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As filed with the Securities and Exchange Commission on March 17, 1998
File No. 333-________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 94-2579751
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification Number)
9162 ETON AVENUE
CHATSWORTH, CALIFORNIA 91311
(818) 709-1244
(Address of Principal Executive Offices)
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DR. FRED H. DEINDOERFER Copies of communications sent to:
PRESIDENT AND CHIEF EXECUTIVE OFFICER DANIEL G. CHRISTOPHER, ESQ.
9162 ETON AVENUE GUTH ROTHMAN & CHRISTOPHER LLP
CHATSWORTH, CALIFORNIA 91311 10866 WILSHIRE BOULEVARD, SUITE 1250
(818) 709-1244 LOS ANGELES, CALIFORNIA 90024
(Name and address of agent for service) (310) 474-8809
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of the Registration Statement, as
determined by market conditions and the potential selling securityholders.
If the only securities being registered on this form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If the only 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. [X]
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. [ ]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO BE AMOUNT OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED TO BE REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, par value $.01
per share 1,034,983 $4.1875 $4,333,991 $1,279
=============================================================================================================
</TABLE>
(1) Pursuant to Rule 416 of the Securities Act of 1933, as amended (the
"Securities Act"), this Registration Statement also covers such
additional securities as may become issuable to prevent dilution
resulting from stock splits, stock dividends and similar events.
(2) Pursuant to Rule 457(c), estimated solely for the purpose of calculating
the registration fee on the basis of the average of the high ($4.250)
and low ($4.125) per share sale prices of the Registrant's Common
Stock on the American Stock Exchange on March 11, 1998.
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> 2
PROSPECTUS
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INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
1,034,983 SHARES OF COMMON STOCK
The potential selling stockholders listed on Appendix A (the "Selling
Stockholders") may use this Prospectus to periodically offer for resale up to
1,034,983 shares of Common Stock of International Remote Imaging Systems, Inc.
(the "Company"). The Selling Stockholders may elect to sell none, some or all of
the shares set forth next to their name on Appendix A. The shares of Common
Stock covered by this Prospectus consist of 210,450 shares previously issued
upon the exercise of various warrants and up to 825,533 additional shares which
may be issued in the future upon further exercises of warrants. See "Selling
Stockholders." While the Company is not offering any shares of Common Stock to
the public and will not directly receive any proceeds from the sale of shares
under this Prospectus, the Company may indirectly receive proceeds of up to
approximately $4,473,000 to the extent that Selling Stockholders exercise more
warrants to purchase shares of Common Stock. The Company has previously received
proceeds of approximately $783,000 through the exercise of such warrants. The
Company is paying the cost of registering the shares and various related
expenses, but the Selling Stockholders are responsible for all selling
commissions, transfer taxes and other costs related to the offer and sale of
their shares. See "Plan of Distribution." The Company's Common Stock is traded
on the American Stock Exchange under the symbol "IRI." On March ___, 1998, the
closing sale price of the Common Stock on the American Stock Exchange was
$_______ per share.
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THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGE 5.
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The Selling Stockholders may sell shares from time to time on the
American Stock Exchange, in the over-the-counter market or in private
transactions, and they may sell shares at prices related to the prevailing price
of the Common Stock on the American Stock Exchange at the time of the sale, at
prices related to such prevailing price or at negotiated prices. The Selling
Stockholders may effect such transactions by selling to or through one or more
broker-dealers, and such broker-dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling
Stockholders. The Selling Stockholders and any broker-dealers that participate
in the distribution may, under certain circumstances, be deemed to be
"underwriters" within the meaning of the Securities Act of 1933. Any commissions
received by such broker-dealers and any profits realized on the resale of shares
by them may be deemed to be underwriting discounts and commissions under the
Securities Act of 1933. To the extent required, the specified shares to be sold,
the public offering price, the names of any such broker-dealers, and any
applicable commission or discount with respect to any particular offer will be
set forth in a prospectus supplement. See "Plan of Distribution."
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 March ___, 1998.
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FORWARD-LOOKING STATEMENTS
Certain information contained in this Prospectus, or incorporated into
it by reference, includes "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 and is subject to the safe
harbor created by that Act. These forward-looking statements include, but are
not limited to, the Company's views with respect to future financial results,
capital requirements, market growth, new product introductions and the like, and
are generally identified by phrases such as "anticipates," "believes,"
"estimates," "expects," "intends," "plans" and words of similar import. There
are several important factors that could cause actual results to differ
materially from those anticipated in the forward-looking statements. The Company
has identified some of those factors in the discussions under "Risk Factors"
beginning on page 5 and elsewhere in this Prospectus and in the documents
incorporated by reference into this Prospectus.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the Public
Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional office at
5757 Wilshire Boulevard, Suite 500, Los Angeles, California 90036. Copies of the
reports, proxy statements and other information may be obtained from the Public
Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Such reports, proxy
statements and other information concerning the Company are also available for
inspection at the offices of the American Stock Exchange at 86 Trinity Place,
New York, NY 10006-1881. The Commission maintains a Web site at
http://www.sec.gov containing reports, proxy statements and other information
regarding registrants, including the Company, that file electronically with the
Commission.
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act, as amended (the "Securities Act") with
respect to the shares of Common Stock offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules filed as a part thereof. For further information about
the Company and the Common Stock offered hereby, reference is made to the
Registration Statement and the exhibits and schedules filed therewith.
Statements contained in this Prospectus concerning the provisions of any
contract or other document are not necessarily complete, and where such contract
or other document is filed as 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 for a full statement of the provisions
thereof. The Registration Statement, including the exhibits and schedules filed
as part thereof, may be inspected the Commission's public reference facilities
described in the preceding paragraph. Copies of these documents may be obtained
from the Commission at its principal office in Washington, D.C. upon payment of
the charges prescribed by the Commission.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the Commission by the
Company under the Exchange Act are incorporated herein by reference: (1) the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1996; (2) the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997; and (3) the description of
the Company's Common Stock contained in the Company's Registration Statement on
Form 8-A filed June 22, 1993.
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All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the shares of Common Stock made hereby shall be
deemed to be incorporated in this Prospectus by reference and to be a part
hereof from the date of filing of such documents. Any statement incorporated
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
Upon written or oral request of any person to whom a copy of this
Prospectus has been delivered, the Company will provide, without charge, a copy
of any and all of the information that has been or may be incorporated by
reference in this Prospectus, other than exhibits thereto. Requests for such
copies should be directed to the Corporate Secretary of International Remote
Imaging Systems, Inc. by mail at 9162 Eton Avenue, Chatsworth, California 91311
or by telephone at (818) 709-1244.
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THE COMPANY
The Company designs, develops, manufactures and markets in vitro
diagnostic ("IVD") imaging systems based on patented and proprietary automated
intelligent microscopy ("AIM") technology for automating microscopic procedures
performed in clinical laboratories. AIM combines the Company's capabilities in
automated specimen presentation, including its patented slideless microscope,
and proprietary high-speed digital processing hardware and software to classify
and present images of microscopic particles in easy-to-view displays. The
Company's IVD imaging systems are designed to provide customers with better and
more rapid results and labor cost-savings over manual methods of performing
microscopy. The Company markets its products primarily to hospital, clinical
reference, genetic and research laboratories.
The Company pioneered its first IVD imaging system application in 1983
with its introduction of The Yellow IRIS family of workstations for urinalysis.
The Company believes that it is still the only supplier of laboratory systems
which fully automate a complete urinalysis, and it recently introduced its
fourth generation models which incorporate significant advancements in speed,
utility and ease of use. In 1996, the Company received Food and Drug
Administration ("FDA") clearance and began to market the Model 900UDx urine
pathology system designed especially for the high-volume testing requirements of
larger laboratories. The Company also provides ongoing sales of supplies and
service necessary for operation of The Yellow IRIS workstations. Most supplies
are purchased under standing orders and, following the initial one-year warranty
period, the majority of customers purchase annual service contracts.
In addition to urinalysis, the Company has also added new applications
for its IVD imaging systems. It recently completed development of The White IRIS
leukocyte differential analyzer for the field of hematology. The FDA cleared The
White IRIS for marketing in May 1996, and the Company is planning its commercial
introduction. The Company also plans to sell supplies and service for The White
IRIS comparable to those sold for The Yellow IRIS.
In July 1996, the Company entered the field of genetics with the
acquisition (the "PSI Acquisition") of the digital imaging business of
Perceptive Scientific Instruments, Inc. ("PSI"). PSI's principal product is the
PowerGene genetic analyzer -- an IVD imaging system for karyotyping, DNA probe
analysis and comparative genomic hybridization. The Company also acquired
international operations from PSI.
The Company was incorporated in 1979 under the laws of California and in
1987 reincorporated under the laws of Delaware. The Company's executive offices
are located at 9162 Eton Avenue, Chatsworth, California 91311 and the telephone
number is (818) 709-1244.
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RISK FACTORS
Prospective investors should carefully consider the specific factors set
forth below, as well as all of the other information contained in this
Prospectus, before deciding to invest in the Common Stock of the Company. This
Prospectus contains, in addition to historical information, forward-looking
statements that involve risks and uncertainties that could cause the Company's
actual results to differ materially from such forward-looking statements.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed below as well as those discussed elsewhere in this
Prospectus and in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company believes that it will continue to have sufficient liquidity
and capital resources to conduct its business until the maturity of its bank
loans in April 1998. Based upon its forecasted cash flow, the Company presently
estimates that it will require approximately $5.0 million of outside financing
to repay the remaining principal balance of its bank loans and continue its
long-term business strategy. While the Company is presently pursuing the
required financing, there can be no assurance that the Company can secure
adequate financing on favorable terms, if at all. The failure to secure adequate
financing would have a material adverse effect on the Company's financial
position and its long-term business strategy. In addition, any equity financing
could result in dilution to holders of Common Stock, and new debt financing
could result in the imposition of more significant financial and operational
restrictions on the Company.
RECENT LOSSES
The Company incurred net losses of approximately $7.4 million for the
fiscal year ended December 31, 1996 and net income of approximately $30,000 for
the nine months ended September 30, 1997. While the majority of the losses for
1996 are attributable to non-recurring write-offs, acquisition expenses,
arbitration and litigation costs and restructuring charges, the Company
attributes a significant portion of the losses to substantial increases during
that year in expenditures for research and development, sales and marketing and
general administration. In response, the Company implemented a restructuring
during the fourth quarter of 1996 which significantly reduced operating
expenses. However, there can be no assurance that the Company can restore annual
profitability.
ARBITRATION
In July 1996, the Company acquired PSI from Digital Imaging
Technologies, Inc. ("DITI"). As part of the purchase price, the Company issued
to DITI a five-year warrant to purchase 875,000 shares of Common Stock at $8.00
per share. In August 1997, the Company filed a demand for arbitration against
DITI with the American Arbitration Association. The Company's demand for
arbitration alleges material breaches of the representations, warranties and
covenants in the purchase agreement governing the PSI acquisition. DITI
subsequently filed a counterclaim in the arbitration proceeding alleging that
the Company misrepresented or omitted to disclose material facts in connection
with the PSI acquisition. DITI had previously requested a reduction in the
exercise price of the warrant but elected to seek unspecified monetary damages
in the counterclaim. Although the Company does not presently anticipate any
material adverse effect as a result of this arbitration proceeding, there can be
no assurance that it will not have such an effect on the Company or result in
additional dilution to holders of the Common Stock.
DEPENDENCE ON INSTRUMENT SALES
The Company derives most of its revenues from the sale of two,
high-priced instruments -- The Yellow IRIS urinalysis workstation and the
PowerGene genetic analyzer. These instruments have list prices ranging from
$35,000 to $185,000 depending on the model and configuration, and relatively
modest declines in unit sales or gross margins for either product line could
have a material adverse effect on the Company's revenues and profits.
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COMPETITION
There are numerous companies engaged in active research and development
programs within and outside of the clinical laboratory imaging systems field
that have considerable experience in areas of interest to the Company. The
Company cannot determine if other firms are currently engaged in potentially
competitive research, and these firms could develop and introduce products
comparable or superior to the products sold by the Company.
RELIANCE ON SINGLE SOURCE SUPPLIERS
Certain key components of the Company's instruments are manufactured
according to the Company's specifications or are available only from single
suppliers. Some of these suppliers have notified the Company that they have
discontinued, or will soon discontinue, production of key components. Although,
in the past, the Company has successfully transitioned to new components to
replace discontinued components, there can be no assurance that the Company can
successfully transition to satisfactory replacement components or that the
Company will have access to adequate supplies of discontinued components on
satisfactory terms during the transition period. The Company's inability to
transition successfully to replacement components or to secure adequate supplies
of discontinued components on satisfactory terms could have a material adverse
effect on the Company.
OPTION TO ACQUIRE POLY U/A SYSTEMS, INC.
In September 1995, the Company entered into a research and development
contract with Poly U/A Systems, Inc. ("Poly"), a Company-sponsored research and
development entity, for development of several new products to enhance automated
urinalysis (the "Poly Products"). The Company has an option to acquire all of
the common stock of Poly for an aggregate price of $5.1 million payable, at the
Company's discretion, in cash or shares of the Company's Common Stock.
If the Company elects to exercise its option, the portion of the net
cost of the acquisition allocated to completed products would be capitalized and
its subsequent amortization would impact future earnings. For the portion of the
net cost of the acquisition allocated to in-process research and development,
the Company would record a nonrecurring, non-cash (if purchased with Common
Stock) charge against then current earnings. In June 1995, the Company exercised
a similar option to acquire LDA Systems, Inc. ("LDA"), another Company-sponsored
research and development entity, in exchange for Common Stock. At that time, it
incurred a non-cash charge of $2.9 million against earnings in 1995 for the
acquisition of in-process research and development related to The White IRIS
leukocyte differential analyzer.
The Company has not reached a decision to exercise its option to acquire
Poly and is under no obligation to do so. However, the Company will periodically
review the merits of acquiring Poly and may elect to exercise the option in the
future based on factors that are subject to change. These factors include (i)
the progress of research and development of the Poly Products, (ii) the
Company's assessment of the commercial feasibility of the Poly Products, (iii)
the cost to acquire Poly, and (iv) the market price of the Common Stock at the
time the Company considers exercising the option.
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DEPENDENCE ON KEY PERSONNEL
The Company's success depends in significant part upon the continued
service of certain key personnel, and its continuing ability to attract,
assimilate and retain such personnel. Competition for such personnel is intense
and there can be no assurance that the Company can retain its key personnel or
that it can attract, assimilate or retain other highly qualified personnel in
the future. While the Company generally enters into agreements with its
employees regarding patents, confidentiality and related matters, the Company
does not have employment agreements with most of its key employees. The Company
does not maintain life insurance polices on such employees. The loss of key
personnel, especially without advance notice, or the inability to hire or retain
qualified personnel could have a material adverse effect on the Company.
DEPENDENCE ON COMPUTER PLATFORM
The Company currently uses the Power Macintosh computer, manufactured by
Apple Computer, as the platform for its PowerGene product line. During 1997,
Apple Computer released Mac OS 8, a new version of their Mac OS operating
system, which has now been adopted on the PowerGene product line. Apple
Computer, which had suffered significant losses in the recent past, also
returned to profitability following the release of Mac OS 8 and the introduction
of a new line of Power Macintosh computers based on the PowerPC 750
microprocessor. Nevertheless, there can be no assurance that future events will
not cause delays in the development and/or timely supply of any new product
based on the this platform, and such delays could affect sales of the PowerGene
product line.
DIFFICULTIES ASSOCIATED WITH INTRODUCTION OF FUTURE PRODUCTS
The commercial success of the Company's future products and systems
depends upon their acceptance by the medical community. Capital-intensive
laboratory instruments such as The White IRIS and the Company's other future
products can significantly reduce labor costs, improve precision and offer other
distinctive benefits. However, often there is resistance to products, which
require significant capital expenditures or which eliminate jobs through
automation.
There can be no assurance that the Company's new products and systems
will achieve significant market acceptance in the future or that sales of such
future products and systems will grow at the rates expected by management.
Furthermore, new product introductions or product enhancements by the Company's
competitors or the use of other technologies could cause a decline in sales or
gross margins on sales or loss of market acceptance of the Company's systems.
INTELLECTUAL PROPERTY RIGHTS
The Company's commercial success depends in part on its ability to
protect and maintain its proprietary technology. The Company has received
patents with respect to certain of its technologies. Receipt of such patents may
not insulate the Company from damaging competition. The validity and breadth of
claims in clinical laboratory instrumentation patents involve complex legal and
factual questions and, therefore, are highly uncertain. There can be no
assurance that the claims allowed under patents held by the Company or under
patents based on pending or future patent applications by the Company will be
sufficiently broad to protect what the Company believes to be its proprietary
rights, that issued patents will not be circumvented by competitors, or that the
rights granted under such patents will provide competitive advantages to the
Company. There also can be no assurance that other parties will not take, or
threaten to take, legal action against the Company, alleging infringement of
such parties' patents by current and proposed products of the Company or that
any of the Company's patents, or patents in which it has licensed rights, will
be held valid and enforceable if subsequently challenged.
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<PAGE> 9
The Company also has trade secrets and unpatented technology and
proprietary knowledge related to the sale, promotion, operation, development and
manufacturing of its products. While the Company generally enters into
confidentiality agreements with its employees and consultants, there can be no
assurance that the Company's trade secrets or proprietary technology will not
become known or be independently developed by competitors in such a manner that
the Company has no practical recourse. Nor can there be any assurance that
others will not develop or acquire equivalent expertise or develop products that
render the Company's current or future products noncompetitive or obsolete.
The Company also claims copyrights in its software and the ways in which
it assembles and displays images and certain trademark rights in the United
States and other foreign countries. There can be no assurance that copyright and
trademark protection can be obtained, or if obtained, can or will be enforced or
will provide significant commercial advantage to the Company.
Litigation regarding patent and other intellectual property rights,
whether with or without merit, could be time-consuming and expensive and could
divert the Company's technical and management personnel. There can be no
assurance that the Company's litigation expenses will not increase in the
future. Any change in the Company's ability to protect and maintain its
proprietary rights could have a material adverse effect on the Company.
TECHNOLOGICAL CHANGE
The market for the Company's systems is characterized by rapid
technological advances, changes in customer requirements, and frequent new
product introductions and enhancements. The Company's future success depends
upon its ability to enhance its current product lines, to introduce new products
that keep pace with technological developments and to respond to evolving
customer requirements. Any failure by the Company to anticipate or respond
adequately to technological developments by its competitors or to changes in
customer requirements, or significant delays in product introduction, could
result in a loss of competitiveness and revenues. There can be no assurance that
the Company will be successful in developing and marketing new products or
product enhancements on a timely or cost-effective basis, and such failure could
have a material adverse effect on the Company.
GOVERNMENT REGULATION
Most of the Company's products are subject to stringent government
regulation in the United States and other countries. The regulatory process can
be lengthy, expensive and uncertain, and securing clearances or approvals may
require the submission of extensive official data and other supporting
information. Failure to comply with applicable requirements can result in fines,
recall or seizure of products, total or partial suspension of production,
withdrawal of existing product approvals or clearances, refusal to approve or
clear new applications or notices, or criminal prosecution, any of which could
have a material adverse effect on the Company. Furthermore, changes in existing
federal, state or foreign laws or regulations, or in the interpretation or
enforcement thereof, or the discussion or promulgation of any additional laws or
regulations could have a material adverse effect on the Company.
ACQUISITIONS AND EXPANSION
As part of the Company's strategy to enhance and maintain its
competitive position, the Company may from time to time consider potential
acquisitions of complementary products, technologies and other businesses. The
Company has completed a number of acquisitions in the past three years. The
evaluation, negotiation and integration of acquisitions may consume significant
time and resources of the Company. There can be no assurance that acquisitions
will not have a material adverse effect upon the Company due to, among other
things, operational disruptions, integration
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<PAGE> 10
issues, unexpected expenses and accounting charges associated with such
acquisitions.
HEALTHCARE REFORM POLICIES
In recent years, an increasing number of legislative proposals have been
introduced or proposed in Congress and in some state legislatures that would
effect major changes in the healthcare system, nationally, at the state level or
both. Future legislation, regulation or payment policies of Medicare, Medicaid,
private health insurance plans, health maintenance organizations and other
third-party payors could adversely affect the demand for the Company's current
or future products and its ability to sell its products on a profitable basis.
Moreover, healthcare legislation is an area of extensive and dynamic change, and
the Company cannot predict future legislative changes in the healthcare field or
their impact on its business.
CERTAIN ANTI-TAKEOVER CONSIDERATIONS
Certain provisions of the Certificate of Incorporation and Bylaws of the
Company and the Delaware General Corporation Law (the "DGCL") could, together or
separately, discourage potential acquisition proposals, delay or prevent a
change in control of the Company and limit the price that certain investors
might be willing to pay in the future for shares of Common Stock. These
provisions provide, among other things, for a classified Board of Directors, for
the issuance, without further stockholder approval, of preferred stock with
rights and privileges which could be senior to the Common Stock, and for
limitations on the right of stockholders to call a special meeting of
stockholders and to take action without a meeting. The Company also is subject
to Section 203 of the DGCL which, subject to certain exceptions, prohibits a
Delaware corporation from engaging in any of a broad range of business
combinations with any "interested stockholder" for a period of three years
following the date that such stockholder became an interested stockholder.
PRODUCT LIABILITY
The Company's products are used to gather information for medical
decisions and diagnosis. Accordingly, the manufacture and sale of the Company's
products entails an inherent risk of product liability arising from an
inaccurate, or allegedly inaccurate, test result. The Company has product
liability insurance coverage of $1.0 million per incident and $2.0 million in
the aggregate per year, and an umbrella policy of $5.0 million. There can be no
assurance that the Company's product liability insurance will be sufficient to
protect the Company in the event of a product liability claim. There has not
been any indication that the Company's insurance carrier will not renew the
Company's product liability insurance at or near current premiums; however,
there can be no assurance that the Company will be able to renew product
liability insurance in the future at acceptable premiums. In addition, any
failure to comply with the FDA's Good Manufacturing Practices regulations could
have a material adverse effect on the ability of the Company to defend against
product liability lawsuits.
CURRENCY FLUCTUATIONS
The Company acquired a foreign subsidiary in the PSI Acquisition that
conducts business in various foreign currencies. Consequently, fluctuations in
exchange rates will affect the Company's future consolidated operating results
and such fluctuations could have an adverse effect on the Company. The impact of
future fluctuations in exchange rates cannot be predicted with any measure of
accuracy and will depend on the percentage of sales generated internationally.
The Company currently does not hedge the risks associated with fluctuations in
exchange rates, and continues to be subject to such risks. In the future, the
Company may undertake such transactions. If any hedging techniques are
implemented by the Company, there can be no assurance that such techniques can
be successful in eliminating or reducing the effects of currency fluctuations.
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USE OF PROCEEDS
While the Company is not offering any shares of Common Stock to the
public and will not directly receive any proceeds from the sale of shares under
this Prospectus, the Company may indirectly receive proceeds of up to
approximately $4,473,000 to the extent that Selling Stockholders exercise
warrants to purchase shares of Common Stock. The Company has previously
received proceeds of approximately $783,000 through the exercise of such
warrants. The actual amount of any proceeds will equal the number of shares
purchased multiplied by the exercise price of the specific warrants exercised.
As of the date hereof, the Selling Stockholders hold warrants to purchase from
the Company an aggregate of 824,533 shares of Common Stock. These warrants have
exercise prices ranging from $3.875 to $7.80 per share and expiration dates
ranging from September 29, 1998 to May 15, 2001. The weighted average exercise
price is $5.42 per share. See "Selling Stockholders." The Company will use any
proceeds from the exercise of warrants for debt repayment and general corporate
purposes.
SELLING STOCKHOLDERS
The purpose of this Prospectus is to permit the parties listed on
Appendix A to publicly trade, if desired, the 210,450 shares of Common Stock
previously issued upon the exercise of various warrants and up to 825,533
additional shares which may be issued in the future upon further exercises of
warrants. These warrants are described in the following paragraphs of this
section of the Prospectus. Appendix A lists in tabular form (1) the name of each
person entitled to sell Common Stock using this Prospectus (collectively, the
"Selling Stockholders"), (2) the number of shares of Common Stock beneficially
owned by each person as of March 6, 1998 and (3) the maximum number of shares
each person may offer and sell using this Prospectus. The Selling Stockholders
may offer shares under this Prospectus from time to time and may elect to sell
none, some or all of the shares set forth next to their name in Appendix A. As a
result, the Company cannot estimate the number of shares of Common Stock that
the Selling Stockholders will beneficially own after termination of sales under
this Prospectus.
In September 1995, the Company was engaged by Poly/UA to develop several
new products to further enhance automation in the urinalysis field. See "Risk
Factors -- Option to Acquire Poly/UA Systems, Inc." In order to fund its share
of the project, Poly/UA sold units consisting of 2,000 shares of Poly/UA common
stock and a warrant to purchase 4,000 shares of the Company's Common Stock,
exercisable until September 29, 1998 at an exercise price of $6.50 per share. In
the aggregate, investors acquired Series D warrants to purchase 512,000 shares
of Common Stock. The Company also issued warrants to the placement agent and
finder to purchase an aggregate of 150,000 shares of the Company's Common Stock,
exercisable until September 29, 2000 at a price of $7.80 per share.
In November 1997, the Company offered to reduce the exercise price of
the Series D Warrants from $6.50 to $4.00 per share for holders exercising their
warrants during a one-week period. The holders that accepted the offer and
exercised their Series D Warrants during that period also received a new Series
F Warrant exercisable until March 29, 2000 at an exercise price of $4.00 per
share of Common Stock. The Company received proceeds of approximately $783,000
through the exercise of Series D Warrants and issued Series F Warrants to
purchase 205,633 shares of Common Stock. The Company also entered into
subscription agreements to sell certain holders additional Series F Warrants
covering an aggregate of 75,000 shares of Common Stock.
In connection with the renegotiation of the loan agreements with its
lender, the Company issued to the lender warrants to purchase (1) 50,000 shares
until January 15, 2000 at $3.875 per share, (2) 25,000 shares until June 1,
2000 at $4.375 per share and (3) 25,000 shares until July 1, 2000 at $4.0625
per share.
The Company also has an agreement to issue a warrant to purchase 10,000
shares of Common Stock until May 15, 2000 at $4.3125 per share to an investment
banker for financial advisory services.
-10-
<PAGE> 12
PLAN OF DISTRIBUTION
This Prospectus is for the public resale of shares of Common Stock
previously issued, or issuable in the future, upon exercise of the warrants
described in the preceding section. This Prospectus does not cover the initial
issuance of shares of Common Stock upon exercise of those warrants. The Selling
Stockholders may offer shares under this Prospectus from time to time and may
elect to sell none, some or all of the shares set forth opposite their name in
Appendix A.
The Selling Stockholders may sell shares from time to time on the
American Stock Exchange, in the over-the-counter market or in private
transactions, and they may sell shares at prices related to the prevailing
price of the Common Stock on the American Stock Exchange at the time of the
sale, at prices related to such prevailing price or at negotiated prices. The
Selling Stockholders may effect such transactions by selling to or through one
or more broker-dealers, and such broker-dealers may receive compensation in the
form of underwriting discounts, concessions or commissions from the Selling
Stockholders. For example, they may sell shares by one or more of the following
methods: (a) a block trade in which the broker or dealer so engaged will attempt
to sell the shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction; (b) purchases by a broker or dealer
as principal and resale by such broker or dealer for its account pursuant to
this Prospectus; (c) ordinary brokerage transactions and transactions in which
the broker solicits purchasers; and (d) face to face transactions between
sellers and purchasers without a broker-dealer. In effecting sales, brokers or
dealers engaged by the Selling Stockholders may arrange for other brokers or
dealers to participate in the resales.
The Selling Stockholders and any broker-dealers that participate in the
distribution may under certain circumstances be deemed to be "underwriters"
within the meaning of the Securities Act. Any commissions received by such
broker-dealers and any profits realized on the resale of shares by them may be
deemed to be underwriting discounts and commissions under the Securities Act. To
the extent required under the Securities Act, a supplemental prospectus will be
filed disclosing (a) the name of any such broker-dealers, (b) the number of
shares involved, (c) the price at which such shares are to be sold, (d) the
commissions paid or discounts or concessions allowed to such broker-dealers,
where applicable, (e) that such broker-dealers did not conduct any investigation
to verify the information set out or incorporated by reference in this
prospectus, as supplemented, and (f) other facts material to the transaction.
The Company and the Selling Stockholders may agree to indemnify such
broker-dealers against certain liabilities, including liabilities under the
Securities Act. In addition, the Company has agreed to indemnify some of the
Selling Stockholders against certain liabilities, including, without limitation,
certain liabilities under the Securities Act, or, if such indemnity is
unavailable, to contribute toward amounts required to be paid in respect of such
liabilities.
The Company has agreed to pay certain costs and expenses incurred in
connection with the registration of the shares of Common Stock covered by this
Prospectus, but the Selling Stockholders are responsible for all selling
commissions, transfer taxes and related charges in connection with the offer and
sale of their shares of Common Stock.
The Company filed with the Commission a Registration Statement on Form
S-3 under the Securities Act covering the shares of Common Stock offered by
this Prospectus and cannot predict whether or to what extent any particular
Selling Stockholder will sell shares. The Company filed the Registration
Statement pursuant to the terms of the exchange offer made in November 1997 to
the holders of the Series D Warrants and has voluntarily included certain other
warrant holders. See "Selling Stockholders." The Company has not made any
commitment to keep the Registration Statement effective and may at any time
temporarily suspend or permanently terminate the effectiveness of the
Registration Statement and the use of this Prospectus. See "Available
Information."
Each Selling Stockholder is required to provide the Company and its
transfer agent with a
-11-
<PAGE> 13
Notice of Transfer, in the form attached hereto as Appendix B, each time the
Selling Stockholder sells shares using this Prospectus. Delivery of the Notice
of Transfer is a prerequisite to the transfer of shares sold pursuant to this
Prospectus.
LEGAL MATTERS
The validity of the securities offered hereby has been passed upon for
the Company by the law firm of Guth Rothman & Christopher LLP, Los Angeles,
California.
EXPERTS
The consolidated financial statements of the Company, included in the
Annual Report on Form 10-K of the Company for the fiscal year ended December 31,
1996 referred to above in "Documents Incorporated by Reference," have been
audited by Coopers & Lybrand L.L.P., independent accountants, as set forth in
their report dated March 21, 1997 (except for Note 8 and Note 14, for which the
dates are April 10, 1997 and April 6, 1997, respectively) accompanying such
financial statements, and are incorporated by reference in reliance upon the
report of such firm, which report is given upon their authority as experts in
accounting and auditing.
The financial statements of StatSpin, Inc., a wholly-owned subsidiary of
the Company, for the fiscal year ended March 31, 1995, insofar as they relate to
the amounts included for StatSpin, Inc. in the consolidated financial statements
of the Company for the fiscal year ended December 31, 1994 included in the
Annual Report on Form 10-K of the Company for the fiscal year ended December 31,
1996 referred to above in "Documents Incorporated by Reference," have been
audited by KPMG Peat Marwick LLP, independent accountants, as set forth in their
report dated May 26, 1995 accompanying such financial statements and are
incorporated by reference in reliance upon the report of such firm, which report
is given upon their authority as experts in accounting and auditing.
Any financial statements incorporated by reference in the registration
statement of which this Prospectus is a part that have been audited and are the
subject of a report by independent accountants will be so incorporated by
reference in reliance upon such reports and upon the authority of such firms as
experts in accounting and auditing to the extent covered by consents filed with
the Commission.
-12-
<PAGE> 14
APPENDIX A
Table of Selling Stockholders
The following table lists (1) the name of each person entitled to sell
Common Stock using this Prospectus (the "Selling Stockholders"), (2) the number
of shares of Common Stock beneficially owned by each person as of March 6, 1998
and (3) the maximum number of shares of Common Stock each person may offer and
sell using this Prospectus. The Selling Stockholders may offer shares under this
Prospectus from time to time and may elect to sell none, some or all of the
shares set forth next to their name. As a result, the Company cannot estimate
the number of shares of Common Stock that the Selling Stockholders will
beneficially own after termination of sales under this Prospectus. In addition,
the Selling Stockholders may have sold, transferred or otherwise disposed of all
or a portion of their shares of Common Stock since the date on which they
provided information for this table. The Company has made no independent
inquiries as to the foregoing. See "Selling Stockholders" (p. 10) and "Plan of
Distribution" (p. 11).
- ------------------------------------------------------------ ----------------
<TABLE>
<CAPTION>
NUMBER OF SHARES MAXIMUM
BENEFICIALLY NUMBER OF SHARES
SELLING STOCKHOLDER (1) OWNED (2) (3) OFFERED (4)
- ------------------------------------------------------------ -----------------
<S> <C> <C>
M. Bernard Aidinoff 4,000 4,000
Albert M. Ames and Patricia A. Clemens 2,000 2,000
Michael A. Arcuri 4,000 4,000
Leonard Becker 9,000 8,000
Herbert R. Behrens 4,000 4,000
Belwool Corp. Retirement Trust 2,000 2,000
E. Eduardo Benmaor 34,780 1,000
Larry Berk and Don Berk 4,000 4,000
Lawrence Berk 60,000 60,000
Achille M. Bigliardi 127,077 4,000
O. Donald Billing IRA 4,000 2,000
Bruce Brewster 8,000 8,000
Brill Securities, Inc. 60,000 60,000
David Brodsky 4,000 4,000
J. Richard Budd III and Susan Nutkis Budd 4,000 4,000
Gordon Busdicker 2,000 2,000
City National Bank 100,000 100,000
Pradip and Rekha Choksi Trust 20,000 20,000
COHAMCO 8,000 8,000
Susan B. Cohen 2,000 2,000
Alvin H. Cohen 4,000 4,000
Raymond D. Cohn 2,000 2,000
Aaron Daniels 2,000 2,000
Philip Dennis Dapeer 9,000 9,000
Paul W. Davis and Priscilla M. Teleky 4,000 4,000
Fred H. Deindoerfer (5) 438,155 8,000
Veronica C. and Thomas P. Devitt 900 600
Mark A. Eberle 4,000 4,000
Ralph W. Engh 53,500 41,500
Barrett M. Fisher IRA 4,000 4,000
Howard J. Frank IRA 8,000 8,000
- ------------------------------------------------------------ ----------------
</TABLE>
A-1
<PAGE> 15
<TABLE>
<CAPTION>
- ------------------------------------------------------------ ----------------
NUMBER OF SHARES MAXIMUM
BENEFICIALLY NUMBER OF SHARES
SELLING STOCKHOLDER (1) OWNED (2) (3) OFFERED (4)
- ------------------------------------------------------------ -----------------
<S> <C> <C>
Richard J. Galvin 5,000 4,000
Ramone and Constance Getzov 2,000 2,000
Rhoda L. Glasser 2,000 2,000
William A.B. and Jane E. Hanchett 15,000 8,000
Scott A. Hartman 2,000 2,000
I. Douglas Harris 4,000 4,000
Pao Liu Jui Hsia 12,000 12,000
Donald and Anna R. Husmann 7,803 5,556
Raymond Jallow 51,500 41,500
Mark B. and Donna Johnson 4,000 4,000
Ronald Kadonaga 3,980 2,000
Michael W. Kane 10,000 10,000
Michael Kaptzan 2,000 2,000
Harvey L. Kasdan 69,205 4,000
Michael and Patricia Keeney 24,192 4,000
Millie Keung 10,000 10,000
Celia R. Klein 4,000 4,000
Mitchell H. Klein 4,000 4,000
Mark Kriendler-Nelson 2,000 2,000
Jimmie R. Kyle 45,945 1,000
Sanford A. and Evelyn Lakoff 5,000 4,000
Saul Lamda 2,000 2,000
Simon Lazowsky 4,000 4,000
Ira Leviton 2,000 2,000
Gary Levitt 19,034 1,000
George C. and Ann C. Limbach Living Trust 2,000 2,000
John K. Lingo 4,300 4,000
Long Chain International 42,965 15,200
Peter Marx 2,000 2,000
Martin Melzer IRA 4,000 4,000
Claus Metulsky 4,000 4,000
Elon Mileikowsky 2,000 2,000
Edward B. Miller 2,000 2,000
Richard H. Miller 2,000 2,000
Byron A. Myhre 11,476 2,500
Tobi K. Nadel 4,000 4,000
Ronald S. Neff 53,085 2,000
Franz and Gretchen J. Neuwirth 23,100 8,000
Beverly J. Newhouse 15,210 15,210
Nancy B. Newman 2,000 2,000
Martin and Pearl Nutkis 4,000 4,000
John A. O'Malley 50,153 8,000
Jeshing Patel 10,500 1,000
Harry H. Perse 4,000 4,000
Roy D. and Joann Piazza 93,000 40,000
Poly U/A 1000, LLC 189,000 189,000
Ralano Family Partners Limited 4,000 4,000
- ------------------------------------------------------------ ----------------
</TABLE>
A-2
<PAGE> 16
<TABLE>
<CAPTION>
- ------------------------------------------------------------ ----------------
NUMBER OF SHARES MAXIMUM
BENEFICIALLY NUMBER OF SHARES
SELLING STOCKHOLDER (1) OWNED (2) (3) OFFERED (4)
- ------------------------------------------------------------ -----------------
<S> <C> <C>
Real Time Electronics Inc. 2,000 2,000
Morton and Zelda Reinhart 9,400 8,000
Neil S. Roth 4,000 4,000
Ernest F. Salomone 8,000 8,000
Jack Salomone 8,000 8,000
Daniel P. Santoro 18,812 1,200
Warren Schwerin 4,000 4,000
Bonnie Seidler 2,000 2,000
Peter C. Siegfried 4,000 4,000
Murray Siegel 4,000 4,000
Jesse G. Silverman, Jr. IRA 4,000 4,000
Carl Simone 2,000 2,000
SJH Money Purchase Plan 2,000 2,000
Alan Stone 18,192 18,000
Robert Strougo 3,000 2,000
Kevin Sundquist IRA 12,000 2,000
Thomas E. Thornbury, Trustee of the
Thomas E. Thornbury Intervivos Trust 20,000 20,000
Robert J. Topchik 2,000 2,000
Terry Turchi 4,000 4,000
Richard H. Turner 4,000 4,000
Steven Vallespir 4,000 4,000
Robert M. Warner, Sr. 8,000 8,000
J. William and Susan Wigert 200 200
Samuel A. and Shirley F. Wolfson 6,000 4,000
Francis J. Wunderlich 6,000 4,000
Edwin S. and Anna W. Yee 8,000 4,000
Ronald L. Yin 3,372 2,000
Michael Zachariash 15,270 1,000
All Other Holders (6) 61,000 61,000
- ------------------------------------------------------------ ----------------
TOTAL 2,070,623 1,034,983
============================================================ ================
</TABLE>
- ----------------------------------
1. The following persons currently hold, or have held within the past three
years, the following positions or relationships with the Company: E. Eduardo
Benmaor -- formerly Secretary and Controller; Achille M. Bigliardi --
Corporate Vice President and General Manager, IRIS Chatsworth Division;
Brill Securities, Inc. -- placement agent for a private unit offering
involving Poly U/A Systems, Inc.; City National Bank -- the Company's
principal bank and lender; Fred H. Deindoerfer -- Chairman of the Board,
President and Chief Executive Officer; Ronald Kadanoga -- consultant;
Michael W. Kane -- investment banking and financial advisor; Harvey L.
Kasdan -- Vice President, Research and Development, IRIS Chatsworth
Division; Michael Keeney -- Regional Sales Manager, IRIS Chatsworth
Division; Jimmie R. Kyle -- Vice President, Manufacturing Operations, IRIS
Chatsworth Division; Gary Levitt -- Manager of Software Development, IRIS
Chatsworth Division; Long Chain International -- Taiwanese Regional
distributor; Byron A. Myrhe -- Director of Poly U/A Systems, Inc.; Ronald S.
Neff -- formerly National Service Manager, IRIS Chatsworth Division; John
A. O'Malley -- Director of the Company and Director of Poly U/A Systems,
Inc.; Real Time Electronics, Inc. -- engineering consulting firm; Daniel
Santoro -- TeleSales Manager, IRIS Chatsworth Division; Alan Stone -
financial consultant; Richard H. Turner -- Director of Poly U/A Systems,
Inc.; Michael Zachariash -- Director of Project Management, IRIS Chatsworth
Division.
A-3
<PAGE> 17
2. Each Selling Stockholder beneficially owns less than 1% of the outstanding
Common Stock, except as follows: Achille M. Bigliardi (2.0%); City National
Bank (1.6%); Fred H. Deindoerfer (6.9%); Roy and Joann Piazza (1.5%); and
Poly U/A 1000, LLC (3.0%). Beneficial ownership is determined in accordance
and with the rules of the Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock subject
to options or warrants currently exercisable, or exercisable within 60 days
of March 6, 1998, are deemed outstanding for computing the percentage of the
person holding such options or warrants but are not deemed outstanding for
computing the percentage held by any other person.
3. Includes 1,143,447 shares issuable pursuant to warrants and employee stock
options which are currently exercisable or exercisable within 60 days of
March 6, 1998.
4. Includes 824,553 shares issuable pursuant to warrants.
5. Includes 57,840 shares owned by family members or trusts to which Dr.
Deindoerfer disclaims beneficial ownership.
6. Assumes that any other holders to be covered by this Prospectus do not
beneficially own any Common Stock other than the shares offered for sale.
Information concerning such other holders will be set forth in Prospectus
Supplements from time to time if so required.
A-4
<PAGE> 18
APPENDIX B
Notice of Transfer Pursuant to Registration Statement
-----------------------------------------------------
[DATE]
Continental Stock Transfer & Trust Company
2 Broadway
New York, New York 10004
Attention: Compliance Department
Re: International Remote Imaging Systems, Inc. (the "Company")
Ladies and Gentlemen:
Please be advised that ___________________ [INSERT NAME OF SELLING STOCKHOLDER
FROM APPENDIX A] has sold _____________ shares of the Company's common stock
pursuant to a Registration Statement on Form S-3 (File No. 333-_________). We
hereby certify that (1) the above-named beneficial owner of the transferred
shares is named as a "Selling Stockholder" in the related Prospectus dated March
___, 1998, (2) the transferred shares are included in the such Prospectus
opposite such owner's name and (3) the prospectus delivery requirements of the
Securities Act of 1933, as amended, have been satisfied.
Sincerely,
----------------------------------------
(Name)
By:
------------------------------------
(Authorized Signature)
Name:
----------------------------------
Title:
---------------------------------
cc: International Remote Imaging Systems, Inc.
9162 Eton Avenue
Chatsworth, California 91311
Attn: Controller
B-1
<PAGE> 19
<TABLE>
===================================== =======================================
<S> <C>
NO DEALER, SALESPERSON OR OTHER
PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING 1,034,983 SHARES
STOCKHOLDERS OR ANY UNDERWRITER.
NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL UNDER ANY CIRCUMSTANCE CREATE INTERNATIONAL REMOTE
ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY IMAGING SYSTEMS, INC.
SINCE THE DATE HEREOF. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN COMMON STOCK
WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO
OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH SOLICITATION.
----------
------------------ PROSPECTUS
----------
</TABLE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C> <C>
Forward-Looking Statements 2 MARCH __, 1998
Available Information 2
Documents Incorporated
by Reference 2
The Company 4
Risk Factors 5
Use of Proceeds 10
Selling Stockholders 10
Plan of Distribution 11
Legal Matters 12
Experts 12
Table of Selling
Stockholders Appendix A
Sample Notice of
Transfer Appendix B
====================================== ======================================
</TABLE>
<PAGE> 20
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be paid by the Company in connection with the
distribution of securities being registered, are estimated as follows:
<TABLE>
<S> <C>
Securities and Exchange Registration Fee........................$ 1,279
Accounting Fees and Expenses.................................... 5,000
Legal Fees and Expenses......................................... 25,000
Miscellaneous Expense........................................... 2,000
------
Total ..........................................................$33,279
======
</TABLE>
The Selling Stockholders will be responsible for all selling
commissions, transfer taxes and related charges in connection with the offer and
sale of their shares.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article SEVENTH of the Company's Certificate of Incorporation contains
certain provisions permitted under the DGCL relating to the liability of
directors. The provisions eliminate a director's liability for monetary damages
for a breach of fiduciary duty, except in certain circumstances involving
wrongful acts, such as the breach of a director's duty of loyalty or acts or
omissions that involve intentional misconduct or knowing violation of law. The
Company's Certificate of Incorporation also contains provisions requiring the
Company to indemnify its directors and officers to the fullest extent permitted
by the DGCL.
Section 145 of the DGCL provides, in part, that a corporation shall have
the power to indemnify any person who was or is a party or is threatened to be
made a party to any suit or proceedings because such person is or was a
director, officer, employee or agent of the corporation or was serving at the
request of the corporation, as a director, officer, employee or agent of another
corporation, against all costs actually and reasonably incurred by him in
connection with such suit or proceedings if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation. Similar indemnity is permitted to be provided to such persons
in connection with an action or suit by or in the right of the corporation,
provided such person acted in good faith and in a manner he believed to be in or
not opposed to the best interests of the corporation, and provided further
(unless a court of competent jurisdiction otherwise determines) that such person
shall not have been adjudged liable to the corporation.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.1 Specimen of Common Stock Certificate (incorporated by reference to
the Company's Registration Statement on Form S-3 filed March 27, 1996
(No. 333-02001)
5.1 Legal Opinion of Guth Rothman & Christopher LLP
23.1 Consent of Guth Rothman & Christopher LLP (included in legal opinion
filed as Exhibit 5.1)
23.2 Consent of Coopers & Lybrand L.L.P.*
23.3 Consent of KPMG Peat Marwick LLP*
</TABLE>
- ----------
* To be filed by amendment.
II-1
<PAGE> 21
ITEM 17. UNDERTAKINGS
(a) Rule 415 Offering. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs 1(i) and 1(ii) 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 the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by Reference. 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 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.
(c) Request for Acceleration of Effective Date. Insofar as indemnification for
liabilities arising under the Securities 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 Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-2
<PAGE> 22
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 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, State of California, on March 17,
1998.
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
By: /s/ Fred H. Deindoerfer
--------------------------------------
Dr. Fred H. Deindoerfer
Chairman of the Board of Directors,
President and Chief Executive Officer
Each person whose signature appears below constitutes and appoints each
of Fred H. Deindoerfer and Martin S. McDermut as his true and lawful
attorney-in-fact and agent, each with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments and post-effective amendments to the
Registration Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to take any action in connection therewith as fully as he might or
could do in person, thereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute 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 by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Fred H. Deindoerfer Chairman of the Board of Directors, March 17, 1998
- -------------------------- President, and Chief Executive Officer
Fred H. Deindoerfer
/s/ Martin S. McDermut Vice President, Finance and March 17, 1998
- -------------------------- Administration, Chief Financial Officer
Martin S. McDermut
/s/ Donald E. Horacek Controller and Chief Accounting Officer March 17, 1998
- --------------------------
Donald E. Horacek
/s/ John A. O'Malley Director March 17, 1998
- --------------------------
John A. O'Malley
/s/ Steven M. Besbeck Director March 17, 1998
- --------------------------
Steven M. Besbeck
/s/ Thomas F. Kelley Director March 17, 1998
- --------------------------
Thomas F. Kelley
</TABLE>
II-3
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.1 Specimen of Common Stock Certificate (incorporated by reference to
the Company's Registration Statement on Form S-3 filed March 27, 1996
(No. 333-02001)
5.1 Legal Opinion of Guth Rothman & Christopher LLP
23.1 Consent of Guth Rothman & Christopher LLP (included in legal opinion
filed as Exhibit 5.1)
23.2 Consent of Coopers & Lybrand L.L.P.*
23.3 Consent of KPMG Peat Marwick LLP*
</TABLE>
- ----------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 5.1
March 17, 1998
Board of Directors
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
9162 Eton Avenue
Chatsworth, California 91311
Re: International Remote Imaging Systems, Inc., a Delaware corporation
(the "Company")
Gentlemen:
We have acted as the Company's counsel in connection with the
preparation and filing of that certain Registration Statement on Form S-3 (the
"Registration Statement") to be filed with the Securities and Exchange
Commission in connection with the registration of 1,034,983 shares (the
"Shares") of the Company's common stock, par value $.01 per share (the "Common
Stock").
The Shares consist of the following:
(i) 210,450 shares of Common Stock previously issued upon the
exercise of the Company's Series D Warrants;
(ii) up to 370,900 shares of Common Stock issuable in the
future upon the exercise of the Company's Series D
Warrants;
(iii) up to 63,000 shares of Common Stock issuable in the future
upon the exercise of the Company's Series E Warrants;
(iv) up to 280,633 shares of Common Stock issuable in the
future upon the exercise of the Company's Series F
Warrants;
(v) up to 10,000 shares of Common Stock issuable in the future
upon the exercise of one warrant issuable to M. Kane & Co.
under an existing contractual arrangement; and
<PAGE> 2
March 17, 1998
Page 2
(vi) up to 100,000 shares of Common Stock issuable upon the
exercise of three warrants previously issued to City
National Bank by the Company during 1997.
As such counsel, we have examined such matters and documents as we have
deemed necessary or relevant as a basis for this opinion. Based on these
examinations, it is our opinion that the Shares described above in clause "(i)"
have been legally issued and are fully paid and non-assessable, and the Shares
described in clauses "(ii)" through "(vi)" above, when issued and paid for in
the accordance with the terms of the applicable warrant certificate, will be
legally issued, fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to our firm under the caption "Legal Matters."
Very truly yours,
/s/ GUTH ROTHMAN & CHRISTOPHER LLP
Guth Rothman & Christopher LLP
