As filed with the Securities and Exchange Commission on February 3, 1999
Registration No. 333-68271
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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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)
----------------------
STEPHEN ROSS
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 STEUBER PASICH REDDICK & TOBEY, LLP
2029 CENTURY PARK EAST, 24TH FLOOR
LOS ANGELES, CALIFORNIA 90067
(310) 728-3000
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. [ ]
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>
PROSPECTUS
DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC.
100,000 SHARES OF COMMON STOCK
----------------
This is an offering of 100,000 shares of common stock of Dental/Medical
Diagnostic Systems, Inc. The selling stockholder named in this prospectus is
offering all of the shares to be sold in the offering. Dental/Medical will not
receive any of the proceeds from the offering.
The common stock is quoted on the Nasdaq SmallCap Market under the symbol
"DMDS" and on the Boston Stock Exchange under the symbol "DMD." On February 1,
1999, the high and low prices of the Common Stock on the Nasdaq SmallCap Market
was $7.19 and $7.00, respectively, and the bid and the ask prices of the Common
Stock on the Boston Stock exchange was $6.88 and $7.75, respectively.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
INVESTING IN THE SHARES INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 7.
---------------
The date of this prospectus is February 3, 1999
PAGE 2
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TABLE OF CONTENTS
Page
----
ABOUT DENTAL/MEDICAL DIAGNOSTIC SYSTEMS ................................... 4
RISK FACTORS .............................................................. 5
USE OF PROCEEDS ........................................................... 11
SELLING STOCKHOLDER ....................................................... 12
PLAN OF DISTRIBUTION ...................................................... 13
WHERE YOU CAN FIND MORE INFORMATION ....................................... 14
LEGAL MATTERS ............................................................. 15
EXPERTS ................................................................... 15
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PAGE 3
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ABOUT DENTAL/MEDICAL DIAGNOSTIC SYSTEMS
Dental Medical Diagnostic Systems, Inc. designs, develops, manufactures and
sells high technology dental equipment. Our primary product emphasis for
approximately the past two years has been on the manufacture and sale of an
intraoral camera system known as the "TeliCam II System," an updated version of
the intraoral camera system, the "TeliCam Elite," and an intraoral camera
network known as the InTELInet, for use in connection with the TeliCam II
System. TeliCam System II and Elite Systems sales have recently been below
levels of prior comparable periods, a trend that we expect to continue. However,
in the last nine months our primary product emphasis has begun to shift toward a
tooth whitening and curing device known as the Apollo 95E which we now market
both domestically and internationally. We believe that the Apollo 95E produces
faster results than other products currently available in the marketplace. This
product is designed to harden composite material in three seconds or less, and
to produce teeth whitening in a dental office in less than one hour.
We also began marketing the chemical composite filling material, Apollo Cure,
and whitening materials, Apollo Secret, to be used in connection with the Apollo
95E in November 1998. We are currently in the process of having the products
manufactured for initial shipment to dentists. Apollo Secret power whitening
offers the following benefits:
o a reduction of patient discomfort;
o the procedure can be performed by a dental assistant or
hygienist in most states (generally in less than 40 minutes);
o the ability to whiten the patient's teeth up to ten shades
lighter; and
o no surface damage to the tooth enamel or pulp.
We have the exclusive rights to market products to the dental market
incorporating certain digital x-ray technology being developed by Suni Imaging
Microsystems, Inc. Suni will keep the rights to developed microchip technology
underlying the x-ray system it develops for us. Digital x-ray systems, including
competitive systems currently on the market, reduce radiation exposure compared
to conventional x-ray systems and allow dentists to view x-ray images in
real-time without the time-consuming process of film development and eliminate
the need to use and dispose of chemicals required to develop conventional x-ray
film. The technology being developed for us by SUNI, if successfully developed,
will provide the following benefits:
o an improved image quality digital x-ray system;
o a price expected to be lower than competitive systems; and
o database storage and recall of images for comparison purposes
similar to competitive systems.
We plan to launch this product internationally beginning in April of 1999 but do
not guarantee that we will achieve this schedule. If our digital x-ray
technology is successfully developed, marketing of this technology domestically
will begin if, and when, FDA approval is granted. We cannot assure you that the
FDA will approve our 510(k) filing.
Dental/Medical was organized in New York in 1981 under the name Edudata
Corporation and reincorporated in Delaware in 1983. Dental/Medical's principal
executive offices are located at 200 North Westlake Boulevard, Suite 202,
Westlake Village, California 91362, (805) 381-2700.
PAGE 4
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RISK FACTORS
Investment in the shares covered by this prospectus involves a significant
degree of risk. You should carefully consider all of the information in this
prospectus, and, in particular, should evaluate the following risks related to
an investment in the shares.
WE HAVE A LIMITED OPERATING HISTORY UPON WHICH TO EVALUATE OUR LIKELIHOOD OF
SUCCESS.
We have only operated our present business which designs and markets our TeliCam
Systems and Apollo 95E since October 1995. Therefore, we have a limited relevant
operating history upon which to evaluate the likelihood of our success. Factors
such as the risks, expenses and difficulties frequently encountered in the
operation and expansion of a relatively new business and the development and
marketing of new products must be considered in evaluating the likelihood of
success of our company.
WE HAVE A HISTORY OF LOSSES AND ACCUMULATED DEFICIT.
For the period from October 23, 1995 to March 2, 1996, we incurred a net loss of
$1,625,213. For the twelve months ended December 31, 1997 we had a net loss of
$2,044,729 and for the nine months ended September 30, 1998 we had a net loss of
$2,897,915. At September 30, 1998, our accumulated deficit was $6,430,706. Our
ability to obtain and sustain profitability will depend, in part, upon the
successful marketing of our existing products and the successful and timely
introduction of new products. There can be no assurance that the Company will
ever become profitable.
ONE OF OUR PRIMARY PRODUCTS HAS HAD A SIGNIFICANT DECLINE IN SALES
The TeliCam Systems, together with related products such as the InTELInet
system, and the Apollo 95E have been our primary products and during the last
nine months have made up a substantial portion of our revenue. We believe that
the market for SALES intraoral cameras, such as the TeliCam systems, is a market
that has declined. TeliCam Systems sales have recently been below levels of
prior comparable periods, a trend which we expect to continue. For example,
TeliCam Systems sales for the nine-month period ended September 30, 1998 were
approximately $4,400,000 as compared to approximately $11,200,000 for TeliCam
Systems sales for the nine-month period ended September 30, 1997.
AS A RESULT OF THE DECLINE IN SALES OF THE TELECAM, OUR FUTURE DEPENDS ON OUR
ABILITY TO DEVELOP AND INTRODUCE NEW PRODUCTS.
As a result of the decline in the intraoral camera market, our future depends
upon our ability to develop and successfully introduce new products to make up
for the diminished sales of the Telicam Systems. Development of new product
lines is risk intensive and often requires:
o long-term forecasting of market trends;
o the development and implementation of new designs;
o compliance with extensive governmental regulatory requirements;
and
o a substantial capital commitment.
PAGE 5
<PAGE>
Also, the medical and dental device industry is characterized by rapid
technological change. As technological changes occur in the marketplace, we may
have to modify our products in order to become or remain competitive or ensure
that our products do not become obsolete. If we fail to anticipate or respond in
a cost-effective and timely manner to government requirements, market trends or
customer requirements, or if there are any significant delays in product
development or introduction, this could have a material adverse effect on our
business.
WE WILL NEED ADDITIONAL CAPITAL TO FINANCE RESEARCH AND DEVELOPMENT OF OUR NEW
PRODUCTS.
We anticipate that we will need additional capital during the calendar year 1999
to satisfy our expected increased working capital and research and development
requirements for our planned new products. We are currently exploring
alternatives to fulfill these requirements, but cannot assure you that
additional financing will be available when needed or that, if available, it
will be on terms favorable to us or our stockholders. If needed funds are not
available, we may be required to limit our operations, which could have a
material adverse effect on our business, operating results and financial
condition. If additional funds are raised through the sale of Dental/Medical
stock, additional dilution to stockholders may occur.
WE SUBSTANTIALLY DEPEND UPON THIRD PARTIES FOR SEVERAL CRITICAL ELEMENTS OF OUR
BUSINESS, INCLUDING THE DEVELOPMENT AND LICENSING FOR DISTRIBUTION OF OUR
PRODUCTS.
We are dependent upon third party developers and suppliers for the development
and manufacture of all of our products. We have had problems in the past
obtaining a marketable product from companies with whom we had entered into a
licensing arrangement. We entered into a licensing arrangement with Ion Laser
Technology under which ILT was unable to develop a product in accordance with
the delivery schedule established by our agreement that met our specifications;
as a result, we were forced to find an alternative product to that which we had
contracted for with ILT.
Under licensing and development arrangements we have obtained exclusive
marketing rights to products for the dental market incorporating certain digital
x-ray technology developed by Suni. We have paid significant non-refundable
advances to, and are dependent upon Suni to successfully develop the digital
x-ray technology and to commercialize the digital x-ray technology. We do not
guarantee that Suni will be successful in this endeavor. If Suni should not
develop a digital x-ray product we believe to be acceptable or successful in the
marketplace, this would have a material adverse effect on our operating results
and financial condition.
IN ORDER TO MAINTAIN OUR EXCLUSIVE RIGHTS TO THE DIGITAL X-RAY TECHNOLOGY
DEVELOPED BY SUNI WE MUST MAKE CERTAIN MINIMUM ROYALTY PAYMENTS TO SUNI.
In order to maintain our rights to be the exclusive dental licensee of the
digital x-ray technology developed by SUNI, our agreement with Suni requires us
to make minimum royalty payments. The royalty payments begin coming due when
products incorporating the developed technology are introduced to the market. We
cannot guarantee that we will be able to make the minimum royalty payments
required to maintain our rights to be the exclusive distributor. If we do not
make the required royalty payments, Suni will be able to license the developed
technology to our competitors, or grant an exclusive license to a competitor,
which could have a material adverse effect on our operating results and
financial condition.
PAGE 6
<PAGE>
THE GOVERNMENT EXTENSIVELY REGULATES OUR PRODUCTS.
The United States Food and Drug Administration and other state and foreign
regulatory agencies regulate both our products and our manufacturing practices.
Under the FDC Act, medical and dental devices, including those which we are
currently developing, must receive FDA clearance or notification or be exempted
from the need to obtain such clearance or notification. FDA regulations also
require us to adhere to certain "Good Manufacturing Practices" regulations,
which include validation testing, quality control and documentation procedures.
The FDA may conduct periodic inspections to make sure that we are complying with
the applicable rules and regulations.
We will need to file for 510(k) notification for any new products that are
developed in the future using digital x-ray technology, as well as certain other
products. The process of obtaining required regulatory clearances or
notifications can be time-consuming and expensive, and compliance with the FDA's
Good Manufacturing Practices regulations and other regulatory requirements can
be burdensome. Moreover, we do not guarantee that the required regulatory
notifications will be obtained, and those obtained may include significant
limitations on the uses of the product in question. In addition, changes in
existing regulations or the adoption of new regulations could make regulatory
compliance by us more difficult in the future. The failure to obtain the
required regulatory clearances or to comply with applicable regulations could
result in any of the following:
o fines;
o delays or suspensions of clearances;
o seizures or recalls of products;
o operating restrictions; and
o criminal prosecution.
In addition, we are required to be licensed as a medical device manufacturer by
the State of California. We filed a timely application for a license to cover
our manufacturing activities but the California Department of Health Services,
Food And Drug Branch has not yet inspected our facilities. The California DHS
has informed us that it intends to conduct an inspection of our facilities
before the end of February 1999. We believe that the California DHS will permit
us to continue to manufacture and sell our products prior to the required
prelicensing inspection. Approval of the license generally requires that we
comply with the FDA's GMP, labeling and medical device reporting regulations, as
well as any other applicable regulatory requirements. We cannot guarantee that
the California DHS will grant or renew our license. Our inability to obtain the
needed approvals or license could result in a delay or suspension of the
manufacture and sale of our products. Any such delay or suspension would have a
material adverse effect on our business.
PAGE 7
<PAGE>
THE LOSS OF OUR CHIEF EXECUTIVE OFFICER WOULD HAVE AN ADVERSE EFFECT ON OUR
BUSINESS.
Our success is highly dependent upon our Chairman of the Board and Chief
Executive Officer, Robert H. Gurevitch. Unlike larger companies, we rely heavily
on a small number of officers to conduct a large portion of our business. The
loss of service of Robert H. Gurevitch along with the loss of his numerous
contacts and relationships in the industry would have a material adverse effect
on our business. We have entered into an Employment Agreement with Robert H.
Gurevitch under which he has agreed to render services to us until October 1,
1999. We have obtained "key person" life insurance on Mr. Gurevitch in the
amount of $2,000,000, of which we are the sole beneficiary, but there can be no
assurance that the proceeds of such insurance will be sufficient to offset the
loss to us in the event of his death.
NONE OF OUR PRODUCTS ARE PROTECTED BY PATENTS.
Our future success and ability to compete is dependent in part upon our
proprietary technology. Our proprietary technology is not protected by any
patents. The Apollo 95E has a patent pending but it is not certain to be issued.
Consequently, we rely primarily on trademark, trade secret and copyright laws to
protect our technology. Also, we have implemented 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. For example, third parties may try to copy our
products. Similarly, our customers may take inadequate precautions to protect
our proprietary information. In addition, many foreign countries' laws may not
protect us from improper use of our proprietary technology overseas. We may not
have adequate remedies if our proprietary rights are breached or our trade
secrets are disclosed.
LIMITATION OF LIABILITY AND INDEMNIFICATION PROVIDED TO OUR OFFICERS AND
DIRECTORS MAY CAUSE THEM TO BE LESS CAUTIOUS IN THEIR ACTIONS.
Dental/Medical's Amended and Restated Certificate of Incorporation limits the
personal liability of directors for monetary damages for breach of their
fiduciary duties as a director, and provides that we must indemnify our officers
and directors and may indemnify our employees and other agents to the fullest
extent permitted by law. We have entered into indemnification agreements with
our directors and executive officers which may require us to indemnify them
against liabilities that arise by reason of their status or service as directors
or officers (other than liabilities arising from willful misconduct of a
culpable nature). These indemnification agreements may also require us to
advance their expenses incurred as a result of any proceeding against them as to
which they could be indemnified. We have purchased directors' and officer's
liability insurance in the amount of $5,000,000. The limitation of liability of
our directors and their indemnity may lead them to be less cautious in their
actions than if they were liable for monetary damages and if no indemnification
were provided.
ISSUANCE OF PREFERRED STOCK MAY HAVE THE EFFECT OF PREVENTING A CHANGE OF
CONTROL.
We have authorized 1,000,000 shares of preferred stock, which may be issued by
the Board of Directors with certain rights not granted to the holders of common
stock. Issuance of such preferred stock, depending upon the terms and the rights
thereof, may have the effect of delaying, deterring or preventing a change in
control.
PAGE 8
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WE ARE SUSCEPTIBLE TO PRODUCT LIABILITY SUITS.
Although we have not yet had any product liability claims, because of the nature
of the medical/dental device industry, there can be no assurance that we will
not be subject to such claims in the future. Our products come into contact with
more vulnerable areas of the human body, such as the mouth, tongue, teeth and
gums, and, therefore, the sale and support of dental products makes us
susceptible to the risk of such claims. A successful product liability claim or
claim arising as a result of use of our products brought against us, or the
negative publicity brought up by such claim, could have a material adverse
effect upon our business. We maintain product liability insurance with coverage
limits of $10,000,000 per occurrence and $11,000,000 per year. While we believe
that we maintain adequate insurance coverage, we do not guarantee that the
amount of insurance will be adequate to satisfy claims made against us in the
future, or that we will be able to obtain insurance in the future at
satisfactory rates or in adequate amounts.
FLUCTUATION IN QUARTERLY RESULTS MAY RESULT IN DECLINES IN OUR STOCK PRICE.
Certain quarterly influences may affect our business. Sales are generally higher
in the fourth quarter due to the purchasing patterns of dentists in the United
States and are generally lower in the first quarter due primarily to the effect
upon demand of increased purchases in the prior quarter. It is also expected
that our business will experience lower sales in the summer months as a
consequence of holiday vacations and a lesser number of trade shows. These
fluctuations could result in significant fluctuations, including significant
declines in our stock price.
THE YEAR 2000 ISSUE COULD HAVE AN IMPACT ON OUR IT AND NON-IT SYSTEMS AS WELL AS
THOSE OF OUR SUPPLIERS, DISTRIBUTORS AND/OR CUSTOMERS, ANY OF WHICH COULD
NEGATIVELY AFFECT SALES OF OUR PRODUCTS.
The Year 2000 readiness issue, which is common to most businesses, arises from
the inability of information systems, and other time and date sensitive products
and systems, to properly recognize and process date-sensitive information or
system failures. Estimates of the potential cost and effects of Year 2000 issues
vary significantly among businesses, and it is extremely difficult to predict
the actual impact. Recognizing this uncertainty, management is continuing to
actively analyze, assess and plan for various Year 2000 issues across its
businesses.
The Year 2000 issue has an impact on both information technology systems and
non-IT systems, such as its manufacturing systems and physical facilities
including, but not limited to, security systems and utilities. Although our
management believes that a majority of our IT systems are Year 2000 ready, such
systems still have to be tested for Year 2000 readiness. We are replacing or
upgrading those systems that are identified as non-Year 2000 compliant. Certain
IT systems previously identified as non-Year 2000 compliant are being upgraded
or replaced which should be complete by June 30, 1999. Non-IT system issues are
more difficult to identify and resolve. We are actively identifying non-IT Year
2000 issues concerning our products and services, as well as our physical
facility locations. As non-IT areas are identified, our management formulates
the necessary actions to ensure minimal disruption to our business processes.
Although our management believes that its efforts will be successful and the
costs will be immaterial (i.e., less than $25,000) to our consolidated financial
position and results of operations, it also recognizes that any failure or delay
could cause a potential impact.
PAGE 9
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We have initiated efforts to ensure Year 2000 readiness of our products and
services. We have moved to a Year 2000 compliant Network Operating System, and
our key financial, manufacturing and other in-house systems are already
materially compliant.
The Year 2000 readiness of our customers varies. We are not investigating
whether or not our customers are evaluating and/or preparing their own systems.
These efforts by customers to address Year 2000 issues may affect the demand for
certain products and services; however, the impact on our revenue is highly
uncertain. We have also begun efforts to assess the Year 2000 readiness of our
key suppliers and business partners. Our direction of this effort is to ensure
the adequacy of resources and supplies to minimize any potential business
interruptions.
The Year 2000 issue presents a number of other risks and uncertainties that
could impact us, such as public utilities failures, potential claims against us
for damages arising from products and services that are not Year 2000 compliant,
and the response ability of certain government commissions of the various
geographic areas where Dental/Medical conducts business. While we continue to
believe the Year 2000 issues described above will not materially affect our
financial position, it remains uncertain as to what extent, if any, we may be
impacted.
If we, our customers or vendors are unable to resolve any Year 2000
compliance problems in a timely manner, we could face business interruptions or
shutdown, financial loss, regulatory actions, reputational harm and/or legal
liability. Contingency plans that address a reasonably likely worst case
scenario have not yet been developed. We intend to determine whether any such
plans will be necessary in the coming months.
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USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares offered by the
selling stockholder under this prospectus. The selling stockholder will pay all
costs, expenses and fees in connection with the registration of the shares
offered under this prospectus.
PAGE 11
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SELLING STOCKHOLDER
We are registering 100,000 shares of common stock on behalf of Chrysalis Dental,
Inc. We issued the 100,000 shares of common stock to the selling stockholder as
the purchase price for our acquisition of a worldwide license to technology
owned by the selling stockholder in October of 1998. We agreed to register the
common stock on a Form S-3 Registration Statement.
We do not know if, when, or in what amounts the selling stockholder will sell
shares of the common stock. Thus, we cannot estimate how many shares the selling
stockholder will hold after completion of the offering.
Common Stock Owned Prior to the Offering
----------------------------------------
Number of Number of
Shares of Percent of Shares to be
Common Stock Class Sold
--------------- ------------ --------------
Chrysalis Dental, Inc. 100,000 1.9% 100,000
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PLAN OF DISTRIBUTION
We are registering the shares on behalf of the selling stockholder. As used in
this prospectus, the term "selling stockholder" includes donees and pledgees
selling shares received from the selling stockholder after the date of this
prospectus. The selling stockholder will pay all costs, expenses and fees in
connection with the registration of the shares offered under this prospectus.
The shares may be offered and sold by the selling stockholder directly to
purchasers or through one or more underwriters, brokers, dealers or agents, in
one or more types of transactions:
o on the Nasdaq SmallCap Market or the Boston Stock Exchange,
o in negotiated transactions,
o through put or call options relating to the shares,
o through short sales of shares, or
o a combination of such methods of sale, at market prices
prevailing at the time of sale, or at negotiated prices.
The selling stockholder has advised us that it has not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities, nor is there an
underwriter or coordinating broker acting in connection with the proposed sale
of shares by the selling stockholder.
The selling stockholder and any broker-dealers that act in connection with the
sale of shares might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, and any commissions received by such
broker-dealers and any profit on the resale of the shares sold by them while
acting as principals might be deemed to be underwriting discounts or commissions
under the Securities Act. Because the selling stockholder may be deemed to be an
underwriter within the meaning of Section 2(11) of the Securities Act, the
selling stockholder will be subject to the prospectus delivery requirements of
the Securities Act. We have informed the selling stockholder that the
anti-manipulative provisions of Regulation M promulgated under the Securities
Exchange Act may apply to their sales in the market.
If required, the following information will be set forth in an accompanying
prospectus supplement or, if appropriate, a post-effective amendment to the
registration statement:
o the specific shares to be sold,
o the names of the selling stockholder,
o the respective purchase prices and public offering prices,
o the names of any agent, dealer or underwriter, and
o any applicable commissions or discounts.
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WHERE YOU CAN FIND MORE INFORMATION
Federal securities law requires us to file information with the SEC concerning
our business and operations. We file annual, quarterly and special reports,
proxy statements and other information with the SEC. You can read and copy these
documents at the public reference facility maintained by the SEC at Judiciary
Plaza, 450 Fifth Street, NW, Room 1024, Washington, DC 20549. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our
SEC filings are also available on the SEC's Website at "http://www.sec.gov." You
can also inspect such reports, proxy statements and other information at the
offices of the Nasdaq Stock Market.
The SEC allows us to "incorporate by reference" the information we file with it,
which means that we can disclose important information to you by referring to
those documents. The information incorporated by reference is an important part
of this prospectus, and information that we file later with the Commission will
automatically update and supersede this information.
We incorporate by reference the following documents:
o Annual Report on Form 10-KSB for the year ended
December 31, 1997.
o Amendment No. 1 to Annual Report on Form 10-KSB for the year
ended December 31, 1997.
o Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1998.
o Quarterly Report on Form 10-QSB for the quarter ended
June 30, 1998.
o Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1998.
o Amendment No. 1 to Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1998.
o Current Report on Form 8-K filed on January 13, 1999.
o Current Report on Form 8-K filed on August 20, 1998.
o Current Report on Form 8-K filed on May 8, 1998.
o Current Report on Form 8-K filed on March 17, 1998.
o Description of our capital stock contained on page 45 of our
amendment No. 2 on Form SB-2 (File # 33-22507).
o All documents filed by us with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934
after the date of this prospectus and before the offering of
the common stock is terminated.
You may request a copy of the information incorporated by reference, at no cost,
by contacting us at the following address or telephone number:
Bette Smith
Dental/Medical Diagnostic Systems, Inc.
200 North Westlake Boulevard, Suite 202
Westlake Village, California 91362
(805) 381-2700
You should rely only on the information incorporated by reference or provided in
this prospectus or any supplement to this prospectus. We have not authorized
anyone else to provide you with different information. The selling stockholder
should not make an offer of these shares in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
supplement to this prospectus is accurate as of any date other than the date on
the cover page of this prospectus or any supplement.
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LEGAL MATTERS
Troop Steuber Pasich Reddick & Tobey, LLP, Los Angeles, California, has rendered
to Dental/Medical a legal opinion as to the validity of the common stock covered
by this prospectus.
EXPERTS
Our independent accountants, PricewaterhouseCoopers LLP, have audited the
following financial statements as indicated in their reports prepared in
connection with these financial statements:
o our consolidated balance sheet as of December 31, 1996,
o our consolidated balance sheet as of December 31, 1997,
o our consolidated statements of income, retained earnings and
cash flows for the period from inception to March 2, 1996,
o our consolidated statements of income, retained earnings and
cash flows for the ten month period ended December 31, 1996, and
o our consolidated statements of income, retained earnings and
cash flows for the twelve-month period ended December 31, 1997.
These financial statements are incorporated herein in reliance upon the
authority of PricewaterhouseCoopers LLP as experts in accounting and auditing.
PAGE 15
<PAGE>
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses, to be borne by the selling stockholder, in connection
with the offering are as follows:
<TABLE>
<CAPTION>
Amount
----------------
<S> <C>
Registration Fee Under Securities Act of 1933 $ 195.00
NASD Filing Fee ............................. $ *
Blue Sky Fees and Expenses .................. $ *
Printing and Engraving Certificates ......... $ *
Legal Fees and Expenses ..................... $ 9,500.00
Accounting Fees and Expenses ................ $ 6,500.00
Registrar and Transfer Agent Fees ........... $ *
Miscellaneous Expenses ...................... $ *
------------
TOTAL .............................. $ 16,195.00
============
<FN>
- -----------------
* Not applicable or none.
</FN>
</TABLE>
ITEM 15 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the Delaware General Corporation Law ("DGCL"), Dental/Medical's
Amended and Restated Certificate of Incorporation limits the personal liability
of directors to Dental/Medical 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 Dental/Medical 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.
Dental/Medical 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
Dental/Medical or of any subsidiary of Dental/Medical or of any other company or
enterprise in which they are serving at the request of Dental/Medical. 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.
PAGE 16
<PAGE>
Dental/Medical has purchased a directors and officers liability insurance policy
in the amount of $5,000,000.
ITEM 16 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
See the Exhibit Index of this Registration Statement.
ITEM 17 UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement 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.
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.
PAGE 17
<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 Amendment No. 2
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Westlake Village, State of California, on January 26, 1999.
DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC.
(Registrant)
By: /s/ ROBERT H. GUREVITCH
-----------------------------------
Robert H. Gurevitch
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 2
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
/s/ Robert H. Gurevitch and Chief Executive Officer January 26, 1999
- ----------------------------
Robert H. Gurevitch
Chief Financial Officer
* and Chief Accounting Officer January 26, 1999
- ----------------------------
Stephen Ross
* Director January 26, 1999
- ----------------------------
Marvin H. Kleinberg
* Director January 26, 1999
- ----------------------------
Jack D. Preston
*By: /s/ Robert H. Gurevitch
- -----------------------------
Robert H. Gurevitch
his Attorney-In-Fact
PAGE 18
<PAGE>
EXHIBIT INDEX
No. Item
- --- ----
4.1 Specimen Stock Certificate of the Registrant [Incorporated by
reference to Amendment No. 1 of Form SB-2 filed on April 7, 1997].
5.1 Opinion of Troop Steuber Pasich Reddick & Tobey, LLP.
[Previously Filed.]
23.1 Consent of PricewaterhouseCoopers, LLP.
23.2 Consent of Troop Steuber Pasich Reddick & Tobey, LLP (included as
part of Exhibit 5.1).
24.1 Power of Attorney (included in signature page). [Previously Filed.]
PAGE 19
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this amendment no. 2 to the
registration statement of Dental/Medical Diagnostic Systems, Inc. on Form S-3 of
our report dated February 16, 1998 on our audits of the consolidated financial
statements of Dental/Medical Diagnostic Systems, Inc. as of December 31, 1997
and 1996 and for the twelve month period ended December 31, 1997, the ten month
period ended December 31, 1996, and for the period from inception (October 23,
1995) to March 2, 1996, which report is included in the Company's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1997. We also consent to
the reference to our firm under the caption "Experts."
/s/ PricewaterhouseCoopers
Los Angeles, California
February 2, 1999
