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
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Title of each Proposed Proposed
class of Amount Maximum Maximum Amount of
securities to be offering price aggregate registration
to be registered registered per Share offering price fee
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Common Stock of 1,214,822 $3.75 $4,555,582.50 $1,202.67
Selling Securities
Holders
* Estimated Price in accordance with Rule 457(h)and based upon the last reported
sale on the NASDAQ SmallCap Market on May 2, 2000.
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 x PAGES.
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TABLE OF CONTENTS
Where You Can Get More Information..................................... 2
Certain Information We Are Incorporating by Reference.................. 2
Forward Looking Statements............................................. 3
Risk Factors........................................................... 3
Innovative Medical Services. ..........................................12
Selling Stockholders...................................................12
Plan of Distribution...................................................19
Legal Matters..........................................................20
Experts................................................................20
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((Innovative Medical Services Logo))
[GRAPHIC OMITTED]
PROSPECTUS
1,214,822 SHARES OF COMMON STOCK OFFERRED BY THE SELLING SECURITIES HOLDERS.
Innovative Medical Services ("Innovative", "us", or "we") will not receive any
of the proceeds from the sale of shares by the Selling Securities Holders.
The Company's Shares are traded on The Nasdaq SmallCap Market under the symbol
PURE.
On April 27, 2000, the closing sale price of the common stock, as reported on
the Nasdaq SmallCap Market, was $3.50 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 Holders 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 Holders 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 Holders. More
information is provided in the section titled "Plan of Distribution."
The date of this Prospectus is May x, 2000
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WHERE YOU CAN GET MORE INFORMATION
We are 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. We
have 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 us and our 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
-- Quarterly Report on Form 10-QSB for the three month period ended
October 31, 1999
-- Quarterly Report on Form 10-QSB for the six month period ended
January 31, 2000
-- All other documents filed by us 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
Innovative Medical Services ("Innovative", "us" or "we"), is based in El Cajon,
California. We market unique water treatment and disinfecting solutions to a
broad range of customers, including pharmaceutical, healthcare and consumer
markets. Our address is 1725 Gillespie Way, El Cajon, California 92020. Our
telephone number is 619 596 8600.
We are the nation's leader in pharmaceutical water purification. Our cornerstone
products have been the Fillmaster(R), Fillmaster 1000e(R)and Scanmaster(TM)water
purification, measuring and dispensing technologies used in pharmacies to
reconstitute oral antibiotic prescriptions. We market proprietary filters for
these products, which are a significant source of revenues and cash flow.
We have also entered the consumer market with our Nutripure(R) line of
residential drinking water systems, including the Nutripure 2000 countertop
water filtration system which delivers superior product quality and capacity to
consumers. Nutripure is the only water filtration system in its class that is
pharmacist recommended.
Innovative Medical Services has begun marketing water treatment and disinfecting
technologies. One of our initial target market is the hospital market. Hospital
water systems can harbor bacteria, including Legionella-- the bacteria
responsible for Legionnaires' disease, which can be deadly to patients with
compromised immune systems. Our licensed technology integrates with a hospital's
water system to control and eliminate bio-film buildup.
Another of our newly licensed products is Axenohl(TM). Axenohl is a
patent-pending, non-toxic aqueous disinfectant containing stabilized silver
ions. Axenohl does not include the use of traditional disinfectants such as
chlorine or bromine compounds. We will market Axenohl to the medical, dental and
food processing markets in addition to the commercial and consumer drinking
water markets in conjunction with IMS' Nutripure line of water treatment
systems.
In February, Innovative Medical Services launched Nutripure.com: an e-commerce
web supersite providing consumers a wide variety of vitamins, minerals,
nutritional supplements, homeopathic remedies and natural products. In addition
to products, the website offers comprehensive health and wellness information in
an easy-to-access, intuitive reference format. The website also presents the
Nutripure line of water filtration systems.
SECURITIES OFFERED: 1,214,822 shares of common stock offered by the named
Selling Securities Holders.
We are not offering any of the Selling Securities Holders securities. These
shares may be sold by the holders from time to time at prevailing market prices.
The Company will not receive any of the proceeds from any sale of the Selling
Securities Holders shares. See "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
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adversely effect the Company's business.
5. Volatility of Retail Markets The Company's recent entrance to mass
merchandising poses several risk factors. The primary retail product, the
Nutripure 2000 home water filtration system, is currently being sold through
select Wal-Mart stores. The Company expects distribution to increase in not only
Wal-Mart, but also many other mass merchandisers in the US. The retail water
filtration market is highly competitive, with other top brands backed by very
large corporations. The Company will depend on developing brand awareness to
attract consumers to Nutripure 2000. As with many retail products, Nutripure
2000 may be subject to external factors of retailing, including the condition of
the economy, seasonal sales, dependence on shippers and transportation
companies, and the ability of retailers to attract customers to the stores. The
Company faces liability related to the product itself and carries insurance to
mitigate that risk.
6. Early Stage Operating Subsidiary Nutripure.com, a subsidiary 80% owned by
Innovative Medical Services, has a limited operating history. Nutripure.com is
engaged in internet retailing of vitamins, minerals, nutritional supplements,
homeopathic remedies and other natural products. Success of this operating
subsidiary depends on several factors, including our ability to compete in the
rapidly evolving and highly competitive online retailing market, our ability to
create brand name awareness and attract and retain customers, our ability to
rely on the capacity, stability, efficiency and security of internet
transactions and software relating to transaction processing, our reliance upon
Bergen Brunswig as our primary fulfillment partner, and our reliance upon UPS
and US Mail for product shipment. In addition, Nutripure.com faces uncertainty
and liability related to government regulation of vitamins, minerals,
nutritional supplements, homeopathic remedies and other natural products.
Governmental regulation of some over-the-counter health products may in the
future limit our sales or add additional costs to distribution. Nutripure.com
may also face liability for the health information and content on our website.
7. New products and technologies The Company has begun marketing several new
antimicrobial silver ion technologies to industrial markets including
healthcare, dental, veterinary and food processing as well as to consumer
products markets. Risks involved in introducing new antimicrobial technologies
include liability for product effectiveness, competition from existing or
emerging antimicrobial solutions. Many of these products must be approved by
government agencies, and the Company may be delayed or prevented from selling
the new products until such approvals are obtained. Even after approval, the
Company will remain subject to changing governmental policies regulating
antimicrobial products. The Company also intends to take these technologies to
the international marketplace, and international business carries a great deal
of risk with regard to foreign governments, banking and markets.
RISK FACTORS RELATING TO THIS OFFERING
1. 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
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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.")
2. 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.
3. Risk of Investing in Penny Stocks.We believe our common stock may be
characterized as penny stock. As such, broker-dealers dealing in our common
stock will be subject to the disclosure rules for transactions involving penny
stocks which require the broker-dealer to determine the if purchasing our common
stock is suitable for a particular investor. The broker-dealer must also obtain
the written consent of purchasers to purchase our common stock. The
broker-dealer must also disclose the best bid and offer prices available for our
stock and the price at which the broker-dealer last purchased or sold our common
stock. These additional burdens imposed upon broker-dealers may discourage them
from effecting transactions in our common stock, which could make it difficult
for an investor to sell their shares.
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DESCRIPTION OF SECURITIES
Common Stock
We are 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. There is no cumulative voting of the common stock. The common
stock shares have no redemption provisions nor any preemptive rights. We are
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 until August
8, 2001.
The Class A Warrants are redeemable for $0.05 per Class A Warrant provided the
closing bid price for the 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.
SELLING SECURITY HOLDERS
The following Selling Security Holders whose shares have been registered for
public resale are set forth below:
SELLING SECURITIES HOLDER SECURITIES OWNED %Before %After
AND OFFERED Offering Offering
Richard Rogers & Julie Rogers JTWROS 29,630 (1) 0.5% 0
Mark Vittert & Carol Vittert 29,630 (1) 0.5% 0
Glen Wegner 29,630 (1) 0.5% 0
Orienstar Finance Limited 29,630 (1) 0.5% 0
Stanford E. Bazilian 207,408 (2) 3.2% 0
Sofisco Nominees Limitied 592,594 (3) 9.1% 0
Richard W. Strang Sr Trustee 29,630 (1) 0.5% 0
Strang Mech. Emp. Ret. Trust
William A. Shewalter 59.260 (1) 1.0% 0
John W. Dowd III 29,630 (1) 0.5% 0
Antonio C Alvarel 29,630 (1) 0.5% 0
Roy Thung 29,630 (1) 0.5% 0
Michael Rothaus 29,630 (1) 0.5% 0
Billy W. Ward 29,630 (1) 0.5% 0
James Pritsiolas 29,630 (1) 0.5% 0
George Tagaris 29,630 (1) 0.5% 0
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(1) Includes 14,815 shares issuable upon exercise of a warrant at $5.25 per
share contained a Unit purchased in March 2000.
(2) Includes 103,704 shares issuable upon exercise of a warrant at $5.25 per
share contained a Unit purchased in March 2000.
(3) Includes 296,297 shares issuable upon exercise of a warrant at $5.25 per
share contained a Unit purchased in March 2000.
William A. Shewalter and James Pritsiolas are directors of Nutripure.com, a
subsidiary of Innovative Medical Services. Global Consulting, Inc., is a public
relations consultant to the Company. None of the other Selling Security Holders
nor any of their affiliates have ever held any position, office, or other
material relationship with the Company nor hold any additional shares of
Innovative.
SELLING SECURITY HOLDERS PLAN OF DISTRIBUTION
The Selling Security Holders 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 Holders shares may be effected from
time to time in one or more transactions (which may involve crosses or block
transactions) in the following types of transactions:
1. Over-the-counter market sales
2. Privately negotiated sales
3. By 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 Holders effect 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 Holders 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 the 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
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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.
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 Holders 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 Shares 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
Risk Factors........................................................... 3
Prospectus Summary ..........................................12
Selling Stockholders...................................................12
Plan of Distribution...................................................19
Legal Matters..........................................................20
Experts................................................................20
UNTIL MAY XX, 2000 (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)
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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 $1,202.67
NASD Filing Fee na
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Printing Expenses 1,000
Accounting Fees and Expenses 0
Legal Fees and Expenses 10,000
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
MARCH 2000 PRIVATE PLACEMENT
NAME OF PURCHASER UNITS(1) CONSIDERATION
Richard Rogers & Julie Rogers JTWROS 14,815 $50,000
Mark Vittert & Carol Vittert 14,815 $50,000
13
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Glen Wegner 14,815 $50,000
Orienstar Finance Limited 14,815 $50,000
Stanford E. Bazilian 103,704 $350,000
Sofisco Nominees Limitied 296,297 $1,000,000
Richard W. Strang Sr Trustee 14,815 $50,000
Strang Mech. Emp. Ret. Trust
William A. Shewalter 29,630 $100,000
John W. Dowd III 14,815 $50,000
Antonio C Alvarel 14,815 $50,000
Roy Thung 14,815 $50,000
Michael Rothaus 14,815 $50,000
Billy W. Ward 14,815 $50,000
James Pritsiolas 14,815 $50,000
George Tagaris 14,815 $50,000
(1) Each Unit consists of one share of common stock and one Warrant to acquire
and additional share of common stock for $5.25 on or before March 31, 2001.
With respect to the sales made, the Company relied on Section 4(2) of the
Securities Act of 1933, as amended and Rule 505 of Regulation D for the March
2000 Private Placement. No advertising or general solicitation was employed in
offering the securities. The securities were offered to accredited investors or
consultants to the Company who were provided all material information regarding
the private placement and all of the Company's reports filed with the Securities
and Exchange Commission to date. 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.
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
4.5 -- March 2000 Warrant
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
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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;
(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.
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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 May 3, 2000.
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 May 3, 2000
- ----------------------- Officer and Director
Michael L. Krall
/s/ GARY BROWNELL Chief Financial Officer, May 3, 2000
- ----------------------- Director
Gary Brownell
/s/ EUGENE PEISER, PD Director May 3, 2000
- -----------------------
Eugene Peiser, PD
/s/ PATRICK GALUSKA Director May 3, 2000
- -----------------------
Patrick Galuska
/s/ DENNIS BROVARONE Director May 3, 2000
- -----------------------
Dennis Brovarone
/s/ DONNA SINGER Director May 3, 2000
- -----------------------
Donna Singer
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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
4.5 -- March 2000 Warrant
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 Form SB-2 Registration SEC File # 333-00434
effective August 8, 1996
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Warrant
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933 (THE "ACT") OR
APPLICABLE STATE SECURITIES LAWS (THE "STATE ACTS") AND SHALL NOT BE SOLD,
PLEDGED, HYPOTHECATED, DONATED, OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR
CONSIDERATION) BY THE HOLDER EXCEPT UPON THE ISSUANCE TO THE COMPANY OF A
FAVORABLE OPINION OF COUNSEL OR SUBMISSION TO THE COMPANY OF SUCH EVIDENCE AS
MAY BE SATISFACTORY TO COUNSEL TO THE COMPANY, IN EACH SUCH CASE, TO THE EFFECT
THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE ACT AND THE STATE ACTS.
WARRANT TO PURCHASE _________ (______) SHARES OF COMMON STOCK
INNOVATIVE MEDICAL SERVICES
(a California Corporation)
Not Transferable or Exercisable Except
upon Conditions Herein Specified
Void after 5:00 P.M.,
Pacific Standard Time, on the March 31, 2001
Innovative Medical Services, a California corporation (the "Company")
hereby certifies that, ___________, as the registered holder hereof (the
"Holder"), for value received, is entitled to purchase from the Company the
number of fully paid and non-assessable shares of Common Stock of the Company
(the "Shares"), stated above at the purchase price of $5.25 per Share (the
"Exercise Price") (the number of Shares and Exercise Price being subject to
adjustment as hereinafter provided) upon the terms and conditions herein
provided. 1. Exercise of Warrants.
(a) Subject to subsection (b) of this Section 1 and Section 11 below, upon
presentation and surrender of this Warrant Certificate, with the attached
Purchase Form duly executed, at the principal office of the Company at 1725
Gillespie Way, El Cajon, California 92020 or at such other place as the Company
may designate by notice to the Holder hereof, together with a certified or bank
cashier's check payable to the order of the Company in the amount of the
Exercise Price times the number of Shares being purchased, the Company shall
deliver to the Holder hereof, as promptly as practicable, certificates
representing the Shares being purchased. This Warrant may be exercised in whole
or in part; and, in case of exercise hereof in part only, the Company, upon
surrender hereof, will deliver to the Holder a new Warrant Certificate or
Warrant Certificates of like tenor entitling the Holder to purchase the number
of Shares as to which this Warrant has not been exercised.
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(b) This Warrant may be exercised in whole or in part at any time prior to
5:00 o'clock P.M., Pacific Standard Time, on March 31, 2001.
2. Exchange and Transfer of Warrant. This Warrant (a) at any time prior to
the exercise hereof, upon presentation and surrender to the Company, may be
exchanged, alone or with other Warrants of like tenor registered in the name of
the Holder, for another Warrant or other Warrants of like tenor in the name of
such Holder exercisable for the same aggregate number of Shares as the Warrant
or Warrants surrendered, (b) may not be sold, transferred, hypothecated, or
assigned, in whole or in part, without the prior written consent of the Company.
3. Rights and Obligations of Warrant Holder.
(a) The Holder of this Warrant Certificate shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or in
equity; provided, however, in the event that any certificate representing the
Shares is issued to the Holder hereof upon exercise of this Warrant, such Holder
shall, for all purposes, be deemed to have become the holder of record of such
Shares on the date on which this Warrant Certificate, together with a duly
executed Purchase Form, was surrendered and payment of the Exercise Price was
made, irrespective of the date of delivery of such Share certificate. The rights
of the Holder of this Warrant are limited to those expressed herein and the
Holder of this Warrant, by its acceptance hereof, consents to and agrees to be
bound by and to comply with all the provisions of this Warrant Certificate,
including, without limitation, all the obligations imposed upon the Holder
hereof by Sections 2 and 5 hereof. In addition, the Holder of this Warrant
Certificate, by accepting the same, agrees that the Company may deem and treat
the person in whose name this Warrant Certificate is registered on the books of
the Company maintained for such purpose as the absolute, true and lawful owner
for all purposes whatsoever, notwithstanding any notation of ownership or other
writing thereon, and the Company shall not be affected by any notice to the
contrary.
(b) No Holder of this Warrant Certificate, as such, shall be
entitled to vote or receive distributions or to be deemed the holder of Shares
for any purpose, nor shall anything contained in this Warrant Certificate be
construed to confer upon any Holder of this Warrant Certificate, as such, any of
the rights of a stockholder of the Company or any right to vote, give or
withhold consent to any action by the Company, whether upon any
recapitalization, issue of stock, reclassification of stock, merger, conveyance
or otherwise, receive notice of meetings or other action affecting stockholders
(except for notices provided for herein), receive distributions, subscription
rights, or otherwise, until this Warrant shall have been exercised and the
Shares purchasable upon the exercise thereof shall have become deliverable as
provided herein; provided, however, that any such exercise on any date when the
stock transfer books of the Company shall be closed shall constitute the person
or persons in whose name or names the certificate or certificates for those
Shares are to be issued as the record holder or holders thereof for all purposes
at the opening of business on the next succeeding day on which such stock
transfer books are open, and the Warrant surrendered shall not be deemed to have
been exercised, in whole or in part as the case may be, until the next
succeeding day on which stock transfer books are open for the purpose of
determining
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entitlement to distributions on the Company's common stock.
4. Shares Underlying Warrants. The Company covenants and agrees that
all Shares delivered upon exercise of this Warrant shall, upon delivery and
payment therefor, be duly and validly authorized and issued, fully-paid and
non-assessable, and free from all stamp taxes, liens, and charges with respect
to the purchase thereof In addition, the Company agrees at all times to reserve
and keep available an authorized number of Shares sufficient to permit the
exercise in full of this Warrant.
5. Disposition of Warrants or Shares.
(a) The holder of this Warrant Certificate and any transferee
hereof or of the Shares issuable upon the exercise of the Warrant Certificate,
by their acceptance hereof, hereby understand and agree that the Warrant, and
the Shares issuable upon the exercise hereof, have not been registered under
either the Securities Act of 1933 (the "Act") or applicable state securities
laws (the "State Acts") and shall not be sold, pledged, hypothecated, donated,
or otherwise transferred (whether or not for consideration) except upon the
issuance to the Company of a favorable opinion of counsel or submission to the
Company of such evidence as may be satisfactory to counsel to the Company, in
each such case, to the effect that any such transfer shall not be in violation
of the Act and the State Acts. It shall be a condition to the transfer of this
Warrant that any transferee thereof deliver to the Company its written agreement
to accept and be bound by all of the terms and conditions of this Warrant
Certificate.
(b) Unless and until there is an effective registration
statement filed with the U.S. Securities and Exchange Commission for the Common
Stock underlying the Warrant, the stock certificates of the Company that will
evidence the shares of Common Stock with respect to which this Warrant may be
exercisable will be imprinted with conspicuous legend in substantially the
following form:
"The securities represented by this certificate have
not been registered under either the Securities Act of 1933 (the "Act")
or applicable state securities laws (the "State Acts") and shall not be
sold, pledged, hypothecated, donated or otherwise transferred (whether
or not for consideration) by the holder except upon the issuance to the
Company of a favorable opinion of its counsel or submission to the
company of such other evidence as may be satisfactory to counsel of the
Company, in each such case, to the effect that any such transfer shall
not be in violation of the Act and the State Acts."
The Company has agreed to register the Common Stock with respect to which this
Warrant may be exercisable for distribution in accordance with the provisions of
the Act pursuant to a registration statement to be filed with the U.S.
Securities and Exchange Commission on or before April 28, 2000.
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6. Adjustments. The number of Shares purchasable upon the exercise of
each Warrant is subject to adjustment from time to time upon the occurrence of
any of the events enumerated below.
(a) In case the Company shall: (i) pay a dividend in Shares,
(ii) subdivide its outstanding Shares into a greater number of Shares, (iii)
combine its outstanding Shares into a smaller number of Shares, or (iv) issue,
by reclassification of its Shares, any shares of its capital stock, the amount
of Shares purchasable upon the exercise of each Warrant immediately prior
thereto shall be adjusted so that the Holder shall be entitled to receive upon
exercise of the Warrant that number of Shares which such Holder would have owned
or would have been entitled to receive after the happening of such event had
such Holder exercised the Warrant immediately prior to the record date, in the
case of such dividend, or the effective date, in the case of any such
subdivision, combination or reclassification. An adjustment made pursuant to
this subsection (a) shall be made whenever any of such events shall occur, but
shall become effective retroactively after such record date or such effective
date, as the case may be, as to Warrants exercised between such record date or
effective date and the date of happening of any such event.
(b) In case the Company shall issue rights or warrants to all
holders of its Shares entitling them to subscribe for or to purchase Shares at a
price per Share which, when added to the amount of consideration received or
receivable by the Company for such rights or warrants, is less than the Current
Market Price (as hereinafter defined) per Share at the record date, the number
of Shares purchasable upon the exercise of this Warrant shall be adjusted so
that thereafter, until further adjusted, each Warrant shall entitle the Holder
to purchase that number of Shares determined by multiplying the number of Shares
purchasable hereunder by a fraction, the numerator of which shall be the number
of additional Shares issuable upon the exercise of such rights or warrants, and
the denominator of which shall be the number of Shares which an amount equal to
the sum of (i) the aggregate exercise price of the total number of Shares
issuable upon the exercise of such rights or warrants, and (ii) the aggregate
amount of consideration, if any, received, or receivable by the Company for such
rights or warrants, would purchase at such Current Market Price. Such adjustment
shall be made whenever such rights or warrants are issued, but shall also be
effective retroactively as to Warrants exercised between the record date for the
determination of stockholders entitled to receive such rights or warrants and
the date such rights or warrants are issued.
(c) For the purpose of any computation under subsection (b)
above, the Current Market Price per Share at any date shall be: (i) if the
Shares are listed on any national securities exchange, the average of the daily
closing prices for the 15 consecutive business days commencing 20 business days
before the day in question (the "Trading Period"); (ii) if the Shares are not
listed on any national securities exchange but are quoted on the Nasdaq SmallCap
Market, the average of the high and low bids as reported by NASDAQ for the
Trading Period; and (iii) if the Shares are neither listed on any national
securities exchange nor quoted on NASDAQ, the higher of (x) the exercise price
then in effect, or (y) the tangible book value per Share as of the end of the
Company's immediately preceding fiscal year.
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(d) No adjustment shall be required unless such adjustment
would require an increase or decrease of at least 1% in the number of Shares
purchasable hereunder; provided, however, that any adjustments which by reason
of this subsection (d) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 6 shall be made to the nearest one-hundredth of a Share.
(e) No adjustment shall be made in any of the following cases:
(i) Upon the grant or exercise of stock options now
or hereafter granted, or under any employee stock option or stock purchase plan
now or hereafter authorized, to the extent that the aggregate of the number of
Shares which may be purchased under such options and the number of Shares issued
under such employee stock purchase plan is less than or equal to 10% of the
number of Shares outstanding on January 1 of the year of the grant or exercise;
(ii) Shares issued upon the conversion of any of the
Company's convertible or exchangeable securities;
(iii) Shares issued in connection with the
acquisition by the Company or by any subsidiary of the Company of 80% or more of
the assets of another corporation or entity, and Shares issued in connection
with the acquisition by the Company or by any subsidiary of the Company of 80%
or more of the voting shares of another corporation (including Shares issued in
connection with such acquisition of voting shares of such other corporation
subsequent to the acquisition of an aggregate
of 80% of such voting shares), Shares issued in a merger of the Company or a
subsidiary of the Company with another corporation in which the Company or the
Company's subsidiary is the surviving corporation, and Shares issued upon the
conversion of other securities issued in connection with any such acquisition or
in any such merger; and
(iv) Shares issued pursuant to this Warrant and
pursuant to all stock options and warrants outstanding on the date hereof.
(f) Notice to Warrant Holders of Adjustment. Whenever the
number of Shares purchasable hereunder is adjusted as herein provided, the
Company shall cause to be mailed to the Holder in accordance with the provisions
of this Section 6 a notice (i) stating that the number of Shares purchasable
upon exercise of this Warrant have been adjusted, (ii) setting forth the
adjusted number of Shares purchasable upon the exercise of a Warrant, and (iii)
showing in reasonable detail the computations and the facts, including the
amount of consideration received or deemed to have been received by the Company,
upon which such adjustments are based.
7. Fractional Shares. The Company shall not be required to issue any
fraction of a Share upon the exercise of Warrants. If more than one Warrant
shall be surrendered for exercise at one time by the same Holder, the number of
full Shares which shall be issuable upon exercise thereof
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shall be computed on the basis of the aggregate number of Shares with respect to
which this Warrant is exercised. If any fractional interest in a Share shall be
deliverable upon the exercise of this Warrant, the Company shall make an
adjustment therefor in cash equal to such fraction multiplied by the Current
Market Price of the Shares on the business day next preceding the day of
exercise.
8. Loss or Destruction. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant
Certificate and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement or bond satisfactory in form, substance and
amount to the Company or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant Certificate, the Company at its expense will
execute and deliver, in lieu thereof, a new Warrant Certificate of like tenor.
9. Survival. The various rights and obligations of the Holder hereof as
set forth herein shall survive the exercise of the Warrants represented hereby
and the surrender of this Warrant Certificate.
10. Notices. Whenever any notice, payment of any purchase price, or
other communication is required to be given or delivered under the terms of this
Warrant, it shall be in writing and delivered by hand delivery or United States
registered or certified mail, return receipt requested, postage prepaid, and
will be deemed to have been given or delivered on the date such notice, purchase
price or other communication is so delivered or posted, as the case may be; and,
if to the Company, it will be addressed to the address specified in Section 1
hereof, and if to the Holder, it will be addressed to the registered Holder at
its, his or her address as it appears on the books of the Company.
11. Redemption of Warrants. This Warrant may be redeemed by the Company
upon thirty days written notice to the Holder for $0.05 per Warrant Share
provided that the closing bid price for the Company's common stock as reported
by its trading market has been not less than $4.00 per share for twenty
consecutive trading days. Unless this Warrant has been exercised pursuant to
Section 1 on or before the thirtieth day following the date of the written
notice, this Warrant shall be null and void save only the Company's obligation
to pay the redemption amount.
INNOVATIVE MEDICAL SERVICES
By:
Michael L. Krall, President
March 31, 2000
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PURCHASE FORM
DATE:
TO: INNOVATIVE MEDICAL SERVICES
The undersigned hereby irrevocably elects to exercise the attached
Warrant Certificate to the extent of ____ shares of the Common Stock, of
INNOVATIVE MEDICAL SERVICES and hereby makes payment of $_______ ($5.25 x # OF
WARRANTS EXERCISED) in accordance with the provisions of Section 1 of the
Warrant Certificate in payment of the purchase price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name: ---------------------------------------------------
Please typewrite or print in block letters)
Address: --------------------------------------------------
--------------------------------------------------
--------------------------------------------------
By: --------------------------
Signature of Record Holder
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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
May 3, 2000
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 1,214,822 shares of Common
Stock to those certain shareholders named as the Selling Securities Holders (the
"Shares"). The Shares are the subject of a Registration Statement on Form S-3
(the "Registration Statement") to be filed on or before May 3, 2000.
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. 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.
Very truly yours,
/s/ DENNIS BROVARONE
Dennis Brovarone
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EXHIBIT 23.2
STEVEN HOLLAND, CPA
3914 MURPHY CANYON RD., STE. A126
SAN DIEGO, CA. 92123
(619) 279-1640
I have prepared the audited financial statements for Innovative Medical Services
for the fiscal years ended July 31, 1998 and 1999 contained in the Company's
annual report on Form 10-KSB for the fiscal year ended July 31, 1999 and do
hereby consent to their inclusion with the company's intended registration
statement on Form S-3.
/s/STEVEN HOLLAND
- -----------------
Steven Holland, CPA
May 2, 2000
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