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As filed with the Securities and Exchange Commission on January 3, 2001.
Registration No. 333-33842
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
PRE-EFFECTIVE
AMENDMENT NO. ONE TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
HEALTHAXIS INC.
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(Exact name of Registrant as specified in its charter)
Pennsylvania 23-2214195
------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
HealthAxis Inc.
2500 DeKalb Pike
East Norriton, PA 19401
Telephone (610)279-2500
(Address,including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Michael Ashker
President and Chief Executive Officer
HealthAxis Inc.
2500 DeKalb Pike
East Norriton, PA 19401
Telephone (610)279-2500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Barry H. Genkin, Esquire Richard N. Weiner, Esquire
Blank Rome Comisky & McCauley LLP Stradley Ronon Stevens & Young, LLP
One Logan Square 2600 One Commerce Square
Philadelphia, Pennsylvania 19103 Philadelphia, PA 19103
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If the only securities 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. [ ]
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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 statement 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 Proposed
maximum maximum Amount of
Title of securities Amount to be offering price aggregate registration
to be registered Registered per share offering price fee
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<S> <C> <C> <C> <C>
Common Stock, par value $.10 per share, issuable
upon conversion of debentures.................. 4,269,740(1) $9.00(2) $38,427,660(2)
========= ====== ===========
Common Stock, par value $.10 per share, issuable
upon exercise of warrants and options.......... 911,124(3) (4) 49,219,107(4)
========= ====== ===========
Total.......................................... 5,180,864 $43,346,677 $ 11,487 (5)
=========== ========
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</TABLE>
(1) This Registration Statement covers 4,269,740 shares of HealthAxis Inc.
common stock issuable upon the conversion of debentures owned by
selling shareholders of which shares may be offered from time to time.
(2) Based upon the maximum conversion price of $9.00 as set forth in the
debentures, estimated solely for the purpose of calculating the
registration fee in accordance with Rule 457(g) under the Securities
Act of 1933, as amended.
(3) This Registration Statement covers 911,124 shares of HealthAxis Inc.
common stock issuable upon the exercise of warrants and options owned
by selling shareholders, of which shares may be offered from time to
time.
(4) Based upon the exercise price of $4.48 with respect to 300,000 shares,
$4.25 with respect to 318,042 shares, $3.28 with respect to 20,000 shares,
$9.00 with respect to 223,082 shares and $3.00 with respect to 50,000
shares, as set forth in the warrants and options, estimated solely for the
purpose of calculating the registration fee in accordance with Rule 457(g)
under the Securities Act of 1933, as amended.
(5) A fee of $10,787 was paid with the initial filing and a fee of $700.00 is
being paid with this Amendment No. One.
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 Section 8(A), may
determine.
================================================================================
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Information in this prospectus is not complete and may be changed. We may not
sell these securities until the registration statement filed with the Securities
and Exchange Commission is effective. This prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
Subject to Completion, Dated January 3, 2001
PROSPECTUS
HEALTHAXIS INC.
5,180,864 Shares of Common Stock
This prospectus relates to the offering, which is not being
underwritten, of 5,180,864 shares of our common stock by some of our current
shareholders listed on page 13.
Prospective investors should carefully consider "Risk Factors"
beginning on page 5 of this prospectus.
Our common stock is traded on the Nasdaq National Market under the
symbol "HAXS." On December 29, 2000, the last sales price of our common stock as
reported on the NASDAQ National Market was $1-7/16 per share.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is _____________, 2001.
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TABLE OF CONTENTS
PAGE
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Summary................................................................. 3
Risk Factors............................................................. 4
Forward Looking Statements............................................... 11
Use of Proceeds.......................................................... 12
Selling Shareholders..................................................... 13
Plan of Distribution..................................................... 16
Description of Securities................................................ 18
Experts................................................................ 20
Legal Matters............................................................ 20
Where You Can Find More Information...................................... 20
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Summary
This summary highlights information contained in other parts of this
prospectus. It does not contain all of the information that you should consider
before investing in the shares. You should read the entire prospectus carefully.
As used in this prospectus, the term HAI means HealthAxis Inc.
(formerly Provident American Corporation) and its subsidiaries, including
HealthAxis.com, Inc. HealthAxis.com, Inc. is referred to as HealthAxis.
Our principal executive offices are located 2500 DeKalb Pike, East
Norriton, Pennsylvania 19401 and our telephone number is (610) 279-2500.
HAI incorporated HealthAxis in March 1998 for the purpose of selling
insurance products on the Internet. In December 1998, HealthAxis initiated
online insurance distribution through America Online and the World Wide Web
through the "soft launch" of one of HAI's products in 18 states. During 1998,
the board of directors of HAI made a strategic decision to sell its insurance
underwriting business and focus its capital and managerial resources on
e-commerce sales of insurance through HealthAxis. In pursuit of this goal,
between December 1998 and November 1999, HAI sold its traditional insurance
businesses in a series of unrelated transactions, including the sale of PILIC to
AHC Acquisition, Inc. As a result of these sales, by the end of 1999, HealthAxis
was HAI's only operating subsidiary.
During 1999, HealthAxis continued to focus on expanding the geographic
scope and diversity of the products offered on its website through its carrier
partner agreements with nationally recognized insurance companies. Throughout
1999, HealthAxis continued to integrate new carrier partner products on its
website and made additional technological enhancements to its website. On
January 7, 2000, Insurdata Incorporated, with over 300 technology professionals
and 20 years of experience, was merged into HealthAxis. In June 2000, HealthAxis
entered into an asset purchase agreement to sell to Digital Insurance, Inc. the
assets used in connection with its retail website, including the current and
next generation of the retail website user interface. Since completion of the
Digital sale on October 13, 2000, HealthAxis is focused exclusively on providing
Internet based application solutions and services to both healthcare payers and
those entities involved in the distribution and administration of health
insurance and will no longer be an Internet based insurance agency.
HealthAxis offers a fully functional Internet platform for the
distribution of health insurance products to the individual, small group, and
large group markets, both on a direct basis and through existing intermediaries
such as agents, affinity relationships and benefits consulting firms. HealthAxis
also offers a suite of Internet based software applications and services
designed to enhance the efficiency and effectiveness of insurance plan
distribution, claims administration, benefits enrollment, benefits maintenance
and conversion of insurance claims information to electronic form. HealthAxis
also provides systems integration, technology management and data capture
services to its clients.
HealthAxis' suite of integrated proprietary software addresses the
workflow and processing inefficiencies embedded in the healthcare insurance
industry. The software enables HealthAxis' clients to reduce costs and improve
customer service through the use of online benefits enrollment and
administration services. The software increases the efficiency of a client's
operations by
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eliminating paper-based processes and improving the client's ability to capture,
process and share data with plan members and other industry participants within
the healthcare system.
HealthAxis offers the suite of proprietary integrated workflow and
business software applications described below:
Insur-Web is HealthAxis' technology that provides an Internet gateway
to the application solutions group's other proprietary business applications.
Insur-Web allows clients to provide direct access to their systems and data
within a secure environment, thereby lowering transaction costs and shortening
cycle times for their constituent users. This application can also be used to
enable a payor's own legacy system to utilize the Internet.
Insur-Image is a seamless scanning optical character recognition and
data verification workflow system specifically engineered for claims processing
that enables payors to create a paperless environment.
Insur-Voice is a scaleable, flexible, interactive voice response system
that provides employees, providers and employers 24-hour access to information,
thereby improving service while reducing customer service costs.
Insur-Enroll is an Internet and interactive voice response enabled
enrollment and eligibility function which provides 24-hour interactive
enrollment, eligibility and life event management and supports an unlimited
number of benefit plans including, health, dental, life, vision, accident and
disability, and medical and dependent care flexible spending accounts.
Insur-Admin is a comprehensive benefits administration system that
features enrollment, group and individual billing and premium collection and
reconciliation for third-party administrators, insurers, self-administered
groups, health plan network managers and healthcare purchasing cooperatives.
Insur-Claims is a comprehensive claims processing system for health,
dental, vision, short-term disability, executive reimbursement and medical and
dependent care flexible spending accounts and includes auto adjudication and
preferred provider organization repricing functions. A rules-based approach
allows Insur-Claim to be fully customized, which allows the system to handle
complex benefit structures and provider reimbursement arrangements.
Insur-Retail. HealthAxis provides technology and related services to
assist both payers and intermediaries in selling health insurance products
online. Such technology and services can be purchased either as a suite of web
based software and services or on a stand-alone basis. The suite of services may
include connectivity technology as embodied in Insur-Enroll, Insur-Web, and
Insur-Admin and/or platform design and presentation layer assistance. HealthAxis
is also capable of providing would-be plan distribution agents with a complete
Internet based insurance distribution platform.
In addition, the application solutions group offers the following
products and services:
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Systems Integration and Technology Management Services which provide
clients with cost-effective design, development and implementation of technical
solutions for healthcare organizations and consist of four primary offerings:
information technology planning, multi-vendor system integration, application
software maintenance and workflow automation.
Imaging and Electronic Data Capture Services which provide outsourcing
services to convert paper healthcare claims into electronic transactions
efficiently. Additionally, HealthAxis provides mailroom services to sort
incoming healthcare claim forms prior to imaging.
Web Based Image Storage and Retrieval which provides claims image
retrieval services via the Internet from a standard desktop personal computer
using a web browser.
HealthAxis' clients include large insurance carriers, Blue Cross and
Blue Shield organizations, independent entities that administer claims
processing and payment, self-funded employers, and other industry participants.
HealthAxis also offers systems integration, technology management and data
capture services to these same customer client groups.
HealthAxis has over 20 years of experience building software
applications and developing systems for the healthcare payor industry.
HealthAxis' current client base represents approximately 750,000 insured lives
(excluding covered dependents) enrolled under the proprietary software
applications and approximately 1,000,000 claims per month through the data
capture services.
Risk Factors
You should consider carefully the risks associated with the ownership
of our common stock. These risks are described in detail below. You should
consider carefully these risk factors, together with all of the other
information in this prospectus and the documents we have incorporated by
reference in the section "Where You Can Find More Information" before you
decide to purchase shares of our common stock.
Business Related Risks
Because we have a history of operating losses, investors could lose all or a
portion of their investment.
Although we recently sold the assets related to our retail website,
which accounted for the majority of the operating losses, we have incurred
significant losses since our inception and may continue to incur losses into the
future. As of September 30, 2000, we have an accumulated deficit of
approximately $102.5 million. Our limited operating history makes it difficult
to evaluate our future prospects. Furthermore, you must consider our prospects
in light of the risks, expenses and difficulties frequently encountered by
companies in new, unproven and rapidly evolving markets. We expect negative cash
flow from operations to continue through the second quarter of 2001.
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If the healthcare industry does not accept our new information technology, or
acceptance occurs at a slower pace than anticipated, we may never increase
revenues and generate net income.
We believe that the claims and administration segment of the healthcare
industry has historically under invested in information technology. If the
conversion from traditional paper methods to electronic information exchange
does not continue to occur or this conversion occurs at levels below those we
currently anticipate, we would not sell a sufficient amount of our products and
services to increase revenues and generate net income. In addition, even if
industry participants convert to electronic information exchange, they may not
elect to use our applications and services.
The loss of one or more of our large clients would result in decreased sales and
revenues.
We expect that a small number of clients, including UICI and its
subsidiaries, which are in the aggregate our largest client, will continue to
account for a substantial portion of our total revenues for the foreseeable
future. For the nine months ended September 30, 2000, UICI and its subsidiaries
accounted for an aggregate of approximately $20.9 million, or 64% of HealthAxis'
total revenues from continuing operations. For the year ended December 31, 1999,
UICI and its subsidiaries accounted for an aggregate of approximately $28.2
million of HealthAxis' pro forma total revenues, which represented approximately
66% of pro forma revenue for the period. A portion of HealthAxis' revenue from
UICI in the past was for year 2000 services that have been substantially
completed. UICI experienced a net loss for the year ended December 31, 1999.
Management is unable to predict whether UICI will continue to experience
financial difficulties in the future. HealthAxis would suffer a decrease in
revenues if UICI or its subsidiaries experience financial difficulties impacting
UICI's ability to pay HealthAxis for services.
Other large clients of HealthAxis include Digital Insurance, Inc. and
CIGNA. For the nine months ended September 30, 2000, these companies in the
aggregate accounted for 7.0% of HealthAxis total revenues from continuing
operations. HealthAxis anticipates that Digital Insurance, Inc. will account for
approximately 5.0% of HealthAxis' total revenue for the year ended December 31,
2000. The loss of one or more of these significant clients, or the failure to
generate anticipated revenue from these clients, would result in decreased sales
and revenues.
Our competitors may be more successful in attracting customers, which could
result in decreased sales, a loss of revenue and a decrease in the value of our
common stock.
Our major competitors include WebMD, RIMS, ChannelPoint, Erisco, El
Dorado, TXEN, a division of Nichols Research Corp., and Amisys Managed Care
Systems, Inc., a division of HBOC, EbenX and Firepond. We compete with the
internal information resources and systems of certain of our prospective and
existing clients. These competitors could develop or offer superior
functionality with respect to specific or overall applications. Some of our
current and potential competitors are larger, better capitalized and have
greater financial and operating resources than us. These competitors may be able
to respond more quickly to changes in consumer requirements or preferences and
be able to devote greater resources to the development, promotion and sale of
their products or to claims processing services.
Errors in the application solutions could detract from the reliability and
quality of our information systems, which, in turn, would result in decreased
sales, a loss of revenue and a decrease in the value of our common stock.
We devote substantial resources to meet the demands of the claims and
administration segment of the healthcare industry for a high level of
reliability and quality from its information systems. Through extensive client
acceptance testing requirements, historically HealthAxis has experienced a
limited number of application solutions errors. However, application solutions
like most software applications, depending upon the complexity of the
application, may contain undetected errors. These errors may result in loss of
data, a reduction in the ability to process transactions on a timely basis, or
loss of, or delay in, market acceptance of HealthAxis' application solutions. We
have attempted to limit contractually and through insurance coverage damages
arising from negligent acts, errors, mistakes or omissions in our application
solutions or in rendering the application solutions group's services; however,
these contractual protections could be unenforceable or insufficient to protect
us from liability for damages in connection with the successful assertion of one
or more large lawsuits.
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If we are unable to protect our proprietary technology, our competitors could
use our proprietary technology to compete against us and our revenues would be
reduced.
Our success depends to a significant extent on our ability to protect
the proprietary and confidential aspects of our application solutions and the
tradenames associated with them. Our applications solutions are not patented and
existing copyright laws offer only limited practical protection. These legal
protections afforded to us or precautions we take may be inadequate to prevent
misappropriation of our technology or the tradenames associated with our
application solutions. Any infringement or misappropriation of our proprietary
application solutions or the related tradenames could have the effect of
allowing competitors to use our proprietary information to compete against us or
result in costly litigation in order to protect our rights. In addition, these
limited protections do not prevent independent third-party development of
functionally equivalent or superior technologies, products or services.
We may be subject to trademark and service mark infringement claims, which could
result in costly litigation and additional losses or decreased revenues.
As competing healthcare information systems increase in complexity and
overall capabilities and the functionality of these systems further overlap, we
could be subject to claims that our technology infringes on the proprietary
rights of third parties. These claims, even if without merit, could subject us
to costly litigation and could direct the time and attention of our technical
and management teams. Further, if a court determined that we infringed on the
intellectual property rights of a third party, we could be required to:
o develop non-infringing technology or tradenames,
o obtain a license to the intellectual property,
o stop selling the applications or using names that contain the
infringing intellectual property, or
o pay substantial damage awards.
If we cannot develop non-infringing technology or tradenames or obtain
a license on commercially reasonable terms, any of the above listed potential
court ordered requirements would adversely impact our operations and revenues.
Additionally, in December 1998, a third party notified Insurdata Incorporated
that it believed Insurdata Incorporated had infringed upon a common law
trademark held by such party through its use of the name "Insur-Web" because a
similar name is currently being utilized by the third party.
If we are unable to register the service marks "HealthAxis" and
"HealthAxis.com," we will not be able to take advantage of the benefits and
protections provided by owning a registered service mark.
HealthAxis was notified by the US Patent and Trademark Office that it
had preliminarily denied registration of the service marks "HealthAxis" and
"HealthAxis.com" on the basis of potential confusion with an allegedly similar
registered service mark. HealthAxis is attempting to overcome the U.S. Patent
and Trademark Office's preliminary denial by negotiating a consent with the
party holding the similar mark. This party has agreed to HealthAxis'
registration of these marks. Until the U.S. Patent and Trademark Office approves
this agreement, HealthAxis can not provide any assurance as to whether it will
be successful in overcoming the U.S. Patent and Trademark Office's preliminary
denial of registration.
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Our failure to meet performance standards described in our services agreements
could result in additional losses or decreased revenues.
Many of our service agreements contain performance standards.
Historically, HealthAxis has failed and it currently anticipates that it will
continue to fail to meet certain contractual performance standards related to
turnaround times, availability and quality standards, set forth in its customer
agreements. Our failure to meet these standards could result in the termination
of these agreements as well as financial penalties from current clients and
decreased sales to potential clients. These penalties range from less than 1% to
a maximum of 3% to 6% (for data capture agreements) of the aggregate amount
payable under these agreements. If we are unable to maintain performance
standards, we may experience decreased sales, decreased revenues and continued
losses.
Our operations outside of the United States may subject us to additional risks,
which could result in decreased revenues and a decrease in the value of our
common stock.
We conduct operations related to the conversion of insurance claims
information to electronic form in Jamaica through an indirect subsidiary. The
Jamaican subsidiary and HealthAxis' subsidiary in Utah provide these services to
some of HealthAxis' application solutions clients in addition to clients that
only contract for these data capture services. For the nine months ended
September 30, 2000, HealthAxis earned 7% of its total revenues from its Jamaican
operations. Our management has limited experience in the area of foreign
operations and may be unable to predict which risks are most likely to present
problems or resolve these problems when or if they occur. There is less
government regulation in Jamaica and there may be more difficulty in enforcing
legal rights . Additionally, there is the possibility of expropriation or
confiscatory taxation, limitations on the removal of property or other assets,
political or social instability or diplomatic developments which could affect
our Jamaican operations and assets.
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Currently, our Jamaican subsidiary is able to take advantage of the
Jamaican labor market which provides both competent and less expensive labor and
as of September 30, 2000, our Jamaican subsidiary had 99 employees. If the risks
or problems posed by conducting operations in Jamaica require significant
financial or managerial resources or we are forced to relocate these operations,
our costs to provide these services would increase and revenues would decrease.
Internet and Insurance Industry Related Risks
If a sufficient number of consumers and insurance payers do not accept the
Internet as a medium for health insurance sales and administration, we may be
unable to increase revenues and decrease losses.
If insurance payers do not accept the Internet as a medium for policy
sales and claims administration, we will not be able to increase revenues
through sales of our application solutions. The health insurance industry's
traditional paper based methods are well established and the industry may be
resistant to change.
In order to maintain compliance with insurance regulations, we may need to
expend financial and managerial resources which could reduce our revenues and
the value of our common stock.
The insurance industry is highly regulated and the regulations that
govern us and our customers are subject to change. Changes in these regulations
could require us to expend additional financial and managerial resources to
maintain our licenses and to revise our application solutions in order to comply
with any revised or new regulation.
We also face regulatory risk because most of the laws and regulations
governing insurance agents contemplate or assume paper-based transactions and do
not currently address the delivery of required disclosures or other documents
through electronic communications. While the Electronic Signatures in Global and
National Commerce Act or the "E-SIGN Act" recently became law, state and federal
regulatory agencies and courts have not interpreted this act yet. Additionally,
many states and insurance regulatory agencies have not yet enacted laws or
regulations which specifically allow for electronic signatures instead of
traditional signatures. Until the insurance laws and regulations are revised to
clarify their applicability to electronic commerce or the E-SIGN Act and state
electronic signature laws are specifically applied to insurance transactions,
our existing and potential customers will face uncertainty as to compliance with
these laws and regulations. Until this uncertainty is resolved, our Internet
based application solutions may not be widely accepted in the insurance
industry.
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Investment Related Risks
Because members of management and UICI own a substantial portion of HAI's common
stock, other shareholders will not have the ability to control company actions
that may be in their best interest.
UICI and certain members of current management, including Messrs Ashker
and Clemens, own or control approximately 49% of HAI's outstanding common stock.
Additionally, pursuant to a shareholders agreement entered into between UICI and
certain members of management, including Messrs. Ashker and Clemens, UICI and
members of current management have the right to nominate for election three
directors and mutually nominate three additional directors. As a result, UICI
and members of current management, acting together, have sufficient voting power
to influence the outcome of corporate matters submitted to the vote of
shareholders or are in a position to refrain from taking action favored by
unaffiliated shareholders. Those individuals and UICI may make decisions which
are not in the best interest of the unaffiliated shareholders.
In addition, the concentration of ownership in UICI and members of
current management could have the effect of delaying or preventing a change in
control of HAI and may eliminate the opportunity for HAI shareholders to realize
a premium over the then-prevailing market price for their shares. Sales by UICI
or members of current management of a significant number of shares of our stock
could have an adverse effect upon the prevailing market price of our common
stock.
Shareownership by current management and UICI may result in the inability of
public shareholders to replace current management.
UICI and some members of current management, including Messrs. Ashker
and Clemens, own or control a significant percentage of the outstanding HAI
common stock. In addition some members of the board of directors, including,
Messrs. Ashker and Clemens, by virtue of their positions as trustees of two
voting trusts, have shared voting power with the other trustees over 19.4% of
HealthAxis' outstanding capital stock. Acting together, UICI and these
individuals will control the nominees for election as directors as well as other
matters submitted to shareholders. As a result, public shareholders may be
unable to replace current management.
Potential conflicts of interest could arise because some people serve as
directors and officers of both HAI and UICI.
Various conflicts of interest between UICI and HAI could arise because
persons serving as directors, of both HAI and UICI may have conflicting duties
to each entity. Gregory T. Mutz, Chief Executive Officer of UICI, and Patrick J.
McLaughlin are directors of HAI and UICI. The relationship of these two
individuals with UICI could also create, or appear to create, potential
conflicts of interest when these directors and officers are faced with decisions
that could have different implications for UICI and for HAI. For example,
conflicts may arise related to the ongoing relationships between UICI and HAI
related to the nature, quality or pricing of services rendered by HAI to UICI or
by UICI to HAI or sales or distributions by UICI of all or a portion of its
ownership interest in HAI. Given the relationships of these individuals with
UICI, their vote may result in a more favorable resolution of a matter to UICI
than HAI.
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Because HealthAxis' agreements with UICI have not been subject to arm's-length
negotiations, these agreements will likely be less favorable to HealthAxis than
agreements negotiated with third parties.
As a result of UICI's control of Insurdata Incorporated prior to the
merger of Insurdata Incorporated and HealthAxis, none of the terms of Insurdata
Incorporated's contracts with UICI and its subsidiaries, including the
outsourcing agreement entered into between Insurdata Incorporated and UICI, were
subject to arm's-length negotiations between the parties. As a result, these
agreements include terms and conditions that may be less favorable to HealthAxis
than terms contained in agreements negotiated with third parties. For example,
the outsourcing agreement with UICI limits HealthAxis pre-tax profit margin and
provides that if HealthAxis charges an unaffiliated third party a rate that is
lower than it charges UICI and its affiliates for similar services, UICI and its
affiliates would be entitled to receive the lower rate. The outsourcing
agreement terminates after an initial term of five years. However, at UICI's
option, HealthAxis is required to negotiate, in good faith, a three year renewal
term prior to the expiration of the agreement. While HealthAxis intends to
negotiate the terms of the renewal with UICI upon expiration of the outsourcing
agreement and any new agreement thereafter, UICI, as HealthAxis' largest
customer and the holder of a substantial amount of HAI's common stock, will
likely receive terms more favorable to UICI than terms contained in agreements
negotiated with third parties.
Forward Looking Statements
Some of the information in this proxy statement/prospectus may contain
"forward-looking statements." Forward-looking statements can be identified by
the use of forward-looking language such as "will likely result," "may," "are
expected to," "is anticipated," "estimate," "projected," "intends to" or other
similar words.
These forward-looking statements regarding our business and prospects
are based upon numerous assumptions about future conditions, which may
ultimately prove to be inaccurate. Actual events and results may materially
differ from anticipated results described in those statements. These
forward-looking statements involve risks and uncertainties that are described in
detail under "Risk Factors" and elsewhere in this prospectus:
Any one or a combination of these factors could have a material adverse
effect on our business, financial condition and results of operations. These
forward-looking statements represent our judgment as of the date of this proxy
statement/prospectus.
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Use of Proceeds
This Prospectus relates to the offering, which is not being
underwritten, of 5,180,864 shares of our common stock by some of our current
shareholders listed on page 16. We refer to these shareholders as selling
shareholders in this document.
4,269,740 of the shares of common stock being sold by these selling
shareholders are issuable upon conversion of the principal amount of and
interest earned on the debentures which were originally issued on September 14,
1999. 911,124 of the shares of common stock being sold by these selling
shareholders are issuable upon exercise of warrants or options.
All net proceeds from the sale of HAI common stock will go to the
shareholders selling common stock under this prospectus. We will not receive any
proceeds from the sale of the common stock sold by the selling shareholders,
except that we may receive the exercise price from the exercise of options and
warrants underlying the common stock registered to the extent the selling
shareholders do not utilize the cashless exercise provisions contained in the
option or warrant agreements. The proceeds from the exercise of the options and
warrants will be used for working capital and other general corporate purposes.
These selling shareholders may sell their HAI common stock in one or more
transactions on the Nasdaq National Market at market prices prevailing at the
time of sale or in private transactions at negotiated prices.
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Selling Shareholders
The following table provides certain information regarding the
beneficial ownership of our common stock by the shareholders selling common
stock under this prospectus prior to and after the offering. Beneficial
ownership is determined under the rules of the SEC, and generally includes
voting or investment power with respect to securities.
<TABLE>
<CAPTION> No. of
No. of Shares No. of Shares Shares Percent of Shares
Owned Prior to Being Offered Owned After Owned After
Selling Shareholder the Offering for Sale the Offering the Offering
------------------- -------------- ------------- ------------ -----------------
<S> <C> <C> <C> <C>
Brown Simpson Partners I, Ltd. 4,366,621 2,069,421(1)(18) 2,297,200 4.2%
Brown Simpson-ORD
Investments LLC 333,998 245,064(2)(18) 88,934 0.2%
LB I Group Inc. 2,656,488 1,633,754(3)(18) 1,022,734 1.9%
UICI 24,241,243 272,292(4)(18) 23,968,951 45.1%
Alvin H. Clemens 6,109,837 272,292(4)(18) 5,837,545 10.9%
Royal Bank of Canada 50,000 50,000(5)
Arden O. French, Jr. 45,090 45,090(6) -- --
Paul J. Klimczak 65,274 65,274(7) -- --
Judith D. Gordon 48,803 48,803(8) -- --
Roger McConnell 24,728 24,728(9) -- --
Charles D. Phillips 22,841 22,841(10) -- --
Calvin R. Sulak 40,147 40,147(11) -- --
Michael S. Nickols 25,328 25,328(12) -- --
Donald Snelling 45,831 45,831(13) -- --
America Online Inc. 1,534,656 300,000(14) 1,234,656 2.9%
Linda G. Robinson 9,000 9,000(15) -- --
Kenneth Lerer 9,000 9,000(16) -- --
Walter Montgomery 2,000 2,000(17) -- --
</TABLE>
----------------------
13
<PAGE>
(1) Represents 1,966,668 shares of common stock which may be acquired upon
the conversion of 2% convertible debentures and interest payable on
these debentures in the form of common stock, with a conversion ratio
of $9.00 per share, subject to adjustment, and 102,753 shares of common
stock subject to a warrant which has an exercise price of $3.01 per
share, subject to adjustment.
(2) Represents 232,895 shares of common stock which may be acquired upon
the conversion of 2% convertible debentures and interest payable on
these debentures in the form of common stock, with a conversion ratio
of $9.00 per share, subject to adjustment, and 12,168 shares of common
stock subject to warrants with an exercise price of $3.01 per share,
subject to adjustment.
(3) Represents 1,552,633 shares of common stock which may be acquired upon
the conversion of 2% convertible debentures and interest payable on
these debentures in the form of common stock, with a conversion ratio
of $9.00 per share, subject to adjustment, and 81,121 shares of common
stock subject to warrants, with an exercise price of $3.01 per share,
subject to adjustment.
(4) Represents 258,772 shares of HAI common stock which may be acquired
upon the conversion of 2% convertible debentures and interest payable,
with a conversion ratio of $9.00 per share and 13,520 shares of HAI
common stock, subject to warrants, with an exercise price of $3.01 per
share, subject to adjustment.
(5) Represents 50,000 shares of common stock subject to warrants with an
exercise price of $3.01 per share, subject to adjustment.
(6) Mr. French is a former insurance agent of Provident Indemnity Life
Insurance Company, a former subsidiary of HAI. Represents 45,090 shares
of common stock issuable upon the conversion of options at an exercise
price of $4.25 per share.
(7) Mr. Klimczak is a former insurance agent of Provident Indemnity Life
Insurance Company, a former subsidiary of HAI. Represents 65,274 shares
of common stock issuable upon the conversion of options at an exercise
price of $4.25 per share.
(8) Ms. Gordon is a former insurance agent of Provident Indemnity Life
Insurance Company, a former subsidiary of HAI. Represents 48,803 shares
of common stock issuable upon the conversion of options at an exercise
price of $4.25 per share.
(9) Mr. McConnell is a former insurance agent of Provident Indemnity Life
Insurance Company, a former subsidiary of HAI. Represents 24,728 shares
of common stock issuable upon the conversion of options at an exercise
price of $4.25 per share.
(10) Mr. Phillips is a former insurance agent of Provident Indemnity Life
Insurance Company, a former subsidiary of HAI. Represents 22,841 shares
of common stock issuable upon the conversion of options for an exercise
price of $4.25 per share.
(11) Mr. Sulak is a former insurance agent of Provident Indemnity Life
Insurance Company, a former subsidiary of HAI. Represents 40,147 shares
of common stock issuable upon the conversion of options at an exercise
price of $4.25 per share.
14
<PAGE>
(12) Mr. Nickols is a former insurance agent of Provident Indemnity Life
Insurance Company, a former subsidiary of HAI. Represents 25,328 shares
of common stock issuable upon the conversion of options at an exercise
price of $4.25 per share.
(13) Represents 45,831 shares of common stock issuable upon conversion of
options assigned to Mr. Snelling at an exercise price of $4.25 per
share.
(14) Represents 300,000 shares of common stock which may be acquired upon
exercise of a warrant dated November 13, 1998 with an exercise price of
$4.48 per share.
(15) Represents 9,000 shares of common stock which may be acquired upon
exercise of a warrant dated as of September 16, 1998 with an exercise
price of $3.28 per share.
(16) Represents 9,000 shares of common stock which may be acquired upon
exercise of a warrant dated as of September 16, 1998 with an exercise
price of $3.28 per share.
(17) Represents 2,000 shares of common stock which may be acquired upon
exercise of a warrant dated as of September 16, 1998 with an exercise
price of $3.28 per share.
(18) In connection with this purchase of our convertible debentures, we
entered into a registration rights agreement which requires us to
register 110% of the number of shares of common stock which the
debentures could be currently converted into plus interest thereon paid
in the form of stock as well as 110% of the number of shares issuable
upon the exercise of the warrants. For purposes of this calculation and
for determining the amount of securities to be registered, we utilized
the conversion and/or exercise price of $3.00 per share.
15
<PAGE>
Plan of Distribution
The shareholders selling common stock under this prospectus, or their
pledgees or transferees, may offer their shares of our common stock at various
times through dealers or brokers or other agents or directly to one or more
purchasers in one or more of the following transactions:
o on the NASDAQ National Market or other exchange on which the
common stock may be listed for trading;
o in the over-the-counter market;
o in privately negotiated transactions;
o in brokerage transactions;
o put or call option transactions;
o in short sales; or
o in a combination of any of the above transactions.
The shareholders selling common stock under this prospectus may sell
their shares:
o at market prices prevailing at the time of sale;
o at prices related to those prevailing market prices; or
o at negotiated prices.
These selling shareholders may use brokers, dealers or other agents to
sell their shares. If this happens, the brokers, dealers or other agents may
receive discounts, concessions or commissions from the shareholders, or they may
receive commissions from purchasers of common stock for whom they acted as
agents. The discounts, concessions or commissions as to a particular broker,
dealer or other agent may be in excess of those customary in the type of
transaction involved.
The selling shareholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with those
transactions, broker-dealers or other financial institutions may engage in short
sales of the common stock or of securities convertible into or exchangeable for
the common stock in the course of hedging positions they assume with the selling
stockholders. The selling stockholders may also enter into options or other
transactions with broker-dealers or other financial institutions which require
the delivery to those broker-dealers or other financial institutions of the
common stock offered by this prospectus, which common stock the broker-dealers
or other financial institutions may resell pursuant to this prospectus (as
amended or supplemented to reflect the transaction).
This prospectus also may be used, with our consent, by donees or
pledgees of the shareholders selling common stock under this prospectus, or by
other persons acquiring common stock from these shareholders and who wish to
offer and sell that common stock under circumstances requiring or making
desirable its use. To the extent required, we will file, during any period in
which offers or sales are being made, one or more supplements to this prospectus
to set forth:
o the names of donees or pledgees of the shareholders;
o the number of shares of common stock involved;
o the price at which those shares are sold;
o the commissions paid or discounts or concessions allowed, where
applicable; and
o any other material information with respect to the plan of
distribution not previously disclosed.
16
<PAGE>
Upon a selling shareholder notifying HAI that any material arrangement
has been entered into with a broker-dealer for the sale of common stock through
a block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer, a supplement to this prospectus will be
filed, if required, pursuant to Rule 424(b) under the Securities Act,
disclosing:
o the name of each selling stockholder and of the participating
broker-dealer;
o the number of shares involved;
o the initial price at which the shares were sold;
o the commissions paid or discounts or concessions allowed to the
broker-dealer(s), where applicable;
o that the broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in
this prospectus; and
o other facts material to the transactions.
Additionally, upon a selling shareholder notifying HAI that a donee or
a pledgee intends to sell more than 1,000 shares, HAI may file a supplement to
this prospectus.
Neither HAI nor the shareholders selling common stock under this
prospectus can presently estimate the amount of this compensation. We know of no
existing arrangements between any shareholder and any other shareholder, broker,
dealer or other agent relating to the sale or distribution of the common stock.
Under applicable rules and regulations under the Securities Exchange Act, any
person engaged in a distribution of any of the common stock may not
simultaneously engage in market activities with respect to the common stock for
the applicable period under Regulation M prior to the commencement of that
distribution.
The shareholders selling common stock under this prospectus will be
subject to applicable provisions of the Securities Exchange Act and its rules
and regulations, including without limitation Rule 10b-5 and Regulation M, which
may limit the timing of purchases and sales of any of the common stock by those
shareholders. All of this may affect the marketability of the common stock.
We will pay substantially all of the expenses incident to this offering
other than commissions, concessions and discounts of brokers, dealers or other
agents or the legal fees of the selling shareholders' counsel. Each shareholder
selling common stock under this prospectus may indemnify any broker, dealer, or
other agent that participates in transactions involving sales of the common
stock against certain liabilities, including liabilities arising under the
Securities Act. We have agreed to indemnify certain of the selling shareholders
and may agree to indemnify any statutory "underwriters" and controlling persons
of those "underwriters" against certain liabilities, including certain
liabilities under the Securities Act. In order to comply with certain states'
securities laws, if applicable, the common stock will be sold in those
jurisdictions only through registered or licensed brokers or dealers.
17
<PAGE>
Description of Securities
Upon shareholder approval and filing with the Commonwealth of
Pennsylvania of the amended and restated articles of incorporation, the
description of the securities of HAI shall be as follows:
Description of HAI Capital Stock. The authorized capital stock of HAI
will consist of 1,900,000,000 shares of common stock $.10 par value, and
100,000,000 shares of preferred stock, $1.00 par value.
HAI Common Stock. As of September 30, 2000, there were approximately
13,097,618 shares of HAI common stock outstanding held of record by
approximately 186 shareholders and held by approximately 5,330 beneficial
holders. HAI common stock is listed and traded on the NASDAQ National Market
under the symbol "HAXS." Holders of HAI common stock are entitled to one vote
per share on all matters to be voted upon by the shareholders. The shareholders
may not cumulate votes in connection with the election of directors. The HAI
articles of incorporation provide that a director may only be removed from
office for cause and by the vote of at least 65% of the votes entitled to be
cast at an annual or regular election. The holders of HAI common stock are
entitled to receive ratably dividends, if any, declared from time to time by the
HAI board of directors out of funds legally available for dividends. In the
event of a liquidation, dissolution or winding up of HAI, the holders of HAI
common stock are entitled to share ratably in all assets remaining after payment
of liabilities. The HAI common stock has no preemptive or conversion rights or
other subscription rights. There are no redemption or sinking fund provisions
applicable to the HAI common stock. All outstanding shares of HAI common stock
are fully paid and non-assessable.
HAI Preferred Stock. HAI has 100,000,000 shares of HAI preferred stock
authorized and no shares are outstanding. The HAI board of directors has the
authority to issue the shares of HAI preferred stock in one or more series and
to fix the rights, preferences, privileges and restrictions granted to or
imposed upon any unissued and undesignated shares of HAI preferred stock and to
fix the number of shares constituting any series and the designations of such
series, without any further vote or action by the shareholders. Although it
presently has no intention to do so, the HAI board of directors, without
shareholder approval, can issue HAI preferred stock with voting and conversion
rights which could adversely affect the voting power or other rights of the
holders of HAI common stock. The issuance of HAI preferred stock may have the
effect of delaying, deferring or preventing a change in control of HAI.
HAI Transfer Agent and Registrar. The transfer agent and registrar for
the HAI common stock is ChaseMellon Shareholder Services LLP, 450 West 33rd St.,
10th Floor, New York, NY 10001 and its telephone number is (212) 273-8016.
Indemnification. As of October 6, 1999, we entered into a registration
rights agreement with certain selling shareholders that were previously our
insurance agents. In the registration rights agreement, we agreed to indemnify
these selling shareholders against all losses, claims, damages, liabilities and
expenses caused by any untrue statement of material fact, alleged untrue
statement of material fact or omission of a material fact required to be stated
to make the statement not misleading contained in any registration statement,
prospectus, or any amendment of the registration statement or prospectus.
However, we are not obligated to indemnify these selling shareholders if the
material misstatement or omission were caused by or contained in any information
furnished in writing to us by these selling shareholders expressly for use in
the registration statement, prospectus or amendment of the registration
statement or prospectus. Additionally, these selling shareholders have agreed to
indemnify us
18
<PAGE>
against all losses, claims, damages, liabilities and expenses caused by any
untrue statement of material fact, alleged untrue statement of material fact or
omission of a material fact required to be stated to make the statement not
misleading that was contained in any information furnished in writing to us by
these selling shareholders expressly for use in the registration statement,
prospectus or amendment of the registration statement or prospectus.
On September 14, 1999, we entered into a registration rights agreement
with certain selling shareholders who concurrently purchased our securities. In
the registration rights agreement, we agreed to indemnify certain selling
shareholders, including Brown Simpson Partners I, Ltd. and Brown Simpson-ORD
Investments LLC, LB I Group Inc., UICI and Mr. Clemens against all losses,
claims, damages, liabilities and costs relating to any untrue statement of
material fact, alleged untrue statement of material fact or omission of a
material fact required to be stated to make any statement not misleading
contained in any registration statement, prospectus, or any amendment of the
registration statement or prospectus. We also agreed to indemnify these selling
shareholders for any violation of any law, including state and federal
securities laws. However, we are not obligated to indemnify these selling
shareholders if the material misstatement or omission upon which we reasonably
relied were caused by or contained in any information furnished in writing to us
by these selling shareholders expressly for use in the registration statement,
prospectus or amendment of the registration statement or prospectus.
Additionally, these selling shareholders have agreed to indemnify us
against all losses, claims, damages, liabilities and expenses caused by any
untrue statement of material fact, alleged untrue statement of material fact or
omission of a material fact required to be stated to make the statement not
misleading upon which we reasonably relied and which was contained in any
information furnished in writing to us by these selling shareholders expressly
for use in the registration statement, prospectus or amendment of the
registration statement or prospectus. These selling shareholders will not have
to indemnify us against any misstatement or omission regarding the selling
shareholders' proposed method of distribution unless the misstatement or
omission was reviewed and approved in writing by these selling shareholders.
These selling shareholders are not required to indemnify us for the cost of
settling any proceeding unless the settlement was previously approved, in
writing, by these selling shareholders. Additionally, the liability of these
selling shareholders for any indemnification of the selling shareholder may not
exceed the net proceeds received by these selling shareholders upon the sale of
securities that giving rise to the indemnification obligation.
We entered into a registration rights agreement with Royal Bank of
Canada as of September 28, 2000. Pursuant to this agreement, we agreed to
indemnify this selling shareholder against any losses, claims, damages,
liabilities, costs or expenses relating to any untrue statement of a material
fact or any omission of a material fact required to make a statement not
misleading, but only to the extent that any untrue statement or omission was not
based on information provided by this selling shareholder. The selling
shareholder agreed to indemnify us against all liabilities caused by an untrue
statement or omission of material fact upon which we reasonably relied and that
was contained in any information furnished in writing to use by this selling
shareholder expressly for use in this registration statement.
On November 13, 1998, we entered into a registration rights agreement
with America Online Inc. pursuant to which we agreed to indemnify this selling
shareholder against any losses, claims, damages or liabilities relating to any
untrue statement of material fact or omission of material fact necessary to make
the statements not misleading. We are not required to indemnify the selling
shareholder for any liabilities for any statement made in reliance upon written
information furnished to the Company by the selling shareholder for the purpose
of preparing the registration statement. The selling shareholder agreed to
indemnify us against all liabilities caused by any untrue statement or omission
of material fact upon which we reasonably relied and that was contained in any
information furnished in writing to us by this selling shareholder expressly for
use in the registration statement.
19
<PAGE>
Experts
The consolidated financial statements of HealthAxis Inc and
Subsidiaries as of December 31, 1999 and 1998 and for each of the three years in
the period ended December 31, 1999 incorporated by reference in this
Registration Statement on Form S-3 have been audited by BDO Seidman, LLP,
independent certified public accountants, to the extent and for the periods set
forth in their report incorporated herein by reference, and are incorporated
herein in reliance upon such report given upon the authority of said firm as
experts in accounting and auditing.
The consolidated financial statements of Insurdata Incorporated and
Subsidiaries at December 31, 1998 and 1999 and for each of the three years in
the period ended December 31, 1999 included in HAI's Form 8- K/A filed with the
SEC on April 20, 2000, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given on the authority of such
firm as experts in accounting and auditing.
Legal Matters
Stradley Ronon Stevens & Young, LLP, Philadelphia, Pennsylvania, will
give its opinion as to the validity of the shares of common stock offered by the
shareholders selling common stock under this prospectus.
Where You Can Find More Information
We file annual, quarterly and special reports, proxy statements and
other information with the SEC under the Securities Exchange Act. You may read
and copy any reports, statements and other information we file with the SEC at
the SEC's public reference room at 450 Fifth Street, NW, Washington, D.C., 20549
and at the SEC's regional offices in Illinois and New York. You may obtain
information on the operation of the public reference rooms by calling the SEC at
1-800-SEC-0330. Our SEC filings are also available on the SEC's Internet site
(http://www.sec.gov). You may also inspect our SEC filings and other information
concerning HealthAxis Inc. at the offices of the Nasdaq National Market, 1735 K
Street, NW, Washington, D.C. 20006-1500.
We have filed a registration statement on Form S-3 to register the
shares of common stock offered under this prospectus. This prospectus is a part
of the registration statement on Form S-3 and constitutes our prospectus as
allowed by SEC rule. This prospectus does not contain all the information you
can find in the registration statement on Form S-3 or the exhibits to the
registration statement on Form S-3.
The SEC also allows us to "incorporate by reference" the information we
file with the SEC, which means we can disclose information to you by referring
you to another document filed separately with the SEC. Information incorporated
by reference is deemed to be part of this prospectus. Later information filed by
us with the SEC updates and supersedes this prospectus.
This prospectus incorporates important business and financial
information about HealthAxis Inc. that is not included in or delivered with this
prospectus. Copies of any of that information are available without charge to
any person to whom this prospectus is delivered, upon written or oral request.
Written requests for those documents should be directed to the Secretary,
HealthAxis Inc., 2500 DeKalb Pike, East Norriton, PA 19401, and telephone
requests may be directed to Mr. Steven Kaplan at (610) 279-2500.
20
<PAGE>
We incorporate by reference the documents listed below which we
previously filed with the SEC and all amendments to such documents:
1. Our annual report on Form 10- K/A for the year ended December
31, 1999, which we filed on December 19, 2000.
2. Our quarterly report on Form 10-Q/A for the three months ended
March 31, 2000, which we filed on December 19, 2000.
3. Our quarterly report on Form 10-Q/A for the six months ended
June 30, 2000, which we filed on December 19, 2000.
4. Our quarterly report on Form 10-Q/A for the quarter ended September
30, 2000, which we filed on December 19, 2000.
5. Our current report on Form 8-K reporting the consummation of
the merger of Insurdata Incorporated with and into HealthAxis
which we filed on January 21, 2000, and amendment on Form
8-K/A, filed on February 17, 2000.
6. Our current report on Form 8-K reporting the execution of the
reorganization and merger agreement between HAI, HealthAxis
and a wholly owned subsidiary of HAI and the amendment to
HAI's amended and restated Articles of Incorporation changing
the name of the company from Provident American Corporation to
HealthAxis Inc., which we filed on February 1, 2000.
7. Our current report on Form 8-K containing the audited
financial statements of Insurdata Incorporated which we filed
on April 3, 2000, and the amendment to the current report on
Form 8-K/A, filed on April 20, 2000.
8. Our current report on Form 8-K reporting the sale of certain assets
related to HealthAxis' retail insurance website to Digital
Insurance, Inc., which we filed on July 20, 2000.
9. Our current report on Form 8-K reporting progress of the
reorganization with HealthAxis which we filed on September 18,
2000.
10. Our current report on Form 8-K reporting the execution of the
amended and restated reorganization and merger agreements with
HealthAxis, the amendment to the securities purchase agreement
related to HAI's 2% convertible debentures and warrants and
the termination of the employment agreement with HAI's
chairman, which we filed on October 11, 2000.
11. Our current report on Form 8-K reporting the consummation of the
sale of certain assets related to HealthAxis' retail website to
Digital Insurance, Inc., which we filed on October 27, 2000.
12. Our current report on Form 8-K reporting management changes, which
we filed on January 3, 2001.
21
<PAGE>
13. Our current report on Form 8-K reporting the completion of the
reorganization, which we filed with the SEC on January __, 2001.
All documents we file with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act after the date of this prospectus until
this offering is completed will be deemed to be incorporated by reference in
this prospectus and to be a part of this prospectus from the date that document
is filed.
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. The shareholders selling
common stock under this prospectus will not make an offer of their shares in any
state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front page of this prospectus. Our business, financial condition, results of
operations and prospects may have changed since that date.
22
<PAGE>
================================================================================
5,180,864 Shares
HEALTHAXIS INC.
Common Stock
--------------
PROSPECTUS
--------------
The date of this Prospectus is _________, 2001
================================================================================
<PAGE>
PART II
Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses in connection
with the issuance and distribution of the securities being registered, all of
which are being borne by the Registrant.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee.................... $11,487*
-------
Accounting Fees and Expenses........................................... 25,000**
-------
Legal Fees and Expenses................................................ 20,000**
-------
Printing and Engraving Expenses........................................ 5,000**
-------
Blue Sky Fees and Expenses............................................. 0**
-------
Total.................................................... $61,487**
=======
</TABLE>
-------------------
* Actual
** Estimated
Item 15. Indemnification of Directors and Officers.
Sections 1741-1743 of the Pennsylvania Business Corporation Law of
1988, as amended (the "BCL"), the law of the Commonwealth in which the
Registrant is organized, requires a corporation, subject to limitations, to
indemnify its officers and directors against expenses, including attorneys'
fees, judgments, fines and certain settlements, actually and reasonably incurred
by them in any suit or proceeding to which they are parties, as long as they
acted in good faith and in a manner they reasonably believed to be in, or not
opposed to, the best interests of the corporation, and with respect to a
criminal action or proceeding, as long as they had no reasonable cause to
believe their conduct to be unlawful. The Registrant's By-laws provide that the
Registrant shall indemnify the Registrant's officers and directors against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement, actually and reasonably incurred by them in any action or
proceeding, whether criminal, civil, administrative or investigative, to which
they are a party, except in any case where the act or failure to act giving rise
to the claim for indemnification is determined by a court to have constituted
willful misconduct or recklessness.
The By-laws of the Registrant also contain certain provisions,
permitted by the BCL, which eliminate the personal liability of directors of the
Registrant to others, including the Registrant and the Registrant's
shareholders, for money damages relating to any action taken or omitted to be
taken by the director, unless the director breached or failed to perform his
duties in good faith, in a manner he reasonably believed to be in the best
interests of the Registrant and with such care, including reasonable inquiry,
skill and diligence, as a person or ordinary prudence would use under similar
circumstances, and such failure constituted self-dealing, willful misconduct or
recklessness. In effect, the By-laws eliminate
II-1
<PAGE>
the liability of the Registrant's directors for negligent and grossly negligent
business decisions. Such elimination of directors' monetary liability limits the
ability of the Registrant and the Registrant's shareholders to bring claims
against directors of the Registrant.
The Registrant maintains an insurance policy that insures the
Registrant's officers and directors against losses arising from claims brought
against them for any negligent act, error, omission, breach of duty,
misstatement or other act while acting in their capacities as officers or
directors. The policy includes certain standard coverage exclusions and
deductibles.
Item 16. Exhibits.
5.1 Opinion of Stradley Ronon Stevens & Young, LLP.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Stradley Ronon Stevens & Young, LLP (included in Exhibit
5.1).
24.1 Power of Attorney of certain signatories (included on the signature
page).*
--------------
*Previously filed.
Item 17. Undertakings.
(a) 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:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the SEC pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in
this Registration Statement;
(iii) 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.
II-2
<PAGE>
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this
section do not apply if the registration statement is on Form S-3, Form S-8 or
Form F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with or
furnished to the SEC by the Registrant pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, 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.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) 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.
(c) 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 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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused this Amendment
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of East Norriton, Commonwealth of
Pennsylvania on December 29, 2000.
HEALTHAXIS INC.
By: /s/ Michael Ashker
------------------------------------
Michael Ashker, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment to the Registration Statement has been signed by the following
persons on December 29, 2000 in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title
---- -----
<S> <C>
/s/ Michael Ashker President and Chief Executive Officer
------------------------------------ (principal executive officer)
Michael Ashker
/s/ Anthony R. Verdi Chief Operating Officer , Chief Financial
------------------------------------ Officer and Treasurer (principal financial and
Anthony R. Verdi accounting officer)
*
------------------------------------ Chairman and Director
Alvin H. Clemens
*
------------------------------------ Director
Harold M. Davis
*
------------------------------------ Director
*
------------------------------------ Director
Henry G. Hager
*
------------------------------------ Director
George W. Karr, Jr.
*
------------------------------------ Director
Edward W. LeBaron, Jr.
*
------------------------------------ Director
Theophile J. Mignatti, Jr.
*
------------------------------------ Director
*
------------------------------------ Director
P. Glenn Moyer
By: /s/ Michael Ashker
--------------------------------- Attorney-in-Fact
Michael Ashker
</TABLE>
<PAGE>
Exhibit Index
Number
5.1 Opinion of Stradley Ronon Stevens & Young, LLP.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Stradley Ronon Stevens & Young, LLP (included in
Exhibit 5.1).
24.1 Power of Attorney of certain signatories (included on the signature
page).*
--------------
*Previously filed.
