As filed with the Securities & Exchange Commission
on July 10, 1995
Registration No. 33-_____________
SECURITIES AND EXCHANGE COMMISSION
FORM S-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
Nebraska 47-0643468
(State or other jurisdiction (I.R.S.
Employer
of incorporation or organization Identification
No.)
101 Southhall Lane, Suite 210, Maitland, Florida 32751
(407)875-9991 (Address, including zip code, and telephone
number, including area code, of registrant's principal executive
offices)
Mitchel J. Laskey, President, Dynamic Healthcare Technologies,
Inc., 101 Southhall Lane, Suite 210, Maitland,
Florida 32751 (407) 875-9991 Name, address, including zip
code, and telephone number, including area code, of agent for
service) Copies should be sent to:
Richard N. Bernstein, Esq.
Cohen, Berke, Bernstein, Brodie,
Kondell & Laszlo, P.A.
2601 South Bayshore Drive, 19th Floor
Miami, Florida 33133
(305) 854-5900
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement
becomes effective. If any of the securities registered on this
form are to be offered on a delayed or continuous basis pursuant
to Rule 415 under the Securities Act of 1933, check the following
box. [x]
If the registrant elects to deliver its latest annual report to
security holders, or a complete and legible facsimile
thereof, pursuant to Item 11(a)(1) of this form, check the
following box. [x]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Titles of each class of Amount to be Proposed Proposed Amount of
securities to be registered offering price aggregate registration
registered per Share offering price fee
<S> <C> <C> <C> <C>
9% Cumulative Convertible
Preferred Stock Series A,
$.01 par value 3,785,118 $1.00 $3,785,118 $1,305
Shares
Common Stock, $.01 par
value 3,785,118 $.25 $946,280 $326
Shares <2>
Rights of Purchase 9%
Cumulative Convertible
Preferred Stock, Series
A, $.01 par value 3,291,407 ___<1> ___<1> ___<1>
Rights
9% Cumulative Convertible
Preferred Stock, Series A,
$.01 par value 750,000 $1.00 $750,000 $259
Shares <3>
Common Stock, $.01 par
value 750,000 $.25 $187,500 $65
Shares <4>
<FN>
<F1> No separate consideration will be received for the Rights
registered hereby
<F2> The number of shares of Common Stock to be registered is
equal to such indeterminate number of shares as may be issued
upon conversion of the 9% Cumulative Convertible Preferred Stock,
Series A, issuable upon exercise of the Rights.
<F3> This number of shares of 9% Cumulative Convertible Preferred
Stock, Series A, is equal to such indeterminate number of shares
as may be issued upon the conversion of certain promissory notes
(the "Notes").
<F4> This number of shares of Common Stock to be registered is
equal to such indeterminate number of shares as may be issued
upon the conversion of the shares of 9% Cumulative Convertible
Preferred Stock, Series A, issuable upon conversion of the Notes.
</FN>
</TABLE>
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date
until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission acting
pursuant to said Section 8(a), may determine.<PAGE>
<PAGE>
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
CROSS REFERENCE SHEET
Showing Location in Prospectus of Information Required by
Items of Form S-2
Registration Statement Item
Location in Prospectus
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus Outside Front Cover Page
2. Inside Front and Outside Back Cover Page
of Prospectus Inside Front and Outside
Back Cover Pages of
Prospectus; Available
Information; Incorporation
of Certain Documents by
Reference
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges Prospectus Summary;
Special Considerations
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price The Rights Offering -
Determination of
Subscription Price
6. Dilution Not Applicable
7. Selling Security Holders Not Applicable
8. Plan of Distribution Outside Front Cover Page;
The Rights Offering;
Recent Developments
9. Description of Securities to be Registered Description of Capital Stock
10. Interest of Named Experts and Counsel Legal Matters; Experts
11. Information with Respect to the Registrant Prospectus Summary;
Incorporation of Certain
Documents by Reference
12. Incorporation of Certain Information
by Reference Incorporation of Certain
Documents by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities Not Applicable<PAGE>
<PAGE>
PROSPECTUS
DATED JULY 10, 1995
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
Up to 4,535,118 Shares of 9% Cumulative Convertible Preferred
Stock, Series A and 4,535,118 Shares of Common Stock
Of the 4,535,118 shares of 9% Cumulative Convertible
Preferred Stock, Series A, $.01 par value, (the "Series A
Preferred Stock" or "Preferred Stock") of Dynamic Healthcare
Technologies, Inc., f/k/a Terrano Corporation (the "Company") and
4,535,118 shares of Common Stock, $.01 par value, of the Company
(the "Common Stock") offered hereby, (i) up to 3,785,118 shares
of Series A Preferred Stock and up to 3,785,118 shares of Common
Stock may be issued by the Company in connection with a Rights
Offering (as hereinafter defined) and (ii) up to 750,000 shares
of Series A Preferred Stock and up to 750,000 shares of Common
Stock may be issued by the Company upon the conversion of certain
promissory notes (the "Notes").
The Company is issuing to the holders of Common Stock rights
(collectively, the "Rights" and individually, a "Right") to
subscribe during the Subscription Period (as herein defined) for
shares (individually a "Share", and collectively, the "Shares")
of the Series A Preferred Stock at $1.00 per Share (the
"Subscription Price") in the ratio of one Right to purchase one
(1) Share of Series A Preferred Stock for every two (2) shares of
Common Stock held of record at the close of business on
August 15, 1995 (the "Rights Offering"). A Rights holder
may purchase one Share for each Right held (the "Basic
Subscription Privilege"). Each Right also carries the right to
subscribe (the "Oversubscription Privilege") for an unlimited
number of Shares that are not otherwise purchased pursuant to the
exercise of Rights up to the total number of Rights issued plus,
at the Company's option, up to an additional 493,711 shares (the
"Additional Shares"). See "The Rights Offering - Subscription
Privileges." If an insufficient number of Shares is available to
satisfy fully all elections to exercise the Oversubscription
Privilege, then the available Shares will be prorated among those
who exercise the Oversubscription Privilege based upon the
respective number of Shares as to which they exercise the
Oversubscription Privilege. To the extent that the
Oversubscription Privilege is not exercised in full, the Company
may determine to offer the Shares not subscribed for (including
Additional Shares) for sale to others, including current
directors or shareholders of the Company or their affiliates,
either directly or through underwriters of agents (the
"Additional Offering"). The Rights are evidenced by transferable
certificates.
The Subscription Period expires at 5:00 p.m., Eastern time,
thirty (30) days from the record date hereof on September 14, 1995
unless extended by the Company (the "Expiration Date"), and the
Rights will be void and may not be exercised after that time.
This Prospectus also relates to the issuance by the Company
to holders of Notes of up to 750,000 shares of the Company's
Series A Preferred Stock, upon conversion of such Notes, in the
ratio of one (1) Share of Series A Preferred Stock for each
dollar of the principal amount of such Note so converted during
the Subscription Period. See "Recent Developments - Bridge
Financing."
The Common Stock is traded on the over-the-counter market.
On June 30, 1995 the closing bid and asked prices for the
Common Stock were $1.0000 and $1.1875, respectively.
<TABLE>
<CAPTION>
Price Estimated Proceeds to
to Public Expenses<F1> Company
<S> <C> <C> <C>
Per Share of Series A
Preferred Stock $1.00 $0.0124 $0.9876
Total $3,785,118 $46,955 $3,738,163
<FN>
<F1> Expenses payable by the Company included printing,
postage, legal and accounting fees and miscellaneous expenses.
The Rights and the Series A Preferred Stock are being
offered and sold directly by the Company, and no commissions or
other remuneration will be paid to any person for
soliciting purchases of the Series A Preferred Stock.
</FN>
</TABLE>
The date of this Prospectus is July 10, 1995<PAGE>
<PAGE>
THE SECURITIES OFFERED HEREBY
INVOLVE A HIGH DEGREE OF RISK
SEE "SPECIAL CONSIDERATIONS"
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prior to this offering, there has been no public
market for the Rights or the Series A Preferred Stock. The
Subscription Price was determined by the Board of Directors of
the Company. See "The Rights Offering - Determination of
Subscription Price". The Rights and the Shares will not be
traded or quoted on the NASDAQ system. There can be no assurance
that a liquid market for the Rights or the Shares will develop.
The Series A Preferred Stock offered hereby has a
liquidation preference of $1.00 per Share, plus accrued
dividends, and is convertible at the option of the holder at any
time unless previously redeemed, into Common Stock at a
conversion price of $1.25 per Share (equivalent to a ratio of one
share of Common Stock for each Share of Series A Preferred
Stock), subject to adjustment under certain conditions.
Dividends on the Series A Preferred Stock will be cumulative and
payable quarterly commencing September 30, 1995, at a rate of 9%
per annum of the liquidation value thereof ($.09 per share per
annum).
The Series A Preferred Stock is redeemable at
the option of the Company on or after July 1, 1998, in
whole or from time to time in part, at the redemption prices set
forth herein, together with accrued interest.
<PAGE>
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange act of 1934 ("Exchange Act") and in
accordance therewith files reports and other information with the
Securities and Exchange Commission ("SEC"). Reports, proxy
statements and other information filed by the Company can be
inspected and copied at the public reference facilities of the
SEC, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, as well as the following Regional Offices: 7 World Trade
Center, Suite 1300, New York, N.Y. 10048; and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, IL 60661-2511.
Such material can also be inspected at the New York, Boston,
Midwest, Pacific and Philadelphia Stock Exchanges. Copies can be
obtained by mail at prescribed rates. Requests should be
directed to the SEC's Public Reference Section, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549.
The Company has filed a Registration Statement on Form
S-2 (herein together with all amendments and exhibits thereto,
called the "Registration Statement") under the Securities Act of
19933 ("Securities Act") with respect to the securities offered
hereby. This Prospectus does not contain all the information set
forth in the Registration Statement. For further information
with respect to the Company and the securities offered hereby,
reference is made to the Registration Statement. Statements
contained in the Prospectus concerning provisions of certain
documents are not necessarily complete and, in each instance,
reference is made to the copy of such document filed as an
exhibit to the Registration Statement or attached hereto, each
such statement being qualified in all respects by such
references.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Prospectus is summary in nature, does not purport to
be a full and complete statement of the business, affairs and
financial condition of the Company and should be read in
conjunction with the following documents of the Company which
have been filed with the Commission and are hereby incorporated
by reference into this Prospectus: the Company's Annual Report
on Form 10-K for the year ended December 31, 1994 and Form 10-Q
for the three months ended March 31, 1995.
All documents filed by the Company pursuant to
Sections 13(a) or 15(d) of the Exchange Act subsequent to the
date hereof are hereby incorporated by reference in this
Prospectus and shall be deemed a part hereof from the date of
filing such documents with the Commission. Any statement
contained herein, in any supplement or amendment hereof or in a document all
or any portion of which is incorporated or deemed to
be 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 or in any supplement or
amendment hereof modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this
Prospectus or any supplement or amendment hereof.
Neither the delivery of this Prospectus nor any
sale of securities made hereunder shall, under any circumstances,
create any implication that there has been no change in the
affairs of the Company or its affiliates since the date hereof or
that the information contained herein is correct as of any time
subsequent to its date.
This Prospectus is accompanied by the Company's Annual
Report for the year ended December 31, 1994 and the Company's
Form 10-Q for the three months ended March 31, 1995. Copies of
the documents incorporated by reference herein are available from
the Company without charge (other than exhibits to such document,
unless such exhibits are specifically incorporated by reference
into the information that this Prospectus incorporates) to any
person to whom this Prospectus is delivered, upon written request
of such person. Requests for such copies should be directed to
Mitchel J. Laskey, President and Chief Operating Officer of the
Company, at the Company's offices located at 101 Southhall Lane,
Suite 210, Maitland, Florida 32751. The Company's telephone
number is (407) 875-9991.
<PAGE>
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is
qualified in its entirety by the more detailed information,
including Financial Statements and related Notes, accompanying
the Prospectus.
The Company
The Company is a software developer, systems provider and
marketer of laboratory, anesthesiology, document imaging, and
other niche products in the healthcare information systems
industry. The Company sells computer hardware and software
products and provides maintenance and support services. The
principal markets in which the Company participates include
laboratory information services, document imaging solutions,
anesthesia information systems, professional and technical
consulting, support and maintenance services and niche software
products.
The Company is a Nebraska corporation organized in 1977 and operated
under the name Terrano Corporation until June, 1995. It
acquired Dynamic Technical Resources, Inc. ("DTR"), a Florida
corporation, in August, 1994. DTR's primary business was
professional and technical consulting, support and maintenance
services, document imaging solutions and niche software products.
The Company maintains its principal offices at 101 Southhall
Lane, Suite 210, Maitland, Florida 32751. Its telephone number
is (407) 875-9991.
The Rights Offering
Securities Offered: 3,785,118 Shares of the Company's Series A
Preferred Stock, upon the exercise of transferrable Rights to
subscribe for one (1) Share of Series A Preferred Stock for every
two (2) shares of Common Stock held on the Record Date. No
fractional Shares or Rights certificates will be issued.
Basis Subscription Privilege: One transferable Right. Each
Right entitles its registered holder to purchase one Share of
Series A Preferred Stock at the Subscription Price.
Oversubscription Privilege: Each Right carries the right of the
holder to whom it is issued to subscribe at the Subscription
Price for an unlimited number of Shares that are not otherwise
purchased pursuant to the exercise of Rights up to the total
number of Rights issued plus, at the Company's option, part or
all of the Additional Shares. See "The Rights Offering -
Subscription Privileges - Oversubscription Privilege." If an
insufficient number of Shares is available to satisfy fully all
elections to exercise the Oversubscription Privilege, then the
available Shares will be prorated among those who exercise the
Oversubscription Privilege. To the extent the Oversubscription
Privilege is not exercised in full, the Company may determine to
offer any or all of the Shares not subscribed for (including any
Additional Shares) for sale to others, including current
directors or shareholders of the Company' or their affiliates,
either directly or through underwriters or agents. See "The
Rights Offering - Subscription Privileges."
Subscription Price: $1.00 per Share
Record Date: August 15, 1995 at 5:00 p.m., Eastern Time
Expiration Date of Rights: September 14, 1995 at 5:00 p.m.,
Eastern Time or thirty (30) days from the record date hereof. The
"Subscription Period" is the period from the date of this
Prospectus to and including the Expiration Date.
<PAGE>
Transferability of Rights: Rights are transferable until the
close of business on the trading day immediately preceding the
Expiration Date. The Rights will not be traded or quoted on the
NASDAQ system and there can be no assurance that a market for the
Rights will develop.
Subscription Agent: The Company will act as the subscription
agent.
Exercise of the Subscription Privileges: The Basic Subscription
Privilege and the Oversubscription Privilege may be exercised by
properly completing the Subscription Certificate and forwarding
it (or following the Guaranteed Delivery Procedures), with
payment of the Subscription Price for each Share subscribed for
pursuant to the Basic Subscription Privilege and Oversubscription
Price, to the Company, which must receive such Subscription
Certificate or Notice of Guaranteed Delivery and payment on or
prior to the Expiration Date. If Subscription Certificates are
sent by mail, Rights holders are urged to use insured, registered
mail.
If the aggregate Subscription Price paid by an exercising
Rights holder is insufficient to purchase the number of Shares
that the holder indicates are being subscribed for, or if no
number of Shares to be purchased is specified, then the Rights
holder will be deemed to have exercised the Basic Subscription
Privilege to purchase Shares to the full extent of the payment
tendered. If the aggregate Subscription Price paid by an
exercising Rights holder exceeds the amount necessary to purchase
the number of Shares for which the Rights holder has indicated an
intention to subscribe, then the Rights holder will be deemed to
have exercised the Oversubscription Privilege to the full extent
of the excess payment tendered.
Once a holder of the Rights has properly exercised the
Basic Subscription Privilege or the Oversubscription Privilege,
such exercise may not be revoked. See "The Rights Offering -
Exercise of Rights."
Persons Holding Common Stock, or Wishing to Exercise Rights,
Through Others: Persons holding shares of Common Stock and
receiving the Rights issuable with respect thereto through a
broker, dealer, commercial bank, trust company or other nominee,
as well as persons holding certificates for Common Stock
personally who would prefer to have such institutions effect
transactions relating to the Rights on their behalf, should
contact the appropriate institution or nominee and request it to
effect such transactions for them. See "The Rights Offering -
Exercise of Rights."
Conversion of Notes
Securities Offered: 750,000 Shares of the Company's Series A
Preferred Stock, upon the conversion of Notes.
Basis of Conversion: One share of Series A Preferred Stock for
each dollar of principal amount of Notes converted.
Expiration of Right to Convert: The Expiration Date.
Terms of Series A Preferred Stock
Dividend Rate: Annual cumulative dividends of $0.09 per share
payable quarterly on March 31, June 30, September 30 and December
31, 1995. Dividends shall accrue and accumulate commencing on
the Expiration Date.
<PAGE>
Conversion: Convertible into Common Stock at anytime until
June 30, 2000 at an implied conversion price of $1.25 per
share of Common Stock. The value of each Share for conversion
purposes is $1.00. Therefore, additional consideration of $.25
per share, subject to adjustment, is required upon conversion of
each Share.
Liquidation Value: $1.00 per Share, plus accrued dividends.
Redemption: Redeemable in whole or in part, at the option of the
Company at any time on or after July 1, 1998 at a
price of $1.10 per Share during the first twelve month period and
at a price of $1.00 per Share thereafter.
Use of Proceeds
The net proceeds from the sale of the Shares may be used to
repay up to $500,000 of principal amount of the Notes, and the
balance for working capital and other general corporate purposes.
See "Use of Proceeds" and "Recent Developments."
Selected Financial Information
(in thousands except per share data)
<TABLE>
<CAPTION>
Three months
ended
Year Ended December 31 March 31
1994 1993 1992 1995 1994
<S> <C> <C> <C> <C> <C>
Operating Revenue $6,987 $9,688 $8,411 $2,234 $2,254
Restructuring Charge 686 ____ ____ ____ ____
Loss from Discontinuance of
Product Line ____ ____ 2,000 ____ ____
Net Earnings (Loss) from
Continuing Operations (3,698) 246 (2,118) (443) ( 204)
Net Earnings (Loss) from
Continuing Operations per
common share (0.67) 0.05 (0.40) (0.07) (0.04)
Total Assets 7,000 6,803 5,940 7,016 6,716
Long-Term Obligations 113 ____ ____ 95 ____
Shareholders' Equity 1,112 3,462 3,210 674 3,298
Ratio of Earnings to Fixed
Charges - 16.09 - - -
(Note 1) (Note 1) (Note 1) (Note 1)
Note 1: Earnings are inadequate to cover fixed
charges.
</TABLE>
<PAGE>
SPECIAL CONSIDERATIONS
The securities being offered hereby are speculative,
involve a high degree of risk, and should only be considered by
those persons able to afford the loss of their entire investment.
Accordingly, prospective investors should carefully consider the
following factors, among other significant considerations set
forth herein, prior to making any investment in the Company.
1. Potential Need for Additional Financing. The capital
which the Company will have after the Rights Offering is
completed may not be adequate to finance the business of the
Company. This could dramatically limit the Company's ability to
achieve its objectives. Therefore, it is likely that the Company
will seek additional capital in the future. No assurance can be
given, however, that the Company will be able to obtain
additional capital or, if available that such additional capital
will be available on terms acceptable to the Company.
Furthermore, currently the Company has a
Revolving Line of Credit with a bank (the "Bank") under which as
of June 1, 1995 the principal amount of $3,400,000 and a $100,000
letter of credit were outstanding. The Revolving Line of Credit
is payable upon demand. On March 20, 1995, the Company and the
Bank entered into a letter agreement whereby it was agreed that
the terms of payment under the Revolving Line of Credit shall be
modified to reflect a maturity date of April 30, 1996 in lieu of
the demand provision, subject to: (1) the closing and funding of
a $1,000,000 equity or debt injection, subordinated to the Bank
debt and on terms and conditions acceptable to the Bank; and (2)
the modification and expansion, on terms acceptable to the Bank,
of existing financial covenants based upon Company-prepared
projections of financial condition deemed reasonable by the Bank
and tested on a quarterly basis. There can be no assurance that
the Revolving Line of Credit will be modified to provide for a
maturity date of April 30, 1996 or that the Bank will not demand
payment of the outstanding principal balance. In the event the
Bank demands the outstanding principal balance due, and should
the Company be unable to secure additional financing or refinance
this debt under terms and conditions satisfactory to the Company,
this could result in the Company becoming insolvent.
2. SEC Investigation. In October 1994, in connection
with conducting a review of the Company's operations, internal
controls and financial accounting in preparing the Company's 1994
third quarter financial statement, the Company's new management
discovered possible misapplication and errors in the application
of generally accepted accounting principles in the Company's
method of recognizing income in its previously issued financial
statements. On November 15, 1994, these problems and issues were
reported to the Company's Audit Committee which immediately
authorized an independent internal investigation pertaining to
income and revenue recognition during prior accounting periods.
The independent internal investigation revealed that the
Company's financial statements during certain periods prior to
September 30, 1994 had improperly recognized income and
recommended that the Company restate and amend its previously
reported financial statements for the years ended December 31,
1993 and December 31, 1992 and for the quarters ended March 31, 1994, June
30, 1994 and September 30, 1994. On January 23, 1995
such restated financial statements were filed with the Securities
and Exchange Commission.
The Securities and Exchange Commission ("SEC") is
conducting an investigation which the Company believes is related
to the Company's previous revenue recognition practices.
Although the Company intends to fully cooperate with the SEC's
investigation, there can be no assurance SEC proceedings will not
result in substantial criminal fines and penalties and civil
penalties.
3. NASDAQ Delisting. To be eligible for
continued listing on the NASDAQ system, all securities, except
warrants and rights, must maintain a minimum bid price of $1.00
or, as an alternative if the bid price is less than $1.00
maintain capital and surplus of $2,000,000 and a market value of
public float of $1,000,000. The Company received correspondence
from NASDAQ, on July 5, 1995, stating that the Company is
below the required capital and surplus minimum and would be
delisted. The Company has appealed for a temporary exception to
the NASDAQ maintenance requirement but remains delisted as of July
10, 1995. There can be no assurance that NASDAQ will grant the
Company temporary exception to the maintenance requirements, that
the Company will be able to comply with the maintenance
requirements, nor that the Company's Common Stock will regain
listing on the NASDAQ system.
4. Dependence on Key Personnel. The management of the
Company and its existing marketing capabilities is dependent to a
great extent upon its chief executive officer, David M.
Pomerance, and its President and Chief Operating Officer, Mitchel
J. Laskey. The loss of the services of either individual could
have an adverse effect upon the business of the Company until a
suitable replacement could be found.
5. FDA Regulation. Since certain of the Company's
products are considered "medical devices" under the Federal Food,
Drug and Cosmetic Act, the Company is subject to regulation by
the U.S. Food & Drug Administration (the "FDA"). The Company is
required to register its manufacturing facilities with the FDA
and its manufacturing operations regarding medical devices are
required to be in compliance with the FDA's rules and
regulations. On May 2, 1995 the FDA sent the Company a warning
letter that it was not operating in conformance with certain
regulations. On May 23, 1995, the Company responded to the FDA's
warning letter setting forth corrective actions the Company
proposes to take. Failure to promptly correct these violations
may result in regulatory action being initiated by the FDA
without further notice which could include seizure, injunction and/or civil
penalties. The Company has been notified that the
FDA will conduct a reinspection to confirm the Company's
compliance with applicable rules and regulations. In addition to
the foregoing, the Company's must receive FDA approval prior to
selling medical devices. Although the Company works with the FDA
to obtain FDA approval when necessary, there can be no assurance
that the Company will ultimately be able to obtain the required
FDA approvals to market its products.
6. Competition. Numerous companies and individuals are
engaged in businesses similar to that of the Company; therefore,
such business is very competitive. Many of the Company's
competitors have materially greater financial and other resources
than does the Company. Accordingly, there can be no assurance
that the Company will be able to effectively compete with its
competitors.
7. Absence of Dividends. No dividends have been
declared or paid by the Company on its Common Stock. The Company
intends to employ all available funds in its business and
accordingly, does not intend to pay any cash dividends on its
Common Stock in the foreseeable future. Furthermore, there can
be no assurance that the Company will be able to pay accumulated
dividends on the Preferred Stock.
8. Market for the Preferred Stock. There is currently
no public trading market for the Rights or Preferred Stock. The
Rights and the Preferred Stock will not be traded or quoted on
the NASDAQ system. The subscription price is not based on any
estimate of the market value of the Preferred Stock and no
representation is made that the shares of Preferred Stock hereby
have a market value equivalent to, or could be resold at, the
Subscription Price. Investors may be required to convert their
shares of Preferred Stock into shares of the Company's Common
Stock, in order to dispose of their shares of Preferred Stock.
9. Market Risk in Exercising Subscription Rights. There
can be no assurance that the market value of the Preferred Stock
or the shares of the Common Stock into which the Preferred Stock
may be converted will not fall below the Subscription Price or
the implied conversion price of the Common Stock, respectively,
between the time a shareholder exercises a Subscription Right and
the time the shareholder takes delivery of the Preferred Stock.
Once a shareholder has exercised a Subscription Right, the
exercise is irrevocable.
10. Possible Dilution of Ownership Interest. Each share
of the Preferred Stock may be converted into one (1) share of the
Common Stock (subject to adjustment) and will be entitled to vote
on all matters presented to stockholders if converted.
Accordingly, shareholders who do not exercise their Subscription
Rights in full may realize a dilution in their voting rights and
percentage interest in future net earnings, if any, of the
Company.
<PAGE>
RECENT DEVELOPMENTS
Bridge Financing:
As of July 10, 1995 the Company has sold to accredited
investors twenty-seven (27) units of the Company's securities for a
total of $675,000 pursuant to a private placement being made by
the Company. Each unit consists of a $25,000 9% Subordinated
Convertible Note (the "Note") of the Company and warrants to
purchase 5,000 shares of Common Stock at a price of $1.00 per
share. The warrants are exercisable for a period of five (5)
years commencing on the date of issuance and contain certain
registration rights.
The Notes are payable on the earlier of (i) one year from
the date of issuance; (ii) the date on which the Company receives
equity or debt financing the gross proceeds of which are equal to
or greater than $1,000,000, or (iii) the Expiration Date.
The holders of Notes may elect to convert the Note into such
number of shares of Series A Preferred Stock equal to the
principal amount of such Note, in lieu of receiving funds
representing the principal amount of such Note. Thomas J.
Martinson, Chairman of the Board, David H. Pomerance, Chief
Executive Officer and Secretary, and Mitchel J. Laskey,
President, Chief Operating Officer and Treasure, purchased Notes
equal to an aggregate principal amount of $250,000 and have
agreed to convert such Notes into an aggregate of 250,000 shares
of Series A Preferred Stock.
New Facilities:
On January 31, 1995, the Company entered into a Sublease
Agreement to sublease premises located at 101 Southhall Lane,
Suite 210, Maitland, Florida 32751 comprising 14,612 square
feet. The term of the sublease commenced on April 1, 1995 and
terminates on March 31, 1999. The base rent is as follows: Year
1 - $189,956.00; Year 2 - $197,262.00; Year 3 - $204,568.00; and
Year 4 - $211,874.00. The Company has two future expansion
options for space aggregating 5,514 square feet at the then
current lease rate.
THE RIGHTS OFFERING
General
The Rights Offering affords each of the Company's
shareholders as of the Record Date the opportunity to subscribe
for and purchase one (1) Share of Series A Preferred Stock for every two (2)
shares of Common Stock owned by such shareholder on
the Record Date at the Subscription Price. The Rights are
evidenced by transferable Subscription Certificates. The Rights
are being issued to the Company's shareholders at no charge.
Determination of Subscription Price
The Subscription Price was determined by the Board of
Directors of the Company. Among the factors considered in
determining the Subscription Price were the public market price
for the Company's Common Stock, the history and prospects of the
Company, its prospects for future earnings, the book value of the
Company's assets, the general conditions of the securities
market, and the prices of equity securities of comparable
companies.
Rights
The Company is distributing to each of its shareholders of
record on the Record Date, without charge, one transferable Right
for every two (2) shares of Common Stock held of record by such
shareholders on the Record Date, or a total 3,291,407 Rights.
Each Right entitles its holder to subscribe for and purchase one
(1) Share of Series A Preferred Stock at the Subscription Price
during the Subscription Period.
Fractional Rights
<PAGE>
Fractional Rights are not being issued and the number of
Rights issued to a record holder of a number of shares of Common
Stock not divisible by two is determined by dividing two into the
number of shares of Common Stock held of record on the Record
Date and rounding up to the nearest number of shares of Common
Stock held of record on the Record Date and rounding up to the
nearest whole number.
Subscription Period
The Subscription Period commences on the date of this
Prospectus and will expire at the Expiration Date, unless
extended by the Company as described below. The Rights will be
void and may not be exercised after the Expiration Date.
The Expiration Date may be extended by the Company from time
to time in its sole discretion by issuing a press release to that
effect no later than 10:00 a.m., Eastern Time, on the following
business day.
Subscription Privileges
Basic Subscription Privilege. Each Right entitles the
holder thereof to purchase at the Subscription Price one Share of Series A
Preferred Stock (the "Basic Subscription Privilege").
Certificates representing Shares purchased pursuant to the Basic
Subscription Privilege will be delivered to subscribers as soon
as practicable after the Expiration Date.
Oversubscription Privilege. Subject to the allocation
described below, each Right also carries the right of the holder
to whom it is issued to subscribe, at the Subscription Price, for
an unlimited number of additional Shares of Series A Preferred
Stock up to the total number of Rights issued plus, at the
Company's option, part or all of the Additional Shares (the
"Oversubscription Privilege"). Only holders who exercise the
Basic Subscription Privilege in full will be entitled to exercise
the Oversubscription Privilege.
Shares will be available for purchase pursuant to the
Oversubscription Privilege only to the extent of Shares not
subscribed for through exercise of the Basic Subscription
Privilege plus, at the Company's option, the Additional Shares.
If Shares not subscribed for through the Basic Subscription
Privilege (plus, if the Company so elects, the Additional Shares)
(the "Excess Shares") are not sufficient to satisfy all
subscriptions pursuant to the Oversubscription Privilege, the
Excess Shares will be allocated pro rata (subject to the
elimination of fractional Shares) among those holders of Rights
exercising the Oversubscription Privilege in proportion to the
number of Shares subscribed for by all holders of Rights pursuant
to the Oversubscription Privilege. If a proration of the Excess
Shares results in a Holder receiving fewer Excess Shares than
such holder subscribed for pursuant to the Oversubscription
Privilege, then the excess funds paid by that Holder as the
Subscription Price for Shares not issued will be returned without
interest or deduction. Certificates representing Shares
purchased pursuant to the Oversubscription Privilege will be
delivered to subscribers as soon as practicable after the
Expiration Date and after all prorations and adjustments
contemplated by the terms of the Rights Offering have been
effected.
In order to exercise the Oversubscription Privilege, banks,
brokers and other nominee holders of Rights who exercise the
Oversubscription Privilege on behalf of beneficial owners of
Rights will be required to certify to the Company the aggregate
number of Rights as to which the Oversubscription Privilege has
been exercised and the number of Shares hereby subscribed for by
each beneficial owner of Rights on whose behalf such nominee
holder is acting. Copies of the Nominee Holder Certification
form may be obtained from the Company.
To the extent that the Oversubscription Privilege is not
exercised in full, the Company may determine to offer any or all
of the Shares not subscribed for (including any Additional
Shares) for sale in the Additional Offering to others, including
current directors or shareholders of the Company or their affiliates, either
directly or through underwriters or agents,
for $1.00 per Share.
<PAGE>
Subscription Price
The Subscription Price is $1.00 per Share subscribed for
pursuant to the Basic Subscription Privilege or the
Oversubscription Privilege and payable only in cash.
Exercise of Rights
Rights holders may exercise their Rights by delivering to
the Company, at the addresses specified below, at or prior to the
Expiration Date, the properly completed and executed Subscription
Certificate(s) evidencing those Rights, with any signatures
guaranteed as required, together with payment in full of the
Subscription Price for each Share subscribed for pursuant to the
Basic Subscription Privilege and the Oversubscription Privilege.
Payment may only be made (a) by check or bank draft drawn upon a
U.S. bank, or postal, telegraphic or express money order, payable
to Dynamic Healthcare Technologies, Inc., or (b) by wire transfer
of funds to the account maintained by the Company for the purpose
of accepting subscriptions, or (c) a combination of the
foregoing. The Subscription Price will be deemed to have been
received by the Company only upon (i) clearance of any
uncertified check, (ii) receipt by the Company of any certified
check or bank draft drawn upon a U.S. bank or of any postal,
telegraphic or express money order, or (iii) receipt of collected
funds in the Company's account designated above. If paying by
uncertified personal check, please note that the funds paid
thereby may take at least five (5) business days to clear.
Accordingly, holders of Rights who wish to pay the Subscription
Price by means of uncertified personal check are urged to make
payment sufficiently in advance of the Expiration Date to ensure
that such payment is received and clears by such time and are
urged to consider in the alternative payment by means of
certified or cashier's check, money order or wire transfer of
funds.
The addresses to which the Subscription Certificates and
payment of the Subscription price should be delivered are:
If by mail or by hand or overnight courier:
Dynamic Healthcare Technologies, Inc.
101 Southhall Lane, Suite 210
Maitland, FL 32751
Attention: Investor Services
The Company's telephone number is (407) 875-9991, or
(800) 832-3020.
If a Rights holder wishes to exercise Rights, but time will
not permit such holder to cause the Subscription Certificate(s)
evidencing those Rights to reach the Company prior to the
Expiration Date, such Rights may nevertheless be exercised if all
of the following conditions (the "Guaranteed Delivery
Procedures") are met:
(i) the Rights holder has caused payment in
full of the Subscription Price for each Share being subscribed
for pursuant to the Basic Subscription Privilege and the
Oversubscription Privilege to be received (in the manner set
forth above) by the Company at or prior to the Expiration Date;
<PAGE>
(ii) the Company receives, at or prior to the
Expiration Date, a guarantee notice (a "Notice of Guaranteed
Delivery"), substantially in the form provided with the
Instructions as to Use of Dynamic Healthcare Technologies, Inc.
Subscription Certificates (the "Instructions") distributed with
the Subscription Certificates, from an "Eligible Guarantor
Institution" (as that term is defined in Rule 17Ad-15 under the
Exchange Act), stating the name of the exercising Rights holder,
the number of Rights represented by the Subscription
Certificate(s) held by the exercising Rights holder, the number
of Shares being subscribed for pursuant to the Basic Subscription
Privilege and, if any, pursuant to the Oversubscription
Privilege, and guaranteeing the delivery to the Company of the
Subscription Certificate(s) evidencing those Rights within six
(6) NASDAQ trading days following the date of the Notice of
Guaranteed Delivery; and
(iii) the properly completed Subscription
Certificate(s) evidencing the Rights being exercised, with any
signatures guaranteed as required, is received by the Company
within six (6) business days following the date of the
Notice of Guaranteed Delivery relating thereto. The Notice of
Guaranteed Delivery may be delivered to the Subscription Agent in
the same manner as Subscription Certificates at the addresses set
forth above, or may be transmitted to the Subscription Agent by
telegram or facsimile transmission (telecopier no. (407)
875-9915).
Additional copies of the form of Notice of Guaranteed
Delivery are available upon request from the Company at the
addressees and telephone number above.
If an exercising Rights holder does not indicate the
number of Rights being exercised, or does not forward full payment of the
aggregate Subscription Price for the number of
Rights that the Rights holder indicates are being exercised, then
the Rights holder will be deemed to have exercised the Basic
Subscription Privilege with respect to the maximum number of
Rights that may be exercised for the aggregate Subscription Price
payment delivered by the Rights holder, and to the extent that
the aggregate Subscription Price payment delivered by the Rights
holder exceeds the product of the Subscription Price multiplied
by the number of Rights evidenced by the Subscription
Certificates delivered by the Rights holder (such excess being
the "Subscription Excess"), the Rights holder will be deemed to
have exercised the Oversubscription Privilege to purchase, to the
extent available, that number of whole Excess Shares equal to the
quotient obtained by dividing the Subscription Excess by the
Subscription Price. Any amount remaining after such division
shall be returned to the Rights holder promptly by mail without
interest or deduction.
Funds received in payment of the Subscription Price for
Excess Shares subscribed for pursuant to the Oversubscription
Privilege will be held in a segregated account pending issuance
of the Excess Shares. If a Rights holder exercising the
Oversubscription Privilege is allocated less than all of the
Shares for which that holder subscribed pursuant to the
Oversubscription Privilege, then the excess funds paid by that
holder as the Subscription Price for Shares not allocated to such
Rights holder shall be returned by mail without interest or
deduction as soon as practicable after the Expiration Date and
after all prorations and adjustments contemplated by the terms of
the Rights Offering have been effected.
Unless a Subscription Certificate (i) provides that the
Shares to be issued pursuant to the exercise of the Rights
represented thereby are to be issued to the holder of such
Rights, or (ii) is submitted for the account of an Eligible
Guarantor Institution, signatures on each Subscription
Certificate must be guaranteed by an Eligible Guarantor
Institution.
Holders who hold shares of Common Stock for the account
of others, such as brokers, trustees or depositaries for
securities, should contact the respective beneficial owners of
such shares as soon as possible to ascertain those beneficial
owners' intentions and to obtain instructions with respect to
their Rights. If a beneficial owner so instructs, the record
holder of that beneficial owner's Rights should complete
appropriate Subscription Certificates and submit them to the
Company with the proper payment. In addition, beneficial owners
of Common Stock or Rights held through such a nominee holder
should contact the nominee holder and request the nominee holder
to effect transactions in accordance with the beneficial owner's
instructions.
The Instructions accompanying the Subscription Certificates should be
read carefully and followed in detail.
SUBSCRIPTION CERTIFICATES SHOULD BE SENT WITH PAYMENT TO THE
COMPANY.
THE METHOD OF DELIVERY OF SUBSCRIPTION CERTIFICATES AND
PAYMENT OF THE SUBSCRIPTION PRICE TO THE COMPANY ARE AT THE
ELECTION AND RISK OF THE RIGHTS HOLDERS. IF SENT BY MAIL, RIGHTS
HOLDERS ARE URGED TO SEND SUBSCRIPTION CERTIFICATES AND PAYMENTS
BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, AND ARE URGED TO ALLOW A SUFFICIENT NUMBER OF DAYS TO
ENSURE DELIVERY TO THE COMPANY AND CLEARANCE OF PAYMENT PRIOR TO
THE EXPIRATION TIME. BECAUSE UNCERTIFIED PERSONAL CHECKS MAY
TAKE AT LEAST FIVE (5) BUSINESS DAYS TO CLEAR, RIGHTS HOLDERS ARE
STRONGLY URGED TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF
CERTIFIED OR CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER OF
FUNDS.
<PAGE>
All issues concerning the timeliness, validity, form
and eligibility of any exercise of Rights will be resolved by the
Company, whose determinations will be final and binding. The
Company, in its sole discretion, may waive any defect or
irregularity, or permit a defect or irregularity to be corrected
within such time as it may determine, or reject the purported
exercise of any Right. Subscription Certificates will not be
deemed to have been received or accepted until all irregularities
have been waived or cured within such time as the Company
determines, in its sole discretion. The Company will not be
under any duty to give notification of any defect or irregularity
in connection with the submission of Subscription Certificates or
incur any liability for failure to give such notification.
Any questions or requests for assistance concerning the
method of exercising Rights or requests for additional copies of
this Prospectus, the Instructions or the Notice of Guaranteed
Delivery should be directed to the Company at one of its
addresses set forth above (telephone (407) 875-9991 or (800)
832-3020.
No Revocation
ONCE A HOLDER OF RIGHTS HAS PROPERLY EXERCISED THE
BASIC SUBSCRIPTION PRIVILEGE AND/OR THE OVERSUBSCRIPTION
PRIVILEGE, SUCH EXERCISE MAY NOT BE REVOKED.
Method of Transferring Rights
Rights may be purchased or sold through usual
investment channels, however, the Rights will not be traded or
quoted on NASDAQ.
The Rights evidenced by a single Subscription
Certificate may be transferred in whole by endorsing the
Subscription Certificate for transfer in accordance with the
following instructions. A portion of the Rights evidenced by a single
Subscription Certificate (but not fractional Rights) may
be transferred by delivering to the Company a Subscription
Certificate properly endorsed for transfer, with instructions to
register that portion of the Rights indicated therein in the name
of the transferee and to issue a new Subscription Certificate to
the transferee evidencing the transferred Rights. In that event,
a new Subscription Certificate evidencing the balance of the
Rights will be issued to the Rights holder or, if the Rights
holder so instructs, to an additional transferee.
Holders wishing to transfer all or a portion of their
Rights (but not fractional Rights) should allow a sufficient
amount of time prior to the Expiration Date for (i) the transfer
instructions to be received and processed by the Company, (ii)
new Subscription Certificates to be issued and transmitted to the
transferees with respect to transferred Rights, and to the
transferor with respect to retained Rights, if any, and (iii) the
Rights evidenced by the new Subscription Certificates to be
exercised or sold by the recipients thereof. Such amount of time
could range from two (2) to ten (10) business days, depending
upon the method by which delivery of the Subscription
Certificates and payment is made and the number of transactions
which the Rights holder instructs the Company to effect. The
Company shall not have any liability to a transferee or
transferor of Rights if Subscription Certificates are not
received in time for exercise or sale prior to the Expiration
Date.
All commissions, fees and other expenses (including
brokerage commissions and transfer taxes) incurred in connection
with the purchase, sale or exercise of Rights will be for the
account of the transferor of the Rights, and none of such
commissions, fees or expenses will be paid by the Company.
<PAGE>
Procedures for DTC Participants
It is anticipated that the Rights will be eligible for
transfer through, and that the exercise of the Basic Subscription
Privilege (but not the Oversubscription Privilege) may be
effected through, the facilities of The Depository Trust Company
("DTC"; Rights exercised through DTC are referred to as "DTC
Exercised Rights"). A holder of DTC Exercised Rights may
exercise the Oversubscription Privilege in respect thereof by
properly executing and delivering to the Company, at or prior to
the Expiration Date, a DTC Participant Oversubscription Exercise
Form, together with payment of the appropriate Subscription Price
for the number of Units for which the Oversubscription Privilege
is to be exercised. Copies of the DTC Participant
Oversubscription Exercise Form may be obtained from the Company.
Interpretation
All issues with respect to the validity, form and
eligibility of the exercise of any Rights, Oversubscription
Privilege or request for transfer will be resolved solely by the
Company. The Company in its sole discretion may waive any defect
or irregularity, permit a defect or irregularity to be corrected
within such time as it may determine, or reject the exercise of
any Right, Oversubscription Privilege, or request for transfer.
A subscription or request for transfer will not be deemed to have
been made until all irregularities have been waived or cured
within such time as the Company determines in its sole
discretion. The Company will not be under any duty to give
notification of defects with regard to the exercise of any
Rights, Oversubscription Privilege or request for transfer, or
incur any liability for failure to give such notification or to
make such transfer.
State and Foreign Securities Law
The Company will not offer, sell or issue any Rights or
Shares in states or other jurisdictions where it is unlawful to
do so or whose laws, rules, regulations or orders would require
the Company to incur costs, obligations or time delays which the
Company determines, in its sole discretion, are disproportionate
to the net proceeds to be realized by the Company from such
offers, sales or issuances. No action has been taken in any
jurisdiction outside the United States to permit offers and sales
of the Rights and the Shares. Consequently, the Company may
reject subscriptions pursuant to the exercise of Rights by any
shareholder, unless it determines that it may lawfully accept
such subscriptions, even if it could do so by qualifying the
Shares for sale or by taking other actions in such jurisdictions.
Rights of Subscribers
Subscribers will have no rights as shareholders of the
Company with respect to the Shares until stock certificates
representing Shares for which they have subscribed are issued to
them. Subscribers will not have any right to revoke their
subscriptions after delivery of their subscriptions to the Rights
Agent.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes certain federal
income tax aspects of the distribution of the Rights and the
Oversubscription Privilege and the acquisition of the Series A
Preferred Stock pursuant to the exercise of the Rights and the
Oversubscription Privilege. This discussion is based upon the
Internal Revenue Code of 1986, as amended (the "Code"), the
applicable Treasury Regulations (the "Regulations"), and the judicial and
administrative interpretations of the Code and
Regulations, all as in effect on the date of this Prospectus.
Each investor should be aware that the Code, the Regulations, and
the interpretations thereof may be subject to change and that any
change may be applied retroactively.
This discussion does not purport to deal with all of
the aspects of federal income taxation that may be relevant to
particular investors in light of their personal investment
circumstances or to certain types of investors subject to special
treatment under the Code (for example, banks, foreign persons,
life insurance companies, or tax exempt organizations). EACH
INVESTOR IS STRONGLY URGED TO CONSULT ITS OWN TAX ADVISOR AS TO
ANY FEDERAL, STATE, LOCAL, OR OTHER TAX CONSIDERATIONS AFFECTING
THE DISTRIBUTION OF THE RIGHTS, THE OVERSUBSCRIPTION PRIVILEGE,
AND THE PURCHASE, HOLDING, AND DISPOSITION OF THE RIGHTS, THE
SERIES A PREFERRED STOCK, OR THE COMMON STOCK.
<PAGE>
Receipt of the Rights and the Oversubscription Privilege
The distribution of the Rights and the related
Oversubscription Privilege may be treated as a dividend for
federal income tax purposes unless the Company establishes that
such distribution will not result in a disproportionate
distribution under Code Section 305(b)(2). The Regulations
provide that the distribution of convertible preferred stock or
rights to purchase convertible preferred stock will result in a
disproportionate distribution when both of the following
conditions exist: (i) the conversion right must be exercised
within a relatively short period of time after the distribution
of the convertible preferred stock; and (ii) it may be
anticipated that some shareholders will exercise the conversion
rights and some will not taking into account such factors as the
dividend rate, the redemption provisions, the marketability of
the convertible preferred stock, and the conversion price. If
the conversion right may be exercised over a period of many
years, and the dividend rate is consistent with market conditions
at the time the distribution of the convertible preferred stock
or the rights to purchase the convertible preferred stock is
made, the Regulations stated that it is unlikely that a
disproportionate distribution will result. Although the period
to exercise the conversion right under to the Series A Preferred
Stock is relatively short, the Company believes that the
distribution of the Rights and the related Oversubscription
Privilege will not result in disproportionate distribution
treated as a dividend because of the market conditions existing
as of the date of issuance.
Except as described below, the tax basis upon exercise
or sale of the Rights will be determined by allocating the tax
basis of the Common Stock with respect to which the distribution
was made (the "Old Common Stock") between the Old Common Stock
and the Rights in proportion to their relative fair market values
as of the date of distribution. If the fair market value of the Rights as of
the date of distribution is less than 15% of the
fair market value of the Old Common Stock as of such date,
however, the tax basis of the Rights will be zero unless the
shareholder makes an irrevocable election to allocate part of the
basis of the Old Common Stock to the Rights, as described in the
preceding sentence. The election is to be made by attaching a
statement to the shareholder's federal income tax return filed
for the taxable year in which the Rights are received and will
apply to all Rights received by a shareholder in the Rights
Offering. The tax basis of the Series A Preferred Stock received
upon exercise of the Rights will be equal to the sum of the basis
of the Rights, if any, and the Subscription Price.
Exercise of the Rights and the Oversubscription Privilege
No gain or loss will be recognized by a shareholder
upon exercise of the Rights and the Oversubscription Privilege.
The holding period of the Shares of Series A Preferred Stock
received upon exercise of the Rights and the Oversubscription
Privilege will commence as of the date of such exercise.
Expiration of Unexercised Rights
If the Rights received by a shareholder are not
exercised and are allowed to expire, no adjustment will be made
to the basis of the Old Common Stock and no gain or loss will be
realized by such shareholder on the expiration of such Rights.
Sale or Exchange of the Rights
Gain or loss will be recognized by a shareholder who is
a United States citizen, resident, or corporation upon the sale
or exchange of the Rights in an amount equal to the difference
between the amount realized upon the sale or exchange of the
Rights and the tax basis of the Rights sold or exchanged. Such
gain or loss treatment may be subject to capital gain or loss
treatment if the Rights are capital assets in the hands of the
shareholder and may be classified as a long-term capital gain or
loss if the shareholder's holding period in the Rights is more
than one (1) year. The holding period of the Rights will include
the period during which the stockholder held the Old Common
Stock.
Distributions on Series A Preferred Stock and Common Stock
Distributions of property made by the Company with
respect to the Series A Preferred Stock or the Common Stock to a
United States Shareholder will be treated as dividends for
federal income tax purposes to the extent such distributions are
<PAGE>
treated as made out of the Company's current or accumulated
earnings and profits, and will be includible in gross income and
characterized as ordinary income to the shareholders. To the
extent that such distributions exceed the Company's current or
accumulated earnings and profits, such excess will be treated as a return of
capital and will be applied against and reduce the
adjusted basis of the Series A Preferred Stock or Common Stock in
the hands of each holder. The amount of any such distribution
which exceeds the adjusted basis of the Series A Preferred Stock
or Common Stock in the hands of the holder will be treated as
gain from the sale or exchange or such stock, generally
reportable as capital gain (provided the Series A Preferred Stock
or Common Stock is held as a capital asset). If the Company does
not have sufficient earnings and profits during a year for all
distributions made to holders of Common Stock and Series A
Preferred Stock to be treated as dividends, then generally,
current earnings and profits will be allocated first to the
distributions made to holders of Series A Preferred Stock.
Redemption Premium
If the Company redeems the Series A Preferred Stock
after a specified period at a price higher than the issue price,
the difference between the redemption price and the issue price
(the "redemption premium") will be deemed a distribution on
preferred stock which may be taxable as a dividend and which may
be deemed to be constructively received by the shareholder over
the period of time during which the preferred stock cannot be
called for redemption unless the redemption premium is
"reasonable." Whether a premium is reasonable will be determined
under Code Section 305(c) and the Regulations promulgated
thereunder and will be in accordance with the original issue
discount rules. A redemption premium will generally be
considered reasonable if it is in the nature of a penalty for a
premature redemption of the preferred stock and if such premium
does not exceed the amount the Company would be required to pay
for the right to make such premature redemption under market
conditions existing at the time of issuance. The Regulations
provide a safe harbor for redemption premiums that are not in
excess of 10% of the issue price on stock which is not redeemable
for five (5) years from the date of issue. Although the Series A
Preferred Stock will not qualify for the safe harbor, the Company
believes that the redemption premium on the Series A Preferred
Stock should be considered reasonable in light of market
conditions existing as of the date of issuance.
Redemption in Exchange for Cash
The redemption of Shares of Series A Preferred Stock
for cash will be treated as a taxable event.
The redemption of Shares of Series A Preferred Stock for
cash may be treated under Code Section 302 as a distribution that
is taxable as a dividend, to the extent described above, unless
the redemption (i) results in a "complete termination" of all of
the stockholder's stock interest in the Company under Code
Section 302(b)(3), (ii) is "substantially disproportionate" with
respect to the stockholder under Code Section 302(b)(2) and the
stockholder owns less than fifty (50%) percent of the total combined voting
power of all classes entitled to vote immediately
after the redemption, or (iii) is "not essentially equivalent to
a dividend" with respect to the stockholder under Code Section
302(b)(1). In determining whether the redemption is not treated
as a dividend, stock considered to be owned by the stockholder by
reason of certain constructive ownership rules set forth in
Section 318, as well as stock actually owned, must be taken into
account.
Generally, a distribution to a stockholder will be "not
essentially equivalent to a dividend" if it results in a
"meaningful reduction" in the stockholder's percentage interest
in the Company. The Internal Revenue Service (the "IRS") has
indicated through published rulings and the Regulations that a
redemption of preferred stock from a stockholder who exercises no
control over company affairs (including ownership of common
stock) will be treated as being "not essentially equivalent to a
dividend."
If the redemption is not treated as a dividend, the
redemption of the Series A Preferred Stock for cash would result
in taxable gain or loss equal to the difference between the
amount of cash received and the stockholder's tax basis in the
Series A Preferred Stock. Such gain or loss may be subject to
capital gain or loss treatment if the Series A Preferred Stock is
held as a capital asset and may be classified as a long-term
capital gain or loss if the holding period for the Series A
Preferred Stock exceeds one (1) year.
If a redemption of the Series A Preferred Stock is
treated as a distribution that is taxable as a dividend, the
amount of the distribution will be measured by the amount of cash
received by the shareholder. The shareholder's basis in the
redeemed Series A Preferred Stock will be transferred to and
increase the basis of his remaining shares of stock in the
<PAGE>
Company. If the shareholder does not retain any stock ownership
in the Company, the basis in the redeemed shares may be
transferred to the shares of a related taxpayer that were
attributed to the shareholder.
Conversion of Series A Preferred Stock into Common Stock
No gain or loss will be recognized for federal income
tax purposes on conversion of the Series A Preferred Stock solely
into shares of Common Stock by the shareholder. However, the
receipt of any cash paid in lieu of fractional shares of Common
Stock will be treated as a distribution followed by a redemption
and therefore subject to federal income taxation. The tax basis
for the shares of Common Stock received upon conversion will be
equal to the adjusted tax basis of the Series A Preferred Stock
converted. If the Series A Preferred Stock is held as a capital
asset, the holding period of the shares of Common Stock will
include the holding period of the Series A Preferred Stock.
Adjustment of Conversion Price
Code Section 305 treats as a taxable dividend certain
actual or constructive distributions of stock made by the Company
with respect to its stock. The Regulations treat a holder of
convertible preferred stock as having received such a
constructive distribution if the shareholder's proportionate
interest in the Company's earnings and profits or assets is
increased and such distribution results in a disproportionate
distribution as defined in Code Section 305(b)(2), (3), (4) or
(5). Thus, under certain circumstances, an adjustment in the
conversion ratio or conversion price of the Series A Preferred
Stock may be taxable to the holders thereof as a dividend, even
though no cash or property was actually received from the
Company. In addition, the failure to adjust fully the conversion
ratio or conversion price of the Series A Preferred Stock to
reflect distributions of stock dividends with respect to Common
Stock (or rights to acquire such stock) may result in such
dividends being taxable to the holders of the Common Stock.
Sale or Exchange of the Series A Preferred Stock and Common Stock
The shareholder selling or exchanging the Series A
Preferred Stock or the Common Stock will realize gain or loss
equal to the difference between the amount received upon the sale
or exchange and the tax basis of such shares. Such gain or loss
may be subject to capital gain or loss treatment if the Series A
Preferred Stock or the Common Stock is held as a capital asset
and may be classified as a long-term capital gain or loss if the
holding period for the Series A Preferred Stock or the Common
Stock exceeds one (1) year.
USE OF PROCEEDS
The Company estimates that the net proceeds from the
sale of the 3,291,407 Shares offered hereby, after payment of the
expenses of this offering, will be $3,244,452. In the event the
Additional Shares are sold, the Company estimates that the net
proceeds from the sale of the 3,785,118 Shares offered hereby,
after payment of the expenses of this offering, will be
$3,738,163.
It is anticipated that the net proceeds, assuming the
Additional Shares are not sold, will be applied substantially as
follows:
<TABLE>
<S> <C>
Repayment of Notes <1> $ 500,000
Working Capital and other General
Corporate Purposes <2> 2,744,452
$3,244,452
<FN>
<F1> The Notes bear interest at the rate of 9% per
annum and mature on the earlier of (i) July 31, 1996; (ii)
the date on which the Company receives debt or equity financing
the gross proceeds of which are equal to or greater than
$1,000,000 or (iii) the Expiration Date. The proceeds from the
sale the Notes were used for expenses relating to capital
improvements in the Company's new facilities and for general
working capital purposes. See "Recent Developments."
<F2> Proceeds, if any, received by the Company from
the sale of Additional Shares will be added to working capital.
</FN>
</TABLE>
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Common Stock
The Company is authorized to issue up to 20,000,000
shares of Common Stock, par value $.01 per share. As of March
31, 1995 there were 6,582,815 outstanding shares of the Company's
Common Stock held by approximately 485 shareholders of record.
The holders of Common Stock have the following rights: to share
ratably in the distribution of dividends, as and when declared by
the Board of Directors out of funds legally available therefor;
to cast one vote per share on all matters voted on by
shareholders generally, except with respect to the election of
directors each holder of Common Stock has cumulative voting
rights and may cast a number of votes equal to the number of
shares of Common Stock owned by him or her multiplied by the
number of directors to be elected to be distributed among
nominees equally or divided among any number of the nominees in
such proportion as the shareholder may desire; and in the event
of liquidation, dissolution or winding up of the Company, to
share ratably in all assets remaining after payment of
liabilities. The shares of Common Stock are not redeemable and
do not carry any preemptive rights to subscribe for or purchase
any additional shares of any class of stock. The currently
outstanding shares of Common Stock are, and the shares of Common
Stock to be issued hereunder will be, upon issuance by the
Company against receipt of the purchase price therefore fully
paid and nonassessable by the Company.
Preferred Stock
General
Under the Company's Certificate of Incorporation, the
Board of Directors of the Company has the authority to divide the
10,000,000 authorized shares of preferred stock, $1.00 par value,
into series and to fix the rights and preferences of any series
so established. Variations between different series may be
created by the Board of Directors with respect to such matters as voting
rights, if any, the rate of dividend, the priority of
payment thereof, and the right to cumulation thereof, if any,
redemption terms and conditions, and the right of conversion, if
any. The holders of preferred stock have no preemptive right to
subscribe to any additional securities which may be issued by the
Company. No shares of preferred stock are currently outstanding.
On June 13, 1995, the Board of Directors adopted
a Certificate of Designation of the 9% Cumulative Convertible
Preferred Stock offered hereby, the rights and privileges of
which are described below.
The Series A Preferred Stock, upon issuance against
full payment of the purchase price therefor, will be fully paid
and nonassessable. The rights of the holders of Shares of Series
A Preferred Stock will be subordinate to the rights of general
creditors.
The following summary of the terms and provisions of
the Preferred Stock does not purport to be complete and is
qualified in its entirety by reference to the pertinent sections
of the Certificate of Designation, a copy of which has been filed
as an Exhibit to the Registration Statement.
Dividend Rights and Limitations
The holders of the Shares of Series A Preferred Stock
in preference to holders of the Common Stock, will be entitled to
receive cumulative cash dividends, out of funds legally available
therefor at an annual rate of nine (9%) percent of the
liquidation value thereof, payable quarterly on March 31, June
30, September 30 and December 31 of each year, provided that, if
on any such day banks in the City of New York are authorized or
required to close, dividends otherwise payable on such day will
be payable on the next day that banks in the City of New York are
not authorized or required to close.
The dividends on the Shares of Series A Preferred Stock
will accrue and be cumulative from the date of first issuance.
The amount of dividends payable on each Share of Series A
Preferred Stock for each quarterly dividend period will be
computed by dividing the annual dividend rate by four. The
amount of dividends payable for the initial dividend period and
<PAGE>
for any period shorter than a full quarterly dividend period will
be computed on the basis of a 360-day year of twelve 30-day
months.
Holders of Shares of Series A Preferred Stock will not
be entitled to any dividends, whether payable in cash, property
or stock, in excess of full dividends (including accrued
dividends, if any) on Shares of Series A Preferred Stock. No
interest or sum of money in lieu of interest will be payable in
respect of any dividend or payments which may be in arrears.
The Company may not declare or pay any dividend or make
any distribution of assets on, or redeem, purchase or otherwise
acquire shares of Common Stock or of any other stock of the
Company ranking junior to the Series A Preferred Stock as to the
payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up, unless all accrued and
unpaid dividends on the Series A Preferred Stock for all prior
dividend periods have been or contemporaneously are declared and
paid and the full quarterly dividend on the Series A Preferred
Stock for the current dividend period has been or
contemporaneously is declared and set apart for payment.
Whenever all accrued dividends on the Series A
Preferred Stock are not paid in full, the Company may not declare
or pay dividends or make any distribution of assets on any other
stock of the Company ranking on a parity with the Series A
Preferred Stock as to the payment of dividends unless (i) all
accrued and unpaid dividends on the Series A Preferred Stock for
all prior dividend periods are contemporaneously declared and
paid, or (ii) all dividends declared and paid or set apart for
payment or other distributions made per share on the Series A
Preferred Stock and such other parity stock of the Company are
declared and paid or set apart for payment or made pro rata so
that the amount of dividends declared and paid or set apart for
payment or other distributions made per share on the Series A
Preferred Stock will bear the same ratio that accrued and unpaid
dividends per share on the Series A Preferred Stock will, and
such other stock of the Company, bear to each other.
Whenever all accrued dividends on the Series A
Preferred Stock are not paid in full, the Company may not redeem,
purchase or otherwise acquire other stock of the Company ranking
on a parity with the Series A Preferred Stock as to the payment
of dividends or the distribution of assets upon liquidation,
dissolution or winding up unless (i) all outstanding Shares of
the Series A Preferred Stock are contemporaneously redeemed, or
(ii) a pro rata redemption is made of Shares of Series A
Preferred Stock and such other stock of the Company with the
amount allocable to each series of such stock determined on the
basis of the aggregate liquidation preference of the outstanding
shares of each series and the shares of each series being
redeemed only on a pro rata basis.
Liquidation Rights
Upon the liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, the holders of the
Series A Preferred Stock will be entitled to receive and to be
paid out of the assets of the Company available for distribution
a liquidation distribution in cash in an amount equal to $1.00
per Share plus accrued and unpaid dividends thereon to the date
of such distribution, before any payment may be made to the
holders of Common Stock or any other securities of the Company
ranking junior to the Series A Preferred Stock as to the distribution of
assets upon liquidation. No such payment on
account of a liquidation, dissolution or winding up of the
Company may be made to the holders of any class or series of
stock of the Company ranking on a parity with the Series A
Preferred Stock in respect of the distribution of assets upon
liquidation unless the holders of the Series A Preferred Stock
receive the distributive amounts ratably in accordance with the
full distributive amounts which they and the holders of such
parity stock are respectively entitled to receive upon such
preferential distribution.
Neither the sale of all or substantially all of the
assets of the Company, nor the merger or consolidation of the
Company into or with any other entity would be deemed to be a
liquidation, dissolution or winding up of the Company. After the
payment to the holders of the Series A Preferred Stock of the
full preferential amounts provided for above, the holders of the
Series A Preferred Stock as such will have no right or claim to
any of the remaining assets of the Company.
<PAGE>
Conversion Rights
The holders of Shares of Series A Preferred Stock have
the right at their option to convert such Shares into shares of
Common Stock of the Company at any time until June 30,2000
at a conversion price subject to adjustment under certain
conditions of $1.25 per Share. The value of each Share of Series
A Preferred Stock for conversion purposes is $1.00 and each Share
would therefore be convertible into one share of Common Stock
upon payment of additional consideration of $0.25. If any Shares
of Series A Preferred Stock are called for redemption, the
conversion rights pertaining thereto will terminate at the close
of business on the business day next preceding the redemption
date. The Company shall make no payment or adjustment on account
of any dividends accrued and unpaid on any Shares of Series A
Preferred Stock surrendered for conversion. Holders who convert
their Shares of Series A Preferred Stock after the record date
for a dividend and before the payment date for such dividend will
be entitled to the dividend as if they held their Shares on the
record date. No fractional shares will be issued upon conversion
and, in lieu of any fractional share, an adjustment in cash will
be made based on the then current market price of the Common
Stock.
The conversion price is subject to adjustment as set
forth in the Certificate of Designation upon the occurrence of
certain events, including: (i) the payment by the Company of any
dividend or other distribution on any class of its capital stock
in shares of Common Stock or securities convertible into Common
Stock, (ii) subdivisions, combinations or reclassifications of
Common Stock, (iii) the Company's issuance of options, rights or
warrants to all holders of Common Stock entitling them to
subscribe for or purchase Common Stock at less than the then current market
price, and (iv) distributions to all holders of
Common Stock of evidences of indebtedness or assets of the
Company (excluding cash dividends or distributions and dividends
payable in shares of Common Stock).
Adjustments to the conversion price, or the failure to
make such adjustments, may in certain circumstances result in
distributions that could be taxable as dividends under Sections
301 and 305 of the Code to holders of the Series A Preferred
Stock or Common Stock. See "Certain Federal Income Tax
Considerations - Adjustment of Conversion Price."
Redemption
The Shares of the Series A Preferred Stock are not
subject to redemption on or prior to June 30, 1998.
After June 30, 1998, the Series A Preferred Stock is
redeemable in whole or in part, at any time at the option of the
Company, at the following redemption prices: (i) if redeemed
during the first 12-month period - $1.10 per Share, and (ii)
$1.00 per Share thereafter, plus an amount in cash equal to all
accrued and unpaid dividends thereon to the date fixed for
redemption.
If less than all of the outstanding Shares of Series A
Preferred Stock are to be redeemed, the Company will redeem such
Shares on a pro rata basis. There is no mandatory redemption or
sinking fund obligation with respect to the Series A Preferred
Stock.
Notice of redemption will be mailed at least thirty
(30) days but not more than sixty (60) days before the redemption
date to each holder of record of Shares of Series A Preferred
Stock to be redeemed at the address shown on the books of the
Company. On and after the redemption date dividends will cease
to accrue on Shares of Series A Preferred Stock called for
redemption and all rights of the holders of such Shares,
including conversion rights, shall terminate except the right to
receive the redemption price.
Voting Rights
The holders of Shares of the Series A Preferred Stock
are not entitled to any voting rights except as required by law
or as described below. In the event quarterly dividends are in
arrears the holders of Shares of the Series A Preferred Stock
shall have the same voting rights as if such Shares of Series A
Preferred Stock had been converted into Shares of Common Stock.
<PAGE>
Transfer Agent
The Company's transfer agent is Norwest Bank Minnesota, N.A.
EXPERTS
The financial statements of the Company as of December
31, 1994 and for the year then ended included in this Prospectus
have been incorporated by reference herein and in the
Registration Statement in reliance on the report of KPMG Peat
Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing. The financial
statements of the Company as of December 31, 1993 and for the
years ended December 31, 1993 and December 31, 1992 included in
this Prospectus have been incorporated by reference herein and in
the Registration Statement in reliance on the report of Deloitte
& Touche, LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters relating to the Shares will be
passed upon for the Company by Cohen, Berke, Bernstein, Brodie,
Kondell & Laszlo, P.A., 2601 South Bayshore Drive, 19th Floor,
Miami, Florida 33133.
<PAGE>
<PAGE>
No dealer, salesman or any other person has been authorized to
give any information or to make any representations not contained
in this Prospectus; any information or representation not
contained herein must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute
an offer to sell, or a solicitation of an offer to sell, or a
solicitation, of an offer to buy, any of the securities covered
by this Prospectus by the Company in any state to any person to
whom it is unlawful for the Company to make such offer or
solicitation. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create an
implication that there has been no change in the affairs of the
Company since the date hereof.
Up to 4,041,407 Shares of Series A Preferred Stock and 4,041,407
Shares of Common Stock
TABLE OF CONTENTS
DYNAMIC HEALTHCARE TECHNOLOGIES, INC. 1
AVAILABLE INFORMATION 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 3
PROSPECTUS SUMMARY 4
SPECIAL CONSIDERATIONS 7
RECENT DEVELOPMENTS 9
THE RIGHTS OFFERING 9
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS 14
USE OF PROCEEDS 17
DESCRIPTION OF CAPITAL STOCK 18
EXPERTS 21
LEGAL MATTERS 21
DYNAMIC HEALTHCARE
TECHNOLOGIES, INC.
PROSPECTUS
July 10, 1995
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses
in connection with the issuance and distribution of the
securities being registered, all of which are being borne by the
Registrant:
<TABLE>
<S> <C>
Securities and Exchange Commission
registration fee $ 1,955.00
Legal fees and expenses 25,000.00
Accounting fees and expenses 5,000.00
Printing fees 5,000.00
Blue Sky qualification fees and expenses 5,000.00
Miscellaneous 5,000.00
TOTAL $46,955.00
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 21-2004(15) of the Nebraska Business
Corporation Act sets forth circumstances under which directors,
officers, employees and agents may be insured or indemnified
against liability which they may incur in their capacity as such.
The Bylaws of the Company provide that the directors, officers,
employees and agents shall be indemnified provided he acted in
good faith and in a manner he reasonably believed to be in and
not opposed to the best interests of the Company and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful.
Such indemnity shall extend to expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement.
The Company carries a liability insurance policy for
its officers and directors.
ITEM 16. EXHIBITS
Exhibits Description Page
4.1 Form of Certificate of Designation for 9%
Cumulative
Convertible Preferred Stock
*4.2 Form of Series A Preferred Stock
Certificate
*4.3 Form of Rights Certificate representing
Dynamic Healthcare Technologies, Inc.
Subscription Rights
*4.4 Form of Subscription Agreement for the
exercise
of Dynamic Healthcare Technologies, Inc.
Subscription Rights
<PAGE>
*5. Opinion of Cohen, Berke, Bernstein,
Brodie, Kondell & Laszlo, P.A.
regarding legality of securities being
registered
10.1 Sublease Agreement between John Alden Life
Insurance
Company and Registrant
**10.2 1993 Incentive Stock Option Plan
*10.3 1993 Director and Officer Stock Warrant
and Option Plan
***10.4 1993 Employee Stock Option Plan
10.5 Employment Agreement between the
Registrant
and David M. Pomerance
*****10.6 Employment Agreement between the
Registrant
and Mitchel J. Laskey
****11. Statement Regarding Computation of Per
Share Earnings
12. Computation of Ratio of Earnings to Fixed
Charges
****13. Annual Report to Security Holders for the
fiscal
year ended December 31, 1994
23.1 Consent of Cohen, Berke, Bernstein,
Brodie,
Kondell & Laszlo, P.A. (contained in
Exhibit 5)
23.2 Consent of KPMG Peat Marwick LLP
24. Power of Attorney (included in signature
page to this Registration Statement)
* To be filed by amendment.
** Previously filed with the Company's Registration
Statement on Form S-8 (SEC File No. 33-72684)
*** Previously filed with the Company's Registration
Statement on Form S-8
(SEC File No. 33-72764)
**** Previously filed with Registrants Annual Report on Form
10-K for the year ended December 31, 1994
(SEC File No. 0-12516)
***** Previously filed with the Company's Current Report on
Form 8-K dated August 23, 1994
<PAGE>
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement;
2. That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
The undersigned Registrant hereby undertakes to supplement
the Prospectus, after the expiration of the Rights Offering, to
set forth the results of the Rights Offering, the amount of
unsubscribed securities to be offered on a best efforts basis by
the Underwriter, and the terms of the Subsequent Offering
thereof. If any public offering by the Registrant is to be made
on terms differing from those set forth on the cover page of the
Prospectus, a post-effective amendment will be filed to set forth
the terms of such offering.
The undersigned registrant hereby undertakes to deliver or
cause to be delivered with the prospectus, to each person to whom
the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the requirements
of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth in the
prospectus, to deliver, or cause to be delivered to each person
to whom the prospectus is sent or given, the latest quarterly
report that is specifically incorporated by reference in the prospectus to
provide such interim financial information.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the 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 Act and will be governed by the final adjudication of such
issue.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Maitland, Florida on the 10th day of
July, 1995.
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
By: /S/PAUL S. GLOVER
Paul S. Glover
Vice President of Finance
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated. Each
person whose signature appears below hereby makes, constitutes
and appoints Mitchel J. Laskey or David M. Pomerance his true and
lawful attorney, with full power to sign for such person and in
such person's name and capacity indicated below any and all
amendments to this Registration Statement, hereby ratifying and
confirming such person's signature as it may be signed by said
attorney to any and all amendments.
Signature Title Date
/S/THOMAS J. MARTINSON Chairman of the Board July 10, 1995
Thomas J. Martinson
/S/DAVID M. POMERANCE CEO, Secretary & Director July 10, 1995
David M. Pomerance
/S/MITCHEL J. LASKEY President, COO, Treasurer July 10, 1995
Mitchel J. Laskey and Director
/S/PAUL S. GLOVER Vice President of Finance, July 10, 1995
Paul S. Glover CFO
/S/JERRY L. CARSON Director July 10, 1995
Jerry L. Carson
/S/KENNETH C. COON Director July 10, 1995
Kenneth C. Coon
<PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibits Description Page
4.1 Certificate of Designation for 9%
Cumulative
Convertible Preferred Stock
*4.2 Form of Series A Preferred Stock
Certificate
*4.3 Form of Rights Certificate representing
Dynamic Healthcare Technologies, Inc.
Subscription Rights
*4.4 Form of Subscription Agreement for the
exercise
of Dynamic Healthcare Technologies, Inc.
Subscription Rights
*5. Opinion of Cohen, Berke, Bernstein, Brodie,
Kondell & Laszlo, P.A. regarding legality
of securities being registered
10.1 Sublease Agreement between John Alden Life
Insurance
Company and Registrant
**10.2 1993 Incentive Stock Option Plan
*10.3 1993 Director and Officer Stock Warrant and
Option Plan
***10.4 1993 Employee Stock Option Plan
10.5 Employment Agreement between the Registrant
and David M. Pomerance
*****10.6 Employment Agreement between the Registrant
and Mitchel J. Laskey
****11. Statement Regarding Computation of Per
Share Earnings
12. Computation of Ratio of Earnings to Fixed
Charges
****13. Annual Report to Security Holders for the
fiscal
year ended December 31, 1994
23.1 Consent of Cohen, Berke, Bernstein, Brodie,
Kondell & Laszlo, P.A. (contained in
Exhibit 5)
23.2 Consent of KPMG Peat Marwick L.L.P.
24 Power of Attorney (included in signature
page to this Registration Statement)
* To be filed by amendment.
** Previously filed with the Company's Registration
Statement on Form S-8 (SEC File No. 33-72684)
*** Previously filed with the Company's Registration
Statement on Form S-8 (SEC File No. 33-72764)
**** Previously filed with Registrants Annual Report
on Form 10-K for the year ended December 31,1994
(SEC File No. 0-12516)
***** Previously filed with the Company's Current Report
on Form 8-K dated August 23, 1994
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
DESIGNATION OF
SERIES A PREFERRED STOCK
1. The name of the corporation is Dynamic
Healthcare Technologies, Inc. (the "Corporation").
2. The resolution determining the Series A
Preferred Stock is as follows:
NOW, THEREFORE BE IT RESOLVED: that the Corporation
be, and it hereby is authorized to issue Four Million Five
Hundred Thirty-Five Thousand One Hundred Eighteen
(4,535,118)
shares of Series A Preferred Stock, $.01 par value ("Series
A Preferred Stock") which shall have the following
attributes:
(1) Rank. The Series A Preferred Stock shall,
with respect to dividend rights and voluntary or involuntary
liquidation, winding-up, dissolution, merger and
combination, rank prior to all classes of Common Stock (all equity
securities of the Corporation to which the Series A
Preferred Stock ranks prior, including the Common Stock,
whether with respect to dividends or upon voluntary or
involuntary liquidation, dissolution, winding-up, merger,
combination or otherwise, are collectively referred to
herein as the "Junior Securities"; all equity securities of
the Corporation with which the Series A Preferred Stock rank
on a parity, whether with respect to dividends or upon
voluntary or involuntary liquidation, dissolution,
winding-up, merger, combination or otherwise, are
collectively referred to herein as the "Parity
Securities"; and all equity securities as to which the
Series A Preferred Stock ranks junior, whether with respect
to dividends or upon liquidation, dissolution, winding up,
merger, combination or otherwise, are collectively referred
to as the "Senior Securities").
(2) Dividends. The holders of record of any
outstanding shares of Series A Preferred Stock shall be
entitled to cumulative dividends at the rate per share of
nine (9%) percent per annum of Liquidation Preference (as
hereinafter defined) payable quarterly, on March 31, June
30, September 30 and December 31 of each year, provided that
if on any such day banks in the City of New York are
authorized or required to close, dividends otherwise payable
on such day
will be payable on the next day that banks in the City of
New
York are not authorized or required to be closed. All
dividends that have accrued on the Series A Preferred Stock
and are unpaid shall be paid at the time of the conversion
of the Series A Preferred Stock pursuant to Section 4
hereof.
The dividends on the shares of Series A Preferred
Stock will accrue and be cumulative from the date of first
issuance. The amount of dividends payable on each share of
Series A Preferred Stock for each quarterly dividend period
will be computed by dividing the annual dividend rate by
four. The amount of dividends payable for the initial
<PAGE>
dividend period and for any period shorter than a full
quarterly dividend period will be computed on the basis of a
360-day year of twelve 30-day months.
Holders of Shares of Series A Preferred Stock will
not be entitled to any dividends, whether payable in cash,
property or stock, in excess of full dividends (including
accrued dividends, if any) on shares of Series A Preferred
Stock. No interest or sum of money in lieu of interest will
be payable in respect of any dividend or payments which may
be in arrears.
The Corporation may not declare or pay any dividend or
make any distribution of assets on, or redeem, purchase or
otherwise acquire shares of Common Stock or of any other
stock of the Corporation ranking junior to the Series A
Preferred Stock as to the payment of dividends or the
distribution of assets upon liquidation, dissolution or
winding up, unless all accrued and unpaid dividends on the
Series A Preferred Stock for all prior dividend periods have
been or contemporaneously are declared and paid and the full
quarterly dividend on the Series A Preferred Stock for the
current dividend period has been or contemporaneously is
declared and set apart for payment.
Whenever all accrued dividends on the Series A
Preferred Stock are not paid in full, the Corporation may
not declare or pay dividends or make any distribution of
assets on any other stock of the Corporation ranking on a
parity with the Series A Preferred Stock as to the payment
of dividends unless (i) all accrued and unpaid dividends on
the Series A Preferred Stock for all prior dividend periods
are contemporaneously declared and paid, or (ii) all
dividends declared and paid or set apart for payment or
other distributions made per share on the Series A Preferred
Stock and such other parity stock of the Corporation are
declared and paid or set apart for payment or made pro rata
so that the amount of dividends declared and paid or set
apart for payment or other distributions made per share on
the Series A Preferred Stock will bear the same ratio that
accrued and unpaid dividends per share on the Series A
Preferred Stock will, and such other stock of the
Corporation, bear to each other.
Whenever all accrued dividends on the Series A
Preferred Stock are not paid in full, the Corporation may
not redeem, purchase or otherwise acquire other stock of the
Corporation ranking on a parity with the Series A Preferred
Stock as to the payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up unless
(i) all outstanding shares of the Series A Preferred Stock
are contemporaneously redeemed, or (ii) a pro rata
redemption is made of shares of Series A Preferred Stock and
such other stock of the Corporation with the amount
allocable to each series of such stock determined on the
basis of the aggregate liquidation preference of the outstanding shares
of each series and the shares of each series being redeemed
only on a pro rata basis.
<PAGE>
(3) Liquidation Rights. Upon the liquidation,
dissolution or winding up of the Corporation, whether
voluntary or involuntary, the holders of the Series A
Preferred Stock will be entitled to receive and to be paid
out of the assets of the Corporation available for
distribution a
liquidation distribution in cash in an amount equal to $1.00
per share plus accrued and unpaid dividends thereon to the
date of such distribution, before any payment may be made to
the holders of Common Stock or any other securities of the
Corporation ranking junior to the Series A Preferred Stock
as to the distribution of assets upon liquidation. No such
payment on account of a liquidation, dissolution or winding
up of the Corporation may be made to the holders of any
class or series of stock of the Corporation ranking on a parity with
the Series A Preferred Stock in respect of the distribution
of assets upon liquidation unless the holders of the Series
A Preferred Stock receive the distributive amounts ratably
in accordance with the full distributive amounts which they
and the holders of such parity stock are respectively
entitled to receive upon such preferential distribution.
Neither the sale of all or substantially all of
the assets of the Corporation, not the merger or
consolidation of the Corporation into or with any other
entity would be deemed to be a liquidation, dissolution or
winding up of the Corporation. After the payment to the
holders of the Series A Preferred Stock of the full
preferential amounts provided for above, the holders of the
Series A Preferred Stock as such will have no right or claim
to any of the remaining assets of the Corporation.
(4) Conversion Rights. The holders of shares of
Series A Preferred Stock have the right at their option to
convert such shares into shares of Common Stock of the
Corporation at any time until June 30, 2000 at a
conversion price subject to adjustment under certain
conditions of $1.25 per Share. The value of each share of
Series A Preferred Stock for conversion purposes is $1.00
and each share would therefore be convertible into one share
of Common Stock upon payment of additional consideration of
$0.25. If any shares of Series A Preferred Stock are called
for redemption, the conversion rights pertaining thereto
will terminate at the close of business on the business day
next preceding the redemption date. The Corporation shall
make no payment or adjustment on account of any dividends
accrued and unpaid on any shares of Series A Preferred Stock
surrendered for conversion. Holders who convert their
shares of Series A Preferred Stock after the record date for
a dividend and before the payment date for such dividend
will be entitled to the dividend as if they held their
shares on the record date. No fractional shares will be
issued upon conversion and, in lieu of any fractional share,
an adjustment in cash will be made based on the then current
market price of the Common Stock.
A request for conversion shall be
effectuated by surrendering the certificate representing the
Series A Preferred Stock to be converted to the Corporation
with a form of conversion notice to be provided by the
Corporation executed by the holder and, if required by the
Corporation, accompanied by proper assignment thereof in
<PAGE>
blank and signature guaranties. The date on which the
notice of conversion is given, shall be deemed to be the
date on which the Series A Preferred Stock certificate, with
the conversion notice duly executed, is delivered to the
Corporation, or, if earlier, on the date set forth in such
notice of conversion if the Series A Preferred Stock
certificate is received by the Corporation within five (5)
days thereafter.
In case of any capital reorganization or of
any reclassification of the Common Stock of the Corporation
or in case of the consolidation of the Corporation with or
the merger of the Corporation into any other corporation or
of the sale of the properties and assets of the Corporation
as, or substantially as, an entirety to any other
corporation, each share of Series A Preferred Stock shall
after such capital reorganization, reclassification of
Common Stock, consolidation, merger or sale be convertible
into the number of shares of stock or other securities or
property of the Corporation, or of the corporation resulting
from such consolidation or surviving such merger or to which
such sale shall be made, as the case may be, to which the Common Stock
issuable (at the time of such capital reorganization, reclassification of
Common Stock, consolidation, merger or
sale) upon conversion of such share of Series A Preferred
Stock would have been entitled upon such capital reorganization,
reclassification of Common Stock,
consolidation, merger or sale; and in any such case, if
necessary, the provisions set forth herein with respect to
the rights and interests thereafter of the holders of the
shares of Series Preferred Stock shall be appropriately
adjusted so as to be applicable, as nearly as may reasonably
be, to any shares of stock or other securities or property
thereafter deliverable on the conversion of the shares of
Preferred Stock. The subdivision or combination of shares
of Common Stock issuable upon conversion of the shares of
Series A Preferred Stock at any time outstanding into a greater
or lesser number of shares of Common Stock (whether with or
without par value) shall not be deemed to be a
reclassification of the Common Stock of the Corporation for
the purposes of this provision.
(5) Redemption. The shares of the Series A
Preferred Stock are not subject to redemption on or prior to
June 30, 1998. After June 30, 1998, the Series A Preferred Stock
is redeemable in whole or in part, at any time at the option of the
Corporation, at the following redemption prices: (i) if redeemed
during the first 12-month period - $1.10 per share, and (ii) $1.00
per share thereafter, plus an amount in cash equal to all accrued and
unpaid dividends thereon to the date fixed for redemption.
If less than all of the outstanding shares
of Series A Preferred Stock are to be redeemed, the
Corporation will redeem such shares on a pro rata basis.
There is no mandatory redemption or sinking fund obligation
with respect to the Series A Preferred Stock.
<PAGE>
Notice of redemption will be mailed at least
thirty (30) days but not more than sixty (60) days before
the redemption date to each holder of record of shares of
Series A Preferred Stock to be redeemed at the address shown
on the books of the Corporation. On and after the
redemption date dividends will cease to accrue on shares of
Series A Preferred Stock called for redemption and all
rights of the holders of such shares, including conversion rights,
shall terminate except the right to receive the redemption price.
(6) Voting Rights. The holders of shares of the
Series A Preferred Stock are not entitled to any voting
rights except as required by law or as described below. In
the event quarterly dividends are in arrears the holder of
shares of the Series A Preferred Stock shall have the same
voting rights as if such shares of Series A Preferred Stock had been
converted into shares of Common Stock.
(7) Status of Converted Stock. In case any shares of Preferred Stock
shall be converted pursuant
hereto, the shares so redeemed shall resume the status of
authorized but unissued shares of Preferred Stock.
3. The foregoing resolution was duly adopted by the
Board of Directors of the Corporation on June 13, 1995.
4. Such resolution was signed by the President and
Secretary of the Corporation.
DYNAMIC TECHNOLOGIES, INC.,
a Nebraska corporation
By: /S/MITCHEL J. LASKEY
Mitchel J. Laskey, President
By: /S/DAVID M. POMERANCE
David M. Pomerance, Secretary
SUBLEASE
THIS SUBLEASE is made and entered into this
31st day of January, 1995 by and between John Alden
Life Insurance Co., (hereinafter referred to as "Sublessor")
and Terrano Corporation dba Dynamic Healthcare Technologies,
Inc. (hereinafter referred to as "Sublessee");
W I T N E S S E T H
WHEREAS, Sublessor has entered into that certain lease
agreement (hereinafter referred to as the "Lease") dated
December 6, 1993, by and between Sublessor, as Tenant, and
Hartford Accident and Indemnity Company, as Landlord,
(hereinafter referred to as "Landlord"), a true and correct
copy of which, as amended, is attached hereto as Exhibit A;
and
WHEREAS, the Lease as amended demises certain premises
located at 101 Southall Lane, Suite 200, Maitland, Florida
32751 (hereinafter referred to as the "Building") which
premises comprise a total floor area of approximately 20,126
rentable square feet (the "Premises"); and
WHEREAS, the Sublessee desires to sublease from the
Sublessor a portion comprising 14,612 rentable square feet
or 13,695 usable square feet as shown in Exhibit B,
described as Suite 210 subject to the said Landlord's
approval, the entire Premises (the space which is subject to
the terms of this Sublease is hereinafter referred to as the
"Sublease Premises" and defined in Section 1.1);
NOW, THEREFORE, in consideration of the following
mutual convenants and conditions, the Sublessor and
Sublessee hereby agree as follows:
Section 1. Sublease Premises; Use
1.1 Subject to the terms and conditions set forth
herein, Sublessor hereby subleases unto Sublessee and
Sublessee hereby hires and takes from Sublessor the premises
of 14,612 rentable square feet including two future
expansion space options at the then current lease rate,
option 1: August 1995 for additional 2,737 rsf with a three
month prior written notice, and a second expansion option:
at any time with (6) six month prior written notice for the
remaining 2,777 rsf, with a six month prior written notice
requirement, referred to on Exhibit B attached hereto.
1.2 The Sublease Premises shall be occupied by
Sublessee as an office, and for no other use or purpose
whatsoever. Sublease shall comply with and not commit or
permit to be committed upon the Sublease Premises any act
which shall violate any provision of the Lease.
<PAGE>
Section 2. Term
2.1 The term of this Sublease shall commence on April
1, 1995 or upon issuance of Certificate of Occupancy,
whichever is the latter, and shall terminate on March 31,
1999 (hereinafter "Termination Date").
Section 3. Rent
3.1 The Sublessee shall pay to Sublessor all and any
amounts of rent and additional rent:
Base Rent Monthly installments
Lease Year per annum of Base Rent
Year 1 $189,956.00 $15,829.67
Year 2 197,262.00 16,438.50
Year 3 204,568.00 17,047.33
Year 4 211,874.00 17,656.17
Florida Sales Tax shall be added to the installments above
and any amount set forth in the lease as additional rent.
Additional rent shall include future increases in the
amounts of taxes on the land, the building, other
improvements on the land, and the cost of operation and
maintenance of the property which exceed the 1995 base year
over the term of the Lease, in monthly installments as set
forth in the Lease in advance on or before the first day of
each month during the term of this Sublease, plus Florida
Sales Tax.
Monthly installments shall be in default if not paid
within five calendar days when due. In the event Sublessee
fails to pay any installment of rent, additional rent, or
any other sum due hereunder, and such failure continues
beyond five calendar days, Sublessee shall also be obligated
to pay interest on such overdue amount at the highest lawful
rate computed from the date when due until the date upon
which Sublessor has received payment.
3.2 In addition to the obligation set forth above,
Sublessee shall be obligated to pay any amounts imposed and
billed by Landlord under the terms of Lease, including but
not limited to the payment of additional rent insofar as
such amounts relate to the Sublease Premises. Without
limiting the generality of the foregoing, if any actions or
obligations of Sublessee result in any additional charges or
liability being imposed upon Sublessor over and above the
rental obligations set forth in the Lease, Sublessee shall
be responsible for paying, or reimbursing Sublessor for all
such amounts.
3.3 Simultaneously with each monthly installment or
rent, additional rent or any other payments, Sublessee shall
additionally pay to Sublessor all taxes levied by any
governmental authority on the payment or receipt of rent,
including, without limitation, any sales tax imposed by the
State of Florida, Orange County, Florida.
<PAGE>
3.4 All installments of rent and other sums due
hereunder shall be paid to Sublessor at its offices at:
7300 Corporate Center Drive
Miami, FL 33126.
Attn: Real Estate Leasing.
3.5 Security deposit: $100,000.00 Letter of Credit,
clean, irrevocable, available by sight draft, unconditional,
and must name John Alden Life Insurance Company as
beneficiary which can decline to $0 in the amount of $2,083.33
per month, over the 48 month lease term, payable upon demand in the
event that Sublessee does not complete its obligations under this
lease.
Section 4.
4.1 The Sublessee agrees that this Sublease is subject
and subordinate to all of the terms and provisions of the
Lease.
4.2 Sublessee hereby assumes and agrees to perform all
of the Sublessor's obligations under the Lease during the
term of this Sublease of the same extent that Sublessor
would be obligated to perform such obligations if this
sublease did not exist; except, however, that Subleasee shall
not be obligated to pay to the Landlord the rental required
pursuant to paragraph 3 of the Lease. Any failure of
Sublessee to comply with and abide by all terms and
provisions of the Lease shall constitute a default hereunder.
Sublessee shall look solely to the Sublessor for the performance
of any obligations under the Lease.
4.3 Sublessor hereby represents that the Lease is
current and in good standing on the date hereof.
4.4 Nothing contained in this Sublease shall in any
way relieve the Sublessor of its obligations to Landlord
under the above-referenced Lease.
Section 5. Insurance
During the period of this Sublease, Sublessee shall
maintain all insurance required by the Lease reflecting
Landlord and Sublessor and their agents, servants, and
employees, as additional insured parties. Upon commencement
of the term of this Sublease, Sublessee shall provide
Landlord and Sublessor with certificates of such coverage,
together with copies of the applicable policies. Not less
than thirty days prior to the expiration of such policies,
Sublessee shall provide Landlord and Sublessor with
certificates evidencing renewal of the required coverage.
Sublessee may satisfy the foregoing obligation by an
umbrella policy or separate policies (but not by a self-
insurance program).
<PAGE>
Section 6. Indemnification
6.1 Sublessee shall at all times indemnify and keep
harmless Sublessor from all losses, damages, liabilities and
expenses which may arise or be claimed against Sublessor for
any injuries or damages to person or property consequent
upon or arising from the use or occupancy of the Sublease
Premises by Sublessee, or consequent upon or arising from
any acts, omissions, neglect or fault of Sublessee, its
agents, servants, employees, licensees, visitors, customers,
patrons or invitees, or consequent upon arising from
Sublessee's failure to comply with the Lease, this Sublease,
or any laws, statutes, ordinances, codes or regulations.
Sublessor shall not be liable to Sublessee for any damages,
losses or injuries to the persons or property of Sublessee
or its agents, servants, employees, licensees, visitors,
customers, or patrons, which may be caused by the acts,
neglect, omissions or faults of any persons,. firms or
corporations, except when such injury, loss or damage results
from negligence of Sublessor, its agents, or employees. All
personal property placed or moved into the Sublease Premises
shall be at the risk of Sublessee or the owner thereof, and
Sublessor shall not be liable to Sublessee for any damage to
said personal property.
6.2 In case Sublessor shall be made a party to any
litigation commenced against Sublessee, Sublessee shall
protect and hold Sublessor harmless and shall also pay all
costs, expenses and reasonable attorney's fees incurred by
Sublessor as a result thereof.
Section 7. Default
If the rent or other monies due under this Sublease
shall not be paid when due, or if Sublessee shall fail to
perform any of the conditions, covenants, provisions and
agreements contained herein, or if Sublessee shall be
adjudged bankrupt or insolvent by any court, or if a
Receiver or Trustee in Bankruptcy or a Receiver of any
property of Sublessee shall be appointed in a suit, action
or proceeding, or if Sublessee shall make an assignment for
the benefit of creditors, or if Sublessee shall abandon or
vacate the Sublease Premises or if Sublessee shall commit
any default under the Lease, then, in each and every such
instance, Sublessor may, at its option:
a. Retake and recover possession of the Sublease
Premises and terminate this Sublease;
b. Retake and recover possession of the Sublease
Premises without terminating this Sublease, in which
event Sublessor may, subject to Landlord's consent as
provided in the Lease, re-rent the premises so retaken
as agent for and for the account of Sublessee and
recover from Sublessee the difference between the rental
herein specified and the rent provided in such re-rental;
c. Permit the Premises to remain vacant in which event
Sublessee shall continue to be responsible for all
rental and other payments hereunder;
d. Retake and recover possession of the Sublease
Premises, and accelerate and collect all rentals due
hereunder for the balance of the term of this Sublease;
<PAGE>
c. Take such other action as may be permitted under
applicable law.
Section 8. Surrender and Holdover
8.1 On the Termination Date or upon the termination
hereof upon a day other than the Termination Date, Sublessee
shall peaceably surrender the Sublease Premises broom-clean
in good order, condition and repair, reasonable wear and
tear only expected. On or before the Termination Date,
Sublessee shall, at its expense, remove all trade fixtures,
personal property and equipment and signs from the Sublease
Premises and any property not removed shall be deemed to
have been abandoned. Any damage caused in the removal of
such items shall be repaired by Sublessee and at its
expense. All alterations, additions, improvements and
fixtures (other than trade fixtures) which shall have been
made or installed by Sublessor or Sublessee upon the
Sublease Premises and all floor covering so installed shall
remain upon and be surrendered with the Sublease Premises as
a part thereof, without disturbance, molestation or injury,
and without charge, at the expiration or termination of this
Sublease. If the Sublease Premises are not surrendered on
the Termination date or the date of termination, Sublessee
shall indemnify Sublessor against loss or liability, claims,
without limitation, made by any succeeding Sublessee founded
on such delay. Sublessee shall promptly surrender all keys
for the Sublease Premises to Sublessor at the place then
fixed for payment of rent.
8.2 In the event of a holding over by Sublessee after
expiration or termination of this Sublease without the
consent in writing of Sublessor, Sublessee shall be deemed a
lessee at sufferance and shall pay rent for such occupancy
at the rate of twice the last-current aggregate Base and
Additional Rent, prorated for the entire holdover period,
plus all attorney's fees and expenses incurred by Sublessor
in enforcing its rights hereunder, plus any other damages
occasioned by such holding over. Except as otherwise
agreed, any holding over with the written consent of
Sublessor shall constitute a month-to-month lease.
Section 9. Special Stipulations
9.1 This Sublease comprises the entire agreement
between the parties hereto with respect to the Sublease
Premises, neither party having made any representation or
promises except as contained herein. No modification or
amendment to this Sublease shall be binding unless it is in
writing signed by both Sublessor and Sublessee.
9.2 Sublessee shall neither assign nor sublet nor
allow any other party to occupy or use the Sublease
Premises, or any portion thereof.
9.3 Sublessee shall have neither an option to renew
this Sublease nor an option to expand the Sublease Premises
hereunder.
9.4 Sublessee accepts possession of the sublease
Premises in "as-is" condition, excluding Sublessor's
personal property, trade fixtures and Wall Innovators
systems; and Sublessor will provide a total of $192,491.00
for Sublessee's interior modifications per Intertect Design Group, Inc.'s
Preliminary Pricing Plan dated 1-27-95 attached as Exhibit A-1, as estimated
by Yovaish Construction, and includes A & E fees of $ 12,325.00,
$ 2,500.00 for signage costs instead of appliances, and the
5 % construction management fee. Sublessor will provide
Sublessee with one of the refrigerators located in the
premises. In the event that the actual construction costs are less
than $192,491.00, Sublessee shall receive a rental credit in an
amount equal to the difference.
Sublessee shall not cause any additions or alterations to
be made to the Sublease Premises without Sublessor's and
Landlord's prior written consent.
All additions or alterations shall remain upon the sublease
Premises and become the property of Landlord upon
termination of this Sublease (exception only movable trade
fixtures which may be removed without damage to the Sublease
Premises); provided, however, if Sublessor so requests,
Sublessee shall remove any such additions or alterations and
repair all damage occasioned thereby. Sublessor shall also
provide Sublessee with an improvement allowance in the amount
equal to (a) multiplied by (b) the number of months remaining in
the sublease term at the commencement date of the sublease of the
option spaces, divided by 48.
<PAGE>
9.5 All costs and expenses which Sublessee assumes or
agrees to pay Sublessor pursuant to this Sublease shall be
deemed additional rent, and in the event of non-payment
thereof, Sublessor shall have the same rights and remedies
provided herein and by law for nonpayment of rent.
9.6 Subleasee shall at all times maintain the Sublease
premises in good and safe condition and shall make all
necessary repairs and perform all necessary maintenance.
9.7 In the event that either party hereto files an
action in the courts to enforce this Sublease, the
prevailing party in that action shall receive from the non-prevailing
party a reasonable attorney's fee plus all costs incurred as a
result of such litigation, including fees and costs related to
appellate proceedings.
9.8 This Sublease shall be governed by the laws of the
State of Florida.
9.9 Sublease represents and warrants that no broker is
involved in this transaction other than The Galbreath
Company, Florida, and the Advantage Realty Group, Inc. and
Sublessee agrees to indemnify and hold Sublessor harmless as
to claims for commissions (and all attorneys' fees and costs
incurred by Sublessor) resulting or arising from any breach
of this warranty.
9.10 All notices, demands, requests, consents or
approvals which may be or are required to be given by the
terms of this Sublease shall be in writing and shall be
deemed to have been given when delivered to the other party
at their respective addresses set forth below. Either party
may change its address at any time, and from time to time,
bY notice to the other in conformance with this provision.
Sublessor: John Alden Life Insurance Company
7300 Corporate Center Drive
Miami, FL 33126
Attn: Real Estate Leasing
Sublessee: Terrano Corporation dba Dynamic Healthcare
Technologies, Inc.
101 Southall Lane, Suite 210
Maitland, FL 32751
9.11 It shall be a condition precedent to performance
of this Sublease by the parties hereto that written consent
to this Sublease be obtained from Landlord under the Lease.
IN WITNESS WHEREOF, Sublessor and Sublessee have
executed these presents as of the date and year first above
written.
Witness as to Sublessor John Alden Life
Insurance Co.
/S/ROBERT C. NICOLL By:/S/NATHAN S. GARRISON
Nathan S. Garrison
/S/B. CORNELIUSON Vice President -
Corporate Services
Witness as to Sublessee Terrano Corporation dba
Dynamic Healthcare
Technologies, Inc.
/S/JAMES BARTON By:/S/MITCHEL J. LASKEY
Mitchel J. Laskey
/S/GREGG J. BANDON President and COO
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of the 23rd day of August,
1994 by and between Terrano Corporation, a Nebraska
corporation ("Employer"), and David M. Pomerance ("Employee").
WHEREAS, Employee wishes to be employed by Employer with
the duties and responsibilities as hereinafter described, and
Employer desires to assure itself of the availability of
Employee's services in such capacity.
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, Employer and
Employee hereby agree as follows:
1. Employment. Employer hereby agrees to employ
Employee, and Employee hereby agrees to serve Employer, upon
the terms and conditions hereinafter set forth.
2. Term. The employment of Employee by Employer
pursuant to this Agreement shall be for a three (3) year
period commencing on the date hereof and shall automatically
renew for two (2) successive one-year periods (hereinafter
referred to as the "Service Period"). Notwithstanding the
foregoing, this Agreement shall terminate upon the expiration
of the initial term, or the any renewal term, as applicable,
upon delivery of written notice by either party not less than
sixty (60) days prior to the end of the initial term, or a
renewal term, as the case may be.
3. Duties. Employee shall, subject to overall
direction consistent with the legal authority of the Board of
Directors of Employer (the "Board"), serve as, and have all
power and authority inherent in the offices of, Chief
Executive Officer of Employer and each of its subsidiaries,
and shall be responsible for those areas in the conduct of the
business reasonably assigned to him by the Board. Employee
shall devote substantially all his business time and efforts
to the business of Employer; provided, however, that it is
understood and agreed that, while Employee may devote limited
time to other business matters in which he has an interest, in
the event of a conflict, Employee's first and primary
responsibility shall be to the performance of his duties for
Employer.
4. Compensation and Other Provisions. Employee shall
be entitled to the compensation and benefits hereinafter
described in subparagraphs (a) through (c) (such compensation
and benefits being hereinafter referred to as "Compensation
Benefits").
(a) Base Salary. Employer or any subsidiary as
Employer may direct, shall pay to Employee a base salary equal
to $150,000.00 per annum during the Service Period (such
amount, as it may be increased from time to time, may
sometimes hereinafter be referred to as "Base Salary"). The
Base Salary and Employee's other compensation will be reviewed
by the Board at least annually during the Service Period and
may be increased (but not decreased) from time to time as the
Board may determine.
<PAGE>
(b) Participation in Benefit Plans. During the
Service Period, Employee shall be eligible to participate in
all employee benefit plans and arrangements now in effect or
which may hereafter be established, including, without
limitation, all life, group insurance and medical care plans
and all disability, retirement and other employee benefit
plans of Employer or its operating subsidiaries provided that
(i) as of the date hereof Employee has received and approved
such benefits, and (ii) such benefit plans shall not be
diminished during the Term of Employment.
(c) Other Provisions. Employee shall be entitled to
four (4) weeks paid vacation per annum. Employee shall be
reimbursed for all reasonable expenses incurred by him in the
performance of his duties, including, but not limited to, all
reasonable entertainment and travel expenses and costs of
transitional housing and commuting expenses.
5. Termination. Employee's employment hereunder shall
terminate as a result of any of the following events:
(a) Employee's death;
(b) Employee shall be unable to perform his duties
hereunder by reason of illness, accident or other physical or
mental disability for a continuous period of at least six
months or an aggregate of nine months during any continuous
twelve month period ("Disability");
(c) termination by Employee; or
(d) for Cause, where "Cause" shall mean: (i) final
non-appealable adjudication of Employee of a felony; or (ii)
the reasonable determination of seventy-five (75%) percent of
the Board that Employee has engaged in intentional misconduct,
or the gross neglect of his duties, which has a material and
continuing adverse effect on the business of Employer.
Any termination pursuant to subparagraph (b), (c) or
(d) of this Section shall be communicated by a written notice
("Notice of Termination"), such notice to set forth with
specificity the grounds for termination if the result of
"Cause". Employee's employment under this Agreement shall be
deemed to have terminated as follows: (i) if Employee's
employment is terminated pursuant to subparagraph (a) above,
on the date of his death; (ii) if Employee's employment is
terminated pursuant to subparagraph (b) or (d) above, on the
date on which Notice of Termination is given; and (iii) if
Employee's employment is terminated pursuant to subparagraph
(c) above, fifteen (15) days after the date on which a Notice
of Termination is given. The date on which termination is
deemed to have occurred pursuant to this paragraph is
hereinafter referred to as the "Date of Termination".
<PAGE>
6. Payments on Termination. In the event that
Employee's employment is terminated pursuant to Section 5
above, Employer shall pay to Employee his full Base Salary
through the Date of Termination together with all benefits and
other compensation, if any, due and owing as of that date. In
the event that Employee's employment is terminated at any time
by Employer without Cause, then Employer shall pay to Employee
on the Date of Termination a lump sum cash payment equal to
one year of Employee's annual Base Salary as of the Date of
Termination in addition to all other benefits and other
compensation, if any, due and owing as of that date.
7. Board of Directors. Employer shall use its best
efforts to cause Employee to be elected as a member of the
Board of Directors of Employer and each of its subsidiaries at
all times during the Service Period. Employee shall agree to
faithfully serve Employer as a member of the Boards of
Directors upon election.
8. Life Insurance. If requested by Employer, Employee
shall submit to such physical examinations and otherwise take
such actions and execute and deliver such documents as may be
reasonably necessary to enable Employer to obtain life
insurance on the life of Employee for the benefit of Employer.
9. Representations and Warranties. Employee represents
and warrants to Employer that he is under no contractual or
other restriction or obligation which would prevent the
performance of his duties hereunder or interfere with the
rights of Employer hereunder.
10. Disclosure and Protection of Confidential
Information.
(a) For purposes of this Agreement, "Confidential
Information" means knowledge, information and material which is
proprietary to Employer, of which Employee may obtain
knowledge or access through or as a result of his employment
by Employer (including information conceived, originated,
discovered or developed in whole or in part by Employee).
Confidential Information includes, but is not limited to, (i)
technical knowledge, information and material such as trade
secrets, processes, formulas, data, know-how, improvements,
inventions, computer programs, drawings, patents, and
experimental and development work techniques, and (ii)
marketing and other information, such as supplier lists,
customer lists, marketing and business plans, business or
technical needs of customers, consultants, licensees or
suppliers and their methods of doing business, arrangements
with customers, consultants, licensees or suppliers, manuals
and personnel records or data. Confidential Information also
includes any information described above which Employer
obtains from another party and which Employer treats as
proprietary or designates as confidential, whether or not
owned or developed by Employer. Notwithstanding the
foregoing, any information which is or becomes available to
the general public otherwise than by breach of this Section 10
shall not constitute Confidential Information for purposes of
this Agreement.
(b) During the term of this Agreement and
thereafter, Employee agrees, to hold in confidence all
Confidential Information and not to use such information for
Employee's own benefit or to reveal, report, publish, disclose
or transfer, directly or indirectly, any Confidential
Information to any person or entity, or to utilize any
Confidential Information for any purpose, except in the course
of Employee's work for Employer.
(c) Employee will abide by any and all security
rules and regulations, whether formal or informal, that may
from time to time be imposed by Employer for the protection of
Confidential Information, and will inform Employer of any
defects in, or improvements that could be made to, such rules
and regulations.
(d) Employee will notify Employer in writing
immediately upon receipt of any subpoena, notice to produce,
or other compulsory order or process of any court of law or
government agency if such document requires or may require
disclosure or other transfer of Confidential Information.
(e) Upon termination of employment, Employee will
deliver to Employer any and all records and tangible property
that contain Confidential Information that are in his
possession or under his control.
11. Covenant Not To Compete.
(a) In consideration for Employer entering into
this Agreement, Employee covenants and agrees that during the
Service Period and for the two (2) year period thereafter,
Employee will not, without the express prior written consent
of Employer, directly or indirectly, compete with the business
of Employer anywhere within the United States of America.
Employee will undertake no activities that may lead Employee
to compete with or to acquire rival, conflicting or
antagonistic interests to those of Employer with respect to
the business of Employer, whether alone, as a partner, or as
an officer, director, employee, independent contractor,
consultant or shareholder holding 5% or more of the
outstanding voting stock of any other corporation, or as a
trustee, fiduciary or other representative of any other person
or entity.
(b) During the Service Period and for a period of
two (2) years after termination of employment, Employee will
not, directly or indirectly, solicit or induce any other
employee of Employer or any parent or affiliate to leave his
or her employment, or solicit or induce any consultant or
independent contractor to sever that person's relationship
with Employer.
(c) If any court shall determine that the duration
or geographical limit of any covenant contained in this
Section 11 is unenforceable, it is the intention of the
parties that covenant shall not thereby be terminated but
shall be deemed amended to the extent required to render it
valid and enforceable, such amendment to apply only in the
jurisdiction of the court that has made such adjudication.
(d) Employee acknowledges and agrees that the
covenants contained in Sections 10 and 11 hereof are of the
essence in this Agreement, that each of such covenants is
<PAGE>
reasonable and necessary to protect and preserve the
interests, properties, and business of Employer, and that
irreparable loss and damage will be suffered by Employer
should Employee breach any of such covenants. Employee
further represents and acknowledges that he shall not be
precluded from gainful engagement in a satisfactory fashion by
the enforcement of these provisions.
12. Availability of Injunctive Relief. Employee
acknowledges and agrees that any breach by him of the
provisions of Sections 10 or 11 hereof will cause Employer
irreparable injury and damage for which it cannot be
adequately compensated in damages. Employee therefore
expressly agrees that Employer shall be entitled to seek
injunctive and/or other equitable relief, on a temporary or
permanent basis to prevent any anticipatory or continuing
breach of this Agreement or any part hereof, and is secured as
an enforcement. Nothing herein shall be construed as a waiver by
Employer of any right it may have or hereafter acquired to
monetary damages by reason of any injury to its property,
business or reputation or otherwise arising out of any
wrongful act or omission of it.
13. Survival. The covenants, agreements, representations
and warranties contained in or made pursuant to this Agreement
shall survive Employee's termination of employment,
irrespective of any investigation made by or on behalf of any
party.
14. Modification. This Agreement sets forth the entire
understanding of the parties with respect to the subject
matter hereof, supersedes all existing agreements between them
concerning such subject matter, and may be modified only by a
written instrument duly executed by each party.
15. Notices. Any notice required or permitted hereunder
shall be deemed validly given if delivered by hand, verified
overnight delivery, or by first class, certified mail to the
following addresses (or to such other address as the addressee
shall notify in writing to the other party):
If to Employee: David M. Pomerance
2421 Southeast Bahia Way
Stuart, Florida 34996
If to Employer: Terrano Corporation
245 South 84th Street
Lincoln, Nebraska 68510
Attn: Mitchel J. Laskey, President and
Chief Operating Officer
<PAGE>
16. Waiver. Any waiver by either party of a breach of
any provision of this Agreement shall not operate as or be
construed to be a waiver of any other breach of such provision
or of any breach of any other provision of this Agreement. The
failure of a party to insist upon strict adherence to any term
of this Agreement on one or more occasions shall not be
considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any
other term of this Agreement. All waivers must be in writing.
17. Binding Effect. Employer's rights and obligations
under this Agreement shall not be transferable by assignment
or otherwise, and any attempt to do any of the foregoing shall
be void. The provisions of this Agreement shall be binding
upon the Employee and his heirs and personal representatives,
and shall be binding upon and inure to the benefit of
Employer, its successors and assigns.
18. Headings. The headings in this Agreement are solely
for convenience of reference and shall be given no effect in
the construction or interpretation of this Agreement.
19. Governing Law; Venue. This Agreement shall be
governed and construed in accordance with the laws of the
State of Florida, without giving effect to rules governing
conflicts of law, with proper venue with respect to all
disputes related to this Agreement being Dade County, Florida.
20. Invalidity. The invalidity or unenforceability of
any term of this Agreement shall not invalidate, make
unenforceable or otherwise affect any other term of this
Agreement, which shall remain in full force and effect.
21. Attorneys' Fees. In the event any dispute or
litigation arises hereunder between any of the parties hereto,
the prevailing party shall be entitled to all reasonable costs
and expenses incurred by it in connection therewith
(including, without limitation, all reasonable attorneys' fees
and costs incurred before and at any trial or other proceeding
and at all tribunal levels), as well as all other relief
granted in any suit or other proceeding.
[Remainder of Page Left Intentionally Blank]<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first hereinabove written.
EMPLOYER:
TERRANO CORPORATION, a Nebraska
corporation
By: /S/MITCHEL J. LASKEY
Mitchel J. Laskey
EMPLOYEE:
/S/DAVID M. POMERANCE
David M. Pomerance
Dynamic Healthcare Technologies, Inc.
SEC Form S-2
Exhibit 12
(Figures are in thousands except Ratio of Earnings to Fixed Charges.)
<TABLE>
Year Ended Three months ended
December 31 March 31
<CAPTION>
1994 1993 1992 1995 1994
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to
Fixed Charges
Pretax Earnings $(3,698) $ 246 $(2,118) $ (443) $ (204)
Fixed Charges 102 16 10 79 6
Earnings (3,596) 262 (2,108) (364) (198)
Fixed Charges:
Interest 102 16 10 79 6
Deficiency $ 3,698 $ n/a $ 2,118 $ 443 $ 204
Ratio of Earnings
to Fixed Charges * $16.09 * * *
*Earnings are inadequate to cover fixed charges
</TABLE>
Exhibit 23.2
Independent Auditors' Consent
The Board of Directors
Dynamic Healthcare Technologies, Inc.
We consent to the use of our reports dated March 31, 1995, relating to the
consolidated balance sheet of Terrano Corporation and subsidiary as of
December 31, 1994 and the related consolidated statements of operations,
shareholders' equity and cash flows for the year then ended, and related
schedule, which reports are included in the December 31, 1994 annual report
on Form 10-K of Terrano Corporation, and incorporated by reference herein in
the registration statement on Form S-2 of Dynamic Healthcare Technologies, Inc.
(formerly known as Terrano Corporation) and to the reference to our firm under
the heading "Experts" in the Registration Statement on Form S-2.
/S/KPMG Peat Marwick LLP
Orlando, Florida
June 29, 1995
