As filed with the Securities and Exchange
Commission on December 12, 2000 Registration No. [---]
===============================================================================
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.)
6416 VARIEL AVENUE, WOODLAND HILLS, CALIFORNIA 91367 (818) 932-2300
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
----------------------
STEPHEN F. ROSS
DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC.
6416 VARIEL AVENUE
WOODLAND HILLS, CALIFORNIA 91367
(818) 932-2300
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
----------------------
COPIES OF CORRESPONDENCE TO:
LISA H. KLEIN, 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 are being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration 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(1) Per Share Offering Price Registration Fee
--------------------------------------- ------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value per share 2,599,948 $0.6719(2) $1,746,905.06(2) $461.18
--------------------------------------- ------------- ---------------- ---------------- ----------------
Common Stock, $.01 par value per share, 1,213,987 $0.6719 $815,677.86 $215.34
issuable upon exercise of warrants
======================================= ============= ================ ================ ================
<FN>
(1) In the event of a stock split, stock dividend, or similar transaction
involving the Registrant's Common Stock, in order to prevent dilution, the
number of shares of Common Stock registered shall automatically increase to
cover the additional shares in accordance with Rule 416 under the
Securities Act.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) on the basis of the average of the high and low
prices ($0.75 and $0.5938, respectively) of Registrant's Common Stock
reported on the Nasdaq SmallCap Market on December 7, 2000.
</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 12, 2000
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 SECURITY HOLDERS 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.
3,813,935 SHARES OF COMMON STOCK
(par value $.01 per share)
-------------------
The persons listed in this prospectus under the caption "Selling Security
Holders" may from time to time offer and sell up to 3,813,935 shares of our
Common Stock. The Selling Security Holders acquired these shares either (i)
pursuant to a Securities Purchase Agreement, (ii) a merger agreement and plan of
reorganization or (iii) will acquire up to 1,213,987 of these shares (the
"Warrant Shares") upon the exercise of various warrants. The Selling Security
Holders are offering any and all of the shares to be sold in this offering.
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 7, 2000 the high and low prices of the Common Stock as quoted on the
Nasdaq SmallCap Market were $0.75 and $0.5938, 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 3.
---------------
The date of this prospectus is December __, 2000
<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 SECURITY HOLDERS 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......................................2
RISK FACTORS.................................................................3
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS..............................9
SELLING SECURITY HOLDERS....................................................10
USE OF PROCEEDS.............................................................13
PLAN OF DISTRIBUTION........................................................13
WHERE YOU CAN FIND MORE INFORMATION.........................................15
LEGAL MATTERS...............................................................16
EXPERTS.....................................................................16
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES..........................................16
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<PAGE>
ABOUT DENTAL/MEDICAL DIAGNOSTIC SYSTEMS
We design, develop, manufacture and sell high technology dental equipment and
related consumables. Our product with the highest gross sales is the tooth
curing and whitening device known as the "ApolloTM." We also market and sell a
line of whitening products known as "Apollo Secret(R)" for use in conjunction
with the ApolloTM. In September 1999, we began marketing and selling the MPDxTM
digital x-ray system. In addition, we continue to manufacture and sell intraoral
camera systems, known as the "TeliCam II System," and "TeliCam Elite," and a
multi-operatory intraoral camera system, known as the "InTELInet," for use in
connection with the TeliCam II System and TeliCam Elite.
From early 1996 to mid-1998, we were primarily involved in designing,
developing, manufacturing, and marketing intra-oral camera systems referred to
as the "TeliCam Systems." The first shipments to customers of the TeliCam System
commenced in early February 1996.
On October 2, 1997, we purchased the assets of S.E.D., a company organized under
the laws of France. Among the acquired assets was a patent for S.E.D.'s
"Biotron" soft tissue surgical device. From this technology, we developed the
"ApolloTM," a unique, visible-light curing instrument, the plasma-arc lamp,
which is designed for two different applications: the hardening of tooth-colored
dental composite materials in three seconds or less and for single appointment,
in-office tooth whitening in less than forty minutes. This plasma-arc lamp uses
a high-frequency electrical field to generate plasma energy, which is ideal for
the fast-curing (hardening) of photosensitive composites. The ApolloTM also
produces light and heat which, when used in conjunction with the Apollo
Secret(R) whitening materials, activates the whitening chemicals in the Apollo
Secret(R). The resulT of this activation is dramatic whitening of stained teeth.
We believe the rapid performance of the ApolloTM in both hardening composite
materials and whitening teeth should enable an average dental practice to save
about 5 to 8 hours per month of a dentist's time.
On October 10, 1997, we entered into an agreement with Suni Imaging
Microsystems, Inc. ("Suni") to develop digital x-ray technology for
incorporation into a digital x-ray system for the dental market. We have
obtained exclusive rights to market products to the dental market incorporating
the digital x-ray technology developed by Suni. Suni will retain the rights to
the developed microchip technology underlying the x-ray system. Digital x-ray
systems, including those 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 while
eliminating the need to use and dispose of chemicals required to develop
conventional x-ray film. The resulting MPDxTM digital x-ray system was
introduced in September 1999.
In April 2000, we established Forever White, Inc. as a wholly-owned subsidiary
to market our home tooth whitening system, Forever WhiteTM. The product is being
marketed through short infomercials in a national advertising campaign on both
national cable and select regional network television stations. Test marketing
of the product began June 9, 2000 in select areas and national coverage began in
August 2000.
We are in the process of introducing a new product known as "Apollo e" (patent
applied for), a wireless, fast curing device that cures (hardens) dental
fillings without heat, and will be phasing out our current model, the Apollo
95E, which originally sold for $4,500. The Apollo e will be priced at $2,495,
will be fully portable and will be programmable by bar code or by the Internet
for any particular composite material. We expect to launch the Apollo e during
the fourth quarter of fiscal year 2000 which will replace the Apollo 95E, and
have scheduled our launch of another new product, the wireless "Apollo Cam"
handheld intraoral camera which will replace the Telicam, for the first quarter
of fiscal year 2001.
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 6416 Variel Avenue, Woodland Hills, California 91367. Our telephone number is
(818) 932-2300.
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<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 SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.
We have experienced significant operating losses in the current and prior years.
We have been unable to pay all of our trade creditors and certain other
obligations in accordance with their terms. We also have a $4,200,000 obligation
to our former preferred stockholders and our forbearance agreement with Imperial
Bank expires on December 29, 2000. We intend to improve liquidity in various
ways such as (a) the completion of equity or debt financing or other strategic
transactions; (b) the continued monitoring and reduction of manufacturing,
facility and administrative costs; and (c) the development and introduction of
new products. However, there is no assurance that we will succeed in
accomplishing any or all of these initiatives. Our fiscal 2000 unaudited interim
consolidated financial statements have been prepared assuming that the Company
will continue as a going concern and do not include any adjustments that might
result from the outcome of this uncertainty.
WE HAVE A $4,200,000 OBLIGATION FOR WHICH WE DO NOT HAVE SUFFICIENT FUNDS AND WE
WILL NEED TO SEEK ADDITIONAL FINANCING.
On November 23, 1999 we sold an aggregate of 2,000 shares of Series A
Exchangeable Preferred Stock ($2 million face value), 2,500 shares of Common
Stock and Warrants to purchase up to 40,000 shares of Common Stock. On March 3,
2000 we sold an aggregate of 2,250 shares of Series B Exchangeable Preferred
Stock ($2.25 million face value) and Warrants to purchase up to 675,000 shares
of Common Stock.
On and after March 15, 2000, holders of Series A Exchangeable Preferred Stock
were able to 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 Exchangeable Preferred Stock then being exchanged.
As a result, the holders were likely to be in a position to exchange their
shares for shares of common stock at a discount to the then current trading
price of out common stock.
Holders of Series B Exchangeable Preferred Stock were able to exchange their
shares into common stock at a price per share equal to the lesser of $2.85 or
one hundred percent (100%) of the Market Price on the date of exchange. The
Market Price is the average of the closing bid prices of any three (3) of the
prior thirty (30) consecutive trading days selected by the holder of the Series
B Exchangeable Preferred Stock then being exchanged. As a result, the holders of
Series B Exchangeable Preferred Stock were likely in a position to exchange
their shares of common stock at a discount to the then current trading price of
our common stock.
To date, 1,246 shares of Series A Exchangeable Preferred Stock have been
converted into 1,270,216 shares of common stock, and 937 shares of Series B
Exchangeable Preferred Stock have been converted into 1,288,467 shares of common
stock.
Under the rules and regulations of the Nasdaq Stock Market, we require
stockholder approval to issue 20% or more of our outstanding common stock in a
single transaction. Because the rate at which the Series A Preferred Stock and
Series B Preferred Stock exchange into common stock fluctuates, it was possible
that the number of shares of common stock into which the Series A Preferred
Stock or Series B Preferred Stock may exchange could exceed 20%. We agreed with
the purchasers of the Series A Preferred Stock and the Series B Preferred Stock
that we would seek stockholder approval of these issuances at the 2000 Annual
Meeting of Stockholders. Prior to receiving stockholder approval, or if
stockholder approval is not obtained, any exchange of shares of Series A
Preferred Stock or Series B Preferred Stock in excess of 19.9% of the
outstanding common stock of the Company must be paid in cash to the holder of
the Series A Preferred Stock or Series B Preferred Stock. In late September,
2000, all remaining Series A and Series B holders requested to convert their
remaining shares. Because we had already issued l9.9% of the outstanding shares,
we are obligated to honor the exchange of shares of Series A Preferred Stock or
Series B Preferred Stock in cash. The combined obligation to the Series A and
Series B holders is approximately $4,200,000. Currently, the Company does not
have sufficient liquid funds to honor such request.
Page 3
<PAGE>
The Company is now negotiating with the former Series A Preferred Stockholders
and Series B Preferred Stockholders, now creditors, for settlement of their
claims. In addition, during the fourth quarter of 2000, the Company received
claims of approximately $1.2 million for additional liquidated damages from
former preferred holders. Management believes that a settlement will be reached
and that such settlement may encompass an issuance of common stock. We
vigorously dispute their right to such liquidated damages since a separate
damages provision applies to these circumstances and since the amount due was
already based upon an assumed sale price. However, no assurances can be given
that a favorable settlement will be reached or that financing of this obligation
will be available, or if available will be on terms satisfactory to us or on
terms favorable to holders of common stock.
WE WILL NEED TO RAISE ADDITIONAL CAPITAL.
At September 30, 2000, we had cash and cash equivalents of $561,267. After
taking into account our cash and cash equivalents, projected revenues and
receipt of funds from other sources, we will need to raise additional funding
through debt or equity financing during the next twelve months to satisfy our
requirements for research and product development, marketing, and general and
administrative expenses. Our cash requirements, however, may vary materially
from those now planned because of changes in our operations or market
conditions. In addition, we have a $4,200,000 obligation to our former preferred
stockholders. Further, at September 30, 2000 and June 30, 2000, we were not in
compliance with financial covenants of our Imperial Bank credit agreement. As of
November 14, 2000, we entered into a forbearance agreement stating that so long
as we remain current in our payments of principal and interest Imperial Bank
will not exercise any remedies it may have resulting from such lack of
compliance until December 29, 2000. If we are not able to remain current in our
payments of principal and interest or obtain additional extensions on the
forbearance agreement, Imperial Bank can declare the loans in default and
require us to pay the balance of the loan, which is currently approximately $4.3
million. In such event, we would seek to obtain alternative financing. There can
be no assurance that alternative financing, whether from equity or debt
financing agreements, will be available, if at all, on favorable terms to us or
our stockholders. If we need capital and cannot raise additional funds, 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 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 ApolloTM since
March 1998. Therefore, we have a limited relevant operating history upon which
to evaluate the likelihood of our success. In addition, we anticipate additional
revenues from our two new products, Apollo E and Forever WhiteTM. The Apollo E
began shipment at the end of November, and our national advertising campaign for
Forever WhiteTM began in August. However, we have not yet commenced significant
sales of Apollo E and we can give no assurances as to the likelihood of success
of this product. 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 period from October 23, 1995 to March 2, 1996, we incurred a net loss of
$1,625,213. For the fiscal years ended December 31, 1997, 1998, and 1999 we had
net losses of $2,044,729, $1,816,702, and $6,727,638, respectively, and for the
nine months ended September 30, 2000, we had a net loss of $11,100,496. At
September 30, 2000, our accumulated deficit was $23,272,012. 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.
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<PAGE>
WE MAY BE DELISTED FROM THE NASDAQ STOCK MARKET AND THE BOSTON STOCK EXCHANGE.
The closing sale price of our Common Stock was below $1.00 per share in August.
Under the rules and regulations of the Nasdaq Stock Market and the Boston Stock
Exchange, to maintain listing on the Nasdaq Small Cap Market and the Boston
Stock Exchange we must maintain a trading price per share of more than $1.00. On
September 6, 2000, Nasdaq notified us that we had failed to maintain a minimum
bid price of $1.00 over the last 30 consecutive trading days as required for
continued listing on The Nasdaq SmallCap Market as set forth in Marketplace Rule
4310(c)(4) (the "Rule"). However, in accordance with Marketplace Rule
4310(c)(8)(B), we will be provided 90 calendar days, or until December 5, 2000
to regain compliance with this Rule. If at anytime before December 5, 2000 the
bid price of our common stock is at least $1.00 for a minimum of 10 consecutive
trading days, a determination will be made as to whether we comply with the
Rule. The bid price of our common stock was above $1.00 for 21 consecutive days
from September 7, 2000 through October 5, 2000. However, Nasdaq must still make
a determination whether we comply with the Rule. If Nasdaq determines we do not
comply with the Rule, our common stock will be delisted. If we were delisted
from the Nasdaq Small Cap Market and the Boston Stock Exchange, trading in our
common stock, if any, would have to be conducted in the over-the-counter market
in so-called "pink sheets" or, if then available, the OTC Bulletin Board. As a
result, the holders of our common stock would find it more difficult to dispose
of, or to obtain accurate quotations as to the market value of, our common
stock.
If our common stock is delisted from trading on Nasdaq and the Boston Stock
Exchange and the trading price is less than $5.00 per share, trading in our
common stock would also be subject to the requirements of Rule 15g-9 promulgated
under the Securities Exchange Act of 1934. Under such rule, broker/dealers who
recommend these low-priced securities to persons other than established
customers and accredited investors must satisfy special sales practice
requirements, including a requirement that they make an individualized written
suitability determination for the purchaser and receive the purchaser's written
consent prior to the transaction. The Securities Enforcement Remedies and Penny
Stock Reform Act of 1990 also requires additional disclosure in connection with
any trades involving a stock defined as a penny stock (generally any equity
security not traded on an exchange or quoted on Nasdaq that has a market price
of less than $5.00 per share, subject to certain exceptions), including the
delivery, prior to any penny stock transaction, of a disclosure schedule
explaining the penny stock market and the risks associated with the penny stock
market. These requirements would likely severely limit the market liquidity of
our common stock and the ability of our shareholders to dispose of their shares,
particularly in a declining market.
TWO OF OUR PRIMARY PRODUCTS 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 ApolloTM have been our primary products since inception. We
believe that our market for the Telicam intraoral cameras, 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. In addition, there has
been a decrease in ApolloTM sales as competitor's lamps curing times become
closer to that of the ApolloTM, a trend which we also expect to continue.
AS A RESULT OF THE DECLINE IN SALES OF THE TELICAM SYSTEMS AND APOLLOTM
PRODUCTS, OUR FUTURE DEPENDS ON OUR ABILITY TO DEVELOP AND INTRODUCE NEW
PRODUCTS.
As a result of the decline in our Telicam 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 and ApolloTM products.
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;
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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 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.
HISTORICALLY, THE SALES OF OUR NEWLY INTRODUCED PRODUCTS HAVE DECLINED IN A
RELATIVELY SHORT PERIOD OF TIME FOLLOWING THE INITIAL INTRODUCTION OF THE
PRODUCT.
Our sales records indicate that the sales of our products decline within a
relatively short period of time following the initial introduction of the
product. If this sales pattern holds true for three new products, the Apollo E,
the Apollo Cam and Forever WhiteTM and our future products, we must continuously
develop and introduce new products in order to maintain an appropriate level of
sales and revenue. As a result, if we fail to develop and introduce new products
on a timely basis, it could adversely affect our revenues and operating results.
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. To date, we have made the required
periodic minimum royalty payments to Suni and have purchased the required
amounts of certain products manufactured by Suni. We cannot guarantee that we
will continue to be able to make the minimum periodic royalty payments, nor can
we guarantee that we will continue to 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.
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 or FDA, 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;
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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 a premarket approval application or FDA approval of an application
for 510k clearance. FDA conducts periodic inspections to assure compliance with
it's regulations. The Company has applications pending for a hand held cordless
curing lamp and a cordless, remote controlled, high resolution, intraoral
camera. The Company received FDA 510k notification for these products during the
third quarter of 2000. Any delay in receipt of FDA 510k notification for these
products will delay our ability to market and sell these products and could
allow our competitors to develop and introduce competing products.
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 September 30,
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.
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 ApolloTM. The ApolloTM 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
ApolloTM 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.
Page 7
<PAGE>
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.
ISSUANCE OF PREFERRED STOCK MAY HAVE THE EFFECT OF PREVENTING A CHANGE OF
CONTROL.
We have authorized 1,000,000 shares of preferred stock, which may be issued by
the Board of Directors with certain rights not granted to the holders of common
stock. Issuance of such preferred stock, depending upon the terms and rights
thereof, may have the effect of delaying, deterring or preventing a change of
control.
A DECREASE IN THE PRICE OF OUR COMMON STOCK COULD INCREASE SHORT SALES OF OUR
COMMON STOCK BY THIRD PARTIES WHICH COULD RESULT IN FURTHER REDUCTIONS IN THE
PRICE OF OUR COMMON STOCK.
Our Series A Preferred Stock and Series B Preferred Stock has been exchanged
into common stock at a discount to the market price of our common stock as a
result of the formula's included in the preferred stock purchase agreements.
This issuance of shares at a discount could result in reductions in the market
price of our common stock. Downward pressure on the price of our common stock
could encourage short sales of our common stock by third parties. Material
amounts of short selling could place further downward pressure on the market
price for our common stock. A short sale is a sale of stock that is not owned by
the seller. The seller borrows the stock for delivery at the time of the short
sale, and buys back the stock when it is necessary to return the borrowed
shares. If the price of the stock declines between the time the seller sells
short the stock and the time the seller subsequently repurchases the stock, the
seller will realize a profit.
A LARGE VOLUME OF SALES OF OUR COMMON STOCK RESULTING FROM THE EXCHANGE OF
SHARES OF SERIES A AND B 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 and B 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 and B 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.
WE FACE THE POTENTIAL LOSS OF OUR TELICAM COMPONENT SUPPLY, AND OTHER CLAIMS OF
BOSTON MARKETING, WHICH COULD RESULT IN SIGNIFICANT LIABILITY, DISRUPT OUR
OPERATIONS AND ADVERSELY AFFECT OUR OPERATING RESULTS.
Effective October 1, 1996, we amended our distribution agreement ("BMC
Distribution Agreement") with Boston Marketing, a licensed distributor of the
Teli manufactured CCD chip which includes the Teli CCU processor. Pursuant to
the BMC Distribution Agreement, we have the exclusive right (i) to market
certain Teli manufactured CCD chip assemblies with CCU processors (each a "Teli
unit," and collectively the "Teli Units") to the dental market, and (ii) to use
the "TeliCam" trademark. The Units are key components of our intraoral digital
cameras. The initial term of the BMC Distribution Agreement, as amended, was due
to expire December 31, 2000, and was terminable by Boston Marketing if we fail
to meet our annual minimum purchase obligation. In April 2000, we were served
with a lawsuit that makes numerous claims including the allegation that we
failed to make the minimum purchases for calendar year 1999 and 2000, and that
the BMC Distribution Agreement has been terminated as a result. Boston Marketing
has refused to accept subsequently placed orders. The lawsuit also claims that
we failed to pay certain commissions to Boston Marketing.
Page 8
<PAGE>
We are investigating the claims made by Boston Marketing in their complaint. We
intend to defend this matter vigorously and believe we have meritorious defenses
to this suit. However, if the BMC Distribution Agreement is cancelled because of
failure to meet minimum purchase requirements, we would need to obtain an
alternative source of supply. We have now obtained other CCD chips, CCU
processors and frame grabbers from third-party suppliers. Management believes
that no disruption in the supply of these products occurred. However, we may not
be able to market the units incorporating those CCD chips, CCU processors and
frame grabbers under the "TeliCam" trademark which could materially adversely
affect our operating results.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains statements that constitute forward-looking statements
within the meaning of Section 21E of the Exchange Act of 1934 and Section 27A of
the Securities Act of 1933. The words "expect," "estimate," "anticipate,"
"predict," "believe" and similar expressions and variations thereof are intended
to identify forward-looking statements. Such statements appear in a number of
places in this prospectus and include statements regarding our intent, belief or
current expectations regarding our strategies, plans and objectives, our product
release schedules, our ability to design, develop, manufacture and market
products, our intentions with respect to strategic acquisitions, the ability of
our products to achieve or maintain commercial acceptance and our ability to
obtain financing for our obligations. Any forward-looking statements are not
guarantees of future performance and involve risks and uncertainties. Actual
results may differ materially from those projected in this prospectus, for the
reasons, among others, described in the Risk Factors section beginning on page
3. You should read the Risk Factors section carefully, and should not place
undue reliance on any forward-looking statements, which speak only as of the
date of this prospectus. We undertake no obligation to release publicly any
updated information about forward-looking statements to reflect events or
circumstances occurring after the date of this prospectus or to reflect the
occurrence of unanticipated events.
Page 9
<PAGE>
SELLING SECURITY HOLDERS
The following table sets forth the names of the Selling Security Holders, the
number of shares of Common Stock and the number of Warrant Shares owned by the
Selling Security Holders as of December 12, 2000, and the maximum amount of
Common Stock which may be offered for the accounts of the Selling Security
Holders under this prospectus.
We do not know if, or when, or in what amounts the Selling Security Holders will
sell shares of the Common Stock. Thus, we cannot estimate how may shares each of
the Selling Security Holders will hold after completion of the offering.
<TABLE>
<CAPTION>
Shares Beneficially Owned Prior
to Offering
--------------------------------
Name of Selling Number of Shares Number of Common Stock
Security Holders of Common Stock Warrant Shares Percent Offered Hereby
----------------------------------------------- ---------------- -------------- ------- --------------
<S> <C> <C> <C> <C>
L.H. Friend, Weinress, Frankson, & Presson, LLC -- 432,337(1) 3.18% 432,337
3333 Michelson Drive, Suite 650
Irvine, CA 92616
John H. Timmis(2) 168,540 56,180(3) 1.70% 224,720
278 Hawley Road
North Salem, NY 10560
Carol L. Colman(2) 168,540 56,180(3) 1.70% 224,720
278 Hawley Road
North Salem, NY 10560
Marc Claesen(2) 112,360 37,453(3) 1.14% 149,813
Xavier de Cocklaan 68/4, B-9831
Deurle, Belgium
Evan Gruber(2) 28,090 9,363(3) * 37,453
50 Osgood Place, Penthouse
San Francisco, CA 94133
Bisbro Investments Co. Ltd.(4) 280,899 93,633(5) 2.83% 374,532
1999 Avenue of the Stars, Suite 2530
Los Angeles, CA 90067
G. Tyler Runnels(4) 56,180 18,727(5) * 74,907
1999 Avenue of the Stars, Suite 2530
Los Angeles, CA 90067
Steven Emerson(4) 56,180 18,727(5) * 74,907
10506 Ilona Ave.
Los Angeles, CA 90064
Robert H. Gurevitch(4) 753,238 28,090(5) 5.93% 112,360
c/o Dental Medical
6416 Variel Avenue
Woodland Hills, CA 91367
Fairchoice Ltd.(4) 56,180 18,727(5) * 74,907
Level 4, 34 Hunter Street
Sydney NSW 2000 Australia
Page 10
<PAGE>
Max Soloman Brozen(4) 22,472 7,491(5) * 29,963
2420 Duxbury Place
Los Angeles, CA 90034
Marc Claesen(4) 280,899 93,633(5) 2.83% 374,532
Xavier de Cocklaan 68/4, B-9831
Deurle, Belgium
A.N. Soloman(4) 112,360 37,453(5) 1.14% 149,813
21 New Street
Bishopsgate, London EC2M 4HR
Bedford Oak Partners(4) 337,079 112,360(5) 3.39% 449,439
100 South Bedford Road
Mt. Kisco, NY 10549
Bernard Foudade(4) 280,899 93,633(5) 2.83% 374,532
Xavier de Cocklaan 68/4, B-9831
Deurle, Belgium
Imperial Bank -- 75,000(6) * 75,000
15303 Ventura Boulevard, Lower Plaza
Sherman Oaks, CA 91403
SincBox, LLC 5,000 20,000(7) * 25,000
2633 Lincoln Boulevard, Suite 434
Santa Monica, CA 90405
Century Media -- 5,000(8) * 5,000
3130 Wilshire Boulevard, Suite 400
Santa Monica, CA 90403
Alan Anderson 170,500(9) -- 1.30% 170,500
7931 Shaggy Mountain Road
Herriman, UT 84065
Frank McNeil 170,500(9) -- 1.30% 170,500
8420 Willow Creek Drive
Sandy, UT 84093
Doug Arakawa 170,500(9) -- 1.30% 170,500
1210 Carmel Terrace
Los Altos, CA 94024
Todd Zenger 34,375(9) -- * 34,375
2565 East Lambourne Avenue
Salt Lake City, UT 84109
Michael Steipp 4,125(9) -- * 4,125
200 East Maple Street, #7A
Murray, UT 84107
<FN>
* Represents less than 1%.
(1) On July 21, 2000, L.H. Friend, Weinress, Frankson & Presson, LLC ("L.H.
Friend") received Warrants to purchase up to 339,640 shares of Common Stock
at $1.67 per share. On September 7, 2000, L.H. Friend received Warrant to
purchase up to 92,697 shares of Common Stock at $.89 per share. The
Weinress Group is controlled by Stephen Weinress, the Vice-Chairman of L.H.
Friend and a director of the Company.
(2) The Selling Security Holders John H. Timmis, Carol L. Colman, Marc Claesen
and Evan Gruber are collectively referred to herein as the "August 25
Investors."
Page 11
<PAGE>
(3) On August 25, 2000, the August 25 Investors received Warrants to purchase
up to an aggregate of 159,176 shares of Common Stock at a price of $2.22
per share.
(4) The Selling Security Holders Bisbro, G. Tyler Runnels, Steven Emerson,
Robert H. Gurevitch, Marc Claesen, Fairchoice Ltd., Max Soloman Brozen,
A.N. Soloman, Bedford Oak Partners, and Bernard Foudade are collectively
referred to herein as the "September Investors." Bob Gurevitch is the Chief
Executive Officer, President, and Secretary of DMD.
(5) On September 7, 2000, the September Investors received Warrants to purchase
up to an aggregate of 559,927 shares of Common Stock at a price of $2.22
per share.
(6) In connection with a bank financing, Imperial Bank was issued a warrant to
purchase 75,000 shares at $2.50 per share.
(7) In connection with services rendered, SincBox was issued 5,000 shares of
common stock and a warrant to purchase 20,000 shares at $1.75 per share.
(8) In connection with services rendered, Century Media was issued a warrant to
purchase 5,000 shares at $1.75 per share.
(9) In connection with its acquisition of Chrysalis Dental, we issued 550,000
shares of common stock to the former shareholders of Chrysalis.
</FN>
</TABLE>
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 12
<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.
PLAN OF DISTRIBUTION
We are registering the shares of common stock on behalf of the selling
stockholders described in this prospectus. As used in this prospectus, the
selling stockholders include donees and pledges selling shares received after
the date of this prospectus from the selling stockholders named in this
prospectus.
We will pay substantially all the expenses incident to the registration,
offering and sale of the shares to the public by the selling stockholders other
than fees, discounts and commissions of underwriters, dealers or agents, if any,
transfer taxes and counsel fees. We also have agreed to indemnify the selling
stockholders and any underwriters against certain liabilities, including
liabilities under the Securities Act.
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.
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 13
<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/A for the year ended December 31, 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.
o Quarterly Report on Form 10-QSB for the period ended September 30,
2000.
o Quarterly Report on Form 10-QSB for the period ended June 30, 2000.
o Quarterly Report on Form 10-QSB for the period ended March 31, 2000.
o Current Report on Form 8-K filed September 29, 2000.
o Definitive Proxy Statement dated October 12, 2000.
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.
6416 Variel Avenue
Woodland Hills, California 91367
(818) 932-2300
You should rely only on the information incorporated by reference or provided in
this prospectus or any supplement to this prospectus. We have not authorized
anyone else to provide you with different information. The Selling Security
Holders 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 14
<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/A for the year ended December 31, 1999, 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 15
<PAGE>
--------------------------------------------------------------------------------
You should rely only on the information incorporated by reference or provided in
this prospectus or any supplement to this prospectus. We have not authorized
anyone else to provide you with different information. The Selling Security
Holders 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.
--------------------------------------------------------------------------------
DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC.
PROSPECTUS
DECEMBER __, 2000
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 Security Holders, in
connection with the offering are as follows:
<TABLE>
<CAPTION>
AMOUNT
--------------
<S> <C>
Registration Fee Under Securities Act of 1933........... $ 676.52
NASD Filing Fee......................................... $ *
Blue Sky Fees and Expenses.............................. $ *
Printing and Engraving Certificates..................... $ *
Legal Fees and Expenses................................. $ 10,000
Accounting Fees and Expenses............................ $ 9,000
Registrar and Transfer Agent Fees....................... $ *
Miscellaneous Expenses.................................. $ *
--------------
TOTAL.............................................. $ 19,676.52
==============
-----------------
<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.
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.
Page 17
<PAGE>
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 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 Woodland Hills, State of California, on December 8, 2000.
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------------------- --------------------------- ------------------
<S> <C> <C>
/s/ Robert H. Gurevitch Chairman of the Board and December 8, 2000
------------------------- Chief Executive Officer
Robert H. Gurevitch
/s/ Stephen F. Ross Chief Financial Officer and December 8, 2000
------------------------- Chief Accounting Officer
Stephen F. Ross
/s/ Jack D. Preston Executive Vice President December 8, 2000
------------------------- and Director
Jack D. Preston
/s/ Marvin H. Kleinberg Director December 8, 2000
-------------------------
Marvin H. Kleinberg
/s/ John Khademi Director December 8, 2000
-------------------------
John Khademi
</TABLE>
Page 19
<PAGE>
EXHIBIT INDEX
NO. ITEM
4.1* Form of Securities Purchase Agreement.
4.2* Form of Registration Rights Agreement.
4.3* Form of Stock Purchase Warrant issued to Selling Security Holders.
5.1 Opinion of Troop Steuber Pasich Reddick & Tobey, LLP.
23.1 Consent of Independent Accountants.
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).
* Incorporated to the Company's Form S-3 Registration Statement filed
August 24, 2000.
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