As filed with the Securities and Exchange Commission on ______________, 1998
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Florida 59-3389871
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
615 Crescent Executive Court, Suite 500, Lake Mary, Florida 32746
(407) 333-5300
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Mitchel J. Laskey, President, Dynamic Healthcare Technologies, Inc.,
615 Crescent Executive Court, Suite 500, Lake Mary, Florida 32746
(407) 333-5300
(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, P.A
2601 South Bayshore Drive, 19th Floor
Miami, Florida 33133
(305) 854-5900
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes
effective. ( )
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment, please
check the following box. ( )
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, other than securities offered
only in connection with dividend or interest reinvestment plans,
please check the following box. (X)
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering. ( )
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, please check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. ( )
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. ( )
<TABLE>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Amount Offering Aggregate Amount of
Titles of each class of to be price per Offering Registration
securities to be registered registered share price fee
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 1,814,996 $1.03125 $1,871,715 $552.16
Common Stock, $.01 par value (2) 780,588 $1.03125 $ 804,981 $237.47
Common Stock, $.01 par value (3)1,000,000 $1.03125 $1,031,250 $304.22
</TABLE>
(1) Estimated solely for the purpose of calculating the
registration fee in accordance with Rule 457(c) under the
Securities Act of 1933 on the basis of the average high and low
sales prices of the Company's Common Stock on September 28,
1998, as reported by NASDAQ.
(2) Represents shares issuable upon the exercise of outstanding
options and warrants.
(3) Represents shares issuable upon the conversion of
outstanding shares of Series C Preferred Stock.
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.
Information contained herein is subject to completion or
amendment. A registration statement relating to these
securities has been filed with the Securities and Exchange
Commission. These securities may not be sold nor may offers to
buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any State in which such
offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any
such State.
PROSPECTUS Subject to Completion Dated September 29, 1998
3,595,584 Shares
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
Common Stock
All of the shares of common stock $.01 par value (the "Common
Stock") offered hereby, are being sold by certain shareholders
of the Company (the "Selling Shareholders"). See "Selling
Shareholders." The Company will not receive any proceeds from
the sale of shares offered hereby.
Of the 3,595,584 shares of Common Stock to which this
Prospectus relates (the "Shares"), 780,588 of such Shares may be
acquired upon the exercise of certain outstanding options and
warrants, 1,000,000 shares may be acquired upon the conversion
of the Company's Series C 8% Redeemable Convertible
Participating Preferred Stock, par value $.01 per share (the "
Series C Preferred Stock"), and 1,814,996 of such shares were
previously issued in connection with the acquisistion of
Collaborative Medical Systems, Inc.("CoMed"), and Dynacor, Inc.
("Dynacor"), on December 17, 1996 and May 21, 1997, respectively
and are currently outstanding. The Shares may be sold or
distributed from time to time by or for the account of the
Selling Shareholders through dealers, brokers or other agents,
or directly to one or more purchasers at market prices
prevailing at the time of sale or at prices otherwise negotiated.
The Common Stock is traded on the over-the-counter market and
is quoted on the National Association of Securities Dealers
Automated Quotation Service ("NASDAQ") under the symbol "DHTI."
On September 28, 1998 the closing bid and asked prices for the
Common Stock were $1.03125 and $1.03125, respectively.
____________________________
See "Risk Factors" on pages 4 through 8 for a discussion of
certain factors that should be considered by potential investors.
____________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
______________________________
The date of this Prospectus is September 29, 1998
1
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended ("Exchange Act") and
in accordance therewith files reports, proxy statements and
other information with the Securities and Exchange Commission
("SEC"). Such reports, proxy statements and other information
filed by the Company can be inspected and copied at the public
reference facilities of the SEC, at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the
following regional offices of the SEC: 7 World Trade Center,
Suite 1300, New York, NY 10048, 3475 Lenox Road, N.E., Suite
1000, Atlanta, GA 30326-7232 and Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, IL 60661-2511.
The SEC also maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants that file
electronically with the SEC. No dealer, salesman or any other
person has been authorized to give any information or to make
any representations not contained in this Prospectus; in
connection with the offer made by this Prospectus and, if given
or made such information or representations must not be relied
upon as having been authorized by the Company or Selling
Shareholders. This Prospectus does not constitute 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 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. The Company's Common Stock is
traded on Nasdaq. Reports, proxy statements and other
information concerning the Company may be inspected at the
National Association of Securities Dealers, Inc., 1735 K Street,
N.W., Washington, D.C. 20006.
The Company has filed a Registration Statement (herein together
with all amendments and exhibits thereto, called the
"Registration Statement") under the Securities Act of 1933
("Securities Act") with the SEC in Washington, D.C. with respect
to the securities offered hereby. This Prospectus, which forms
a part of the Registration Statement, does not contain all the
information set forth in the Registration Statement and exhibits
thereto. For further information with respect to the Company
and the securities offered hereby, reference is made to the
Registration Statement which may be inspected and copied as set
forth above. 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
The following documents filed by the Company with the SEC are
incorporated by reference in this Prospectus:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1997;
2. The Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998;
3. The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998;
4. The Company's Proxy Statement dated April 24, 1998; and
5. The description of the Company's Common Stock that is
contained in the Registration Statement, as amended, of the
Company filed on Form S-1 on August 29, 1996 (Registration No.
333-10605).
All documents filed by the Company with the Commission pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this Prospectus and prior to the termination of this
offering shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of
such documents. 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.
2
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.
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 615 Crescent Executive Court, Suite 500, Lake
Mary, Florida 32746. The Company's telephone number is (407)
333-5300.
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is
qualified in its entirety by the more detailed information,
accompanying the Prospectus.
THE COMPANY
Dynamic Healthcare Technologies is a leading provider of
mission-critical healthcare information systems for clinical
services departments and facilities. The Company's product
line, DynamicVision, is a suite of web-image-, and voice-enabled
systems for anatomic pathology, radiology, laboratory, surgical
services and health information management. By making it
possible for healthcare professionals to have access to the
information they need about a patient more readily, Dynamic's
information systems contribute to higher quality and more
cost-effective delivery of care.
The Company believes that healthcare providers are realizing
that a relatively small investment in healthcare information
technology can significantly reduce variable costs. As a result
of industry trends, healthcare providers are making significant
investments in healthcare information technology solutions that
capitalize on evolving information management technologies.
Industry analysts estimate that healthcare organizations spent
approximately $17 billion in 1997 for information technology
solutions, and anticipate that such expenditures will increase
to approximately $28 billion annually by 2002.
Dynamic currently serves over 600 customers, most of which are
located in the United States. Key customers include St.
Barnabas Medical Center, Ohio State University Hospital, Orlando
Regional Healthcare System, Parkland Memorial Hospital,
University of Illinois at Chicago Medical Center, UCSF Medical
Center, Mayo Foundation, Cleveland Clinic Foundation, Yale-New
Haven Hospital/Yale University School of Medicine, Massachusetts
General Hospital/Harvard Medical Center, Kaiser Foundation
Health Plan, Borgess Health Alliance and Memorial
Sloan-Kettering Cancer Institute.
The Company has a broad product line comprising a strategic mix
of applications, technologies and services that support the
restructuring of the healthcare delivery system. A full range
of professional consulting services including project
management, implementation, planning, training and education are
also offered. The Company's technical services include network
design, implementation and support, custom software development,
interfaces and modifications and systems integration. Dynamic
also provides support services including 24-hour telephone
support, and software maintenance and enhancements.
Dynamic is a publicly traded company (Nasdaq National Market:
DHTI), which was originally incorporated in California in 1977,
reincorporated in Nebraska in 1982 and subsequently
reincorporated in Florida in 1996. The Company's corporate
headquarters are located at 615 Crescent Executive Court, Suite
500, Lake Mary, Florida 32746; its telephone number is
(407)333-5300; and its World Wide Web address is
http://www.dht.com.
3
RISK FACTORS
Prospective investors should carefully consider the specific
factors set forth below, as well as the other information
contained in this Prospectus before deciding to invest in the
Units offered hereby. This Prospectus contains certain
'forward-looking statements" within the meaning of Section 27A
of the Securities Act of 1933, as amended (the "Securities Act")
which represent the Company's expectations or beliefs including,
but not limited to, statements regarding growth in sales of the
Company's products, profit margins and the sufficiency of the
Company's cash flow for its future liquidity and capital
resource needs. For this purpose, any statements contained in
this Prospectus that are not statements of historical fact may
be deemed to be forward-looking statements. Without limiting
the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "intend," "estimate" or "continue" or the negative
or other variations thereof or comparable terminology are
intended to identify forward-looking statements. These
statements by their nature involve substantial risks and
uncertainties, and actual results may differ materially
depending on a variety of factors, including those described
below.
Operating Losses
The Company incurred a net loss of $2.9 million for the quarter
ended March 31, 1998 and $2.2 million for the quarter ended June
30, 1998. Although the Company generated a profit for the year
ended December 31, 1997, it incurred a net loss of $15.6 million
for the year ended December 31, 1996, $15.1 million of which was
attributable to the write-off of research and development
expenses incurred in connection with the acquisition of
Collaborative Medical Systems, Inc. consummated in 1996. The
Company also incurred net losses of $600,000 and $4.3 million,
respectively, in the years ended December 31, 1995 and 1994.
There can be no assurance that the Company will be able to
achieve or maintain profitability on a quarterly or annual basis
or that it will be able to generate revenue growth.
Uncertainty of Market Development, Delivery and Acceptance of
the Company's Systems
The market for electronic health record systems and clinical
information systems is relatively new and may not develop as the
Company expects, which could have a material adverse effect on
the Company. The Company's success is dependent upon market
acceptance of its systems. The Company's future success and
financial performance will depend in large part on the Company's
ability to continue to meet the increasingly sophisticated needs
of its customers through the timely development and successful
introduction of enhanced versions of its existing systems,
complementary systems and new systems. There can be no
assurance that the Company will successfully complete, develop,
introduce and market new systems or system enhancements, or that
systems or system enhancements currently in development or that
may be developed by the Company in the future will meet the
requirements of healthcare providers and achieve market
acceptance. The Company has experienced delays from time to
time in completing the development of new or enhanced systems
and may experience additional delays in the future. The
inability of the Company to develop and deliver new systems on a
timely basis could have a material adverse effect on the Company.
Changing prices of computer hardware could have a material effect
on the cost of products sold and the related selling price of software and
hardware sales.
Variability of Quarterly Operating Results; Extended Sales Cycle
The Company's revenues and operating results may vary
significantly from quarter to quarter as a result of a number of
factors, some of which are outside the Company's control. These
factors include, among others, the magnitude of customer
agreements; unpredictability in the number and timing of systems
sales; length of the sales cycle; possible delays in the
installation process; and changes in the customer's financial
condition or budget. The Company's systems may be implemented
in several phases, in some cases over several years. In the
past, the Company has permitted its customers to delay
installations from the originally scheduled installation date
and to modify the original system configurations and intends to
continue this practice in the future. There can be no assurance
that customers will not cancel all or portions of master sales
agreements in the future. Due to the foregoing factors, the
Company's operating results may be adversely affected.
The decision by a healthcare provider to replace, substantially
modify or upgrade its information systems involves a large
capital commitment and an extended review and approval process.
The sales cycle for the Company's systems is typically six to
eighteen months from initial contact with a customer to
execution of a master sales agreement with the Company. During
this period, the Company may expend substantial time, effort and
funds preparing proposals and negotiating a master sales
agreement with no certainty of an agreement being reached.
4
Uncertainty Related to Acquisitions
The Company has in the past and may in the future pursue the
acquisition of complementary businesses, products or
technologies. Acquisitions involve a number of risks that could
adversely affect the Company's operating results, including the
diversion of management's attention, the assimilation of the
operations and personnel of the acquired companies, the
amortization of acquired intangible assets and the potential
loss of key employees of the acquired companies. There can be
no assurance that the Company will consummate future
acquisitions on satisfactory terms, if at all, that adequate
financing will be available on terms acceptable to the Company,
if at all, or that any acquired operations will be successfully
integrated.
Dependence upon Third Parties
The Company enters into strategic relationships for the
non-exclusive use of information management technologies of
leading technology developers. There can be no assurance that
any of these companies with which the Company has entered into,
or may in the future enter into, strategic relationships will
continue these strategic relationships with the Company or that
the Company will obtain rights to newly developed technologies
of additional technology developers. The Company's products are
based upon industry adherence to open architecture systems. In
the event that a non-open architecture standard is developed and
widely accepted, the Company may need to change its interfaces
or develop its own information management technology. The
Company is dependent upon third-party suppliers to license to it
necessary technology that is incorporated into certain of the
Company's integration software tools. The Company has less
control over the scheduling and quality of work of third-party
suppliers than its own employees.
Furthermore, the Company's agreements to license certain
third-party technology will terminate after specified dates
unless renewed. There can be no assurance that the Company's
efforts to develop such technology would be successful or that
there would be adequate funds available for such effort.
Furthermore, there can be no assurance that the Company's
relationship with any third party technology developers will
develop, continue or be successful.
Ability to Manage Future Growth
Although as a result of its current liquidity position the
Company has restructured its operations in order to decrease its
operating expenses, the Company anticipates that it could
experience a period of growth and expansion which would place a
significant strain on the Company's service and support
operations, sales and administrative personnel and other
resources. In order to serve the needs of its existing and
anticipated customer base, the Company believes that it may have
to increase its workforce substantially, which would require the
Company to attract, train, motivate, manage and retain highly
qualified employees. The Company's ability to manage such
growth also will require the Company to expand its operational,
management and financial systems and controls, all of which may
significantly increase its operating expenses. If the Company
fails to achieve its growth as planned or is unsuccessful in
managing growth that does occur, there could be a material
adverse effect on the Company.
Dependence upon Key Personnel
The Company's business is dependent upon the performance of its
senior executives, in particular Mitchel J. Laskey, its
President and Chief Executive Officer, Paul S. Glover, its Vice
President - Finance and Chief Financial Officer, Scott E.
Waldrop, its Senior Vice President and Chief Operating Officer
and Michael L. Carlay, its Senior Vice President - Sales and
Marketing. The loss of the services of one or more of those
individuals or the Company's inability to attract, motivate and
retain highly qualified employees in the future could have a
material adverse effect on the Company. The Company maintains a
key man life insurance policy in the amount of $2.0 million on
the life of Mitchel J. Laskey.
Competition
The market for information technology in the healthcare industry
is intensely competitive. Many of the Company's competitors
have significantly greater financial, research and development,
technical and marketing resources than the Company. Competitors
vary in size and in the scope and breadth of the products and
services they offer. The Company's systems compete both with
other technologies and with similar systems developed by other
companies. Other major information management companies,
including the companies with whom the Company has strategic
relationships, may enter
5
the markets in which the Company
competes. Competitive pressures and other factors, such as new
system introductions by the Company's competitors, may result in
significant pricing pressures that could have a material adverse
effect on the Company. In addition, in the professional and
technical consulting segment, the Company competes with the
consulting divisions of national accounting firms as well as
national and regional healthcare specialty consulting firms.
Rapid Changes in Technology
The computer and information systems industries are
characterized by rapid technological advances in both software
and hardware, frequent new product introductions and
enhancements as well as changes in customer needs. New
developments of software or hardware would have a material
adverse effect on the Company's sales or render the Company's
systems non-competitive or obsolete. To respond to rapidly
changing technology, the Company will be required to make
substantial continuing investments in research and development,
and there can be no assurance that its efforts will be
successful or that there will be adequate funds available for
such efforts. The Company believes that to sustain its growth
it must continue to devote substantial resources to its product
development efforts and the maintenance and enhancement of its
existing products.
Uncertainty of Market Acceptance
The Company's success will depend in large part on the
acceptance of the Company's integration software tools and
integration services as partial or complete solutions to an
enterprise's system integration problems by the chief
information executive and technical users within an enterprise.
There can be no assurance that the Company's integration
software tools and integration services will achieve the market
acceptance necessary for profitable operations.
Volatility of Stock Price
The Company's stock price has experienced significant
volatility. Moreover, the stock market has from time to time
experienced extreme price and volume fluctuations, particularly
in the high technology sector, which may be unrelated to the
operating performance of particular companies. Market
fluctuations and factors, such as announcements of technological
innovations or new products by the Company, its competitors or
third parties, as well as market conditions in the computer
software or hardware industries and healthcare reform measures,
may have a significant effect on the market price of the Common
Stock. Since the Company recognizes revenues for certain
products upon the completion of identified milestone conditions,
delays in meeting such conditions could result in the shift of
revenue recognition from one quarter to another. Any such shift
could adversely impact the results of operations for
a particular quarter, which in turn could cause fluctuations in
the Company's stock price.
Dependence upon Proprietary Software
The Company's healthcare information systems consist primarily
of the Company's software integrated with third party hardware
and software. The Company does not hold any patents nor has it
filed copyrights with respect to any of its software systems.
To protect its proprietary rights, the Company primarily relies
upon trade secrets, copyright laws and confidentiality
agreements with employees and customers. These safeguards
provide only limited protection, and competitors may imitate the
Company's systems and attempt to integrate the same or similar
third party systems into systems competitive with those licensed
by the Company. Furthermore, there can be no assurance that
others will not independently develop systems similar or
superior to those of the Company. There has been substantial
litigation regarding intellectual property rights in the
computer industry. Although no such litigation is pending or
threatened against the Company, there can be no assurance that
third parties will not assert infringement claims against the
Company in the future. Moreover, the Company may need to
initiate litigation from time to time to enforce or protect the
Company's intellectual property rights and to determine the
validity and scope of the proprietary rights of others. Such
litigation could result in substantial costs and diversion of
resources, which could have a material adverse effect on the
Company.
Uncertainty in Healthcare Industry; Government Regulation
The Company generates revenue primarily through sales to
entities operating within the healthcare industry located
throughout the United States. Due to this concentration,
substantially all receivables are from healthcare institutions
which may be similarly affected by changes in economic,
regulatory or other conditions. The healthcare industry is
undergoing
6
significant and rapid changes, including the
consolidation of hospitals and other healthcare providers to
form integrated delivery networks as well as market-driven and
government initiatives to reform healthcare, which the Company
anticipates will affect the operation and procurement process of
healthcare providers. The increased bargaining power of such
combined enterprises and their focus on cost containment could
force the Company to reduce prices for its systems, which could
have a material adverse effect on the Company. As the number of
hospitals and other healthcare providers decreases due to
further industry consolidation, each potential sale of the
Company's systems becomes more significant and competition for
each sale will be greater. Such consolidation also creates the
possibility that the Company's customers could cancel their
master sales agreements if the other healthcare information
providers involved in the consolidation have installed or
selected a competing or potentially incompatible information
system. Further, healthcare providers may react to proposed
federal and state measures and cost containment pressures by
curtailing or delaying investments, including those for the
Company's systems and related services. Although the effects of
federal and state initiatives for healthcare reform are unknown,
the Company believes that competitive factors in the healthcare
industry will continue to drive reform of healthcare delivery.
The Company cannot predict with any certainty what impact if
any, such market and government initiatives might have on the
Company.
The Health Insurance Portability and Accountability Act of 1996
("HIPAA"), enacted on August 21, 1996, provides for the adoption
by the Secretary of the U.S. Department of Health and Human
Services (the "Secretary") of a standardized format for the
electronic transmission of certain healthcare-related
administrative and financial transactions. Such healthcare
transactions include the following: health claims or equivalent
encounter information; health claims attachments; enrollment and
disenrollment in a health plan; eligibility for a health plan;
healthcare payment and remittance advice; health plan premium
payments; first report of injury; health claim status; and
referral certification and authorization. The standards would
apply to all health plans, health clearinghouses, and healthcare
providers who transmit information in electronic form. Although
the deadline set for the implementation of such standards by
HIPAA was February 1998, a proposed rule for standards for
electronic transactions was first published in the May 7, 1998
Federal Register, and the security and electronic signatures
standards have yet to be published as of the date hereof. In
order to service customers subject to HIPAA, the Company's
software must be designed or modified to reflect any
standardized format requirements eventually imposed. In adopting
the standards, the Secretary is required to adopt standards
developed by a private sector standard setting organization.
The Secretary is also required to adopt standards regarding the
privacy of individually identifiable health information.
Penalties may be imposed for noncompliance with the requirements
and standards, as well as for wrongfully obtaining or disclosing
individually identifiable health information. Penalties for
noncompliance may not be imposed if the failure was due to
reasonable cause and not to willful neglect. Penalties for
wrongfully obtaining or disclosing individually identifiable
health information may not be imposed unless it is done so
knowingly. Because the Company has access to individually
identifiable health information as a result of interfacing with
its customer's systems, its business could be subject to HIPAA
and the penalties thereunder.
The United States Food and Drug Administration ("FDA") has
issued a draft guidance document addressing the regulation of
certain computer products as devices under the Federal Food,
Drug, and Cosmetic Act (the "FFDCA"). To the extent that
computer software is classified as a device under the applicable
regulations, the manufacturers of such products could be
required, depending upon the product, to: (i) register and list
their products with the FDA; (ii) notify the FDA and demonstrate
substantial equivalence to other products on the market before
marketing such products; or (iii) obtain FDA clearance by filing
a pre-market application that establishes the safety and
effectiveness of the product. Compliance with these
requirements can be burdensome, time consuming and expensive and
there can be no assurance that the Company will ultimately be
able to obtain the required FDA clearances to market its
products. The Company has two products considered devices under
the FFDCA and has additional products under development that may
be considered devices under the FFDCA. Failure to obtain or
maintain compliance with FDA regulations could result in
withdrawal of the products from the market, which could have a
material adverse effect on the Company.
Potential Liability to Customers or Third Parties
Certain of the Company's systems provide access to patient
information used by physicians and other medical personnel in
providing medical care. The medical care provided by physicians
and other medical personnel is subject to numerous medical
malpractice risks and other claims. The Company may be subject
to claims by parties who may seek damages from any and all
persons or entities connected to the process of delivering
patient care. Although the Company maintains liability
insurance to protect against certain claims associated with the
use of its systems, there can be no assurance that the Company
will not be subject to product liability or other claims and
that its insurance coverage and the contractual limitations on
7
liability typically contained in master sales agreements will
provide adequate protection. A successful claim brought against
the Company, or unsuccessful claims causing a substantial
expenditure of funds and a diversion of management's time and
resources, could have a material adverse effect on the Company.
While the Company has been able to obtain liability insurance,
there can be no assurance that the Company will be able to
maintain such insurance or that it will continue to be available
on terms acceptable to the Company or at all.
No Dividends
The Company intends to retain future earnings for use in its
business and does not anticipate paying any cash dividends on
shares of its Common Stock in the foreseeable future.
Risks Associated with the Year 2000
The Year 2000 issue refers generally to the data structure
problem that will prevent systems from properly recognizing
dates after the year 1999. For example, computer programs and
various types of electronic equipment that process date
information by reference to two digits rather than four to
define the applicable year may recognize a date using "00" as
the year 1900 rather than the year 2000. The Year 2000 problem
could result in system failures or miscalculations causing
disruptions of operations. The Year 2000 problem may occur in
computer software programs, computer hardware systems and any
device that relies on a computer chip if that chip relies on
date information. During 1997, the Company made modifications
to certain of its existing resale software products which were
not already Year 2000 compliant. In addition, during 1997 the
Company converted its human resources, time tracking, general
accounting and payroll systems to systems which the vendors
represent to be Year 2000 compliant. The 1997 effect of and the
cost of the modifications and conversions relative to the Year
2000 issue were not material and any future costs relative to
this issue are not expected to be material. However, there can
be no assurance that the Company's tools and systems, nor the
systems of other companies with whom the Company conducts
business will be Year 2000 compliant prior to December 31, 1999
or that the failure of any such system will not have a material
adverse effect on the Company's business, operating results and
financial condition.
Shares Eligible for Future Sale; Registration Rights
Sales of substantial amounts of shares of Common Stock in the
public market after this offering or the perception that such
sales could occur could adversely affect the market price of the
Common Stock and the Company's ability to raise equity. Upon
completion of this offering, the Company will have 18,217,280
shares of Common Stock outstanding. All 3,595,584 shares
offered hereby will be freely tradeable unless acquired by
"affiliates" of the Company as defined in Rule 144 promulgated
under the Securities Act of 1933, as amended (the "Securities
Act").
THE COMPANY
Dynamic Healthcare Technologies is a leading provider of
mission-critical healthcare information systems for clinical
services departments and facilities. The Company's product
line, DynamicVision, is a suite of web-image-, and voice-enabled
systems for anatomic pathology, radiology, laboratory, surgical
services and health information management. By making it
possible for healthcare professionals to have access to the
information they need about a patient more readily, Dynamic's
information systems contribute to higher quality and more
cost-effective delivery of care.
The Company believes that healthcare providers are realizing
that a relatively small investment in healthcare information
technology can significantly reduce variable costs. As a result
of industry trends, healthcare providers are making significant
investments in healthcare information technology solutions that
capitalize on evolving information management technologies.
Industry analysts estimate that healthcare organizations spent
approximately $17 billion in 1997 for information technology
solutions, and anticipate that such expenditures will increase
to approximately $28 billion annually by 2002.
Dynamic currently serves over 600 customers, most of which are
located in the United States. Key customers include St.
Barnabas Medical Center, Ohio State University Hospital, Orlando
Regional Healthcare System, Parkland Memorial Hospital,
University of Illinois at Chicago Medical Center, UCSF Medical
Center, Mayo Foundation, Cleveland Clinic Foundation, Yale-New
Haven Hospital/Yale University School of Medicine, Massachusetts
General Hospital/Harvard Medical Center, Kaiser Foundation
Health Plan, Borgess Health Alliance and Memorial
Sloan-Kettering Cancer Institute.
8
The Company has a broad product line comprising a strategic mix
of applications, technologies and services that support the
restructuring of the healthcare delivery system. A full range
of professional consulting services including project
management, implementation, planning, training and education are
also offered. The Company's technical services include network
design, implementation and support, custom software development,
interfaces and modifications and systems integration. Dynamic
also provides support services including 24-hour telephone
support, and software maintenance and enhancements.
Dynamic is a publicly traded company (Nasdaq National Market:
DHTI), which was originally incorporated in California in 1977,
reincorporated in Nebraska in 1982 and subsequently
reincorporated in Florida in 1996. The Company's corporate
headquarters are located at 615 Crescent Executive Court, Suite
500, Lake Mary, Florida 32746; its telephone number is
(407)333-5300; and its World Wide Web address is
http://www.dht.com.
Industry
Over the past decade, healthcare costs in the United States has
risen faster than the overall rate of inflation. According to
the U.S. Health Care Financing Administration, healthcare
expenditures have increased from less than $250 billion, or
approximately 9% of U.S. gross domestic product, in 1980 to over
$1.0 trillion, or approximately 15% of U.S. gross domestic
product in 1996. This increase has resulted in broad pressures
to reduce costs without sacrificing the quality of care and has
caused significant changes in the healthcare industry.
In recent years, the healthcare industry has undergone, and
continues to undergo, radical and rapid change. The increasing
cost of providing healthcare has caused the provider
reimbursement environment to shift from the indemnity model,
characterized by fee-for-service arrangements and traditional
indemnity insurance, to the managed-care model, in which
providers are aligned within networks and healthcare delivery
must follow plan-established rules to qualify for reimbursement.
As a result, the emphasis of healthcare providers has shifted
from providing care regardless of cost to providing high-quality
care in the most cost-effective manner possible. The pressures
to achieve successful clinical outcomes more efficiently while
managing costs more effectively have led to significant industry
consolidation, resulting in the development of large integrated
healthcare delivery networks.
As these integrated healthcare networks grow larger and more
dispersed, the challenge of effectively managing and delivering
information throughout the enterprise also increases. In
addition, large and widely-spread healthcare delivery networks
require data warehouse and analysis tools that permit them to
effectively extract and analyze data located throughout the
enterprise.
Healthcare providers have recently begun to view information
systems technology as a viable avenue for increasing
productivity and efficiency, measuring and managing costs, and
improving the quality of services delivered. The 1998 Annual
Healthcare Information Management and Systems Society
("HIMSS")/Hewlett Packard Leadership Survey reported that 73
percent of the respondents indicated that they expect their
Information Technology ("IT") budgets to go up in the next year
by a weighted average increase of 14 percent. The survey was
completed by 1,754 senior operations and financial managers, IT
managers, clinical managers, other provider organization
professionals, IT consultants and IT vendors.
The Company believes that healthcare providers are realizing
that a relatively small investment in healthcare information
technology can significantly reduce variable costs. As a result
of industry trends, healthcare providers are making significant
investments in healthcare information technology solutions that
capitalize on evolving information management technologies.
Industry analysts estimate that healthcare organizations spent
approximately $17 billion in 1997 for information technology
solutions, and anticipate that such expenditures will increase
to approximately $28 billion annually by 2002.
9
Products and Services
The Company has a broad product line comprising a strategic mix
of applications, technologies and services that support the
restructuring of the healthcare delivery system. The Company
offers information solutions for radiology, anatomic pathology,
clinical laboratory and electronic health records.
Products Generally
Available Type of Solution Description
I. DynamicVision for Radiology
Dynamic Dynamic RadPlus / Radiology Information System / A voice
and image-enabled client/server radiology information system
that manages clerical and administrative functions as well as
patient scheduling and film tracking for the radiology
department.
Dynamic PACSPlus / PACS / A picture archiving and
communication system (PACS) that enables physicians and
caregivers to access, review and manipulate images from local
and remote locations.
Dynamic OPTIMA / Mammography Management / Manages clerical and
administrative functions for mammography services.
Dynamic Talk / Continuous Speech Recognition / An IBM speech
recognition system supported by a radiology knowledge base.
Enables radiologists to quickly create and edit their own
diagnostic reports.
Dynamic WebSight / Teleradiology / A point-to-point
teleradiology solution that enables the transfer and reception
of images via a local area network or wide area network. Images
can be displayed and manipulated at remote locations.
II. DynamicVision for Pathology
Dynamic CoPathPlus / Anatomic Pathology System / An image and
voice enabled client/server solution that manages clerical and
administrative functions of the cytology/pathology department.
Dynamic PICSPlus / Image Management System / A product of
AutoCyte Inc., AIMS captures, stores and communicates high
resolution digital microscope and gross images of pathology
specimens.
Dynamic Talk / Continuous Speech Recognition / An IBM speech
recognition solution that expedites pathology report turnaround
with hands-free, eyes-free generation of dictated reports.
III. DynamicVision for Clinical Laboratory
Premier Series / Laboratory Information System / Manages
clerical and administrative functions in the laboratory
including monitoring and controlling specimens, ordering,
tracking, and results reporting.
IV. DynamicVision for Health Information Management
Dynamic RecordPlus / Document Imaging and Workflow for the
Health Information Management Department / An enterprise-wide,
solution that provides document imaging and management, advanced
workflow and business process automation.
Dynamic AccountPlus / Document Imaging and Workflow for Patient
Accounting Department / An enterprise-wide, solution that
provides document imaging and management, advanced workflow and
business process automation.
V. DynamicVision for Surgical Services
Dynamic SurgiPlus / Perioperative Information Management
System / A client/server solution that collects and organizes
vital patient, surgical, and anesthesia data. Monitrax
facilitates clinical and management decision-making as well as
outcomes research.
10
Consulting, Systems Integration and Other Services
The Company provides a full range of professional consulting
services including project management, implementation planning,
training and education. The Company's technical services
includes network design, implementation and support, custom
software development, interfaces and modifications and Systems
integration. The Company also provides support services
including 24-hour telephone support, and software maintenance
and enhancements.
Sales and Marketing
As of August 31, 1998, the Company had 50 full time employees in
sales and marketing related functions. The Company had 30 sales
employees and 20 marketing employees. The compensation of the
sales employees is substantially dependent on the achievement of
individual sales targets. Marketing personnel perform
telemarketing, proposal development, demonstration coordination,
develop product competitive analyses, sales collateral, audio
and video products, coordinate trade shows, advertising, public
relations activities, and administrative support.
The Company's sales cycle is typically six to eighteen months
and includes several steps: (i) initial contact and
qualification; (ii) development of proposal in response to
request for a proposal or direct sales lead; (iii) business
problem requirements definition; (iv) product demonstrations;
(v) site visits; and (vi) contract preparation and negotiations.
Members of the Company's professional services, product
management and sales support departments, and members of
executive management assist the sales force in completing the
proposal, conducting demonstrations and analyzing the
requirements. In support of the sales efforts, the Company
advertises in trade journals, participates in trade shows,
publishes articles and provides speakers for industry shows and
conferences. In addition, the Company receives qualified leads
as well as support in proposal development, demonstrations and
site visits from its strategic business partners, which include
IBM, Wang, Dictaphone, NRI and others.
Strategic Relationships
The Company has entered into strategic relationships with
several leading technology developers to gain access to certain
technologies that are integrated into the Company's systems. In
addition, through these strategic relationships, the Company is
able to cross-market its internally developed or acquired
technologies to customers of its business partners.
IBM - In 1997, the Company acquired IBM's Medical Records Plus
enterprise document imaging and management system. This AS/400
product is based on IBM's ImagePlus/4OO image processing system
and offers DynamicVision customers an AS/400 document imaging
alternative. The Company has also integrated IBM
MedSpeak/Radiology solution into its Maxifiler radiology
information system and MedSpeak/Pathology into its CoPath
anatomic pathology system. This expands the functionality of
these two solutions to include continuous speech recognition for
direct dictation of results, bypassing the need for
transcription of diagnostic reports. Continuous speech
recognition allows radiologists and pathologists to dictate at a
normal rate of speech for instantaneous report production, with
little or no time lapse between the spoken and typed word. The
Company is also a re-marketer of IBM hardware.
Eastman Software - The Company has a non-exclusive agreement
with Eastman Software to market its EASTMAN SOFTWARE Imaging and
EASTMAN SOFTWARE Workflow products as integral components of the
Dynamic Vision electronic health record solution. This offers
DynamicVision customers a Microsoft Windows NT alternative for
document imaging and workflow.
Who? Vision Inc. - The Company has a marketing agreement with
Who? Vision Inc. of Sebastian, FL. Through this agreement,
Who's biometric authentication security capability has been
integrated into the Company's information solutions.
Microsoft - The Company is a Microsoft Solution Provider
("MSP"). Through this program, Microsoft works with the Company
to provide information, tools, and business development
assistance in implementing the successful use of Microsoft
Solutions Platform products such as Windows 98 and NT.
Sybase - The Company is an Option Solutions Partner with Sybase
Corporation. This partnership enables Dynamic and Sybase to
deliver enterprise client/server solutions.
11
AutoCyte - Dynamic has an original equipment manufacturer
("OEM") distribution agreement with AutoCyte, Inc. of Elon
College, North Carolina. Through this agreement, the Company
has the exclusive rights to sell the AutoCyte Image Management
System ("AIMS") within the laboratory and anatomic pathology
information systems markets in the U.S. and Canada as an OEM
software contractor. A pathology imaging solution, AIMS works
in conjunction with Dynamic's CoPathPlus system for anatomic
pathology and is sold under the name Dynamic PICSPlus. AutoCyte
formerly was known as Roche Image Analysis Systems.
Sunquest Information Systems - The Company has a value-added
re-marketer agreement with Sunquest Information Systems
("Sunquest") of Tucson, Arizona. Under the terms of the
agreement, Sunquest exclusively markets and sub-licenses the
Company's CoPathPlus anatomic pathology solution to their
existing base of clients. Sunquest may also sell CoPathPlus,
when bundled with their laboratory information system, in the
general U.S. healthcare market and on a stand-alone product
basis in the international market.
Customers
The Company currently supports over 600 customers, the majority
of which are located in the United States. The Company
generates revenues almost exclusively through sales to the
healthcare industry located in the United States. Due to this
concentration, substantially all receivables of the Company are
from healthcare institutions which may be similarly affected by
changes in economic, regulatory or other industry related
conditions. Key customers include St. Barnabas Medical Center,
Ohio State University Hospital, Orlando Regional Healthcare
System, Parkland Memorial Hospital, University of Illinois at
Chicago Medical Center, UCSF Medical Center, Mayo Foundation,
Cleveland Clinic Foundation Yale-New Haven Hospital/Yale
University School of Medicine, Massachusetts General
Hospital/Harvard Medical Center, Kaiser Foundation Health Plan,
Borgess Health Alliance and Memorial Sloan-Kettering Cancer
Institute.
Competition
The market for information technology in the healthcare industry
is intensely competitive. Many of the Company's competitors have
significantly greater financial, research and development,
technical and marketing resources than the Company. Competitors
vary in size and in the scope and breadth of the products and
services they offer. The Company's systems compete both with
other technologies and with similar systems developed by other
companies. Other major information management companies,
including the companies with whom the Company has strategic
relationships, may enter the markets in which the Company
competes. Competitive pressures and other factors, such as new
system introductions by the Company's competitors, may result in
significant pricing pressures that could have a material adverse
effect on the Company. In addition, in the professional and
technical consulting segment, the Company competes with the
consulting divisions of national accounting firms as well as
national and regional healthcare specialty consulting firms.
Backlog
The Company had contracts which it believed to be firm for the
delivery of systems and services ("backlog"), totaling
approximately $11.2 million on June 30, 1998, compared to $7.4
million on June 30, 1997. In addition, as of June 30, 1998 the
Company had contracts for the delivery of software support
services billable at an annual rate of $12.4 million, compared
to $12.3 million as of June 30, 1997.
Research and Development
The Company's research and development program is designed to
extend the capabilities of existing products and develop new
healthcare application solutions. The Company believes that a
substantial and sustained commitment to product development is
important to the long-term success of its business. As of August
31, 1998, 31 professional employees were engaged in research and
development activities. During the years ended December 31,
1995,1996, and 1997, the Company spent $2,727,000, $3,564,000
and $8,336,000, respectively, on research and development. The
increase in research and development expenditures in each period
resulted from the Company's acquisition of Collaborative Medical
Systems, Inc., which conducts significant research and
development activities. The acquisition was consummated in
December, 1996 and increased development expenditures associated
with the DynamicVision, Maxifiler C/S, CoPath C/S, PACPlus+ and
Monitrax product lines. The Company's research and development
is influenced by customer input and user group forums.
12
Intellectual Property
The Company relies primarily upon trade secrets, copyright laws
and confidentiality agreements with employees and customers to
protect its rights in its software technology. The Company does
not hold any patents nor has it filed copyrights with respect to
any of its software technology. Due to the rapid pace of
innovation within the software industry, the Company believes
that patent, trade secret and copyright protection are less
significant than the Company's ability to farther develop,
enhance and modify its current products and other clinical
information systems through the technology and creative skills
of its personnel. To minimize the possibility of third parties
imitating the Company's systems, the Company licenses object
codes only and does not license or otherwise distribute source
codes.
The Company's employees are required to enter into
confidentiality agreements which prohibit the disclosure of
confidential information and require employees to report and
assign to the Company all concepts, developments, discoveries
and inventions conceived during their employment.
The Company has obtained federal trademark protection for
Maxifiler, and OPTIMAr. There can be no assurance that the
legal protections and precautions taken by the Company will be
adequate to prevent misappropriation of the Company's
technology. In addition, these protections do not prevent
independent third-party development of functionally equivalent
or superior technologies or services. The Company does not
believe that its operations or products infringe on the
intellectual property fights of others. There can be no
assurance that others will not assert infringement or trade
secret claims against the Company with respect to its current or
future products or that the Company will be successful in
defending any such claim.
Government Regulations
The United States Food and Drug Administration ("FDA") has
issued a draft guidance document addressing the regulation of
certain computer products as devices under the Federal Food,
Drug and Cosmetic Act ("FFDCA"). To the extent that the computer
software is classified as a device under applicable regulations,
the manufacturers of such products could be required, depending
upon the product, to: (i) register and list their products with
the FDA, (ii) notify the FDA and demonstrate substantial
equivalence to other products on the market before marketing
such products or (iii) obtain FDA clearance by filing a
pre-market application that establishes the safety and
effectiveness of the product. The Company has three products
considered devices under the FFDCA: Monitrax, PACsPlus+ and
Transfusion Service Manager ("TSM"). As a result of the
characterization of certain of the Company's products as
devices, the Company's manufacturing facilities are registered
with the FDA and its manufacturing operations regarding devices
are required to be in compliance with the FDA's rules and
regulations. The FDA conducted on-site inspections at the
Florida facility in May 1996 and at the Minnetonka facility in
June 1996. Both inspections were concluded without incident. On
December 19, 1997, the FDA issued a letter of Substantial
Equivalence to the Company for the TSM product. This letter was
the positive outcome of the 510(k) submission process begun in
March 1996. There can be no assurance that the Company
ultimately will be able to obtain or maintain required FDA
approvals to market its products.
Facilities
The Company's corporate headquarters are located at 615 Crescent
Executive Court, Suite 500, Lake Mary, Florida 32746. The Lake
Mary location consists of approximately 53,800 square feet of
office space under a lease which expires March 2005. The Company
maintains an office at 10901 Bren Road East, Minnetonka,
Minnesota 55343 as the Company's radiology technology center
which the Company intends to close on or before December 31,
1998. The Minnetonka location consists of approximately 12,800
square feet under lease which expires on July 31, 1999, which
the Company does not intend to renew. In addition, the Company
also maintains an office at Two University Office Park, 51
Sawyer Road, Waltham, Massachusetts, 02154 as the Company's
clinical solutions center. The Waltham location consists of
approximately 30,000 square feet under lease which expires on
November 30, 1999.
USE OF PROCEEDS
This Prospectus relates to Shares being registered for the
accounts of the Selling Shareholders. The Company will not
receive any proceeds from the sale of the Shares but will pay
all expenses related to the registration of the Shares.
13
<TABLE>
SELLING SHAREHOLDERS
Number of Series C Preferred Common Shares(19)
Shares Beneficially Owned Beneficially Owned
Shareholder Relationship Registered Number Percent Number Percent
<S> <C> <C> <C> <C> <C> <C>
Mitchel J. President, CEO, 402,500 0 * 1,142,855(1) 6.09%
Laskey Treasurer &
Director
Riverside Managing 832,000 640,000 64.00% 2,542,200(2) 13.35%
Partnership Partner is a
Director
Argentum Managing 377,000 290,000 29.00% 1,155,750(3) 6.22%
Capital Partner is a
Partners, LP Director
Scott E. Senior Vice 16,250 12,500 1.25% 16,250(4) *
Waldrop President & COO
Michael L. Senior Vice 32,500 25,000 2.50% 32,500(5) *
Carlay President Sales
& Marketing
Paul S. Vice President 3,250 2,500 * 37,637(6) *
Glover Finance, CFO
& Secretary
Linda A. Vice President 32,500 25,000 2.50% 375,317(7) 2.05%
Moline Consultant Services
Brian M. Vice President 6,500 5,000 * 6,500(8) *
Paige Development
Saul M. Former CoMed 422,674 0 * 414,674(9) 2.27%
Bloom Exec. VP &
Director
Jerome B. Former CoMed 414,674 0 * 409,874(10) 2.25%
Lerman Treasurer &
Director
Charles M. Former CoMed 402,674 0 * 402,674(11) 2.21%
Cooper President, CEO
& Director
Martin B. Former CoMed 225,199 0 * 220,399 1.21%
Levine Exec. VP &
Director
Marianne Former CoMed 79,877 0 * 79,877 *
Boswell Sales VP &
Director
Kay Former CoMed 63,898 0 * 63,898 *
McDonald Finance VP &
Director
Richard D. Former Dynacor 75,734 0 * 78,430 *
Hausten Exec. VP &
Director
Craig T. Former Dynacor 75,733 0 * 96,729(12) *
Arneson President, CEO &
Director
Robert R. Former Dynacor 75,733 0 * 101,146(13) *
Harris Exec. VP, Secty,
Treas. & Director
Eugene W. Former Dynacor 11,825 0 * 29,768(14) *
Dietz Director
EWD Dynacor Managing Director 4,725 0 * 29,768(15) *
Group LLP was former Dynacor
Director
Ron Braatz None 6,250 0 * 19,813(16) *
Daly Family, None 9,088 0 * 9,088(17) *
LP
Glen Siedel None 25,000 0 * 25,500(18) *
</TABLE>
* Less than 1%
(1) Includes 541,500 shares of Common Stock that Mr. Mitchel J.
Laskey may acquire upon the exercise of Common Stock purchase
warrants.
(2) Includes 192,000 shares of Common Stock that Riverside
Partnership may acquire upon the exercise of Common Stock
purchase warrants.
(3) Includes 87,000 shares of Common Stock that Argentum Capital
Partners, LP may acquire upon the exercise of Common Stock
purchase warrants.
(4) Includes 3,750 shares of Common Stock that Mr. Scott E.
Waldrop may acquire upon the exercise of Common Stock purchase
warrants.
(5) Includes 7,500 shares of Common Stock that Mr. Michael L.
Carlay may acquire upon the exercise of Common Stock purchase
warrants.
(6) Includes 1,746 shares of Common Stock held by spouse, Mrs.
Gail Glover, and 11,250 Mr. Paul S. Glover may acquire upon the
exercise of Common Stock purchase warrants.
(7) Includes 270,753 shares of Common Stock held by spouse, Mr.
Phil Kneeland, and 41,500 Mrs. Linda A. Moline may acquire upon
the exercise of Common Stock purchase warrants.
(8) Includes 1,500 shares of Common Stock that Mr. Brian M.
Paige may acquire upon the exercise of Common Stock purchase
warrants.
(9) Includes 12,000 shares of Common Stock that Mr. Saul M.
Bloom may acquire upon the exercise of Common Stock purchase
warrants.
(10) Includes 7,200 shares of Common Stock that Mr. Jerome B.
Lerman may acquire upon the exercise of Common Stock purchase
warrants.
(11) Includes 7,200 shares of Common Stock that Mr. Martin B.
Levin may acquire upon the exercise of Common Stock purchase
warrants.
14
(12) Includes 20,000 shares of Common Stock that Mr. Craig T.
Arneson may acquire upon the exercise of Common Stock purchase
warrants.
(13) Includes 20,000 shares of Common Stock that Mr. Robert R.
Harris may acquire upon the exercise of Common Stock purchase
warrants.
(14) Includes 8,400 shares of Common Stock owned by EWD Dynacor
Group, LLP. Mr. Eugene W. Dietz is the managing partner of EWD
Dynacor Group, LLP.
(15) Includes 21,368 shares of Common Stock owned by Mr. Eugene
W. Dietz, the managing partner of EWD Dynacor Group, LLP.
(16) Includes 538 shares of Common Stock held by spouse, Mrs. J.
Braatz, and 9,800 Mr. Ron Braatz may acquire upon the exercise
of Common Stock purchase warrants.
(17) Includes 9,088 shares of Common Stock that Daly Family, LP
may acquire upon the exercise of Common Stock purchase warrants.
(18) Includes 25,000 shares of Common Stock that Mr. Glen Siedel
may acquire upon the exercise of Common Stock purchase warrants
(19) The shares of Series C Preferred Stock are convertible on a
share for share basis into Common Stock and have been included
in the Common Shares Beneficially Owned column.
PLAN OF DISTRIBUTION
The securities which may be sold by the Selling Shareholders
may be offered and sold by them from time to time as market
conditions permit in the over-the-counter market, or otherwise,
at prices and terms then prevailing or at prices related to the
then current market price, or in negotiated transactions. Such
securities may be sold by one or more of the following methods,
without limitation: (a) a block trade in which a broker or
dealer so engaged will attempt to sell such securities as agent
but may position and resell a portion of the block as principal
to facilitate the transaction; (b) purchases by a dealer as
principal and resale thereby for its account pursuant to this
Prospectus; (c) ordinary brokerage transactions and transactions
in which the broker solicits purchasers; and (d) face-to-face
transactions between sellers and purchasers without a broker or
dealer. In effecting sales, brokers or dealers engaged by the
Selling Shareholders may arrange for other brokers or dealers to
participate. Such brokers or dealers may receive commissions or
discounts from the Selling Shareholders in amounts to be
negotiated. Such brokers and dealers and any other
participating brokers or dealers may each be deemed to be an
"underwriter," as that term is defined in the Securities Act, in
connection with offers or sales of securities owned by the
Selling Shareholders.
Under applicable rules and regulations under the Exchange Act,
any person engaged in a distribution of any of the Shares may
not simultaneously engage in market activities with respect to
the Common Stock for the applicable period under Regulation M
prior to the commencement of such distribution. In addition and
without limiting the foregoing, the Selling Shareholders will be
subject to applicable provisions of the Exchange Act and the
rules and regulations thereunder, including without limitation
Rule 10b-5 and Regulation M, which provisions may limit the
timing of purchases and sales of any of the Shares by the
Selling Shareholders. All of the foregoing may affect the
marketability of the Common Stock.
The Company will pay substantially all of the expenses incident
to this Offering of the Shares by the Selling Shareholders to
the public other than commissions, concessions and discounts of
brokers, dealers or other agents. Each Selling Shareholder may
indemnify any broker, dealer, or other agent that participates
in transactions involving sales of the Shares against certain
liabilities, including liabilities arising under the Securities
Act. The Company may agree to indemnify the Selling
Shareholders and any such statutory "underwriters" and
controlling persons of such "underwriters" against certain
liabilities, including certain liabilities under the Securities
Act.
15
DESCRIPTION OF SECURITIES TO BE REGISTERED
Terms of the Common Stock
The Company is authorized to issue 40,000,000 shares of Common
Stock, $.01 par value, of which as of August 31, 1998,
18,199,650 shares were issued and outstanding. Holders of
shares of Common Stock are entitled to dividends as and when
declared by the Board of Directors of the Company from funds
legally available therefor, and upon liquidation, dissolution or
winding up of the Company to share ratably in all assets
remaining after payment liabilities. The holders of shares of
Common Stock do not have preemptive rights, are entitled to one
vote for each share of Common Stock held of record.
Registered Shares
Of the 3,595,584 shares of Common Stock to which this
Prospectus relates (the "Shares"), 780,588 of such Shares may be
acquired upon exercise of certain outstanding options and
warrants, 1,000,000 of the Shares may be acquired upon the
conversion of the Company's Series C 8% Redeemable Convertible
Participating Preferred Stock, par value $.01 per share (the
"Series C Preferred Stock"), and 1,814,996 of such shares are
outstanding having been previously issued in connection with the
acquisitions of Collaborative Medical Systems, Inc. and Dynacor,
Inc. on December 17, 1996 and May 21, 1997, respectively. The
780,588 of shares which may be acquired upon exercise of certain
options and warrants are summarized as follows:
Issuable
Common Shares Exercise Price Expiration Date
300,000 $ 2.2500 07/30/03
100,000 $ 6.0000 01/01/03
100,000 $ 7.5000 01/01/03
100,000 $ 9.0000 01/01/03
100,000 $10.5000 01/01/03
2,500 $ 4.6250 01/01/02
44,000 $ 5.0000 12/17/01
25,000 $ 4.6250 01/01/02
9,088 $ 8.8200 02/28/99
780,588
EXPERTS
The consolidated financial statements of the Company as of
December 31, 1996 and 1997 and for each of the years in the
three-year period ended December 31, 1997, have been
incorporated by reference in this Prospectus and Registration
Statement in reliance on the report of KPMG Peat Marwick LLP,
independent certified public accountants, which is 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, P.A., 2601 South Bayshore Drive, 19th Floor, Miami,
Florida. Richard N. Bernstein, a principal in the law firm of
Cohen, Berke, Bernstein, Brodie & Kondell, P.A., is the trustee
of the Laskey Family Irrevocable Trust, which is the beneficial
owner of 125,000 shares of Common Stock.
16
No dealer, salesperson or other person has been authorized to
give any information or to make any representations other than
those contained in or incorporated by reference in this
Prospectus in connection with the offer made by this Prospectus
and, if given or made, such information or representations must
not be relied upon as having been authorized by the Company or
the Selling Stockholders. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has not been
any change in the facts set forth in this Prospectus or in the
affairs of the Company since the date hereof. This Prospectus
does not constitute an offer or solicitation by anyone in any
jurisdiction in which such offer or solicitation is not
authorized or in which the person making such offer or
solicitation is not qualified to do so or to anyone to whom it
is unlawful to make such offer or solicitation.
Up to 3,595,584 Shares of Common Stock
TABLE OF CONTENTS DYNAMIC HEALTHCARE
TECHNOLOGIES, INC.
DYNAMIC HEALTHCARE TECHNOLOGIES, INC. 1
AVAILABLE INFORMATION 2
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE 2
PROSPECTUS SUMMARY 3
RISK FACTORS 4
THE COMPANY 8
USE OF PROCEEDS 13 PROSPECTUS
SELLING SHAREHOLDERS 14
PLAN OF DISTRIBUTION 15
DESCRIPTION OF SECURITIES TO BE
REGISTERED 16 SEPTEMBER 29, 1998
EXPERTS 16
LEGAL MATTERS 16
17
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:
NASD National Market Listing Fee $17,500
Securities and Exchange Commission registration fee 1,127
Legal and Accounting fees and expenses 5,000
Miscellaneous 5,000
TOTAL $28,627
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the Company's Articles of Incorporation, Bylaws and
applicable state law, the Company will indemnify its directors,
officers, employees an agents against all expenses (including
attorneys' fees), judgments, fines and amounts paid in
settlement which are actually and reasonably incurred in
connection with any threatened, pending or actually completed
action, suit or proceeding, whether civil, criminal,
administrative or investigative, to which any such person
becomes subject as a result of having served in such role, as an
employee or agent of the Company, or at the Company's request as
a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise. However,
except as described below, such indemnification will be made
only if such person acted in good faith and in a manner he or
she reasonably believed to be in, or 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 or
her conduct was unlawful. The termination of any action, suit
or proceeding by judgment, order, settlement, conviction or upon
a plea of nolo contendere or its equivalent will not, of itself,
create a presumption that such person did not act in good faith
and in a manner which he or she reasonably believed to be in or
not opposed to the best interests of the Company, or with
respect to any criminal action or proceeding, did not have
reasonable cause to believe that his or her conduct was unlawful.
ITEM 16. EXHIBITS
Exhibit
Number Exhibit
5.1 Opinion of Cohen, Berke, Bernstein, Brodie & Kondell, P.A.
23.1 Consent of Cohen, Berke, Bernstein, Brodie & Kondell, P.A.
(included in Exhibit 5.01)
23.2 Consent of KPMG Peat Marwick LLP
18
ITEM 17. UNDERTAKINGS
(a) 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;
(ii) To reflect in the prospectus any facts or event arising
after the effective date of this Registration Statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to the Rule 424(b)
if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table
in this Registration Statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement.
Provided, however, that paragraphs (a)(1)(I) and (a)(1)(ii)
above do not apply if the information required to be included in
a post-effective amendment by these paragraphs is contained in
periodic reports filed with or furnished by the Registrant
pursuant to Section 13 or 15(d) of the Exchange Act that are
incorporated by reference in this Registration Statement.
(i) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
(ii) 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.
1. 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.
2. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) 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.
19
(d) 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.
20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certified that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and
has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the
City of Maitland, State of Florida, on September 29, 1998.
REGISTRANT:
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
By: /S/ PAUL S. GLOVER
Paul S. Glover, Vice President of Finance,
Chief Financial Officer and Secretary
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/ DAVID M. POMERANCE Chairman of the Board September 29, 1998
David M. Pomerance
/S/ MITCHEL J. LASKEY President, Chief Executive Officer,
Mitchel J. Laskey Treasurer and Director September 29, 1998
/S/ PAUL S. GLOVER Vice President of Finance,
Paul S. Glover Chief Financial Officer
and Secretary September 29, 1998
/S/ THOMAS J. MARTINSON Director September 29, 1998
Thomas J. Martinson
/S/ JERRY L. CARSON Director September 29, 1998
Jerry L. Carson
/S/ BRET MAXWELL Director September 29, 1998
Bret Maxwell
/S/ DANIEL RAYNOR Director September 29, 1998
Daniel Raynor
/S/ RICHARD W. TRUELICK Director September 29, 1998
Richard W. Truelick
/S/ GUY RABBAT Director September 29, 1998
Guy Rabbat
21
INDEX TO EXHIBITS
Exhibits Description Page
5.01 Opinion of Cohen, Berke, Bernstein, Brodie & Kondell, P.A. 23
23.1 Consent of Cohen, Berke, Bernstein, Brodie & Kondell, P.A.
(included in Exhibit 5.01) 23
23.2 Consent of KPMG Peat Marwick LLP 24
22
Exhibit 5.01
September ____, 1998
Board of Directors
Dynamic Healthcare Technologies, Inc.
615 Crescent Executive Court, Fifth Floor
Lake Mary, Florida 32746
Re: Registration Statement on Form S-3
shares of Common Stock
Gentlemen:
We have acted as counsel for Dynamic Healthcare Technologies,
Inc. (the "Company") in connection with the above-described
Registration Statement.
In connection therewith, we have examined the following:
1. The Articles of Incorporation of the Company, as amended,
certified by the Secretary of State of the State of Florida;
2. The Bylaws of the Company, as amended;
3. The minute book of the Company;
4. Certificate of Good Standing with respect to the Company,
issued by the Florida Secretary of State.
Based upon such examination and upon examination of such other
instruments and records as we have deemed necessary, we are of
the opinion that:
A. The Company has been duly incorporated under the laws of the
State of Florida and is validly existing and in good standing
under the laws of that state.
B. The 3,595,584 shares of Common Stock covered by the
Registration Statement when issued and sold in accordance with
the terms described in said Registration Statement, will be
validly issued, fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under
the caption "Legal Matters" in the Prospectus. In giving this
consent, we do not admit that we come within the category of
persons whose consent is required under Section 7 of the
Securities Act of 1933, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Sincerely,
/s/ COHEN, BERKE, BERNSTEIN,
BRODIE & KONDELL, P.A.
23
Independent Auditors' Consent
The Board of Directors
Dynamic Healthcare Technologies, Inc.:
We consent to the use of our report incorporated herein by
reference and to the reference to our firm under the heading
"Experts" in the propsectus.
/s/ KPMG PEAT MARWICK LLP
Orlando, Florida
September 25, 1998
24
