As filed with the Securities and Exchange Commission on March 13, 2000
REGISTRATION NO. 333-87975
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
PRE-EFFECTIVE AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------
COMPUMED, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 5047 95-2860434
-------- ----------
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION CLASSIFICATION
OR ORGANIZATION) CODE NO.)
----------------------------
5777 W. CENTURY BOULEVARD
SUITE 1285
LOS ANGELES, CALIFORNIA 90045
(310) 258-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF PRINCIPAL EXECUTIVE OFFICES)
----------------------------
ROBERT GOLDBERG
CHAIRMAN OF THE BOARD OF DIRECTORS
COMPUMED, INC.
5777 WEST CENTURY BOULEVARD
SUITE 1285
LOS ANGELES, CALIFORNIA 90045 (310) 258-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------------------
COPIES TO:
BRUCE A. RICH, ESQ.
THELEN REID & PRIEST LLP
40 WEST 57TH STREET
NEW YORK, NEW YORK 10019
(212) 603-6780
APPROXIMATE DATE 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, 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. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
============================================ ================ ================== ================== ================
TITLE OF EACH PROPOSED MAXIMUM PROPOSED MAXIMUM
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT (1) PRICE (1) REGISTRATION FEE
- -------------------------------------------- ---------------- ------------------ ------------------ ----------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share(1) 3,805,424 $0.95 $3,615,152.80 $ 954.40
Common Stock, par value $.01 per share(1)(2) 647,170 $2.50 1,617,925.00 427.13
--------------
Total $1,381.53
============================================= =============== ================== ===================================
</TABLE>
(1) In accordance with Rule 457(g), the registration fee for these shares is
calculated upon a price which represents the highest of (i) the price at
which the warrants or options may be exercised; (ii) the offering price of
securities of then same class included in this registration statement; or
(iii) the price of securities of the same class, as determined pursuant to
Rule 457(c).
(2) The registration fee for these shares was previously paid as these shares
had been included in Registration Statement No. 33-48437
(3) The sum of $1,175.93 was paid in connection with the filing of Amendment
No. 1 to this registration statement filed on November 19, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON THE 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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON THE
DATE THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE>
Information contained in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and we are not soliciting offers to buy these
securities in any state where the offer or sale is not permitted.
PROSPECTUS (SUBJECT TO COMPLETION)
DATED MARCH 13, 2000
-------------------------------------------------
COMPUMED, INC.
4,452,594 SHARES OF COMMON STOCK
-------------------------------------------------
The stockholders of CompuMed, Inc. listed elsewhere in this prospectus
are offering up to 4,452,594 shares of our common stock. These shares will have
been issued upon the exercise of common stock purchase warrants previously
issued by us. We will not receive any proceeds from the sale of the common
stock. However, we will receive proceeds in the amount of $4,129,505 from the
sale of shares issuable upon the exercise of warrants by the selling
stockholders.
The selling stockholders may offer their shares at prevailing market
prices in public transaction in the OTC Electronic Bulletin Board or in
privately negotiated transactions. No period of time has been fixed within which
the shares may be offered or sold.
Our common stock is quoted in the OTC Electronic Bulletin Board under
the symbol "CMPD.OB." On March 9, 2000, the closing price of our common stock
was $0.92.
The selling stockholders and any participating broker-dealers may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933,
and any commissions or discounts given to any such broker-dealer may be regarded
as underwriting commissions or discounts under the Securities Acts of 1933.
Brokers or dealers effecting transactions in the shares should confirm
the registration of these securities under the securities laws of the states in
which transactions occur or the existence of an exemption from registration.
INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 5.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR 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 __, 2000
<PAGE>
TABLE OF CONTENTS
Page
----
PROSPECTUS SUMMARY........................................................2
SELECTED FINANCIAL INFORMATION............................................5
RISK FACTORS..............................................................6
USE OF PROCEEDS..........................................................10
MARKET PRICE INFORMATION.................................................10
PLAN OF DISTRIBUTION.....................................................12
LEGAL MATTERS............................................................13
EXPERTS..................................................................13
WHERE YOU CAN FIND MORE INFORMATION ABOUT US.............................13
1
<PAGE>
YOUR RELIANCE ON INFORMATION CONTAINED IN THIS PROSPECTUS
In deciding whether to invest in our common stock, you should rely on
the information contained in this prospectus. We have not authorized anyone to
provide you with information different from that contained in this prospectus.
The selling stockholders are offering to sell, and seeking offers to buy, shares
of common stock only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of this
prospectus, regardless of the time of delivery of this prospectus or of any sale
of the common stock. You must not consider that the delivery of this prospectus
or any sale of the common stock covered by this prospectus implies that there
has been no change in our affairs since the date of this prospectus or that the
information contained in this prospectus is current or complete as of any time
after the date of this prospectus.
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by the
information contained elsewhere in this prospectus and the documents
incorporated by reference herein.
THE COMPANY
We develop medical devices and employ information technologies to
diagnose and monitor costly, high incidence diseases. We have focused our
business primarily on:
o the ongoing development of our osteoporosis testing technology
and
o electrocardiogram (ECG) computer interpretation and overread
services.
CompuMed was incorporated in the State of Delaware on July 21, 1986.
Our primary business is the development and marketing of our
osteoporosis testing technology and the computer interpretation of ECGs. We
currently serve approximately 1,000 point-of-care sites nationwide, consisting
primarily of primary care physicians, correctional facilities, surgery centers,
clinics, institutions, small hospitals and industrial health care facilities
with ECG terminals. These entities access our centralized computers and custom
software to produce on-line ECGs and computer interpretations. When requested,
we arrange for a cardiologist "overread" of the ECG, which is a specialist's
opinion regarding the computer interpretation analysis. We also offer a full
range of ECG supplies including electrodes, recording paper, gel, patient
cables, and related supplies.
Our ECG terminals are provided to customers on a rental basis, or a
terminal is sold to the customer, and a per-ECG usage fee is charged. The rental
contracts usually include a minimum base quantity of ECG's. We maintain the ECG
terminals as part of the service contract and when the units are rented. If the
customer owns an ECG terminal, we charge either hardware maintenance fees or
repair fees for maintaining and repairing the equipment. Approximately 50% of
the new systems with customers involve ECG terminal sales, and approximately 50%
involve rental of a terminal.
SIGNIFICANT BUSINESS DEVELOPMENTS
FDA Approval of Automated OsteoGram(R) 2000 System. We have been
developing automated software called OsteoGram(R) which will assist medical
professionals in analyzing bone density by producing a digitized image of the
bone from a radiograph (x-ray). On May 19, 1999, we received clearance from the
U.S. Food and Drug Administration to begin marketing our Automated OsteoGram(R)
2000 system. The system consists of a desktop scanner, standard personal
computer and the OsteoGram(R) bone density analysis software, and it allows
physicians to perform accurate bone density tests in their offices using
existing standard x-ray equipment. We are taking steps to commercialize the
technology.
Ongoing Research and Development of the OsteoView(R). We plan to
develop a device called the OsteoView(R) to measure bone density, which we have
performed initial feasibility testing and analysis. This instrument will use a
low-dose x-ray source and a digital detector to determine bone density from a
measurement of the fingers and the wrist. We have entered into an agreement with
The Johns Hopkins University Medical School and The Johns Hopkins University
Applied Physics Laboratory to cooperatively develop instruments to diagnose and
treat osteoporosis and other musculoskeletal diseases. As part of the agreement,
2
<PAGE>
the University may employ its engineering resources to assist in the
manufacturing design and augment the clinical capability of our Digital
OsteoView(R) 2000 concept device. The completion of the development, manufacture
and marketing of the Osteoview(R) device will probably require a development or
manufacturing partner. There is no assurance that such a partner will be secured
or that such a device will be completed.
Cessation of Development of Detoxahol(TM). In March 1994, we acquired
the rights to a potential new drug called Detoxahol(TM), which could facilitate
the rapid lowering of blood alcohol levels. We filed a patent application
covering the technology underlying Detoxahol(TM), and we had been developing
Detoxahol(TM) technology in conjunction with the University of Georgia. We
subsequently stopped this development work. We have been seeking a partner with
which to recommence our development efforts, but there is no assurance that such
a partner will be secured. Significant further research and development,
including clinical testing, as well as obtaining necessary regulatory
clearances, are required before we could produce a marketable Detoxahol(TM)
product.
OUR COMMON STOCK HAS BEEN DELISTED FROM THE NASDAQ SMALLCAP MARKET
On December 1, 1999, we were notified by the National Association of
Securities Dealers that our common stock had been delisted from the Nasdaq
SmallCap Market because we had not met the minimum bid price requirement for a
sufficient duration. Our shares of common stock began trading immediately on the
OTC Bulletin Board and our trading symbol is "CMPB.OB." Nasdaq maintains
requirements for the continued listing on the Nasdaq SmallCap Market that
include the following: the listed shares of common stock have a minimum bid
price of $1.00 per share, companies with listed shares have net tangible assets
of $2,000,000, market capitalization of $35,000,000 or net income (in latest
fiscal year or 2 of last 3 fiscal years) of $500,000; and that the market value
of the public float of our common stock be at least $4,000,000. Nasdaq took this
action to delist our common stock from the Nasdaq SmallCap Market despite the
fact that we continue to meet all of the financial net worth criteria. The NASD,
which supervises the Nasdaq SmallCap Market, had granted us on July 19, 1999 a
temporary exception from our prior inability to meet the minimum bid price
standard, that allowed us to continue to list our common stock on the Nasdaq
SmallCap Market, subject to certain conditions. On October 13, 1999, the
exception conditions were amended to apply increased requirements regarding the
minimum bid price requirement. Holders of our common stock may find it more
difficult to dispose of their shares of common stock on the OTC Bulletin Board
than they would on the Nasdaq SmallCap Market.
PRINCIPAL EXECUTIVE OFFICES
Our principal executive offices are located at 5777 W. Century
Boulevard, Suite 1285, Los Angeles, California 90045. You can reach our
principal executive offices by telephone at (310) 258-5000.
THE OFFERING
SECURITIES OFFERED
This prospectus relates to the offer and sale of up to 4,452,594 share
of our common stock by stockholders listed elsewhere in this prospectus.
The shares of common stock covered by this prospectus will have been
issued upon the exercise of common stock purchase warrants. In 1997, we offered
shares of our Class C 7% Convertible Preferred Stock to the public. Each share
of this series of preferred stock was converted into shares of our common stock
and an equal number of common stock purchase warrants during the fiscal year
ended September 30, 1998 and 1999. See the description of the Class C 7%
Convertible Preferred Stock and the conversion into common stock and warrants
below at "The Class C Convertible Preferred Stock". In 1992, we offered shares
of our common stock and warrants to purchase shares of our common stock. Of the
4,452,594 shares of common stock being offered hereby, 3,805,424 shares of
common stock relate to the warrants that we have issued upon the conversion of
the preferred stock and 647,170 shares of common stock relate to the warrants
that we issued in 1992.
SECURITIES OUTSTANDING
At January 31, 2000, we had the following securities outstanding other
than warrants and stock options:
3
<PAGE>
Common Stock.................................................... 16,803,097
Class A Convertible Preferred Stock............................. 8,400
Class B Convertible Preferred Stock............................. 300
Preferred Stock
The holders of Series A Convertible Preferred Stock may convert these
securities into shares of common stock by surrendering two shares of the
preferred stock. At January 31, 2000, a total of 4,200 shares of common stock
were issuable upon conversion of all of the currently outstanding shares of this
series of preferred stock. Each share of Class B Convertible Preferred Stock is
convertible into ten shares of common stock. At January 31, 2000, a total of
3,000 shares of common stock were issuable upon conversion of all of the
outstanding shares of this series of preferred stock.
Warrants
At January 31, 2000, we had outstanding warrants to purchase a total
of 7,008,585 shares of common stock at a weighted average price of $1.52 per
share. In 1992, we issued warrants to the public to purchase 8,000,000 shares of
common stock at $3.75 per share. After we effected a one-for-ten reverse stock
split of our common stock and amended the warrant agreement by extending the
expiration date and reducing the exercise price, the public warrants entitle
holders to purchase a total of 647,170 shares of common stock at $2.50 per share
and expire on August 2, 2000. Upon the conversion of shares of our Class C
Preferred Stock, we have issued Class C Warrants to purchase 5,619,525 shares of
common stock, of which warrants to purchase 4,289,415 shares of common stock
remain unexercised. During November 1999, a portion of such warrants were
exercised to purchase 186, 512 shares of common stock for $80,006. Each of the
Class C Warrants is exercisable at the price that the holder converted his
preferred stock. The Class C Warrants expire between February 17, 2001 and May
26, 2002. In January 1998, a United States federal district court approved the
settlement of a class action against us. Under the terms of this settlement
agreement, we issued warrants to purchase 1,875,000 shares of common stock at
$3.00 per share, expiring on January 25, 2003. In addition, there are other
warrants to purchase an aggregate of 197,000 shares of common stock expiring
between September 2000 and January 2003.
Options
At January 31, 2000, we had issued currently exercisable stock options
to purchase 897,172 shares of common stock at a weighted average exercise price
of $0.94 per share.
Common Stock Issuable upon Conversion of Other Securities
The following table provides information with respect to our
securities that are exchangeable or exercisable for shares of common stock at
January 31, 2000.
NUMBER OF SHARES OF WEIGHTED AVERAGE
COMMON STOCK PRICE
------------------- ----------------
Class A Preferred Stock.................. 4,200 $ 0.0
Class B Preferred Stock.................. 3,000 0.0
Public Warrants.......................... 647,170 2.50
Class C Warrants......................... 4,289,415 0.62
Settlement Warrants...................... 1,875,000 3.00
Other Warrants........................... 197,000 2.63
Stock Options............................ 897,172 0.94
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock
sold by the selling stockholders listed elsewhere in this prospectus.
4
<PAGE>
The shares of common stock covered by this prospectus underlie common
stock purchase warrants. Although we will receive no proceeds from the sale of
the common stock, we will receive proceeds upon the exercise of the common stock
purchase warrants. In order to receive one share of common stock, the holders of
the public warrants that we issued in 1992 must pay us $2.50 and surrender ten
warrants. We will receive $1,617,925 if all of these warrants are exercised. The
other 3,805,424 shares of common stock covered by this prospectus underlie
warrants that we have issued upon the conversion of the Class C Preferred Stock.
The holders of these warrants must surrender one warrant and pay us the same
amount as the conversion price for their preferred stock. Because the conversion
price of the preferred stock was based upon the market price of our common
stock, and holders have converted their shares of preferred stock at different
times, the exercise prices for the warrants vary. We anticipate that we will
receive approximately $2,511,580 if all of these warrants are exercised based
upon the weighted average exercise price of $0.66.
RISK FACTORS
You should read the disclosures we make beginning on page 6 under the
heading "Risk Factors" in considering whether to invest in our common stock.
SELECTED FINANCIAL INFORMATION
The following table provides summary financial data of CompuMed for
the periods indicated. We have prepared this information using the consolidated
financial statements of CompuMed for the years ended September 30, 1996, 1997,
1998 and 1999. We have derived the summary financial data for the three months
ended December 31, 1998 and 1999 from our unaudited interim financial statements
which have been incorporated in this prospectus by reference to our Quarterly
Report on Form 10-QSB for the fiscal quarter ended December 31, 1999. We believe
that these unaudited interim financial data include all adjustments, consisting
of normal recurring adjustments necessary for a fair statement of our operating
and non-operating results for the unaudited interim periods. The results of
operations for the three months ended December 31, 1999 are not necessarily
indicative of the results of operations to be expected for the entire year ended
September 30, 2000. This data should be read in conjunction with our financial
statements and "Management's Discussion and Analysis or Plan of Operation"
incorporated in this prospectus by reference to our Annual Report on Form 10-KSB
for the fiscal year ended September 30, 1999 and the Quarterly Report on Form
10-QSB for the fiscal quarter ended December 31, 1999.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED SEPTEMBER 30 DECEMBER 31
--------------------------------------------------------------- -----------------------------
1996 1997 1998 1999 1998 1999
-------------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA
Revenues:
ECG services............... $ 2,008,000 $ 1,674,000 $ 1,420,000 $ 1,385,000 $ 326,000 $ 351,000
Osteo royalty revenues 37,000 119,000 42,000 17,000 5,000 13,000
Product sales.............. 200,000 146,000 395,000 923,000 186,000 115,000
Rental property............ 99,000 -- -- -- -- --
-------------- -------------- ------------- ------------- ------------- -------------
2,344,000 1,939,000 1,857,000 2,325,000 517,000 479,000
Costs and expenses............ 7,123,000 4,222,000 3,488,000 3,396,000 847,000 722,000
Other Income (Expense) 132,000 69,000 298,000 30,000 10,000 14,000
-------------- -------------- ------------- ------------- ------------- -------------
Net Loss...................... $(4,647,000) $(2,214,000) $ (1,333,000) $ (1,041,000) $ (320,000) $ (229,000)
=========== =========== ============= ============= ============ ============
Net Loss Per Share............ $ (.54) $ (.25) $ (.19) $ (.07) $ (.02) $ (.01)
=========== =========== ============= ============= ============= =============
Weighted average number of
common shares outstanding 8,534,276 8,965,045 10,912,240 14,328,343 12,934,929 16,708,292
============== ============== ============= ============= ============= =============
Balance Sheet Data
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------------------------------------- DECEMBER 31,
1996 1997 1998 1999 1999
---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Cash and Marketable Securities... $ 2,644,000 $ 931,000 $ 2,833,000 $ 2,643,000 $ 2,531,000
Total Assets..................... 3,978,000 1,776,000 3,450,000 3,772,000 3,516,000
Total Current Liabilities........ 942,000 756,000 453,000 680,000 600,000
Total Stockholders' Equity....... 2,958,000 868,000 2,885,000 2,904,000 2,760,000
</TABLE>
RISK FACTORS
You should consider the following factors and other information in
this prospectus before deciding to invest in the common stock. This investment
involves a high degree of risk, and you should only purchase shares of common
stock if you can afford a complete loss of your investment.
FINANCIAL RISKS
WE HAVE A HISTORY OF INCURRING LOSSES AND WE ANTICIPATE THAT WE WILL CONTINUE TO
INCUR LOSSES.
We incurred net losses of approximately $4,647,000 in 1996, $2,214,000
in 1997, $1,333,000 in 1998, $1,041,000 in 1999 and $229,000 for the fiscal
quarter ended December 31, 1999. We anticipate that we will continue to incur
net losses due to future research and development costs and corporate costs. Our
retained deficit at December 31, 1999 was $28,996,000.
OUR CONTINUED DEVELOPMENT EFFORTS AND FUTURE GROWTH DEPEND UPON OUR ABILITY TO
RAISE ADDITIONAL CAPITAL WHICH MAY NOT BE AVAILABLE TO US WHEN NEEDED OR ON
ACCEPTABLE TERMS.
We will require capital to finance our continued research and
development programs and to support and grow our existing ECG business. Although
we believe that we have sufficient capital to fund these activities for at least
the next 12 months, there can be no assurance that we will have adequate working
capital to fund all of these activities in the future particularly in light of
our continued and significant losses. There can be no assurance that additional
financing required will be available when needed or, if available, will be on
terms acceptable to us.
BUSINESS AND REGULATORY RISKS
WE MUST ATTRACT AND RETAIN KEY PERSONNEL IN ORDER TO REMAIN COMPETITIVE WHICH
MAY BE DIFFICULT GIVEN OUR SMALL SIZE AND LIMITED RESOURCES COMPARED TO MANY OF
OUR COMPETITORS.
Robert B. Goldberg, the Company's chairman, has been serving as the
interim principal and executive officer since the resignation of the former
President and Chief Financial Officer in September 1999, and has been devoting
an increased portion of his time to the Company while serving in such
capacities, and Phuong Dang is serving as the interim principal accounting
officer until a person is hired for these positions. Our success depends on our
ability to attract and retain skilled managerial, marketing and sales personnel.
We face competition for such personnel from other companies and institutions in
our industry. Our company is smaller and we have fewer resources than many of
our competitors. Therefore, we may have difficulty successfully competing for
the personnel required to achieve future success.
THE SUCCESS OF OSTEOGRAM(R) FORMS AN IMPORTANT PART OF OUR PLANS FOR FUTURE
GROWTH AND POTENTIAL CUSTOMERS MAY NOT ACCEPT THIS METHOD OF TESTING BONE
MINERAL DENSITY.
We intend to market the OsteoGram(R) software in the future, but this
method of testing bone mass is currently at an earlY stage in market development
and is not widely recognized by the medical profession and the public. Education
of the medical profession and public of the OsteoGram(R)'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 OsteoGram(R). Physicians and
other members of the medical community frequently are reluctant to accept new
6
<PAGE>
products until their contribution to health care has been established over an
extended period of time. In addition, other obstacles, such as competition with
other companies that are better known and financed than us, may impede the
OsteoGram(R)'s acceptance. Many radiography centers consider themselves to be
our competitors because of their capital investments iN expensive bone scanning
equipment.
OUR DEVICES ARE COVERED BY MEDICAL REIMBURSEMENT PROGRAMS, AND ANY LEGISLATION
THAT REDUCED THE ABILITY OF PATIENTS TO OBTAIN REIMBURSEMENT FOR THE USE OF, OR
OF PHYSICIANS TO RECOVER THE COST OF, OUR DEVICES WOULD ADVERSELY AFFECT OUR
BUSINESS.
The OsteoGram(R) and ECG services 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. Government regulation may
change at any time, and Medicare reimbursements for the Osteogram(R) or ECG
services may be withdrawn or reduced. Further, should Medicare reimbursemenT
programs be significantly reduced or should other regulatory changes affect the
ability of physicians or us to recover the cost of OsteoGram(R) tests or ECG
services, our ability to market and sell our products would be adversely
affected.
WE HAVE NOT PATENTED TECHNOLOGIES THAT ARE IMPORTANT ASSETS OF OUR BUSINESS, AND
WE CANNOT ASSURE THE CONTINUED PROPRIETARY NATURE OF SUCH TECHNOLOGIES.
We believe that the software that operates the OsteoGram(R) is a
proprietary trade secret that is protected by A confidentiality agreements with
a prior licensee of the technology and with other parties that have developed
the technology. However, such protection may not preclude competitors from
developing products which can be marketed in competition with the OsteoGram(R).
In November 1999, we filed two applications for patents for our OsteoGram(R)
2000 software and we intend to file For additional patents as improvements are
made to the OsteoSystem or as the OsteoView(R) 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 we are not infringing the patents of others.
WE WILL RELY ON OTHERS TO MANUFACTURE OUR DEVICES, AND WE MAY NOT BE ABLE TO
MEET CUSTOMER DEMAND IF OUR SUPPLIERS CANNOT MEET OUR QUANTITY AND QUALITY
REQUIREMENTS.
We do not manufacture apparatus used in connection with the
OsteoGram(R) or ECG services. We have entered into arrangementS with third
parties for the manufacture of apparatus used in connection with the ECG
services. However, there can be no assurance that third party manufacturers will
be able to continue to meet our quantity and quality requirements for
manufactured products.
OUR BUSINESS EXPOSES US TO PRODUCTS LIABILITY AND MEDICAL MALPRACTICE SUITS, AND
WE CANNOT BE SURE THAT OUR INSURANCE WILL BE SUFFICIENT TO COVER ALL POTENTIAL
LIABILITIES.
We could be sued for products liability if a patient is injured as the
result of the misuse or malfunction of one of our medical devices. Although we
maintain insurance that provides $5,000,000 of coverage per occurrence and
$5,000,000 in the aggregate with a deductible of $1,000, we cannot be sure that
this 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, we have
never been involved in any litigation as a result of alleged product liability.
Our current liability insurance policy does not cover losses due to
misinterpreted overreads of ECG printouts by physicians that we retain to
provide such services. Medical professional liability claims which may be
brought against us for misinterpreted overreads, which are not covered by or
exceed the coverage amount of a medical professional liability insurance policy
held by the physician performing the overread, could have a material adverse
effect on our business, financial condition or operating results. Since
commencing our ECG services, no medical professional liability claims have been
made against either the physicians retained by us to perform overreads or our
employees with respect to misinterpreted overreads.
7
<PAGE>
OUR PRODUCTS AND SERVICES ARE HIGHLY REGULATED BY THE FDA, AND NEW LEGISLATION,
GOVERNMENT REGULATIONS OR COURT RULINGS COULD ADVERSELY EFFECT OUR BUSINESS BY
PREVENTING US FROM MARKETING NEW PRODUCTS OR INCREASING OUR COSTS.
Our medical devices, medical services and potential pharmaceutical
products are subject to varying degrees of FDA regulation. All medical devices
and their components are subject to general FDA controls, including compliance
with specified manufacturing practices. Manufacturers must 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 their commercial use.
The FDA and other government agencies may in the future issue new
regulations, or issue new interpretations of existing regulations, which affect
the manufacture, marketing and sale of our products. Our operations may also be
affected if Congress passes new legislation or if courts issue new rulings with
respect to existing legislation. We can offer no assurances that we will not be
adversely affected by new, or newly interpreted, regulatory requirements.
OUR INDUSTRY IS CHARACTERIZED BY RAPID TECHNOLOGICAL CHANGES AND AGGRESSIVE
COMPETITION.
We operate in an industry where technological developments occur at a
rapid pace. We compete with a large number of established companies and
institutions many of whom have more capital, larger staffs and greater expertise
than our company. Our competitors may develop technologies and products that are
more effective than any that we currently have. If this occurs, our products and
technology could become obsolete.
MARKET RISKS
OUR SHARES OF COMMON STOCK HAVE BEEN DELISTED FROM THE NASDAQ SMALLCAP MARKET
WHICH WOULD REDUCE THE LIQUIDITY OF OUR COMMON STOCK.
Our common stock is listed on the OTC Electronic Bulletin Board after
Nasdaq delisted the shares of our common stock from the Nasdaq SmallCap Market
on December 1, 1999. As a result, investors may find it difficult to dispose of,
or to obtain accurate quotations of the price of, our securities. This will
severely limit the liquidity of our common stock, and likely will have a
material adverse effect on the market price of our common stock and on our
ability to raise additional capital.
OUR COMMON STOCK COULD BECOME SUBJECT TO "PENNY STOCK" RESTRICTIONS UNDER
FEDERAL SECURITIES LAWS, WHICH COULD REDUCE THE LIQUIDITY OF OUR COMMON STOCK.
The SEC has adopted regulations, which generally define Penny Stocks
to be an equity security that has a market price less than $5.00 per share or an
exercise price of less than $5.00 per share, subject to certain exemptions. On
February 24, 2000, the closing bid and asked prices for our common stock was
$.88 and $.94 per share and therefore, our common stock is designated a "Penny
Stock." As a Penny Stock, our common stock may become subject to Rule 15g-9
under the Exchange Act or the Penny Stock Rule. This rule imposes additional
sales practice requirements on broker-dealers that sell such securities to
persons other than established customers and "accredited investors" (generally,
individuals with a net worth in excess of $1,000,000 or annual incomes exceeding
$200,000, or $300,000 together with their spouses). For transactions covered by
Rule 15g-9, a broker-dealer must make a special suitability determination for
the purchaser and have received the purchaser's written consent to the
transaction prior to sale. As a result, this rule may affect the ability of
broker-dealers to sell our securities and may affect the ability of purchasers
to sell any of our securities in the secondary market.
For any transaction involving a penny stock, unless exempt, the rules
require delivery, prior to any transaction in a penny stock, of a disclosure
schedule prepared by the SEC relating to the penny stock market. Disclosure is
also required to be made about sales commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements are required to be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stock.
8
<PAGE>
The penny stock restrictions will not apply to our common stock if we
meet a $2,000,000 minimum net tangible assets or, a $1.00 market price. There
can be no assurance that our common stock will qualify for exemption from the
penny stock restrictions. In any event, even if our common stock were exempt
from the Penny Stock restrictions, we would remain subject to Section 15(b)(6)
of the Exchange Act, which gives the SEC the authority to restrict any person
from participating in a distribution of penny stock, if the SEC finds that such
a restriction would be in the public interest.
THE MARKET PRICE FOR OUR COMMON STOCK COULD DECLINE AS A RESULT OF SHARES THAT
WILL BE ELIGIBLE FOR SALE IN THE FUTURE.
At December 31, 1999, 16,803,097 shares of our common stock were
outstanding. In addition:
o 7,200 shares of common stock are issuable upon conversion of the
outstanding Class A Preferred Stock and Class B Preferred Stock,
o 7,008,585 shares of common stock, including the shares of common
stock offered hereby, are issuable upon the exercise of warrants,
and
o 1,455,794 shares of common stock are issuable upon the exercise
of outstanding stock options.
The sale, or availability for sale, of substantial amounts of common stock in
the public market could adversely affect the prevailing market price of the
common stock and could impair our ability to raise additional capital when
needed through the sale of its equity securities.
If our common stock were subject to the rules on penny stocks, the
market liquidity for our common stock could be materially adversely affected.
PROVISIONS IN OUR CERTIFICATE OF INCORPORATION COULD DISCOURAGE UNSOLICITED
TAKEOVER ATTEMPTS WHICH COULD DEPRESS THE MARKET PRICE OF OUR COMMON STOCK.
Provisions of our Certificate of Incorporation and By-laws and of
Delaware law could discourage potential acquisition proposals and could delay or
prevent a change in control. Such provisions could diminish the opportunities
for a stockholder to participate in tender offers, including tender offers at a
price above the then current market value of the common stock. Such provisions
may also inhibit fluctuations in the market price of the common stock that could
result from takeover attempts. In addition, our board of directors, without
further stockholder approval, may issue preferred stock that could have the
effect of delaying or preventing a change in control. The issuance of preferred
stock could also adversely affect the voting power of the holders of common
stock, including the loss of voting control to others.
THE ACCURACY OF FORWARD-LOOKING STATEMENTS CONTAINED IN THIS PROSPECTUS IS
UNCERTAIN.
This prospectus contains certain forward-looking statements that are
based on the beliefs of our management, as well as assumptions made by, and
information currently available to, our management. The words "anticipates,"
"believes," "estimates," "expects," "plans," "intends" and similar expressions
are intended to identify these forward-looking statements, but are not the
exclusive means of identifying them. These forward-looking statements reflect
the current views of our management and are subject to certain risks,
uncertainties and contingencies which could cause our actual results,
performance or achievements to differ materially from those expressed in, or
implied by, these statements. These risks, uncertainties and contingencies
include, but are not limited to, the following:
o our ability to raise additional capital when needed or on
acceptable terms;
o the acceptance of our products and services by the medical
profession;
o our ability to obtain regulatory approvals for the devices that
we develop;
o our ability to retain the proprietary nature of the technologies
that we develop; and
9
<PAGE>
o other factors discussed above under the heading "Risk Factors"
and elsewhere in this prospectus.
We assume no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise.
USE OF PROCEEDS
The stockholders listed elsewhere in this prospectus will sell the
common stock being offered hereby, and we will not receive any of the proceeds
from the sales.
MARKET PRICE INFORMATION
Our common stock is included on the National Association of Securities
Dealers Automated Quotation System (NASDAQ) over-the-counter bulletin board
under the symbol "CMPD.OB". The following table sets forth the quarterly high
and low closing bid prices for the common stock as reported by Nasdaq for the
periods indicated. These prices are based on quotations between dealers, and do
not reflect retail mark-up, mark-down or commissions, and may not necessarily
represent actual transactions.
High Low
---- ---
FISCAL 1998
First Quarter $2.34 $1.34
Second Quarter 1.50 0.78
Third Quarter 1.25 0.69
Fourth Quarter 0.81 0.34
FISCAL 1999
First Quarter 1.25 0.34
Second Quarter 0.75 0.38
Third Quarter 4.03 0.38
Fourth Quarter 2.06 0.75
FISCAL 2000
First Quarter 1.41 0.52
Second Quarter (through March 9, 2000) 1.12 0.50
See the cover page of this prospectus for the last sales price of the
common stock reported on the OTC Electronic Bulletin Board as of a recent date.
SELLING STOCKHOLDERS
We have agreed with the selling stockholders to register the shares of
common stock underlying common stock purchase warrants that we had issued. We
also agreed to use our best efforts to keep the registration statement effective
until all of the shares have been sold. Our registration of the shares does not
necessarily mean that the selling stockholder will sell all or any of the
shares.
Of the 4,452,594 shares of common stock being offered hereby,
3,805,424 shares of common stock relate to warrants issued upon conversion of
preferred stock that we issued in 1997 and 1998 and 647,170 shares of common
stock relate to the remaining outstanding warrants that we issued in 1992. In
1992, on our initial public offering, we offered shares of common stock and
warrants to purchase shares of common stock.
10
<PAGE>
In 1997 and 1998, we offered and sold 35,000 shares of our Class C 7%
Convertible Preferred Stock. Each share of this class of preferred stock was
convertible into shares of our common stock and an equal number of common stock
purchase warrants determined by dividing $100 by the conversion price. For one
half of these preferred shares the conversion price was equal to the lesser of
(1) $1.51 or (2) the product of 75% of the average closing price for our common
stock for the ten trading days immediately preceding the day of the notice of
conversion. For the other half of these preferred shares the conversion price
was equal to the lesser of (1) $1.34 or (2) the product of 77 1/2% (or 80% for
shares issued after December 31, 1997) of the average closing price for our
common stoCk for the ten trading days immediately preceding the day of the
notice of conversion. The conversion prices ranged from $0.29 to $0.83, with an
average conversion price of $0.62 per share. All of the shares of that class of
preferred stock have been converted.
The shares offered by this prospectus may be offered from time to time
by the stockholders listed in the following table. Each selling stockholder will
determine the number of shares he may sell and the timing of his sales. The
information provided in the following table relates to the selling stockholders
who acquired an aggregate of 3,805,424 shares of common stock upon the exercise
of warrants that they received from us upon the conversion of shares of
preferred stock. The balance of 647,170 shares of common stock covered by this
prospectus have been acquired upon the exercise of publicly traded warrants.
Because these warrants are publicly traded, there is no way for us to know the
identity of the beneficial holders at the date of this prospectus. To our
knowledge, none of the selling stockholders has held any position, office or
material relationship with us or any of our predecessors or affiliates within
three years prior to the date of this prospectus. The following table sets
forth, as of January 31, 2000, information with regard to the beneficial
ownership of common stock by each of the listed selling stockholders. The
information included below is based upon information provided to us by the
selling stockholders. Because the selling stockholders may offer all, some or
none of their common stock, no definitive estimate as to the number of shares
that will be held by the selling stockholders after the offering can be provided
and the following table has been prepared on the assumption that all shares of
common stock offered under this prospects will be sold. The persons and entities
named in the table have sole voting and sole investment power with respect to
all shares beneficially owned, subject to community property laws where
applicable. We have assumed the sale of all shares of common stock being offered
by this prospectus.
<TABLE>
<CAPTION>
AMOUNT BENEFICIALLY AMOUNT BENEFICIALLY
OWNED SHARES TO BE OWNED
NAME(1) PRIOR TO OFFERING OFFERED AFTER OFFERING(2)
- ----------------------------------- ------------------- ------------- -------------------
<S> <C> <C> <C>
The Shaar Fund Ltd (3). 2,066,992 2,066,992 0
Shaar Advisor Services Ltd. (4) 796,906 796,906 0
First Geneva Holdings, Inc. (5) 189,558 189,558 0
Rutgers Casualty, Inc. (6) 178,312 178,312 0
Firmvest Capital Corp.(7) 168,122 168,122 0
Nachum Stein & Feige Stein 139,877 139,877 0
Peter Chenam 137,033 137,033 0
Kentucky National Insurance Co. (6) 108,362 108,362 0
NSI Partnership (6) 20,262 20,262 0
</TABLE>
(1) Unless otherwise indicated, the persons and entities named in the table
have sole voting and sole investment power with respect to all shares
beneficially owned.
(2) Assumes the sale of all shares offered hereby.
(3) The Shaar Fund Ltd. is an entity controlled by Uri Wolfson.
(4) Shaar Advisory Services Ltd. is an entity controlled by Jeremy Posen.
(5) First Geneva Holdings, Inc. is an entity controlled by Joseph Beck.
11
<PAGE>
(6) Rutgers Casualty, Kentucky National Ins. Co. and NSI Partnership are
entities controlled by Nochum Stein.
(7) Firmvest Capital Corp. is an entity controlled by Joseph Fried.
PLAN OF DISTRIBUTION
The selling stockholders have advised us that, prior to the date of
this prospectus, they have not made any agreement or arrangement with any
underwriters, brokers or dealers regarding the distribution and resale of the
shares. If we are notified by a selling stockholder that any material
arrangement has been entered into with an underwriter for the sale of the
shares, a supplemental prospectus will be filed to disclose such of the
following information as we believe appropriate:
o the name of the participating underwriter;
o the number of the shares involved;
o the price at which such shares are sold, the commissions paid or
discounts or concessions allowed to such underwriter; and
o other facts material to the transaction.
We expect that the selling stockholders will sell their shares covered
by this prospectus through customary brokerage channels, either through
broker-dealers acting as agents or brokers for the seller, or through
broker-dealers acting as principals, who may then resell the shares in the
over-the-counter market, or at private sale or otherwise, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The selling stockholders may effect such
transactions by selling the shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of concessions or
commissions from the selling stockholders and/or the purchasers of the shares
for whom they may act as agent (which compensation may be in excess of customary
commissions). The selling stockholders and any broker-dealers that participate
with the selling stockholders in the distribution of shares may be deemed to be
underwriters and commissions received by them and any profit on the resale of
shares positioned by them might be deemed to be underwriting discounts and
commissions under the Securities Act. There can be no assurance that any of the
selling stockholders will sell any or all of the shares offered by them
hereunder.
Sales of the shares on the OTC Electronic Bulletin Board or other
trading system may be made by means of one or more of the following:
o a block trade in which a broker or dealer will attempt to sell
the shares as agent, but may position and resell a portion of the
block as principal to facilitate the transaction;
o purchases by a dealer as principal and resale by such dealer for
its account pursuant to this prospectus; and
o ordinary brokerage transactions and transactions and transactions
in which the broker solicits purchasers.
In effecting sales, brokers or dealers engaged by the selling stockholders may
arrange for other brokers or dealers to participate.
The selling stockholders are not restricted as to the price or prices
at which they may sell their shares. Sales of shares at less than market prices
may depress the market price of our common stock. Moreover, the selling
stockholders are not restricted as to the number of shares which may be sold at
any one time.
We have agreed to pay all of the expenses incident to the offer and
sale of the shares to the public by the selling stockholders other than
commissions and discounts of underwriters, dealers or agents. In addition, we
and the selling stockholders have agreed to indemnify each other and certain
persons, including broker-dealers or others, against certain liabilities in
12
<PAGE>
connection with the offering of the common stock, including liabilities arising
under the Securities Act.
We have advised the selling stockholders that the anti-manipulative
rules under the Exchange Act, including Regulation M, may apply to sales in the
market of the shares offered hereby, and we have furnished the selling
stockholders with a copy of such rules. We have also advised the selling
stockholders of the requirement for the delivery of this prospectus in
connection with resales of the shares offered hereby.
We have been advised by each selling stockholder that it will comply
with Regulation M promulgated under the Exchange Act in connection with all
resales of the shares offered hereby. We have also been advised by the selling
stockholders that none of them has, as of March __. 2000, entered into any
arrangement with a broker-dealer for the sale of the shares through block trade,
special offering, exchange distribution or secondary distribution of a purchase
by a broker-dealer.
LEGAL MATTERS
Legal matters in connection with the validity of the shares of common
stock offered hereby will be passed upon for us by Thelen Reid & Priest LLP, New
York, New York.
EXPERTS
Ernst & Young LLP, our independent auditors, have audited our
consolidated financial statements included in our Annual Report on Form 10-KSB
for the year ended September 30, 1999, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our consolidated financial statements are incorporated by reference
in reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
ACCESS TO OUR PUBLICLY FILED DOCUMENTS
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any document we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public at the SEC's web site at
http://www.sec.gov.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we
file with it, which means we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be a part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 until all of the shares of common stock offered hereby are
sold.
1. Proxy Statement on Schedule 14A filed March 15, 1999.
2. Annual Report on Form 10-KSB for the fiscal year ended September
30, 1999.
3. Quarterly Report on Form 10-QSB for the fiscal quarter ended
December 31, 1999.
4. The description of our common stock contained in our Registration
Statement on Form SB-2, filed March 5, 1996 and any amendment or
report filed to update this description.
This prospectus is part of a registration statement that we filed with
the SEC under the Securities Act of 1933. As permitted by the rules and
regulations of the SEC, this prospectus does not contain all the information set
forth in the registration statement and the exhibits and schedules thereto. The
statements contained in this prospectus as to the contents of any contract or
any other document are not necessarily complete. We qualify any statement by
reference to the copy of such contract or document filed as an exhibit to the
registration statement.
13
<PAGE>
You may request a copy of any document incorporated in this prospectus
by reference (other than exhibits, unless such exhibits are specifically
incorporated by reference in any such document) at no cost, by writing or
telephoning us at the following address: CompuMed, Inc., at 5777 W. Century
Boulevard, Suite 1285, Los Angeles, California 90045, Attn: Robert Goldberg,
Chairman of the Board of Directors; telephone (310) 258-5000.
14
<PAGE>
4,452,594 Shares
of Common Stock
COMPUMED, INC.
---------------------
P R O S P E C T U S
---------------------
March , 2000
<PAGE>
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 Registrant, are as follows:
Registration Fee....................................... $ 1,762.78
Legal Fees and Expenses................................ 17,000.00
Accounting Fees and Expenses........................... 8,000.00
Miscellaneous Expenses................................. 1,237.22
------------
Total............................................. $ 28,000.00
===========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article TENTH of the Certificate of Incorporation of CompuMed and
Article VI of the By-laws of CompuMed provide in part that CompuMed 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.
II-1
<PAGE>
CompuMed has purchased and maintains insurance for its officers and
directors against certain liabilities, including liabilities under the
Securities Act. The effect of such insurance is to indemnify any officer or
director of CompuMed against expenses, judgements, fines, attorney's fees and
other amounts paid in settlements incurred by him, subject to certain
exclusions. Such insurance does not insure against any such amount incurred by
an officer or director as a result of his own dishonesty.
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
4.1 Certificate of Incorporation of CompuMed [Incorporated by
reference to Exhibit 3.1 to CompuMed's Registration Statement of
Form S-1 (File No. 33-46061), effective May 7, 1992]
4.2 Certificate of Amendment of Certificate of Incorporation
[Incorporated by reference to Exhibit 3.1a to Amendment No. 1 to
Post-Effective Amendment No. 1 to CompuMed's Registration
Statement on Form S-2 (File No. 33-48437), filed June 28, 1994]
4.3 Certificate of Amendment of Certificate of Incorporation
[Incorporated by reference to Exhibit 3.1b to Amendment No. 2 to
Post-Effective Amendment No. 1 to CompuMed's Registration
Statement on Form S-2 (File No. 33-48437), filed November 7,
1994]
4.4 Certificate of Correction of Certificate of Amendment
[Incorporated by reference to Exhibit 3.1c to Amendment No. 2 to
Post-Effective Amendment No. 1 to CompuMed's Registration
Statement on Form S-2 (File No. 33-48437), filed November 7,
1995]
4.5 By-Laws of CompuMed, as currently in effect [Incorporated by
reference to Exhibit 3.2 to CompuMed's Registration Statement on
Form S-1 (File No. 33-46061), effective May 7, 1992]
4.6 Specimen Common Stock Certificate [Incorporated by reference to
Exhibit 4.1 to CompuMed's Registration Statement on Form S-1
(File No. 33-46061), effective May 7, 1992]
5. Opinion of Thelen Reid & Priest LLP (filed with the Commission on
September 28, 1999, as Exhibit 5 of the initial filing of this
Registration Statement]
23.1* Consent of Ernst & Young LLP
23.2** Consent of Thelen Reid & Priest LLP (included as part of Exhibit
5)
24.** Power of Attorney (included on p. II-5 of the initial filing of
this Registration Statement)
- ------------------------------------
* Filed herewith.
** Previously filed.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED, 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
PRE-EFFECTIVE AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF LOS
ANGELES, AND STATE OF CALIFORNIA, ON THE 8TH DAY OF MARCH, 2000.
COMPUMED, INC.
By: /s/ Robert B. Goldberg
-------------------------------
Robert B. Goldberg
Chairman of the Board of Directors
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED, THIS PRE-EFFECTIVE AMENDMENT NO. 2 TO THE REGISTRATION STATEMENT HAS
BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES
INDICATED.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Robert B. Goldberg Chairman of the Board
- --------------------------------- (Principal Executive Officer) March 8, 2000
Robert B. Goldberg
/s/ Phuong Dang
- ---------------------------------
Phuong Dang Principal Accounting Officer March 8, 2000
*
- ---------------------------------
Herbert Lightstone Director March 8, 2000
*
- ---------------------------------
John D. Minnick Director March 8, 2000
*
- ---------------------------------
John Romm Director March 8, 2000
*
- ---------------------------------
Robert Stuckelman Director March 8, 2000
/s/ Robert B. Goldberg
- ---------------------------------
* Signed by Robert B. Goldberg as attorney-in-fact.
II-3
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 2 to the Registration Statement (Form S-3 No. 333-87975) and related
Prospectus of CompuMed, Inc. for the registration of 4,452,594 shares of its
common stock and to the incorporation by reference therein of our report dated
December 3, 1999, with respect to the consolidated financial statements of
CompuMed, Inc. included in its Annual Report (Form 10-KSB) for the year ended
September 30, 1999, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Los Angeles, California
March 6, 2000
