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Registration No. 333-
As filed with the Securities and Exchange Commission on April 9,
1997
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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MEDICAL RESOURCES, INC.
Delaware 13-3584552
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
155 State Street,
Hackensack, New Jersey 07601
(201) 488-6230
(Address, including zip code and telephone number, including
area code, of registrant's principal executive offices)
William D. Farrell
President and Chief Operating Officer
155 State Street,
Hackensack, New Jersey 07601
(201) 488-6230
(Address, including zip code and telephone number, including
area code, of agent for service)
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Copies of communications to:
STEPHEN M. DAVIS, ESQ.
Werbel & Carnelutti
A Professional Corporation
711 Fifth Avenue
New York, New York 10022
(212) 832-8300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes
effective.
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If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please
check the following box. / /
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, as amended (the "Securities Act")
other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. /x /
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. / /
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and
list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
/ /
If delivery of the prospectus is expected to be made pursuant
to Rule 434, please check the following box. / /
Pursuant to Rule 429 under the Securities Act, the form of
Prospectus included herein also relates to the securities
registered under the Registrant's Registration Statement on Form S-
2 (file No. 333-4056) declared effective on April 29, 1996, is
intended for use therewith, and constitutes a post-effective
amendment thereto.
CALCULATION OF REGISTRATION FEE
Title of Each Class
of Securities Common Stock,
to be Registered $.01 par value
Amount to be
Registered (1) 3,528,550
Proposed Maximum
Offering Price
Per Unit (2) $10.63
Proposed Maximum
Aggregate Offering
Price (2) $37,508,487
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Amount of
Registration
Fee (1)(2) $4,374
(1) 3,180,425 shares of the Registrant's Common Stock being
registered hereby have previously been registered on a Registration
Statement on Form S-2 declared effective on April 29, 1996 (File
No. 333-4056) and a registration fee of $6,992 was paid in
connection therewith.
(2) Estimated solely for the purpose of calculating the
registration fee in accordance with Rule 457 under the Securities
Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL
THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY
STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR
UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH
DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO
SAID SECTION 8(a), MAY DETERMINE.
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SUBJECT TO COMPLETION DATED APRIL 9, 1997
Prospectus 3,528,550 Shares
MEDICAL RESOURCES, INC.
Common Stock
($.01 Par Value)
The shares offered hereby (the "Shares") consist of 3,528,550
shares of common stock, par value $.01 per share (the "Common
Stock"), of Medical Resources, Inc., a Delaware corporation (the
"Company"). The Shares may be offered from time to time by certain
stockholders (the "Selling Stockholders") identified herein. See
"Selling Stockholders." The Company will not receive any part of
the proceeds from the sales of the Shares. All expenses of
registration incurred in connection herewith are being borne by the
Company, but all selling and other expenses incurred by the Selling
Stockholders will be borne by the Selling Stockholders.
The Selling Stockholders have not advised the Company of any
specific plans for the distribution of the Shares covered by this
Prospectus, but it is anticipated that the Shares will be sold from
time to time primarily in transactions (which may include block
transactions) on the National Association of Securities Dealers
Automated Quotation (NASDAQ) System at the market price then
prevailing or at prices related to prevailing prices, although
sales may also be made in negotiated transactions at negotiated
prices or otherwise. See "Plan of Distribution."
The Company's Common Stock is traded and quoted on the Nasdaq
National Market under the symbol MRII. On March 31, 1997, the
closing sale price of the Common Stock was $10.88 per share.
THE PURCHASE OF THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE
OF RISK. SEE "RISK FACTORS" ON PAGES 5-12.
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 April , 1997
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No dealer, salesperson or other person has been
authorized to give any information or to make any representations,
other than those contained or incorporated by reference in this
Prospectus, in connection with the offering contained herein and,
if given or made, such information must not be relied upon as
having been authorized by the Company or the Selling Stockholders.
This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction to any person to whom it is unlawful to
make such offer in such jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder shall under any
circumstances create any implication that there has been no change
in the affairs of the Company since the date hereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements
of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy and information
statements filed by the Company may be inspected and copied at the
Public Reference Section of the Commission at 450 Fifth Street,
N.W. Washington, D.C. 20549, and at the Commission's Regional
Offices at 7 World Trade Center, 13th Floor, New York, New York
10048 and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such material
can also be obtained from the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street N.W.,
Washington D.C. 20549 at prescribed rates. The Commission
maintains a Web site that contains reports, proxy and information
statements and other information regarding the Company; the address
of such site is http://www.sec.gov.
The Company has filed with the Commission a Registration
Statement on Form S-3 (the "Registration Statement"), under the
Securities Act of 1933, as amended (the "Act"), with respect to the
Common Stock offered hereby. This Prospectus, which constitutes a
part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement certain parts
of which are omitted in accordance with the rules and regulations
of the Commission. Copies of the Registration Statement, including
all exhibits thereto, may be obtained from the Commission's
principal office in Washington D.C. upon payment of the fees
prescribed by the Commission or may be examined without charge at
the offices of the Commission as described above.
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The Company's securities are quoted on the Nasdaq National
Market. Reports and other information about the Company may be
inspected at the offices maintained by the National Association of
Securities Dealers, Inc., NASDAQ Reports Section, 1735 K Street,
N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or portions of documents filed by
the Company with the Commission are incorporated by reference in
this Prospectus:
(a) The Company's Annual Report on Form 10-K/A for the fiscal year
ended December 31, 1996 which contains consolidated financial
statements of the Company and certain other information regarding
the Company.
(b) The Company's Current Reports on Form 8-K dated February 5,
1997 and March 4, 1997.
(c) The Company's Registration Statement on Form 10 filed under
the Exchange Act, File No. 0-20440, which contains a description of
the Company's Common Stock.
(d) The description of certain rights attaching to the Common
Stock to purchase Series C Junior Participating Preferred Stock
contained in the Company's Registration Statement on Form 8-A,
filed with the Commission on September 13, 1996.
(e) All other reports pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the Company's fiscal year ended
December 31, 1996.
Each document filed subsequent to the date of this
Prospectus by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act, prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities remaining unsold,
shall be deemed to be incorporated by reference herein and to be a
part hereof from the date of the filing of such reports and
documents. Any statement contained in a document, all or a portion
of which is incorporated by reference herein, shall be deemed to be
modified or superseded for purposes of this Prospectus to the
extent that a statement contained or incorporated by reference
herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge
to each person to whom a copy of this Prospectus has been
delivered, upon the written or oral request of any such person, a
copy of any or all such documents which are incorporated herein by<PAGE>
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reference (other than exhibits to such documents unless such
exhibits are specifically incorporated by reference into the
documents that this Prospectus incorporates). Written or oral
requests for copies should be directed to: Investor Relations,
Medical Resources, Inc., 155 State Street, Hackensack, New Jersey,
07601, telephone number: 201/488-6230.
THE COMPANY
The Company specializes in the operation, management and
acquisition of diagnostic imaging centers. The Company currently
operates 53 outpatient diagnostic imaging centers located in the
Northeast (29), Florida (15), the Chicago area (6) and California
(3), and provides network management services to managed care
organizations. The Company is rapidly growing and has increased
the number of diagnostic imaging centers it operates from 11 at
December 31, 1995 to 53 at March 31, 1997 through acquisitions,
including 18 imaging centers resulting from the Company's
acquisition on August 30, 1996 of NMR of America, Inc.. In
addition, through the Per Diem and Travel Nursing divisions of its
wholly-owned subsidiary, StarMed Staffing, Inc. ("StarMed"), the
Company provides temporary healthcare staffing to acute and sub-
acute care facilities nationwide.
The Company's diagnostic imaging centers provide
diagnostic imaging services to patients referred by physicians in
a comfortable, service-oriented environment located in an
outpatient setting. At each of its centers, the Company provides
management, administrative, marketing and technical services, as
well as equipment and facilities, to physicians who interpret scans
performed on patients. Medical services are provided by board-
certified interpreting physicians, generally radiologists, with
whom the Company typically enters into contracts. Of the Company's
53 centers, 52 provide magnetic resonance imaging, which accounts
for a majority of the Company's imaging revenues. Many of the
Company's centers also provide some or all of the following
services:
computerized tomography, ultrasound, nuclear medicine, general
radiology and fluoroscopy and mammography.
The Company was incorporated in Delaware in August 1990
and has its principal executive offices at 155 State Street,
Hackensack, New Jersey 07601 (telephone no.: (201) 488-6230).
Prior to the Company's incorporation, the Company's operations,
which commenced in 1979, were conducted by subsidiary corporations.
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RISK FACTORS
In addition to the other information contained or
incorporated by reference in this Prospectus, prospective investors
should carefully consider the following matters in evaluating the
Company and its business before purchasing the shares of Common
Stock offered hereby.
Acquisition Strategy; Management of Growth
One of the Company's key objectives is to continue to
acquire diagnostic imaging centers and temporary healthcare
staffing businesses and integrate them into the Company's
operations. Successfully accomplishing this goal depends upon a
number of factors, including the Company's ability to find suitable
acquisition candidates, negotiate acquisitions on acceptable terms,
obtain necessary financing on acceptable terms, retain key
personnel of the acquired entities, hire and train other competent
managers, and effectively and profitably integrate the operations
of the acquired businesses into the Company's existing operations.
The process of integrating acquired businesses may require a
significant amount of resources and management attention which will
temporarily detract from attention to the day-to-day business of
the Company and may be prolonged due to unforeseen circumstances.
The Company's ability to manage its growth effectively will require
it to continue to improve its operational, financial and management
information systems and controls, and to attract, retain, motivate
and manage employees effectively. The failure of the Company to
manage growth in its business effectively would have a material
adverse effect on its results of operations. Future acquisitions
may be financed through the incurrence of additional indebtedness
or the issuance of equity securities. The issuance by the Company
of additional Common Stock in connection with acquisitions could be
dilutive to Company stockholders. Competition for suitable
acquisition candidates is expected to be intense and, in addition
to local hospital and physician groups, to include regional and
national diagnostic imaging service companies, regional and
national staffing companies and other medical services companies,
many of which have greater financial resources than the Company.
The Company may also pursue the development of new centers. New
centers may incur significant operating losses during their
development stages, and could materially adversely affect the
Company's operating results and financial condition.
Limitations and Delays in Reimbursement
Third-party payors, including Medicare, Medicaid, managed
care/HMO providers and certain commercial payors have taken
extensive steps to contain or reduce the costs of healthcare. In
certain areas, the payors are subject to regulations which limit
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regarding national healthcare reform are emphasizing containment of
healthcare costs. In addition, certain managed care organizations
have negotiated capitated payment arrangements for imaging
services. Under capitation, diagnostic imaging service providers
are compensated using a fixed rate per member of the managed care
organization regardless of the total cost, including the number of
procedures performed, of rendering diagnostic services to the
members. Services provided under these contracts are expected to
become an increasingly significant part of the Company's business.
The inability of the Company to properly manage the administration
of capitated contracts could materially adversely effect the
Company. Although patients are ultimately responsible for payment
for services rendered, substantially all of the Company's imaging
centers' revenues are derived from third-party payors. Successful
reduction of reimbursement amounts and rates, changes in services
covered, delays or denials of reimbursement claims, negotiated or
discounted pricing and other similar measures could materially
adversely affect the Company's respective imaging centers'
revenues, profitability and cash flow.
The Company's management believes that reimbursement
rates will continue to decline due to factors such as the expansion
of managed care providers and continued national healthcare reform
efforts. The Company enters into contractual arrangements with
managed care organizations which, due to the size of their
membership, are able to command reduced rates for services. These
agreements are expected to increase the number of procedures
performed due to the additional referrals from these managed care
arrangements. However, there can be no assurance that the
increased volume of procedures associated with these contractual
arrangements will offset the reduction in reimbursement rate per
procedure.
In addition, a significant percentage of the Company's
net service revenues from imaging centers are derived through
physicians providing imaging services to patients involved in
personal injury claims. Receivables relating to personal injury
claims require more extensive documentation than other procedures.
In addition, those individuals with obligations to the Company in
excess of insurance coverage or those who do not have insurance
coverage tend to delay payment until legal claims are resolved,
which may result in significant collection delays. Due to the
greater complexity in processing receivables relating to personal
injury claims, as well as increased information requirements from
third-party payors, such receivables typically require a longer
period of time to collect compared to other receivables and, in the
experience of the Company, incur a higher bad debt expense. The
Company believes that providing imaging services to patients
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because of the higher reimbursement rates typically realized in
such cases as compared to payors such as Medicare, Medicaid and
managed care providers. Therefore, the Company expects new centers
which it has recently acquired and centers which it may acquire in
the future to actively target such personal injury cases, which may
increase such centers' bad debt expense levels. Significant delays
in the collection or the inability to collect receivables relating
to personal injury claims could have an adverse effect on the
Company's diagnostic imaging operations.
Restrictions Imposed by Government Regulation
The healthcare industry is highly regulated. The
ownership, construction, operation, expansion and acquisition of
outpatient diagnostic imaging centers are subject to various
federal and state laws, regulations and approvals concerning such
matters as physician referrals, licensing of facilities and
personnel, and Certificates of Need and other required certificates
for certain types of healthcare facilities and major medical
equipment. Among other penalties, violations of these laws can
result in the shutdown of a company's facilities and loss of
Medicare and Medicaid reimbursement. The Federal Anti-Kickback Act
of 1977, as amended (the "Anti-Kickback Act") prohibits the offer,
payment, solicitation or receipt of any form of remuneration in
return for referring Medicare or Medicaid patients or purchasing,
leasing, ordering or arranging for any item or service that is
covered by Medicare or Medicaid. The law provides several
penalties for engaging in prohibited acts, including criminal
sanctions and exclusion from the Medicare and Medicaid programs.
Although the Company does not believe that it is operating in
violation of this law, the scope of the law remains somewhat
unclear and there is no assurance that the Company would prevail in
its position. In addition, in 1991 and subsequently, the Office of
the Inspector General of the Department of Health and Human
Services promulgated "safe harbor" regulations specifying
activities that will be protected from criminal and civil
investigation and prosecution under the Anti-Kickback Act. The
Office of the Inspector General has stated that failure to satisfy
the conditions of an applicable "safe harbor" does not necessarily
indicate that the arrangement in question violates the
Anti-Kickback Act, but means that the arrangement is not among
those that the "safe harbor" regulations protect from criminal and
civil investigation and prosecution under that law. The finding of
a violation must still be determined based upon the precise
language of the Anti-Kickback Act.
The Federal Omnibus Budget Reconciliation Act of 1989, as
amended by the Federal Omnibus Budget Reconciliation Act of 1993
contains provisions that, unless an exception applies, restrict
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and other radiological services for services to be rendered to
Medicare or Medicaid patients in which the physicians have a
"financial relationship" or an ownership interest or with which
they have a compensation arrangement (the so-called "Stark Law").
The Stark Law provides exceptions for certain types of employment
and contractual relationships. The Company believes that it is in
compliance with the Stark Law, but there is no assurance that the
Company will prevail in its position if challenged.
The State of Florida also enacted in 1992 an
anti-kickback statute substantially similar in scope to the
Anti-Kickback Act. Although the Company does not believe that it
is operating in violation of this law, as with its Federal
counterpart, the scope of the Florida law remains unclear and there
is no assurance that the Company would prevail in its position.
The States of Florida, Illinois, New Jersey, New York,
Maryland and Pennsylvania in which the Company currently operates
centers have enacted laws that restrict or prohibit physicians from
referring patients to healthcare facilities in which such
physicians have a financial interest. Although the Company does
not believe that these laws will have a material adverse effect on
its operations in these states, there is no assurance that these
laws will not be interpreted or applied in such a way as to create
such a material adverse effect, or that these states, or other
states in which the Company does business, will not adopt similar
or more restrictive laws or regulations that could have such a
material adverse effect.
All states where the Company has imaging centers have
enacted Certificate of Need laws to facilitate healthcare planning
by placing limitations on the purchase of certain major medical
equipment and certain other capital expenditures. These statutes,
together with their implementing regulations, could limit the
Company's ability to acquire new imaging equipment or expand or
replace its equipment at existing centers, and no assurances can be
given that the required regulatory approvals for any future
acquisitions, expansions or replacements will be granted to the
Company.
The Company continues to review all aspects of its
operations and believes that it complies in all material respects
with applicable provisions of the Anti-Kickback Act, the Stark Law
and applicable state laws governing fraud and abuse as well as
licensing and certification, although because of the broad and
sometimes vague nature of these laws and requirements, there can be
no assurance that an enforcement action will not be brought against
the Company or that the Company will not be found to be in
violation of one or more of these regulatory provisions.
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Further, there can be no assurance that new laws or regulations
will not be enacted, or existing laws or regulations interpreted or
applied in the future in such a way as to have a material adverse
impact on the Company, or that Federal or state governments will
not impose additional restrictions upon all or a portion of the
Company's activities, which might adversely affect the Company's
business.
Significant Long-Term Debt, Including Capitalized Lease Obligations
The Company has significant outstanding debt, including
capitalized lease obligations relating to equipment at its centers.
The Company has financed the acquisition of substantially all of
the diagnostic imaging equipment used at its centers (typically
with terms ranging from five to seven years) from lenders and
lessors, with the equipment and other assets serving as collateral
for the loans. A significant portion of the of the Company's
assets have been pledged as collateral for its capitalized lease
obligations, as well as other indebtedness. In certain cases, the
center leasing the equipment and the subsidiary which operates the
center are the only obligors under the capitalized leases. A
default under an equipment lease or certain other indebtedness of
the Company could materially adversely affect the operations of the
Company. See "Recent Developments."
Competition; Reliance on Referrals
The outpatient diagnostic imaging industry is highly
competitive. Competition focuses primarily on attracting physician
referrals, including referrals through relationships with managed
care organizations, at the local market level. The Company
believes that principal competitors in each of its markets are
hospitals and independent or management company owned imaging
centers, some of which are owned with physician investors. Some of
these competitors have greater financial and other resources than
the Company. Principal competitive factors include facility
location, type and quality of equipment, quality and timeliness of
test results, ability to develop and maintain relationships with
referring physicians, convenience of scheduling and availability of
patient appointment times and the pricing of services. Competition
for physician referrals can also be affected by the ownership or
affiliation of competing centers or hospitals, with certain of the
Company's competitors having historically derived a significant
portion of their revenues from referrals by physicians who are also
investors and have a financial interest in, or are otherwise
affiliated with, the competing center or hospital. In addition,
managed care has affected the availability of referrals by
approving only a certain number of centers in a given geographic
region.
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The temporary healthcare staffing business is also very
competitive. StarMed competes for clients' business with other
providers of travel nurse temporary staffing and with other
staffing companies that provide per diem staffing services.
StarMed also competes for the limited number of available qualified
staff. StarMed competes with several companies which are larger
and may possess greater financial and other resources.
Potential Adverse Effect of Restrictions on Unlicensed Practice of
Medicine
Diagnostic imaging centers are subject to laws
prohibiting the practice of medicine by non-physicians and the
rebate or division of fees between physicians and non-physicians.
Professional radiology services are performed at the Company's
centers by licensed physicians under contract with a medical
professional corporation, while the Company provides the imaging
equipment, technical employees and administrative functions.
Although the Company believes that it is in compliance with
relevant existing laws, there can be no assurance that state
authorities or others may not challenge this structure as involving
the Company in the unlawful practice of medicine.
Dependence on Qualified Interpreting Physicians
The Company's strategy of maintaining the high quality of
its services is dependent upon its ability to obtain and maintain
arrangements with qualified interpreting physicians at each of its
centers. No assurance can be given that the Company's contractual
arrangements with interpreting physician groups at each of the
Company's centers can be maintained on terms advantageous to the
Company. No assurance can be given that the interpreting
physicians with whom the Company has contracts will perform
satisfactorily or continue to practice in the markets served by its
imaging centers. In addition, with respect to the development of
new centers, there can be no assurance that arrangements can be
entered into with interpreting physicians on acceptable terms or
that such physicians will be successful in such centers. The
Company's success is significantly dependent on the ability of
these physicians to attract patient referrals, thereby enabling the
Company's centers to operate profitably. The inability of these
physicians to attract sufficient referrals could have a material
adverse effect on the Company's financial condition and operating
results.
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Technological Obsolescence
There have been rapid technological advancements made in
the software and, to a lesser extent, hardware in the diagnostic
imaging industry. Although the Company believes that its equipment
can generally be upgraded as necessary, the development of new
technologies or refinements of existing technologies might make
existing equipment technologically or economically obsolete. If
such obsolescence were to occur, the Company may be compelled to
acquire new equipment, which could have a material adverse effect
on its financial condition, results from operations and cash flow.
In addition, certain of the Company's centers compete against local
centers which contain more advanced imaging equipment or provide
additional modalities.
Liability Claims and Insurance
Although the Company provides administrative and
technical services and is not engaged in the practice of medicine,
the diagnostic imaging and temporary staffing businesses entail the
risk of professional liability claims. The Company's exposure to
such liability is reduced for its imaging centers because
interpreting physicians are required to carry their own medical
malpractice insurance. Similarly, the Company's nursing personnel
perform services in accordance with treatments prescribed by
third-party physicians or under hospital supervision.
Nevertheless, the Company maintains general liability insurance and
professional liability insurance for both its diagnostic imaging
business and its temporary staffing business in amounts deemed
adequate by management of the Company. There can be no assurance,
however, that potential claims will not exceed the coverage limits
or that, in the future, such insurance will be available.
Losses from Certain Centers
Certain centers of which the Company has acquired since
January 1996 have generated losses. With respect to these centers,
the Company has advanced, and, in most circumstances, will continue
to advance, working capital to fund the operations of such centers.
The Company cannot determine if or when such centers will become
profitable, or if or when these advances will be repaid. In the
event that the Company determines to close any such center, the
Company would expect to incur a loss in connection with such
closure.
Absence of Dividends
The Company has never paid cash dividends and has no
present plans to pay cash dividends to its stockholders and, for
the foreseeable future, intends to retain all of its earnings, if
any, for use in its business.
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The declaration of any future dividends by the Company is
within the discretion of its Board of Directors and will be
dependent on the earnings, financial condition and capital
requirements of the Company, as well as any other factors deemed
relevant by its Board of Directors.
Certain Anti-Takeover Measures
Certain provisions of the Company's Certificate of
Incorporation, as well as Delaware corporate law and the Company's
Stockholder Rights Plan (the "Rights Plan"), may be deemed to have
anti-takeover effects and may delay, defer or prevent a takeover
attempt that a stockholder might consider in its best interest.
Such provisions also may adversely affect prevailing market prices
for the Common Stock. Certain of such provisions allow the
Company's Board of Directors to issue, without additional
stockholder approval, preferred stock having rights senior to those
of the Common Stock. In addition, the Company is subject to the
anti-takeover provisions of Section 203 of the Delaware General
Corporation Law, which prohibits the Company from engaging in a
"business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which
the person became an interested stockholder, unless the business
combination is approved in a prescribed matter. In September 1996,
the Company adopted the Rights Plan, pursuant to which holders of
the Common Stock received a distribution of rights to purchase
additional shares of Common Stock, which rights become exercisable
upon the occurrence of certain events.
Volatility of Stock Price
The market price of the Common Stock has been and may
continue to be volatile. Recently, the stock market in general and
the shares of healthcare and diagnostic imaging services companies
in particular have experienced significant price fluctuations.
These broad market and industry fluctuations may adversely affect
the market price of the Common Stock. Factors such as quarterly
fluctuations in results of operations, the timing and terms of
future acquisitions and general conditions in the healthcare
industry may have a significant impact on the market price of the
Common Stock.
Sales by Selling Stockholders
All of the Shares being offered hereby are offered solely
by the Selling Stockholders who are not restricted as to the prices
at which they may sell the Shares. Shares sold below the then
current level at which the shares of Common Stock are trading may
adversely affect the market price of the Common Stock.
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RECENT DEVELOPMENTS
On January 16, 1997, the Company, through its indirect
wholly-owned subsidiary, Melbourne Resources, Inc. ("Melbourne
Sub"), consummated the acquisition (the "Melbourne Acquisition") of
the diagnostic imaging business assets of Melbourne Neurologic,
P.A. ("Melbourne Seller") consisting primarily of one diagnostic
imaging center located in Melbourne, Florida. The Melbourne
Acquisition was consummated pursuant to an Asset Purchase Agreement
(the "Melbourne Agreement") dated as of January 16, 1997, by and
among the Company, Melbourne Sub, Melbourne Seller, Thomas G.
Hoffman, Scott L. Gold and Eugene M. Shephard. Pursuant to the
Melbourne Agreement, Melbourne Sub acquired substantially all of
the diagnostic imaging business assets of Melbourne Seller for
$1,125,000 in cash.
On January 27, 1997, the Company, through its indirect
wholly-owned subsidiaries, San Clemente Resources, Inc. and Long
Beach Resources, Inc. (collectively, "San Clemente Subs"),
consummated the acquisition (the "San Clemente Acquisition") of the
business assets of Dedicated Medical Imaging, San Clemente, Inc.,
and Long Beach Radiology Center, Ltd. (collectively, "San Clemente
Sellers"), consisting primarily of one diagnostic imaging center
located in San Clemente, California and one diagnostic imaging
center located in Long Beach, California. The San Clemente
Acquisition was consummated pursuant to an Asset Purchase Agreement
(the "San Clemente Agreement") dated as of January 27, 1997, by and
among the Company, San Clemente Subs, San Clemente Sellers and Mr.
Joseph Payne. Pursuant to the San Clemente Agreement, San Clemente
Subs acquired substantially all of the business assets of San
Clemente Sellers for $1,030,000 in cash.
On February 28, 1997, the Company, through its indirect
wholly-owned subsidiary, Jacksonville Resources, Inc.
("Jacksonville Sub"), consummated the acquisition (the
"Jacksonville Acquisition") of the business assets of The MRI
Center of Jacksonville Inc. ("Jacksonville Seller") consisting
primarily of one diagnostic imaging center located in Jacksonville,
Florida. The Jacksonville Acquisition was consummated pursuant to
an Asset Purchase Agreement (the "Jacksonville Agreement") dated as
of January 31, 1997, by and among the Company, Jacksonville Sub,
Jacksonville Seller and Francis D. Hussey. Pursuant to the
Jacksonville Agreement, Jacksonville Sub acquired substantially all
of the business assets of Jacksonville Seller for 215,000 shares of
Common Stock.
On March 10, 1997, the Company, through its indirect
wholly-owned subsidiary, West Palm Beach Resources, Inc. ("West
Palm Beach Sub"), consummated the acquisition (the "West Palm Beach
Acquisition") of the business assets of The Magnet of Palm Beach,
Ltd. ("West Palm Beach Seller") consisting primarily of one
diagnostic imaging center located in West Palm Beach, Florida.<PAGE>
<PAGE>
The West Palm Beach Acquisition was consummated pursuant
to an Asset Purchase Agreement (the "West Palm Beach Agreement")
dated as of March 10, 1997, by and among the Company, West Palm
Beach Sub, West Palm Beach Seller and MRI of Palm Beach, Inc.
Pursuant to the West Palm Beach Agreement, West Palm Beach Sub
acquired substantially
all of the business assets of West Palm Beach Seller for $2,000,000
in cash and 56,670 shares of Common Stock.
On March 10, 1997, the Company consummated the
acquisition (the "ADI Acquisition") of the capital stock of Advance
Diagnostic Imaging, Inc. ("ADI Seller"). The business assets of
ADI Seller consist of ownership interests in nine diagnostic
imaging centers located in New Jersey (6) and Massachusetts (3).
The ADI Acquisition was consummated pursuant to a Stock Purchase
Agreement (the "ADI Agreement") dated as of February 27, 1997, by
and among the Company, ADI Seller, Drew M. Netter and William Lehn.
Pursuant to the ADI Agreement, the Company acquired all of the
issued and outstanding capital stock of ADI Seller for $6,637,344
in cash, an $825,000 deferred payment and $3,200,000 payable in
connection with the assumption of certain long-term indebtedness.
Additionally, pursuant to the ADI Agreement, the Company acquired
an option to purchase one additional diagnostic imaging center
located in the Northeast owned by an affiliate of a former
stockholder of ADI Seller.
On March 14, 1997, the Company, through its indirect
wholly-owned subsidiary, Rancho Cucamonga Resources, Inc. ("Rancho
Cucamonga Sub"), consummated the acquisition (the "Rancho Cucamonga
Acquisition") of the business assets of Grove Diagnostic Imaging
Center, Inc. ("Rancho Cucamonga Seller") consisting primarily of
one diagnostic imaging center located in Rancho Cucamonga,
California. The Rancho Cucamonga Acquisition was consummated
pursuant to an Asset Purchase Agreement (the "Rancho Cucamonga
Agreement") dated as of March 14, 1997, by and among the Company,
Rancho Cucamonga Sub, Rancho Cucamonga Seller, J. Kenneth Luke and
J.M. Benesky. Pursuant to the Rancho Cucamonga Agreement, Rancho
Cucamonga Sub acquired substantially all of the business assets of
Rancho Cucamonga Seller for $2,500,000 in cash and 44,016 shares of
Common Stock.
On March 7, 1997, the Company, through its indirect
wholly-owned subsidiary, ATI Resources, Inc. ("ATI Sub"), entered
into a purchase agreement with respect to the acquisition (the "ATI
Acquisition") of the business assets of ATI Centers, Inc. ("ATI
Seller"), consisting primarily of eleven diagnostic imaging centers
located in New Jersey and Pennsylvania. The ATI Acquisition, if
consummated, will be consummated pursuant to an Asset Purchase
Agreement (the "ATI Agreement") dated as of March 7, 1997, by and
among the Company, ATI Sub, ATI Seller, Americare Health Services,
Inc., John A. Bennett, M.D. and Nancy DiRocco. Pursuant to the ATI
Agreement, ATI Sub would acquire substantially all of the business
assets of ATI Seller for $12,900,000 in cash.<PAGE>
<PAGE>
On February 20, 1997, the Company completed a $52,000,000
private placement of Senior Notes (the "Notes") to a group of
insurance companies. The Notes bear interest at an annual rate of
7.77%, are subject to equal annual sinking fund payments commencing
in February 2001 and have a final maturity in February 2005. The
terms of the agreement pursuant to which the Notes were issued
contain, among other provisions, certain financial covenants,
including net worth and debt covenants, and certain dividend
limitations. In addition, the Notes are collateralized by the
guaranty of certain of the Company's subsidiaries and the pledge of
certain partnership interests.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale
of the Shares by the Selling Stockholders.
SELLING STOCKHOLDERS
The Shares offered hereby consist of (i) 1,088,833 shares
of Common Stock which may be issued upon conversion of certain
convertible debentures in an aggregate principal amount of
$6,533,000 (the "10.5% Convertible Debentures") sold by the Company
in a February 1996 private placement (the "1996 Private Placement")
and (ii) 1,087,500 shares of Common Stock which may be issued upon
conversion of certain convertible debentures in an aggregate
principal amount of $4,350,000 (the "11% Convertible Debentures")
sold by the Company in a June 1995 private placement (the "1995
Private Placement"), (iii) 18,868 shares of Common Stock issued in
connection with the acquisition of the business assets of NMR
Associates 1983-I, Ltd., consisting primarily of one diagnostic
imaging center located in Newark, New Jersey, (iv) 56,670 shares of
Common Stock issued in connection with the West Palm Beach
Acquisition, (v) 44,016 shares of Common Stock issued in connection
with the Rancho Cucamonga Acquisition, (vi) 228,571 shares of
Common Stock issued in connection with the Company's acquisition of
three imaging centers located in Tampa, Florida and Tarpon Springs,
Florida in May 1996 from Americare Imaging Centers, Inc. and Tarpon
Springs, Inc. and (vii) 1,004,092 outstanding shares of Common
Stock which were not issued in connection with the 1995 or 1996
Private Placements.
The following table sets forth as of March 31, 1996,
information regarding the beneficial ownership of the Company's
Common Stock held by each Selling Stockholder who may sell the
Shares pursuant to this Prospectus as of such date, the number of
Shares offered hereunder by each such Selling Stockholder and the
net ownership of shares of Common Stock, if all such Shares so
offered are sold by each Selling Stockholder.
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Name of Shares Owned
Selling Prior to this
Stockholders Offering (1)
- -------------------------------------------------------------
Arnhold and S. Bleichroeder
Profit Sharing Plan 62,500
Arnhold and S. Bleichroeder, Inc. (3) 266,666
Amadeus Offshore Fund, Ltd. 151,750
Amadeus Fund L.P. 27,416
Equipont Partners, L.P. 50,000
Clarisse Arnhold 25,000
Arthur M. Spiro(4) 87,500
Firebird Overseas, Ltd. 25,000
Cantrade Banque Privee
Lausanne S.A. 62,500
First Marathon Securities Limited 175,000
Bova Trading Pension Trust 12,500
Infico Ltd. 12,500
Irwin Schubert 33,333
Siegler, Collery & Co.
Profit Sharing Plan 12,500
Clarex Limited 208,333
Arnhold Foundation #1 12,500
Robert M. Pergament 87,500
Robert Ingram 12,500
Michael Kubin 12,500
Jay and Beth Thalheim 37,500
David Thalheim 37,500
Patricia Capone 12,500
Nathan and David Mandelbaum 51,311
Emil Solimine 51,311
Arena Investors, L.P. (5) 901,470
Pitt & Co. 50,000
CBG Compaginie
Bancaire Geneve 83,333
Ernest K. Schneider 16,666
Banque Privee Edmond
de Rothschild S.A. 8,333
Dorchester Partners, L.P. 83,333
Diversified Strategies 16,666
JAP Partners 33,333
Edward Y. Albert, Jr. 40,000
Nancy Bazemore 16,666
Laterman Strategies 90s L.P. 35,000
Offshore Strategies Ltd. 58,333
Laterman & Company 23,333
Alpha Atlas Holdings LDC 16,666
MH Capital Partners L.P. 8,333
The SC Fundamental
Value Fund, L.P. 401,690<PAGE>
<PAGE>
SC Fundamental Value
BVI, Ltd. 195,710
The Gifford Fund Ltd. 50,000
David Basner 4,166
Leonard Klehr 3,000
Marilyn Diamond 8,333
Thomas Scharbaugh,
Trustee, U/A dated 12/14/92
F/B/O John Justin Churchill 16,666
SNR Group N.V. 16,666
Michael Schnabel-Kuehn 8,333
Gary L. Fuhrman(6) 147,591(7)
Peter M. Collery(8) 3,233,493(9)(10)
Gary N. Siegler(11) 4,461,608(9)(12)
NMR Associates 1983-I, Ltd. 18,868
The Magnet of Palm Beach, Ltd. 56,670
Grove Diagnostic Imaging Center, Inc. 44,016
Americare Imaging Centers, Inc. 228,571
</TABLE>
<TABLE>
<S> <C>
Total Number of Shares Total Shares to be
to be Offered for Selling Owned Upon Completion
Stockholder's Account (2) of this Offering(2)
Number Percent
- --------------------------------------------------------------
62,500 0 0%
266,666 0 0%
151,750 0 0%
27,416 0 0%
50,000 0 0%
25,000 0 0%
87,500 0 0%
25,000 0 0%
62,500 0 0%
175,000 0 0%
12,500 0 0%
12,500 0 0%
33,333 0 0%
12,500 0 0%
208,333 0 0%
12,500 0 0%
87,500 0 0%
12,500 0 0%
12,500 0 0%
37,500 0 0%
37,500 0 0%
<PAGE>
<PAGE>
</TABLE>
<TABLE>
<S> <C> <C>
12,500 0 0%
51,311 0 0%
51,311 0 0%
901,470 0 0%
50,000 0 0%
83,333 0 0%
16,666 0 0%
8,333 0 0%
83,333 0 0%
16,666 0 0%
33,333 0 0%
40,000 0 0%
16,666 0 0%
35,000 0 0%
58,333 0 0%
23,333 0 0%
16,666 0 0%
8,333 0 0%
65,000 336,690 1.7%
35,000 160,710 X
50,000 0 0%
4,166 0 0%
3,000 0 0%
8,333 0 0%
16,666 0 0%
16,666 0 0%
8,333 0 0%
41,666 105,925(7) X
6,250 3,227,243(9)(10) 16.7%
6,250 4,455,358(9)(12) 21.7%
18,868 0 9%
56,670 0 0%
44,016 0 0%
228,571 0 0%
</TABLE>
- ----------------------------
X Less than 1 percent.
(1) Except as otherwise noted, all shares or rights to these
shares are beneficially owned and sole voting and investment power
is held by the party named.
(2) Assumes the conversion of all the 11% Convertible Debentures
and the 10.5% Convertible Debentures into shares of Common Stock
and the sale of all shares listed in the "Total Number of Shares to
be Offered for the Selling Stockholder's Account" column. Also
assumes that none of the Selling Stockholders sells shares of
Common Stock not being offered hereunder or purchases additional
shares of Common Stock.
<PAGE>
<PAGE>
(3) Arnhold & S. Bleichroeder, Inc. ("A&SB"), acted as placement
agent for the 1995 and 1996 Private Placements.
(4) Mr. Spiro shares voting and investment power with respect to
45,000 shares with his wife, Joan Spiro.
(5) Includes shares of Common Stock which may have been
distributed to limited partners of such partnership. The general
partner of Arena Investors, L.P., Arena Capital Corp., is a
corporation of which Messrs. Gary N. Siegler and Peter M. Collery,
the Chairman and a former Director of the Company, respectively,
are the sole stockholders, directors and officers.
(6) Mr. Fuhrman is a Director of the Company and is a Director and
Senior Vice President of A&SB.
(7) Includes 71,000 shares underlying outstanding options which
are exercisable immediately or within 60 days.
(8) Mr. Collery is a former Director of the Company.
(9) Messrs. Siegler and Collery, due to their joint control of
Siegler Collery and other affiliates, including the Siegler,
Collery & Co. Profit Sharing Plan, which control certain entities
which beneficially own an aggregate of 3,074,037 shares of Common
Stock, are each deemed to beneficially own all of the shares of
Common Stock owned of record by all such entities.
(10) Includes 51,000 shares underlying outstanding options which
are exercisable immediately or within 60 days.
(11) Mr. Siegler is a Director of the Company.
(12) Includes 608,666 shares underlying outstanding options which
are exercisable immediately or within 60 days and 569,000 shares
underlying outstanding warrants which Mr. Siegler is deemed to
beneficially own.
PLAN OF DISTRIBUTION
The Selling Stockholders may sell some or all of the
Shares in transactions involving broker/dealers, who may act as
agent or acquire the Shares as principal. Any broker/dealer
participating in such transactions as agent may receive a
commission from the Selling Stockholders (and, if they act as agent
for the purchaser of such Shares, from such purchaser). Usual and
customary brokerage fees will be paid by the Selling Stockholders.
Broker/dealers may agree with the Selling Stockholders to sell a
specified number of Shares at a stipulated price per Share and, to <PAGE>
<PAGE>
the extent such broker/dealer is unable to do so acting as agent
for the Selling Stockholders, to purchase as principal any unsold
Shares at the price required to fulfill the respective
broker/dealer's commitment to the Selling Stockholders.
Broker/dealers who acquire Shares as principals may thereafter
resell such Shares from time to time in transactions (which may
involve cross and block transactions and which may involve sales to
and through other broker/dealers, including transactions of the
nature described above) in the over-the-counter market, in
negotiated transactions or otherwise, at market prices prevailing
at the time of sale or at negotiated prices, and in connection
which such resales may pay to or receive commissions from the
purchasers of such Shares.
The Selling Stockholders also may sell some or all of the
Shares directly to purchasers without the assistance of any
broker/dealer or if applicable, have distributed or may distribute
such Shares to one or more of their limited partners which are
unaffiliated with the Company; such limited partners may, in turn,
distribute such shares as described above.
The Company is bearing all costs relating to the
registration of the Shares, provided that, any commissions or other
fees payable to broker/dealers in connection with any sale of the
Shares will be borne by the Selling Stockholders or other party
selling such Shares.
The Selling Stockholders must comply with the
requirements of the Act and the Exchange Act and the rules and
regulations thereunder in the offer and sale of the Shares. In
particular, during such times as the Selling Stockholders may be
deemed to be engaged in a distribution of the Common Stock, and
therefore be deemed to be an underwriter under the Act, it must
comply with Rules 10b-6 and 10b-7 under the Exchange Act, as
amended, and will, among other things:
(a) not engage in any stabilization activities in connection
with the Company's securities;
(b) furnish each broker/dealer through which Shares may be
offered such copies of this Prospectus, as amended from time to
time, as may be required by such broker/dealer; and
(c) not bid for or purchase any securities of the Company or
attempt to induce any person to purchase any securities of the
Company other than as permitted under the Exchange Act.
LEGAL MATTERS
The validity of the shares of the Company's Common Stock
offered hereby will be passed upon for the Company by Werbel &
Carnelutti, A Professional Corporation, New York, New York.<PAGE>
<PAGE>
EXPERTS
The consolidated balance sheet of the Company as of
December 31, 1996 and the consolidated statement of operations,
stockholders' equity, and cash flows and the financial statement
schedule listed in the index at Item 14(a) for the year ended
December 31, 1996, and incorporated by reference in the Prospectus
and Registration Statement, have been so incorporated in reliance
on the report of Coopers & Lybrand L.L.P., given on the authority
of said firm as experts in accounting and auditing.
The consolidated balance sheet of the Company at December
31, 1995 and the related consolidated statements of operations,
cash flows and changes in stockholders' equity for the years ended
December 31, 1995 and 1994 and the financial statement schedule
listed in the index at Item 14(a), incorporated by reference in
this Prospectus and Registration Statement, have been audited by
Ernst & Young LLP, independent certified public accountants as set
forth in their report thereon and incorporated by reference herein
which, as to the year ended December 31, 1994, is based in part on
the reports of Dixon, Odom & Co., L.L.P., independent auditors, and
Kempisty & Company, Certified Public Accountants, P.C., independent
auditors. The consolidated financial statements referred to above
are incorporated by reference herein in reliance upon such reports
given upon the authority of such firms as experts in accounting and
auditing.
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution X
Securities and Exchange Commission registration fee $ 6,404
Accounting fees and expenses 10,000
Legal fees and expenses 12,000
Blue Sky fees and expenses 2,000
Miscellaneous 2,000
Total $32,404
X All amounts are estimates other than the Commission's
registration fee. No portion of these expenses will be borne by
the Selling Stockholders.
Item 15. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of the State
of Delaware ("DGCL") empowers the Company to, and the Certificate
of Incorporation of the Company provides that it shall, indemnify
any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or
proceeding by any reason of the fact that he is or was a director,
officer, employee or agent of the Company, or is or was serving at
the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Company, and, with respect to
any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful; except that, in the case of an
action or suit by or in the right of the Company, no
indemnification may be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty
to the Company unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought
shall determine that such person is fairly and reasonably entitled
to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
<PAGE>
<PAGE>
The Company's Certificate of Incorporation provides, pursuant
to Section 145 of the DGCL, for indemnification of officers,
directors, employees and agents of the Company and persons serving
at the request of the Company in such capacities within other
business organizations against certain losses, costs, liabilities
and expenses incurred by reason of their position with the Company
or such other business organizations.
Article Ninth of the Company's Certificate of
Incorporation limits a director's liability in accordance with
Section 102(b) of the DGCL. Specifically, Article Ninth provides
that no director of the Company shall be liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL, or (iv) for any transaction from which the
director derived an improper personal benefit. Article Ninth also
provides that if the DGCL is further amended to authorize corporate
action further eliminating or limiting the personal liability of
directors, the liability of a director of the Company shall be
eliminated or limited to the fullest extent permitted by the DGCL.
Item 16. Exhibits.
Exhibit
Number Description
5.1 Opinion of Werbel & Carnelutti, a Professional Corporation.
23.1 Consent of Werbel & Carnelutti (included in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Dixon, Odom & Co., LLP.
23.4 Consent of Kempisty & Company, Certified Public Accountants,
P.C.
23.5 Consent of Coopers & Lybrand L.L.P.
24.1 Power of Attorney (Reference is made to the signature page of
the Registration Statement).
99.1 Important Factors Regarding Forward-Looking Statements.
<PAGE>
<PAGE>
Item 17. Undertaking.
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, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or 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; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information
in the Registration Statement; provided, however, that the
undertakings set forth in paragraphs (i) and (ii) above do not
apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed by the Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") that are incorporated by reference in this
Registration Statement.
2. That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered herein, 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 hereby
which remain unsold at the termination of the offering.
4. That, for the purpose of determining any liability
under the Securities Act each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act)
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.
<PAGE>
<PAGE>
Insofar as indemnifications for liabilities arising under
the Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions
described under Item 15 above, 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 Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of
the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer, or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act,
and will be governed by the final adjudication of such issue.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1933, the Registrant certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing
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 Hackensack, State of New Jersey on April 9, 1997.
MEDICAL RESOURCES, INC.
By: /s/ William D. Farrell
--------------------------
William D. Farrell, President
and Chief Operating Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints William D. Farrell
and Stephen M. Davis, or either of them, his true and lawful
attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any
and all capacities to sign any or all amendments (including post-
effective amendments) to this registration statements and any
related registration statement filed under Rule 462(b), and to file
the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, each acting alone,
full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises,
as fully for all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-
fact and agents, each acting along, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed below by the
following persons in the capacities and on April 9, 1997.
Signature Capacity in Which Signed
/s/ Gary N. Siegler Chairman of the
- ---------------------- Board of Directors
Gary N. Siegler
/s/ Neil H. Koffler Director
- ----------------------
Neil H. Koffler<PAGE>
<PAGE>
/s/ Stephen M. Davis Director
- -----------------------
Stephen M. Davis
/s/ Gary Fuhrman Director
- -----------------------
Gary Fuhrman
/s/ John Josephson Director
- -----------------------
John Josephson
/s/ William D. Farrell President (Principal Executive
- ----------------------- Officer), Chief Operating
William D. Farrell Officer and Director
/s/ John P. O'Malley III Senior Vice President- Finance
- ------------------------- and Chief Financial Officer
John P. O'Malley III (Principal Financial/Accounting
Officer)
93483
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1933, the Registrant certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing
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 Hackensack, State of New Jersey on April 9, 1997.
MEDICAL RESOURCES, INC.
By:
--------------------------
William D. Farrell,
President and
Chief Operating Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints William D. Farrell
and Stephen M. Davis, or either of them, his true and lawful
attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any
and all capacities to sign any or all amendments (including post-
effective amendments) to this registration statements and any
related registration statement filed under Rule 462(b), and to file
the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, each acting alone,
full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises,
as fully for all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-
fact and agents, each acting along, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed below by the
following persons in the capacities indicated on April 9, 1997.
Signature Capacity in Which Signed
- ---------------------- Chairman of the
Gary N. Siegler Board of Directors
- -----------------------
Neil H. Koffler Director<PAGE>
<PAGE>
- ------------------------
Stephen M. Davis Director
- -------------------------
Gary Fuhrman Director
- -------------------------
John Josephson Director
President (Principal Executive
- ------------------------- Officer), Chief Operating
William D. Farrell Officer and Director
Senior Vice President- Finance
- --------------------------- and Chief Financial Officer
John P. O'Malley III (Principal Financial/Accounting
Officer)
93483
<PAGE>
<PAGE>
<Ex.5.1>
April 9, 1997
Medical Resources, Inc.
155 State Street
Hackensack, New Jersey 07601
Gentlemen:
You have requested our opinion as counsel for Medical
Resources, Inc., a Delaware corporation (the "Company"), in
connection with the registration under the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder,
and the public offering by a certain selling stockholders (the
"Selling Stockholders") of 3,528,550 shares of the Company's common
stock (the "Shares").
We have examined the Company's Registration Statement on
Form S-3 in the form to be filed with the Securities and Exchange
Commission on or about April 9, 1997 (the "Registration
Statement"). We further have examined the Certificate of
Incorporation of the Company as certified by the Secretary of State
of the State of Delaware, the By-laws, the minute books and other
agreements of the Company as a basis for the opinion hereafter
expressed.
Based on the foregoing examination, we are of the opinion
that the when the Shares have been issued, delivered and paid for
as contemplated in the Prospectus forming a part of the
Registration Statement and upon issuance by the Company and sale by
the Selling Stockholders in the manner described in the
Registration Statement, the Shares will be legally issued, fully
paid and non-assessable.
We consent to the filing of this opinion as an exhibit to
the Registration Statement.
Very truly yours,
WERBEL & CARNELUTTI
/s/ Werbel & Carnelutti
------------------------
A Member of the Firm
93483<PAGE>
<PAGE>
<Ex.23.2>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts"
in the Registration Statement (Form S-3) of Medical Resources, Inc.
for the registration of 3,528,550 shares of common stock and to the
incorporation by reference therein of our report dated February 29,
1996, with respect to the consolidated financial statements and
schedule of Medical Resources, Inc. included in its Annual Report
(Form 10-K) for the year ended December 31, 1995, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
------------------------
Tampa, Florida
April 8, 1997
93483<PAGE>
<PAGE>
<Ex.23.3>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We consent to the references to our firm under the caption
"Experts" in the Registration Statement (Form S-3) and related
Prospectus of Medical Resources, Inc. for the registration of
3,528,550 shares of its common stock and to the incorporation by
reference therein of our reports dated February 21, 1995 with
respect to the financial statements of Kik Kin, L.P. for the years
ended December 31, 1994 and January 1, 1994.
----------------------------
/s/ DIXON, ODOM & CO., L.L.P.
April 7, 1997
93483<PAGE>
<PAGE>
<Ex.23.4>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-3 of our report dated February 9,
1996, which appears in the annual report on Form 10-K of Medical
Resources, Inc. for the year ended December 31, 1995, and to the
reference to our Firm under the caption "Experts" in the
Prospectus.
/s/ KEMPISTY & COMPANY
--------------------------------
Certified Public Accountants, PC.
New York, New York
April 8, 1997
93483<PAGE>
<PAGE>
<Ex.23.5>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of Medical Resources, Inc. on Form S-3 of our report
dated March 28, 1997, on our audit of the consolidated financial
statements and financial statement schedule of Medical Resources,
Inc. and Subsidiaries (the "Company") as of December 31, 1996 and
for the year ended December 31, 1996, which report is included in
the Company's Annual Report on Form 10-K/A. We also consent to the
reference to our firm under the caption "Experts".
/s/ COOPERS & LYBRAND L.L.P.
- -----------------------------
Parsippany, New Jersey
April 9, 1997
<PAGE>
<PAGE>
<EX. 99.1>
IMPORTANT FACTORS REGARDING FORWARD - LOOKING STATEMENTS
The Company may occasionally make forward-looking
statements and estimates, such as forecasts and projections of
the Company's future performance or statements of management's
plans and objectives. These forward-looking statements may be
contained in SEC filings, Annual Reports to Stockholders, press
releases and oral statements, among others, made by the Company.
Actual results could differ materially from those in such
forward-looking statements. Therefore, no assurances can be
given that the results in such forward-looking statements will be
achieved. Important factors that could cause the Company's
actual results to differ from those contained in such forward-
looking statements include, among other matters, the factors
mentioned below.
Acquisition Strategy; Management of Growth
One of the Company's key objectives is to continue to
acquire diagnostic imaging centers and temporary healthcare
staffing businesses and integrate them into the Company's
operations. Successfully accomplishing this goal depends upon a
number of factors, including the Company's ability to find
suitable acquisition candidates, negotiate acquisitions on
acceptable terms, obtain necessary financing on acceptable terms,
retain key personnel of the acquired entities, hire and train
other competent managers, and effectively and profitably
integrate the operations of the acquired businesses into the
Company's existing operations. The process of integrating
acquired businesses may require a significant amount of resources
and management attention which will temporarily detract from
attention to the day-to-day business of the Company and may be
prolonged due to unforeseen circumstances.The Company's ability
to manage its growth effectively will require it to continue to
improve its operational, financial and management information
systems and controls, and to attract, retain, motivate and manage
employees effectively. The failure of the Company to manage
growth in its business effectively would have a material adverse
effect on its results of operations. Future acquisitions may be
financed through the incurrence of additional indebtedness or the
issuance of equity securities. The issuance by the Company of
additional Common Stock in connection with acquisitions could be
dilutive to Company stockholders. Competition for suitable
acquisition candidates is expected to be intense and, in addition
to local hospital and physician groups, to include regional and
national diagnostic imaging service companies, regional and
national staffing companies and other medical services companies,
many of which have greater financial resources than the Company.
The Company may also pursue the development of new centers. New <PAGE>
<PAGE>
centers may incur significant operating losses during their
development stages, and could materially adversely affect the
Company's operating results and financial condition.
Limitations and Delays in Reimbursement
Third-party payors, including Medicare, Medicaid,
managed care/HMO providers and certain commercial payors have
taken extensive steps to contain or reduce the costs of
healthcare. In certain areas, the payors are subject to
regulations which limit the amount of payments. Discussions
within the Federal government regarding national healthcare
reform are emphasizing containment of healthcare costs. In
addition, certain managed care organizations have negotiated
capitated payment arrangements for imaging services. Under
capitation, diagnostic imaging service providers are compensated
using a fixed rate per member of the managed care organization
regardless of the total cost of rendering diagnostic services to
the members. Services provided under these contracts are
expected to become an increasingly significant part of the
Company's business. The inability of the Company to properly
manage the administration of capitated contracts could materially
adversely effect the Company. Although patients are ultimately
responsible for payment for services rendered, substantially all
of the Company's imaging centers' revenues are derived from
third-party payors. Successful reduction of reimbursement
amounts and rates, changes in services covered, delays or denials
of reimbursement claims, negotiated or discounted pricing and
other similar measures could materially adversely affect the
Company's respective imaging centers' revenues, profitability and
cash flow.
The Company's management believes that reimbursement
rates will continue to decline due to factors such as the
expansion of managed care providers and continued national
healthcare reform efforts. The Company enters into contractual
arrangements with managed care organizations which, due to the
size of their membership, are able to command reduced rates for
services. These agreements are expected to increase the number
of procedures performed due to the additional referrals from
these managed care arrangements. However, there can be no
assurance that the increased volume of procedures associated with
these contractual arrangements will offset the reduction in
reimbursement rate per procedure.
In addition, a significant percentage of the Company's
net service revenues from imaging centers are derived through
physicians providing imaging services to patients involved in
personal injury claims. Receivables relating to personal injury
claims require more extensive documentation than other
procedures. In addition, those individuals with obligations to
the Company in excess of insurance coverage or <PAGE>
<PAGE>
those who do not have insurance coverage tend to delay payment
until legal claims are resolved, which may result in significant
collection delays. Due to the greater complexity in processing
receivables relating to personal injury claims, as well as
increased information requirements from third-party payors, such
receivables typically require a longer period of time to collect
compared to other receivables and, in the experience of the
Company, incur a higher bad debt expense. The Company believes
that providing imaging services to patients involved in personal
injury claims is an attractive revenue source because of the
higher reimbursement rates typically realized in such cases as
compared to payors such as Medicare, Medicaid and managed care
providers. Therefore, the Company expects new centers which it
has recently acquired and centers which it may acquire in the
future to target actively such personal injury cases, which may
increase such centers' bad debt expense levels. Significant
delays in the collection or the inability to collect receivables
relating to personal injury claims could have an adverse effect
on the Company's diagnostic imaging operations.
Restrictions Imposed by Government Regulation
The healthcare industry is highly regulated. The
ownership, construction, operation, expansion and acquisition of
outpatient diagnostic imaging centers are subject to various
federal and state laws, regulations and approvals concerning such
matters as physician referrals, licensing of facilities and
personnel, and Certificates of Need and other required
certificates for certain types of healthcare facilities and major
medical equipment. Among other penalties, violations of these
laws can result in the shutdown of a company's facilities and
loss of Medicare and Medicaid reimbursement. The Federal
Anti-Kickback Act of 1977, as amended (the "Anti-Kickback Act")
prohibits the offer, payment, solicitation or receipt of any form
of remuneration in return for referring Medicare or Medicaid
patients or purchasing, leasing, ordering or arranging for any
item or service that is covered by Medicare or Medicaid. The law
provides several penalties for engaging in prohibited acts,
including criminal sanctions and exclusion from the Medicare and
Medicaid programs. Although the Company does not believe that it
is operating in violation of this law, the scope of the law
remains somewhat unclear and there is no assurance that the
Company would prevail in its position. In addition, in 1991 and
subsequently, the Office of the Inspector General of the
Department of Health and Human Services promulgated "safe harbor"
regulations specifying activities that will be protected from
criminal and civil investigation and prosecution under the
Anti-Kickback Act. The Office of the Inspector General has
stated that failure to satisfy the conditions of an applicable
"safe harbor" does not necessarily indicate that the arrangement
in question violates the Anti-Kickback Act, but means that the <PAGE>
<PAGE>
arrangement is not among those that the "safe harbor" regulations
protect from criminal and civil investigation and prosecution
under that law. The finding of a violation must still be
determined based upon the precise language of the Anti-Kickback
Act.
The Federal Omnibus Budget Reconciliation Act of 1989,
as amended by the Federal Omnibus Budget Reconciliation Act of
1993 contains provisions that, unless an exception applies,
restrict physicians from making referrals to, among others,
providers of MR and other radiological services for services to
be rendered to Medicare or Medicaid patients in which the
physicians have a "financial relationship" or an ownership
interest or with which they have a compensation arrangement (the
so-called "Stark Law"). The Stark Law provides exceptions for
certain types of employment and contractual relationships. The
Company believes that it is in compliance with the Stark Law, but
there is no assurance that the Company will prevail in its
position if challenged.
The State of Florida also enacted in 1992 an
anti-kickback statute substantially similar in scope to the
Anti-Kickback Act. Although the Company does not believe that it
is operating in violation of this law, as with its Federal
counterpart, the scope of the Florida law remains unclear and
there is no assurance that the Company would prevail in its
position.
The States of Florida, Illinois, New Jersey, New York,
Maryland and Pennsylvania in which the Company currently operates
centers have enacted laws that restrict or prohibit physicians
from referring patients to healthcare facilities in which such
physicians have a financial interest. Although the Company does
not believe that these laws will have a material adverse effect
on its operations in these states, there is no assurance that
these laws will not be interpreted or applied in such a way as to
create such a material adverse effect, or that these states, or
other states in which the Company does business, will not adopt
similar or more restrictive laws or regulations that could have
such a material adverse effect.
All states where the Company has imaging centers have
enacted Certificate of Need laws to facilitate healthcare
planning by placing limitations on the purchase of certain major
medical equipment and certain other capital expenditures. These
statutes, together with their implementing regulations, could
limit the Company's ability to acquire new imaging equipment or
expand or replace its equipment at existing centers, and no
assurances can be given that the required regulatory approvals
for any future acquisitions, expansions or replacements will be
granted to the Company.<PAGE>
<PAGE>
The Company continues to review all aspects of its
operations and believes that it complies in all material respects
with applicable provisions of the Anti-Kickback Act, the Stark
Law and applicable state laws governing fraud and abuse as well
as licensing and certification, although because of the broad and
sometimes vague nature of these laws and requirements, there can
be no assurance that an enforcement action will not be brought
against the Company or that the Company will not be found to be
in violation of one or more of these regulatory provisions.
Further, there can be no assurance that new laws or regulations
will not be enacted, or existing laws or regulations interpreted
or applied in the future in such a way as to have a material
adverse impact on the Company, or that Federal or state
governments will not impose additional restrictions upon all or a
portion of the Company's activities, which might adversely affect
the Company's business.
Significant Long-Term Debt, Including Capitalized Lease
Obligations
The Company has significant outstanding debt, including
capitalized lease obligations relating to equipment at its
centers. The Company has financed the acquisition of
substantially all of the diagnostic imaging equipment used at its
centers (typically with terms ranging from five to seven years)
from lenders and lessors, with the equipment and other assets
serving as collateral for the loans. Substantially all of the
Company's assets have been pledged as collateral for its
capitalized lease obligations, as well as other indebtedness. In
certain cases, the center leasing the equipment and the
subsidiary which operates the center are the only obligors under
the capitalized leases. A default under an equipment lease or
certain other indebtedness of the Company could materially
adversely affect the operations of the Company. See "Recent
Developments."
Competition; Reliance on Referrals
The outpatient diagnostic imaging industry is highly
competitive. Competition focuses primarily on attracting
physician referrals, including referrals through relationships
with managed care organizations, at the local market level. The
Company believes that principal competitors in each of its
markets are hospitals and independent or management company owned
imaging centers, some of which are owned with physician
investors. Some of these competitors have greater financial and
other resources than the Company. Principal competitive factors
include facility location, type and quality of equipment, quality
and timeliness of test results, ability to develop and maintain
relationships with referring physicians, convenience of
<PAGE>
<PAGE>
scheduling and availability of patient appointment times and the
pricing of services. Competition for physician referrals can
also be affected by the ownership or affiliation of competing
centers or hospitals, with certain of the Company's competitors
having historically derived a significant portion of their
revenues from referrals by physicians who are also investors and
have a financial interest in, or are otherwise affiliated with,
the competing center or hospital. In addition, managed care has
affected the availability of referrals by approving only a
certain number of centers in a given geographic region.
The temporary healthcare staffing business is also very
competitive. StarMed competes for clients' business with other
providers of travel nurse temporary staffing and with other
staffing companies that provide per diem staffing services.
StarMed also competes for the limited number of available
qualified staff. StarMed competes with several companies which
are larger and may possess greater financial and other resources.
Potential Adverse Effect of Restrictions on Unlicensed Practice
of Medicine
Diagnostic imaging centers are subject to laws
prohibiting the practice of medicine by non-physicians and the
rebate or division of fees between physicians and non-physicians.
Professional radiology services are performed at the Company's
centers by licensed physicians under contract with a medical
professional corporation, while the Company provides the imaging
equipment, technical employees and administrative functions.
Although the Company believes that it is in compliance with
relevant existing laws, there can be no assurance that state
authorities or others may not challenge this structure as
involving the Company in the unlawful practice of medicine.
Dependence on Qualified Interpreting Physicians
The Company's strategy of maintaining the high quality
of its services is dependent upon its ability to obtain and
maintain arrangements with qualified interpreting physicians at
each of its centers. No assurance can be given that the
Company's contractual arrangements with interpreting physician
groups at each of the Company's centers can be maintained on
terms advantageous to the Company. No assurance can be given
that the interpreting physicians with whom the Company has
contracts will perform satisfactorily or continue to practice in
the markets served by its imaging centers. In addition, with
respect to the development of new centers, there can be no
assurance that arrangements can be entered into with interpreting
physicians on acceptable terms or that such physicians will be
successful in such centers. The Company's success is
significantly dependent on the ability of these physicians to
<PAGE>
<PAGE>
attract patient referrals, thereby enabling the Company's centers
to operate profitably. The inability of these physicians to
attract sufficient referrals could have a material adverse effect
on the Company's financial condition and operating results.
Technological Obsolescence
There have been rapid technological advancements made
in the software and, to a lesser extent, hardware in the
diagnostic imaging industry. Although the Company believes that
its equipment can generally be upgraded as necessary, the
development of new technologies or refinements of existing
technologies might make existing equipment technologically or
economically obsolete. If such obsolescence were to occur, the
Company may be compelled to acquire new equipment, which could
have a material adverse effect on its earnings and cash flow. In
addition, certain of the Company's centers compete against local
centers which contain more advanced imaging equipment or provide
additional modalities.
Liability Claims and Insurance
Although the Company provides administrative and
technical services and is not engaged in the practice of
medicine, the diagnostic imaging and temporary staffing
businesses entail the risk of professional liability claims. The
Company's exposure to such liability is reduced for its imaging
centers because interpreting physicians are required to carry
their own medical malpractice insurance. Similarly, the
Company's nursing personnel perform services in accordance with
treatments prescribed by third-party physicians or under hospital
supervision. Nevertheless, the Company maintains general
liability insurance and professional liability insurance for both
its diagnostic imaging business and its temporary staffing
business in amounts deemed adequate by management of the Company.
There can be no assurance, however, that potential claims will
not exceed the coverage limits or that, in the future, such
insurance will be available.
Losses from Certain Centers
Certain centers of which the Company has acquired since
January 1996 have generated losses. With respect to these
centers, the Company has advanced, and, in most circumstances,
will continue to advance, working capital to fund the operations
of such centers. The Company cannot determine if or when such
centers will become profitable, or if or when these advances will
be repaid. In the event that the Company determines to close any
such center, the Company would expect to incur a loss in
connection with such closure.
93483
