug Screen test. With this approval and the approvals obtained related to our
Rapid One dipsticks, we can offer a variety of combinations to meet customer
requirements, both in multiple panel tests and individual Rapid One tests. In
addition, the testing strips contained in the RDS InCup are the same as those
testing strips contained within the RDS. Therefore, the RDS InCup can be offered
in a variety of combinations to meet customer requirements
In November 2004, we received our third 510(k) clearance related to our
Rapid TEC product line (we previously received clearances in 2002 and 2003).
With this third clearance ABMC can provide clinical customers with various
configurations of 2 to 14 classes of drugs of abuse. In July 2005 we received
510(k) clearance on the Rapid Reader. This was the first all-inclusive drug
screen result interpretation and data management system that received 510(k)
clearance from FDA. The clearance allows ABMC to provide the Rapid Reader to
customers in clinical markets. We have submitted an application for 510(k)
clearance for our Rapid TOX product line to FDA and are currently awaiting FDA's
decision on the application. The OralStat has not received 510(k) clearance from
FDA and is currently available for "forensic use only".
In addition to manufacturing, marketing and selling our point of
collection devices, we also perform contract manufacturing for non-affiliated
POC diagnostic companies. Currently we manufacture test components for the
detection of:
o TB (Tuberculosis; a highly contagious disease responsible for more
deaths than any other infectious disease according to the World
Health Organization);
o HIV (Human Immunodeficiency Virus; the virus that causes AIDS);
o RSV (Respiratory Syncytial Virus; the most common cause of lower
respiratory tract infections in children worldwide); and
o Fetal amniotic membrane rupture.
We do not currently derive a significant portion of our revenues from
contract manufacturing.
THE OFFERING
This is an offering of up to 400,000 common shares, par value $0.01 a
share, of American Bio Medica Corporation common stock, all of which are common
shares issuable upon the exercise of warrants. On April 28, 2000, in connection
with our sale of 1,408,450 common shares for $2,000,000 ($1.42 per share) in a
private placement to Seaside Partners, L.P. ("Seaside"), we issued a 5 year
warrant to Seaside to purchase 953,283 common shares of our stock at an exercise
price of $1.17 per share. These common shares were registered by ABMC in an SB-2
Registration Statement filed with the Commission on November 17, 2000. To settle
a penalty owed to Seaside because of the late effective registration statement,
we adjusted the exercise price of the 953,283 warrant shares from $1.17 to $0.95
in February 2001.
In November 2003, the Seaside warrant was transferred and the common
shares underlying the exercise of the warrants and respective rights and
obligations under the Common Stock Purchase Agreement were assigned to Steven
Grodko ("Grodko"). As of the date of this Prospectus, Grodko has exercised
553,283 warrants, leaving a balance of 400,000 warrants. In October 2005, the
Company entered into an Extension Agreement and registration letter agreement
with Grodko in which the Company extended the term of the warrant. The Grodko
warrant will now expire on October 28, 2006. (the Extension Agreement and
registration letter agreement were filed as Exhibits 4.18 and 4.19 respectively
to ABMC's Annual Report on Form 10-KSB filed with the Commission on March 31,
2006).
3
All of these securities are being offered by the Selling Shareholder
identified on page __, below. We are registering the Selling Shareholder's
resale of these securities. The registration of these common shares does not
necessarily mean that any of them will be offered or sold by the Selling
Shareholder. The securities may be sold directly by the Selling Shareholder or
through brokers, dealers or agents in private or market transactions. In
connection with any sales, the Selling Shareholder and any brokers, dealers or
agents participating in such sales may be deemed to be "underwriters" within the
meaning of the Securities Act. See "Selling Shareholder" and "Plan of
Distribution."
RISK FACTORS
We have a limited operating history, which may make it difficult to accurately
forecast our future revenues and other operating results.
We began selling our drugs of abuse screening products in 1996 and began
providing contract manufacturing services for other companies in late 2001. As a
result, we have only a limited operating history upon which one may evaluate our
business and prospects. Our limited operating history may make it difficult or
impossible for analysts or investors to accurately forecast regarding our future
revenues and other operating results and the price of our securities could
decline substantially.
We have a history of incurring net losses.
Since inception in 1992 through the fiscal transition period ending
December 31, 2001, we incurred net losses. We began earning profits in the
fiscal year ending December 31, 2002 and continued to be profitable through
December 31, 2004. However, in the fiscal year ending December 31, 2005, we
incurred a net loss of $376,000. As of December 31, 2005, we have an accumulated
deficit of $13.5 million. We expect to continue to make substantial expenditures
for sales and marketing, product development and other purposes. Our ability to
achieve profitability in the future will primarily depend on our ability to
increase sales of our products, reduce production and other costs and
successfully introduce new products and enhanced versions of our existing
products into the marketplace. There can be no assurance that we will be able to
increase our revenues at a rate that equals or exceeds expenditures. Our failure
to do so will result in our incurring additional losses.
Our products are sold in limited markets and the failure of any one of them to
achieve widespread market acceptance would significantly harm our results of
operation.
We offer a number of drugs of abuse screening products that are sold in
limited markets, and we currently derive most of our revenues from sales of our
drugs of abuse screening product line. To attain break-even results of
operations, given current levels of operating expenses, we must achieve
approximately $3.3 million in quarterly revenues from our products. In addition,
the markets in which we sell our products are cost competitive. If we are
required to lower our prices to our customers, our revenue levels could be
negatively impacted which would adversely affect our gross profit margins. If
our products do not achieve and maintain this level of revenue, or maintain
certain gross profit margins, our results of operations would be significantly
harmed.
In addition, we only began selling our drugs of abuse product line in
1996, and cannot yet predict whether they will gain further widespread market
acceptance. Achieving market acceptance for our drug tests will require
substantial marketing efforts and expenditure of significant funds to inform
potential distributors and customers of the distinctive characteristics,
benefits and advantages of our test kits. A number of our products have only
recently been introduced in the marketplace (with our most recent additions
being the OralStat and RDS InCup, introduced in July 2004 and the Rapid TOX,
introduced in July 2005). We have no history upon which to base market or
customer acceptance of these products. Introduction of the OralStat, RDS InCup
and Rapid TOX have required, and may continue to require substantial marketing
efforts and expenditure of funds.
4
Due to the variety and complexity of the environments in which our
customers operate, our products may not operate as expected. This could result
in cancelled orders, delays and increased expenses. In addition, the success of
competing products and technologies, pricing pressures or manufacturing
difficulties could further reduce our profitability and the price of our
securities.
If we fail to keep up with technological factors and fail to develop our
products, we may be at a competitive disadvantage.
The point of collection drug testing market is highly competitive. Several
companies produce drug tests that compete directly with our drugs of abuse
product line, including Varian, Inc., Biosite Diagnostics and Medtox Scientific,
Inc. in the urine point of collection testing market and OraSure Technologies,
Inc. in the saliva point of collection testing market. As new technologies
become introduced into the point of collection testing market, we may be
required to commit considerable additional efforts, time and resources to
enhance our current product portfolio or develop new products. Our success will
depend upon new products meeting targeted product costs and performance, in
addition to timely introduction into the marketplace. We are subject to all of
the risks inherent in product development, which could cause material delays in
manufacturing.
We rely on third parties for raw materials used in our drugs of abuse products
and in our contract manufacturing processes.
We currently have approximately 68 suppliers who provide us with the raw
materials necessary to manufacture our drug testing strips and our drugs of
abuse screening products. For most of our raw materials we have multiple
suppliers however, there are a few chemical raw materials for which we only have
one supplier. The loss of one or more of these suppliers, the non-performance of
one or more of their materials or the lack of availability of raw materials
could suspend our manufacturing process related to our drugs of abuse products.
This interruption of the manufacturing process could impair our ability to fill
customers' orders as they are placed, which would put us at a competitive
disadvantage.
Furthermore, we rely on a number of third parties for supply of the raw
materials necessary to manufacture the test components we supply to other
diagnostic companies under contract manufacturing agreements. For most of these
raw materials we have multiple suppliers however, there are a few chemical raw
materials for which we only have one supplier. The loss of one or more of these
suppliers could suspend the strip manufacturing process and this interruption
could impair our ability to perform contract manufacturing services.
We have a significant amount of raw material and "work in process" inventory on
hand that may not be used in the next twelve months if the expected
configuration of sales orders are not received at our projected levels.
We currently have approximately $2.043 million in raw material components
for the manufacture of our product at December 31, 2005. The non-chemical raw
material components may be retained and used in production indefinitely and the
chemical raw materials components have lives in excess of 20 years. In addition
to the raw material inventory, we have approximately $2.049 million in
manufactured testing strips, or other "work in process" inventory at December
31, 2005. The components of this work in process inventory have lives of 12-18
months. If sales orders received are not for devices that would utilize the raw
material components, or if product developments make the raw materials obsolete,
we may be required to dispose of the unused raw materials. In addition, since
the components of the work in process inventory have lives of 12-18 months, if
sales orders within the next 12-18 months are not for devices that contain the
components of the work in process inventory, we may need to discard the unused
work in process inventory. In 2004, we established a $100,000 reserve for
obsolete or slowing moving inventory. In 2005, we increased this reserve by an
incremental $150,000. There can be no assurance that this reserve will be
adequate for 2006 and/or that it will not have to be increased.
5
We depend on our Research & Development ("R&D") team for product development
and/or product enhancement.
Product development and/or enhancement are performed by our R&D team.
There can be no assurance that our R&D team can successfully complete the
enhancement of our current products and/or complete the development of new
products. Furthermore, the loss of one or more members of our R&D team could
result in the interruption or termination of new product development and/or
current product enhancement, affecting our ability to provide new or improved
products to the marketplace, which would put us at a competitive disadvantage.
Our products must be cost competitive and perform to the satisfaction of our
customers.
Cost competitiveness and satisfactory product performance are essential
for success in the point of collection drug testing market. There can be no
assurance that new products we may develop will meet projected price or
performance objectives. In fact, price competition is increasing in the point of
collection testing markets as additional foreign (i.e. non-U.S. based companies)
manufacturers enter the market. Foreign manufacturers have lower manufacturing
costs and therefore can offer their products at a lower cost than a U.S.
manufacturer. These lower costs include but are not limited to costs for labor,
materials, regulatory compliance and insurance.
Moreover, there can be no assurance that unanticipated problems will not
arise with respect to technologies incorporated into our test kits or that
product defects, affecting product performance, will not become apparent after
commercial introduction of our additional test kits. In the event that we are
required to remedy defects in any of our products after commercial introduction,
the costs to us could be significant, which could have a material adverse effect
on our revenues or earnings.
We face significant competition in the drug testing market and potential
technological obsolescence.
We face competition from other manufacturers of drugs of abuse screening
products such as Varian, Inc., Medtox Scientific, Inc. and Biosite Diagnostics
in the urine point of collection testing market and OraSure Technologies, Inc in
the saliva point of collection testing market. These competitors are more well
known and have far greater financial resources than us. The markets for drugs of
abuse screening products and related products are highly competitive. There can
be no assurance that other companies will not attempt to develop or market
products directly competitive with our drugs of abuse product line. We expect
other companies to develop technologies or products, which will compete with our
products.
Possible inability to hire and retain qualified personnel.
We will need additional skilled, sales and marketing, technical and
production personnel to grow the business. If we fail to retain our present
staff or hire additional qualified personnel our business could suffer.
6
We depend on key personnel to manage our business effectively.
We are dependent on the expertise and experience of our senior management
such as Stan Cipkowski, Chief Executive Officer, Keith E. Palmer, Chief
Financial Officer, Martin Gould, Chief Scientific Officer and Todd Bailey, Vice
President, Sales & Marketing for our future success. The loss of Messrs.
Cipkowski, Palmer, Gould and/or Bailey could negatively impact our business and
results of operations. We do not maintain key man insurance for any of our
management employees and there can be no assurance that any of our senior
management will continue their employment.
Failure to effectively manage our growth and expansion could adversely affect
our business and operating results.
We anticipate expansion of our operations in the future. Any failure to
manage our growth effectively will result in less efficient operations, which
could adversely affect our operating and financial results.
To effectively manage our growth, we must, among other things:
o accurately estimate the number of employees we will require and the
areas in which they will be required;
o upgrade and expand our office infrastructure so that it is
appropriate for our level of activity;
o manage expansion into additional geographic areas; and
o improve and refine our operating and financial systems.
We expect to devote considerable resources and management time to
improving our operating and financial systems to manage our growth. Failure to
accomplish any of these objectives would impede our ability to deliver products
and services in a timely fashion, fulfill existing customer orders and attract
and retain new customers; these impediments would have a material adverse effect
on our financial condition, results of operations and cash flows.
Any adverse changes in our regulatory framework could negatively impact our
business.
Approval from FDA is not currently required for the sale of our products
in non-clinical markets, but is required in the clinical and over-the-counter
("OTC") markets. Although our drugs of abuse products have met FDA requirements
for professional use, we have not obtained OTC clearance from FDA. The workplace
market is one of our primary markets and if any additional FDA clearance is
required to sell in this market, this additional cost may cause us to raise the
price of our products making it difficult to compete with other point of
collection products or laboratory based testing, thereby negatively impacting
our revenues. Furthermore, there can be no assurance that if we are required to
apply for additional FDA clearances they will be granted. If such clearance is
not granted, we would be unable to sell our products in the workplace market and
our revenues would be negatively impacted. Although we are currently unaware of
any changes in regulatory standards related to the clinical and OTC markets, if
regulatory standards were to change in the future, there can be no assurance
that FDA will grant us the approvals, if and when we apply for them, required to
comply with the changes.
We rely on intellectual property rights, and we may not be able to obtain patent
or other protection for our technology, products or services.
We rely on a combination of patent, copyright, trademark and trade secret
laws, confidentiality procedures and contractual provisions to protect our
proprietary technology, products and services. We also believe that factors such
as the technological and creative skills of our personnel, new product
developments, frequent product enhancements and name recognition are essential
to establishing and maintaining our technology leadership position. All
personnel are bound by non-disclosure agreements. If personnel leave our
employment, in some cases we would be required to protect our intellectual
property rights pursuant to common law theories, which may be less protective
than provisions of employment, non-competition or non-disclosure agreements.
7
We seek to protect our proprietary products under trade secret and
copyright laws, which afford only limited protection. We currently have a total
of 24 U.S. and foreign patents relating to the Rapid Drug Screen and/or Rapid
One product line. We have additional patent applications pending in the United
States, and other countries, related to our drugs of abuse products. We have
trademark applications pending in the United States. Certain trademarks have
been registered in the United States and in other countries.
Despite our efforts to protect our proprietary rights, unauthorized
parties may attempt to copy aspects of our products or to obtain information
that we regard as proprietary. For example, our sales were adversely affected in
fiscal 2000 and fiscal 2001 (year ending April 30, 2001) as a result of sales of
products similar to ours. In April of 1999, we filed suit in a federal court
against Phamatech, Inc. of California, a former supplier of ours, and numerous
other parties to stop these sales. We incurred significant legal fees attempting
to enforce our patents. In April 2001, we settled with Phamatech and all other
defendants in this lawsuit.
We may be required to incur significant costs to protect our intellectual
property rights in the future. In addition, the laws of some foreign countries
do not ensure that our means of protecting our proprietary rights in the United
States or abroad will be adequate. Policing and enforcement against the
unauthorized use of our intellectual property rights could entail significant
expenses and could prove difficult or impossible. Additionally, there is no
assurance that the additional patents will be granted or that additional
trademarks will be registered.
Potential issuance and exercise of new warrants and exercise of outstanding
warrants could adversely affect the value of our securities.
In addition to the warrants and 400,000 common shares underlying the
warrants covered under this Prospectus, ABMC has the following securities
outstanding:
In May 2001, we issued a 5 year warrant to purchase 200,000 common shares
of our stock at an exercise price of $1.50 per share to Brean Murray & Co., Inc.
("Brean Murray") as compensation for their services as a financial advisor.
On August 22, 2001, we issued warrants ("Private Placement Warrants"),
exercisable during a 54 month period beginning February 22, 2002, to purchase
1,274,500 common shares of our stock at an exercise price of $1.05 per share in
connection with the private placement of 2,549,000 shares of common stock (the
1,274,500 warrants issued in connection with the August 2001 private placement
trade on the National Association of Securities Dealers Automated Quotations
("NASDAQ") SmallCap Market and may be hereafter referred to as the "trading
warrants"). We also issued, on August 22, 2001, warrants, exercisable during a
54 month period beginning February 22, 2002, to purchase a total of 203,920
common shares of our stock at an exercise price of $1.20 per share, of which
warrants to purchase 152,940 common shares were issued to Brean Murray as
compensation for their services as placement agent and warrants to purchase
12,745 common shares were issued to Axiom Capital Management, Inc., warrants to
purchase 5,735 common shares were issued to Jeffrey Goldberg, warrants to
purchase 16,250 common shares were issued to Barry Zelin, and warrants to
purchase 16,250 common shares were issued to David L. Jordon, each for their
services as sub-agents of Brean Murray. In the fiscal year end December 31,
2004, 2,500 trading warrants were exercised and in fiscal year ending December
31, 2005, 2,500 trading warrants were exercised, leaving a balance of 1,269,500
trading warrants.
8
On December 2, 2003, we issued a warrant, exercisable during a 5 year
period beginning December 2, 2003, to purchase 300,000 common shares of our
stock at an exercise price of $1.15 per share to Brean Murray as compensation as
our financial advisor. In June 2004, we amended the December 2, 2003 Financial
Advisory Agreement with Brean Murray and Brean Murray surrendered 150,000 of the
300,000 warrants to purchase common stock (a copy of this amendment was filed as
Exhibit 10.19.1 to the Company's Form 10QSB for the quarter ended June 30,
2004).
If the warrants under this Prospectus, the Brean Murray warrants, and the
Private Placement warrants are exercised, the common shares issued will be
freely tradable, increasing the total number of common shares issued and
outstanding. If these shares are offered for sale in the public market, the
sales could adversely affect the prevailing market price by lowering the bid
price of our securities. The exercise of any of these warrants could also
materially impair our ability to raise capital through the future sale of equity
securities because issuance of the common shares underlying the warrants would
cause further dilution of our securities. The warrants are subject to or contain
certain anti-dilution protection that may result in the issuance of additional
shares under some circumstances including, but not limited to, paying of a
dividend, subdivision of our outstanding shares into a greater number of shares,
combination of our outstanding shares into a smaller number of shares, an
issuance of shares of common stock by reclassification or in the case of the
warrants under this Prospectus and Brean Murray warrants, a sale of our common
shares, or a security convertible into common shares, for consideration per
share less than the exercise price of the warrants.
Potential issuance and exercise of new options and exercise of outstanding
options could adversely affect the value of our securities.
The Board of Directors of the Company has adopted 4 Nonstatutory Stock
Option Plans providing for the granting of options to employees, directors, and
consultants (see Note H[2]). As of December 31, 2005, there were 4,268,080
options issued and outstanding under all four plans combined. The Company's
Board of Directors accelerated the vesting periods of all outstanding options to
vest 100% on December 14, 2005 therefore as of December 31, 2005 all options
issued and outstanding, or 4,268,080 were exercisable. As of December 31, 2005,
there were 9,500 options available for issuance under the Fiscal 2000 Plan and
664,420 options available for issuance under the Fiscal 2001 Plan. There are no
options available for issuance under either the Fiscal 1997 Plan or the Fiscal
1998 Plan and there are no options issued and outstanding under the Fiscal 1997
Plan As options expire or are cancelled under the Fiscal 1997 and Fiscal 1998
Plan, they are not re-issued.
If these options are exercised, the common shares issued will be freely
tradable, increasing the total number of common shares issued and outstanding.
If these shares are offered for sale in the public market, the sales could
adversely affect the prevailing market price by lowering the bid price of our
securities. The exercise of any of these options could also materially impair
our ability to raise capital through the future sale of equity securities
because issuance of the common shares underlying the options would cause further
dilution of our securities. The options are subject to or contain certain
anti-dilution protection that may result in the issuance of additional shares
under some circumstances including, but not limited to, paying of a dividend in
common shares, a declaration of a dividend payable in a form other than common
shares in an amount that has a material effect on the price of common shares, a
combination or consolidation of the outstanding common shares (by
reclassification or otherwise) into a lesser number of common shares, a
recapitalization, a spin-off or a similar occurrence.
9
Substantial resale of restricted securities may depress the market price of our
securities.
There are 4,369,655 common shares presently issued and outstanding as of
the date hereof that are "restricted securities" as that term is defined under
the Securities Act of 1933, as amended, (the "Securities Act") and in the future
may be sold in compliance with Rule 144 of the Securities Act, or pursuant to a
Registration Statement filed under the Securities Act. Rule 144 provides that a
person holding restricted securities for a period of one year or more may, in
any three month period, sell those securities in unsolicited brokerage
transactions or in transactions with a market maker, in an amount equal to the
greater of one percent of our outstanding common shares or the average weekly
trading volume for the prior four weeks. Sales of unrestricted shares by
affiliates of the Company are also subject to the same limitation upon the
number of shares that may be sold in any three-month period. Investors should be
aware that sales under Rule 144 or 144(k), or pursuant to a registration
statement filed under the Act, may depress the market price of our Company's
securities in any market that may develop for such shares.
We may need additional funding for our existing and future operations.
The Company believes that its current cash balances, and cash generated
from future operations will be sufficient to fund operations for the next twelve
months. This estimate is based on certain assumptions and there can be no
assurance that unanticipated costs will not be incurred. Future events,
including the problems, delays, expenses and difficulties which may be
encountered in establishing and maintaining a substantial market for our
products, could make cash on hand insufficient to fund operations. If cash
generated from operations is insufficient to satisfy the Company's working
capital and capital expenditure requirements, the Company may be required to
sell additional equity or debt securities or obtain additional credit
facilities. There can be no assurance that such financing will be available or
that the Company will be able to complete financing on satisfactory terms, if at
all. Any financing may result in further dilution to existing shareholders.
Our ability to retain and attract market makers is important to the continued
trading of our securities.
Our common shares trade on the NASDAQ SmallCap Market under the symbol
"ABMC", and our common stock purchase warrants trade on the NASDAQ SmallCap
Market under the symbol "ABMCW". In the event that the market makers cease to
function as such, public trading in our securities will be adversely affected or
may cease entirely.
If we fail to meet the continued listing requirements of the NASDAQ SmallCap
Market, our securities could be delisted.
Our securities are listed on the NASDAQ SmallCap Market. The NASDAQ Stock
Market's Marketplace Rules impose requirements for companies listed on the
NASDAQ SmallCap Market to maintain their listing status, including minimum
common share bid price of $1.00, and $2,500,000 in shareholders' equity or
$500,000 in net income in the last fiscal year. As of the date of filing of this
Prospectus our common shares are trading below the minimum bid requirement and
our common shares have traded at levels lower than the minimum bid requirement
within the last twelve months (see Current Report on Form 8-K filed with the
Securities and Exchange Commission on March 23, 2006).
Delisting could reduce the ability of investors to purchase or sell our
securities as quickly and as inexpensively as they have done historically and
could subject transactions in our securities to the penny stock rules.
Furthermore, failure to obtain listing on another market or exchange may make it
more difficult for traders to sell our securities. Broker-dealers may be less
willing or able to sell or make a market in our securities because of the penny
stock disclosure rules. Not maintaining a listing on a major stock market may
result in a decrease in the trading price of our securities due to a decrease in
liquidity and less interest by institutions and individuals in investing in our
securities. Delisting from the NASDAQ SmallCap Market would also make it more
difficult for us to raise capital in the future.
10
CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING STATEMENTS
Some of the statements in this Prospectus are forward-looking statements.
In addition, we may make forward-looking statements in future filings with the
Securities and Exchange Commission and in written materials, press releases and
oral statements issued by us or on our behalf. Forward-looking statements
include statements regarding the intent, belief or current expectations of us or
our officers, including statements preceded by, followed by or including
forward-looking terminology such as "may", "will", "could", "should", "believe",
"expect", "anticipate", "estimate", "continue", "predict" or similar
expressions, with respect to various matters.
It is important to note that our actual results could differ materially
from those anticipated from the forward-looking statements depending on various
important factors. These important factors include continued acceptance of the
Company's products, increased levels of competition in our industry, the
acceptance of new products, inherent risks associated with product development
and intellectual property rights, our dependence on key personnel, third party
sales and suppliers, and other factors discussed in "Risk Factors" beginning on
page 12 of this Prospectus.
All forward-looking statements in this Prospectus are based on information
available to us on the date of this Prospectus. We do not undertake any duty to
update any forward-looking statements that may be made by us or on our behalf in
this Prospectus or otherwise. In addition, please note that matters set forth
under the caption "Risk Factors" beginning on page 12 of this Prospectus
constitute cautionary statements identifying important factors with respect to
the forward-looking statements, including certain risks and uncertainties that
could cause actual results to differ materially from those in such
forward-looking statements.
An investment in our common shares involves a high degree of risk. You
should carefully consider the specific factors listed above, together with the
cautionary statement under the caption "Cautionary Statement Regarding Forward
Looking Statements" and the other information included in this Prospectus,
before purchasing our common shares. The risks described above are not the only
ones that we face. Additional risks that are not yet known to us or those we
currently think are immaterial could also impair our business, operating results
or financial condition. If any of the following risks actually occur, our
business, financial condition or results of operations could be adversely
affected. In such case, the trading price of our common shares could decline,
and you may lose all or part of your investment.
USE OF PROCEEDS
We will not receive any proceeds from the common shares being sold in this
offering. The common shares will be offered and sold by the Selling Shareholder
for their own accounts. However, if the Selling Shareholder exercises the
remaining warrants to purchase 400,000 common shares, we will receive proceeds
of $380,000 as a result of such exercise.
11
SELLING SHAREHOLDER
The following table sets forth the name of the Selling Shareholder, the
number of common shares beneficially owned by the Selling Shareholder as of
April 25, 2006 and the number and percentage of common shares owned by them
after the offering, assuming all shares offered by the selling shareholder are
sold and are sold to third parties:
NUMBER OF COMMON NUMBER OF COMMON
SHARES BENEFICIALLY SHARES BENEFICIALLY PERCENT BENEFICIALLY
NAME OF SELLING OWNED BEFORE THE NUMBER OF COMMON OWNED AFTER THE OWNED AFTER THE
SHAREHOLDER OFFERING SHARES OFFERED(1) OFFERING OFFERING(2)
--------------- ------------------- ----------------- ------------------- --------------------
Steven Grodko 400,000 400,000 0 0%
(1) The number set forth in this column represents the number of common
shares issuable under the exercise of warrants issued to the Selling
Shareholder.
(2) Based upon 21,359,768 common shares outstanding as of April 25, 2006.
Assuming all shares offered by this Prospectus are sold and are sold to third
parties.
Except for being a holder of our common shares listed in the table above,
the Selling Shareholder has not held any position, office, or had any other
material relationship with us in the past three years.
PLAN OF DISTRIBUTION
The Selling Shareholder, or their pledgees, donees, transferees or other
successors in interest, may offer the common shares covered by this Prospectus
to the public or otherwise from time to time. We are registering the Selling
Shareholder's resale of these common shares. The registration of these common
shares does not necessarily mean that any of them will be offered or sold by the
Selling Shareholder. In connection with any sales, the Selling Shareholder and
any brokers, dealers or agents participating in such sales may be deemed to be
"underwriters" within the meaning of the Securities Act, and any profit on the
sale of common shares by them and any discounts, concessions or commissions
received by any brokers, dealers or agents may be deemed to be underwriting
discounts and commissions under the Securities Act.
The sales may be made, from time to time, in The Nasdaq Stock Market, on
any stock exchange, in the over-the-counter market, in privately negotiated
transactions or otherwise at prices prevailing in such market, at prices related
to market prices or at negotiated or fixed prices. In effecting sales, the
Selling Shareholder may engage brokers, dealers and agents, and they may arrange
for other brokers, dealers or agents to participate. Brokers, dealers and agents
will receive usual and customary commissions, concessions or discounts from the
Selling Shareholder in amounts to be negotiated, and, if the broker, dealer or
agent acts as agent for the purchaser of the common shares, from the purchaser.
Brokers, dealers or agents may agree with the Selling Shareholder to sell
a specified number of common shares at a stipulated price per share, and, to the
extent such broker, dealer or agent is unable to do so acting as agent for the
Selling Shareholder, to purchase as principal any unsold common shares at the
price required to fulfill the broker's, dealer's or agent's commitment to the
Selling Shareholder. Brokers, dealers or agents who acquire the common shares as
principal may resell those common shares from time to time in transactions,
which may involve crosses and block transactions and which may involve sales to
and through other brokers, dealers or agents, including transactions of the
nature described above in The Nasdaq Stock Market, on any stock exchange, in the
over-the-counter market, in negotiated transactions or otherwise, at market
prices prevailing at the time of sale, at prices related to market prices or at
negotiated or fixed prices, and in connection with these resales may pay to or
receive from the purchasers of common shares, commissions, concessions or
discounts as described above.
12
We are bearing all of the costs relating to the registration of the common
shares. Any commissions, concessions, discounts, or other fees payable to a
broker, dealer, agent or market maker in connection with any sale of common
shares will be borne by the Selling Shareholder. We estimate that our total
expenses of this offering, other than such commissions, concessions, discounts
or other fees, will be approximately $12,542. We will not receive any of the
proceeds from the sale of the common shares by the Selling Shareholder. However,
if the Selling Shareholder exercises the remaining warrants to purchase 400,000
common shares, we will receive proceeds of $380,000 as a result of such
exercise.
We have informed the selling shareholder that the anti-manipulation
provisions of Regulation M under the Exchange Act may apply to purchases and
sales of securities by the Selling Shareholder, and that there are restrictions
on market-making activities by persons engaged in the distribution of the common
shares. We have also advised the Selling Shareholder that if a particular offer
of common shares is to be made on terms constituting a material change from the
information described in this "Plan of Distribution" section of the Prospectus,
then, to the extent required, a Prospectus Supplement must be distributed
setting forth such terms and related information as required.
LEGAL MATTERS
The validity of the common shares offered by this prospectus has been
passed upon for us by Tuczinski, Cavalier, Burstein & Collura, P.C., 54 State
Street, Suite 803, Albany, New York 12207.
EXPERTS
The financial statements as of December 31, 2005, incorporated in this
Prospectus by reference, have been so included in reliance on the report of UHY
LLP, independent registered public accountants, given on the authority of said
firm as experts in auditing and accounting.
MATERIAL CHANGES
There have been no material changes in the Company's affairs since
December 31, 2005 which have not been described in a report on Quarterly Report
on Form 10-QSB or a Current Report on Form 8-K.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You can read and copy any materials we file with the
SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549. You may also obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet
site that contains reports, proxy and information statements, and other
information regarding issuers such as us that file electronically with the SEC.
The address of the SEC's website is http://www.sec.gov. We also maintain a
website at http://www.abmc.com. The information on our website is not part of
this Prospectus.
13
We have filed with the SEC a Registration Statement on Form S-3 to
register the common shares that we are offering in this Prospectus. This
Prospectus is part of the Registration Statement. This Prospectus does not
include all of the information contained in the Registration Statement. For
further information about the common shares and us offered in this Prospectus,
you should review the Registration Statement. You can inspect or copy the
Registration Statement, at prescribed rates, at the SEC's public reference
facilities at the address listed above.
Statements contained in this Prospectus concerning the provisions of
documents are necessarily summaries of such documents and when any such document
is an exhibit to the Registration Statement, each such statement is qualified in
its entirety by reference to the copy of such document filed with the SEC.
INCORPORATION BY REFERENCE
The Securities and Exchange Commission allows us to "incorporate by
reference" information that we file with it, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is an important part of this prospectus.
Information in this prospectus supersedes information incorporated by reference
that we filed with the SEC prior to the date of this prospectus, while
information that we file later with the SEC will automatically update and
supersede this information.
This Prospectus incorporates documents by reference that are not presented
in or delivered with it. The following documents, which we have filed with the
SEC, are incorporated by reference into this Prospectus:
o Our Annual Report on Form 10-KSB for fiscal year ended December 31,
2005 filed March 31, 2006.
o The description of our common shares in our prospectus included in
our registration statement filed with the Securities and Exchange
Commission on November 21, 1996, on Form 10-SB under the caption
"Description of Securities" on page 18 of the prospectus and
incorporated by reference into any reports filed for the purpose of
updating such description.
In addition, all documents filed by us under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 after the date of this Prospectus
but before termination of this offering are deemed to be incorporated by
reference into this Prospectus and will constitute a part of this Prospectus
form the date of filing of those documents.
The documents incorporated by reference into this Prospectus are available
from us upon request. We will provide to each person, including any beneficial
owner, to whom this Prospectus is delivered, at no cost to the requester, upon
your written or oral request, a copy of all of the information that is
incorporated in this Prospectus by reference, except for exhibits unless the
exhibits are specifically incorporated by reference into this prospectus. Please
submit your requests for any of such documents to: American Bio Medica
Corporation, 122 Smith Road, Kinderhook, New York 12106, Attn: Melissa A.
Decker, Corporate Secretary, (800) 227-1243.
14
PART II
Information Not Required in Prospectus
Item 14. Other Expenses Of Issuance And Distribution
The expenses payable by us in connection with the issuance and
distribution of the securities are estimated as follows:
AMOUNT
------
SEC Registration Fee $ 42
Legal Fees and Expenses $ 7,500
Accounting $ 5,000
Transfer Agent Fees $ --
Miscellaneous $ --
Total: $ 12,542
========
Item 15. Indemnification of Directors and Officers
Under the New York Business Corporation Law ("NYBCL"), a corporation may
indemnify any person made, or threatened to be made, a party to any action or
proceeding, except for shareholder derivative suits, by reason of the fact that
he or she was a director or officer of the corporation, provided such director
or officer acted in good faith for a purpose which he or she reasonably believed
to be in the best interests of the corporation and, in criminal proceedings, in
addition, had no reasonable cause to believe his or her conduct was unlawful. In
the case of shareholder derivative suits, the corporation may indemnify any
person by reason of the fact that he or she was a director or officer of the
corporation if he or she acted in good faith for a purpose which he or she
reasonably believed to be in the best interests of the corporation, except that
no indemnification may be made in respect of (i) a threatened action, or a
pending action which is settled or otherwise disposed of; or (ii) any claim,
issue or matter as to which such person has been adjudged to be liable to the
corporation, unless and only to the extent that the court on which the action
was brought, or, if no action was brought, any court of competent jurisdiction,
determines upon application that, in view of all the circumstances of the case,
the person is fairly and reasonably entitled to indemnity for that portion of
the settlement amount and expenses as the court deems proper.
The indemnification described above under the NYBCL is not exclusive of
other indemnification rights to which a director or officer may be entitled,
whether contained in the certificate of incorporation or by-laws, or when
authorized by (i) such certificate of incorporation or by-laws; (ii) a
resolution of shareholders; (iii) a resolution of directors; or (iv) an
agreement providing for such indemnification, provided that no indemnification
may be made to or on behalf of any director or officer if a judgment or other
final adjudication adverse to the director or officer establishes that his or
her acts were committed in bad faith or were the result of active and deliberate
dishonesty and were material to the cause of action so adjudicated, or that he
or she personally gained in fact a financial profit or other advantage to which
he or she was not legally entitled.
In addition, we also maintain a Directors' and Officers' Liability
Insurance Policy.
Item 16. Exhibits
See Index to Exhibits
15
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, ABMC 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 ABMC of expenses incurred or paid by a
director, officer or controlling person of ABMC 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, we will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by us is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue. The Company will:
(a) file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to include any
additional or changed material information on the plan of distribution.
(b) for determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(c) file a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Kinderhook and State of New York on April 27, 2006.
AMERICAN BIO MEDICA CORPORATION
(Registrant)
By: /s/ Keith E. Palmer
-------------------
Keith E. Palmer
Principal Financial Officer,
Executive Vice President &
Treasurer
(Principal Accounting Officer)
Each of the undersigned officers and directors of American Bio Medica
Corporation whose signature appears below hereby appoints Stan Cipkowski and
Keith E. Palmer, and each of them, as true and lawful attorney-in-fact for the
undersigned with full power of substitution, to execute in his name and on his
behalf in each capacity stated below, any and all amendments (including
post-effective amendments) to this registration statement as the
attorney-in-fact shall deem appropriate, and to cause to be filed any such
amendment (including exhibits thereto and other documents in connection
therewith) to this registration statement with the Securities and Exchange
Commission, as fully and to all intents and purposes as such person might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact, or any of them, may lawfully do or cause to be done by virtue
herewith.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on April 27, 2006:
Signature Title
--------- -----
/s/ Stan Cipkowski Chief Executive Officer and Director
-------------------------------- (Principal Executive Officer)
Stan Cipkowski
/s/ Edmund M. Jaskiewicz President and Chairman of the Board of
-------------------------------- Directors
Edmund M. Jaskiewicz
/s/ Keith E. Palmer Principal Financial Officer, Executive Vice
-------------------------------- President and Treasurer
Keith E. Palmer (Principal Accounting Officer)
/s/ Richard P. Koskey Director
--------------------------------
Richard P. Koskey
/s/ Daniel W. Kollin Director
--------------------------------
Daniel W. Kollin
/s/ Carl A. Florio Director
--------------------------------
Carl A. Florio
/s/ Anthony G. Costantino, Ph.D. Director
--------------------------------
Anthony G. Costantino, Ph.D.
S-1
American Bio Medica Corporation
Index to Exhibits
Number Description of Exhibits
------ -----------------------
4.18 Extension Agreement by and between the Company and Steven Grodko, filed
as an exhibit to the Company's Annual Report on Form 10-KSB filed on
March 31, 2006 and incorporated herein by reference
4.19 Registration Letter Agreement by and between the Company and Steven
Grodko filed as an exhibit to the Company's Annual Report on Form
10-KSB filed on March 31, 2006 and incorporated herein by reference
4.20* Form of Warrant by and between the Company and Steven Grodko
5.1* Opinion and Consent of Tuczinski, Cavalier, Burstein & Collura, P.C.
23.1* Consent of Independent Registered Public Accounting Firm
23.2* Consent of Tuczinski, Cavalier, Burstein & Collura. P.C. (contained in
Exhibit 5.1)
24.1* Powers of Attorney (included on page S-1)
----------
* Filed with this registration statement.
E-1