SECURITIES AND EXCHANGE COMMISSION
FORM S-3 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
INNOVATIVE MEDICAL SERVICES
(Exact Name of Registrant as Specified in its Charter)
CALIFORNIA 3841 33-0530289
(State of Incorporation) (Primary Standard (IRS Employer ID No.)
Classification Code)
1725 Gillespie Way, El Cajon, California 92020
(619) 596 8600
(Address and Telephone Number of Registrant's Principal
Executive Offices and Principal Place of Business)
MICHAEL L. KRALL
1725 Gillespie Way, El Cajon, California 92020
(619) 596 8600
(Name, Address and Telephone Number of Agent for Service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
CALCULATION OF REGISTRATION FEE
- --------------------------------
Title of each Proposed Proposed
class of Amount Maximum Maximum Amount of
securities to be offering price aggregate registration
to be registered registered per unit offering price fee
- - ---------------------------------------------------------------------------
Common Stock of
Selling Securities
Holder 160,000 $2.00 $320,000 $100
* Estimated Price in accordance with Rule 457(h)and based upon the last reported
sale on the NASDAQ SmallCap Market on December 2, 1999.
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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),
MAY DETERMINE.
THE EXHIBIT INDEX APPEARS ON PAGE II-4 OF THE SEQUENTIALLY NUMBERED PAGES
OF THIS REGISTRATION STATEMENT. THIS REGISTRATION STATEMENT, INCLUDING
EXHIBITS, CONTAINS 58 PAGES.
TABLE OF CONTENTS
Where You Can Get More Information..................................... 2
Certain Information We Are Incorporating by Reference.................. 2
Forward Looking Statements............................................. 3
Prospectus Summary..................................................... 4
Risk Factors........................................................... 5
Use of Proceeds........................................................ 7
Selling Stockholders................................................... 8
Plan of Distribution................................................... 8
Legal Matters.......................................................... 9
Experts................................................................ 9
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INNOVATIVE MEDICAL SERVICES
PROSPECTUS
LOGO
160,000 SHARES OF COMMON STOCK OFFERRED BY THE SELLING SECURITIES HOLDER.
Innovative Medical Services (the Company) will not receive any of the proceeds
from the sale of shares by the Selling Securities Holder.
The Company's Shares are traded on The Nasdaq SmallCap Market under the symbol
PURE.
On December 2, 1999, the closing sale price of the common stock, as reported on
the Nasdaq SmallCap Market, was $2.00 per share.
THESE ARE SPECULATIVE SECURITIES, INVOLVE A HIGH DEGREE OF RISK AND SHOULD
BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE
INVESTMENT. (SEE "RISK FACTORS.")
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISSAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Selling Securities Holder may sell the shares of common stock described
in this prospectus in public or private transactions, on or off the Nasdaq
SmallCap Market, at prevailing market prices, or at privately negotiated prices.
The Selling Securities Holder may sell shares directly to purchasers or through
brokers or dealers. Brokers or dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Securities Holder. More
information is provided in the section titled "Plan of Distribution."
The date of this Prospectus is December 3, 1999
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WHERE YOU CAN GET MORE INFORMATION
The Company is subject to the reporting requirements of the Securities Exchange
Act of 1934 and files annual, quarterly and current reports, proxy statements
and other information with the SEC. You may read and copy these reports, proxy
statements and other information at the SEC's public reference facilities at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, Seven World
Trade Center, 13th Floor, New York, New York 10048 and at Northwest Atrium
Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You can
request copies of these documents by writing to the SEC and paying a fee for the
copying cost. Please call the SEC at 1-800-SEC-0330 for more information about
the operation of the public reference facilities. SEC filings are also available
at the SEC's Web site at http://www.sec.gov. The Company's common stock is
listed on the Nasdaq SmallCap Market, and you can read and inspect our filings
at the offices of the National Association of Securities Dealers, Inc. at 1735 K
Street, Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" information that we file with
them. Incorporation by reference allows us to disclose important information to
you by referring you to those other documents. The information incorporated by
reference is an important part of this prospectus, and information that we file
later with the SEC will automatically update and supersede this information. The
Company has filed a Registration Statement on Form S-3 under the Securities Act
of 1933 with the SEC with respect to the common stock being offered pursuant to
this prospectus. This prospectus omits certain information contained in the
Registration Statement on Form S-3, as permitted by the SEC. Refer to the
Registration Statement on Form S-3, including the exhibits, for further
information about The Company and the common stock being offered pursuant to
this prospectus. Statements in this prospectus regarding the provisions of
certain documents filed with, or incorporated by reference in, the Registration
Statement are not necessarily complete and each statement is qualified in all
respects by that reference. Copies of all or any part of the Registration
Statement, including the documents incorporated by reference or the exhibits,
may be obtained upon payment of the prescribed rates at the offices of the SEC
listed above.
Upon request, the Company will provide without charge to each person to whom a
copy of this prospectus has been delivered a copy of any information that was
incorporated by reference in the prospectus (other than exhibits to documents,
unless the exhibits are specifically incorporated by reference into the
prospectus). The Company will also provide upon request, without charge to each
person to whom a copy of this prospectus has been delivered, a copy of all
documents filed from time to time by The Company with the SEC pursuant to the
Exchange Act of 1934. Requests for copies should be directed to Donna Singer
Vice President, Innovative Medical Services, 1725 Gillespie Way, El Cajon,
California 92020. Telephone requests may be directed to Ms. Singer at (619) 596
9600.
CERTAIN INFORMATION WE ARE INCORPORATING BY REFERENCE
We incorporate by reference the documents listed below and any future filings we
will make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934:
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-- Annual Report on Form 10-KSB for the fiscal year ended July 31, 1999
-- The Definitive Proxy Statement filed on November 29, 1999
-- All other documents filed by the Company after the date of this
Prospectus under Section 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, (the Exchange Act) are incorporated by reference
herein to be a part thereof from the date of filing of such documents.
You may request a copy of these filings at no cost, by writing, telephoning or
e-mailing us at the following address:
Innovative Medical Services
1725 Gillespie Way, El Cajon, California 92020
e-mail: [email protected]
This prospectus is part of a Registration Statement we filed with the SEC. You
should rely only on the information incorporated by reference or provided in
this prospectus. No one else is authorized to provide you with different
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of this
document.
FORWARD-LOOKING STATEMENTS
This prospectus contains and incorporates by reference forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, including statements
regarding The Company's drug development programs, clinical trials, receipt of
regulatory approval, capital needs, collaborative agreements, intellectual
property, expectations and intentions. Forward-looking statements may be
identified or qualified by words such as "likely", "will", "suggests", "may",
"would", "could", "should", "expects", "anticipates", "estimates", "plans",
"projects", "believes", or similar expressions and variants of those words or
expressions.
Forward-looking statements necessarily involve risks and uncertainties, and The
Company's actual results could differ materially from those anticipated in the
forward-looking statements due to a number of factors, including those set forth
below under "Risk Factors" and elsewhere in this prospectus. The factors set
forth below under "Risk Factors" and other cautionary statements made in this
prospectus should be read and understood as being applicable to all related
forward-looking statements wherever they appear in this prospectus. The
forward-looking statements contained in this prospectus represent our judgment
as of the date of this prospectus. The Company cautions readers not to place
undue reliance on such statements. We undertake no obligation to update publicly
any forward-looking statements for any reason, even if new information becomes
available or other events occur in the future.
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PROSPECTUS SUMMARY
THE COMPANY:
Innovative Medical Services was incorporated in the State of California in 1992,
to pursue the immediate business of manufacturing and marketing the
Fillmaster(R) and subsequently a broadly based business of delivering advanced
technology, equipment and supplies to the pharmacy industry, in addition to
pursuing the business of residential water filtration. During our first three
years, we established the production and design, entered into contracts with its
parts suppliers and manufacturers, developed its initial assembly process and
implemented our marketing program for the Fillmaster. We have also entered the
consumer market with our Nutripure(R) line of residential drinking water
systems.
The Company's cornerstone product is the Fillmaster pharmaceutical water
purification and dispensing system. The Fillmaster provides measured amounts of
purified water for reconstitution of liquid oral antibiotics and certain other
pharmacy applications. The Fillmaster System uses a six-stage water purification
unit featuring an electronic water purity testing module and an auxiliary faucet
for dispensing purified water. The Fillmaster System integrates with the
building's tap water plumbing, is closed and pressurized and, according to our
testing, has a fill rate at least three times that of current bottle-and-hose
methods. We market proprietary filters for the Fillmaster that require changing
every nine to twelve months or whenever indicated by the system's water quality
monitor. Filter replacements represent a significant continuing source of sales
to the Company.
The Nutripure product line is the Company's entry into the retail market. The
Nutripure 2000, developed specifically for mass merchandising, offers excellent
water filtration technology at competitive pricing through a unique marketing
approach. Nutripure's professional one-micron, carbon microfilter reduces dirt,
chemicals, lead and parasites to improve the taste, quality and safety of water.
Nutripure is the only water filtration system in its class that is pharmacist
recommended.
In the past three years, we have launched five new products: the Fillmaster
1000e computerized dispenser, the Scanmaster(TM) bar code reader, and three
products in the Company's Nutripure line of residential drinking water systems.
The Company continued its marketing campaigns to expand into new markets while
pursuing development of future products. We have also established an
export/import operation to distribute medical supplies and its water filtration
products in Brazil.
In addition, Innovative Medical Services is establishing an internet marketing
presence for its residential water products through a corporate web site and a
shopping site on Yahoo!(R) Store. We are currently engaged in contracts with
major web portals and search engines for banner and keyword advertising. The
Company is developing a strategic partnership to create an e-commerce medium for
high quality vitamins, minerals and supplements at value pricing.
SECURITIES OFFERED: The Company has filed a Registration Statement of which this
Prospectus is a part which registers 160,000 shares of common stock issued to a
certain investor in a Private Placement conducted in September 1999.
The Company is not offering any of the Selling Securities Holder securities.
These shares may be sold by the holder from time to time at prevailing market
prices. The Company will not receive any of the proceeds from any sale of the
Selling Securities Holder shares. See "Description of Securities", "Securities
Being Registered" and "Selling Security Holders".
USE OF PROCEEDS: The Company will not receive any of the proceeds from any sale
of the Selling Securities Holder shares
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RISK FACTORS
These Securities involve a high degree of risk. Prospective purchasers should
consider carefully, among other factors set forth in the Prospectus, the
following:
RISK FACTORS RELATING TO THE COMPANY
1. Limited Operating History. As of July 31, 1999 we had an accumulated deficit
of $3,840,610. The Company was formed in 1992 and commenced the manufacture and
marketing of its Fillmaster(R) product in the final quarter of fiscal year 1993.
As a result, it is subject to the risks inherent in a new enterprise, including
the absence of a lengthy operating history, shortage of cash, under
capitalization and new products.
2. Competition. The Company believes that the business of providing advanced
technology apparatus to the pharmaceutical industry is relatively new and that
it is likely that the Company will face extensive competition as the market
develops. These competitors are likely to be larger and have greater financial
resources than the Company. As a result no assurances can be given that the
Company will be able to obtain and maintain sufficient market share to be
successful. In addition, the Company's consumer line of water filtration
products has been introduced into a highly competitive retail market. The
products have limited retail distribution at this time, and may or may not be
widely adopted by retailers. If the products do become nationally distributed,
there is no assurance that retailers will continue to carry the products.
3. Dependence on Management. The success of the Company will be dependent
largely upon the efforts of its present management. To the extent the services
of management would be unavailable to the Company for whatever reason, the
Company would be required to obtain other executive personnel to manage and
operate the Company. In such event, there can be no assurance that the Company
would be able to employ qualified persons on terms favorable to the Company.
Although the Company has Key Man Life Insurance on its President, Michael L.
Krall, it is anticipated that the Company will remain primarily dependent upon
the efforts of Management. (Please see "Management.")
4. Regulation of Pharmaceutical Products. The United States Food and Drug
Administration has established a Good Manufacturing Practices protocol which
requires that products be built to certain standards and specifically that an
apparatus used in handling anything added to a prescription not cause any
contamination of the prescription. The Company believes that all components and
materials in its Product meet or exceed the current FDA standards. However no
assurances can be given that FDA standards will not change in the future. In
addition, the United States Pharmacopeia and the National Formulary (USP/NF)
provide the standards for materials and substances and their preparations that
are used in the practice of healing arts and establish standards of quality,
strength and purity. The USP/NF require that only "Purified Water" be used in
the reconstitution of oral prescriptions. Also, State Boards of Pharmacy
uniformly defer to the standards of the USP/NF. In addition, drug manufacturers
themselves require the use of "Purified Water" to ensure product stability and
potency. While the Company's Fillmaster(R) meets or exceeds the USP requirements
for "Purified Water", no assurance can be given that the current regulations
will not be modified or that new regulations be implemented which could
adversely effect the Company's business.
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RISK FACTORS RELATING TO THIS OFFERING
1. Lack of Dividends. The Company has never paid a dividend on its common stock
and intends to retain all earnings for the foreseeable future in order to
complete its business plan.
2. Potential Adverse Effect of Shares Issuable Upon Exercise Of Stock Options
And Outstanding Shares Available for Resale. The Company has adopted a 1996
Incentive Stock Option Plan, a 1996 Directors and Officers Stock Option Plan and
a 1998 Directors and Officers Stock Option Plan. The Company has reserved
1,000,000, 1,000,000 and 2,000,000 Common shares for issuance under each
respective plan. As of the date of this Prospectus options to acquire 1,270,250
shares have been awarded pursuant to the 1996 and 1998 Directors and Officers
Stock Option Plan. In addition, 1,147,972 of the Company's presently outstanding
4,392,242 shares of common stock are "restricted securities" as defined by Rule
144 adopted under the Securities Act of 1933, as amended. Rule 144 is a
regulated method for holders of restricted securities to sell their securities
into the market. Nearly all of holders of such restricted securities have held
the securities for the time period required by Rule 144 and may sell their
securities. Such sales and the exercise of options and sale of underlying shares
could have an adverse effect on the market for the Shares. (Please see "Market
for Company's Common Stock and Related Stockholder Matters.")
3. Maintenance Criteria for Nasdaq Securities. The National Association of
Securities Dealers, Inc. (the "NASD"), which administers the Nasdaq SmallCap
Market has established the criteria for continued Nasdaq eligibility. In order
to continue to be included in the Nasdaq SmallCap Market, a company must
maintain $2 million in total assets, a $200,000
market value of its public float and $1 million in total capital and surplus. In
addition, continued inclusion requires two market-makers, at least 300 holders
of the Shares and a minimum bid price of $1 per share; provided, however, that
if a company falls below such minimum bid price, it will remain eligible for
continued inclusion in Nasdaq if the market value of the public float is at
least $1 million and the Company has $2 million in capital and surplus. The
Company's failure to meet these maintenance criteria in the future may result in
the discontinuance of the inclusion of its securities in Nasdaq. In such event,
trading, if any, in the securities may then continue to be conducted in the
non-Nasdaq over-the-counter market in what are commonly referred to as the
electronic bulletin board and the "pink sheets". As a result, an investor may
find it more difficult to dispose of or to obtain accurate quotations as to the
market value of the securities. In addition. the Company would be subject to a
Rule promulgated by the Securities and Exchange Commission (the "Commission")
that, if the Company fails to meet criteria set forth in such rule, imposes
various sales practice requirements on broker-dealers who sell securities
governed by the Rule to persons other than established customers and accredited
investors. For these types of transactions, the broker-dealer must make a
special suitability determination for the purchaser and have received the
purchaser's written consent to the transactions prior to sale. Consequently, the
rule may have an adverse effect on the ability of broker-dealers to sell the
securities, which may affect the ability of purchasers in the offering to sell
the securities in the secondary market.
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4. Disclosure Related to Penny Stocks. The Commission has adopted rules that
define a "penny stock". In the event that any of the Company's securities are
characterized in the future as penny stock, broker-dealers dealing in the
securities will he subject to the disclosure rules for transactions involving
penny stocks which require the broker-dealer among other things to (i) determine
the suitability of purchasers of the securities, and obtain the written consent
of purchasers to purchase such securities and (ii) disclose the best (inside)
bid and offer prices for such securities and the price at which the
broker-dealer last purchased or sold the securities. The additional burdens
imposed upon broker-dealers may discourage them from effecting transactions in
penny stocks, which could reduce the liquidity of the securities offered hereby.
5. Limitation on Directors' Liability. The Company's Articles of Incorporation
provide for certain limitations on the liability of the Company's directors to
its stockholders for monetary damages. Such limitations could adversely affect
an investor's ability to recover damages from such directors.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares by the
Selling Securities Holder.
DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized to issue up to 20,000,000 shares of its no par value
common stock. Each share is entitled to one vote on matters submitted to a vote
of the shareholders of the Company. There is no cumulative voting of the common
stock. The common stock shares have no redemption provisions nor any preemptive
rights. The Company is also authorized to issue up to 5,000,000 shares of
preferred stock, the rights and preferences of which may be set from time to
time prior to issuance by the Board of Directors.
Class A Warrants
Each Class A Warrant entitles the holder to acquire an additional common share
for $5.25 per common share. The Class A Warrants remain exercisable at the
original exercise price until August 8, 2001.
The Class A Warrants are redeemable by the Company for $0.05 per Class A Warrant
provided the closing bid price for the Company's common shares shall have
averaged in excess of $9.00 per share for any twenty (20) trading days within a
period of thirty (30) consecutive business days ending within five (5) days of
the date of a Notice of Redemption. The Class A Warrants expire on August 8,
2001.
Class Z Warrants: The Class Z Warrants entitle the holder to acquire one (1)
common share at $10 per share. The Class Z Warrants have been exercisable since
August 8, 1998 and expire on August 8, 2001.
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PLAN OF DISTRIBUTION
The Company intends to solicit the exercise of the Class A Warrants by mailing a
copy of this prospectus to the registered holders of the Class A Warrants with
instructions on how to deposit the Class A Warrants and the exercise price with
the Warrant Agent, American Securities Transfer & Trust, Inc., Lakewood,
Colorado. The Company does not intend to engage the services of any independent
parties to solicit the exercise of the Class A Warrants nor pay any commissions
for obtaining the exercise of the Class A Warrants. SELLING SECURITY HOLDERS
The following Selling Security Holders whose shares have been registered for
public resale under the registration statement which registered the public
offering of the shares underlying the Class A Warrants are set forth below:
SELLING SECURITIES HOLDER SECURITIES OWNED AND OFFERED
Adler Corporation PTY, Ltd. 160,000
Neither the Selling Security Holder nor any of its affiliates have ever held any
position, office, or other material relationship with the Company.
The Selling Security Holder and its affiliates do not own any other securities
of the Company.
SELLING SECURITY HOLDER PLAN OF DISTRIBUTION
The Selling Security Holder may sell or distribute its shares in transactions
through underwriters, brokers, dealers or agents from time to time or through
privately negotiated transactions, including in distributions to shareholders or
partners or other persons affiliated with the Selling Security Holder.
The distribution of the Selling Security Holder shares may be effected from time
to time in one or more transactions (which may involve crosses or block
transactions) (i) in the over-the-counter market, (ii) in transactions otherwise
than in the over-the-counter market or (iii) through the writing of options on
the shares (whether such options are listed on an options exchange or
otherwise). Any of such transactions may be effected at market prices prevailing
at the time of sale, at prices related to such prevailing market prices, at
negotiated prices or at fixed prices. If the Selling Security Holder effects
such transactions by selling the shares to or through underwriters, brokers,
dealers or agents, such underwriters, brokers, dealers or agents may receive
compensation in the form of discounts, concessions or commissions from the
Selling Security Holder or commissions from purchasers of the shares for whom
they may act as agent (which discounts, concessions or commissions as to
particular underwriters, brokers, dealers or agents might be in excess of those
customary in the types of transactions involved). A Selling Security Holder and
any brokers, dealers or agents that participate in the distribution of the
securities might be deemed to be underwriters, and any profit on the sale of the
securities by them and any discounts, concessions or commissions received by any
such underwriters, brokers, dealers or agents might be deemed to be underwriting
discounts and commissions under the Securities Act. A Selling Security Holder
may pledge its shares from time to time in connection with such Selling Security
Holder's financing arrangements. To the extent any such pledgees exercise their
rights to foreclose on any such pledge, and sell the shares, such pledgees may
be deemed underwriters with respect to such shares and sales by them may be
effected under this Prospectus. The Company will not receive any of the proceeds
from the sale of any of the shares by the Selling Security Holder.
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Under the Exchange Act and applicable rules and regulations promulgated
thereunder, any person engaged in a distribution of any of the shares may not
simultaneously engage in market making activities with respect to the shares for
a period, depending upon certain circumstances, of either two days or nine days
prior to the commencement of such distribution. In addition, and without
limiting the foregoing, the Selling Security Holder will be subject to
applicable provisions of the Exchange Act and the rules and regulations
promulgated thereunder, including without limitation Rules 10b-6 and 10b-7,
which provisions may limit the timing of purchases and sales of any of the
shares by the Selling Security Holder.
Under the securities laws of certain states, the shares may be sold in such
states only through registered or licensed brokers or dealers. In addition, in
certain states the shares may not be sold unless the shares have been registered
or qualify for sale in such state or an exemption from registration or
qualification is available and is complied with.
TRANSFER AGENT
The Transfer Agent with respect to the Shares is American Securities Transfer &
Trust, Inc., Lakewood, Colorado.
LEGAL MATTERS
The legality of the Securities of the Company offered will be passed on for the
Company by Dennis Brovarone, Attorney at Law, Westminster, Colorado.
Mr. Brovarone is also a Director of the Company.
EXPERTS
The Financial Statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-KSB for the year ended July 31, 1999 have been so
incorporated in reliance on the report of Steven Holland certified public
accountant, given on the authority of said firm as experts in auditing and
accounting.
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE SHARES UNDERLYING THE CLASS A
WARRANTS OFFERED BY THIS PROSPECTUS OR AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY THE SHARES AND THE CLASS A WARRANTS IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION.
TABLE OF CONTENTS
Where You Can Get More Information..................................... 2
Certain Information We Are Incorporating by Reference.................. 2
Forward Looking Statements............................................. 3
Prospectus Summary..................................................... 4
Risk Factors........................................................... 5
Use of Proceeds........................................................ 7
Selling Stockholders................................................... 8
Plan of Distribution................................................... 8
Legal Matters.......................................................... 9
Experts................................................................ 9
UNTIL December 28, 1999 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
INNOVATIVE MEDICAL SERVICES
LOGO
-------------------------
PROSPECTUS
-------------------------
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The only statute, charter provision, bylaw, contract, or other arrangement under
which any controlling persons, director or officer of the Registrant is insured
or indemnified in any manner against any liability which he may incur in his
capacity as such, is as follows:
(a) The Company's Certificate of Incorporation provides the Company's Officers
and Directors the full extent of the protection offered by the General
Corporation Law of the State of California.
(b) The General Corporation Law of the State of California provides that a
corporation may include a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director (i) for any breach of
the directors' duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under the Corporation Law dealing with the
liability of directors for unlawful payment of dividend or unlawful stock
purchase or redemption, or (iv) for any transaction from which the director
derived an improper personal benefit. No such provision shall eliminate or limit
the liability of a director for any act or omission occurring prior to the date
when such provision becomes effective.
(c) The Company's Bylaws provide that the Company may indemnify its Officers and
Directors to the full extent permitted by the General Corporation Law of the
State of California.
(d) The General Corporation Law of the State of California provides that a
corporation may indemnify its directors and officers against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
incurred by them in connection with any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the rights of the corporation), by reason of
being or having been directors or officers, if such directors or officers acted
in good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the corporation and, with respect to any criminal action or
proceeding, they had no reasonable cause to believe their conduct was unlawful.
The indemnification provided the General Corporation Law of the State of
California is not exclusive of any other rights arising under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses of the offering, all of which are to be borne by the
Registrant, are as follows:
SEC Filing Fee 100
NASD Filing Fee na
Printing Expenses 1,000
Accounting Fees and Expenses 0
Legal Fees and Expenses 0
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ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the Registrant sold securities which were not
registered under the Securities Act of 1933, as amended, as follows:
COMMON TOTAL
NAME OF PURCHASER DATE STOCK CONSIDERATION
Frederick Hirth 09/17/97 12,000 property (1)
(1) Issued in consideration of the assignment of the Medifier patent
CERTAIN OPTION HOLDERS
# OF UNDERLYING
NAME OF OPTIONEE DATE COMMON STOCK CONSIDERATION
Glenn Hall 08/03/98 40,000 Services (1)
Minneapolis Company 11/16/98 300,000 Services (2)
(1) 5 year options to acquire common stock at $0.625 per share granted in
consideration of services rendered in connection with the Company's obtaining a
line of credit.
(2) Options to acquire common stock at $1.1875 per share granted in
consideration of investment banking services to be rendered. In February 1999,
the Minneapolis Company surrendered the options in consideration of the
Registrant's agreement to terminate the investment banking agreement.
JANUARY 1999 PRIVATE PLACEMENT
COMMON TOTAL
NAME OF PURCHASER DATE STOCK CONSIDERATION
Mitchell Kaminsky 01/29/99 117,766 175,000
Mathew Kanter 01/29/99 125,000 185,750
SEPTEMBER 1999 PRIVATE PLACEMENT
COMMON TOTAL
NAME OF PURCHASER DATE STOCK CONSIDERATION
Adler Corporation PYT, Ltd. 09/24/99 160,000 $200,000
With respect to the sales made, the Company or its affiliates relied on Section
4(2) of the Securities Act of 1933, as amended. No advertising or general
solicitation was employed in offering the securities. The securities were
offered to officers and directors who had access to information by virtue of
their relationship as officers and directors of the Company or to persons with a
prior business or family relationship with officers and directors of the
Company. The securities were offered for investment only and not for the purpose
of resale or distribution, and the transfer thereof was appropriately restricted
by the Company.
12
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ITEM 27. EXHIBITS.
The following Exhibits are filed as part of this Registration Statement pursuant
to Item 601 of Regulation S-B:
*3.1 -- Articles of Incorporation, Articles of Amendment and Bylaws
*4.1 -- Form of Class A Warrant
*4.2 -- Form of Class Z Warrant
*4.3 -- Form of Common Stock Certificate
*4.4 -- Warrant Agreement
5.1 -- Opinion of Dennis Brovarone, Attorney at Law
*10.1 -- Employment Contract/Michael L. Krall
23.1 -- Consent of Dennis Brovarone, Attorney at Law (see opinion)
23.2 -- Consent of Steven Holland, Certified Public Accountant
* Incorporated by reference from incorporated by reference from Form SB-2
Registration SEC File # 333-00434 effective August 8, 1996
ITEM 28. UNDERTAKINGS.
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 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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;
(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;
II-4
-13-
<PAGE>
(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.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
-14-
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933 as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and authorized this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of El Cajon, State of California on December 3, 1999.
INNOVATIVE MEDICAL SERVICES
By: /s/ MICHAEL L. KRALL
- --------------------------------
Michael L. Krall
Executive Officer
In accordance with 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 stated.
SIGNATURE TITLE DATE
/s/ MICHAEL L. KRALL President, Chief Executive December 3, 1999
- ------------------------ Officer and Director
Michael L. Krall
/s/ GARY BROWNELL Chief Financial Officer, December 3, 1999
- ------------------------ Director
Gary Brownell
/s/ EUGENE PEISER, PD Director December 3, 1999
-----------------------
Eugene Peiser, PD
/s/ PATRICK GALUSKA Director December 3, 1999
- ------------------------
Patrick Galuska
/s/ DENNIS BROVARONE Director December 3, 1999
- ------------------------
Dennis Brovarone
/s/ DONNA SINGER Director December 3, 1999
- ------------------------
Donna Singer
15
<PAGE>
EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
*3.1 -- Articles of Incorporation, Articles of Amendment and Bylaws.
*4.1 -- Form of Class A Warrant.
*4.2 -- Form of Class Z Warrant
*4.3 -- Form of Common Stock Certificate
*4.4 -- Warrant Agreement
5.1 -- Opinion of Dennis Brovarone, Attorney at Law
23.1 -- Consent of Dennis Brovarone, Attorney at Law (see opinion)
23.2 -- Consent of Steven Holland, Certified Public Accountant
* Incorporated by reference from Form SB-2 Registration SEC File # 333-00434
effective August 8, 1996
16
<PAGE>
EXHIBIT 5.1
DENNIS BROVARONE
ATTORNEY AND COUNSELOR AT LAW
11249 West 103rd Drive
Westminster, Colorado 80021
phone: 303 466 4092 / fax: 303 466 4826
December 7, 1999
Board of Directors
Innovative Medical Services
Re: Registration Statement on Form S-3
-----------------------------------
Gentlemen:
You have requested my opinion as to the legality of the issuance by
Innovative Medical Services, (the "Corporation") of 160,000 shares of Common
Stock to Adler Corporation PTY, Ltd., being offered by a certain selling
securities holder (the "Shares"). The Shares are the subject of a Registration
Statement on Form S-3 (the "Registration Statement") to be filed on or before
December 7, 1999.
Pursuant to your request I have reviewed and examined:(1).The Articles of
Incorporation of the Corporation, as amended (the "Articles"); (2). The Bylaws
of the Corporation, as certified by the Secretary of the Corporation; (3). The
minute book of the Corporation; (4). A copy of certain resolutions of the Board
of Directors of the Corporation; (5). The Registration Statement; (6) and
(7).Such other matters as I have deemed relevant in order to form my opinion.
Based upon the foregoing, and subject to the qualifications set forth
below, I am of the opinion that the Shares, if issued as described in the
Registration Statement will have been duly authorized, legally issued, fully
paid and non-assessable.
This opinion is furnished by me as counsel to the Corporation and is solely
for your benefit. Neither this opinion nor copies hereof may be relied upon by,
delivered to, or quoted in whole or in part to any governmental agency or other
person without our prior written consent. My opinion is subject to the
qualification that no opinion is expressed herein as to the application of state
securities or Blue Sky laws.
Not withstanding the above, I consent to the use of this opinion in the
Registration Statement. In giving my consent, I do not admit that I come without
the category of persons whose consent is required under Section 7 of the
Securities and Exchange Commission promulgated thereunder.
Very truly yours,
/s/ DENNIS BROVARONE
- ---------------------
Dennis Brovarone
<PAGE>
EXHIBIT 23.2
STEVEN HOLLAND, CPA
3914 MURPHY CANYON RD., STE. A126
SAN DIEGO, CA. 92123
(619) 279-1640
I have prepared the attached audited financial statements for Innovative Medical
Services for the fiscal years ended July 31, 1998 and 1997 contained in the
Company's annual report on Form 10-ksb for the fiscal year ended July 31, 1998
and do hereby consent to their inclusion with the company's intended
registration statement on Form S-3.
/s/STEVEN HOLLAND
- - -----------------
Steven Holland, CPA
December 7, 1999
<PAGE>
