Prospectus
Summary
|
1
|
Risk
Factors
|
5
|
Use
of Proceeds
|
11
|
Dilution
|
11
|
Selling
Security Holders
|
11
|
Plan
of Distribution
|
17
|
Legal
Proceedings
|
19
|
Directors,
Executive Officers and Control Persons
|
19
|
Security
Ownership of Certain Beneficial Owners and Management
|
21
|
Description
of Securities
|
23
|
Cautionary
Statement Regarding Forward-Looking Statements
|
36
|
Management’s
Discussion and Analysis and Plan of Operation
|
36
|
Description
of Property
|
43
|
Certain
Relationships and Related Transactions
|
43
|
Market
for Common Equity and Related Stockholder Matters
|
45
|
Executive
Compensation
|
46
|
Financial
Statements
|
48
|
Experts
|
49
|
Legal
Matters
|
49
|
Disclosure
of Commission Position of Indemnification for Securities Act
Liabilities
|
49
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
49
|
Additional
Information
|
49
|
Existing
or Proposed Product
|
Regulatory
Status
|
Development
Status
|
Partners
Involved in the Development or Marketing of the
Products
|
|||
HIV
Rapid Tests (Sure Check™ HIV; HIV 1/2 Stat Pak; HIV 1/2 Stat Pak
Dipstick). Rapid Tests for detection of antibodies to HIV 1 and
2 in
finger-stick whole blood, venous whole blood, serum and
plasma
|
In
December 2004 we completed clinical trials for Sure CheckTM
and HIV 1/2 Stat-Pak in the U.S. for FDA approval for sales in
the U.S.
with results that we believe will exceed the performance requirements
for
U.S. FDA approval. We are pursuing U.S. FDA approval for these
products
and on February 17, 2005 we submitted our Pre-Marketing
Approval
application (“PMA”)
to the FDA. Based upon recent correspondence with the FDA we
expect to
have an “approvable” PMA in July and for our facility inspection to be
completed during the third quarter. Facility inspection is the
main
remaining step we have in achieving FDA approval. We currently
qualify under U.S. FDA export regulations to sell, subject to
any required
approval by the importing country, to customers outside the U.S.
To date
we have received approval from a number of potential importing
countries,
although Brazil is the only country in which we have significant
sales. We
have also just recently qualified for procurements by the United
States
Agency for International Development under the President’s Emergency Plan
for AIDS Relief and the World Health Organization’s Bulk Procurement
Scheme.
|
Completed
|
Thirteen-year
supply and technology transfer agreement with FIOCRUZ-Bio-Manguinhos,
a
division of the Ministry of Health of Brazil. FIOCRUZ-Bio-Manguinhos
will
supply product to Brazilian public health market and potentially
other
markets in the region. We also have been actively seeking to
have our
tests procured by governmental and non-governmental organizations
engaged
in HIV prevention programs in numerous locations outside the
United
States.
We
have hired an individual to direct our sales and marketing
efforts in East
Africa who will be based in that region and whose efforts will
be
primarily aimed toward participating in what we believe will
be a
substantial increase in demand for our HIV rapid tests from
the PEPFAR
program. We are in discussions with a number of other groups
and
individuals to assist us in our marketing efforts in markets
that we have
focused on in Africa.
|
Existing
or Proposed Product
|
Regulatory
Status
|
Development
Status
|
Partners
Involved in the Development or Marketing of the
Products
|
Dental
Bacteria Test
|
Regulatory
submissions in the European Union will be made in 2005 if product
development is satisfactorily completed in accordance with
development
timetable.
|
Discussing
revised development plan with marketing partner Ivoclar Vivadent,
AG due
to technical issues.
|
If
a new development plan is agreed upon, Ivoclar Vivadent AG,
Schaan,
Liechtenstein will exclusively market the product and is the
exclusive
licensee of patented antibodies being incorporated by Chembio
in product
development.
|
|||
Cerebral
Spinal Fluid (CSF) Leak Rapid Test
|
Not
yet submitted for approval.
|
Initial
development work being supported with matching funds from the
State of New
York.
|
The
State University of New York at Stony Brook (SUNY) is developing
antibodies against this marker. SUNY has applied for a patent
for the
antibodies and the test. Chembio has an exclusive option to
license the
technology once the patent is issued.
|
|||
Rapid
diagnostic test for the detection of antibodies to active pulmonary
tuberculosis in non-human primate whole blood samples
|
Submitted
to United States Department of Agriculture for regulatory approval
in the
U.S. in March 2005.
|
Product
validation completed.
|
Sequella
Corporation, Rockville, MD and Chembio have entered into an
agreement
whereby Chembio will have exclusive worldwide marketing and
manufacturing
rights for the product.
|
|||
Rapid
diagnostic test for the detection of antibodies to active pulmonary
tuberculosis in human whole blood samples
|
Evaluation
by World Health Organization to be completed in 2005 to support
use in
international programs is pending. We do not plan to market
this product
in the U.S. or Europe and have no plans for seeking regulatory
approval in
these markets.
|
Product
validation completed.
|
Public
Health Research Institute, Newark, NJ,
and Staten Serum Institute have provided research collaboration on
product development.
|
|||
Rapid
diagnostic test for the detection of antibodies to Chagas
Disease
|
Evaluation
by World Health Organization to be completed in 2005 to support
use in
international programs is pending. We do not plan to market
this product
in the US or Europe and have no plans for seeking regulatory
approval in
these markets.
|
Product
validation completed. Studies have been completed that have
increased
awareness of product. United Nations Development Program began
to procure
product in 2004.
|
A
consortium of researchers from Latin America collaborated to
develop the
recombinant antigen incorporated in this product.
|
Existing
or Proposed Product
|
Regulatory
Status
|
Development
Status
|
Partners
Involved in the Development or Marketing of the
Products
|
Private
label pregnancy tests
|
Cleared
for marketing by FDA.
|
Completed
|
During
2004 we sold substantially all of the business related with
this product
line for the right to receive participation in future profits,
if any,
derived from this product line. We have also continued to supply
the buyer
with certain components for these products.
|
2004
|
2003
|
||||||
Pregnancy
Tests
|
25.93
|
%
|
46.84
|
%
|
|||
HIV
Tests
|
37.58
|
%
|
18.50
|
%
|
|||
Other
Infectious Disease Tests
|
19.65
|
%
|
24.88
|
%
|
|||
Research
Grants and Contracts
|
16.84
|
%
|
9.78
|
%
|
|||
Total
|
100.00
|
%
|
100.00
|
%
|
|
||||||||||
Three
Months Ended
March 31, 2005 (Unaudited) |
Year
Ended
December 31, 2004 |
Year
Ended
December 31, 2003 |
||||||||
Revenue
|
731,885
|
3,305,932
|
2,818,351
|
|||||||
Operating
Expenses
|
890,811
|
3,923,701
|
1,516,076
|
|||||||
Net
Loss
|
(619,986
|
)
|
(3,098,891
|
)
|
(1,059,074
|
)
|
||||
Current
Assets
|
4,766,750
|
1,211,060
|
772,680
|
|||||||
Total
Assets
|
5,135,090
|
1,426,449
|
1,086,745
|
|||||||
Current
Liabilities
|
1,278,191
|
1,663,196
|
1,503,418
|
|||||||
Total
Liabilities
|
1,525,926
|
1,950,413
|
3,544,186
|
|||||||
Convertible
Redeemable Preferred
|
5,783,793
|
2,427,030
|
-
|
|||||||
Stockholders’
Deficit
|
(2,174,629
|
)
|
(2,950,994
|
)
|
(2,457,441
|
)
|
·
|
regulatory
requirements and customs
regulations;
|
·
|
cultural
and political differences;
|
·
|
foreign
exchange rates, currency fluctuations and
tariffs;
|
·
|
dependence
on and difficulties in managing international distributors or
representatives;
|
·
|
the
creditworthiness of foreign
entities;
|
·
|
difficulties
in foreign accounts receivable collection;
and
|
·
|
economic
conditions and the absence of available funding
sources.
|
·
|
control
the composition of our board of
directors;
|
·
|
control
our management and policies;
|
·
|
determine
the outcome of significant corporate transactions, including changes
in
control that may be beneficial to stockholders;
and
|
·
|
act
in each of their own interests, which may conflict with, or be
different
from, the interests of each other or the interests of the other
stockholders.
|
·
|
the
number of shares of common stock beneficially owned as of June
2, 2005 and
prior to the offering contemplated
hereby,
|
·
|
the
number of shares of common stock eligible for resale and to be
offered by
each selling security holder pursuant to this prospectus,
|
·
|
the
number of shares owned by each selling security holder after the
offering
contemplated hereby assuming that all shares eligible for resale
pursuant
to this prospectus actually are sold,
|
·
|
the
percentage of shares of common stock beneficially owned by each
selling
security holder after the offering contemplated hereby,
and
|
·
|
in
notes to the table, additional information concerning the selling
security
holders including any NASD affiliations and any relationships,
excluding
non-executive employee and other non-material relationships, that
a
selling security holder had during the past three years with the
registrant or any of its predecessors or affiliates.
|
Selling
security holders (C)
|
Number
of Shares of Common Stock Owned Before Offering (A)
|
Number
of Shares To Be Offered (B)
|
Number
of Shares Owned After Offering
|
Percentage
of Shares of Common Stock Owned After Offering
|
|||||||||
Alchemy,
LLC 1
|
40,471
|
40,471
|
—
|
0.00
|
%
|
||||||||
Alpha
Capital AG 2 ,3
|
1,253,819
|
1,232,000
|
21,819
|
0.25
|
%
|
||||||||
Bassett,
Truman 1
|
42,526
|
42,526
|
—
|
0.00
|
%
|
||||||||
Baum,
Mark L. 2
|
1,796,963
|
1,792,666
|
4,297
|
0.05
|
%
|
||||||||
Bell,
Lon E. 2
|
287,195
|
282,198
|
4,997
|
0.06
|
%
|
||||||||
Beller,
Claudio 2
|
148,080
|
145,582
|
2,498
|
0.03
|
%
|
||||||||
BioEquity
Partners, Inc.
1,4
|
175,000
|
175,000
|
—
|
0.00
|
%
|
||||||||
Breitbart,
Ted 1,5
|
18,208
|
18,208
|
—
|
0.00
|
%
|
||||||||
Bruce,
Richard 1
|
75,500
|
75,500
|
—
|
0.00
|
%
|
||||||||
Calamaro,
Jean—Paul 2
|
314,578
|
309,581
|
4,997
|
0.06
|
%
|
||||||||
CEOcast,
Inc.
|
76,250
|
76,250
|
—
|
0.00
|
%
|
||||||||
Chrust,
Steve 1
|
127,656
|
127,656
|
—
|
0.00
|
%
|
||||||||
Clarke,
John R.1,6
|
158,400
|
158,400
|
—
|
0.00
|
%
|
||||||||
Colby,
Russ 1
|
12,500
|
12,500
|
—
|
0.00
|
%
|
||||||||
Crestview
Capital Master, LLC 7
|
9,590,162
|
9,590,162
|
—
|
0.00
|
%
|
||||||||
Dabush,
Ami 2
|
578,500
|
569,718
|
8,782
|
0.11
|
%
|
||||||||
Daedalus
Consulting, Inc.8
|
35,963
|
35,963
|
—
|
0.00
|
%
|
||||||||
Dashefsky,
Jeff 1
|
12,500
|
12,500
|
—
|
0.00
|
%
|
||||||||
Diamond
Deecembra 8
|
143,853
|
143,853
|
—
|
0.00
|
%
|
||||||||
DKR
Soundshore Oasis Holding Fund, Ltd.9
|
1,198,770
|
1,198,770
|
—
|
0.00
|
%
|
(A) | Includes
shares underlying series A and series B preferred stock into
which the
series A and series B preferred stock is convertible, and
shares
underlying warrants and/or options held by the selling security
holder
that are covered by this prospectus, including any convertible
securities
that, due to contractual restrictions, may not be exercisable
within 60
days of the date of this prospectus. |
(B) | The number of shares of common stock to be sold assumes that the selling security holder elects to sell all the shares of common stock held by the selling security holder that are covered by this prospectus. |
(C) | It is our understanding that any selling security holder that is an affiliate of a broker-dealer purchased the securities offered hereunder in the ordinary course of business, and at the time of the purchase, had no agreements or understanding to distribute the securities. |
1 | The sale of all of these shares is currently registered under Chembio’s Registration Statement on Form SB-2 that became effective with the SEC on November 4, 2004. The sale of these shares also is included in this Prospectus so that Chembio can make any future amendments for the Registration Statement of which this Prospectus is a part, together with amendments of the 2004 Registration Statement in a single joint prospectus. |
2 | The sale of all of these shares, except for less than 235,000 that represent dividend shares, currently is registered under Chembio’s Registration Statement on Form SB-2 that became effective with the SEC on November 4, 2004. The sale of these shares also is included in this Prospectus so that Chembio can make any future amendments for the Registration Statement of which this Prospectus is a part, together with amendments of the 2004 Registration Statement, in a single joint prospectus. |
3 | Konrad Ackerman has ultimate control over Alpha Capital AG and the shares held by Alpha Capital AG. |
4 | Provides marketing consulting services to the Company. |
5 | Affiliated with Wellfleet Partners. |
6 | Affiliated with HC Wainwright, investment banking services. |
7 | Affiliated with Dillion Capital, a NASD member. Robert Hoyt has ultimate control over Crestview Capital Master, LLC and the shares held by Crestview Capital Master, LLC. |
8 | Affiliated with Midtown Partners & Co., LLC, investment banking services. |
Selling
security holders (C)
|
Number
of Shares of Common Stock Owned Before Offering (A)
|
Number
of Shares To Be Offered (B)
|
Number
of Shares Owned After Offering
|
Percentage
of Shares of Common Stock Owned After Offering
|
Eckert,
Christopher & Lynn 2,10
|
189,971
|
186,666
|
3,305
|
0.04
|
%
|
||||||||
Engel,
Sam 1
|
4,118
|
4,118
|
—
|
0.00
|
%
|
||||||||
Esfandiari,
Javan 1
|
167,080
|
167,080
|
—
|
0.00
|
%
|
||||||||
Falvo,
Pete 2
|
40,000
|
40,000
|
—
|
0.00
|
%
|
||||||||
FAMALOM,
LLC 8
|
179,817
|
179,817
|
—
|
0.00
|
%
|
||||||||
Feldman,
Stephen 1
|
2,055
|
2,055
|
—
|
0.00
|
%
|
||||||||
Fuchs,
Ari 2,6
|
49,058
|
49,058
|
—
|
0.00
|
%
|
||||||||
Ginsberg,
Mike 1
|
2,375
|
2,375
|
—
|
0.00
|
%
|
||||||||
Glass,
Marc 1
|
20,708
|
20,708
|
—
|
0.00
|
%
|
||||||||
Goldberg,
Jeffrey 1,11
|
52,875
|
52,875
|
—
|
0.00
|
%
|
||||||||
Greenblatt,
Phil 1
|
10,347
|
10,347
|
—
|
0.00
|
%
|
||||||||
Gregoretti,
Gordan
|
79,916
|
79,916
|
—
|
0.00
|
%
|
||||||||
Gressel,
Daniel 1,12
|
462,501
|
462,501
|
—
|
0.00
|
%
|
||||||||
Guzikowski,
Frank J.1
|
178,114
|
178,114
|
—
|
0.00
|
%
|
||||||||
H.C.
Wainwright & Co.
1,13
|
390,867
|
390,867
|
—
|
0.00
|
%
|
||||||||
Haendler,
Kurt 1
|
436,607
|
434,288
|
2,319
|
0.03
|
%
|
||||||||
Haendler,
Renata 1
|
139,392
|
138,211
|
1,181
|
0.02
|
%
|
||||||||
Haendler,
Tomas 2,14
|
542,188
|
540,710
|
1,478
|
0.02
|
%
|
||||||||
Haim,
Eduardo 1
|
7,115
|
7,115
|
—
|
0.00
|
%
|
||||||||
Hamblett,
Michael 15
|
498,714
|
498,714
|
—
|
0.00
|
%
|
||||||||
Hanson,
Andrew Merz 2,16
|
121,544
|
119,545
|
1,999
|
0.03
|
%
|
||||||||
Hunt,
David 1
|
60,000
|
60,000
|
—
|
0.00
|
%
|
||||||||
Ide,
Bruce J.2,17
|
495,548
|
491,062
|
4,486
|
0.06
|
%
|
||||||||
Jacob,
Sam 1
|
10,000
|
10,000
|
—
|
0.00
|
%
|
||||||||
Jacoby,
Richard A.2
|
476,358
|
469,545
|
6,813
|
0.09
|
%
|
||||||||
Joffe,
Wendy 2
|
37,593
|
37,222
|
371
|
0.00
|
%
|
||||||||
Jordan,
Bruce 18
|
67,931
|
67,931
|
—
|
0.00
|
%
|
9 | DKR SoundShore Oasis Holding Fund Ltd. (the “Fund”) is a master fund in a master-feeder structure. The Fund's investment manager is DKR Oasis Management Company LP (the “Investment Manager”). Pursuant to an investment management agreement among the Fund, the feeder funds and the Investment Manager, the Investment Manager has the authority to do any and all acts on behalf of the Fund, including voting any shares held by the Fund. Mr. Seth Fischer is the managing partner of Oasis Management Holdings LLC, one of the general partners of the Investment Manager. Mr. Fischer has ultimate responsibility for trading with respect to the Fund. Mr. Fischer disclaims beneficial ownership of the shares. |
10 | Christopher Eckert is an employee of Smith Barney. |
11 | Affiliated with Wellfleet Partners and Starobin Partners, investment banking services. |
12 | Former Director of CDS. |
13 | NASD member. |
14 | Former President of CDS and Director. |
15 | Employee of Starboard Capital Markets, LLC, investment banking services. |
16 | Assisted the Company in fundraising. |
17 | Form Director of CDS. |
18 | Employee of Midtown Partners & Co., LLC, investment banking services. |
Selling
security holders (C)
|
Number
of Shares of Common Stock Owned Before Offering (A)
|
Number
of Shares To Be Offered (B)
|
Number
of Shares Owned After Offering
|
Percentage
of Shares of Common Stock Owned After Offering
|
JP
Turner 1,5
|
41,250
|
41,250
|
—
|
0.00
|
%
|
||||||||
Keskinen,
Karen 1
|
1,579
|
1,579
|
—
|
0.00
|
%
|
||||||||
Klaus,
Elaine 1
|
2,242
|
2,242
|
—
|
0.00
|
%
|
||||||||
Knasin,
Paul and Ellen 2
|
154,805
|
152,307
|
2,498
|
0.03
|
%
|
||||||||
Koch,
Scott F.1,6
|
158,400
|
158,400
|
—
|
0.00
|
%
|
||||||||
Kolstad
Jr., Kaare 1
|
50,589
|
50,589
|
—
|
0.00
|
%
|
||||||||
Kreger,
Richard 18
|
453,435
|
453,435
|
—
|
0.00
|
%
|
||||||||
Krumholz,
Jacob & Arlene
|
66,869
|
66,869
|
—
|
0.00
|
%
|
||||||||
Kurzman
Partners, LP 19
|
65,878
|
65,265
|
613
|
0.01
|
%
|
||||||||
Lankenau,
Robert 1
|
228,150
|
226,585
|
1,565
|
0.02
|
%
|
||||||||
Lanouette,
Kevin P.
|
31,966
|
31,966
|
—
|
0.00
|
%
|
||||||||
Larkin,
Richard 2
|
110,188
|
109,189
|
999
|
0.01
|
%
|
||||||||
Lawrence,
Colin 1
|
7,115
|
7,115
|
—
|
0.00
|
%
|
||||||||
Ledowitz,
Bill 1
|
7,118
|
7,118
|
—
|
0.00
|
%
|
||||||||
Lew,
Felicia 1
|
31,250
|
31,250
|
—
|
0.00
|
%
|
||||||||
Lew,
Hanka 1
|
31,250
|
31,250
|
—
|
0.00
|
%
|
||||||||
Lifshitz,
Joshua 20
|
100,260
|
98,959
|
1,301
|
0.02
|
%
|
||||||||
Little
Gem Life Sciences Fund LLC 21
|
174,900
|
173,248
|
1,652
|
0.02
|
%
|
||||||||
Lyashchenko,
Konstantin 1
|
10,500
|
10,500
|
—
|
0.00
|
%
|
||||||||
Maloney
& Company, LLC
|
79,916
|
79,916
|
—
|
0.00
|
%
|
||||||||
Mayer-Wolf,
Mike 1
|
18,379
|
18,379
|
—
|
0.00
|
%
|
||||||||
McCarthy,
Michael 1
|
4,145
|
4,145
|
—
|
0.00
|
%
|
||||||||
McGusty,
Edwin 1
|
125,000
|
125,000
|
—
|
0.00
|
%
|
||||||||
Metasequoia,
LLC 2
|
37,993
|
37,332
|
661
|
0.01
|
%
|
||||||||
Midtown
Partners & Co., LLC 22
|
116,639
|
116,639
|
—
|
0.00
|
%
|
||||||||
Millennium
3 Opportunity Fund, LLC 23
|
3,196,720
|
3,196,720
|
—
|
0.00
|
%
|
||||||||
Moran,
Sean
|
47,950
|
47,950
|
—
|
0.00
|
%
|
19 | Affiliated with Needham & Company, investment banking services, until February 4, 2005. |
20 | Except for 26,393 shares, the sale of these shares is registered under Chembio’s Registration Statement on Form SB-2 that became effective with the SEC on November 4, 2004. The sale of these shares also is included in this Prospectus so that Chembio can make any future amendments for the Registration Statement of which this Prospectus is a part, together with amendments of the 2004 Registration Statement, in a single joint prospectus. |
21 | Except for 81,582 shares, the sale of these shares is registered under Chembio’s Registration Statement on Form SB-2 that became effective with the SEC on November 4, 2004. The sale of these shares also is included in this Prospectus so that Chembio can make any future amendments for the Registration Statement of which this Prospectus is a part, together with amendments of the 2004 Registration Statement, in a single joint prospectus. |
22 | NASD member, assisted the Company in fundraising. |
23 | Fred Fraenkel and Udi Toledano have ultimate control over Millennium 3 Opportunity Fund and the shares held by Millennium 3 Opportunity Fund. |
Selling
security holders (C)
|
Number
of Shares of Common Stock Owned Before Offering (A)
|
Number
of Shares To Be Offered (B)
|
Number
of Shares Owned After Offering
|
Percentage
of Shares of Common Stock Owned After Offering
|
MSAS
Trust 2
|
751,922
|
742,666
|
9,256
|
0.11
|
%
|
||||||||
Nite
Capital, LP
|
719,261
|
719,261
|
—
|
0.00
|
%
|
||||||||
Patton
Boggs LLP 1
|
37,319
|
37,319
|
—
|
0.00
|
%
|
||||||||
Pelossof,
Avi 2
|
571,084
|
570,685
|
399
|
0.01
|
%
|
||||||||
Pelossof,
Elior 2
|
86,158
|
84,659
|
1,499
|
0.02
|
%
|
||||||||
Perlmutter,
Alan 1
|
60,000
|
60,000
|
—
|
0.00
|
%
|
||||||||
Phillips,
Chris 8
|
86,264
|
86,264
|
—
|
0.00
|
%
|
||||||||
Phillips,
Scott W.1
|
50,589
|
50,589
|
—
|
0.00
|
%
|
||||||||
Poole,
Colin 2
|
143,116
|
141,098
|
2,018
|
0.03
|
%
|
||||||||
Poole,
John G.1
|
68,365
|
68,365
|
—
|
0.00
|
%
|
||||||||
Raker,
Gilbert 2
|
85,870
|
84,659
|
1,211
|
0.02
|
%
|
||||||||
Reibman,
Spencer 1
|
18,780
|
18,780
|
—
|
0.00
|
%
|
||||||||
Rohan,
J. Rory 18
|
453,435
|
453,435
|
—
|
0.00
|
%
|
||||||||
Rojas,
Zilma 1
|
5,500
|
5,500
|
—
|
0.00
|
%
|
||||||||
Ross,
Anne 1
|
63,236
|
63,236
|
—
|
0.00
|
%
|
||||||||
Sandler,
J & S 1
|
8,287
|
8,287
|
—
|
0.00
|
%
|
||||||||
Sandler,
Mark and Lori 2
|
189,971
|
186,666
|
3,305
|
0.04
|
%
|
||||||||
Schnipper,
Steve 24
|
162,366
|
160,426
|
1,940
|
0.03
|
%
|
||||||||
Schwartz,
Eric 1
|
5,496
|
5,496
|
—
|
0.00
|
%
|
||||||||
Seren,
Stanley 1
|
8,287
|
8,287
|
—
|
0.00
|
%
|
||||||||
Shapiro,
Alex 1
|
112,412
|
112,412
|
—
|
0.00
|
%
|
||||||||
Siderowf,
Richard 2,25
|
87,240
|
86,624
|
616
|
0.01
|
%
|
||||||||
Siebert
Best, Ellen 2
|
43,682
|
43,311
|
371
|
0.00
|
%
|
||||||||
Siebert,
Lawrence 26
|
6,390,372
|
1,163,078
|
5,227,294
|
43.11
|
%
|
||||||||
Sive
Paget & Reisel 1
|
2,055
|
2,055
|
—
|
0.00
|
%
|
||||||||
Smith,
Robin 1,27
|
119,883
|
119,883
|
—
|
0.00
|
%
|
||||||||
Spatacco,
Jr., Anthony J. 28
|
89,520
|
89,520
|
—
|
0.00
|
%
|
||||||||
Speer,
Sandy 1
|
65,468
|
65,468
|
—
|
0.00
|
%
|
||||||||
Spilka,
R. Edward 2,29
|
316,443
|
313,138
|
3,305
|
0.004
|
%
|
||||||||
Starboard
Capital Markets, LLC 30
|
9,604
|
9,604
|
—
|
0.00
|
%
|
24 | Except for 51,578 shares, the sale of these shares is registered under Chembio’s Registration Statement on Form SB-2 that became effective with the SEC on November 4, 2004. The sale of these shares also is included in this Prospectus so that Chembio can make any future amendments for the Registration Statement of which this Prospectus is a part, together with amendments of the 2004 Registration Statement, in a single joint prospectus. |
25 | Registered sales representative with RBC Dain Rauscher. |
26 | Except for 663,078 shares, the sale of these shares is registered under Chembio’s Registration Statement on Form SB-2 that became effective with the SEC on November 4, 2004. The sale of these shares also is included in this Prospectus so that Chembio can make any future amendments for the Registration Statement of which this Prospectus is a part, together with amendments of the 2004 Registration Statement, in a single joint prospectus. |
27 | Provided marketing consulting services; affiliated with Wellfleet Partners and Starobin Partners. |
28 | Assisted the Company in fundraising; employee of Starboard Capital Markets LLC. |
29 | Stockholder of Lehman Brothers. |
30 | NASD member. |
Selling
security holders (C)
|
Number
of Shares of Common Stock Owned Before Offering (A)
|
Number
of Shares To Be Offered (B)
|
Number
of Shares Owned After Offering
|
Percentage
of Shares of Common Stock Owned After Offering
|
Starobin
Partners 1,5
|
110,000
|
110,000
|
—
|
0.00
|
%
|
||||||||
Straightline
Capital Opportunities Fund I, LLC 2
|
763,166
|
750,195
|
12,971
|
0.16
|
%
|
||||||||
Talesnick,
Alan L. 2,31
|
243,958
|
241,088
|
2,870
|
0.04
|
%
|
||||||||
TCMP3
Partners
|
319,671
|
319,671
|
—
|
0.00
|
%
|
||||||||
Thunderbird
Global Corporation 2,32
|
1,031,745
|
1,021,750
|
9,995
|
0.12
|
%
|
||||||||
Total
M.I.S., Inc. 2
|
569,917
|
560,000
|
9,917
|
0.12
|
%
|
||||||||
Tyson,
John 2,33
|
16,250
|
16,250
|
—
|
0.00
|
%
|
||||||||
Vicis
Capital Master Fund 2,34
|
5,699,178
|
5,600,000
|
99,178
|
0.76
|
%
|
||||||||
Wachs,
Mark 2
|
28,718
|
28,219
|
499
|
0.01
|
%
|
||||||||
Weiss,
Gunther 1
|
28,334
|
28,334
|
—
|
0.00
|
%
|
||||||||
Westbury
Diagnostics, Inc. 2
|
147,043
|
144,485
|
2,558
|
0.03
|
%
|
||||||||
TOTALS
|
45,934,137
|
40,466,304
|
5,467,833
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal
to
facilitate the transaction;
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer
for its
account;
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
·
|
privately
negotiated transactions;
|
·
|
settlement
of short sales entered into after the date of this
prospectus;
|
·
|
broker-dealers
may agree with the Selling Stockholders to sell a specified number
of such
shares at a stipulated price per
share;
|
·
|
a
combination of any such methods of
sale;
|
31 | Partner at Patton Boggs LLP, our legal counsel. |
32 | WSITE International Foundation (“WSITE”) is the ultimate beneficiary of Thunderbird Global Corporation. Gustavo Montilla is the Chairman of WSITE International Foundation and controls the daily affairs of WSITE. |
33 | Provides marketing consulting services. |
34 | Vicis Capital Master Fund’s investment manager is Vicis Capital, LLC. Shad Stastney, John Succo, and Sky Lucas have the ultimate control over the shares held by Vicis Capital Master Fund. |
·
|
through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;
or
|
·
|
any
other method permitted pursuant to applicable
law.
|
Name
and Address of Beneficial Owner
|
Number
of Shares Beneficially Owned
|
Percent
of Class
|
|||||
Lawrence
Siebert (1)
|
1,918,651
|
24.08
|
%
|
||||
Avi
Pelossof (2)
|
498,911
|
6.35
|
%
|
||||
Javan
Esfandiari (3)
|
117,080
|
1.52
|
%
|
||||
Richard
Bruce (4)
|
75,500
|
0.99
|
%
|
||||
Konstantin
Lyashchenko (5)
|
10,500
|
0.14
|
%
|
||||
Dr.
Gary Meller (6)
|
12,000
|
0.16
|
%
|
||||
Gerald
A. Eppner (6)
|
12,000
|
0.16
|
%
|
||||
Alan
Carus (6)
|
12,000
|
0.16
|
%
|
||||
All
officers, directors and director nominees as a group (7)
|
2,584,009
|
30.59
|
%
|
||||
Mark
Baum (8)
580
Second Street, Suite 102
Encinitas,
California 92024
|
1,554,333
|
18.42
|
%
|
||||
Tomas
Haendler (9)
31
Cogswell Lane
Stamford,
CT 06902
|
451,820
|
5.92
|
%
|
||||
Thunderbird
Global Corporation (10)
c/o
The Baum Law Firm
820
Second Street, Suite 102
Encinitas,
CA 92024
|
467,431
|
6.16
|
%
|
||||
Daniel
Gressel (11)
460
E. 79th
Street, Apt. 17B
New
York, NY 10021
|
462,501
|
6.06
|
%
|
(1)
|
Includes
170,000 shares issuable upon exercise of options exercisable within
60
days and 207,566 shares issuable upon exercise of warrants. Does
not
include 50,000 shares issuable upon exercise of options that are
not
exercisable within the next 60 days. Also does not include 1,937,220
shares issuable upon conversion of series A preferred stock, 2,324,666
shares issuable upon exercise of warrants, 81,967 shares issuable
upon
conversion of series B preferred stock and 77,868 shares issuable
upon
exercise of warrants because conversion of any of those shares
of series A
or series B preferred stock or exercise of those warrants would
result in
the holder beneficially owning in excess of 4.99% of the then issued
and
outstanding shares of common stock outstanding at that
time.
|
(2)
|
Includes
250,000 shares issuable upon exercise of options exercisable within
60
days and 22,555 shares issuable upon exercise of warrants. Does
not
include 50,000 shares issuable upon exercise of options that are
not
exercisable within the next 60 days. Also does not include 10,078
shares
issuable upon conversion of series A preferred stock and 12,095
shares
issuable upon exercise of warrants because conversion of any of
those
shares of series A preferred stock or exercise of any of those
warrants
would result in the holder beneficially owning in excess of 4.99%
of the
then issued and outstanding shares of common stock outstanding
at that
time.
|
(3)
|
Includes
95,000 shares issuable upon exercise of options exercisable within
60 days
and 2,007 shares issuable upon exercise of warrants. Does not include
50,000 shares issuable upon exercise of options that are not exercisable
within the next 60 days.
|
(4)
|
Includes
70,000 shares issuable upon exercise of options exercisable within
60 days
and 500 shares issuable upon exercise of warrants.
|
(5)
|
Includes
5,000 shares issuable upon exercise of options exercisable within
60 days
and 500 shares issuable upon exercise of
warrants.
|
(6)
|
Includes
12,000 shares issuable upon exercise of options currently exercisable.
Does not include 24,000 shares issuable upon exercise of options
that are
not exercisable within 60 days.
|
(7)
|
Includes
all securities covered in footnotes
(1)-(6).
|
(8)
|
Includes
850,000 shares issuable upon exercise of warrants. Does not include
108,333 shares issuable upon conversion of series A preferred stock
and
130,000 shares issuable upon exercise of warrants because conversion
of
any of those shares of series A preferred stock or exercise of
those
warrants would result in the holder beneficially owning in excess
of 4.99%
of the then issued and outstanding shares of common stock outstanding
at
that time.
|
(9)
|
Includes
38,197 shares issuable upon exercise of warrants. Does not include
44,450
shares issuable upon conversion of series A preferred stock and
53,334
shares issuable upon the exercise of warrants because conversion
of any of
those shares of series A preferred stock or exercise of any of
those
warrants would result in the holder beneficially owning in excess
of 4.99%
of the then issued and outstanding shares of common stock outstanding
at
that time.
|
(10)
|
Does
not include 251,963 shares issuable upon conversion of series A
preferred
stock and 302,356 shares issuable upon exercise of warrants because
conversion of any of those shares of series A preferred stock or
exercise
of any of those warrants would result in the holder beneficially
owning in
excess of 4.99% of the then issued and outstanding shares of common
stock
outstanding at that time. Gustavo Montilla may be deemed to have
voting or
investment control over the shares held by Thunderbird Global Corporation.
|
(11)
|
Includes
42,065 shares issuable upon exercise of warrants.
|
·
|
amend,
alter or repeal the provisions of the series A preferred stock
so as to
adversely affect any right, preference, privilege or voting power
of the
series A preferred stock;
|
·
|
repurchase,
redeem or pay dividends on shares of common stock or any other
shares of
our equity securities that by their terms do not rank senior to
the series
A preferred stock, other than de minimus repurchases from our employees
in
certain circumstances;
|
·
|
amend
our articles of incorporation or bylaws so as to affect materially
and
adversely any right, preference, privilege or voting power of the
series A
preferred stock;
|
·
|
effect
any distribution with respect to any equity securities that by
their terms
do not rank senior to the series A preferred
stock;
|
·
|
reclassify
our outstanding securities;
|
·
|
voluntarily
file for bankruptcy, liquidate our assets or make an assignment
for the
benefit of our creditors; or
|
·
|
change
the nature of our business.
|
·
|
such
date is at least one hundred eighty (180) days following the effective
date of this registration statement, and
|
·
|
this
registration statement has been effective, without lapse or suspension
of
any kind, for a period of sixty (60) days (or the common stock
into which
the series A preferred stock is convertible can be freely traded
pursuant
to Rule 144(k) under the Securities
Act).
|
·
|
a
consolidation, merger, or other business combination involving
Chembio
Diagnostics, Inc.,
|
·
|
the
sale of more than 50% of our assets, or
|
·
|
the
closing of a purchase, tender or exchange offer made to and accepted
by
holders of more than 50% of our outstanding shares of common
stock,
|
·
|
the
lapse or unavailability of this registration statement,
|
·
|
the
suspension from listing of the common stock for a period of seven
(7)
consecutive days,
|
·
|
our
failure or inability to comply with a conversion request from a
holder of
series A preferred stock, or
|
·
|
our
material breach of any of our representations or warranties contained
in
the series A preferred stock documentation that continues uncured
for a
period of ten (10) days,
|
·
|
amend,
alter or repeal the provisions of the series B preferred stock
so as to
adversely affect any right, preference, privilege or voting power
of the
series B preferred stock;
|
·
|
authorize
or create any class of stock ranking as to dividends, redemption
or
distribution of assets upon a liquidation event, senior to or otherwise
pari passu with the series B preferred
stock;
|
·
|
amend
our articles of incorporation or by-laws so as to adversely affect
any
rights of the series B preferred
stock;
|
·
|
increase
the authorized number of shares of series B preferred stock;
or
|
·
|
enter
into any agreement with respect to the
foregoing.
|
·
|
a
consolidation, merger, or other business combination involving
Chembio
Diagnostics, Inc.,
|
·
|
the
sale of all or substantially all of our assets,
|
·
|
the
acquisition by another person of in excess of 50% of our voting
securities, or
|
·
|
certain
specified triggering events (involving (A) the lapse or unavailability
of
a registration statement, (B) the suspension from listing of our
common
stock for a period of seven consecutive days, (C) our failure or
inability
to comply with a conversion request from a holder of series B preferred
stock, (D) our breach of any of our representations or warranties
contained in the series B preferred stock documentation that continues
uncured for a period of 30 days, or (E) our becoming subject to
certain
bankruptcy events),
|
HIV
Rapid Tests
Commercially Available |
Regulatory
Status
|
Partners
Involved in the Product
|
||
HIV
Rapid Tests (Sure Check™ HIV; HIV 1/2 Stat-Pak; HIV 1/2 Stat-Pak
Dipstick). Rapid Tests for detection of antibodies to HIV 1 and
2 in
finger-stick whole blood, venous whole blood, serum and
plasma
|
We
currently qualify under U.S. FDA export regulations to sell,
subject to
any required approval by the importing country, to customers
outside the
U.S. To date we have received approval from a number of potential
importing countries, although Brazil is the only country in which
we have
significant sales. In December 2004 we completed clinical trials
for Sure
Check™ HIV and HIV 1/2 Stat-Pak in the U.S. for FDA approval for sales
in
the U.S. with results that we believe will exceed the performance
requirements for U.S. FDA approval. We are pursuing FDA approval
for these
products and on February 17, 2005 we submitted our Pre-Marketing
Approval application (“PMA”)
to the FDA. Based upon recent correspondence with the FDA we
expect to
have an “approvable” PMA in July and for our facility inspection to be
completed during the third quarter. Facility inspection is the
main
remaining step we have in achieving FDA approval. Our HIV 1/2
Stat-Pak and HIV 1/2 Stat-Pak Dipstick products were also evaluated
by the
World Health Organization in 2004. In January 2005 we received
a final
report that confirms that these products meet the performance
criteria for
inclusion in the WHO Bulk Procurement Scheme, which is a pre-requisite
for
these products being eligible for procurements from programs
funded by the
United Nations and their partners’ programs. We have also received
confirmation from the United States Agency for International
Development
that our Sure Check™ HIV and HIV 1/2 Stat-Pak have met the criteria for
being eligible for procurements pursuant to the President’s Emergency Plan
for AIDS Relief
|
Thirteen-year
supply and technology transfer agreement with FIOCRUZ-Bio-Manguinhos,
an
affiliate of the Ministry of Health of Brazil. FIOCRUZ-Bio-Manguinhos
will
supply product to Brazilian public health market and potentially
other
markets in the region. Other marketing partners are being actively
pursued
with a principal focus on those countries that are receiving
funding from
the United States pursuant to the Presidential Emergency Plan
for AIDS
Relief and from the United Nations programs and partners.
We
have hired an individual to direct our sales and marketing
efforts in East
Africa who will be based in that region and whose efforts will
be
primarily aimed toward participating in what we believe will
be a
substantial increase in demand for our HIV rapid tests from
the PEPFAR
program. We are in discussions with a number of other groups
and
individuals to assist us in our marketing efforts in markets
that we have
focused on in Africa.
|
·
|
Scientific and technological capability; |
·
|
Proprietary know-how; |
·
|
The ability to develop and market products and processes; |
·
|
The ability to obtain FDA or other required regulatory approvals; |
·
|
The
ability to manufacture products that meet applicable FDA requirements,
(i.e. FDA’s Quality System Regulations) see Governmental Regulation
section;
|
·
|
Access to adequate capital; |
·
|
The ability to attract and retain qualified personnel; and |
·
|
The availability of patent protection. |
Existing
or Proposed Product
|
Regulatory
Status |
Development
Status |
Partners
involved in the
development or marketing of the products |
|||
Rapid
test for detection of Bovine Spongeiform Encephalopathy, also
known as mad
cow disease, in cattle
|
Not
yet submitted for approval
|
Work
has been suspended due to Prionics being unable to complete
product
specifications.
|
Prionics
AG, Zurich, Switzerland
|
|||
Dental
Bacteria Test
|
Not
yet submitted for approval
|
Phase
2 (Optimization of Test) Work has been suspended and discussing
new
development plan.
|
Ivoclar-Vivadent,
AG, Schaan Liechtenstein
|
|||
Tuberculosis
Stat Pak II- rapid diagnostic test for detection of antibodies
to active
pulmonary tuberculosis in human whole blood samples
|
Not
yet submitted for approval
|
Product
validation completed
|
Public
Health Research Institute and Statens Serum Institute
|
|||
TBD
Non-Human Primate Rapid Tuberculosis Test for the detection of
antibodies
to active pulmonary tuberculosis in non-human primate whole blood
samples
|
Submitted
for approval first quarter of 2005
|
Product
validation completed
|
Sequella
Corporation, Rockville, Maryland
|
|||
Combination
HIV/Tuberculosis Rapid Test for the detection of antibodies to
active
pulmonary tuberculosis and HIV in human whole blood samples using
different color latex test lines
|
Not
yet submitted for approval
|
Initial
Prototype
|
None
|
|||
New
Generation HIV Test
|
Not
yet submitted for approval
|
Initial
Prototype
|
None
|
|||
Cerebral
Spinal Fluid Leak Test
|
Not
yet submitted for approval
|
Initial
R&D on Monoclonal Antibodies
|
State
University of New York at Stony Brook
|
2004
|
2003
|
||||||
Human
Tuberculosis
|
$
|
99,675
|
$
|
59,491
|
|||
Veterinary
Tuberculosis
|
354,473
|
116,239
|
|||||
HIV
|
823,596
|
36,400
|
|||||
Dental,
Mad cow, and Other
|
155,659
|
101,761
|
|||||
Totals
|
$
|
1,433,403
|
$
|
313,891
|
Project
|
Rapid
Test for Mad Cow Disease
|
Current
status
|
We
believe that this project is now in substantial doubt. We
are waiting for technology transfer from Prionics AG in order
to begin
production scale-up, validation and regulatory submission.
In February
2005 we entered into a license agreement with Prionics AG related
to our
licensing certain technology that Prionics desired in order
for Prionics
to complete the technology transfer to Chembio. The agreement
provides for
additional contingent payments based upon our attainment of
certain
milestones relating to product performance specified in the
agreement. If
the milestones are not achieved, there may be a significant
reduction or
complete elimination of any additional payments under this
license
agreement. Moreover, the manufacturing agreement we signed
with Prionics
AG in 2004 would be of no further force or effect.
|
Nature,
timing and estimated costs of the efforts necessary to
complete
|
Prionics
has informed us that they believe that our technology has not
produced the
desired result and that there is no activity related to this
project.
|
Anticipated
completion date
|
Not
known.
|
Risks
and uncertainties associated with completing development on schedule,
and
the consequences to operations, financial position and liquidity
if not
completed timely
|
We
were
relying on technology and product specifications developed
by Prionics,
including certain changes they have made to their formulation
since the
product underwent a successful evaluation. As stated above,
there is
substantial
doubt now
that the technology transfer from Chembio will be
completed and therefore
the Manufacturing agreement will be of no further force and
effect. The
risks associated with the product involve regulatory and technology
risks.
We had anticipated that we would start to see revenues form
this program
in 2005. This is now in substantial doubt. The Manufacturing
Contract
provides for a minimum purchase of one million units during
the first year
following approval in the EU. We understand that the product
has in fact
been approved in the EU based upon the above-referenced evaluation
but
because of the problems described herein, Prionics has been
unable to
complete the production specifications for this
product.
|
Timing
of commencement of expected material net cash inflows
|
It
is not known or estimable when net cash inflows from this project
will
commence due to the uncertainties associated with the completion
of the
product, regulatory submissions, and the nature and timing of
Prionics’
distribution network
|
Project
|
Dental
Bacteria Test
|
Current
status
|
We
expected to complete Phase 2 of the Project Plan (Optimization
of Test)
and move into Phase 3 (Scale Up of Production and validation)
in 2005.
However, one of the monoclonal antibodies has sensitivity and
specificity
problem with lateral flow test system. We are therefore discussing
strategies in order to overcome this technical problem. We are
also
considering another detection system, which could be applied
instead of
the lateral flow system. Such a system could be based on antibodies
labeled with fluorescence markers. However, a correspondent reader
would
have to be used for an analysis of the risk of caries (dental
decay).
|
Nature,
timing and estimated costs of the efforts necessary to
complete
|
In
April 2004, Chembio received 80% of the Phase 2 project funding
of
$65,000, or $52,000 and this reflected the estimate of the costs
anticipated to be incurred to complete Phase 2 during a three
to five
month period. It is now assumed that Phase 2 will not be satisfactorily
completed and that any additional funding from Ivoclar-Vivadent
will be
pursuant to a new development contract, which is under discussion.
Chembio
has completed the level of effort needed to earn the 80%
funded.
|
Anticipated
completion date
|
It
is not known at this time whether or how long it will take to
develop the
product or obtain regulatory approvals in the US, Europe, Japan
and other
potential markets.
|
Risks
and uncertainties associated with completing development on schedule,
and
the consequences to operations, financial position and liquidity
if not
completed timely
|
Technical
challenges remain that must be overcome in order for this product
to meet
the performance specifications that Ivoclar-Vivadent had set
forth in the
Agreement. If we do not achieve the performance specifications,
the
product will not be completed.
|
Timing
of commencement of expected material net cash inflows
|
It
is not known or estimable when net cash inflows from this project
will
commence due to the uncertainties associated with the completion
of the
product, regulatory submissions, and the nature and timing of
Ivoclar-Vivadent’s distribution network and strategy.
|
Project
|
Rapid
Test for the detection of antibodies to active
pulmonary
tuberculosis in non-human primate whole blood
samples
|
Current
status
|
Product
validation completed.
|
Nature,
timing and estimated costs of the efforts necessary to
complete
|
We
submitted the initial documentation required to commence our
application
to the United States Department of Agriculture (USDA) for the
approval of
the product and of our facility where it will be manufactured.
|
Anticipated
completion date
|
We
anticipate that we could have USDA approval by the end of
2005.
|
Risks
and uncertainties associated with completing development on schedule,
and
the consequences to operations, financial position and liquidity
if not
completed timely
|
The
requirements for clinical testing and the outcomes of such clinical
testing can not be known at this time, and this information poses
substantial risk and uncertainty as to whether or when this product
will
contribute to the operations, financial position and
liquidity.
|
Timing
of commencement of expected material net cash inflows
|
It
is not known or estimable when net cash inflows from this project
will
commence due to the uncertainties associated with the completion
of the
product, regulatory submissions, and without further progress
on a
distribution strategy.
|
OBLIGATIONS
|
Total
|
Less
than
1
Year
|
1-3
Years
|
4-5
Years
|
Greater
than
5
Years
|
|||||||||||
Long
Term Debt(1)
|
$
|
303,160
|
$
|
120,000
|
$
|
183,160
|
$
|
-
|
$
|
-
|
||||||
Capital
Leases (2)
|
$
|
111,443
|
$
|
46,868
|
$
|
64,575
|
-
|
-
|
||||||||
Operating
Leases
|
$
|
198,450
|
$
|
98,000
|
$
|
100,450
|
-
|
-
|
||||||||
Other
Long Term Obligations(3)
|
$
|
863,250
|
$
|
478,167
|
$
|
247,583
|
$
|
25,000
|