As filed with the Securities and Exchange Commission on June 7, 2001
Registration Statement No. 333-61054
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM S-3/A
(AMENDMENT NO. 2)
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
______________________
BRITESMILE, INC.
(Exact name of registrant as specified in its charter)
______________________
UTAH 87-0410364
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
490 North Wiget Lane
Walnut Creek, CA 94598
(925) 941-6260
(Address, including zip code, and
telephone number, including area code,
of registrant's principal
executive offices)
_______________________
PETER HAUSBACK
CHIEF FINANCIAL OFFICER
BriteSmile, Inc.
490 North Wiget Lane
Walnut Creek, CA 94598
(925) 941-6260
(Name, address, including zip code, and
telephone number, including area code,
of agent for service)
COPY TO:
JEFFREY M. JONES, ESQ.
WAYNE D. SWAN, ESQ.
DURHAM JONES & PINEGAR, P.C.
BROADWAY CENTRE, SUITE 900
111 EAST BROADWAY
SALT LAKE CITY, UTAH 84111
(801) 415-3000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: from time to
time after the effective date of this Registration Statement as determined by
market conditions.
i
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, 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
================================================================================
Proposed Proposed
Maximum Maximum
Title of Class of Amount Offering Aggregate Registration
Securities To be Price Fee
to be Registered Registered Per Share Price
--------------------------------------------------------------------------------
Common Stock, 5,371,428 shares $9.52 (1) $51,135,995 (1) $12,784
$0.001 par value
per share
Common Stock, 537,143 shares(2) $9.52 (3) $ 5,113,601 (3) $ 1,278
$0.001 par value
per share
Totals 5,908,571 shares $ 56,249,596 $14,062
--------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) on the basis of the average high and low sale price of the
common stock on the Nasdaq National Market on May 9, 2001.
(2) Shares issuable upon exercise of warrants issued to placement agent at
exercise price of $5.25 per share in connection with private placement of
$28,200,000 of restricted common stock.
(3) Calculated pursuant to Rule 457(g).
Pursuant to Rule 416, there are also registered hereby such additional
indeterminate number of shares of such Common Stock as may become issuable as
dividends or to prevent dilution resulting from stock splits, stock dividends or
similar transactions.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a)
OF THE ACT, MAY DETERMINE.
==============================================================================
ii
Prospectus Subject to Completion, Dated June 7, 2001
The information in this prospectus is not complete, and it may change. This
prospectus is included in a registration statement that BriteSmile filed with
the Securities and Exchange Commission. The selling shareholders cannot sell
these securities until that registration statement becomes effective. This
prospectus is not an offer to sell these securities or the solicitation of an
offer to buy these securities in any state where an offer to sell or the
solicitation of an offer to buy is not permitted.
[LOGO]
BriteSmile, Inc.
5,908,571 Shares
Common Stock
This prospectus relates to the public offering of 5,908,571 shares of our
common stock that may be resold from time to time by the selling shareholders
named in this prospectus.
Our common stock is quoted on the Nasdaq National Market and trades under
the symbol "BSML". The last reported sale price for the common stock on May 9,
2001 on the Nasdaq National Market was $9.34 per share.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. YOU SHOULD CAREFULLY REVIEW
THE RISK FACTORS BEGINNING ON PAGE 4 FOR A DISCUSSION OF THINGS YOU SHOULD
CONSIDER BEFORE BUYING SHARES OF OUR COMMON STOCK. YOU SHOULD BE PREPARED TO
ACCEPT ALL OF THE RISKS ASSOCIATED WITH PURCHASING THE SHARES, INCLUDING A LOSS
OF YOUR INVESTMENT.
____________________
The Securities and Exchange Commission and state securities regulators have
not approved or disapproved the shares, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
June __, 2001
Table of Contents
Table of Contents................................................... 2
-----------------
Summary............................................................. 3
Risk Factors........................................................ 4
------------
Explanation About Forward-Looking Information....................... 9
---------------------------------------------
Use of Proceeds..................................................... 9
---------------
Dividend Policy..................................................... 9
Selling Shareholders................................................ 10
--------------------
Plan of Distribution................................................ 12
--------------------
Legal Matters....................................................... 13
-------------
Experts............................................................. 14
SEC Position on Indemnification..................................... 14
-------------------------------
Where You Can Find More Information................................. 14
-----------------------------------
The terms "company," "BriteSmile," "we," "us," and "our" in this prospectus
refer to BriteSmile, Inc.
We have not authorized any person to provide you with information that differs
from what is in this prospectus. If anyone provides you with different or
inconsistent information, you should not rely on it. The selling shareholders
are not making an offer to sell these securities in any jurisdiction where the
offer or sale is not permitted. You should assume that the information appearing
in this prospectus is accurate as of the date on the front cover of this
prospectus only. Our business, financial condition, results of operations and
prospects may have changed since that date.
_____________________
2
Summary
This summary highlights selected information and does not contain all of
the information that is important to you. We urge you to read the entire
prospectus carefully and any information contained in or incorporated by
reference in this prospectus before you decide whether to buy our common stock.
You should pay special attention to the risks of investing in our common stock
discussed under "Risk Factors."
BriteSmile
We develop, produce, sell and lease advanced teeth whitening products,
services and technology. Our operations include the development of
technologically advanced teeth whitening processes that are distributed in
professional salon-like settings known as BriteSmile Professional Teeth
Whitening Centers, and in existing dental offices known as BriteSmile
Professional Teeth Whitening Associated Centers.
We offer consumers a new, simple and safe way to return teeth to their
optimal natural whiteness in just one visit to a BriteSmile Center or BriteSmile
Associated Center. The BriteSmile teeth whitening system uses a combination of
our proprietary gas plasma light technology and wavelength specific gel. The
power level is well below that used in other bleaching systems, resulting in
greater comfort to consumers without sacrificing the speed of the whitening
process. Our unique fiberoptic delivery arm permits blue-green light to reach
all 16 front teeth simultaneously, whitening the teeth by activating the
wavelength specific gel, which is applied to the teeth during three consecutive
twenty-minute sessions. Including the time necessary for initial customer
evaluation and consultation, prep work and clean up, the customer can complete
an entire teeth whitening visit in approximately 90 minutes.
As of March 1, 2001, we had 14 centers operating in the following
locations: Beverly Hills, Irvine, Walnut Creek, Palo Alto and La Jolla, CA;
Chicago, IL; Phoenix, AZ; Boca Raton, FL; Honolulu, HI; Atlanta, GA; Houston,
TX; Denver, CO; Boston, MA; and New York, NY. We have also contracted with
dentists to operate approximately 1,800 associated centers, of which 1,383 are
in operation throughout the United States and around the world in countries
including Argentina, Belgium, France, Italy, Japan, the Netherlands, Singapore
and Switzerland. We plan to open additional associated centers in the United
States and in select foreign locations in the future.
In addition to our services, we also sell BriteSmile brand post-whitening
maintenance products, including toothpaste and electric toothbrushes, to
consumers in centers, associated centers, and on our e-Commerce Internet site.
We are currently developing other BriteSmile brand post-whitening products,
including mouthwash, toothbrushes, chewing gum, travel kits and breath mints.
We were incorporated in Utah in 1984 under the name Ion Laser Technology,
Inc. In 1998 we changed our name to BriteSmile, Inc. Our principal executive
office is located at 490 North Wiget Lane, Walnut Creek, CA 94598. Our
telephone number at that office is (925) 941-6260).
This Offering
The selling shareholders are offering 5,908,571 shares of common stock
under this prospectus. The selling shareholders acquired these shares in a
private placement that was completed on April 30, 2001. In connection with that
offering, we sold the selling shareholders 5,371,428 shares of common stock for
$5.25 per share, or total proceeds of $28,200,000. In addition, we paid a fee
to our placement agent for the offering consisting of cash compensation of
$1,410,000 and warrants to purchase a total of 537,143 shares of common stock
for a per share exercise price of $5.25. Because these securities were issued
in reliance upon exemptions from the registration requirements of the Securities
Act, they are restricted securities, meaning that they cannot be resold in the
absence of registration or an available exemption from registration under the
Securities Act and applicable state securities laws.
3
We granted the investors and the placement agent in the private offering
registration rights with respect to the common stock issued in the private
placement and the shares to be issued upon exercise of the placement agent's
warrants. Under the registration rights granted to the private placement
investors and the placement agent, we agreed to register these securities with
the SEC within 20 days from the closing date of April 30, 2001.
Risk Factors
An investment in our common stock involves a high degree of risk. You
should carefully consider the risks described below in addition to the other
information presented in this prospectus or incorporated by reference into this
prospectus before deciding to invest in our common stock. The risks and
uncertainties described below are not the only ones facing BriteSmile.
Additional risks and uncertainties not presently known to us or that we
currently deem immaterial may also impair our business operations. If any of
the following risks actually occur, our business, financial condition, or
results of operations could be materially adversely affected. As a result, the
market price of our common stock could decline, and you may lose all of your
investment.
We have a limited operating history upon which to evaluate our likelihood
of success.
We have only manufactured and distributed our BS2000 light-activated teeth
whitening technology ("LATW") since November 1998. In November 1999, we
introduced our BS3000 keycard system into our associated centers. The BS3000 is
a compact and mobile version of the BS2000. We opened our first BriteSmile
Center in Walnut Creek, California in February 1999, and BriteSmile Associated
Centers began performing teeth whitening procedures in April 1999. Therefore,
we have a limited relevant operating history upon which to evaluate the
likelihood of our success. You must evaluate the likelihood of our success in
light of the risks, expenses and difficulties frequently encountered in the
operation and expansion of a new business and the development and marketing of
new products. We cannot be certain that our business strategy will be
successful or that we will successfully address these risks and difficulties.
Our failure to address any of these risks or difficulties could have a material
adverse effect on our business.
We have a history of losses and accumulated deficit and this trend of
losses may continue in the future.
In 2000, we adopted a 52/53-week (4 week - 4 week - 5 week quarter) fiscal
calendar and changed our fiscal year end from March to December of each year.
For the Transition Period beginning April 2, 2000 and ended December 30, 2000,
we had a net loss of approximately $44,000,000 and for the full fiscal year
ended April 1, 2000 we had a net loss of approximately $23,500,000. As of
December 30, 2000, our accumulated deficit was approximately $89,300,000. Our
ability to reach and sustain profitability will depend, in part, upon the
successful marketing of our existing services and products and the successful
and timely introduction of new services and products. We anticipate that net
losses will continue for the foreseeable future. We cannot assure you that we
will achieve profitability or, if achieved, that we will sustain profitability.
Our success will depend on acceptance of our LATW process and post-
whitening maintenance products.
We derive approximately 93% of our revenues from our LATW procedures, a
relatively new teeth whitening concept for consumers. We have also begun to
market BriteSmile brand toothpaste, electric toothbrushes and post-whitening
procedure touchup kits through our centers and associated centers. Product
sales were approximately 7% of total revenues in the 39-week Transition Period
ended December 30, 2000. We expect to add other oral care accessories under the
BriteSmile brand name to our line of retail products, including mouthwash,
toothbrushes, chewing gum, travel kits and breath mints. Our success will
depend in large part on our ability to successfully encourage consumers,
dentists and dental office employees to switch from traditional and less
expensive bleaching tray whitening methods to our LATW system, and on our
ability to successfully market our line of post-whitening maintenance products.
There can be no assurance that consumers will accept our procedure or products.
Typically, medical and dental insurance policies do not cover teeth whitening
procedures, including our LATW procedure, or whitening maintenance products,
which may have an adverse impact upon the market acceptance of our products and
services.
4
Our success will depend on our ability to update our technology to remain
competitive.
The dental device and supply industry is subject to rapid technological
change. As technological changes occur in the marketplace, we may have to modify
our products in order to become or remain competitive or to ensure that our
products do not become obsolete. While we are continuing our research and
development efforts to improve our current LATW systems in order to strengthen
our competitive advantage, we cannot assure you that we will successfully
implement design or technological improvements to our LATW systems on a timely
basis, or at all. If we fail to anticipate or respond in a cost-effective and
timely manner to government requirements, market trends or customer demands, or
if there are any significant delays in product development or introduction, our
revenues and profit margins may decline which could adversely affect our cash
flows, liquidity and operating results.
We may have problems financing our future growth.
Our growth strategy includes investment in and expansion of our centers and
associated centers throughout the United States and internationally, increasing
awareness of the BriteSmile brand and developing and marketing our brand name
retail products. To finance our prior growth we have sold debt and equity
securities; however, additional funds are needed in the future for continued
expansion. We cannot assure you that additional financing will be available or
that, if available, it will be on terms favorable to our shareholders or us. If
needed funds are not available, we may be required to close existing centers,
and/or limit or forego the establishment of new centers or associated centers
and the development of new products, or limit the scope of our current
operations, which could have a material adverse effect on our business,
operating results and financial condition. We may be required to take other
actions that may reduce the market price of our common stock, including
borrowing money on terms that are not favorable to us.
We may not be able to effectively compete with our competition.
The market for teeth whitening products and services is highly competitive.
Competition in the market for teeth whitening products and services may
intensify in the future. Numerous well-established companies and smaller
entrepreneurial companies are focusing significant resources on developing and
marketing products and services that will compete with our products and
services. In addition, many of our current and potential competitors have
greater financial, technical, operational and marketing resources. Teeth
whitening products and services offered by our competitors include traditional
and often less expensive bleaching tray methods and other forms of heat or light
activated curing methods. We may not be able to compete successfully against
these competitors in developing, marketing and distributing our services and
products, which could result in the loss of customers and could have a material
adverse effect on our business. Competitive pressures may also force prices for
teeth whitening services down and those price reductions may adversely affect
our potential future revenue.
We are susceptible to product liability suits and if a lawsuit is brought
against us it could result in us having to pay large legal expenses and/or
judgments.
Although no lawsuits have been filed against BriteSmile relating to our
products or services, because of the nature of the dental device industry, there
can be no assurance that we will not be subject to that type of claims in the
future. Our products come into contact with vulnerable areas of the human body,
such as the mouth, tongue, teeth and gums, and, therefore, the sale and support
of dental products makes us susceptible to the risk of claims for injuries. A
successful product liability claim or claim arising as a result of use of our
products or services brought against us, or the negative publicity brought up by
these types of claims, could have a material adverse effect on our business. We
maintain product liability insurance with coverage limits of $5,000,000 per
occurrence and $5,000,000 per year. Although we believe that we maintain
adequate insurance coverage that is reasonable and customary for our business,
we cannot assure that the amount of insurance will be adequate to satisfy claims
made against us in the future, or that we will be able to obtain insurance in
the future at satisfactory rates or in adequate amounts.
5
Future growth may place strains on our managerial, operational and
financial resources and we may be unable to recruit and retain qualified
personnel.
If we grow as expected, a significant strain on our managerial, operational
and financial resources may occur. Further, as the number of our centers,
associated centers, customers, advertisers and other business partners grows, we
will be required to manage multiple relationships with various associated center
dentists, customers, strategic partners and other third parties. Future growth
or increase in the number of our strategic relationships may strain our
managerial, operational and financial resources, thereby inhibiting our ability
to achieve the rapid execution necessary to successfully implement our business
plan. In addition, our future success will also depend on our ability to expand
our sales and marketing organization and our support organization commensurate
with the growth of our business.
We may experience shortages of the supplies we need because we do not have
long-term agreements with suppliers.
Our success depends to a significant degree on our ability to provide our
affiliated dentists with our LATW systems, and a sufficient supply of teeth
whitening gels and maintenance products. Since our BS2000 was first used
commercially, we have relied upon manufacturing and supply agreements with
multiple suppliers and a single manufacturer of our LATW systems, Boyd
Industries in Tampa Florida. Since April 2001, our LATW systems have been
manufactured by Peak Industries, Frederick, Colorado, under a new agreement
between BriteSmile and Peak. Excimer Vision Leasing L.P. will finance our
purchase of the LATW systems, and will then lease the LATW systems to us under a
$15,000,000 Lease Line Agreement. This change in manufacturers may initially
result in delays between the date of final shipments of LATW devices produced by
prior manufacturer, and shipments of LATW devices manufactured by Peak. Those
delays could delay receipt of revenues from associated centers that receive
systems from the new manufacturer. We have no long-term purchase contracts or
other contractual assurance of continued supply, pricing or access to new
products. While we believe that we have good relationships with our suppliers
and our manufacturer, if we are unable to extend or secure manufacturing
services or to obtain component parts or finished products from one or more key
vendors on a timely basis and on acceptable commercial terms, our results of
operations could be seriously harmed.
We need to successfully manage our growth in order for the addition of any
new BriteSmile Centers and BriteSmile Associated Centers to be profitable.
Although we have grown significantly in the past two years in terms of
numbers of centers and associated centers opened and in operation, we may not be
able to achieve profitable operations at these centers. We currently have 14
centers in operation. We have no current plans to open additional centers.
Successful introduction of any new centers is subject to, among other things,
securing suitable sites on satisfactory terms, hiring, training and retaining
qualified dentists, support staff and other personnel, having adequate capital
resources and successfully integrating new centers into existing operations. It
is possible that any new centers, if opened, will not achieve sales levels
comparable to existing centers. Our future growth depends primarily upon
expansion of the number of our associated centers. We cannot assure you that we
will be successful in expanding the number of associated centers, or that these
new associated centers will achieve sales levels satisfactory to us.
A large volume of resales of our common stock that has been issued
privately or on the exercise of warrants and subsequent resales of those
shares may result in downward pressure or increased volatility in the
trading price of our common stock.
Because we have registered for resale the shares of common stock issued
upon the conversion in December 2000 of $19,200,000 principal amount of notes
originally issued in June and August 2000, and registered for resale the shares
of common stock issuable upon the exercise of the warrants granted in June and
August 2000 in connection with the sale of those notes, and the shares covered
by this prospectus, the holders thereof who are not in positions of control
6
or management with BriteSmile may sell without regard to any volume
restrictions, including the volume restrictions set forth in Rule 144
promulgated under the Securities Act. As a result, resales by the holders of
that stock could lead to an excess supply of shares of our common stock in the
market, which could, in turn, result in downward pressure or increased
volatility in the trading price of our common stock.
We cannot guarantee that the patents we have applied for will be granted,
or that even if granted, competitors will not infringe them.
We have filed a number of patent applications related to the LATW system
which are currently pending, including patent applications related to the
composition of our whitening gel, methods of whitening teeth with light tissue
isolation barriers, our business method and our unique system of delivery of
light to all teeth simultaneously through our gas-plasma light activating
device. In January 2001, patents were issued to BriteSmile related to a method
for light-activated tooth whitening, and a design for a device that provides
light to teeth for whitening procedures. In addition, we have ongoing research
and development efforts to improve and expand our current technology, and to
develop new teeth whitening compositions and light devices. Although we intend
to continue to apply for patents as advised by patent counsel, we cannot assure
you that additional patents will be issued or that, if they are issued, any new
patents or our existing patents will not be infringed upon by third parties or
that they will cover all aspects of the product or system to which they relate.
If we are unable to protect our intellectual property rights, this
inability could weaken our competitive position, reduce our revenue and
increase our costs.
In addition to patents, we rely on a combination of trade secrets,
copyright and trademark laws, nondisclosure agreements and other contractual
provisions and technical measures to protect our intellectual property rights.
These measures may not be adequate to safeguard the technology underlying our
products and services. If they do not protect our rights, third parties could
use our technology, and our ability to compete in the market would be reduced.
In addition, employees, consultants and others who participate in the
development of our products and services may breach their agreements with us
regarding our intellectual property, and we may not have adequate remedies for
the breach. We also may not be able to effectively protect our intellectual
property rights in some foreign countries. For a variety of reasons, we may
decide not to file for additional patent, copyright or trademark protection
outside of the United States or in foreign jurisdictions. We also realize that
our trade secrets may become known through other means not currently foreseen by
us. Notwithstanding our efforts to protect our intellectual property, our
competitors may independently develop similar or alternative technologies or
products that are equal or superior to our technology and products without
infringing on any of our intellectual property rights or design around our
proprietary technologies.
Our products or services could infringe on the intellectual property rights
of others, which may cause us to engage in costly litigation and, if we are
not successful, could also cause us to pay substantial damages and prohibit
us from selling our products or services.
Third parties may assert infringement or other intellectual property claims
against us. We may have to pay substantial damages, including treble damages,
for past infringement if it is ultimately determined that our products or
services infringe a third party's proprietary rights. Further, we may be
prohibited from selling our products before we obtain a license, which, if
available at all, may require us to pay substantial royalties. Even if these
claims are without merit, defending a lawsuit takes significant time, may be
expensive and may divert management's attention from other business concerns.
Notwithstanding the foregoing, we are not aware of any infringement or other
intellectual property claims asserted or threatened against us by others.
We are subject to government regulation regarding the corporate practice of
dentistry.
Our corporate structure, operation of centers and contractual relationships
with the licensed dentists at our centers are subject to government regulation
and may be reviewed by applicable state agencies governing the practice of
7
dentistry (such as a Board of Dental Examiners). We believe that our present
and contemplated operation of centers is and will be in compliance in all
material respects with applicable federal, state and local laws and regulations,
and that favorable review of our corporate structure would be obtained from any
state agency which chooses to review our operational structure. However, we
cannot assure you that favorable review would be obtained in all instances. If
we are unable to obtain favorable review, we may be subject to penalties.
Further, if we are unable to comply with the applicable laws and regulations in
any state, we may be limited in those states to offering our LATW procedure
through associated centers. We continue to cooperate with state regulatory
agencies to respond to any requests for information about our business structure
and to obtain any necessary governmental approvals. We cannot assure you that
future enactments, amendments or interpretations of government regulations will
not be more stringent, and will not require structural, organizational or
operational modifications to our existing or future contractual relationships
with the licensed dentists at our centers who provide our services.
We may become subject to government regulation regarding our teeth
whitening services and products.
The light used in the LATW systems is categorized as a Class I Medical
Device as defined by the Food and Drug Administration. As long as the light is
used specifically to perform cosmetic dental procedures (teeth whitening), it is
not subject to pre-market notification requirements, although we are subject to
FDA requirements regarding handling of complaints and other general FDA record
keeping standards. We cannot assure you that some or all of the existing
government regulations will not change significantly or adversely in the future,
or that we will not become subject to compliance with additional and stricter
government regulations which could, in the future, affect our potential future
revenue.
Ownership of our common stock is concentrated in a limited number of
shareholders.
Current directors and executive officers of BriteSmile, or their
affiliates, own and control approximately 67% of our common stock and,
therefore, have ultimate authority to make all major decisions affecting our
business, including the identity and make-up of our Board of Directors, and any
other matters requiring approval of the shareholders.
Our efforts to build strong brand identity and customer loyalty may not be
successful.
We believe that establishing and maintaining brand identity and brand
loyalty is critical to attracting customers, dentists and other strategic
partners. In order to attract and retain these groups, and respond to
competitive pressures, we intend to continue substantial spending to create and
maintain brand loyalty. We believe that advertising rates, and the cost of
advertising campaigns in particular, could increase substantially in the future.
If our branding efforts are not successful, our results of operations could be
adversely affected.
Promotion and enhancement of the BriteSmile brand will also depend on our
success in consistently providing a high-quality customer experience for our
teeth whitening services and satisfaction with our products. If customers do
not perceive our service and product offerings to be of high quality, or if we
introduce new services and products that are not favorably received by these
groups, the value of the BriteSmile brand could be harmed. Any brand impairment
or dilution could decrease the attractiveness of BriteSmile to one or more of
these groups which could harm our reputation, reduce our net revenue and cause
us to lose customers.
Failures in our information technology systems or the systems of third
parties could adversely affect our business and result in a loss of
customers.
Our web site or our Internet-based scheduler system may experience slow
response times, decreased capacity to accommodate a large number of customers or
a temporary disruption in service for a variety of reasons. Additionally, power
outages and delays in these services may interrupt or prevent us from
immediately coordinating with the schedules of centers and associated centers,
and may interrupt or prevent customers from arranging for our services or
8
from ordering our products through our e-Commerce Internet site. Any of these
potential problems could have an adverse effect on business.
Computer hardware and software components to our scheduler system are
located at our headquarters. In addition, a back-up file server and tape back-
ups of the scheduler database reside both at our headquarters and off-site.
Delays in scheduling teeth whitening procedures would result if we were required
to use our backup computer hardware and software systems. Nevertheless, natural
disasters such as floods, fires, and power outages, telecommunications failures,
physical or electronic break-ins or vandalism, viruses and other similar events
could damage our hardware and software systems, lead to a loss of data, cause
substantial disruption in our business operations, and have a material adverse
effect on our business.
Explanation About Forward-Looking Information
This prospectus, including information contained in documents that are
incorporated by reference in this prospectus, contains "forward-looking
statements," as that term is defined by federal securities laws, that relate to
the financial condition, results of operations, plans, objectives, future
performance and business of BriteSmile. These statements are frequently
preceded by, followed by or include the words "believes," "expects,"
"anticipates," "estimates" or similar expressions. We have based these forward-
looking statements on our current expectations and projections about future
events. These forward-looking statements are not guarantees of future
performance and are subject to risks, uncertainties and assumptions, including,
among other things:
. Anticipated trends in our business, including consumer acceptance of and
willingness to pay for teeth whitening services;
. Adequacy of our management and infrastructure to manage growth in sales
and locations;
. Deployment of additional centers at new locations and increasing sales at
existing locations;
. Securing capital for future acquisitions and growth; and
. Adaptation to changes in the regulatory environment.
In addition to these risks, in the section of the prospectus entitled
"Risk Factors" we have summarized a number of the risks and uncertainties that
could affect the actual outcome of the forward-looking statements included in
this prospectus. We advise you not to place undue reliance on these forward-
looking statements in light of the material risks and uncertainties to which
they are subject. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Use of Proceeds
The shares of common stock being offered are solely for the accounts of the
selling shareholders. BriteSmile will not receive any proceeds from the sale of
the common stock.
Dividend Policy
We have never paid cash dividends on our common stock. We intend to retain
future earnings, if any, for use in the operation and expansion of our business
and do not anticipate paying any cash dividends in the foreseeable future.
9
The declaration and payment of dividends are subject to the discretion of our
board of directors. In addition, it is possible that any debt financing
agreements entered into in the future may contain restrictions on our ability to
declare dividends with respect to our common stock.
10
Selling Shareholders
The table below lists the selling shareholders and other information
regarding the actual or potential beneficial ownership of our common stock by
each of the selling shareholders as of May 11, 2001. Of the 5,908,571 shares of
common stock offered by the selling shareholders, 537,143 shares are issuable
upon the exercise of warrants issued to the private placement agent.
The second column of the table sets forth the number of shares beneficially
held by each selling shareholder on May 11, 2001, including the number of shares
that would have been held by the placement agent on May 11, 2001 upon conversion
of all of the warrants. The information provided in this table has been obtained
from the selling shareholders.
Shares Owned by Percentage of
or Issuable to Shares Owned Shares
Selling Beneficially Beneficially
Shareholder Prior Shares Offered After this Owned After the
Name of Selling Shareholders to Offering (1) Hereby Offering Offering
---------------------------------------------- ----------------- -------------- ------------ ---------------
Erinch R. Ozada, IRA Rollover................. 100,000 100,000 - -
Eric Erdinch Ozada............................ 7,000 7,000 - -
Eric E. Ozada Irrev. Trust.................... 5,000 5,000 - -
Joyce E. Heinzerling.......................... 3,750 3,750 - -
Pharos Fund Limited........................... 325,850 325,850 - -
Lighthouse Partners (USA) LP.................. 80,250 80,250 - -
Lighthouse Investment Fund.................... 29,580 29,580 - -
Mary Kathryn Norman........................... 19,000 19,000 - -
H. Kenneth Jackier............................ 1,000 1,000 - -
Ascend Partners, LP........................... 67,103 54,286 12,817 *
Ascend Partners Sapient, LP................... 12,744 10,667 2,077 *
Ascend Offshore Fund.......................... 207,848 173,142 34,706 *
Bonanza Partners, Ltd......................... 68,047 19,047 49,000 *
Federal Partners, L.P......................... 900,000 900,000 - -
Gryphon Master Fund, L.P...................... 223,809 223,809 - -
North Olmsted Partners, LP.................... 223,800 223,800 - -
Narragansett I, LP............................ 34,000 34,000 - -
Narragansett Offshore, Ltd.................... 66,000 66,000 - -
Firstar Bank N.A. fbo The Perkins Opportunity
Fund......................................... 130,000 130,000 - -
Piper Jaffray Healthcare Fund III, L.P........ 380,953 380,953 - -
Rainbow Trading Corporation................... 95,238 95,238 - -
RS Diversified Growth......................... 402,700 350,500 52,200 *
RS Microcap Growth............................ 165,829 65,829 100,000 *
The Paisley Pacific Fund...................... 129,200 120,500 8,700 *
The Paisley Fund, L.P......................... 38,000 34,600 3,400 *
White Rock Capital Partners, L.P.............. 149,356 142,856 6,500 *
Thomas U. Barton.............................. 9,524 9,524 - -
Joseph U. Barton.............................. 9,524 9,524 - -
Tex Rock, Ltd................................. 28,572 28,572 - -
Scott R. Griffith SEP IRA (2)................. 276,385 276,385 - -
Jesse B. Shelmire IV (3)...................... 276,385 276,385 - -
Richard F. Dahlson............................ 9,524 9,524 - -
SMALLCAP World Fund, Inc...................... 962,000 962,000 - -
11
Shares Owned by Percentage of
or Issuable to Shares Owned Shares
Selling Beneficially Beneficially
Shareholder Prior Shares Offered After this Owned After the
Name of Selling Shareholders to Offering (1) Hereby Offering Offering
---------------------------------------------- ----------------- -------------- ------------ ---------------
American Funds Insurance Series-Global
Small Capitalization Fund..................... 180,000 180,000 - -
Putnam Variable Trust-Putnam VT Small Cap
Value Fund................................... 79,300 79,300 - -
Putnam Investment Funds-Putnam Small Cap
Value Fund................................... 301,652 301,652 - -
Andrew W. May (3)............................. 188,048 179,048 9,000 *
--------------
5,908,571
_____________________
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to
securities, subject to community property laws where applicable. Shares of
common stock that a person has the right to acquire within 60 days of May
25, 2001 through the conversion or exercise of any security or other right
are deemed to be beneficially owned by the person holding those securities
or rights. Except as indicated in the footnotes to this table and as
provided pursuant to applicable community property laws, the shareholders
named in the table have sole voting and investment power with respect to
the shares set forth opposite each shareholder's name.
(2) Includes 179,047 shares issuable upon exercise of warrants to purchase
common stock.
(3) Includes 179,048 shares issuable upon exercise of warrants to purchase
common stock.
Plan of Distribution
We are registering the resale of shares of common stock on behalf of the
selling shareholders. The selling shareholders or, subject to applicable law
and the registration rights granted to them in connection with the private
placement of the shares, their transferees, may offer and resell the shares from
time to time, either in increments or in a single transaction. They may also
decide not to sell all of the shares they are allowed to resell under this
prospectus. The selling shareholders will act independently of us in making
decisions with respect to the timing, manner and size of each sale.
The selling shareholders may sell the shares in one or more types of
transactions:
. on the Nasdaq National Market;
. in negotiated transactions;
. in ordinary brokers' transactions;
. in transactions involving cross or block trades or otherwise on the
Nasdaq National Market;
. in purchases by brokers, dealers or underwriters as principal and resale
by those purchasers for their own accounts under this prospectus;
12
. "at the market" to or through market makers or into an existing market
for the common stock;
. in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected through
agents;
. through transactions in options, swaps or other derivatives (whether
exchange-listed or otherwise); or
. to cover short sales.
The shares may be sold at market prices prevailing at the time of sale, or
at negotiated prices. These transactions may or may not involve brokers or
dealers. In effecting sales, brokers or dealers engaged by the selling
shareholders may arrange for other brokers or dealers to participate in the
resales. The selling shareholders may enter into hedging transactions with
broker-dealers, and in connection with those transactions, broker-dealers may
engage in short sales of the shares. The selling shareholders also may sell
shares short and deliver the shares to close out such short positions. The
selling shareholders also may enter into option or other transactions with
broker-dealers that require the delivery to the broker-dealer of the shares,
which the broker-dealer may resell pursuant to this prospectus. The selling
shareholders also may pledge the shares to a broker-dealer or financial
institution, and upon a default, the broker-dealer or financial institution may
effect sales of the pledged shares pursuant to this prospectus.
Brokers, dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling shareholders in amounts to be
negotiated in connection with the sale. The selling shareholders and any
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales and any such
commission, discount or concession may be deemed to be underwriting
compensation. The selling shareholders will pay all brokerage commissions and
similar selling expenses, if any, attributable to the sale of the shares.
We have agreed to indemnify each selling shareholder against liabilities
that may arise in connection with the registration, offer and sale of the
shares, including liabilities arising under the Securities Act. The selling
shareholders also may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of shares against liabilities that
may arise in connection with the registration, offer and sale of the shares,
including liabilities under the Securities Act. See, however, the information
describing the position of the SEC concerning indemnification for liabilities
under the Securities Act in the section captioned "SEC Position on
Indemnification," on page 14 of this prospectus.
Information as to whether underwriters who the selling shareholders may
select, or any other broker-dealer, is acting as principal or agent for the
selling shareholders, the compensation to be received by underwriters that the
selling shareholders may select or by any broker-dealer acting as principal or
agent for the selling shareholders, and the compensation to be paid to other
broker-dealers, in the event the compensation of such other broker-dealers is in
excess of usual and customary commissions, will, to the extent any such
information exists or is required, be set forth in a supplement to this
prospectus. The supplement will disclose:
. the name of each applicable selling shareholder and of the participating
broker-dealers,
. the number of shares involved,
. the price at which those shares are sold,
. the commissions paid or discounts or concessions allowed to those
broker-dealers, where applicable,
. that the broker-dealers did not conduct any investigation to verify the
information in this prospectus, and
13
. any other facts material to the transaction.
Because they may be deemed to be underwriters, the selling shareholders and
any dealer or broker participating in any distribution of the shares may be
required to deliver a copy of this prospectus, including a prospectus
supplement, if any, to any person who purchases any of the shares from or
through that dealer or broker. This might include delivery through the
facilities of the Nasdaq National Market in accordance with Rule 153 of the
Securities Act.
We have advised the selling shareholders that during such time as they may
be engaged in a distribution of the shares they are required to comply with
Regulation M promulgated under the Exchange Act. Regulation M generally
precludes any selling shareholder, any affiliated purchasers and any broker-
dealer or other person who participates in a distribution from bidding for or
purchasing, or attempting to induce any person to bid for or purchase any
security that is the subject of the distribution until the entire distribution
is complete. Regulation M also prohibits any bids or purchases made in order to
stabilize the price of a security in connection with the distribution of that
security. All of the foregoing may affect the marketability of the common stock.
Under the Exchange Act, any person engaged in the distribution of the
shares of common stock may not simultaneously engage in market-making activities
with respect to the common stock for five business days prior to the start of
the distribution. In addition, each selling shareholder and any other person
participating in a distribution will be subject to the Exchange Act, which may
limit the timing of purchases and sales of common stock by the selling
shareholder or any such other person.
Legal Matters
The validity of the Shares offered hereby will be passed upon for
BriteSmile by Durham Jones & Pinegar, P.C., Broadway Centre, Suite 900, 111 East
Broadway, Salt Lake City, Utah 84144.
Experts
The consolidated financial statements of BriteSmile appearing in
BriteSmile's Annual Report (Form 10-K) for the year ended December 30, 2000,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
SEC Position on Indemnification
Sections 16-10a-901 et. seq. of the Utah Business Corporation Act, together
with Article 5 of our bylaws, provide for indemnification of our directors,
officers, employees, fiduciaries or agents, subject to the determination in each
instance that indemnification is in accordance with the standards set forth in
the Utah Act and in the bylaws. We may purchase and maintain liability
insurance on behalf of a person who is or was a director, officer, employee,
fiduciary, or agent against liability asserted against or incurred by him or her
in that capacity or arising from his or her status as a director, officer,
employee, fiduciary, or agent, whether or not we would have power to indemnify
him or her against the same liability under the provisions of the bylaws.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling BriteSmile
pursuant to the foregoing provisions, or otherwise, we have been informed that
in the opinion of the SEC this indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
14
Where You Can Find More Information
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. Our filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file at the SEC's Public Reference Rooms in Washington,
D.C., New York, New York, and Chicago, Illinois. The Public Reference Room in
Washington, D.C. is located at 450 Fifth Street, N.W. Please call the SEC at 1-
800-SEC-0330 for further information on the Public Reference Rooms.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and the information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference into this prospectus and refer you to the documents
listed below:
. Our Annual Report on Form 10-K for the transition period ended December
31, 2000;
. Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2001;
and
. Any future filings we will make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus
and prior to the filing of a post-effective amendment that indicates that
all shares offered have been sold or which deregisters all shares then
remaining unsold.
This prospectus is part of a registration statement on Form S-3 filed with
the SEC under the Securities Act of 1933. This prospectus does not contain all
of the information set forth in the registration statement. You should read the
registration statement for further information about our company and the common
stock. You may request a copy of any or all of these documents without charge.
You should direct written or telephone requests for copies to our principal
office: BriteSmile, Inc., 490 North Wiget Lane, Walnut Creek, CA 94598,
Attention: Chief Financial Officer (telephone: (925) 941-6260).
15
Table of Contents
Summary 3
Risk Factors 4
Explanation About Forward-Looking
Information 8
Use of Proceeds 9
Dividend Policy 9
Selling Shareholders 10
Plan of Distribution 12
Legal Matters 13
Experts 14
SEC Position on Indemnification 14
Where You Can Find More Information 14
Dealer Prospectus Delivery Obligation. All dealers that effect transactions in
these securities, whether or not participating in this offering, may be
required to deliver a prospectus. This is in addition to the dealers'
obligation to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
BriteSmile, Inc.
5,908,571
SHARES
COMMON STOCK
____________________
PROSPECTUS
___________________
June __, 2001
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses to be incurred in
connection with the sale and distribution of the securities being registered
hereby, all of which will be borne by the Company. All amounts shown are
estimates except the Securities and Exchange Commission registration fee.
Filing Fee - Securities and Exchange Commission $ 14,062
Legal fees and expenses of the Company 45,000
Accounting fees and expenses 15,000
Blue Sky fees and expenses 10,000
Printing expenses 500
Miscellaneous expenses 5,000
----------
Total Expenses $ 89,562
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 16-10a-901 et. seq. of the Utah Business Corporation Act (the
AUtah Act@), together with Article 5 of the Bylaws of the Company, provide for
indemnification of the Company's directors, officers, employees, fiduciaries or
agents, subject to the Company's determination in each instance that
indemnification is in accordance with the standards set forth in the Utah Act
and in the Bylaws. The Company may purchase and maintain liability insurance on
behalf of a person who is or was a director, officer, employee, fiduciary, or
agent of the Company against liability asserted against or incurred by him or
her in that capacity or arising from his or her status as a director, officer,
employee, fiduciary, or agent, whether or not the Company would have power to
indemnify him or her against the same liability under the provisions of the
Bylaws.
ITEM 16. LIST OF EXHIBITS.
5 Opinion of Durham Jones & Pinegar, P.C.*
23.1 Consent of Durham Jones & Pinegar, P.C., included in Exhibit 5 filed
herewith.*
23.2 Consent of Ernst & Young LLP
* Previously filed
II-1
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this 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 this
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
derivation 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 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement.
Provided, however, that paragraphs (1)(i) and (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 Company pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are
incorporated by reference in this Registration Statement.
(2) That, for the purposes of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d)
II-2
of the Exchange Act) that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein and the offering of such securities at the time shall
be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the indemnification provisions described herein, 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 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company 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 Company 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 Securities Act and will be governed by
the final adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement as amended to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Walnut Creek, State of California, on this 7th
day of June, 2001.
BriteSmile, Inc.
By: /s/ John Reed
------------------------
John Reed
Chief Executive Officer
II-4
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
--------- ----- ----
/s/ Anthony M. Pilaro
_______________________ Chairman of the Board of Directors June 5, 2001
Anthony M. Pilaro
/s/ John L. Reed
_______________________ Chief Executive Officer June 6, 2001
John L. Reed and Director (Principal Executive Officer)
/s/ Peter Hausback
_______________________ Chief Financial Officer June 6, 2001
Peter Hausback (Principal Accounting Officer)
/s/ Linda S. Oubre
_______________________ Director June 6, 2001
Linda S. Oubre
/s/ R. Eric Montgomery
_______________________ Director June 6, 2001
R. Eric Montgomery
/s/ Gerald Poch
_______________________ Director June 6, 2001
Gerald Poch
_______________________ Director June __, 2001
Dr. Gasper Lazzara, Jr.
/s/ Brad Peters
_______________________ Director June 6, 2001
Brad Peters
_______________________ Director June ___, 2001
Harry Thompson
/s/ Peter Schechter
_______________________ Director June 6, 2001
Peter Schechter
/s/ Dennis F. Hightower
_______________________ Director June 6, 2001
Dennis F. Hightower
II-5
EXHIBIT INDEX
5 Opinion of Durham Jones & Pinegar, P.C.*
23.1 Consent of Durham Jones & Pinegar, P.C., included in Exhibit 5 filed
herewith.*
23.2 Consent of Ernst & Young LLP
* Previously filed
II-6