360 ◾ The Guide to Entrepreneurship: How to Create Wealth for Your Company
uncertainty would adversely affect the ability of Gish to attract and
retain key management, sales, marketing, and technical personnel. In
addition, in connection with the merger, certain employees are entitled
to acceleration of vesting of stock options, which would adversely affect
the ability of CardioTech to retain such employees following the acquisi-
tion. Any failure to attract and retain key personnel would have a mate-
rial adverse effect on the combined businesses of Gish and CardioTech.
15.8.4.3 Opportunities
◾ The manufacture and sale of medical devices, including products cur-
rently sold by Gish and Gish’s other potential products, are subject to
extensive regulation by numerous governmental authorities in the U.S.,
principally the FDA, and corresponding state agencies, such as the
California Department of Health Services (CDHS). In order for Gish to
market its products for clinical use in the U.S., Gish must obtain clearance
from the FDA of a 510(k) pre-market notication or approval of a more
extensive submission known as a pre-market approval (PMA) application.
CardioTech had experience in obtaining 510(k) approvals from FDA.
◾ Gish did not have heparin coatings for its product line. By 2003, the
industry required all blood-contacting surfaces to be coated with an
antithrombotic surface. CardioTech had expertise in this area, and could
be of great assistance in developing and introducing coated products.
◾ CardioTech planned a subsequent acquisition of an established and
highly protable medical device company in China, thus opening the
Chinese market to Gish’s products.
15.8.4.4 Threats
◾ Introduction of substitute products. The entry of minimally invasive
stents as a disruptive new procedure resulted in cataclysmic reductions in
coronary-bypass open heart surgeries. The industry was suddenly faced
with a supply overcapacity that became more produced year after year.
◾ Downward pricing pressures. Gish was facing increasing down-
ward pricing pressures from domestic and international competi-
tors, especially from competitors specializing in the cardiovascular
surgery products market. Governmental reimbursements were being
steadily eroded, as cardiopulmonary products were becoming more
“commoditized.”
Harvesting ◾ 361
◾ Political, economic, and regulatory inuences were subjecting the
healthcare industry in the U.S. to fundamental change. Potential reforms
proposed have included mandated basic healthcare benets, controls on
healthcare spending through limitations on the growth of private health
insurance premiums and Medicare and Medicaid spending, the creation
of large insurance purchasing groups, and fundamental changes in the
healthcare delivery system. The CardioTech/Gish combined company
must be prepared to address healthcare issues in a systematic and
orderly fashion.
15.8.4.5 The Stock-for-Stock Transaction
Gish Selling Security
Holder
Number of Shares of
CardioTech Common
Stock Expected to be
Benecially Owned Prior
to the Offering
Number of Shares of
CardioTech Common
Stock Offered
Asset Value Fund Limited
Partnership (1)
792,435 792,435
Craig Corporation
(through its controlling
interest in Citadel
Holding Corporation)
783,711 783,711
Gish CEO 527,887 138,649
Investor 1 186,821 180,110
Investor 2 12,319 5,608
Total 2,303,173 1,900,513
15.8.5 An Accretive Acquisition
An accretive acquisition occurs when (1) the acquiring company’s earnings
per share increase, thus creating shareholder value, or (2) when the price-
earnings ratio of the acquirer is greater than the target.
By either measure, CardioTech’s acquisition of Gish was accretive, as
shown below:
362 ◾ The Guide to Entrepreneurship: How to Create Wealth for Your Company
2001 2002 2003 2004 2005 2006
CardioTech 1543 3220 3394 21,799 21,841 22,381
Gish 18,017 16,410 17,584
19,560 19,630 20,978 21,799 21,841 22,381
Shares
Outstanding @
3/31
9,126,889 17,654,854 19,258,983 19,796,833
Stock Price @
3/31
$1.03 $5.15 $1.90 $2.78
Market
Capitalization @
3/31
$9,400,696 $90,922,498 $36,592,068 $55,035,196
15.9 Sample Prospectus
“A Prospectus is Latin for close your eyes and open your wallet.”
As led with the Securities and Exchange Commission on November 26, 2003
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
CARDIOTECH INTERNATIONAL,INC.
(Exact name of registrant as specied in its charter)
MASSACHUSETTS 2834 04-3186647
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classication Code Number)
(I.R.S. Employer
Identication No.)
Harvesting ◾ 363
78-E Olympia Ave.
WOBURN, MASSACHUSETTS 01801
(781)933-4772
(Address, including zip code, and telephone number, including area code, of
registrant’s principal executive ofces)
DR. MICHAEL SZYCHER
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
CARDIOTECH INTERNATIONAL,INC.
78-E Olympia Ave.
WOBURN, MASSACHUSETTS 01801
(781)933-4772
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Copies to:
DAVID SELENGUT, ESQ.
ELLENOFF GROSSMAN& SCHOLE LLP
370 Lexington Avenue
NEW YORK, NY 10017
(212)370-1300
Approximate date of commencement of proposed sale to the pub-
lic: As soon as practicable from time to time after the 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 Rule415 under the Securities Act
of 1933, check the following box. ◽
If this Form is led to register additional securities for an offering pursu-
ant to Rule462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier effec-
tive registration statement for the same offering. ◽
If this Form is a post-effective amendment led pursuant to Rule462(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 led pursuant to Rule462(d)
under the Securities Act, check the following box and list the Securities Act
364 ◾ The Guide to Entrepreneurship: How to Create Wealth for Your Company
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
Rule434, please check the following box. ◽
CALCULATION OF REGISTRATION FEE
Title of each
class of
securities to
be registered
Amount to be
registered(1)
Proposed
maximum
offering price
per share(2)
Proposed
maximum
aggregate
offering
price(2)
Amount of
registration
fee
Common
stock, $.01
par value
410,000 $5.70 $2,337,000 $189.06
(1) We are registering a total of 410,000 shares of our common stock
issuable upon exercise of warrants issued to certain stockholders at various
exercise prices.
(2) Estimated solely for the purposes of determining the registration fee.
In accordance with Rule457(c) under the Securities Act of 1933, as amended,
the above calculation is based on the approximate average of the high and
low prices reported on the American Stock Exchange on November20, 2003.
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 lea further amendment which specically states that this Registration
Statement shall thereafter become effective in accordance with Section8(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
Section8(a), may determine.
PROSPECTUS
Registration No. [ ]
410,000 SHARES
of
CARDIOTECH INTERNATIONAL,INC.
COMMON STOCK
(Par Value $.01 per share)
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