<PAGE>
As filed with the Securities and Exchange Commission on October 3, 1997
SEC Registration No. ___________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
IMAGEMATRIX CORPORATION
-------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado 84-1313108
------------------------ ----------------------------
(State of Incorporation) (I.R.S. Employer I.D. No.)
400 S. Colorado Boulevard, Suite 500, Denver, Colorado 80222, (303) 399-3700
----------------------------------------------------------------------------
(Address, including zip code, and telephone number, including area
code of Registrant's Principal Executive Offices)
Gerald E. Henderson
ImageMatrix Corporation
400 S. Colorado Boulevard, Suite 500
Denver, Colorado 80222
(303) 399-3700
-------------------------------------------------------
(Name, address, including zip code and telephone number
including area code of agent for service)
Copies to:
----------
Christopher M. Hazlitt, Esq.
Peter J. Jensen, Esq.
Chrisman, Bynum & Johnson, P.C.
1900 Fifteenth Street
Boulder, CO 80302
(303) 546-1300
================================================================================
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
-
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. /x/
-
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed
Proposed Maximum
Title of Each Shares Maximum Aggregate Amount of
Class of Securities to be Offering Price Offering Registration
to be Registered Registered Per Share* Price* Fee
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
Common Stock
(no par value) 1,500,000 $2.44 $3,660,000 $1,109.09
</TABLE>
*Estimated solely for the purpose of calculating the registration fee. Computed
pursuant to Rule 457(c) on the basis of the closing sale price as quoted on the
Nasdaq SmallCap Stock Market system as of the close of trading on September 30,
1997.
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.
===============================================================================
<PAGE>
PROSPECTUS 1,500,000 SHARES
IMAGEMATRIX CORPORATION
COMMON STOCK
(NO PAR VALUE)
--------------------
This Prospectus relates to up to 1,500,000 shares (the "Shares") of the
common stock, no par value (the "Common Stock") of ImageMatrix Corporation
("ImageMatrix" or the "Company"), which may be offered from time to time by the
Selling Shareholder named herein under "Selling Shareholder." The Shares may be
purchased from the Company in the future upon exercise of certain warrants held
by the Selling Shareholder.
The Company will not receive any of the proceeds from the sale of the
Shares. The distribution of the Shares by the Selling Shareholder is not
subject to any underwriting agreement. The Shares offered by the Selling
Shareholder may be sold from time to time at designated prices that may be
changed, at market prices prevailing at the time of sale, at prices relating to
such prevailing market prices or at negotiated prices. In addition, the Selling
Shareholder may sell the Shares through customary brokerage channels, either
through broker-dealers acting as agents or principals. The Selling Shareholder
may effect such transactions by selling Shares to or through broker-dealers, and
such broker-dealers may receive compensation in the form of underwriting
discounts, concessions, commissions, or fees from the Selling Shareholder and/or
purchasers of the Shares for whom such broker-dealers may act as agent, or to
whom they sell as principal, or both (which compensation to a particular broker-
dealer might be in excess of customary commissions). Any broker-dealers that
participate with the Selling Shareholder in the distribution of Shares may be
deemed to be underwriters and any commissions received by them and any profit on
the resale of Shares positioned by them might be deemed to be underwriting
discounts and commissions within the meaning of the Securities Act of 1933, in
connection with such sales.
As of the close of trading on September 30, 1997, the closing sale price of
the Common Stock as quoted on the Nasdaq SmallCap Stock Market system was $2.44
per share. Total expenses of the offering are estimated to be $11,000, all of
which will be paid by the Company.
SEE "RISK FACTORS" COMMENCING ON PAGE 3 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE COMMON STOCK.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ____________, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (together with all amendments, exhibits,
schedules and supplements thereto, the "Registration Statement") on Form S-3
under the Securities Act for registration of the shares of Common Stock offered
hereby. This Prospectus, which forms a part of the Registration Statement, does
not contain all of the information set forth in the Registration Statement,
certain parts of which have been omitted as permitted by the rules and
regulations of the Commission. For further information with respect to the
Company and the Common Stock offered hereby, reference is made to the
Registration Statement. Statements contained in this Prospectus regarding the
contents of any contract or any other document to which reference is made are
not necessarily complete, and where such contract or other document is an
exhibit to the Registration Statement, each such statement is qualified in all
respects by the provisions of such exhibit, to which reference is hereby made.
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith files periodic
reports, proxy statements and other information with the Commission. Such
periodic reports, proxy statements and other information, and a copy of the
Registration Statement can be copied and inspected at the public reference
facilities of the Commission at 450 Fifth Street, Washington, D.C. 20549, and
at the Commission's regional offices at 7 World Trade Center, Suite 1300, New
York, New York 10048, and Citicorp Center, 500 West Madison, Suite 1400,
Chicago, Illinois 60661. Copies of all or any portion of the Registration
Statement may be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Company files certain of its materials with the Commission electronically. The
Commission maintains a World Wide Web site (www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants
that file electronically.
The Company intends to furnish its Shareholders with Annual Reports
containing audited financial statements for each fiscal year.
DOCUMENTS INCORPORATED BY REFERENCE
The Company will furnish without charge to each person, including any
beneficial owner to whom this Prospectus is delivered, upon the request of such
person, a copy of any or all of the documents referred to below, other than
exhibits to such documents. All requests for copies of such documents should be
directed in writing to Blair W. McNea, Vice President, ImageMatrix Corporation,
400 S. Colorado Boulevard, Suite 500, Denver, Colorado 80222.
The following documents filed by the Company with the Commission are
incorporated herein by reference:
1) Annual Report on Form 10-KSB/A for the fiscal year ended December
31, 1996.
2) Proxy Statement for the May 16, 1997 Annual Meeting of
Shareholders.
3) Current Report on Form 8-K dated January 16, 1997.
4) Quarterly Report on Form 10-QSB for the fiscal quarter ended
March 31, 1997.
5) Quarterly Report on Form 10-QSB for the fiscal quarter ended June
30, 1997.
6) A description of the Common Stock contained in the Company's
Registration Statement No. 333-1990 on Form SB-2, dated June 4,
1996.
All documents filed subsequent to the date of this Prospectus by the
Company with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 prior to the termination of the offering of
the Shares shall be deemed to be incorporated herein by reference from the date
of filing of such documents. Any statement contained in a document incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
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<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus the following risk
factors should be considered carefully in evaluating the Company and its
business before purchasing the securities offered hereby.
ACCUMULATED LOSSES; HISTORY OF OPERATING LOSSES. In order to execute its
business strategy and develop new software products, the Company will require
significant funds. Increased spending and decreased sales levels from the
Company's business plan resulted in a net loss of $3,663,000 for the year ended
December 31, 1996 and resulted in a net loss of $1,421,000 for the six months
ended June 30, 1997. Operating losses are expected to continue as the Company
will incur significant expenses in connection with research and development,
development of its direct and indirect selling and marketing channels, and the
hiring of additional personnel. There can be no assurance that the Company will
be profitable in the future or that funds provided by operations and presently
available capital will be sufficient to fund the Company's ongoing operations.
If the Company has insufficient funds, there can be no assurance that additional
financing can be obtained on acceptable terms, if at all. The absence of such
financing would have a material adverse effect on the Company's business,
including a possible reduction, reorganization or cessation of operations.
VARIABILITY OF QUARTERLY OPERATIONS. Results of operations have fluctuated
significantly in the past and may continue to fluctuate significantly from
quarter to quarter as a result of a number of factors, including but not limited
to: (i) the volume and timing of system sales; (ii) customer purchasing
patterns, long sales cycles, order cancellations and rescheduling of system
installations; (iii) the mix of direct and indirect sales; (iv) the actions of
competitors; (v) introduction of new versions of operating systems which would
require new programming expenses by the Company; and (vi) the timing of the
introduction of new software systems. In addition, the Company believes that
sales generated by the opening of additional branch offices, the potential for
arranging distribution partners and the potential of acquiring other claims
processing system providers or document imaging systems integration companies,
all of which are difficult to predict, have the possibility of significantly
increasing or decreasing the Company's revenues. Accordingly, the Company's
future operating results are likely to be subject to significant variability
from quarter to quarter and could be adversely affected in any particular
quarter. Due to the foregoing factors, it is possible that the Company's
operating results may from time to time be below the expectations of public
market analysts and investors. In such event, the price of the Company's
securities could be adversely affected.
AUTHORIZATION AND ISSUANCE OF PREFERRED STOCK. The Company's Articles of
Incorporation authorize the issuance of up to 5,000,000 shares of Preferred
Stock. Pursuant to such authorization, the Company has issued 3,300,000 shares
of Series A Convertible Preferred Stock ("Series A Preferred"). The Series A
Preferred is non-voting, carries a 7% dividend payable in cash or Common Stock
at the election of the Company, has a liquidation preference of $1.00 per share,
and is convertible into Common Stock at any time at the lesser of $2.25 per
share or 75% of the average closing price for the previous eight trading days
prior to conversion. As a result of the conversion feature, the Company
recognized a dividend charge of approximately $833,000 effective on April 14,
1997, the date of issuance of the Preferred Stock. The Articles of
Incorporation authorize the issuance of a further 1,700,000 shares of Preferred
Stock with such rights and preferences as may be determined from time to time by
the Board of Directors ("Undesignated Preferred Stock"). Accordingly, under the
Articles of Incorporation the Board of Directors may, without shareholder
approval, issue the Undesignated Preferred Stock with dividend, liquidation,
conversion, voting, redemption or other rights which could adversely affect the
voting power or other rights of the holders of the Common Stock. The issuance
of any shares of the Undesignated Preferred Stock, having rights superior to
those of the Common Stock, may result in a decrease of the value or market price
of the Common Stock and could be used by the Board of Directors as a device to
prevent a change in control of the Company. Holders of the Undesignated
Preferred Stock may have the right to receive dividends, certain preferences in
liquidation and conversion rights. The Company has no plans to issue shares of
the Undesignated Preferred Stock.
PRODUCT ACCEPTANCE AND MARKET DEVELOPMENT; FUTURE ESTABLISHMENT OF
DISTRIBUTION PARTNERS. The market for imaging-based claims processing,
particularly for HMOs, is still relatively new and may not develop as
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<PAGE>
anticipated by the Company. The Company's success is dependent upon market
acceptance of its products and services in preference to current competing
products and services and those that may be developed by others. There can be no
assurance that the Company's products and services will achieve a sufficient
level of market acceptance to result in profitable operations. The Company's
success is also dependent upon the success of its marketing and distribution
strategy which involves, to a significant degree, reliance upon attracting
additional qualified sales personnel, the establishment of additional branch
office locations either internally, or through acquisition, as well as adding
marketing partners to sell the Company's systems.
REVENUE RECOGNITION, PERCENTAGE COMPLETION OF PROJECTS. The Company
designs and installs systems which may take up to six months to complete. As a
result of using the percentage of completion method of accounting for its long-
term contracts, the Company's estimates of total project costs will have a
significant influence on the amount of revenue and gross margin to be recognized
on individual contracts. In addition, the Company's estimates of the costs to
complete a project will determine the amount of revenue and gross margin
recognized through the end of each quarter. If actual results differ from the
Company's estimates it could result in the premature recording of revenues and
gross margins or the deferral into future periods of income or loss that should
be currently recognized. If a client cancels a contract the Company could be
required to reverse some revenue previously recognized in connection with such
contract.
RELIANCE ON INTERNALLY DEVELOPED SOFTWARE AND CONSEQUENTIAL RISK OF DELAY.
The Company's strategy of selling integrated imaging systems which use aspects
of its internally created software creates a reliance on software which has
been used in limited installations and for a limited amount of time. The
Company's software could have functional problems or inadequacies which have not
yet been recognized. To the extent such flaws would require redevelopment, the
Company's ongoing customer relationships as well as its ability to sell and
market its system could be adversely affected.
RISKS RELATING TO COMPETITION; DYNAMIC MARKET. The market for imaging-
based information systems is intensely competitive. Many of the Company's
competitors have significantly greater financial, technical, research and
development and marketing resources than the Company. The imaging products and
services the Company sells compete with other technologies as well as with
similar products and services offered by other companies. Additionally, other
information management companies may enter the market in which the Company
competes. Competitive pressures and other factors, such as new product
introductions by the Company's competitors, or the entry into new geographic
markets, may result in significant price erosion that could have a material
adverse effect on the Company's business. The Company's products are dependent
upon a number of advanced technologies, including those relating to computer
hardware and software, scanning devices, storage devices, robotic systems and
other peripheral components, all of which are subject to rapid technological
change. To be competitive, the Company must respond effectively to technological
changes by continuing to enhance its existing products to incorporate emerging
or evolving technologies and standards. There can be no assurance that the
Company will be able to respond effectively to technological changes or new
product announcements or introductions by others. Furthermore, there can be no
assurance that the Company will be able to access the needed new technology at
an acceptable price.
REVENUE CONCENTRATION FROM SMALL GROUP OF CUSTOMERS. Sales of the
Company's imaging systems have been concentrated in a small number of customers.
In the six months ended June 30, 1997, four customers accounted for 73% of
the Company's revenues, in the year ended December 31, 1996, two customers
accounted for 34% of the Company's revenues and in the year ended December 31,
1995, two customers accounted for 69% of the Company's revenues. The inability
to replace any such customers with significant new customers would have a
material adverse effect on the Company's business. The Company believes the
expected increase in the number of sales offices and the release of its
proprietary systems may decrease customer concentration levels in the future.
However, the Company expects that the proportion of revenues from large
customers will continue to be a significant factor with respect to future
operations.
DEPENDENCE ON SOFTWARE VENDOR RELATIONSHIPS. The Company's products and
services integrate the software application platforms of various third party
software vendors including, but not limited to, FileNet, Inc. ("FileNet"),
Oracle Systems, Inc. ("Oracle"), Microsoft, Inc. ("Microsoft") and KOFAX, Inc.
("Kofax"). There can be no assurance that these vendors will continue to
conduct business with the Company over the long term, that these
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<PAGE>
vendors will not themselves attempt to compete with the Company in its markets,
or that these firms will continue to work cooperatively with the Company in the
development of the Company's products. In the case of FileNet, the Company's
vendor authorization is an important requirement to the Company's business
operations and future plans. FileNet regularly provides referrals of potential
clients and establishes credibility with potential clients. Dealer agreements
typically provide that a dealer may be terminated with cause upon as little as
30 days' notice. The Company's current dealer agreements are generally for
durations of one year. Vendors have regularly renewed the Company's dealer
agreements; however, no assurance can be given that such renewals will continue
or that the referrals generated from such relationships, whether the
relationships continue or not, will continue to occur. The loss of vendor
authorization from FileNet could have a material adverse effect on the Company's
business. The Company believes that there are competitive alternatives should
its relationship with any particular software vendor deteriorate, but there can
be no assurance that such alternatives would be available, or could be
implemented without adverse effect on the Company.
ABILITY TO MANAGE GROWTH IN REVENUE, ASSETS, LIABILITIES AND INCOME. As a
result of internal development and expansion into additional applications and
markets, the Company has at times grown rapidly. There is no assurance that the
Company will continue to experience growth. However, growth and expansion, if
experienced, could continue to place a significant strain on the Company's
services and support operations, cash flow, sales and administrative personnel
and other resources. The Company's ability to manage such growth effectively
will require the Company to continue improving its operational, management and
financial capabilities and systems. As a result, the Company is subject to
certain growth-related risks, including the risk that it will be unable to hire
and retain qualified personnel or other resources necessary to sustain growth.
DEPENDENCE ON KEY PERSONNEL. Gerald E. Henderson, Blair W. McNea, Dennis
C. Hefter and certain other executive officers and employees have been
primarily responsible for the development and expansion of the Company's
business, and the loss of the services of one or more of these individuals could
have a material adverse effect on the Company. The Company's future success will
be dependent in part upon its continued ability to recruit, motivate and retain
qualified personnel. There can be no assurance that the Company will be
successful in this regard. Except for a non-disclosure provision in Mr.
Henderson's employment agreement and a non-competition provision in the
Company's employment agreement with Dennis Hefter, President and Chief Operating
Officer of the Company, the Company does not have non-competition agreements
with any key personnel. The Company maintains for its benefit a $1,000,000 key
man life insurance policy on the life of Mr. Henderson, a $500,000 key man life
insurance policy on the life of Mr. McNea and has applied for a key man life
insurance policy of $1,000,000 on Mr. Hefter.
DEPENDENCE ON PROPRIETARY RIGHTS, COPYRIGHTS, AND POTENTIAL PATENTS. To
develop and maintain its competitive position, the Company relies primarily upon
the technical expertise and creative skills of its personnel, independent
consultants and contractors. To protect its proprietary products, concepts and
systems, the Company relies on copyrights held by third parties and by the
Company, confidentiality and invention assignment agreements, and may in the
future file applications for patents and further copyrights for software it
develops. There can be no assurance that copyrights, patents (if applied for)
or confidentiality or invention assignment agreements will not be breached or
that the Company will have adequate remedies for any such breaches. Although
the Company is not aware of any infringement by it of intellectual property
rights held by third parties, there can be no assurance that the Company is not
infringing on the intellectual property rights of others. The Company has
acquired non-exclusive licenses to certain software owned by third parties which
is used in certain of the Company's products. Litigation against the Company,
whether or not successful, regarding copyrights, or infringement by the Company
of the patent rights or copyrights of others could have a material adverse
effect on the Company's business. There can be no assurance that patents or
copyright registrations which may be applied for, issued to or licensed by the
Company will not be challenged or circumvented by competitors or found to be
overly broad so as to fail to adequately protect the Company's technology or to
provide it with any competitive advantage.
LONG SALES AND DELIVERY CYCLE. Because the Company's imaging systems
typically range in sales price from $150,000 to $3,000,000, the decision by a
client to purchase a system typically involves a major commitment of capital
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<PAGE>
and an extended review and approval process. Accordingly, the sales cycle for
the Company's system is typically 6 to 12 months from initial contact to receipt
of order. During these periods, the Company may expend substantial efforts and
funds preparing a contract proposal and negotiating the contract. The length of
time between receipt of order and system acceptance typically ranges from three
to six months depending on the size of the system, the products ordered and
delivery terms. Any significant or ongoing failure to achieve signed contracts
and subsequent customer acceptance after expending time, effort and funds, or in
excess of expected completion time, could have a material adverse effect on the
Company's business.
CREDIT RISK. Although the Company has not experienced any material losses
related to client inability to pay for its services, as the Company's customer
base expands it may be subject to increased credit risk. Because the Company's
revenues are derived from a small number of significant customers, the Company's
receivables are similarly concentrated. The inability of one of these
significant customers to satisfy its obligations to the Company could have an
adverse material effect on the Company. Also, in the event that the system
performance does not meet customer expectations, customers could hold back on
payments for portions of the overall system contract until additional services
have been performed. Such hold backs could cause the Company to: (i) incur
losses on its installations or earn less profit than anticipated; or (ii) fail
to receive payments for certain portions of its work.
UNCERTAINTY IN COVERAGE PROVIDER INDUSTRY; GOVERNMENT HEALTH CARE REFORM
PROPOSALS. The health insurance and HMO industries are subject to changing
political, economic and regulatory influences that may affect the procurement
practices and operation of health maintenance organizations ("HMOs") and health
insurance companies ("Coverage Providers"). If health care reform proposals
that feature a single-payor system or that control methods by which claims are
processed and reimbursed are adopted, the anticipated market for the
ClaimMatrix/(TM)/ system could be materially adversely affected. Health care
reform proposals have contained provisions to increase governmental involvement
in health care, lower reimbursement rates and otherwise change the operating
environment for care providers and Coverage Providers. Coverage Providers may
react to these proposals and the uncertainty surrounding such proposals by
curtailing or deferring investments, including those for the Company's products
and services. Cost containment measures instituted by Coverage Providers as a
result of regulatory reform or otherwise could result in greater selectivity in
the allocation of capital funds. Such selectivity could have a material adverse
effect on the Company's ability to sell its products and services.
PRODUCT LIABILITY. The Company's products are used to provide information
that is critical to its clients' operations and management information systems.
Any failure by the Company's systems to provide accurate and timely information
or loss of client data could result in claims against the Company. The Company
maintains insurance to protect against errors and omissions claims associated
with the use of its systems in an amount up to a $1,000,000 total limit with a
deductible amount of $25,000 per occurrence, but there can be no assurance that
its insurance coverage would adequately cover any claim asserted against the
Company. A successful claim brought against the Company in excess of its
insurance coverage or for any reason not within the scope of coverage of its
policy could have a material adverse effect on the Company. Generally, the
Company's contracts with its clients limit the ability of such clients to seek
payment from the Company for consequential damages. Even unsuccessful claims
could result in the Company's expenditure of funds in litigation and management
time and resources. There can be no assurance that the Company will not be
subject to claims related to its products and services, that such claims will
not result in liability in excess of its insurance coverage, that the Company's
insurance will cover such claims, or that appropriate insurance will continue to
be available to the Company in the future at commercially reasonable rates.
REGULATORY RISK. The Company does not believe that its current systems are
subject to U.S. Food and Drug Administration ("FDA") review and approval. The
core ClaimMatrix/(TM)/ system is intended for internal use by Coverage Providers
to process claims for payment to insured or member parties. However, if the FDA
chooses to regulate software associated with medical treatment management, it
could impose extensive requirements governing pre- and post-market conditions
such as device investigation, approval, labeling and manufacturing. In addition,
such products would be subject to FDA's general controls, including those
relating to good manufacturing practices and adverse
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experience reporting. To the extent the Company is forced by competitive
pressures, or it desires to expand the applications of the ClaimMatrix/(R)/
system to include patient records management, the Company's systems may come
under FDA jurisdiction.
TREND TOWARD CAPITATION OF HEALTH CARE COSTS. So-called "capitation-based"
health care plans utilize a flat fee rate service which is negotiated with a
health care provider or group. Through capitation plans the cost risks are
transferred from the Coverage Provider to the health care provider or group. In
the event that Coverage Providers are not subject to claim risks, the positive
productivity impacts of installation of the Company's ClaimMatrix/(TM)/ system
for Coverage Providers may be reduced, which may adversely affect the Company's
sales.
SECURITIES ELIGIBLE FOR FUTURE SALE. The sale of substantial amounts of
Common Stock in the public market subsequent to the effectiveness of the
registration statement of which this Prospectus forms a part, pursuant to Rule
144 and Regulation S promulgated under the Securities Act of 1933, as amended
(the "Securities Act") or otherwise, or the perception that such sales could
occur, may adversely affect prevailing market prices of the Company's securities
and could impair the future ability of the Company to raise additional capital
through an offering of its equity securities.
RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS. This Prospectus contains
certain forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities and Exchange Act of
1934 and the Company intends that such forward-looking statements be subject to
the safe harbors for such statements under such sections. The Company's forward-
looking statements include the plans and objectives of management for future
operations, including plans and objectives relating to the ClaimMatrix/(TM)/
system, systems integration services, and future economic performance of the
Company. The forward-looking statements and associated risks set forth in this
Prospectus include or relate to: (i) the ability of the Company to attract and
retain qualified professionals for system installation for the
ClaimMatrix/(TM)/, CaptureMatrix/(TM)/ and ServiceMatrix/(TM)/ systems, (ii) the
ability of the Company to market its products and services at competitive
prices, (iii) the ability of the Company to develop brand-name recognition for
its systems, (iv) the ability of the Company to develop an effective sales staff
and sales network of distribution partners, (v) market acceptance of the
Company's systems, (vi) success of the Company's market initiatives, (vii)
success of the Company in forecasting demand for its systems, (viii) the ability
of the Company to diversify sales of Company products and services to large and
small customers, (ix) the ability to maintain pricing and thereby maintain
adequate profit margins, (x) ability to achieve adequate intellectual property
protection for the Company's products, and (xi) success of the Company in
increasing proprietary system sales as a percentage of overall revenues to
increase gross profit margins and decrease general, administrative and sales
costs as a percentage of overall gross profit.
The forward-looking statements herein are based on current expectations
that involve a number of risks and uncertainties. Such forward-looking
statements are based on assumptions that the Company will continue to design,
market and provide new products and services on a timely basis, that competitive
conditions in the claims processing market will not change adversely or
materially, the market will accept the Company's systems, that the Company will
retain and add qualified sales, research and systems integration personnel and
consultants, that the Company's forecasts will accurately anticipate market
demand, and that there will be no material adverse change in the Company's
operations or business. The foregoing assumptions are based on judgments with
respect to, among other things, future economic, competitive and market
conditions, and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the Company's
control. Accordingly, although the Company believes that the assumptions
underlying the forward-looking statements are reasonable, any such assumption
could prove to be inaccurate and therefore there can be no assurance that the
results contemplated in forward-looking statements will be realized. In
addition, as disclosed elsewhere in the "Risk Factors" section of this
Prospectus, there are a number of other risks presented by the Company's
business and operations which could cause the Company's net sales or net income,
or growth in net sales or net income to vary markedly from prior results or the
results contemplated by the forward-looking statements. Growth in absolute
amounts of cost goods sold and selling, general and administrative expenses or
the occurrence of extraordinary events could cause actual results to vary
materially from the results contemplated by the forward-looking statements.
Management decisions, including budgeting, are subjective in many respects and
periodic revisions must be made to reflect actual conditions and business
developments, the impact of which may cause
7
<PAGE>
the Company to alter its marketing, capital investment and other expenditures,
which may also adversely affect the Company's results of operations. In light of
significant uncertainties inherent in the forward-looking information included
in this Prospectus, the inclusion of such information should not be regarded as
a representation by the Company or any other person that the Company's
objectives or plans will be achieved.
NO DIVIDENDS. The Company has not paid any dividends on its Common Stock
and does not intend to pay dividends in the foreseeable future.
STAGGERED TERMS OF DIRECTORS. The Company's directors are elected to
staggered terms, such that it would require at least two years for a majority of
the Company's current directors to be replaced.
LIMITATIONS ON LIABILITY OF DIRECTORS. The Company's Articles of
Incorporation substantially limit the liability of the Company's Directors to
its shareholders for breach of fiduciary or other duties to the Company, to the
full extent permitted by Colorado law.
THINLY TRADED STOCK AND VOLATILITY OF STOCK PRICE. The Company's Common
Stock is concentrated in the hands of management, is thinly traded and is
subject to significant price volatility. Between the Company's June 1996
initial public offering and September 30, 1997, the closing prices of Company's
Common Stock ranged from a high of $6.13 to a low of $1.25.
USE OF PROCEEDS
The Company will not receive any part of the proceeds from the sale of the
Shares. All net proceeds of sale will go to the Selling Shareholder.
SELLING SHAREHOLDER
The following table sets forth certain information with respect to the
Common Stock beneficially owned by the Selling Shareholder as of September 30,
1997, and as adjusted to give effect to the sale of such securities. The Shares
are being registered to permit public secondary trading of such securities, and
the Selling Shareholder may offer such securities for resale from time to time.
See "Plan of Distribution".
The Shares of Common Stock being offered by the Selling Shareholder
constitute 1,500,000 Shares that may be purchased by the Selling Shareholder
upon exercise of warrants to purchase Common Stock held by such person
("Warrants") acquired from the Company in a private transaction in reliance on
Section 4(2) of the Securities Act and Regulation D promulgated thereunder as
the basis for an exemption from registration. In connection with such private
transaction, the Company agreed to register all such shares of Common Stock
issuable upon exercise of the Warrants. The registration statement of which this
Prospectus is a part registers only the resale of shares of Common Stock that
are issuable upon exercise of Warrants, and does not register the Warrants
themselves. The Selling Shareholder has not had a material relationship with
the Company within the past three years other than as a result of ownership of
the securities of the Company. The Shares may be offered from time to time by
the Selling Shareholder named below or its nominees, and this Prospectus may be
required to be delivered by persons who may be deemed to be underwriters in
connection with the offer or sale of such securities. See "Plan of
Distribution". In accordance with the rules of the Commission, the columns
"Common Stock Owned After Offering" show the amount of securities owned by
Selling Shareholder after the offering. The numbers in such columns assume all
Shares registered and offered by this Prospectus, shown in the column "Common
Stock Offered" are sold by the Selling Shareholder. However, the Selling
Shareholder is not required to sell any of the Shares offered, and the Selling
Shareholder may sell as many or as few Shares as it chooses. See "Plan of
Distribution".
As of September 30, 1997 there were 8,935,120 shares of Common Stock and
325,000 shares of Series A Convertible Preferred Stock ("Preferred Stock")
outstanding. The Preferred Stock is convertible by the holders thereof
8
<PAGE>
at any time into the number of shares of Common Stock resulting from dividing
the number of shares of Preferred Stock by the lesser of (i) $2.25, or (ii) 75%
of the average market price of the Common Stock on the eight trading days prior
to conversion ("Average Market Price"). The Average Market Price as of September
30, 1997 was $1.81, and therefore, for purposes of the table below, the 325,000
shares of Preferred Stock are treated as converted into 184,000 shares of Common
Stock, resulting in 9,119,120 total shares of Common Stock outstanding as of
such date. As a result of the conversion feature, the Company recognized a
dividend charge of approximately $833,000 effective on April 14, 1997, the date
of issuance of the Preferred Stock.
<TABLE>
<CAPTION>
Name of Common Stock Common Stock Common Stock
Selling Shareholder Owned Prior to Offering/(1)/ Offered/(1)/ Owned After Offering
- ------------------- ---------------------------- ------------- -------------------
Amount Percent/(2)/ Amount/(3)/ Percent/(2)(4)/
------ ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
Mueller Trading LP of Lakewood 1,500,000 16.4% 1,500,000 0 --
</TABLE>
- -------------------------------------
(1) Includes 1,500,000 Shares which may be purchased by Selling Shareholder
upon exercise of Warrants.
(2) No percent of class is shown for holders of less than 1%. Percentage
computations are based on 9,119,120 shares of Common Stock outstanding as
of September 30, 1997 (includes Common Stock issuable upon conversion of
Preferred Stock - see paragraphs preceding table).
(3) Assumes sale of all Common Stock offered hereby. See "Plan of
Distribution".
(4) Assumes issuance of 1,500,000 shares of Common Stock registered hereby,
issuable upon exercise of the Warrants, and is therefore based on
10,619,120 shares of Common Stock outstanding (includes Common Stock
issuable upon conversion of Preferred Stock - see paragraphs preceding
table). No percent of class is shown for holders of less than 1%.
PLAN OF DISTRIBUTION
The distribution of the Shares by the Selling Shareholder is not subject to
any underwriting agreement. The Shares offered by the Selling Shareholder may
be sold from time to time at designated prices that may be changed, at market
prices prevailing at the time of sale, at prices relating to such prevailing
market prices or at negotiated prices. The Selling Shareholder are not required
to sell any of the Shares offered, and the Selling Shareholder may sell as many
or as few Shares as they choose. In addition, the Selling Shareholder may sell
the Shares through customary brokerage channels, either through broker-dealers
acting as agents or principals. The Selling Shareholder may effect such
transactions by selling Shares to or through broker-dealers, and such broker-
dealers may receive compensation in the form of underwriting discounts,
concessions, commissions, or fees from the Selling Shareholder and/or purchasers
of the Shares for whom such broker-dealers may act as agent, or to whom they
sell as principal, or both (which compensation to a particular broker-dealer
might be in excess of customary commissions). Any broker-dealers that
participate with the Selling Shareholder in the distribution of Shares may be
deemed to be underwriters and any commissions received by them and any profit on
the resale of Shares positioned by them might be deemed to be underwriting
discounts and commissions within the meaning of the Securities Act of 1933, in
connection with such sales. The Company has entered into a Selling Agreement
with holders of all of the Shares offered hereby, which contains the Company's
agreement to indemnify the Selling Shareholder for losses or damages, including
losses or damages under the Securities Act, to which the Selling Shareholder may
become subject arising out of or based upon untrue statements of fact contained
in the registration statement of which this Prospectus is a part.
INDEMNIFICATION
The Colorado Business Corporation Act (the "Colorado Act") permits the
Company to indemnify an officer or director who was or is a party or is
threatened to be made a party to any proceeding because of his or her position,
9
<PAGE>
if: (i) the officer or director acted in good faith; (ii) the person reasonably
believed, in the case of conduct in an official capacity with the Company, that
his or her conduct was in the best interests of the Company, or in all other
cases, that his or her conduct was at least not opposed to the Company's best
interests; and, (iii) in the case of a criminal proceeding, the person had no
reasonable cause to believe his or her conduct was unlawful. If the officer or
director is successful on the merits in such a proceeding, the Colorado Act
requires the Company to indemnify the officer or director against all expenses,
including attorneys' fees incurred in connection with any such proceeding. The
Colorado Act authorizes the Company to advance expenses incurred in defending
any such proceeding under certain circumstances. Article X of the Company's
Articles of Incorporation provide that the Company shall indemnify its officers
and directors to the fullest extent permitted by the Colorado Act.
The Colorado Act permits the Company to limit the personal liability of its
directors for monetary damages for breaches of fiduciary duty as a director,
except for breaches that involve the director's duty of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, acts involving unlawful dividends or stock redemptions or
transactions from which the director derived an improper personal benefit.
Article IX of the Company's Articles of Incorporation, as amended, includes such
a provision which limits the personal monetary liability of its directors.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act of 1933 (the "Act") may be permitted to directors, officers
and controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
EXPERTS
The consolidated financial statements of ImageMatrix Corporation appearing
in ImageMatrix Corporation's Annual Report (Form 10-KSB/A) for the year ended
December 31, 1996 have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
LEGAL OPINION
The legality of the Common Stock offered will be passed upon for the
Company by Chrisman, Bynum & Johnson, P.C., 1900 Fifteenth Street, Boulder, CO
80302.
10
<PAGE>
-------------------------------
No person has been authorized to give any information or make any
representations other than those contained in this Prospectus in connection with
the sale or offering of any Shares of Common Stock covered by this Prospectus,
and if given or made, such other information or representations must not be
relied upon as having been authorized by ImageMatrix Corporation or the Selling
Shareholder. This Prospectus does not constitute an offer of any securities
other than those to which it relates or an offer to sell, or a solicitation of
an offer to buy, in any jurisdiction to any person to whom it is not lawful to
make such offer or solicitation in such jurisdiction. Under no circumstances
should the delivery of this Prospectus or the sale or offering of any Shares of
Common Stock covered by this Prospectus create any implication that there has
been no change in the business or operations of ImageMatrix Corporation since
the date of this Prospectus.
-------------------------------
TABLE OF CONTENTS
Page
----
Available Information. . . . . . . . . . . . . . . . . . . 2
Documents Incorporated by Reference. . . . . . . . . . . . 2
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . 3
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . 8
Selling Shareholder. . . . . . . . . . . . . . . . . . . . 8
Plan of Distribution . . . . . . . . . . . . . . . . . . . 9
Indemnification. . . . . . . . . . . . . . . . . . . . . . 9
Experts . . . . . . . . . . . . . . . . . . . . .. . . . . 10
Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . 10
1,500,000 Shares
IMAGEMATRIX CORPORATION
Common Stock (No Par Value)
PROSPECTUS
-------------------------------------------
-------------------------------------------
_____________, 1997
11
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
--------------------------------------------
The expenses in connection with the issuance and distribution of the
securities being registered, other than brokerage discounts, fees or
commissions, are:
Commission Registration Fee $ 1,109
Accounting Fees and Expenses 4,500
Legal Fees and Expenses 5,000
Miscellaneous Expenses 391
____________
Total $ 11,000
All expenses, except the registration fee, are estimated. The Company will
pay all expenses in connection with this Offering.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
------------------------------------------
The Colorado Business Corporation Act (the "Colorado Act") permits the
Company to indemnify an officer or director who was or is a party or is
threatened to be made a party to any proceeding because of his or her position,
if: (i) the officer or director acted in good faith; (ii) the person reasonably
believed, in the case of conduct in an official capacity with the Company, that
his or her conduct was in the best interests of the Company, or in all other
cases, that his or her conduct was at least not opposed to the Company's best
interests; and, (iii) in the case of a criminal proceeding, the person had no
reasonable cause to believe his or her conduct was unlawful. If the officer or
director is successful on the merits in such a proceeding, the Colorado Act
requires the Company to indemnify the officer or director against all expenses,
including attorneys' fees incurred in connection with any such proceeding. The
Colorado Act authorizes the Company to advance expenses incurred in defending
any such proceeding under certain circumstances. Article X of the Company's
Articles of Incorporation provide that the Company shall indemnify its officers
and directors to the fullest extent permitted by the Colorado Act.
The Colorado Act permits the Company to limit the personal liability of its
directors for monetary damages for breaches of fiduciary duty as a director,
except for breaches that involve the director's duty of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, acts involving unlawful dividends or stock redemptions or
transactions from which the director derived an improper personal benefit.
Article IX of the Company's Articles of Incorporation, as amended, includes such
a provision which limits the personal monetary liability of its directors.
II-1
<PAGE>
ITEM 16. EXHIBITS
--------
Exhibit
Number Description of Exhibit
- ------ ----------------------
1.1 Form of Selling Agreement.
4.1 Form of Certificate for Shares of Common Stock./(1)/
4.2 Form of Warrant Agreement and Redeemable Warrant./(1)/
4.3 Form of Stock Purchase Warrant A./(2)/
4.4 Form of Stock Purchase Warrant B./(2)/
5.1 Opinion of Chrisman, Bynum & Johnson, P.C.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Chrisman, Bynum & Johnson, P.C. (contained in the opinion filed
as Exhibit 5.1).
24.1 Power of attorney (included in signature page of original filing).
_________
(1) Incorporated by reference from the Company's Registration Statement No. 333-
1990 on Form SB-2 dated June 4, 1996.
(2) Incorporated by reference from the Company's Quarterly Report on Form 10-QSB
for the fiscal quarter ended March 31, 1997.
ITEM 17. UNDERTAKINGS
------------
(1) The undersigned Registrant hereby undertakes:
A. To file, during any period in which offers or sales are being
made of the securities registered hereby, 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 this Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in this Registration
Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that the undertakings set forth in Paragraph (i) and (ii)
above do not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic reports filed
by the Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this Registration
Statement.
B. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-2
<PAGE>
C. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(2) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") 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 small business issuer 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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Denver, State of Colorado, on the 2nd day of
October, 1997.
IMAGEMATRIX CORPORATION
By:/s/ Dennis Hefter
------------------------------
Dennis Hefter, President
By:/s/ Blair W. McNea
------------------------------
Blair W. McNea, Chief Financial Officer,
Vice President, Business Development
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Dennis Hefter, Blair W. McNea, or either of them,
his true and lawful attorney-in-fact and agent, with full powers of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Registration Statement,
including post-effective amendments, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, and hereby ratifies and confirms all
his said attorneys-in-fact and agents, or their substitute or substitutes, may
lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Dennis Hefter President, Chief Operating October 2, 1997
- ------------------------ Officer and Director
Dennis Hefter (Principal Executive Officer)
Chief Executive Officer _________, 1997
- ------------------------ and Director
Gerald E. Henderson
II-4
<PAGE>
/s/ Blair W. McNea Chief Financial Officer, October 2, 1997
- ----------------------- Senior Vice President -
Blair W. McNea Business Development,
Secretary, Treasurer and
Director, (Principal Financial
and Accounting Officer)
Director _________, 1997
- ------------------------
Robert Beekmann
/s/ Bryan Finkel Director September 30, 1997
- ------------------------
Bryan Finkel
/s/ David Seigle Director September 30, 1997
- ------------------------
David Seigle
/s/ Beverly Sloan Director October 2, 1997
- ------------------------
Beverly Sloan
/s/ Jaidev Sugavanam Director October 1, 1997
- ------------------------
Jaidev Sugavanam
II-5
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
- ------ ---------------------- ----
1.1 Form of Selling Agreement.
4.1 Form of Certificate for Shares of Common Stock./(1)/
4.2 Form of Warrant Agreement and Redeemable Warrant./(1)/
4.3 Form of Stock Purchase Warrant A./(2)/
4.4 Form of Stock Purchase Warrant B./(2)/
5.1 Opinion of Chrisman, Bynum & Johnson, P.C.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Chrisman, Bynum & Johnson, P.C.
(contained in the opinion filed as Exhibit 5.1).
24.1 Power of attorney (included in signature page of
original filing).
_________
(1) Incorporated by reference from the Company's Registration Statement No. 333-
1990 on Form SB-2 dated June 4, 1996.
(2) Incorporated by reference from the Company's Quarterly Report on Form 10-QSB
for the fiscal quarter ended March 31, 1997.
II-6
<PAGE>
Exhibit 1.1
SELLING AGREEMENT
This SELLING AGREEMENT is made as of this ____ day of October, 1997 ,
between IMAGEMATRIX CORPORATION, a Colorado corporation ("Company"), with
principal offices at 400 S. Colorado Boulevard, Suite 500, Denver, CO 80222, and
the person whose name appear on the signature page hereof ("Selling
Shareholder").
RECITALS:
WHEREAS, the Company has issued to Selling Shareholder warrants to
purchase shares of the Company's Common Stock (the shares issuable upon exercise
of said warrants being hereinafter referred to as the "Shares");
WHEREAS, the Company intends to file a registration statement on Form
S-3 ("Registration Statement") with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933 (the "Act"), registering the
Shares for sale;
WHEREAS, this Agreement is entered into between the Company and the
Selling Shareholder to facilitate a legal and orderly distribution of the Shares
pursuant to the Registration Statement.
NOW, THEREFORE, in consideration of the promises made herein and for
other good and valuable consideration, the parties agree as follows:
1. Covenants, Representations and Warranties of the Company.
---------------------------------------------------------
(a) The Company shall use its best efforts to keep the
Registration Statement effective so as to permit the public sale of the Shares
for a period of one (1) year after the effective date of the Registration
Statement.
(b) The Company will provide the Selling Shareholder with
sufficient copies of the Registration Statement (and prospectus contained
therein) as shall be required to satisfy prospectus delivery requirements under
federal and state securities laws.
(c) The Company will pay all expenses of the public offering of
the Shares except for fees of attorneys, accountants and other advisors retained
by the Selling Shareolders and brokerage and other selling commissions
associated with the distribution of the Shares.
<PAGE>
(d)
(i) In the case of the happening, at any time after the
commencement of the offering of the Shares, and prior to its termination,
of any event which materially affects the Company or the Shares which
should be set forth in an amendment of or supplement to the Registration
Statement in order to make the statements therein not misleading, the
Company agrees, upon receiving knowledge of such event, to notify the
Selling Shareholder as promptly as possible of the happening of such an
event.
(ii) In such event, the Company agrees to prepare and
furnish to the Selling Shareholder copies of an amended Registration
Statement or a supplement to the Registration Statement (including the
prospectus contained therein) in such quantities as the Selling Shareholder
may reasonably request, in order that the Registration Statement as so
amended or supplemented will not contain any untrue statement of material
fact, or omit to state any material fact necessary in order to make the
statements therein not misleading in light of the circumstances under which
they were made. The Selling Shareholder agrees temporarily to terminate the
offering of the Shares during the period between the notification by the
Company to the Selling Shareholder of the need for such amendment or
supplement to the Registration Statement and the time such amendment or
supplement has been completed. The duration of this time period shall be at
the sole discretion of the Company.
(e) The Company agrees to obtain the necessary state securities
and blue sky registrations or clearances in only those states in which it elects
to do so.
(f) No order preventing or suspending the use of any preliminary
prospectus contained in the Registration Statement has been issued by the
Commission, and such preliminary prospectus, at the time of filing thereof,
conformed in all material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder, and did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty does not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Company by and with respect to the Selling Shareholder expressly
for use therein.
(g) The Company meets the requirements for the use of Form S-3
under the Act and the rules and regulations of the Commission.
(h) The Registration Statement and the final prospectus contained
therein and any further amendments or supplements thereto (including any
document incorporated by reference therein filed after the effective date of the
Registration Statement) will, when they
<PAGE>
become effective or are filed with the Commission, as the case may be, conform
in all material respects to the requirements of the Act, the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and the rules and regulations of
the Commission thereunder; all documents incorporated by reference into the
Registration Statement will conform in all material respects to the requirements
of the Commission thereunder; and no part of the Registration Statement, the
prospectus or any such amendment or supplement (including documents incorporated
by reference therein) will contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions in
the Registration Statement or prospectus made in reliance upon and in conformity
with substantive information furnished in writing to the Company by and with
respect to the Selling Shareholder expressly for use therein.
2. Covenants, Representations and Warranties of the Selling Shareholder.
--------------------------------------------------------------------
(a) In the case of the happening, at any time after the commencement
of the offering of the Shares, and prior to its termination, of any event which
materially affects the plan of distribution of the Shares, which event should be
set forth in an amendment of or supplement to the Registration Statement in
order to make the statements therein not misleading, the Selling Shareholder,
upon receiving knowledge of such event, agrees to notify the Company, as
promptly as possible, of the happening of such an event, whereupon the
provisions of Section l(d) (ii) above shall then apply.
(b) Each Selling Shareholder agrees to deliver copies of the final
prospectus contained in the Registration Statement, as it may be amended and
supplemented from time to time, to purchasers of the Shares as required by
applicable federal and state securities laws. Each Selling Shareholder agrees
that it will offer and sell the Shares in only those states as to which counsel
for the Company has advised each Selling Shareholder in writing that the
necessary state securities or blue sky clearances have been obtained. The
Selling Shareholder will notify the Company in writing at the time the
distribution of the Shares has been completed.
(c) Statements contained in the Registration Statement, the prospectus
or any amendments or supplements thereto (including any document incorporated by
reference therein) made in reliance upon and in conformity with substantive
information furnished in writing to the Company by and with respect to the
Selling Shareholder expressly for use therein do not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make such statements therein not misleading.
(d) If during the effectiveness of the Registration Statement, the
Company notifies the Selling Shareholder of the occurrence of any intervening
event that, in the opinion of the Company's legal counsel, causes the prospectus
included in the Registration Statement not to comply with the Act, each Selling
Shareholder, promptly after receipt of the Company's notice,
<PAGE>
shall cease making any offers, sales, or other dispositions of the Shares
included in the Registration Statement until the Selling Shareholder receives
from the Company copies of a new, amended, or supplemented prospectus complying
with the Act.
3. Suspension of Offering. It is understood that the Company and the
----------------------
Selling Shareholder will advise each other immediately, in writing, of the
receipt of any threat or the initiation of any steps or procedures by any
federal or state instrumentality or any individual which would impair or prevent
the offer of the Shares or the issuance of any suspension orders or other
prohibitions preventing or impairing the proposed offering. In the case of the
happening of any such event, neither the Company nor the Selling Shareholder
will acquiesce in such steps, procedures or suspension orders, and the Company
agrees actively to defend against any such actions or orders unless all parties
agree in writing to the acquiescence in such actions or orders.
4. Indemnification.
---------------
(a) Company's Indemnification. The Company hereby agrees to indemnify
-------------------------
and hold harmless each Selling Shareholder, its officers and directors, and each
other person, if any, who controls the Selling Shareholder within the meaning of
the Act, against any losses, claims, damages or liabilities, joint or several,
to which the Selling Shareholder or any such person controlling the Selling
Shareholder may become subject under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or proceedings in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in the Registration
Statement, or in any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
necessary to make the statements therein not misleading, and will reimburse the
Selling Shareholder or such person controlling the Selling Shareholder for any
legal or other expenses reasonably incurred in connection with investigating or
defending any such loss, claim, damage, liability or proceeding; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such Registration Statement, amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by the
Selling Shareholder.
(b) Selling Shareholder's Indemnification. Each Selling Shareholder
-------------------------------------
hereby agrees to indemnify and hold harmless the Company, its officers and
directors, and each other person, if any, who controls the Company within the
meaning of the Act, against any losses, claims, damages or liabilities, joint or
several, to which the Company or such other person controlling the Company may
become subject under the Act or otherwise, but only to the extent that such
losses, claims, damages or liabilities (or proceedings in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in the Registration
Statement or in any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a
<PAGE>
material fact necessary to make the statements therein not misleading, which, in
each such case, has been made in or omitted from the Registration Statement,
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by the Selling Shareholder and will
reimburse the Company or such person controlling the Company for any legal or
other expenses reasonably incurred in connection with investigating or defending
any such loss, claim, damage, liability or proceeding.
5. Miscellaneous:
-------------
(a) This Agreement is made pursuant to and governed by the laws of the
State of Colorado.
(b) Any notices by the Company to Selling Shareholder shall be deemed
delivered if in writing and delivered personally, or sent by certified mail, to
the Selling Shareholder addressed to them at their addresses as set forth in the
Company's books and records. Any notice by Selling Shareholder to the Company
shall be deemed delivered if in writing and delivered personally, or sent by
certified mail, addressed to the Company at its address as set forth at the
beginning hereof.
IN WITNESS WHEREOF, the parties have executed this Selling Agreement as of
the date first above written.
COMPANY: IMAGEMATRIX CORPORATION
By:________________________________
Blair W. McNea, Vice-President
SELLING SHAREHOLDER:
MUELLER TRADING LP OF LAKEWOOD
By:___________________________
Its:__________________________
<PAGE>
Exhibit 5.1
[LETTERHEAD OF CHRISMAN BYNUM & JOHNSON APPEARS HERE]
October 3, 1997
ImageMatrix Corporation
400 S. Colorado Boulevard, Suite 500
Denver, CO 80222
Ladies and Gentlemen:
We have acted as counsel to ImageMatrix Corporation (the "Company") in
connection with the preparation and filing of a Registration Statement on Form
S-3 (the "Registration Statement") registering under the Securities Act of 1933,
as amended, an aggregate of 1,500,000 shares (the "Shares") of common stock of
the Company, no par value ("Common Stock"), consisting of 1,500,000 shares
underlying warrants to purchase Common Stock ("Warrants"). As such, we have
examined the Registration Statement, the Company's Articles of Incorporation, as
amended, Bylaws, and minutes of meetings of the Company's Board of Directors.
Based upon the foregoing, and assuming that the Shares will be issued and sold
in accordance with the Registration Statement at a time when effective, we are
of the opinion that, upon issuance of the Shares and receipt of the
consideration to be paid for the Shares, as applicable, the shares of Common
Stock to be issued upon the exercise of the Warrants in accordance with their
terms at a time when the Registration Statement is effective, will be validly
issued, fully paid and non-assessable securities of the Company.
We consent to the use of this opinion as an exhibit to the Registration
Statement and to the references to our firm in the Prospectus which is made a
part of the Registration Statement.
Very truly yours,
/s/ Chrisman, Bynum & Johnson, P.C.
CHRISMAN, BYNUM & JOHNSON, P.C.
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of ImageMatrix
Corporation for the registration of 1,500,000 shares of its common stock and to
the incorpration by reference therein of our report dated February 18, 1997,
except for Note 8 as to which the date is April 21, 1997, with respect to the
consolidated financial statements of ImageMatrix Corporation included in its
Annual Report (Form 10-KSB/A) for the year ended December 31, 1996, filed with
the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Denver, Colorado
October 3, 1997
