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Filed pursuant to Rule 424(b)(3)
Registration No. 33-84604
PROSPECTUS
DVI, INC.
1,367,925 SHARES OF COMMON STOCK
Par Value $.005 per share
This Prospectus relates to 1,367,925 shares (the "Shares") of
Common Stock, $.005 par value per share (the "Common Stock"), of DVI, Inc., a
Delaware corporation (the "Company"), which may be offered from time to time by
the persons named in this Prospectus under "Selling Stockholders," who will
have acquired those shares upon conversion of the Company's 9-1/8% Convertible
Subordinated Notes Due 2002 (the "Notes"). The Company will receive no portion
of the proceeds of the sale of the Shares offered hereby.
It is anticipated that the Selling Stockholders will offer the
Shares for sale at the prices prevailing on the New York Stock Exchange
("NYSE") (or other principal market on which the Shares are then traded) on the
date of sale. The Selling Stockholders also may sell the Shares privately,
either directly to the purchaser or through a broker or brokers. All costs,
expenses and fees incurred in connection with the registration of the Shares
are being borne by the Company, but all selling and other expenses incurred by
the Selling Stockholders will be borne by the Selling Stockholders. See "Plan
of Distribution."
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FACTORS SET FORTH UNDER
"RISK FACTORS" BEGINNING ON PAGE 6 OF THIS PROSPECTUS.
The Selling Stockholders, and the brokers through whom sales of the
Shares are made, may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933, as amended (the "Securities Act").
In addition, any profits realized by the Selling Stockholders or such brokers
on the sale of the Shares may be deemed to be underwriting commissions. The
Company has agreed to indemnify the Selling Stockholders and any brokers
through whom sales of Shares are made against certain liabilities, including
liabilities under the Securities Act.
Shares of the Company's Common Stock are traded on the NYSE under
the symbol "DVI." On July 24, 1996, the last reported sale price of the Common
Stock on the NYSE, was $12.25 per share. Prospective purchasers of Common
Stock are urged to obtain a current price quotation.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS SUPPLEMENT. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy the Shares offered hereby in any jurisdiction
in which such offer or solicitation may be unlawful. No person has been
authorized to give any information or to make any representations other than
those contained in this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized. Except
where otherwise indicated, neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create any implication that
there has been no change in the affairs of the Company since the date hereof or
that the information contained herein is correct as of any time subsequent to
its date.
The date of this Prospectus is July 25, 1996
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities 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"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; and at its
regional offices at 7 World Trade Center, 13th Floor, New York, New York 10048
and at 500 West Madison Street, Suite 1400, Chicago, Illinois, 60661-2511.
Copies of such material can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Reports, proxy statements and other information concerning the Company
also can be inspected at the office of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
The Company has filed with the Commission under the Securities Act
of 1933, as amended (the "Securities Act"), a registration statement on Form
S-3 (which is referred to in this Prospectus, together with all amendments
thereto, as the "Registration Statement") with respect to the securities
offered hereby. This Prospectus does not contain all of the information set
forth in the Registration Statement and the exhibits and schedules thereto.
For further information with respect to the Company and the Common Stock,
reference is hereby made to the Registration Statement, exhibits and schedules.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are incorporated
herein by reference:
(a) The Company's Annual Report on Form 10-K for its fiscal
year ended June 30, 1995 (the "1995 10-K").
(b) The Company's Quarterly Report on Form 10-Q for the fiscal
quarters ended September 30, 1995, December 31, 1995 and March 31, 1996.
(c) All other reports filed pursuant to Section 13(a) or 15(d)
of the Exchange Act since the end of the fiscal year covered by the 1995 10-K.
All documents filed by the Company after the date of the Prospectus
pursuant to Sections 13(a), 13(c), 14 and 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 in this
Prospectus and to be a part hereof from the date of the filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference into this Prospectus will be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus or any other subsequently filed document which
also is or is deemed to be incorporated by reference into this Prospectus
modifies or supersedes that statement.
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO EACH PERSON TO WHOM
THIS PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST OF SUCH PERSON, A
COPY OF ANY AND ALL DOCUMENTS INCORPORATED BY REFERENCE INTO THE REGISTRATION
STATEMENT OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). REQUESTS FOR SUCH
COPIES SHOULD BE DIRECTED TO: DVI, INC., 500 HYDE PARK, DOYLESTOWN,
PENNSYLVANIA 18901 (TELEPHONE: 215-345-6600), ATTENTION: LEGAL DEPARTMENT.
This Prospectus supplements and replaces in their entirety all
prospectuses and prospectus supplements previously filed with the Commission
with respect to the offering of securities made hereby. Additional updating
information with respect to the matters discussed in this Prospectus may be
provided in the future by means of appendices to this Prospectus or other
documents.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information and financial statements appearing elsewhere or
incorporated by reference in this Prospectus.
THE COMPANY
DVI, Inc. (the "Company") is a specialty commercial finance company
whose core business is financing higher cost diagnostic imaging, radiation
therapy and other types of sophisticated medical equipment for outpatient
healthcare centers, groups of physicians and hospitals. Over the last 10
years, the Company has developed extensive expertise in analyzing the credit of
healthcare providers that lack audited financial statements and detailed
business plans. By servicing the equipment financing needs of these healthcare
providers and the corresponding need for equipment manufacturers to arrange
financing for their customers, the Company has established a niche in markets
underserved by most banks and finance companies. In addition to equipment
financing, a small but growing part of the Company's business is making working
capital loans to outpatient healthcare providers secured by their medical
receivables and other collateral; these working capital loans are referred to
collectively in this Prospectus as "medical receivables loans."
Virtually all of the Company's equipment loans are structured on a
fixed interest rate basis and such that the full cost of the equipment and all
financing costs are repaid during the financing term, which typically is five
years. The Company's risk management strategy is to avoid risks associated
with the residual value of equipment and of loan prepayments and to minimize
its exposure to interest rate fluctuations. The Company's equipment loans are
structured principally as notes secured by equipment or direct financing leases
with a bargain purchase option for the equipment user, and are referred to
collectively in this Prospectus as "equipment loans."
In the past two years, the Company has grown substantially. In its
fiscal year ended June 30, 1995 ("fiscal 1995"), the Company's loan origination
volume increased approximately 107% to $338.0 million from $163.0 million for
the fiscal year ended June 30, 1994 ("fiscal 1994"). During the nine months
ended March 31, 1996, the Company's loan origination volume increased
approximately 43% to $260.4 million from $181.7 million for the third quarter
of fiscal 1995. The Company's net financed receivables increased approximately
73% to $405.3 million at June 30, 1995 from $234.8 million at June 30, 1994.
The Company's net financed receivables increased approximately 26% to $466.7
million at March 31, 1996 from $370.6 million at March 31, 1995.
The Company uses asset securitization ("securitization") and other
structured finance techniques to permanently fund most of its equipment loans
and since 1991 has funded $518.3 million of equipment loans in this manner.
The Company's ability to securitize loans improved significantly in recent
years which enabled it to begin securitizing loans in the public market in
fiscal 1994. Access to the public securitization market has lowered the
Company's relative funding costs and expanded the Company's access to funding.
The Company's growth strategy is to increase the size of its loan
portfolio by expanding its share of the diagnostic imaging and radiation
therapy equipment financing markets and by generating financing opportunities
in other areas of the healthcare industry. The Company's principal means of
implementing this strategy are to (i) maximize the value of its relationships
with four of the six largest manufacturers of diagnostic imaging equipment by
obtaining additional customer referrals, (ii) originate medical equipment loans
on a wholesale basis, (iii) generate additional equipment and medical
receivable financing business directly from the Company's existing customer
base, (iv) establish equipment financing relationships with manufacturers of
patient treatment devices and (v) expand its medical receivable financing
activities.
Further information with respect to the Company, including
Management's Discussion and Analysis of Financial Condition and Results of
Operations for fiscal 1995 and for the nine-month periods ended March 31, 1994
and 1995, is contained in the 1995 10-K and the Company's Quarterly Report on
Form 10-Q for the nine months ended March 31, 1996, copies of which may be
obtained from the Company. See "Incorporation of Certain Documents by
Reference."
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THE OFFERING
Securities offered . . . . . . . . . . . . . . 1,367,925 shares of Common
Stock which may be offered
from time to time by the
persons named in this
Prospectus under "Selling
Stockholders," who will have
acquired such shares upon
conversion of the Notes. The
Notes are convertible, at the
option of the holders, into
up to 1,367,925 shares of
Common Stock, subject to
adjustment in certain
circumstances. The
conversion price of the Notes
is $10.60 per share, subject
to adjustment in certain
circumstances. See
"Description of Capital
Stock."
Use of proceeds . . . . . . . . . . . . . . . . The Company will receive no
portion of the proceeds of
the sale of the Shares
offered hereby.
Risk factors . . . . . . . . . . . . . . . . . See "Risk Factors" for a
discussion of certain factors
to be considered by
prospective investors.
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THE COMPANY
The Company is a specialty commercial finance company whose core
business is financing higher cost diagnostic imaging, radiation therapy and
other types of sophisticated medical equipment for outpatient healthcare
centers, groups of physicians and hospitals. Over the last 10 years, the
Company has developed extensive expertise in analyzing the credit of healthcare
providers that lack audited financial statements and detailed business plans.
By servicing the equipment financing needs of these healthcare providers and
the corresponding need for equipment manufacturers to arrange financing for
their customers, the Company has established a niche in markets underserved by
most banks and finance companies. In addition to equipment financing, a small
but growing part of the Company's business is making working capital loans to
outpatient healthcare providers secured by their medical receivables and other
collateral.
Virtually all of the Company's equipment loans are structured on a
fixed interest rate basis such that the full cost of the equipment and all
financing costs are repaid during the financing term, which typically is five
years. The Company's risk management strategy is to avoid risks associated
with the residual value of equipment and of loan prepayments and to minimize
its exposure to interest rate fluctuations. The Company's equipment loans are
structured principally as notes secured by equipment or direct financing leases
with a bargain purchase option for the equipment user.
In the past two years, the Company has grown substantially. In fiscal
1995, the Company's loan origination volume increased approximately 107% to
$338.0 million from $163.0 million for fiscal 1994. During the nine months
ended March 31, 1996, the Company's loan origination volume increased
approximately 43% to $260.4 million from $181.7 million for the third quarter
of fiscal 1995. The Company's net financed receivables increased approximately
73% to $405.3 million at June 30, 1995 from $234.8 million at June 30, 1994.
The Company's net financed receivables increased approximately 26% to $466.7
million at March 31, 1996 from $370.6 million at March 31, 1995.
The Company uses securitization and other structured finance
techniques to permanently fund most of its equipment loans and since 1991 has
funded $518.3 million of equipment loans in this manner. The Company's ability
to securitize loans improved significantly in recent years which enabled it to
begin securitizing loans in the public market in fiscal 1994. Access to the
public securitization market lowered the Company's relative funding costs and
expanded the Company's access to funding.
The Company's growth strategy is to increase the size of its loan
portfolio by expanding its share of the diagnostic imaging and radiation
therapy equipment financing markets and by generating financing opportunities
in other areas of the healthcare industry. The Company's principal means of
implementing this strategy are to (i) maximize the value of its relationships
with four of the six largest manufacturers of diagnostic imaging equipment by
obtaining additional customer referrals, (ii) originate medical equipment loans
on a wholesale basis, (iii) generate additional equipment and medical
receivable financing business directly from the Company's existing customer
base, (iv) establish equipment financing relationships with manufacturers of
patient treatment devices and (v) expand its medical receivable financing
activities.
The Company is a Delaware corporation and conducts its business
operations through operating subsidiaries. The principal operating
subsidiaries are DVI Financial Services Inc. ("DVI Financial Services") and DVI
Business Credit Corporation. The Company conducts securitizations through DVI
Receivables Corp. and other limited purpose subsidiaries, each of which is
wholly owned by DVI Financial Services. The Company also conducts other
structured financings through limited purpose subsidiaries or through DVI
Financial Services. The obligors under the Company's various warehouse credit
facilities are DVI Financial Services or DVI Business Credit. The Notes are
obligations of DVI, Inc. Except as the context otherwise requires, in this
Prospectus the term "Company" refers to DVI, Inc. and its wholly owned
subsidiaries.
The Company's principal executive offices are located at 500 Hyde
Park, Doylestown, Pennsylvania 18901 (telephone: (215) 345-6600).
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RISK FACTORS
The purchase of the Shares involves a substantial degree of risk.
Prospective investors should carefully consider, among other matters, the
following risks and other factors before making a decision to purchase.
Dependence on Warehouse Financing. The Company's ability to sustain
the growth of its financing business is dependent upon funding obtained through
warehouse facilities until its equipment loans are permanently funded. The
funds the Company obtains through warehouse facilities are full recourse
short-term borrowings secured primarily by the underlying equipment. These
borrowings in turn typically are repaid with the proceeds received by the
Company when its equipment loans are securitized or sold. The Company has a
$116.5 million revolving credit facility with a syndicate of banks led by Fleet
Bank N.A., which is renewable annually at the bank syndicate's discretion; a
$3.0 million warehouse facility with Connecticut Bank of Commerce, which
provides warehouse financing for certain medical receivables loans; and a
$100.0 million warehouse facility with Union Bank of Switzerland, which
provides warehouse financing for certain equipment loans to be securitized. In
addition, on July 2, 1996 the Company executed a commitment for a $100.0
million revolving Credit Facility with Lehman Brothers Inc., which will provide
warehouse financing for certain equipment loans to be securitized. There can
be no assurance that this type of warehouse financing will continue to be
available to the Company on acceptable terms. If the Company were unable to
arrange continued access to acceptable warehouse financing, the Company would
have to curtail its loan originations, which in turn would have a material
adverse effect on the Company's financial condition and operations.
Dependence on Permanent Funding Programs. The Company's use of
securitization as its principal form of permanent funding is an important part
of the Company's business strategy. To sustain the growth of its
securitization program, the Company will need an increasing amount of equity
and/or long-term debt financing. If for any reason the Company were to become
unable to access the securitization market to permanently fund its equipment
loans, the consequences for the Company would be materially adverse. The
Company's ability to complete securitizations and other structured finance
transactions depends upon a number of factors, including general conditions in
the credit markets, the size and liquidity of the market for the types of
receivable-backed securities issued or placed in securitizations sponsored by
the Company and the overall financial performance of the Company's loan
portfolio. The Company does not have binding commitments from financial
institutions or investment banks to provide permanent funding for its equipment
or medical receivables loans.
Impact of Credit Enhancement Requirements. In connection with its
securitizations and other structured financings, the Company is required to
provide credit enhancement for the debt obligations issued and sold to third
parties. Typically, the credit enhancement consists of cash deposits, the
funding of subordinated tranches and/or the pledge of additional equipment
loans which are funded with the Company's capital. In the securitizations
sponsored to date by the Company, the Company effectively has been required to
furnish credit enhancement equal to the difference between (i) the aggregate
principal amount of the equipment loans originated by the Company and
transferred to the Company's special purpose finance subsidiary and the related
costs of consummating the securitization and (ii) the net proceeds received by
the Company in such securitizations. The requirement to provide this credit
enhancement reduces the Company's liquidity and requires it to obtain
additional capital. If the Company is unable to obtain and maintain sufficient
capital, it may be required to halt or curtail its securitization or other
structured financing programs, which in turn would have a material adverse
effect on the Company's financial condition and operations.
Credit Risk. Many of the Company's customers are outpatient
healthcare providers that have complex credit characteristics. Providing
financing for these customers often involves a high degree of credit risk.
Although the Company seeks to mitigate its risk of default and credit losses
through its underwriting practices and loan servicing procedures and through
the use of various forms of limited and non-recourse financing (in which the
financing sources that permanently fund the Company's equipment loans assume
some or all of the risk of default by the Company's customers), the Company
remains exposed to potential losses resulting from a default by an obligor.
Obligors' defaults could cause the Company to make payments to the extent of
the recourse position the Company maintains under its permanent equipment
funding arrangements; could result in the loss of the cash or other collateral
pledged as credit enhancement under its permanent equipment funding
arrangements; or could require the Company to forfeit any residual interest it
may have retained in the underlying equipment. During the period after the
Company initially funds an
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equipment loan and prior to the time it funds the loan on a permanent basis
with non-recourse or limited recourse financing, the Company is exposed to full
recourse liability in the event of default by the obligor. In addition, under
the terms of securitizations and other types of structured finance
transactions, the Company generally is required to replace or repurchase
equipment loans in the event they fail to conform to the representations and
warranties made by the Company, even in transactions otherwise designated as
non-recourse or limited recourse.
Defaults by the Company's customers also could adversely affect the
Company's ability to obtain additional financing in the future, including its
ability to use securitization or other forms of structured finance. The
sources of such permanent funding take into account the credit performance of
the equipment loans previously financed by the Company in deciding whether and
on what terms to make new loans. In addition, the credit rating agencies and
insurers that are often involved in securitizations consider prior credit
performance in determining the rating to be given to the securities issued in
securitizations sponsored by the Company and whether and on what terms to
insure such securities. In addition, to date, all of the Company's medical
receivable loans (as opposed to its equipment loans) have been funded on a full
recourse basis whereby the Company is fully liable for any losses that are
incurred.
Under the Company's wholesale loan origination program (the "Wholesale
Program"), the Company purchases equipment loans from regional medical
equipment finance companies and equipment manufacturers (collectively,
"Originators") that generally do not have direct access to the securitization
market as a source of permanent funding for their loans. The Company does not
work directly with the borrowers at the origination of these equipment loans
and therefore is not directly involved in structuring the credits and generally
does not independently verify credit information supplied by the Originator.
Accordingly, the Company faces a higher degree of risk when it acquires loans
on a wholesale basis. The Company initiated the Wholesale Program in June 1994
and expects to focus on this business as a significant part of the Company's
growth strategy. The Company has limited experience in the wholesale loan
origination business and there can be no assurance that the Company will be
able to grow this business successfully or avoid related liabilities or losses.
Interest Rate Risk. The Company's equipment loans are all structured
on a fixed interest rate basis with its customers. Prior to securitizing or
selling its loans, the Company funds its loans through short-term warehouse
facilities which bear interest at variable rates. At any point in time, the
Company may be exposed to interest rate risk on loans funded through its
warehouse facilities to the extent interest rates increase between the time the
loans are initially funded and the time they are permanently funded. Increases
in interest rates during this period could narrow, eliminate or result in a
negative spread between the interest rate the Company realizes on its equipment
loans and the interest rate that the Company pays under its warehouse
facilities. To protect itself against this risk, the Company may use a hedging
strategy, including taking short positions in U.S. Treasury securities having
maturities comparable to the maturities of the equipment loans to be
securitized. There can be no assurance, however, that the Company's hedging
strategy or techniques will be effective, that the profitability of the Company
will not be adversely affected during any period of changes in interest rates
or that the costs of hedging will not exceed the benefits. In addition, the
Company is subject to margin calls on the outstanding short positions in U.S.
Treasury obligations it assumes in connection with its hedging activities. If
the Company is required to pay additional margin on its short positions, the
Company's capital may be adversely affected. A substantial and sustained
increase in interest rates could adversely affect the Company's ability to
originate loans. In certain circumstances, the Company for a variety of
reasons may retain for an indefinite period certain of the equipment loans it
originates. In such cases, the Company's interest rate exposure may continue
for a longer period of time.
Leverage. The Company is highly leveraged. As of March 31, 1996, the
Company and its consolidated subsidiaries had total debt of $393.9 million, of
which $220.9 million was full recourse debt and $173.0 million was limited
recourse debt. Of the $393.9 million of total debt, $186.8 million was
long-term debt and $207.1 million was short-term debt. The degree to which the
Company is leveraged also may impair its ability to obtain additional financing
on acceptable terms.
Possible Adverse Consequences From Recent Growth. In the past two
years, the Company originated a significantly greater number of equipment loans
than it did in previous years. As a result of this rapid growth, the Company's
loan portfolio grew from $234.8 million at June 30, 1994 to $466.7 million at
March 31, 1996. In light of this growth, the historical performance of the
Company's loan portfolio, including rates of credit loss, may be of
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limited relevance in predicting future loan portfolio performance. Any credit
or other problems associated with the large number of equipment loans
originated in the recent past will not become apparent until sometime in the
future. Further, while the Company's loan originations have grown
substantially in the past two years, the Company's gross margins have declined
significantly during the same period, and, as a result, the Company's
historical results of operations may be of limited relevance to an investor
seeking to predict the Company's future performance.
The Company's significant growth has also placed substantial new and
increased pressures on the Company's personnel. Although the Company believes
the addition of new operating procedures and personnel, together with its new
computer system, will be sufficient to enable it to meet its current operating
needs, there can be no assurance that this will be the case. If the Company
does not effectively manage its growth, or if the Company fails to sustain its
historical levels of performance in credit analysis and transaction structuring
with respect to the increased loan origination volume, the consequences will be
materially adverse.
Ability to Sustain Growth. To sustain the rates of growth it has
achieved in the last two years, the Company will be required to penetrate
further the markets for lower cost diagnostic imaging equipment and for other
types of medical equipment or devices such as lasers used in patient treatment.
The Company faces significant barriers to entry in the patient treatment device
market, which is more diverse than the diagnostic imaging market because of the
larger number of manufacturers and types of products and the greater price
range of those products. The Company has limited experience in the patient
treatment device market. There can be no assurance that the Company will be
able to penetrate and compete effectively in the markets described above.
Risks Related to the Medical Receivable Financing Business. In July
1993, the Company entered the medical receivable financing business and expects
to focus on this business as a part of the Company's growth strategy. The
Company's medical receivable financing business generally consists of providing
loans to healthcare providers that are secured by their receivables from payors
such as insurance companies, large self-insured companies and governmental
programs and by other collateral. The Company has limited experience in the
medical receivable financing business and there can be no assurance that the
Company will be able to grow this business successfully or avoid related
liabilities or losses. The Company has funded its medical receivable financing
business to date through the use of the Company's capital and a relatively
small medical receivables warehouse facility and recently, on a limited basis,
through the Company's revolving credit facility which the Company generally
uses for its equipment financing business. The growth of the Company's medical
receivable financing business is dependent on various factors including the
Company's ability to obtain additional funding facilities to finance medical
receivables loans.
While the medical receivable financing business shares certain
characteristics, including an overlapping customer base, with the Company's
core equipment financing business, there are many differences, including unique
risks. Healthcare providers could overstate the quality and characteristics of
their medical receivables, which the Company analyzes in determining the amount
of the line of credit to be secured by such receivables. After the Company has
established or funded a line of credit, the healthcare providers could change
their billing and collection systems, accounting systems or patient records in
a way that could adversely affect the Company's ability to monitor the quality
and/or performance of the related medical receivables. There are substantial
technical legal issues associated with creating and maintaining perfected
security interests in medical receivables. Payors may make payments directly
to healthcare providers that have the effect (intentionally or otherwise) of
circumventing the Company's rights in and access to such payments. Payors may
attempt to offset their payments to the Company against debts owed to the
payors by the healthcare providers. In addition, as a lender whose position is
secured by receivables, the Company is likely to have less leverage in
collecting outstanding receivables in the event of a borrower's insolvency than
a lender whose position is secured by medical equipment which the borrower
needs to run its business. A customer which receives medical receivables loans
from the Company and defaults on obligations secured by such receivables may
require additional loans, or modifications to the terms of existing loans, in
order to continue operations and repay outstanding loans. The Company may have
a conflict of interest when the Company acts as servicer for an equipment-based
securitization and originates medical receivables loans to borrowers whose
previous equipment loans have been securitized. The Company's efforts to
develop suitable sources of funding for its medical receivable financing
business through securitization or other structured finance transactions may be
constrained or hindered due to the fact that the use of structured finance
transactions to fund medical receivables is a relatively new process. The
Company has not previously issued debt secured by medical receivables in the
structured finance markets. While the Company believes
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it has structured its credit policies and lending practices to take account of
these and other factors, there is no assurance the Company will not realize
credit losses in connection with its medical receivable financing business or
that the medical receivable financing business will meet the Company's growth
expectations.
Medical Equipment Market. The demand for the Company's equipment
financing services is impacted by numerous factors beyond the control of the
Company. These factors include general economic conditions, including the
effects of recession or inflation, and fluctuations in supply and demand for
various types of sophisticated medical equipment resulting from, among other
things, technological and economic obsolescence and government regulation. In
addition, the demand for sophisticated medical equipment also may be negatively
affected by declining reimbursement to healthcare providers for their services
from third-party payors such as insurance companies and government programs,
and the increased use of managed healthcare plans that often restrict the use
of certain types of high technology medical equipment.
Healthcare Reform. During the past half decade, large U.S.
corporations and U.S. consumers of healthcare services have substantially
increased their use of managed healthcare plans such as health maintenance
organizations ("HMOs") and preferred provider organizations ("PPOs"). This
development has increased the purchasing power of those plans, which in turn
have used that power to lower the amounts they pay for healthcare services.
Since 1993, numerous proposals have been presented to Congress to restructure
the U.S. healthcare system. The principal features of these proposals are to
provide universal access to healthcare services and to achieve overall cost
containment. To date none of the proposals initiated at the federal government
level have been enacted. In the private sector, however, cost containment
initiatives have continued. Certain aspects of these actual and proposed cost
containment initiatives, particularly plans to eliminate payment for
duplicative procedures, may reduce the overall demand for the types of medical
equipment financed by the Company. Declining reimbursement for medical
services also could pressure hospitals, physician groups and other healthcare
providers, which form a significant portion of the Company's customer base, to
experience cash flow problems. This in turn could negatively impact their
ability to meet their financial obligations to the Company and/or reduce their
future equipment acquisitions which could adversely affect the Company. The
Company believes that the general movement toward a managed healthcare system
in the U.S. will materially reduce the demand for medical equipment and for
related financing.
Consequences of Government Regulation. The acquisition, use,
maintenance and ownership of most types of sophisticated medical equipment
financed by the Company are regulated by federal, state and/or local
authorities.
Dependence on Referrals and Support from Equipment Manufacturers. The
Company obtains a significant amount of its equipment financing business
through referrals from four primary manufacturers of diagnostic imaging
equipment and other manufacturers of medical equipment it finances. In
addition, these manufacturers often provide credit support for or assume first
loss positions with respect to equipment financing they refer to the Company.
These manufacturers are not contractually obligated to refer their customers to
the Company or to provide credit support. There is no assurance that these
manufacturers will continue to provide such referrals or credit support. If
for any reason the Company were no longer to benefit from these referrals or
credit support, its equipment financing business would be materially adversely
affected.
Competition. The business of financing sophisticated medical
equipment is highly competitive. The Company competes with equipment
manufacturers that sell and finance sales of their own equipment and finance
subsidiaries of national and regional commercial banks and equipment leasing
and financing companies. Many of the Company's competitors have significantly
greater financial and marketing resources than the Company. In addition, the
competition in the new markets recently targeted by the Company, specifically
equipment financing in the hospital market and medical receivable financing
market, may be greater than the levels of competition historically experienced
by the Company.
The Company believes that increased equipment loan originations during
the past two years resulted, in part, from a decrease in the number of
competitors in the higher cost medical equipment financing market and the
Company's high level of penetration in this market. There can be no assurance
that new competitive providers of financing will not enter the medical
equipment financing market in the future. To meet its long-term growth plans,
the Company must penetrate further its targeted markets for lower cost medical
equipment and medical receivable
9
<PAGE> 10
financing businesses. Such penetration may require the Company to reduce its
margins to be competitive in the lower cost medical equipment and medical
receivable financing businesses. In addition, there can be no assurance that
the Company will sustain the same level of equipment loan originations in
future periods as during the past two years or that it will be able to meet its
long- term growth objectives.
Investee Companies. The Company has an investment in and does
business with a company that operates diagnostic imaging equipment and
accordingly is subject to the risks of that business. The Company owns
approximately 4.5 million shares of convertible preferred stock of Diagnostic
Imaging Services, Inc. ("DIS") having an aggregate liquidation preference of
$4.5 million.
Shares Eligible for Future Sale. Upon completion of the offering made
by this Prospectus and assuming conversion of all of the Notes, the Company
will have outstanding approximately 11,806,795 shares of Common Stock. Of
these shares of Common Stock, 10,464,642 shares, which include the 1,367,925
Shares offered hereby, will be freely tradable without restriction or further
registration under the Securities Act. All of the remaining 1,342,153 shares
of Common Stock outstanding upon completion of the Offering are restricted
securities as defined in the Securities Act (the "Restricted Securities"). All
of the Restricted Securities and any other shares of Common Stock acquired by
an officer, director or more than 10% stockholder of the Company (each, an
"affiliate") are eligible for resale pursuant to the provisions of Rule 144
under the Securities Act ("Rule 144") or at any time pursuant to an effective
registration statement covering such shares of Common Stock.
The Company also has reserved or made available for issuance
approximately 1,269,761 shares of Common Stock pursuant to various options to
purchase Common Stock and the Company's 1986 Stock Incentive Plan, as amended
(the "Plan"). Of these reserved shares, approximately 1,009,761 shares
available for issuance pursuant to the Plan are covered by currently effective
registration statements under the Securities Act and are therefore freely
tradable upon issuance. The remaining 260,000 reserved shares are Restricted
Securities that are eligible for resale upon exercise pursuant to Rule 144 or
at any time pursuant to an effective registration statement covering such
shares of Common Stock. The Company also has reserved (i) 400,000 shares of
Common Stock (the "MEF Shares") for issuance to the former shareholders of
Medical Equipment Finance Corp. ("MEF Corp.") in connection with the January
1993 acquisition of MEF Corp. by the Company and (ii) 200,000 shares of Common
Stock for issuance to certain employees of the Company under a stock incentive
plan. See "Description of Capital Stock."
No prediction can be made as to the effect, if any, that sales of the
Common Stock or the availability of such shares for sale in the public market
will have on the market price for the Common Stock prevailing from time to
time. Nevertheless, sales of substantial amounts of Common Stock in the public
market under Rule 144 or otherwise could adversely affect prevailing market
prices for the Common Stock and impair the ability of the Company to raise
capital through the sale of equity securities in the future.
Dependence upon Key Personnel. The ability of the Company to
successfully continue its existing financing business, to expand into its
targeted markets and to develop its newer businesses depends upon the ability
of the Company to retain the services of its key management personnel,
including Michael A. O'Hanlon, the Company's President and Chief Operating
Officer. The loss of any of these individuals or an inability to attract and
maintain additional qualified personnel could adversely affect the Company.
There can be no assurance that the Company will be able to retain its existing
management personnel or to attract additional qualified personnel.
Potential Future Sales Pursuant to Rule 144. Approximately 13% of the
currently outstanding shares of Common Stock are "restricted securities" as
that term is defined under Rule 144 promulgated under the Securities Act. In
general, under Rule 144 as currently in effect, a person (or persons whose
shares are aggregated) who has beneficially owned shares for at least two
years, including an "affiliate" as that term is defined under the Securities
Act, is entitled to sell, within any three-month period, a number of shares
that does not exceed the greater of 1% of the then outstanding Common Stock or
the average weekly trading volume in the Common Stock in composite trading on
all exchanges during the four calendar weeks preceding such sale. A person (or
persons whose shares are aggregated) who is not deemed an affiliate of the
Company and who has beneficially owned shares for at least three years is
entitled to sell such shares under Rule 144 without regard to the volume
limitations described above. The Company is unable
10
<PAGE> 11
to predict the effect that sales made under Rule 144 or otherwise may have upon
the then prevailing market prices of the Common Stock, although such sales may
depress the per share price of the Common Stock.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 75,000,000
shares of Common Stock and 100,000 shares of preferred stock, $10.00 per share
par value ("Preferred Stock"). As of July 19, 1996, there were 10,495,473
shares of Common Stock issued and outstanding. No shares of Preferred Stock
are outstanding.
COMMON SHARES
Holders of shares of Common Stock are entitled to one vote per share
on matters to be voted upon by the stockholders of the Company. Holders of
shares of Common Stock do not have cumulative voting rights; therefore, the
holder of more than 50% of the Common Stock will have the ability to elect all
of the Company's directors. Holders of shares of Common Stock will be entitled
to receive dividends when, as and if declared by the Board of Directors and to
share ratably in the assets of the Company legally available for distribution
to its stockholders in the event of the liquidation, dissolution or winding up
of the Company, in each case subject to the rights of the holders of any
Preferred Stock issued by the Company. Holders of Common Stock have no
preemptive, subscription, redemption or conversion rights.
PREFERRED STOCK
The Company's Board of Directors has the authority, without further
action by the stockholders of the Company, to issue shares of Preferred Stock
in one or more series and to fix the rights, preferences, privileges and
restrictions of those shares. The issuance of Preferred Stock could adversely
affect the voting power and economic rights of holders of Common Stock and
could have the effect of delaying, deferring or preventing a change in control
of the Company.
CONVERTIBLE SUBORDINATED NOTES
In June 1994, the Company issued and sold $15 million aggregate
principal amount of Notes in a private placement to certain accredited
investors. Of that amount, approximately $9.55 million was sold to officers,
directors, 10% or more stockholders and investors related to such officers,
directors and stockholders. The Notes are convertible, at the option of the
holders, into up to 1,415,094 shares of Common Stock, subject to adjustment in
certain circumstances. The conversion price of the Notes is $10.60 per share,
subject to adjustment in certain circumstances. In March 1995, $500,000
aggregate principal amount of the Notes were converted into 47,169 shares of
Common Stock (the "March 1995 Conversion Shares") and in July 1996, $600,000
aggregate principal amount of the Notes were converted into 56,603 shares of
Common Stock (the "July 1996 Conversion Shares"). The remaining outstanding
Notes are convertible, at the option of the holders, into up to 1,311,322
shares of Common Stock (collectively with the March 1995 Conversion Shares and
the July 1996 Conversion Shares, the "Conversion Shares").
OTHER OUTSTANDING OPTIONS AND WARRANTS
At June 30, 1996, there were options and warrants outstanding under
which an aggregate of 949,275 shares of Common Stock were issuable. Of this
amount, 749,275 shares are issuable on exercise of various options or warrants
issued to employees and directors of the Company pursuant to compensatory
arrangements and 200,000 shares are issuable to W.I.G. Securities Limited
Partnership ("W.I.G. Securities") pursuant to a warrant issued as compensation
for prior investment banking services.
11
<PAGE> 12
OUTSTANDING REGISTRATION RIGHTS
The Company has entered into agreements under which it has granted to
certain of its security holders rights under specified circumstances to require
the registration under the Securities Act of shares of Common Stock held by
them. Under the first agreement, W.I.G. Securities, as a holder of a warrant
to purchase an aggregate of 200,000 shares of Common Stock, has a "demand"
registration right to require the Company to file a registration statement on
one occasion at any time until April 27, 1997, and also has a "piggyback"
registration right to require inclusion of the shares issuable pursuant to the
warrant in any registration statement filed by the Company after April 27, 1995
but before May 14, 1999. Under the second agreement, holders of the Notes have
three "piggyback" registration rights, exercisable beginning after June 21,
1995, and two "demand" registration rights, which currently are exercisable, in
each case with respect to the Conversion Shares. Under the third agreement,
the Company is required to register the MEF Shares promptly after the issuance
of the MEF Shares. The shares of Common Stock issuable upon exercise of the
Conversion Shares are covered by a currently effective registration statement
under the Securities Act of which this Prospectus forms a part and therefore
will be freely tradeable upon issuance.
EMPLOYEE MATTERS
As part of an employee incentive plan, the Company agreed in principle
on June 8, 1995 to issue an aggregate of 200,000 shares of Common Stock of the
Company (the "Incentive Shares") to certain of its employees if the last sale
price (as reported in the consolidated reporting system of the NYSE) of the
Common Stock is $16.00 per share or higher for 30 consecutive calendar days at
any time before December 31, 1998, provided that any such employee must be
employed by the Company during the above-described 30-day period in order to
receive any Incentive Shares under this agreement. The Company has agreed
that, if there is an event or series of events that constitutes a sale of the
Company at any time prior to December 31, 1998 and the consideration to be
received for each share of Common Stock of the Company in such sale of the
Company is $13.00 or higher, the Company will issue the Incentive Shares to
those employees.
MEF CORP.
In January 1993, the Company acquired the outstanding shares of MEF
Corp. Under the terms of the original purchase agreement, the purchase price
was payable before October 15, 1998 in cash or Common Stock of the Company, as
elected by the Company. As initially structured, the purchase price was to be
determined as a percentage of the aftertax earnings of the MEF Corp. division
of the Company during the sixty-six month period following the date of
acquisition. During the year ended June 30, 1994, management entered into
negotiations with the former shareholders of MEF Corp. to revise certain terms
of the purchase agreement. The Company and the former shareholders of MEF
Corp. agreed in June 1995 to set the purchase price of MEF Corp. at 400,000
shares of Common Stock.
TRANSFER AGENT
The transfer agent and registrar for the Company's Common Stock is
American Stock Transfer & Trust Company.
DELAWARE ANTI-TAKEOVER LAW
The Company is governed by the provisions of Section 203 of the
General Corporation Law of the State of Delaware, an anti- takeover law. In
general, the law prohibits a public Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an
interested stockholder, unless the business combination is approved in the
prescribed manner. "Business combination" includes merger, asset sales and
other transactions resulting in a financial benefit to the interested
stockholder. An "interested stockholder" is a person who, together with
affiliates and associates, owns (or within three years, did own) 15% or more of
the corporation's voting stock.
12
<PAGE> 13
USE OF PROCEEDS
The Company will receive no portion of the proceeds of the sale of
the Shares offered hereby.
SELLING STOCKHOLDERS
The Selling Stockholders are persons who have acquired or may in the
future acquire shares of Common Stock upon conversion of the Notes. The table
below sets forth, for each of the Selling Stockholders, (i) the Selling
Stockholder's affiliation with the Company; (ii) the aggregate number of shares
of Common Stock owned prior to the offering made by this Prospectus; (iii) the
maximum aggregate number of shares of Common Stock which may be acquired upon
conversion of the Notes; (iv) the maximum number of shares each Selling
Stockholder may offer and sell pursuant to this Prospectus; and (v) the number
of shares (and percentage of the outstanding shares) of Common Stock owned
after the offering made by this Prospectus. Shares of Common Stock described
under (ii) and (v) above may not be offered or sold pursuant to this
Prospectus.
13
<PAGE> 14
SELLING STOCKHOLDERS
<TABLE>
<CAPTION>
Number of Shares
(and Percentage
of
Outstanding
Shares)
Number of Shares Maximum of Common Stock
of Common Stock Number of to be
Material Beneficially Number of Shares that Beneficially
Relationship Owned by Shares of May Be Owned
With Company Selling Common Stock Offered by Selling
During Stockholders Issuable on Hereby by Stockholders
Previous Before Conversion of Selling After
Name Three Years Offering(1) Notes Stockholder Offering(2)(3)
- --------------------------------------------------- ----------- ------------------------------ ----------------
<S> <C> <C> <C> <C> <C>
Hannah S. and Samuel A. Cohn Related to 91,117(5) 18,867 18,867 72,250(*)(5)
Memorial Foundation Gerald L. Cohn,
a Director of
the Company (4)
Starwood Group, L.P.(6) None 56,603 56,603 56,603 0
Canadian Imperial Bank of Commerce (7) 2,200,720 716,981 716,981 1,483,739
Trust Company, as Trustee of (12.6%)
Settlement
T-1740 Trusts #14, #27, #28, #29,
#30, #31, #32, #33, #34, #35 and
#36
Luckman Family Ventures None (8) 9,433 9,433 9,433 0
Penn Footwear Retirement Trust None 14,150 14,150 14,150 0
Delbert Coleman and Rose Meisel, None 94,339 94,339 94,339 0
Jtwros
Edward A. Newman None 53,166 9,433 9,433 43,733(*)(9)
Herbert J. Siegel None 47,169 47,169 47,169 0
Gerald L. Cohn Revocable Trust Related to 147,721(5) 75,471 75,471 72,250(*)(5)
Gerald L. Cohn,
a Director of
the Company (4)
Brenda McHugh Wife of John E. 63,317(9) 23,584 23,584 39,733(*)
McHugh, a
Director of the
Company (9)
Sandy Jordan None 18,867 18,867 18,867 0
Richard Weiss and Gail Weiss, Related to 9,433 9,433 9,433 0
Jtwros Sidney Luckman,
a Director of
the Company
(10)
Robert Luckman Related to 9,433 9,433 9,433 0
Sidney Luckman,
a Director of
the Company
(11)
S.L.K. Retirement Trust None 9,433 9,433 9,433 0
Guaranty & Trust Co. FBO Sidney Sidney Luckman 37,735 37,735 37,735 0
Luckman is a Director
Individual Retirement of the Company
Account
William C. Bartholomay None 9,433 9,433 9,433 0
Granite Capital, L.P. None 608,679 188,679 188,679 420,000 (3.6%)
Yehuda Ben-Arieh Residuary Trust None 18,867 18,867 18,867 0
</TABLE>
________________________
(See notes on next page.)
14
<PAGE> 15
______________________________
* Less than 1%
(1) Includes shares issuable on conversion of Notes.
(2) Based on the initial conversion price of $10.60 per share with respect to
the Notes.
(3) Assuming all shares covered by this Prospectus are sold at the same time.
Computed based on a pro forma number of shares of Common Stock outstanding
(10,495,473) issued and outstanding at July 19, 1996, plus 1,311,322
shares issuable on conversion of the Notes. Because no fractional shares
are issuable on conversion of Notes, the aggregate number of shares shown
on the table as issuable on conversion of the Notes is slightly less than
1,311,322.
(4) The Hannah S. and Samuel A. Cohn Memorial Foundation (the "Foundation") is
a charitable enterprise of which Gerald L. Cohn is the President and a
board member. Mr. Cohn has no financial interest in the Foundation, but
may be deemed for securities law purposes to be the beneficial owner of
the securities owned by the Foundation by reason of his positions with the
Foundation.
The Gerald L. Cohn Revocable Trust (the "Cohn Trust") is a trust of which
Mr. Cohn is a co-trustee and the sole beneficiary. For securities law
purposes Mr. Cohn is deemed to be the beneficial owner of the securities
owned by the Cohn Trust.
Aside from the holdings of the Cohn Trust and the Foundation, Mr. Cohn is
the beneficial owner of 333,333 shares of Common Stock, not including the
shares described in footnote (5). If Mr. Cohn's holdings are aggregated
with those of the Foundation and the Cohn Trust, he may be deemed to be
beneficial owner of 427,671 shares, representing approximately 3.6% of the
aggregate of (i) the shares of Common Stock outstanding at July 19, 1996
plus (ii) all the shares of Common Stock issuable on conversion of the
Notes. The amounts shown on the table as beneficially owned by the
Foundation and the Cohn Trust do not include the 333,333 shares
beneficially owned by Mr. Cohn.
(5) Includes (a) 46,500 shares of Common Stock held of record by Cynthia J.
Cohn, as Trustee of the Cynthia J. Cohn Revocable Trust (Ms. Cohn is a
Vice President of the Company and one of Mr. Cohn's daughters), (b) 15,000
shares held of record by a trust established for the benefit of Shelly
Cohn Schmidt, another of Mr. Cohn's daughters, and (c) 10,750 shares held
of record by trusts established for the benefit of Clayton Schmidt and
Blake Schmidt, Mr. Cohn's grandchildren. Mr. Cohn disclaims beneficial
ownership of all the shares described in this footnote.
(6) In July 1996 Starwood Group, L.P. converted $600,000 aggregate principal
amount of the Notes into 56,603 shares of Common Stock.
(7) Canadian Imperial Bank of Commerce Trust Company (Bahamas) Limited
("CIBC"), as trustee of trusts for the benefit of various descendants of
A.N. Pritzker, deceased, is the record holder of 1,483,739 shares of
Common Stock. The amounts shown on the table do not include 56,339 shares
of Common Stock owned by Diversified Capital, L.P., a partnership
comprised principally of trusts for the benefit of various members of the
lineal descendants of Nicholas J. Pritzker, deceased. CIBC is not the
trustee of such trusts.
(8) Luckman Family Ventures is a limited partnership in which Robert Luckman
is the general partner and certain of the grandchildren of Sidney Luckman,
a Director of the Company, are limited partners. Robert Luckman is the
son of Sidney Luckman. Sidney Luckman disclaims beneficial ownership of
the securities owned by Luckman Family Ventures. The amounts shown on the
table do not aggregate the securities held by Luckman Family Ventures with
those held by Mr. Luckman or others related to him.
(9) Includes 43,733 shares of Common Stock, including 13,333 shares issuable
on the exercise of options, beneficially owned by Mr. McHugh.
(10) Mr. and Mrs. Weiss are the son-in-law and daughter, respectively, of Mr.
Luckman. Mr. Luckman disclaims beneficial ownership of the securities
held by Mr. and Mrs. Weiss. The amounts shown on the table do not
aggregate the securities held by Mr. and Mrs. Weiss with those held by Mr.
Luckman or others related to him.
(11) Robert Luckman is the son of Sidney Luckman. Sidney Luckman disclaims
beneficial ownership of the securities held by Robert Luckman. The
amounts shown on the table do not aggregate the securities held by Robert
Luckman with those held by Sidney Luckman or others related to him.
15
<PAGE> 16
PLAN OF DISTRIBUTION
It is anticipated that the Selling Stockholders will offer the Shares
for sale at the prices prevailing on the NYSE (or other principal market on
which the Shares are then traded) on the date of sale. The Selling
Stockholders also may sell the Shares privately, either directly to the
purchaser or through a broker or brokers. There are no arrangements or
agreements with any brokers or dealers to act as underwriters of the Common
Stock as of the date hereof. All costs, expenses and fees incurred in
connection with the registration of the Shares, including, but not limited to,
all registration and filing fees, printing expenses and fees (if any) and
disbursements of the Company's counsel and accountants, are being borne by the
Company, but all selling and other expenses incurred by the Selling
Stockholders will be borne by the Selling Stockholders.
The Selling Stockholders, and the brokers through whom the sales of the
Shares are made, may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act. In addition, any profits realized by the
Selling Stockholders or such brokers on the sale of the Shares may be deemed to
be underwriting commissions. The Company has agreed to indemnify the Selling
Stockholders and any brokers through whom sales of Shares are made against
certain liabilities, including liabilities under the Securities Act.
EXPERTS
The financial statements and the related financial statement schedules
included and incorporated in this Prospectus and elsewhere in the Registration
Statement by reference from the Company's Annual Report on Form 10-K for the
year ended June 30, 1995 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is included and
incorporated herein by reference, and have been so included and incorporated in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Rogers & Wells, New York, New York.
16
<PAGE> 17
<TABLE>
=================================================== ===================================================
<S> <C>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY DVI, INC.
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING 1,367,925 SHARES
BEEN GIVEN BY THE COMPANY OR THE UNDERWRITER. OF COMMON STOCK
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF
THE UNITS OFFERED HEREBY IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN
OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
----------------------------------
PROSPECTUS
----------------------------------- ----------------------------------
TABLE OF CONTENTS
PAGE
----
Available Information . . . . . . . . . . . 2
Incorporation of Certain Documents by JULY 25, 1996
Reference . . . . . . . . . . . . . . . . 2
Prospectus Summary . . . . . . . . . . . . 3
The Company . . . . . . . . . . . . . . . . 5
Risk Factors . . . . . . . . . . . . . . . 6
Description of Capital Stock . . . . . . . . 11
Use of Proceeds . . . . . . . . . . . . . . 13
Selling Stockholders . . . . . . . . . . . . 13
Plan of Distribution . . . . . . . . . . . 16
Experts . . . . . . . . . . . . . . . . . . 16
Legal Matters . . . . . . . . . . . . . . . 16
=================================================== ===================================================
</TABLE>
