AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 5, 2003
REGISTRATION NO. 333-109442
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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BIOTIME, INC.
(Exact name of Registrant as specified in charter)
CALIFORNIA 94-3127919
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification Number)
organization)
JUDITH SEGALL, VICE PRESIDENT AND SECRETARY
935 PARDEE STREET BIOTIME, INC.
BERKELEY, CALIFORNIA 94710 935 PARDEE STREET
(510) 845-9535 BERKELEY, CALIFORNIA 94710
(510) 845-9535
(Address, including zip code, and telephone number, (Name, address, including zip code, and telephone number,
including area code, including area code, of agent for service)
of Registrant's principal executive offices)
---------------------
COPIES OF ALL COMMUNICATIONS, INCLUDING ALL COMMUNICATIONS SENT TO THE AGENT FOR
SERVICE, SHOULD BE SENT TO:
RICHARD S. SOROKO, ESQ.
LIPPENBERGER, THOMPSON, WELCH, SOROKO & GILBERT LLP
201 TAMAL VISTA BLVD.
CORTE MADERA, CALIFORNIA 94925
TEL. (415) 927-5200
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
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 check the following box: [X]
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following box. [ ]
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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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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TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AGGREGATE
SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT(1) OFFERING PRICE(1)
-------------------------------------------------------------------------------------------------------------------
Subscription Rights................. 13,654,949 -- --
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Units(2)............................ 1,706,869 $1.40 $2,389,616.60
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Common Shares, no par value(3)...... 1,706,869 -- --
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Warrants to Purchase Common
Shares(3)......................... 853,434 -- --
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Common Shares, no par value(4)...... 853,434 $1.40 $1,194,807.60
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Warrants to Purchase Common
Shares(4)......................... 426,717 -- --
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Common Shares, no par value......... 428,571 $1.40 $600,000
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Warrants to Purchase Common
Shares............................ 214,285 -- --
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Warrants to Purchase Common
Shares(5)......................... 250,000 -- --
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Warrants to Purchase Common
Shares(6)......................... 500,000 -- --
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Common Shares, no par value(7)...... 1,071,428 $1.40 $1,500,000
-------------------------------------------------------------------------------------------------------------------
Warrants to Purchase Common
Shares(7)......................... 535,714 -- --
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Common Shares, no par value(8)...... 2,780,150 $2.00 $5,560,300
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Total Registration Fee.................................................................. $909.70(9)
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------------------------------------ -------------------------
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TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE
------------------------------------ -------------------------
Subscription Rights................. --
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Units(2)............................ $193.32
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Common Shares, no par value(3)...... --
-------------------------------------------------------------------------------------------------------------------
Warrants to Purchase Common
Shares(3)......................... --
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Common Shares, no par value(4)...... $96.66
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Warrants to Purchase Common
Shares(4)......................... --
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Common Shares, no par value......... $48.54
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Warrants to Purchase Common
Shares............................ --
-------------------------------------------------------------------------------------------------------------------
Warrants to Purchase Common
Shares(5)......................... --
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Warrants to Purchase Common
Shares(6)......................... --
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Common Shares, no par value(7)...... $121.35
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Warrants to Purchase Common
Shares(7)......................... --
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Common Shares, no par value(8)...... $449.83
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Total Registration Fee..............
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) Issuable upon the exercise of the Subscription Rights
(3) Issuable as part of the Units upon the exercise of the Subscription Rights.
(4) Issuable to fill Excess Over-Subscriptions.
(5) Issuable to the Guarantors
(6) Issuable to Participating Debenture Holders
(7) Issuable in Exchange for Debenture
(8) Issuable upon the exercise of the Warrants
(9) Previously paid
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),
MAY DETERMINE.
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--------------------------------------------------------------------------------
PROSPECTUS
BIOTIME, INC.
1,706,869 UNITS ISSUABLE UPON THE EXERCISE OF SUBSCRIPTION RIGHTS
853,434 UNITS ISSUABLE TO FILL EXCESS OVER-SUBSCRIPTIONS
428,571 UNITS OFFERED TO THE GUARANTORS
1,071,428 UNITS ISSUABLE IN EXCHANGE FOR SERIES 2001-A DEBENTURES
2,780,150 COMMON SHARES ISSUABLE UPON EXERCISE OF WARRANTS
EACH UNIT CONSISTS OF ONE COMMON SHARE AND ONE-HALF OF A WARRANT
BioTime, Inc. ("BioTime") is issuing new securities called "rights." You
will receive one right for each BioTime common share you owned as of the close
of business on December , 2003, the record date.
- The rights will entitle you to subscribe for and purchase one "unit" for
every eight rights you hold.
- Each unit will consist of one BioTime common share and one-half of a
warrant to purchase one common share. We may issue 1,706,869 units for
$2,389,616.60 through the exercise of the rights.
- The subscription price is $1.40 per unit.
- Each full warrant will entitle you to purchase one common share of BioTime
for $2.00 per share.
- By over-subscribing, you may be able to purchase any units that are left
over by shareholders who fail to exercise their rights. BioTime may also
issue up to 853,434 additional units for $1.40 each to fill
over-subscriptions.
- THE RIGHTS WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME ON DECEMBER 31,
2003.
A group of private investors (the "Guarantors"), and certain holders of
BioTime Series 2001-A debentures (the "Participating Debenture Holders"), have
agreed to purchase units that remain unsold at the conclusion of the rights
offering. The purchase obligation of the Guarantors and Participating Debenture
Holders is limited to a maximum of $2,250,000.
- The Guarantors and Participating Debenture Holders are not required to
purchase the units that we have authorized to issue to fill
over-subscriptions.
- The Participating Debenture Holders will purchase their portion of any
unsold units by exchanging a principal amount Series 2001-A debentures
equal to the purchase price of the units.
- The Guarantors are Dr. Cynthia Bayern, George Karfunkel, and Alfred D.
Kingsley. The Participating Debenture Holders are Alfred D. Kingsley,
Camco Tactical Return Partners, LP, George Karfunkel, and Goren Brothers,
LP.
- The Guarantors and Participating Debenture holders are deemed underwriters
under the Securities Act of 1933, as amended.
We are also offering to sell up to an additional 428,571 units for $600,000
directly to the Guarantors and their designees. The Guarantors will not be
obligated to purchase any of these additional units. We are also offering all
holders of our Series 2001-A debentures the opportunity to exchange up to
$1,500,000 of those debentures for units at the subscription price per unit.
The common shares are authorized for trading on the American Stock Exchange
("AMEX") under the symbol BTX. The rights will be transferable and will trade on
the AMEX under the symbol BTX.R. The units themselves will not be listed or
traded on the AMEX. Instead, the warrants and common shares issuable upon the
exercise of the rights will be immediately tradeable apart from the units. We
have applied to list the warrants on the AMEX and we expect that, upon approval
of our application, the warrants will be listed under the symbol BTX.WS.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE PURCHASED ONLY
BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK
FACTORS" ON PAGE 9.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
GUARANTORS'
FEE AND
PARTICIPATING
PRICE TO DEBENTURE PROCEEDS TO THE
UNITS OFFERED THE PUBLIC HOLDERS' FEE COMPANY(1)
------------- ------------- ------------- ---------------
Subscription Rights Exercise Price Per Unit......... 2,560,303 $ 1.40 $ 0.088 $ 1.31
Price Per Unit Offered to the Guarantors............ 428,571 $ 1.40 -- $ 1.40
Price Per Unit Offered to Debenture Holders(2)...... 1,071,428 $ 1.40 -- $ 1.40
Total (3)........................................... 4,060,302 $4,184,424.11 $150,000 $4,034,424.11
---------------
(1) Before deducting expenses of the Rights offer which are estimated to be
$240,000.
(2) Payable by tendering Series 2001-A Debentures in exchange for units.
(3) Assumes all of the Rights are exercised, 853,434 units are sold to fill
excess over-subscriptions, and all 428,571 units offered to the Guarantors
are sold. Does not include the exchange of up to $1,500,000 of Series 2001-A
debentures for units.
The date of this prospectus is December , 2003
[THIS PAGE INTENTIONALLY LEFT BLANK]
PROSPECTUS SUMMARY
The following summary explains only some of the information in this
prospectus. More detailed information and financial statements appear elsewhere
in this prospectus or in the documents incorporated by reference into this
prospectus. Statements contained in this prospectus that are not historical
facts may constitute forward-looking statements that are subject to risks and
uncertainties that could cause actual results to differ materially from those
discussed. Words such as "expects," "may," "will," "anticipates," "intends,"
"plans," "believes," "seeks," "estimates," and similar expressions identify
forward-looking statements. See "Risk Factors."
THE COMPANY
BioTime, Inc. is a development stage company engaged in the research and
development of synthetic solutions that can be used as blood plasma volume
expanders, blood replacement solutions during hypothermic (low temperature)
surgery, and organ preservation solutions. Plasma volume expanders are used to
treat blood loss in surgical or trauma patients until blood loss becomes so
severe that a transfusion of packed red blood cells or other blood products is
required. We are also developing a specially formulated hypothermic blood
substitute solution that would have a similar function and would be used for the
replacement of very large volumes of a patient's blood during cardiac surgery,
neurosurgery and other surgeries that involve lowering the patient's body
temperature to hypothermic levels.
Our first product, Hextend(R) is a physiologically balanced blood plasma
volume expander for the treatment of hypovolemia. Hypovolemia is a condition
caused by low blood volume, often from blood loss during surgery or from injury.
Hextend maintains circulatory system fluid volume and blood pressure and keeps
vital organs perfused during surgery. Hextend, approved for use in major
surgery, is the only blood plasma volume expander that contains a medically
approved form of starch called hetastarch, lactate, multiple electrolytes and
glucose. Hextend is designed to compete with and to replace products that have
been used to maintain fluid volume and blood pressure during surgery. These
competing products include albumin and other colloid solutions, and crystalloid
solutions. Albumin is a solution that contains a protein processed from human
blood. Other colloid solutions contain proteins or a starch that keep the fluid
in the patient's circulatory system in order to maintain blood pressure.
Crystalloid solutions generally contain salts and may also contain other
electrolytes, and are not as effective as Hextend, albumin and other colloids on
a per unit basis in maintaining a patient's circulatory system fluid volume and
pressure. Hextend is also completely sterile to avoid risk of infection. Health
insurance reimbursements and HMO coverage now include the cost of Hextend used
in surgical procedures.
Hextend is being sold in the United States and Canada by Abbott
Laboratories under an exclusive license from the Company. Abbott also has a
right to obtain licenses to manufacture and sell other BioTime products. During
March 2003, BioTime granted to CJ Corp. an exclusive license to manufacture and
sell Hextend and another of our plasma volume expanders, PentaLyte,(R) in South
Korea. CJ Corp. will have to obtain regulatory approval before sales can begin.
CJ Corp. will be responsible for obtaining the regulatory approvals required to
manufacture and market Hextend and PentaLyte, including conducting any clinical
trials that may be required, and will bear all related costs and expenses.
Abbott has announced its intension to spin-off a substantial portion of its
hospital products business into a new company. Abbott's Hospital Products
Division presently markets Hextend and Abbott has informed us that it is likely
that its license to manufacture and market Hextend will be assigned to the new
company. According to information disclosed by Abbott, Abbott had global sales
of approximately $17.7 billion during 2002 and has over 70,000 employees, and
the new hospital products company is expected to have global sales of
approximately $2.5 billion and will employ approximately 14,000 people
world-wide. Abbott believes that the new company will be the only company of its
size focused solely on sales to hospitals. The spin-off is expected to be
completed during the first half of 2004.
Various colloid and crystalloid products are being marketed by other
companies for use in maintaining patient fluid volume in surgery and trauma
care, but those solutions do not contain the unique comprehensive combination of
electrolytes, glucose, lactate and hydroxyethyl starch found in Hextend. The use
of competing solutions may contribute to patient morbidity, including conditions
such as hypovolemia, fluid accumulation in
4
body tissues, impaired blood clotting, and a disturbance of the delicate
chemical balances on which most of the body's chemical reactions depend. One of
these competing products is 6% hetastarch in saline solution. The FDA has
required the manufacturers of 6% hetastarch in saline solutions to change their
product labeling by adding a warning stating that those products are not
recommended for use as a cardiac bypass prime solution, or while the patient is
on cardiopulmonary bypass, or in the immediate period after the pump has been
disconnected. We have not been required to add that warning to the labeling of
Hextend.
Another competing product is albumin produced from human plasma. Albumin is
more expensive than Hextend and is subject to supply shortages. An FDA warning
has cautioned physicians about the risk of administering albumin to seriously
ill patients.
We are also developing two other blood volume replacement products,
PentaLyte, and HetaCool(R) that, like Hextend, have been formulated to maintain
the patient's tissue and organ function by sustaining the patient's fluid volume
and physiological balance.
In order to commence clinical trials for regulatory approval of new
products, or new therapeutic uses of Hextend, it will be necessary for us to
prepare and file with the FDA an Investigational New Drug Application ("IND") or
an amendment to expand the present IND for additional clinical studies. Filings
with foreign regulatory agencies will be required to commence clinical trials
overseas.
We have completed a Phase I clinical trial of PentaLyte involving a small
number of subjects and we have submitted our findings to the FDA. We plan to
test PentaLyte for the treatment of hypovolemia in surgery. PentaLyte contains a
lower molecular weight hydroxyethyl starch than Hextend, and is more quickly
metabolized. PentaLyte is designed for use when short lasting volume expansion
is desirable. Our ability to commence and complete our clinical studies of
PentaLyte depends on our cash resources and the costs involved, which are not
presently determinable.
We are also continuing to develop solutions for low temperature surgery and
trauma care. A number of physicians have reported using Hextend to treat
hypovolemia under mild hypothermic conditions during cardiac surgery. Additional
cardiac surgeries have been performed at deeper hypothermic temperatures. In one
case, Hextend was used to treat hypovolemia in a cancer patient operated on
under deep hypothermic conditions in which the heart was arrested. Once a
sufficient amount of data from successful low temperature surgery has been
compiled, we plan to seek permission to conduct trials using Hextend as a
complete replacement for blood under near-freezing conditions. We currently plan
to market Hextend for complete blood volume replacement at very low temperatures
under the trade mark "HetaCool(R)" after FDA approval is obtained.
The cost of preparing regulatory filings and conducting clinical trials is
not presently determinable, but could be substantial. It will be necessary for
us to obtain additional funds in order to complete any clinical trials that we
may conduct for our new products or for new uses of Hextend.
In addition to developing clinical trial programs, we plan to continue to
provide funding for laboratory testing programs at selected universities,
medical schools and hospitals for the purpose of developing additional uses of
Hextend, PentaLyte, HetaCool, and other new products, but the amount of research
that will be conducted at those institutions will depend upon our financial
status.
BioTime was incorporated under the laws of the State of California on
November 30, 1990. Our principal office is located at 935 Pardee Street,
Berkeley, California 94710. Our telephone number at such office is (510)
845-9535.
Hextend,(R) PentaLyte,(R) and HetaCool(R) are registered trademarks of
BioTime, Inc.
5
PURPOSE OF THE RIGHTS OFFER
We have determined that it is necessary for us to raise additional capital
at this time to finance our operations, including:
- Costs of conducting additional clinical trials of BioTime products;
- Costs associated with seeking regulatory approval of our products;
- Continued research and product development; and
- General and administrative expenses.
We are issuing the rights to raise additional capital without significant
dilution of the ownership interests of existing shareholders who exercise their
rights. Shareholders who exercise their rights will be able to purchase shares
at a price below market without incurring broker's commissions.
Generally, shareholders who exercise their rights in full will be able to
maintain their prorata share of BioTime's outstanding common shares. However,
shareholders will experience some dilution to their percentage interests in
BioTime by virtue of the units and warrants issuable to the Guarantors, the
Participating Debenture Holders, and other holders of our Series 2001-A
debentures. Also, if the rights offer is oversubscribed and we issue additional
units to fill over-subscriptions, shareholders who do not purchase their prorata
portion of those additional units by over-subscribing would experience a
reduction in their percentage interests in BioTime's outstanding shares.
Shareholders could also experience a reduction in their percentage interest in
BioTime if they fail to exercise their warrants in the future. The distribution
of the rights to shareholders will also afford those shareholders who choose not
to exercise their rights the potential of receiving a cash payment upon the sale
of their rights. Therefore, the receipt of rights by shareholders who chose not
to exercise their rights may be viewed as compensation for the possible
dilution.
TERMS OF THE OFFER
Securities Offered............ The rights will entitle you to subscribe for
and purchase one "unit" for every eight rights
you hold. Each 'unit' will consist of one new
common share and one-half of a warrant to
purchase an additional common share. Fractional
warrants will not be issued, so rights holders
must exercise at least 16 rights to receive a
full warrant.
Each full warrant entitles the holder to
purchase one common share at a price of $2.00
per share. The number of common shares and the
exercise price will be proportionally adjusted
in the event of a stock split, stock dividend,
combination or similar recapitalization of the
common shares. The warrants will expire on
January 14, 2007 and may not be exercised after
that date.
BioTime may redeem the warrants by paying $.05
per warrant if the closing price of the common
shares on the AMEX or any other national
securities exchange or the Nasdaq Stock Market
exceeds 200% of the exercise price of the
warrants for any 20 consecutive trading days.
BioTime will give the warrant holders 20 days
written notice of the redemption, setting the
redemption date, and the warrant holders may
exercise the warrants prior to the redemption
date. The warrants may not be exercised after
the last business day prior to the redemption
date.
Common Shares Outstanding..... 13,654,949
6
Common Shares Offered......... 1,706,869 through the exercise of the rights
853,434 to fill excess over-subscriptions
428,571 offered to the Guarantors
1,071,428 offered in exchange for debentures
2,780,150 through the exercise of warrants(1)
Warrants Offered.............. 853,434 through the exercise of rights
426,717 to fill excess over-subscriptions
214,285 offered to the Guarantors
750,000 issuable as a fee to the Guarantors and
Participating Debenture Holders
535,714 offered in exchange for debentures
Subscription Price............ The subscription price per unit is $1.40.
Over-Subscription Privilege... Shareholders who fully exercise the rights
initially issued to them will be entitled to
the additional privilege of subscribing for and
purchasing any units not acquired by other
holders of rights. See "The Rights
Offer -- Over-Subscription Privilege."
Distribution of Rights........ The Rights will be evidenced by subscription
certificates which will be mailed to
shareholders other than foreign shareholders
whose record addresses are outside the United
States. A copy of the subscription certificate
can be found in Appendix A of this prospectus.
If your BioTime shares were held in the name of
Cede & Co. as nominee for The Depository Trust
Company, or in the name of any other depository
or nominee, on the record date, you will also
receive rights. You should contact your
broker-dealer or other financial institution
that holds your common shares in order to
exercise, sell, or transfer your rights.
How to Exercise Rights........ The rights will be evidenced by subscription
certificates, which will be distributed to
shareholders. You may exercise your rights by
completing the subscription certificate and
delivering it, together with payment of the
subscription price, to the subscription agent,
American Stock Transfer & Trust Company, 59
Maiden Lane, New York, New York 10038. Payment
may be made either by check drawn on a United
States bank, or by notice of guaranteed
delivery, as explained under "The Rights
Offer -- Payment for Units." Rights must be
exercised no later than the expiration date.
You may not rescind a purchase after exercising
your rights.
Sale of Rights................ The rights are transferable until the last
business day prior to the expiration date. A
business day is a day on which the AMEX trades.
The rights are expected to be authorized for
trading on the AMEX. Trading of the rights will
be conducted from , 2003 through
the last business day prior to the expiration
date. Any commissions in connection with the
sale of rights will be paid by the selling
rights holder. BioTime and the subscription
agent cannot assure that a market for the
rights will develop, or the prices at which
rights may be sold if a market does develop.
---------------
(1) This amount is the number of common shares that will be issuable upon the
exercise of warrants if the all of the rights are exercised, the rights
offer is fully over-subscribed, the Guarantors purchase all of the units
offered to them, and debenture holders exchange $1,500,000 of debentures for
units.
7
Participation by Officers and
Directors and Certain
Financial Consultants......... Officers and directors of BioTime who own, in
the aggregate, 720,095 common shares, have
informed BioTime that they intend to purchase
up to 90,011 units through the exercise of
rights distributed to them, provided that
suitable financial arrangements can be made,
but they are not legally bound to do so. Alfred
Kingsley, an affiliate of our financial advisor
who beneficially owns 2,753,919 outstanding
common shares, is a Guarantor and a
Participating Debenture Holder.
Foreign Restrictions.......... Subscription certificates will not be mailed to
shareholders whose addresses of record are
outside the United States. The rights will be
held by the subscription agent for foreign
shareholders' accounts until instructions are
received to exercise, sell or transfer the
rights. If no instructions are received by 5:00
p.m., New York time on December 26, 2003, which
is three business days prior to the expiration
date, the subscription agent will use its best
efforts to sell the rights of foreign
shareholders. The net proceeds, if any, from
such a sale will be paid to the foreign
shareholders on a prorata basis. See "The
Rights Offer -- Foreign Shareholders."
Important Dates to Remember... Record Date: , 2003
Expiration Date: December 31, 2003
Last Date of Guaranteed Delivery: January 6,
2004
Amendment, Extension or
Termination of the Rights
Offer......................... BioTime may, in its sole discretion: (a)
terminate the rights offer prior to delivery of
the units for which rights holders have
subscribed; (b) extend the expiration date to a
later date; (c) change the record date prior to
the distribution of the rights to shareholders;
or (d) amend or modify the terms of the rights
offer.
Sale of Additional Units to
the Guarantors................ We will offer the Guarantors the opportunity to
purchase an additional 428,571 until 30 days
after the Expiration Date of the rights offer.
The additional Units will be offered at $1.40
per unit.
Mandatory Retirement of
Debentures.................... The Participating Debenture Holders have agreed
to exchange $1,500,000 of their debentures for
Units if the rights offer is fully
over-subscribed and the Guarantors or their
designees purchase all of the additional units
offered to them. If that occurs we will use
proceeds of rights offer and the sale of units
to the Guarantors offer to pay off the
remaining debentures.
We have also offered all holders of our Series
2001-A Debentures the opportunity to
voluntarily exchange their debentures for units
at the subscription price. We will accept up to
$1,500,000 of debentures from all debenture
holders. There is $3,350,000 of debentures
outstanding.
8
RISK FACTORS
AN INVESTMENT IN THE UNITS INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
PURCHASE THE UNITS ONLY IF YOU CAN AFFORD TO LOSE YOUR ENTIRE INVESTMENT. BEFORE
DECIDING TO PURCHASE ANY OF THE UNITS OFFERED BY THIS PROSPECTUS, YOU SHOULD
CONSIDER THE FOLLOWING FACTORS WHICH COULD MATERIALLY ADVERSELY AFFECT THE
PROPOSED OPERATIONS AND PROSPECTS OF BIOTIME AND THE VALUE OF AN INVESTMENT IN
BIOTIME. THERE MAY BE OTHER FACTORS THAT ARE NOT MENTIONED HERE OR OF WHICH WE
ARE NOT PRESENTLY AWARE THAT COULD ALSO AFFECT BIOTIME'S OPERATIONS.
WE MAY NOT SUCCEED IN MARKETING OUR PRODUCTS DUE TO THE AVAILABILITY OF
COMPETING PRODUCTS
Our ability to generate operating revenue depends upon our success in
developing and marketing our products. We may not succeed in marketing our
products and we may not receive sufficient revenues from product sales to meet
our operating expenses or to earn a profit. In this regard, sales of Hextend to
date have not been sufficient to generate an amount of royalties or licensing
fees sufficient to cover our operating expenses. Factors that affect the
marketing of our products include the following:
- Hextend and our other plasma expander products will compete with other
products that are commonly used in surgery and trauma care and sell at
low prices.
- In order to compete with other products, particularly those that sell at
lower prices, BioTime products will have to provide medically significant
advantages.
- Physicians and hospitals may be reluctant to try a new product due to the
high degree of risk associated with the application of new technologies
and products in the field of human medicine.
- Competing products are being manufactured and marketed by established
pharmaceutical companies. For example, B. Braun/McGaw presently markets
Hespan, an artificial plasma volume expander, and Abbott and Baxter
International, Inc. manufacture and sell a generic equivalent of Hespan.
- There also is a risk that our competitors may succeed in developing safer
or more effective products that could render our products and
technologies obsolete or noncompetitive.
WE WILL SPEND A SUBSTANTIAL AMOUNT OF OUR CAPITAL ON RESEARCH AND DEVELOPMENT
BUT WE MIGHT NOT SUCCEED IN DEVELOPING PRODUCTS AND TECHNOLOGIES THAT ARE USEFUL
IN MEDICINE
- We are attempting to develop new medical products and technologies.
- Many of our experimental products and technologies have not been applied
in human medicine and have only been used in laboratory studies on
animals. These new products and technologies might not prove to be safe
and efficacious in the human medical applications for which they were
developed.
- The experimentation we are doing is costly, time consuming and uncertain
as to its results. We incurred research and development expenses
amounting to $1,103,490 during 2002, $675,900 during the first nine
months of 2003, and $23,409,908 in total from BioTime's inception on
November 30, 1990 through September 30, 2003.
- If we are successful in developing a new technology or product,
refinement of the new technology or product and definition of the
practical applications and limitations of the technology or product may
take years and require the expenditure of large sums of money. For
example, we spent approximately $5,000,000 on research and development of
Hextend before commencing clinical trials on humans during October 1996.
The cost of completing the Hextend clinical trials and preparing our FDA
application was approximately $3,000,000. These costs exclude corporate
overhead included in general and administrative costs in our financial
statements.
- Future clinical trials of new products such as PentaLyte may take longer
and may be more costly than our Hextend clinical trials. The FDA
permitted us to proceed directly into a Phase III clinical trial of
Hextend involving only 120 patients because the active ingredients in
Hextend had already been approved for use by the FDA in other products.
Because PentaLyte contains a starch that has not been approved by the FDA
9
for use in a plasma volume expander, we have had to complete a Phase I
clinical trial of PentaLyte, and we may have to complete a Phase II
clinical trial in addition to a Phase III trial, or a combined Phase II/
Phase III trial, that will involve more patients than our Hextend trials.
We do not yet know the scope or cost of the clinical trials that the FDA
will require for PentaLyte or the other products we are developing.
WE HAVE INCURRED OPERATING LOSSES SINCE INCEPTION AND WE DO NOT KNOWN IF WE WILL
ATTAIN PROFITABILITY
From November 1990, the date BioTime was incorporated, through September
30, 2003 we incurred $34,759,151 of cumulative losses. Our net losses for the
fiscal years ended December 31, 2000, 2001 and 2002 were $4,925,024, $3,658,825,
and $2,844,932, respectively. During the first nine months of 2003 we had an
operating loss of $1,143,981. Our ability to generate sufficient operating
revenue to earn a profit depends upon our success in developing and marketing or
licensing our products and technology for medical use.
WE MIGHT NOT BE ABLE TO RAISE ADDITIONAL CAPITAL NEEDED TO PAY OUR OPERATING
EXPENSES
We plan to continue to incur substantial research, product development, and
regulatory expenses, and we will need to raise additional capital to pay
operating expenses until we are able to generate sufficient revenues from
product sales, royalties, and license fees. We have not received an amount of
royalties and licensing fees from the sale of Hextend sufficient to cover our
operating expenses. As of September 30, 2003, we had $1,181,535 of cash and cash
equivalents on hand. At our current rate of spending, those funds and license
fees receivable and anticipated royalties from Abbott, will last approximately
12 months. The amount and pace of research and development work that we can do
or sponsor, and our ability to commence and complete clinical trials required to
obtain FDA and foreign regulatory approval of our products, depends upon the
amount of money we have. Future research costs are not presently determinable
due to many factors, including the inherent uncertainty of those costs and the
uncertainty as to the timing, source, and amount of capital that will become
available for those projects. We have already curtailed the pace of our product
development efforts due to the limited amount of funds available, and we may
have to postpone further laboratory and clinical studies, unless our cash
resources increase through a growth in revenues or additional equity investment
or borrowing. In addition, during August 2004 we must repay the portion of
$3,350,000 of debenture indebtedness that is not exchanged for units. Although
we will continue to seek licensing fees from pharmaceutical companies for
licenses to manufacture and market our products abroad, it is likely that
additional sales of equity or debt securities will be required to meet our
short-term capital needs and to pay our debenture indebtedness. Sales of
additional equity securities could result in the dilution of the interests of
present shareholders. We may not be able to raise a sufficient amount of
additional funds to permit us to develop and market our products. Unless we are
able to generate sufficient revenue or raise additional funds when needed, it is
likely that we will be unable to continue our planned activities, even if we are
making progress with our research and development projects.
IF WE ARE UNABLE TO ENTER INTO ADDITIONAL LICENSING OR MANUFACTURING
ARRANGEMENTS, WE MAY HAVE TO INCUR SIGNIFICANT EXPENSE TO ACQUIRE MANUFACTURING
FACILITIES AND A MARKETING ORGANIZATION
We presently do not have adequate facilities or resources to manufacture
our products and the ingredients used in our products. We plan to enter into
arrangements with pharmaceutical companies for the production and marketing of
our products. We have granted Abbott an exclusive license to manufacture and
market Hextend in the United States and Canada, and we have granted CJ Corp. an
exclusive license to manufacture and market Hextend and PentaLyte in Korea.
Abbott's obligation to pay royalties on sales of Hextend will expire in the
United States or Canada when all patents protecting Hextend in the applicable
country expire and any third party obtains certain regulatory approvals to
market a generic equivalent product in that country. CJ Corp. will not be able
to commence sales of Hextend or PentaLyte in Korea until they obtain regulatory
approval to do so. CJ Corp's obligation to pay royalties on sales of Hextend and
PentaLyte, respectively, will expire when the patents protecting those products
in Korea expire. Although a number of other pharmaceutical companies have
expressed their interest in obtaining licenses to manufacture and market our
products in other countries, we might not be successful in negotiating other
licensing arrangements. If licensing or manufacturing arrangements cannot
10
be made on acceptable terms, we will have to construct or acquire our own
manufacturing facilities and establish our own marketing organization, which
would entail significant expenditures of time and money.
OUR BUSINESS COULD BE ADVERSELY AFFECTED IF WE LOSE THE SERVICES OF THE KEY
PERSONNEL UPON WHOM WE DEPEND
We recently lost our Chairman and Chief Executive Officer, Paul Segall, who
passed away in June. Following the passing of Dr. Segall, we formed the Office
of the President, a three-person executive "office" comprised of the three
remaining founders: Dr. Hal Sternberg, Dr. Harold Waitz, and Judith Segall. The
Office of the President is charged with assuming those executive duties
previously attended to by Dr. Segall. We believe that the Office of the
President has provided a smooth management transition without entailing
additional operating costs. So long as the Office of the President meets our
needs, we will defer appointing a new chief executive officer until our cash
flow improves and we have sufficient capital to finance the additional executive
compensation expenses. It is not possible to determine what impact, if any, this
will have on our operations. Scientific concerns, such as product development
and laboratory research, will continue to be addressed primarily by Dr.
Sternberg, the Vice-President of Research, who worked very closely with Dr.
Segall for many years on all matters of scientific importance and strategy.
The loss of the services of any of our other executive officers could have
a material adverse effect on us. We do not presently have long term employment
agreements with any of our executive officers because our present financial
situation precludes us from making long term compensation commitments in amounts
commensurate with prevailing salaries of executive officers of similar companies
in the San Francisco Bay Area. This may also limit our ability to engage a new
Chief Executive Officer.
RISKS RELATED TO OUR INDUSTRY
We will face certain risks arising from regulatory, legal, and economic
factors that affect our business and the business of other pharmaceutical
development companies. Because we are a small company with limited revenues and
limited capital resources, we may be less able to bear the financial impact of
these risks than larger companies that have substantial income and available
capital.
IF WE DO NOT RECEIVE FDA AND OTHER REGULATORY APPROVALS WE WILL NOT BE PERMITTED
TO SELL OUR PRODUCTS
The products that we develop cannot be sold until the FDA and corresponding
foreign regulatory authorities approve the products for medical use. We have
received FDA and Canadian approvals to market Hextend in the United States and
Canada only. We have completed a Phase I clinical trial of PentaLyte that
provided us with data concerning the safety of PentaLyte, but we do not
presently have sufficient funds for the Phase II or later stage clinical trials
that will be necessary to demonstrate that PentaLyte can be used safely and
effectively as a plasma volume expander in surgery.
The need to obtain regulatory approval to market a new product means that:
- We will have to conduct expensive and time consuming clinical trials of
new products.
- We will incur the expense and delay inherent in seeking FDA and foreign
regulatory approval of new products. For example, 12 months elapsed
between the date we filed our application to market Hextend and the date
on which our application was approved. Approximately 36 months elapsed
between the date we filed our application for approval to market Hextend
in Canada, and the date on which our application was approved, even
though we did not have to conduct any additional clinical trials. We also
have an application pending in Sweden to market Hextend there. We filed
that application during August 2000 and we responded to the latest
request for information by the Swedish authorities in August 2002.
- A product that is approved may be subject to restrictions on use.
- The FDA can recall or withdraw approval of a product if problems arise.
11
- We will face similar regulatory issues in foreign countries.
OUR PATENTS MAY NOT PROTECT OUR PRODUCTS FROM COMPETITION
We have patents in the United States, Canada, the European Union countries,
Australia, Israel, Russia, South Africa, South Korea, Japan, Hong Kong, and
Singapore, and have filed patent applications in other foreign countries, for
certain products, including Hextend, HetaCool, and PentaLyte. We might not be
able to obtain any additional patents, and any patents that we do obtain might
not be comprehensive enough to provide us with meaningful patent protection.
Also, there will always be a risk that our competitors might be able to
successfully challenge the validity or enforceability of any patent issued to
us. The costs required to uphold the validity and prevent infringement of any
patent issued to us could be substantial, and we might not have the resources
available to defend our patent rights.
THE PRICE AND SALE OF OUR PRODUCTS MAY BE LIMITED BY HEALTH INSURANCE COVERAGE
AND GOVERNMENT REGULATION
Success in selling our products may depend in part on the extent to which
health insurance companies, HMOs, and government health administration
authorities such as Medicare and Medicaid will pay for the cost of the products
and related treatment. Presently, most health insurance plans and HMOs will pay
for Hextend when it is used in a surgical procedure that is covered by the plan.
However, until we actually introduce a new product into the medical market place
we will not know with certainty whether adequate health insurance, HMO, and
government coverage will be available to permit the product to be sold at a
price high enough for us to generate a profit. In some foreign countries,
pricing or profitability of health care products is subject to government
control which may result in low prices for our products. In the United States,
there have been a number of federal and state proposals to implement similar
government controls, and new proposals are likely to be made in the future.
RISKS PERTAINING TO OUR COMMON SHARES
Before purchasing BioTime Common Shares, investors should consider the
price volatility of our shares and the fact that we do not pay dividends.
BECAUSE WE ARE A DRUG DEVELOPMENT COMPANY, THE PRICE OF OUR STOCK MAY RISE AND
FALL RAPIDLY
The market price of BioTime shares, like that of the common stock of many
biotechnology companies, has been highly volatile. The following table
illustrates the range of closing price of BioTime common shares on the AMEX for
the fiscal years ended December 31, 2001 and 2002, and the first three quarters
of 2003, based on transaction data as reported by the AMEX.
QUARTER ENDED HIGH LOW
------------- ----- ----
March 31, 2001......................................... 11.10 6.23
June 30, 2001.......................................... 8.50 6.40
September 30, 2001..................................... 7.95 4.50
December 31, 2001...................................... 6.15 4.22
March 31, 2002......................................... 4.70 3.00
June 30, 2002.......................................... 3.10 2.15
September 30, 2002..................................... 2.20 1.10
December 31, 2002...................................... 1.90 0.85
March 31, 2003......................................... 1.75 1.31
June 30, 2003.......................................... 2.79 1.60
September 30, 2003..................................... 1.99 1.30
The price of BioTime shares may rise rapidly in response to certain events,
such as the commencement of clinical trials of an experimental new drug, even
though the outcome of those trials and the likelihood of ultimate
12
FDA approval remains uncertain. Similarly, prices of BioTime shares may fall
rapidly in response to certain events such as unfavorable results of clinical
trials or a delay or failure to obtain FDA approval. The failure of our earnings
to meet analysts' expectations could result in a significant rapid decline in
the market price of our common shares. In addition, the stock market has
experienced and continues to experience extreme price and volume fluctuations
which have affected the market price of the equity securities of many
biotechnology companies and which have often been unrelated to the operating
performance of these companies. Broad market fluctuations, as well as general
economic and political conditions, may adversely affect the market price of the
common shares.
BECAUSE BIOTIME CURRENTLY DOES NOT MEET CERTAIN EXCHANGE CONTINUED LISTING
REQUIREMENTS THE SHARES COULD BE DELISTED IN THE FUTURE
BioTime is presently not in compliance with some of the AMEX continued
listing standards in that it has shareholder's equity of less than $2,000,000
and has incurred losses during each of the last three years, which could lead
the AMEX to determine to delist BioTime shares. The AMEX has granted us an
extension of time until April 2005 to regain compliance with the continued
listing standards based upon a plan of compliance that we submitted. In order to
comply with the continued listing standards, we need to have a total market
capitalization (based upon the market price of our outstanding common shares) of
at least $50,000,000 (of which $15,000,000 must be part of the public float) or
we must have shareholders' equity of at least $4,000,000 by April 2005. That
means we will most likely have to raise additional equity capital in order to
maintain the listing of the common shares and warrants on the AMEX. Raising
additional equity capital could result in the dilution of the interests of the
present shareholders. We will be subject to periodic review by the AMEX staff
during the extension period. Failure to make progress consistent with the plan
or to regain compliance with the continued listing standards by the end of the
extension period could result in the our common shares and warrants being
delisted from the AMEX. We plan to use our best efforts to maintain the AMEX
listing of its common shares, but if the common shares were to be delisted by
the AMEX the market value and liquidity for the common shares would be adversely
affected and it could be more difficult for us to raise capital in the future.
If the common shares were no longer traded on the AMEX they could be traded in
the over-the-counter market on an electronic bulletin board established for
securities that do not meet the listing requirements of the Nasdaq stock market
or the major national securities exchanges. Also, if our common shares were to
be delisted by the AMEX, the warrants would be delisted as well.
IF THE COMMON SHARES AND WARRANTS WERE DELISTED FROM THE AMEX THEY COULD BE
SUBJECT TO THE SO-CALLED PENNY STOCK RULES THAT IMPOSE RESTRICTIVE SALES
PRACTICE REQUIREMENTS
If the common shares and warrants were delisted from the AMEX they could be
subject to the so-called penny stock rules that impose restrictive sales
practice requirements on broker-dealers who sell penny stocks to persons other
than established customers and accredited investors. An accredited investor
generally is a person who has a net worth in excess of $1,000,000 or individual
annual income exceeding $200,000, or joint annual income with a spouse exceeding
$300,000. For transactions covered by this rule, the broker-dealer must make a
special suitability determination for the purchaser and must have received the
purchaser's written consent to the transaction prior to sale. This means that
delisting could affect the ability of shareholders to sell their common shares
and warrants in the secondary market.
The Securities and Exchange Commission (the "Commission") has adopted
regulations that define a "penny stock" to be any equity security that has a
market price of less than $5.00 per share or an exercise price of less than
$5.00 per share, subject to certain exceptions. AMEX listed securities are
exempt from the definition of "penny stock." If a transaction involving a penny
stock is not exempt from the Commission's rule, a broker-dealer must deliver a
disclosure schedule relating to the penny stock market to the investor prior to
the transaction. The broker-dealer also must disclose the commissions payable to
both the broker-dealer and the registered representative, current quotations for
the penny stock, and, if the broker-dealer is the sole market-maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Finally, monthly statements must be sent disclosing recent
price information for the penny stock held in the customer's account and
information on the limited market in penny stocks.
13
BECAUSE WE DO NOT PAY DIVIDENDS, OUR STOCK MAY NOT BE A SUITABLE INVESTMENT FOR
ANYONE WHO NEEDS TO EARN DIVIDEND INCOME
We do not pay cash dividends on our common shares. For the foreseeable
future we anticipate that any earnings generated in our business will be used to
finance the growth of BioTime and will not be paid out as dividends to our
shareholders. We have also agreed not to declare or pay any cash dividends on
our capital stock or to redeem or repurchase any shares of our capital stock,
until we have paid off our $3,350,000 of debenture indebtedness in full with
interest. This means that our stock may not be a suitable investment for anyone
who needs to earn income from their investments.
THERE HAS PREVIOUSLY BEEN NO PUBLIC MARKET FOR THE WARRANTS AND THERE IS NO
ASSURANCE THAT A PUBLIC MARKET FOR THE WARRANTS WILL DEVELOP
Although we have applied to list the warrants on the AMEX, there is no
assurance that the warrants will be approved for listing. Even if the warrants
are listed for trading on the AMEX, there is no way of predicting whether an
active market for trading in the warrants will develop. The absence of an active
public market would make it difficult for warrant holders to sell their warrants
and would aversely affect the value of the warrants.
THE WARRANTS CANNOT BE EXERCISED UNLESS A REGISTRATION STATEMENT IS IN EFFECT
UNDER FEDERAL AND STATE SECURITIES LAWS
A registration statement under the Securities Act of 1933, as amended, must
be in effect in order for warrant holders to exercise their warrants. This means
that we will have to periodically update our registration statement and
prospectus by filing post-effective amendments. We intend to use our best
efforts to keep our registration statement effective. However, if we are unable
to do so for any reason, warrant holders would not be able to exercise their
warrants, even if the market price of our common shares was then greater than
the exercise price.
So long as our common shares are listed on the AMEX, they will be exempt
from registration or qualification under state securities laws, but that
exemption would be lost if the shares were to be delisted from the AMEX and not
subsequently listed on the Nasdaq Stock Market or a regional securities exchange
for which an exemption would apply under the various state laws. If our common
shares are not exempt from state registration or qualification, most states will
require us to obtain a permit, issued through an application for registration or
qualification, and to maintain that permit in effect in order for warrant
holders in the state to exercise their warrants.
THE RIGHTS OFFER
ISSUANCE OF RIGHTS
We are issuing rights to subscribe for units consisting of common shares
and warrants. The rights will be issued to shareholders who owned BioTime shares
as of the close of business on , 2003, which has been set as the
record date. Beneficial owners of shares held in the name of Cede & Co. as
nominee for The Depository Trust Company, or in the name of any other depository
or nominee, on the record date will also receive rights. Each shareholder will
be issued one transferable Right for each common share owned on the record date.
No fractional rights will be issued. The rights entitle the holders to acquire
one common share and one-half of a warrant for each eight rights held by paying
the subscription price. Any shareholder who is issued fewer than eight Rights
may subscribe for one full common share at the subscription price. Fractional
warrants will not be issued, so rights holders must exercise at least 16 rights
to receive a full warrant. The rights will be evidenced by subscription
certificates (see Appendix A) which will be mailed to shareholders other than
foreign shareholders whose record addresses are outside the United States. The
United States includes the fifty states, the District of Columbia, U.S.
territories and possessions.
The rights issued to foreign shareholders will be held by the subscription
agent for their accounts until instructions are received to exercise (if
permissible under applicable foreign or state securities laws), sell, or
transfer those rights. If no instructions have been received by 12:00 noon, New
York City time, three business
14
days prior to the expiration date, the subscription agent will use its best
efforts to sell the rights of those foreign shareholders on the AMEX. The net
proceeds from the sale of those rights will be paid to the foreign shareholders.
See "Sale of Rights."
Officers and directors of BioTime who own, in the aggregate, 720,095 common
shares, have informed BioTime that they intend to purchase up to 90,011 common
shares through the exercise of the rights distributed to them, provided that
suitable financial arrangements can be made, but they are not legally bound to
do so. Any common shares acquired by officers, directors and other persons who
are "affiliates" of BioTime, as that term is defined under the Securities Act of
1933, may only be sold in accordance with Rule 144 under the Securities Act or
pursuant to an effective registration statement under the Securities Act. In
general, under Rule 144, as currently in effect, an "affiliate" of BioTime is
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of 1% of the then-outstanding common shares or the
average weekly reported trading volume of the common shares during the four
calendar weeks preceding such sale. Sales under Rule 144 are also subject to
certain restrictions on the manner of sale, to notice requirements and to the
availability of current public information about BioTime.
PURPOSE OF THE RIGHTS OFFER
The Board of Directors of BioTime has determined that it is necessary for
BioTime to raise additional capital at this time to finance its operations,
including:
- Costs of conducting additional clinical trials of BioTime products;
- Costs of seeking regulatory approval of our products;
- Continued research and product development; and
- General and administrative expenses.
Until we begin to receive sufficient revenues from product sales and
licensing fees from Abbott or other companies that may obtain a license to sell
our products, we will have to finance our operations with our cash on hand, the
funds received from shareholders who exercise of their rights, and any
additional capital raised through other sales of equity securities.
The rights offer provides an opportunity for us to raise additional capital
without diluting the ownership interests of existing shareholders who exercise
their rights. Shareholders who exercise their rights will be able to purchase
BioTime shares at a price below market, without incurring broker's commissions.
Generally, shareholders who exercise their rights in full will be able to
maintain their prorata share of BioTime's outstanding common shares. However,
shareholders will experience some dilution to their percentage interests in
BioTime by virtue of the units and warrants issuable to the Guarantors, the
Participating Debenture Holders, and other holders of our Series 2001-A
debentures. In this regard, we will issue 750,000 warrants to the Guarantors and
the Participating Debenture Holders as compensation under the Standby Purchase
Agreement, we may sell 428,571 units to the Guarantors for cash, and we may sell
1,071,428 units to the Participating Debenture Holders and other debenture
holders in exchange for debentures. Also, if the rights offer is oversubscribed
and BioTime issues additional common shares and warrants to fill
over-subscriptions, shareholders who do not purchase their prorata portion of
those additional shares and warrants through the over-subscription privilege
would experience a reduction in their percentage interests in BioTime's
outstanding shares. Similarly, shareholders who do not exercise their warrants
in full could experience a reduction of their percentage interests in BioTime's
outstanding shares. The distribution of the rights to shareholders will also
afford those shareholders who choose not to exercise their rights the potential
of receiving a cash payment upon the sale of their rights. Therefore, the
receipt of rights by shareholders who chose not to exercise their rights may be
viewed as compensation for the possible dilution of their interest in BioTime.
We considered other financing alternatives, including a private placement
or underwritten public offering of newly issued shares. Those alternatives would
have entailed the payment of commissions and fees to broker-dealers in an amount
greater than the $150,000 of cash fees we will pay the Guarantors and
Participating Debenture Holders. A private placement or underwritten public
offering would also have been more dilutive to
15
BioTime shareholders because all of the shares could have been sold to new
investors. In the case of a private placement, the sale would probably have been
made at a discount to market. In contrast, the sale of shares through the rights
and warrants will permit BioTime to incur lower transaction fees in raising
capital and will permit the shareholders who exercise their rights and warrants
to enjoy the price discount that might otherwise have been realized by new
investors. During January and February 1997, and during February and March 1999,
BioTime conducted similar subscription rights offers that were over-subscribed,
leading BioTime to conclude that the rights offer might be a better alternative
to the other sources of financing.
In determining the subscription price of the rights we considered the
financial condition of BioTime, the price range at which BioTime common shares
have traded during recent weeks, the volatility of the price of the common
shares, the discounts to the market price and additional broker-dealer or
underwriting costs that we would likely have to incur if we were to sell shares
in a private placement or an underwritten public offering, and the discounts we
allowed in our two previous rights offers. We determined that the subscription
price is fair to us and to our shareholders in that it allows our shareholders
to realize the economic benefits that might otherwise have been offered to new
investors and broker-dealers, while providing us with approximately the same
amount of net capital that we would have received through alternative financing
arrangements.
The factors that we considered in determining the subscription price of the
rights were also considered in determining the exercise price of the warrants.
The warrants are intended to serve as a future source of new capital that we can
receive without additional broker-dealer, underwriting, and other transactional
costs. We adjusted the price to a premium over the current and recent market
price of the common shares to reduce the dilution that will result when the
warrants are exercised. Dilution will result from the exercise of the warrants
because warrant holders will not exercise the warrants unless the market price
of our common shares is greater than the exercise price of the warrants. To
further limit future dilution, we made the warrants redeemable when the market
price of the common shares exceeds 200% of the exercise price for 20 consecutive
trading days. We also felt that the warrants will provide an extra incentive for
our shareholders to exercise their rights and to continue to participate as
equity holders in our company.
THE SUBSCRIPTION PRICE
The subscription price for the units to be issued pursuant to the rights
offer is $1.40. We announced the rights offer on October 2, 2003. The last
reported sale price of the common shares on the AMEX on October 2, 2003 and
December 2, 2003 was $1.61 and $1.55, respectively.
EXPIRATION OF THE RIGHTS OFFER
The rights offer will expire at 5:00 p.m., New York City time, on December
31, 2003, the expiration date. Rights will expire on the expiration date and may
not be exercised after that date.
EXERCISE OF RIGHTS
In order to exercise your rights you must do all of the following:
- Fill in and sign the reverse side of the subscription certificate which
accompanies this prospectus;
- Deliver the completed and signed subscription certificate to the
subscription agent with your payment in full for the common shares you
wish to purchase. You may use the enclosed envelope to mail the
subscription certificate and payment to the subscription agent or you may
arrange for one of the alternative methods of delivery described below.
- The method of making payment for your shares is described below under
"Payment for Units."
- Properly completed and executed subscription certificates must be
received by the subscription agent at the offices of the subscription
agent at the address set forth below prior to 5:00 p.m., New York City
time, on the expiration date, unless payment is effected by means of a
notice of guaranteed delivery as described below under "Payment for
Units."
- Rights may also be exercised through a broker, who may charge you a
servicing fee.
16
You should send your signed subscription certificates, accompanied by
payment of the subscription price, to American Stock Transfer & Trust Company,
the subscription agent, by one of the methods described below:
(1) BY HAND:
American Stock Transfer & Trust Company
59 Maiden Lane, Plaza Level
New York, New York 10038
(2) BY MAIL, EXPRESS MAIL OR OVERNIGHT COURIER:
American Stock Transfer & Trust Company
Exchanges and Tenders
59 Maiden Lane
New York, New York 10038
(3) BY FACSIMILE (TELECOPIER):
(718) 236-4588 or (718) 234-5001
You should confirm that your facsimile has been received by contacting the
subscription agent by telephone at 1-877-248-6417, or outside the United States,
(718) 921-8200 and ask for Shareholder Relations. If you deliver your
subscription certificate by telecopier, you must send the original subscription
certificate to the subscription agent by mail or hand delivery.
DO NOT SEND SUBSCRIPTION CERTIFICATES TO BIOTIME.
If your BioTime shares were held in the name of Cede & Co. as nominee for
The Depository Trust Company, or in the name of any other depository or nominee,
on the record date, you should contact your broker-dealer or other financial
institution that holds your common shares in order to exercise, sell, or
transfer your rights.
A subscription will be deemed accepted by the subscription agent when
payment, together with a properly completed and executed subscription
certificate, is received by the subscription agent at its Exchanges and Tenders
Department.
If you are issued fewer than eight rights, you may subscribe for one full
unit. Fractional shares and fractional warrants will not be issued. If after
exercising your rights you are left with fewer than eight rights, you will not
be able to exercise the remaining rights. If you exercise fewer than 16 rights
you will receive the maximum number of full shares issuable but you will not
receive a warrant.
If you do not indicate the number of rights you are exercising, or if you
do not deliver full payment of the subscription price for the number of units
that you indicate you are subscribing for, then you will be deemed to have
exercised rights to purchase the maximum number of units determined by dividing
the total subscription price you paid by the subscription price per unit.
If you submit payment for more units than may be purchased through the
regular exercise of your rights, your excess payment will be deemed to be a
subscription payment for additional units through the over-subscription
privilege. The number of additional units that you will be deemed to have
subscribed for in the over-subscription privilege will be determined by dividing
the amount of the excess payment by the subscription price per unit.
All questions concerning the timeliness, validity, form and eligibility of
any exercise of rights or subscriptions pursuant to the over-subscription
privilege will be determined by BioTime. BioTime's determination will be final
and binding. BioTime in its sole discretion may waive any defect or
irregularity, or may permit any defect or irregularity to be corrected, within
such time as BioTime may determine. BioTime may reject, in whole or in part, the
purported exercise of any right or any subscription pursuant to the
over-subscription privilege. Neither BioTime nor the subscription agent will be
under any duty or obligation to give any notification or to permit the cure of
any defect or irregularity in connection with the submission of any subscription
17
certificate, the exercise or attempt to exercise any right or the
over-subscription privilege, or the payment of the subscription price.
Subscriptions through the exercise of rights or the over-subscription privilege
will not be deemed to have been received or accepted by BioTime until all
irregularities or defects have been waived by BioTime or cured to the
satisfaction of, and within the time allotted by, BioTime in its sole
discretion.
OVER-SUBSCRIPTION PRIVILEGE
The over-subscription privilege may allow shareholders to acquire more
units than the number issuable upon the exercise of the rights issued to them.
By exercising the over-subscription privilege, shareholders who have exercised
all exercisable rights issued to them may purchase any units that are left over
by shareholders who fail to exercise their rights.
The over-subscription privilege may only be exercised by shareholders who
were shareholders on the record date and who exercise all of the rights they
received from BioTime. Any person who purchases rights and who was not a
shareholder on the record date may not exercise the over-subscription privilege.
Shareholders such as broker-dealers, banks, and other professional
intermediaries who hold shares on behalf of clients, may participate in the
over-subscription privilege for the client if the client fully exercises all
rights attributable to him.
If you are eligible to exercise the over-subscription privilege and you
wish to do so, you should indicate on the subscription certificate how many
units you are willing to acquire through the over-subscription privilege. If
sufficient units remain unsold, all over-subscriptions will be honored in full.
If you were a shareholder on the record date and you wish to exercise the
over-subscription privilege through The Depository Trust Corporation, you must
properly execute and deliver to the subscription agent a DTC Participant
Over-Subscription Form, together with payment of the subscription price for the
number of units that you wish to purchase through the over-subscription
privilege. Copies of the DTC Participant Over-Subscription Form may be obtained
from the subscription agent. Your properly executed DTC Participant
Over-Subscription Form and payment must be received by the subscription agent at
or prior to 5:00 p.m., New York City time on the expiration date.
If subscriptions for units through the over-subscription privilege exceed
the initial 1,706,869 units being offered by BioTime through the exercise of the
rights, BioTime may issue up to 853,434 additional units to fill all or a
portion of the excess over-subscriptions. The issuance of units to fill excess
over-subscriptions may dilute the percentage ownership interests of other
shareholders.
BioTime will not be obligated to issue any units to fill excess
over-subscriptions, but it may do so in its sole and absolute discretion.
BioTime reserves the right to limit the number of units issued to fill an excess
over-subscription from any single shareholder or from shareholders that are
known or believed by BioTime to be under common control or acting as a group for
the purpose of acquiring units.
Subject to the right of BioTime to limit the number of units issuable to
any shareholder, if the rights offer is over-subscribed so that
over-subscriptions cannot be filled in full, the available units will be
allocated among those who over-subscribe based on the number of rights
originally issued to them, so that the number of units issued to shareholders
who subscribe through the over-subscription privilege will generally be in
proportion to the number of common shares owned by them on the record date. The
percentage of remaining units each over-subscribing shareholder may acquire may
be rounded up or down to result in delivery of whole units. The allocation
process may involve a series of allocations in order to assure that the total
number of units available for over-subscriptions is distributed on a prorata
basis. If you are not allocated the full amount of units that you subscribe for
pursuant to the over-subscription privilege, you will receive a refund of the
subscription price you paid for units that are not allocated to and purchased by
you. The refund will be made by a check mailed by the subscription agent.
18
PAYMENT FOR UNITS
If you wish to exercise your rights or to acquire units pursuant to the
over-subscription privilege, you may choose between the following methods of
payment:
1. You may send to the subscription agent full payment for all of the units
you wish to acquire, including any additional units that you desire to acquire
through the over-subscription privilege, if you are entitled to exercise the
over-subscription privilege. Make sure that your payment is accompanied by your
completed and signed subscription certificate. The payment and properly
completed and executed subscription certificate must be received by the
subscription agent no later than 5:00 p.m., New York City time, on the
expiration date. The subscription agent will deposit all checks received by it
for the purchase of units into a segregated interest-bearing account of BioTime
pending proration and distribution of units. The interest earned on the account
will belong to BioTime.
TO BE ACCEPTED, A PAYMENT PURSUANT TO THIS METHOD MUST BE MADE IN THE
FOLLOWING MANNER:
- The payment must be in U.S. dollars;
- The payment must be by money order or check drawn on a bank located in
the United States;
- The payment must be payable to BioTime, Inc.; and
- The payment must accompany a properly completed and executed subscription
certificate.
2. Alternatively, a subscription will be accepted by the subscription agent
if, prior to 5:00 p.m., New York City time, on the expiration date, the
subscription agent has received a notice of guaranteed delivery by facsimile
telecopy or otherwise from a bank, a trust company, or a New York Stock Exchange
member guaranteeing delivery of (1) payment of the full subscription price for
the units subscribed for, including any additional units subscribed for pursuant
to the over-subscription privilege, and (2) a properly completed and executed
subscription certificate. The notice of guaranteed delivery must be received by
the subscription agent before 5:00 p.m., New York City time, on the expiration
date. The subscription agent will not honor a notice of guaranteed delivery
unless a properly completed and executed subscription certificate and full
payment for the units is received by the subscription agent by the close of
business on the third business day after the expiration date.
You will not be allowed to rescind your purchase after the subscription
agent has received payment either by means of a notice of guaranteed delivery or
a check or money order.
Nominees who hold common shares for the account of others, such as brokers,
trustees or depositories for securities, should notify the respective beneficial
owners of the common shares as soon as possible to ascertain the beneficial
owners' intentions and to obtain instructions with respect to the rights. If the
beneficial owner so instructs, the nominee should complete the subscription
certificate and submit it to the subscription agent with the proper payment. In
addition, beneficial owners of common shares or rights held through a nominee
should contact the nominee and request the nominee to effect transactions in
accordance with the beneficial owner's instructions.
SALE OF RIGHTS
The rights are transferable until the last business day prior to the
expiration date. BioTime has applied to list the rights for trading on the AMEX.
Assuming a market for the rights develops, the rights may be purchased and
through usual brokerage channels. Although no assurance can be given that a
market for the rights will develop, trading in the rights may be conducted until
and including the close of trading on the last business day prior to the
expiration date.
You may transfer some or all the rights evidenced by your subscription
certificate by following these instructions and the instructions on the back of
your subscription certificate. If you wish to transfer all of your rights, you
need only sign your subscription certificate and deliver it to the subscription
agent. If you wish to transfer some but not all of your rights, you must also
deliver to the subscription agent a subscription certificate properly endorsed
for transfer with instructions to register the portion of the rights evidenced
by the subscription certificate in the name of the transferee and to issue a new
subscription certificate to the transferee evidencing the
19
number of rights transferred. In that event, a new subscription certificate
evidencing the balance of the rights will be issued to you or, if you so
instruct, to an additional transferee.
If you wish to transfer all or a portion of your rights, you should allow
sufficient time prior to the expiration date for (1) the transfer instructions
to be received and processed by the subscription agent; (2) a new subscription
certificate to be issued and transmitted to the transferee or transferees with
respect to transferred rights, and to you with respect to retained rights, if
any; and (3) the rights evidenced by the new subscription certificate to be
exercised or sold by the recipients. BioTime and the subscription agent shall
have no liability to a transferee or transferor of rights if subscription
certificates are not received in time for exercise or sale prior to the
expiration date.
BioTime anticipates that the rights will be eligible for transfer through
the facilities of The Depository Trust Company.
Except for the fees charged by the subscription agent, which will be paid
by BioTime, all commissions, fees and other expenses, including brokerage
commissions and transfer taxes, incurred in connection with the purchase, sale
or exercise of rights will be for the account of the transferor of the rights,
and none of those commissions, fees or expenses will be paid by BioTime or the
subscription agent.
AMENDMENT, EXTENSION OR TERMINATION OF THE RIGHTS OFFER
BioTime reserves the right, in its sole discretion, to: (a) terminate the
rights offer prior to delivery of the units for which rights holders have
subscribed; (b) extend the expiration date for up to 21 days; (c) change the
record date prior to distribution of the rights to shareholders; or (d) amend or
modify the terms of the rights offer. If BioTime amends the terms of the rights
offer, an amended prospectus will be distributed to each holder of record of
rights and to each person who previously exercised any of their rights. An
extension of the expiration date for up to 21 days will not be deemed an
amendment or modification of the rights offer. If you exercised your rights
prior to the amendment or within four business days after the mailing of the
amended prospectus, you will be given the opportunity to confirm the exercise of
your rights by executing and delivering a consent form.
If you exercise rights before or within four days after mailing of an
amended prospectus relating to an amendment of the rights offer and you fail to
deliver, in a proper and timely manner, a properly executed consent form, you
will be deemed to have rejected the amended terms of the rights offer and you
will be deemed to have elected to revoke in full the exercise of your rights and
the over-subscription privilege. If your exercise of rights is so revoked, the
full amount of the subscription price you paid will be returned to you.
If your executed subscription certificate is received by the subscription
agent more than four days after the mailing of an amended prospectus, you will
be deemed to have accepted the amended terms of the rights offer in connection
with the exercise of your rights and the over-subscription privilege.
If BioTime elects to terminate the rights offer before delivering the units
for which you subscribed, the subscription price you paid will be returned to
you by mail. Except for the obligation to return the subscription price you paid
when you attempted to exercise your rights, neither BioTime nor the subscription
agent will have any obligation or liability to you in the event of an amendment
or termination of the rights offer.
DELIVERY OF SHARE AND WARRANT CERTIFICATES
Certificates representing the common shares and warrants you purchased by
exercising your rights will be delivered to you as soon as practicable after
your rights have been validly exercised and full payment for the units has been
received and cleared. Certificates representing common shares and warrants you
purchase pursuant to the over-subscription privilege will be delivered to you as
soon as practicable after the expiration date and after all allocations have
been affected. It is expected that the certificates will be available for
delivery three business days following the expiration date.
20
SUBSCRIPTION AGENT
The subscription agent is American Stock Transfer & Trust Company, which
will receive for its administrative, processing, invoicing and other services as
subscription agent, a fee estimated to be $25,000, and reimbursement for all
out-of-pocket expenses related to the rights offer. The subscription agent is
also BioTime's transfer agent and registrar. Questions regarding the
subscription certificates should be directed to American Stock Transfer & Trust
Company, 59 Maiden Lane, New York, New York, 10038; telephone (718) 921-8200.
Shareholders may also consult their brokers or nominees.
FEDERAL INCOME TAX CONSEQUENCES
The U.S. Federal income tax consequences to holders of common shares with
respect to the rights offer will be as follows:
1. The distribution of rights will not result in taxable income nor
will the holder realize taxable income as a result of the exercise of
rights.
2. The basis of a right will be (a) to a holder of common shares to
whom it is issued, and who exercises or sells the right (1) zero, if the
market value of the right immediately after issuance is less than 15% of
the market value of the common share with regard to which it is issued,
unless the holder elects, by filing a statement with his timely filed
federal income tax return for the year in which the rights are received, to
allocate the basis of the common share between the right and the common
share based on their respective market values immediately after the right
is issued, and (2) a portion of the basis in the common share based upon
the respective values of the common share and the right immediately after
the right is issued, if the market value of the right immediately after
issuance is 15% or more of the market value of the common share with
respect to which it is issued; (b) zero, to a holder of common shares to
whom it is issued and who allows the right to expire; and (c) the cost to
acquire the right, to anyone who purchases a right in the market.
3. The holding period of a right received by a holder of a common
share includes the holding period of the common share.
4. Any gain or loss on the sale of a right will be treated as a
capital gain or loss if the right is a capital asset in the hands of the
seller. A capital gain or loss will be long-term or short-term, depending
on how long the right has been held, in accordance with paragraph 3 above.
A right issued with regard to a common share will be a capital asset in the
hands of the person to whom it is issued if the common share was a capital
asset in the hands of that person. If a right is allowed to expire, there
will be no loss realized unless the right had been acquired by purchase, in
which case there will be a loss equal to the basis of the right.
5. If a right is exercised by the holder of common shares, the basis
of the common share and warrant received will include the basis allocated
to the right and the amount paid upon exercise of the right.
6. If a right is exercised, the holding period of the common share and
warrant acquired begins on the date the right is exercised.
7. Gain recognized by a non-U.S. shareholder on the sale of a right
will be taxed in the same manner as gain recognized on the sale of common
shares.
Proceeds from the sale of a right may be subject to withholding of U.S.
taxes at the rate of 31% unless the seller's certified U.S. taxpayer
identification number or certificate regarding foreign status is on file with
the subscription agent and the seller is not otherwise subject to U.S. backup
withholding. The 31% withholding tax is not an additional tax. Any amount
withhold may be credited against the seller's U.S. federal income tax liability.
The foregoing discussion of the applicable federal income tax law does not
include any state or local tax consequences of this transaction. Shareholders
and other rights holders should consult their tax advisers concerning the tax
consequences of the rights offer.
21
SPECIAL CONSIDERATIONS
As a result of the terms of the rights offer, shareholders who do not fully
exercise their rights should expect that they will, at the completion of the
rights offer, own a smaller proportional interest in BioTime than would
otherwise be the case.
STANDBY GUARANTY
The Guarantors and the Participating Debenture Holders have entered into a
Standby Purchase Agreement under which they have agreed to purchase any units
that remain unsold at the termination of the rights offer, excluding units that
have been authorized to be sold to fill excess over-subscriptions. The
Guarantors' obligations are limited to $750,000 (535,714 units) in the aggregate
and the Participating Debenture Holders' obligations are limited to $1,500,000
(1,071,428 units) in the aggregate. The obligation to purchase units is pro
rata, based on the maximum purchase obligations of each of the Guarantors and
the Participating Debenture Holders. The Participating Debenture Holders will
purchase their portion of any unsold units by exchanging a principal amount
Series 2001-A debentures equal to the purchase price of the units.
We have agreed to pay the Guarantors a cash fee in the amount of $50,000,
to pay up to $15,000 of the fees and expenses of the Guarantors' counsel, and to
issue to the Guarantors a warrant to purchase 250,000 common shares. We have
agreed to pay the Participating Debenture Holders $100,000 and to issue the
Participating Debenture Holders warrants to purchase a total of 500,0000 common
shares. The warrants issuable to the Guarantors and the Participating Debenture
Holders will be on the same terms as the warrants contained in the units offered
to shareholders through the rights. The fees and warrants will be allocated
among the Guarantors and among the Participating Debenture Holders in the ratio
of their respective standby purchase commitments.
We have registered for sale under the Securities Act of 1933, as amended,
the warrants and the common shares issuable upon the exercise of the warrants
issued to the Guarantors and the Participating Debenture Holders, and we have
agreed to register for resale by them any common shares and warrants they may
acquire through their standby purchase commitments. We have agreed to indemnify
the Guarantors and the Participating Debenture Holders from certain liabilities,
including liabilities arising under the Securities Act.
The following table shows the maximum amount of the standby purchase
commitments of the Guarantors and the Participating Debenture Holders:
AMOUNT OF
GUARANTOR PURCHASE COMMITMENT
--------- -------------------
Dr. Cynthia Bayern.......................... $375,000
Alfred D. Kingsley.......................... $187,500
George Karfunkel............................ $187,500
--------
Total....................................... $750,000
========
AMOUNT OF
PARTICIPATING DEBENTURE HOLDER PURCHASE COMMITMENT
------------------------------ -------------------
Alfred D. Kingsley.......................... $ 818,182
George Karfunkel............................ $ 272,727
Cameo Tactical Return Partners, LP.......... $ 272,727
Goren Brothers, L.P. ....................... $ 136,364
----------
Total....................................... $1,500,000
==========
Alfred D. Kingsley beneficially owns more than 5% of the outstanding common
shares of BioTime and $1,500,000 of Series 2001-A debentures.
22
OFFER OF ADDITIONAL UNITS TO GUARANTORS
We have offered the Guarantors the opportunity to purchase up to an
additional 428,571 units until 10 days after the expiration date of the rights
offer. These additional units will be offered at the same subscription price as
the rights offer. The Guarantors will not be obligated to purchase any of these
additional units. The additional units are being offered to the Guarantors on a
pro rata basis according to the ratio of the amount of their respective standby
purchase commitments. The Guarantors may assign the offer to purchase units to
one or more third parties. If any Guarantor or his assignee declines to purchase
the number of units offered to him, the other Guarantors may purchase those
units.
OFFER TO EXCHANGE ADDITIONAL UNITS FOR DEBENTURES
We are also offering all holders of our Series 2001-A debentures the
opportunity to exchange their debentures for units at the rights offer
subscription price per unit. The Participating Debenture Holders have agreed to
exchange their debentures for units if the rights offer is over-subscribed and
BioTime issues all 853,434 units reserved to fill over-subscriptions. The total
amount of debentures that may be exchanged for units will be $1,500,000, less
the amount of any debentures that may have been exchanged for units by
Participating Debenture Holders to meet their obligations to purchase units that
remain unsold at the termination of the rights offering. If the amount of
debentures tendered in exchange for units exceeds $1,500,000, the Company will
accept debentures tendered by Participating Debenture Holders, up to the
$1,500,000 limit, before accepting debentures tendered by other debenture
holders. Otherwise, the debentures will be accepted for exchange pro rata based
upon the ratio of the principal amount of debentures owned to the total
principal amount tendered. If all of the debenture holders accept the exchange
offer, we would issue an additional 1,071,428 units.
USE OF PROCEEDS
The net cash proceeds received by BioTime from the sale of the 1,706,869
units in the rights offer are estimated to be $1,984,617, after deducting the
expenses of the offer of approximately $405,000, without taking into account any
common shares that may be sold through the exercise of warrants. An additional
$1,794,807 of cash proceeds may be received through the sale of up to 853,434
units to fill excess over-subscriptions and through the sale of up to 428,571
units to the Guarantors. BioTime intends to use the net proceeds of the rights
offer as shown in the following table. The minimum amount of proceeds reflects
the proceeds from the sale of 1,706,869 units in the rights offer only, and the
maximum amount also includes proceeds from the sale of 853,434 units to fill
excess over-subscriptions and through the sale of 428,571 units to the
Guarantors. In addition, up to $1,500,000 of debenture indebtedness may be
retired through the exchange of Series 2001-A Debentures for units.
ESTIMATED AMOUNT PERCENT OF TOTAL
----------------------- -----------------
APPLICATION MINIMUM MAXIMUM MINIMUM MAXIMUM
----------- ---------- ---------- ------- -------
Clinical Trials of PentaLyte.............. $1,000,000 $1,000,000 50.4% 26.5%
Working Capital........................... $ 984,617 $ 929,424 49.6 24.6
Repayment of Debentures................... $ 0 $1,850,000 0 48.9
---- ----
Total..................................... $1,984,617 $3,779,424 100% 100%
========== ========== ==== ====
Clinical Trials of PentaLyte. Up to $1,000,000 of the proceeds allocated
to research and development will be used to finance clinical testing of
PentaLyte. We have completed a Phase I clinical trial of PentaLyte and we are
planning the next phase of clinical trials in which PentaLyte will be used to
treat hypovolemia in surgery. We have spent approximately $2,000,000 in direct
costs through September 30, 2003 developing PentaLyte. If Abbott obtains a
license to manufacture and market PentaLyte under our License Agreement with
them, they would reimburse us for our direct costs incurred in developing
PentaLyte. Abbott's decision whether to license PentaLyte would follow the
completion of our Phase II trial, or if we proceed directly into a Phase II/II
trial, the first successful human use in that trial.
Working Capital. We intend to apply the balance of the proceeds of the
rights offer to research and development and general corporate purposes. We will
have broad discretion with respect to the use of proceeds
23
retained as working capital. The proceeds allocated to research and development
may be used to finance additional clinical trials of Hextend, initial clinical
trials of HetaCool, and laboratory testing of other products we are developing.
When laboratory testing of a product has been completed, a portion of the
proceeds allocated to research and development may also be used to commence
clinical trials of that product. We may also use a portion of the proceeds to
fund the cost of seeking regulatory approval of our products. The proceeds may
be used to defray overhead expenses and for future opportunities and
contingencies that may arise. We expect that our general and administrative
expenses will increase as we achieve progress in developing products and
bringing them to market. For example, a portion of the proceeds allocated to
working capital may be used to pay the salaries, benefits and fees to employees
and consultants who assist in the preparation of applications to the FDA and
foreign regulatory agencies and patent applications. Proceeds allocated to
working capital also may be reallocated to research and development and may be
used to pay the costs of clinical trials of our products.
Repayment of Debentures. We have $3,350,000 of Series 2001-A debentures
outstanding. These debentures bear interest at 10% per annum. The entire
principal amount of the debentures, plus accrued interest, will be payable on
August 1, 2004. The Participating Debenture Holders have agreed to exchange
$1,500,000 principal amount of their debentures for units at the subscription
price if all 1,706,869 units are issued to rights holders and an additional
853,434 units are sold to fill excess over-subscriptions, and all 428,571 units
are sold to the Guarantors. If that occurs, we will use approximately $1,850,000
of the proceeds to prepay the remaining outstanding debentures.
The foregoing represents only an estimate of the allocation of the net
proceeds of the rights offer based upon the current state of our product
development program. The development of new medical products and technologies
often involves complications, delays and costs that cannot be predicted, and may
cause us to make a reallocation of proceeds among the categories shown above or
to other uses. We may need to raise additional capital after the rights offer to
pay operating expenses until such time as we are able to generate sufficient
revenues from product sales, royalties, and license fees.
Until used, the net proceeds of the rights offer will be invested in
certificates of deposit, United States government securities or other high
quality, short-term interest-bearing investments.
DESCRIPTION OF SECURITIES
SUBSCRIPTION RIGHTS
The rights will entitle the holders to subscribe for and purchase for the
subscription price one unit for every eight rights owned. Each unit will consist
of one BioTime common share and one-half of a warrant to purchase one common
share. The subscription price is $1.40 per unit. Holders of the common shares
will receive one right for each BioTime common share owned as of the close of
business on the record date. The rights will expire at 5:00 p.m. New York City
time on December 31, 2003. We may extend the Expiration Date for up to 21 days.
More detailed information about how to exercise the rights can be found in this
prospectus under "The Rights Offer -- Exercise of Rights" and "The Rights
Offer -- Payment for Units."
Rights holders who exercise all of the rights originally issued to them may
also be able to purchase any units that are left over by shareholders who fail
to exercise their rights. BioTime may also issue up to 853,434 additional units
for $1.40 each to fill excess over-subscriptions. Further information on
over-subscriptions can be found in this prospectus under "The Rights
Offer -- Over-Subscription Privilege."
UNITS
Each unit will consist of one new common share and one-half of a warrant to
purchase an additional common share. Fractional warrants will not be issued.
COMMON SHARES
BioTime's Articles of Incorporation currently authorize the issuance of up
to 40,000,000 common shares, no par value, of which 13,654,949 shares were
outstanding at November 5, 2003 and held by 7,068 persons based
24
upon the share position listings for the common shares. Each holder of record is
entitled to one vote for each outstanding common share owned by him on every
matter properly submitted to the shareholders for their vote.
Subject to the dividend rights of holders of any of the preferred shares
that may be issued from time to time, holders of common shares are entitled to
any dividend declared by the Board of Directors out of funds legally available
for that purpose. BioTime has not paid any cash dividends on our common shares,
and it is unlikely that any cash dividends will be declared or paid on any
common shares in the foreseeable future. Instead, BioTime plans to retain our
cash for use in financing our future operations and growth.
Subject to the prior payment of the liquidation preference to holders of
any preferred shares that may be issued, holders of common shares are entitled
to receive on a prorata basis all remaining assets of BioTime available for
distribution to the holders of common shares in the event of the liquidation,
dissolution, or winding up of BioTime. Holders of common shares do not have any
preemptive rights to become subscribers or purchasers of additional shares of
any class of BioTime's capital stock.
PREFERRED SHARES
BioTime's Articles of Incorporation currently authorize the issuance of up
to 1,000,000 preferred shares, no par value. We may issue preferred shares in
one or more series, at any time, with such rights, preferences, privileges and
restrictions as the Board of Directors may determine, all without further action
of our shareholders. Any series of preferred shares which may be authorized by
the Board of Directors in the future may be senior to and have greater rights
and preferences than the common shares. There are no preferred shares presently
outstanding and we have no present plan, arrangement or commitment to issue any
preferred shares.
WARRANTS
Each full warrant entitles the holder to purchase one common share at a
price of $2.00 per share. The number of common shares and exercise price will be
proportionally adjusted in the event of a stock split, stock dividend,
combination or similar recapitalization of the common shares. The warrants will
expire on January 14, 2007 and may not be exercised after that date.
Warrants may be exercised in whole or in part by presentation of a warrant
certificate to the warrant agent and payment of the exercise price. The purchase
form on the reverse side of the warrant must be signed by the warrant holder and
the warrant holder's signature must be guaranteed by a financial institution
that is a participant in a recognized signature guarantee program. Payment of
the exercise price of the warrants must be made in cash or by certified or bank
cashier's check or wire transfer. If your warrants are held in the name of Cede
& Co. as nominee for The Depository Trust Company, or in the name of any other
depository or nominee, you should contact your broker-dealer or other financial
institution that holds your warrants in order to exercise them.
BioTime may redeem the warrants by paying $.05 per warrant if the closing
price of the common shares on the AMEX or any other national securities exchange
or the Nasdaq Stock Market exceeds 200% of the exercise price of the warrants
for any 20 consecutive trading days ending not more than 20 days before the
Company sends a notice of redemption to the warrant holders (the "Trigger
Period"). We will give the warrant holders at least 20 days written notice of
the redemption, setting the redemption date, and the warrant holders may
exercise the warrants prior to the redemption date. The warrants may not be
exercised after the last business day prior to the redemption date.
The redemption date will abate, and the notice of redemption will be of no
effect, if the closing price or average bid price of BioTime common share does
not equal or exceed 120% of the exercise price of the warrants on the redemption
date and each of the five trading days immediately preceding the redemption
date. However, BioTime will have the right to redeem the warrants at a future
date if the market price of the common shares again exceeds 200% of the exercise
price for 20 consecutive trading days, as described above. In addition, BioTime
may not redeem the warrants unless a registration statement with respect to the
warrants and underlying common shares is effective under the Securities Act
during the Trigger Period and during the 20 day period ending on the redemption
date.
25
TRANSFER AGENT, WARRANT AGENT, AND REGISTRAR
The transfer agent, warrant agent, and registrar for the common shares and
warrants is American Stock Transfer and Trust Company, 59 Maiden Lane, New York,
New York 10038.
RESALE OF SHARES AND WARRANTS
The Guarantors and Participating Debenture Holders have advised us that
they may hold for investment purposes any common shares and warrants they
acquire, or they may sell common shares and warrants from time to time on the
AMEX at prevailing market prices, or at prices related to the prevailing market
price, or in privately negotiated transactions. They also may sell common shares
in connection with the exercise of their warrants or they may hold those shares
for investment purposes and sell them at later date.
The Guarantors and Participating Debenture Holders will bear all
broker-dealer commissions payable in connection with the sale of their common
shares and warrants. Broker-dealers who acquire common shares or warrants from
the Guarantors and Participating Debenture Holders as principals may resell the
shares and warrants from time to time in transactions on the AMEX, or may resell
the shares and warrants in negotiated transactions at prevailing market prices
or at negotiated prices, and may receive usual and customary commissions from
the purchasers of the shares and warrants.
The Guarantors and Participating Debenture Holders have advised us that
during the time that they may be engaged in a distribution of their common
shares and warrants they will (a) not engage in any stabilization activity in
connection with BioTime securities, (b) cause to be furnished to each broker
through whom their shares or warrants may be offered the number of copies of
this prospectus required by the broker, and (c) not bid for or purchase any
BioTime securities or rights to acquire BioTime securities, or attempt to induce
any person do so, other than as permitted under the Securities Exchange Act of
1934, as amended. The Guarantors and Participating Debenture Holders and any
broker-dealers who participate in the sale of their common shares and warrants
are deemed to be "underwriters" as defined in the Securities Act. Any
commissions paid or any discounts or concessions allowed to any broker-dealers
in connection with the sale of the common shares and warrants, and any profits
received on the resale of any shares and warrants purchased by broker-dealers as
principals, may be deemed to be underwriting discounts and commissions under the
Securities Act.
LEGAL MATTERS
The validity of the rights, common shares, and warrants will be passed upon
for BioTime by Lippenberger, Thompson, Welch, Soroko & Gilbert LLP, San
Francisco and Corte Madera, California.
EXPERTS
The financial statements incorporated by reference in this prospectus have
been audited by BDO Seidman, LLP, independent certified public accountants, to
the extent and for the periods set forth in their report (which contains an
explanatory paragraph related to the development stage of BioTime's operations)
incorporated herein by reference, and are incorporated herein in reliance upon
such report given upon the authority of said firm as experts in accounting and
auditing.
The financial statements incorporated in this prospectus by reference from
the BioTime Annual Report on Form 10-K/A-1 as of December 31, 2002 and for the
years ended December 31, 2001 and 2000 and the period from November 30, 1990
(inception) to December 31, 2001 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, incorporated herein by
reference (which report expresses an unqualified opinion and includes an
explanatory paragraph related to the development stage of BioTime's operations),
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
26
ADDITIONAL INFORMATION ABOUT BIOTIME
This prospectus is accompanied by a copy of our Annual Report on Form
10-K/A-1 for the year ended December 31, 2002 and our Quarterly Report on Form
10-Q for the three months ended September 30, 2003, which contain important
information about us.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
BioTime's Annual Report on Form 10-K, filed with the Securities and
Exchange Commission on March 31, 2003, as amended by Form 10-K/A-1, filed with
the Commission on April 14, 2003, for the fiscal year ended December 31, 2002,
and Quarterly Reports on Form 10-Q for the periods ended March 31, 2003, June
30, 2003, and September 30, 2003, filed with the Commission on May 15, 2003,
August 13, 2003, and November 12, 2003, respectively, Current Reports on Form
8-K filed with the Commission on January 21, 2003, and June 26, 2003, and all
other reports filed by BioTime pursuant to Sections 13(a), 13(c), 14, or 15(d)
of the Securities Exchange Act of 1934, as amended, since the end of the fiscal
year covered by such Form 10-K are hereby incorporated into this prospectus by
reference. Description of the common shares and warrants contained in
Registrations Statements on Form 8-A filed under the Securities Exchange Act of
1934, as amended, are also incorporated into this prospectus by reference.
BioTime will provide without charge to each person, including any beneficial
owner, to whom a prospectus is delivered, upon written or oral request of such
person, a copy of any and all of the information that has been incorporated by
reference but not delivered with this prospectus. Such requests may be addressed
to the Secretary of BioTime at 935 Pardee Street, Berkeley, California 94710;
Telephone: (510) 845-9535.
BioTime is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith files quarterly,
annual, and current reports and proxy statements and other information with the
Securities and Exchange Commission. The public may read and copy any materials
BioTime files with Securities and Exchange Commission at the Commission's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may
obtain information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330.
The Commission maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the Commission. The address of such site is
http://www.sec.gov.
ADDITIONAL INFORMATION
BioTime has filed with the Securities and Exchange Commission, 450 Fifth
Street, N.W., Washington, D.C. a registration statement on Form S-2 under the
Securities Act of 1933, as amended, for the registration of the securities
offered hereby. This prospectus, which is part of the registration statement,
does not contain all of the information contained in the registration statement.
For further information with respect to BioTime and the securities offered
hereby, reference is made to the registration statement, including the exhibits
thereto, which may be inspected, without charge, at the Office of the Securities
and Exchange Commission, or copies of which may be obtained from the Commission
in Washington, D.C. upon payment of the requisite fees. Statements contained in
this prospectus as to the content of any contract or other document referred to
are not necessarily complete. In each instance reference is made to the copy of
the contract or other document filed as an exhibit to the registration
statement, and each such statement is qualified in all respects by reference to
the exhibit.
27
APPENDIX A
CONTROL NUMBER BIOTIME, INC. SUBSCRIPTION CERTIFICATE FOR
SUBSCRIPTION CERTIFICATE FOR UNITS VOID IF NOT
EXERCISED AT OR BEFORE 5:00 P.M. (NEW YORK TIME) ON
DECEMBER 31, 2003 (UNLESS EXTENDED), THE EXPIRATION Rights
DATE. THIS SUBSCRIPTION CERTIFICATE IS TRANSFERRABLE
AND MAY BE COMBINED OR DIVIDED (BUT ONLY INTO SUBSCRIPTION PRICE U.S. $1.40 PER
Expiration Date SUBSCRIPTION CERTIFICATES EVIDENCING A WHOLE NUMBER OF UNIT
December 31, 2003 RIGHTS) AT THE OFFICE OF THE SUBSCRIPTION AGENT
CUSIP 09066L 13 9
THIS SUBSCRIPTION CERTIFICATE MAY BE USED TO SUBSCRIBE FOR If you exercise fewer than all the Rights represented by
UNITS OR MAY BE ASSIGNED OR SOLD. FULL INSTRUCTIONS APPEAR this Subscription Certificate, the subscription agent will
ON THE BACK OF THIS SUBSCRIPTION CERTIFICATE. issue a new Subscription Certificate representing the
REGISTERED OWNER: balance of the unexercised Rights, provided that the
The registered owner of this Subscription Certificate, named subscription agent has received your properly completed and
above, or assignee, is entitled to the number of Rights to executed Subscription Certificate and payment prior to 5:00
subscribe for Units consisting of one common share, no par p.m., New York time, on December 30, 2003. No new
value, and one-half of a warrant to purchase one common Subscription Certificate will be issued after that date.
share of BioTime, Inc. shown above, in the ratio of one Unit
for each 8 Rights held, and upon the terms and conditions IMPORTANT: Complete appropriate form on reverse
and at the price for each Unit specified in the Prospectus
dated , 2003. BIOTIME, INC.
DATE: , 2003 ------------------------------------------------------------
VICE PRESIDENT;
BIOTIME, INC. MEMBER, OFFICE
OF THE PRESIDENT
------------------------------------------------------------
SECRETARY
Countersigned: American Stock Transfer & Trust Company (New
York, N.Y.) Subscription Agent
By:
------------------------------------------
Authorized Signature
A-1
Expiration Date: December 31, 2003
PLEASE COMPLETE ALL APPLICABLE INFORMATION
By Mail: By Hand: By Overnight Courier:
To: American Stock To: American Stock To: American Stock
Transfer & Trust Company Transfer & Trust Company Transfer & Trust Company
Exchanges and Tenders Exchanges and Tenders Exchanges and Tender
59 Maiden Lane 59 Maiden Lane, Plaza Level 59 Maiden Lane, Plaza Level
New York, New York 10038 New York, New York 10038 New York, New York 10038
SECTION 1: TO SUBSCRIBE: I hereby irrevocably subscribe for the dollar amount of
Units indicated as the total of A and B below upon the terms and
conditions specified in the Prospectus related hereto, receipt of
which is acknowledged.
TO SELL: If I have checked either the box on line C or the box on
line D, I authorize the sale of Rights by the subscription agent
according to the procedures described in the Prospectus. The check
for the proceeds of sale will be mailed to the address of record.
Please check below:
[ ] A. Subscription /8 = .000 x $1.40 = $
------------ ----------------- -------------------- -----------------
(Rights Exercised) (Units Requested) (Subscription Price) (Amount Required)
[ ] B. Over-Subscription Privilege .000 x $1.40 = $ (*)
----------------- -------------------- -----------------
(Units Requested) (Subscription Price) (Amount Required)
Amount of Check Enclosed or Amount in Notice of Guaranteed Delivery (Total of A + B) = $
-----------------
Make check payable to the order of "BioTime, Inc."
(*) The Over-Subscription Privilege can be exercised by certain shareholders only, as described in the
Prospectus.
[ ] C. Sell any remaining unexercised Rights
[ ] D. Sell all of my Rights.
Please provide your telephone number Day (___)___________
---------------------------------------------
Signature of Subscriber(s)/Seller(s) Evening (___)________
Social Security Number or Tax ID Number:
--------------------------------------
SECTION II: TO TRANSFER RIGHTS: (except pursuant to C and D above)
For value received, ____________ of the Rights represented by this Subscription
Certificate are assigned to
-------------------------------------------------- --------------------------------------------------
Social Security Number or Tax ID Number of (Print Full Name of Assignee)
Assignee
-------------------------------------------------- --------------------------------------------------
Signature(s) of Assignor(s) (Print Full Address including postal Zip Code)
The signature(s) must correspond with the name(s) as written upon the face of
this Subscription Certificate, in every particular, without alteration.
IMPORTANT: For transfer, a signature guarantee must be provided by an eligible
financial institution which is a participant in a recognized signature guarantee
program.
SIGNATURE GUARANTEED BY:
PROCEEDS FROM THE SALE OF RIGHTS MAY BE SUBJECT TO WITHHOLDING OF U.S. TAXES
UNLESS THE SELLER'S CERTIFIED U.S. TAXPAYER IDENTIFICATION NUMBER (OR
CERTIFICATION REGARDING FOREIGN STATUS) IS ON FILE WITH THE SUBSCRIPTION AGENT
AND THE SELLER IS NOT OTHERWISE SUBJECT TO U.S. BACKUP WITHHOLDING.
[ ] CHECK HERE IF RIGHTS ARE BEING EXERCISED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY DELIVERED TO THE SUBSCRIPTION AGENT PRIOR TO THE DATE HEREOF AND
COMPLETE THE FOLLOWING:
NAME(S) OF REGISTERED OWNER(S):
WINDOW TICKET NUMBER (IF ANY):
DATE OF EXECUTION OF NOTICE OF GUARANTEED DELIVERY:
NAME OF INSTITUTION WHICH GUARANTEED DELIVERY:
A-2
APPENDIX B
[Form of Notice of Guaranteed Delivery]
NOTICE OF GUARANTEED DELIVERY OF SUBSCRIPTION RIGHTS AND
THE SUBSCRIPTION PRICE FOR UNITS OF
BIOTIME, INC. SUBSCRIBED FOR IN THE RIGHTS OFFER
As set forth in the Prospectus under "The Rights Offer -- Payment for
Units," this form or one substantially equivalent may be used as a means of
effecting subscription and payment for all Units of BioTime, Inc. subscribed for
in the Rights Offer. Such form may be delivered by hand or sent by facsimile
transmission, overnight courier or mail to the Subscription Agent.
The Subscription Agent is:
American Stock Transfer & Trust Company
By Mail: By Facsimile:
American Stock Transfer & Trust Company (718) 234-5001
59 Maiden Lane Confirm by Telephone
New York, New York 10038 1-877-248-6417
By Hand: By Overnight Courier:
American Stock Transfer & Trust Company American Stock Transfer & Trust Company
Exchanges and Tenders Exchanges and Tenders
59 Maiden Lane, Plaza Level 59 Maiden Lane, Plaza Level
New York, New York 10038 New York, New York 10038
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A TELECOPY OR FACSIMILE NUMBER, OTHER THAN AS
SET FORTH ABOVE, DOES NOT CONSTITUTE A VALID DELIVERY
The New York Stock Exchange member firm or bank or trust company which
completes this form must communicate the guarantee and the number of Units
subscribed for to the Subscription Agent and must deliver this Notice of
Guaranteed Delivery guaranteeing delivery of (i) payment in full for all
subscribed Units (including any Units subscribed for through the
over-subscription privilege) and (ii) a properly completed and executed
Subscription Certificate (which certificate and full payment must then be
delivered by the close of business on the third business day after the
expiration date, as defined in the Prospectus) to the Subscription Agent prior
to 5:00 p.m., New York time, on the expiration date (December 31, 2003, unless
extended). Failure to do so will result in a forfeiture of the Rights.
B-1
GUARANTEE
The undersigned, a member firm of the New York Stock Exchange or a bank or
trust company, guarantees delivery to the Subscription Agent by the close of
business (5:00 p.m., New York time) on the third business day after the
expiration date (December 31, 2003, unless extended) of (A) a properly completed
and executed Subscription Certificate and (B) payment of the full subscription
price of Units subscribed for in the Rights offer (including the
over-subscription privilege, if applicable) as subscription for such Units as
indicated herein or in the Subscription Certificate.
-------------------------------------------- --------------------------------------------
Number of Units subscribed for (excluding Number of Units subscribed for pursuant to
the over-subscription privilege) for which the over-subscription privilege for which
you are guaranteeing delivery of Rights you are guaranteeing delivery of Rights and
and payment payment
Number of Rights to be delivered: --------------------------------------------
Total subscription price payment to $
bedelivered: --------------------------------------------
Method of delivery [circle one] A. Through DTC
B. Direct to Corporation
Please note that if you are guaranteeing for over-subscription Units, and
are a DTC participant, you must also execute and forward to American Stock
Transfer & Trust Company a Nominee Holder Over-Subscription Exercise Form.
-------------------------------------------- --------------------------------------------
Name of Firm Authorized Signature
-------------------------------------------- --------------------------------------------
Address Title
-------------------------------------------- --------------------------------------------
Zip Code (Type or Print)
-------------------------------------------- --------------------------------------------
Name of Registered Holder (If Applicable)
-------------------------------------------- --------------------------------------------
Telephone Number Date
* IF THE RIGHTS ARE TO BE DELIVERED THROUGH DTC, A REPRESENTATIVE OF THE
SUBSCRIPTION AGENT WILL PHONE YOU WITH A PROTECT IDENTIFICATION NUMBER, WHICH
NEEDS TO BE COMMUNICATED BY YOU TO DTC.
PLEASE NOTE THAT IF YOU ARE GUARANTEEING FOR OVER-SUBSCRIPTION UNITS AND ARE A
DTC PARTICIPANT, YOU MUST ALSO EXECUTE AND FORWARD TO THE SUBSCRIPTION AGENT A
NOMINEE HOLDER OVER-SUBSCRIPTION EXERCISE FORM.
B-2
APPENDIX C
[FORM OF NOMINEE HOLDER OVER-SUBSCRIPTION EXERCISE FORM]
BIOTIME, INC.
RIGHTS OFFER
NOMINEE HOLDER OVER-SUBSCRIPTION EXERCISE FORM
PLEASE COMPLETE ALL APPLICABLE INFORMATION
By Mail: By Hand: By Overnight Courier:
To: American Stock To: American Stock To: American Stock
Transfer & Trust Company Transfer & Trust Company Transfer & Trust Company
Exchanges and Tenders Exchanges and Tenders Exchanges and Tenders
59 Maiden Lane 59 Maiden Lane, Plaza 59 Maiden Lane, Plaza
New York, New York 10038 Level Level
New York, New York 10038 New York, New York 10038
THIS FORM IS TO BE USED ONLY BY NOMINEE HOLDERS TO EXERCISE THE OVER-
SUBSCRIPTION PRIVILEGE IN RESPECT OF RIGHTS THAT WERE EXERCISED AND DELIVERED
THROUGH THE FACILITIES OF A COMMON DEPOSITORY. ALL OTHER EXERCISES OF OVER-
SUBSCRIPTION PRIVILEGES MUST BE EFFECTED BY THE DELIVERY OF THE SUBSCRIPTION
CERTIFICATES.
---------------------
THE TERMS AND CONDITIONS OF THE RIGHTS OFFER ARE SET FORTH IN BIOTIME'S
PROSPECTUS DATED , 2003 (THE "PROSPECTUS") AND ARE INCORPORATED HEREIN
BY REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM BIOTIME.
---------------------
VOID UNLESS RECEIVED BY THE SUBSCRIPTION AGENT WITH PAYMENT IN FULL BY 5:00
P.M., NEW YORK TIME, ON DECEMBER 31, 2003, UNLESS EXTENDED BY BIOTIME (THE
"EXPIRATION DATE").
1. The undersigned hereby certifies to the Subscription Agent that it is a
participant in [Name of Depository] (the "Depository") and that it
has either (i) exercised all of the Rights and delivered such exercised
Rights to the Subscription Agent by means of transfer to the Depository
Account of BioTime, Inc., or (ii) delivered to the Subscription Agent a
Notice of Guaranteed Delivery in respect of the exercise of the Rights and
will deliver the Rights called for in such Notice of Guaranteed Delivery to
the Subscription Agent by means of transfer to such Depository Account of
BioTime, Inc.
2. The undersigned hereby exercises the over-subscription privilege to purchase,
to the extent available, Units and certifies to the Subscription Agent that
such over-subscription privilege is being exercised for the account or
accounts of persons (which may include the undersigned) on whose behalf all
Rights have been exercised.(*)
3. The undersigned understands that payment of the subscription price of $1.40
per Unit for each Unit subscribed for pursuant to the over-subscription
privilege must be received by the Subscription Agent at or before 5:00 p.m.,
New York time, on the Expiration Date, and represents that such payment, in
the aggregate amount of $ either (check appropriate box):
[ ] has been or is being delivered to the Subscription Agent pursuant to the
Notice of Guaranteed Delivery referred to above or;
[ ] is being delivered to the Subscription Agent herewith or;
C-1
[ ] has been delivered separately to the Subscription Agent; and, in the case
of funds not delivered pursuant to a Notice of Guaranteed Delivery, is or
was delivered in the manner set forth below (check appropriate box and
complete information relating thereto):
[ ] uncertified check
[ ] certified check
[ ] bank draft
[ ] money order
------------------------------------------------------
Depository Subscription Confirmation Number
------------------------------------------------------
Depository Participant Number
Contact Name
--------------------------------------
Phone Number
-------------------------------------
Dated: , 2003
------------------------------------------------------
Name of Nominee Holder
------------------------------------------------------
Address
------------------------------------------------------
City State Zip Code
By:
-------------------------------------------------
Name:
----------------------------------------------
Title:
-----------------------------------------------
* PLEASE COMPLETE THE BENEFICIAL OWNER CERTIFICATION ON THE BACK HEREOF
CONTAINING THE RECORD DATE POSITION OF RIGHTS OWNED, THE NUMBER OF UNITS
SUBSCRIBED FOR (OTHER THAN OVER-SUBSCRIPTIONS) AND THE NUMBER OF OVER-
SUBSCRIPTION UNITS, IF APPLICABLE, REQUESTED BY EACH SUCH OWNER.
C-2
BIOTIME, INC.
BENEFICIAL OWNER CERTIFICATION
The undersigned, a bank, broker or other nominee holder of Rights
("Rights") to purchase Units of BioTime, Inc. ("BioTime") pursuant to the Rights
Offer described and provided for in BioTime's Prospectus dated , 2003
(the "Prospectus") hereby certifies to BioTime and to American Stock Transfer &
Trust Company, as Subscription Agent for such Rights Offer, that for each
numbered line filled in below the undersigned has exercised, on behalf of the
beneficial owner thereof (which may be the undersigned), the number of Rights
specified on such line, and such beneficial owner wishes to subscribe for the
purchase of additional Units pursuant to the over-subscription privilege (as
defined in the Prospectus), in the amount set forth in the third column of such
line:
NUMBER OF UNITS REQUESTED PURSUANT
RECORD DATE SHARES NUMBER OF RIGHTS EXERCISED TO THE OVER-SUBSCRIPTION PRIVILEGE
------------------ ---------------------------- ----------------------------------
1)
---------------------------- ---------------------------- ----------------------------
2)
---------------------------- ---------------------------- ----------------------------
3)
---------------------------- ---------------------------- ----------------------------
4)
---------------------------- ---------------------------- ----------------------------
5)
---------------------------- ---------------------------- ----------------------------
6)
---------------------------- ---------------------------- ----------------------------
7)
---------------------------- ---------------------------- ----------------------------
8)
---------------------------- ---------------------------- ----------------------------
9)
---------------------------- ---------------------------- ----------------------------
10)
---------------------------- ---------------------------- ----------------------------
------------------------------------------------------
Name of Nominee Holder
------------------------------------------------------
Name:
Title:
Dated: , 2003
------------------------------------------------------
Depository Participant Number
------------------------------------------------------
Depository Primary Subscription Confirmation Number(s)
C-3
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH
THIS OFFERING TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
OR A SOLICITATION IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE CIRCUMSTANCES OF BIOTIME OR THE FACTS
HEREIN SET FORTH SINCE THE DATE HEREOF.
TABLE OF CONTENTS
Prospectus Summary..................... 4
Risk Factors........................... 9
The Rights Offer....................... 14
Offer of Additional Units to
Guarantors........................... 22
Offer of Additional Units for
Debentures........................... 23
Use of Proceeds........................ 23
Description of Securities.............. 24
Resale of Shares and Warrants.......... 26
Legal Matters.......................... 26
Independent Accountants................ 26
Additional Information About BioTime... 26
Incorporation of Certain Information by
Reference............................ 27
Additional Information................. 27
Form of Subscription Certificate......... Appendix A
Form of Notice of
Guaranteed Delivery.................... Appendix B
Form of Nominee Holder
Over-Subscription Exercise Form........ Appendix C
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
BIOTIME, INC.
1,706,869 UNITS ISSUABLE UPON THE EXERCISE
OF SUBSCRIPTION RIGHTS
853,434 UNITS ISSUABLE TO FILL EXCESS
OVER-SUBSCRIPTIONS
428,571 UNITS OFFERED TO THE GUARANTORS
1,071,428 UNITS ISSUABLE IN EXCHANGE FOR
SERIES 2001-A DEBENTURES
2,780,150 COMMON SHARES ISSUABLE UPON
EXERCISE OF WARRANTS
EACH UNIT CONSISTS OF ONE COMMON SHARE
AND ONE-HALF OF A WARRANT
---------------------
PROSPECTUS
---------------------
, 2003
------------------------------------------------------
------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses of the Registrant in connection with the issuance
and distribution of the securities being registered hereby are as follows:
Registration Fee-Securities and Exchange Commission......... $ 909.70
AMEX Listing Fee............................................ 57,500
Printing and Engraving Expenses............................. 75,000
Accounting Fees............................................. 30,000
Legal Fees.................................................. 50,000
Subscription Agent.......................................... 25,000
Miscellaneous Expenses...................................... 1,590.30
---------
Total..................................................... $ 240,000
=========
---------------
* To be filed by amendment
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 317 of the California Corporations Code permits indemnification of
directors, officers, employees and other agents of corporations under certain
conditions and subject to certain limitations. In addition, Section 204(a)(10)
of the California Corporations Code permits a corporation to provide, in its
articles of incorporation, that directors shall not have liability to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty, subject to certain prescribed exceptions. Article Four of the Articles of
Incorporation of the Registrant contains provisions for the indemnification of
directors, officers, employees and other agents within the limitations permitted
by Section 317 and for the limitation on the personal liability of directors
permitted by Section 204(b)(10), subject to the exceptions required thereby.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT
NUMBERS DESCRIPTION
------- -----------
3.1 Articles of Incorporation, as Amended.(1)
3.2 By-Laws, As Amended.(3)
4.1 Specimen of Common Share Certificate.(2)
4.2 Form of Subscription Certificate(16)
4.3 Form of Warrant(16)
4.4 Form of Warrant Agreement between the Registrant and
American Stock Transfer & Trust Company(16)
5. Opinion of Counsel(16)
10.1 Lease Agreement dated July 1, 1994 between the Registrant
and Robert and Norah Brower, relating to principal executive
offices of the Registrant.(4)
10.2 Intellectual Property Agreement between the Registrant and
Hal Sternberg.(2)
10.3 Intellectual Property Agreement between the Registrant and
Harold Waitz.(2)
10.4 Intellectual Property Agreement between the Registrant and
Judith Segall.(2)
10.5 Intellectual Property Agreement between the Registrant and
Steven Seinberg.(13)
10.6 Agreement between CMSI and BioTime Officers Releasing
Employment Agreements, Selling Shares, and Transferring
Non-Exclusive License.(2)
II-1
EXHIBIT
NUMBERS DESCRIPTION
------- -----------
10.7 Agreement for Trans Time, Inc. to Exchange CMSI Common Stock
for BioTime, Inc. Common Shares.(2)
10.8 2002 Stock Option Plan, as amended.(6)
10.9 Addenda to Lease Agreement between the Registrant and Donn
Logan.(10)
10.10 Exclusive License Agreement between Abbott Laboratories and
BioTime, Inc. (Portions of this exhibit have been omitted
pursuant to a request for confidential treatment).(8)
10.11 Modification of Exclusive License Agreement between Abbott
Laboratories and BioTime, Inc. (Portions of this exhibit
have been omitted pursuant to a request for confidential
treatment).(9)
10.12 Warrant Agreement, dated March 27, 2001, between BioTime,
Inc. and Alfred D. Kingsley.(11)
10.13 Form of Series 2001-A 10% Debenture due August 1, 2004.(12)
10.14 Warrant Agreement between BioTime, Inc. and Purchasers of
Series 2001-A Debentures.(12)
10.15 Warrant Agreement, dated March 27, 2002, between BioTime,
Inc. and Alfred D. Kingsley.(13)
10.16 Warrant for the Purchase of Common Shares, dated August 12,
2002, issued to Ladenburg Thalmann & Co. Inc.(14)
10.17 Exclusive License Agreement between BioTime, Inc. and CJ
Corp.(15)
10.18 Warrant Agreement, dated April 9, 2003, between BioTime,
Inc. and certain holders of Series 2001-A Debentures.(15)
10.19 Standby Purchase Agreement between BioTime and the persons
named therein as Guarantors and Participating Debenture
Holders(16)
10.20 Amendment to Standby Purchase Agreement between BioTime and
the persons named therein as Guarantors and Participating
Debenture Holders.(17)
23.1 Consent of Deloitte & Touche, LLP(17)
23.2 Consent of BDO Seidman, LLP(17)
23.3 Consent of Counsel (included in Exhibit 5)(16)
---------------
(1) Incorporated by reference to the Registrant's Form 10-K for the fiscal year
ended June 30, 1998.
(2) Incorporated by reference to Registration Statement on Form S-1, File
Number 33-44549 filed with the Securities and Exchange Commission on
December 18, 1991, and Amendment No. 1 and Amendment No. 2 thereto filed
with the Securities and Exchange Commission on February 6, 1992 and March
7, 1992, respectively.
(3) Incorporated by reference to Registration Statement on Form S-1, File
Number 33-48717 and Post-Effective Amendment No. 1 thereto filed with the
Securities and Exchange Commission on June 22, 1992, and August 27, 1992,
respectively.
(4) Incorporated by reference to the Registrant's Form 10-K for the fiscal year
ended June 30, 1994.
(5) Incorporated by reference to the Registrant's Form 10-Q for the quarter
ended March 31, 1997.
(6) Incorporated by reference to Registration Statement on Form S-8, File
Number 333-101651 filed with the Securities and Exchange Commission on
December 4, 2002.
(7) Incorporated by reference to the Registrant's Form 10-Q for the quarter
ended March 31, 1999.
(8) Incorporated by reference to the Registrant's Form 8-K, filed April 24,
1997.
(9) Incorporated by reference to the Registrant's Form 10-Q for the quarter
ended June 30, 1999.
(10) Incorporated by reference to the Registrant's Form 10-K for the year ended
December 31, 1999.
(11) Incorporated by reference to the Registrant's Form 10-K for the year ended
December 31, 2000.
(12) Incorporated by reference to the Registrant's Form 10-Q for the quarter
ended June 30, 2001.
(13) Incorporated by reference to the Registrant's Form 10-K for the year ended
December 31, 2001.
(14) Incorporated by reference to the Registrant's Form 10-Q for the quarter
ended June 30, 2002.
(15) Incorporated by reference to the Registrant's Form 10-K/A-1 for the year
ended December 31, 2002.
(16) Previously filed.
(17) Filed herewith.
II-2
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than 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 final adjudication of
such issue.
The undersigned registrant hereby undertakes:
(1) To file during any period in which offers or sales are 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.
(2) That for the purpose of determining any liability under the
Securities Act of 1933, each 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.
The undersigned registrant hereby undertakes to supplement the prospectus
after the expiration of the subscription period, to set forth the results of the
subscription offer, the amount of unsubscribed securities to be purchased by the
Guarantors and Participating Debenture Holders, and the terms of any subsequent
reoffering thereof. If any public offering by the Guarantors and Participating
Debenture Holders is to be made on terms differing from those set forth in the
prospectus, a post-effective amendment will be filed to set forth the terms of
such offering.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Berkeley,
State of California on December 4, 2003.
BIOTIME, INC.
By JUDITH SEGALL
------------------------------------
Vice President -- Operations
Member, Office of the President*
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
HAROLD WAITZ Vice President, Member Office of the December 4, 2003
------------------------------------------ President* and Director (Co-Principal
HAROLD WAITZ Executive Officer)
HAL STERNBERG Vice President, Member Office of the December 4, 2003
------------------------------------------ President* and Director (Co-Principal
HAL STERNBERG Executive Officer)
JUDITH SEGALL Vice President-Operations, Secretary, December 4, 2003
------------------------------------------ Member Office of the President* and
JUDITH SEGALL Director (Co-Principal Executive Officer)
STEVEN SEINBERG Chief Financial Officer (Principal December 4, 2003
------------------------------------------ Financial and Accounting Officer)
STEVEN SEINBERG
JEFFREY B. NICKEL Director December 4, 2003
------------------------------------------
JEFFREY B. NICKEL
Director 2003
------------------------------------------
MILTON H. DRESNER
Director
------------------------------------------
KATHERINE GORDON
Director 2003
------------------------------------------
MICHAEL D. WEST
---------------
* The Office of the President is composed of three executive officers of the
registrant who collectively exercise the powers of the Chief Executive
Officer.
II-4
EXHIBIT INDEX
EXHIBIT
NUMBERS DESCRIPTION
------- -----------
3.1 Articles of Incorporation, as Amended.(1)
3.2 By-Laws, As Amended.(3)
4.1 Specimen of Common Share Certificate.(2)
4.2 Form of Subscription Certificate(16)
4.3 Form of Warrant(16)
4.4 Form of Warrant Agreement between the Registrant and
American Stock Transfer & Trust Company(16)
5. Opinion of Counsel(16)
10.1 Lease Agreement dated July 1, 1994 between the Registrant
and Robert and Norah Brower, relating to principal executive
offices of the Registrant.(4)
10.2 Intellectual Property Agreement between the Registrant and
Hal Sternberg.(2)
10.3 Intellectual Property Agreement between the Registrant and
Harold Waitz.(2)
10.4 Intellectual Property Agreement between the Registrant and
Judith Segall.(2)
10.5 Intellectual Property Agreement between the Registrant and
Steven Seinberg.(13)
10.6 Agreement between CMSI and BioTime Officers Releasing
Employment Agreements, Selling Shares, and Transferring
Non-Exclusive License.(2)
10.7 Agreement for Trans Time, Inc. to Exchange CMSI Common Stock
for BioTime, Inc. Common Shares.(2)
10.8 2002 Stock Option Plan, as amended.(6)
10.9 Addenda to Lease Agreement between the Registrant and Donn
Logan.(10)
10.10 Exclusive License Agreement between Abbott Laboratories and
BioTime, Inc. (Portions of this exhibit have been omitted
pursuant to a request for confidential treatment).(8)
10.11 Modification of Exclusive License Agreement between Abbott
Laboratories and BioTime, Inc. (Portions of this exhibit
have been omitted pursuant to a request for confidential
treatment).(9)
10.12 Warrant Agreement, dated March 27, 2001, between BioTime,
Inc. and Alfred D. Kingsley.(11)
10.13 Form of Series 2001-A 10% Debenture due August 1, 2004.(12)
10.14 Warrant Agreement between BioTime, Inc. and Purchasers of
Series 2001-A Debentures.(12)
10.15 Warrant Agreement, dated March 27, 2002, between BioTime,
Inc. and Alfred D. Kingsley.####
10.16 Warrant for the Purchase of Common Shares, dated August 12,
2002, issued to Ladenburg Thalmann & Co. Inc.(14)
10.17 Exclusive License Agreement between BioTime, Inc. and CJ
Corp.(15)
10.18 Warrant Agreement, dated April 9, 2003, between BioTime,
Inc. and certain holders of Series 2001-A Debentures.(15)
10.19 Standby Purchase Agreement between BioTime and the persons
named therein as Guarantors and Participating Debenture
Holders(16)
10.20 Amendment to Standby Purchase Agreement between BioTime and
the persons named therein as Guarantors and Participating
Debenture Holders.(17)
23.1 Consent of Deloitte & Touche, LLP(17)
23.2 Consent of BDO Seidman, LLP(17)
23.3 Consent of Counsel (included in Exhibit 5)(16)
---------------
(1) Incorporated by reference to the Registrant's Form 10-K for the fiscal year
ended June 30, 1998.
(2) Incorporated by reference to Registration Statement on Form S-1, File
Number 33-44549 filed with the Securities and Exchange Commission on
December 18, 1991, and Amendment No. 1 and Amendment No. 2 thereto filed
with the Securities and Exchange Commission on February 6, 1992 and March
7, 1992, respectively.
(3) Incorporated by reference to Registration Statement on Form S-1, File
Number 33-48717 and Post-Effective Amendment No. 1 thereto filed with the
Securities and Exchange Commission on June 22, 1992, and August 27, 1992,
respectively.
(4) Incorporated by reference to the Registrant's Form 10-K for the fiscal year
ended June 30, 1994.
(5) Incorporated by reference to the Registrant's Form 10-Q for the quarter
ended March 31, 1997.
(6) Incorporated by reference to Registration Statement on Form S-8, File
Number 333-101651 filed with the Securities and Exchange Commission on
December 4, 2002.
(7) Incorporated by reference to the Registrant's Form 10-Q for the quarter
ended March 31, 1999.
(8) Incorporated by reference to the Registrant's Form 8-K, filed April 24,
1997.
(9) Incorporated by reference to the Registrant's Form 10-Q for the quarter
ended June 30, 1999.
(10) Incorporated by reference to the Registrant's Form 10-K for the year ended
December 31, 1999.
(11) Incorporated by reference to the Registrant's Form 10-K for the year ended
December 31, 2000.
(12) Incorporated by reference to the Registrant's Form 10-Q for the quarter
ended June 30, 2001.
(13) Incorporated by reference to the Registrant's Form 10-K for the year ended
December 31, 2001.
(14) Incorporated by reference to the Registrant's Form 10-Q for the quarter
ended June 30, 2002.
(15) Incorporated by reference to the Registrant's Form 10-K/A-1 for the year
ended December 31, 2002.
(16) Previously filed.
(17) Filed herewith.