As
filed with the Securities and Exchange Commission on November 20,
2007,
Registration
No. 333-120329
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
POST-EFFECTIVE
AMENDMENT NO. 1 TO
FORM
S-8
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
ARRHYTHMIA
RESEARCH TECHNOLOGY, INC.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
72-0925679
|
|
|
(State
or other jurisdiction of incorporation or
organization)
|
(I.R.S.
Employer Identification
Number)
|
25
Sawyer Passway, Fitchburg, MA 01420; (978) 345-5000
(Address,
including zip code, and telephone number, including
area
code, of registrant’s principal executive offices)
ARRHYTHMIA
RESEARCH TECHNOLOGY, INC. 2001 STOCK OPTION PLAN
(Full
title of the plan)
David
A. Garrison
Chief
Financial Officer
Arrhythmia
Research Technology, Inc.
25
Sawyer Passway
Fitchburg,
MA 01420
(Name
and address of agent for service)
(978)
345-5000
(Telephone
number, including area code, of agent for service)
Copies
to:
|
Kathleen
Cerveny, Esq.
Ellenoff
Grossman & Schole, LLP
1627
K St. NW, Suite 1000
Washington,
DC 20006
Telephone: (202)
470-4921
Facsimile: (240)
491-3980
|
CALCULATION
OF REGISTRATION FEE
|
Title
of Securities
To
Be Registered
|
Amount
To
Be
Registered
|
Proposed
Maximum
Offering
Price Per Share
|
Proposed
Maximum
Aggregate
Offering
Price
|
Amount
of
Registration
Fee
|
|||
|
Common
Stock, $.01 par value
|
200,000
shares (1)
|
$
|
8.77(2)
|
$
|
1,754,000
(2)
|
$
|
53.82
|
|
Common
Stock, $.01 par value
|
200,000
shares (3)
|
(3)
|
(3)
|
(4)
|
|||
|
(1)
|
Pursuant
to Rule 416 under the Securities Act of 1933, as amended, an indeterminate
amount of additional shares of common stock, which may become issuable
pursuant to the anti-dilution provisions of the 2001 Stock Option
Plan, as
amended (the “Plan”) are also being registered
hereunder. The shares being registered consist of the following
shares, which may be reoffered and resold from time to time: (a)
an
aggregate of 200,000 shares pursuant to amendment of the 2001 Stock
Option
Plan on May 11, 2007, and (b) an aggregate of 197,000 shares registered
on
Form S-8 (File No. 333-111326) which registration statement is
incorporated herein by reference.
|
|
(2)
|
Estimated
solely for the purpose of calculating the registration fee, pursuant
to
Rule 457(c) and (h)(1) under the Securities Act of 1933, as
amended. The price per share and aggregate offering price are
based on the average of the high and low prices of Registrant’s common
stock as reported on the American Stock Exchange on November 15,
2007.
|
|
(3)
|
Represents
the same shares described in the line above, which may be resold
by the
holder.
|
|
(4)
|
Pursuant
to Rule 457(h)(3), no additional fee is payable since the shares,
which
may be offered for resale, are the same shares being registered hereby
upon their initial issuance pursuant to the
Plan.
|
EXPLANATORY
NOTE
This
registration statement is being
filed pursuant to General Instruction E to Form S-8 to reflect that the Board
of
Directors and majority of the stockholders of Arrhythmia Research Technology,
Inc. (the “Company”) have amended the Company’s 2001 Stock Option Plan (as
amended, the “Plan”). This amendment increased the number of shares
included in the Plan by 200,000 shares of common stock issuable upon exercise
of
options,
which may be granted pursuant
to the
Plan. The
Company hereby
incorporates by reference the contents of its registration statement on Form
S-8, File No. 333-111326, as to 197,000 shares issuable pursuant to options
granted or to be granted under the Plan.
This
Post
Effective Amendment No.
1 contains several
parts.
Immediately
following Part I
is a “Reoffer Prospectus,”
which has been prepared
in accordance with the requirements of Part I of Form
S-3 (as required by Section C.1 of the General Instructions to Form S-8).
The
Reoffer Prospectus will be used for
reoffers and resales by control persons or affiliates
of the Company
of shares of common stock of the
Company to
be issued upon exercise of options
granted or to be granted
pursuant to the Plan.
The
next
part
contains information required in
the registration statement pursuant to Part II of Form S-8.
Pursuant
to the introductory note to
Part I of Form S-8, the plan information, which constitutes part of the “Plan
Prospectus,” is
not being filed with the Securities and
Exchange Commission.
PART
I
| ITEM 1. | PLAN INFORMATION |
The
Company will send or give
document(s) containing the information specified in Part I to participants
as
specified by Rule 428(b)(1). These documents are not required to be
filed as part of this Registration Statement.
|
ITEM
2.
|
REGISTRANT
INFORMATION AND EMPLOYEE PLAN ANNUAL
INFORMATION
|
Upon
written or oral request by a
participant in the 2001 Stock Option Plan, as amended, the Company will provide
any of the documents incorporated by reference into the Section 10(a)
prospectus, without charge. Any document required to be delivered to
the participants pursuant to Rule 428(b) will also be delivered without
charge.
PROSPECTUS
ARRYTHMIA
RESEARCH TECHNOLOGY,
INC.
397,000
Shares of Common
Stock
_____________
This
prospectus is being used in
connection with the offering from time to time by certain selling stockholders
of Arrhythmia Research
Technology, Inc. (the “Company”) or their successors
in interest of
shares of the common stock
which may be
acquired upon the exercise
of stock options
issued
or to be issued
pursuant to the
Company’s 2001 Stock
Option Plan,
as amended (the “Plan”).
The
common stock may be sold from time
to time by the selling stockholders or by their pledgees, donees, transferees
or
other successors in interest. Such sales may be made on a stock exchange,
in
the over-the-counter market or
otherwise at prices and at terms then prevailing or at prices related to the
then current market price, or in negotiated transactions. The common
stock may be sold by one or more of the following: (a) block trades in
which the broker or dealer
so engaged will attempt to sell the shares as agent but may position and resell
portions of the block as principal to facilitate the transaction; (b) purchases
by a broker or dealer as principal and resale by such broker or dealer for
its
account pursuant to this prospectus; (c) an exchange distribution in accordance
with the rules of such exchange; and (d) ordinary brokerage transactions and
transactions in which the broker solicits purchases. In effecting sales, brokers
or dealers engaged by the selling stockholders may arrange for other brokers
or
dealers to participate. Brokers or dealers will receive commissions
or discounts from selling stockholders in amounts to be negotiated immediately
prior to the sale. Such brokers or dealers and any
other participating brokers or dealers may be deemed to be
“underwriters” within the meaning of the Securities Act of 1933, as amended (the
“Act”) in connection with such sales. In addition, any securities
covered by this prospectus which qualify for sale pursuant to Rule 144 may
be
sold under Rule 144 rather than pursuant to this prospectus. We will not receive
any of the proceeds from the sale of these shares, but we
will receive proceeds to the extent
that currently outstanding
options are exercised. We have paid the expenses
of preparing
this prospectus and the related registration statement.
The
closing sales price of our common
stock, trading under the
symbol “HRT”,
on November 14, 2007
as reported by the American Stock Exchange
(“AMEX”) was $
8.79.
_____________________
Investing
in any of our securities involves risks. Please read carefully the section
entitled “Risk Factors” beginning on page 9 of this
prospectus.
These
securities have not been approved
or disapproved by the Securities and Exchange Commission or any state securities
commission now has the Commission or any state securities commission passed
upon
the accuracy or adequacy of this prospectus. Any representation to the contrary
is a criminal offense.
____________________
The
date of this Prospectus is
November 19,
2007.
No
person has been authorized to give
any information or to make any representations, other than those contained
in
this prospectus, in connection with the offering made hereby, and, if given
or
made, such information or representation must not be relied upon as having
been
authorized by the Company or any other person. Neither the delivery
of this prospectus nor any sale made hereunder shall under any circumstances
create any implication that there has been no change in the affairs of the
Company since the date hereof.
Forward-Looking
Statements
Some
of the statements set forth in this prospectus are forward-looking
statements. These statements involve known and unknown risks,
uncertainties and other factors that may cause our or our industry’s actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance, or
achievements expressed or implied by forward-looking statements. Such
factors include, among other things, those listed under “Risk Factors” and
elsewhere in this prospectus.
In
some cases, you can identify
forward-looking statements by terminology such as “may,” “will,” “should,”
“expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,”
“potential,” “proposed,” “intended,” or “continue” or the negative of these
terms or other comparable terminology. You should read statements
that contain these words carefully, because they discuss our expectations about
our future operating results or our future financial condition or state other
“forward-looking” information. There may be events in the future that
we are not able to accurately predict or control. Before you invest
in our securities, you should be aware that the occurrence of any of the events
described in these risk factors and elsewhere in this prospectus could
substantially harm our business, results of operations and financial condition,
and that upon the occurrence of any of these events, the trading price of our
securities could decline and you could lose all or part of your
investment. Although we believe that the expectations reflected in
the forward-looking statements are reasonable, we cannot guarantee future
results, growth rates, levels of activity, performance or
achievements. We are under no duty to update any of the
forward-looking statements after the date of this prospectus to conform these
statements to actual results.
The
following summary contains basic
information about Arrhythmia Research
Technology, Inc. and this
prospectus. It may not contain all of the information that is
important to you. For
a more complete understanding, we
encourage you to read the entire prospectus and the documents incorporated
by
reference into this prospectus. In this prospectus, the words “ART,”
“Company,”
“we,”
“our”
and
“us”
refer
to Arrhythmia Research
Technology,
Inc. and
our consolidated
subsidiary.
|
Common
stock outstanding
before the
offering
|
2,711,680
shares (1)
|
|
|
Common
stock issuable
upon exercise of
options granted or
to
be granted which may
be offered pursuant to this prospectus
|
397,000
|
|
|
AMEX
symbol for common
stock
|
HRT
|
|
|
Use
of
proceeds
|
We
will not receive any proceeds
from
the sales of these
shares. We will receive proceeds to the extent that currently
outstanding options are exercised. We will use the exercise
proceeds, if any, for working capital and general corporate
purposes.
|
|
|
Risk
factors
|
There
are risks associated with an
investment in the common stock offered by this prospectus. You
should carefully consider the risk factors described in this prospectus
in
the “Risk Factors” section before making a decision to
invest.
|
|
|
Executive
offices
|
Our
executive offices are located
at 25 Sawyer Passway, Fitchburg,
MA 01420;
telephone: (978)
345-5000.
|
(1)
As of November 14, 2007. Does
not include shares of
common stock issuable upon exercise of options.
We
file annual, quarterly and current
reports, proxy statements and other information with the Securities and Exchange
Commission (the “SEC”). You may read and copy, upon payment of a fee
set by the SEC, any documents that we file with the SEC as its public reference
room at 100 F
Street, N.E.,
Washington,
D.C. 20549. You
may also call the SEC at
1-800-432-0330 for more information on the public reference rooms. Our filings
are also available to the public on the Internet through the SEC's EDGAR
database. You may access the EDGAR database at the SEC's website at
www.sec.gov.
This
prospectus is part of Registration
Statement
on Form S-8 that we have filed
with the SEC to register the common stock offered hereby under the Act. As
permitted by SEC rules, this prospectus does not contain all of the information
contained in the registration statement and accompanying exhibits and schedules
that we file with the SEC. You may refer to the registration
statement, the exhibits and schedules for more information about us and our
common stock. The registration statement, exhibits and schedules are available
at the SEC's public reference rooms or through its EDGAR database on the
Internet.
The
following documents, together with any amendments
thereof, filed with the SEC
pursuant to the Securities Exchange Act of 1934, as amended, (the “Exchange
Act”) are incorporated herein by reference:
|
(a)
|
Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2006,
filed
with the SEC on March 29, 2007;
|
|
(b)
|
Quarterly
Report on Form 10-QSB filed with the SEC on May 16,
2007;
|
|
(c)
|
Current
Report on Form 8-K filed with the SEC on June 8,
2007;
|
|
(d)
|
Quarterly
Report on Form 10-QSB filed with the SEC on August 14,
2007;
|
|
(e)
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Quarterly
Report on Form 10-QSB filed with the SEC on November 14,
2007;
|
|
(f)
|
The
description of our Common Stock contained in our Registration Statement
on
Form 8-A, filed with the SEC on February 12, 1992, including any
amendment
or reports filed for the purpose of updating such description;
and
|
|
(g)
|
All
other reports filed by the Company pursuant to Section 13(a) and
15(d) of
the Exchange Act prior to the sale of all of the shares covered by
this
registration statement.
|
Any
statement contained in a document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute part of this
prospectus.
We
will provide without charge to each
person to whom this prospectus is delivered, upon written or oral request of
that person, a copy of all documents incorporated by reference into the
registration statement of
which this prospectus is a
part, other than exhibits to those documents (unless such exhibits
are specifically incorporated
by reference
into such documents). Requests for such documents should be directed to
Secretary,
Arrhythmia
Research
Technology, Inc.,
25
Sawyer Passway,
Fitchburg,
MA 01420,
telephone: (978)
345-5000.
Arrhythmia
Research Technology, Inc. ("ART") was incorporated under the laws of the State
of Louisiana in 1981 and reincorporated under the laws of the State of Delaware
in 1987. ART is engaged in the development of medical software, which
acquires data and analyzes electrical impulses of the heart to detect and aid
in
the treatment of potentially lethal arrhythmias. ART’s patented
products consist of signal-averaging electrocardiographic (SAECG) software
whose
proprietary Windows based version is named the Predictorâ
series. Rather than having a direct sales force, our current intent
is to market ART’s product through licensing with original equipment
manufacturers. No sales of the software were recorded in 2006 or
2005.
Our
SAECG product is currently used in a National Institutes for Health (“NIH”)
funded investigation into “Risk Stratification in MADIT II Type
Patients”. At the completion of this study and assuming favorable
study results, we intend to establish contracts with original equipment
manufacturers for this product.
Sudden
cardiac death afflicts over 400,000 individuals in the United States each
year. These occurrences are due to sustained ventricular tachycardia
(abnormally rapid heartbeat) or ventricular fibrillation (very fast, completely
irregular heartbeat), which severely affect the capability of the heart’s
pumping chambers or ventricles. The electric signals that emanate
from the heart are used to detect the presence of Late Potentials, which
indicate the risk of life-threatening ventricular arrhythmias. The
SAECG processes enable Late Potentials to be amplified and enhanced, while
eliminating undesired electrical noise in these tests.
|
ART’s
wholly owned subsidiary, Micron Products, Inc. (“Micron”), was
incorporated in the State of Massachusetts in 1972, and is located
in
ART’s facility in Fitchburg, Massachusetts. Micron is a
manufacturer and distributor of silver plated and non-silver plated
conductive resin sensors ("sensors") used in the manufacture of disposable
integrated electrodes constituting a part of electrocardiographic
diagnostic and monitoring instruments. Micron also acts as a
distributor of metal snap fasteners ("snaps"), another component
used in
the manufacture of disposable electrodes. The sensors are a
critical component of the signal pathway in many different types
of
disposable electrodes. For example, the disposable electrodes
used to capture the electric impulses of the heart and enable the
analysis
of Late Potentials require sensors which provide for an accurate,
low
noise signal to be transmitted to the monitoring device. Micron
also manufactures and sells or leases assembly machines to its sensor
and
snap customers.
|
 |
|
Figure
1: Schematic of Integrated ECG Electrode.
|
Micron
is the largest of a few companies providing silver / silver-chloride sensors
to
the medical device industry. Micron’s customers manufacture
monitoring and transmitting electrodes which are utilized in a variety of
bio-feedback and bio-stimulation applications including, among many others,
electrocardiograms (ECG’s), electroencephalograms (EEG’s), electro-muscular
stimulation (EMS), and thermo-electrical neural stimulation
(TENS). Micron also produces high volume precision plastic
products. These high volume products leverage the production skills
for the resin sensors while providing a diversification from the dependence
on a
single product line.
In
2004, Micron completed the purchase of substantially all of the operating assets
of privately held Shrewsbury Molders Inc. formerly known as New England Molders,
Inc. of Shrewsbury, Massachusetts forming the New England Molders ("NEM")
division of Micron. This division is a custom thermoplastic injection
molder that produces a wide variety of consumable medical products, medical
device and equipment components, and other products for the consumer,
electronic, aerospace, and defense industries. The NEM division is
located at the Company’s Fitchburg complex in a renovated 100 year old brick
mill building. The location provides operational synergies between
Micron and NEM in manufacturing and administration. Late in 2006,
construction began on a class 100,000 level clean room for precision injection
molding to meet NEM’s new customer requirement. This manufacturing
space was fully operational in February 2007.
On
January 3, 2006, Micron announced the formation of Micron Integrated
Technologies, a division of Micron Products (“MIT”). This division
specializes in the production of metal and plastic components and assemblies
for
the medical and defense industries. Leveraging the high quality
manufacturing of the NEM division’s plastic production capacity with a
comprehensive portfolio of value-added manufacturing, design and engineering
services, the division provides complete product life cycle management: from
concept to product development, prototyping, volume production, and
assembly. The success of the division which is located in the Mill
building in the Fitchburg complex is dependent on a comprehensive network of
small highly specialized manufacturing partners to produce a wide variety of
component parts for the manufacture of the division’s products.
On
December 27, 2006, Micron completed the purchase of substantially all of the
operating assets of privately held Leominster Tool Company, Inc. forming the
Leominster Tool Division (“LTD”) of Micron. This new division, which
is located in Leominster Massachusetts, vertically integrates the design,
manufacture, and repair of production injection molding tooling used by Micron,
NEM, and MIT. The division is expected to maintain its loyal customer
base in die casting, plastic blow molding as well as thermoplastic injection
molding. Micron and its divisions will benefit from an in-house
source for injection molding tooling as well as new capabilities in the
production of metal components for the MIT division.
PRODUCTS
The
following table sets forth for the periods specified, the revenue derived from
the products of ART and its subsidiary Micron (collectively the
"Company"):
|
Year
Ended December 31,
|
||||||||||||||||
|
|
2006
|
%
|
|
2005
|
%
|
|||||||||||
|
Sensors
|
$ |
10,840,418
|
56
|
$ |
9,349,874
|
73
|
||||||||||
|
Other
molded products
|
6,866,517
|
35
|
2,488,581
|
19
|
||||||||||||
|
Snaps
and snap machines
|
496,092
|
3
|
404,396
|
3
|
||||||||||||
|
Other
products
|
1,115,079
|
6
|
652,142
|
5
|
||||||||||||
|
Total
|
$ |
19,318,106
|
100
|
$ |
12,894,993
|
100
|
||||||||||
Sensors
Micron
is a manufacturer and distributor of silver-plated and non-silver plated
conductive resin sensors for use in the manufacture of disposable electrodes
for
ECG diagnostic, monitoring and related instrumentation. The type of
sensor manufactured by Micron consists of a molded plastic substrate plated
with
a silver / silver chloride surface, which is a highly sensitive conductor of
electrical signals. Silver / silver chloride-plated disposable
electrodes are utilized in coronary care units, telemetry units, and for other
monitoring purposes. In addition to the traditional ECG tests,
disposable electrodes incorporating Micron’s sensor are used in connection with
stress tests and Holter monitoring. The disposable electrode has
proven to be more reliable than the reusable electrodes available in the
market. Additionally, disposable electrodes are easier and less
expensive to use than reusable electrodes, which require cleaning after each
use.
Micron
also manufactures sensors and conductive plastic studs used in the manufacture
of radio translucent electrodes. The radio translucent conductive
plastic studs are manufactured with uniquely engineered resin to enable
electrical conductivity between the sensor and the electrophysiological
instrumentation without the use of a metal snap. The radio
translucent electrodes are virtually invisible to X-rays and are preferred
in
some applications such as nuclear medicine, catheterization laboratory or cath
lab, ICU/CCU, and certain stress and Holter procedures. Micron also
manufactures the mating conductive resin snaps, which replace traditional metal
snap fasteners, used in the radio translucent application.
Other
custom designed sensors are manufactured for specific unique applications in
the
EEG, EMG or TENS markets. Recent growth in the volume of highly
engineered EEG sensors reflects the demand for noninvasive measuring of
neurological impulses. Micron’s strength in design and low cost
manufacturing support enables our customers to grow into unique niche medical
applications and electrophysiological monitoring with custom designed
sensors.
Other
Molded Products
In
2004, Micron began selling high volume precision custom molded component
parts. The Company’s sales in these high volume molded products
diversify our existing product lines while utilizing previously unused
manufacturing capacity. The Company began shipping product and
realizing sales of such high volume molded products in the fourth quarter of
2004. To defray the customer’s upfront tooling costs and remain
competitive with global competition, some high volume customers require the
financing of a customer specific tool over several years. The cost of
the tool is guaranteed by the customer and repaid over time as the molded
product is shipped.
The
incorporation of the NEM division into the Micron molding facility in 2004
increased production flexibility for both entities, and dramatically expanded
the size and shape of products. From consumable medical products to
medical equipment components, this division has decreased our dependence on
sensor production for manufacturing growth. In order to leverage the
NEM division’s thermoplastic injection molding capabilities, the MIT division
produces assemblies using plastic molded components assembled with outsourced
metal components.
Snaps
and Snap Machines
Metal
Snap Fasteners
Metal
snap fasteners are used as an attachment and conductive connection between
the
disposable electrode and the lead wires of an ECG machine. Micron
purchases the metal snap fasteners for resale from multiple suppliers and
performs additional quality assurance tests, repackages and stocks product
for
its customers who may or may not purchase the snaps in addition to Micron’s
sensors.
High
Speed Electrode Assembly Machine
Certain
manufacturers of disposable medical electrodes use the Company’s attaching
machines in the assembly of sensors and snaps into disposable
electrodes. Manufacturing, leasing, selling, and providing
replacement parts to medical sensor and snap application machines provide Micron
with a complimentary product to sell to existing sensor and snap
customers. As a value added service, a technician can be dispatched
to troubleshoot and improve the performance of our customers’ fully automated
electrode assembly production lines.
Other
Products
Injection
Molding Tooling
The
design, manufacture, and rehabilitation of injection molding tools for our
customers are part of the service package provided by the NEM
division. The design and manufacture of tooling is a leading
indicator of future product revenue. Engineering and mold designers
work with our customers’ product development engineers to design and produce
unique tooling for their products. The Company’s expertise in cost
effective manufacturing creates a sustainable partnership with our customers
as
prototyped parts move to full scale production.
The
newly acquired Leominster Tool division’s primary product is thermoplastic
injection molding tooling. The division is expected to retain its
pre-acquisition revenue levels from other customers for similar industrial
applications, metal die casting molds, investment casting wax molds, and
thermoplastic injection/extrusion blow molds. The division will
provide cost savings to all aspects of the organization by vertically
integrating mold making and repair into the structure of Micron’s sensor
business, and providing in-house services for the NEM and MIT
divisions.
Signal-Averaging
Electrocardiographic (SAECG) Products - Predictorâ
7
The
Predictor® 7
software is a Windows® compatible
version
of Arrhythmia Research Technology’s analytical program for the detection of Late
Potentials. Predictor® 7 utilizes
the
unique, patented Bi-directional, Four-Pole Butterworth Filtering technique
defined as the “Standard” by the joint AHA/ACC/ESC task force on
Signal-Averaging Electrocardiography1. All clinically accepted
measurement criteria are provided: total QRS duration, duration of
the QRS under 40 µV, the RMS voltage of the last 40 msec of the QRS and the
noise level. Graphical output of the analysis is presented both on
screen and in hard copy. Predictor® 7 also incorporates
additional signal processing capabilities for clinical research. The
IntraSpect™ module permits detection of ventricular late potentials in patients
with Bundle Branch Block. P-wave signal averaging helps predict
patients at risk for atrial fibrillation and flutter. A Heart Rate
Variability module can be incorporated on the Predictor platform.
The
SAECG product is currently used in a National Institutes for Health (“NIH”)
funded investigation into “Risk Stratification in MADIT II Type
Patients”. The primary objectives of this study are: 1. To
evaluate the predictive value of a multivariate model consisting of
pre-specified clinical and ECG parameters for predicting arrhythmic events
in
Multicenter Automatic Defibrillator Implantation Trial II (“MADIT II”) type
post-infarction patients; 2. To develop a multivariate
risk-stratification model, based on a broader spectrum of pre-specified clinical
covariates and ECG parameters, and from it a risk-scoring algorithm identifying
high-risk and low-risk patient groups; this algorithm will be validated by
a
cross-validation study. Such an algorithm will enable an ordering of
patients who may benefit most, and benefit least, from implantable cardiac
defibrillator (“ICD”) therapy. At the completion of this study and
assuming favorable study results, we intend to establish contracts with original
equipment manufacturers for this product.
Windows®
is a registered trademark of Microsoft Corporation
1AHA/ACC/ESC
Policy Statement: "Standards for the Analysis of Ventricular Late Potentials
Using High Resolution or Signal-Averaged Electrocardiography: A Statement by a
Task Force Committee of the European Society of Cardiology, the American
Heart
Association and the American College of Cardiology. JACC Vol. 17, No. 5,
April
1991:999-1006
GENERAL
Customers
and Sales
During
the year ended December 31, 2006, each of two major customers accounted for
over
10% of the Company’s sales and a loss of this base would have a material adverse
effect on results. The two largest customers accounted for 29% and
20% of sales in 2006 as compared to 34% and 11% of sales for the year ended
December 31, 2005. The 20% and 11% customers in 2006 and 2005 are
different entities and were customers prior to 2006. The 11%
concentration in 2005 decreased below 10% of total sales in 2006.
Micron
manufactures its sensors against purchase orders from electrode
manufacturers. The Company is aware of approximately 30 significant
manufacturers of disposable snap type, radio translucent and pre-wired
electrodes worldwide. Micron sells its sensors to most of these
manufacturers. Sales backlog is not material to Micron’s sensor
business due to the method of ordering employed by its customer base in this
competitive industry. Customers generally purchase on a single
purchase order basis without long-term commitments.
The
majority of the NEM and MIT divisions’ customers for injection molded
thermoplastic products are from the medical equipment, medical device and
defense industries. From single use medical or defense consumable
products to equipment components, the engineered production services provide
quality design and production capacity which exceed our customers’ manufacturing
requirements. Certain customers require that an inventory of their
products be maintained at all times to enable just in time delivery
schedules. A commitment from customers is required by NEM and MIT to
maintain the higher level of finished goods inventory and raw material required
for their products. These agreements allow for a more flexible
manufacturing schedule with longer more cost effective production
cycles. NEM’s primary target customer is a medical manufacturer or
development company with a need for complex custom injection molded
components. MIT’s primary target customer is a defense or medical
manufacturer or development company with a need for complete product life cycle
management from design to full production preferably combining multiple
manufacturing technologies such as plastic injection molding, metalworking,
assembly, and packaging.
The
following table sets forth, for the periods indicated, the approximate
consolidated revenues and percentages of revenues derived from the sales of
all
of the Company's products in its geographic markets:
|
Revenues
for the Years Ended December 31,
|
||||||||||||||||
|
2006
|
%
|
2005
|
%
|
|||||||||||||
|
United
States
|
$ |
9,344,815
|
48
|
$ |
4,438,000
|
34
|
||||||||||
|
Canada
|
5,816,071
|
30
|
4,894,956
|
38
|
||||||||||||
|
Europe
|
3,415,235
|
18
|
2,938,868
|
23
|
||||||||||||
|
Pacific
Rim
|
374,190
|
2
|
345,975
|
3
|
||||||||||||
|
Other
|
367,795
|
2
|
277,194
|
2
|
||||||||||||
|
Total
|
$ |
19,318,106
|
100
|
$ |
12,894,993
|
100
|
||||||||||
While
some risks exist in foreign markets, the vast majority of the Company’s
customers are based in historically stable markets. To reduce the
risks associated with foreign shipment and currency exchange fluctuations,
most
of our products are the responsibility of our customers when shipped, and
payment is required in US Dollars.
To
offset the risk from fluctuations in the market price of silver, sensor
customers are subject to a silver surcharge or discount based on the market
price of silver at the time of shipment. The silver surcharge has
become a greater component of our product pricing as the price of silver has
more than doubled over the last three years. The Company is sensitive
to the impact of recent increases in silver cost, and continues to explore
options with our customers to help mitigate the resulting increases in
surcharges.
Marketing
and Competition
Micron
sells its sensors to manufacturers of disposable snap type and radio translucent
ECG electrodes. The Company has one major domestic competitor and
several minor competitors worldwide for sensors, and believes that its sales
of
sensors exceed those of its competition in the aggregate. The
competition in the sensor and snap market is extremely price
sensitive. In an effort to ensure higher volume without a firm long
term purchase order, Micron offers a rebate program to customers. The
rebates are typically paid to the customer after the end of the calendar year
if
certain volume thresholds are attained. These rebates are accrued and
recorded with each sale as a reduction of gross sales. The rebates
for the calendar year 2006 and 2005 were $65,263 and $56,459
respectively.
The
Company markets Micron and its NEM division as a highly specialized custom
injection thermoplastic molder to new and existing customers. The
Company believes it competes effectively based on its expertise in low cost
manufacturing of high volume precision products. The complex medical
products produced by the NEM division has expanded our existing customer base
and extensively diversified the product mix. It is our intention to
continue these efforts to market to the expanded customer base and further
diversify our product offerings. Global competition creates a highly
competitive environment. To meet this challenge, the NEM and MIT
divisions focus their product development efforts on complex close tolerance
products not readily outsourced to offshore manufacturing.
Management
is not currently pursuing licensing of the SAECG products to original equipment
manufacturers for integration into existing cardio diagnostic
equipment. The Company sponsored a well attended satellite session on
SAECG featuring a presentation by Wojciech Zareba, MD, Associate Professor
of
Medicine (Cardiology) at the University of Rochester at a major scientific
conference held in June 2005 in Gdansk, Poland. The SAECG product is
currently used in a National Institutes for Health (“NIH”) funded investigation
into “Risk Stratification in MADIT II Type Patients”. At the
completion of this study and assuming favorable study results, we intend to
establish contracts with original equipment manufacturers for this
product.
Product
Suppliers and Manufacturing
Micron
manufactures its sensors at its Fitchburg, Massachusetts facility employing
a
proprietary non-patented multi-step process. All employees sign
confidentiality agreements to protect this proprietary process. The
raw materials used by Micron are plastic resins used to mold the substrates
and
silver / silver chloride chemical solutions for plating the molded plastic
substrates. Both the resins and the chemicals involved in the silver
/ silver chloride process are in adequate supply from multiple commodity
sources. Fluctuations in the price of silver are contractually passed
to customers in the form of a surcharge or discount. As insulation
against unanticipated price increases, some resins and chemicals used in the
production of sensors are purchased in large quantity to lower or stabilize
prices.
Resins
used by the custom molding division are purchased for an individual customer
order, with most increases in resin costs passed on to the customer as orders
are acknowledged. Because the customer order determines the quantity
of material required, customers may, and have, guaranteed the purchase of
specific large quantities of product which allows the division to purchase
raw
material at a more favorable cost thereby lowering the final cost to the
customer. The metal alloys used by the MIT division in its products
are subject to the same customer order limitations, and prices are fixed as
the
customer guarantees an order.
Micron
distributes medical grade nickel plated brass and stainless steel snap fasteners
purchased from multiple domestic and international sources. Micron
buys these snaps in bulk, performs additional quality assurance tests, and
stocks inventory to facilitate just in time shipments to its
customers.
Inventory
Requirements
Our
larger customers benefit from our ability to maintain an inventory of standard
sensors and snaps. This inventory policy allows for predictable and
planned production resulting in cost efficiencies that we are able to pass
on to
our customers. The rebate program discussed in the marketing and
competition section above allows us to provide volume based discounts to our
customers for targeted volume shipped.
While
inventory quantities required to sustain the current manufacturing forecast
have
not changed, the significant increase in cost of silver, brass, and specific
specialty engineered resins used in sensor production has caused a large
increase in the value of our raw material inventories. Some of these
increases are absorbed by our customers in the form of surcharges and temporary
price increases.
Custom
molded product is manufactured on an order by order basis. Finished
goods inventory is product made in advance of an acknowledged sales order,
part
of an annual blanket order quantity, or for a specific safety stock requested
by
the customer.
Research
and Development
ART's
research and development efforts focus primarily in maintaining the software
library in the SAECG product lines in a compatible platform. Our
primary focus in 2006 and 2005 was to verify the integrity of the analytical
algorithms, and facilitate use of the application in the previously discussed
NIH study. For the fiscal years ended December 31, 2006,
and 2005, ART had research and development expenses of approximately $57,200
and
$40,900, respectively.
In
2006 and 2005, Micron’s research and development efforts resulted in $7,100 and
$7,300 of expense. Included in these efforts was a unique process
improvement to eliminate certain hazardous materials from our manufacturing
processes.
Patents
and Proprietary Technology
As
part of the purchase of substantially all the assets of Corazonix Corporation
in
1993, ART acquired three patents related to time and frequency domain analysis
of electrocardiogram signals. The Corazonix technologies are utilized
in the current version of Predictorâ
7. ART acquired U.S. Patent No. 5,117,833 entitled “Bi-Spectral
Filtering of Electrocardiogram Signals to Determine Selected QRS Potentials,”
(the “Bi-Spec Patent”) which expires in 2009. ART also acquired
three additional patents, which cover the spectral-temporal, mapping
post-processing software packages. In March 1997, the U.S. Patent
Office granted United States Patent No. 5,609,158 entitled “Apparatus and
Method for Predicting Cardiac Arrhythmia, by Detection of Micropotentials and
Analysis of all ECG Segments and Intervals” which covers a frequency domain
analysis technique for SAECG data.
The
Company believes that ART's products do not and will not infringe on patents
or
violate proprietary rights of others. In the event that ART's
products infringe patents or proprietary rights of others, ART may be required
to modify the design of its products or obtain a license. There can
be no assurance that ART will be able to do so in a timely manner upon
acceptable terms and conditions. In addition, there can be no
assurance that ART will have the financial or other resources necessary to
enforce or defend a patent infringement or proprietary rights violation
action. Moreover, if ART's products infringe patents or proprietary
rights of others, ART could, under certain circumstances, become liable for
damages, which could have a material adverse effect on earnings.
Micron
employs a highly complex, proprietary non-patented multi-step manufacturing
process for its silver/silver chloride-plated sensors. To maintain
our trade secrets associated with the manufacture of disposable electrode
sensors, key employees are required to sign non-disclosure and/or
non-competition agreements. Micron uses a patented material in the
production of some sensors. Micron paid $7,100 in 2006 and $7,000 in
2005 in royalties associated with this patent.
Government
Regulation
ART’s
software products are subject to, and ART believes currently comply with,
material clearance and distribution requirements from governmental regulatory
authorities, principally the U.S. FDA and the European Union (EU) equivalent
agency. These agencies promulgate quality system requirements under
which a medical device is to be developed, validated and
manufactured. The development of the product line will be managed in
accordance with applicable regulatory requirements.
Micron’s
sensor elements are components used in medical devices designed and manufactured
by original equipment manufacturers. As such, these elements are not
required to be listed with regulatory agencies and do not require regulatory
clearance for distribution. However, because Micron primarily
distributes sensors to manufacturers for use in finished medical devices, Micron
exercises as stringent controls over its manufacturing processes and finished
products as would be required if the sensors were considered medical
devices.
The
NEM and MIT divisions manufacture parts for invasive medical devices, components
for medical equipment, patented disposable medical laboratory products, and
patented military applications. Our customers own the product designs
and are, therefore, subject to FDA, DOD and EU regulations. While
such products are a part of a medical device or other regulated equipment,
our
customers are the regulated entity for the clearance of those
products. NEM and MIT exercise stringent controls over all their
manufacturing operations, and comply with any special controls required by
their
customers.
Environmental
Regulation
Micron’s
operations involve use of hazardous and toxic materials, and generate hazardous,
toxic and other wastes. It is subject to federal, state and local
laws and regulations governing the use, storage, handling and disposal of such
materials and certain waste products. Although management believes that our
safety procedures for using, handling, storing and disposing of such materials
comply with these standards required by state and federal laws and regulations,
we cannot completely eliminate the risk of accidental contamination or injury
from these materials. An insurance policy has been purchased to
mitigate this risk to the Company and the environment.
Since
its inception, Micron has expended significant funds to train its personnel,
install waste treatment and recovery equipment and to retain an independent
environmental consulting firm to regularly review, monitor and upgrade its
air
and waste water treatment activities. Management continues to
evaluate and test many possible technological advances that reduce or eliminate
the need for and use of hazardous materials in our processes. The
recent acquisition of equipment to eliminate a hazardous chemical from the
process further emphasizes the commitment to the reduction and elimination
of
certain hazardous processes. In 2006 and 2005, the related
expenditures for waste treatment were approximately $50,000. The
operational costs are expected to be similar in 2007. Micron believes
that the operation of its manufacturing facility is in compliance with currently
applicable safety, health and environmental laws and regulations.
Employees
As
of December 31, 2006, the Company had 97 full-time and 3 part-time employees
including 27 administrative, sales and supervisory personnel, 15 quality control
personnel and 58 production personnel. The employees of the Company
are not represented by a union, and the Company believes its relationship with
the employees is satisfactory.
Property
The
manufacturing facility and offices of the Company are located in two buildings
in an industrial area in Fitchburg, Massachusetts. The first
building, which was purchased in April 1994, consists of a 22,000 square foot,
six story building. The second building, which was purchased in
September 1996, is over 94,000 square feet, including an antique brick three
story mill building. Commencing in 2003, the 40,000 square foot
“Mill” building portion of the second building underwent major renovations to
preserve and create functional space from a previously unusable section of
the
facility. The renovations created space currently occupied by the NEM
and MIT divisions. In October 2006, a third building of approximately
40,000 square feet and abutting our complex was acquired without any specific
requirement for space. The Company believes the acquisition of
the adjacent property positions the Company for continued growth in its current
location. The Company believes our current facilities are sufficient
to meet our current and future production needs through fiscal year ending
December 31, 2007.
Legal
Proceedings
The
Company is from time to time subject to legal proceedings, threats of legal
action and claims which arise in the ordinary course of our
business. Management believes the resolution of these matters will
not have a material adverse effect on our results of operations or financial
condition.
You
should carefully consider the
following risk factors and all other information contained in this prospectus
before investing in our common stock. Investing in our common stock involves
a
high degree of risk. Any of the following risks could adversely
affect our business, financial condition, results of operations, performance,
achievements and industry and could result in a complete loss of one's
investment. The risks and uncertainties described below are not the
only ones we may face. Additional risks and uncertainties that the
Company does not presently know or currently deems immaterial may also impair
the Company’s business, results of operations and financial
condition. See also
“Forward Looking Statements.”
Risks
Relating to Our Business
The
Company’s operating results may fluctuate significantly as a result of a variety
of factors.
Our
operating results may fluctuate significantly in the future as a result of
a
variety of factors, many of which are outside of our control. These
factors include our ability to maintain our current pricing model and/or
decrease our cost of sales; increasing sales of lower margin products; the
level
of demand for the products that we may develop; our ability to attract and
retain personnel with the necessary strategic, technical and creative skills
required for effective operations; the amount and timing of expenditures by
customers; variability of customer delivery requirements, continued availability
of supplies or materials used in manufacturing at current prices; the amount
and
timing of capital expenditures and other costs relating to the expansion of
our
operations; government regulation and general economic conditions. As
a strategic response to changes in the competitive environment, we may from
time
to time make certain pricing, service, technology or marketing decisions or
business or technology acquisitions that could have a material adverse effect
on
our quarterly and annual results. Due to all of these factors, our
operating results may fall below the expectations of securities analysts,
stockholders and investors in any future period.
If
trade secrets are not kept confidential, the secrets may be used by others
to
compete against us.
Micron
relies on unpatented trade secrets to protect its proprietary processes as
there
are no assurances that others will not independently develop or acquire
substantially equivalent technologies or otherwise gain access to our
proprietary process. Ultimately the meaningful protection of such
unpatented proprietary technology cannot be guaranteed. The Company relies
on
confidentiality agreements with its employees. Remedies for any
breach by a party of these confidentiality agreements may not be adequate to
prevent such actions. Failure to maintain trade secret protection, for any
reason, could have a material adverse effect on us.
We
are dependence on a limited number of customers.
In
the fiscal years 2006 and 2005, 49% and 45%, respectively, of the Company’s
revenues were derived from individual customers with 10% or more of the total
sales. The loss of any one or more of these customers would have an
immediate significant adverse effect on our financial results. In an
effort to maintain this customer base, more favorable terms than might otherwise
be agreed to could be granted. Currently, the Company generally does
not receive purchase volume commitments extending beyond several months. Large
corporations can shift focus away from a need for our product with little or
no
warning.
The
majority of our revenues are derived from the sale of a single
product.
In
fiscal years 2006 and 2005, the Company derived 56% and 73%, respectively,
of
its income from medical electrode sensors for use in disposable
electrodes. While the technology in electrode sensors has been used
for many years, there is no assurance that a new patented or unpatented
technology might not replace the existing market for disposable electrode
sensors. Any substantial technological advance that eliminates our
product will have a material adverse effect on our operating
results. Margins on sensors are higher generally than our other
products, and as the Company diversifies our product lines, reliance on lower
margin sales may affect our results of operations.
The
Company is subject to stringent environmental regulations.
The
Company is subject to a variety of federal, state and local requirements
governing the protection of the environment. These environmental
regulations include those related to the use, storage, handling, discharge
and
disposal of toxic or otherwise hazardous materials used in or resulting from
the
Company’s manufacturing processes. Failure to comply with
environmental law could subject the Company to substantial liability or force
us
to significantly change our manufacturing operations. In addition,
under some of these laws and regulations, the Company could be held financially
responsible for remedial measures if its properties are contaminated, even
if it
did not cause the contamination.
If
the Company is unable to keep up with rapid technological changes, our
processes, products or services may become obsolete and
unmarketable.
The
medical device and medical software industries are characterized by
technological change over time. Although the Company attempts to
expand our technological capabilities in order to remain competitive,
discoveries by others may make our processes or products obsolete. If
the Company cannot compete effectively in the marketplace, our potential for
profitability and financial position will suffer.
The
Company could become involved in litigation over intellectual property
rights.
The
medical device industry has been characterized by extensive litigation regarding
patents and other intellectual property rights. Litigation, which would likely
result in substantial cost to us, may be necessary to enforce any patents issued
or licensed to us and/or to determine the scope and validity of others'
proprietary rights. In particular, our competitors and other third
parties hold issued patents and are assumed to hold pending patent applications,
which may result in claims of infringement against us or other patent
litigation. The Company also may have to participate in interference
proceedings declared by the United States Patent and Trademark Office, which
could result in substantial cost, to determine the priority of
inventions.
A
product liability suit could adversely affect our operating
results.
The
testing, manufacture, marketing and sale of medical devices of our customers
entail the inherent risk of liability claims or product recalls. If our
customers are involved in a lawsuit, it is foreseeable that the Company would
also be named. Although the Company maintains product liability
insurance, coverage may not be adequate. Product liability insurance is
expensive, and in the future may not be available on acceptable terms, if at
all. A successful product liability claim or product recall could have a
material adverse effect on our business, financial condition, and ability to
market product in the future.
The
Company may be exposed to potential risks relating to our internal control
over
financial reporting and our ability to have those controls attested to by our
independent registered public accounting firm.
As
directed by Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX 404”), the
Securities and Exchange Commission adopted rules requiring public companies
to
include a report of management on the company’s internal control over financial
reporting in their annual reports, including Form 10-KSB. In
addition, the independent registered public accounting firm auditing a company’s
financial statements must also attest to and report on management’s assessment
of the effectiveness of the company’s internal control over financial reporting
as well as the operating effectiveness of the Company’s internal
controls. The Company was not subject to these requirements for the
fiscal year ended December 31, 2006. We are evaluating our internal
control systems in order to allow our management to report on, and our
independent auditors attest to, our internal controls, as a required part of
our
Annual Report on Form 10-KSB beginning with our report for the fiscal year
ended
December 31, 2008.
While
we expect to expend significant resources beginning in the latter part of 2007
to develop the necessary documentation and testing procedures required by SOX
404, there is a risk that we will not comply with all of the requirements
imposed thereby. In the event the Company no longer qualifies as a
small business issuer at the end of 2007, we may be subject to more stringent
requirements under SOX 404. Accordingly, there can be no assurance
that the Company will receive any required attestation from the independent
registered public accounting firm. In the event we identify
significant deficiencies or material weaknesses in our internal controls that
we
cannot remediate in a timely manner or we are unable to receive an attestation
from the independent registered public accounting firm with respect to our
internal controls, investors and others may lose confidence in the reliability
of our financial statements and our ability to obtain equity or debt financing
could suffer.
Risks
Relating To Acquisitions
We
will encounter difficulties in identifying suitable acquisition candidates
and
integrating new acquisitions.
A
key element of our expansion strategy is to grow through acquisitions. If we
identify suitable candidates, we may not be able to make investments or
acquisitions on commercially acceptable terms. Acquisitions may cause a
disruption in our ongoing business, distract management, require other resources
and make it difficult to maintain our standards, controls and procedures. We
may
not be able to retain key employees of the acquired companies or maintain good
relations with their clients or suppliers. We may be required to incur
additional debt and to issue equity securities, which may be dilutive to
existing stockholders, to effect and/or fund acquisitions.
We
face intense competition for acquisition candidates, and we may have limited
cash available for such acquisitions.
There
is a high degree of competition among companies seeking to acquire interests
in
manufacturers such as those we may target for acquisition. We are expected
to
continue to be an active participant in the business of seeking business
relationships with, and acquisitions of interests in, such companies. A large
number of established and well-financed entities, including venture capital
firms, are active in acquiring interests in companies that we may find to be
desirable acquisition candidates. Many of these investment-oriented entities
have significantly greater financial resources, technical expertise and
managerial capabilities than we do. Consequently, we may be at a competitive
disadvantage in negotiating and executing possible investments in these entities
as many competitors generally have easier access to capital. Even if we are
able
to compete with these venture capital entities, this competition may affect
the
terms and conditions of potential acquisitions and, as a result, we may pay
more
than expected for targeted acquisitions. If we cannot acquire interests in
attractive companies on reasonable terms, our strategy to build our business
through acquisitions may be inhibited.
The
Company may make acquisitions of companies, products or technologies that may
disrupt the business and divert management’s attention, adversely impacting our
results of operations and financial condition.
The
Company may make acquisitions of complementary companies, products or
technologies from time to time. Any acquisitions will require the
assimilation of the operations, products and personnel of the acquired
businesses and the training and motivation of these
individuals. Management may be unable to maintain and improve upon
the uniform standards, controls, procedures and policies if the Company fails
in
this integration. Acquisitions may cause disruptions in operations
and divert management’s attention from day-to-day operations, which could impair
our relationships with current employees, customers and strategic
partners. The Company also may have to, or choose to, incur debt or
issue equity securities to pay for any future acquisitions. The
issuance of equity securities for an acquisition could be substantially dilutive
to our stockholders’ holdings. In addition, our profitability may
suffer because of such acquisition-related costs or amortization costs for
other
intangible assets. If management is unable to fully integrate
acquired businesses, products, technologies or personnel with existing
operations, the Company may not receive the intended benefits of such
acquisitions. The Company is not currently party to any agreements,
written or oral, for the acquisition of any company, product or
technology.
We
cannot assure you that any acquisitions we make will enhance our
business.
We
cannot assure you that any completed acquisition will enhance our business.
Since we anticipate that acquisitions could be made with both cash and our
common stock, if we consummate one or more significant acquisitions, the
potential impacts are:
|
·
|
a
substantial portion of our available cash could be used to consummate
the
acquisitions and/or we could incur or assume significant amounts
of
indebtedness;
|
|
·
|
losses
resulting from the on-going operations of these acquisitions could
adversely affect our cash flow; and
|
|
·
|
our
stockholders could suffer significant dilution of their interest
in our
common stock.
|
Also,
we are required to account for acquisitions under the purchase method, which
would likely result in our recording significant amounts of goodwill. The
inability of a subsidiary to sustain profitability may result in an impairment
loss in the value of long-lived assets, principally goodwill and other tangible
and intangible assets, which would adversely affect our financial statements.
Additionally, we could choose to divest any acquisition that is not
profitable.
Risks
Relating To Our Common Stock
We
may be de-listed from the AMEX if we
do not meet continued listing requirements.
Our
common stock commenced trading on
the AMEX on March 3,
1992. If our
common stock is de-listed by the AMEX, trading of our common stock would
thereafter likely be conducted on the OTC Bulletin Board. In such case, the
market liquidity for our common stock would likely be negatively affected,
which
may make it more difficult for holders of our common stock to sell their
securities in the open market and we could face difficulty raising capital
necessary for our continued operations.
The
limited public market and trading
market may cause possible volatility in our stock
price.
There
has only been a limited public
market for our securities and there can be no assurance that an active trading
market in our securities will be maintained. In addition, the overall market
for
securities in recent years has experienced extreme price and volume fluctuations
that have particularly affected the market prices of many smaller companies.
The
trading price of our common stock is expected to be subject to significant
fluctuations including, but not limited to, the following:
|
·
|
quarterly
variations in operating results and achievement of key business
metrics;
|
|
·
|
changes
in earnings estimates by securities analysts, if
any;
|
|
·
|
any
differences between reported results and securities analysts' published
or
unpublished expectations;
|
|
·
|
announcements
of new contracts or service offerings by us or our
competitors;
|
|
·
|
market
reaction to any acquisitions, divestitures, joint ventures or strategic
investments announced by us or our
competitors;
|
|
·
|
demand
for our services and products;
|
|
·
|
shares
being sold pursuant to Rule 144;
and
|
|
·
|
general
economic or stock market conditions unrelated to our operating
performance.
|
These
fluctuations, as well as general
economic and market conditions, may have a material or adverse effect on the
market price of our common stock.
Shares
eligible for future sale may
adversely affect the market.
From
time to time, certain of our
stockholders may be eligible to sell all or some of their shares of common
stock
by means of ordinary brokerage transactions in the open market pursuant to
Rule
144, promulgated under the Securities Act of 1933, subject to certain
limitations. In general, pursuant to Rule 144, a stockholder (or stockholders
whose shares are aggregated) who has satisfied a one-year holding period may,
under certain circumstances, sell within any three-month period a number of
securities which does not exceed the greater of 1% of the then outstanding
shares of common stock or the average weekly trading volume of the class during
the four calendar weeks prior to such sale. Rule 144 also permits, under certain
circumstances, the sale of securities, without any limitation, by holders of
restricted securities that are non-affiliates that have satisfied a two-year
holding period. Any substantial sale of our common stock pursuant to Rule 144
or
pursuant to any resale prospectus may have material adverse effect on the market
price of our securities.
Director
and officer liability is
limited.
As
permitted by Delaware
law, our certificate of incorporation
limits the liability of our directors for monetary damages for breach of a
director's fiduciary duty except for liability in certain instances. As a result
of our charter provision and Delaware
law, stockholders may have limited
rights to recover against directors for breach of fiduciary duty. In addition,
our certificate of incorporation provides that we shall indemnify our directors
and officers to the fullest extent permitted by law.
The
shares which may be sold pursuant to
this prospectus will be sold for the respective accounts of each of the selling
stockholders. Accordingly, ART will not realize any proceeds from the
sale of the shares, except that it will derive proceeds if options currently
outstanding or hereafter granted are exercised. If exercised, such
funds will be available to ART for working capital and general corporate
purposes. No assurance can be given, however, as to when or if any or
all of the options will be exercised. All expenses of the
registration of the shares will be paid for by ART. See “Selling
Stockholders” and “Plan of Distribution.”
The
following table sets
forth the name and relationship to ART of each selling stockholder, the number
of shares of common stock which each selling stockholder (1) owned of record
before the offering; (2) may acquire pursuant to the exercise of a previously
granted option or options which hereafter may be exercisable under
the Plan, all of which shares may be sold pursuant to this prospectus; and
(3)
the amount of common stock to be owned by each selling stockholder and the
percentage of the class to be owned by such stockholder, the exercise of all
options granted under the Plan, and the sale of all shares acquired upon
exercise of such options.
The
information contained in this table
reflects “beneficial”
ownership
of common stock
within the meaning of Rule 13d-3 under the Exchange Act. As of
November 14,
2007 we had 2,711,680
shares of common stock outstanding. Beneficial ownership information
reflected in the table includes shares issuable upon the exercise of outstanding
options issued by us at their initial exercise prices.
|
Name
|
Relationship
to Us Within the
Past Three
Years
|
Amount
of Common
Stock
Beneficially
Owned
(1)
|
Amount
Offered
Hereby
|
Percentage
of
Common
Stock to
be
owned after the
offering(1)
|
|||
|
Julius
Tabin
|
Director
|
116,824
|
(2) |
10,000
|
(2) |
4.2
|
% |
|
Paul
F. Walter
|
Director
|
72,055
|
(2) |
10,000
|
(2) |
2.6
|
% |
|
E.P.
Marinos
|
Director
|
59,448
|
(2) |
10,000
|
(2) |
2.1
|
% |
|
Jason
Chambers
|
Director
|
45,549
|
(3)(5) |
10,000
|
(3) |
1.6
|
% |
|
James
E. Rouse
|
Director,
President and Chief Executive Officer
|
15,000
|
-
|
*
|
|||
|
David
A. Garrison
|
Executive
Vice President and Treasurer
|
28,000
|
(4) |
28,000
|
(4) |
1.0
|
% |
|
Michael
F. Nolan
|
Chief
Operating Officer
|
-
|
(6) |
-
|
(6) |
*
|
|
|
|
(*)
|
Less
than
1%.
|
|
|
(1)
|
Unless
otherwise noted in these notes, the Company believes that all shares
referenced in this table are owned of record by each person named
as
beneficial owner and that each person has sole voting and dispositive
power with respect to the shares of Common stock owned by each
of
them. In accordance with Rule 13d-3 under the Exchange Act,
each person’s percentage ownership is determined by assuming that the
options that are held by that person, and which are exercisable
within 60
days, have been exercised. The address of all persons listed
above is c/o Arrhythmia Research Technology, Inc., 25 Sawyer Passway,
Fitchburg, MA 01420.
|
|
|
(2)
|
Includes
10,000 shares issuable upon exercise of options granted under the
2001
Stock Option Plan.
|
|
|
(3)
|
Includes
options granted under the 2001 Stock Option Plan to acquire 2,000
shares
but excludes options to acquire 8,000 shares which are not currently
exercisable but which vest and will be exercisable as to an additional
2,000 shares on or after 8/4/2008 and each anniversary until the
remaining
8,000 options vest.
|
|
|
(4)
|
Represents
28,000 shares issuable upon exercise of options granted under the
2001
Stock Option Plan; excludes options to acquire 5,000 shares which
are not
exercisable but which vest and will be exercisable July 31,
2008.
|
|
|
(5)
|
Includes
35,216 shares held in the EBC Charitable Remainder Trust, for which
Mr.
Chambers serves as trustee and as to which an immediate family
member is
beneficiary. Mr. Chambers disclaims beneficial ownership of the
shares held by the EBC Charitable Remainder
Trust.
|
|
|
(6)
|
Includes
options granted under the 2001 Stock Option Plan to acquire 10,000
shares
which options vest and will be exercisable as to 2000 shares on or
after
June 4,
2008 and to the
extent of an additional one-fifth of the shares after each of the
next
four successive years.
|
In
this section of the prospectus, the
term “selling stockholder” means and includes: (1) the persons identified in the
table above as the selling stockholders; and (2) any of their donees, pledgees,
distributees, transferees or other successors in interest who may (a) receive
any of the shares of our common stock offered hereby after the date of this
prospectus and (b) the offer or sell those shares hereunder.
The
shares of our common stock offered
by this prospectus may be sold from time to time directly by the selling
stockholders. Alternatively, the selling stockholders may from time
to time offer such shares through underwriters, brokers, dealers, agents or
other intermediaries. The selling stockholders as of the date of this
prospectus have advised us that there were no underwriting or distribution
arrangements entered into with respect to the common stock offered hereby.
The
distribution of the common stock by the selling stockholders may be effected
in
one or more transactions that may take place on the AMEX (or another exchange
or
quotation system where the common stock may trade, such as the OTCBB) (including
one or more block transaction) through customary brokerage channels, either
through brokers acting as agents for the selling stockholders, or through market
makers, dealers or underwriters acting as principals who may resell these shares
on the AMEX (or another exchange or quotation system where the common stock
may
trade, such as the OTCBB); in privately-negotiated sales; by a combination
of
such methods; or by other means. These transactions may be effected
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at other negotiated prices. Usual and
customary or specifically negotiated brokerage fees or commissions may be paid
by the selling stockholders in connection with sales of our common
stock.
The
selling stockholders may enter into
hedging transactions with broker-dealers in connection with distributions of
the
shares or otherwise. In such transactions, broker-dealers may engage
in short sales of the shares of our common stock in the course of hedging the
positions they assume with the selling stockholders. The selling
stockholders also may sell shares short and redeliver the shares to close out
such short positions. The selling stockholders may enter into option
or other transactions with broker-dealers which require the delivery to the
broker-dealer of shares of our common stock. The broker-dealer may
then resell or otherwise transfer such shares of common stock pursuant to this
prospectus.
The
selling stockholders also may lend
or pledge shares of our common stock to a broker-dealer. The
broker-dealer may sell the shares of common stock so lent, or upon a default
the
broker-dealer may sell the pledged shares of common stock pursuant to this
prospectus. Any securities covered by this prospectus which qualify
for sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant
to
this prospectus. The selling stockholders have advised us that they
have not entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their securities. There
is
no underwriter or coordinating broker acting in connection with the proposed
sale of shares of common stock of the selling stockholders.
Although
the shares of common stock
covered by this prospectus are not currently being underwritten, the selling
stockholders or their underwriters, brokers, dealers or other agents or other
intermediaries, if any, that may participate with the selling security holders
in any offering or distribution of common stock may be deemed “underwriters”
within the meaning of the Act and any profits realized or commissions received
by them may be deemed underwriting compensation thereunder.
Under
applicable rules and regulations
under the Exchange Act, any person engaged in a distribution of shares of the
common stock offered hereby may not simultaneously engage in market making
activities with respect to the common stock for a period of up to five days
preceding such distribution. The selling stockholders will be subject
to the applicable provisions of the Exchange Act and the rules and regulations
promulgated thereunder, including without limitation Regulation M, which
provisions may limit the timing of purchases and sales by the selling
stockholders.
In
order to comply with certain state
securities or blue sky laws and regulations, if applicable, the common stock
offered hereby will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In certain states, the common stock may not be
sold
unless they are registered or qualified for sale in such state, or unless an
exemption from registration or qualification is available and is
obtained.
We
will bear all costs, expenses and
fees in connection with the registration of the common stock offered hereby.
However, the selling stockholders will bear any brokerage or underwriting
commissions and similar selling expenses, if any, attributable to the sale
of
the shares of common stock offered pursuant to this
prospectus.
There
can be no assurance that the
selling stockholders will sell any or all of the securities offered by them
hereby.
The
legality of the common stock to be
offered hereby has been passed upon for us by Ellenoff Grossman & Schole
LLP, New York,
New
York.
The
audited financial statements for our
company as of the year ended December 31, 2006, incorporated by reference in
this prospectus are reliant on the reports of Carlin, Charron, & Rosen, LLP,
independent registered public accountants, as stated in their reports therein,
upon the authority of that firm as experts in auditing and
accounting.
|
NO
DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED IN CONNECTION
WITH THIS OFFERING TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. THE PROSPECTUS
DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION IN ANY JURISDICTION
TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE CIRCUMSTANCES OF THE COMPANY
OR THE
FACTS HEREIN SET FORTH SINCE THE DATE HEREOF.
|
Arrhythmia
Research
Technology,
Inc.
397,000
shares of
Common
Stock
PROSPECTUS
November
19, 2007
|
|
|
TABLE
OF CONTENTS
|
||
|
ARRHYTHMIA
RESEARCH TECHNOLOGY, INC. HAS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, WASHINGTON, D.C., A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT WITH RESPECT TO THE SHARES OFFERED HEREBY. THIS
PROSPECTUS OMITS CERTAIN INFORMA-TION CONTAINED IN THE REGISTRATION
STATEMENT. THE INFORMATION OMITTED MAY BE OBTAINED FROM THE
SECURITIES AND EXCHANGE COMMISSION UPON PAYMENT OF THE REGULAR CHARGE
THEREFOR.
|
||
PART
II
INFORMATION
REQUIRED IN THE REGISTRATION STATEMENT
ITEM
3.
INCORPORATION OF DOCUMENTS BY REFERENCE
The
SEC allows us to incorporate by reference information from other documents
that
we file with them, which means that we can disclose important information by
referring to those documents. The information incorporated by
reference is considered to be part of this prospectus, and information that
we
file later with the SEC will automatically update and supersede this
information.
We
incorporate by reference the documents listed below together with any amendments
thereof:
|
(a)
|
Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2006,
filed
with the SEC on March 29, 2007;
|
|
(b)
|
Current
Report on Form 8-K filed with the SEC on June 8,
2007;
|
|
(c)
|
Quarterly
Report on Form 10-QSB filed with the SEC on May 16,
2007;
|
|
(d)
|
Quarterly
Report on Form 10-QSB filed with the SEC on August 14,
2007;
|
|
(e)
|
Quarterly
Report on Form 10-QSB filed with the SEC on November 14,
2007;
|
|
(f)
|
The
description of our Common Stock contained in our Registration Statement
on
Form 8-A, filed with the SEC on February 12, 1992, including any
amendment
or reports filed for the purpose of updating such description;
and
|
|
(g)
|
All
other reports filed by the Company pursuant to Section 13(a), 13(c),
14
and 15(d) of the Securities Exchange Act prior to the sale of all
of the
shares covered by this registration
statement.
|
We
will provide to you, without charge, upon your written or oral request, a copy
of any or all of the documents that we incorporate by reference, other than
exhibits to those documents. Please direct requests
to: Arrhythmia Research Technology, Inc., 25 Sawyer Passway,
Fitchburg, Massachusetts 01420, Attn: Corporate Secretary;
(978) 345-5000.
ITEM
4. DESCRIPTION
OF SECURITIES
Not
applicable.
ITEM
5. INTERESTS
OF NAMED EXPERTS AND COUNSEL
Not
applicable.
ITEM
6. INDEMNIFICATION
OF OFFICERS AND DIRECTORS
Section
145 of the General Corporation Law of the State of Delaware grants each
corporation organized thereunder, such as the Company, the power to indemnify
its directors and officers against liability for certain of their acts. Section
102(b)(7) of the Delaware Corporation Law permits a provision in the certificate
of incorporation of each corporation organized thereunder eliminating or
limiting, with specified exceptions, the personal liability of a director to
the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director. The Company’s certificate of incorporation
contains this provision. The foregoing statements are subject to the detailed
provisions of Sections 145 and 102(b)(7) of the Delaware General Corporation
Law.
Article
VI of the Company’s By-Laws provides that the Company will indemnify its
officers, directors and employees to the fullest extent permitted by the
Delaware General Corporation Law in connection with proceedings with which
any
such person is involved by virtue of his or her status as an officer, director,
employee or agent. The Company maintains directors’ and officers’ liability
insurance, including a reimbursement policy in favor of the
Company.
The
By-Laws may require the Company, among other things, to indemnify directors
or
officers against certain liabilities that may arise by reason of their status
or
service as directors (other than liabilities resulting from willful misconduct
of a culpable nature), to advance expenses to them as they are incurred,
provided that they undertake to repay the amount advanced if it is ultimately
determined by a court that they are not entitled to indemnification, and to
obtain and maintain directors’ and officers’ insurance if available on
reasonable terms.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, Arrhythmia has been advised that in the
opinion of the SEC such indemnification is against public policy as expressed
in
the Securities Act and is, therefore, unenforceable.
ITEM
7. EXEMPTION
FROM REGISTRATION CLAIMED
Not
applicable.
ITEM
8. EXHIBITS
|
Exhibit
Number
|
Description
|
|
|
4.
|
1 |
Arrhythmia
Research Technology, Inc. 2001 Stock Option Plan, as amended
(1)
|
| 1 | ||
| 1 | ||
| 2 | ||
| 1 | ||
(1)
Filed as exhibits
to the Company’s Registration Statement on Form S-8 (File No. 333-11326)
incorporated herein by reference.
ITEM
9. UNDERTAKINGS
|
1.
|
The
undersigned registrant hereby
undertakes:
|
|
(a)
|
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 the
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 a twenty percent (20%) change in the maximum
aggregate offering price set forth in the “Calculation of Registration
Fee” table in the effective registration statement;
and
|
|
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 1(a)(i) and 1(a)(ii) do not apply if the registration
statement is on Form S-3 or Form S-8 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 Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference herein.
|
(b)
|
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 herein,
and the
offering of such securities at that time shall be deemed to be the
initial
bona fide offering thereof.
|
|
(c)
|
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.
|
|
2.
|
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 Section 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 herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
|
|
3.
|
Insofar
as indemnification for liabilities arising under the Securities Act
of
1933 may be permitted to directors, officers and controlling persons
of
the Registrant pursuant to the foregoing provisions, or otherwise,
the
Registrant has been advised that in the opinion of the Securities
and
Exchange Commission such indemnification is against public policy
as
expressed in the Securities 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
Securities Act and will be governed by the final adjudication of
such
issue.
|
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-8 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Fitchburg, Massachusetts, on the 19th day of November, 2007.
|
ARRHYTHMIA
RESEARCH TECHNOLOGY, INC.
|
||
|
By:
|
/s/ David A. Garrison | |
|
David
A. Garrison
|
||
|
Executive
Vice President and Chief Financial
Officer
|
||
POWER
OF ATTORNEY
Each
of the undersigned officers and directors of the Registrant whose signature
appears below hereby appoints David A. Garrison and James E. Rouse, jointly
and
individually, as attorneys-in-fact for the undersigned with full power of
substitution, to execute in his or her name and on behalf of such person,
individually, and in each capacity stated below, this Registration Statement
on
Form S-8 and one or more amendments (including post-effective amendments) to
this Registration Statement and any related registration statement under Rule
462(b) under the Securities Act of 1933 as the attorney-in-fact shall deem
appropriate, and to file any such amendment (including exhibits thereto and
other documents in connection herewith) to this Registration Statement on Form
S-8 or Rule 462(b) registration statement with the Securities and Exchange
Commission, granting unto said attorneys-in-fact, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as such person might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact, or either of them, may lawfully
do
or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities and on
the
dates indicated.
|
Signature
|
Title
|
Date
|
|
| /s/ James E. Rouse | November 19, 2007 | ||
|
James
E. Rouse
|
President,
Chief Executive Officer and Director
(principal
executive officer)
|
||
| /s/ E. P. Marinos | November 19, 2007 | ||
|
E.
P. Marinos
|
Chairman
of the Board and Director
|
||
| /s/ Jason R. Chambers | November 19, 2007 | ||
|
Jason
R. Chambers
|
Director
|
||
| /s/ Julius Tabin | November 19, 2007 | ||
|
Julius
Tabin
|
Director
|
||
| /s/ Paul F. Walter | November 19, 2007 | ||
|
Paul
F. Walter
|
Director
|
||
| /s/ David A. Garrison | November 19, 2007 | ||
|
David
A. Garrison
|
Executive
Vice President and Chief Financial Officer
(principal
financial officer)
|
EXHIBIT
INDEX
|
Exhibit
Number
|
Description
|
|
|
4.
|
1 |
Arrhythmia
Research Technology, Inc. 2001 Stock Option Plan, as
amended(1)
|
| 1 | ||
| 2 | ||
| 1 | ||
(1)
Filed as exhibits
to the Company’s Registration Statement on Form S-8 (File No. 333-11326)
incorporated herein by reference.