Registration No. ________
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- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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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. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Maximum Proposed Maximum
Title Of Shares Account To Be Aggregate Price Aggregate Amount Of
To Be Registered Registered Per Unit (1) Offering Price Registration Fee
<S> <C> <C> <C> <C>
Common Stock 901,000 $7.35 $6,622,350 $1,841
=================== ================== ================== ================== ==================
</TABLE>
(1) Estimated solely for the purposes 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 Small Cap Market on July
19, 1999.
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 1
<PAGE>
PROSPECTUS
DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC.
901,000 SHARES OF COMMON STOCK
This is an offering of 901,000 shares of common stock of Dental/Medical
Diagnostic Systems, Inc. The selling stockholders named in this prospectus are
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 July 19,
1999, the high and low prices of the Common Stock on the Nasdaq SmallCap Market
was $7.50 and $7.19, respectively, and the bid and the ask prices of the
Common Stock on the Boston Stock exchange was $7.06 and $7.69, 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 5.
---------------
The date of this prospectus is July 23, 1999
Page 2
<PAGE>
TABLE OF CONTENTS
PAGE
ABOUT DENTAL/MEDICAL DIAGNOSTIC SYSTEMS.................................4
RISK FACTORS............................................................5
USE OF PROCEEDS........................................................12
SELLING STOCKHOLDERS...................................................13
PLAN OF DISTRIBUTION...................................................14
WHERE YOU CAN FIND MORE INFORMATION....................................15
LEGAL MATTERS..........................................................16
EXPERTS................................................................16
Page 3
<PAGE>
ABOUT DENTAL/MEDICAL DIAGNOSTIC SYSTEMS
We design, develop, assemble and market high technology dental equipment and
related consumables. Our best selling product during the 1998 fiscal year and
the first and second fiscal quarter of 1999 has been our tooth curing and
whitening lamp known as the "Apollo 95E." We also market and sell a line of
whitening gels known as "Apollo Secret" for use with the Apollo 95E, and a line
of composite materials known as "ASAP-Accelerated Solutions for Aesthetic
Procedures," also for use with the Apollo 95E. In the second fiscal quarter of
1999, we launched a new tooth curing and whitening lamp known as the
"Wavelight." In addition, we manufacture and sell intraoral camera systems,
known as the "TeliCam II System," and "TeliCam Elite," and a multi-examination
room intraoral camera system, known as the InTELInet, for use with the TeliCam
II System and TeliCam Elite.
We have the exclusive rights to market products to the dental market
incorporating certain digital x-ray technology 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 developed for us by Suni 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 domestically beginning in the third quarter of
1999 and internationally if, and when, CE notification is received, but we do
not guarantee that we will achieve this schedule.
Our customers are dentists located in the United States and internationally. In
the United States, the United Kingdom and Germany, we sell directly to dentists.
In the international marketplace, with the exception of the United Kingdom and
Germany, we sell our products through independent dealers and distributors. Our
products are not currently available through traditional retail channels.
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
<PAGE>
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 manufactured and distributed our TeliCam systems since October 1995
and manufactured and distributed our Apollo 95E since March 1998. 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 and this trend of losses may
continue in the future.
For the period from October 23, 1995 to March 2, 1996 we had a net loss of
$1,625,213. For the fiscal year ended December 31, 1997 we had a net loss of
$2,044,729 and for the fiscal year ended December 31, 1998 we had a net loss of
$1,816,702. At March 31, 1999, our accumulated deficit was $4,189,716. 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. Although the Company was profitable in the
quarters ended December 31, 1998, March 31, 1999 and June 30, 1999 there can be
no assurance that the Company will continue to be profitable.
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.
One of our primary products has had a significant decline in sales and if this
decline continues we may not be able to achieve profitability.
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 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.
Page 5
<PAGE>
As a result of the decline in sales of the TeliCam, 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.
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.
If we are unable to raise additional capital to finance research and development
of our new products we may be forced to forego the development of new products
and possibly even limit current operations.
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 or forego the development of new products
or even limit current operations, which could have a material adverse effect on
our business, operating results and financial condition. If we raise needed
funds through the sale of additional shares of our common stock it may result in
dilution to current stockholders.
We substantially depend upon third parties for several critical elements of our
business, including the development and licensing for distribution of our
products and if these third parties do not deliver we may be forced to limit
operations.
We are dependent upon third party developers and suppliers for the development
and manufacture of all of the components se use at our domestic and French
facilities in assembling our dental equipment and for the development and
manufacture of our consumable products. Outside of updating our current
products, we do not develop any of our own technology; rather, we continually
seek out third parties that own new and innovative technology that they may be
willing to license to us or develop into new dental products under a development
agreement. 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 specifications; as a result, we were forced to find an
alternative product from that which we had contracted for with ILT. The
agreement with ILT was subsequently terminated in accordance with the terms of a
settlement and release agreement entered into by the parties.
Page 6
<PAGE>
If we do not make certain required minimum royalty payments to Suni, we will
lose our exclusive rights to the digital x-ray technology developed for us by
Suni.
Under licensing and develop arrangements we have obtained exclusive marketing
rights to products for the dental market incorporating certain digital x-ray
technology developed by Suni Microsystems Imaging, Inc. 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 which is accepted in the marketplace,
and has sufficient sales to achieve profits, this could have a material adverse
effect on our future prospects.
Page 7
<PAGE>
The government extensively regulates our products and failure to comply with
applicable regulations could result in fines, suspensions, seizure actions,
product recalls, injunctions and criminal prosecutions.
The United States Food and Drug Administration, as well as state and foreign
agencies, regulate almost all aspects of our medical devices including:
o entry into the marketplace;
o design;
o testing;
o manufacturing procedures;
o reporting of complaints;
o labeling; and
o promotional activities.
Under the Federal Food, Drug, and Cosmetic Act, FDA has the authority to control
the introduction of new products into the marketplace. Unless specifically
exempted by the agency, medical devices enter the marketplace through either FDA
clearance of premarket approval application or FDA approval of an application
for 510k clearance. FDA conducts periodic inspections to assure compliance with
it's regulations.
Unless specifically exempted by FDA's regulations, we will need to file a 510(k)
submission or premarket approval application for any new products developed in
the future. The process of obtaining a clearance or approval can be
time-consuming and expensive. Compliance with the FDA's regulatory requirements
can be burdensome. We do not guarantee that the required regulatory approvals or
clearances will be obtained. Any approval or clearance obtain from the FDA may
include significant limitations on the use of the medical device which is the
subject of the approval or clearance. In addition, in order to sell our products
internationally we need to obtain the appropriate approvals of foreign
regulators, none of which can be guaranteed to be received. The international
regulatory review process varies from country to country. For example in Europe,
the regulations of the European Union require that a device have a CE mark
before it can be sold in that market, in Canada we need to obtain a Canadian
Medical Device License and in Japan we need to obtain approval from the Japan
Welfare. We cannot market a medical device in any particular market if the
required approval or clearance is not granted. Inability to obtain such approval
or clearance could result in a delay or suspension of the manufacture and sale
of affected medical devices in that market. Any such delay or suspension would
have a material adverse effect on our business. Also 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 one or more of the following:
o fines;
o delays or suspensions of device clearances;
o seizure actions;
o mandatory recalls;
o injunction action; and
o criminal prosecution.
Page 8
<PAGE>
The loss of our chief executive officer could result in the loss of a
significant portion of our business because of his personal relationships in the
industry.
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 May 31, 2002.
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.
Our products have very limited patents protection, and therefore, they may not
be adequately protected from copying by competitors.
Our future success and ability to compete is dependent in part upon our
proprietary technology. The Apollo 95E is currently only protected by a patent
in France. Patent protection is being sought in all of the countries of the
world in which this technology can be marketed. There can be no assurance that
patents outside of France will be granted for the Apollo 95E system, and if
granted, the patents will provide adequate protection for our technologies. In
addition, our proprietary technology for the TeliCam is not protected by any
patents. Consequently, we rely primarily on trademark, trade secret and
copyright laws to protect our technology. However, there can be no assurance
that third parties will not try to copy our products. 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 and therefore a breach of our proprietary rights could have a
material adverse effect on our financial condition.
We are susceptible to product liability suits and if a lawsuit is brought
against us it could result in us having to pay large legal expenses and/or
judgments.
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.
Page 9
<PAGE>
The Year 2000 issue could have an impact on our information technology and
non-information technology systems as well as those of our suppliers 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-information technology systems, such as manufacturing systems and physical
facilities including, but not limited to, security systems and utilities. We
have tested all of our information technology systems and non-information
technology systems for Year 2000 readiness. All of our non-information
technology systems are Year 2000 compliant. With respect to information
technology systems, as of June 30, 1999, our in-house data network is Year 2000
compliant. Also as of June 30, 1999, one-hundred percent of our workstations are
Year 2000 compliant. Although our management believes that its efforts
will be successful and the costs will be immaterial to our consolidated
financial position and results of operations, it also recognizes that any
failure or delay could cause a potential impact.
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
to be Year 2000 compliant. 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 investigated the Year 2000 readiness of our key suppliers. Our direction
of this effort is to ensure that there are adequate components and supplies
available to us to minimize any potential business interruptions. Our assessment
of our key suppliers is now complete and we have determined that our policy of
maintaining an inventory of components and supplies sufficient to last a minimum
of a one to three months will be adequate to minimize almost any potential
business interruptions. We believe that our one to three month inventories will
allow enough time for our suppliers to remedy Year 2000 problems that may arise
in their respective businesses.
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.
Page 10
<PAGE>
If we, our customers or suppliers are unable to resolve any Year 2000 compliance
problems in a timely manner, we could face business interruptions or a shutdown,
financial loss, regulatory actions, reputational harm and/or legal liability. We
anticipate that we will have adequate components and supplies in our inventories
to minimize any potential business interruptions that may result from Year 2000
compliance problems suffered by our suppliers. As a result, we have determined
that we will not be developing any contingency plans that address a reasonably
likely worst case scenario.
Page 11
<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares offered by the
selling stockholders under this prospectus. The Selling Stockholders will pay
all costs, expenses and fees in connection with the registration of the shares
offered under this prospectus.
Page 12
<PAGE>
SELLING STOCKHOLDERS
We are registering 901,000 shares of common stock on behalf of the selling
stockholders named below. We issued the 901,000 shares of common stock in a
private placement of our common stock that closed on July 16, 1999. 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 stockholders will sell
shares of the common stock. Thus, we cannot estimate how many shares the selling
stockholders will hold after completion of the offering.
<TABLE>
<CAPTION>
Common Stock Owned Prior to the Offering
-----------------------------------------
Number of Number of
Shares of Percent of Shares to be
Common Stock Class Sold
------------ -------- -----------
<S> <C> <C> <C>
Valor Capital Management, L.P. 200,000 3.2% 200,000
Pharmaceutical and Medical
Technology Fund 160,000 2.5 160,000
Strategic Health Care Fund 40,000 * 40,000
Hathaway Partners Investment
Limited Partnership 15,000 * 15,000
Fran-Ann Fashions, Inc. 50,000 * 50,000
Manhattan Group Funding 136,000 2.1 136,000
Tallac Corporation 100,000 1.6 100,000
Europa International, Inc. 200,000 3.2 200,000
- ---------------
* Less than 1%
</TABLE>
Page 13
<PAGE>
PLAN OF DISTRIBUTION
We are registering the shares on behalf of the selling stockholders. As used in
this prospectus, the selling stockholders include donees and pledgees who are
selling shares received from the selling stockholders after the date of this
prospectus. The selling stockholders 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 stockholders 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 these methods of sale, at market prices or at
negotiated prices.
The selling stockholders have each advised us that they have not entered into
any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities.
Any selling stockholder and any broker-dealers that act in connection with the
sale of shares might be considered "underwriters" within the meaning of Section
2(11) of the Securities Act. Any commissions received by broker-dealers and any
profit on the resale of the shares sold by them might be considered to be
underwriting discounts or commissions under the Securities Act. Because any of
the selling shareholders may be considered an underwriter within the meaning of
Section 2(11) of the Securities Act, each selling stockholder will be required
to deliver a prospectus in connection with the sale of their respective shares.
If required, the following information will be disclosed in a prospectus
supplement or, if necessary, an amendment to the registration statement:
o the specific shares to be sold,
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.
Page 14
<PAGE>
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,
1998. o Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1999.
o Current Report on Form 8-K filed on January 13, 1999. o
Current Report on Form 8-K filed on March 19, 1999. o
Description of our capital stock contained on page 44 of our
amendment No. 2 on Form SB-2 filed on May 28, 1999 (File #
33-76977).
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. No selling stockholder
should 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.
Page 15
<PAGE>
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, 1997,
o our consolidated balance sheet as of December 31, 1998,
o our consolidated statements of operations, stockholders' equity, cash
flows and comprehensive income (loss) for the ten month period ended December
31, 1996,
o our consolidated statements of operations, stockholders' equity, cash
flows and comprehensive income (loss) for the twelve-month period ended December
31, 1997, and
o our consolidated statements of operations, stockholders' equity, cash
flows and comprehensive income (loss) for the twelve-month period ended December
31, 1998.
These financial statements are incorporated herein in reliance upon the
authority of PricewaterhouseCoopers LLP as experts in accounting and auditing.
Page 16
<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............. $ 1,841.00
NASD Filing Fee........................................... $ *
Blue Sky Fees and Expenses................................ $ *
Printing and Engraving Certificates....................... $ *
Legal Fees and Expenses................................... $ 7,500.00
Accounting Fees and Expenses.............................. $ 5,000.00
Registrar and Transfer Agent Fees......................... $ *
Miscellaneous Expenses.................................... $ *
-----------
TOTAL............................................. $14,341.00
===========
</TABLE>
- -----------------
* Not applicable or none.
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.
Dental/Medical has purchased a directors and officers liability insurance policy
in the amount of $5,000,000.
Page 17
<PAGE>
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 18
<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 July 21, 1999.
DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC.
(Registrant)
By: /S/ ROBERT H. GUREVITCH
------------------------------------
Robert H. Gurevitch
Chairman of the Board and
Chief Executive Officer
Each person whose signature appears below constitutes and appoints Robert H.
Gurevitch and Stephen Ross, and each of them, as his true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for him and his name, place and stead, in any and all capacities, to sign any or
all amendments (including post effective amendments) to this Registration
Statement and a new Registration filed pursuant to Rule 462(b) of the Securities
Act of 1933 and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the foregoing, as fully to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement has been signed by
the following persons in the capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
---------- ----- -----
<S> <C> <C>
/s/ Robert H. Gurevitch
- --------------------------- Chairman of the Board, Chief Executive
Robert H. Gurevitch Officer and President July 21, 1999
/s/ Stephen Ross Chief Financial Officer (Principal
- --------------------------- Financial and Accounting Officer) July 21, 1999
Stephen Ross
/s/ Jack Preston Executive Vice President of Product July 21, 1999
- --------------------------- Development and Director
Jack Preston
/s/ Marvin Kleinberg Director July 21, 1999
- ---------------------------
Marvin Kleinberg
/s/ John Khademi Director July 21, 1999
- ---------------------------
John Khademi
</TABLE>
Page 19
<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.
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).
Troop Steuber Pasich Reddick & Tobey, llp
lawyers
July 23, 1999
Exhibit 5.1
Dental/Medical Diagnostic Systems, Inc.
200 N. Westlake Blvd.
Westlake Village, CA 91362
Ladies/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"), 901,000 shares of Common Stock (the "Shares") of the Company issued
pursuant a certain Stock Purchase Agreement, dated July 16, 1999.
We are of the opinion that the Shares have been duly authorized and upon
issuance and sale, the Shares will be validly issued, fully paid and
non-assessable.
We consent to the use of this opinion as an Exhibit to the Registration
Statement and to the use of our name in the Prospectus constituting a part
thereof.
Respectfully submitted,
/s/ TROOP STEUBER PASICH REDDICK & TOBEY, LLP
TROOP STEUBER PASICH REDDICK & TOBEY, LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
Dental/Medical Diagnostics Systems, Inc. on Form S-3 of our report dated
February 5, 1999, except for subsequent events described in Note 19 as which the
date is March 18, 1999, on our audits of the consolidated financial statements
of Dental/Medical Diagnostics Systems, Inc. as of December 31, 1998 and 1997 and
for the years ended December 31, 1998 and 1997 and for the ten month period
ended December 31, 1996, which report is included in the Company's Annual Report
of Form 10-KSB for the fiscal year ended December 31, 1998. We also consent to
the reference to our firm under the caption "Experts."
/s/ PricewaterhouseCoopers LLP
Woodland Hills, California
July 23, 1999
