As filed with the Securities and Exchange Commission on December 19, 1996
Registration No. 333-________
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3152648
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 NORTH WESTLAKE BOULEVARD, SUITE 202,
WESTLAKE VILLAGE, CALIFORNIA 91362 (805) 381-2700
Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
--------------------
RONALD E. WITTMAN
DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC.
200 NORTH WESTLAKE BOULEVARD, SUITE 202
WESTLAKE VILLAGE, CALIFORNIA 91362
(805) 381-2700
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
---------------------
Copies to:
MURRAY MARKILES, ESQ.
TROOP MEISINGER STEUBER & PASICH, LLP
10940 WILSHIRE BOULEVARD
LOS ANGELES, CALIFORNIA 90024
(310) 824-7000
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
If the only securities on this form are being offered pursuant to dividend
or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement 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 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. [ ]
CALCULATION OF REGISTRATION FEE
===============================================================================
Title Of Amount To Proposed Proposed Amount Of
Shares To Be Be Registered Maximum Maximum Registration
Registered Aggregate Aggregate Fee
Price Per Offering
Unit(1) Price(1)
- -------------------------------------------------------------------------------
Common Stock 596,120 $8.00 $4,768,960 $1,406.84
===============================================================================
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) on the basis of the average high and low prices of
Registrant's Common Stock reported on the Nasdaq SmallCap Market on December
16, 1997.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Subject to Completion, Dated December 19, 1997
PROSPECTUS
DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC.
596,120 SHARES OF COMMON STOCK
(par value $0.01 per share)
-------------------
This Prospectus relates to the resale of an aggregate of 596,120 shares
(the "Shares") of the common stock, par value $.01 per share (the "Common
Stock") of Dental/Medical Diagnostic Systems, Inc. (the "Company" or "DMD")
offered for the account of certain stockholders of the Company (the "Selling
Stockholders"). Of the total number of Shares, 546,120 shares offered by
certain of the Selling Stockholders were acquired by the Selling Stockholders
pursuant to certain Stock Purchase Agreements, dated as of January 31, 1997,
and that certain Stock Purchase Agreement, dated January 2, 1997, each between
Hiroki Umezaki and a Selling Stockholder. The remaining 50,000 Shares were
acquired by one of the Selling Stockholders in exchange for his transfer to the
Company of the exclusive European distribution rights to all present and
future products of the Company pursuant to an Agreement, dated September 17,
1997. See "Selling Stockholders and Plan of Distribution." The Selling
Stockholders may from time to time sell all or a portion of the Common Stock
which may be offered by them under this Prospectus in routine brokerage
transactions in the over-the-counter market, at prices and terms prevailing at
the time of sale. The Selling Stockholders may also make private sales
directly or through brokers. The Selling Stockholders may pay customary
brokerage fees, commissions and expenses. The Company will pay all other
expenses of the offering. The Selling Stockholders and the brokers executing
selling orders on behalf of the Selling Stockholders may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended
(the "Securities Act"), in which event commissions received by such brokers may
be deemed underwriting commissions under the Securities Act.
The Company will not receive any proceeds from the sale of the Common
Stock offered by the Selling Stockholders hereby.
The Common Stock is quoted on the Nasdaq SmallCap Market ("Nasdaq SmallCap
Market") under the symbol "DMDS." On December 16, 1997, the closing price of
the Common Stock on the Nasdaq SmallCap Market was $8.00.
THESE SHARES OF COMMON STOCK HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR BY 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.
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.
SEE "RISK FACTORS" BEGINNING ON PAGE 6 HEREOF FOR A DISCUSSION OF CERTAIN
INFORMATION THAT SHOULD BE CAREFULLY CONSIDERED BY PROSPECTIVE PURCHASERS OF
THE SHARES.
_______________
The date of this Prospectus is December 19, 1997
Page 1
<PAGE>
No dealer, salesman or any other person has been authorized to give any
information or to make any representation not contained in this Prospectus and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Company or the Managers. This Prospectus does
not relate to any securities other than those described herein or constitute an
offer to sell, or the solicitation of an offer to buy, securities in any
jurisdiction where, or to any person to whom, it is unlawful to make such an
offer or solicitation. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create an implication that the
information herein is correct as of any time subsequent to the date hereof or
that there has been no change in the affairs of the Company since such date.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act with respect to the
Common Stock offered hereby. This Prospectus, which constitutes part of the
Registration Statement does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and the Common Stock offered hereby,
reference is hereby made to such Registration Statement, and the exhibits and
schedules thereto which may be obtained from the Commission's principal office
in Washington, D.C., upon payment of the fees prescribed by the Commission.
Statements contained in this Prospectus as to the contents of any contract,
agreement or other document are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement of which this Prospectus forms a part,
each such statement being qualified in all respects by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. These reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
following regional offices of the Commission: Offices located at 7 World
Trade Center, Suite 1300, New York, New York 10048, and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of the material can be
obtained at prescribed rates by writing to the Securities and Exchange
Commission, Public Reference Section, 450 Fifth Street, N.W., Washington,
D.C. 20549. The Commission also maintains a Web site (http://www.sec.gov)
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The
Common Stock is traded on the Nasdaq SmallCap Market and the Company's
reports, proxy or information statements, and other information filed with the
Nasdaq SmallCap Market may be inspected at the offices of Nasdaq at 1735 K
Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the
Commission pursuant to the Exchange Act, are incorporated by reference into
this Prospectus:
(1) Registrant's Annual Report on Form 10-K for the ten-month period
ended December 31, 1996;
(2) Registrant's Quarterly Report on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997; and
(3) Registrant's Reports on Form 8-K, filed on February 13, 1997, April
21, 1997, and November 14, 1997.
All documents filed by the Company 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 the offering of the securities covered by this Prospectus
shall be deemed to be incorporated by reference herein and to be part hereof
from the date of filing of such documents. Any statement contained herein or
in a document, all or a 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 other subsequently filed document which also is or is deemed
to be 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 oral or written
request of any such person, a copy of any or all of the documents incorporated
herein by reference (other than exhibits to such documents, unless such
exhibits are expressly incorporated by reference into such documents). Written
requests for such copies
Page 2
<PAGE>
should be directed to Ronald E. Wittman, Chief Financial Officer,
Dental/Medical Diagnostic Systems, Inc. 200 North Westlake Boulevard, Suite
202, Westlake Village, California, 91362. Telephone inquiries may be directed
to Dental/Medical Diagnostic Systems, Inc., at (805) 381-2700.
Page 3
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, AND
SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND
FINANCIAL STATEMENTS (INCLUDING THE NOTES THERETO) APPEARING ELSEWHERE IN THIS
PROSPECTUS. UNLESS OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS HAS
BEEN ADJUSTED TO REFLECT A ONE-FOR-2.197317574 REVERSE STOCK SPLIT OF THE
COMMON STOCK EFFECTED ON JANUARY 13, 1997, AND A ONE-FOR-1.333333333 REVERSE
STOCK SPLIT APPROVED BY THE COMPANY'S STOCKHOLDERS ON MARCH 24, 1997 ("REVERSE
STOCK SPLITS"). THIS PROSPECTUS AND OTHER INFORMATION INCORPORATED HEREIN,
CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT
OF, AMONG OTHER FACTORS, THE FACTORS SET FORTH UNDER THE CAPTION "RISK
FACTORS."
THE COMPANY
Dental/Medical Diagnostic Systems, Inc. ("DMD" or the "Company") designs,
develops, manufactures and sells high technology dental equipment. Currently,
the Company's primary emphasis is on the manufacture and sale of three
versions of an intraoral camera system known as the TeliCam System, and a
dental office networking system, known as InTELInet, for use in connection
with the TeliCam System. The TeliCam System displays close-up color video
images of dental patients' teeth and gums. These TeliCam images assist
dentists in displaying dental health and hygiene problems to patients and, as
a result of such display, promote patient acceptance of treatment plans. The
TeliCam System offers dentists the ability to capture and display multiple
video images without an expensive external capture device such as a video
cassette recorder or color printer, thereby providing a low-cost alternative
to the more expensive traditional intraoral dental camera systems. For this
reason, the Company believes that the TeliCam System should be particularly
attractive to the overseas market because printed copies of dental images are
not generally required by foreign insurance companies. The Company commenced
shipments of the initial model of the TeliCam System, referred to as TeliCam
I, and an international version compatible with the PAL television system, to
customers in February 1996, and April 1996, respectively. Through September
30, 1997, the Company had sold 3,800 TeliCam Systems to dentists throughout
the United States, as well as to several dental schools, and 2,153 TeliCam
Systems internationally. The Company has completed the development of an
enhanced version of the TeliCam System, referred to as the "TeliCam II," which
was introduced in April 1997.
In November 1996, the Company introduced its InTELInet Networking System
("InTELInet") for use with the TeliCam System. InTELInet creates a
video-electronic information link between the different operatories of the
dental office. InTELInet is different from other intra-office networking
systems known to the Company in that it enables simultaneous use of two or more
intraoral cameras, which allows dentists and their staff to conduct more than
one patient examination at a time. In addition, the TeliCam, unlike other
intraoral cameras on the market today has its own microprocessor video capture
device (or "frame grabber") built in, facilitating the need for only one
central video printer regardless of the number of intraoral cameras being used
at the same time. Competing systems require a separate color video printer or
other image storage device to capture the video images from each intraoral
camera that is in use. The color printer or other image storage device is
typically the second most expensive element of an intraoral camera system. The
TeliCam System and InTELInet presently enable the Company to offer its
customers more efficient and cost-effective networking of multiple operatories.
From the time of its first introduction in late November 1996, through
September 30, 1997, 257 InTELInet multiple operatory networking systems have
been sold by the Company.
On May 14, 1997, the Company closed an underwritten offering (the
"Offering") of 2,070,000 shares of Common Stock, and 2,070,000 Redeemable
Common Stock Purchase Warrants, raising gross proceeds of $10,350,000 prior to
expenses associated with the Offering. Of these proceeds, $1,700,000 was
applied to repay bridge notes issued by the Company in November 1996, and
$201,000 was applied to repay loans from related parties.
The Company has signed a definitive agreement with Ion Laser Technology,
Inc. ("ILT") giving the Company exclusive distribution rights to ILT's new
patent pending dental composite curing and tooth whitening device in the United
States and Canada. The Company will market the device under the name Apollo
9500(TM). This device utilizes a high energy, high pressure ionized gas in the
presence of an electrical current to create a laser-type light to effect teeth
whitening. The Company believes that the Apollo 9500TM can produce faster
results at a lower cost than currently commercially available teeth whitening
systems. The technology will also function as a curing system for curing
composites, adhesives and sealants used in dental bonding and repair. The
Company has also obtained marketing rights to digital dental x-ray technology
currently under development through an exclusive worldwide distribution
agreement with Suni Imaging Microsystems, Inc. The Company anticipates that
this
Page 4
<PAGE>
technology would enable the Company to provide a more user-friendly digital
x-ray system comparable to functionally competitive systems at a lower price
point.
The Company's principal executive offices are located at 200 North
Westlake Boulevard, Suite 202, Westlake Village, California 91362, and its
telephone number is (805) 381-2700.
Page 5
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS, THE FOLLOWING FACTORS SHOULD BE CONSIDERED
BEFORE MAKING AN INVESTMENT IN THE COMPANY.
LIMITED OPERATING HISTORY; HISTORY OF LOSSES AND ACCUMULATED DEFICIT. While
the Company has been in existence since 1981, its operations between 1988 and
its acquisition of DMD and BDI in March 1996, were limited to the exploration
of acquisition opportunities. Dental\Medical Diagnostic Systems, the division
of the Company which designs and markets the Company's TeliCam System, and BDI,
a subsidiary of the Company, have only been in operation since October 1995.
For the period from inception (October 23, 1995) to March 2, 1996, the Company
incurred a net loss of $1,625,213, and for the ten month period ended
December 31, 1996, the Company had net income of $137,151. For the nine months
ended September 30, 1997, the Company had a net loss after extraordinary item
of $534,322. At September 30, 1997, the Company's accumulated deficit was
$2,022,385. The ability of the Company to sustain profitability will depend, in
part, upon the successful marketing of existing products and the successful and
timely introduction of new products. There can be no assurance that the Company
will be able to generate and sustain net sales or profitability in the future.
DEPENDENCE UPON A SINGLE PRODUCT. The TeliCam I and its enhanced version, the
TeliCam II, are currently the Company's primary product and, together with
related products such as the InTELInet system, will account for a substantial
portion of the Company's revenue for the foreseeable future. There can be no
assurance that the TeliCam System will be more effective than competing
products or technologies, or will be successfully marketed. The Company is
still in the early stages of marketing the TeliCam System and related products,
and, consequently, the degree to which the market will accept this product is
still uncertain. If the TeliCam System and related products cannot be marketed
successfully on a sustained basis, it is likely that the Company's business
operations would be substantially and adversely impacted.
IMPORTANCE OF NEW PRODUCT DEVELOPMENT TO GROWTH. The Company's ability to
develop and introduce new products successfully on a timely basis will be a
significant factor in the Company's ability to grow and remain competitive.
New product development often requires long-term forecasting of market trends,
the development and implementation of new designs, compliance with extensive
governmental regulatory requirements and a substantial capital commitment. The
medical and dental device industry is characterized by rapid technological
change. As technological changes occur in the marketplace, the Company may
have to modify its products in order to keep pace with these changes and
developments. The introduction of products embodying new technologies, or the
emergence of new industry standards, may render existing products, or products
under development, obsolete or unmarketable. Any failure by the Company to
anticipate or respond in a cost-effective and timely manner to government
requirements, market trends or customer requirements, or any significant delays
in product development or introduction, could have a material adverse effect on
the Company's business, operating results and financial condition.
POSSIBLE NEED FOR ADDITIONAL CAPITAL. Based on its current operating plan, the
Company anticipates that, in addition to the remaining proceeds of the
Offering, together with the Comerica credit facility, further capital may be
required during the next twelve months to satisfy the Company's expected
increased working capital and research and development requirements for the new
products. The Company is currently exploring alternatives to fulfill these
requirements. No assurance can be given that additional financing will be
available when needed or that, if available, it will be on terms favorable to
the Company or its stockholders. If needed funds are not available, the
Company may be required to curtail its operations, which could have a material
adverse effect on the Company's business operating results and financial
condition. There can be no assurance that the Company's working capital
requirements during this period will not exceed its available resources or that
these funds will be sufficient to meet the Company's longer-term cash
requirements for operations.
EXPANSION THROUGH UNDETERMINED ACQUISITIONS AND JOINT VENTURES. The Company
intends to expand its product lines and domestic and international markets, in
part, through acquisitions. The Company's ability to expand successfully
through acquisitions will depend upon the availability of suitable acquisition
candidates at prices acceptable to the Company, the Company's ability to
consummate such transactions and the availability of financing on terms
acceptable to the Company. There can be no assurance that the Company will be
successful in completing acquisitions. Such transactions involve numerous
risks, including possible adverse short-term effects on the Company's operating
results or the market price of the Common Stock. These acquisitions and joint
ventures may not be subject to approval or review by the Company's
stockholders. The Company does not expect that it will obtain an appraisal by
any independent appraisers with respect to any such acquisition. Certain of
the Company's future acquisitions may also give rise to an obligation by the
Company to make contingent payments or to satisfy certain repurchase
obligations, which payments could have an adverse financial effect on the
Company. In addition, integrating acquired businesses may result in a loss of
customers or product lines of the acquired businesses and also requires
significant
Page 6
<PAGE>
management attention and may place significant demands on the Company's
operations, information systems and financial resources. The failure to
effectively integrate acquired businesses with the Company's operations could
adversely affect the Company. In addition, the Company competes for
acquisition opportunities with companies which have significantly greater
financial and management resources than those of the Company. There can be no
assurance that suitable acquisition opportunities will be identified, that any
such transactions can be consummated, or that, if acquired, such new businesses
can be integrated successfully and profitably into the Company's operations.
Moreover, there can be no assurance that the Company's historic rate of growth
will continue, that the Company will continue to successfully expand, or that
growth or expansion will result in profitability.
The Company also intends to expand its product lines and domestic and
international markets through joint ventures. The Company's ability to expand
successfully through joint ventures will depend upon the availability of
suitable joint venture candidates whose terms are acceptable to the Company,
the Company's ability to consummate such transactions and the availability of
financing on terms acceptable to the Company. There can be no assurance that
the Company will be successful in completing joint ventures. Such transactions
involve numerous risks, including possible adverse short-term effects on the
Company's operating results or the market price of the Common Stock. The
Company is currently engaged in discussions relating to product development
joint ventures. The failure to effectively integrate joint ventures with the
Company's operations could adversely affect the Company. In addition, the
Company competes for expansion opportunities with companies which have
significantly greater financial and management resources than those of the
Company. There can be no assurance that suitable investment opportunities will
be identified, that any such transactions can be consummated, or that such new
businesses can be integrated successfully and profitably into the Company's
operations. Moreover, there can be no assurance that the Company's historic
rate of growth will continue, that the Company will continue to successfully
expand, or that growth or expansion will result in profitability.
DEPENDENCE ON THIRD-PARTY SUPPLIERS. With the exception of the TeliCam
System's CCD processor unit, the Company believes that there are multiple
sources from which it may purchase the components of the TeliCam System. The
Company anticipates that it will obtain certain of the components of the
TeliCam System from a single source or a limited number of sources of supply.
Although the Company believes it will be able to negotiate satisfactory supply
arrangements and relationships, the failure to do so may have a material
adverse effect on the Company. Furthermore, there can be no assurance that
suppliers will dedicate sufficient production capacity to satisfy the Company's
requirements within scheduled delivery times or at all. Failure or delay by
the Company's suppliers in fulfilling its anticipated needs may adversely
affect the Company's ability to market the TeliCam System. Pursuant to an
agreement with Boston Marketing Company, Ltd. ("Boston Marketing") the Company
has the exclusive right to market TeliCam's CCD processor unit ("Teli Units")
to the dental market ("Boston Marketing Distribution Agreement"). Boston
Marketing is a licensed distributor of the Teli Units under a separate
agreement with their manufacturer. The agreement between Boston Marketing and
the Teli Units manufacturer obligates Boston Marketing to meet minimum purchase
obligations. If Boston Marketing fails to meet these obligations, Boston
Marketing will be terminated as a licensed distributor. In the event of such
termination, the Company, as a sublicensee subdistributor of Boston Marketing,
may lose its right to purchase the Teli Units. Moreover, in the event the
Company is unable to meet its minimum annual purchase obligations under the
Boston Marketing Distribution Agreement, and, as a consequence, such agreement
terminates, the Company may be required to find an alternative source for the
primary component of its TeliCam System. The Company believes that, in the
event the Company loses its right to sell the Teli Units, replacement
components could be developed by and obtained from third parties, but that this
may take more than six months. The potential delay associated with locating an
alternative source of supply would have a significant adverse effect on the
Company's operating results and financial condition. In addition, there is no
guarantee that an intraoral dental camera system utilizing the replacement
components will be accepted by the dental marketplace.
FLUCTUATIONS IN QUARTERLY RESULTS. The Company's business is subject to
certain quarterly influences. Management's prior experience in the industry
would indicate that net sales and operating profits are generally higher in the
fourth quarter due to the purchasing patterns of dentists and are generally
lower in the first quarter due primarily to increased purchases in the prior
quarter and during the summer months due to a reduced volume of trade shows and
increased unavailability of dentists due to summer vacations. The Company
plans to increase expenses to fund greater levels of research and development
and to fund investments in joint ventures and acquisitions. To the extent that
such expenses precede or are not subsequently followed by increased revenues,
the Company's business, quarterly operating results and financial condition
will be adversely affected. Quarterly results may also be adversely affected
by a variety of other factors, including the timing of acquisitions and their
related costs, as well as the release of new products and promotions taking
place within the quarter. Other factors that may influence the Company's
quarterly operating results include the timing of introduction or enhancement
of products by the Company's or its competitors, market acceptance of the
TeliCam II, the InTELInet System and other new products, development
Page 7
<PAGE>
and promotional expenses relating to the introduction of new products or
enhancements of existing products, reviews in the industry press concerning the
products of the Company or its competitors, changes or anticipated changes in
pricing by the Company or its competitors, mix of distribution channels through
which products are sold, mix of products sold, product returns, the timing of
orders from major distributors, order cancellations, delays in shipment and
general economic conditions. Due to all of the foregoing factors, it is also
likely that in some future periods the Company's operating results may be below
the expectations of analysts and investors. In such event, the price of the
Company's Common Stock would likely be materially adversely affected.
EXTENSIVE GOVERNMENT REGULATION. The Company's products and its manufacturing
practices are subject to regulation by the United States Food and Drug
Administration ("FDA") pursuant to the Federal Food, Drug and Cosmetic Act
("FDC Act"), and by other state and foreign regulatory agencies. Under the FDC
Act, medical and dental devices, including those under development by the
Company must receive FDA clearance or approval before they may be sold, or be
exempted from the need to obtain such clearance or approval. FDA regulations
also require the Company to adhere to certain "Good Manufacturing Practices"
("GMP") regulations, which include validation testing, quality control and
documentation procedures. The Company's compliance with applicable regulatory
requirements is subject to periodic inspections by the FDA.
The Company has been notified by the staff of the United States Food and
Drug Administration ("FDA") of its view that the Company is required to file
and obtain clearance of a pre-market notification (a "510(k) Notification")
pursuant to Section 510(k) of the Federal Food, Drug and Cosmetic Act ("FDC
Act") in connection with the sale by the Company of its TeliCam intraoral
dental camera. The staff of the FDA has orally indicated to the Company that
the Company will not be required to suspend sales of the TeliCam System pending
clearance of its 510(k) Notification. Although the Company believes that the
marketing and sale of the TeliCam intraoral dental camera does not require
filing or clearance of a 510(k) Notification and would vigorously challenge
any enforcement action based upon such a contention, the Company has determined
to promptly comply with the FDA staff's direction.
The Company had previously determined not to submit a 510(k) Notification
based on advice from its regulatory experts that although the FDA had not
specifically classified intraoral dental cameras, certain other similar
devices, including a surgical camera and a fiber-optic dental light, had been
classified by the FDA as Class I devices exempt from 510(k) Notification and
that the Company's intraoral dental camera was therefore likely to be treated
in the same manner provided that it was marketed only for use in assisting
patient communications and in providing a record in order to facilitate
insurance payment or reimbursement. The Company did not promote the TeliCam
intraoral dental camera for diagnostic uses.
In general, clearance of a 510(k) Notification may be obtained if a
manufacturer or seller of medical devices can establish that a new device is
"substantially equivalent" to a predicate device other than one that has an
approved premarket approval application ("PMA"). PMAs are substantially more
rigorous approvals generally applicable only to life sustaining, life
supporting or implantable devices, as well as certain novel technology or new
intended uses or applications for existing devices. The claim for substantial
equivalence in a 510(k) Notification may have to be supported by various types
of information, including clinical data, indicating that the device is as safe
and effective for its intended use as its legally marketed equivalent device.
Generally, the 510(k) Notification is required to be cleared by the FDA prior
to introducing a device into commercial distribution. Obtaining market
clearance for a 510(k) Notification submission may take 2 to 8 months or
longer. The process of obtaining required regulatory clearances or approvals
can be time-consuming and expensive, and there can be no assurance that the
required regulatory clearances will be obtained, or that the FDA will not
change its position and seek to suspend sales of the TeliCam intraoral dental
camera while a 510(k) notification is pending.
Although the Company believes that its products and procedures are
currently in material compliance with all relevant FDA requirements, the
failure to obtain the required regulatory clearances or to comply with
applicable regulations could result in fines, delays or suspensions of
clearances, seizures or recalls of products, operating restrictions and
criminal prosecutions, and would have a material adverse effect on the Company.
COMPETITION. The manufacture and distribution of medical and dental devices
is intensely competitive. The Company competes with numerous other companies,
including several major manufacturers and distributors. With respect to the
intraoral camera market, the Company has at least five major competitors. Most
of the Company's competitors have greater financial and other resources than
the Company. Consequently, such entities may begin to develop, manufacture,
market and distribute systems which are substantially similar or superior to
the Company's products.
RAPID EXPANSION OF THE COMPANY'S BUSINESS. From inception (October 23, 1995)
through September 30, 1997, the Company has experienced rapid and substantial
growth in revenues and geographic scope of operations. Any future growth may
place a significant strain on management and on the Company's financial
resources and information processing systems. The failure to recruit
additional staff and key personnel, to have sufficient financial resources, to
maintain or upgrade these financial reporting systems, or to respond
effectively to difficulties encountered during expansion could have a material
adverse effect on the Company's business, operating results and financial
condition.
<PAGE> page 8
RELIANCE ON INTERNATIONAL SALES AND DISTRIBUTORS AND GENERAL RISKS OF
INTERNATIONAL OPERATIONS. For the nine-month period ended September 30, 1997,
international sales have accounted for approximately 26% of the Company's net
sales, and the Company expects that international sales may increase as a
percentage of sales in the future. Consequently, the Company is subject to the
risks of conducting business internationally, including unexpected changes in,
or impositions of, legislative or regulatory requirements; fluctuations in the
U.S. dollar which could materially adversely affect U.S. dollar revenues;
tariffs and other barriers and restrictions; potentially adverse taxes; and the
burdens of complying with a variety of international laws and communications
standards. The Company's international sales involve potentially longer
payment cycles and the Company may experience greater difficulty collecting
accounts receivable. The Company currently depends on third party distributors
for substantially all of its international sales. At September 30, 1996, five
of the Company's international distributors accounted for 70% of the Company's
accounts receivable, and nine of these distributors accounted for approximately
$3,100,000, or 26%, of the Company's total sales for the nine-month period
ended September, 1997. Certain of the Company's third party distributors may
also act as resellers for competitors of the Company and could devote greater
effort and resources to marketing competitive products. The loss of, or other
significant reduction in sales to, certain of these third party distributors
could have a material adverse effect on the Company's business and results of
operations. The Company is also subject to general geopolitical risks, such as
political and economic instability and changes in diplomatic and trade
relationships, in connection with its international operations. There can be
no assurance that these risks of conducting business internationally will not
have a material adverse effect on the Company's business. Further, any failure
by the Company to predict or plan for changes in the international arena could
have a material adverse effect on the Company's business, operating results and
financial condition.
Page 8
<PAGE>
DEPENDENCE ON KEY PERSONNEL. The Company's future performance will depend
significantly upon its Chairman of the Board and Chief Executive Officer,
Robert H. Gurevitch, and upon certain other key employees of the Company. The
loss of service of one or more of these persons could have a material adverse
effect on the Company's business and operations. The Company has entered into
Employment Agreements with Robert H. Gurevitch and Dewey Perrigo, the Company's
Vice President of Sales, pursuant to which they each have agreed to render
services to the Company until October 1, 1999. The Company has obtained "key
person" life insurance on Mr. Gurevitch in the amount of $2,000,000, of which
the Company is the sole beneficiary, but there can be no assurance that such
increased coverage can be obtained or that, if obtained, the proceeds of such
insurance will be sufficient to offset the loss to the Company in the event of
his death. The Company does not maintain any insurance on the lives of its
other senior management. In addition, the Company's success will be dependent
upon its ability to recruit and retain qualified personnel. Any failure by the
Company to retain and attract key personnel could have a material adverse
effect on the Company's business, operating results, and financial condition.
LIMITED PROPRIETARY PROTECTION. The Company's success and ability to compete
is dependent in part upon its proprietary technology. The Company's
proprietary technology is not protected by any patents. Consequently, the
Company relies primarily on trademark, trade secret and copyright laws to
protect its technology. Also, the Company is currently implementing a policy
that most senior and technical employees and third-party developers sign
nondisclosure agreements. However, there can be no assurance that such
precautions will provide meaningful protection from competition or that
competitors will not be able to develop similar or superior technology
independently. Also, the Company has no license agreements with the end users
of its products, so it may be possible for unauthorized third parties to copy
the Company's products or to reverse engineer or otherwise obtain and use
information that the Company regards as proprietary. If litigation is
necessary in the future, to enforce the Company's intellectual property rights,
to protect the Company's trade secrets or to determine the validity and scope
of the proprietary rights of others, such litigation could result in
substantial costs and diversion of resources and could have a material adverse
effect on the Company's business, operating results and financial condition.
Ultimately, the Company may be unable, for financial or other reasons, to
enforce its rights under intellectual property laws. In addition, the laws of
certain countries in which the Company's products are or may be distributed may
not protect the Company's products and intellectual property rights to the same
extent as the laws of the United States.
The Company believes that its products do not infringe any valid existing
proprietary rights of third parties. Although the Company has received no
communication from third parties alleging the infringement of proprietary
rights of such parties, there can be no assurance that third parties will not
assert infringement claims in the future. Any such third party claims, whether
or not meritorious, could result in costly litigation or require the Company to
enter into royalty or licensing agreements. There can be no assurance that the
Company would prevail in any such litigation or that any such licenses would be
available on acceptable terms, if at all. If the Company were found to have
infringed upon the proprietary rights of third parties, it could be required to
pay damages, cease sales of the infringing products and redesign or discontinue
such products, any of which alternatives, individually or collectively could
have a material adverse effect on the Company's business, operating results and
financial condition.
CONFLICT OF INTERESTS. Robert Gurevitch, Chairman of the Company, has loaned
money to the Company ("Loan Obligations") and has guaranteed the performance by
the Company under its lease for its Westlake, California premises.
The Company believes that this transaction was on terms no less
favorable than were available from unaffiliated third parties. The Company
intends to attempt to relieve Mr. Gurevitch from his obligations under
the guaranty and it is possible that, in order to achieve the release of
Mr. Gurevitch from the guaranty, the Company will be required to post
collateral or provide other concessions to the recipients of the guarantees.
The Company has, in the past, entered into transactions with affiliates and
there can be no assurance that the Company will not enter into transactions
with affiliated parties in the future.
LIMITATION OF LIABILITY AND INDEMNIFICATION. The Company's Amended and
Restated Certificate of Incorporation limits, to the maximum extent permitted
by the Delaware General Corporation Law ("Delaware Law"), the personal
liability of directors for monetary damages for breach of their fiduciary
duties as a director, and provides that the Company shall indemnify its
officers and directors and may indemnify its employees and other agents to the
fullest extent permitted by law. The Company has entered into indemnification
agreements with its directors and executive officers which may require the
Company, among other things, to indemnify such directors against liabilities
that may arise by reason of their status or service as directors or officers
(other than liabilities arising from willful misconduct of a culpable nature),
to advance their expenses incurred as a result of any proceeding against them
as to which they could be indemnified, and to obtain directors' and officers'
insurance, if available on reasonable terms. The Company has purchased
directors' and officers' liability insurance in the amount of $3.0 million.
Section 145 of the Delaware Law provides that a corporation may indemnify a
director, officer, employee or agent made, or threatened to be made,
Page 9
<PAGE>
a party to an action by reason of the factthat he was a director, officer,
employee or agent of the corporation or was serving at the request of the
corporation against expenses actually and reasonably incurred in connection
with such action if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, if he had no reasonable
cause to believe his conduct was unlawful. Delaware Law does not permit a
corporation to eliminate a director's duty of care, and the provisions of the
Company's Amended and Restated Certificate of Incorporation have no effect on
the availability of equitable remedies, such as injunction or rescission, for a
director's breach of the duty of care.
ANTI-TAKEOVER PROVISIONS. The Company has an authorized class of 1,000,000
shares of preferred stock which may be issued by the Board of Directors on such
terms and with such rights, preferences and designations as the Board of
Directors may determine. Issuance of such preferred stock, depending upon the
rights, preferences and designations thereof, may have the effect of delaying,
deterring or preventing a change in control of the Company. In addition,
certain "anti-takeover" provisions of the Delaware Law, among other things,
restrict the ability of stockholders to effect a merger or business combination
or obtain control of the Company, and may be considered disadvantageous by a
stockholder.
PRODUCT LIABILITY. Although the Company has not experienced any product
liability claims to date, the sale and support of products by the Company may
entail the risk of such claims, and there can be no assurance that the Company
will not be subject to such claims in the future. A successful product
liability claim or claim arising as a result of use of the Company's products
brought against the Company, or negative publicity attendant to any such claim,
could have a material adverse effect upon the Company's business, operating
results and financial condition. The Company maintains product liability
insurance with coverage limits of $1,000,000 per occurrence and $1,000,000 per
year. While the Company believes that it maintains adequate insurance
coverage, there can be no assurance that the amount of insurance will be
adequate to satisfy claims made against the Company in the future, or that the
Company will be able to obtain insurance in the future at satisfactory rates or
in adequate amounts.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS. This Prospectus includes
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 ("Securities Act") and Section 21E of the Exchange Act.
All statements other than statements contained herein regarding the Company's
strategies, plans, objectives and expectations; the Company's ability to
design, develop, manufacture and market products; the ability of the Company's
products to maintain commercial acceptance; the Company's ability to achieve
new product commercialization; the anticipated growth of its target markets;
its future operating results; and other matters are all forward-looking
statements. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable at this time, it can give no
assurance that such expectations will prove to have been correct. Important
factors that could cause actual results to differ materially from the Company's
expectations are set forth in these "Risk Factors," as well as elsewhere in
this Prospectus. All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by the "Risk Factors."
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Securities
offered by the Selling Stockholders hereunder.
Page 10
<PAGE>
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
Of the total of 596,120 Shares, 546,120 Shares were issued by the
Company to Hiroki Umezaki pursuant to that certain Contribution Agreement,
dated as of February 29, 1996, whereby the Company acquired all of the
outstanding securities of Dental/Medical Diagnostic Systems, LLC, a California
limited liability company ("DMD LLC") in exchange for the issuance by the
Company of a total of 1,365,301 shares of the Company's Common Stock to the
Members of DMD LLC. As a Member of DMD LLC, Mr. Umezaki received 546,120
Shares. On January 2, 1997, Mr. Umezaki entered into a Stock Purchase
Agreement for the sale of an aggregate of 204,795 of the Shares to Far West
Capital Partners, L.P., Ponte Vedra Partners, Ltd. and Robert S. London
(collectively, the "First Purchaser Group") whereby each of the parties in such
First Purchaser Group purchased 68,265 of the Shares in a private placement
pursuant to Regulation D under the Securities Act. Subsequently, on January
31, 1997, Mr. Umezaki entered into Stock Purchase Agreements with each of North
American Trust Co. TTEE; JMG Capital Partners, L.P.; Dorchester Offshore Fund;
Dorchester Partners, L.P.; Steven B, Dunn, as Custodian for Brittany B, Dunn;
Charles B. Runnels, Jr.; and Philip E. Muhl (collectively, the "Second
Purchaser Group"), for the sale of Mr. Umezaki's remaining 341,325 Shares,
which shares were allocated among the parties in the Second Purchaser Group as
described in the chart below. The parties included in both the First Purchaser
Group and the Second Purchaser Group are, collectively, the Selling
Stockholders. Pursuant to the terms of those two certain Letter Agreements,
dated December 20, 1996 and January 31, 1997, respectively, the Company agreed
to undertake to register the Shares by December 31, 1997. The remaining 50,000
Shares were acquired by Guy De Vreese, pursuant to that certain Agreement,
dated September 17, 1997, in exchange for his transale to the Company of
the exclusive European distribution rights to all present and future products
of the Company. The following table sets forth certain information regarding
the beneficial ownership of the Common Stock by the Selling Stockholders as of
December 16, 1997. The Selling Stockholders respectively have the sole voting
and investment power with respect to the Shares owned, subject to applicable
community property laws. Additional Selling Security Holders will be
identified and other information concerning additional Selling Security Holders
will be set forth in Prospectus Supplements from time to time. As of December
16 1997, the Company had outstanding 5,115,778 shares of Common Stock, par
value $.01 per share, the only outstanding voting security of the Company.
Common Stock Owned Prior Common Stock Owned
to the Offering(1) After the Offering
(1)
------------------------------- ------------------
Number of Percent Number of Number of Percent
Shares of Class Shares to Shares of Class
be Sold
FIRST PURCHASER GROUP
- ------------------------- --------- --------- --------- --------- --------
Far West Capital Part- 68,265 1.33 68,265 0 *
ners, L.P
P.O. Box 440
Woodacre, CA 94973
Ponte Vedra Partners, Ltd. 68,265 1.33 68,265 0 *
4400 Marsh Landing Boule-
vard, Suite 9
Ponte Vedra Beach, FL 32082
Robert S. London 68,265 1.33 68,265 0 *
809 Presidio Avenue,
Suite B
Santa Barbara, CA 93101
SECOND PURCHASER GROUP
- -------------------------
North America Trust Co. 123,000 2.40 123,000 0 *
TTEE
FBO J. Steven Emerson IRA
525 B Street, 16th Floor
San Diego, CA 92121
Contact: Ms Pat Schmidt
JMG Capital Partners, L.P. 75,000 1.47 75,000 0 *
1999 Avenue of the Stars,
Suite 1950
Los Angeles, CA 90067
Page 11
<PAGE>
Common Stock Owned Prior Common Stock Owned
to the Offering(1) After the Offering
(1)
------------------------------- ------------------
Number of Percent Number of Number of Percent
Shares of Class Shares to Shares of Class
be Sold
Dorchester Offshore Fund 12,825 .25 12,825 0 *
c/o Goldman, Sachs & Co.
One New York Plaza,
48th Floor
New York, NY 10004
Dorchester Partners, L.P. 119,250 2.33 119,250 0 *
1999 Avenue of the Stars,
Suite 1950
Los Angeles, CA 90067
Steven B. Dunn, Custodian 3,750 .07 3,750 0 *
Brittany B. Dunn UTMA/CA
2069 Coldwater Canyon Drive
Beverly Hills, CA 90210
Charles B. Runnels, Jr. 3,750 .07 3,750 0 *
556 Catalonia
Pacific Palisades, CA 90272
Philip E. Muhl 3,750 .07 3,750 0 *
3614 Camino De La Cumbre
Sherman Oaks, CA 94123
Guy DeVreese 50,000 .98 50,000 0 *
_________________________
* Less than one percent.
(1) Assumes no purchase of additional shares and no exercise of outstanding
warrants to purchase the Company's Common Stock.
The Selling Stockholders may sell all or a portion of the Shares offered
hereby from time to time in brokerage transactions in the NASDAQ SmallCap
Market and the Boston Stock Exchange market at prices and terms prevailing at
the times of such sales. The Selling Stockholders may also make private sales
directly or through brokers. The Selling Stockholders may individually pay
customary brokerage commissions and expenses. In connection with any sales,
the Selling Stockholders and any brokers participating in such sales may be
deemed to be underwriters within the meaning of the Securities Act, in which
event commissions received by such brokers may be deemed underwriting
commissions under such Act.
Under the 1934 Act and the regulations thereunder, any person engaged in a
distribution of the shares of Common Stock of the Company offered by this
Prospectus may not simultaneously engage in market making activities with
respect to the shares of Common Stock of the Company during the
applicable"cooling off" periods prior to the commencement of such distribution.
In addition, and without limiting the foregoing, the Selling Stockholder will
need to comply with applicable provisions of the 1934 Act and the rules and
regulations thereunder including, without limitation, Rules 10b-6 and 10b-7,
which provisions may limit the timing of purchases and sales of shares of
Common Stock by the Selling Stockholder.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for the
Company by Troop Meisinger Steuber & Pasich, LLP, Los Angeles, California.
Page 12
<PAGE>
EXPERTS
The consolidated balance sheets of Dental/Medical Diagnostic Systems, Inc.
and Subsidiaries as of December 31, 1996 and March 2, 1996 and the consolidated
statements of income, retained earnings and cash flows for the ten-month period
ended December 31, 1996 and for the period from inception (October 23, 1995) to
March 2, 1996, incorporated by reference in this registration statement on Form
S-3, have been incorporated herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
No dealer, salesperson or other person has been authorized to give any
information or to make any representation, other than those 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. 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. 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 is not qualified to do so or to anyone to
whom it is unlawful to make such offer or solicitation.
Page 13
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the offering are as follows:
Amount
-----------
Registration Fee Under Securities Act of 1933 $ 1,406.84
NASD Filing Fee $ *
Blue Sky Fees and Expenses $ *
Printing and Engraving Certificates $ *
Legal Fees and Expenses $10,000.00
Accounting Fees and Expenses $ 3,000.00
Registrar and Transfer Agent Fees $ *
Miscellaneous Expenses $ *
TOTAL $14,406.84
===========
_________________
* Not applicable or none.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the Delaware General Corporation Law ("DGCL"), the
Company's Amended and Restated Certificate of Incorporation limits the personal
liability of directors to the Company for monetary damages for certain breaches
of fiduciary duty. Liability is not eliminated for (i) any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) unlawful payment of dividends or stock
purchases or redemptions pursuant to Section 174 of the DGCL, or (iv) any
transaction from which the director derived an improper personal benefit.
The Company has also entered into indemnification agreements with each of
its directors and executive officers. The indemnification agreements provide
that the directors and executive officers will be indemnified to the fullest
extent permitted by applicable law against all expenses (including attorneys'
fees), judgments, fines and amounts reasonably paid or incurred by them for
settlement in any threatened, pending or completed action, suit or proceeding,
including any derivative action, on account of their services as a director or
officer of the Company or of any subsidiary of the Company or of any other
company or enterprise in which they are serving at the request of the Company.
No indemnification will be provided under the indemnification agreements,
however, to any director or executive officer in certain limited circumstances,
including on account of knowingly fraudulent, deliberately dishonest or willful
misconduct. To the extent the provisions of the indemnification agreements
exceed the indemnification permitted by applicable law, such provisions may be
unenforceable or may be limited to the extent they are found by a court of
competent jurisdiction to be contrary to public policy.
The Company has purchased a directors and officers liability insurance
policy in the amount of $3,000,000.
Page 14
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission
("Commission") such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
See the Exhibit Index of this Registration Statement.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the 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 the 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.
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 to include any material
information with respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such information in the
Registration Statement;
(2) That, for the purpose of determining liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 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 15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Westlake Village, State of California, on December 19, 1997.
DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC.
(Registrant)
By: /S/ ROBERT H. GUREVITCH
-------------------------------------
Robert H. Gurevitch
Chairman of the Board,
Chief Executive Officer, President
and Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert H. Gurevitch and Ronald E. Wittman or any
one of them, his attorney-in-fact and agent, with full power of substitution,
for him in any and all capacities, to sign any amendments to this Registration
Statement on Form S-3, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorney-in-fact, or their
substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed below by the following
persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
Chairman of the Board, Chief
Executive Officer, President
/S/ ROBERT H. GUREVITCH and Secretary December 19, 1997
- -----------------------
Robert H. Gurevitch
Chief Financial Officer, Chief
Accounting Officer and Vice
/S/ RONALD E. WITTMAN President December 19, 1997
- -----------------------
Ronald E. Wittman
/S/ MARVIN H. KLEINBERG Director December 19, 1997
- -----------------------
Marvin H. Kleinberg
/S/ JACK D. PRESTON Director December 19, 1997
- -----------------------
Jack D. Preston
<PAGE>
EXHIBIT INDEX
NO. ITEM PAGE
- ----- ------- ------
5.1 Opinion of Troop Meisinger Steuber & Pasich, LLP
23.1 Consent of Coopers & Lybrand, LLP
23.2 Consent of Troop Meisinger Steuber & Pasich, LLP (included
as part of Exhibit 5.1)
Page 17
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this by registration statement
of Dental/Medical Diagnostic Systems, Inc. and Subsidiaries on Form S-3 (File
No. 333-_______) of our report dated January 31, 1997, excepts for note 2 as to
which the date is March 24,1997, on our audits of the consolidated financial
statements of Dental/Medical Diagnostic Systems, Inc. and Subsidiaries as of
December 31, 1996 and March 2, 1996 and for the ten-month period ended December
31, 1996 and for the period from inception (October 23, 1995) to March 2, 1996.
We also consent to the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand, LLP
COOPERS & LYBRAND, LLP
Los Angeles, California
December 19, 1997
EXHIBIT 23.1
<PAGE>
[LETTERHEAD OF TROOP MEISINGER STEUBER & PASICH, LLP]
December 19, 1997
Dental/Medical Diagnostic Systems, Inc.
200 North Westlake Boulevard, Suite 202
Westlake Village, CA 91362
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on Form S-3
(the "Registration Statement") to which this letter is attached as Exhibit 5.1
filed by Dental/Medical Diagnostic Systems, Inc., a Delaware corporation (the
"Company"), in order to register under the Securities Act of 1933, as amended
(the "Act"), 596,120 shares of Common Stock of the Company which may be
registered pursuant to Rule 415 under the Act (the "Shares").
We are of the opinion that the Shares have been duly authorized, validly
issued, fully paid and non-assessable.
We consent to the use of this opinion as an Exhibit to the Registration
Statement and to use of our name in the Prospectus constituting a part thereof.
Respectfully submitted,
/s/ Troop Meisinger Steuber & Pasich, LLP
TROOP MEISINGER STEUBER & PASICH, LLP
EXHIBIT 5.1
