<PAGE>
As filed with the Securities and Exchange Commission on September 29, 1998
SEC Registration No. ___________
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
COLORADO MEDTECH, INC.
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(Exact name of registrant as specified in its charter)
Colorado 84-0731006
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(State of Incorporation) (I.R.S. Employer ID. No.)
6175 Longbow Drive, Boulder, Colorado 80301, (303) 530-2660
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(Address, including zip code, and telephone number, including area
code of Registrant's Principal Executive Offices)
Bruce L. Arfmann
Colorado MEDtech, Inc.
6175 Longbow Drive
Boulder, Colorado 80301
(303) 530-2660
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(Name, address, including zip code and telephone number
including area code of agent for service)
Copies to:
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Peter J. Jensen, Esq.
Chrisman, Bynum & Johnson, P.C.
1900 Fifteenth Street
Boulder, CO 80302
(303) 546-1300
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Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. /_/
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. /x/
--------------------------
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed
Proposed Maximum
Title of Each Shares Maximum Aggregate Amount of
Class of Securities to be Offering Price Offering Registration
to be Registered Registered Per Share Price Fee
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 3,500,000 $7.00* $24,500,000* $7,227.50
Common Stock underlying
Non-Qualified Stock Options
and Warrants 281,756 $7.00* $ 1,972,292* $ 581.83
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TOTAL 3,781,756 $7,809.33
</TABLE>
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*Estimated solely for the purpose of calculating the registration fee. Computed
pursuant to Rule 457(c) on the basis of the closing sale price as quoted on the
Nasdaq Stock Market National Market system as of the close of trading on
September 23, 1998
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>
PROSPECTUS 3,781,756 SHARES
COLORADO MEDTECH, INC.
COMMON STOCK
(NO PAR VALUE)
-------------
This Prospectus relates to up to 3,781,756 shares (the "Shares") of the
common stock, no par value (the "Common Stock"), of Colorado MEDtech, Inc. (the
"Company"), which may be offered from time to time by the Selling Shareholders
named herein under "Selling Shareholders". The Shares fall into two categories:
(i) those that are now owned by Selling Shareholders as a result of purchases
from the Company in private transactions in reliance on Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"), and Regulation D
promulgated thereunder as the basis for exemption from registration; and (ii)
those that may be purchased in the future by Selling Shareholders from the
Company upon the exercise of certain non-qualified stock options held by Selling
Shareholders that were originally issued by the Company in connection with its
acquisition of Novel Biomedical, Inc. (the "Options").
The Company will not receive any of the proceeds from the sale of the
Shares. The distribution of the Shares by the Selling Shareholders is not
subject to any underwriting agreement. The Shares offered by the Selling
Shareholders may be sold from time to time at designated prices that may be
changed, at market prices prevailing at the time of sale, at prices relating to
such prevailing market prices or at negotiated prices. In addition, the Selling
Shareholders may sell the Shares through customary brokerage channels, either
through broker-dealers acting as agents or principals. The Selling Shareholders
may effect such transactions by selling Shares to or through broker-dealers, and
such broker-dealers may receive compensation in the form of underwriting
discounts, concessions, commissions or fees from the Selling Shareholders and/or
purchasers of the Shares for whom such broker-dealers may act as agent, or to
whom they sell as principal, or both (which compensation to a particular
broker-dealer might be in excess of customary commissions). Any broker-dealers
that participate with any of the Selling Shareholders in the distribution of
Shares may be deemed to be underwriters and any commissions received by them and
any profit on the resale of Shares positioned by them might be deemed to be
underwriting discounts and commissions within the meaning of the Securities Act,
in connection with such sales.
As of the close of trading on September 25, 1998, the closing sale price of
the Common Stock as quoted on the Nasdaq Stock Market National Market system was
$7.50 per share. Total expenses of the offering are estimated to be $20,900,
all of which will be paid by the Company.
SEE "RISK FACTORS" COMMENCING ON PAGE 3 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE COMMON STOCK.
-------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ____________, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (together with all amendments, exhibits,
schedules and supplements thereto, the "Registration Statement") on Form S-3
under the Securities Act for registration of the shares of Common Stock offered
hereby. This Prospectus, which forms a part of the Registration Statement, does
not contain all of the information set forth in the Registration Statement,
certain parts of which have been omitted as permitted by the rules and
regulations of the Commission. For further information with respect to the
Company and the Common Stock offered hereby, reference is made to the
Registration Statement. Statements contained in this Prospectus regarding the
contents of any contract or any other document to which reference is made are
not necessarily complete, and where such contract or other document is an
exhibit to the Registration Statement, each such statement is qualified in all
respects by the provisions of such exhibit, to which reference is hereby made.
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files periodic reports, proxy statements and other information with
the Commission. Such periodic reports, proxy statements and other information,
and a copy of the Registration Statement, can be copied and inspected at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices at 7 World
Trade Center, Suite 1300, New York, New York 10048, and Citicorp Center, 500
West Madison, Suite 1400, Chicago, Illinois 60661. Copies of all or any portion
of the Registration Statement may be obtained from the Public Reference Section
of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Company files certain of its materials with the Commission
electronically. The Commission maintains a World Wide Web site (www.sec.gov)
that contains reports, proxy and information statements and other information
regarding registrants that file electronically.
The Company intends to furnish its shareholders with annual reports
containing audited financial statements for each fiscal year.
DOCUMENTS INCORPORATED BY REFERENCE
The Company will furnish without charge to each person, including any
beneficial owner to whom this Prospectus is delivered, upon the request of such
person, a copy of any or all of the documents referred to below, other than
exhibits to such documents. All requests for copies of such documents should be
directed in writing to Bruce L. Arfmann, Vice President and Chief Financial
Officer, Colorado MEDtech, Inc., 6175 Longbow Drive, Boulder, Colorado 80301.
The following documents filed by the Company with the Commission are
incorporated herein by reference:
1) Annual Report on Form 10-K for the fiscal year ended June 30,
1998.
2) A description of the Common Stock contained in the Company's
Registration Statement No. 2-83841-D on Form S-18, dated May 17, 1983.
All documents filed subsequent to the date of this Prospectus by the
Company with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act prior to the termination of the offering of the Shares shall be
deemed to be incorporated herein by reference from the date of filing of such
documents. Any statement contained in a document incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
2
<PAGE>
RISK FACTORS
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS
INCLUDING THOSE SET FORTH IN THE FOLLOWING "RISK FACTORS" AND ELSEWHERE IN THIS
PROSPECTUS. THE FOLLOWING FACTORS SHOULD BE CAREFULLY CONSIDERED IN EVALUATING
THE COMPANY AND ITS BUSINESS BEFORE PURCHASING THE COMMON STOCK OFFERED HEREBY.
CUSTOMER RISK FACTORS
The Company's success depends on the success of its customers and their
products that are developed or manufactured by the Company. Any unfavorable
developments or adverse effects on the sales of those products or its customers'
businesses could have a corresponding adverse effect on the Company. The Company
believes that its customers and their products (and, accordingly, the Company)
are generally subject to the following risks:
COMPETITIVE ENVIRONMENT
The medical products industry is highly competitive, subject to significant
technological change, and requires ongoing investment to keep pace with
technological developments and quality and regulatory requirements. The medical
products industry consists of numerous companies, ranging from start-up to
well-established companies. The competitors of the Company's customers may
succeed in developing or marketing technologies and products that will be better
accepted in the marketplace than the products manufactured by the Company for
its customers or that would render its customers' technology and products
obsolete or noncompetitive. Some of the Company's customers are emerging
medical technology companies that have competitors and potential competitors
with substantially greater capital resources, research and development staffs
and facilities and substantially greater experience in developing and
commercializing new products. The Company's customers may not be successful in
marketing or distributing their products, or may not respond to pricing,
marketing or other competitive pressures or the rapid technological innovation
demanded by the marketplace and, as a result, may experience a dramatic drop in
product sales, which would have an adverse effect on the Company's business,
results of operations and financial condition.
UNCERTAIN MARKET ACCEPTANCE OF NEW PRODUCTS; PRODUCT OBSOLESCENCE
There can be no assurance that the Company's customers' will be able to
gain any significant market acceptance for the products developed or
manufactured for them by the Company. Market acceptance may depend on a variety
of factors, including educating the target market regarding the use of a new
procedure and convincing health care payers that the benefits of the product and
its related treatment regimen outweigh its costs. Market acceptance and market
share are also affected by the timing of market introduction of competitive
products. Some of the Company's customers, especially emerging medical
technology companies, have limited or no experience in marketing their products
and may be unable to establish effective sales and marketing and distribution
channels to successfully commercialize their products.
CUSTOMER REGULATORY COMPLIANCE
The Food and Drug Administration (the "FDA") regulates many of the products
developed and manufactured by the Company for its customers, and requires
certain clearances or approvals before new medical devices can be marketed. As a
prerequisite to any introduction of a new device into the medical marketplace,
the Company or its customers must obtain necessary product clearances or
approvals from the FDA or other regulatory agencies. There can be no assurance
that such clearances or approvals will be obtained on a timely basis, if at all.
3
<PAGE>
Certain medical devices manufactured by the Company may be subject to the
need to obtain FDA approval of a premarket approval application ("PMA"), which
requires substantial preclinical and clinical testing and may cause delays and
prevent introduction of such instruments. Other instruments can be marketed
only by establishing "substantial equivalence" to a predicate device in a 510(k)
premarket notification. In addition, products intended for use in foreign
countries must comply with similar requirements and be certified for sale in
those countries. A customer's failure to comply with the FDA's requirements can
result in the delay or denial of approval to proceed with the device. Delays in
obtaining regulatory approval are frequent and, in turn, can result in delaying
or canceling customer orders from the Company. There can be no assurance that
the Company's customers will obtain or be able to maintain all required
clearances or approvals for domestic or exported products on a timely basis, if
at all. The delays and potential product cancellations inherent in the
regulatory approval and ongoing regulatory compliance of products developed or
manufactured by the Company may have a material adverse effect on the Company's
business, reputation, results of operations and financial condition.
CUSTOMERS' FUTURE CAPITAL REQUIREMENTS
Some of the Company's customers, especially emerging medical technology
companies, are not profitable and may have little or no revenues, but they have
significant working capital requirements for which the customer may be required
to raise additional funds through public or private financings. Adequate funds
for their operations may not be available when needed, if at all. Insufficient
funds may require a customer to suspend its research and development spending,
delay development of a product, clinical trials (if required) or the commercial
introduction of a product. Depending on the significance of a customer's
product to the Company's revenues or profitability, any adverse effect on a
customer resulting from insufficient funds could result in an adverse effect on
the Company's business, results of operations and financial condition.
UNCERTAINTY REGARDING THIRD-PARTY REIMBURSEMENT
Governmental and insurance industry efforts to reform the health care
industry and reduce health care spending have affected, and will continue to
affect, the market for medical devices. Adverse governmental regulation
relating to the Company's or its customers' products which might arise from
future legislative, administrative or insurance industry policy cannot be
predicted and the ultimate effect on private insurer and governmental health
care reimbursement is unknown. Government and other commercial insurance
companies are increasingly vigorous in their attempts to contain health care
costs by limiting both coverage and the level of reimbursement for new
therapeutic products even if approved for marketing by the FDA. If adequate
coverage and reimbursement levels are not provided by government and commercial
payers for uses of the Company's new and existing products, the market
acceptance of these products and the Company's profitability would be adversely
affected.
RELIANCE ON MAJOR CUSTOMERS
In the fiscal year ended June 30, 1998, two (2) customers accounted for
approximately forty-five percent (45%) of the Company's consolidated
revenues. In the fiscal year ended June 30, 1997, three (3) customers
accounted for approximately forty-five percent (45%) of the Company's
consolidated revenues. In the fiscal year ended June 30, 1996, two (2)
customers accounted for approximately forty percent (40%) of the Company's
consolidated revenues. As a contract developer and manufacturer, the
Company has historically obtained a significant share of its revenue from a
small number of customers, but the identity of those major customers tends to
change from year to year. A significant reduction in orders from any of
these customers could have a material adverse effect on the Company's
business and results of operations. Vencor, Inc., a Selling Shareholder under
this prospectus, accounted for less than 10% of the Company's consolidated
revenues in each of the fiscal years ended June 30, 1998, 1997 and 1996.
4
<PAGE>
COMPETITION
The Company faces competition from a variety of sources, including
consulting, commercial product development and manufacturing companies.
Competition also comes from commercial and university research laboratories and
from current and prospective customers who evaluate the Company's capabilities
against the merits of designing, engineering and manufacturing products
internally. Many of the Company's competitors have substantially greater
financial, research and development manufacturing resources than the Company.
Competition from any of the foregoing sources could place pressure on the
Company to accept lower margins on its contracts or lose existing or potential
business, which could result in a material adverse effect on the Company's
business, results of operations and financial condition.
VARIABILITY OF OPERATING RESULTS
The Company's annual and quarterly operating results are affected by a
number of factors, including the volume and timing of revenue from customer
orders, which varies due to (i) variation in demand for the customer's products
as a result of, among other things, product life cycles, competitive conditions
and general economic conditions, (ii) suspension or cancellation of a customer's
development project or R&D budget for reasons often unrelated to the project;
(iii) a change in a customer's R&D strategy as a result of sale or merger of the
customer to another company; and (iv) delays in projects associated with the
approval process for changes to a project. Because the Company's outsourcing
services business organization and its related cost structure anticipate
supporting a certain minimum level of revenues, the Company's limited ability to
adjust its short-term cost structure may compound the adverse effect of any
significant revenue reduction. Any one of these factors or a combination
thereof could result in a material adverse effect on the Company's business,
results of operations and financial condition. Due to the foregoing factors, it
is possible that the Company's operating results may from time to time be below
the expectations of public market analysts and investors. In such event, the
price of the Company's securities could be adversely affected.
DEPENDENCE ON KEY PERSONNEL
The Company's success depends to a significant extent on the continued
service of certain of its key managerial, technical and engineering
personnel, particularly its President and Chief Executive Officer, John V.
Atanasoff II, and the Company's continuing ability to attract, train,
assimilate and retain highly qualified engineering, technical and managerial
personnel experienced in commercializing medical products. Competition for
such personnel is intense, the available pool of qualified candidates is
limited and there can be no assurance that the Company can retain its key
engineering, technical and managerial personnel or that it can attract,
train, assimilate or retain other highly qualified engineering, technical and
managerial personnel in the future. The loss of Mr. Atanasoff or any of the
Company's other key personnel or the inability of the Company to hire, train,
assimilate or retain qualified personnel could have a material adverse effect
on the Company's business, results of operations and financial condition.
COMPLIANCE WITH REGULATORY REQUIREMENTS
The Company is subject to a variety of regulatory agency requirements in
the United States and foreign countries relating to many of the products that it
develops and manufactures for its customers. The process of obtaining and
maintaining required regulatory approvals and otherwise remaining in regulatory
compliance is lengthy, expensive and uncertain.
The FDA inspects manufacturers of certain types of devices before
providing a clearance to manufacture and sell such device, and the failure to
pass such an inspection could result in delay in moving ahead with a project.
The Company is required to comply with the FDA's Quality System Regulation
for Medical Devices ("QSR") regulations for the manufacture of medical
products. In addition, in order for the Company's instruments to be exported
and for the Company and its customers to be qualified to use the "CE" mark in
the European Union, the Company maintains ISO
5
<PAGE>
9001/EN 46001 certification which, like the QSRs, subjects the Company's
operations to periodic surveillance audits. To ensure compliance with QSR
requirements, the Company expends significant time, resources and effort in the
areas of training, production and quality assurance. Failure to comply with QSR
regulations or other FDA or applicable legal requirements can lead to warning
letters, government sanctions and serious penalties. In addition, the continued
sale of any products manufactured by the Company may be halted or otherwise
restricted. Any such actions could have an adverse effect on the willingness of
customers and prospective customers to do business with the Company. In
addition, any such noncompliance or increased cost of compliance could have a
material adverse effect on the Company's business, results of operations and
financial condition.
PRODUCT RECALLS, PRODUCT LIABILITY AND INSURANCE
Most of the products the Company designs or manufactures are medical
devices, many of which may be used in life-sustaining or life-supporting roles.
The tolerance for error in the design, manufacture or use of these products may
be small or nonexistent. If a product designed or manufactured by the Company
is found to be defective, whether due to design or manufacturing defects, to
improper use of the product or to other reasons, the product may need to be
recalled, possibly at the Company's expense. Furthermore, the adverse effect of
a product recall on the Company might not be limited to the cost of the recall.
Recalls, especially if accompanied by unfavorable publicity or termination of
customer contracts, could result in substantial costs, loss of revenues and a
diminution of the Company's reputation, each of which would have a material
adverse effect on the Company's business, results of operations and financial
condition.
The manufacture and sale of the medical devices developed and manufactured
by the Company involves the risk of product liability claims. Although the
Company generally obtains indemnification from its customers for products it
manufactures to the customers' specifications and in addition maintains product
liability insurance, there can be no assurance that the indemnities will be
honored or the coverage of the Company's insurance policies will be adequate.
In addition, the Company generally provides a design defect warranty and
indemnifies its customers for failure of a product to conform to design
specifications and against defects in materials and workmanship. Product
liability insurance is expensive and in the future may not be available on
acceptable terms, in sufficient amounts, or at all. A successful claim brought
against the Company in excess of its insurance coverage or any material claim
for which insurance coverage was denied or limited and for which indemnification
was not available could have a material adverse effect on the Company's
business, results of operations and financial condition.
YEAR 2000 ISSUE
Many existing computer systems and applications, and other control
devices, use only two digits to identify a year in the date code field, and
were not designed to account for the upcoming change in the century. As a
result, such systems and applications could fail or create erroneous results
unless corrected so that they can process data related to the year 2000. The
Company relies on its systems, applications and devices in operating and
monitoring all major aspects of its business, including financial systems
(such as general ledger, accounts payable and accounts receivable modules),
inventory and receivables systems, customer services, infrastructure,
embedded computer chips, networks and telecommunications equipment and end
products. The Company also relies, directly and indirectly, on systems of
external business enterprises such as distributors, suppliers, creditors,
financial organizations, and of governmental entities, for accurate exchange
of data. The Company does not believe that its proprietary products or any of
its outsourcing services projects involve any material year 2000 risks, and
the Company does not presently anticipate that the costs to address the year
2000 issue will have a material adverse effect on the Company's financial
condition, results of oeprations or liquidity. Even if the internal systems
of the Company are not materially affected by the year 2000 issue, the
Company could be affected through disruptions in the operation of the
enterprises with which the Company and the systems and software in its
proprietary products and its oursourcing products interacts. If the year
2000 issue affects the ability of the Company's component suppliers to meet
delivery schedules for the components needed to manufacture the Company's
products, the Company may not be able to timely meet its obligations to its
customers. This would likely have an adverse impact on the Company's
business, financial condition and operating results which could be material.
There can be no assurance that year 2000 issues will not have a material
adverse effect on the Company's business, financial condition or results of
operations.
6
<PAGE>
CUSTOMER CONFLICTS
The medical technology industry reflects vigorous competition among its
participants. Although the Company generally does not enter into
non-competition agreements, on occasion the Company's agreements prohibit it
from working for certain competitors of its customers. The Company's growth
may be adversely affected if its customers require it to enter into
non-competition agreements that prevent the Company from manufacturing
instruments for its customers' competitors. Any conflicts among its customers
could prevent or deter the Company from obtaining contracts to manufacture
successful instruments, which could result in a material adverse effect on its
business, results of operations and financial condition.
SHARES ELIGIBLE FOR FUTURE SALE
On the date of this prospectus there were a total of approximately
10,740,846 shares of common stock outstanding, of which 5,451,582 are freely
tradeable. The remaining 5,289,264 shares are held by officers and directors
of the Company and their affiliates (including 3,500,000 shares held by
Vencor, Inc. which are registered under the registration statement of which
this prospectus is a part). Such shares are eligible for sale in the public
markets in accordance with the volume restrictions of Rule 144 under the
Securities Act of 1933. In addition there are outstanding warrants and stock
options to purchase 3,234,072 shares of common stock, 1,749,121 of which are
currently exercisable or become exercisable in 60 days from the date of this
prospectus. Except as limited by Rule 144 volume limitations applicable to
affiliates, shares issued upon the exercise of the Company's warrants and
options generally are available for sale in the open market. Options to
purchase 332,000 shares underlie non-qualified stock options which expire in
January 1999, and the Company expects such options will be exercised prior to
such date. Because such options are non-qualified stock options, it is
expected that a portion of the shares will be sold to fund the taxes
associated with the exercise of the options. Future sales of the shares of
common stock referred to above could adversely affect the market price of the
common stock.
CONTROL BY MANAGEMENT
Prior to this offering, executive officers and directors of the Company
and their affiliates owned approximately 5,289,264, or 49%, of the
outstanding common stock. 3,500,000 of such shares are held by Vencor, Inc.,
a Selling Shareholder under this prospectus. This concentration in the hands
of insiders has the effect of reducing the effective float of the common
stock. Accordingly, these individuals have the ability to influence the
election of the Company's directors and to effectively control most corporate
actions. This concentration of ownership may also have the effect of
delaying, deterring or preventing a change in control of the Company.
Pursuant to agreements with Vencor entered into at the time it purchased
common stock from the Company, the Company agreed to take steps necessary to
elect one representative of Vencor to the Company's board of directors for so
long as Vencor owns at least 500,000 shares of common stock, and an additional
representative for so long as Vencor owns at least 1,500,000 shares of common
stock. Pursuant to such agreements, Michael Barr, an officer of Vencor, has
served as a director of the Company since 1993. Vencor waived its right to the
additional board seat for the fiscal years 1995-1998. Mr. Barr has announced
his resignation from Vencor. Vencor intends to name a designee to fill his
position on the Company's board of directors in the immediate future. The
Company believes that no executive officers or directors of the Company or their
affiliates intend to purchase any of the Shares offered pursuant to this
prospectus. If no executive officers or directors of the Company or their
affiliates purchase any of the Shares and if Vencor sells all 3,500,000 Shares
it is offering, then following this offering the current executive officers and
directors of the Company and their affiliates will beneficially own or have
voting control over approximately 15% of the outstanding common stock. The
Company has indicated that it may repurchase up to 1,000,000 of the Shares
being offered by Vencor. Should the Company acquire all of such 1,000,000
shares, the current executive officers and directors of the Company and their
affiliates will beneficially own or have voting control over approximately
18% of the outstanding common stock.
7
<PAGE>
USE OF PROCEEDS
The Company will not receive any part of the proceeds from the sale of the
Shares. All net proceeds from the sale of the Shares will go to the Selling
Shareholders.
SELLING SHAREHOLDERS
The following table sets forth certain information with respect to the
Common Stock beneficially owned by the Selling Shareholders as of August 31,
1998, and as adjusted to give effect to the sale of such securities. The
Shares are being registered to permit public secondary trading of such
securities, and the Selling Shareholders may offer such securities for resale
from time to time. See "Plan of Distribution".
The Shares of Common Stock being offered by the Selling Shareholders fall
into two categories: (i) 3,500,000 Shares owned by Vencor, Inc. as a result of
purchases from the Company in private transactions in reliance on Section 4(2)
of the Securities Act and Regulation D promulgated thereunder as the basis for
exemption from registration; and (ii) 281,756 Shares which may be purchased in
the future by Selling Shareholders from the Company upon the exercise of Options
held by Selling Shareholders. With respect to the latter category of Shares,
the Registration Statement of which this Prospectus is a part registers only the
resale of Shares that are issuable upon the exercise of such Options, and does
not register the Options themselves. Except as set forth below, none of the
Selling Shareholders has had a material relationship with the Company within the
past three years other than as a result of ownership of securities of the
Company. The Shares may be offered from time to time by the Selling
Shareholders named below or their nominees, and this Prospectus may be required
to be delivered by persons who may be deemed to be underwriters in connection
with the offer or sale of such securities. See "Plan of Distribution". In
accordance with the rules of the Commission, the columns "Common Stock Owned
After Offering" show the amount of securities owned by the Selling Shareholders
after the offering. The numbers in such columns assume all Shares registered
and offered by this Prospectus, shown in the column "Common Stock Offered", are
sold by the Selling Shareholders. However, the Selling Shareholders are not
required to sell any of the Shares offered, and the Selling Shareholders may
sell as many or as few Shares as they choose. See "Plan of Distribution".
Pursuant to agreements entered into at the time Vencor purchased common
stock from the Company, the Company has agreed to take steps necessary to elect
one representative of Vencor to the Company's board of directors for so long as
Vencor owns at least 500,000 shares of common stock, and an additional
representative for so long as Vencor owns at least 1,500,000 shares of common
stock. Pursuant to such agreements, Michael Barr, an officer of Vencor, has
served as a director of the Company since 1993. Vencor waived its right to the
additional board seat for the fiscal years 1995-1998. Mr. Barr has announced
his resignation from Vencor. Vencor intends to name a designee to fill his
position on the Company's board of directors in the immediate future. The
Company's sales to Vencor and corresponding percentage of total revenues in the
fiscal years ended June 30, 1998, 1997 and 1996 are as follows: 1998 --
$67,000 (0.1%); 1997 -- $1,473,000 (5.2%); 1996 -- $381,000 (2.0%).
<TABLE>
<CAPTION>
Name of Common Stock Common Stock
Selling Shareholders Owned Prior to Offering(1) Common Stock Owned After Offering
- -------------------- -------------------------- Offered --------------------
Amount Percent(2) ------- Amount(3) Percent(2)
------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Vencor, Inc. 3,500,000 31.8% 3,500,000 0 --
Andcor Human Resources 10,500 -- 10,500 0 --
Lloyd Armstrong 41,000 -- 41,000 0 --
Paul Backer 2,477 -- 2,477 0 --
Tammy Bren 2,515 -- 2,515 0 --
Lisa Cheney 3,245 -- 3,245 0 --
Norm Dann 25,313 -- 25,313 0 --
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Name of Common Stock Common Stock
Selling Shareholders Owned Prior to Offering(1) Common Stock Owned After Offering
- -------------------- -------------------------- Offered --------------------
Amount Percent(2) ------- Amount(3) Percent(2)
------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Wyn Davies 30,500 -- 30,500 0 --
Kim Dorr 2,961 -- 2,961 0 --
Tim Hidani 18,198 -- 18,198 0 --
Angi Hillyard 11,383 -- 11,383 0 --
Jonathan Kagan(4) 170,000 1.5% 100,000 70,000 --
Bob Laine 3,125 -- 3,125 0 --
Cindy Olsen 9,317 -- 9,317 0 --
Ricci Smelser 9,387 -- 9,387 0 --
Ae Suk Yim 3,710 -- 3,710 0 --
Frank Vargas 4,375 -- 4,375 0 --
Rodney Young 3,750 -- 3,750 0 --
All Selling Shareholders 3,851,756 34.9% 3,781,756 70,000 --
</TABLE>
- -----------------------
(1) Includes the following Shares which may be purchased by Selling
Shareholders upon the exercise of the Options: Andcor Human Resources -
10,500; Lloyd Armstrong - 41,000; Paul Backer - 2,477; Tammy Bren - 2,515;
Lisa Cheney - 3,245; Norm Dann - 25,313; Wyn Davies - 30,500; Kim Dorr -
2,961; Tim Hidani - 18,198; Angi Hillyard - 11,383; Jonathan Kagan -
100,000; Bob Laine - 3,125; Cindy Olsen - 9,317; Ricci Smelser - 9,387; Ae
Suk Yim - 3,710; Frank Vargas - 4,375; Rodney Young - 3,750.
(2) No percent of class is shown for holders of less than 1%. Percentage
computations are based on 11,022,602 shares of Common Stock outstanding,
computed by adding the 281,756 shares issuable upon exercise of the Options
to the 10,740,846 shares of common stock outstanding on August 31, 1998.
(3) Assumes sale of all Common Stock offered hereby. See "Plan of
Distribution".
(4) Mr. Kagan is president of the Company's wholly-owned subsidiary, Novel
Biomedical, Inc.
PLAN OF DISTRIBUTION
The distribution of the Shares by the Selling Shareholders is not subject
to any underwriting agreement. The Shares offered by the Selling Shareholders
may be sold from time to time at designated prices that may be changed, at
market prices prevailing at the time of sale, at prices relating to such
prevailing market prices or at negotiated prices. The Selling Shareholders are
not required to sell any of the Shares offered, and the Selling Shareholders may
sell as many or as few Shares as they choose. In addition, the Selling
Shareholders may sell the Shares through customary brokerage channels, either
through broker-dealers acting as agents or principals. The Selling Shareholders
may effect such transactions by selling Shares to or through broker-dealers, and
such broker-dealers may receive compensation in the form of underwriting
discounts, concessions, commissions or fees from the Selling Shareholders and/or
purchasers of the Shares for whom such broker-dealers may act as agent, or to
whom they sell as principal, or both (which compensation to a particular
broker-dealer might be in excess of customary commissions). Any broker-dealers
that participate with any of the Selling Shareholders in the distribution of
Shares may be deemed to be underwriters and any commissions received by them and
any profit on the resale of Shares positioned by them might be deemed to be
underwriting discounts and commissions within the meaning of the Securities Act,
in connection with such sales. The Company has entered into a Selling Agreement
with holders of all of the Shares offered hereby, which contains the Company's
agreement to indemnify the Selling Shareholders for losses or damages, including
losses or damages under the Securities Act, to which the Selling Shareholders
may become subject arising out of or based upon untrue statements of fact
contained in the Registration Statement of which this Prospectus is a part.
INDEMNIFICATION
The Colorado Business Corporation Act (the "Colorado Act") permits the
Company to indemnify an officer or director who was or is a party or is
threatened to be made a party to any proceeding because of his or her position,
if: (i) the officer or director acted in good faith; (ii) the person reasonably
believed, in the case of conduct in an official
9
<PAGE>
capacity with the Company, that his or her conduct was in the best interests of
the Company, or in all other cases, that his or her conduct was at least not
opposed to the Company's best interests; and, (iii) in the case of a criminal
proceeding, the person had no reasonable cause to believe his or her conduct was
unlawful. If the officer or director is successful on the merits in such a
proceeding, the Colorado Act requires the Company to indemnify the officer or
director against all expenses, including attorneys' fees incurred in connection
with any such proceeding. The Colorado Act authorizes the Company to advance
expenses incurred in defending any such proceeding under certain circumstances.
Article VIII of the Company's Articles of Incorporation, as amended, provide
that the Company shall indemnify its officers and directors to the fullest
extent permitted by the Colorado Act.
The Colorado Act permits the Company to limit the personal liability of its
directors for monetary damages for breaches of fiduciary duty as a director,
except for breaches that involve the director's duty of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, acts involving unlawful dividends or stock redemptions or
transactions from which the director derived an improper personal benefit.
Article XIII of the Company's Articles of Incorporation, as amended, includes
such a provision which limits the personal monetary liability of its directors.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act (the "Act") may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Commission,
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
EXPERTS
The consolidated financial statements of the Company appearing in its
Annual Report (Form 10-K) for the year ended June 30, 1998, have been audited by
Arthur Andersen LLP, independent public accountants, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
LEGAL OPINION
The legality of the Common Stock offered will be passed upon for the
Company by Chrisman, Bynum & Johnson, P.C., 1900 Fifteenth Street, Boulder, CO
80302.
10
<PAGE>
------------------------------------------------------------
No person has been authorized to give any information or make any
representations other than those contained in this Prospectus in connection with
the sale or offering of any Shares of Common Stock covered by this Prospectus,
and if given or made, such other information or representations must not be
relied upon as having been authorized by Colorado MEDtech, Inc. or the Selling
Shareholders. This Prospectus does not constitute an offer of any securities
other than those to which it relates or an offer to sell, or a solicitation of
an offer to buy, in any jurisdiction to any person to whom it is not lawful to
make such offer or solicitation in such jurisdiction. Under no circumstances
should the delivery of this Prospectus or the sale or offering of any Shares of
Common Stock covered by this Prospectus create any implication that there has
been no change in the business or operations of Colorado MEDtech, Inc. since the
date of this Prospectus.
---------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Documents Incorporated by Reference. . . . . . . . . . . . . . . . . . . . 2
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
3,781,756 Shares
COLORADO MEDTECH, INC.
Common Stock (No Par Value)
PROSPECTUS
------------------------------------------------------------
------------------------------------------------------------
_____________, 1998
11
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securities being registered, other than brokerage discounts, fees or
commissions, are:
<TABLE>
<S> <C>
Commission Registration Fee $ 7,809
Accounting Fees and Expenses 2,500
Legal Fees and Expenses 10,000
Miscellaneous Expenses 591
-------
Total $20,900
</TABLE>
All expenses, except the registration fee, are estimated. The Company will
pay all expenses in connection with this offering.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Colorado Business Corporation Act (the "Colorado Act") permits the
Company to indemnify an officer or director who was or is a party or is
threatened to be made a party to any proceeding because of his or her position,
if: (i) the officer or director acted in good faith; (ii) the person reasonably
believed, in the case of conduct in an official capacity with the Company, that
his or her conduct was in the best interests of the Company, or in all other
cases, that his or her conduct was at least not opposed to the Company's best
interests; and, (iii) in the case of a criminal proceeding, the person had no
reasonable cause to believe his or her conduct was unlawful. If the officer or
director is successful on the merits in such a proceeding, the Colorado Act
requires the Company to indemnify the officer or director against all expenses,
including attorneys' fees incurred in connection with any such proceeding. The
Colorado Act authorizes the Company to advance expenses incurred in defending
any such proceeding under certain circumstances. Article VIII of the Company's
Articles of Incorporation, as amended, provide that the Company shall indemnify
its officers and directors to the fullest extent permitted by the Colorado Act.
The Colorado Act permits the Company to limit the personal liability of its
directors for monetary damages for breaches of fiduciary duty as a director,
except for breaches that involve the director's duty of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, acts involving unlawful dividends or stock redemptions or
transactions from which the director derived an improper personal benefit.
Article XIII of the Company's Articles of Incorporation, as amended, includes
such a provision which limits the personal monetary liability of its directors.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ------ ----------------------
<S> <C>
1.1 Form of Selling Agreement.
4.1 Form of Certificate for Shares of Common Stock.(1)
5.1 Opinion of Chrisman, Bynum & Johnson, P.C.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Chrisman, Bynum & Johnson, P.C. (contained in the opinion
filed as Exhibit 5.1).
24.1 Power of attorney (included in signature page of original filing).
</TABLE>
- ---------
(1) Incorporated by reference from the Company's Registration Statement No.
2-83841-D on Form S-18, dated May 17, 1983.
ITEM 17. UNDERTAKINGS
(1) The undersigned Registrant hereby undertakes:
A. To file, during any period in which offers or sales are being
made of the securities registered hereby, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this Registration
Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement;
provided, however, that the undertakings set forth in Paragraph (i)
and (ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the Registrant pursuant to Section
13 or Section 15(d) of the Exchange Act that are incorporated by reference in
this Registration Statement.
B. 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 that time shall be deemed to be the initial bona
fide offering thereof.
C. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(2) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d)
II-2
<PAGE>
of the Exchange Act) that is incorporated by reference in this Registration
Statement shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boulder, State of Colorado, on the 29th day of
September, 1998.
COLORADO MEDTECH, INC.
By: /s/ John V. Atanasoff, II
-----------------------------------------------
John V. Atanasoff, II, Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints John V. Atanasoff, II, Bruce L. Arfmann, or
either of them, his or her true and lawful attorney-in-fact and agent, with full
powers of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any and all amendments
to this Registration Statement, including post-effective amendments, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, and hereby ratifies and confirms all his or her said attorneys-in-fact
and agents, or their substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ------ -----
/s/ John V. Atanasoff, II Chief Executive Officer, September 29, 1998
- --------------------------- President and Director
John V. Atanasoff, II (Principal Executive Officer)
/s/ Dean A. Leffingwell Director September 29, 1998
- ---------------------------
Dean A. Leffingwell
/s/ Ira M. Langenthal Director September 29, 1998
- ---------------------------
Ira M. Langenthal
/s/ Robert L. Sullivan Director September 29, 1998
- ---------------------------
Robert L. Sullivan
/s/ Clifford W. Mezey Director September 29, 1998
- ---------------------------
Clifford W. Mezey
/s/ Michael R. Barr Director September 29, 1998
- ---------------------------
Michael R. Barr
II-4
<PAGE>
/s/ John E. Wolfe Director September 29, 1998
- ---------------------------
John E. Wolfe
/s/ Bruce L. Arfmann Chief Financial Officer September 29, 1998
- --------------------------- (Principal Accounting
Bruce L. Arfmann Officer)
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit Page
- ------ ---------------------- ----
<S> <C> <C>
1.1 Form of Selling Agreement.
4.1 Form of Certificate for Shares of Common Stock.(1)
5.1 Opinion of Chrisman, Bynum & Johnson, P.C.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Chrisman, Bynum & Johnson, P.C. (contained in the
opinion filed as Exhibit 5.1).
24.1 Power of attorney (included in signature page of original
filing).
</TABLE>
- ---------
(1) Incorporated by reference from the Company's Registration Statement No.
2-83841-D on Form S-18, dated May 17, 1983.
II-6
<PAGE>
SELLING AGREEMENT
This SELLING AGREEMENT is made as of this _____ day of ___________,
1998, between COLORADO MEDTECH, INC., a Colorado corporation ("Company"), with
principal offices at 6175 Longbow Drive, Boulder, Colorado 80301, and those
persons whose names appear on the signature pages hereof ("Selling
Shareholders").
RECITALS:
WHEREAS, the Company has issued to Selling Shareholders shares of the
Company's common stock ("Common Stock") and/or options to purchase shares of the
Company's Common Stock (the shares of Common Stock and shares issuable upon
exercise of said options being hereinafter referred to as the "Shares");
WHEREAS, the Company intends to file a registration statement on Form
S-3 ("Registration Statement") with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"),
registering the Shares for sale;
WHEREAS, this Agreement is entered into between the Company and the
Selling Shareholders to facilitate a legal and orderly distribution of the
Shares pursuant to the Registration Statement.
NOW, THEREFORE, in consideration of the promises made herein and for
other good and valuable consideration, the parties agree as follows:
1. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) The Company shall use its best efforts to keep the
Registration Statement effective so as to permit the public sale of the Shares
for a period of one (1) year after the effective date of the Registration
Statement.
(b) The Company will provide the Selling Shareholders with
sufficient copies of the Registration Statement (and the prospectus contained
therein) as shall be required to satisfy prospectus delivery requirements under
federal and state securities laws.
(c) The Company will pay all expenses of the public offering of
the Shares except for fees of attorneys, accountants and other advisors retained
by the Selling Shareholders and brokerage and other selling commissions
associated with the distribution of the Shares.
<PAGE>
(d) In the case of the happening, at any time after the commencement
of the offering of the Shares, and prior to the termination thereof, of any
event which materially affects the Company or the Shares which should be set
forth in an amendment of or supplement to the Registration Statement in order to
make the statements therein not misleading, the Company agrees, upon receiving
knowledge of such event, to notify the Selling Shareholders as promptly as
possible of the happening of such an event. In such event, the Company agrees
to prepare and furnish to the Selling Shareholders copies of an amended
Registration Statement or a supplement to the Registration Statement (including
the prospectus contained therein) in such quantities as the Selling Shareholders
may reasonably request, in order that the Registration Statement as so amended
or supplemented will not contain any untrue statement of material fact, or omit
to state any material fact necessary in order to make the statements therein not
misleading in light of the circumstances under which they were made. The
Selling Shareholders agree temporarily to terminate the offering of the Shares
during the period between the notification by the Company to the Selling
Shareholders of the need for such amendment or supplement to the Registration
Statement and the time such amendment or supplement has been completed. The
duration of this time period shall be at the sole discretion of the Company.
(e) The Company shall obtain the necessary state securities and blue
sky registrations or clearances in only those states in which it elects to do
so.
(f) No order preventing or suspending the use of any preliminary
prospectus contained in the Registration Statement has been issued by the
Commission, and such preliminary prospectus, at the time of filing thereof,
conformed in all material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder, and did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty does not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Company by and with respect to the Selling Shareholders expressly
for use therein.
(g) The Company meets the requirements for the use of Form S-3 under
the Act and the rules and regulations of the Commission.
(h) The Registration Statement and the final prospectus contained
therein and any further amendments or supplements thereto (including any
document incorporated by reference therein filed after the effective date of the
Registration Statement) will, when they become effective or are filed with the
Commission, as the case may be, conform in all material respects to the
requirements of the Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission thereunder.
All documents incorporated by reference into the Registration Statement will
conform in all material respects to the requirements of the Commission. No part
of the Registration Statement, the prospectus or any amendment or supplement
thereto (including documents incorporated by reference therein) will contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that this representation and
-2-
<PAGE>
warranty shall not apply to any statements or omissions in the Registration
Statement or prospectus made in reliance upon and in conformity with substantive
information furnished in writing to the Company by and with respect to the
Selling Shareholders expressly for use therein.
2. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.
(a) In the case of the happening, at any time after the commencement
of the offering of the Shares, and prior to the termination thereof, of any
event which materially affects the plan of distribution of the Shares, which
event should be set forth in an amendment of or supplement to the Registration
Statement in order to make the statements therein not misleading, each Selling
Shareholder who or which receives knowledge of such event, upon receiving such
knowledge, shall notify the Company, as promptly as possible, of the happening
of such an event, whereupon the provisions of Section l(d) above shall then
apply.
(b) Each Selling Shareholder agrees to deliver copies of the final
prospectus contained in the Registration Statement, as it may be amended and
supplemented from time to time, to purchasers of the Shares as required by
applicable federal and state securities laws. Each Selling Shareholder agrees
that it will offer and sell the Shares in only those states as to which counsel
for the Company has advised each Selling Shareholder in writing that the
necessary state securities or blue sky clearances have been obtained. The
Selling Shareholders will notify the Company in writing at the time the
distribution of the Shares has been completed.
(c) Statements contained in the Registration Statement, the
prospectus or any amendments or supplements thereto (including any document
incorporated by reference therein) made in reliance upon and in conformity with
substantive information furnished in writing to the Company by and with respect
to the Selling Shareholders expressly for use therein do not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make such statements therein not misleading.
(d) If during the effectiveness of the Registration Statement, the
Company notifies the Selling Shareholders of the occurrence of any intervening
event that, in the opinion of the Company's legal counsel, causes the prospectus
included in the Registration Statement not to comply with the Act, each Selling
Shareholder, promptly after receipt of the Company's notice, shall cease making
any offers, sales or other dispositions of the Shares included in the
Registration Statement until the Selling Shareholders receive from the Company
copies of a new, amended or supplemented prospectus complying with the Act.
3. SUSPENSION OF OFFERING. It is understood that the Company and the
Selling Shareholders will advise each other immediately, in writing, of the
receipt of any threat or the initiation of any steps or procedures by any
federal or state instrumentality or any individual which would impair or prevent
the offer of the Shares or the issuance of any suspension orders or other
prohibitions preventing or impairing the proposed offering. In the case of the
happening of any such event, neither the Company nor the Selling Shareholders
will acquiesce in such steps, procedures
-3-
<PAGE>
or suspension orders, and the Company agrees actively to defend against any such
actions or orders unless all parties agree in writing to the acquiescence in
such actions or orders.
4. INDEMNIFICATION.
(a) COMPANY'S INDEMNIFICATION. The Company hereby agrees to
indemnify and hold harmless each Selling Shareholder, its officers and
directors, and each other person, if any, who controls the Selling Shareholders
within the meaning of the Act, against any losses, claims, damages or
liabilities, joint or several, to which the Selling Shareholders or any such
person controlling the Selling Shareholders may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
proceedings in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained, on the
effective date thereof, in the Registration Statement, or in any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make the statements
therein not misleading, and will reimburse the Selling Shareholders or such
person controlling the Selling Shareholders for any legal or other expenses
reasonably incurred in connection with investigating or defending any such loss,
claim, damage, liability or proceeding; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in such Registration
Statement, amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by a Selling Shareholder.
(b) SELLING SHAREHOLDER'S INDEMNIFICATION. Each Selling Shareholder
hereby agrees to indemnify and hold harmless the Company, its officers and
directors, and each other person, if any, who controls the Company within the
meaning of the Act, against any losses, claims, damages or liabilities, joint or
several, to which the Company or such other person controlling the Company may
become subject under the Act or otherwise, but only to the extent that such
losses, claims, damages or liabilities (or proceedings in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in the Registration
Statement or in any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
necessary to make the statements therein not misleading, which, in each such
case, has been made in or omitted from the Registration Statement, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by such Selling Shareholder and will reimburse the Company or
such person controlling the Company for any legal or other expenses reasonably
incurred in connection with investigating or defending any such loss, claim,
damage, liability or proceeding.
5. MISCELLANEOUS:
(a) This Agreement is made pursuant to and governed by the laws of
the State of Colorado, without regard to its choice of law principles.
-4-
<PAGE>
(b) Any notices by the Company to Selling Shareholders shall be
deemed delivered if in writing and delivered personally, or sent by certified
mail, to the Selling Shareholders addressed to them at their addresses as set
forth in the Company's books and records. Any notice by Selling Shareholders to
the Company shall be deemed delivered if in writing and delivered personally, or
sent by certified mail, addressed to the Company at its address as set forth at
the beginning hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Selling Agreement as of
the date first above written.
COMPANY:
COLORADO MEDTECH, INC.
By:
-----------------------------------
John V. Atanasoff, II
Its: Chief Executive Officer
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<PAGE>
September 29, 1998
Colorado MEDtech, Inc.
6175 Longbow Drive
Boulder, CO 80301
Ladies and Gentlemen:
We have acted as counsel to Colorado MEDtech, Inc. (the "Company") in connection
with the preparation and filing of a Registration Statement on Form S-3 (the
"Registration Statement") registering under the Securities Act of 1933, as
amended, an aggregate of 3,781,756 shares (the "Shares") of no par common stock
of the Company ("Common Stock"), consisting of 3,500,000 shares of presently
issued and outstanding shares of Common Stock and 281,756 shares underlying
options to purchase Common Stock ("Options"). As such, we have examined the
Registration Statement, the Company's Articles of Incorporation and Bylaws
(each as amended), and minutes of meetings of the Company's Board of Directors.
Based upon the foregoing, and assuming that the Shares will be issued and sold
in accordance with the Registration Statement at a time when effective, we are
of the opinion that, upon issuance of the Shares and receipt of the
consideration to be paid for the Shares, as applicable, the shares of Common
Stock and the shares of Common Stock to be issued upon the exercise of the
Options in accordance with their terms at a time when the Registration Statement
is effective will be validly issued, fully paid and non-assessable securities of
the Company.
We consent to the use of this opinion as an exhibit to the Registration
Statement and to the references to our firm in the Prospectus which is made a
part of the Registration Statement.
Sincerely,
/s/ Chrisman, Bynum & Johnson, P.C.
CHRISMAN, BYNUM & JOHNSON, P.C.
<PAGE>
Arthur Andersen LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated August 24, 1998
included in Colorado MEDtech, Inc.'s Form 10-K as of June 30, 1998 and 1997
and for each of the three years in the period ended June 30, 1998 and to all
references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
Denver, Colorado,
September 29, 1998
