As filed with the Securities and Exchange Commission on May 8, 1998
File No. 333-________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
IMAGING DIAGNOSTIC SYSTEMS, INC.
(Name of Small Business Issuer in its charter)
Florida 22-2671269
(State or other jurisdiction of (IRS Employer Indet. No.)
incorporation or organization)
6531 NW 18th Court, Plantation, Florida 33313
(Address of Principal Executive Offices and Zip code)
Issuer's telephone number: (954)581-9800
----------------
Professional Consulting Agreement
(Full title of the plan)
----------------
Linda B. Grable
6531 NW 18th Court
Plantation, Florida 33313
(Name and address of agent of service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED OFFERING PRICE OFFERING PRICE REGISTRATION FEE
PER SHARE
<S> <C> <C> <C> <C>
Common Stock 200,000 $0.71(1) $142,000(1) $103.41
(no par value)
TOTAL 200,000 $0.71 $142,000 $103.41
</TABLE>
- --------------------------
(1) Pursuant to Rule 457(h)(1)and (c), the average of the the bid and asked
price of the Registrant's Common Stock in the over-the-counter market on May 7,
1998, was $0.71.
<PAGE>
IMAGING DIAGNOSTIC SYSTEMS, INC.
CROSS REFERENCE SHEET REQUIRED BY ITEM 501(b) OF REGUALTION S-K
Form S-8 Number and Caption Caption in Prospectus
1. Forepart of Registration Facing page of Registration
Statement and Outiside Statement and Cover Page of
Cover Page Prospectus
2. Inside Front and Outside Inside Cover Page of
Back Cover Pages of Prospectus and Outside
Prospectus Cover Page of Prospectus
3. Summary Information, Risk Not Applicable
Factors and Ratio of
Earnings to Fixed Charges
4. Use of Proceeds Not Applicable
5. Determination of Offering Not Applicable
Price
6. Dilution Not Applicable
7. Selling Security Holders Sales by Selling Security
Holder
8. Plan of Distribution Cover Page of Prospectus
and Sales by Selling
Security Holder
9. Description of Securities Description of Securities;
to be registered Grant of Options to Purchase
Stock; Service Agreement
10. Interests of Named Experts Not Applicable
and Counsel
11. Material Changes Not Applicable
12. Incorporate of Certain Incorporation of Certain
Information by Reference Documents by Reference
13. Disclosure of Commission Indemnification
Position on Indemnification
of Securities Act Liabilities
<PAGE>
PROSPECTUS
IMAGING DIAGNOSTIC SYSTEMS, INC.
200,000 Shares of Common Stock
(No par value)
To be Issued Pursuant to the Company's
Professional Consulting Agreement
This Prospectus is part of a Registration Statement which registers and
aggregate of 200,000 shares of Common Stock, no par value ("Common Stock") of
Imaging Diagnostic Systems, Inc. (the "Company") which will be issued, pursuant
to a Professioal Consulting Agreementi (the "Agreement"). The Company has been
advised by the service provider that they may sell all or a portion of its
shares of Common Stock from time to time in the over-the-counter market in
negotiated transactions, directly or through brokers or otherwise, and that such
shares will be sold at market prices prevailing at the time of such sales or at
negotiated prices.
No person has been authorized by the Company to give any information or to make
any representation other than as contained in the Prospectus, and if given or
made, such information or representation must not be relied upon as having been
authorized by the Company. Neither the delivery of this Prospectus nor any
distribution of the shares of Common Stock shall, under any circumstances,
create any implication that there has been no change in the affairs of the
Company since the date hereof.
-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SECURITIES IN ANY STATE TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH STATE.
The date of this Prospectus is May 8, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements, and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed with the Commission can be inspected and copied at
the public reference facilities of the Commission at 450 Fifth Street, NW.,
Washington, D.C. 20549. Copies of this material can also be obtained at
prescribed rates from the Public Reference Section of the Commission at its
principal office at 450 Fifth Street, NW., Washington, D.C. 20549. The Company's
Common Stock is traded the NASDAQ Electronic Bulletin Board under the symbol
"IMDS".
The Company has filed with the Commission a Registration Statement on form S-8
(the Registration Statement") under the Securities Act of 1933, as amended (the
"Act"), with respect to an aggregate of 200,000 shares of the Company's Common
Stock, to be issued to a consultant to the Company pursuant to a Professional
Consulting Agreement. This Prospectus, which is Part I of the Registration
Statement, omits certain information contained in the Registration Statement.
For further information with respect to the Company and the shares of Common
Stock offered by this prospectus, reference is made to the Registration
Statement, including the exhibits thereto. Statements in this Prospectus as to
any document are not necessarily complete, and where any such document is an
exhibit to the Registration Statement or is incorporated by reference herein,
each such statement is qualified in all respects by the provisions of such
exhibit or other document, to which reference is hereby made, for a full
statement of the provisions thereof. A copy of the Registration Statement, with
exhibits, may be obtained from the Commission's office in Washington, D.C. (at
the above address) upon payment of the fees prescribed by the rules and
regulations of the Commission, or examined there without charge.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Securities and Exchange
Commission are incorporated herein by reference and made a part hereof:
1. The Company's Form 10-QSB dated November 14, 1997
2. The Company's Forms 8-KSB dated October 15, 1997, January 12,
1998, February 13, 1998, February 19, 1998, and March 6, 1998.
3. The Company's Form 10-KSB dated September 26,1997;
<PAGE>
4. The Company's 1997 Proxy Statement dated September 7, 1997;
5. The Company's Registration Statement on Form S-1, as amended,
dated July 25, 1997;
6. All reports and documents filed by the Company pursuant to
Section 13, 14, or 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated by
reference herein and to be a part hereof from the respective date
of filing of such documents. Any statement incorporated by
reference herein shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document,
which also is or is deemed to be incorporated by reference
herein, modifies or supersedes such statement. Any statement
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute part of this Prospectus. The Company
hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of the Prospectus
has been delivered, or the written request of any such person, a
copy of any and all of the documents referred to above which have
been or may be incorporated by reference in this Prospectus,
other than exhibits to such documents. Written requests for such
copies should be directed to Corporate Secretary, Imaging
Diagnostic Systems, Inc., 6531 NW 18th Court, Plantation, Florida
33313. Telephone (954)581-9800.
THE COMPANY
General
Imaging Diagnostic Systems, Inc.(the "Company") is a developmental stage
company. Since its inception (December 10, 1993), the Company has been engaged
in the research and development of its cancer detection technology and
developing, for commercial application its Computed Tomography Laser Mammography
(CTLM(TM))device.
The CTLM is a device for detecting breast cancer through the skin in a
non-invasive and objective procedure. The CTLM employs a high-speed femto-second
pulsed titanium sapphire laser and proprietary scanning geometry and
reconstruction algorithms to detect and analyze masses in the breast for indicia
of malignancy or benignancy. The combination and incorporation of the foregoing
components into a device provide for enhanced diagnostic capabilities which the
company believes are superior to standard mammography diagnostic tools such as
ultra-sound and
<PAGE>
mammography. Based upon the known optical properties of benign and malignant
tissues (whether and to what extent light is impeded as it passes through the
tissue and the measurement of the impedance), the CTLM device is designed to
provide both the physician and patient with immediate, on-site, objective
interpretation and determination of further clinical work-up. Accordingly, the
Company believes that the CTLM, will improve early diagnosis, reduce diagnostic
uncertainty and decrease the number of biopsies performed on benign lesions. In
addition, the CTLM(TM) device does not expose the patient to ionizing radiation
or the breast to painful compression. Which the Company believes are the
contributing factors that contribute to a portion of the patient population not
obtaining a conventional mammogram.
During the first year of operations, the Company researched the interaction
between high speed, rapid pulsed (Ti:Sapphire) laser technology and various
detection technologies associated with standard computed tomographic ("CT")
schemes. Using this research the Company developed the first prototype of the
CTLM(TM) able to create images of a breast. The Company refined various software
and hardware configurations and components of the prototype based on these first
images, and filed a patent in June 1995. During this period of time there were
further advances in laser technology effecting the size and stability of the
laser component. The Company capitalized upon these advances by purchasing a
laser package manufactured by Spectra-Physics, Inc. and incorporating it into
the CTLM(TM). On December 12, 1995, the Company had a preliminary meeting with
the Food and Drug Administration to discuss the approach the Company would need
to take to obtain marketing clearance for its CTLM(TM) device. The Company was
advised that it would need to submit for approval a pre-market approval
application ("PMA") in order to obtain marketing clearance for the device.
Further, the Company also needed to submit an investigational device exemption
("IDE") application to the FDA in order to commence human clinical trials of the
device. The Company submitted its IDE application on January 8, 1996, and it was
approved February 9, 1996. During calendar year 1996, among otherdevelopments,
the Company further refined the detection scheme and laser power configuration
in order to obtain substantially better image quality. In order to incorporate
the changes into the CTLM(TM) the Company was required to submit an amendment to
its IDE application. In November, 1996 the Company installed its first CTLM(TM)
device at the Strax Breast Diagnostic Center which was subsequestly removed.
On June 12, 1997, the Company was advised by patent counsel that the patent
filed June 5, 1995, "Diagnostic Tomographic Laser Imaging Apparatus" was granted
with 7 independent and 16 subordinate claims. The Company, purauant to an oral
agreement, has the right to use this patent. The Company is in the process of
finalizing a written licensing agreement.
<PAGE>
The competition for developing a commercial device utilizing computed tomography
techniques and laser technology is difficult to ascertain given the proprietary
nature of the technology. There are a significant number of academic
institutions involved in various areas of research involving "optical medical
imaging" which is a shorthand description of the technology the Company's
CTLM(TM) device utilizes. A brief list of the most prestigious of these
institutions includes the University of Pennsylvania, The City College of New
York, and University College London. Two of these institutions have granted
licenses on certain patented technologies to two companies: University of
Pennsylvania - Non-Invasive Technologies; City College of New York -
MediScience, Inc.
The market in which the Company intends to participate is highly competitive.
Many companies may succeed in developing products that are more effective or
less costly than the Company's products or such companies may be successful in
manufacturing and marketing their products than the Company. Physicians using
imaging equipment such as x-ray mammography equipment, ultrasound or high
frequency ultrasound systems, Magnetic Resonance Imaging (MRI) systems, and
thermography, diaphonography and transilluminational devices may be reluctant to
the CTLM(TM). Currently, mammography is the most popular choice for the
detection of breast cancer. The Company's ability to sell the CTLM(TM) device to
medical facilities will, in part, be dependent on the Company's ability to
demonstrate the clinical utility of the CTLMTM device as an adjunct to
mammography and physical examination as well as the CTLMTM's advantages over
other available diagnostic tests.
On March 19, 1998 the Company submitted the final Report for the Company's IDE
and several supplements thereafter. As of the date hereof the Company is
awaiting approval for the IDE. Also on March 19,1998 the Company met with
representatives of the FDA. The purpose of the meeting was to describe several
options to the Company's IDE and to get the FDA's perspective on these
approaches. It was decided that the Company will complete the first phase with
20 patient studies performed in-house and monitored by an Institutional Review
Board ("IRB") established by the Company. The information obtained from the
study will be submitted to the FDA to enable the Company to commence the second
phase at three unaffiliated clinical sites.
In April 1998 the Company appointed eight specialists in the fields of
Gynecology and Obstetrics, Mammography, breast surgery, Neurology and optics and
laser engineering to serve on the IRB.
To date, due to the necessity of complying with all applicable United States
government regulations, the Company has not completed the FDA required clinical
testing, obtained FDA approval or begun to market or sell the CTLMTM and
therefore has not generated revenues. The Company has obtained its working
capital soley from the sale of equity
<PAGE>
securities and may continue to do so until such time as it generates revenues
sufficient to meet its operating costs.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
Imaging Diagnostic Systems, Inc. (the "Company") is a developmental stage
company which, since inception, has been engaged in research and development of
its Computed Tomography Laser Mammography ("CTLM(TM)"). The CTLM(TM) is a
breast-imaging device for the detection of cancer, utilizes laser technology and
proprietary computer algorithms to produce three dimensional cross section slice
images of the breast. Due to the fact that the Company is in the last stages of
the development of its cancer detection technology and its CTLM(TM), it has not
yet engaged in any marketing or distribution of it products and therefore has
had no revenue from its operations.
The Company has incurred net losses since inception through December 31, 1997 of
approximately $18,531,094. The Company anticipates that loss from operations
will continue for at least the next year, primarily due to an anticipated
increase in marketing and manufacturing expenses associated with the
commercialization of the CTLM(TM) and other research and development activities.
There can be no assurances that the CTLM(TM) will achieve market acceptance or
that sufficient revenues will be generated from sales of the CTLM(TM) to allow
the Company to operate profitably.
RESULTS OF OPERATIONS
General and administrative expenses during the three months and six months ended
December 31, 1997, were $164,293 and $493,696, respectively, representing a
decrease of $42,856 and an increase of $218,224 for the corresponding periods
for 1997. The decrease during the three-month period ending December 31, 1997,
was primarily due to certain administrative costs associated with the move to
our new building in November of 1996.
Compensation and related benefits during the three months and six months ended
December 31, 1997, were $484,483 and $1,000,334, respectively, representing a
decrease of $82,665 and an increase of $120,316 for the corresponding periods
for 1997. This increase was primarily due to additional compensation expenses as
a result of the hiring of an additional 12 employees during the calendar year
1997.
BALANCE SHEET DATA
The Company's combined cash and cash equivalents totaled $575,084 as of December
31, 1997. This is an increase of $88,361 from $486,723 for
<PAGE>
the year ended June 30, 1997. On December 31, 1997, Imaging Diagnostic Systems,
Inc. finalized a private placement transaction resulting in $500,000 in equity
financing. See Item 5, Other Information.
The Company does not expect to generate a positive internal cash flow for at
least the next twelve (12) months due to the expected increase in spending for
research and development and the expected costs of commercializing its initial
product, the CTLM(TM) device.
Property and Equipment was valued at $3,338,312 as of December 31, 1997. The
overall gross increase of $156,080 is due primarily to the purchase of
additional laboratory equipment.
Prototype Equipment was valued as of December 31, 1997, at $1,648,216. This
represents an increase of $431,631 from $1,216,585 for the year ended June 30,
1997. This increase is due primarily to an increase in developmental activities
leading to the commercialization of the CTLM(TM) device.
LEGAL PROCEEDINGS.
None.
CHANGES IN SECURITIES.
Effective February 4, 1998, the Board of Directors amended the Articles of
Incorporation of the Company in order to designate a class of shares as Series E
Convertible Preferred. The Series E Preferred is non-voting, can be converted
into common stock of the Company and has rights and preferences that materially
limit or qualify the rights of the holders of registered common stock, including
a liquidation preference of $10,000 per share
Effective February 20,1998, the Board of Directors amended the Articles of
Incorporation of the Company in order to designate a class of shares as Series E
Convertible Preferred. The Series F Preferred is non-voting, can be converted
into common stock of the Company and has rights and preferences that materially
limit or qualify the rights of the holders of registered common stock, including
a liquidation preference of $10,000 per share
NASDAQ LISTING
On March 24, 1996, the Company filed its application with NASDAQ to be listed on
the Small Cap Market. The Company's request for listing was subsequently denied
after a hearing before the Listing Qualifications Panel (the "Panel"). The
denial was based upon the fact that one of the Company's outside shareholders
(the "Shareholder"), who had no
<PAGE>
influence over the Company, had a questionable background and owned a 5%
interest in the Company.
As a result, the Company appealed the denial decision to the NASDAQ Listing and
Hearing Review Committee (the "Committee") which on February 5, 1997, reversed
the decision of the Panel and stated in part the following:
"Accordingly, we recommend that the Panel's decision denying initial
inclusion be reversed and the case be remanded to the Staff with instructions to
implement the Company's proposal..."
The Company in fact, did implement its proposal and on March 12th, provided
NASDAQ with copies of all things necessary to satisfy any concerns that the
Panel had regarding the Shareholder. Prior to the time NASDAQ acted on the
proposal, Barrons published an inaccurate article stating that a NASDAQ
spokesman indicated that the listing would be denied. At all times up until the
date of this article the Company's stock traded at $3.00 and above. The article
had a predictable negative impact on the Company's stock and the price dropped
below $3.00, where it has stayed ever since the Barrons article, despite a
retraction from Barrons. Based upon this decline the NASDAQ staff has refused to
approve the Company for listing on the NASDAQ Small Cap Market.
The Company appealed the denial of the listing at an oral hearing before the
Committee in Washington D.C. on January 22, 1998. Pursuant to this meeting the
Panel determined to approve the Company for listing on the NASDAQ Small Cap
Market, subject to the following conditions:
1. On or before May 11, 1998, the Company must effect a reverse stock
split sufficient to raise its bid price to, or above $4.00 per share for the
opening of one trading day or in the alternative, on or before May 11, 1998, the
Company must have and retain for 10 consecutive trading days a $4.00 bid price
through natural forces.
2. On or before May 11, 1998, the Company must make a public filing
with the SEC and NASDAQ evidencing a minimum of $5,000,000 in net tangible
assets.
The Board of Directors determined that a reverse split at this time would be
detrimental to the interests of its shareholders and vetoed the proposal for the
reverse split. The conditional listing expires on May 11, 1998. To date the
Company has been unable to comply with the above conditions.
The Company immediately appealed this decision. The Company, as of the date
hereof, has not received a ruling in this matter.
<PAGE>
Patents
In December 1997, the patent for the CTLM(TM) was issued by the United States
Department of Commerce Patent and Trademark Office under Patent Number 5692311.
The Company holds an exclusive license for this patent. In addition, the Company
has twelve additional patents pending with regard to Optical Tomography.
Private Placements
On February 4,1998, the Company finalized a $500,000 private placement to
foreign investors of 50 shares of its Series E Convertible Preferred Stock ("the
"Preferred Shares") and Warrants to purchase up to 25,000 shares of the
Company's common stock. The offering was conducted pursuant to Regulation S as
promulgated under the Securities Act of 1933, as amended (the "Regulation S
Sale");
The Preferred Shares are convertible, at any time, commencing 45 days from the
date of issuance and for a period of three years thereafter, in whole or in
part, without the payment of any additional consideration. The number of fully
paid and nonassessable shares of common stock, no par value, of the Company to
be issued upon conversion will be determined by dividing (i) the sum of $10,000
by (ii) the Conversion Price (determined as hereinafter provided) in effect at
the time of conversion. The "Conversion Price" is equal to seventy five percent
(75%) of the Average Closing Price of the Corporation's Common Stock for the
five-day trading period ending on the day prior to the date of conversion but in
no event greater than $.82 per share.
In connection with the Regulation S Sale, the Company paid an unaffiliated
Investment Banker a total of 4 shares of the Preferred Stock and $5,000 for
placement and legal fees.
Net proceeds to the Company of $495,000 will be used for working capital and the
continuous research, development and testing of the Company's Computed
Tomography Laser Mammography (CTLM(TM)) device.
On February 20,1998, the Company finalized a $750,000 private placement to
foreign investors of 75 shares of its Series F Convertible Preferred Stock ("the
"Preferred Shares"). The Preferred Stock pays a dividend of 6% per annum. The
offering was conducted pursuant to Regulation S as promulgated under the
Securities Act of 1933, as amended (the "Regulation S Sale");
The Preferred Shares are convertible, at any time, commencing 45 days from the
date of issuance and for a period of three years thereafter, in whole or in
part, without the payment of any additional consideration.
<PAGE>
The number of fully paid and nonassessable shares of common stock, no par value,
of the Company to be issued upon conversion will be determined by dividing (i)
the sum of $10,000 by (ii) the Conversion Price (determined as hereinafter
provided) in effect at the time of conversion. The "Conversion Price" is equal
to seventy five percent (70%) of the Average Closing Price of the Corporation's
Common Stock for the five-day trading period ending on the day prior to the date
of conversion.
In connection with the Regulation S Sale, the Company paid an unaffiliated
Investment Banker a total of $50,000 for expenses and legal fees.
Net proceeds to the Company of $700,000 will be used for working capital and the
continuous research, development and testing of the Company's Computed
Tomography Laser Mammography (CTLM(TM)) device.
International Distribution
In April 1998, the Company entered into an exclusive International Distribution
with Focus Surgical LTD, to distribute the CTLM(TM) device to hospitals and
clinics throughout the United Kingdom and Ireland. The term os the Agreement is
three years, with a minimum purchase requirement of 10, 12 and 15 CTLM(TM)
devices in the first, second and third year(s) of the Agreement, respectively.
Focus Surgical currently distributes noncompetitive laser products for companies
such as Sunrise Medical Technologies and Baltec, among many others.
The Company has already secured exclusive distributors for the following
territories: Italy, France, South Korea, the Pacific Rim including China,
Switzerland, Moscow, Germany, Austria, the Republic of Turkey and Ecuador.
Based on its present research and development and supplier production schedules,
the Company anticipates that the CTLM(TM) device will be ready for distribution
this Summer.
FDA UPDATE
On March 19, 1998 the Company submitted the final Report for the Company's IDE
and several supplements thereafter. As of the date hereof the Company is
awaiting approval for the IDE. Also on March 19,1998 the Company met with
representatives of the FDA. The purpose of the meeting was to describe several
options to the Company's IDE and to get the FDA's perspective on these
approaches. It was decided that the Company will complete the first phase with
20 patient studies
<PAGE>
performed in-house and monitored by an Institutional Review Board ("IRB")
established by the Company. The information obtained from the study will be
submitted to the FDA to enable the Company to commence the second phase at three
unaffiliated clinical sites.
In April 1998 the Company appointed eight specialists in the fields of
Gynecology and Obstetrics, Mammography, breast surgery, Neurology and optics and
laser engineering to serve on the IRB.
FEDERAL INCOME TAX EFFECTS
A person who receives shares of the Company in exchange for services rendered
will recognize taxable income on the date of the reciept of the shares based on
the fair market value of the Common Stock.
RESTRICTIONS UNDER SECURITIES LAW
The sale of any shares of Common Stock must be made in compliance with federal
and state securities laws. Officers, directors and 10% or greater shareholders
of the Company, as well as certain other persons or parties whom may be deemed
"affiliates" of the Company under the Federal Securities Laws, should be aware
that shares acquired by affiliates are subject to certain resale limitation
imposed by Rule 144. Officers, directors and 10% or greater shareholders are
also subject to the "short swing" profit rule under Section 16(b) of the
Securities Exchange Act of 1934. Section 16(b) of the Exchange Act generally
provides that if any officer, director or 10% and greater shareholder sold any
Common Stock of the Company acquired pursuant to the exercise of a stock option,
he would generally be required to pay any "profits" resulting from the sale of
the stock and receipt of the stock option. Section 16(b) exempts all warrant
exercises from being treated as purchases and, instead, treats a warrant grant
as a purchase of an underlying security, which grant/purchase may be matched
with the sale of the underlying security within six months of the date of grant.
DESCRIPTION OF SECURITIES
The Company is currently authorized to issue up to 50,000,000 shares of stock of
which 48,000,000 shares are common stock no par value and 2,000,000 shares are
preferred, no par value. As of May 8, 1998, there were 29,533,942 shares of
common stock issued and outstanding. As of the Same Date, there were 450, 49, 40
and 75 shares of Series B,D,E and F, respectively,outstanding.
Common Stock
Subject to the dividend rights of holders of Preferred Stock, if any, holders of
shares of Common Stock are entitled to share, on a ratable
<PAGE>
basis, such dividends as may be declared by the Board of Directors out of funds
legally available therefor. Upon liquidation, dissolution or winding up of the
Company, after payment to creditors and holders of Preferred Stock that may be
outstanding, the assets of the Company will be divided pro rata on a per share
basis among the holders of the Common Stock.
Each share of Common Stock entitles the holders thereof to one vote. Holders of
Common Stock do not have cumulative voting rights. The By-laws of the Company
require that only a majority of the issued and outstanding shares of Common
Stock of the Company need be represented to constitute a quorum and to transact
business at a shareholder's meeting. The Common Stock has no preemptive,
subscription or conversion rights and is not redeemable by the Company.
Preferred Stock
The shares of preferred stock may be issued from time to time in series and that
the Board of Directors of the Corporation is authorized to establish and
designate series and to fix the number of shares and the relative voting,
dividend, conversion, liquidation, redemption, and other rights, preferences,
and limitations as between series, subject to such limitations as may be
prescribed by law; that the proper officers of the corporation are by this means
authorized to make, subscribe, acknowledge, execute, and file, or cause to be
filed, such certificate or certificates as may be required under the laws of the
state of New Jersey and other jurisdictions to give effect to the proposal, as
presented in the proxy statement, or as may be required in connection with the
issuance of shares of preferred stock in series from time to and things as in
its discretion may be necessary or advisable in connection with such proposal.
NASDAQ
The Company's Common Stock is traded on the NASDAQ electronic bulletin board
under the symbol "IMDS".
TRANSFER AGENT
The Transfer Agent for the shares of Common Stock is Jersey Transfer & Trust,
201 Bloomfield Avenue, Verona, New Jersey 07044, (201) 239-2712.
LEGAL MATTERS
Certain legal matters in connection with the securities being offered hereby
will be passed upon for the Company by Rebecca J. Del Medico, Esq., General
Counsel of the Company.
<PAGE>
EXPERTS
The financial statements of the Company appearing in Company's Form 10-KSB for
the period ended June 30, 1997, have been audited by Margolies,Fink and
Wichrowski, independent certified public accountants, as set forth in their
report thereon included therein and incorporated herein by reference. Such
financial statements are, and audited financial statements to be included in
subsequently filed documents will be, incorporated herein in reliance upon the
reports of Margolies, Fink, and Wichrowski pertaining to such financial
statements (to the extent covered by consents filed with the Securities and
Exchange Commission) given upon the authority of such firm as experts in
accounting and auditing.
INDEMNIFICATION
Article XII of the Company's By-Laws provides as follows:
1. So long as permitted by law, no director of the corporation shall be
personally liable to the corporation or its shareholders for damages for
breach of any duty owed by such person to the corporation or its
shareholders; provided, however, that, to the extent required by applicable
law, this Article shall not relieve any person from liability for any
breach of duty based upon an act or omission (i) in breach of such person's
duty of loyalty to the corporation or its shareholders, (ii) not in good
faith or involving a knowing violation of law or (iii) resulting in receipt
by such person of an improper personal benefit. No amendment to or repeal
of this Article and no amendment, repeal or termination of effectiveness of
any law authorizing this Article shall apply to or effect adversely any
right or protection of any director for or with respect to any acts or
omissions of such director occurring prior to such amendment, repeal or
termination of effectiveness.
2. So long as permitted by law, no officer of the corporation shall be
personally liable to the corporation or its shareholders for damages for
breach of any duty owed by such person to the corporation or its
shareholders; provided, however, that, to the extent required by applicable
law, this Article shall not relieve any person from liability for any
breach of duty based upon an act or omission (i) in breach of such person's
duty of loyalty to the corporation or its shareholders, (ii) not in good
faith or involving a knowing violation of law or (iii) resulting in receipt
by such person of an improper personal benefit. No amendment to or repeal
of this Article and no amendment, repeal or termination of effectiveness of
any law authorizing this Article shall apply to or effect adversely any
right or protection of any director for or with respect to any acts or
omissions of such officer
<PAGE>
occurring prior to such amendment, repeal or termination of effectiveness.
3. To the extent that a Director, Officer, or other corporate agent of this
corporation has been successful on the merits or otherwise in defense of
any civil or criminal action, suit, or proceeding referred to in sections
(a) and (b), above, or in defense of any claim, issue, or matter therein,
he shall be indemnified against any expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
4. Expenses incurred by a Director, Officer, or other corporate agent in
connection with a civil or criminal action, suit, or proceeding may be paid
by the corporation in advance of the final disposition of such action suit,
or proceeding as authorized by the board of directors upon receipt of an
undertaking by or on behalf of the corporate agent to repay such amount if
it shall ultimately be determined that he is not entitled to be
indemnified.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Company, the Company has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company 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
Company will, unless in the opinion of its legal 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 Act and will be governed by the final
adjudication of such issues.
<PAGE>
IMAGING DIAGNOSTIC SYSTEMS, INC.
PART II
INFORMATION REQUIRED FOR THE REGISTRATION STATEMENT
ITEM 3 - INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed in (1) through (3) below are incorporated by
reference in the Registration Statement. All documents subsequently filed by the
Company pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in the Registration Statement and to be part
thereof form the date of filing such documents.
(1) The Company's latest annual report filed pursuant to Section 13(a)
or 15(d) of the Exchange Act, or, in the case of the Company, either (1) the
latest prospectus filed pursuant to Rule 424(b) under the Securities Act of
1933, as amended (the "Act"), that contains audited financial statements for the
Company's latest fiscal year for which statement have been filed or (2) the
Company's effective registration statement on Form 10-SB or 30F filed under the
Exchange Act containing audited financail statements for the Company's latest
fiscal year.
(2) All reports and documents filed by the Company pursuant to Section
13(a), 14, or 15(d) of the Exchange Act. Written requests for such copies should
be directed to Corporate Secretary, Imaging Diagnostic Systems, Inc., 6531 NW
18th Court, Plantation, Florida 33313, telephone (954)581-9800.
(3) The description of the Common Stock of the Company which is
contained in a Registration Statement filed under the Exchange Act, inlcuding
any amendment or report filed for the purpose of updating such description.
ITEM 4 - DESCRIPTION OF SECURITIES
The class of securities to be offered hereby is registered under Section 12(g)
of the Securities Exchange Act of 1934, as amended. A description of the
Company's securities is set forth in the Registration Statment filed pursuant to
Form 10-SB: the Company registered common stock which is entitled to share, on a
ratable basis, such dividends as may be declared by the Board of Directors out
<PAGE>
of funds legally available therefor. Each share of common stock entitles the
holders thereof to one vote. Holders of common stock do not have cumulative
voting rights nor does the common stock have preemptive, subscription nor
conversion rights and is not redeemable by the Registrant.
ITEM 5 - INTERESTS OF NAMED EXPERTS OR COUNSEL
Not Applicable
ITEM 6 - INDEMNIFICATION
Article XII of the Company's By-Laws provides as follows:
1. So long as permitted by law, no director of the corporation shall be
personally liable to the corporation or its shareholders for damages for breach
of any duty owed by such person to the corporation or its shareholders;
provided, however, that, to the extent required by applicable law, this Article
shall not relieve any person from liability for any breach of duty based upon an
act or omission (i) in breach of such person's duty of loyalty to the
corporation or its shareholders, (ii) not in good faith or involving a knowing
violation of law or (iii) resulting in receipt by such person of an improper
personal benefit. No amendment to or repeal of this Article and no amendment,
repeal or termination of effectiveness of any law authorizing this Article shall
apply to or effect adversely any right or protection of any director for or with
respect to any acts or omissions of such director occurring prior to such
amendment, repeal or termination of effectiveness.
2. So long as permitted by law, no officer of the corporation shall be
personally liable to the corporation or its shareholders for damages for breach
of any duty owed by such person to the corporation or its shareholders;
provided, however, that, to the extent required by applicable law, this Article
shall not relieve any person from liability for any breach of duty based upon an
act or omission (i) in breach of such person's duty of loyalty to the
corporation or its shareholders, (ii) not in good faith or involving a knowing
violation of law or (iii) resulting in receipt by such person of an improper
personal benefit. No amendment to or repeal of this Article and no amendment,
repeal or termination of effectiveness of any law authorizing this Article shall
apply to or effect adversely any right or protection of any director for or with
respect to any acts or omissions of such officer occurring prior to such
amendment, repeal or termination of effectiveness.
3. To the extent that a Director, Officer, or other corporate agent of
this corporation has been successful on the merits or otherwise in defense of
any civil or criminal action, suit, or proceeding referred
<PAGE>
to in sections (a) and (b), above, or in defense of any claim, issue, or matter
therein, he shall be indemnified against any expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.
4. Expenses incurred by a Director, Officer, or other corporate agent
in connection with a civil or criminal action, suit, or proceeding may be paid
by the corporation in advance of the final disposition of such action suit, or
proceeding as authorized by the board of directors upon receipt of an
undertaking by or on behalf of the corporate agent to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Company, the Company has been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company 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 Company will, unless in the opinion of its
legal 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 Act and will be governed by the
final adjudication of such issues.
ITEM 7 - EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8 - EXHIBITS
Exhibit Description
(4)(i) Incorporated by reference from the Company's Registration
Statement on Form 10-SB dated May 4, 1995, Form S-1, as amended,
dated July 25, 1997; the Company's Forms 8-KSB dated October 15,
1997, January 12, 1998, February 13, 1998, February 19, 1998, and
March 6, 1998.
(5) Opinion dated May 8, 1998, of Rebecca J. Del Medico Esq.
relating to the issuance of shares of Common Stock pursuant to
the Professional consulting Agreement.
<PAGE>
(23) Consent of Rebecca J. Del Medico, Esq. included in the opinion
filed as exhibit (5) hereto.
(23.1) Consent of Independent Certified Public Accountants.
ITEM 9 - UNDERTAKINGS
(1) The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offerings 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;
(b) That, for the purposes of determining any liability under the
Act, each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof; and,
(c) 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.
(2) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 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 the time shall be deemed to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities under the 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 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than payment by the Registration 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 Act and will be governed by the final adjudication of
such issue.
<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
of the requirements for filing Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Plantation and the State of Florida, on the 11th day
of May, 1998.
IMAGING DIAGNOSTIC SYSTEMS, INC.
By: /s/ Linda B. Grable
-------------------
Linda B. Grable
Chairman of the Board,
Director, and President.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
By: /s/ Linda B. Grable
-------------------
Linda B. Grable
Chairman of the Board and President
Dated: May 11, 1998
By: /s/ Allan L. Schwartz
--------------------
Allan L. Schwartz
Director,Executive Vice-President
And Chief Financial Officer
Dated: May 11, 1998
<PAGE>
EXHIBIT (5)
IMAGING DIAGNOSTIC SYSTEMS, INC.
[Letterhead of Registrant]
May 8, 1998
Imaging Diagnostic Systems, Inc.
6531 N.W. 18th Court
Plantation, FL 33313
Re: Registration Statement on Form S-8/Professional Consulting Agreement
Gentleman:
This opinion is submitted pursuant to applicable rules of the Securities and
Exchange Commission with respect to the registration by Imaging Diagnostic
Systems, Inc. (the "Company") of an aggregate of 200,000 shares of Common Stock,
no par value (the "Common Stock") pursuant to the Professioal Consulting
Agreement (the "Agreement").
In my capacity as general counsel to the Company, I have examined the original,
certified, conformed, or other copies of the Plan, the Company's Certificate of
Incorporation, By-Laws and corporate minutes provided to me by the Company. In
all such examinations, I have assumed the genuineness of all signatures on
original documents, and the conformity to originals or certified documents of
all copies submitted to us as conformed, photostat or other copies. In passing
upon certain corporate records and documents of the Company, we have necessarily
assumed the correctness and completeness of the statements made or included
therein by the Company, and we express no opinion thereon.
Based upon and in reliance of the foregoing, I am of the opinion that the Common
Stock, when issued in accordance with the terms and conditions of the Agreement,
will be validly issued, fully paid and non-assessable.
I hereby consent to the use of this opinion in the Registration Statement on
Form S-8 to be filed with the Commission.
/s/ Rebecca J. Del Medico
- ------------------------
Rebecca J. Del Medico
General Counsel
<PAGE>
EXHIBIT
IMAGING DIAGNOSTIC SYSTEMS, INC.
(23) Consent of Rebecca J. Del Medico, Esq. included in the opinion
filed as exhibit (5) hereto.
<PAGE>
EXHIBIT (23.1)
IMAGING DIAGNOSTIC SYSTEMS, INC.
Consent of Independent Certified Public Accountants.
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of our report dated August 6, 1997,
which appears on page F-1 of our financial statements included in the
Imaging Diagnostic Systems, Inc. Form 10-KSB dated September 26, 1997
/S/ Margolies, Fink and Wichrowski
----------------------------------
MARGOLIES, FINK AND WICHROWSKI
Pompano Beach, Florida
May 8, 1998
<PAGE>
EXHIBIT 99
PROFESSIONAL CONSULTING AGREEMENT
<PAGE>
PROFESSIONAL CONSULTING AGREEMENT
THIS PROFESSIONAL CONSULTING AGREEMENT is made this 8th day of May,
1998, by and between JCG Inc. ("Consultant"), and Imaging Diagnostic Systems,
Inc. ("Client"), a Florida corporation with principal offices located at 6531 NW
18th Court, Plantation, Florida 33313.
WHEREAS, Consultant renders corporate, finance and public relations
services designed to heighten public awareness of the business conducted and
performance results achieved by specified companies, which services consist
primarily of organizing, assembling and presenting information provided to the
Consultant by the company in a format which profiles the company and which is
conducive to dissemination in appropriate information channels and networks, and
disseminating such information; and
WHEREAS, Consultant employs Steven Daiagi and Client wishes to enlist
Steve Daiagi, through Consultant, to provide such services, and to distribute
such information and Consultant and Client wish to formalize in a written
agreement the terms and conditions under which consultant will provide such
services to Client;
NOW, THEREFORE, for the mutual promises and other consideration
described herein, the parties hereto agree as follows:
1. Information to be Furnished by Client. Client shall furnish
Consultant with current public information about Client, including any and all
statements and reports filed by Client with the United States Securities and
Exchange Commission, its most recent Annual Report to Shareholders and shall
also provide any other public information reasonable requested by Consultant
("Client Information"). Client shall not provide to Consultant any confidential
or nonpublic information concerning Client, and any and all information
concerning Client provided to Consultant by Client shall be deemed
non-confidential and public.
2. Services to be Provided by Consultant. Consultant shall provide the
following services to Client on an as needed basis:
a. The implementation of short range and long term strategic planning
to fully develop and enhance the Company's image and its assets, resources,
products and services;
b. The implementation of a program to assist the Company in promoting
the image of the Company and its business and services;
c. Assist the Company in the monitoring of services provided by the
Company's advertising firm, public relations firm and other professionals
retained or to be employed by the Company;
d. Advise the Company relative to the continued development of a
stockholder relations program and to stimulate interest in the Company by
institutional investors and other members of the financial community;
e. Advise the Company relative to the recruitment and retention of
consultants and others consistent with the expansion of operations of the
Company;
f. Assist the Company in long-term financial planning, corporate
reorganization and expansion;
g. Perform such other lawful consulting and advisory services relating
to such aspects of the Client, its management, operation and development or
otherwise as the principal executive, financial, sales and/or operating
officer(s) of the Client may reasonably request consistent with the provisions
of this Agreement (hereafter collectively referred to as the "Services").
<PAGE>
h. Notwithstanding anything herein to the contrary, Consultant shall
not provide services in connection with the offer or sale of securities or other
capital-raising transactions.
Consultant will provide such assistance on an as-needed basis at the
request of the Company's chief executive officer or other officers. Consultant
will respond to all telephone calls from the aforementioned persons within a
time period of 24 hours from the time the call was placed. In addition,
Consultant will attend board of directors' and committee meetings as a guest and
meet with management from time to time, if requested by the Company to do so.
3. Compensation for Services. In consideration of Consultant's
providing the services described in paragraph 2, Client's Board of Directors
shall authorize the issuance of 200,000 shares of the Company's Common stock to
be registered pursuant to an S-8 Registration Statement.
4. Term and Termination. This Agreement shall become effective as of
the date written above, and shall remain in effect until May 8, 1999
("Expiration Date"). Client and Consultant may mutually agree to extend the
Agreement for an additional period. In the absence of such an agreement, this
Agreement shall automatically terminate upon the Expiration Date.
In addition to any other remedy available at law or in equity, in the event of
any breach of this agreement by Consultant, the number of shares to be retained
by Consultant shall be based upon 200,000 times a fraction whose numerator is
the number of days after the date hereof and whose denominator is 365. All
remaining shares shall be immediately returned to the Company for cancellation;
The parties hereto agree and acknowledge that inducement for Client to enter
into this Agreement is the fact that Steve Daiagi will be providing services to
Client on Consultants behalf. If Steve Daiagi is unable by reason of death or
disability to perform the Services, it shall be treated as a breach by
Consultant. For the purpose of this agreement, disability shall be defined as
the inability to perform the duties set forth in this agreement because of
physical or mental illness or injury and the inability to perform such duties
for 30 consecutive days.
5. Reimbursement for Expense, Fees. Consultant shall bear all of its
expenses and costs without reimbursement from Client. Consultant shall not
receive any finders' fees, commissions or other remuneration in connection with
any transaction it assists the Company with during the term of this Agreement.
6. Representations and Warranties.
a. Consultant represents and warrants that services to be provided and
materials to be produced or developed by Consultant under this Agreement will be
performed, produced or developed by competent, trained personnel in a
workmanlike manner. Consultant and its personnel shall comply with all
applicable statues, rules and regulations governing all aspects of the services
to be performed under this Agreement; provided that, as described in paragraph 1
of this Agreement, Client shall be fully responsible to assure all Client
Information is accurate and complete. Client understands and acknowledges that
Consultant cannot guarantee that the services provided hereunder will achieve
any particular objective or fulfill any specified goals. Client further
understands and acknowledges that Consultant is not registered or licensed as an
investment advisor, financial planner, or broker/dealer, nor is Consultant
licensed as principal or representative of any of the foregoing and that, by
entering into this Agreement, Consultant is not undertaking to provide, nor will
Consultant provide, any services that require any such registration or
licensing. OTHER THAN THE FOREGOING EXPRESS WARRANTIES, CONSULTANT MAKES NO
WARRANTIES WITH RESPECT TO THE QUALITY OF THE GOODS AND SERVICES TO BE PROVIDED
HEREUNDER OR ANY RESULTS TO BE ACHIEVED, AND HEREBY EXPRESSLY DISCLAIMS THE
EXISTENCE OF ANY SUCH REPRESENTATIONS AND WARRANTIES, INCLUDING WITHOUT
LIMITATION AND IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. CONSULTANT SHALL HAVE NO LIABILITY FOR ANY INDIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES SUFFERED BY CLIENT AS A RESULT OF ANY
FAILURE ON THE PART OF CONSULTANT IN THE PERFORMANCE OF ITS DUTIES HEREUNDER.
<PAGE>
b. In order to induce the Company to issue the Shares, recognizing that
the Company will be relying on the information and on the representations set
forth below, you hereby represent, warrant and agree as follows:
(i) I have determined that the purchase of the shares of the
Company (the "Shares") is a suitable investment for me and that I am a
person who is able to bear economic risks including a total loss of an
investment in the Shares.
(ii) I am purchasing the Shares for my own account for
investment, and not with a view to or for sale in connection with the
distribution of the Shares nor with any present intention of selling or
otherwise disposing of all or any part of the Shares. I hereby
acknowledge my understanding that the Shares are not being registered
under the Securities Act of 1933 (the "Act"), or any state securities
laws on the ground that the issuance and sale of the Shares to me is
exempt under the Act and relevant state securities laws as not
involving a public offering. I agree not to sell the Shares unless they
are subsequently registered or an exemption from such registration is
available. I authorize the Company to place a legend denoting the
restrictions on the certificates to be issued.
I further acknowledge my understanding that the Company's reliance on
such exemptions are, in part, based upon the foregoing representations,
warranties, and agreements by me and that the statutory basis for such
exemptions would not be present, if notwithstanding such
representations, warranties and agreements, I was acquiring the Shares
for resale on the occurrence or non-occurrence of some pre-determined
event. In order to induce the Company to issue and sell the Shares to
me, it is agreed that the Company will have no obligation to recognize
the ownership, beneficial or otherwise, of such shares by anyone but
me, except as set forth herein.
(iii) I acknowledge and am aware that, except as set forth
herein, the Investor will not transfer or assign the Option, the
Shares, or any interest therein; the assignment and transferability of
the Option and the Shares will be governed by this Agreement and all
applicable laws.
(iv) I have acknowledge and am aware that except for the three
day rescission rights provided under Florida law (or other rights under
other applicable law), I am is not entitled to cancel, terminate or
revoke this subscription, and any agreements of mine in the connection
herewith shall survive my death or disability.
(v) I have had the opportunity to ask questions of, and
receive answers from management of the Company regarding the terms and
conditions of this Agreement, and the transactions contemplated
thereby, as well as the affairs of the Company and related matters.
I may have access to whatever additional information concerning the
Company, its financial condition, its business, its prospects, its
management, its capitalization, and other similar matters that I or my
purchaser representative, if any, desires, provided that the Company
can acquire such information without unreasonable effort or expense. In
addition, as required by ss.517.061(11)(a)(3), Florida Statutes, and
Rule 3E-500.05(a) thereunder, I and my purchaser representative may
have, at the offices of the Company, at any reasonable hour, after
reasonable prior notice, access to the materials set forth in the Rule
which the Company can obtain without unreasonable effort or expense.
(vi) I have had the opportunity to obtain additional
information necessary to verify the accuracy of the information
referred to in subparagraph (e) hereof.
I hereby agree to indemnify and hold harmless the Company its
respective officers, directors, shareholders, employees, agents and attorneys
against any and all losses, claims, demands, liabilities and expenses (including
reasonable attorney fees, expert witness and accounting fees and other
disbursements and costs or other expenses) incurred by each such person in
connection with defending or investigating any such claims or liabilities,
whether or not resulting in any liability to such person) to which any such
indemnified party may become subject under the Act, under any other statute, at
<PAGE>
common law or otherwise, insofar as such losses, claims, demands, liabilities
and expenses (a) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in this Agreement, or (b) arise
out of or are based upon any breach of any representation, warranty or agreement
contained herein.
- --------------------------------------------------------------------------------
The representations, warranties and agreements contained herein shall
survive the delivery of, and payment for, the Shares.
FLORIDA LAW PROVIDES THAT WHEN SALES ARE MADE TO FIVE OR MORE PERSONS IN
FLORIDA, ANY SALE MADE IN FLORIDA IS VOIDABLE BY THE PURCHASER WITHIN THREE DAYS
AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE
COMPANY, AN AGENT OF THE COMPANY OR AN ESCROW AGENT OR WITHIN THREE DAYS AFTER
THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER
OCCURS LATER. PAYMENTS FOR TERMINATED SUBSCRIPTIONS VOIDED BY PURCHASERS AS
PROVIDED FOR IN THIS PARAGRAPH WILL BE PROMPTLY REFUNDED WITHOUT INTEREST.
- --------------------------------------------------------------------------------
7. Miscellaneous.
a. This Agreement shall be interpreted and construed in accordance with
the laws of the State of Florida. The parties agree that jurisdiction and venue
of any dispute arising hereunder shall be in Broward County, Florida.
b. Any controversy or claim arising out of or relating to this
Agreement, or to the interpretation, breach or enforcement thereof, shall be
submitted to one arbitrator and settled by arbitration in Fort Lauderdale
Florida, in accordance with the rules, then obtaining, of the American
Arbitration Association. Any reward made by such arbitrator shall be final,
binding and conclusive on all parties hereto for all purposes, and judgment may
be entered thereon in any court having jurisdiction thereof.
c. Neither party may assign its rights or duties under this Agreement
without the express prior written consent of the other party, except that
Consultant may assign to any other party, without Client's consent, its right to
receive all or any portions of the fees and expenses due and owing to it.
d. This Agreement contains the entire understanding of the parties with
respect to the subject matter hereof. The terms of this Agreement may be altered
only by written agreement between the parties. The failure of either party to
object to or take affirmative action with respect to any conduct of the other
which is in violation of the terms of this Agreement shall not be construed as a
waiver of the violation or breach, or of any future similar violation or breach.
e. In the event of any cause of action, arbitration or litigation
arising hereunder, all costs and reasonable attorney's fees of the prevailing
party, including, without limitation, attorney's fees and costs at all
administrative and appellate levels and in all bankruptcy proceedings, shall be
paid by the non-prevailing party.
f. This Agreement may be executed in any number of counterparts, all of
which shall be deemed to be an original, but all of which shall be deemed to
constitute but one instrument.
IN WITNESS WHEREOF, the parties hereto have set their hands the day and
year first above written.
Imaging Diagnostic Systems, Inc.
By: /s/ Linda B. Grable, President
---------------------------------
JCG, Inc.
By: /s/ Steven Daiagi, President
---------------------------------
