As filed with the Securities and Exchange Commission on October 14, 2004
Registration No. 333-__________
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE QUIGLEY CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
Nevada 23-2577138
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
Kells Building
621 Shady Retreat Road
Doylestown, Pennsylvania 18901
(215) 345-0919
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(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
Guy J. Quigley
President and Chief Executive Officer
The Quigley Corporation
Kells Building
621 Shady Retreat Road
Doylestown, Pennsylvania 18901
(215) 345-0919
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(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
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Copies to:
Robert H. Friedman, Esq.
Olshan Grundman Frome Rosenzweig & Wolosky LLP
Park Avenue Tower
65 East 55th Street
New York, New York 10022
(212) 451-2300
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Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Amount to be Maximum Offering Maximum Aggregate Amount of
Title of Shares to be Registered Registered(1) Price Per Share Offering Price Registration Fee
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Common Stock, $.0005 par
value per share 113,097 $9.04(2) $1,022,396.88 $129.54
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TOTAL $129.54
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(1) In the event of a stock split, stock dividend and similar transactions
involving the Registrant's Common Stock, $.0005 par value per share, the
shares registered hereby shall automatically be increased or decreased
pursuant to Rule 416 of the Securities Act of 1933, as amended.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) of the Securities Act, based on the average of
the high and low prices of the Registrant's Common Stock on the Nasdaq
National Market on October 11, 2004.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
SUBJECT TO COMPLETION, DATED OCTOBER 14, 2004
PROSPECTUS
113,097 SHARES OF COMMON STOCK
THE QUIGLEY CORPORATION
This prospectus relates to the offer and sale by the selling stockholders
identified in this prospectus of up to an aggregate 113,097 shares of our common
stock. We will not receive any proceeds from the sale of our common stock under
this prospectus.
The selling stockholders may sell the securities from time to time on any
stock exchange or automated interdealer quotation system on which the securities
are listed, in the over-the-counter market, in privately negotiated transactions
or otherwise, at fixed prices that may be changed, at market prices prevailing
at the time of sale, at prices related to prevailing market prices or at prices
otherwise negotiated.
Our principal executive offices are located at the Kells Building, 621
Shady Retreat Road, Doylestown, Pennsylvania 18901. Our telephone number is
(215) 345-0919.
Our common stock is listed on the Nasdaq National Market under the symbol
"QGLY." The last reported sale price for our common stock on October 13, 2004
was $9.35 per share.
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THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 2.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is October 14, 2004.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
TABLE OF CONTENTS
Page
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Prospectus Summary............................................................1
Summary of the Company........................................................1
Summary of the Offering.......................................................2
Risk Factors..................................................................2
Where You Can Find More Information..........................................12
Special Note Regarding Forward-Looking Statements............................13
Incorporation By Reference...................................................13
Use of Proceeds..............................................................14
Selling Stockholders.........................................................14
Plan of Distribution.........................................................15
Legal Matters................................................................17
Experts......................................................................17
You should rely only on the information contained in this prospectus or
any accompanying supplemental prospectus and the information specifically
incorporated by reference. We have not authorized anyone to provide you with
different information or make any additional representations. This is not an
offer of these securities in any state or other jurisdiction where the offer is
not permitted. You should not assume that the information contained in or
incorporated by reference into this prospectus or any prospectus supplement is
accurate as of any date other than the date on the front of each of such
documents.
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PROSPECTUS SUMMARY
This summary represents a summary of all material terms of the offering
and only highlights the more detailed information that appears elsewhere, or
incorporated by reference, in this prospectus. This summary may not contain all
the information important to you as an investor. Accordingly, you should
carefully read this entire prospectus before deciding whether to invest in our
common stock.
Unless the context otherwise requires, all references to "we," "us," or
"the Company" in this prospectus refer collectively to The Quigley Corporation,
a Nevada corporation, and its subsidiaries.
SUMMARY OF THE COMPANY
We are a Nevada corporation which was organized on August 24, 1989 and
commenced business operations in October 1989.
We are engaged in the development, manufacturing, and marketing of
homeopathic and health products that are being offered to the general public,
and the research and development of potential prescription products. We are
organized into three business segments which are Cold Remedy, Health and
Wellness, and Ethical Pharmaceutical. All of our revenues are realized in the
Health and Wellness business segment and the Cold Remedy business segment.
Our Cold Remedy business segment distributes over-the-counter cold remedy
products. Our key product, Cold-Eeze(R), is a zinc gluconate glycine lozenge. In
two double-blind clinical studies Cold-Eeze(R) has been proven to reduce the
duration and severity of common cold symptoms by nearly half. Cold-Eeze(R) is
now an established product in the health care and cold remedy market. In
October, 2004, we closed on the purchase of substantially all of the assets of
JOEL, Inc., a Food and Drug Administration ("FDA") approved contract
manufacturer of lozenges and other candy food products that has been the
exclusive manufacturer of our key product, Cold-Eeze(R), since its launch in
1995.
Darius International Inc. ("Darius"), our wholly owned subsidiary, is a
direct selling organization constituting the Health and Wellness business
segment that was formed in January 2000 to introduce new health and wellness
products to the marketplace through a network of independent distributors.
In January 2001, we formed an Ethical Pharmaceutical business segment
which is now Quigley Pharma Inc. ("Pharma"), a wholly-owned subsidiary of ours,
to develop pharmaceutical products. We believe that Quigley Pharma will enable
us to diversify into the prescription drug market and will also enable us to
safely and effectively distribute important potential new products currently
under development. These potential new products are based on patents that have
been assigned to us by Quigley Pharma's Chief Operating Officer, Dr. Richard A.
Rosenbloom, M.D., Ph.D. We will be required to expend substantial resources to
develop these applications into commercial products.
During 2000, we acquired a 60% ownership position in Caribbean Pacific
Natural Products, Inc. ("CPNP"), a developer and marketer of sun-care and
skincare products for luxury resorts, theme parks and spas. On January 22, 2003,
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we completed the sale of our 60% equity interest in CPNP to Suncoast Naturals,
Inc. ("Suncoast") in exchange for 750,000 shares of common stock of Suncoast and
100,000 shares of Series A Redeemable Preferred Stock of Suncoast which bear
interest at a rate of 4.25% per annum. We subsequently distributed approximately
500,000 shares of the common stock of Suncoast to our stockholders of record on
September 1, 2004.
Darius International Inc. and Quigley Pharma provides us with
diversification in both the method of product distribution and the broader range
of products we can provide to the marketplace.
Our mailing address is PO Box 1349, Doylestown, PA 18901. Our telephone
number is (215) 345-0919.
SUMMARY OF THE OFFERING
This prospectus relates to the offer and sale, from time to time, of up to
113,097 shares of our common stock by the selling stockholders listed below. The
shares of common stock being offered under this prospectus were acquired from us
by the selling stockholders pursuant to the closing on October 1, 2004 of our
purchase of substantially all of the assets of JOEL, Inc. pursuant to an asset
purchase and sale agreement by and between us and JOEL, Inc. dated August 18,
2004. In connection with the closing, we agreed to register the resale of such
common stock with the Securities and Exchange Commission.
Our registration of the resale of our common stock does not necessarily
mean that all or any portion of such common stock will be offered for resale by
the selling stockholders. We will not receive any proceeds from the sale of our
common stock under this prospectus. We have agreed to bear the expenses of
registering the shares under all federal and state securities laws.
RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. THE RISK
FACTORS LISTED BELOW ARE THOSE THAT WE CONSIDER TO BE MATERIAL TO AN INVESTMENT
IN OUR COMMON STOCK AND THOSE WHICH, IF REALIZED, COULD HAVE MATERIAL ADVERSE
EFFECTS ON OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS AS
SPECIFICALLY DISCUSSED BELOW. IF SUCH AN ADVERSE EVENT OCCURS , THE TRADING
PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU COULD LOSE ALL OR PART OF YOUR
INVESTMENT. BEFORE YOU INVEST IN OUR COMMON STOCK, YOU SHOULD BE AWARE OF
VARIOUS RISKS, INCLUDING THOSE DESCRIBED BELOW. YOU SHOULD CAREFULLY CONSIDER
THESE RISK FACTORS, TOGETHER WITH ALL OF THE OTHER INFORMATION INCLUDED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, BEFORE YOU DECIDE WHETHER TO
PURCHASE OUR COMMON STOCK. THIS SECTION INCLUDES OR REFERS TO CERTAIN
FORWARD-LOOKING STATEMENTS. YOU SHOULD REFER TO THE EXPLANATION OF THE
QUALIFICATIONS AND LIMITATIONS ON SUCH FORWARD-LOOKING STATEMENTS DISCUSSED ON
PAGE 13.
WE HAVE A HISTORY OF LOSSES AND LIMITED WORKING CAPITAL AND WE EXPECT TO
INCREASE OUR SPENDING.
We have experienced net losses for three of our past five fiscal years.
Although we earned net income of $675,000 in our most recent fiscal year ended
December 31, 2003, we incurred net losses of $6,454,000, $5,196,000 and
$4,204,000, respectively, in the fiscal years ended December 31, 2002, December
31, 2000 and December 31, 1999. In the fiscal year ended December 31, 2001, we
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earned net income of $216,000, but that amount included net settled litigation
payments paid to us of approximately $700,000 related to licensing fees. As of
December 31, 2003, we had working capital of approximately $18,257,000. Since we
continue to increase our spending on research and development in connection with
Quigley Pharma's product development, we are uncertain whether we will generate
sufficient revenues to meet expenses or to operate profitably in the future.
WE HOLD PATENTS WHICH WE MAY NOT BE ABLE TO DEVELOP INTO PHARMACEUTICAL
MEDICATIONS.
Our success depends in part on Quigley Pharma's ability to research and
develop prescription medications based on our patents which are:
o Patent (No. 6,555,573 B2) entitled "Method and Composition for
the Topical Treatment of Diabetic Neuropathy." The patent extends
through March 27, 2021.
o A Patent (No. 6,592,896 B2) entitled "Medicinal Composition and
Method of Using It" (for Treatment of Sialorrhea and other
Disorders) for a product to relieve Sialorrhea (drooling) in
patients suffering from Amyotrophic Lateral Sclerosis (ALS),
otherwise known as Lou Gehrig's Disease. The patent extends
through August 6, 2021.
o Patent (No. 6,596,313 B2) entitled "Nutritional Supplement and
Method of Using It" for a product to relieve Sialorrhea
(drooling) in patients suffering from Amyotrophic Lateral
Sclerosis (ALS), otherwise known as Lou Gehrig's Disease. The
patent extends through April 15, 2022.
o A Patent (No. 6,753,325 B2) entitled "Composition and Method for
Prevention, Reduction and Treatment of Radiation Dermatitis," a
composition for the preventing, reducing or treating radiation
dermatitis. The patent extends through November 5, 2021.
o A Patent (number to be assigned) entitled "Nutritional Supplement
& Methods of Using Same" for a naturally derived compound
developed for the treatment of arthritis and related inflammatory
disorders. The patent extends through approximately August 6,
2021.
These potential new products are in the development stage and we cannot
give any assurances that we can develop commercially viable products from these
patent applications. Prior to any new product being ready for sale, we will have
to commit substantial resources for research, development, preclinical testing,
clinical trials, manufacturing scale-up and regulatory approval. We face
significant technological risks inherent in developing these products. We may
abandon some or all of our proposed new products before they become commercially
viable. Even if we develop and obtain approval of a new product, if we cannot
successfully commercialize it in a timely manner, our business and financial
condition may be materially adversely affected.
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WE WILL NEED TO OBTAIN ADDITIONAL CAPITAL TO SUPPORT LONG-TERM PRODUCT
DEVELOPMENT AND COMMERCIALIZATION PROGRAMS.
Our ability to achieve and sustain operating profitability depends in
large part on our ability to commence, execute and complete clinical programs
for, and obtain additional regulatory approvals for, prescription medications
developed by Quigley Pharma, particularly in the U.S. and Europe. We cannot
assure you that we will ever obtain such approvals or achieve significant levels
of sales. Our current sales levels of Cold-Eeze(R) products and health and
wellness products may not generate all the funds we anticipate will be needed to
support our current plans for product development. We may need to obtain
additional financing to support our long-term product development and
commercialization programs. We may seek additional funds through public and
private stock offerings, arrangements with corporate partners, borrowings under
lines of credit or other sources.
The amount of capital we may need to complete product development of
Quigley Pharma's products will depend on many factors, including;
o the cost involved in applying for and obtaining FDA and
international regulatory approvals;
o whether we elect to establish partnering arrangements for
development, sales, manufacturing and marketing of such products;
o the level of future sales of our Cold-Eeze(R) and health and
wellness products, expense levels for our international sales and
marketing efforts;
o whether we can establish and maintain strategic arrangements for
development, sales, manufacturing and marketing of our products;
and
o whether any or all of our outstanding options and warrants are
exercised and the timing and amount of these exercises.
Many of the foregoing factors are not within our control. If we need to
raise additional funds and such funds are not available on reasonable terms, we
may have to reduce our capital expenditures, scale back our development of new
products, reduce our workforce and out-license to others products or
technologies that we otherwise would seek to commercialize ourselves. Any
additional equity financing will be dilutive to stockholders, and any debt
financing, if available, may include restrictive covenants.
OUR CURRENT PRODUCTS AND POTENTIAL NEW PRODUCTS ARE SUBJECT TO EXTENSIVE
GOVERNMENTAL REGULATION.
Our business is regulated by various agencies of the states and localities
where our products are sold. Governmental regulations in foreign countries where
we plan to commence or expand sales may prevent or delay entry into a market or
prevent or delay the introduction, or require the reformulation, of certain of
our products. In addition, we cannot predict whether new domestic or foreign
legislation regulating our activities will be enacted. Any new legislation could
have a material adverse effect on our business, financial condition and
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operations. Noncompliance with any applicable requirements may subject us or the
manufacturers of our products to sanctions, including warning letters, fines,
product recalls and seizures.
COLD REMEDY AND HEALTH AND WELLNESS PRODUCTS. The manufacturing,
processing, formulation, packaging, labeling and advertising of our cold remedy
and health and wellness products are subject to regulation by several federal
agencies, including:
o the FDA;
o the Federal Trade Commission ("FTC");
o the Consumer Product Safety Commission;
o the United States Department of Agriculture;
o the United States Postal Service;
o the United States Environmental Protection Agency; and
o the Occupational Safety and Health Administration.
In particular, the FDA regulates the safety, labeling and distribution of
dietary supplements, including vitamins, minerals and herbs, food additives,
food supplements, over-the-counter and prescription drugs and cosmetics. The FTC
also has overlapping jurisdiction with the FDA to regulate the promotion and
advertising of vitamins, over-the-counter drugs, cosmetics and foods. In
addition, our cold remedy products are homeopathic remedies which are regulated
by the Homeopathic Pharmacopoeia of the United States ("HPUS"). HPUS sets the
standards for source, composition and preparation of homeopathic remedies which
are officially recognized in the Federal Food, Drug and Cosmetics Act of 1938.
QUIGLEY PHARMA. The preclinical development, clinical trials, product
manufacturing and marketing of Quigley Pharma's potential new products are
subject to federal and state regulation in the United States and other
countries. Clinical trials and product marketing and manufacturing are subject
to the rigorous review and approval processes of the FDA and foreign regulatory
authorities. Obtaining FDA and other required regulatory approvals is lengthy
and expensive. Typically, obtaining regulatory approval for pharmaceutical
products requires substantial resources and takes several years. The length of
this process depends on the type, complexity and novelty of the product and the
nature of the disease or other indication to be treated. Preclinical studies
must comply with FDA regulations. Clinical trials must also comply with FDA
regulations and may require large numbers of test subjects, complex protocols
and possibly lengthy follow-up periods. Consequently, satisfaction of government
regulations may take several years, may cause delays in introducing potential
new products for considerable periods of time and may require imposing costly
procedures upon our activities. If we cannot obtain regulatory approval of new
products in a timely manner or at all we could be materially adversely affected.
Even if we obtain regulatory approval of new products, such approval may impose
limitations on the indicated uses for which the products may be marketed which
could also materially adversely affect our business, financial condition and
future operations.
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WE MAY BE UNABLE TO SUCCESSFULLY INTEGRATE THE OPERATIONS OF JOEL, INC.
WITH OUR OPERATIONS.
On October 1, 2004, we closed on the purchase of substantially all of the
assets of JOEL, Inc., a FDA approved contract manufacturer of lozenges and other
candy food products that has been the exclusive manufacturer of our key product,
Cold-Eeze(R), since its launch in 1995. Although we do not have any prior
experience in manufacturing, we have retained the former president and vice
president-operations of JOEL, Inc. to oversee the manufacturing operation. The
difficulties of combining the manufacturing operations with our operations
include the necessity of coordinating geographically separated systems and
facilities and integrating and retaining the former JOEL, Inc. personnel. The
diversion of our management's attention and any delays or difficulties
encountered in connection with integrating this manufacturing operation into our
business could materially adversely affect our financial condition and future
operations.
OUR BUSINESS IS VERY COMPETITIVE AND INCREASED COMPETITION COULD HAVE A
SIGNIFICANT IMPACT ON OUR EARNINGS.
Both the non-prescription healthcare product and pharmaceutical industries
are highly competitive. Many of our competitors have substantially greater
capital resources, research and development staffs, facilities and experience
than we do. These and other entities may have or may develop new technologies.
These technologies may be used to develop products that compete with ours.
We believe that our primary cold remedy product, Cold-Eeze(R), has a
competitive advantage over other cold remedy products because it has been
clinically proven to reduce the severity and duration of common cold symptoms.
We believe Darius has an advantage over its competitors because it directly
sells its proprietary health and wellness products through its extensive network
of independent distributors. Competition in Quigley Pharma's expected product
areas would most likely come from large pharmaceutical companies as well as
other companies, universities and research institutions, many of which have
resources far in excess of our resources.
The Company believes that its ability to compete depends on a number of
factors, including price, product quality, availability, reliability and name
recognition of its cold remedy, health and wellness products and Quigley
Pharma's ability to successfully develop and market prescription medications.
There can be no assurance that we will be able to compete successfully in the
future. If we are unable to compete, our earnings may be significantly impacted.
OUR FUTURE SUCCESS IS DEPENDENT ON THE CONTINUED SERVICES OF KEY PERSONNEL
INCLUDING OUR CHAIRMAN OF THE BOARD OF DIRECTORS, PRESIDENT AND CHIEF EXECUTIVE
OFFICER.
Our future success depends in large part on the continued service of our
key personnel. In particular, the loss of the services of Guy J. Quigley, our
Chairman of the Board, President and Chief Executive Officer could have a
material adverse effect on our operations. We have an employment agreement with
Mr. Quigley which expires on May 31, 2005. Our future success and growth also
depends on our ability to continue to attract, motivate and retain highly
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qualified employees. If we are unable to attract, motivate and retain qualified
employees, our business and operations could be materially adversely affected.
OUR FUTURE SUCCESS DEPENDS ON THE CONTINUED EMPLOYMENT OF RICHARD A.
ROSENBLOOM, M.D., PH.D., WITH QUIGLEY PHARMA.
Quigley Pharma's potential new products are being developed through the
efforts of Dr. Rosenbloom. The loss of his services could have a material
adverse effect on our product development and future operations.
OUR FUTURE SUCCESS IS DEPENDENT ON THE CONTINUED ACCEPTANCE OF THE DIRECT
SELLING PHILOSOPHY, THE MAINTENANCE OF OUR NETWORK OF EXISTING INDEPENDENT
REPRESENTATIVES AND THE RECRUITMENT OF ADDITIONAL SUCCESSFUL INDEPENDENT
REPRESENTATIVES.
Darius markets and sells herbal vitamins and dietary supplements for the
human condition through its network of independent representatives. Its products
are sold to independent representatives who either use the products for their
own personal consumption or resell them to consumers. The independent
representatives receive compensation for sales achieved by means of a commission
structure or compensation plan on their product sales and those of personnel
within their downstream independent representative network. Since the
independent representatives are not employees of Darius, they are under no
obligation to continue buying and selling Darius' products and the loss of key
high-level distributors could negatively impact our future growth and
profitability.
OUR FUTURE SUCCESS DEPENDS ON THE CONTINUED SALES OF OUR PRINCIPAL
PRODUCT.
For the fiscal year ended December 31, 2003, our Cold-Eeze(R) products
represented approximately 49% of our total sales. While we have diversified into
health and wellness products, our line of Cold-Eeze(R) products continues to be
a major part of our business. Accordingly, we have to depend on the continued
acceptance of Cold-Eeze(R) products by our customers. However, there can be no
assurance that our Cold-Eeze(R) products will continue to receive market
acceptance. The inability to successfully commercialize Cold-Eeze(R) in the
future, for any reason, would have a material adverse effect on our financial
condition, prospects and ability to continue operations.
WE HAVE A CONCENTRATION OF SALES TO AND ACCOUNTS RECEIVABLE FROM SEVERAL
LARGE CUSTOMERS.
Although we have a broad range of customers that includes many large
wholesalers, mass merchandisers and multiple outlet pharmacy chains, our five
largest customers account for a significant percentage of our sales. These five
customers accounted for 23% of total sales for the fiscal years ended December
31, 2003 and 2002 and 35% of total sales for the fiscal year ended December 31,
2001. In addition, customers comprising the five largest accounts receivable
balances represented 34% and 44% of total accounts receivable balances at
December 31, 2003 and 2002, respectively. We extend credit to our customers
based upon an evaluation of their financial condition and credit history, and we
do not generally require collateral. If one or more of these large customers
cannot pay us, the write-off of their accounts receivable would have a material
7
adverse effect on our operations and financial condition. The loss of sales to
any one or more of these large customers would also have a material adverse
effect on our operations and financial condition.
WE ARE DEPENDENT ON THIRD-PARTY MANUFACTURERS AND SUPPLIERS FOR OUR HEALTH
AND WELLNESS PRODUCTS AND THIRD-PARTY SUPPLIERS FOR CERTAIN OF OUR COLD REMEDY
PRODUCTS.
We do not manufacture any of our Health and Wellness products, nor do we
manufacture any of the ingredients in these products. In addition, we purchase
all active ingredients that are raw materials used in connection with our
Cold-Eeze(R) product from a single unaffiliated supplier. Should any of these
relationships terminate, we believe that the contingency plans which we have
formulated would prevent a termination from materially affecting our operations.
However, if any of these relationship is terminated, there may be delays in
production of our products until an acceptable replacement facility is located.
We continue to look for safe and reliable multiple-location sources for product
and raw materials so that we can continue to obtain products and raw materials
in the event of a disruption in our business relationship with any single
manufacturer or supplier. While we have identified secondary sources for some of
our products and raw materials, our inability to find other sources for some of
our other products and raw materials may have a material adverse effect on our
operations. In addition, the terms on which manufacturers and suppliers will
make product and raw materials available to us could have a material effect on
our success.
WE ARE UNCERTAIN AS TO WHETHER WE CAN PROTECT OUR PROPRIETARY RIGHTS.
The strength of our patent position may be important to our long-term
success. We currently own four patents in connection with products that are
being developed by Quigley Pharma. In addition, we have been granted an
exclusive agreement for worldwide representation, manufacturing, marketing and
distribution rights to a zinc/gluconate/glycine lozenge formulation. That
formulation has been patented in the United States, Germany, France, Italy,
Sweden, Canada and Great Britain and a patent is pending in Japan. However, this
patent in the United States expired in August, 2004.
There can be no assurance that these patents and our exclusive license
will effectively protect our products from duplication by others. In addition,
we may not be able to afford the expense of any litigation which may be
necessary to enforce our rights under any of our patents. Although we believe
that our current and future products do not and will not infringe upon the
patents or violate the proprietary rights of others, if any of our current or
future products do infringe upon the patents or proprietary rights of others, we
may have to modify our products or obtain an additional license for the
manufacture and/or sale of such products. We could also be prohibited from
selling the infringing products. If we are found to infringe on the proprietary
rights of others, we are uncertain whether we will be able to take corrective
actions in a timely manner, upon acceptable terms and conditions, or at all, and
the failure to do so could have a material adverse effect upon our business,
financial condition and operations.
We also use non-disclosure agreements with our employees, suppliers,
consultants and customers to establish and protect the ideas, concepts and
documentation of our confidential non-patented and non-copyright protected
proprietary technology and know-how. However, these methods may not afford
complete protection. There can be no assurance that third parties will not
8
obtain access to or independently develop our technologies, know-how, ideas,
concepts and documentation, which could have a material adverse effect on our
financial condition.
THE SALES OF OUR PRIMARY PRODUCT FLUCTUATES BY SEASON.
A significant portion of our business is highly seasonal, which causes
major variations in operating results from quarter to quarter. The third and
fourth quarters generally represent the largest sales volume for our cold remedy
products. There can be no assurance that we will be able to manage our working
capital needs and our inventory to meet the fluctuating demand for our products.
Failure to accurately predict and respond to consumer demand may cause us to
produce excess inventory. Conversely, if products achieve greater success than
anticipated for any given quarter, we may not have sufficient inventory to meet
customer demand.
OUR EXISTING PRODUCTS AND OUR NEW PRODUCTS UNDER DEVELOPMENT EXPOSE US TO
POTENTIAL PRODUCT LIABILITY CLAIMS.
Our business exposes us to an inherent risk of potential product liability
claims, including claims for serious bodily injury or death caused by the sales
of our existing products and the clinical trials of our products which are being
developed. These claims could lead to substantial damage awards. We currently
maintain product liability insurance in the amount of, and with a maximum payout
of, $22 million. A successful claim brought against us in excess of, or outside
of, our insurance coverage could have a material adverse effect on our results
of operations and financial condition. Claims against us, regardless of their
merit or eventual outcome, may also have a material adverse effect on the
consumer demand for our products.
WE ARE ENGAGED IN A LAWSUIT REGARDING CERTAIN FORWARD AND REVERSE STOCK
SPLITS.
We have been involved in ongoing litigation since 1997 against two
individuals, Thomas Goldblum and Alan Wayne, who claim that they are entitled to
the monetary value of 1,000,000 shares of our common stock as if they had owned
those shares since May 1990 and sold them at historic highs. Their claim, with
respect to the number of shares which they purport to own, has been based on the
alleged invalidity of certain of our previously completed forward and reverse
stock splits.
We have vigorously defended this action on its merits. We have further
filed a declaratory judgment action in Nevada asking for ratification of a
series of corrective actions taken by our stockholders on April 15, 1999
ratifying the forward and reverse stock splits in question. On March 19, 2002, a
Nevada court made a decision that the corrective actions were valid and a final
judgment was entered of record by the court on June 21, 2002. The period for
appeal of this order to the Nevada Supreme Court has expired.
Thomas Goldblum and Alan Wayne, the plaintiffs, also previously filed an
underlying claim on March 17, 1996 with a Pennsylvania court alleging that they
each became owners of 500,000 shares of our common stock in or about 1990 and
requested damages in excess of $100,000 for breach of contract and conversion.
We vigorously defended this lawsuit through trial and in January, 2004, a jury
returned an unanimous verdict in our favor. The plaintiffs have filed a motion
for post-trial relief as a first step toward an appeal. The Company vigorously
9
defended this lawsuit through trial during January 2004, when a jury returned a
unanimous verdict in favor of the Company. Thereafter, the plaintiffs filed a
motion for post-trial relief as a first step toward an appeal. The motion was
denied by the Court of Common Pleas of Montgomery County. The plaintiffs then
failed to file an appeal within the time frame required by law, and the matter
is now terminated.
WE ARE INVOLVED IN LAWSUITS REGARDING CLAIMS RELATING TO CERTAIN OF OUR
COLD-EEZE(R) PRODUCTS.
In September, 2000, we were sued by two individual plaintiffs (Jason
Tesauro and Elizabeth Eley, both residents of Georgia), on behalf of a
"nationwide class" of "similarly situated individuals," in the Court of Common
Pleas of Philadelphia County, Pennsylvania. The complaint alleges that the
plaintiffs purchased certain Cold-Eeze(R) products between August, 1996 and
November, 1999 based upon cable television, radio and Internet advertisements
which allegedly misrepresented the qualities and benefits of our Cold-Eeze(R)
products. The complaint requests an unspecified amount of damages. The court has
certified the class based on the plaintiffs' breach of warranty and unjust
enrichment claims. Discovery has been completed and the trial has not been
scheduled yet. We believe that the lawsuit lacks merit and are vigorously
defending it. If we are unsuccessful in our defense, the marketability of our
Cold-Eeze(R) products and our revenues could be materially adversely affected.
On February 26, 2004, Paige D. Davison filed an action against us, which
was not served until April 5, 2004. The action alleges that the plaintiff
suffered certain losses and injuries as a result of using our nasal spray
product. Among the allegations of the plaintiff are that the nasal spray was
defective and unreasonably dangerous, lacked proper and adequate warnings and/or
instructions, and was not fit for the purposes and uses intended. At the present
time the matter is being defended by our liability insurance carrier. We believe
the plaintiff's claims are without merit and are vigorously defending those
claims. Based upon the information we have at this time, we believe the action
will not have a material impact on us. However, at this time, no prediction as
to the outcome can be made.
We are also a defendant in an action filed in Minnesota by the plaintiffs,
Howard J. Polski and Sheryl L. Polski. The plaintiffs have made a product
liability claim involving our nasal spray product. The claim is being defended
by our insurance carrier at the present time. We believe the plaintiffs' claims
to be without merit and are vigorously contesting the claim. Based upon the
information available to us at this time, we believe that the action will not
have a material impact on us. However, at this time, no prediction as to the
outcome can be made.
WE ARE ENGAGED IN A LAWSUIT WITH THE FORMER PRESIDENT OF OUR WHOLLY OWNED
SUBSIDIARY, DARIUS INTERNATIONAL INC.
On April 12, 2002, we commenced a complaint in Equity in the Court of
Common Pleas of Bucks County, Pennsylvania against the former president of our
wholly owned subsidiary, Darius International Inc., following our termination of
him as president of Darius. The allegations in the complaint include, but are
not limited to, an alleged breach of his fiduciary duty to us. We are seeking
both injunctive and monetary relief. On or about May 1, 2002, the former
president of Darius filed a counterclaim requesting that the Court declare him
the lawful owner of 55,000 stock options, unspecified damages relating to an
10
alleged breach of an oral contract and for commissions allegedly owed. In
addition, he requested the return of certain intellectual property used to
commence and continue Darius' operations.
We believe the former president of Darius' claims are without merit, are
vigorously defending the counterclaims and are prosecuting the claims in our
complaint. Based upon the information we have at this time, we believe the
lawsuit will not have a material impact on us. However, at this time, no
prediction as to the outcome can be made.
A SUBSTANTIAL AMOUNT OF OUR OUTSTANDING COMMON STOCK IS OWNED BY OUR
CHAIRMAN OF THE BOARD AND PRESIDENT AND OUR EXECUTIVE OFFICERS AND DIRECTORS AS
A GROUP CAN SIGNIFICANTLY INFLUENCE ALL MATTERS VOTED ON BY OUR STOCKHOLDERS.
Guy J. Quigley, our Chairman of the Board, President and Chief Executive
Officer, through his beneficial ownership, has the power to vote approximately
32.4% of our common stock. Mr. Quigley and our other executive officers and
directors collectively beneficially own approximately 47.0% of our common stock.
These individuals have significant influence over the outcome of all matters
submitted to stockholders for approval, including election of directors.
Consequently, they exercise substantial control over all of our major decisions
which could prevent a change of control of us.
OUR STOCK PRICE IS VOLATILE.
The market price of our common stock has experienced significant
volatility. From January 1, 2002 to October 13, 2004, our per share bid price
has ranged from a low of approximately $2.03 to a high of approximately $11.12.
There are several factors which could affect the price of our common stock, some
of which are announcements of technological innovations for new commercial
products by us or our competitors, developments concerning propriety rights, new
or revised governmental regulation or general conditions in the market for our
products. Sales of a substantial number of shares by existing stockholders could
also have an adverse effect on the market price of our common stock.
FUTURE SALES OF SHARES OF OUR COMMON STOCK IN THE PUBLIC MARKET COULD
ADVERSELY AFFECT THE TRADING PRICE OF SHARES OF OUR COMMON STOCK AND OUR ABILITY
TO RAISE FUNDS IN NEW STOCK OFFERINGS.
Future sales of substantial amounts of shares of our common stock in the
public market, or the perception that such sales are likely to occur, could
affect prevailing trading prices of our common stock and, as a result, the value
of the notes. As of October 13, 2004, we had 11,636,786 shares of common stock
outstanding.
We recently issued 113,097 shares of our common stock to the selling
stockholders listed in this prospectus. We also have outstanding options to
purchase an aggregate of 2,167,500 shares of common stock at an average exercise
price of $5.52 per share and outstanding warrants to purchase an aggregate of
1,660,000 shares of common stock at an exercise price of $4.76 per warrant. If
the holders of these shares, options or warrants were to attempt to sell a
substantial amount of their holdings at once, the market price of our common
stock would likely decline. Moreover, the perceived risk of this potential
dilution could cause stockholders to attempt to sell their shares and investors
to "short" the stock, a practice in which an investor sells shares that he or
11
she does not own at prevailing market prices, hoping to purchase shares later at
a lower price to cover the sale. As each of these events would cause the number
of shares of our common stock being offered for sale to increase, the common
stock's market price would likely further decline. All of these events could
combine to make it very difficult for us to sell equity or equity-related
securities in the future at a time and price that we deem appropriate.
WE DO NOT INTEND TO PAY CASH DIVIDENDS IN THE FORESEEABLE FUTURE.
We have not paid cash dividends on our common stock since our inception.
We currently intend to retain earnings, if any, for use in our business and do
not anticipate paying any cash dividends to our stockholders in the foreseeable
future.
OUR ARTICLES OF INCORPORATION AND BY-LAWS CONTAIN CERTAIN PROVISIONS THAT
MAY BE BARRIERS TO A TAKEOVER.
Our Articles of Incorporation and By-laws contain certain provisions which
may deter, discourage, or make it difficult to assume control of us by another
corporation or person through a tender offer, merger, proxy contest or similar
transaction or series of transactions. These provisions may deter a future
tender offer or other takeover attempt. Some stockholders may believe such an
offer to be in their best interest because it may include a premium over the
market price of our common stock at the time. In addition, these provisions may
assist our current management in retaining its position and place it in a better
position to resist changes which some stockholders may want to make if
dissatisfied with the conduct of our business.
WE HAVE AGREED TO INDEMNIFY OUR OFFICERS AND DIRECTORS FROM LIABILITY.
Sections 78.7502 and 78.751 of the Nevada General Corporation Law allow us
to indemnify any person who is or was made a party to, or is or was threatened
to be made a party to, any pending, completed, or threatened action, suit or
proceeding because he or she is or was a director, officer, employee or agent of
ours or is or was serving at our request as a director, officer, employee or
agent of any corporation, partnership, joint venture, trust or other enterprise.
These provisions permit us to advance expenses to an indemnified party in
connection with defending any such proceeding, upon receipt of an undertaking by
the indemnified party to repay those amounts if it is later determined that the
party is not entitled to indemnification. These provisions may also reduce the
likelihood of derivative litigation against directors and officers and
discourage or deter stockholders from suing directors or officers for breaches
of their duties to us, even though such an action, if successful, might
otherwise benefit us and our stockholders. In addition, to the extent that we
expend funds to indemnify directors and officers, funds will be unavailable for
operational purposes.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-3 with the Securities and
Exchange Commission for the resale of the common stock being offered under this
prospectus. This prospectus does not contain all the information set forth in
the registration statement. You should refer to the registration statement and
its exhibits for additional information. Whenever we make references in this
prospectus to any of our contracts, agreements or other documents, the
12
references are not necessarily complete and you should refer to the exhibits
attached to the registration statement for the copies of the actual contract,
agreement or other document.
You should rely only on the information and representations provided or
incorporated by reference in this prospectus or any related supplement. We have
not authorized anyone else to provide you with different information. The
selling stockholders will not make an offer to sell these shares in any state
where the offer is not permitted. You should not assume that the information in
this prospectus or any supplement is accurate as of any date other than the date
on the front of each such document.
The Securities and Exchange Commission maintains an Internet site at
http://www.sec.gov, which contains reports, proxy and information statements,
and other information regarding us. You may also read and copy any document we
file with the Securities and Exchange Commission at its Public Reference Room,
450 Fifth Street, N.W., Washington, D.C. 20549. Please call the Securities and
Exchange Commission at 1-800-SEC-0330 for further information on the operation
of the Public Reference Room.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into this
prospectus contain forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, that are not historical facts but rather are
based on current expectations, estimates and projections about our business and
industry, our beliefs and assumptions. Words such as "anticipates", "expects",
"intends", "plans", "believes", "seeks", "estimates" and variations of these
words and similar expressions are intended to identify forward-looking
statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and other factors, some of which are
beyond our control, are difficult to predict and could cause actual results to
differ materially from those expressed or forecasted in the forward-looking
statements. These risks and uncertainties include those described in "Risk
Factors" beginning on page 2 and elsewhere in this prospectus and documents
incorporated by reference into this prospectus. You are cautioned not to place
undue reliance on these forward-looking statements, which reflect our
management's view only as of the date of this prospectus or as of the date of
any document incorporated by reference into this prospectus. We undertake no
obligation to update these statements or publicly release the results of any
revisions to the forward-looking statements that we may make to reflect events
or circumstances after the date of this prospectus or the date of any document
incorporated into this prospectus or to reflect the occurrence of unanticipated
events.
INCORPORATION BY REFERENCE
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with them, which means that we can disclose
important information to you by referring to those documents. The information we
incorporate by reference is considered to be a part of this prospectus and
information that we file later with the Securities and Exchange Commission will
automatically update and replace this information. We incorporate by reference
the documents listed below and any future filings we make with the Securities
13
and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended prior to the termination of this
offering:
(1) Our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
2004;
(2) Our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
2004;
(3) Our Annual Report on Form 10-K for the fiscal year ended December 31, 2003;
(4) Our Current Report on Form 8-K filed on October 13, 2004;
(5) Our Current Report on Form 8-K filed on October 7, 2004;
(6) Our Current Report on Form 8-K filed on August 20, 2004;
(7) Item 5 and Exhibit 99.1 of Item 7 of our Current Report on Form 8-K filed
on August 2, 2004;
(8) Our Current Report on Form 8-K filed on July 15, 2004;
(9) Our Current Report on Form 8-K filed on June 4, 2004;
(10) The description of our common stock contained in our registration statement
on Form 8-A filed on October 25, 1996, including any amendments or reports
filed for the purpose of updating such descriptions.
You may request a copy of these filings (excluding the exhibits to such
filings which we have not specifically incorporated by reference in such
filings) at no cost, by writing or telephoning us at:
The Quigley Corporation
Kells Building
631 Shady Retreat Road
Doylestown, Pennsylvania 18901
Attention: Chief Financial Officer
Tel. (215) 345-0919
USE OF PROCEEDS
The selling stockholders will receive all the proceeds from the sale of
our common stock under this prospectus. Accordingly, we will not receive any
part of the proceeds from the sale of our common stock under this prospectus.
SELLING STOCKHOLDERS
The following table sets forth the name of each of the selling
stockholders, the number of shares beneficially owned by each of the selling
stockholders, the number of shares that may be offered under this prospectus and
the number of shares of common stock owned by each of the selling stockholders
14
after the offering is completed. None of the selling stockholders has been an
officer, director or had any material relationship with us within the past three
years.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities.
Number of Common
Number of Number of Shares/Percentage
Common Shares Owned Common Shares to be of Class to Be Owned After
Prior to the Offering to be Offered Completion of the Offering
--------------------- ------------- --------------------------
Name
- ----
David B. Deck 27,500(1) 22,996 4,504(1)/0.0%
Cheryl K. Deck 22,996 22,996 0/0.0%
Sandra K. Sattazahn 37,699 37,699 0/0.0%
Andrew D. Deck 14,703 14,703 0/0.0%
Kristin L. Deck 14,703 14,703 0/0.0%
(1) Includes 4,504 shares of our common stock owned by JOEL, Inc. David B. Deck
holds voting and investment power over these shares owned by JOEL, Inc.
Our registration of the shares included in this prospectus does not
necessarily mean that each of the selling stockholders will opt to sell any of
the shares offered hereby. The shares covered by this prospectus may be sold
from time to time by the selling stockholders so long as this prospectus remains
in effect.
Each of the selling stockholders acquired shares of our common stock
pursuant to the closing on October 1, 2004 of our purchase of substantially all
of the assets of JOEL, Inc. and at the time of their receipt of our common
stock, none of the selling stockholders had any agreements or understandings
directly or indirectly with any person to distribute our common stock.
PLAN OF DISTRIBUTION
The selling stockholders and any of their pledgees, donees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. Subject to compliance with applicable law, the selling
stockholders may use any one or more of the following methods when selling
shares:
o ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
o 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;
o purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
o an exchange distribution in accordance with the rules of the applicable
exchange;
15
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, if available, rather than under this prospectus.
Broker-dealers engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The selling stockholders may from time to time pledge or grant a security
interest in some or all of the shares owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell shares of common stock from time to time under this prospectus,
or under an amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933 amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus.
Upon our being notified in writing by a selling stockholder that any
material arrangement has been entered into with a broker-dealer for the sale of
common stock through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act of 1933, disclosing (i) the name of each such selling stockholder
and of the participating broker-dealer(s), (ii) the number of shares involved,
(iii) the price at which such shares of common stock were sold, (iv) the
commissions paid or discounts or concessions allowed to such broker-dealer(s),
where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference in
this prospectus, and (vi) other facts material to the transaction.
The selling stockholders also may transfer the shares of common stock in
other circumstances, in which case the transferees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this
prospectus.
The selling stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933 in connection with such sales. In such
event, any commissions received by such broker-dealers or agents and any profit
on the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act of 1933. Each selling
16
stockholder has represented and warranted to us that he or she does not have any
agreement or understanding, directly or indirectly, with any person to
distribute the common stock.
We are required to pay all fees and expenses incident to the registration
of the shares. We have agreed to indemnify the selling stockholders against
certain losses, claims, damages and liabilities, including liabilities under the
Securities Act of 1933.
LEGAL MATTERS
The validity of the shares of common stock offered in this prospectus have
been passed upon by Olshan Grundman Frome Rosenzweig & Wolosky LLP, Park Avenue
Tower, 65 East 55th Street, New York, New York 10022.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to our Annual Report on Form 10-K for the fiscal year ended December
31, 2003 have been so incorporated in reliance on the report (which contains an
explanatory paragraph relating to the 2002 consolidated financial statements
being restated to revise the accounting for certain warrants as described in
Note 15 to the consolidated financial statements) of PricewaterhouseCoopers LLP,
an independent registered public accounting firm, given on the authority of said
firm as experts in auditing and accounting.
On July 8, 2004, we dismissed PricewaterhouseCoopers LLP as our
independent registered public accounting firm. On the same date, we engaged
Amper, Politziner & Mattia, P.C. as our independent registered public accounting
firm. The dismissal of PricewaterhouseCoopers LLP and engagement of Amper,
Politziner & Mattia, P.C. were approved by our Audit Committee.
The reports of PricewaterhouseCoopers LLP on our financial statements for
the past two fiscal years did not contain an adverse opinion or a disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principle, except for the 2003 fiscal year opinion, which contained a
reference for a restatement of the 2002 consolidated financial statements to
revise the accounting for certain warrants. During the two most recent fiscal
years and through July 8, 2004, there were no disagreements with
PricewaterhouseCoopers LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of PricewaterhouseCoopers
LLP, would have caused them to make reference to the subject matter of the
disagreement in connection with its reports on the financial statements for that
year. During the two most recent fiscal years and through July 8, 2004, there
were no reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K).
17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
- ------- -------------------------------------------
The following table sets forth the various expenses which will be paid by
the Company in connection with the securities being registered. With the
exception of the Securities and Exchange Commission registration fee, all
amounts shown are estimates.
SEC registration fee....................................................$ 130
Legal fees and expenses ................................................$ 25,000
Accounting Fees and Expenses............................................$ 28,000
Miscellaneous ........................................................$ 870
Total ....................................................$ 54,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
- ------- -----------------------------------------
The Company's By-laws authorize indemnification of directors and officers
as follows:
ARTICLE V - INDEMNIFICATION OF OFFICERS, DIRECTORS,
EMPLOYEES AND AGENTS
Section 1. The corporation shall indemnify any person who was or is a
party or threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 2. No officer, director or stockholder may become surety on behalf
of the corporation for any of its obligations under any circumstances
whatsoever.
In addition, Section 78.7502 of the Nevada General Corporation Law reads
as follows:
DISCRETIONARY AND MANDATORY INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES
AND AGENTS: GENERAL PROVISIONS.
II-1
1. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he:
(a) Is not liable [if it is proven that his act or failure to act did
not constitute a breach of his fiduciary duties as a director or officer
and his breach of those duties did not involve intentional misconduct,
fraud or a knowing violation of law]; or
(b) Acted in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent, does
not, of itself, create a presumption that the person is liable [since his act or
failure to act constituted a breach of his fiduciary duties as a director or
officer and his breach of those duties involved intentional misconduct, fraud or
a knowing violation of law] or did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
corporation, or that, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he:
(a) Is not liable [if it is proven that his act or failure to act did
not constitute a breach of his fiduciary duties as a director or officer
and his breach of those duties did not involve intentional misconduct,
fraud or a knowing violation of law]; or
(b) Acted in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue or matter as to which
such a person has been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable to the corporation or for
amounts paid in settlement to the corporation, unless and only to the extent
that the court in which the action or suit was brought or other court of
competent jurisdiction determines upon application that in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
II-2
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 1 and 2, or in defense of
any claim, issue or matter therein, the corporation shall indemnify him against
expenses, including attorneys' fees, actually and reasonably incurred by him in
connection with the defense.
Pursuant to the Registration Rights Agreement dated October 1, 2004 by and
among the Company and the selling stockholders in which we agreed to register
the resale of their shares of common stock with the Securities and Exchange
Commission, we will indemnify the selling stockholders against certain
liabilities, including liabilities under the Securities Act of 1933, and the
selling stockholders will indemnify us and our executive officers and directors
against certain liabilities, including liabilities under the Securities Act of
1933.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to any charter, provision, by-law, contract, arrangement,
statute or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable.
ITEM 16. EXHIBITS.
- ------- --------
Exhibit No. Description
4.1 Specimen Certificate of the Registrant's Common Stock
(incorporated by reference to Exhibit 4.1 of Form 10-KSB/A filed
on April 4, 1997).
4.2 Registration Rights Agreement dated as of October 1, 2004 by and
among the Registrant and the selling stockholders named therein
(incorporated by reference to Exhibit 10.5 of Form 8-K filed on
October 7, 2004).
5.1* Opinion of Olshan Grundman Frome & Rosenzweig LLP with respect
to legality of the Common Stock.
23.1** Consent of PricewaterhouseCoopers LLP, an independent registered
public accounting firm.
23.2* Consent of Olshan Grundman Frome Rosenzweig & Wolosky LLP,
included in Exhibit No. 5.1.
24.1** Power of Attorney, included on the signature page to this
Registration Statement.
-------
* To be filed by amendment.
** Filed herewith.
ITEM 17. UNDERTAKINGS.
- ------- ------------
(a) The undersigned registrant hereby undertakes:
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(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20% change
in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
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;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE
offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
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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
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Doylestown, state of Pennsylvania on the 14th day of
October, 2004.
THE QUIGLEY CORPORATION
(Registrant)
By: /s/ Guy J. Quigley
-------------------------------------------
Name: Guy J. Quigley
Title: President and Chief Executive Officer
POWER OF ATTORNEY
Know all men by these presents, that each person whose signature appears
below hereby constitutes and appoints Guy J. Quigley and George J. Longo his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Form S-3 and to file the
same, with exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Guy J. Quigley Chairman of the Board, October 14, 2004
- ------------------------- President, Chief Executive
Guy J. Quigley Officer and Director
(Principal Executive Officer)
/s/ Charles A. Phillips Executive Vice President, October 14, 2004
- ------------------------- Chief Operating Officer
Charles A. Phillips and Director
/s/ George J. Longo Vice President, Chief Financial October 14, 2004
- ------------------------- Officer and Director (Principal
George J. Longo Financial and Accounting Officer)
/s/ Jacqueline F. Lewis Director October 14, 2004
- -------------------------
Jacqueline F. Lewis
/s/ Rounsevelle W. Schaum Director October 14, 2004
- -------------------------
Rounsevelle W. Schaum
/s/ Stephen W. Wouch Director October 14, 2004
- -------------------------
Stephen W. Wouch
/s/ Terrence O. Tormey Director October 14, 2004
- -------------------------
Terrence O. Tormey
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