As filed with the Securities and Exchange Commission on April 19, 1999
File No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MEDICAL DYNAMICS, INC.
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(Exact name of Registrant as specified in charter)
Colorado 84-0631765
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
99 Inverness Drive East
Englewood, Colorado 80112
(303) 790-2990
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(Address, including zip code and telephone number,
including area code of registrant's principal
executive offices)
Van A. Horsley, President
99 Inverness Drive East
Englewood, Colorado 80112
(303) 790-2990
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(Name, address, including zip code and telephone number,
including area code, of agent for service)
It is requested that copies of all correspondence be sent to:
Herrick K. Lidstone, Jr., Esq.
Norton o Lidstone, LLC
5445 DTC Parkway, Suite 850
Englewood, Colorado 80111-3053
Telephone Number (303) 221-5552
Facsimile Number (303) 221-5553
Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box:
[ ]
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If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [xx]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------
Title of Shares to Amount to be Proposed Proposed Amount of
be registered registered maximum maximum Registration
aggregate price aggregate Fee
per unit offering price
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Common (1) 523,834 $2.00 $1,047,668 $292
Total 523,834 $1,047,668 $292
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</TABLE>
Pursuant to Rule 416 of the Securities Act of 1933 and as required by
Section 2(a) of the registration rights agreement between the Company and the
Selling Stockholder, this registration statement shall be deemed to cover such
additional shares as may be issued to the Selling Stockholder to prevent
dilution resulting from future dividends, stock distributions, stock splits or
similar transactions.
(1) The amount to be registered includes the shares issued to Resonance
Limited. The maximum offering price is based on the last sale price
quoted on the Nasdaq SmallCap Market on April 9, 1999 pursuant to Rule
457(c).
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.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
Subject to Completion, Dated April 16, 1999
PROSPECTUS
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MEDICAL DYNAMICS, INC.
523,834 Shares of Common Stock
Offered for Resale by a Shareholder
Resonance Limited, a shareholder, is offering up to 523,834 shares of
Medical Dynamics, Inc. common stock for sale. Resonance acquired these shares
from us for $800,000 in March 1999. Our common stock is traded in the
over-the-counter market and is quoted on the Nasdaq SmallCap Market under the
symbol "MEDY." On April 9, 1999, Nasdaq reported that the closing price of our
Common Stock was $2.00 per share.
We will not receive any money from Resonance's sale of the shares. We
will pay all expenses incurred in connection with this offering except
commissions and discounts which Resonance will pay to underwriters, dealers,
brokers or agents.
Resonance has advised us that it has made no commitments with respect
to the sale of the shares, but that it may sell the shares from time-to-time
o on the Nasdaq SmallCap Market;
o in the over-the-counter market outside of Nasdaq; or
o in negotiated transactions other than the Nasdaq SmallCap Market or the
over-the-counter market.
Any of these sales may involve block transactions. Resonance has advised us that
it may sell the Shares at market prices at the time of sale, at prices related
to prevailing market prices at the time of sale, or at other negotiated prices.
This Investment Involves a High Degree of Risk. You Should Purchase Shares Only
If You Can Afford a Complete Loss. See "Risk Factors" Beginning on Page 5. We
have not authorized anyone to give information or to make any representation
other than as contained in this prospectus in connection with the offering
described herein.
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<PAGE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is ______________ , 1999
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, proxy statements, and other information with the
Securities and Exchange Commission (the "SEC"). You may read and copy any
document we have filed with the SEC in its public reference room at 450 Fifth
Street N.W. Washington, D.C. 20549. You may obtain information on the operation
of the public reference room by calling the SEC at 1-800-432-0330. Our filings
are also available to on the Internet through the SEC's EDGAR database. You may
access the SEC's web site at http://www.sec.gov
We also furnish Annual Reports to our shareholders which contain audited
financial information.
This prospectus is part of a registration statement (on Form S-3) we have
filed with the SEC relating to our common stock described in this prospectus. As
permitted by the SEC rules, this prospectus does not contain all of the
information contained in the registration, accompanying exhibits and schedules
we file with the SEC. You may refer to the registration, the exhibits and
schedules for more information about us and our common stock. The registration
statement, exhibits, and schedules are also available at the SEC's public
reference rooms or through its EDGAR database on the Internet.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information in
documents we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and
information that we file later with the SEC will automatically update and
supersede this information. These documents provide a significant amount of
information about us. We incorporate by reference the documents listed below and
any future filings we will make with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934:
(1) Our Annual Report on Form 10-KSB for the fiscal year ended September 30,
1998.
(2) Our Quarterly Report on Form 10-QSB for the quarter ended December 31,
1998.
(3) Our Current Report on Form 8-K reporting an event of April 13, 1999,
describing certain litigation and negotiations related to our acquisition
of Command Dental systems.
(4) Our Current Report on Form 8-K reporting an event of March 18, 1999,
describing certain amendments to our agreements with The Tail Wind Fund,
Ltd. and financing accomplished with Resonance Limited.
(5) Our Current Report on Form 8-K reporting an event of March 4, 1999,
describing amendments to our agreements with The Tail Wind Fund, Ltd.
(6) Our Current Report on Form 8-K reporting an event of October 9, 1998,
describing a line of credit we obtained from Norwest Business Credit, Inc.
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(7) Our Current Report on Form 8-K, as amended, reporting an event of October
23, 1997, describing our acquisition of Computer Age Dentist, Inc.
We have not authorized any person to give any information which is
inconsistent with information contained in or incorporated into this prospectus.
You should not rely on any inconsistent information.
Neither the delivery of this Prospectus nor any sale made hereunder shall
under any circumstances create any implication that the information contained
herein is correct as of any time subsequent to the date hereof.
You may request a copy of these filings or a copy of any or all of the
documents referred to above which have been or may be incorporated in this
Prospectus by reference, at no cost, by writing us or calling us at the
following address and telephone number:
Medical Dynamics, Inc.
99 Inverness Drive East
Englewood, CO 80110
303-790-2990
Additionally, the documents are available electronically in the EDGAR database
on the web site maintained by the SEC. You can find this information at
http://www.sec.gov.
NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Prospectus and the information
incorporated by reference herein may contain forward-looking statements within
the meaning of the federal securities laws. Forward-looking statements are based
on our management's beliefs, assumptions, and expectations of our anticipated
future economic performance, taking into account information currently available
to our management. These statements are not statements of historical fact, but
may use terms such as "may," "expects to," and other terms denoting future
possibilities. Forward- looking statements include, but are not limited to,
those statements relating to development of new products, our projected
financial condition, our ability to increase distribution of our products,
integration of businesses we acquired during the 1998 fiscal year, approval of
our products as and when required by the Food and Drug Administration ("FDA") in
the United States and similar regulatory bodies in other countries. The accuracy
of these statements cannot be guaranteed as they are subject to a variety of
risks which are beyond our ability to predict or control; these 'risk factors'
and the other factors described in this prospectus and information incorporated
by reference may cause actual results to differ materially from our projections
or estimates contained in this prospectus or in the documents incorporated by
reference.
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PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information regarding our company and the common stock being offered by
Resonance as the selling shareholder, as well as our financial statements and
notes to those statements appearing elsewhere in this prospectus and in the
documents incorporated by reference.
Medical Dynamics, Inc
We are engaged in the design, development, manufacture and marketing of
medical and dental video cameras and related disposable products for a variety
of professional specialties. Our principal products are small, color, medical
and dental video camera systems for use in patient diagnosis and various
surgical procedures. We have been manufacturing similar cameras since August
1981. When used in this prospectus, the terms "we" and "our" refer to our
company, Medical Dynamics, Inc.
In October 1997 we acquired Computer Age Dentist, Inc. ("CADI"), a
California corporation based in Los Angeles, California. CADI develops and sells
practice management software and related electronic services to the dental
profession. In February 1998, through CADI, we acquired Information Presentation
Systems, Inc. of Marietta, Georgia, at that time one of the nation's largest
suppliers of customized multimedia systems for use in a variety of dental
operatory environments. In April 1998, through CADI the Company acquired Command
Dental Systems of Farmington Hills, Michigan, which develops and markets
turn-key computer systems for the efficient management of dental practices.
Our principal executive offices and manufacturing facilities are at 99
Inverness Drive East, Englewood, Colorado, 80112. Our telephone number at that
address is (303) 790-2990.
The Offering
Resonance, the shareholder which is selling the shares pursuant to this
prospectus, is offering up to 523,834 shares of our common stock (the "Shares").
Resonance will receive all of the proceeds from the offer and sale of the
Shares. We will receive no cash proceeds from any sale Resonance may make.
We will pay the costs related to the registration statement in which this
Prospectus is included. Resonance will pay its own expenses related to the offer
and sale of the Shares, including any underwriter discounts or commissions.
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RISK FACTORS
Investment in the shares of common stock offered in this prospectus (the
"Shares") involves a high degree of risk. You should consider the following
discussion of risks as well as other information in this prospectus and in the
documents incorporated by reference before purchasing any Shares.
1. Losses from Operations. We have a history of net operating losses,
which, when accumulated, total $20,792,400 through December 31, 1998. These net
operating losses have resulted in working capital shortages from time to time.
We can offer no assurance that we will be able to operate profitably in the
future. The risks described in this section must be considered when judging the
likelihood that we may achieve profitable operations in the future.
2. Working Capital Shortages and Dependence on Third Party Financing. We
have regularly incurred working capital shortages and have sought to alleviate
these shortages through debt and equity financing provided by third party and
affiliated investors, which have been accomplished at prices significantly below
the market price concurrently quoted on Nasdaq.
Although we have been successful in the past raising necessary working
capital, we cannot offer any assurance that these sources of capital will
continue to be available on terms which are acceptable to us. Eventually we will
be required to finance our operations with our cash flow, and we are attempting
to increase our revenues in an effort to do so.
We cannot offer you any assurance, however, that our past working capital
shortages will not continue and may not adversely affect our ability to raise
additional debt or equity capital in the future, if necessary.
3. Risk of Dilution. We have sold our common stock at discounts to the
market price existing at the time of the sale. We may do so again in the future,
although there are no plans to do so at present. We have several obligations
outstanding which may result in further dilution to shareholders, including
persons who may purchase the shares described in this prospectus:
Convertible Debentures. There are approximately $1,300,000 of convertible
debentures outstanding. These debentures are convertible at 85% of "Market
Price." "Market Price" is defined to mean the average of the two lowest closing
bid prices of the Common Stock as reported by The Nasdaq Stock Market over the
60 trading day period immediately preceding the determination date. If the
debentures were entirely converted on April 9, 1999, we would cancel $1,300,000
of debt in exchange for the issuance of 977,444 shares of our Common Stock
(approximately $1.33 per share). The issuance of these shares, if any, will
result in dilution to our shareholders at a time when the quoted market price of
our shares is significantly higher.
Additional Shares. We also have an obligation to issue additional shares to
Resonance. The additional shares are intended to compensate Resonance for
one-third of any decrease in the public market price of our Common Stock on
_________, 1999, ______, 1999, and __________ (two, four, and six months after
the date of this prospectus). The issuance of these shares, if any, will also
result in dilution to our shareholders.
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Market Impact. We anticipate that the sales of our Common Stock following
the conversion of the debentures, and by Resonance have had and may continue to
have in the future a negative impact on the market for the Common Stock. We also
believe that perhaps even the possibility of these sales may have a negative
impact on the market for our Common Stock.
4. Product Liability. We could be subject to claims for personal injuries
resulting from the use of our products. Although we carry product liability
insurance coverage in amounts we believe are commercially reasonable within the
medical products industry, there can be no assurance that the amount of coverage
would be sufficient to cover any proven claims. We would be materially and
adversely affected if any damages were awarded in amounts which were in excess
of our coverage limits.
5. Acquisition of New Businesses. During the fiscal year ended September
30, 1998, we acquired three new businesses, Computer Age Dentist, Information
Presentation Systems, and Command Dental Systems. We believe that we have been
generally successful in our efforts to integrate these businesses into our
business. We are, however, seeking to resolve certain issues with respect to the
Command Dental acquisition. Following the completion of the Command Dental
acquisition, certain of the principals appear to have violated confidentiality
and non-competition provisions. We believe that the former principals of Command
Dental encouraged certain former employees of Command Dental (who became
employees of Computer Age Dentist) to violate their employment obligations. In
addition, the operations of the Command Dental assets did not conform to
representations made to us. Although we have commenced litigation on this
matter, we are also negotiating with the former Command Dental principals to
resolve the issues identified. Although we are disappointed with the situation,
we do not believe that any resolution will have a material adverse effect on us,
our business operations or our financial condition as a whole.
6. Limitations on Ability to Obtain Additional Financing. Our agreement
with the holder of the convertible debentures ("Tail Wind") contains limitations
on our ability to raise additional capital. These restrictions prohibit us from
raising working capital or other equity investment in transactions where the
purchase price of the securities is to be adjusted for future market
fluctuations (known as "variable rate transactions") until at least August 1999.
However, we believe that we will be able to work within these restrictions to
the extent we need additional capital.
7. Technological Change and Risk of Technological Obsolescence. The medical
products segment and the dental products segment, our two principal lines of
business, are subject to rapid and significant technological change.
Accordingly, our viability will be dependent in part on our ability to introduce
competitive products to the marketplace in a timely manner and enhance and
improve such products to the satisfaction of our customers. We cannot assure
that we will be able to keep pace with technological developments or that our
products will not become obsolete.
8. Competition. Our operations and product lines are subject to a high
level of competition from foreign, as well as domestic, manufacturers of color
medical and dental video cameras and other medical devices which we currently
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manufacture and sell, or which we may develop in the future. Some of our
competitors are affiliated with large companies with substantial economic and
personnel resources which greatly exceed our resources. We can offer no
assurance that we will be able to compete successfully with other companies.
In addition, there are a large number of competitors in Computer Age
Dentist's dental practice management area. Most of these competitors are smaller
businesses. Computer Age Dentist's software is Y2K compliant, unlike the
software offered by some of our competitors. There can be no assurance, however,
that competitors may not reduce our market share by offering their proprietary
version of dental practice management software. Through Computer Age Dentist, we
plan to compete with other businesses by continuing to upgrade software and by
continuing to package the dental practice software with a complete office system
of hardware and software and diagnostic equipment.
9. Potential Conflicts of Interest. There have been significant conflicts
of interest in our operation and management. These conflicts include our
purchase of certain equipment and patents from our directors and executive
officers, granting of royalties, loans made available to us by our Chairman, and
our employment of sons of two of our directors. These transactions were not
negotiated at arms' length, although the Board of Directors believes that all of
these transactions were fair and in our best interests. Although we use our best
efforts to minimize conflicts of interest, the existence of such conflicts may
impact us in our business activities.
10. Dependence on Management. At present, our success is dependent upon the
active participation of our existing management, our Chairman and principal
shareholder, Dr. Adair, and our Chief Executive Officer, Van Horsley, Dr.
Adair's step-son. We do not have employment contracts with either Mr. Horsley or
Dr. Adair.
Computer Age Dentist's operations are significantly dependent on the
continued availability of the services of Daniel L. Richmond and Chae U. Kim.
Both Messrs. Richmond and Kim are subject to five year employment agreements
which expire in October 2002.
The loss of the services of any of these persons would have a material
adverse effect on us and our operations. In the event of such a loss, we can
give no assurance that we could replace any person without incurring substantial
additional expense.
11. Government Regulation. Because certain of the products that we
manufacture are used in surgery and other medical applications, agencies of the
federal government, including the FDA, regulate and closely scrutinize these
products. Although we believe that our facilities are in compliance with all
applicable regulations, we can offer no assurance that we will be able to comply
fully with all of the government regulations to which our operations are
subject. Failure to comply strictly with all FDA requirements (not all of which
are written) may result in sanctions as severe as the cessation of our
manufacturing business. Although we have had difficulty in certain instances in
the past in obtaining FDA approval on new products, our current business in not
materially dependent on this issue and, therefore, this is not deemed to be a
significant risk.
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12. Protection of Technology. Although we obtain secrecy agreements from
our employees and others having access to our trade secrets and from those
persons holding patents on certain of our technology, such agreements and
patents do not afford complete protection against the unauthorized use of such
information by others. Furthermore, the costs of prosecuting persons who may
accidentally or intentionally infringe on our patents or divulge our trade
secrets can be expensive and time consuming.
The unauthorized use of our trade secrets and the infringement of its
patents could have a material adverse effect on us and on Computer Age Dentist
and our ability to compete.
13. Significant Investment in Intangible Assets. As a result of the
acquisitions of Computer Age Dentist, Information Presentation Systems, and
Command Dental System, we have a significant investment in intangible assets,
amounting to approximately $5,945,100 at December 31, 1998 (64% of MEDY's total
assets). There are two risks associated with our significant investment in
intangible assets:
The expenses associated with the annual amortization of the intangible
assets will make it more difficult for us to realize net income.
Because intangible assets are incapable of precise valuation, it may be
necessary for us to reduce the balance sheet valuation of these assets
at some later point, although we have no intention or basis to do so at
the present time.
14. Limited Public Market; Price Volatility; and No Assurance of Liquidity.
There currently is a limited public market for our Common Stock. The public
market for our common stock is highly volatile, both as to price and trading
volume. Factors such as those discussed in this "Risk Factors" section may have
a significant impact on the market price of the securities offered. Also, some
brokerage firms may not effect transactions in securities that trade below a
stipulated price, and most lending institutions will not permit the use of
low-priced or thinly traded securities as collateral for loans.
15. No Dividends Paid or Contemplated. We have never paid any dividends,
and we do not expect to pay any dividends in the foreseeable future. Investors
who anticipate the need for either immediate or future income by way of
dividends from their investment, should not purchase the Shares made available
in this Offering. Our lending arrangements with Norwest Business Credit, Inc.,
significantly restrict our ability to pay dividends.
16. Year 2000 Compliance. Although there can be no assurance, we do not
anticipate that we will suffer any adverse impact as a result of Year 2000 (Y2K)
computer software issues, either as a result of third party non-compliance or as
a result of internal matters. The Y2K issue is the result of computer system
programs being written for two digits rather than four to define the applicable
year. As a result, date-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in system failures or
miscalculations, causing disruption of normal business activities.
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None of the information technology or other software and hardware systems
which we use (including our subsidiary, Computer Age Dentist) incorporates
technology that is incapable of recognizing dates beyond December 31, 1999.
Computer Age Dentist, through our internal staff, has developed our dental
practice management software for the Windows platform and, consequently, such
software recognizes dates beyond December 31, 1999. While Computer Age Dentist
is still supporting some software which is DOS-based or which otherwise may not
be Y2K compliant, we have advised the customers using this software of their
need to upgrade their office software in anticipation of Y2K. Even if we were to
provide the necessary software upgrade to these customers at no cost (which we
do not have an obligation to do), the total loss would be less than $60,000 in
revenues and is not considered to be material. Computer Age Dentist's dental
practice management software is Y2K compliant. We believe that this offers us a
marketing opportunity in that some of our competitors' software currently being
utilized by dental offices is not Y2K compliant and will need to be replaced by
those offices before December 31, 1999. We cannot offer any assurance, however,
that these offices purchase our dental practice management software to replace
their systems.
In making the foregoing determination, we assessed embedded systems
contained in our office buildings, equipment, and other infrastructures. As a
result, we have not established a contingency plan in the event of a Y2K
catastrophe, and we do not believe that such a plan is necessary. Of course, we
are all dependent on facilities outside of our control, such as electrical power
supplies, banking facilities, transportation facilities (such as airlines), and
communications facilities. While we believe, based on public reports and
notifications we received, that these outside facilities are or will be Y2K
compliant, we have no other basis for determining their compliance. Our
operations would be significantly and adversely affected if any of these outside
facilities are adversely affected by the millennium change or by other issues
related to Y2K.
USE OF PROCEEDS
Resonance, as the selling shareholder, will receive all proceeds from the
sale of the Shares offered and sold under this Prospectus. We will receive no
proceeds.
THE COMPANY
Our corporate name is "Medical Dynamics, Inc." We were incorporated in
Colorado in March 1971. We are engaged in the design, development, manufacture
and marketing of medical and dental video cameras and related disposable
products for a variety of professional specialties. Our principal products are
small, color, medical and dental video camera systems for use in patient
diagnosis and various surgical procedures. We have been manufacturing these
types of cameras since August 1981.
In October 1997, we acquired 100% of the outstanding capital stock of
Computer Age Dentist, Inc., based in Los Angeles, California. Computer Age
Dentist is engaged in the development and sale of practice management software
and related electronic services to the dental profession.
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In February 1998, through Computer Age Dentist, we acquired Information
Presentation Systems, Inc. of Marietta, Georgia ("IPS"). IPS supplied customized
multimedia systems for use in a variety of dental operatory environments.
In April 1998, also through Computer Age Dentist, we acquired Command
Dental Systems of Farmington Hills, Michigan ("Command"). Command developed and
marketed turn-key computer systems for the efficient management of dental
practices. During the period following our acquisition of Command, we developed
some significant concerns about the information provided to us when we made our
decision to acquire Command, and we have sought rescission of that transaction
and damages. We are seeking to negotiate a resolution of this matter with the
former principals of Command whom we believe responsible for the transaction.
Although this matter is in only the early stages of resolution, we do not
believe it will have any material impact on us, our business, or our financial
condition. The assets acquired from Command made an immaterial contribution to
our revenues in the current fiscal year and are not expected to make a
significant contribution in the future, even if we were to retain Command.
In reviewing our financial statements which are incorporated herein by
reference, it should be noted that a substantial portion of our revenues for
fiscal 1998 were derived from the businesses we acquired during fiscal 1998 and
not from our historical businesses of medical and dental camera manufacturing.
For example, our revenues during fiscal year 1998 (ending September 30, 1998)
totaled approximately $7,847,000; of that amount, approximately $7,575,000 was
attributable to business generated as a result of the acquisitions of Computer
Age Dentist, IPS and Command ($671,556 attributable to Command).
Our principal executive offices and manufacturing facilities are located at
99 Inverness Drive East, Englewood, Colorado, 80112. Our telephone number is
(303) 790-2990.
SELLING SHAREHOLDER
The selling shareholder under this prospectus is Resonance Limited
("Resonance"). Resonance is not one of our affiliates; neither Resonance nor any
affiliate of Resonance has any position, office or other material relationship
with us for more than the past three years. The following table sets forth
certain information about Resonance's ownership of our common stock:
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Selling Shareholder Shares Owned Shares Being Beneficial
Prior to Offering Offered Ownership
After Offering
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Resonance Limited 523,834 shares 523,834 shares -0- 0%
Burleigh Manor,
Peel Road,
British Isles,
Isle of Man
Based on information Resonance has given to us, Resonance does not own,
directly or indirectly, any other shares of our Common Stock. Resonance does
have the right to obtain additional shares of our common stock and a warrant to
purchase our common stock for six months after the date of this Prospectus. That
right is wholly dependent on market conditions.
On _______, 1999, _______, 1999, and _______ (two months, four months and
six months after the date of this prospectus) we may be obligated to issue
additional shares to Resonance if the per share market price is less than the
$1.526 Resonance paid for the shares included in this prospectus. The "per share
market price" shall mean the average closing bid price for the 20 trading days
immediately preceding the date on which the price is to be determined. The
number of additional shares which we may be obligated to issue to Resonance will
be calculated pursuant to a formula set forth in our agreement with Resonance,
which can best be explained by the following example (assuming that the per
share market price on the first determination date is $1.10 per share):
<TABLE>
<CAPTION>
<S> <C> <C>
523,834 shares initially issued / $1.10 = $576,217 value at the assumed per share
market price
$800,000 initial purchase price - $576,217 = $223,783 difference
$223,782.60 difference / 3 / $1.10 = 67,813 additional shares to be issued to
Resonance.
</TABLE>
In addition, on ___________, we must issue warrants to purchase 523,834
shares of our common stock. In order to acquire the shares, Resonance will have
to pay us $1.526 per share. The warrants will expire on _________, 2000 (twelve
months after the date of this prospectus). We have agreed with Resonance that
the total number of additional shares plus the total number of warrants will not
exceed 2,060,033 shares. Resonance has agreed to reduce the number of warrants
to ensure that this limitation (which we refer to as the "future priced
securities limitation") is not exceeded.
-14-
<PAGE>
PLAN OF DISTRIBUTION
Resonance has advised us that it may offer and sell their Shares at various
times in one or more of the following types of transactions:
o on the Nasdaq SmallCap Market;
o in the over-the-counter market outside of Nasdaq; or
o in negotiated transactions other than the Nasdaq SmallCap Market or the
over-the-counter market.
Any of the foregoing may involve block transactions. Resonance has advised
us that it may sell the Shares at market prices at the time of sale, at prices
related to prevailing market prices at the time of sale, or at other negotiated
prices.
Resonance has also advised us that it may use brokers or dealers to sell
the Shares, and that the brokers or dealers may act as agents for Resonance, or
as principals in the transaction. If this happens, Resonance will pay the
discounts or commissions for the brokers or dealers, or the brokers or dealers
may receive commissions from purchasers for whom they acted as agents or
principals.
If Resonance gives or pledges the shares to another person, the other
person may sell the shares as a Selling Shareholder under this Prospectus. Any
Shares that qualify for sale under Rule 144 of the Securities Act may be sold
under such rule rather than pursuant to this Prospectus.
In effecting sales, brokers or dealers may arrange for other brokers or
dealers to participate. Such broker or dealers may receive commissions or
discounts from Resonance in amounts to be negotiated by it. Resonance may enter
into hedging transactions with brokers or dealers. The brokers or dealers may
engage in short sales of the Common Stock in the course of hedging the positions
assumed with Resonance (including, without limitation, in connection with the
distribution of the Common Stock by such brokers or dealers). Resonance may also
engage in short sales of the Common Stock and may enter into option or other
transactions with brokers or dealers that involve the delivery of the Common
Stock to the brokers or dealers, who may then resell or otherwise transfer such
Common Stock. Such brokers or dealers and any other participating brokers or
dealers may, in connection with such sales, be deemed to be underwriters within
the meaning of the Securities Act of 1933, as amended. Any discounts or
commissions received by any such brokers or dealers may be deemed to be
underwriting discounts and commissions under the Securities Act of 1933, as
amended.
We will pay all of the expenses incident to the filing of this Registration
Statement, which we estimate to be $20,000. These expenses include legal and
accounting fees in connection with the preparation of the Registration Statement
of which this Prospectus is a part, legal and other fees in connection with the
qualification of the sale of the Shares under the laws of certain states (if
any), registration and filing fees, printing expenses, and other expenses.
Resonance will pay all other expenses incident to the offering and sale of the
Shares to the public, including commissions and discounts of underwriters,
brokers, dealers or agents, if any.
-15-
<PAGE>
We have agreed to use our best efforts to keep the registration of the
Shares offered hereby effective until the date upon which all of the Shares
offered by Resonance have been sold.
DESCRIPTION OF SECURITIES
Our articles of incorporation authorize us to issue two classes of stock:
Common Stock and Preferred Stock. The following generally describes these two
classes.
Common Stock
Authorized. We are authorized to issue 30,000,000 shares of Common Stock.
Each holder of a share of Common Stock gets one vote per share on all matters
submitted to a vote of shareholders, but may not cumulate votes for the election
of directors. Accordingly, the holders of more than 50% of the shares voting for
the election of directors can elect 100% of the directors if they choose to do
so; and, in such event, the holders of the remaining less than 50% of the shares
voting for the election of the directors will be unable to elect any person or
persons to the Board of Directors. Holders of Common Stock also are entitled to
receive ratably such dividends as may be declared by the Board of Directors out
of funds legally available therefor. In the event of our dissolution,
liquidation or winding up, holders of common stock are entitled to share ratably
in all assets. Holders of Common Stock have no preemptive, subscription,
redemption or conversion rights. All the outstanding shares of Common Stock are
fully paid and nonassessable.
Issued and Outstanding. On March 31, 1999, MEDY had issued and outstanding
10,851,270 shares of Common Stock. We may issue additional shares to Resonance
as is discussed above, and we will likely issue additional shares to Tail Wind
Fund, Ltd. for conversion of outstanding convertible debentures, in payment of
interest or on exercise of outstanding warrants (estimated to be not more than
an additional 1,779,000 shares). The number of additional shares and warrants to
be issued to Resonance will not be determined until at least six months after
the date of this Prospectus. In addition, on March 31, 1999, we were obligated
to issue an additional 75,000 shares to Merchant Capital, Inc., on exercise of
an option to purchase our Common Stock it held.
On March 31, 1999, we also had outstanding stock options to purchase an
additional 4,483,037 shares of Common Stock exercisable at exercise prices
ranging between $1.00 and $4.50 per share. Certain of these options are only
exercisable upon the Company achieving certain performance goals.
Dividends. Holders of our Common Stock are entitled to dividends when, as
and if declared by the Board of Directors out of funds legally available
therefor, subject to the rights, if any, of holders of any outstanding shares of
Preferred Stock. We have not declared or paid any dividends on Common Stock and
we do not anticipate that we will declare or pay any dividends in the
foreseeable future. Our agreement with Norwest Business Credit, Inc. precludes
us from declaring any dividends.
-16-
<PAGE>
Preferred Stock
We are also authorized to issue up to 5,000,000 shares of Preferred Stock,
and we may do so in series which may be designated by the Board of Directors. We
have not issued any shares of Preferred Stock and we do not contemplate issuing
any shares of Preferred Stock in the immediate future; however, the Board may
use its ability to issue Preferred Stock as it deems appropriate to effect our
business purposes.
Our Board of Directors will determine the material terms of any series of
Preferred Stock without shareholder approval. These terms may include dividend
rate, conversion features and voting rights. Our Board will determine these
terms at the time of issuance. The ability of our Board to issue Preferred Stock
may also be used as a means of resisting a change of control and, therefore,
could be considered an "anti-takeover" device.
Transfer Agent
The transfer agent for our Common Stock is Continental Stock Transfer &
Trust Co., 72 Reade Street, New York, New York 10007.
LEGAL MATTERS
The firm of Norton o Lidstone, LLC, 5445 DTC Parkway, Suite 850, Englewood,
CO 80111, has acted as our counsel in connection with this offering and has
passed upon the validity of the securities offered hereby.
EXPERTS
The financial statements of Medical Dynamics, Inc. for the years ended
September 30, 1998 and 1997 incorporated into the Registration Statement by
reference have been audited by Hein + Associates LLP, independent certified
public accountants, upon the authority of that firm as experts in accounting and
auditing.
-17-
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY MEDY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF
AN OFFER TO BUY ANY OF THE SECURITIES TO ANY PERSON IN ANY JURISDICTION WHERE
SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS AT
ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
MEDICAL DYNAMICS, INC.
TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION....................................-5-
DOCUMENTS INCORPORATED BY REFERENCE....................................-5-
NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS...................-6-
PROSPECTUS SUMMARY.....................................................-7-
RISK FACTORS...........................................................-8-
USE OF PROCEEDS.......................................................-12-
THE COMPANY...........................................................-12-
SELLING SHAREHOLDER...................................................-13-
PLAN OF DISTRIBUTION..................................................-15-
DESCRIPTION OF SECURITIES.............................................-16-
LEGAL MATTERS.........................................................-17-
EXPERTS...............................................................-17-
-18-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is an itemization of all expenses (subject to future
contingencies) incurred or to be incurred by the Registrant in connection with
the issuance and distribution of the securities being offered. All expenses are
estimated except the registration fee.
Registration and filing fee $ 292
Printing 1,000
Accounting fees and expenses 7,500
Legal fees and expenses 7,500
Blue sky filing fees and expenses 1,000
Transfer and Warrant Agent fees 500
Miscellaneous 2,208
-------
Total $20,000
Item 15. Indemnification of Directors and Officers.
Section 7-109-102 of the Colorado Revised Statutes and the Registrant's
Articles of Incorporation, under certain circumstances provide for the
indemnification of the Registrant's officers, directors and controlling persons
against liabilities which they may incur in such capacities. A summarization of
the circumstances in which such indemnification is provided for is contained
herein, but that description is qualified in its entirety by reference to the
Registrant's Articles of Incorporation and the relevant Section of the Colorado
Revised Statutes.
In general, the statute provides that any director may be indemnified
against liabilities (including the obligation to pay a judgment, settlement,
penalty, fine or expense), incurred in a proceeding (including any civil,
criminal or investigative proceeding) to which the director was a party by
reason of status as a director. Indemnity may be provided if the director's
actions resulting in the liabilities: (i) were taken in good faith; (ii) were
reasonably believed to have been in the Registrant's best interest with respect
to actions taken in the director's official capacity; (iii) were reasonably
believed not to be opposed to the Registrant's best interest with respect to
other actions; and (iv) with respect to any criminal action, the director had no
reasonable grounds to believe the actions were unlawful. Unless the director is
successful upon the merits in such an action, indemnification may generally be
awarded only after a determination of independent members of the Board of
Directors or a committee thereof, by independent legal counsel or by vote of the
shareholders that the applicable standard of conduct was met by the director to
be indemnified.
The statutory provisions further provide that unless limited by a
corporation's articles of incorporation, a director or officer who is wholly
successful, on the merits or otherwise, in defense of any proceeding to which
the director or officer as a party, is entitled to receive indemnification
-19-
<PAGE>
against reasonable expenses, including attorneys' fees, incurred in connection
with the proceeding. In addition, a corporation may indemnify or advance
expenses to an officer, employee or agent who is not a director to a greater
extent than permitted for indemnification of directors, if consistent with law
and if provided for by its articles of incorporation, bylaws, resolution of its
shareholders or directors or in a contract. The provision of indemnification to
persons other than directors is subject to limitations as may be imposed on
general public policy grounds.
In addition to the foregoing, unless limited by the Registrant's articles
of incorporation, a court, upon petition by an officer or director, may order
the Registrant to indemnify the officer or director against liabilities arising
in connection with any proceeding. A court may order the Registrant to provide
indemnification, whether or not the applicable standard of conduct described
above was met by the officer or director. To order indemnification, the court
must determine that the petitioner is fairly and reasonably entitled to
indemnification in light of the circumstances. With respect to liabilities
arising as a result of proceedings on behalf of the Registrant, a court may only
require that a petitioner be indemnified as to the reasonable expenses incurred.
The Registrant has entered into indemnification agreements with certain of its
directors agreeing to provide indemnification benefits to the fullest extent
permitted by Colorado law and its articles of incorporation and bylaws.
Indemnification in connection with a proceeding by or in the right of the
Registrant in which the director is successful, is permitted only with respect
to reasonable expenses incurred in connection with the defense. In these
actions, the person to be indemnified must have acted in good faith, in a manner
believed to have been in the Registrant's best interest and must not have been
adjudged liable for negligence or misconduct. Indemnification is otherwise
prohibited in connection with a proceeding brought on behalf of the Registrant
in which a director is adjudged liable to the Registrant, or in connection with
any proceeding charging improper personal benefit to the director in which the
director is adjudged liable for receipt of an improper personal benefit.
Colorado law authorizes the Registrant to reimburse or pay reasonable
expenses incurred by a director, officer, employee or agent in connection with a
proceeding, in advance of a final disposition of the matter. Advances of
expenses are permitted if the person furnishes to the Registrant a written
statement of his belief that he met the applicable standard of conduct required
to permit indemnification. The person seeking expense advances must also provide
the Registrant with a written agreement to repay the advances if it is
determined the applicable standard of conduct was not met. A determination must
also be made that the facts known to the Registrant would not preclude
indemnification.
The statutory section cited above further specifies that any provisions for
indemnification of or advances for expenses to directors which may be contained
in the Registrant's Articles of Incorporation, Bylaws, resolutions of its
shareholders or directors, or in a contract (except for insurance policies)
shall be valid only to the extent the provisions are consistent with the
Colorado statutes and any limitations upon indemnification set forth in the
Articles of Incorporation.
-20-
<PAGE>
The statutory provision cited above also grants the power to the Registrant
to purchase and maintain insurance policies which protect any director, officer,
employee, fiduciary or agent against any liability asserted against or incurred
by them in such capacity arising out of his status as such. The policies may
provide for indemnification whether or not the corporation would otherwise have
the power to provide for it. The Registrant has not obtained any policies
providing protection against liabilities imposed under the securities laws. The
registration rights agreements dated July 31, 1998, and October 31, 1997 between
the Registrant and Tail Wind., provide for cross indemnification by the
Registrant and Resonance, in certain circumstances, including certain securities
laws violations.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits. The following is a complete list of exhibits filed as a
part of this Registration Statement, which Exhibits are incorporated herein.
Number Description
- ------ -----------
4.1* Form of Convertible Debenture, incorporated by reference to the
Registrant's Current Report on Form 8-K reporting an event of October
23, 1997 (Commission file no. 0-8632)
4.2* Common Stock Purchase Warrant issued to The Tail Wind Fund, Ltd.,
incorporated by reference to the Registrant's Current Report on Form
8-K reporting an event of October 23, 1997 (Commission file no.
0-8632)
4.3* Form of Convertible Debenture, incorporated by reference to the
Registrant's Current Report on Form 8-K reporting an event of July 31,
1998 (Commission file no. 0-8632)
4.4* Common Stock Purchase Warrant issued to The Tail Wind Fund, Ltd.,
incorporated by reference to the Registrant's Current Report on Form
8-K reporting an event of July 31, 1998 (Commission file no. 0-8632)
5.1+ Opinion and Consent of Norton * Lidstone, LLC.
10.1* Purchase Agreement between Medical Dynamics, Inc. and The Tail Wind
Fund, Ltd., incorporated by reference to the Registrant's Current
Report on Form 8-K reporting an event of October 23, 1997 (Commission
file no. 0- 8632)
10.2* Registration Rights Agreement between Medical Dynamics, Inc., and The
Tail Wind Fund, Ltd., incorporated by reference to the Registrant's
Current Report on form 8-K reporting an event of October 23, 1997
(Commission file no. 0-8632)
-21-
<PAGE>
10.3* Purchase Agreement between Medical Dynamics, Inc. and The Tail Wind
Fund, Ltd., incorporated by reference to the Registrant's Current
Report on Form 8-K reporting an event of July 31, 1998 (Commission
file no. 0-8632)
10.4* Registration Rights Agreement between Medical Dynamics, Inc., and The
Tail Wind Fund, Ltd., incorporated by reference to the Registrant's
Current Report on form 8-K reporting an event of July 31, 1998
(Commission file no. 0-8632)
10.5* Financial Public Relations/Consulting Agreement between Medical
Dynamics, Inc. and Merchant Capital, Inc., incorporated by reference
to the Registrant's Annual Report on Form 10-KSB for the year ended
September 30, 1998.
10.6* Amendment No. 1 to Purchase Agreement between Medical Dynamics, Inc.
and The Tail Wind Fund, Ltd. incorporated by reference to the
Registrant's Current Report on Form 8-K reporting an event of March 4,
1999.
10.7* Amendment No. 2 to Purchase Agreement between Medical Dynamics, Inc.
and The Tail Wind Fund, Ltd. incorporated by reference to the
Registrant's Current Report on Form 8-K reporting an event of March 4,
1999.
10.8* Amendment No. 3 to Purchase Agreement between Medical Dynamics, Inc.
and The Tail Wind Fund, Ltd. incorporated by reference to the
Registrant's Current Report on Form 8-K reporting an event of March
18, 1999.
10.9* Purchase Agreement between Medical Dynamics, Inc. and Resonance
Limited incorporated by reference to the Registrant's Current Report
on Form 8-K reporting an event of March 18, 1999.
23.1+ Consent of Norton * Lidstone, LLC. (See Exhibit 5.1)
23.2+ Consent of Hein + Associates LLP.
* Previously filed.
+ Included herewith.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes: (1) to file, during any
period in which offers or sales are being made, a post-effective amendment to
the 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; and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the Registration
-22-
<PAGE>
Statement or any material change to the information in the Registration
Statement, including (but not limited to) any addition or deletion of a managing
underwriter; (2) that for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of securities at that time shall be deemed to be the initial bona fide
offering thereof; and (3) to remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
The 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 securities at
that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered, to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
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 Registrant's Articles of Incorporation, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against 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 a 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.
-23-
<PAGE>
SIGNATURE
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 to be signed on its behalf by the undersigned, thereunto duly
authorized, in Englewood, Arapahoe County, State of Colorado, on April 19, 1999.
MEDICAL DYNAMICS, INC.
By: /s/ Van A. Horsley
--------------------------------
Van A. Horsley, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
/s/ Edwin L. Adair Director April 19, 1999
- -----------------------
Edwin L. Adair, M.D.
/s/ Pat Horsley Adair Director April 19, 1999
- -----------------------
Pat Horsley Adair
/s/ I. Dean Bayne Director April 19, 1999
- -----------------------
I. Dean Bayne, M.D.
/s/ Van A. Horsley Director, April 19, 1999
- ----------------------- Principal Financial Officer,
Van A. Horsley and Chief Executive Officer
/s/ Leroy Bilanich Director April 19, 1999
- -----------------------
Leroy Bilanich
/s/ Daniel L. Richmond Director April 19, 1999
- -----------------------
Daniel L. Richmond
/s/ Chae U. Kim Director April 19, 1999
- -----------------------
Chae U. Kim
/s/ Edward Boggs Controller April 19, 1999
- -----------------------
Edward Boggs
-24-
NORTON o LIDSTONE, LLC
The Quadrant
5445 DTC Parkway, Suite 850
Michael J. Norton Englewood, Colorado 80111 telephone: 303-221-5552
Herrick K. Lidstone, Jr. facsimile: 303-221-5553
April 19, 1999
Medical Dynamics, Inc.
99 Inverness Drive East
Englewood, Colorado 80112
Re: Medical Dynamics, Inc.
Registration Statement on Form S-3
Registration No. 333-
Ladies and Gentlemen:
In connection with the above-captioned Registration Statement (the
"Registration Statement") filed by Medical Dynamics, Inc., a Colorado
corporation (the "Company"), with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Act"), and the rules
and regulations thereunder as amended through the date hereof, we have been
requested to render our opinion as to the legality of the 523,834 shares of the
Company's common stock (the "Securities") included therein.
In connection with this opinion, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of (i) the Registration
Statement (including all amendments thereto); (ii) the Articles of Incorporation
and the By-laws of the Company, each as amended to date; and (iii) records of
certain of the Company's proceedings relating to, among other things, the
issuance and sale of the Securities. In addition, we have made such other
examinations of law and facts as we considered necessary in order to form a
basis for the opinions hereunder expressed.
In our examination of the aforesaid documents, we have assumed, without
independent investigation, the genuineness of all signatures, the enforceability
of the documents against each party thereto other than the Company, the
authenticity of all documents submitted to us as originals, the conformity to
the original documents of all documents submitted to us as certified,
photostatic, reproduced or conformed copies of validly existing agreements or
other documents, the authenticity of all such latter documents and the legal
capacity of all individuals who have executed any of the documents we have
reviewed.
In expressing the opinions set forth herein, we have relied upon
representations as to factual matters contained in certificates of officers of
the Company.
<PAGE>
NORTON O LIDSTONE, LLC
Medical Dynamics, Inc.
April 19, 1999
Page 2
Based upon the foregoing, and subject to the assumptions, exceptions and
qualifications set forth herein, we are of the opinion that the Securities have
been duly authorized and legally issued, fully paid and nonassessable.
The foregoing opinions are limited to the laws of the State of Colorado.
Our opinion is rendered only with respect to the laws, and the rules,
regulations and orders thereunder, which are currently in effect.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to us under the heading "Legal
Matters" in the Prospectus. In giving such consent, we do not thereby admit that
we are in the category of persons whose consent is required under Section 7 of
the Act.
Very truly yours,
Norton o Lidstone, LLC
Exhibit 23.2
INDEPENDENT AUDITOR'S CONSENT
-----------------------------
We consent to the incorporation by reference in the Registration Statement of
Medical Dynamics, Inc. on Form S-3 of our report dated December 29, 1998 on our
audits of the consolidated financial statements of Medical Dynamics, Inc. as of
September 30, 1998, and for the years ended September 1998 and 1997, which
report is included in the Annual Report of Medical Dynamics, Inc. on Form
10-KSB, and to the reference to our firm under the heading "Experts" in the
Registration Statement.
We also consent to the incorporation by reference of our report dated October
13, 1997 on our audits of the financial statements of computer Age Dentist, Inc.
as of and for the periods ended June 30, 1997 and September 30, 1996, which
report is included in the Company's current report on Form 8-K/A-1 dated October
23, 1997.
/s/ Hein + Associates LLP
- --------------------------
Hein + Associates LLP
Denver, colorado
April 15, 1999
