As filed with the Securities and Exchange Commission on October 4, 1995
Registration No. 33-48437
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
AMENDMENT NO. 3
TO
POST EFFECTIVE AMENDMENT NO. 1
TO
REGISTRATION STATEMENT
ON FORM SB-2
ON
FORM S-3
UNDER
THE SECURITIES ACT OF 1933
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COMPUMED, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-2860434
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
1230 ROSECRANS AVENUE, SUITE 1000
MANHATTAN BEACH, CALIFORNIA 90266
(310) 643-5106
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
-----------------
ROD N. RAYNOVICH, President BRUCE A. RICH
CompuMed, Inc. Reid & Priest LLP
1230 Rosecrans Avenue, Suite 1000 40 West 57th Street
Manhattan Beach, California 90266 New York, New York 10019
(310) 643-5106 (212) 603-6780
(NAMES AND ADDRESSES, INCLUDING ZIP CODES, AND TELEPHONE NUMBERS, INCLUDING
AREA CODES, OF AGENTS FOR SERVICE)
-----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this registration statement as
determined by market conditions and other factors.
-----------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, please check the following
box. [x]
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===========================================================================
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 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
===========================================================================
Title of Proposed Proposed
Each Class Maximum Maximum
of Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) Per Unit Price Fee(2)
____________________________________________________________________________
Common Stock
issuable upon
exercise of
Common Stock
Purchase
Warrants. . . 800,000 shares $3.75 $3,000,000 $2,929.69
___________________________________________________________________________
Common Stock
issuable upon
full exercise
of
Representative's
Warrants(3) . 80,000 shares $3.00 240,000 234.36
80,000 shares $3.75 300,000 292.97
___________________________________________________________________________
TOTAL $3,540,000 $3,457.02
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(1) An indeterminate number of additional shares of Common Stock are
registered hereunder which may be issued, as provided in the Warrants, the
Representative's warrants and the Warrants underlying the Representative's
Warrants in the event provisions against dilution become operative. No
additional consideration will be received by the Company upon issuance of
such additional shares.
(2) The registration fee has previously been paid.
(3) As a result of a one-for-ten Reverse Stock Split the Representative
must exercise ten Representative's Warrants at an aggregate exercise price
of $3.00 in order to obtain a unit consisting of one share of Common Stock
of the Company and one Warrant to purchase one share of Common Stock at an
exercise price of $3.75.
-----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
===========================================================================
P R O S P E C T U S
COMPUMED, INC.
960,000 SHARES OF COMMON STOCK
($.01 PAR VALUE)
This Prospectus relates to the offering by CompuMed, Inc., a Delaware
corporation (the "Company"), of 800,000 shares of its Common Stock, $.01
par value per share ("Common Stock"), issuable upon exercise of outstanding
common stock purchase warrants (the "Warrants"). The Warrants were issued
in connection with the Company's public offering in August 1992 of
8,000,000 Units (the "Units"), each Unit consisting of one share of Common
Stock and one Warrant. As a result of a one for ten reverse stock split
effected in October 1994 (the "Reverse Stock Split"), a Warrantholder must
exercise ten Warrants in order to purchase one share of Common Stock of the
Company at an aggregate exercise price of $3.75. The Warrants expire on
August 2, 1997. The Warrants are presently redeemable by the Company upon
30 days prior written notice at a redemption price of $.05 per Warrant.
This Prospectus also relates to 160,000 shares of Common Stock which
may be offered for sale from time to time for the account of Paulson
Investment Company, Inc. ("Paulson") which may be issued upon full exercise
of 800,000 Representative's Warrants granted to Paulson in its capacity as
representative of several underwriters in the Company's August 1992 public
offering (the "Representative's Warrants"). As a result of the Reverse
Stock Split, the Representative must exercise ten Representative's Warrants
at an aggregate exercise price of $3.00 in order to obtain a unit
consisting of one share of Common Stock and one warrant to purchase one
share of Common Stock at an exercise price of $3.75. The Representative's
Warrants are currently exercisable and expire on August 2, 1997.
The Company's Common Stock and the Warrants are quoted on the Nasdaq
Small Cap Market under the symbols CMPD and CMPDW, respectively. On
October ___, 1995, the closing bid and asked prices were $______ and
$________ per share of Common Stock and $_______ and $_______ per Warrant.
The Company will receive proceeds from the exercise of the Warrants and the
Representative's Warrants, but not from the sale of the underlying Common
Stock.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGES 4 THROUGH 7 HEREOF.
----------------------
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 October __, 1995.
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 and other information with the
Securities and Exchange Commission (the "SEC"). Such reports and other
information can be inspected and copied at the Public Reference Section of
the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549;
or at its offices at 500 West Madison Street, 14th Floor, Chicago, IL
60661; or Seven World Trade Center, 13th Floor, New York, NY 10048. Copies
of this material can also be obtained at prescribed rates by writing to the
Public Reference Section of the SEC at its principal office at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
This Prospectus constitutes a part of a Registration Statement filed
by the Company with the SEC under the Securities Act of 1933, as amended
(the "Securities Act"). This Prospectus omits certain information
contained in the Registration Statement, and reference is hereby made to
the Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the offering. Any statements
contained herein concerning the provisions of any document are not
necessarily complete, and, in each instance, reference is made to the copy
of such document filed as an exhibit to the Registration Statement or
otherwise filed with the SEC. Each such statement is qualified in its
entirety by such reference. The Company's Common Stock is quoted on the
Nasdaq Small Cap Market, and such reports and other information can also be
inspected at the offices of Nasdaq Operations, 1735 K Street, N.W.,
Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the SEC are incorporated
by reference in this Prospectus:
1. Annual Report on Form 10-KSB for the fiscal year ended September
30, 1994.
2. Quarterly Report on Form 10-QSB for the quarter ended December 31,
1994.
3. Quarterly Report on Form 10-QSB for the quarter ended March 31,
1995.
4. Quarterly Report on Form 10-QSB for the quarter ended June 30,
1995.
5. Proxy Statement for 1995 Annual Meeting of Stockholders, dated
February 20, 1995.
All documents filed by the Company with the SEC pursuant to Section 13
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the securities covered by this
Prospectus shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for the purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document
which is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
The Company undertakes to provide without charge to each person to
whom this Prospectus is delivered, upon written or oral request of any such
person, a copy of any and all of the documents referred to above which have
been or may be incorporated by reference in this Prospectus other than the
exhibits thereto. Requests for such copies should be directed to CompuMed,
Inc. at 1230 Rosecrans Avenue, Suite 1000, Manhattan Beach, California
90266, Attn: DeVere Pollom, Chief Financial Officer, telephone (310) 643-
5106.
THE COMPANY
The Company is a medical systems company engaged primarily in the
application of computer technology to medicine. The main aspects of the
Company's business are (i) the licensing of its proprietary technology in
the OsteoGram, a bone density test that was developed by the Company as a
means of aiding physicians in diagnosing and monitoring osteoporosis, (ii)
the computer interpretation of electrocardiograms ("ECGs"), (iii) the
TeleCor Services Division ("TeleCor"), which is engaged in transtelephonic
cardiac event monitoring, and (iv) the development of Detoxahol TM, a
substance and delivery technology intended to facilitate the rapid lowering
of blood alcohol levels from people who have been drinking alcohol. In
addition, the Company owns and manages a small industrial park complex
located in the Los Angeles area. In August 1995, the Company entered into
a Technology License Agreement (the "License Agreement"), with Merck & Co.,
Inc. ("Merck"), pursuant to which the Company has licensed its proprietary
technology in the OsteoGram to Merck and has sold to Merck certain assets
used in conducting and analyzing OsteoGrams (such assets together with the
proprietary technology are hereinafter referred to as the "OsteoSystem").
Management expects its near-term growth to come from the royalties obtained
pursuant to the License Agreement.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information and consolidated financial statements incorporated by
reference herein.
THE OFFERING
Common Stock Outstanding . . . . 8,216,278 shares as of September
27, 1995; 9,108,368 shares
upon completion of the offering
(1)
Use of Proceeds . . . . . . . . . Marketing, sales and distribution,
research and development
expenses and for working capital.
See "Use of Proceeds."
Terms of Warrants . . . . . . . . As a result of the Reverse Stock
Split, a warrantholder must
exercise ten Warrants at an
aggregate exercise price of $3.75
to purchase one share of Common
Stock. The Warrants
expire on August 2, 1997.
Rights of Redemption . . . . . . The Warrants are presently
redeemable by the Company upon
30 days prior written notice at a
redemption price of $.05 per
Warrant.
Terms of Representative's Warrants As a result of the Reverse Stock
Split, the Representative
must exercise ten Representative's
Warrants at an aggregate
exercise price of $3.00 in order to
obtain a unit consisting of
one share of common stock and one
warrant to purchase one
share of common stock at an
exercise price of $3.75.
Risk Factors . . . . . . . . . . Exercise of the Warrants involves a
high degree of risk and
substantial dilution. See "Risk
Factors."
Nasdaq Symbols . . . . . . . . . Common Stock - CMPD
Warrants - CMPDW
(1) Includes 732,090 shares issuable upon exercise of Warrants
(67,910 shares were previously issued) and 160,000 shares issuable upon
exercise of the Representative's Warrants. Does not include an aggregate
of 1,545,322 shares reserved for issuance upon exercise of other
outstanding warrants and options to purchase shares of the Company's Common
Stock, and 527,530 shares underlying convertible preferred stock.
RISK FACTORS
The shares of Common Stock issuable upon exercise of the Warrants and
the Representative's Warrants involve a high degree of risk and, therefore,
should be considered extremely speculative. They should not be purchased
by persons who cannot afford the possibility of the loss of their entire
investment. Prospective investors should consider carefully among other
risk factors, the risk factors and other special considerations relating to
the Company and this offering set forth below.
History of Losses. The Company's operations incurred net losses of
$1,080,000 for the nine months ended June 30, 1995, $3,864,000 in 1994,
$2,202,000 in 1993 and $2,015,000 in 1992. The Company's accumulated
losses since inception are $17,207,000. The Company anticipates further
losses until a significant market for the OsteoGram is developed and the
Company begins to receive royalties from the licensing of the OsteoSystem
pursuant to its License Agreement with Merck. Future operating results
could be impaired by development efforts and associated expenses in
connection with the creation of a second generation OsteoSystem and the
Company's rights to Detoxahol TM.
No Assurance of Future Sources of Capital to Support and Grow
Business. The Company will require capital to finance its continued
investment in research and development of Detoxahol TM and a second
generation OsteoSystem and to support and grow its existing ECG systems and
TeleCor businesses. Although the Company has sufficient capital to fund
these activities in the near-term, inasmuch as it expects to incur
additional operating losses, there can be no assurance that the Company
will have adequate working capital to fund all of these activities in the
future.
Lack of Acceptance of the OsteoGram. Management expects a significant
portion of the Company's future revenues to come from royalties under the
License Agreement with Merck. The License Agreement grants Merck the
exclusive right to market and sell the OsteoGram, including complete
control over the operation of, marketing and sales for,
the OsteoGram. Royalties receivable by the Company
pursuant to the License Agreement are dependent on OsteoGram
sales volume. Merck is not obligated to pay the Company any minimum amount
of royalties. The existence of the OsteoGram for testing bone mass as an
indicator of osteoporosis is currently at an early stage in market
development and is not widely recognized by the medical profession and the
public. Although management believes that the introduction of drugs like
Merck's Fosamax into the market will increase the public's awareness
of the OsteoGram, education of the medical community and public of
the OsteoGram's effectiveness, low cost, ease of use, and lack of
any need for specialized capital equipment to administer the test remains
vital to the success of the OsteoGram. However, other obstacles, in
addition to education, could impede the OsteoGram's success. There is no
assurance that any of these approaches will be successful to develop a
profitable market for the OsteoGram or that Merck will be able to
successfully market the OsteoGram or that the Company will receive
substantial royalties pursuant to the License Agreement.
Technological and Market Uncertainty for Detoxahol TM. The Detoxahol
TM product will require significant further research and development,
including clinical testing, prior to its commercialization. To date only
one series of animal studies has been completed as related to Detoxahol TM.
Favorable results were concluded in those studies. There can be no
assurance that the Company's research and development efforts will be
successful or that its product will prove to be safe and effective in
further pre-clinical or clinical trials. Moreover, even if Detoxahol TM is
approved for marketing, there can be no assurance that it can be marketed
successfully. The Company may encounter unanticipated problems relating to
requisite Food and Drug Administration (the "FDA") clearance, development,
manufacturing, distribution or marketing, some of which may be beyond the
financial and technical abilities of the Company to solve. The failure to
adequately address such problems could have a material adverse effect on
the Company. Finally, there can be no assurance that the Company's
Detoxahol TM product will not be rendered obsolete by competitors' products
or that competitors' products will not significantly limit the potential
market for the Company's products. See "Risk Factors - Competition" and
"Government Regulation."
FDA Regulation. The Company's medical devices, medical services and
pharmaceutical products are subject to varying degrees of FDA regulation.
The FDA Office of Medical Devices regulates the safety and efficacy of
"medical devices." All medical devices and their components are subject to
certain general controls, including compliance with specified manufacturing
practices. Manufacturers are required to provide the FDA with advance
notice of their intention to introduce and market new medical devices and
demonstrate such devices' safety and efficacy to the FDA's satisfaction
prior to commencement of their commercial use.
In December 1993, the FDA issued a "Warning Letter" to the Company
relating to the OsteoGram (the "Warning Letter"). The Warning Letter
primarily concerned two areas. One concern of the FDA was labeling. The
FDA has required all companies involved in the measurement of bone density
to eliminate from their advertising reference that such measurements can
"detect osteoporosis." In order to comply with this FDA requirement the
Company has removed the reference to "detection of osteoporosis" from all
of its advertising literature. The second concern of the FDA was the
Company's lack of documentation relating to an exemption for the Company
from the 510-K filing requirements. The OsteoGram was in use prior to 1976
when the 510-K regulations were established and thus the Company believes
that the OsteoGram is "grand-fathered" in without having to file under 510-
K. In addition, the Company considers the OsteoGram to be a medical
service, which in the opinion of management and its consultants is not
subject to the requirements of a 510-K. The Company and Merck have
recently provided additional information on the OsteoSystem to the FDA, and
management expects that the Company and Merck will be able to resolve the
FDA concerns. There is, however, no assurance that there will not be
future FDA concerns having an adverse effect on revenues the Company
receives from Merck on OsteoGram sales.
Prior to marketing any prescription or over-the-counter Detoxahol TM
product, such prescription or product must undergo an extensive regulatory
clearance process conducted by the FDA and comparable agencies in other
countries. This process, which generally includes a review of preclinical
and clinical testing and confirmation by the FDA that Good Laboratory
Practices established by the FDA and Good Clinical Practices were
maintained during testing, can take many years and require the expenditure
of substantial resources. The Company is dependent on the laboratory and
medical institutions that will conduct its preclinical and clinical testing
to maintain both Good Laboratory Practices and Good Clinical Practices.
Data obtained from preclinical and clinical testing are subject to varying
interpretations that can result in delays in the regulatory clearance
process or limitations on, or even prevention of, regulatory clearance. In
addition, delays or rejections may be encountered as a result of changes in
regulatory review policies during the period of development and regulatory
review of an Investigational New Drug Application ("IND"). The FDA review
process could take as long as five years before clearance is received.
There can be no assurance that regulatory clearance will be obtained
for any of the Company's proposed Detoxahol TM products. In the
pharmaceutical industry, only a small percentage of the new products for
which INDs are submitted to the FDA to commence human testing ultimately
are cleared for marketing. Moreover, regulatory clearances may result in
restrictions on the indicated uses for which a product may be marketed.
Any significant delays in obtaining regulatory clearances or limitations
imposed on indicated uses could result in the Company incurring substantial
additional expenditures or in diminishing any competitive advantage that
the Company's products might otherwise enjoy.
Even if regulatory marketing clearances are obtained, a marketed
product and its manufacturer are subject to continual review. Subsequent
discovery of previously unknown problems with a product or its manufacture
may result in restrictions on such product or manufacture, including
withdrawal of such product from the market. Any change by the Company in
the manufacture of any product approved for marketing would also be subject
to regulatory review. See "Business - Government Regulation".
Medical Reimbursement Program. Currently, the OsteoGram, ECG services
and TeleCor are approved for reimbursement by Medicare and most other third
party payors. Most payments for these services are made by the medical
insurance carrier of the patients. Should these reimbursement programs be
significantly reduced or should other regulatory changes affect the ability
of physicians or the Company (or Merck in the case of the OsteoGram) to
recover the cost of OsteoGrams, ECG services or TeleCor services, the
Company's ability to market and sell its products would be adversely
affected.
Lack of Patent Protection. The Company has licensed its proprietary
technology in the OsteoGram to Merck in reliance on trade secret protection
for the OsteoGram and considers the software to process the OsteoGram to be
proprietary. However, such protection may not necessarily preclude
competitors from developing products which can be marketed in competition
with the OsteoGram. The Company may file for patents as improvements are
made to the OsteoSystem or as the second generation OsteoSystem is
developed. There can be no assurance that patent applications, if filed,
will result in issued patents or that patents, if issued will not be
circumvented or invalidated. Moreover, there is no assurance that the
Company is not infringing the patents of third parties.
In June 1995, a patent application was filed on behalf of the Company
covering the technology underlying Detoxahol TM. There can be no assurance
that such patent application will be approved, that the Company can develop
or acquire Detoxahol TM products or methods of use that are patentable, or
even if patents are issued that they will afford the Company's Detoxahol TM
products any competitive advantage or will not be challenged by third
parties, or that patents issued to others will not adversely affect the
development or commercialization of the Company's products. In addition,
to the extent that the Company develops uses of Detoxahol TM in combination
with other products, if such products are covered by third-party patents,
the Company could be required to obtain licenses from the owners of such
patents in order to market such combination products.
Competition. The primary business in which the Company engages,
testing for bone density and sales and processing of ECGs, is highly
competitive. There are other companies with substantially greater
financial and development resources than those of the Company which are
engaged in the marketing of products similar to and which compete with the
OsteoGram and the Company's ECG terminals. Many radiology centers (in
hospitals and free standing) also consider themselves competitors of the
Company, because of their capital investments in expensive bone scanning
equipment. In addition, and particularly in regard to the OsteoGram,
physicians and other prominent members of the medical community frequently
are reluctant to accept new products until their contribution to health
care has been established over an extended period of time. To the extent
the medical community is slow to accept the use of the OsteoGram, any
revenues receivable by the Company pursuant to the License Agreement may be
retarded. In addition, there is no assurance that other companies with
competing technologies will not be approved for reimbursement by Medicare
and/or private insurance carriers.
Securities Market Volatility. There have been periods of extreme
volatility in the stock markets, which in many cases were unrelated to the
operating performance of, or announcements concerning, the issuers of the
affected stock. The Company's Common Stock has recently been traded at a
high volume and the bid and asked prices for its Common Stock have
increased significantly as a result of such volume. General market price
declines or market volatility or factors related to the general economy or
the Company in the future could adversely affect the price of the Common
Stock. Investors should check market prices before making an investment
decision with respect to securities of the Company.
Dilution. The exercise price of $3.75 per share is in
excess of net tangible book value, which was $.25 per share on June
30, 1995. Warrantholders who exercise the Warrants would absorb immediate
dilution in the net tangible book value per share underlying the Warrants.
New Products and Technological Change. The Company is in the "high
tech" end of the health care industry. This industry has been historically
marked by very rapid technological change and frequent introductions of new
products. Accordingly, the Company's future growth and profitability
depend in part on its ability to continue to respond to technological
changes and successfully develop and market new products that achieve
significant market acceptance. There is no assurance that the Company will
be able to do so.
Dependence on Third Parties for Manufacturing and Marketing. The
Company currently has no capability to manufacture or market any of its
proposed Detoxahol TM products or certain apparatus used in connection with
the OsteoSystem, ECG services or TeleCor services. The Company has entered
into arrangements for the manufacture of certain apparatus used in
connection with the OsteoSystem, ECG services and TeleCor services. The
Company intends to seek license agreements with pharmaceutical companies
for the manufacture and marketing of the Detoxahol TM products.
Accordingly, the Company will be dependent on these and other third parties
for the manufacture of its products for clinical testing and commercial
purposes and for the marketing of these products.
The Company has not yet entered into any discussions with third
parties for manufacturing and marketing of any of its proposed Detoxahol TM
products. In addition, there can be no assurance that the Company will be
able to enter into commercial manufacturing or marketing agreements for any
of these products or that the terms of any such agreements will be
attractive to the Company.
In the event that the Company is unable to obtain or retain third-
party manufacturers, it may not be able to commercialize its products as
planned. Clearance of the Company's products for marketing outside the
United States and Canada may be dependent on the consummation of
manufacturing and marketing agreements with licensees or partners. The
Company's dependence upon third parties for the manufacture and marketing
of its products also may adversely affect the amount of any future profit
to the Company from the marketing of its products.
Products Liability Exposure. The malfunction or misuse of the medical
devices assembled and sold and services rendered by the Company may result
in potential injury to patients, thereby subjecting the Company to possible
liability. Although the Company's insurance coverage is $3,000,000 per
occurrence and $3,000,000 in the aggregate, which amounts and deductibles
are customary in the industry, there can be no assurance that such
insurance will be sufficient to cover any potential liability.
Furthermore, there can be no assurance that this coverage will continue to
be available or, if available, that it can be maintained at reasonable
cost. To date the Company has never been involved in any litigation as a
result of alleged product liability.
Shares Eligible for Future Sale. An aggregate of 9,635,898 shares
of the Company's Common Stock will be outstanding immediately,
assuming conversion of outstanding shares of Class A and Class B
Preferred Stock, the exercise of the Warrants and the full exercise of the
Representative's Warrants, but excluding shares underlying options and
other warrants. The sale, or availability for sale, of
substantial amounts of Common Stock in the public market subsequent to this
offering could adversely affect the prevailing market price of the Common
Stock and could impair the Company's ability to raise additional capital
through the sale of its equity securities. In addition, an aggregate of
1,236,000 shares were issued in August 1995 to certain purchasers and
finders pursuant to exemptions from registration under the Securities Act
and the holders thereof have certain demand and "piggy-back" registration
rights with respect to their shares.
Effect of Exercise of the Warrants. Holders of the Warrants might be
expected to exercise at a time when the market price of the Company's
Common Stock is in excess of the exercise price under the terms of the
Warrants, with a resulting dilution of the interest of stockholders. In
the event the Warrants are exercised, any sales of the shares so acquired
might depress the then current market price of the Common Stock. In
addition, the Warrants could serve as an impediment to the Company's
ability to raise capital based on a sale of equity on terms more favorable
than those of the Warrants.
Warrants Redeemable. The Warrants may be redeemed by the Company in
whole or in part at any time at the Company's option upon 30 days prior
written notice at the price of $.05 per Warrant, so long as there is a
current prospectus in effect. Although a Warrantholder may have the right
to exercise his Warrants through the date of redemption, he may not be able
to exercise because of lack of funds at the time of redemption. Further,
the Warrants will have no value other than the redemption price upon the
close of business on the date of redemption.
BUSINESS
GENERAL
The Company is a medical systems company engaged primarily in the
application of computer technology to medicine. The main aspects of the
Company's business are (i) the licensing of its proprietary technology in
the OsteoGram, a bone density test that was developed by the Company as a
means of aiding physicians in diagnosing and monitoring osteoporosis, (ii)
the computer interpretation of ECGs, (iii) TeleCor, which is engaged in
transtelephonic cardiac event monitoring, and (iv) the development of
Detoxahol TM, a substance and delivery technology intended to facilitate
the rapid lowering of blood alcohol levels from people who have been
drinking alcohol. In addition, the Company owns and manages a small
industrial park complex located in the Los Angeles area. Management
expects its near-term growth to come from the licensing of the OsteoGram.
LICENSING OF THE OSTEOSYSTEM
BACKGROUND
On August 31, 1995, the Company entered into the License Agreement
with Merck, effective September 27, 1995, pursuant to which Merck has been
granted a perpetual, exclusive license of the OsteoSystem. The Company
understands that Merck will offer the OsteoGram and related services to
physicians on a per-test basis. The Company received a $250,000 payment
upon closing as a one-time fee plus the book value of certain assets sold,
subject to a $175,000 limit. In addition, the Company will receive a
royalty payment from Merck for each OsteoGram test sold by Merck to a
physician subject to certain limitations. The Company is not entitled to a
minimum royalty payment. Merck is to spend $750,000 for product
development, regulatory compliance and clinical studies in connection with
the OsteoSystem and the Company is to spend $250,000 on marketing the
OsteoSystem during the first year of the License Agreement. Merck has the
right to terminate the License Agreement at any time without cause.
Since the License Agreement provides Merck with full control over the
operation of, marketing and sales for, the OsteoSystem, the Company does
not have a basis to adequately estimate the amount of revenues that it will
receive as royalties over the term of the License Agreement. The Company
has retained the right to perform developmental work on the proprietary
technology licensed to Merck and thereby form a second generation
OsteoSystem. The Company intends to license any second generation
OsteoSystem developed by it, subject to certain rights of first refusal
held by Merck.
OTHER OSTEOPOROSIS DETECTION AIDS
The only present methods used to assist physicians in detecting
osteoporosis are bone mineral density measurement and bone biopsy. Because
of patient risk, pain and cost, the latter method is rarely used. Bone
mineral density is measured by passing nuclear radiation or x-ray beams
through bone and determining how much energy is absorbed by the bone. In
classical techniques a carefully calibrated source enables determination of
how much energy is absorbed by the bone before reaching the detector. The
use of a calibrated source necessitates the purchase of costly special
equipment for bone density measurement.
THE OSTEOGRAM
The OsteoGram, which is part of the OsteoSystem licensed to Merck
pursuant to the License Agreement, involves taking a standard hand x-ray
with an aluminum alloy calibration wedge in the field of view utilizing
existing and widely available standard x-ray equipment. The physicians
utilizing the OsteoSystem would x-ray the patient's hand and then send the
developed film to Merck for analysis by proprietary software to accurately
determine bone density, using the calibration wedge to adjust for any
differences among x-ray machines, exposures, types of film and development.
The OsteoGram report would then be delivered to the patient's physician.
The scientific name for the testing technique utilized by the
OsteoGram is radiographic absorptiometry. It is capable of detecting
changes in bone mineral density as small as approximately 1.5%. Since
1985, the OsteoGram has been cleared for reimbursement by Medicare. To the
best of the Company's knowledge, the OsteoGram is the only test for
osteoporosis that can be performed without any specialized medical
equipment. The OsteoGram can be taken using an OsteoGram Starter Kit with
standard x-ray equipment which could be found at any of an estimated
100,000 locations in the U.S., including hospitals, clinics and doctors'
offices. The OsteoGram Starter Kit includes a proprietary aluminum alloy
calibration wedge, instructions, billing information, and pre-addressed
envelopes for mailing developed x-rays of the hand to Merck's laboratory
for scanning and computer analysis.
TREATING OSTEOPOROSIS
Osteoporosis treatment alternatives include estrogen replacement
therapy, calcitonin, bisphosphonates, diet, calcium supplements,
weight-bearing exercises. In addition, many new medication alternatives
such as Merck's Fosamax are being offered as alternative treatments to
Osteoporosis.
Pharmaceutical companies have estimated that only about 5% of patients
requiring medical treatment for osteoporosis receive prescriptions today.
They ascribe this lack of treatment to a lack of knowledge about
osteoporosis by the primary care physician and the patient, lack of
convenient affordable tests for osteoporosis, lack of an adequate array of
FDA approved medications and poor patient compliance when medication is
prescribed. The OsteoGram introduces a convenient affordable test for
osteoporosis and improves compliance because of the availability of bone
density trend data, which is displayed graphically when a patient has had
two or more OsteoGrams.
Current FDA approved medications for osteoporosis include the female
hormone estrogen, in pill and patch forms, and the bone metabolism hormone,
calcitonin, administered by injection or through a nasal spray. The
estrogen pill market is dominated by Premarin (American Home Products) and
also includes Estrace (Bristol Myers Squibb Company), Ogen (The Upjohn
Company) and Ortho-EST (Johnson & Johnson). The estrogen transdermal patch
is produced by Estaderm (CIBA-Geigy Limited Group). Approved calcitonin
medications are Calcimar (Rhone Poulenc Rorer Pharmaceuticals, Inc.) and
Miacalcin (Sandoz Pharmaceutical Corporation). Estrogen medication is also
approved for problems associated with menopause, such as hot flashes.
Approximately 60 companies worldwide are developing new drugs for
osteoporosis, including Merck.
COMPETITION
The OsteoGram competes with specialized capital equipment used for
bone density measurement such as single photon absorptiometry nuclear
scanners (SPA), dual photon absorptiometry nuclear scanners (DPA),
quantitative computed tomography scanners (QCT) and dual energy x-ray
absorptiometry scanners (DXA). Of these techniques, only the OsteoGram and
SPA are currently approved for Medicare reimbursement. There are several
manufacturers of bone density testing equipment. The most popular of these
technologies is DXA, which is manufactured principally by Hologic, Inc.,
Lunar Corp., and Ostech, Inc.
Management believes that the OsteoGram has several competitive
advantages over other existing osteoporosis detection aids, including that
the OsteoGram is the only test for the measurement of bone density that can
be administered using standard x-ray equipment. This factor alone makes
the OsteoGram available to large segments of the population who cannot, or
will not, go to those few hospitals or radiology centers that have
specialized capital equipment to measure bone density. The OsteoGram also
provides an easy "low cost" way for primary care physicians, who have many
patients at risk for osteoporosis, to initiate the first steps for testing
and treating the disease.
Many radiology centers (in hospitals and free standing) may consider
their services to be in competition with the OsteoGram because of their
capital investment in expensive bone scanning equipment. However,
management believes that the OsteoGram's wide availability will help expand
the market for all bone density testing services. Some radiology centers
now offer the OsteoGram as a complement to other bone density scanning
tests.
ECG SERVICES
GENERAL
Through its ECG computer diagnostic services, the Company currently
serves approximately 1,600 health care providers nationwide. The Company
provides primary care physicians, clinics, institutions, small hospitals
and industrial health care facilities with a line of fully-automated,
solid-state microprocessor terminals, which access the Company's five host
computers and custom software to provide medical users with on-line ECG's
and computer interpretations, in less than three minutes. The Company's
ECG terminal products are connected by phone to its ECG analysis computer
center. Using a Company terminal, a physician, nurse or technician can
apply ECG electrodes on a patient, transmit the ECG by phone to the
Company, and receive a printed computer interpretation within three
minutes. The principal ECG terminal models are the System 107 and System
307, both designed and manufactured by the Company. System 107 is a low-
cost unit with single-channel trace printout for low to moderate volume
applications. System 307 adds a thermal graphics printer to generate an
8.5 x 11-inch unit record for high volume accounts. Both units are
available for either rental or sale. System 307 offers a Pulmonary
Function Analysis (PFA) option for performing pulmonary tests as well as
ECGs.
The Company provides users of its products with what it believes to be
the most up-to-date electrocardiography interpretation software programs
available. The software is customized and periodically updated by the
Company, with the assistance of its Cardiology Advisory Board and
cardiologists associated with Harbor-UCLA Medical Center.
ECG analysis services are available to users by telephone 24 hours a
day, seven days a week. The computer center located on site at the
Company, which is staffed at all times, currently includes five on-line
computers, with a sixth used for backup and off-line research and
development. Some processing is also performed at Sisters of Providence
Medical Center in Seattle, Washington, under contract to the Company. The
Seattle facility can provide backup processing to a subset of accounts
under emergency conditions. In addition to basic ECG analysis, the Company
offers its customers a range of optional services, including ECG overreads
(reviews by a cardiologist), network transmission (to a local cardiologist
with a special remote printer), FAA transmission (for FAA examiners
performing pilot physicals), and long-term storage of ECGs on laser optical
disk.
The Company offers physicians and its other customers a full range of
disposable cardiopulmonary supplies including electrodes, ECG recording
paper, gel, and patient cables.
MARKETING
The Company's sales efforts for its ECG products and services are
aimed principally at primary care physicians, clinics, institutions, small
hospitals and industrial health care facilities.
The Company conducts its marketing efforts through commissioned
dealers and telemarketing sales people. The Company also maintains a
National Accounts department, which markets products to the health care
facilities at large national companies such as Ingersoll-Rand Corporation,
Ethyl Corporation, General Motors Corporation, and other multi-installation
users such as major governmental institutions and agencies, including
prisons. The Company attends national and regional medical conventions to
generate leads for its services, equipment and supplies.
System 107 and System 307 are sold directly or leased on a fee-for-use
basis to medical users. A user who leases, commits to a minimum monthly
payment. The charge for ECGs in excess of those included in the monthly
fee varies with the volume of usage.
Upon the request of a medical user, the Company provides the services
of a board-certified cardiologist to assist the attending or examining
physician in overreading the ECG interpretation for a fee, which is billed
by the Company directly to the medical user.
COMPETITION
The computer interpreted ECG business has attracted a number of
companies, domestic and foreign. A number of medical equipment
manufacturers are presently offering ECG terminals and systems, some of
which perform computer-assisted ECG analysis. Some of these competitors
market their products primarily to hospitals, whereas the Company markets
primarily to physicians' offices and government and industrial health care
facilities. The Company estimates that its form of business, computerized
ECG analyses via a service bureau, constitutes only 1.5% of the total
number of ECGs taken each year in the United States. It has approximately
30% of this market. Its major competitor, Merx Diagnostics, Inc. has about
40% and a number of smaller companies share the balance of the market. The
principal methods under which the Company competes are service, product and
software performance, and price.
ASSEMBLY, REPAIR AND CUSTOMER SERVICE
Assembly operations conducted by the Company are typical of the
electronics industry and require no extraordinary methods, procedures or
equipment. The Company's systems consist primarily of a number of
electronic component parts assembled on Company-designed printed circuit
boards, as well as printer and recorder components. The component parts,
except for the circuit boards, sheet metal chassis and equipment cases, are
standard items. The nature of the Company's systems do, however, require
extensive testing by skilled personnel. The Company has developed several
types of specialized tests to facilitate this process and does limited
internal engineering for continuing support and new product development.
All assembly operations are conducted at the Company's headquarters in the
Los Angeles area. Quality control procedures used in testing the products
have been approved by the FDA and are subject to yearly inspections by the
FDA.
Most equipment is repaired at the Company's facility, with some users
in large population centers receiving third party on-site maintenance.
Loaner equipment is available in some of the Company's maintenance
programs.
The Company uses a "hot line" and a customer service staff to handle
most customer equipment and training problems. Initial installation and
set up is handled with videotape, and in some instances with visits by
customer service sales or distributor personnel. The Company's customer
support services are an important aspect of the ultimate successful
installation and operation of its products, which are sold with a warranty
covering both parts and labor.
TELECOR
In February 1995, the Company entered into a Licensing Agreement (the
"TeleCor Licensing Agreement") with Aerotel Ltd, a medical device and
telecommunications company based in Holon, Israel. Pursuant to the TeleCor
Licensing Agreement, the Company is able to provide cardiac transtelephonic
monitoring services to physicians and other healthcare providers in the
United States and Mexico. The term of such agreement expires in January
1996. The Company is presently negotiating the renewal of the TeleCor
Licensing Agreement.
The Company provides its TeleCor customers with a cardiac event
recorder, which is a device that continuously monitors the patients heart
rate and rhythms to detect arrhythmias and other cardiac abnormalities.
The Company's technicians transtelephonically monitor signals received from
the cardiac event recorder.
TeleCor analysis services are available to users by telephone 24 hours
a day, seven days a week. The computer center used for TeleCor analysis
services is the same center used for ECG services. The computer center is
staffed at all times, currently includes five on-line computers, with a
sixth used for backup and off-line research and development. The Company
provides, free of charge, to its customers a full range of disposable
cardiopulmonary supplies including a cardiac event monitor, electrodes, and
other miscellaneous supplies.
MARKETING
The Company's sales efforts for TeleCor are aimed principally at home
health agencies and primary care physicians.
Marketing for TeleCor is handled by the Company's sales, marketing and
service organization, Medical Data Resources, which trained the TeleCor
sales and service force. As with its ECG Services, the Company attends
national and regional medical conventions to generate leads for its
services, equipment and supplies.
The Company sells and leases the cardiac event monitor and related
equipment required to obtain TeleCor services. As part of the leasing
arrangement, the Company provides the services of a board-certified
cardiologist to assist the attending or examining physician in overreading
the TeleCor interpretation.
COMPETITION
The TeleCor business, like the ECG services, has attracted a number of
companies, domestic and foreign. The Company's major competitors in the
field of cardiac event monitoring include Instromedix, Inc. which has
approximately 35% of the market with approximately 20 other companies
having the remaining 65% of the market.
DETOXAHOL TM
In March 1994, the Company acquired the rights to a potential new
pharmaceutical product called Detoxahol TM through the acquisition of MB
Nutraceuticals, Inc. ("MB"). In June 1995, a patent application was filed
on behalf of the Company covering the technology underlying Detoxahol TM.
Detoxahol TM is a substance intended to facilitate the rapid lowering of
blood alcohol from people who have been drinking alcohol. Detoxahol TM is
currently under development at the University of Georgia, with the Company
funding the research and development. Detoxahol TM is to augment the
liver's natural function of removing alcohol from the blood by creating an
"auxiliary liver function" in the small intestine. Its efficacy would
depend on the amount of Detoxahol TM taken compared to the amount of
alcohol consumed; since large doses of Detoxahol TM can be taken, alcohol
detoxification could occur quickly.
Management expects that the initial market for Detoxahol TM would be
for emergency rooms and ambulances. Management does not know of any other
current method or existing drug or product that would rapidly remove
alcohol from the blood. However, there is no assurance that other
universities and/or pharmaceutical companies are not currently working on a
similar drug or product. The Detoxahol TM compound is currently in the
development phase with pre-clinical testing expected in 1996.
Before commencing marketing and sales efforts for Detoxahol TM, the
Company must obtain FDA clearance of Detoxahol TM. The FDA and
corresponding regulatory bodies in other countries require that the drug
for which clearance is sought must be shown to be safe and effective in
adequately controlled clinical trials. Prior to initiation of clinical
trials, extensive basic research and development information must be
submitted to the FDA in an IND. If clearance is obtained to proceed to
clinical trials based on the IND, Phases 1 through 3 clinical trials are
performed. If Phases 1 through 3 are successfully completed, the data from
these trials is collected into a New Drug Application ("NDA"), which is
filed with the FDA in an effort to obtain marketing clearance. The FDA
reported industry average for intervals between filing of an IND and
submission of an NDA is about five years and about two years between NDA
filing and FDA clearance. If a drug is designated for fast track clearance
the process can be faster. Since pre-clinical testing of Detoxahol TM has
not yet commenced, it is premature to estimate when the Company will file
an IND with respect to Detoxahol TM.
Under a research agreement with the University of Georgia, through
December 31, 1995 the Company will have funded $260,000 for the research
and development of Detoxahol TM, which includes expenses associated with
the filing of a patent application for Detoxahol TM. The Company has
agreed to fund up to an additional $740,000 over the next year of which
$250,000 will be released only for FDA preclinical testing if the results
of the research of the project are satisfactory to the Company and the
University. The Company is required to fund an additional $350,000 for the
project through December 15, 1995.
INDUSTRIAL PROPERTY - IRSCO DEVELOPMENT COMPANY, INC.
In August 1994, the Company acquired Irsco Development Company, Inc.
("Irsco") whose principal asset is a 6.3 acre industrial park, consisting
of nine buildings comprising a total of 118,270 sq. ft. plus parking. The
buildings have been divided into 25 separate units, ranging from 1,900 sq.
ft. to 10,000 sq. ft. The property is located in Irwindale, California,
approximately 18 miles from downtown Los Angeles.
The units of the industrial park are rented to commercial tenants.
Presently, approximately 80% of the units are rented at current market
rates and management is making efforts to find tenants for the remaining
vacant units. Management expects gross revenues from the industrial park
to equal approximately $440,000 for 1995.
The Company acquired Irsco in exchange for 52,333 shares of the
Company's $3.50 Series B Convertible Preferred Stock (the "Preferred
Stock"). Each share of Preferred Stock is convertible into ten shares of
the Company's Common Stock. The Preferred Stock is presently redeemable by
the Company upon thirty days notice, at a price of $3.85 per share. In
addition to the Preferred Stock, the Company issued warrants to purchase
22,000 shares of Common Stock at an exercise price of $3.75 per share
expiring in August 1999.
GOVERNMENT REGULATION
The Health Care Finance Administration (HCFA) approves diagnostic
tests for reimbursement by Medicare. The OsteoGram has been approved for
reimbursement for Medicare.
Government regulations may change at any time and Medicare
reimbursement for the OsteoGram may be withdrawn or reduced. Other forms
of testing for bone mineral density as an indicator of osteoporosis may be
approved for reimbursement and may reduce the OsteoGram's market share or
profit margins. In addition, although the Company and Merck have recently
provided more information on the OsteoSystem to the FDA with respect to the
Warning Letter, there is no assurance that such information will resolve
the FDA's concerns. These factors could adversely affect the Company's
revenues and profits.
The FDA registers medical devices used for diagnostic testing and
pharmaceutical products for safety and efficacy. Prior to marketing, each
of the Company's Detoxahol TM products must undergo an extensive regulatory
clearance process conducted by the FDA and comparable agencies in other
countries. This process, which generally includes a review of preclinical
and clinical testing and confirmation by the FDA that Good Laboratory
Practices established by the FDA and Good Clinical Practices were
maintained during testing, can take many years and require the expenditure
of substantial resources. The Company is dependent on the laboratory and
medical institutions that will conduct its preclinical and clinical testing
to maintain both Good Laboratory Practices and Good Clinical Practices.
Data obtained from preclinical and clinical testing are subject to varying
interpretations that can result in delays in the regulatory clearance
process or limitations on, or even prevention of, regulatory clearance. In
addition, delays or rejections may be encountered as a result of changes in
regulatory review policies during the period of development and regulatory
review of an IND.
There can be no assurance that regulatory clearance will be obtained
for any of the Company's proposed Detoxahol TM products. In the
pharmaceutical industry, only a small percentage of the new products for
which INDs are submitted to the FDA to commence human testing ultimately
are cleared for marketing. Moreover, regulatory clearance may be
conditioned upon the imposition of restrictions on the indicated uses for
which a product may be marketed. Any significant delays in obtaining
regulatory clearances or limitations imposed on indicated uses could result
in the Company incurring substantial additional expenditures or in
diminishing any competitive advantage that the Company's products might
otherwise enjoy.
Even if regulatory marketing clearance is obtained, a marketed product
and its manufacturer are subject to continual review. Subsequent discovery
of previously unknown problems with a product or its manufacture may result
in restrictions on such product or manufacture, including withdrawal of
such products from the market. Any change by the Company in the
manufacture of any product cleared for marketing also would be subject to
regulatory review.
PATENTS AND PROPRIETARY RIGHTS
The Company does not have any patents for the OsteoGram. It does have
proprietary rights to the algorithms and software which have been developed
and refined over a 10 year period. The software is protected by copyright.
Such proprietary rights are licensed to Merck under the License Agreement.
The OsteoGram trade mark, which is also licensed to Merck is a registered
trade mark.
The Company believes that others may attempt to develop x-ray scanning
and computer analysis systems similar to the OsteoGram. This will take
time and money for development, clinical studies and government clearance.
Meanwhile the Company expects to develop and patent or copyright a second
generation OsteoSystem. However, companies with greater resources than the
Company may successfully compete and greatly reduce the Company's projected
revenues and profits from any second generation OsteoSystem developed by
the Company.
In June 1995, a patent application was filed on behalf of the Company
covering the technology underlying Detoxahol TM. There can be no assurance
that such patent application will be approved, that the Company can develop
or acquire Detoxahol TM products or methods of use that are patentable, or
even if patents are issued that they will afford the Company's Detoxahol TM
products any competitive advantage or will not be challenged by third
parties, or that patents issued to others will not adversely affect the
development or commercialization of the Company's products. In addition,
to the extent that the Company develops uses of Detoxahol TM in combination
with other products, if such products are covered by third-party patents,
the Company could be required to obtain licenses from the owners of such
patents in order to market such combination products.
DESCRIPTION OF PROPERTY
The Company's principal facilities are located in 18,000 square feet
in a modern office building located at 1230 Rosecrans Avenue, Manhattan
Beach, California 90266. This facility is leased through August 1996 at a
monthly rental of $25,693, plus a cost-of-living adjustment. This is a
full service lease including utilities, maintenance and taxes on the
property, janitorial and security service. The Company also leases,
on a month to month basis, a 1,200 square foot facility in
Yellow Springs, Ohio, which is used as an additional processing facility
for the OsteoSystem. The Company believes that these facilities are
sufficient for its existing activities and potential growth, and that these
facilities are well maintained and in good condition.
LEGAL PROCEEDINGS
In July 1994, an alleged former associate of the principals of MB, a
company acquired by the Company in March 1994, filed an action against the
Company, its officers and directors and the former principals of MB. The
action was filed in the Los Angeles County Superior Court, seeking
unspecified damages and injunctive relief based on numerous alleged causes
of action, including intentional interference with contract, intentional
interference with prospective economic advantages, and aiding and abetting
breach of fiduciary duties.
The Company denies the allegations and contends that the lawsuit has
no merit. In accordance with its acquisition agreement with MB, the
Company has demanded indemnification for any costs, expenses or awards
relating to this matter. The Company has also notified its insurance
carrier in regard to indemnification. The Company's right to
indemnification and the scope of such indemnification have not been
resolved. The former principals of MB have settled the claims against
them. Under the terms of such settlement, the former principals of MB must
give the plaintiff 120,000 shares of Common Stock of the Company which they
obtained in March, 1994 when the Company acquired MB. The Company is
presently engaged in settlement negotiations with the plaintiff. The
Company is unable to determine the ultimate outcome of such negotiations.
USE OF PROCEEDS
Assuming all outstanding Warrants and Representative's Warrants are
exercised, the Company will receive net proceeds of approximately
$3,290,000 after expenses of the offering. The proceeds, if any, to be
received by the Company from the exercise of the Warrants will be used for
research and development activities marketing and sales and general working
capital purposes.
DESCRIPTION OF SECURITIES
COMMON STOCK
The Company is authorized to issue 50,000,000 shares of Common Stock,
$.01 par value, of which 8,216,278 shares were issued and outstanding as of
September 27, 1995.
The holders of Common Stock are entitled to one vote for each share
held of record on all matters to be voted by stockholders. There is no
cumulative voting with respect to the election of directors with the result
that the holders of more than 50% of the shares of Common Stock voted for
the election of directors can elect all of the directors.
The holders of shares of Common Stock are entitled to dividends when
and as declared by the Board of Directors from funds legally available
therefore, and, upon liquidation are entitled to share pro rata in any
distribution to holders of Common Stock. All of the outstanding shares of
Common Stock are, and all shares sold hereunder will be, when issued upon
payment therefor, duly authorized, validly issued, fully paid and
non-assessable.
PREFERRED STOCK
The Company is authorized to issue up to 1,000,000 shares of Preferred
Stock, $.10 par value, of which 8,400 shares of $3.50 Class A Cumulative
Convertible Preferred Stock and 52,333 shares of $3.50 Class B Cumulative
Convertible Preferred Stock were issued and outstanding as of September 27,
1995.
The Board of Directors has authority to issue the authorized Preferred
Stock in one or more series, each series to have such designation and
number of shares as the Board of Directors may fix prior to the issuance of
any shares of such series. Each series may have such preferences and
relative, participating, optional or other special rights, with such
qualifications, limitations or restrictions, as are stated in the
resolution or resolutions providing for the issue of such series as may be
adopted from time to time by the Board of Directors prior to the issuance
of any shares of such series.
CLASS A PREFERRED STOCK
The holders of Class A Preferred Stock are entitled to receive, when
and as declared by the Board of Directors of the Company, dividends at an
annual rate of $.35 per share, payable quarterly. Dividends are cumulative
from the date of issuance. As a result of the Reverse Stock Split, every
two shares of the Class A Preferred Stock are convertible, subject to
adjustment, into one share of Common Stock. In the event of any
liquidation, the holders of the Class A Preferred Stock are entitled to
receive $2.00 in cash per share plus accumulated and unpaid dividends out
of assets available for distribution to stockholders, prior to any
distribution to holders of Common Stock or any other stock ranking junior
to the Class A Preferred Stock. The Class A Preferred Stock may be
redeemed by the Company, upon 30-days' written notice, at a redemption
price of $3.85 per share. Class A Preferred Stock stockholders have the
right to convert their shares into Common Stock during such 30-day period.
Shares of Class A Preferred Stock have one vote each. Shares of Class
A Preferred Stock vote along with shares of Common Stock and shares of
Class B Preferred Stock as a single class on all matters presented to the
stockholders for action except as follows: Without the affirmative vote of
the holder of a majority of the Class A Preferred Stock then outstanding,
voting as a separate class, the Company may not (i) amend, alter or repeal
any of the preferences or rights of the Class A Preferred Stock, (ii)
authorize any reclassification of the Class A Preferred Stock, (iii)
increase the authorized number of shares of Class A Preferred Stock or (iv)
create any class or series of shares ranking prior to the Class A Preferred
Stock as to dividends or upon liquidation.
CLASS B PREFERRED STOCK
The holders of Class B Preferred Stock are entitled to receive
dividends only, when and as declared by the Board of Directors of the
Company. Each share of Class B Preferred Stock is convertible, subject to
adjustment, into ten shares of Common Stock. In the event of any
liquidation, the holders of the Class B Preferred Stock are entitled to
receive $3.50 in cash per share plus accumulated and unpaid dividends out
of assets available for distribution to stockholders, prior to any
distribution to holders of Common Stock or any other stock ranking junior
to the Class B Preferred Stock. Each Class B Preferred Stock may be
redeemed by the Company, upon 30-days' written notice, at a redemption
price of $3.85 per share. Class B Preferred Stock stockholders have the
right to convert their shares into Common Stock during such 30-day period.
Shares of Class B Preferred Stock have one vote each. Shares of Class
B Preferred Stock vote along with shares of Common Stock and shares of
Class A Preferred Stock as a single class on all matters presented to the
stockholders for action except as follows: Without the affirmative vote of
the holder of a majority of the Class B Preferred Stock then outstanding,
voting as a separate class, the Company may not (i) amend, alter or repeal
any of the preferences or rights of the Class B Preferred Stock, (ii)
authorize any reclassification of the Class B Preferred Stock, (iii)
increase the authorized number of shares of Class B Preferred Stock or (iv)
create any class or series of shares ranking prior to the Class B Preferred
Stock as to dividends or upon liquidation.
WARRANTS
The 8,000,000 Warrants were issued in August 1992 subject to the terms
and conditions of a Warrant Agreement between the Company and U.S. Stock
Transfer Corporation, Glendale, California, as Warrant Agent. 67,910 of
the Warrants have been exercised. As of September 27, 1995 there were
7,320,900 Warrants issued and outstanding. The following description of
the Warrants is not complete and is qualified in all respects by the
Warrant Agreement which was previously filed with the SEC. As a result of
the Reverse Stock Split, a Warrantholder must exercise ten Warrants in
order to purchase one share of Common Stock of the Company at an aggregate
exercise price of $3.75, subject to adjustment for stock splits, reverse
stock splits and similar events. The Warrants are exercisable through
August 2, 1997. The Company is not required to issue fractional shares
upon the exercise of the Warrants. If any fraction (calculated to the
nearest one-hundredth) of a share of Common Stock would be issuable on the
exercise of any Warrant, the Company, at its option, may either purchase
such fraction for an amount in cash equal to the fair market value of such
fraction on the trading day immediately preceding the day upon which such
Warrant was surrendered for exercise or issue the required fractional
share. The Warrants are presently redeemable by the Company upon 30 days
prior written notice at a redemption price of $.05 per Warrant.
The Warrants contain anti-dilution provisions upon the occurrence of
certain events such as stock dividends or splits, mergers or acquisitions.
In the event of liquidation, dissolution or winding up of the Company,
Warrantholders will not be entitled to receive any assets of the Company
available for distribution to the holders of Common Stock. Holders of the
Warrants will have no voting, preemptive, liquidation or other rights of a
stockholder, and no dividends will be declared on the Warrants.
The Warrants may be exercised on surrender of the applicable Warrant
certificate on or prior to the expiration of the Warrant exercise period,
accompanied by payment in full of the exercise price for the number of
Warrants being exercised.
The Company has agreed to use its best efforts to maintain the
effectiveness of a registration statement under the Securities Act for the
Common Stock underlying the Warrants and to take such other actions under
the laws of various states as may be required to cause the lawful sale of
securities upon the exercise of Warrants. However, the Company will not be
required to honor the exercise of Warrants if, in the opinion of the Board
of Directors, upon advice of counsel, the sale of securities upon such
exercise would be unlawful.
REPRESENTATIVE'S WARRANTS
In connection with the August 1992 offering, the Company granted
800,000 Representative's Warrants to the Representative or its designees.
As a result of the Reverse Stock Split, the Representative must exercise
ten Representative's Warrants at an aggregate exercise price of $3.00 in
order to obtain a unit consisting of one share of Common Stock and one
warrant to purchase one share of Common Stock at an exercise price of
$3.75. The Representative's Warrants are currently exercisable and expire
on August 2, 1997. The exercise price of the Representative's Warrants is
subject to adjustment pursuant to customary anti-dilution provisions. The
warrants issuable upon exercise of the Representative's Warrants are
identical to the Warrants.
PLAN OF DISTRIBUTION
No underwriter is being utilized in connection with this offering or
with the exercise of the Warrants. The shares of Common Stock issuable
upon exercise of the Warrants are being offered directly by the Company
pursuant to the terms of the Warrants.
The Company is registering the shares of Common Stock issuable upon
exercise of the Warrants and the Representative's Warrants and not the
resale thereof by the holders of the shares of Common Stock after such
exercise.
The Company has agreed to pay broker-dealers who are members of the
NASD a solicitation fee of 5% of the aggregate exercise price of each
Warrant in those states where commissions are allowed. In order to
facilitate the exercise of the Warrants the Company will furnish, at its
expense, such number of copies of this Prospectus to each recordholder of
the Warrants as the holder may request together with instructions that such
copies be delivered to the beneficial owners thereof.
LEGAL MATTERS
Certain legal matters in connection with the validity of the shares of
Common Stock offered hereby will be passed upon for the Company by Reid &
Priest LLP, 40 West 57th Street, New York, New York 10019.
EXPERTS
The consolidated financial statements of the Company and its
subsidiaries at September 30, 1993 and 1994 and for each of the three years
in the period ended September 30, 1994, incorporated by reference in this
Prospectus and Registration Statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their reports thereon (which
contain an explanatory paragraph with respect to both the Company's ability
to continue as a going concern mentioned in Notes A and O and Litigation
mentioned in Note I to the consolidated financial statements) appearing
elsewhere herein and in the Registration Statement, and are included in
reliance upon such reports given upon the authority of such firm as experts
in accounting and auditing.
==================================== ===================================
No person is authorized in
connection with any offering made
hereby to give any information or to
make any representation not contained
in this Prospectus, and, if given or
made, such information or representation
must not be relied upon as having been
authorized by the Company or any
underwriter. This Prospectus does not
constitute an offer to sell or a 960,000 Shares of Common Stock
solicitation of an offer to buy any
security other than the shares of
Common Stock offered hereby, nor does
it constitute an offer to sell or a
solicitation of any offer to buy any of
the securities offered hereby to any
person in any jurisdiction in which it COMPUMED, INC.
is unlawful to make such an offer or
solicitation. Neither the delivery of
this Prospectus nor any sale made
hereunder shall under any circumstances
create an implication that there has
been no change in the affairs of the
Company since the date hereof.
TABLE OF CONTENTS -------------------
----------------- P R O S P E C T U S
-------------------
Page
----
Available Information . . . . . . 2
Incorporation of Certain
Documents by Reference . . . . . 2
The Company . . . . . . . . . . . 3
Prospectus Summary . . . . . . . 3
Risk Factors . . . . . . . . . . 4 October __, 1995
Business . . . . . . . . . . . . 8
Use of Proceeds . . . . . . . . . 15
Description of Securities . . . . 15
Plan of Distribution . . . . . . 17
Legal Matters . . . . . . . . . . 17
Experts . . . . . . . . . . . . . 17
=================================== ===================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses of this offering in connection with the
issuance and distribution of the securities being registered, all of which
are to be paid by the Company, are as follows:
Securities and Exchange Commission Registration Fee . . . $3,457.02 (1)
Legal Fees and Expenses . . . . . . . . . . . . . . . . . 75,000.00
Accounting Fees and Expenses . . . . . . . . . . . . . . 15,000.00
Miscellaneous Expenses . . . . . . . . . . . . . . . . . 6,542.98
---------
Total . . . . . . . . . . . . . . . . . . . . . $100,000.00
(1) The registration fee has previously been paid.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article TENTH of the Certificate of Incorporation of the Company and
Article VI of the By-laws of the Company provide in part that the Company
shall indemnify its directors, officers, employees and agents to the
fullest extent permitted by the General Corporation Law of the State of
Delaware (the "DGCL").
Section 145 of the DGCL permits a corporation, among other things, to
indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an
action by or in the right of the corporation), by reason of the fact that
he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with such action, suit or proceeding 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, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.
A corporation also may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation. However, in such an
action by or on behalf of a corporation, no indemnification may be made in
respect of any claim, issue or matter as to which the person is adjudged
liable to the corporation unless and only to the extent that the court
determines that, despite the adjudication of liability but in view or all
the circumstances, the person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
In addition, the indemnification and advancement of expenses provided
by or granted pursuant to Section 145 shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibit
Number Description
------- -----------
1.1* Form of Underwriting Agreement with Paulson Investment Company,
Inc.
1.2* Form of Agreement Among Underwriters
3.1* Certificate of Incorporation
3.1(a)* Amendment to Certificate of Incorporation
3.1(b)* Amendment to Certificate of Incorporation
3.1(c)* Certificate of Correction of Certificate of Amendment
3.2* By-Laws of the Company
4.1* Form of Underwriter's Warrant Agreement
4.2* Form of Warrant Agreement and Warrant
4.3* Specimen Common Stock Certificate
4.4* Form of Preferred Stock Certificate
4.5* Form of Warrant and Warrant Agreement issued to L.H. Friend,
Weinress & Frankson, Inc. and/or its assigns dated September 13,
1991
5** Opinion of Reid & Priest LLP, as to the legality of the
securities being registered
23.1** Consent of Reid & Priest LLP (included in Exhibit 5)
23.2** Consent of Ernst & Young LLP, as independent auditors
24** Power of Attorney (included on the signature page of this
Registration Statement)
______________________
* Filed as exhibits to Company's Registration Statement on Form S-1
(Commission File No. 33-46061), as amended, which was declared
effective by the Commission on May 7, 1992, and incorporated herein by
this reference.
** Filed herewith.
ITEM 17. UNDERTAKINGS
Undertakings Required by Regulation S-B Item 512(a).
The Company 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.
(ii)to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
(iii)to include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
(2)That, for the purpose of determining any liability under the
Securities Act, 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 the 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.
Undertaking Required by Regulation S-B, Item 512(e).
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Company pursuant to the provisions of its Certificate of
Incorporation, of the DGCL or otherwise, the Company has been advised that
in the opinion of the SEC 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 Company of expenses incurred or paid by a director,
officer of controlling person of the Company 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
Company 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.
Undertakings Required by Regulation S-B, Item 512(f).
The undersigned Company hereby undertakes:
(1) That for purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule
430A and contained in the form of prospectus filed by the Company
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this Registration Statement as of the
time it was declared effective.
(2) That for purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus 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.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Company
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 Amendment
to the Post-Effective Amendment to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Manhattan Beach, and State of California on the 29th day of September,
1995.
COMPUMED, INC.
By: /s/ Rod N. Raynovich
___________________________________
Rod N. Raynovich
President
POWER OF ATTORNEY
Each director and/or officer of the registrant whose signature appears
below hereby appoints Rod N. Raynovich and DeVere Pollom, and each of them
severally, as his attorney-in-fact to sign in his name and behalf, in any
and all capacities stated below and to file with the SEC, any and all
amendments, including post-effective amendments, to this Registration
Statement.
Pursuant to the requirements of the Securities Act, this Amendment to
the Post-Effective Amendment to the Registration Statement has been signed
below by the following persons in the capacities and on the dates
indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Rod N. Raynovich President, Chief September 29, 1995
_____________________ Executive Officer
Rod N. Raynovich and Director
/s/ DeVere Pollom Vice President Finance, September 29, 1995
_____________________ Chief Financial Officer,
DeVere Pollom and Secretary
/s/ Robert Funari Chairman September 29, 1995
_____________________
Robert Funari
/s/ Robert Goldberg Director September 29, 1995
_____________________
Robert Goldberg
/s/ Howard Mark, M.D. Director September 29, 1995
_____________________
Howard Mark, M.D.
/s/ Winston Millet Director September 29, 1995
_____________________
Winston Millet
/s/ John Minnick Director September 29, 1995
_____________________
John Minnick
/s/ Robert Stuckelman Director September 29, 1995
_____________________
Robert Stuckelman
/s/ Russell Walker Director September 29, 1995
_____________________
Russell Walker
<PAGE>
EXHIBIT INDEX
Exhibit Page
------- ----
5 Opinion of Reid & Priest LLP, as to
the legality of the securities being
registered
23.2 Consent of Ernst & Young LLP, as
independent auditors
Exhibit 5
REID & PRIEST LLP
A NEW YORK LIMITED LIABILITY PARTNERSHIP
40 WEST 57TH STREET
NEW YORK, NY 10019-4097
TELEPHONE 212 603-2000
FAX 212 603-2298
(212) 603-6780
New York, New York
October 3, 1995
CompuMed, Inc.
1230 Rosecrans Avenue, Suite 1000
Manhattan Beach, California 90266
Gentlemen:
We have acted as special counsel to CompuMed, Inc., a
Delaware corporation ("CompuMed"), in connection with the
preparation of an amendment to a post-effective amendment to a
registration statement on Form SB-2 on Form S-3 (the
"Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), relating to the registration of
960,000 shares of CompuMed Common Stock, $.01 par value per share
("Common Stock"), issuable upon (i) the exercise of 8,000,000
outstanding CompuMed Common Stock Purchase Warrants (the
"Warrants") and (ii) the full exercise of 800,000
Representative's Warrants (the "Representative's Warrants")
issued to the representative of several underwriters (the
"Representative") in CompuMed's August 1992 public offering.
This opinion is being rendered in connection with the
filing by CompuMed of the Registration Statement.
The Warrants were issued under a Warrant Agreement,
dated as of August 3, 1992, between CompuMed and U.S. Stock
Transfer Corporation, as Warrant Agent (the "Warrant Agreement").
The Representative's Warrants were issued pursuant to the terms
of an Underwriting Agreement, dated as of August 3, 1992, between
CompuMed and the Representative (the "Underwriting Agreement").
For purposes of this opinion, we have examined
originals or copies, certified or otherwise identified to our
satisfaction, of (i) the Registration Statement; (ii) the Warrant
Agreement; (iii) the form of Warrant Certificate; (iv) the
Underwriting Agreement, (v) the Representative's Warrant
Certificate, (vi) the Certificate of Incorporation and By-Laws of
CompuMed, as in effect on the date hereof; (vii) resolutions
adopted by the Board of Directors of CompuMed relating to the
approval of the Warrant Agreement, the Underwriting Agreement and
the issuance and delivery of the Warrants and the
Representative's Warrants; and (viii) such other documents,
certificates or other records as we have deemed necessary or
appropriate.
Based upon the foregoing, and subject to the
qualifications hereinafter expressed, we are of the opinion that:
(1) CompuMed is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware.
(2) The shares of Common Stock included in the
Registration Statement to be issued upon the exercise of the
Warrants will be duly authorized and validly issued, and fully
paid and non-assessable when (i) the Registration Statement shall
have become effective under the Securities Act and (ii) the
Warrants shall have been properly exercised and the exercise
price shall have been paid for such shares of Common Stock in
accordance with the terms of the Warrant Agreement.
(3) The shares of Common Stock included in the
Registration Statement to be issued upon the full exercise of the
Representative's Warrants will be duly authorized and validly
issued, and fully paid and non-assessable when (i) the
Registration Statement shall have become effective under the Act
and (ii) the Representative's Warrants and the warrants issuable
upon the exercise of the Representative's Warrants (the
"Underlying Warrants") shall have been properly exercised and the
exercise price for the shares of Common Stock issuable upon the
exercise of the Representative's Warrants and the shares of
Common Stock issuable upon the exercise of the Underlying
Warrants shall have been paid in accordance with the terms of the
Underwriting Agreement and the Representative's Warrant
Certificate.
We are members of the Bar of the State of New York and
do not hold ourselves out as experts concerning, or qualified to
render opinions with respect to any laws other than the laws of
the State of New York, the Federal laws of the United States and
the General Corporation Law of the State of Delaware.
We hereby consent to the reference to this firm under
the caption "Legal Matters" in the Prospectus and to filing of
this opinion with the Securities and Exchange Commission as
Exhibit 5 to the Registration Statement. In giving the foregoing
consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the
Securities Act, or the rules and regulations of the Securities
and Exchange Commission thereunder.
Very truly yours,
/s/ Reid & Priest LLP
REID & PRIEST LLP
Exhibit 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated December 5, 1994,
except for Note J as to which the date is December 29, 1994, in
Amendment No. 3 to Post-Effective Amendment No. 1 to the
Registration Statement (Form SB-2 No. 33-48437) on Form S-3 and
related Prospectus of CompuMed, Inc. for the registration of
960,000 shares of its common stock.
ERNST & YOUNG LLP
October 2, 1995
