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)
----------------------
STEPHEN F. 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 Amount To Be Aggregate Price Aggregate Amount Of
To Be Registered Registered Per Share(1) Offering Price(1) Registration Fee
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 1,697,659(2) $3.359 $5,702,437 $1,505
===============================================================================================
<FN>
(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 23,
1999.
(2) Consists of up to 1,655,159 shares of Common Stock issuable upon
exchange of Series A Exchangeable Preferred Stock, 40,000 shares of Common Stock
issuable upon exchange Warrants, and 2,500 shares of Common Stock.
</FN>
</TABLE>
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 27, 1999
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. THE SELLING STOCKHOLDERS MAY NOT SELL THESE
SECURITIES BEFORE THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS
SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS
DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC.
1,697,659 SHARES OF COMMON STOCK
The persons listed in this Prospectus under the caption "Selling Security
Holders" may from time to time offer and sell up to 1,697,659 shares of our
common stock. The selling security holder(s) will acquire up to 1,655,159 of
these shares upon the exchange of exchangeable preferred stock. The selling
security holder(s) will acquire 40,000 of these shares upon the exercise of
warrants.
The common stock is quoted on the Nasdaq SmallCap Market under the symbol
"DMDS" and is listed on the Boston Stock Exchange under the symbol "DMD." On
December 23, 1999 the high and low prices of the Common Stock as quoted on the
Nasdaq SmallCap Market were $3.50 and $3.2188, 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.
INVESTING IN THE SHARES INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 5.
---------------
The date of this prospectus is December 27, 1999
Page 2
<PAGE>
PROSPECTIVE PURCHASERS OF THESE SHARES SHOULD RELY ONLY ON INFORMATION
CONTAINED IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE INTO IT. NEITHER THE
COMPANY NOR THE SELLING STOCKHOLDERS HAVE AUTHORIZED ANYONE TO PROVIDE DIFFERENT
INFORMATION. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THESE SHARES BY ANY PERSON IN ANY
JURISDICTION WHERE SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
TABLE OF CONTENTS
PAGE
ABOUT DENTAL/MEDICAL DIAGNOSTIC SYSTEMS.......................................4
RISK FACTORS..................................................................5
USE OF PROCEEDS..............................................................11
SELLING SECURITY HOLDERS.....................................................12
PLAN OF DISTRIBUTION.........................................................14
WHERE YOU CAN FIND MORE INFORMATION..........................................16
LEGAL MATTERS................................................................17
EXPERTS......................................................................17
Page 3
<PAGE>
ABOUT DENTAL/MEDICAL DIAGNOSTIC SYSTEMS
Dental Medical Diagnostic Systems, Inc. designs, develops, manufactures and
sells high technology dental equipment as well as tooth whitening and composite
materials. Up until the third quarter of 1998, our primary product emphasis was
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. During approximately the last 18 months we shifted our primary
product emphasis 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 in conjunction with our Apollo Secret formula.
We also market the whitening materials, Apollo Secret, to be used with the
Apollo 95E. Apollo Secret power whitening offers the following benefits:
o the procedure causes less patient discomfort compared to
competing technologies;
o the procedure can be performed by a dental assistant or hygienist
in most states, generally in less than 40 minutes;
o the procedure may whiten the patient's teeth up to ten shades
lighter; and
o the procedure causes 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 developed by Suni Imaging
Microsystems, Inc. Suni keeps 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 offers the following benefits:
o improved image quality;
o competitive pricing; and
o database storage and recall of images.
We were organized in New York in 1981 under the name Edudata Corporation and
reincorporated in Delaware in 1983. Our principal executive offices are located
at 200 North Westlake Boulevard, Suite 202, Westlake Village, California 91362.
Our telephone number is (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 digital x-ray systems since
September 1999, our TeliCam systems since October 1995 and 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 new
business and the development and marketing of new products must be considered in
evaluating the likelihood of our success.
WE HAVE A HISTORY OF LOSSES AND ACCUMULATED DEFICIT AND THIS TREND OF LOSSES MAY
CONTINUE IN THE FUTURE.
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. For
the nine-month period ended September 30, 1999, we incurred a net loss of
$756,931. As of September 30, 1999, our accumulated deficit was $6,106,424. 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. We can give no assurances that we will achieve
profitability or, if achieved, that we will sustain profitability.
FLUCTUATION IN QUARTERLY RESULTS MAY RESULT IN DECLINES IN OUR STOCK PRICE.
Certain quarterly influences may affect our business. Historically, sales have
been generally higher in the fourth quarter due to the purchasing patterns of
dentists in the United States and have been generally lower in the first quarter
due primarily to the effect upon demand of increased purchases in the prior
quarter. Historically we have experienced lower sales in the summer months as a
result of holiday vacations and fewer trade shows. These fluctuations in
quarterly operating results could result in increased volatility, including
significant declines, of the trading price of our common stock.
ONE OF OUR PRIMARY PRODUCTS HAS HAD A SIGNIFICANT DECLINE IN SALES AND IF THIS
DECLINE CONTINUES WE MAY NOT BE ABLE TO ACHIEVE OR SUSTAIN PROFITABILITY.
The TeliCam systems, together with related products such as the InTELInet
system, and the Apollo 95E have been our primary products since inception. 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 at or below
levels of prior comparable periods, a trend which we expect to continue.
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.
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 to
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 demands, or if there are any significant delays in product
development or introduction, our revenues and profit margins may decline which
could adversely affect our cash flows, liquidity and operating results.
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 LIMIT CURRENT OPERATIONS.
We anticipate that we will need to raise additional capital during the next 12
months to satisfy our expected increased working capital and research and
development requirements. We are currently exploring alternatives to fulfill
these requirements, but cannot assure 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 limit the scope of our
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 or securities convertible into
shares of our common stock it may result in dilution to current stockholders.
WE SUBSTANTIALLY DEPEND UPON UNAFFILIATED THIRD PARTIES FOR SEVERAL CRITICAL
ELEMENTS OF OUR BUSINESS, INCLUDING THE DEVELOPMENT AND LICENSING FOR
DISTRIBUTION OF OUR PRODUCTS.
We are dependent upon unaffiliated third party developers and suppliers for the
development and manufacture of all of the components used in 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
technology. Instead of developing technology, 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 agreement 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 with ILT.
IF WE DO NOT MAKE CERTAIN REQUIRED MINIMUM ROYALTY PAYMENTS TO SUNI, AND IF WE
DO NOT PURCHASE REQUIRED AMOUNTS OF CERTAIN PRODUCTS MANUFACTURED BY SUNI, WE
WILL LOSE OUR EXCLUSIVE RIGHTS TO THE DIGITAL X-RAY TECHNOLOGY DEVELOPED FOR US
BY SUNI.
In order to maintain our right to be the exclusive dental licensee of the
digital x-ray technology developed by Suni, we must make significant minimum
periodic royalty payments to Suni and we must purchase a significant amount of
certain products manufactured by Suni. We cannot guarantee that we will be able
to make the minimum periodic royalty payments, nor can we guarantee that we will
be able to purchase the amount of products that are required to maintain our
right to be the exclusive distributor. If we do not make the required periodic
royalty payments and purchase the required products, 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 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 510k
submission or PMA application for any new products developed in the future
including any using digital x-ray technology. The process of obtaining a
clearance or approval can be time-consuming and expensive. Compliance with FDA's
regulatory requirements can be expensive and time consuming. We do not guarantee
that the required regulatory approvals or clearances will be obtained. Any
approval or clearance obtained from FDA may include significant limitations on
the use of the medical device which is the subject of the approval or clearance.
We cannot market a medical device if needed FDA 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. Any such
delay or suspension would have a material adverse effect on our business. 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 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.
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 October 1,
2001. 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.
Page 7
<PAGE>
NONE OF OUR PRODUCTS ARE PROTECTED BY PATENTS, 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 used in the Apollo 95E. The Apollo 95E is currently only
protected by a patent in France. We are currently seeking patent protection 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 the Company's technologies. 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
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.
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 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. We believe that all of our
information and our non-information technology systems are Year 2000 compliant.
Page 8
<PAGE>
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 interruption. We believe that our one to three month supply of
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 ability to respond of certain government commissions in the various
geographic areas where we conduct 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 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.
Because we believe that all of our internal systems are Year 2000 compliant and
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, we have determined that we will
not develop any contingency plans that address a reasonably likely worst case
scenario.
OUR RECENT SALE OF SERIES A EXCHANGEABLE PREFERRED STOCK, COMMON STOCK AND
WARRANTS TO PURCHASE COMMON STOCK MAY RESULT IN SUBSTANTIAL DILUTION TO OUR
COMMON SHAREHOLDERS.
On November 23, 1999 we sold an aggregate of 2,000 shares of Series A
Exchangeable Preferred Stock, 2,500 shares of Common Stock and Warrants to
purchase up to 40,000 shares of Common Stock.
Prior to March 15, 2000, holders of Series A Exchangeable Preferred Stock may
exchange their shares into common stock at $4.00 per share based upon a stated
value of $1,000 per share of Series A Exchangeable Preferred Stock. On and after
March 15, 2000, holders of Series A Exchangeable Preferred Stock may exchange
their shares for shares of common stock at the lesser of $4.00 per share or the
average of the closing bid prices of the common stock during any three (3) of
the prior thirty (30) consecutive trading days selected by the holder of the
Series A Shares then being exchanged. As a result, after March 15, 2000 (or
prior to March 15, 2000 if the trading price of our common stock exceeds $4.00
per share) the holders of Series A Exchangeable Preferred Stock will likely be
in a position to exchange their shares for shares of common stock at a discount
to the then current trading price of our common stock.
Page 9
<PAGE>
A LARGE VOLUME OF SALES OF OUR COMMON STOCK RESULTING FROM THE EXCHANGE OF
SHARES OF SERIES A EXCHANGEABLE PREFERRED STOCK AND/OR THE EXERCISE OF WARRANTS
MAY RESULT IN DOWNWARD PRESSURE OR INCREASED VOLATILITY IN THE TRADING PRICE OF
OUR COMMON STOCK.
Because we have agreed to register for resale the 2,500 shares of Common Stock
and the shares of Common Stock issuable upon exchange or exercise of the Series
A Exchangeable Preferred Stock and the Warrants, the holders thereof may sell
without regard to any volume restrictions, including the volume restrictions set
forth in Rule 144 promulgated under the Securities Act of 1933. As a result,
sales by the holders of Series A Exchangeable Preferred Stock and the Warrants
could lead to an excess supply of shares of our Common Stock being sold which
could, in turn, result in downward pressure or increased volatility in the
trading price of our Common Stock.
IF WE FAIL TO TIMELY EFFECT AN EXCHANGE OF SERIES A EXCHANGEABLE PREFERRED STOCK
FOR SHARES OF COMMON STOCK, WE MAY BE LIABLE FOR SIGNIFICANT LIQUIDATED DAMAGES.
We have agreed to effect an exchange of Series A Exchangeable Preferred Stock
into Common Stock within four (4) trading days of receipt of a notice from a
holder of Series A Exchangeable Preferred Stock requesting an exchange. If we
fail to effect an exchange of Series A Exchangeable Preferred Stock into Common
Stock within four (4) trading days of receipt of a valid notice, we have agreed
to pay to the holder of Series A Exchangeable Preferred Stock requesting the
exchange liquidated damages in an amount equal to $100 per day for the first ten
(10) days and $200 per day thereafter for each $5,000 in liquidation preference
amount then being exchanged. An obligation to pay these liquidated damages could
have a material adverse effect on our liquidity and cash flows.
Page 10
<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares offered by the
selling security holders, under this prospectus. We will pay all costs, expenses
and fees in connection with the registration of the shares offered under this
prospectus.
Page 11
<PAGE>
SELLING SECURITY HOLDERS
The following table sets forth the names of the Selling Security Holders and (i)
the number of shares of Common Stock owned by the Selling Security Holders as of
December 15, 1999, and (ii) the maximum amount of Common Stock which may be
offered for the accounts of the Selling Security Holders under this prospectus.
<TABLE>
<CAPTION>
Number of
Shares of
Common
Stock
Underlying
Number of Series A
Shares of Exchangeable Number of Common Percentage of
Common Preferred Warrant Stock Outstanding
Name of Selling Security Stock Stock Shares Offered Common
Holders Owned(1) Owned(2) Owned (3) Hereby(4) Stock (5)
- --------------------------------- -------------- -------------- ---------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
AMRO International, S.A. 0 579,305 14,000 593,305 8.49%
c/o Ultra Finanz AG
Grossmuensterplatz 6
Zurich, CH-8022 Switzerland
The Endeavor Capital Fund, 0 413,790 10,000 423,790 6.21%
S.A.
c/o Endeavor Management, Inc.
14/14 Divrei Chaim Street
Jerusalem 94479 Israel
Esquire Trade & Finance Inc. 1,250 331,032 8,000 339,032 5.03%
P.O. Box 2154
Baar, CH-6342 Switzerland
Austinvest Anstalt Balzers 1,250 331,032 8,000 339,032 5.03%
Landstrasse 938
9494 Furstenturns
Balzers, Liechtenstein
- ----------------------------------
<FN>
(1) In November 1999, Esquire Trade & Finance Inc. and Austinvest Anstalt
Balzers each acquired 1,250 shares of Common Stock.
(2) In November 1999, AMRO International, S.A., The Endeavor Capital Fund,
S.A., Esquire Trade & Finance Inc., and Austinvest Anstalt Balzers
(collectively, the "Investors") acquired an aggregate of 2,000 shares of
Series A Exchangeable Preferred Stock. The Series A Exchangeable Preferred
Stock has an aggregate stated value of $2 million and is exchangeable into
Common Stock at a rate per share equal to the lesser of (a) $4.00 or (b)
the average of the three lowest closing sale prices of our Common Stock
over the thirty (30) trading days prior to the date of the exchange. By
agreement with the Investors, we have agreed to register for resale 175% of
the shares of Common Stock issuable upon exchange of the Series A
Exchangeable Preferred Stock, assuming an exchange in full on the trading
day prior to our filing the registration statement of which this prospectus
is a part. Because the number of shares of Common Stock issuable upon
exchange of Series A Exchangeable Preferred Stock is not determinable until
the date of the exchange, each number in this column represents 175% of the
shares of Common Stock issuable upon exchange of Series A Exchangeable
Preferred Stock, assuming exchange in full by each Selling Security Holder
on December 23, 1999.
(3) In November, 1999, the Investors received Warrants to purchase up to an
aggregate 40,000 shares of Common Stock at a purchase price of $2.749 per
share.
(4) Because the number of shares of Common Stock issuable upon exchange of
Series A Exchangeable Preferred Stock is not determinable until the date of
the exchange, each number in this column includes 175% of the shares of
Common Stock issuable upon exchange of Series A Exchangeable Preferred
Stock, assuming exchange in full by each Selling Security Holder on
December 23, 1999.
(5) Based on 6,397,498 shares outstanding as of December 1, 1999.
</FN>
</TABLE>
Page 12
<PAGE>
The Selling Security Holders may offer all or some portion of the
Common Stock that they have the right to acquire upon exchange of the Series A
Exchangeable Preferred Stock. Accordingly, no estimate can be given as to the
amount of the Common Stock that will be held by the Selling Security Holders
upon termination of any such sales. In addition, the Selling Security Holders
may have sold, transferred or otherwise disposed of all or a portion of their
Series A Exchangeable Preferred Stock since the date on which they provided the
information regarding the Series A Exchangeable Preferred Stock in transactions
exempt from the registration requirements of the Securities Act. See "Plan of
Distribution."
The Selling Security Holders may from time to time offer and sell any
or all of the Common Stock issuable upon exchange of the Series A Exchangeable
Preferred Stock. The term Selling Security Holders includes the holders listed
in any Supplement to this Prospectus and the beneficial owners of the Series A
Exchangeable Preferred Stock and their transferees, pledges, donees or other
successors. Any supplement will contain certain information with respect to the
Selling Security Holders and the respective number of shares of Common Stock
beneficially owned by the Selling Security Holders that may be offered pursuant
to this Prospectus. Such information will be obtained from the Selling Security
Holders.
Under the Securities Exchange Act of 1934 and the regulations
promulgated thereunder, any person engaged in a distribution of the shares of
the Common Stock offered by this Prospectus may not simultaneously engage in
market making activities with respect to our shares of Common Stock during the
applicable "cooling off" periods prior to the commencement of such distribution.
In addition, and without limiting the foregoing, the Selling Security Holders
will need to comply with applicable provisions of the Securities Exchange Act of
1934 and the rules and regulations promulgated thereunder including, without
limitation, Regulation M, which provisions may limit the timing of purchases and
sales of shares of Common Stock by the Selling Security Holders. Regulation M
contains certain limitations and prohibitions intended to prevent issuers and
selling security holders and other participants in a distribution of securities
from conditioning the market through manipulative or deceptive devices to
facilitate the distribution.
We will bear all costs, expenses and fees in connection with the
registration of the Selling Security Holders' shares. All brokerage commissions,
if any, attributable to the sale of the Selling Security Holders' shares will be
borne by them.
Page 13
<PAGE>
PLAN OF DISTRIBUTION
On November 23, 1999, we sold, pursuant to an Exchangeable Preferred
Stock and Warrant Purchase Agreement (the "Purchase Agreement") dated as of
October 25, 1999 with the Selling Security Holders, an aggregate of 2,000 shares
of Series A Exchangeable Preferred Stock, Warrants to purchase up to 40,000
shares of Common Stock, and 2,500 shares of Common Stock. We received gross
proceeds from this transaction of $2,000,000.
Our Series A Exchangeable Preferred Stock has an aggregate stated value
of $2,000,000 and is exchangeable into Common Stock at a rate per share equal to
the lesser of (a) $4.00 or (b) the average of the three lowest closing sale
prices of our Common Stock over the thirty (30) trading days prior to the date
of the exchange. The table below sets forth the number of shares of our Common
Stock that the Selling Security Holders would acquire if they elected to convert
the entire $2,000,000 aggregate stated amount of Series A Exchangeable Preferred
Stock. The share amounts assume exchange prices of $3.25, $2.75, $2.25, and
$1.75. There were 6,397,498 shares of our Common Stock outstanding on December
20, 1999 and the closing date price of our Common Stock on December 23, 1999 was
$3.2812.
<TABLE>
<CAPTION>
Shares of Common Stock Percentage of Outstanding
Assumed Exchange Price Issued Upon Exchange Common Stock
- ------------------------ ---------------------- -------------------------
<S> <C> <C> <C>
$3.25 615,385 8.78%
$2.75 727,273 11.37%
$2.25 888,889 13.89%
$1.75 1,142,857 17.86%
</TABLE>
The Selling Security Holders have advised us that the sale or
distribution of the Common Stock may be effected directly to purchasers by the
Selling Security Holders as principals or through one or more underwriters,
brokers, dealers or agents from time to time in one or more transactions (which
may involve crosses or block transactions) (i) on the Boston Stock Exchange, on
the Nasdaq SmallCap market, or in the over-the-counter market, (ii) in
transactions otherwise than on any stock exchange or in the over-the-counter
market, or (iii) through the writing of options (whether such options are listed
on an options exchange or otherwise) on the Common Stock. Any of such
transactions may be effected at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, at varying prices determined at
the time of sale or at negotiated or fixed prices, in each case as determined by
the Selling Security Holders or by agreements between the Selling Security
Holders and underwriters, brokers, dealers or agents or purchasers. If the
Selling Security Holders effect such transactions by selling Common Stock to or
through underwriters, brokers, dealers or agents, such underwriters, brokers,
dealers or agents may receive compensation in the form of discounts, concessions
or commissions from the Selling Security Holders or commissions from purchasers
of Common Stock for whom they may act as agent (which discounts, concessions or
commissions as to particular underwriters, brokers, dealers or agents may be in
excess of those customary in the types of transactions involved). The Selling
Security Holders and any brokers, dealers or agents that participate in the
distribution of the Common Stock may be deemed to be underwriters, and any
profit on the sale of Common Stock by them and any discounts, concessions or
commissions received by any such underwriters, brokers, dealers or agents may be
deemed to be underwriting discounts and commissions under the Securities Act.
Because the Selling Security Holders may each be deemed to be an
"underwriter" within the meaning of Section 2(11) of the Securities Act, the
Selling Security Holders will be subject to prospectus delivery requirements
under the Securities Act. Furthermore, in the event of a "distribution" of its
shares, the Selling Security Holders, any selling broker or dealer and any
"affiliated purchasers" may be subject to Regulation M under the Securities
Exchange Act of 1934 until its participation in the distribution is completed.
To comply with the securities laws of certain jurisdictions, if
applicable, the shares of Common Stock will be offered or sold in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain jurisdictions the shares of Common Stock may not be offered
or sold unless they have been registered or qualified for sale in such
jurisdictions or an exemption from registration or qualification is available
and is complied with.
The Selling Security Holders will be subject to applicable provisions
of the Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder, which provisions may limit the timing of purchases and sales of any
of the shares of Common Stock by the Selling Security Holders. The foregoing may
affect the marketability of the shares of Common Stock.
Page 14
<PAGE>
We have agreed to pay all expenses of the registration of the shares,
including, without limitation, Securities and Exchange Commission filing fees
and expenses of compliance with state securities or "blue sky" laws; provided,
however, that the Selling Security Holders will pay all underwriting discounts
and selling commissions, if any. The Selling Security Holders will be
indemnified by us against certain civil liabilities, including certain
liabilities under the Securities Act of 1933, or will be entitled to
contribution from us in connection therewith.
Page 15
<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 period ended March 31, 1999.
o Quarterly Report on Form 10-QSB for the period ended June 30, 1999.
o Quarterly Report on Form 10-QSB for the period ended September 30,
1999.
o Current Report on Form 8-K filed on December 8, 1999.
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 Investors 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.
Page 16
<PAGE>
LEGAL MATTERS
Troop Steuber Pasich Reddick & Tobey, LLP, Los Angeles, California, has rendered
an opinion as to the validity of the common stock covered by this prospectus.
EXPERTS
The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-KSB for the year ended December 31, 1998, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our Bylaws provide that we will indemnify our directors and executive officers
and any of our other officers, employees and agents to the fullest extent
permitted by Delaware law. Our Bylaws also empower us to enter into
indemnification agreements with any such persons and to purchase insurance on
behalf of any person whom we are required or permitted to indemnify.
Our Amended and Restated Certificate of Incorporation provides that, pursuant to
Delaware law, our directors shall not be liable for monetary damages for breach
of the director's fiduciary duty of care to us and to our stockholders. Such
provision does not eliminate the duty of care and, in appropriate circumstances,
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Delaware law. Each director continues to be subject to
liability for breach of the director's duty of loyalty, for acts or omissions
not in good faith or involving intentional misconduct, for knowing violations of
law, for actions leading to improper personal benefit to the director, and for
payment of dividends or approval of stock repurchases or redemptions that are
unlawful under Delaware law. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities laws or
federal environmental laws.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons controlling us pursuant to the
foregoing provisions, we have been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
Page 17
<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..................... $ 1,505
NASD Filing Fee................................................... $ *
Blue Sky Fees and Expenses........................................ $ *
Printing and Engraving Certificates............................... $ *
Legal Fees and Expenses........................................... $ 10,000
Accounting Fees and Expenses...................................... $ 5,000
Registrar and Transfer Agent Fees................................. $ *
Miscellaneous Expenses............................................ $ *
-----------
TOTAL.................................................... $ 16,505
===========
- -----------------
<FN>
* Not applicable or none.
</FN>
</TABLE>
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 Dental/Medical Diagnostic Systems, Inc. or 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 Diagnostic Systems,
Inc. 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 Diagnostic Systems, Inc. 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 Diagnostic
Systems, Inc. or of any subsidiary of Dental/Medical Diagnostic Systems, Inc. or
of any other company or enterprise in which they are serving at the request of
Dental/Medical Diagnostic Systems, Inc. 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 18
<PAGE>
Dental/Medical Diagnostic Systems, Inc. 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;
(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; and
(4) 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.
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 19
<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 27, 1999.
DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC.
(Registrant)
By: /S/ ROBERT H. GUREVITCH
---------------------------------
Robert H. Gurevitch
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert H. Gurevitch and Stephen F. Ross and each
of them, his attorneys-in-fact, each with the power of substitution, for him and
in his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and to sign any registration statement for the same offering covered by this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) promulgated under the Securities Act of 1933, as amended, and all
post-effective amendments thereto, and to file the same, with all exhibits
thereto and all 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 premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents or any of them, or his or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement 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 and
/s/ Robert H. Gurevitch Chief Executive Officer December 27, 1999
- -------------------------
Robert H. Gurevitch
Chief Financial Officer and
/s/ Stephen F. Ross Chief Accounting Officer December 27, 1999
- -------------------------
Stephen F. Ross
/s/ Marvin H. Kleinberg Director December 27, 1999
- -------------------------
Marvin H. Kleinberg
/s/ Jack D. Preston Director December 27, 1999
- -------------------------
Jack D. Preston
/s/ John Khademi Director December 27, 1999
- -------------------------
John Khademi
Page 20
<PAGE>
EXHIBIT INDEX
NO. ITEM
- --- ------
4.1 Certificate of Designations, Preferences and Rights of Series A
Exchangeable Preferred Stock of the Registrant. [Incorporated by
reference to the Registrant's Report on Form 8-K dated December 8,
1999.]
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).
Page 21
Exhibit 5.1
OPINION OF TROOP STEUBER PASICH REDDICK & TOBEY, LLP
December 27, 1999
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"), 1,626,927 shares of Common Stock (the "Shares") of the
Company issued November 23, 1999 or to be issued upon exchange of outstanding
shares of Series A Exchangeable Preferred Stock (the "Series A Preferred Stock")
and upon exercise of outstanding Warrants (the "Warrants").
We are of the opinion that the Shares have been duly authorized and
upon issuance pursuant to the terms of the Series A Preferred Stock or the
Warrants, as the case may be, 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 hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated February 5, 1999, except for
subsequent events described in Note 19 as to which the date is March 18, 1999,
relating to the financial statements, which appear in Dental/Medical Diagnostic
Systems, Inc.'s Annual Report on Form 10-KSB for the year ended December 31,
1998. We also consent to the reference to us under the heading "Experts" in such
Registration Statement.
/s/ PricewaterhouseCoopers LLP
Woodland Hills, California
December 24, 1999
