As filed with the Securities and Exchange Commission on November 21, 1996
Registration Statement No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CRYOLIFE, INC.
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(Exact name of registrant as specified in its charter)
Florida 59-2417093
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification No.)
1655 Roberts Boulevard, NW, Kennesaw, Georgia 30144 (770) 419-3355
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(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Steven G. Anderson, President, CEO and
Chairman of the Board of Directors
CryoLife, Inc.
1655 Roberts Boulevard, NW
Kennesaw, Georgia 30144 (770) 419-3355
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(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copy to:
B. Joseph Alley, Jr., Esq.
Arnall Golden & Gregory
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30303-3450
(404) 873-8500
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: FROM TIME TO
TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE, AS DETERMINED BY THE
SELLING SHAREHOLDER.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
367906.5
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. [ ]
CALCULATION OF REGISTRATION FEE
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Proposed
Title of Each Class Proposed Maximum Amount of
of Securities to be Amount to be Maximum Offering Aggregate Offering Registration Fee(1)
Registered Registered Price Per Share (1) Price (1)
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Common Stock
$.01 Par Value 10,395 Shares $15.25 $158,523.75 $100.00
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1
Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) and based upon the average of the high and low prices for the
Company's Common Stock on the Nasdaq National Market on November 15, 1996.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
shall determine.
367906.5
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWfUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED NOVEMBER 21, 1996
CRYOLIFE, INC.
10,395 SHARES
COMMON STOCK
(PAR VALUE, $.01 PER SHARE)
This Prospectus ("Prospectus") relates to 10,395 shares (the "Shares") of
common stock, $.0l par value per share ("Common Stock"), of CryoLife, Inc., a
Florida corporation (the "Company"). The Shares may be offered by a shareholder
of the Company (the "Selling Shareholder") from time to time in transactions in
the over-the-counter market, in negotiated transactions or a combination of such
methods of sale at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. On November
15, 1996, the closing sales price of the Common Stock on the National Market
System, as reported by the National Association of Securities Dealers' Automated
Quotation System ("Nasdaq") was $14.75. The Selling Shareholder may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts or commissions
from the Selling Shareholder and/or the purchasers of the Shares for whom such
broker-dealers may act as agents or to whom they sell as principals, or both.
See "Selling Shareholder" and "Manner of Distribution."
All of the Shares offered hereunder are to be sold by the Selling
Shareholder. None of the proceeds from the sale of the Shares by the Selling
Shareholder will be received by the Company. The Company has agreed to bear all
expenses (other than discounts or commissions) in connection with the
registration and sale of the Shares being offered by the Selling Shareholder.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS NOVEMBER ____, 1996.
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 by this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell, or the
solicitation of an offer to buy, the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make an offer or
solicitation. Except where otherwise indicated, this Prospectus speaks as of the
date hereof. The delivery of this Prospectus shall not, under any circumstances,
create any implication that there has been no change in the affairs of the
Company since the date hereof.
367906.5
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files Annual, Quarterly and Current Reports (on Forms 10-K, 10-Q and
8-K, respectively), proxy statements utilized in the solicitation of
shareholders as well as other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed by the Company under the Exchange Act can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's
Regional Offices at 7 World Trade Center, Suite 1300, New York, New York 10048
and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the Commission, Washington D.C. at prescribed rates. The
Common Stock of the Company is traded on the Nasdaq National Market System.
Reports and other information concerning the Company may be inspected at the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with any amendments thereto, the "Registration Statement") filed with
the Commission under the Securities Act of 1933, as amended (the "Securities
Act") relating to the Shares offered hereby. This Prospectus does not contain
all of the information set forth in the Registration Statement and the exhibits
and schedules thereto, certain portions of which have been omitted in accordance
with the rules and regulations of the Commission. Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance reference is made to such copy of
such contract or other document filed as an exhibit to the Registration
Statement, each statement being qualified in all respects by such reference and
the exhibits and schedules thereto. For further information regarding the
Company and the Shares offered hereby, reference is hereby made to such
Registration Statement and such exhibits and schedules, which may be inspected
without charge at the office of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies of which may be obtained, from the Commission
upon payment of the fees prescribed by the Commission.
DOCUMENTS INCORPORATED BY REFERENCE
In accordance with the requirements of the Exchange Act, the Company
periodically files certain reports and other information with the Commission.
The following documents filed with the Commission are hereby incorporated in
this Prospectus by reference:
(a) The Company's Annual Report on Form 10-K, as amended, filed with
respect to the year ended December 31, 1995.
(b) The Company's Quarterly Report on Form 10-Q filed with respect to the
quarter ended March 31, 1996.
(c) The Company's Current Report on Form 8-K filed with the Commission on
April 16, 1996.
(d) The Company's Quarterly Report on Form 10-Q filed with respect to the
quarter ended June 30, 1996.
(e) The Company's Quarterly Report on Form 10-Q filed with respect to the
quarter ended September 30, 1996.
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(f) The description of the Company's Common Stock contained in the
Company's registration statement filed under Section 12 of the Securities
Exchange Act of 1934, including any amendment or report filed for the purpose of
updating such description.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act prior to the filing of a post-effective
amendment to this registration statement which indicates that all of the shares
of Common Stock offered have been sold or which deregisters all of such shares
then remaining unsold shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this registration statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this registration
statement.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of any such person, a
copy of any or all of the documents incorporated by reference into this
Prospectus, other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference herein. Such requests should be addressed
to CryoLife, Inc., 1655 Roberts Boulevard, NW, Kennesaw, Georgia 30144,
Attention: Suzanne Gabbert, Assistant Secretary (770) 419-3355.
THE COMPANY
The Company is a leader in the development and commercialization of
technology for cryopreservation of viable human cardiovascular and orthopaedic
tissues for transplant. The Company was organized in 1984 to address market
opportunities in the area of biological implantable devices and materials, and
it is today the dominant provider of cryopreservation services for viable human
heart valves. The Company uses proprietary or patented processes to disinfect,
preserve, store, and transport human heart valves, veins, and connective tissues
for use in cardiac, vascular, and orthopaedic surgeries. Tissue preserved using
the Company's proprietary cryopreservation processes can be stored for extended
periods of time and retains cell viability when properly thawed for implantation
into human recipients. Tissue is procured from deceased human donors by organ
procurement agencies and tissue banks (all of which are not-for-profit), which
consign the tissue to the Company for processing and preservation. After
preservation, tissue is stored by the Company or delivered directly to hospitals
at the implanting physician's request. The Company charges a fee for performing
its services but does not buy or sell human tissue. The Company's Common Stock
is traded over the Nasdaq National Market System under the ticker symbol "CRYL."
RISK FACTORS
GOVERNMENT REGULATION
The processing and distribution of the Company's human heart valves are
currently regulated as Class II medical devices by the U.S. Food and
Drug Administration ("FDA"), and are subject to significant regulatory
requirements, including current good manufacturing regulations (GMP)
and record-keeping requirements. There can be no assurance that changes
in regulatory treatment or the adoption of new statutory or regulatory
requirements will not occur, which could impact the marketing of these
products or could affect market demand for these products.
Other allograft tissues processed and distributed by the Company are
currently regulated as "banked human tissue" under an interim rule
promulgated by the FDA pursuant to the Public Health Services Act. This
interim rule establishes requirements for donor testing and screening
for human tissue and record-keeping relating to these activities.
Although the Company's other human tissue allografts are not currently
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regulated as medical devices, such tissue may in the future become
subject to more extensive FDA regulation, which could include premarket
approval or product licensing requirements.
The Company's porcine heart valve products are classified as Class III
medical devices and have not been approved for distribution within the
United States. Distribution of these porcine heart valves within the
European common market is dependent upon the Company maintaining its CE
Mark and ISO 9001 status. There can be no assurance that the Company
will be able to obtain the FDA approval which will be required to
distribute its porcine heart valve products in the United States or
that it will be able to maintain its CE Mark or ISO 9001 status.
Most of the Company's products in development, if successfully
developed, will require regulatory approvals from the FDA and perhaps
other regulatory authorities before they may be commercially
distributed. The process of obtaining required regulatory approvals
from the FDA and other regulatory authorities normally involves
clinical trials in humans and the preparation of an extensive premarket
approval application and often takes many years. The process is
expensive and can vary significantly based on the type, complexity and
novelty of the product. There can be no assurance that any products
developed by the Company, independently or in collaboration with
others, will meet applicable regulatory criteria to receive the
required approvals for manufacturing and marketing. Delays in obtaining
United States or foreign approvals could result in substantial
additional cost to the Company and adversely affect the Company's
competitive position.
The FDA may also place conditions on clearances that could restrict
commercial applications of such products. Product marketing approvals
or clearances may be withdrawn if compliance with regulatory standards
is not maintained or if problems occur following initial marketing.
Delays imposed by the governmental clearance process may materially
reduce the period during which the Company has the exclusive right to
commercialize patented products.
Products marketed by the Company pursuant to FDA or foreign oversight
or approval are subject to pervasive and continuing regulation. In the
United States, devices and biologics must be manufactured in
registered, and in the case of biologics licensed, establishments and
must be produced in accordance with GMP regulations. Manufacturing
facilities and processes are subject to periodic FDA inspection.
Labeling and promotional activities are also subject to scrutiny by the
FDA and, in certain instances, by the Federal Trade Commission. The
export of devices and biologics is also subject to regulation and may
require FDA approval. From time to time the FDA may modify such
regulations, imposing additional or different requirements. Failure to
comply with any applicable FDA requirements, which may be ambiguous,
could result in civil and criminal enforcement actions, product recalls
or detentions and other penalties.
In addition, the National Organ Transplant Act ("NOTA") prohibits the
acquisition or transfer of human organs for "valuable consideration"
for use in human transplantation. NOTA permits the payment of
reasonable expenses associated with the removal, transportation,
processing, preservation, quality control and storage of human organs.
There can be no assurance, however, that restrictive interpretations of
NOTA will not be adopted in the future that will call into question one
or more aspects of the Company's methods of charging for its
preservation services. The Company's laboratory operations are subject
to the U.S. Department of Labor, Occupational Safety and Health
Administration and Environmental Protection Agency requirements for
prevention of occupational exposure to infectious agents and hazardous
chemicals and protection of the environment. Some states have enacted
statutes and regulations governing the processing, transportation and
storage of human organs and tissue and management believes that the
Company is presently in compliance in all material respects with all
such applicable statutes and regulations. There can be no assurance
that more restrictive state laws or regulations will not be adopted in
the future that could adversely affect the Company's operations.
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COMPETITION
The Company faces competition from other companies that cryopreserve
human tissue, as well as companies that market mechanical valves and
synthetic and animal tissue for implantation. Management believes that
at least four tissue banks offer cryopreservation services for human
heart valves and many companies offer processed porcine heart valves
and mechanical heart valves. A few companies dominate portions of the
mechanical and porcine heart valve markets, including St. Jude Medical
Inc. and Medtronic Inc. (mechanical valves) and a division of Baxter
International Inc. (porcine valves). Many of the Company's competitors
have greater financial, technical and marketing resources than the
Company and are well established in their markets. There can be no
assurance that the Company's products and services will be able to
continue to compete successfully with the products of these or other
companies.
Any products developed by the Company that gain regulatory clearance or
approval will have to compete for market acceptance and market share.
An important factor in such competition may be the timing of market
introduction of competitive products. Accordingly, the relative speed
with which the Company can develop products, gain regulatory approval
and reimbursement acceptance and supply commercial quantities of the
product to the market are expected to be important competitive factors.
In addition, the Company believes that the primary competitive factors
for its products include safety, efficacy, ease of use, reliability,
suitability for their specified uses in service and price. The Company
also believes that physician relationships are important competitive
factors.
LIMITED AVAILABILITY OF TISSUE
Although the Company is pursuing the development of products and
services that would not be constrained by tissue availability, such as
its porcine heart valves and biological glues, much of the Company's
current business depends upon the availability of sufficient quantities
of tissue from human donors. In particular, continuing limits on the
supply of donated heart tissue could restrict the Company to modest, if
any, growth in the number of human heart valves preserved by the
Company. Over the past several years, the overall number of human
donors has been relatively constant. A significant reduction in
supplies of human tissue could have a material adverse effect on the
Company's business. The Company relies primarily upon the efforts of
third party procurement agencies (all of which are not for profit) and
others to educate the public and foster an increased willingness to
donate tissue. Based on the Company's experience with human heart
valves, management believes that once the use by physicians of a
particular tissue gains acceptance, demand for transplantable tissue
will exceed the amount of tissue available from human donors. While
tissue availability is not currently a limiting factor for most vein
tissue and orthopedic tissues, rapid growth in these areas could
ultimately be limited by tissue availability, in addition to other
factors.
UNCERTAINTIES REGARDING PRODUCTS IN DEVELOPMENT
The Company's porcine heart valve products are currently only offered
for sale outside of the United States and are presently manufactured by
a third party under a contract. The porcine heart valves are subject to
the risk that the Company may be unable to obtain governmental approval
necessary to permit commercial distribution of these valves in the
United States and to the risk that the Company's manufacturer will not
fulfill its contractual obligations, which could, in turn, result in
shortages of supplies of porcine heart valves.
The Company's research and development efforts are time consuming and
expensive and there can be no assurance that these efforts will lead to
commercially successful products or services. Even the successful
commercialization of a new service or product in the medical industry
can be characterized by slow growth and high cost associated with
marketing, under-utilized production capacity, and continuing research
and development and education costs. Generally, the introduction of new
human tissue products requires significant physician training and years
of clinical evidence derived from human implants in order to gain
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community acceptance. With respect to the Company's major products
under development, FibRx(R) has progressed through animal trials and is
presently undergoing virology validation procedures mandated by the FDA
prior to the approval for human clinical trials, BioGlue(R) is
progressing through animal and toxicity evaluations, and SynerGraft(R)
has begun initial animal testing. In addition, the Company's emphasis
with respect to its BioGlue product in development continues to undergo
modification regarding delivery mechanisms and evaluation of its key
components and their intended applications. As a result of the
foregoing, management cannot effectively predict the duration or extent
of, or whether any newly introduced service will successfully complete,
these initial stages, and as a result, there is no guaranty that any of
these products will ultimately be approved for use on human tissue.
DEVELOPMENT PARTNERS
The Company's strategy for developing, testing and commercializing
certain of its products in development includes entering into
collaborations with academic institutions, corporate partners,
licensors, licensees and others. These collaborations potentially will
provide access to technologies, technical expertise and financial and
other resources that might otherwise be unavailable to the Company. The
Company has entered into collaborations with various institutions
related to the development and testing of its tissue technologies.
Although the Company believes that its partners in these collaborations
are motivated to succeed in performing their contractual
responsibilities, their actual and timely success cannot be assured.
Furthermore, the Company anticipates that its future research and
development projects, including those with respect to its Synergraft
and Bioglue products under development, may require the assistance of
third party collaborators with respect to the provision of capital and
know-how. There can be no assurance, however, that the Company will be
able to negotiate additional collaborative agreements in the future on
acceptable terms, if at all, or that such collaborative arrangements
will be successful. Failure to obtain and successfully execute such
arrangements in the future could increase the Company's capital
requirements to undertake research, development and marketing of its
proposed products. In addition the Company may encounter significant
delays in introducing its proposed products into certain markets or
find that the development, manufacture or sale of its proposed products
in certain markets is adversely affected by the absence of such
collaborative agreements or the failure of collaborative partners to
perform their obligations in a timely fashion.
PATENTS AND PROTECTION OF PROPRIETARY TECHNOLOGY
The Company owns several patents, patent applications, and licenses
relating to its technologies, which it believes provide important
competitive advantages. There can be no assurance that the Company's
pending patent applications will issue as patents or that challenges
will not be instituted concerning the validity or enforceability of any
patent owned by the Company, or, if instituted, that such challenges
will not be successful. The cost of litigation to uphold the validity
and prevent infringement of a patent would be substantial. Furthermore,
there can be no assurance that competitors will not independently
develop similar technologies or duplicate the Company's technologies or
design around the patented aspects of the Company's technologies. There
can be no assurance that the Company's proposed technologies will not
infringe patents or other rights owned by others, licenses to which may
not be available to the Company. In addition, under certain of the
Company's license agreements, if the Company fails to meet certain
contractual obligations, including the payment of minimum royalty
amounts, such licenses may become nonexclusive or terminable by the
licensor. Additionally, the Company protects its proprietary technology
and processes in part by confidentiality agreements with its
collaborative partners, employees and consultants. There can be no
assurance that these agreements will not be breached, that the Company
will have adequate remedies for any breach, or that the Company's trade
secrets will not otherwise become known or independently discovered by
competitors.
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UNCERTAINTIES REGARDING FUTURE HEALTH CARE REIMBURSEMENTS
Even though the Company does not receive payments directly from third
party healthcare payers, their reimbursement methods may impact demand
for the Company's cryopreserved tissue. The Company is unable to
predict what changes will be made in the reimbursement methods utilized
by third party healthcare payers or their effect on the Company.
Changes in the reimbursement methods utilized by third party healthcare
payers, including Medicare, with respect to cryopreserved tissues
provided for implant by the Company and other Company services and
products, could have a material adverse effect on the Company.
Significant uncertainty exists as to the reimbursement status of newly
approved health care products and services and there can be no
assurance that adequate third party coverage will be available for the
Company to maintain price levels sufficient for realization of an
appropriate return on its investment in developing new products.
Government and other third party payers are increasingly attempting to
contain healthcare cost by limiting both coverage and the level of
reimbursement for new products approved for marketing by the FDA and by
refusing in some cases to provide any coverage for uses of approved
products for indications for which the FDA has not granted marketing
approval. If adequate coverage and reimbursement levels are not
provided by government and other third party payers for uses of the
Company's new products and services, market acceptance of these
products could be adversely affected.
DEPENDENCE ON KEY PERSONNEL
The Company's business and future operation results depend in
significant part upon the continued contributions of its key technical
personnel and senior management, many of whom would be difficult to
replace. The Company's business and future operating results also
depend in significant part upon its ability to attract and retain
qualified management, processing, technical, marketing, sales, and
support personnel for its operation. Competition for such personnel is
intense and there can be no assurance that the Company will be
successful in attracting and retaining such personnel. The loss of key
employees, the failure of any key employee to perform adequately or the
Company's inability to attract and retain skilled employees as needed
could materially adversely affect the Company's business, financial
condition and results of operations.
PRODUCT LIABILITY AND INSURANCE
The Company faces the inherent business risk of financial exposure to
product liability claims in the event that the use of tissue processed,
preserved or distributed by the Company results in personal injury or
the transmission of infectious disease. Although the Company has
incurred minimal losses due to product liability claims to date, there
can be no assurance that it will not incur such losses in the future.
The Company currently maintains product liability insurance in the
aggregate amount of $14 million per occurrence per year. There can be
no assurance that such coverage will continue to be available on terms
acceptable to the Company or will be adequate to cover any losses due
to product claims if actually incurred. Furthermore, if any such claim
is successful, it could have a material adverse effect on the demand
for the Company's services.
USE AND DISPOSAL OF HAZARDOUS MATERIAL
The Company's research, development and processing activities involve
the controlled use of small quantities of radioactive compounds,
chemical solvents and other hazardous materials. The Company's
activities also include the preservation and growth of human cells and
the processing of human tissue. Although the Company believes that its
safety procedures for handling, processing and disposing of hazardous
materials and human tissue comply with the standards prescribed by
federal, state and local regulations, the risk of accidental
contamination, injury or disease transmission from these materials
cannot be completely eliminated. In the event of such an accident or
transmission, the Company could be held liable for resulting damages
and any liability could have a material adverse effect on the Company.
Any
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failure to comply with such regulations could result in the imposition
of penalties, fines and sanctions which could have a material adverse
effect on the Company's business.
VOLATILITY OF SECURITIES PRICES
The trading price of the Company's Common Stock has been subject to
wide fluctuations from time to time and may continue to be subject to
such volatility in the future. Trading price fluctuations can be caused
by a variety of factors including quarter to quarter variations in
operating results, announcement of technological innovations or new
products by the Company or its competitors, governmental regulatory
acts, development with respect to patents or proprietary rights,
general conditions in the medical or cardiovascular device or service
industries, actions taken by government regulators, changes in earnings
estimates by securities analysts, or other events or factors, many of
which are beyond the Company's control. If the Company's revenues or
operating results in future quarters fall below the expectations of
securities analysts and investors, the price of the Company's Common
Stock would likely decline, perhaps substantially. Changes in the
trading price of the Company's Common Stock may bear no relation to the
Company's actual operational or financial results.
ANTI-TAKEOVER PROVISIONS
The Company's Articles of Incorporation and By-laws contain provisions
that may discourage or make more difficult any attempt by a person or
group to obtain control of the Company, including provisions
authorizing the issuance of preferred stock without shareholder
approval, restricting the persons who may call a special meeting of the
shareholders, and prohibiting shareholders from taking action by
written consent. In addition, the Company is subject to certain
provisions of Florida law that may discourage or make more difficult
takeover attempts or acquisitions of substantial amounts of the
Company's Common Stock. Further, pursuant to the terms of a stockholder
rights plan adopted in 1995, the Company has distributed a dividend of
one right for each outstanding share of Common Stock. The rights will
cause substantial dilution of the ownership of a person or group that
attempts to acquire the Company on terms not approved by the Board and
may have the effect of deterring hostile takeover attempts.
SHARES ELIGIBLE FOR FUTURE SALE
Substantially all of the Company's outstanding Common Stock is
available for sale in the public marketplace. There are also
outstanding stock options to purchase an aggregate of approximately
710,000 shares of Common Stock at various exercise prices per share.
The majority of the shares to be received upon exercise of these
options will be available for immediate resale in the public markets.
No prediction can be made as to the effect, if any, that sales of
shares of Common Stock or the availability of such shares for sale will
have on the market prices prevailing from time to time. The possibility
exists that substantial amounts of Common Stock may be sold in the
public market, which may adversely effect prevailing market prices for
the Common Stock and could impair the Company's ability to raise
capital through the sale of its equity securities.
ABSENCE OF DIVIDENDS
The Company has not paid and does not presently intend to pay cash
dividends. It is not likely that any cash dividends will be paid in the
foreseeable future.
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MATERIAL CHANGES
Set forth below is a discussion of all material changes in the Company's
affairs which have occurred since December 31, 1995 and which have not been
described in a report on Form 10-Q or Form 8-K filed under the Exchange Act and
incorporated by reference herein:
Revenues for the third quarter of 1996 were $10,411,000 an increase of 25%
compared to $8,347,000 for the third quarter of 1995. Net income for the third
quarter of 1996 was $1,261,000 or $.13 per common share, an increase of 85%
compared to $685,000 or $.07 per common share for the same period in 1995.
In March 1996, the Company received a $250,000 payment from Bayer
Corporation for a limited term exclusive right to negotiate with the Company for
a world-wide license of the Company's FibRx adhesive technology. Termination of
negotiations between the two companies was announced on August 30, 1996 and the
payment was recorded in the third quarter of 1996. The Company has initiated
discussions with additional parties with respect to partnership license
agreements for FibRx technology.
The Company entered into a new line of credit agreement with NationsBank
during the third quarter of 1996 which increased the Company's aggregate line of
credit from $3,000,000 to $10,000,000. The purpose of the new line of credit is
to assist the Company in facilitating internal growth programs and acquisitions.
As of October 31, 1996, approximately $7.5 million dollars was available to the
Company pursuant to the line of credit.
On September 12, 1996, the Company announced the acquisition of the assets
of United Cryopreservation Foundation, Inc. ("UCFI"), a processor and
distributor of cryopreserved human heart valves and saphenous veins for
transplant. Under the terms of the acquisition, the Company will pay
approximately $2,000,000 over a five year period and will assume certain
obligations of UCFI in exchange for assets of UCFI consisting of
cryopreservation equipment and storage facilities.
The Company received a $99,000 Phase One Innovation Research Grant from the
National Institutes of Health during the third quarter of 1996. This grant
pertains to CryoLife's Synergraft program for the development of a
bio-engineered human implantable heart valve. Pursuant to the grant, CryoLife
scientists will conduct advanced studies using a porcine heart valve collagen
matrix that can be "seeded" with human cells. The goal of the project is to
create a non-immunogenic heart valve for use in human heart valve replacement
surgery.
The Company signed a licensing agreement during the second quarter of 1996
with Innovacion Cientifica, SA of Buenos Aires, Argentina. Under the terms of
the contract, CryoLife received a technology transfer fee of $50,000 during the
third quarter of 1996 and will supply Innovacion Cientificia with CryoLife's
patented cryoprotectants, antibiotic treatment and viral inactivation
technology. Similar licensing programs are under discussion with medical groups
in Spain and Italy.
During the third quarter of 1996, the Company announced a new manufacturing
agreement with Tissuemed, Ltd.of Leeds, England, extending European production
of the CryoLife-O'Brien advanced design porcine stentless heart valves.
The Company's new 100,000 square foot leased world headquarters laboratory,
located in suburban Atlanta, is expected to be ready for occupancy on or about
November 25, 1996. It is anticipated that a majority of the Company's
departments will complete their relocation to the new facility on or before the
end of November 1996.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares
offered hereby.
367906.5
9
SELLING SHAREHOLDER
Set forth below is the name of the Selling Shareholder and the number of
Shares being offered by him. To the best of the Company's knowledge, assuming
all of the Shares being offered hereby are sold and the Selling Shareholder does
not choose to acquire additional Common Stock during the offering period, the
Selling Shareholder will own 1000 shares of the issued and outstanding shares of
Common Stock upon completion of the offering.
Selling Shareholder Number of Shares Owned1 Number of Shares Offered
- ------------------- ----------------------- ------------------------
Donald Nixon Ross 11,395 10,395
_________________
1 As of November 15, 1996.
All of the Shares being offered by the Selling Shareholder were acquired in
connection with the purchase by the Company from the Selling Shareholder of
certain patents, intellectual property rights and other assets. In the agreement
dated as of August 15, 1996 (the "Agreement") executed in connection with the
purchase, the Company granted certain demand registration rights to the Selling
Shareholder. The Company has agreed to bear all expenses (other than commissions
and discounts of underwriters, dealers or agents) in connection with the
registration and sale of the Shares being offered by the Selling Shareholder.
See "Manner of Distribution."
The Selling Shareholder has requested that the Company use its best efforts
to effectuate a registration of the Shares for resale under the Securities Act.
In light of this request and in accordance with the Agreement, the Company has
filed with the Securities and Exchange Commission a Registration Statement with
respect to the resale of the Shares from time to time in the over-the-counter
market or in privately negotiated transactions and has agreed to prepare and
file such amendments and supplements to the Registration Statement as may be
necessary to keep the Registration Statement effective until the earlier of
three months from the date hereof or until all of the Shares offered hereby have
been sold. This Prospectus forms a part of the Registration Statement.
In connection with the Agreement, the Company has entered into a consulting
agreement of even date therewith with the Selling Shareholder which provides
that the Selling Shareholder shall make himself available to provide specific
consulting services to the Company for a period of five years at a rate of
$15,000 per year plus expenses and an additional $1,000 for each day on which
consulting services are provided by the Selling Shareholder in excess of 24
days. The Selling Shareholder has not held any position or office or had any
other material relationship in the with the Company.
MANNER OF DISTRIBUTION
The Shares covered hereby may be offered and sold from time to time by the
Selling Shareholder. The Selling Shareholder will act independently of the
Company in making decisions with respect to the timing, manner and size of each
sale. Such sales may be made in the over-the-counter market or otherwise, at
prices related to the then current market price or in negotiated transactions,
including one or more of the following methods: (a) purchases by a broker-dealer
as principal and resale by such broker or dealer for its account pursuant to
this Prospectus; (b) ordinary brokerage transactions and transactions in which
the broker solicits purchasers; and (c) block trades in which the broker-dealer
so engaged will attempt to sell the Shares as agent but may position and resell
a portion of the block as principal to facilitate the transaction. The Company
has been advised by the Selling Shareholder that he has not made any
arrangements relating to the distribution of the Shares covered by this
Prospectus. In effecting sales, broker-dealers engaged by the Selling
Shareholder may arrange for other broker-dealers to participate. Broker-dealers
may receive commissions or discounts from the Selling Shareholder in amounts to
be negotiated.
367906.5
10
In offering the Shares covered hereby, the Selling Shareholder and any
broker-dealers and any other participating broker-dealers who execute sales for
the Selling Shareholder may be deemed to be "underwriters" within the meaning of
the Securities Act in connection with such sales, and any profits realized by
the Selling Shareholder and the compensation of such broker-dealer may be deemed
to be underwriting discounts and commissions. In addition, any Shares covered by
this Prospectus which qualify for sale pursuant to Rule 144 or Regulation S may
be sold under Rule 144 or Regulation S rather than pursuant to this Prospectus.
None of the Shares covered by this Prospectus presently qualify for sale
pursuant to Rule 144 or Regulation S, and it is not anticipated that any Shares
will so qualify during the effectiveness of the Registration Statement in which
this Prospectus is contained.
The Company has advised the Selling Shareholder that during such time as he
may be engaged in a distribution of Shares covered hereby, he is required to
comply with Rules l0b-6 and l0b-7 under the Exchange Act as described below and,
in connection therewith, that he may not engage in any stabilization activity in
connection with the Company's Common Stock, is required to furnish to each
purchaser and/or broker-dealer through which Shares covered hereby may be
offered copies of this Prospectus, and may not bid for or purchase any
securities of the Company or attempt to induce any person to purchase any
securities of the Company except as permitted under the Exchange Act. The
Selling Shareholder has agreed to inform the Company when the distribution of
his Shares is completed.
Rule l0b-6 under the Exchange Act prohibits, with certain exceptions,
participants in a distribution from bidding for or purchasing, for an account in
which the participant has a beneficial interest, any of the securities that are
the subject of the distribution. Rule l0b-7 governs bids and purchases made in
order to stabilize the price of a security in connection with a distribution of
the security.
This offering will terminate on the earlier of three months from the date
hereof or the date on which all Shares offered hereby have been sold by the
Selling Shareholder.
In order to comply with certain states' securities laws, if applicable, the
Shares offered hereby will be sold in such jurisdictions only through registered
or licensed brokers or dealers. In addition, the Shares may not be sold in
certain states unless they have been registered or qualified for sale in such
states or an exemption from regulation or qualification is available and is
complied with.
LEGAL MATTERS
The legality of the Shares offered hereby has been passed upon for the
Company by Arnall Golden & Gregory.
EXPERTS
The consolidated financial statements as of December 31, 1995 and 1994 and
for each of the years in the three year period ended December 31, 1995 have been
incorporated by reference herein and in the Registration Statement in reliance
upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, and upon the authority of said firm as experts in accounting and
auditing.
367906.5
11
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
A reasonable estimate of the costs to be incurred in connection with this
Registration Statement and Prospectus, to be borne entirely by the Registrant,
is as follows:
Securities and Exchange Commission Registration Fee $ 100.00
Accounting Fees and Expenses 5,000.00
Legal Fees and Expenses 6,500.00
Printing and Publication 1,000.00
Miscellaneous 500.00
---------
TOTAL $13,100.00
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company is a Florida corporation. The following summary is qualified in
its entirety by reference to the complete text of the Florida Business
Corporation Act (the "FBCA"), the Company's Restated Articles of Incorporation,
and the Company's Bylaws.
Under Section 607.0850(1) of the FBCA, a corporation may indemnify any of
its directors and officers against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding (including any
appeal thereof) (i) if such person acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and (ii) with respect to any criminal action or proceeding, he or
she had no reasonable cause to believe his or her conduct was unlawful. In
actions brought by or in the right of the corporation, however, Section
607.0850(2) provides that no indemnification shall be made in respect of any
claim, issue or matter as to which the director or officer shall have been
adjudged to be liable unless, and only to the extent that, the court in which
such proceeding was brought, or any other court of competent jurisdiction, shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
Article X of the Company's Restated Articles of Incorporation and Article VI of
the Company's Bylaws require that, if in the judgment of the majority of the
Board of Directors (excluding from such majority any director under
consideration for indemnification) the criteria set forth under Section 607.0850
have been met, then the Company shall indemnify its directors and officers for
certain liabilities incurred in the performance of their duties on behalf of the
Company to the maximum extent allowed by Section 607.0850 of the FBCA (formerly
Section 607.014 of the Florida General Corporation Act).
The Securities Purchase Agreement dated December 17, 1985 between the
Company and certain shareholders of the Company provides that any investors
exercising registration rights pursuant to such agreement must indemnify the
officers and directors signing the registration statement against any liability
arising from statements or omissions made in reliance upon information furnished
by such investors to the Company for use in such registration statement.
The registration rights agreement dated August 22, 1991, among the Company,
Galen Partners, L.P. ("Galen"), and Galen Partners International, L.P. ("Galen
International") provides that if Galen or Galen International exercises its
registration rights, then such prospective seller and any underwriter acting on
its behalf shall have agreed to indemnify the Company and each officer and
director signing such registration statement for
367906.5
II-1
any liability arising from any untrue statement or omission made in such
registration statement in reliance upon written information provided to the
Company for use in such registration statement. The registration rights
agreement further specifies that the indemnification rights granted therein
shall be inoperative if, in connection with an underwritten public offering, an
underwriting agreement is executed containing provisions covering
indemnification among the partners thereto.
The Company has purchased insurance to insure (i) the Company's directors
and officers against damages from actions and claims incurred in the course of
their duties, and (ii) the Company against expenses incurred in defending
lawsuits arising from certain alleged acts of its directors and officers.
ITEM 16. EXHIBITS
The following exhibits have been filed (except where otherwise indicated)
as part of this Registration Statement:
EXHIBIT NUMBER EXHIBIT
2.1 Sale Agreement dated August 15, 1996 between the
Company and Donald Nixon Ross. (Incorporated By
Reference To Exhibit 2.1 to the Registrant's Form
10-Q for the Quarter Ended September 30, 1996. The
Company has applied for confidential treatment of
portions of this Agreement. Accordingly, portions
thereof were omitted and filed separately with the
Securities and Exchange Commission.)
5 Opinion of Arnall Golden & Gregory
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Arnall Golden & Gregory (contained in
Exhibit 5 hereto)
24.1 Powers of Attorney relating to subsequent amendments
(included on the signature page of this Registration
Statement)
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;
(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;
(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;
367906.5
II-2
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 periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(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 of 1933, each filing
of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant, or otherwise, the Securities and Exchange
Commission has informed the registrant that such indemnification is
against public policy as expressed in the Act and is therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
367906.5
II-3
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 Marietta, State of Georgia on November 15, 1996.
CRYOLIFE, INC.
By:/s/ Steven G. Anderson
______________________
Steven G. Anderson
President, Chief Executive Officer and
Chairman of the Board of Directors
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Steven G. Anderson and Edwin B. Cordell, Jr. and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place, and stead,
in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
PRINCIPAL EXECUTIVE, FINANCIAL & ACCOUNTING OFFICERS AND DIRECTORS:
Name Title Date
---- ----- ----
/s/ Steven G. Anderson President, Chief Executive Officer and November 15, 1996
- --------------------------------------
Steven G. Anderson Chairman of the Board of Directors
(Principal Executive Officer)
/s/ Edwin B. Cordell, Jr. Vice President and Chief Financial Officer November 15, 1996
- ---------------------------------------
Edwin B. Cordell, Jr. (Principal Financial and Accounting
Officer)
/s/ Ronald D. McCall Director November 15, 1996
- --------------------------------------
Ronald D. McCall
/s/ Benjamin H. Gray Director November 15, 1996
- ---------------------------------------
Benjamin H. Gray
- --------------------------------------- Director November __, 1996
Rodney G. Lacy
/s/ Ronald Charles Elkins, M.D. Director November 15, 1996
- ---------------------------------------
Ronald Charles Elkins, M.D.
367906.5
II-4
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
2.1 Sale Agreement dated August 15, 1996 between the
Company and Donald Nixon Ross. (Incorporated By
Reference To Exhibit 2.1 to the Registrant's Form
10-Q for the Quarter Ended September 30, 1996. The
Company has applied for confidential treatment of
portions of this Agreement. Accordingly, portions
thereof were omitted and filed separately with the
Securities and Exchange Commission.)
5 Opinion of Arnall Golden & Gregory
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Arnall Golden & Gregory (contained in
Exhibit 5 hereto)
24.1 Powers of Attorney relating to subsequent amendments
(included on the signature page of this Registration
Statement)
367906.5
ARNALL GOLDEN & GREGORY
2800 ONE ATLANTIC CENTER
1201 WEST PEACHTREE STREET
ATLANTA, GEORGIA 30309-3450
(404) 873-8688
(404) 873-8689
November 21, 1996
CryoLife, Inc.
1655 Roberts Boulevard, NW
Kennesaw, GA 30144
Re: Form S-3 Registration Statement
Gentlemen:
We have acted as your counsel in connection with the preparation of the
Registration Statement on Form S-3 (the "Registration Statement") filed by
CryoLife,Inc., a Florida corporation (the "Company"), with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act").
This Registration Statement relates to an offer by a certain selling stockholder
named therein of up to 10,395 shares of the Company's Common Stock, $.01 par
value (the "Shares").
In acting as counsel to you, we have examined and relied upon such
corporate records, documents, certificates and other instruments and examined
such questions of law as we have considered necessary or appropriate for the
purposes of this opinion. Based upon and subject to the foregoing, we advise you
that in our opinion the Shares are legally issued, fully paid and
non-assessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and the reference to this firm under the caption "Legal Matters"
contained therein and elsewhere in the Registration Statement. This consent is
not to be construed as an admission that we are a party whose consent is
required to be filed with the Registration Statement under the provisions of the
Act.
Sincerely,
ARNALL GOLDEN & GREGORY
ARNALL GOLDEN & GREGORY
BJA:dlm
382903.1
ACCOUNTANTS' CONSENT
The Board of Directors
CryoLife, Inc.
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
KPMG MARWICK LLP
KPMG MARWICK LLP
Atlanta, Georgia
November 20, 1996
