<PAGE>
As filed with the Securities and Exchange Commission on October 7, 1996
Registration No. _____________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________
DENTAL SERVICES OF AMERICA, INC.
(Name of small business issuer in its charter)
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<CAPTION>
<S> <C> <C>
DELAWARE 8021 59-2754843
- ----------------------- ---------- --------------
(Primary Standard Industrial (I.R.S. Employer
(State or jurisdiction of Classification Code Number) Identification No.)
incorporation
or organization)
</TABLE>
DENTAL SERVICES OF AMERICA, INC.
12000 Biscayne Boulevard, Suite 108
Miami, Florida 33181
(305) 895-0716
(Address and telephone number of principal executive office
and principal place of business)
HERSHEL KRASNOW
DENTAL SERVICES OF AMERICA, INC.
1101 96th Street, Suite 505
Miami, Florida 33154
(305) 864-3255
(Name, address and telephone number of agent for service)
Copies of all communications to:
MARSHALL R. BURACK, Esq.
Akerman, Senterfitt & Eidson, P.A.
One S.E. 3rd Avenue, 28th Floor
Miami, Florida 33131
(305) 374-5600
Approximate Date of Proposed Sale to the Public: As soon as practicable
after this Registration Statement becomes effective.
______________________
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of earlier effective registration
statement for the same offering. [_] ___________________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] __________________________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [X]
<PAGE>
CALCULATION OF REGISTRATION FEE
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==================================================================================================================
TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO PROPOSED MAXIMUM PROPOSED AMOUNT OF
REGISTERED BE OFFERING PRICE PER AGGREGATE REGISTRATION FEE
REGISTERED SHARE OFFERING PRICE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 3,755,000 $ .50 $1,877,500.00 $ 647.41
$.001 par value (1)
- -------------------------------------------------------------------------------------------------------------------
Common Stock, 1,745,000 $ .50 $ 872,500.00 $ 300.86
$.001 par value (2)
- -------------------------------------------------------------------------------------------------------------------
Class B Warrants(3) 500,000 .00 .00 .00
- -------------------------------------------------------------------------------------------------------------------
Common Stock
$.001 par value (4) 500,000 $1.00 $ 500,000.00 $ 172.41
- -------------------------------------------------------------------------------------------------------------------
Dental Preferred Stock, 5,000,000 $ .10 $ 500,000.00 $ 172.41
$.01 par value
===================================================================================================================
TOTAL $3,750,000.00 $1,293.10
===================================================================================================================
===================================================================================================================
</TABLE>
(1) Issuable upon exercise of Non-Public Warrants and Class A Warrants.
(2) To be sold from time to time by Selling Stockholders.
(3) Issuable upon exercise of Class A Warrants.
(4) Issuable upon exercise of Class B Warrants.
The registrant hereby amends this registration statement on such dates
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with (S) 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said (S) 8(a), may
determine.
<PAGE>
DENTAL SERVICES OF AMERICA, INC.
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<CAPTION>
LOCATION OR CAPTION
ITEM NO. CAPTION IN FORM SB-2 IN PROSPECTUS
- -------- -------------------- -------------------
<S> <C>
1. Front of Registration Statement
and Outside Front Cover Page of
Prospectus ...................... Outside Front Cover
2. Inside Front and Outside Back
Cover Pages of Prospectus........ Inside Front and Outside Back Cover
Pages.
3. Summary Information and Risk
Factors.......................... Prospectus Summary; Risk Factors.
4. Use of Proceeds.................. Use of Proceeds.
5. Determination of Offering Price.. Plan of Distribution.
6. Dilution......................... N/A
7. Selling Security Holders......... Principal and Selling Stockholders.
8. Plan of Distribution............. Plan of Distribution
9. Legal Proceedings................ Business - Litigation
10. Directors, Executive Officers,
Promoters, and Control Persons... Management.
11. Security Ownership of Certain
Beneficial Owners and Management. Principal and Selling Stockholders.
12. Description of Securities........ Description of Securities.
13. Interests of Named Experts and
Counsel.......................... Legal Matters; Experts.
14. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities.................. Indemnification.
15. Organization Within Last Five
Years............................ N/A.
16. Description of Business.......... Prospectus Summary; Management's
Discussion and Analysis of Financial
Condition and Results of Operation;
Business; Financial Statements.
17. Management's Discussion and
Analysis or Plan of Operation.... Management's Discussion and Analysis
of Financial Condition and Results of
Operations.
18. Description of Property.......... Business - Dental Facilities;
Principal Executive Office.
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
LOCATION OR CAPTION
ITEM NO. CAPTION IN FORM SB-2 IN PROSPECTUS
- -------- -------------------- -------------------
<S> <C>
19. Certain Relationships and Related
Transactions..................... Principal and Selling Stockholders;
Certain Transactions.
20. Market for Common Equity and
Related Stockholder Matters...... Outside Front Cover; Certain Market
Information.
21. Executive Compensation........... Management - Executive Compensation
and Employment Agreements.
22. Financial Statements............. Financial Statements.
23. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosures............ N/A.
</TABLE>
ii
<PAGE>
EXPLANATORY NOTE
----------------
This Registration Statement covers (i) the primary offering of shares of
Common Stock, Class B Warrants and Dental Preferred Stock by Dental Services of
America, Inc. (the "Company"), and (ii) shares of Common Stock owned by certain
Selling Stockholders. The Company is registering under the Primary Prospectus
("Primary Prospectus") (i) 3,755,000 shares of Common Stock issuable upon
exercise of Non-Public Warrants and Class A Warrants, (ii) 500,000 Class B
Warrants, (iii) 500,000 shares of Common Stock issuable upon exercise of Class B
Warrants, and (iv) 5,000,000 shares of Dental Preferred Stock. The Company is
also registering under an alternate prospectus ("Alternate Prospectus") the
resale of 1,745,000 shares of Common Stock on behalf of certain Selling
Stockholders. The Alternate Prospectus pages, which follow the Primary
Prospectus, are to be combined with all of the sections contained in the Primary
Prospectus with the following exceptions: The front and back cover pages and the
section entitled "Plan of Distribution." Such sections from the Alternate
Prospectus pages will be added to the Primary Prospectus. Furthermore, all
references contained in the Alternate Prospectus to the "Offering" shall refer
to the Company's Offering under the Primary Prospectus.
The Company will provide all Selling Stockholders with copies of the
Alternate Prospectus, at no charge.
iii
<PAGE>
SUBJECT TO COMPLETION - PRELIMINARY PROSPECTUS DATED OCTOBER __, 1996
PROSPECTUS
6,000,000 SHARES OF COMMON STOCK
5,000,000 SHARES OF DENTAL PREFERRED STOCK
[LOGO] DENTAL SERVICES OF AMERICA, INC.
COMMON STOCK: $.50 PER SHARE ISSUABLE UPON EXERCISE OF NON-PUBLIC WARRANTS
AND CLASS A WARRANTS
$1.00 PER SHARE ISSUABLE UPON EXERCISE OF CLASS B WARRANTS
DENTAL PREFERRED STOCK: $.10 PER SHARE
Of the 6,000,000 shares of common stock, $.001 par value (the "Common
Stock") being offered hereby, 3,755,000 shares are being offered by Dental
Services of America, Inc. (the "Company") upon the exercise of outstanding
Common Stock purchase warrants, 500,000 shares are being offered by the Company
upon the exercise of Common Stock purchase warrants which would be issued upon
exercise of outstanding warrants, and 1,745,000 shares are being offered by
certain of the Company's stockholders (the "Selling Stockholders"). See
"Principal and Selling Stockholders." The Company will not receive any proceeds
from the sale of Common Stock by Selling Stockholders. The Common Stock offered
by the Selling Stockholders may be sold from time to time by the Selling
Stockholders or their transferees. The Company is also registering 500,000
Class B common stock purchase warrants ("Class B Warrants"), which are issuable
upon exercise of currently outstanding Class A common stock purchase warrants
("Class A Warrants") (the Class A Warrants, the Class B Warrants and certain
common stock purchase warrants held by a limited number of private investors
("Non-Public Warrants") may be referred to collectively as the "Warrants").
The shares of preferred stock, $.01 par value, being offered hereby
("Dental Preferred Stock") will be offered and sold only to licensed dental
practitioners and other dental professionals, as approved by a committee created
by the Board of Directors.
There are currently 3,255,000 Non-Public Warrants and 500,000 Class A
Warrants outstanding. Each Non-Public Warrant entitles the holder to purchase
one share of Common Stock at a price of $.50. Each Class A Warrant entitles
the holder to purchase one share of Common Stock and one Class B Warrant at a
price at $.50. Non-Public Warrants and Class A Warrants are exercisable until
June 29, 1997.
Each Class B Warrant entitles the holder to purchase one share of
Common Stock at a price of $1.00. Class B Warrants are exercisable until June
29, 1998.
The Warrants are subject to redemption at $.01 per Warrant on thirty
(30) days written notice. See "Description of Securities."
Prior to the date hereof, the Company's Common Stock and Class A
Warrants have been quoted from time to time on the NASDAQ bulletin board and by
the National Quotations Bureau. The Company believes only sporadic trading of
its securities has occurred since the Company's initial public offering in June,
1987, and does not believe that any established trading market presently exists
for the Common Stock or the Class A Warrants. The Company recently applied to
have its Common Stock listed on the NASDAQ bulletin board and recently changed
the symbol for its Common Stock to FLOS. There can be no assurance that any
trading market in the Company's Common Stock or Warrants will develop subsequent
to the date of this Prospectus.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. THE DATE OF THIS PROSPECTUS IS OCTOBER ___, 1996.
<PAGE>
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<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
PRICE TO THE UNDERWRITERS' PROCEEDS TO PROCEEDS TO
PUBLIC COMMISSIONS THE COMPANY/2/ SELLING
AND DISCOUNTS/1/ STOCKHOLDERS/3/
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock
- ------------
Per Share - Issuable upon Exercise of
Class A Warrants and Non-Public Warrants,
or upon sale by Selling Stockholders $ 0.50 $ 0.00 $ 0.50 $ 0.50
- -----------------------------------------------------------------------------------------------------------------
Per Share - Issuable upon
Exercise of Class B Warrants $ 1.00 $ 0.00 $ 1.00 $ 0.00
- -----------------------------------------------------------------------------------------------------------------
Total Maximum 3,755,000 Shares Issuable
upon Exercise of Class A Warrants and Non-
Public Warrants./4/ $1,877,500.00 $ 0.00 $ 1,877,500.00 $ 0.00
- -----------------------------------------------------------------------------------------------------------------
1,745,000 Shares to be sold from time to time
by Selling Shareholders $ 872,500.00 $ 0.00 $ 0.00 $ 872,500.00
- -----------------------------------------------------------------------------------------------------------------
500,000 Shares Issuable upon Exercise of
Class B Warrants $ 500,000.00 $ 0.00 $ 500,000.00 $ 0.00
- -----------------------------------------------------------------------------------------------------------------
Dental Preferred Stock
- ----------------------
Per Share $ 0.10 $ 0.00 $ 0.10 $ 0.00
- -----------------------------------------------------------------------------------------------------------------
Total - 5,000,000 shares $ 500,000.00 $ 0.00 $ 500,000.00 $ 0.00
- -----------------------------------------------------------------------------------------------------------------
Total - 6,000,000 Shares/5/ of Common Stock
5,000,000 Shares of Preferred Stock $3,750,000.00 $ 0.00 $ 2,877,500.00 $ 872,500.00
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ No commission or any other form of remuneration will be paid by the Company
in connection with the exercise of Warrants, and no broker has been
retained to solicit the exercise of Warrants.
/2/ Before deducting expenses that will be incurred in connection with the
Prospectus, estimated at approximately $40,000.
/3/ Proceeds to the Selling Stockholders may be lesser or greater, depending
upon the market price of the Common Stock at the times when the Selling
Stockholders sell their shares.
/4/ There can be no assurance that any Warrants will be exercised. The exercise
of Warrants will be solicited by officers and directors of the Company on a
"best-efforts" basis.
/5/ Includes 5,500,000 shares issuable upon exercise of Class A Warrants and
Non-Public Warrants and 500,000 shares issuable upon exercise of Class B
Warrants.
AVAILABLE INFORMATION
A registration statement on Form SB-2 (the "Registration Statement") under
the Securities Act of 1933, relating to the securities offered hereby has been
filed by the Company with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 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
securities offered hereby, reference is made to such Registration Statement,
exhibits and schedules. Statements contained in this Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as exhibits to the Registration Statement, each such
statement being qualified in all respects by such reference. A copy of the
Registration Statement may be inspected without charge at the Commission's
principal offices in Washington, D.C., and copies of any part thereof may be
obtained from the Commission upon the payment of certain fees prescribed by the
Commission. The Company will provide without charge to each person who receives
a Prospectus, upon written or oral request, a copy of any information that is
incorporated by reference in this Prospectus. Requests should be directed to
the Company at the address and/or telephone number set forth on the following
page.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files
periodic reports, proxy statements and other information with the Commission.
Such reports, proxy statements and other information concerning the Company may
be inspected or
2
<PAGE>
copied at the public reference facilities at the Commission located at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Offices in New York, 7 World Trade Center, 13th Floor, New York, New
York 10048, and in Chicago, Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such documents can be
obtained at the public reference section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates.
THE COMPANY FURNISHES ITS SHAREHOLDERS WITH ANNUAL REPORTS CONTAINING
AUDITED FINANCIAL STATEMENTS CERTIFIED BY THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTING FIRM AND SUCH OTHER REPORTS AT THE COMPANY DEEMS APPROPRIATE.
3
<PAGE>
PROSPECTUS SUMMARY
------------------
The following information is qualified in its entirety by reference to the
more detailed information, including the Financial Statements and the Notes
thereto, appearing elsewhere in the Prospectus.
THE COMPANY
- -----------
Dental Services of America, Inc. (the "Company"), formerly known as
Campbell Capital Corp., was organized under the laws of the State of Delaware in
January, 1987, for the purpose of providing a vehicle to raise capital and seek
business opportunities. Effective as of July, 1996, the Company acquired 100%
of the issued and outstanding capital stock of Dental Practice Administrators,
Inc. ("DPA"), a Florida corporation which was formed in 1995 to engage in the
business of operating dental centers. In conjunction with the acquisition of
DPA, the Company changed its corporate name to Dental Services of America, Inc.
References herein to the "Company" may be deemed to refer to Dental Services of
America, Inc. and/or to its wholly-owned subsidiary, Dental Practice
Administrators, Inc.
The Company currently operates seven dental centers, all of which are
located in the South Florida area. Each dental center is located within or in
close proximity to a high volume medical clinic. The medical clinics serve
primarily Medicaid patients.
In most states, including Florida where all of the Company's dental centers
are located, dental practices must be owned by a licensed dentist. In keeping
with these legal requirements, the Company operates its dental centers through
majority-owned subsidiaries, which are controlled by licensed dentists. The
Company provides the required capital, and management and marketing services,
allowing the dentists to focus on delivery of high quality dental care.
The Company plans to open new dental centers in other Florida regions and
additional locations in the greater Miami metropolitan area. The Company
intends to expand its operations to other states, including potential expansion
into Georgia, South Carolina, Alabama, Mississippi, Missouri and New Jersey.
The Company intends to position itself to capitalize on developing trends
within the health care industry, such as the penetration of "managed care," by
using the dental centers as a basis for the development of prepaid managed
dental care plans. Management believes that participation in dental managed
care will be critical to the long-term growth of the Company.
The Company's principal executive offices are located at 12000 Biscayne
Boulevard, Suite 108, Miami, Florida 33181, its telephone number is (305) 895-
0716, and its telecopy number is (305) 895-0514.
RISK FACTORS
- ------------
Purchase of the securities offered hereby by exercise of the Warrants or by
purchase of the Dental Preferred Stock involves a high degree of risk. See
"Risk Factors."
4
<PAGE>
SECURITIES OFFERED
- ------------------
. 3,255,000 shares of Common Stock issuable upon exercise of Non-Public
Warrants, at a price of $.50.
. 500,000 shares of Common Stock and 500,000 Class B Warrants issuable upon
exercise of Class A Warrants,
at a price of $.50.
. 500,000 shares of Common Stock issuable upon exercise of Class B Warrants,
at a price of $1.00.
. 5,000,000 shares of Dental Preferred Stock, at a price of $.10.
. 1,745,000 shares of Common Stock to be sold from time to time by Selling
Stockholders, at the prevailing
market price at time of sale.
No minimum number of Warrants must be exercised for any of them to be exercised,
and there is no assurance that any or all of such Warrants will be exercised.
<TABLE>
<CAPTION>
SECURITIES OUTSTANDING AND TO BE OUTSTANDING/1/
- -------------------------------------------------
TO BE OUTSTANDING,
OUTSTANDING AS OF ASSUMING EXERCISE OF
JULY 31, 1996 ALL WARRANTS
(EXCEPT PRIVATE WARRANTS)
AND SALE OF ALL DENTAL PREFERRED STOCK
<S> <C> <C>
Common Stock 7,320,000 11,575,000
Preferred Stock 0 5,000,000
Non-Public Warrants 3,255,000 0
Class A Warrants 500,000 0
Class B Warrants 0 0
Private Warrants 1,000,000 1,000,000
</TABLE>
USE OF PROCEEDS
- ---------------
The proceeds which may be received by the Company upon exercise of Warrants
and the sale of the Dental Preferred Stock will be used for (a) growth of the
Company's business through internal growth and establishment of additional
dental centers, (b) marketing programs, and (c) working capital. See "Use of
Proceeds."
______________________________
/1/ See "Description of Securities."
5
<PAGE>
SUMMARY FINANCIAL INFORMATION
- -----------------------------
DENTAL SERVICES OF AMERICA, INC. AND SUBSIDIARY
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Year ended Ten months ended
September 30, July 31,
1994 1995 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income statement information:
Revenue $ 52 $ 55 $ 48 $ 665,131
Income (loss) before
extraordinary item (7,783) (2,145) (2,902) 3,763
Earnings per share before
extraordinary item (.001) - - .0005
Net income (loss) (7,783) (2,145) (2,902) 3,763
Earnings (loss) per share (.001) - - -
Balance sheet information
(at end of period):
Total assets 4,232 2,087 2,180 1,120,443
Stockholders' equity $ (5,828) $ (7,973) $(8,730) $1,079,736
</TABLE>
6
<PAGE>
RISK FACTORS
------------
An investment in the Common Stock pursuant to the exercise of Warrants or
an investment in the Dental Preferred Stock involves a high degree of risk.
Prospective investors should give careful consideration, among other items, to
the following factors prior to exercising any Warrants or purchasing Dental
Preferred Stock.
Recent Acquisition; Limited Operating History. The Company was organized
---------------------------------------------
in 1987 for the purpose of providing a vehicle to raise capital and seek
business opportunities. The recent acquisition of DPA represents the Company's
first acquisition of an operating business. DPA was organized and began
operating dental centers in 1995, and its operations and revenues have been
limited to date. The Company's operations are subject to all of the risks
inherent in the establishment of a new business, particularly a new business in
the highly competitive health care field. The likelihood the Company will be
successful in its business operations must be considered in light of the
problems, expenses, difficulties, complications and delays frequently
encountered in connection with establishing a new health care business,
including, without limitation, regulatory problems, unanticipated expenses and
competition. Although the Company's management believes that the operation of a
series of dental centers is an attractive business which offers opportunities
for profits and growth, there can be no assurance that such business will prove
to be a profitable business for the Company to engage in, or that the
acquisition of DPA will be a beneficial acquisition for the Company.
Lack of Diversification. As of the date hereof, the operation of a series
-----------------------
of dental centers in the State of Florida constitutes the Company's only
business. The Company plans to expand its current business operation into
other states and intends to develop and operate a series of prepaid managed
dental care plans, but there can be no assurance as to when and if such
expansion will occur. The Company is continuing to search for other business
opportunities, but there can be no assurance that the Company will be able to
identify or acquire other attractive businesses. Accordingly, the Company will
be subject to the advantages and disadvantages caused by a lack of
diversification.
Government Regulations. The dental industry and dental practices are
----------------------
regulated extensively at the state and federal levels. The Company does not
control the practice of dentistry by the affiliated dentists or their compliance
with the regulatory requirements directly applicable to dentists and their
practices. The laws of many states prohibit non-dental entities (such as the
Company) from practicing dentistry (which in certain states includes managing or
operating a dental office), splitting professional fees with dentists, owning a
dental practice or controlling the content of a dentist's advertising. The laws
of many states also prohibit dentists from paying any portion of fees received
for dental services in consideration for the referral of a patient. In
addition, many states impose limits on the tasks that may be delegated by a
dentist to dental hygienists and other staff members. These laws and their
interpretation vary from state to state and are enforced by regulatory
authorities with broad discretion. There can be no assurance that any review of
the Company's business relationships by the courts or other regulatory
authorities will not result in determinations that could adversely affect the
operations of the Company or that the regulatory environment will not change to
restrict the Company's existing or future operations. Further, there can be no
assurance that the legality of the Company's long-term service, management and
consulting agreements will not be successfully challenged or that enforceability
of the provisions thereof will not be limited.
The laws and regulations of certain states in which the Company may seek to
expand may require the Company to change its contractual relationship with
dentists in a manner that may restrict the Company's operations in those states
or may prevent the Company from acquiring the assets of or managing dental
practices in those states. Further, there can be no assurance that the laws and
regulations of the state of Florida, in which the Company presently maintains
operations, will not change or be interpreted in the future to either restrict
or adversely affect the Company's relationship with dentists in that state.
There can be no assurance that the Company will be approved for licensing
as a prepaid managed dental care plan in any state, in which case the Company's
expansion plans will be affected. State insurance laws and other governmental
regulations establish various licensing, operational, financial and other
requirements relating to the
7
<PAGE>
prepaid managed dental care plan business. State insurance departments and
other regulatory agencies are typically empowered to interpret such laws and
promulgate regulations applicable to the prepaid dental plan business. The laws
and regulations relating to the prepaid dental plans are rapidly changing and
have been the subject of numerous past and present legislative proposals, which
could adversely affect the Company's ability to enter the prepaid managed dental
care business and consequently, the Company's expansion plans.
Competition. The Company competes with other licensed dentists, as well as
-----------
with other dental care management companies, the majority of which may have more
capital, resources, expertise and experience than the Company. The Company
expects to compete with other companies offering prepaid dental care services as
well as other types of businesses in the health care industry, including
insurance companies offering both prepaid managed dental care plans and
indemnity dental care insurance, Health Maintenance Organizations (HMOs), self-
funded employer plans, Preferred Provider Organizations (PPOs), and discount
fee-for-service dental plans. The Company believes that the competition for
prepaid managed dental care plans will continue to increase in the future and
that insurance companies and HMOs in particular will continue to seek to enter
the managed dental care benefits business and expand their dental care markets.
Many of the Company's competitors will be better known to the public and have
substantially greater financial and other resources than the Company. Pricing
of the plans will be a significant competitive factor, especially with contracts
that are awarded on a competitive bid basis. There can be no assurance that the
Company will be able to compete with other companies or entities in the same
line of business.
Risks Associated with Expansion. The success of the Company's expansion
-------------------------------
strategy will depend on a number of factors including:
(i) The Company's ability to affiliate with dentists to open new dental
centers, the availability of suitable markets and the Company's ability to
obtain good locations within those markets;
(ii) The Company's ability to identify and affiliate with existing dental
practices and to integrate such practices into the Company's existing
operations;
(iii) the availability of adequate financing to fund the Company's
expansion strategy;
(iv) regulatory constraints.
There can be no assurance that the Company's expansion strategy will be
successful, that modifications to the Company's strategy will not be required,
that the Company will be able to manage effectively and enhance the
profitability of additional dental centers or that the Company will be able to
obtain adequate financing on reasonable terms to expand the number of dental
centers.
Risk of Providing Dental Services. The dental centers provide dental
---------------------------------
services to the public and are exposed to the risk of professional liability and
other claims. Such claims, if successful, could result in substantial damage
awards to the claimants which could exceed the limits of any applicable
insurance coverage. The Company does not control the practice of dentistry by
the affiliated dentists or their compliance with the regulatory and other
requirements directly applicable to dentists and their practices. Each
affiliated dentist has undertaken, however, to comply with all applicable
regulations and requirements, and the Company is indemnified under its long-term
agreements for claims against the affiliated dentists. The Company will
maintain liability insurance for itself and must be named as an additional
insured party under the liability insurance policy required to be maintained by
each affiliated dentist. However, a successful malpractice claim against the
Company or an affiliated dentist could have a material adverse effect on the
Company.
Dividends. The Company has never paid any dividends. The Company intends
---------
to retain earnings to finance the growth and development of its business and
does not anticipate paying cash dividends on its Common Stock in the foreseeable
future.
8
<PAGE>
Health Care Reform. Congress and certain state legislatures have
------------------
considered various types of health care reform, including comprehensive
revisions to the current health care system. It is uncertain what legislative
proposals will be adopted in the future, if any, or what actions Congress, state
legislatures or third party payers may take in anticipation of or in response to
any health care reform proposals or legislation. Health care reform legislation
adopted by Congress or state legislatures could have a material adverse effect
on the operations of the Company, and changes in the health care industry, such
as the growth of managed care organizations and provider networks, many result
in lower payment levels for the services of the affiliated dentists.
Risk Factors Related to Purchase of Dental Preferred Stock. It is not
----------------------------------------------------------
expected that any public trading market for the Dental Preferred Stock will
develop, and purchasers of Dental Preferred Stock may be required to bear the
risk of such investment for an indefinite period of time. Although Dental
Preferred Stock is convertible into Common Stock, it is convertible at the rate
of 50 shares of Dental Preferred Stock for each share of Common Stock. Thus,
unless the market price of the Common Stock exceeds $5.00 per share (without
adjustment for subsequent stock splits or stock dividends), the value of Common
Stock received upon conversion of Dental Preferred Stock will be less than the
amount paid to purchase the Dental Preferred Stock.
Although the Dental Preferred Stock is entitled to receive cumulative
dividends at the rate of $.01 per share per annum, there can be no assurance
that such dividends will be paid.
The liquidation preference of the Dental Preferred Stock is less than the
purchase price of such stock. In the event of the liquidation of the Company,
holders of Dental Preferred Stock will not recover their initial investment.
Control by Insiders. Assuming exercise of all Warrants (including Class B
-------------------
Warrants to be issued upon exercise of Class A Warrants), the executive officers
and directors of the Company and DPA and entities controlled by or affiliated
with them will beneficially own approximately 25% of the outstanding Common
Stock of the Company, and will likely be able to elect the Company's directors
and thereby direct the policies of the Company. See "Principal and Selling
Stockholders" and "Description of Securities."
Future Sales of Common Stock. Five Million Two Thousand (5,002,000) shares
----------------------------
of the Company's outstanding Common Stock and 3,755,000 Non-Public Warrants are
"restricted securities" as that term is defined in Rule 144 promulgated under
the Securities Act of 1933, as amended (the "Act"), and under certain
circumstances may be sold without registration pursuant to such Rule. Five
hundred fifty-seven thousand (557,000) of such shares and 625,000 of such
Warrants are currently eligible for sale under Rule 144. The remaining
4,445,000 shares and 3,135,000 Warrants are eligible for sale under Rule 144
commencing in July, 1998. Shares issued upon exercise of Warrants subsequent to
the date of this Prospectus and shares owned by Selling Stockholders which are
being registered hereby are eligible for sale immediately pursuant to the
Registration Statement of which this Prospectus is a part, but substantially
all of the Selling Stockholders and holders of the Non-Public Warrants have
agreed, in writing, with the Company, not to sell any shares issued upon
exercise of such Warrants until after October 1, 1996, and thereafter, to limit
their sale of shares issued upon exercise of Warrants to not more than 20% of
their holdings of such shares every three months (computed on a cumulative
basis). The Company is unable to predict the effect that sales made under Rule
144, or sales of shares issued upon exercise of Warrants, may have on the then
prevailing market price of the Common Stock, although any substantial sale of
restricted securities pursuant to Rule 144 or of shares issued upon exercise of
Warrants may have an adverse effect.
Non-Registration in Certain Jurisdictions of Shares Underlying the
------------------------------------------------------------------
Warrants; Need for Current Prospectus. Holders of Warrants may reside in
- -------------------------------------
jurisdictions in which the Class B Warrants and the shares of Common Stock
issuable upon exercise of the Warrants are not registered or qualified during
the period that the Warrants are exercisable. In this event, the Company would
be unable to issue shares of Common Stock and/or Class B Warrants to those
persons desiring to exercise their Warrants unless and until the underlying
securities could be qualified for sale in jurisdictions in which such purchasers
reside, or an exemption to such qualification exists in such jurisdiction. In
addition, warrant holders will not be able to exercise their Warrants, unless at
the time of exercise the Company
9
<PAGE>
has a current prospectus covering the shares of Common Stock underlying the
Warrants. No assurances can be given that the Company will be able to maintain
a current prospectus. See "Description of Securities - Warrants."
Authorization of Preferred Stock. The Company's certificate of
--------------------------------
incorporation authorizes the issuance of 10,000,000 shares of "blank check"
preferred stock with such designations, rights and preferences as may be
determined from time to time by the Board of Directors. Accordingly, the Board
of Directors is empowered, without stockholder approval, to issue preferred
stock with dividend, liquidation, conversion, voting or other rights which could
adversely affect the voting power or other rights of the holders of the
Company's Common Stock.
Five million (5,000,000) of such shares of preferred stock have been
designated as Dental Preferred Stock. See "Description of Securities." An
additional 5,000,000 shares of preferred stock remain available for designation
and issuance. In the event of issuance, the preferred stock could be utilized,
under certain circumstances, as a method of discouraging, delaying or preventing
a change in control of the Company. Although the Company has no present
intention to issue any shares of its preferred stock other than the Dental
Preferred Stock, there can be no assurance that the Company will not do so in
the future. See "Description of Securities-Preferred Stock."
Absence of Public Market; Arbitrary Determination of Exercise Prices. The
--------------------------------------------------------------------
Company's Common Stock has been quoted from time to time on the NASDAQ bulletin
board and by the National Quotations Bureau. The Company believes that only
sporadic trading of its securities has occurred since its initial public
offering in 1987 and does not believe that any established trading market
presently exists for the Common Stock or Class A Warrants. There is no
assurance that a market will develop following exercise of Warrants, or if one
does develop, that it will be sustained. The exercise prices of the Warrants
were established by the Company in 1987, in connection with the Company's
initial public offering. The exercise price of the Non-Public Warrants was
subsequently revised by the Company and such exercise prices are not necessarily
related to the Company's current asset value, net worth or other established
criteria of value. See "Description of Securities-Warrants" and "Plan of
Distribution."
Inability to Qualify, or Maintain Qualification, for Listing of Securities
--------------------------------------------------------------------------
on NASDAQ System. The Company expects that, following the exercise of
- ----------------
outstanding Warrants, the Company will apply to NASDAQ to have its Common Stock
and Warrants listed on the NASDAQ System. For initial and continued inclusion
on NASDAQ (i) the Company will have to have total assets of at least $4,000,000
for initial inclusion and maintain at least $2,000,000 in total assets for
continued inclusion, and must have $2,000,000 in capital and surplus for initial
inclusion and maintain $1,000,000 in capital and surplus for continued
inclusion, (ii) the minimum bid price of the Common Stock will have to be $3.00
per share for initial inclusion and $1.00 per share for continued inclusion,
(iii) there will have to be at least 100,000 shares in the public float valued
at $1,000,000 or more, (iv) the Common Stock will have to have at least two
active markets makers, and (v) the Common Stock will have to be held by at least
300 holders.
If the Company is unable to satisfy NASDAQ's maintenance requirements, its
securities may not be listed on or may be delisted from NASDAQ. In such event,
trading, if any, in the Common Stock and Warrants would thereafter be conducted
in the over-the-counter market in the so-called "pink sheets" or the NASD's
"Electronic Bulletin Board." Consequently, the liquidity of the Company's
securities could be impaired, not only in the number of securities which could
be bought and sold, but also through delays in the timing of the transactions,
reduction in security analysts' and the news media coverage of the Company, and
lower prices for the Company's securities than might otherwise be attained.
10
<PAGE>
Risk of Low-Priced Stock. The Company's securities are subject to Section
------------------------
15(g) under the Securities Exchange Act of 1934 (the "1934 Act"), and the rules
promulgated thereunder, which regulate the sale of "penny stocks." The
Commission has adopted regulations which define a "penny stock" to be an equity
security that has a market price (as therein defined) less than $5.00 per share
or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, a
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction prior to
sale. The rules also require delivery, prior to any transaction in a penny
stock, of a disclosure schedule prepared by the Commission relating to the penny
stock market. Disclosure is also required to be made about commissions payable
to both the broker-dealer and the registered representative and current
quotations for the securities. Finally, monthly statements are required to be
sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks. Consequently, the rule
may adversely affect the ability of broker-dealers to sell the Company's
securities and may adversely the ability of holders of the Company's securities
to sell any such securities in the secondary market.
11
<PAGE>
USE OF PROCEEDS
---------------
The Company may receive up to a maximum of $1,877,500 gross proceeds from
the exercise of outstanding Non-Public Warrants and Class A Warrants and a
maximum of $500,000 gross proceeds from the exercise of Class B Warrants
issuable upon exercise of Class A Warrants, assuming all such Warrants are
exercised ($2,337,500 of aggregate net proceeds after deducting all expenses of
registering the Common Stock underlying such Warrants). The Company may also
receive up to a maximum of $500,000 of gross proceeds from the sale of the
Dental Preferred Stock. The Company will not receive any proceeds from the sale
of Common Stock by the Selling Stockholders. There can be no assurance as to how
many Warrants will be exercised, how many shares of Dental Preferred Stock will
be sold, or as to the amount of proceeds, if any, the Company will receive.
Accordingly, the Company's plans for the use of such proceeds must be extremely
flexible.
The Company intends to apply the proceeds from the exercise of the Warrants
and the sale of the Dental Preferred Stock to the extent received, of which
there can be no assurance, as follows:
<TABLE>
<CAPTION>
PERCENT OF
APPLICATION NET PROCEEDS
----------- ------------
<S> <C>
Acquisition and Development of
Additional Dental Centers 50%
Marketing/(1)/ 25%
Working Capital/(2)/ 25%
</TABLE>
The foregoing percentages may vary depending upon the amount of proceeds
received.
_______________________________
(1) Includes salaries for marketing personnel as well as expenses for
advertising and promotional materials, enrollment forms, member
handbooks, and provider directories.
(2) For general and administrative expenses, including payment of
professional fees.
The foregoing represents the Company's best estimate of the allocation of
the net proceeds received upon the exercise of Warrants, based upon the current
status of the Company's business operations, its current plans and current
economic conditions. Future events, including the problems, delays, expenses
and complications frequently encountered by early stage companies, as well as
changes in regulatory, political and competitive conditions affecting the
Company's business and the success or lack thereof of the Company's expansion
and marketing efforts, may make shifts in the allocation of funds necessary or
desirable.
Prior to expenditure, the net proceeds will be invested in short-term
interest bearing securities or money market funds.
12
<PAGE>
CAPITALIZATION
--------------
The following table sets forth the capitalization of the Company as of July
31, 1996 (and reflects the exercise of 1,745,000 Non-Public Warrants), and as
adjusted to give effect to the issuance of 4,255,000 shares of Common Stock upon
the exercise of Warrants, and issuance of 5,000,000 shares of Dental Preferred
Stock.
<TABLE>
<CAPTION>
STOCKHOLDERS' EQUITY: ACTUAL AS ADJUSTED
- -------------------- ----------- ------------
<S> <C> <C>
Common Stock, $.001 par value,
25,000,000 shares authorized;
7,320,000 shares issued and
outstanding; 11,575,000
shares issued and outstanding
as adjusted (1).......................... $ 7,320 $ 11,575
Preferred Stock, $.01 par
value, 10,000,000 shares
authorized; no shares issued;
5,000,000 shares issued as adjusted (1).. $ 0 $ 50,000
Additional Paid-in Capital............... $1,305,653 $2,173,898
Retained Earnings........................ $ (233,237) $ (233,237)
Total Stockholders' Equity............. $1,079,736 $1,992,236
</TABLE>
______________________
(1) "As Adjusted" amounts assume exercise of all 3,755,000 outstanding Non
Public Warrants and Class A Warrants and all 500,00 Class B Warrants which
are issuable upon exercise of Class A Warrants. "As Adjusted" amounts do
not assume exercise of Private Warrants issued in July, 1996, which have an
exercise price of $2.50 per share and expire in June, 2001. "As Adjusted"
amounts also assume the sale of all 5,000,000 shares of Dental Preferred
Stock.
13
<PAGE>
BUSINESS
HISTORY OF THE COMPANY
- ----------------------
The Company was organized under the laws of the State of Delaware in
January, 1987, for the purpose of providing a vehicle to raise capital to seek
business opportunities. In July, 1996, the Company acquired 100% of the
outstanding capital stock of Dental Practice Administrators, Inc. ("DPA"). In
connection with such acquisition, the Company changed its corporate name from
Campbell Capital Corp. to Dental Services of America, Inc.
DPA was organized under the laws of the State of Florida in October, 1995,
for the purpose of establishing and operating dental centers.
GENERAL
- -------
The Company currently operates seven dental centers within medical clinics
or in close proximity to medical clinics. All of such dental centers are
located in the South Florida area. The medical clinics are high volume,
treating primarily Medicaid patients. The Company provides the required capital
and management and marketing services for each dental center, allowing the
dentist to focus on delivering high quality dental care services.
The Company will continue to be engaged in the start-up, acquisition and
management of dental centers throughout the United States. The Company will use
its dental centers as a base to enter the business of providing managed dental
care services through the establishment of prepaid managed dental care plans.
The Company plans to open new dental centers in other Florida regions, and
additional locations in the greater Miami metropolitan area. Other potential
states for the Company's expansion include Georgia, South Carolina, Alabama,
Mississippi, Missouri and New Jersey.
In most states, including Florida where all of the Company's dental centers
are located, dental practices must be owned by a licensed dentist. In keeping
with these legal requirements, the Company operates the dental centers through
majority-owned subsidiaries which are controlled by licensed dentists. The
Company generally owns the equipment and is the lessee of the premises where
each dental center is located.
The Company will continue to position itself to capitalize on the
developing trends within the health care industry by using the dental centers as
a base to develop and operate prepaid managed dental care plans throughout the
geographic areas it services. Management believes that dental services will
become increasingly subject to managed care arrangements. Therefore,
participation in dental managed care will be critical to the long term future
growth of the Company.
The Company's business plan contemplates the establishment of regional and
statewide networks of dental centers, managed and operated by the Company, and
increasing the patient flow by contracting with third-party payers, health
insurance companies, managed health care organizations and prepaid managed
dental care plans.
THE DENTAL PROFESSION AND DENTAL CARE INSURANCE
- -----------------------------------------------
The U.S. dental health care profession and industry are highly fragmented.
According to the American Dental Association (ADA), there were approximately
138,000 active licensed dentists in the United States in 1991. In 1993,
approximately 68% of the nation's private dentists were in solo practice and 20%
were in two-person practices. The U.S. Office of National Health Statistics
projects dental care spending will increase from $43.2 billion
14
<PAGE>
in 1993 to $90 billion by the year 2000. In 1995, $2 billion were paid for
dental services with government funds, primarily through the Medicaid program.
This state/federal program insures approximately 20% of the children in America.
Most dentists currently do not accept Medicaid recipients as patients because of
the lower reimbursement rates paid by the program. The Medicaid rate is
generally about half of the usual and customary fee-for-service rate. The
limited supply of dental services for Medicaid recipients presents an
opportunity for high volume dental clinics which cater to this sector of the
market.
According to the National Association of Dental Plans, approximately 48% of
the U.S. population, approximately 125 million people, have dental insurance
benefits. Of those, only 18% were covered by a prepaid managed dental care plan
and the remainder were in indemnity or similar type plans. Prepaid managed
dental care plans have grown from approximately 7.8 million covered members in
1990 to an estimated 23.1 million in 1995, an annual compounded rate of
approximately 24.3%. The enrollment growth of prepaid managed dental care plans
has been attributed to the shifting of patients from higher priced indemnity
insurance plans into lower cost managed care plans.
Dental care insurance is the second most requested benefit by employees,
after medical coverage. While historically, dental care coverage has not been
an employee benefit customarily provided by employers, more companies are
offering this benefit than ever before. According to Foster Higgins, a national
employee benefits consulting firm, approximately 87% of employers with more than
200 employees, 63% of employers with 50-199 employees and 39% of employers with
10-49 employees offer dental coverage as an available employee benefit. Dental
care insurance benefits generally cost about 10% of the cost of medical
coverage. Dental coverage is generally offered separately from medical coverage
and the employer frequently pays none, or only a portion, of the premium for the
dental coverage. Most of those offering these benefits do so in the way of an
indemnity dental insurance plan. This is similar to medical indemnity insurance
plans in that the individual or the employer pays a premium for the dental
insurance coverage and the insurance company pays or reimburses the dentist in
whole or in part for the charges of the dental services. Dental indemnity
insurance companies utilize mechanisms to control costs, such as deductibles,
annual maximums, limiting charges for services and utilizing preferred providers
that negotiate discounted fees for their services. While these mechanisms help
control some costs to the insurance company, these mechanisms do not transfer
significant risk to the dentist or provide significant incentives to the dentist
to control costs or reduce fees. Furthermore, there are no incentives for the
insured to utilize preventive dental services.
PREPAID MANAGED DENTAL CARE PLANS
- ---------------------------------
Prepaid managed dental care plans pay a fixed monthly capitation payment to
the dentist who provides dental services to the plan member at no cost to the
member or at reduced fees (copayments) which are paid by the member. Under this
scenario, the risk of high utilization is shifted to the dentist, although the
dentist receives copayments for many covered services that are often greater
than the direct costs of the service to the dentist, therefore reducing
financial risk. This capitation method rewards efficient dentists who stress
routine, preventive care and control their fixed expenses. Some prepaid managed
dental care plans also offer specialty dental care at fixed copayments by the
plan member. Unlike medical care, most dental care is provided by general
dentists with some specialty care provided by orthodontists (specialists in
correction of teeth alignment), endodontists (specialists in root canal
therapy), oral surgeons (specialists in extraction), pedodontists (specialists
in pediatric dentistry) and periodontists (specialists in gum-related
treatment).
Prepaid managed dental care plans are the fastest growing type of dental
care benefit coverage. An increasing number of employers view this type of
coverage as a way of offering their employees enhanced dental benefits at a
reduced cost. Premium costs for prepaid managed dental care plans have been
increasing at a lower rate than premium costs for traditional indemnity plans
during recent years. The popularity of these plans is also attributed to the
generally greater acceptance and utilization of managed care, and the increasing
acceptance of capitated arrangements by dentists, which results in improved
accessibility and convenience for plan members. Even
15
<PAGE>
though the acceptance level is increasing, in 1994 only 19% (26,000) of all
active dentists were affiliated with prepaid managed dental care plans.
The managed dental care benefits industry is in its early growth stage and
is highly fragmented. According to the National Association of Dental Plans, in
1994, 40% of its members operating prepaid managed dental care plans were small,
single-state companies. Members of prepaid managed dental care plans presently
represent only 18% of those with dental coverage. This constitutes only 9% of
the United States population. As more employers and individuals purchase dental
care coverage and as employers and individuals trade-in their current indemnity
policies for richer benefits and lower cost prepaid managed dental care plans,
growth opportunities will develop for the Company in the managed dental benefits
industry.
EXPANSION STRATEGY
- ------------------
The Company's expansion strategy is two-pronged. One objective is to
establish regional and statewide networks of dental clinics, managed and
operated by the Company. The second objective is to increase the patient flow
by contracting with third-party payers, health insurance companies, managed
health care organizations, and through the establishment of Company-owned
prepaid managed dental care plans.
The Company intends to continue to expand its business operations through
the establishment of dental centers within or in close proximity to established
medical and health care related facilities. The Company may also seek to
provide dental care services at certain institutional locations, such as schools
and correctional facilities, through portable dental centers. The Company
intends to continue to target underserved population centers. The Company
anticipates offering its own network of dental centers on a fee-for-service and
capitated basis to third-party payers, insurance companies and managed care
organizations. The Company also intends to apply for a limited prepaid health
services license from the Florida Department of Insurance in the near future,
and upon approval will use its existing dental centers to form the basis for
such plan's network of providers. The same procedure will be followed to enter
other states and regional geographic markets. States in which the Company is
considering entering include Georgia, South Carolina, Alabama, Mississippi,
Missouri and New Jersey.
In order to build a profitable and successful full service dental services
company, the Company will focus on achieving the following objectives:
1. Establishing regional and statewide networks of high quality dental
care centers, managed and operated by the Company.
2. Contracting the networks with third-party payers, insurance companies
and managed health care organizations.
3. Establishing patient loyalty through high quality service, innovative
marketing programs, and name recognition.
4. Creating prepaid managed dental care plans which will utilize the
Company's dental centers.
ESTABLISHMENT AND MANAGEMENT OF DENTAL CENTERS
- -----------------------------------------------
The Company provides comprehensive management and marketing services to its
dental centers. The Company's initial dental centers are all located in
Florida. The Company operates these centers through management agreements with
majority-owned subsidiaries which are controlled by licensed dentists. The type
of agreement between dental centers and the Company will vary based on the
regulatory provisions of the state in which the dental center is located. There
are generally three types of agreements that the Company enters into:
16
<PAGE>
Service Agreements. Pursuant to the service agreement, the Company manages
the business and marketing aspects of the dental center, provides capital,
staff, facilities and equipment, supplies and inventory, patient scheduling,
billing and collections services, legal and accounting services, and maintains
all files and records.
Management Agreements. The terms and conditions of the management
agreement vary according to the statutory and regulatory requirements of the
state in which the dental center is located. The services provided by the
Company pursuant to the agreement are similar to those provided under the
service agreements.
Consulting Agreements. In a limited number of states, the Company may only
provide consulting services to dental centers and may not manage the dental
practice. The terms and conditions of the consulting agreement will differ
significantly from the terms and conditions of the other types of arrangements
described previously. The services provided by the Company will vary depending
upon the regulatory requirements of the state in which the dental center is
located.
Key elements of the Company's operating strategy for its dental centers
include:
1. Increasing market penetration by providing patients with state-of-the-
art dental facilities within or in close proximity to an existing health
center at convenient locations.
2. Achieving operating efficiencies and economies of scale through:
a) dental centers which promote increased productivity through
innovative designs and layouts:
b) efficient use of dental assistants and other dental clinic
personnel;
c) centralized purchasing and distribution programs which allow for
greater discounts on dental products through volume purchasing;
d) standardized operating support systems and training programs which
increase efficiency and allows all the dental centers to offer the
same high quality dental care services;
e) a management information system ("MIS") which links the dental
centers to third-party payers, insurance companies and managed
health care organizations;
f) efficient return and recall procedures.
DESIGN OF DENTAL CLINICS. The dental centers are generally located
------------------------
inside medical clinics or in very close proximity to such clinics.
Substantially all of the dental centers have partitions strategically placed
between the dental chairs which allows for certain equipment to be shared
between chairs. This creates a clinically efficient environment whereby
expenses for equipment and employees are reduced.
Freestanding dental centers will be opened or acquired only in locations
that are in close proximity to large medical facilities or locations which,
through managed health care contracts or other such arrangements, will have an
assured flow of patients. The Company is also planning to develop portable
dental centers, which can be transported to institutional locations to provide
services to patients residing at or attending such institutions.
STAFFING AND SCHEDULING. Dental centers are generally operated during the
-----------------------
hours that the medical clinics are open for business. In dental centers where
the volume of patients is low, the dental center is only open during certain
days and hours each week, allowing the dentists to work at other facilities
during the off days. This allows dentists to rotate to different facilities and
utilize their time in the most efficient manner. Patients are scheduled based
on the rotation schedule, if applicable. At all times during normal business
hours, all centers have dentists,
17
<PAGE>
receptionists or dental staff to assist with appointments and emergency
situations. During the off hours or days, the appointments are scheduled
through other open dental centers which receive the telephone calls through call
forwarding, a toll-free number, and an integrated appointment scheduling system.
The scheduling system groups appointments by the type of procedure. The
operational systems in place enable each dentist to treat an optimal average of
21 patients per eight hour patient treatment day. In addition, certain time
periods will be dedicated to dental maintenance and follow-up care, and two
standard preventive care dental visits will be scheduled annually.
MARKETING. The Company generally advertises and markets the services of
---------
the dental centers through direct mail, community civic and religious
organizations, telephone contact and direct patient contact with written
materials during visits to the medical clinics in which the dental centers are
located. The Company recruits additional business through churches, health
fairs, public and private schools and other community and civic events. As the
Company grows and is able to offer its services in larger geographic areas,
advertisements through electronic and print media will be used.
PURCHASING AND DISTRIBUTION. The Company presently purchases all dental
---------------------------
equipment, office supplies, forms and supplies in bulk for all the dental
centers. The equipment and supplies are all available from more than one
supplier, and the Company will not be dependent upon any particular vendor. The
Company purchases through negotiated arrangements which provide the best
possible prices through volume purchasing. As the number of dental centers
increases, the Company will renegotiate all contracts and arrangements to
receive greater discounts and establish drop-shipments in an effort to reduce
storage of unused inventory and supplies.
DENTAL FACILITIES; PRINCIPAL EXECUTIVE OFFICE
- ---------------------------------------------
The Company currently operates seven dental centers in the South Florida
area. All clinics are operating in leased premises, under leases with initial
terms of between two and four years, within one or more options for additional
years. The Company has not experienced significant difficulty in finding
suitable locations for its dental clinics.
The Company leases 1,088 square feet of office space at 12000 Biscayne
Boulevard, Miami, Florida for use as its principal executive office. The lease
extends through May, 1998.
ESTABLISHMENT OF PREPAID MANAGED DENTAL CARE PLANS
- --------------------------------------------------
The second part of the Company's strategy is to establish prepaid managed
dental care plans in the markets in which the Company operates dental centers.
Through the prepaid managed dental care plans, the Company will negotiate
contracts with health care plans, self-insurance groups, and other third-party
payers to provide dental care services to their members and patients. The
prepaid managed dental care plans will offer employers and individuals a full
range of comprehensive dental care plans. The strategy includes contracting
with other prepaid managed dental care organizations to provide dental care
services for their members at the Company's dental centers. These contracts
will help increase the dental clinics' patient flow and revenues.
Key elements of the Company's operating strategy for its managed dental
care plans include:
OFFERING A FULL RANGE OF COMPREHENSIVE DENTAL CARE PLANS. By offering a
broad range of dental care benefit plans, each of which provides a different
level of dental coverage, the Company will be able to attract various groups of
members and health care plans. The Company will tailor the benefits offered by
the plans to meet the various needs of its customers.
PROVIDING HIGH QUALITY DENTAL CARE THROUGH EXTENSIVE NETWORKS. The basis
for the Company's networks will be the Company's dental centers. While the
Company will attempt to direct as many members as
18
<PAGE>
possible to its dental centers, additional dental practitioners in the service
areas will be recruited. The Company's strategy is to have an extensive dental
care network in each of its markets. In order to establish its provider
networks, the Company will hire professional provider relations representatives
who will be assigned to a concise geographic area.
UTILIZING MULTIPLE CHANNEL MARKETING EFFORTS. The Company will market its
prepaid managed dental care plans through i) its own direct sales force for
medium to large size employers, professional and civic organizations and
contracts with managed care organizations; ii) established networks of
independent insurance brokers to small employers and individuals; iii) through
health, property and casualty, and other insurance companies for individuals;
and (iv) through other managed health care plans.
BENEFIT PLANS
PREPAID MANAGED DENTAL CARE PLANS. Under each of the dental care plans, a
---------------------------------
premium is paid to the Company for the type of coverage selected. Premiums are
paid by the employer, the employee (usually through payroll deductions), the
individual or the managed health care organization (for services to their
member). Once a premium is paid, all patients being covered by the premium
become members of the dental care plan. A portion of the premium is then
prepaid to Company, affiliated dental centers or to dentists on the Company's
panel of providers for the dental care of the members.
The prepayments of services (capitated payments) require the panel service
providers, which are the Company-affiliated dental centers or independent
dentists, to provide certain basic dental procedures at no additional charges.
In some cases, depending on the benefits level selected by the member, small per
visit copayments will be charged by the providers. Some plans require larger
copayments for more complicated services and procedures. Some plans cover
specialty services which may be performed by specialists participating as panel
providers. The Company does not anticipate assuming underwriting or insurance
risks under these plans, as most services provided are prepaid to the providers
on a capitated basis.
The Company's prepaid managed dental care plans will be tailored to meet
the needs of the Company's customers and will range from plans having higher
levels of benefits and premiums to basic, low cost plans. The members or the
contracting managed health care organizations select the plans and the providers
at enrollment time. They are then enrolled in the plan for a one year period,
subject to cancellations by the members.
DUAL CHOICE PLANS. Because of market demand, the Company expects to create
-----------------
a dual choice plan to attract the sector of the market seeking the alternatives
to receiving services solely from the selected provider on the Company's panel.
These are plans which offer the managed dental care plan offered by the Company
and an indemnity insurance plan underwritten by an insurance company, but
marketed and administered by the Company under an agreement with the
underwriting insurer. This offers the potential customers flexibility when
there are subscribers outside the service area of the Company's plans.
Presently, a limited number of states require the prepaid managed dental
plans be offered only as part of dual choice plans. Dual choice plans will
allow the Company to offer its plans in areas where the dental provider network
is not fully developed or there is a lack of dental practitioners available to
participate in the network.
Under the dental indemnity portion of the dual choice plan, members pay
deductibles and copayments (coinsurance). These payments are generally higher
than those under the prepaid managed dental care plans, but the member is
allowed to receive services from any dentist of their choice.
The Company's arrangements with the insurance company are expected to be
that the Company will retain at least 10% of the premiums and then pay the
remainder to the insurance company. The insurance company may also receive a
small percentage of the managed dental care plan's portions of the premiums
(usually less than 2%).
19
<PAGE>
PRIVATE LABEL PLANS. The Company intends to offer customized plans and
-------------------
services through contractual arrangements with Health Maintenance Organizations
(HMOs) and insurance companies. These plans will be marketed by the HMO or the
insurance company but will be fully serviced through the Company's dental care
organization and network. This will provide an ideal opportunity to increase
the utilization of the Company's affiliated dental clinics.
Under these plans, the HMO or the insurance company sells the Company's
dental plan developed specifically for the members of the HMO or the insurance
company's policyholder. The HMO or insurance company pays the monthly premiums
and the Company provides the agreed upon services for the HMOs members or the
insured. This plan will be very effective in recruiting business from Medicaid
HMOs as they generally are unable to contract with enough dental practitioners
willing to accept Medicaid recipients. Dental practitioners generally do not
accept Medicaid HMO members because of the lower reimbursement or capitation
level. By using the Company's affiliated dental clinics for most of the
services, the Company is in an ideal position to capitalize on this market
niche.
DISCOUNTED DENTAL NETWORK PLANS. This plan allows managed care
-------------------------------
organizations to use the Company's provider network in exchange for a fixed
capitation fee per member authorized to use the Company's network of providers.
Under this plan, the members of the managed care organization use the Company's
dental network and pay a reduced rate to the providers. The Company does not
pay any of the capitation to the providers and administers the program for the
managed care organization in exchange for the premiums paid.
ESTABLISHMENT OF PROVIDER NETWORKS
- ----------------------------------
The Company intends to use its affiliated dental centers as the basis to
form extensive provider networks. The Company believes that it can attract and
retain sufficient general and specialist dentists in its panel of providers in
all of the markets in which the Company will establish prepaid managed dental
care plans. Dentists will be attracted to the Company's dental care plans by
the many benefits they derive from participating as plan providers, including:
1) flexible capitation rate structures;
2) the timely remittance of capitation checks, allowing for a favorable
cash flow situation;
3) additional plan members' revenue to the dentist in the form of
copayments for certain services provided by the dentist;
4) increased practice profitability through the Company's ability to
provide additional patients to the dentists. This eliminates open
"chairtime," which according to the American Dental Association is the
number one reason dentists join dental plans as providers;
5) no collection risks associated with fee-for-service patients;
6) reduced marketing expenses as a result of additional patients received
by the dentist from the Company;
7) reduced administrative expenses through reduced paperwork by not having
to fill-out insurance forms or other documentation required by third-
party payers;
8) the Company's maintenance of member history and accurate eligibility
information;
9) retention of existing patients seeking to lower dental expenses through
managed dental care participation.
20
<PAGE>
Prior to contracting with a dentist, the Company will review the dentist's
credentials and the dental facility. A quality management team will conduct an
on-site visit of the facility in which the dentist practices. Selection of
dentists for the Company's provider networks will be based upon the dentist's
training and license, the condition and capabilities of the dental facility, and
the dentist's patient care record.
After determination by the Company that the dentist meets the standards of
the dental care plan, initial certification is issued, making the dentist a
panel provider. Patient satisfaction surveys will be conducted to assure that
panel providers are maintaining the dental plan's quality standards.
All providers, except for Company-affiliated dental centers, are
independent from the Company and provide service to plan members pursuant to the
terms and conditions of the contract between the Company and the provider.
Contracts with providers will be non-exclusive and may be terminated by the
Company or by the provider with 90 days written notice.
The Company will support its providers through administration policies and
procedures manuals, local, regional and corporate service support, provider
discussion groups on creating better relations with patients and provider
satisfaction surveys which allow for provider input into the Company's
operations.
SALES AND MARKETING
- -------------------
The Company will market its prepaid managed dental care plans through:
1) its own direct sales force, which will focus on medium to large size
employers, self-insurance groups, professional and civic organizations
which would like dental care coverage for their members, managed care
organizations seeking private label plans or discounted provider
network plans, and other insurance companies which can offer the
Company's dental care plans on a contracted marketing basis to their
policyholders;
2) established networks of independent insurance brokers, who will target
small employers and individuals with which they have existing
relationships;
3) health, property and casualty, and other insurance companies, which
will use their network of insurance agents to market additional
coverage to their existing policy holders in exchange for a percentage
of the premiums.
4) other health care plans, which will advise their members of the
opportunity to obtain dental coverage (not provided by such plans) from
the Company's dental care plans.
The Company's management expects to pursue contracts with managed health
care organizations (HMOs, PPOs and PHOs) and other health insurance companies to
offer its prepaid managed dental care plans as an additional benefit to its
members or policy holders. This will not only assist in meeting the Company's
managed dental care plans growth goals but will also increase the patient flow
in the affiliated dental centers.
Due to increasing demand for prepaid managed dental care plans by multi-
state employers, the Company will attempt to seek other prepaid managed dental
care companies wishing to enter into marketing alliances with the Company in an
effort to jointly market to prospective multi-state employers. The Company will
seek companies that do not have a presence in the Company's primary markets.
In all sales presentations and marketing brochures, the Company will
stress:
1) the extensive network of quality providers, including the Company's
affiliated dental centers;
21
<PAGE>
2) the benefits offered by the different plans available;
3) the broad range of price levels available, based on the level of
covered services;
4) the low cost in comparison to indemnity plans as well as competing
prepaid managed dental care plans;
5) its customer service approach to providing services;
6) the support the Company gives network providers, which allows for
quality dental care from all panel providers.
The Company will have a customer service department that will focus on
member retention. This department will handle all customer complaints,
disenrollment requests, member inquiries and other aspects of customer
satisfaction.
COMPETITION
- -----------
The business of providing dental care services through clinics is very
competitive, though highly fragmented. Each dental center will compete with
dentists who maintain single offices or operate satellite offices, as well as
with dentists who maintain group practices or operate in multiple offices. The
dental centers will compete with general and specialist dental practitioners, as
well as with other health care related companies and medical care centers which
decide to implement the Company's current strategy of developing dental care
centers within existing health care facilities. While there can be no
assurances, management believes that it will be able to effectively compete in
the dental marketplace because of the marketing programs and operational systems
that are currently being used and developed.
While the Company competes with other dental practitioners, the Company is
not aware of any other companies currently using the Company's strategy of
developing and managing dental centers within established medical centers and
facilities. The Company is not aware of any other company operating within
medical care centers with the high Medicaid volume that the Company is
experiencing.
The Company's prepaid managed dental care plans will compete in a highly
competitive marketplace. The competitors include more than 150 existing local
and regional prepaid managed dental care plans across the United States; large
insurance companies able to offer both managed dental care benefits and dental
indemnity insurance; managed health care organizations that also offer dental
benefit programs; self-insured employers with their own facilities and dental
programs; dental preferred provider organizations; and discounted fee-for-
service dental network plans.
The key factors which affect those selecting a managed dental care plan
include:
1) the price of the dental plans in relation to the services offered.
2) the broad range of dental benefits the plans offer,
3) the size of the dental plan's provider network,
4) the quality of care provided by the dental plan's providers,
5) the treatment of customers by the dental plan's representatives.
22
<PAGE>
Price competition may be the most important factor in dealing with
employers who pay for the benefit, government contracts which are generally
awarded on a competitive bidding basis, and contracts with other managed health
care companies and private label insurers.
The largest prepaid managed dental care companies in the United States
include Cigna Dental Plans, Prudential Dental Plans, Delta Dental Plans,
CompDent Corp., United Dental Plans, First Commonwealth and Safeguard Health
Enterprises, all of which are public companies except for Delta Dental Plans.
In addition to the above-named companies, Oral Health Services, a privately held
company with more than 500,000 members and International Dental Plans, a
subsidiary of a public company with more than 200,000 members, will compete with
the Company in Florida.
Even though larger, more experienced and better financed companies will
compete with the Company for business, the Company believes that, through its
dental clinics and through the development of extensive provider networks and
innovative marketing programs, it will be able to compete with other companies
for customers.
GOVERNMENT REGULATIONS AND LEGAL ISSUES
- ---------------------------------------
The field of dentistry is highly regulated, and there can be no assurance
that the regulatory environment in which the Company operates will not change
significantly in the future.
Every state imposes licensing and other requirements on individual
dentists, dental facilities, dental services and dental managed care plans. In
addition, federal and state laws regulate third party payers for dental
services. Every state imposes insurance and prepaid managed dental care plan
licensing laws and regulations which establish licensing, financial,
operational, marketing and other requirements relating to prepaid managed dental
care plans. The state insurance departments and other regulatory agencies
typically interpret such laws and promulgate regulations applicable to the
prepaid managed dental care business. In the future, the Company may become
subject to compliance with additional regulations.
The operation and management of the dental centers must meet federal, state
and local regulatory standards in the areas of health and safety. Those
standards have not had any material affect on the operation of the dental
centers or the operations of the Company. Based on management's familiarity and
knowledge of the operations of the dental centers and the activities of the
affiliated dentists, management believes that the dental centers and the
dentists are in compliance in all material respect with all applicable federal,
state and local laws and regulations relating to health and safety.
The laws of many states prohibit dentists from splitting fees with non-
dentists and prohibit non-dental entities (such as the Company) from practicing
dentistry, and from employing dentists or, in certain circumstances, dental
assistants. The laws of some states prohibit advertising dental services under
a trade or corporate name and further require that all advertisements of dental
services be in the name of the dentist providing the services. A few states
also regulate the content of advertisements of dental services and the use of
promotional gift items to attract new clients.
Some states limit the ability of a non-licensed dentist or non-dentist to
own or control equipment or offices used in a dental practice. Some of the
states allow leasing of equipment and office space to a dental practice, under a
bonafide lease, if the equipment and office remains in the complete care and
custody of the dentist. Management believes, based on its familiarity and
knowledge of the operations of the Company and the activities of the affiliated
dentists, that the Company's current and planned activities do not violate these
statutes and regulations. There can be no assurance, however, that future
interpretation of such laws, or the enactment of new laws, will not require
structural and organizational modifications of the Company's existing
contractual relationship with the affiliated dentists or the operation of the
dental clinics. In addition, statutes in some states could restrict expansion
of the Company's operations in those jurisdictions.
23
<PAGE>
Some states restrict the Company to conducting business through a
contractual arrangement with an indemnity insurance company or a licensed HMO,
which would be less advantageous and profitable than offering prepaid managed
dental care plans directly to the public at large. In some states, the
licensing process for prepaid managed dental care plans may require up to two
years to obtain final approval, and six months to obtain approval of an
acquisition. While this could adversely affect the Company's ability to expand
and maintain the planned growth, this regulatory environment also impacts the
conduct and expansion prospects of other prepaid managed dental care plans which
could compete with the Company once the Company is duly licensed.
The Company regularly monitors changes in laws and regulations relating to
the dental industry, dentistry and the business of prepaid managed dental care
plans. The Company may be required to modify its agreements, operations and
marketing from time to time in response to changes in the business and
regulatory environment. The Company plans to structure all of its agreements,
operations and marketing in accordance with applicable laws and regulations,
although there can be no assurance that its arrangements will not be
successfully challenged or that required changes may not have a material adverse
effect on operations or profitability. Failure of the Company's prepaid managed
dental care plans to maintain regulatory compliance could adversely affect the
Company's ability to conduct its business and may result in (i) revocation of
the Company's prepaid managed dental care plans' licenses, (ii) enrollment
limitations, and/or (iii) limits on the Company's ability to receive the proper
approval for new products, premium increases or market expansions.
EMPLOYEES
- ---------
As of the date hereof, the Company has __ full-time and __ part-time
affiliated dental practitioners, __ full-time dental assistants, and a total of
__ full-time employees. None of the Company's employees are members of a labor
union, and the relationship between the Company and its employees is favorable.
The Company provides various incentives and benefits to its employees, such as a
stock option plans and a 401(k) plan.
LITIGATION
- ----------
The Company is not currently a party to any litigation, nor to the
knowledge of management is any litigation threatened against the Company which
may materially affect the Company.
24
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Year ended September 30, 1995 compared to September 30, 1994
During the year ended September 30, 1994, the Company was involved in
keeping its available funds in money market accounts and other short-term
investments, while at the same time seeking potential business ventures. In the
year ended September 30, 1995, the Company continued to seek potential ventures,
while incurring approximately $2,190 in expenses for professional fees and other
minor office expenses.
Ten months ended July 31, 1996 compared to July 31, 1995
During the ten months ended July 31, 1995, the Company was involved in
seeking to acquire an operating business.
During the ten months ended July 31, 1996, the Company, through its
recently-acquired wholly-owned subsidiary, Dental Practice Administrators, Inc.
("DPA"), was involved in laying the foundation to develop a business which would
provide quality and cost-effective dental health care services through a series
of dental clinics managed by the Company.
During the period ending July 31, 1996, a total of 1,745,000 Non-Public
Warrants were exercised by various holders thereof, and the Company received
warrant exercise proceeds of $872,500, a portion of which funds were used to
open new dental clinics and for general corporate purposes.
The acquisition of DPA was completed in July, 1996. The above-referenced
expenses were incurred by DPA prior to its acquisition by the Company, but have
been incorporated into the Company's results of operations as a result of such
acquisition.
The Company will be dependent upon the exercise of a substantial number of
additional Warrants and the sale of shares of Dental Preferred Stock to provide
funds for the expansion of its business operations.
25
<PAGE>
MANAGEMENT
----------
DIRECTORS AND EXECUTIVE OFFICES
- -------------------------------
The following table set forth certain information concerning the directors
and executive officers of the Company and DPA. Each person listed below holds
identical positions with the Company and DPA, unless otherwise specified.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Paulo Dominguez 27 Director, Chief Operating Officer
Roger Prieto, D.D.S. 32 Director, President, Chief Dental
Officer
Carolina Sierra, M.D. 39 Director
Hershel Krasnow 72 Director
Robert M. Leopold 70 Director
Henry L. Ewen 41 Treasurer, Chief Financial Officer
Sujit Shyam 26 Secretary, Manager of
Management Information Systems
</TABLE>
Directors of the Company are elected at the annual meeting of stockholders
and hold office until the following annual meeting and until their successors
are elected and qualified. Mr. Dominguez, Dr. Prieto and Dr. Sierra were
elected to the Board of Directors of the Company in July, 1996. Mr. Krasnow and
Mr. Leopold have served as Directors of the Company since its inception. All
officers serve at the discretion of the Board of Directors.
Set forth below is a brief summary of the background of each director and
executive officer.
PAULO DOMINGUEZ, the founder of DPA, has been Chief Operating Officer
of DPA since its inception in 1995. Prior to founding DPA, Mr. Dominguez was
Operations Manager for Advanced Attention Dental Care, a Miami, Florida dental
clinic, from 1993 to 1995. From 1991 to 1993, Mr. Dominguez was general manager
of an orthodontic dental practice based in Sunrise, Florida.
ROGER PRIETO, D.D.S., serves as the Company's President and Chief
Dental Officer. He was the Staff Dentist at Morris Heights Health Center from
1995 to 1996, when he joined the Company. He obtained his Doctor in Dentistry
from University of Central East Dominican Republic in 1989 and a D.D.S. degree
from New York University College of Dentistry in 1994. He has practiced
dentistry in the Dominican Republic and since moving to the United States in
1990, practiced as a dental assistant in Miami, Florida and Providence, Rhode
Island prior to obtaining his D.D.S. degree.
CAROLINA SIERRA, M.D. is a member of the Board of Directors, and
Medical Director of American Medical Plans, Inc., a company which owns and
operates health maintenance organizations in several states. She has held such
position since September, 1994. From August, 1993 until September, 1994, she
was President and medical director of Max A Med Health Plans, Inc. Prior to
that time, since 1987, she was engaged in the private practice of medicine,
specializing in endocrinology.
26
<PAGE>
HERSHEL KRASNOW has been a senior vice president of Josephthal Lyon &
Ross, Incorporated, an investment banking firm, since April, 1990. Mr. Krasnow
has been in the investment banking business for over 30 years. He is a director
of Windsor Capital Corp. Mr. Krasnow is also a director of International Asset
Management Group, Inc., one of the principal shareholders of the Company.
ROBERT M. LEOPOLD has been President of Huguenot Associates, Inc., a
financial and business consulting company, since 1977, and Chairman of the Board
of International Asset Management Group, Inc. since 1983. Huguenot Associates,
Inc. is a wholly owned subsidiary of IAMG. From June 1982 to December 1990, Mr.
Leopold held various positions with Insituform of North America, Inc., including
Vice Chairman (1982-1986), Chief Executive officer (1986 - 1989), Chairman (1986
- - 1987) and Advisor to the Chairman (1989 - 1990). Mr. Leopold was also a
director of Insituform Mid-America, Inc. Mr. Leopold is currently a consultant
to Insituform Technologies, Inc. Mr. Leopold is a director of H.E.R.C. Products
Incorporated, Infodata Systems, Inc., Windsor Capital Corp., and Standard
Security Life Insurance Company of New York, a wholly owned subsidiary of
Independence Holding Company.
HENRY L. EWEN has served as Treasurer and Chief Financial Officer of
the Company since August, 1996. Mr. Ewen is a certified public accountant. From
1986 through June, 1996, Mr. Ewen practiced public accounting as the owner of
Henry L. Ewen, CPA. During the same period, he was also the owner and principal
employee of International Financial Management Systems, a developer of
international banking and mutual fund software.
SUJIT SHYAM has served as MIS Director for DPA since its inception in
1995. From 1994 to 1995 he was an account executive for Metropolitan Life
Insurance Company. From 1990 to 1994 he was general merchandise manager for
Follet Corporation in Miami, Florida.
COMMITTEES
- ----------
The Board of Directors has established an Executive Committee, an Audit
Committee and a Compensation Committee. The Executive Committee will receive
regular reports from the Chief Operating Officer regarding the business
operations of the Company and will supervise the operations of the Company
between meetings of the Board of Directors. Paulo Dominguez and Hershel Krasnow
serve as members of the Executive Committee. The Audit Committee will review
with the Company's independent accountants, the scope of their audit and their
report thereon. The Compensation Committee will review and approve the
compensation of executive offices and responsible for administering the
Company's stock option plans. Dr. Carolina Sierra and Hershel Krasnow serve as
members of the Audit Committee and of the Compensation Committee. Mr. Krasnow
serves as Chairman of the Executive Committee, the Audit Committee and the
Compensation Committee.
DIRECTOR COMPENSATION
- ---------------------
Directors will receive a directors fee of $200 per meeting for each Board
of Directors meeting attended and $100 per meeting for each committee meeting
attended.
In addition, all directors will receive stock option grants on an annual
basis under the 1996 Director Stock Option Plan. Five-year options to purchase
10,000 shares of the Company Common Stock will be automatically granted to each
director on October 1 of each year, starting October 1, 1996, at an option price
equal to the market price of the Common Stock on the date of the grant.
Existing directors have each been granted five-year options to purchase 10,000
shares of Common Stock at an option price equal to the market price as of the
date of such grant, and directors appointed to the Board of Directors in the
future will also be granted options to purchase 10,000 shares of common stock
when they are appointed to the Board, at an option price equal to the market
price of the Common Stock as of the date of their appointment to the Board. In
addition, directors will be granted options to purchase 5,000 shares for each
committee of which they are a member and options to purchase 10,000 shares for
serving as chairman of a committee. As of the date of this Prospectus, options
to purchase 95,000 shares at an exercise price of $.50 per share have been
granted under the Director Plan.
27
<PAGE>
STOCK OPTION PLANS
- ------------------
The Company's Board of Directors and shareholders have adopted two stock
option plans (the "Plans"). Pursuant to the 1996 Director Stock Option Plan (the
"Director Plan"), options to acquire a maximum of the greater of 300,000 shares
or 5% of the number of shares of Common Stock then outstanding may be granted to
directors of the Company. Pursuant to the 1996 Employee Stock Option Plan (the
"1996 Plan"), options to acquire a maximum of the greater of 500,000 shares of
Common Stock or 8% of the number of shares of Common Stock then outstanding may
be granted to executive officers, employees (including employees who are
directors), independent contractors and consultants of the Company. Options to
purchase 95,000 shares at an exercise price of $.50 per share have granted
under the Director Plan. Options to purchase 80,000 shares at prices ranging
from $.50 to $1.125 per share have been granted to employees and consultants of
the Company under the 1996 Plan.
The Plans are administered by the Compensation Committee of the Board of
Directors. The Compensation Committee will determine which persons will receive
options and the number of options to be granted to such persons. The Director
Plan also provides for annual mandatory grants of options to directors. See
"Management - Director Compensation." The Compensation Committee will also
interpret the provisions of the Plans and make all other determinations that it
may deem necessary or advisable for the administration of the Plans.
Pursuant to the Plans, the Company may grant Incentive Stock Options
("ISOs") as defined in Section 422(b) of the Internal Revenue Code of 1986, as
amended (the "Code"), and Non-Qualified Stock Options ("NQSOs"), not intended to
qualify under Section 422(b) of the Code. The price at which the Company's
Common Stock may be purchased upon the exercise of options granted under the
Plans will be required to be at least equal to the per share fair market value
of the Common Stock on the date particular options are granted. Options granted
under the Plans may have maximum terms of not more than 10 years and are not
transferable, except by will or the laws of descent and distribution. None of
the ISOs under the Plans may be granted to an individual owning more than 10% of
the total combined voting power of all classes of stock issued by the Company
unless the purchase price of the Common Stock under such option is at least 110%
of the fair market value of the shares issuable on exercise of the option
determined as of the date the option is granted, and such option is not
exercisable more than five years after the grant date.
Generally, options granted under the Plans may remain outstanding and may
be exercised at any time up to three months after the person to whom such
options were granted is no longer employed or retained by the Company or serving
on the Company's Board of Directors.
Pursuant to the Plans, unless otherwise determined by the Compensation
Committee, one-third of the options granted to an individual are exercisable
upon grant, one-third are exercisable on the first anniversary of such grant and
the final one-third are exercisable on the second anniversary of such grant.
However, options granted under the Plans shall become immediately exercisable if
the holder of such options is terminated by the Company or is no longer a
director of the Company, as the case may be, subsequent to certain events which
are deemed to be a "change in control" of the Company. A "change in control" of
the Company generally is deemed to occur when (i) any person becomes the
beneficial owner of or acquires voting control with respect to more than 20% of
the Common Stock (or 35% if such person is a holder of Common Stock on the
effective date of the Offering); (ii) a change occurs in the composition of a
majority of the Company's Board of Directors during a two-year period, provided
that a change with respect to a member of the Company's Board of Directors shall
be deemed not to have occurred if the appointment of a member of the Company's
Board of Directors is approved by a vote of at least 75% of the individuals who
constitute the then existing Board of Directors; or (iii) the Company's
stockholders approve the sale of all or substantially all of the Company's
assets.
ISOs granted under the Plans are subject to the restriction that the
aggregate fair market value (determined as of the date of grant) of options
which first become exercisable in any calendar year cannot exceed $100,000.
28
<PAGE>
The Plans provide for appropriate adjustments in the number and type of
shares covered by the Plans and options granted thereunder in the event of any
reorganization, merger, recapitalization or certain other transactions involving
the Company.
EXECUTIVE COMPENSATION AND EMPLOYMENT AGREEMENTS
- ------------------------------------------------
No officer, director or employee of the Company received compensation in
excess of $100,000 during the fiscal year ended September 30, 1995, or during
any prior fiscal year, and no officer, director or employee is expected to
receive compensation in excess of $100,000 during fiscal 1996. Prior to the
Company's acquisition of DPA in July, 1996, Mr. Hershel Krasnow served, without
compensation, as the Company's chief executive officer.
Mr. Paulo Dominguez, the Company's Chief Operating Officer and principal
executive officer, is employed by the Company pursuant to a three-year
employment agreement extending through June 30, 1999. The agreement provides
for a base salary of $50,000 during the first year, $55,000 during the second
year, and $60,000 during the third year. One-fourth of Mr. Dominguez's first
year salary will be paid on a deferred basis during the second year. Dr. Roger
Prieto, President and Chief Dental Officer, is also employed pursuant to a three
year employment agreement, providing for annual salaries of $30,000, $36,000 and
$42,000. One-fourth of Dr. Prieto's first year salary will be paid on a
deferred basis. Sujit Shyam is also employed pursuant to a three year
employment agreement, providing for annual salaries of $37,500 during the first
year, $45,000 during the second year, and $50,000 during the third year. One-
fourth of Mr. Shyam's first year salary is deferred until the second year. Such
persons were not officers or employees of the Company and received no
compensation from the Company during its last fiscal year ended September 30,
1995.
INDEMNIFICATION
---------------
DELAWARE GENERAL CORPORATION LAW
- --------------------------------
Subsection (a) of Section 145 of the Delaware General Corporation Law
("GCL") empowers a corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the corporation
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise (including an employee benefit plan), against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
Subsection (b) of Section 145 of the GCL empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted
under similar standards, except that no indemnification may be made in respect
to any claim, issue or matter as to which such person shall have been adjudged
to be liable for negligence or misconduct in the performance of his duty to the
corporation unless and only to the extent that the Court of Chancery of the
State of Delaware or the court in which such action or suit was brought shall
determine that despite the adjudication of liability, but in view of all of the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
29
<PAGE>
GCL Section 145 further provides that indemnification provided for by
Section 145 shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled and empowers the corporation to purchase
and maintain insurance on behalf of a director, officer, employee or agent of
the corporation against any liability asserted against him and incurred by him
in the capacities set forth above, or arising out of his status as such, whether
or not the corporation would have the power to indemnify him against such
liabilities under Section 145.
Subsection (b)(7) of Section 102 of the GCL empowers a corporation to
eliminate or limit the personal liability of a director to such corporation or
its stockholders for monetary damages for breach of fiduciary duty as a director
other than (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders; (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (iii) under
Section 174 of the GCL (which provides that under certain circumstances
directors shall be jointly and severally liable for willful or negligent
violations of provisions regarding the unlawful payment of dividends or unlawful
stock repurchases or redemptions); or (iv) for any transaction from which the
director derived an improper personal benefit.
CERTIFICATE OF INCORPORATION
- ----------------------------
Article Tenth of the Company's Certificate of Incorporation provides that
the Company shall indemnify those persons entitled to be indemnified, to the
fullest extent permitted by Section 145 of the GCL.
Article Ninth of the Company's Certificate of Incorporation has adopted the
provisions of GCL Section 102(b)(7).
SECURITIES AND EXCHANGE COMMISSION POLICY
- -----------------------------------------
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers or persons controlling the Company, the Company
has been informed 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.
30
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
----------------------------------
PRINCIPAL STOCKHOLDERS
- ----------------------
The following table sets forth certain information concerning stock
ownership of all persons known by the Company to own beneficially 5% or more of
the outstanding shares of the Company's Common Stock, each director, the
Company's Chief Executive Officer, and all officers and directors of the
Company, as a group, as of the date of this Prospectus, and their percentage
ownership of Common Stock after exercise of all outstanding Class A Warrants and
of all Class B Warrants issuable upon exercise of Class A Warrants, and exercise
of all stock options granted to directors and employees of the Company.
<TABLE>
<CAPTION>
BEFORE EXERCISE OF WARRANTS AFTER EXERCISE OF OPTIONS AND WARRANTS/1/
--------------------------- -----------------------------------------
NAME AND ADDRESS OF PERCENT OF PERCENT OF
BENEFICIAL OWNER NO. OF SHARES COMMON STOCK NO. OF SHARES/2/ COMMON STOCK
- ---------------- ------------- ------------ ---------------- -------------
<S> <C> <C> <C> <C>
International Asset 557,000 7.6% 1,592,000 13.5%
Management Group, Inc./3/
1101 96th Street
Miami, FL 33154
Paulo Dominguez 615,500 8.4% 630,500 5.4%
12000 Biscayne Blvd., #108
Miami, FL 33181
Roger Prieto, D.D.S. 200,000 2.7% 210,000 1.8%
12000 Biscayne Blvd., #108
Miami, FL 33181
Carolina Sierra, M.D. 78,750 1.1% 140,000 1.2%
One S.E. 3rd Avenue
Miami, FL 33131
Hershel Krasnow/3/ 557,000 7.6% 1,632,000 13.9%
1101 96th Street
Miami, FL 33154
Robert M. Leopold/3/ 557,000 7.6% 1,602,000 13.7%
4 Gilder Street
Larchmont, NY 10504
Henry L. Ewen 0 --- 45,000 .4%
12000 Biscayne Blvd., #108
Miami, FL 33181
Sujit Shyam 300,000 4.1% 315,000 2.7%
12000 Biscayne Blvd., #108
Miami, FL 33181
All officers and directors as a group
(7 persons) 1,751,250 23.9% 2,982,500 25.4%
</TABLE>
/1/ Assumes exercise of all 3,755,000 Outstanding Non-Public Warrants and Class
A Warrants and exercise of 500,000 Class B Warrants. Also assumes all
Directors and officers exercise all stock options which have been granted
under the Director Plan and the 1996 Plan.
/2/ Includes shares to be issued upon exercise of options to officers and
directors in the following amounts: Dominguez - 15,000; Prieto - 10,000;
Sierra - 20,000; Krasnow - 40,000; Leopold -10,000; Ewen - 25,000; Shyam -
15,000.
/3/ Mr. Krasnow and Mr. Leopold, as officers and directors of International
Asset Management Group, Inc. ("IAMG") may be deemed to be beneficial owners
of the Common Stock of the Company owned by IAMG. The officers, directors
and principal shareholders of IAMG are as follows:
31
<PAGE>
<TABLE>
<CAPTION>
NO. OF SHARES PERCENT OF COMMON
NAME POSITION BENEFICIALLY OWNED STOCK
---- -------- ------------------ -----
<S> <C> <C> <C>
Hershel Krasnow Director 0 0
Claire Krasnow Shareholder 278,288 3.3%
Robert M. Leopold Officer, director, 659,360* 7.8%
shareholder
Richard J. Tucker Shareholder 500,000 5.9%
</TABLE>
Hershel Krasnow and Claire Krasnow are husband and wife. Mr. Krasnow does
not have voting power over and disclaims beneficial ownership with respect
to the shares owned by his wife.
*Excludes 70,515 shares of common stock owned by Mr. Leopold's wife. Mr.
Leopold does not have voting power with respect to such shares and
disclaims beneficial ownership thereof.
SELLING STOCKHOLDERS
- --------------------
In addition to registering 3,755,000 shares of Common Stock issuable by the
Company upon exercise of Warrants, the Company is registering an additional
1,745,000 shares of Common Stock which may be sold by the Selling Stockholders
listed below. All of such shares were purchased from the Company by the Selling
Stockholders upon the exercise of Non-Public Warrants, which such Selling
Stockholders acquired from IAMG. Subject to restrictions set forth in "lock-up
letters" executed by the Selling Stockholders (See "Plan of Distribution"), the
---
Selling Stockholders may sell such shares of Common Stock from time to time,
while the Registration Statement of which the Prospectus is a part remains
effective, at the market price of such Common Stock prevailing at the time of
sale, at prices related to such prevailing market price, or at negotiated
prices. None of the Selling Stockholders is an officer or director of, or has
any material relationship with the Company. All costs incurred in connection
with registering the shares being sold by the Selling Stockholders are being
borne by the Company. The Company will not pay any commissions incurred in
connection with sale of the common stock.
<TABLE>
<CAPTION>
Shares of
Common Stock Shares of Common Stock Shares of Common
Owned Before to be Offered for Selling Stock to be Owned
Name of Selling Stockholder Offering Stockholder's Account/(1)/ After Offering/(2)/
- ----------------------------- ---------------- ---------------------------- ---------------------
<S> <C> <C> C>
Andrea Allen 25,000 25,000 0
William J. Arnone 50,000 50,000 0
Melvin Axler 50,000 50,000 0
Harold Blue* 287,000 100,000 187,000
James and Mindy Cassel 50,000 50,000 0
Robert Chahine 10,000 10,000 0
William Dioguardi 25,000 25,000 0
Dowdeswell Investments Corp. 25,000 25,000 0
Dunvegan Mortgage Corp. 50,000 50,000 0
Richard Friedman* 100,000 100,000 0
William Gehshan 25,000 25,000 0
Gibbons Trading, Inc. 25,000 25,000 0
Hashu Gidoomal 25,000 25,000 0
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Shares of
Common Stock Shares of Common Stock Shares of Common
Owned Before to be Offered for Selling Stock to be Owned
Name of Selling Stockholder Offering Stockholder's Account/(1)/ After Offering/(2)/
- ----------------------------- ---------------- ---------------------------- ---------------------
<S> <C> <C> <C>
Alfredo Gonzalez 10,000 10,000 0
Steven and Sandra Gordon 20,000 20,000 0
Eric Hanson* 100,000 100,000 0
Sam and Phyllis Harte 50,000 50,000 0
Christine Hassuk Rev. Trust 25,000 25,000 0
Intergalactic Growth 100,000 100,000 0
J.W. Charles Financial Corp. 50,000 50,000 0
Kenneth Liberman 25,000 25,000 0
Ellery McLanahan 20,000 20,000 0
Richard Newburg 25,000 25,000 0
Alan O'Connor 25,000 25,000 0
Randolph Pace* 100,000 100,000 0
Don J. Perez* 100,000 100,000 0
Hermann and Virginia Poh 25,000 25,000 0
PSM Investment Partners 50,000 50,000 0
Jerome T. Price* 75,000 75,000 0
P.T.C. Finance, Ltd. 50,000 50,000 0
Mildred Rostholder 50,000 50,000 0
Henry Rothman 25,000 25,000 0
Alan Sakowitz 25,000 25,000 0
Sandra Schwemmer 50,000 50,000 0
Joseph Smith 25,000 25,000 0
Martin Snyder 20,000 20,000 0
Jay Solowsky 25,000 25,000 0
Michael Stary 25,000 25,000 0
Spiros Corp. 20,000 20,000 0
Michele Suppes 25,000 25,000 0
Dr. and Lishka Wittels 25,000 25,000 0
Martin Zilber 20,000 20,000 0
</TABLE>
(1) The Company is registering for sale all shares of Common Stock owned by
each Selling Stockholder which were acquired pursuant to the exercise of
Non-Public Warrants.
(2) Assumes each Selling Stockholder sells all shares registered for sale.
Certain Selling Stockholders also own Non-Public Warrants to purchase
shares of Common Stock and may exercise such Warrants after the date of
this Prospectus, and may sell the shares of Common Stock issuable upon
such exercise otherwise than pursuant to this Prospectus.
(*) Each Selling Stockholder owns less than 1% of the Company's outstanding
Common Stock except those indicated by an asterisk (*), each of whom owns
less than 5% of the Company's Common Stock.
33
<PAGE>
CERTAIN TRANSACTIONS
--------------------
In July, 1996, the Company acquired 100% of the outstanding capital stock
of DPA in a transaction in which the shareholders and certain other persons who
had made investments in or provided services to DPA acquired from IAMG 4,370,000
shares of the Company's common stock and 1,820,000 Non-Public Warrants formerly
held by IAMG. Persons receiving securities of the Company in such transaction
include Paulo Dominguez (665,500 shares and 450,000 Warrants), Roger Prieto,
D.D.S. (400,000 shares), Carolina Sierra, M.D. (78,750 shares and 41,250
Warrants), and Sujit Shyam (400,000 shares). Mr. Dominguez subsequently sold
50,000 shares and 40,000 Warrants and transferred 410,000 Warrants to IAMG in
exchange for 410,000 shares of IAMG common stock; Dr. Prieto subsequently sold
200,000 shares; and Mr. Shyam subsequently sold 100,000 shares.
DESCRIPTION OF SECURITIES
-------------------------
COMMON STOCK
- ------------
The Company has 25,000,000 shares of authorized Common Stock, $.001 par
value per share, of which 7,320,000 shares are issued and outstanding. Each
outstanding share of Common Stock is entitled to one vote, either in person or
by proxy, on all matters that may be voted upon by the owners thereof at
meetings of the stockholders.
The holders of Common Stock (i) have equal ratable rights to dividends from
funds legally available therefor, when, as and if declared by the Board of
Directors of the Company; (ii) are entitled to share ratably in all of the
assets of the Company available for distribution to holders of Common Stock upon
liquidation, dissolution or winding up of the affairs of the Company; (iii) do
not have preemptive, subscription or conversion rights, or redemption or sinking
fund provisions applicable thereto; and (iv) are entitled to one non-cumulative
vote per share on all matters on which stockholders may vote at all meetings of
stockholders.
A total of 4,255,000 shares of Common Stock are reserved for issuance upon
exercise of Non-Public Warrants, Class A Warrants and Class B Warrants;
3,255,000 shares may be issued upon exercise of outstanding Non-Public Warrants,
500,000 shares may be issued upon exercise of Class A Warrants, and 500,000
shares may be issued upon exercise of Class B Warrants. An additional 1,000,000
shares are reserved for issuance upon exercise of the recently issued Private
Warrants. See "Description of Securities - Warrants." All shares of Common
---
Stock issuable upon exercise of Warrants pursuant to this Prospectus, when
issued, will be legally issued, fully paid and non-assessable.
The holders of shares of Common Stock of the Company do not have cumulative
voting rights, which means that the holders of more than 50% of such outstanding
shares, voting for the election of directors, can elect all of the directors of
the Company if they so choose and, in such event, the holders of the remaining
shares will not be able to elect any of the Company's directors.
PREFERRED STOCK
- ---------------
The Company has 10,000,000 shares of authorized preferred stock, par value
$.01 per share, none of which are outstanding. The preferred stock is issuable
in series, each of which may vary, as determined by the Board of Directors, as
to the designation and number of shares in such series, the voting power of the
holders thereof, the dividend rate, redemption terms and prices, the voluntary
and involuntary liquidation preferences, and the conversion rights and sinking
fund requirements, if any, of such series.
The Board of Directors has designated 5,000,000 shares of the Company's
authorized preferred stock as Dental Preferred Stock, and has authorized the
issuance of such Dental Preferred Stock to licensed dental practitioners and
other dental professionals, including licensed dentists, dental office,
managers, dental assistants, and dental
34
<PAGE>
hygienists. Prospective purchasers of Dental Preferred Stock must be approved
by a committee created by the Board of Directors. Shares of Dental Preferred
Stock will be offered and sold at a price of $.10 per share.
Each share of Dental Preferred Stock will be entitled to 1/50th (.02) of a
vote, voting together with the Common Stock. The Dental Preferred Stock is
entitled to receive a cumulative dividend of $.01 per share per annum, payable
annually to recordholders as of October 25 of each year. Dividends are payable,
at the option of the Company, in cash or in Common Stock of the Company, valued
at the average bid price for such Common Stock for the 30 trading days prior to
the record date.
The Dental Preferred Stock is convertible into Common Stock at any time, at
the option of the holder, at the rate of 50 shares of Dental Preferred Stock for
each share of Common Stock. The Company may call the Dental Preferred Stock for
redemption at any time at $.11 per share. Upon call for redemption, holders of
Dental Preferred Stock will have the right, for 30 days, to convert their shares
of Dental Preferred Stock into shares of Common Stock.
The Dental Preferred Stock has a liquidation preference equal to its par
value ($.01 per share).
The existence of authorized, but unissued, preferred stock might tend to
discourage persons or entities wishing to acquire control of the Company or
might tend to encourage persons seeking control of the Company to negotiate
terms of a proposed acquisition with the Company's management. A request by an
outsider for approval of a transaction may pose an unavoidable conflict of
interest for some officers and members of the Board of Directors. For example,
they may be confronted with the prospect of losing their positions on the Board
of Directors or as officers of the Company if the transaction is consummated,
notwithstanding the fact that the terms of the proposed transaction may be
favorable to stockholders. Also, if the Board of Directors does not approve a
proposed transaction, a determined tender offeror may elect to proceed with his
offer and the resulting combination may be more difficult and consequently more
expensive. As a result, the price offered to stockholders may be lower than
would normally be the case.
WARRANTS
- --------
The Company has outstanding 3,255,000 Non-Public Warrants. Each Non-Public
Warrant entitles the holder thereof to purchase one share of Common Stock at an
exercise price of $.50. The Non-Public Warrants expire June 29, 1997.
The Company has outstanding 500,000 Class A Warrants. Each Class A Warrant
entitles the holder thereof to purchase one share of Common Stock and one Class
B Warrant at an exercise price of $.50. The Class A Warrants expire June 29,
1997.
The Company issued 5,000,000 Non-Public Warrants to IAMG in 1987, each of
which entitled IAMG to purchase one share of the Company's Common Stock for
$2.50 per share until January 7, 1990. The 500,000 Class A Warrants were issued
by the Company in June, 1987, as part of its initial public offering, and
originally were to expire on June 29, 1990. The expiration date of both the
Non-Public Warrants and the Class A Warrants were subsequently extended to June
29, 1997.
In connection with the Company's acquisition of DPA and the distribution of
certain Warrants formerly held by IAMG to the shareholders of DPA, the exercise
price of such Warrants was reduced to $.50 per share, and the period during
which such warrants are exercisable was extended to June 29, 1997. Similarly,
the period during which outstanding Class A Warrants are exercisable was
extended until June 29, 1997. Thus, the exercise price and expiration date of
the 5,000,000 Non-Public Warrants formerly held by IAMG are identical to the
exercise price and expiration date of the 500,000 Class A Warrants issued
pursuant to the Company's initial public offering. In addition to the 1,820,000
Non-Public Warrants distributed by IAMG in connection with the acquisition of
DPA, IAMG has also sold 2,555,000 Non-Public Warrants to a limited number of
accredited investors, and, as of the date of this Prospectus, such investors
have exercised 1,745,000 of such Warrants.
35
<PAGE>
The 500,000 Class B Warrants, which would be issued upon exercise of Class
A Warrants, are exercisable until June 29, 1998, and will entitle the holder
thereof to purchase one share of Common Stock at an exercise price of $1.00.
The period during which Class B Warrants are exercisable was extended at the
same time the period during which Class A Warrants may be exercised was
extended.
The exercise price of the Class A Warrants issued in 1987 and the Class B
Warrants were arbitrarily determined by the Company, and bear no relationship
whatsoever to the Company's assets, earnings, book value or any other objective
standard of value. Among the factors considered by the Company at that time
were the Company's lack of operating history, the amount of capital to be
contributed by public investors relative to the amount of stock to be retained
by the existing shareholder, the Company's capital requirements, and the then-
current market conditions in the over-the-counter market. In connection with
the Company's acquisition of DPA in July, 1996, the Company revised the exercise
price of 5,000,000 warrants held by IAMG and subsequently transferred to the
stockholders of DPA and certain in other persons, and conformed the exercise
price and expiration date of such warrants to the price and terms of the Class A
Warrants held by public holders.
The appropriate exercise price and the number of shares purchasable upon
exercise of the Warrants are subject to adjustment upon the occurrence of
certain events, including stock dividends, stock splits or combinations,
reclassifications, a merger terminating the Company's existence, or a sale of
all or substantially all of the Company's assets. The Warrants will terminate
in the event of the complete liquidation and dissolution of the Company. No
fractional shares will be issued upon the exercise of the Warrants, but the
Company will pay the cash value of any fractional shares otherwise issuable. No
adjustments as to dividends (except stock dividends) will be made upon any
exercise of the Warrants. The exercise period of all Warrants may be extended
at the discretion of the Company. Holders of Warrants, as such, do not have any
voting or other rights conferred upon shareholders of the Company.
The Non-Public Warrants, Class A Warrants and Class B Warrants may be
redeemed in whole or in part at any time and from time to time, at the Company's
option, upon thirty (30) days written notice at the redemption price of $.01 per
Warrant.
Warrants can be exercised by surrendering to the Warrant Agent, or to the
Company at its principal executive office, a warrant certificate signed by the
holder thereof or his duly authorized agent indicating such holder's election to
exercise all, or a portion of, the Warrants evidenced by such certificate.
Surrendered warrant certificates must be accompanied by payment of the aggregate
appropriate Exercise Price of the Warrants to be exercised, which payment may be
in the form of cash or check (subject to collection) equal to such exercise
price. All cash or checks so received by the Warrant Agent shall be delivered
by the Warrant Agent to the Company. The Company has authorized and reserved
for sale the shares of Common Stock purchasable upon exercise of the Warrants.
When delivered, such Common Stock shall be fully paid, nonassessable, and in
registered form.
The Company intends to register the shares of Common Stock underlying the
Warrants only in certain states. Thereafter, as Warrants are exercised, the
Company will use its best efforts to register or qualify the shares deliverable
upon exercise in the state wherein the holder resides, if the securities law of
such state so requires. If, however, the Company is unable to or does not
otherwise qualify the shares of Common Stock underlying the Warrants in those
states will have no choice but to sell their Warrants prior to expiration.
Holders of Warrants may write or call the Company for a list of the states in
which the shares underlying the Warrants are qualified.
The Company believes that it may be unable to qualify the shares of Common
stock in most states because of the cost of such qualification or registration,
statutory requirements that may have to be met by the Company and state
securities requirements making the sale of such stock unlawful in those states.
While Warrants are outstanding, the terms on which the Company can obtain
additional capital may be adversely affected and the warrant holders may be
expected to exercise the Warrants at times when the Company could obtain needed
capital by an offering of securities on terms more favorable than those provided
by the Warrants.
36
<PAGE>
The foregoing outline is subject to the provisions of the Warrants
themselves. Copies of the forms of Warrants have been filed as exhibits to the
Registration Statement of which this Prospectus is a part. Reference is made to
such exhibits for a detailed description of the provisions thereof that are
summarized herein.
Effective as of July 17, 1996, the Company issued 1,000,000 private
warrants (the "Private Warrants") to its principal stockholder, International
Asset Management Group, Inc. ("IAMG"), in consideration for past consulting and
administrative services provided by IAMG, for which compensation had never been
paid. Each Private Warrant entitles the holder thereof to acquire one share of
the Company's Common Stock at an exercise price of $2.50. The Private Warrants
expire on June 29, 2001, and are callable for 1/2c per Warrant upon 15 days
notice.
CERTAIN MARKET INFORMATION
--------------------------
The Company's Common Stock and Class A Warrants have been quoted from time
to time on the NASDAQ bulletin board and by the National Quotations Bureau.
There is currently no established trading market for the Common Stock or Class A
Warrants, and only sporadic trading of the Company's securities has occurred
since its initial public offering in 1987. The Company recently applied to have
its Common Stock listed on the NASDAQ bulletin board and recently changed the
symbol for its Common Stock to "FLOS."
Of the Company's outstanding securities, 5,057,000 shares of Common Stock
and 3,745,000 Warrants are "restricted securities" as that term is defined by
Rule 144, promulgated pursuant to the Securities Act of 1933, as amended.
Generally, under Rule 144, a person who has satisfied a two year holding period
may, under certain circumstances, sell within any three month period a number of
shares or warrants which do not exceed the greater of (i) one percent of the
outstanding shares or warrants of that class, or (ii) the average weekly trading
volume for the four calendar weeks prior to such sale. Any person who at the
time of such sale has held restricted securities for at least three years and is
not then, and for the preceding three months was not an affiliate of the Company
may sell such restricted securities without regard to the requirements of Rule
144. Five Hundred Fifty-Seven Thousand (557,000) of the above-referenced
shares of Common Stock and 625,000 Warrants are currently available for sale
under Rule 144, provided that the other requirements of the rule are satisfied
at the time of such sale. The remaining 4,445,000 shares of Common Stock and
3,135,000 Warrants will be available for sale under Rule 144 in July, 1998. In
addition, such shares and Warrants may also be sold in private transactions
which are exempt from registration under the Securities Act of 1933.
An aggregate of 6,000,000 shares of Common Stock are reserved for issuance
upon the exercise of Non-Public Warrants and Class A Warrants that are
outstanding and Class B Warrants which are as yet unissued. Exercise of a
substantial number of Warrants could adversely affect the market price of the
Common Stock. Shares of Common Stock issuable upon exercise of the Warrants are
not "restricted securities" and may be sold immediately; provided, however,
substantially all of the holders of the Non-Public Warrants have agreed with the
Company not sell any of the shares of Common Stock issuable upon exercise of
such Warrants until after October 1, 1996, and thereafter, not to sell any more
than 20% of the shares issued upon exercise of such Warrants during each
subsequent three-month period, computed on a cumulative basis; i.e., holders of
----
Non-Public Warrants or shares of Common Stock issuable upon exercise of such
Warrants may sell a maximum of 20% of their shares issuable upon exercise of
such Warrants between October 1, 1996 and January 1, 1997; up to 40% of their
shares prior to April 1, 1997; up to 60% of their shares prior to July 1, 1997;
up to 80% of their shares prior to October 1, 1997; and all of such shares after
October 1, 1997.
An additional 1,000,000 shares of Common Stock are reserved for issuance
upon exercise of Private Warrants at $2.50 per share.
As of July 31, 1996, the Company had approximately 100 record holders of
its Common Stock and believes that there are more than 100 beneficial holders of
its Common Stock.
37
<PAGE>
THE TRANSFER AGENT FOR THE COMMON STOCK AND THE CLASS A WARRANTS IS
AMERICAN STOCK TRANSFER AND TRUST COMPANY, 40 WALL STREET, 46TH FLOOR, NEW YORK,
NEW YORK 10005.
DIVIDENDS
- ---------
The Company has never paid dividends on its Common Stock. The Company
presently intends to retain future earnings, if any, to finance the growth of
its recently acquired health care business and does not anticipate that any cash
dividends will be paid on the Common Stock in the foreseeable future. A
dividend of $.01 per share is payable annually with respect to the Dental
Preferred Stock. Such dividend is payable in cash or in Common Stock of the
Company.
PLAN OF DISTRIBUTION
--------------------
The Company is offering 3,755,000 shares of its Common Stock which may be
issued upon exercise of outstanding Non-Public Warrants and Class A Warrants,
and 500,000 shares of its Common Stock which may be issued upon exercise of
Class B Warrants which are issued upon exercise of Class A Warrants. The
Exercise Price for each Non-Public Warrant (which entitles the holder to
purchase one share of Common Stock) and for each Class A Warrant is $.50. The
exercise price for each Class B Warrant (which entitles the holder to purchase
one share of Common Stock), is $1.00. In addition, certain Selling Stockholders
may sell up to a total of 1,745,000 shares of Common Stock which shares have
been issued upon prior exercise of Warrants.
The Company is also offering up to 5,000,000 shares of its authorized but
unissued Dental Preferred Stock at a price of $.10 per share. The Dental
Preferred Stock may be sold by the Company, from time to time, only to licensed
dental practitioners and other dental professionals, including licensed
dentists, dental officer managers, dental assistants and dental hygienists.
Prospective purchasers of Dental Preferred Stock must be approved by a committee
created by the Board of Directors.
The purpose of the Dental Preferred Stock is to assist the Company in
recruiting and establishing alliances with dental professionals throughout the
nation who are in a position to assist the Company in its plan to establish a
chain of dental clinics.
No underwriter has been engaged or will participate in soliciting the
exercise of Warrants or in distributing the shares of Common Stock to be sold by
Selling Stockholders, or in selling shares of Dental Preferred Stock.
The Company's officers and directors will solicit, without compensation or
remuneration, exercise of the Warrants on the prices and terms stated herein.
The Company will send prospectuses to all record owners of the Company's
outstanding Warrants, including holders of the 500,000 Class A Warrants which
were registered in the Company's prior public offering. If such persons express
interest in exercising such Warrants, a representative of the Company will
instruct the person to complete the Warrant Exercise Form and forward it,
together with the necessary funds to the Warrant Agent or to the Company's
principal office. The Company's officers and directors will also offer and
sell, without compensation, shares of Dental Preferred Stock to eligible dental
practitioners and professionals. Mr. Hershel Krasnow, a director of the Company
who may participate in soliciting the exercise of Warrants and the sale of
Dental Preferred Stock, is an associated person of Josephthal Lyon & Ross,
Incorporated, a registered broker/dealer. Josephthal Lyon & Ross, Incorporated
is not involved in this offering.
Subject to the restrictions described below, the Common Stock to be sold by
the Selling Stockholders may be sold from time to time, in one or more
transactions that may take place on the over-the-counter market, including
ordinary broker's transactions, privately negotiated transactions or through
sales to one or more broker-dealers for resale of such shares as principals, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions
38
<PAGE>
may be paid by the Selling Stockholders in connection with such sales of Common
Stock. Selling Stockholders have agreed with the Company, in writing, not to
sell any shares issued upon exercise of Warrants until after October 1, 1996,
and thereafter, to limit their sale of shares issued upon exercise of Warrants
to not more than 20% of their holdings of such shares every three months
(computed on a cumulative basis); i.e., holders of Non-Public Warrants or shares
----
of Common Stock issuable upon exercise of such Warrants may sell a maximum of
20% of their shares issuable upon exercise of such Warrants between October 1,
1996 and January 1, 1997; up to 40% of their shares prior to April 1, 1997; up
to 60% of their shares prior to July 1, 1997; up to 80% of their shares prior to
October 1, 1997; and all of such shares after October 1, 1997.
At the time a particular offer of securities is made by or on behalf of a
Selling Stockholder to the extent required, a Prospectus will be distributed
which will set forth the number of shares being offered at the terms of the
offering. Sales of Common Stock by Selling Stockholders or even the potential
of such sales would likely have an adverse effect on the market prices of the
securities offered hereby.
There has been no established public trading market for the Company's
outstanding Common Stock or Class A Warrants. It is possible that a public
trading market for the Company's Common Stock and Warrants may develop following
the date of the Prospectus. It is also possible that holders of registered
and/or unregistered Warrants may elect to sell such Warrants in private
transactions, and such Warrants may be exercised by the purchasers thereof. It
is not anticipated that any established public trading market for the Dental
Preferred Stock will develop.
Solicitation of the exercise of Warrants is being made on a "best efforts"
basis, and no minimum number of Warrants must be exercised for any of them to be
exercised. The Company intends to use its best efforts to maintain a current
registration statement with respect to the Common Stock underlying the Warrants
until June 29, 1998, or until all outstanding Warrants have been exercised or
redeemed, whichever first occurs. The securities offered hereby will be
registered for sale in only a limited number of states.
TRANSFER AND WARRANT AGENT
--------------------------
American Stock Transfer and Trust Company, 40 Wall Street, New York, NY
10005, serves as the Company's Transfer and Warrant Agent. Certificates for
Warrants may be surrendered for exercise at the office of the Transfer and
Warrant Agent or at the office of the Company.
LEGAL MATTERS
-------------
Akerman, Senterfitt & Eidson, P.A., One S.E. 3rd Avenue, Miami, Florida
33131, has acted as counsel to the Company in connection with the issuance of
common stock pursuant to the exercise of Warrants and has rendered an opinion as
to the legality of the securities being offered hereby. Individual shareholders
of Akerman, Senterfitt & Eidson, P.A. own a total of 30,000 shares of the
Company's Common Stock.
EXPERTS
-------
The financial statements of Dental Services of America, Inc. (a development
stage company) included herein and elsewhere in the Registration Statement have
been included herein and in the Registration Statement in reliance upon the
report of Harvey Judkowitz, Certified Public Accountant, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.
39
<PAGE>
FURTHER INFORMATION
-------------------
The Company has filed with the Securities and Exchange Commission,
Washington, D.C. (the "Commission"), a Registration Statement on Form SB-2 under
the Securities Act of 1933, as amended, with respect to the securities contained
in the Registration Statement as permitted by the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement and to the schedules filed therewith. Statements contained in this
Prospectus as to the contents of any contract or other document referred to are
not complete, and where such contract or other document is an exhibit to the
Registration Statement, each such statement is deemed to be qualified and
amplified in all respects by the provisions of the exhibit.
40
<PAGE>
DENTAL SERVICES OF AMERICA, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
Dental Services of America, Inc. and F-1
Subsidiaries Consolidated Financial
Statements - July 31, 1996
Report of Independent Certified Public Accountant F-2
Consolidated Balance Sheet - July 31, 1996 F-3
Consolidated Statement of Operations for
the Ten Months ended July 31, 1996 F-4
Consolidated Statement of Cash Flows for the
Ten Months ended July 31, 1996 F-6
Notes to the Consolidated Financial Statements F-7
Dental Practice Administrators, Inc. and Subsidiaries F-10
Consolidated Financial Statements - March 31, 1996
Report of Independent Certified Public Accountant F-11
Consolidated Balance Sheet - March 31, 1996 F-12
Consolidated Statement of Income for the Period
October 12, 1995 (Inception) to March 31, 1996 F-13
Consolidated Statement of Stockholders' Equity
for the Period October 12, 1995 (Inception) to
March 31, 1996 F-14
Consolidated Statement of Cash Flows
for the Period October 12, 1995 (Inception)
to March 31, 1996 F-15
Notes to Consolidated Financial Statements F-16
Campbell Capital Corporation Financial F-19
Statements - Years ended September 30,
1993, 1994 and 1995
Independent Auditor's Report F-20
Balance Sheets - September 30, 1995 and 1994 F-21
Statement of Operations for the Three Years
ended September 30, 1995 F-22
Statement of Changes in Stockholders' Equity
for the Three Years ended September 30, 1995 F-23
Statement of Cash Flows for the Three Years ended
September 30, 1995 F-24
Notes to Financial Statements -
September 30, 1995 and 1994 F-25
</TABLE>
41
<PAGE>
DENTAL SERVICES OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1996
<PAGE>
[LETTER HEAD OF HARVEY JUDKOWITZ APPEARS HERE]
To the Board of Directors of
Dental Services of America, Inc.
I have compiled the accompanying balance sheet of Dental Services of America,
Inc. as of July 31, 1996 and the related statements of operations and
stockholders' equity and cash flows for the ten months then ended, in accordance
with Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. I have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
/s/ Harvey Judkowitz
CPA
Miami, Florida
September 8, 1996
<PAGE>
DENTAL SERVICES OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JULY 31, 1996
ASSETS
<TABLE>
<S> <C>
Current assets
Cash $ 777,142
Accounts receivable, less allowance for doubtful
accounts of $ 40,704 163,558
Supplies inventory 37,959
---------
Total current assets 978,659
---------
Investments in subsidiaries 2,000
---------
Furniture and equipment, less accumulated
depreciation of $ 17,755 139,784
---------
$1,120,443
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 20,707
Loan payable bank 20,000
---------
Total current liabilities 40,707
---------
Stockholders' equity
Common stock, $.001 par value. Authorized
shares 25,000,000. 7,320,000 shares
issued and outstanding 7,320
Additional paid-in capital 1,305,653
Deficit ( 233,237)
---------
1,079,736
---------
$1,120,443
=========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
DENTAL SERVICES OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TEN MONTHS ENDED JULY 31, 1996
<TABLE>
<S> <C>
Fees earned $ 665,131
---------
Direct costs
Dentists remuneration 169,672
Dental supplies 31,203
Laboratory costs 6,563
----------
207,438
----------
457,693
General and administrative expense 453,008
-----------
4,685
Other income and expense
Interest income 1,009
Interest expense ( 1,267)
------------
( 258)
------------
Income before income taxes 4,427
Income taxes 664
----------
Net income $ 3,763
===========
Income per common share $ .0005
==========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
DENTAL SERVICES OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE TEN MONTHS ENDED JULY 31, 1996
<TABLE>
<CAPTION>
Additional
Common stock paid-in
Shares Amount capital Deficit
------ ------ ---------- --------
(000's)
<S> <C> <C> <C> <C>
Balance September 30,
1995 5,500 $5,500 $223,527 ($237,000)
Sales of common
stock 1,820 1,820 927,972
Effect of acquisition
of DPA 154,154
Net income for 10
month period 3,763
--- ---- ---------- -----------
Balance July 31,
1996 7,320 $ 7,320 $1,305,653 ( $233,237)
===== ======= ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
DENTAL SERVICES OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE TEN MONTHS ENDED JULY 31, 1996
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATION ACTIVITIES
Net income $ 3,763
Adjustments to reconcile net loss to
net cash provided by operating activities
Depreciation 17,755
Increase in accounts receivable ( 163,558)
Increase in supplies inventory ( 37,959)
Increase in accounts payable and accrued expenses 10,647
----------
NET CASH USED BY OPERATION ACTIVITIES ( 169,352)
----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of furniture and equipment ( 24,975)
----------
NET CASH USED BY INVESTING ACTIVITIES ( 24,975)
----------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Investments in unconsolidated subsidiary ( 2,000)
Proceeds of long-term debt 20,000
Proceeds from sale of common stock 951,382
----------
CASH PROVIDED BY FINANCING ACTIVITIES 969,382
----------
INCREASE IN CASH 775,055
Cash, October 1, 1995 2,087
---------
Cash, July 31, 1996 $ 777,142
=========
SUPPLEMENTARY INFORMATION
Furniture and equipment valued at $132,564 was contributed to the Company and is
included as additional paid-in capital.
Amounts paid for interest during the period $ 1,267
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
DENTAL SERVICES OF AMERICA, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Organization
- ------------
Dental Services of America, Inc. (the Company), (DSA), formally known as
Campbell Capital Corp. was organized under the laws of the State of Delaware in
January, 1987, for the purpose of providing a vehicle to raise capital and seek
business opportunities. Effective as of July, 1996, the Company acquired 100% of
the issued and outstanding capital stock of Dental Practice Administrators, Inc.
(DPA), a Florida corporation which was formed in 1995 to engage in the business
of operating dental clinics. In conjunction with the acquisition of DPA, the
Company changed its corporate name to Dental Services of America, Inc.
In July, 1996, DSA formed two new subsidiaries; International Capital
Development Corp. and Spencer Services, Inc.
These financial statements include the operations of DSA and its wholly owned
subsidiary Dental Practice Administrators, Inc.
DPA has been operating since January 1, 1996. Prior to the acquisition, DSA had
no operations. The results of operations in these financial statements relate
primarily to the operations of DPA.
Supplies Inventory
- ------------------
Supplies inventory is recorded at cost and represents the materials needed for
day to day operations.
Accounts Receivable
- -------------------
Revenues are recognized on the accrual method of accounting. Therefore when the
patients are treated revenue is recorded and a corresponding receivable is
established. As many patients are covered by insurance, the accounts receivable
represent the amounts due from insurance companies.
An allowance for uncollectible accounts has been established for those
receivables which may not be collected.
Furniture and Equipment
- -----------------------
Furniture and equipment are recorded at cost. The Company provides depreciation
for financial purposes over the estimated useful lives of the assets using the
straight line method. Upon retirement or sale of fixed assets, their net book
value is removed from the accounts and the difference between such net book
value and proceeds received is recorded in income. Expenditures for maintenance
and repairs are charged to income; renewals and improvements are capitalized.
The annual rates of depreciation are 20% for furniture and equipment.
<PAGE>
DENTAL SERVICES OF AMERICA, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1996
NOTE 2. LEASES
The Company leases office facilities under operating leases which expire over
the next 6 years. Most of these leases provide for renewals for a like period of
time.
Minimum payments for these leases having initial or remaining noncancelable
terms in excess of one year are as follows:
Year ended: September 30, 1997 $116,499
September 30, 1998 107,924
September 30, 1999 47,358
September 30, 2000 41,400
September 30, 2001 22 100
--------
$335,281
========
Rental expense for the period ended July 31, 1996 was $96,472 and should
approximate $116,499 for the year ending September 30, 1996.
NOTE 3. FURNITURE AND EQUIPMENT
Furniture and equipment as of March 31, 1996 and their respective accumulated
depreciation are as follows:
<TABLE>
<CAPTION>
Accumulated Estimated
Cost Depreciation Lives
-------- ------------ ---------
<S> <C> <C> <C>
Dental equipment $151,969 $17,105 5 years
Furniture 5,570 650 5 years
-------- -------
$157,539 $17,755
======== =======
</TABLE>
During the formation of the Company, $132,564 in dental equipment and furniture
was donated to the Company as part of the initial capitalization. This amount
was credited to addition paid-in capital.
<PAGE>
DENTAL SERVICES OF AMERICA, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1996
NOTE 4. LINE OF CREDIT
On March 31, 1996, the Company was granted a $25,000 line of credit from the
Barnett Bank. The use of proceeds from this line will be used to give additional
financing to the Company. The repayment of any monies borrowed under this line
are guaranteed by the stockholder of the Company. The Company borrowed $20,000
on this line as of July 31, 1996. This loan bears interest at the prime rate as
determined by the lender.
NOTE 5. COMMITMENTS AND CONTINGENCIES
The Company has entered into employment contracts with certain of its officers.
Mr. Paulo Dominguez will receive $50,000, $55,000 and $60,000 for the next three
years. Mr. Sujit Shyam will receive $37,500, $45,000 and $50,000 for the next
three years. Dr. Roger Prieto will receive $30,000, $36,000 and $42,000 for the
next three years.
<PAGE>
DENTAL PRACTICE ADMINISTRATORS, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
<PAGE>
[LETTER HEAD OF HARVEY JUDKOWLTZ]
[APPEARS HERE]
To the Board of Directors of
Dental Practice Administrators, Inc.
I have audited the accompanying consolidated balance sheet of Dental Practice
Administrators, Inc. and subsidiaries as of March 31, 1996, and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for the period from October 12, 1995 (date of inception) to March 31,
1996. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Dental Practice Administrators,
Inc. as of March 31, 1996, and the results of its operations and its cash flows
for the period from October 12, 1995 (date of inception) to March 31, 1996 in
conformity with generally accepted accounting principles.
/s/[Signature Illegible]
Miami, Florida
May 31, 1996
<PAGE>
DENTAL PRACTICE ADMINISTRATORS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
ASSETS
Current assets
Cash $ 21,430
Accounts receivable 58,619
Supplies inventory 21,231
---------
Total current assets 101,280
---------
Furniture and equipment, less accumulated
depreciation of $6,675 130,836
---------
$ 232,116
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 12,953
Income taxes payable 5,100
---------
Total current liabilities 18,053
---------
Long-term debt 59,042
---------
Stockholders' equity
Common stock, $1 par value, 100 shares, authorized
issued and outstanding 100
Additional paid-in capital 132,564
Retained earnings 22,357
---------
155,021
---------
$ 232,116
=========
The accompanying notes are an integral part of these financial
statements
<PAGE>
DENTAL PRACTICE ADMINISTRATORS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE PERIOD OCTOBER 12, 1995 (DATE OF INCEPTION)
TO MARCH 31, 1996
Fees earned $ 245,761
----------
Direct costs
Dentists remuneration 76,234
Dental supplies 12,280
Laboratory costs 2,278
----------
90,792
----------
154,969
General and administrative expense 127,512
----------
Income before income taxes 27,457
Income taxes 5,100
----------
Net income $ 22,357
==========
Earnings per common share $224
====
The accompanying notes are an integral part of these financial
statements
<PAGE>
DENTAL PRACTICE ADMINISTRATORS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD OCTOBER 12, 1995 (DATE OF INCEPTION)
TO MARCH 31, 1996
Additional
Common stock paid-in Retained
Shares Amount capital earnings
------ ------ ---------- --------
October 12, 1995
Sales of common
stock 100 $100 $ $
Contribution
of furniture and
equipment 132,564
Net income for
period --- ---- --------- 22,357
-------
Balance March 31,
1996 100 $100 $ 132,564 $22,357
=== ==== ========= =======
The accompanying notes are an integral part of these financial
statements
<PAGE>
DENTAL PRACTICE ADMINISTRATORS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD OCTOBER 12, 1995 (DATE OF INCEPTION)
TO MARCH 31, 1996
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATION ACTIVITIES
Net income $ 22,357
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation 6,675
Increase in accounts receivable ( 58,619)
Increase in supplies inventory ( 21,231)
Increase in accounts payable and accrued expenses 12,953
Increase in income taxes payable 5,100
---------
NET CASH USED BY OPERATION ACTIVITIES ( 32,765)
---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of furniture and equipment ( 4,947)
---------
NET CASH USED BY INVESTING ACTIVITIES ( 4,947)
---------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Proceeds of long-term debt 59,042
Proceeds from sale of common stock 100
---------
CASH PROVIDED BY FINANCING ACTIVITIES 59,142
---------
INCREASE IN CASH AND CASH BALANCE,
March 31, 1996 $ 21,430
=========
</TABLE>
SUPPLEMENTARY INFORMATION
Furniture and equipment valued at $132,564 was contributed to the Company and is
included as additional paid-in capital.
The accompanying notes are an integral part of these financial
statements
<PAGE>
DENTAL PRACTICE ADMINISTRATORS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Organization
- ------------
Dental Practice Administrators, Inc. (the Company) (DPA) was organized in
October, 1995, in the State of Florida, for the purpose of administrating dental
practices in the state of Florida. These financial statements include the
accounts of the Company and its five wholly owned subsidiaries, each of which is
a fully operational dental practice. In addition to opening up additional dental
practices, the Company also plans to operate mobile dental practices servicing
schools and nursing homes.
Supplies Inventory
- ------------------
Supplies inventory is recorded at cost and represents the materials needed for
day to day operations.
Accounts Receivable
- -------------------
Revenues are recognized on the accrual method of accounting. Therefore when the
patients are treated revenue is recorded and a corresponding receivable is
established. As many patients are covered by insurance, the accounts receivable
represent the amounts due from insurance companies.
Furniture and Equipment
- -----------------------
Furniture and equipment are recorded at cost. The Company provides depreciation
for financial purposes over the estimated useful lives of the assets using the
straight line method. Upon retirement or sale of fixed assets, their net book
value is removed from the accounts and the difference between such net book
value and proceeds received is recorded in income. Expenditures for maintenance
and repairs are charged to income; renewals and improvements are capitalized.
The annual rates of depreciation are 20% for furniture and equipment.
<PAGE>
DENTAL PRACTICE ADMINISTRATORS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 2. LEASES
The Company leases office facilities under operating leases which expire over
the next 6 years. Most of these leases provide for renewals for a like period of
time.
Minimum payments for these leases having initial or remaining noncancelable
terms in excess of one year are as follows:
Year ended: September 30, 1997 $ 86,499
September 30, 1998 69,524
September 30, 1999 8,958
September 30, 2000 3,000
September 30, 2001 500
--------
$168,481
========
Rental expense for the period ended March 31, 1996 was $29,000 and should
approximate $70,700 for the year ended September 30, 1996.
NOTE 3. FURNITURE AND EQUIPMENT
Furniture and equipment as of March 31, 1996 and their respective accumulated
depreciation are as follows:
<TABLE>
<CAPTION>
Accumulated Estimated
Cost Depreciation Lives
-------- ------------ ---------
<S> <C> <C> <C>
Dental equipment $123,712 $6,022 5 years
Furniture 13,799 653 5 years
-------- ------
$137,511 $6,675
======== ======
</TABLE>
During the formation of the Company, $132,564 in dental equipment and furniture
was donated to the Company as part of the initial capitalization. This amount
was credited to addition paid-in capital.
NOTE 4. INCOME TAXES
Provision for income taxes for the period ended March 31, 1996 is as follows:
State of Florida $ 1,200
Federal tax 3,900
-------
$ 5,100
=======
<PAGE>
DENTAL PRACTICE ADMINISTRATORS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 5. LONG-TERM DEBT
In March of 1996, $ 59,042 was loaned to the Company. The total loan was to be
$60,000. The balance of $ 958 plus an additional $ 7,500 was received by the
Company on May 31, 1996. At the discretion of the lender this amount can be
converted into common stock of the Company.
NOTE 6. COMMITMENTS and CONTINGENCIES
In February, 1996, the Company began discussions with Campbell Capital
Corporation, (Campbell), an SEC reporting Company. The discussions center upon
the meeting of certain conditions. Should these conditions be met, there will be
a statutory merger of the two companies, which will result in DPA becoming a
public company, subject to the rules and regulations of the securities and
exchange commission.
NOTE 7. SUBSEQUENT EVENTS
On March 31, 1996, the Company was granted a $25,000 line of credit from the
Barnett Bank. The use of proceeds from this line will be used to give additional
financing to the Company. The repayment of any monies borrowed under this line
are guaranteed by the stockholder of the Company. The Company borrowed $15,000
on this line subsequent to March 31, 1996.
<PAGE>
CAMPBELL CAPITAL CORPORATION
FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30,
1993, 1994 AND 1995
<PAGE>
[LETTERHEAD OF HARVEY JUDKOWITZ APPEARS HERE]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Campbell Capital Corp.
I have audited the accompanying balance sheets of Campbell Capital Corp. as of
September 30, 1995 and 1994, and the related statements of operations, changes
in stockholders' equity, and cash flows for each of the three years in the
period ended September 30, 1995. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Campbell Capital Corp. at September
30, 1995 and 1994, and the results of its operations and its cash flows for each
of the three years in the period ended September 30, 1995, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 5 to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency that raises substantial doubt about its ability
to continue as a going concern. Management's plan in regard to these matters are
also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Harvey Judkowitz
CPA
Miami, Florida
November 10, 1995
<PAGE>
CAMPBELL CAPITAL CORP.
BALANCE SHEETS
SEPTEMBER 30, 1995 AND 1994
1995 1994
---- ----
ASSETS
Current assets
Cash and cash equivalents $ 2,087 $ 4,232
-------- --------
Total current assets $ 2,087 $ 4,232
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ - $ 5,000
Due to affiliate 10,060 5,060
-------- --------
Total current liabilities 10,060 10,060
-------- --------
Stockholders' equity
Preferred stock, $.01 par value.
Authorized 10,000,000; none
issued or outstanding
Common stock, $.001 par value.
Authorized 25,000,000 shares;
5,500,000 shares issued and
outstanding 5,500 5,500
Additional paid-in capital 223,527 223,527
Deficit ( 237,000) (234,855)
---------- ---------
( 7,973) ( 5,828)
---------- ---------
$ 2,087 $ 4,232
========== =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
CAMPBELL CAPITAL CORP.
STATEMENT OF OPERATIONS
FOR THE THREE YEARS ENDED SEPTEMBER 30, 1995
1995 1994 1993
---- ---- ----
Interest income $ 55 $ 52 $ 35
Operating expenses 2,200 7,835 4,898
------- ------ ------
Net loss ($ 2,145) ($ 7,783) ($ 4,863)
======= ======== ========
Loss per common share - ($.001) -
======= ====== ====
The accompanying notes are an integral part of these financial statements.
<PAGE>
CAMPBELL CAPITAL CORP.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE YEARS ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Common Common Paid-in
Stock Stock Capital Deficit
------ ------ ------- -------
(Shares) (Par value)
-------- -----------
<S> <C> <C> <C> <C>
Balance, October 1,
1992 5,500,000 $5,500 $223,527 ($222,209)
Net loss ( 4,863)
--------- ------ -------- ----------
Balance,
September 30, 1993 5,500,000 5,500 223,527 ( 227,072)
Net loss ( 7,783)
--------- ------ -------- ----------
Balance,
September 30, 1994 5,500,000 5,500 223,527 ( 234,855)
Net loss ( 2,145)
--------- ------ -------- ----------
Balance,
September 30, 1995 5,500,000 $5,500 $223,527 ($237,000)
========= ====== ======== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CAMPBELL CAPITAL CORP.
STATEMENT OF CASH FLOWS
FOR THE THREE YEARS ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
1995 1994 1993
------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ($2,145) ($7,783) ($4,863)
Adjustments to reconcile net income
to net cash used for operating
activities
Change in accounts payable ( 5,000) 5,000 -
-------- ------- --------
NET CASH USED FOR
OPERATING ACTIVITIES ( 7,145) ( 2,783) ( 4,863)
-------- ------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Advance from affiliate 5,000 5,060
-------- -------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 5,000 5,060
-------- -------
NET INCREASE (DECREASE) IN CASH ( 2,145) 2,277 ( 4,863)
CASH AND CASH EQUIVALENTS
BEGINNING OF YEAR 4,232 1,955 6,818
-------- ------- --------
END OF YEAR $ 2,087 $ 4,232 $ 1,955
======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CAMPBELL CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 AND 1994
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business and Organization
- -------------------------
Campbell Capital Corp. (the Company) is a Delaware Corporation organized on
January 6, 1987, and is owned 90.91% by International Asset Management Group,
Inc. (IAMG).
The Company intends to seek potential business ventures. The Company's
management intends to be involved in the acquisition of existing businesses or
the acquisition of assets to establish businesses for the company. Present
management of the Company does not expect to become involved as management in
the aforementioned businesses and will hire presently unidentified individuals
as management for the ventures.
Income Taxes
- ------------
The Company is included in the consolidated Federal income tax returns filed by
IAMG. The Company will pay IAMG its applicable income tax liability, computed on
a separate return basis before surtax exemption.
Effective October 1, 1993, the Company adopted Statement of Financial Accounting
Standard No. 109, "Accounting for Income Taxes", which requires an asset and
liability approach to financial accounting and reporting for income taxes.
There was no cumulative effect on the Company's financial statements due to the
adoption of this standard.
Cash and Cash Equivalents
- -------------------------
For purposes of the statement of cash flows, the Company considers all temporary
cash investments purchased with a maturity of three months or less to be cash
equivalents.
<PAGE>
CAMPBELL CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1995 AND 1994
NOTE 2 - STOCKHOLDERS' EQUITY
Common Stock and Warrants
- -------------------------
On January 6, 1987, IAMG purchased 5,000,000 shares of $.001 par value common
stock for $125,000 or $.025 per share. The purchase price included one common
stock warrant for each share purchased. Each warrant entitles the holder to
purchase one share of the Company's common stock for $.50 through January 6,
1989. The expiration date for the warrants has been extended to June 29, 1996.
In August, 1987, the Company sold 500,000 units (Units), each Unit consisting of
one share of $.001 par value common stock, and one common stock purchase
warrant. Each common stock purchase warrant entitles the holder to purchase, at
a price of $.50, one share of common stock together with one additional common
stock purchase warrant exercisable through August 1990 for the original warrant
and through August 1992 for the additional warrant. The expiration date for the
common stock purchase warrants has been extended to June 29, 1996, and the
expiration date for the additional common purchase warrants has been extended to
one year from the date of issue.
The Company has the right to redeem the warrants on 30 days' notice at any time
during the exercise period at a price of $.01 per warrant, during which period
the warrants may be exercised. Further, the exercise price and the number of
shares to be purchased upon exercise of the warrants are subject to adjustment
upon the occurrence of certain events, including stock dividends, stock splits
or combinations, reclassifications, a merger terminating the Company's existence
or a sale of all or substantially all of the Company's assets. The warrants will
terminate in the event of the complete liquidation and dissolution of the
Company. Holders of warrants as such do not have any voting or other rights
conferred upon stockholders of the Company.
Preferred Stock
- ---------------
The Company has 10,000,000 shares of authorized preferred stock, par value $.01
per share, none of which are outstanding. The preferred stock is issuable in
series, each of which may vary, as determined by the Board of Directors, as to
the designation and number of shares in such series, voting power of the holders
thereof, the dividend rate, redemption terms and prices, the voluntary and
involuntary liquidation preferences and the conversion rights and sinking fund
requirements, if any, of such series. Each series shall consist of such number
of shares as shall be stated and expressed in such resolution or resolutions
providing for the issuance of the stock of such series. All shares of any one
series of preferred stock shall be alike in every particular.
<PAGE>
CAMPBELL CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1995 AND 1994
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company presently uses offices and facilities of an affiliated company at no
charge. All directors of the Company are also stockholders and directors of
IAMG.
The business of the Company raises potential conflicts of interest between the
Company and its officers and directors. The Company has been formed for the
purpose of locating suitable business opportunities in which to participate. The
officers and directors of the Company, who will not devote full time to the
Company, are engaged in various other business activities. From time to time, in
the course of such activities, they may become aware of investment and business
opportunities and may be faced with whether or not to bring such opportunities
to the attention of the Company or its affiliates for its participation.
NOTE 4 - CONTINGENCY
In settlement for outstanding legal fees, the Company entered into an agreement
whereby, in the event that Campbell becomes a viable company prior to January 3,
2004, it will pay to Wallace, Engles, Pertnoy. Solowsky & Allen, P.A. the amount
of $3,500 plus interest at the rate of 10% from the date of maturity until fully
paid.
In April, 1995, the Company settled the above in full with a payment of $1,750
to Wallace, Engels, et al.
NOTE 5 - GOING CONCERN
As noted in Note 1, above, the Company intends to seek potential business
ventures. At the present time, the Company's majority owned stockholder,
International Asset Management Group, Inc., is advancing funds in order for the
Company to meet its current obligations. As long as this continues the Company
will be able to continue as a growing concern.
<PAGE>
__________________
No dealer, salesman or any other person has been authorized to give any
information or to make any representation 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 by the Company.
______________________
This Prospectus does not constitute an offer of any securities other than
those to which it relates or an offer to sell or a solicitation of any offer to
buy any securities in any jurisdiction to any person to whom it is unlawful to
make such offer in such jurisdiction. The delivery of this Prospectus at any
time does not imply that the information herein is correct as of any time
subsequent to its date. Notwithstanding the foregoing, the Company has
undertaken to amend this Prospectus in the event of any fundamental changes in
the affairs of the Company.
TABLE OF CONTENTS
Prospectus Summary............................................................
Risk Factors..................................................................
Use of Proceeds...............................................................
Capitalization................................................................
Business......................................................................
Management's Discussion and
Analysis of Financial Condition
and Results of Operations....................................................
Management....................................................................
Indemnification...............................................................
Principal and Selling Stockholders............................................
Certain Transactions..........................................................
Description of Securities.....................................................
Certain Market Information....................................................
Plan of Distribution..........................................................
Litigation....................................................................
Transfer and Warrant Agent....................................................
Legal Matters.................................................................
Experts.......................................................................
Further Information...........................................................
Index to Financial Statements.................................................
DENTAL SERVICES OF
AMERICA, INC.
6,000,000 SHARES
OF COMMON STOCK
$.50 PER SHARE ISSUABLE UPON EXERCISE OF
NON-PUBLIC WARRANTS AND CLASS A WARRANTS
$1.00 PER SHARE ISSUABLE UPON EXERCISE
OF CLASS B WARRANTS
5,000,000 SHARES
OF DENTAL PREFERRED STOCK
$.10 PER SHARE
_______________________________
PROSPECTUS
_______________________________
[LOGO]
DENTAL SERVICES OF
AMERICA, INC.
12000 BISCAYNE BOULEVARD
MIAMI, FLORIDA 33181
(305) 895-0716
FAX (305) 895-0514
<PAGE>
SUBJECT TO COMPLETION,
ALTERNATE PRELIMINARY PROSPECTUS DATED OCTOBER ___, 1996
ALTERNATE
PROSPECTUS 1,745,000 SHARES OF COMMON STOCK
[LOGO]
DENTAL SERVICES OF AMERICA, INC.
This Prospectus relates to the sale of 1,745,000 shares of common stock,
$.001 par value (the "Common Stock"), held by certain stockholders (the "Selling
Stockholders") of Dental Services of America, Inc. (the "Company"). The Selling
Stockholders acquired such shares of Common Stock upon the exercise of a like
number of the Company's Non-Public Warrants. The Selling Stockholders have
agreed with the Company not to sell any of the shares of Common Stock issued
upon exercise of the Non-Public Warrants until October 1, 1996, and thereafter
to limit their sales of shares issued upon the exercise of such warrants to not
more than 20% of their holdings of such shares every three months (computed on a
cumulative basis). The Company will not receive any of the proceeds of the sale
of the Common Stock by the Selling Stockholders. The resale of the Common Stock
by the Selling Stockholders is subject to Prospectus delivery and other
requirements of the Securities Act of 1933. Sales of such shares or the
potential of such sales at any time may have an adverse effect on the market
prices of the securities offered herein.
The Common Stock offered by this Prospectus may be sold from time to time
by the Selling Shareholders or their transferees. No underwriting arrangements
have been entered into with the Selling Stockholders. The distribution of the
shares by the Selling Stockholders may be effected in one or more transactions
that may take place on the over-the-counter market, including ordinary broker's
transactions, privately-negotiated transactions or through sales to one or more
dealers for resale of such shares as principals at market prices prevailing at
the time of sale, at prices related to such prevailing market prices or at
negotiated prices. Usual and customary or specifically negotiated brokerage
fees or commissions may be paid by the Selling Stockholders in connection with
sales of such securities.
The Company will not receive any of the proceeds from the sale of the
shares by the Selling Stockholders. All costs incurred in the registration of
the securities of the Selling Stockholders are being borne by the Company. See
" Principal and Selling Stockholders."
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is October ____, 1996
<PAGE>
ALTERNATE
- ---------
ALTERNATE PROSPECTUS
PLAN OF DISTRIBUTION
--------------------
The shares offered hereby may be sold from time to time directly by the
Selling Stockholders. Alternatively, the Selling Stockholders may from time to
time offer such shares through underwriters, dealers or agents. The
distribution of shares by the Selling Stockholders may be effected in one or
more transactions that may take place on the over-the-counter market, including
ordinary broker's transactions, privately-negotiated transactions or through
sales to one or more broker-dealers for resale of such shares as principals, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Stockholders in connection with such sales of shares. The shares offered by the
selling Stockholders may be sold by one or more of the following methods,
without limitations: (a) a block trade in which a broker or dealer so engaged
will attempt to sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction; (b) purchases by a
broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers, and (d) face-to-face
transactions between sellers and purchasers without a broker-dealer. In
effecting sales, brokers or dealers engaged by the Selling Stockholders may
arrange for other brokers or dealers to participate. The Selling Stockholders
and intermediaries through whom such securities are sold may be deemed
"underwriters" within the meaning of the Act with respect to the securities
offered, and any profits realized or commissions received may be deemed
underwriting compensation.
At the time a particular offer of securities is made by or on behalf of a
Selling Stockholder, to the extent required, a Prospectus will be distributed
which will set forth the number of shares being offered and the terms of the
Offering, including the name or names of any underwriters, dealers or agents, if
any, the purchase price paid by any underwriter for sales purchased from the
Selling Stockholder and any discounts, commissions or concessions allowed or
reallowed or paid to dealers and the proposed selling price to the public.
Sales of shares by the Selling Stockholders or even the potential of such
sales would likely have an adverse effect on the market prices of the securities
offered hereby.
<PAGE>
ALTERNATE PROSPECTUS
_______________________________
No dealer, salesman or any other person has been authorized to give any
information or to make any representation 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 by the Company.
_______________________________
This Prospectus does not constitute an offer of any securities other than
those to which it relates or an offer to sell or a solicitation of any offer to
buy any securities in any jurisdiction to any person to whom it is unlawful to
make such offer in such jurisdiction. The delivery of this Prospectus at any
time does not imply that the information herein is correct as of any time
subsequent to its date. Notwithstanding the foregoing, the Company has
undertaken to amend this Prospectus in the event of any fundamental changes in
the affairs of the Company.
TABLE OF CONTENTS
Prospectus Summary..........................................................
Risk Factors................................................................
Use of Proceeds.............................................................
Capitalization..............................................................
Business....................................................................
Management's Discussion and
Analysis of Financial Condition
and Results of Operations..................................................
Indemnification.............................................................
Principal and Selling Stockholders..........................................
Certain Transactions........................................................
Description of Securities...................................................
Certain Market Information..................................................
Plan of Distribution........................................................
Litigation..................................................................
Transfer and Warrant Agent..................................................
Legal Matters...............................................................
Experts.....................................................................
Further Information.........................................................
Index to Financial Statements...............................................
DENTAL SERVICES OF
AMERICA, INC.
1,745,000 SHARES OF
COMMON STOCK
__________________________________
PROSPECTUS
__________________________________
[LOGO]
DENTAL SERVICES OF
AMERICA, INC.
1200 BISCAYNE BOULEVARD
SUITE 108
MIAMI, FLORIDA 33181
(305) 895-0716
FAX (305) 895-0514
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Pursuant to the provisions of Section 145(a) of the Delaware General Corporation
Law, the Company has the power to indemnify anyone made or threatened to be made
a party to any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative (other than an action
by or in the right of the Company) because such person is or was a director or
officer of the Company against expenses (including attorneys' fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred in the
defense or settlement of such action, suit, or proceeding, provided that (i)
such person acted in good faith and in a manner he reasonably believed to be in
or not opposed to the Company's best interest and (ii) in the case of a criminal
proceeding such person had no reasonable cause to believe his conduct was
unlawful.
With respect to an action or suit by or in the right of the Company to procure a
judgment in its favor, Section 145(b) of the Delaware General Corporation Law
provides that the Company shall have the power to indemnify anyone who was, is,
or is threatened to be made a party to any threatened, pending, or completed
action or suit brought by or in the right of the Company to procure a judgment
in its favor because such person is or was a director or officer of the Company
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit,
provided that such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the Company's best interests, except that no
indemnification shall be made in a case in which such person shall have been
adjudged to be liable to the Company unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
have determined upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses.
Indemnification as described above shall only be granted in a specific case upon
a determination that indemnification is proper under the circumstances using the
applicable standard of conduct which is made by (a) a majority of a quorum of
directors who were not parties to such proceeding, (b) independent legal counsel
in a written opinion if such quorum cannot be obtained or if a quorum of
disinterested directors so directs, or (c) the shareholders of the Company.
Section 145(g) of the Delaware General Corporation Law permits the purchase and
maintenance of insurance to indemnify directors and officers against any
liability asserted against or incurred by them in any such capacity, whether or
not the Company itself would have the power to indemnify any such director or
officer against such liability. The Company has such insurance and premiums are
paid by the Company.
This provides for the indemnification of directors and officers of the Company
to the fullest extent permitted by Section 145 of the Delaware General
Corporation Law, as the same may be amended or supplemented. The Certificate of
Incorporation further provides that the indemnification provided for therein
shall not be exclusive of any rights to which those indemnified may be entitled
under any bylaw, agreement, vote of shareholders or disinterested directors, or
otherwise.
The Certificate of Incorporation also contains a provision that eliminates the
personal liability of the Company's directors to the Company or its shareholders
for monetary damages for breach of fiduciary duty as a director. The provision
does not limit a director's liability for (i) breaches of duty of loyalty to the
Company or its shareholders, (ii) acts or omissions not in good faith, involving
intentional misconduct or involving knowing violations of law, (iii) the payment
of unlawful dividends or unlawful stock repurchases or redemptions under Section
174 of the Delaware General Corporation Law, or (iv) transactions in which the
director received as improper personal benefit. Depending on judicial
interpretation, the provision may not affect liability for violations of the
federal securities laws.
<PAGE>
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the issuance of the securities being
registered are as follows:
<TABLE>
<S> <C>
SEC Registration Fee ...................................................... $1,293.10
--------------
NASD Filing Fee............................................................ --------------
Printing Expenses.......................................................... --------------
Accounting Fees and Expenses............................................... --------------
Legal Fees and Expenses.................................................... 30,000.00
--------------
Blue Sky Fees and Expenses................................................. --------------
Transfer Agent and Registrar Fees and Expenses............................. --------------
Miscellaneous.............................................................. --------------
Total............................................................... $
--------------
</TABLE>
*All amounts, except the SEC registration fee and the NASD filing fee, are
estimated.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
During May, June and July, 1996, the Company issued a total of 1,745,000
shares of its common stock upon exercise of outstanding Non-Public Warrants. The
shares were issued at the exercise price of $.50 per share, and the Company
received gross proceeds of $872,500. No underwriter participated in soliciting
exercise of the Warrants.
In July, 1996, the Company issued 1,000,000 Private Warrants to its parent,
International Asset Management Group, Inc., in consideration for past services.
The Private Warrants, each of which entitles the holder to purchase one share of
Common Stock, are exercisable at a price of $2.50 per share, and expire on June
29, 2001.
In July, 1996, the Company issued a total of 75,000 shares at a price of
$.01 per share to certain persons, in consideration of services performed or to
be performed for the Company by such persons. The Company agreed with the
purchaser of 25,000 of such shares to repurchase the shares, at the purchaser's
request, at a price of $2.00 per share ($50,000 in the aggregate) at any time
prior to December 31, 1998. The repurchase obligation will terminate if the
Company's common stock trades at a price in excess of $2.25 per share for at
least 10 days during the period from August 1, 1998 through December 31, 1998.
The shares of Common Stock and the Private Warrants referred to above were
issued without registration pursuant to the exemption from registration for
transactions not involving a public offering set forth in Section 4(2) of the
Securities Act of 1933.
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
2.1 Share Exchange Agreement (incorporated by reference to
Exhibit A of the Registrant's Form 10-QSB for the quarterly
period ended June 30, 1996, filed on August 13, 1996)
3.1a Certificate of Incorporation of the Company (incorporated by
reference to the Exhibits to Registrant's Registration
Statement on Form S-18, Registration No. 33-11935)
</TABLE>
<PAGE>
<TABLE>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
3.1b Certificate of Amendment to the Company's Certificate of
Incorporation
3.2 Bylaws of the Company (incorporated by reference to the
Exhibits to Registrant's Registration Statement on Form S-
18, Registration No. 33-11935)
4.1 Warrant Certificates
4.2 Certificate of Designation, Preferences, Rights and
Limitations of Dental Preferred Stock
*5 Opinion of Akerman, Senterfitt & Eidson, P.A.
10.1 1996 Director Stock Option Plan
10.2 1996 Employee Stock Option Plan
*10.3 Employment Agreement - Paulo Dominguez
*10.4 Employment Agreement - Roger Prieto
*10.5 Employment Agreement - Sujit Shyam
21.1 Subsidiaries of the Registrant
*23.1 Consent of Akerman, Senterfitt & Eidson, P.A. (included in
Exhibit 5)
23.2 Consent of Harvey Judkowitz, CPA
</TABLE>
* To be filed by amendment
<PAGE>
(B) SCHEDULES
ITEM 28. UNDERTAKINGS.
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under Securities Act,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of Prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
Prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities,
a post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information
in the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Miami, State of Florida,
on the 7th day of October, 1996.
DENTAL SERVICES OF AMERICA, INC.
By: /s/ Roger Prieto, D.D.S.
--------------------------------------
Roger Prieto, D.D.S., President
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Paulo Dominguez Chief Operating Officer, Director October 7, 1996
- ----------------------------- (principal executive officer)
Paulo Dominguez
/s/ Roger Prieto, D.D.S. President, Chief Dental Officer, October 7, 1996
- ----------------------------- Director
Roger Prieto, D.D.S.
/s/ Robert M. Leopold Director October 7, 1996
- -----------------------------
Robert M. Leopold
/s/ Carolina Sierra, M.D. Director October 7, 1996
- -----------------------------
Carolina Sierra, M.D.
Director ________ , 1996
- -----------------------------
Hershel Krasnow
Treasurer
/s/ Henry Ewen (principal financial and October 7, 1996
- ----------------------------- accounting officer)
Henry Ewen
</TABLE>
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
2.1 Share Exchange Agreement (incorporated by reference to
Exhibit A of the Registrant's Form 10-QSB for the quarterly
period ended June 30, 1996, filed on August 13, 1996)
3.1a Certificate of Incorporation of the Company (incorporated by
reference to the Exhibits to Registrant's Registration
Statement on Form S-18, Registration No. 33-11935)
3.1b Certificate of Amendment to the Company's Certificate of
Incorporation
3.2 Bylaws of the Company (incorporated by reference to the
Exhibits to Registrant's Registration Statement on Form S-
18, Registration No. 33-11935)
4.1 Warrants Certificates
4.2 Certificate of Designation, Preferences, Rights and
Limitations of Dental Preferred Stock
*5 Opinion of Akerman, Senterfitt & Eidson, P.A.
10.1 1996 Director Stock Option Plan
10.2 1996 Employee Stock Option Plan
*10.3 Employment Agreement - Paulo Dominguez
*10.4 Employment Agreement - Roger Prieto
*10.5 Employment Agreement - Sujit Shyam
21.1 Subsidiaries of the Registrant
*23.1 Consent of Akerman, Senterfitt & Eidson, P.A. (included in
Exhibit 5)
23.2 Consent of Harvey Judkowitz, CPA
* To be filed by amendment
</TABLE>
<PAGE>
Exhibit 3.1(b)
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
CAMPBELL CAPITAL CORP.
A Delaware corporation
Pursuant to the Delaware General Corporation Law, Article I of the
Certificate of Incorporation of CAMPBELL CAPITAL CORP., a Delaware corporation,
hereinafter referred to as the "Corporation", is amended to read as follows:
ARTICLE I
_________
The name of the Corporation is DENTAL SERVICES OF AMERICA, INC.
The foregoing Amendment to the Certificate of Incorporation of the
Corporation was proposed by the directors and approved by the Corporation's
shareholders on July 1, 1996, pursuant to Section 242 of the Delaware General
Corporation Law. The number of votes cast in favor of the amendment by the
shareholders was sufficient for approval of the amendment.
In accordance with Section 103 of the Delaware General Corporation Law,
this Amendment shall be effective upon filing by the Department of State of the
State of Delaware.
IN WITNESS WHEREOF, the undersigned officer of the Corporation has executed
this Certificate of Amendment effective as of the 31 day of July, 1996.
CAMPBELL CAPITAL CORP.
By: /s/ Robert Leopold
------------------------------------
Robert Leopold
an Officer thereof
<PAGE>
Exhibit 4.1
WARRANT NO. _______________________
WARRANT TO PURCHASE ___________ SHARES OF COMMON STOCK
WARRANT TO PURCHASE COMMON STOCK
OF
DENTAL SERVICES OF AMERICA, INC.
THIS CERTIFIES THAT, for value received,
________________________________________________________________, or any
subsequent holder hereof, has the right to purchase from Dental Services of
America, Inc. (the "Company"), subject to certain adjustments herein set forth,
the number of fully paid and non-assessable shares of the Company's Common
Stock, $.001 par value (the "Shares") set forth above.
This Warrant is exercisable at any time on or prior to June 29, 1997,
at the exercise price of $.50 per Share.
The holder of this Warrant agrees with the Company that this Warrant
is issued and all rights hereunder shall be held subject to all of the
conditions, limitations and provisions set forth herein.
1. Assignment and Registration. Subject to the provisions of this
---------------------------
Warrant, this Warrant may be transferred on the books of the Company, wholly or
in part, in person or by attorney, upon surrender of this Warrant properly
endorsed, with signature guaranteed and upon the Company's determination that
such transfer may be effected in compliance with the Securities Act of 1933 and
state blue sky laws. Each holder hereof consents and agrees that the Company
may treat the person in whose name this Warrant is registered on the books of
the Company as the absolute owner hereof for all purposes and that the Company
shall not be affected by any notice to the contrary.
2. Exercise.
--------
(a) This Warrant may be exercised as to all or any lesser number
of Shares covered hereby upon the surrender of this Warrant, with the
Subscription Form attached hereto duly completed and executed, together with the
full purchase price in cash, or by certified or official bank check payable in
United States Funds, for each Share of the Company as to which this Warrant is
exercised, at the principal office of the Company, or at such other office or
agency as the Company may designate, on or before the expiration date of this
Warrant (such surrender and payment being hereinafter called the "exercise of
this Warrant"). As soon as practicable after the exercise of this Warrant, the
holder hereof shall be entitled to receive a certificate or certificates for the
number of Shares purchased upon such exercise and a new Warrant or Warrants
representing any unexercised
<PAGE>
portion of this Warrant. This Warrant shall be cancelled upon such exercise.
Each person in whose name any certificate for Shares is issued shall, for all
purposes, be deemed to have become the holder of record of such Shares at the
close of business on the date of exercise of this Warrant, irrespective of the
date of delivery of such certificates, except that if the transfer books of the
Company are closed on such date, such person shall be deemed to have become the
holder of record of such Shares at the close of business on the next succeeding
date on which the transfer books are open. Nothing in this Warrant shall be
construed as conferring upon the holder hereof any rights as a shareholder of
the Company.
3. Anti-Dilution Adjustments.
-------------------------
(a) In case the Company shall at any time prior to the exercise of
this Warrant declare a dividend or any distribution payable in any class of the
Company's Shares now outstanding or to be outstanding to which the exercise of
this Warrant pertains, then the holder hereof, upon the exercise of this Warrant
after the record date for the determination of holders of Shares entitled to
receive such dividend or distribution, shall be entitled to receive upon
exercise of this Warrant, in addition to the number of Shares as to which this
Warrant is exercised, such additional Shares, as such holder would have received
had this Warrant been exercised immediately prior to such record date.
(b) In case the Company shall at any time prior to the exercise of
this Warrant effect a recapitalization or reclassification of such character
that the Shares shall be changed into or become exchangeable for a larger or
smaller number of Shares, then upon the effective date thereof, the number of
Shares which the holder hereof shall be entitled to purchase upon exercise of
this Warrant shall be increased or decreased, as the case may be, in direct
proportion to the increase or decrease in the number of Shares by reason of such
recapitalization or reclassification, and the Purchase Price Per Share of such
recapitalized or reclassified Shares shall, in the case of an increase in the
number of Shares, be proportionately decreased and in the case of a decrease in
the number of Shares, be proportionately increased.
(c) In case the Company shall at any time prior to the exercise of
this Warrant issue or sell any Shares or any other securities convertible into
Shares or any options or warrants to purchase Shares (except as provided in
subsection (a) or (b) of this Paragraph 3 or pursuant to incentive compensation
plans or options to officers or employees) for a consideration per Share less
than the Purchase Price Per Share immediately prior to such issue or sale, then
forthwith upon such issue or sale the Purchase Price Per Share (until another
such issue or sale) shall be reduced to a price (calculated to the nearest full
cent) determined by dividing (i) an amount equal to the sum of (A) the product
obtained by multiplying (x) the total number of Shares outstanding immediately
prior to such issue or sale, by (y) the Purchase Price Per Share in effect
immediately prior to such issue or sale plus (B) the aggregate amount of any
consideration in connection with such issue or sale, by (ii) the
2
<PAGE>
total number of Shares outstanding immediately after such issue or sale.
Simultaneously with such reduction in the Purchase Price Per Share, the number
of Shares issuable upon exercise of this Warrant shall be increased (to the
nearest full Share) to the number obtained by multiplying the Purchase Price Per
Share in effect immediately prior to such reduction by the number of Shares then
issuable upon exercise of this Warrant and dividing the product so obtained by
the reduced Purchase Price Per Share. For purposes of this subsection 3(c), the
consideration in connection with any such issue or sale shall be the initial
offering price for the sale of such shares or other securities, options or
warrants before deducting therefrom any commissions or other expenses paid or
incurred by the Company in connection with the issue or sale of such securities,
options or warrants plus any additional cash receivable by the Company on
conversion or exercise of such other securities, options or warrants, except
that in the event that any portion of such consideration is a consideration
other than cash, the amount of such consideration other than cash shall be the
value thereof as determined in good faith by the Board of Directors of the
Company. In the event that the conversion price or exercise price of any
securities convertible into Shares or options or warrants to purchase Shares is
not specified at the time of the issue or sale of such securities, options or
warrants, the amount thereof, for purposes only of this subsection 3(c), shall
be as determined in good faith by the Board of Directors of the Company. In the
event of the issuance or sale by the Company of any securities convertible into
Shares or any options or warrants to purchase Shares (except as provided in
subsection (a) or (b) of this Paragraph 3 or pursuant to incentive compensation
plans or options to officers or employees) the Company shall be deemed to have
issued the maximum number of Shares into which such convertible securities may
be converted or the maximum number of Shares deliverable upon the exercise of
such options or warrants, as the case may be. On the expiration of such options
or warrants or the termination of such right to convert, the Purchase Price Per
Share shall be readjusted based upon the number of Shares actually delivered
upon the exercise of such options or warrants or upon the conversion of such
securities. Except as provided in the next preceding sentence, no further
adjustment of the Purchase Price Per Share shall be made as a result of the
actual issuance of Shares upon the exercise of such options or warrants or the
conversion of such securities.
(d) In case the Company shall at any time prior to the exercise of
this Warrant consolidate or merge with any other corporation or transfer all or
substantially all of its assets to any other corporation preparatory to a
dissolution, then the Company shall, as a condition precedent to such
transaction, cause effective provision to be made so that the holder hereof upon
the exercise of this Warrant after the effective date of such transaction shall
be entitled to receive the kind and amount of shares, evidences of indebtedness
and/or other securities or property receivable on such transaction by a holder
of the number of Shares as to which this Warrant was exercisable immediately
prior to such transaction (without giving effect to any restriction upon such
exercise); and, in any such case, appropriate provision shall be made with
respect to the rights and interests of the holder hereof to the end that the
provisions of this Warrant shall thereafter be applicable (as
3
<PAGE>
nearly as may be practicable) with respect to any Shares, evidences of
indebtedness or other securities or assets thereafter deliverable upon exercise
of this Warrant.
(e) The term "Purchase Price Per Share" as used in this Paragraph
3 shall mean the price specified in this Warrant until the occurrence of an
event stated in subsection (b) or (c) of this Paragraph 3 and thereafter shall
mean said price as adjusted from time to time in accordance with the provisions
of said subsections. No such adjustment shall be made unless such adjustment
would change the then Purchaser Price Per Share by $.005 or more; provided,
however, that all adjustments not so made shall be deferred and made when the
aggregate thereof would change the then Purchase Price Per Share by $.005 or
more. No adjustment made pursuant to any provision of this Paragraph 3 shall
have the effect of increasing the total consideration payable upon exercise of
this Warrant in respect of all the Shares purchasable hereunder.
(f) Whenever the number of Shares or other types of securities or
assets purchasable under this Warrant shall be adjusted as provided in this
Paragraph 3, the Company shall forthwith obtain and file with its corporate
records a certificate or letter from a firm of independent public accountants of
recognized standing setting forth the computation and the adjusted number of
Shares or other securities or assets purchasable hereunder resulting from such
adjustments, and a copy of such certificate or letter shall be mailed to the
holder hereof. Any such certificate or letter shall be conclusive evidence as
to the correctness of the adjustment or adjustments referred to therein and
shall be available for inspection by the holder of this Warrant on any day
during normal business hours.
(g) In the event that at any time, as a result of an adjustment
made pursuant to this Paragraph 3, the holder of this Warrant shall become
entitled to purchase upon exercise of this Warrant, shares, evidences of
indebtedness or other securities or assets (other than Shares) then, wherever
appropriate, all references herein to Shares shall be deemed to refer to and
include such shares, evidences of indebtedness or other securities or assets;
and thereafter the number of such shares, evidences of indebtedness or other
securities or assets shall be subject to adjustment from time to time in a
manner and upon terms as nearly equivalent as practicable to the provisions of
this Paragraph 3.
4. Fractional Interests. The Company shall not be required to issue
--------------------
a fraction of a Share on the exercise of this Warrant. If any fraction of a
Share would be issuable on such exercise except for the provisions of this
Paragraph 4, the Company shall, in lieu thereof, pay to the holder hereof an
amount equal to the current value of such fraction computed (a) if the Shares
shall then be listed or admitted to trading on any national securities exchange,
on the basis of the last reported sale price of the Shares on such exchange
prior to the date of exercise, (b) if the Shares shall not then be so listed or
admitted, on the basis of the average of the high and low bid prices of the
Shares in the
4
<PAGE>
over-the-counter market, as reported by NASDAQ or any successor thereto, on the
last business day prior to the date of exercise, or (c) if there is no market
for the Shares, the fair market value as determined in good faith by the
Company's Board of Directors.
5. Notices to Warrantholder. If, at any time prior to the expiration
------------------------
or exercise of this Warrant, any of the following events shall occur:
(a) the Company shall declare any dividend payable in securities
upon its Shares or make any distribution (other than a cash dividend payable out
of earned surplus) to the holders of its Shares; or
(b) the Company shall offer to the holders of its Shares any
additional shares of the Company or securities convertible into shares of the
Company or any right to subscribe therefor; or
(c) a dissolution, liquidation or winding-up of the Company (other
than in connection with a consolidation or merger) or a transfer of all or
substantially all of its assets shall be proposed, then in any one or more of
said events, the Company shall give to the holder of this Warrant, by first-
class mail, postage prepaid, at the address of such holder as shown on the books
of the Company, not less than twenty (20) days' prior notice of the date on
which:
(i) The books of the Company shall be closed or a record taken
for determination of the shareholders entitled to such dividend,
distribution or subscription rights; or
(ii) the books of the Company shall be closed or record taken
for determination of the shareholders entitled to vote on such
proposed dissolution, liquidation, winding-up or transfer.
6. Reservation of Shares. The Company shall at all times reserve for
---------------------
issuance such number of authorized and unissued Shares (or other securities
substituted therefor as hereinabove provided) as shall be sufficient for
exercise of the Warrants.
7. Redemption.
----------
(a) The Company shall have the right to redeem all or, on a pro
rata basis, a portion of the Warrants outstanding at any time and from time to
time. Upon such redemption, the Company shall pay to each Warrant holder a
redemption price of $.01 per Share purchasable upon the exercise of a Warrant.
5
<PAGE>
(b) To exercise its rights to redeem any Warrant, the Company
shall give to each Warrant holder whose Warrants are to be redeemed, at least
thirty (30) days prior to the date set for redemption (the "Redemption Date"), a
written notice (the "Redemption Notice") indicating (i) that the Company has
elected to redeem the number of Warrants specified in the Redemption Notice,
(ii) the mechanism by which such redemption will be made, (iii) that such
Warrants may be exercised according to their terms at any time prior to the
Redemption Date, and (iv) that all Warrants which are to be redeemed and which
are not exercised before the Redemption Date shall thereafter cease to be
exercisable and shall be redeemed and cancelled.
8. Benefits of this Warrant. Nothing in this Warrant shall be
------------------------
construed to confer upon any person other than the Company and the holder of
this Warrant any legal or equitable right, remedy or claim under this Warrant
and this Warrant shall be for the sole and exclusive benefit of the Company and
the holder of this Warrant.
9. Applicable Law. This Warrant is issued under and shall for all
--------------
purposes be governed by and construed in accordance with the laws of the State
of Delaware.
This Warrant is binding upon the Company and its successors and
assigns.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed, sealed and delivered in its name by its duly authorized officers.
DATED: _________ day of _______________________________, 199______.
DENTAL SERVICES OF AMERICA, INC.
By:__________________________________________
President
6
<PAGE>
Exhibit 4.2
CERTIFICATE OF DESIGNATION, PREFERENCES, RIGHTS
AND LIMITATIONS
OF
DENTAL PREFERRED STOCK,
$.01 PAR VALUE,
OF
DENTAL SERVICES OF AMERICA, INC.,
a Delaware Corporation
Dental Services of America, Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify:
At a meeting of the Corporation's Board of Directors duly held on August 7,
1996, the Board of Directors authorized issuance of a series of 5,000,000 shares
of Dental Preferred Stock, $.01 par value, at a price of $.10 per share. The
preferences, rights and limitations of the Dental Preferred Stock shall be as
follows:
1. DIVIDENDS.
---------
(a) The holders of the Dental Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors out of the funds of the
Corporation legally available therefor, cumulative dividends at the rate of
$.01 per share per annum, payable annually prior to November 30 of each year to
holders of record as of October 25 of each year (the "Record Date").
(b) Such dividends shall be cumulative from and after the date of
issuance of such shares. No dividends shall be paid or set apart for payment
on, nor shall any distribution be made with respect to, the Common Stock of the
Corporation or on stock of any other class ranking junior to the Dental
Preferred Stock, nor shall any shares of Common Stock or such junior stock be
redeemed, retired or otherwise acquired for valuable consideration, unless full
cumulative dividends on all Dental Preferred Stock for all past dividend periods
shall have been declared and paid.
(c) Dividends on Dental Preferred Stock may be paid, at the option of
the Corporation, in cash and/or in unregistered shares of the Corporation's
Common Stock, $.001 par value, such Common Stock to be valued at the average bid
price of such Common Stock for the 30 trading days immediately preceding the
Record Date.
<PAGE>
(d) The holders of Dental Preferred tock shall not be entitled to
receive any dividends thereon other than the dividends provided for in this
paragraph 1. Any accumulation of dividends on the Dental Preferred Stock shall
not bear interest.
2. REDEMPTION.
----------
(a) The Corporation, by action of its Board of Directors, may redeem
the whole or any part of the Dental Preferred Stock, at any time, at the
redemption price of $.11 per share, plus a sum equal to all accumulated and
unpaid dividends thereon to the date fixed for redemption.
(b) Notice of the election of the Corporation to redeem any Dental
Preferred Stock shall be given by the Corporation by mailing a copy of such
notice, postage prepaid, not less than 30 or more than 90 days prior to the date
designated therein as the date for such redemption, to the holders of record of
the Dental Preferred Stock to be redeemed, addressed to them at their respective
address appearing on the books of the Corporation. Following receipt of any
such notice of redemption, each holder of record of the Dental Preferred Stock
shall have the option to convert such stock into shares of the Company's Common
Stock, in accordance with the provisions of Section 3 hereof.
(c) In the case of the redemption of less than all of the Dental
Preferred Stock at the time outstanding, the Corporation shall redeem the shares
to be redeemed pro rata from all holders of record of such shares. On and after
the date specified in such notice, each holder of the Dental Preferred Stock
called for redemption as aforesaid, upon presentation and surrender at the place
designated in such notice of the certificate or certificates for such Dental
Preferred Stock held by him, properly endorsed in blank for transfer or
accompanied by proper instruments of assignment in blank (if required by the
Corporation) and bearing all necessary stock transfer tax stamps thereto affixed
and cancelled, shall be entitled to receive therefor the redemption price
thereof. Subject to the limitations and provisions herein contained, the Board
of Directors shall have full power and authority to prescribe the manner in
which and the terms and conditions upon which the Dental Preferred Stock shall
from time to time be redeemed.
(d) From and after the date of redemption specified in such notice of
redemption (unless default shall be made by the Corporation in providing moneys
for the payment of the redemption price), all dividends upon the Dental
Preferred Stock so called for redemption shall cease to accrue and, from and
after said date (unless default shall be made by the Corporation), all rights of
the holders of the Dental Preferred Stock so called for redemption as
stockholders of the Corporation, excepting only the right to receive the
redemption price of such shares on and after the redemption date without
interest thereon, shall cease.
(e) The Corporation may also from time to time, to the extent now or
hereafter permitted by law, purchase Dental Preferred Stock.
2
<PAGE>
(f) All Dental Preferred Stock at any time redeemed or purchased
shall be deemed treasury stock and may be reissued by the Corporation.
3. CONVERSION. The holders of shares of Dental Preferred Stock
----------
shall have the right, at their option, to convert such shares into shares of
Common Stock of the Corporation on the following terms and conditions:
(a) Shares of Dental Preferred Stock shall be convertible at any time
(or, if such shares are called for redemption, at any time up to and including,
but not after, the close of business on the fifth full business day prior to the
date fixed for such redemption) into fully paid and non-assessable shares of
Common Stock of the Corporation as constituted at the time of such conversion.
Subject to the provisions of Section 3 (e) hereof, each share of Dental
Preferred Stock shall be convertible into one-fiftieth (.02) shares of Common
Stock.
(b) The Corporation shall not issue any fraction of a share of Common
Stock upon any conversion, but rather shall round any fraction of a share up to
the next full share.
(c) On presentation and surrender to the Corporation of the Dental
Preferred Stock so to be converted, duly endorsed for transfer, the holder of
such Dental Preferred Stock, shall be entitled, subject to the limitations
herein contained, to receive in exchange therefor a certificate or certificates
for fully paid and nonassessable shares of Common Stock, on the basis aforesaid.
The Dental Preferred Stock shall be deemed to have been converted and the person
converting the same to have become the holder of record of Common Stock, for the
purpose of receiving dividends and for all other purposes whatever as of the
date when the certificate or certificates for such Dental Preferred Stock are
surrendered to the Corporation as aforesaid.
(d) The Corporation shall, so long as any of the Dental Preferred
Stock is outstanding, reserve and keep available out of its authorized and
unissued Common Stock, solely for the purpose of effecting the conversion of the
Dental Preferred Stock, such number of shares of Common Stock as shall from time
to time be sufficient to effect the conversion of all shares of the Dental
Preferred Stock then outstanding.
(e) In order to prevent dilution of the right to convert shares of
Dental Preferred Stock into shares of the Corporation's Common Stock, the number
and kind of shares issuable upon conversion of each share of Dental Preferred
Stock is subject to adjustment upon the occurrence of the following events: If,
at any time prior to conversion, the Corporation shall (i) issue any stock as a
dividend or distribution on its outstanding shares of Common Stock, (ii)
subdivide or reclassify its outstanding shares of Common Stock into a greater
number of shares, or (iii) combine or reclassify its outstanding shares of
Common Stock into a smaller number of shares, the number of shares of Common
Stock issuable upon conversion of each share of Dental Preferred Stock
immediately prior to the record date for such dividend or distribution, or the
effective date of such subdivision, combination or reclassification, shall be
adjusted so that upon conversion of each share of Dental Preferred Stock after
such date, the holder thereof will receive the number and kind of
3
<PAGE>
shares which the holder would have owned and been entitled to receive as a
result of the dividend, distribution, subdivision, combination or
reclassification had such share of Dental Preferred Stock been converted
immediately prior to that date.
(f) The Corporation shall pay any and all taxes which may be imposed
upon it with respect to the issuance and delivery of Common Stock upon the
conversion of Dental Preferred Stock as herein provided. The Corporation shall
not be required in any event to pay any transfer or other taxes by reason of the
issuance of such Common Stock in names other than those in which the Dental
Preferred Stock surrendered for conversion may stand, and no such conversion or
issuance of common stock shall be made unless and until the person requesting
such issuance has paid to the Corporation the amount of any such tax, or has
established to the satisfaction of the Corporation and its transfer agent, if
any, that such tax has been paid. Upon any conversion of Dental Preferred
Stock, as herein provided, all rights to future dividends, if any, shall cease,
but nothing in this sentence shall be deemed to relieve the Corporation from its
obligation to pay all accumulated and unpaid dividends thereon through the date
of such conversion.
4. VOTING RIGHTS.
-------------
(a) Except as herein or by law expressly provided otherwise, each
holder of Dental Preferred Stock shall be entitled to receive notice of any
meeting of the stockholders, and shall be entitled to one fiftieth (.02) vote
for each share of Dental Preferred Stock held on any matter presented for a vote
of stockholders.
(b) In accordance with the provisions of Section 242(b)(2) of the
General Corporation Law of the State of Delaware, the holders of the outstanding
Dental Preferred Stock shall be entitled to vote as a class upon any proposed
amendment of the Corporation's certificate of incorporation if such amendment
would increase or decrease the number of authorized shares of Dental Preferred
Stock, increase or decrease the par value of shares of such series, or alter of
change the powers, preferences, or special rights of the shares of such series,
so as to adversely affect the holders of such shares.
5. PREFERENCE ON LIQUIDATION. In the event of any voluntary or
-------------------------
involuntary liquidation, dissolution or winding up of the Corporation, the
holders of the Dental Preferred Stock shall be entitled to receive in cash out
of the assets of the Corporation, whether from capital or from earnings,
available for distribution to its stockholders, before any amount shall be paid
to the holders of the Common Stock or of the stock of any other class ranking
junior to the Dental Preferred Stock, the sum of $.01 per share, plus an amount
equal to all accumulated and unpaid dividends thereon to the date fixed for
payment of such distributive amount. Neither the consolidation nor merger of
the Corporation with or into any other corporation or corporations, nor the sale
or transfer by the Corporation of all or any part of its assets, shall be deemed
to be a liquidation, dissolution or winding up of the Corporation for the
purposes of this paragraph. No holder of Dental Preferred Stock shall be
entitled to receive any amounts with respect thereto upon any liquidation,
dissolution or winding up of the Corporation other than the amounts provided for
in this paragraph.
4
<PAGE>
Exhibit 10.1
DENTAL SERVICES OF AMERICA, INC.
1996 EMPLOYEE STOCK OPTION PLAN
1. Purposes.
The DENTAL SERVICES OF AMERICA, INC. 1996 EMPLOYEE STOCK OPTION PLAN (the
"Plan") is intended to provide the employees (including employees who are also
directors), independent contractors and consultants of DENTAL SERVICES OF
AMERICA, INC., f/k/a Campbell Capital Corp. (the "Company") with an added
incentive to provide their services to the Company and to induce them to exert
their maximum efforts toward the Company's success. By thus encouraging
employees, directors, independent contractors and consultants and promoting
their continued association with the Company, the Plan may be expected to
benefit the Company and its stockholders. The Plan allows the Company to grant
Incentive Stock Options ("ISOs") (as defined in Section 422(b) of the Internal
Revenue Code of 1986, as amended [the "Code"]), and Non-Qualified Stock Options
("NQSOs"), not intended to qualify under Section 422(b) of the Code (ISOs and
NQSOs hereinafter collectively the "Options"), to employees, directors,
independent contractors and consultants of the Company.
2. Shares Subject to the Plan.
The total number of shares of Common Stock of the Company, $.001 par value
per share, that may be subject to Options granted under the Plan shall be the
greater of 500,000 shares or 8% of the number of shares of the Company's Common
Stock which are from time to time outstanding, in the aggregate, subject to
adjustment as provided in Paragraph 8 hereunder. The Company shall at all times
while the Plan is in force reserve such number of shares of Common Stock as will
be sufficient to satisfy the requirement of outstanding Options granted under
the Plan, except as otherwise provided below. In the event any Option granted
under the Plan shall expire or terminate for any reason without having been
exercised in full or shall cease for any reason to be exercisable in whole or in
part, the unpurchased shares subject thereto shall again be available for the
granting of Options under the Plan.
In a given fiscal year, the maximum number of Options that can be granted
hereunder to a single person shall be limited to 25,000 Options, as adjusted for
future stock dividends and/or stock splits. Further, such limitation shall not
be deemed exceeded in the event subsequent to the date of grant of Options under
the Plan, the Company effectuates a stock split and/or stock dividend which
results in an adjustment to the number of Options previously granted. The
aforesaid limitation is intended to comply with Section 162(m) of the Code. To
the extent any provision of the Plan or action by the Board of Directors or
Committee, as hereinafter defined, fails to comply with Section 162(m), it shall
be deemed null and void to the extent required by statute and to the extent
deemed advisable by the Board of Directors and/or such Committee.
<PAGE>
3. Eligibility.
ISOs may be granted from time to time under the Plan to one or more
employees of the Company or of a "subsidiary" or "parent" of the Company, as the
quoted terms are defined within Section 424 of the Code. An Officer is an
employee for the above purposes. NQSOs may be granted from time to time under
the Plan to one or more employees of the Company, Officers, members of the Board
of Directors, independent contractors, consultants and other individuals who are
not employees of, but are involved in the continuing development and success of
the Company and/or of a subsidiary of the Company.
4. Administration of the Plan.
(a) The Plan shall be administered by a Compensation Committee of the Board
of Directors of the Company (the "Committee") comprised of at least two outside
directors (as described under Rule 16b-3, promulgated under the Securities
Exchange Act of 1934 [the "1934 Act"]), and in accordance with the requirement
of Section 162(m) of the Code, appointed by the Board of Directors of the
Company. In the event such Committee is not comprised of said outside directors,
any Option granted hereunder shall not be deemed automatically null and void,
except as otherwise provided below. Within the limits of the express provisions
of the Plan, the Committee shall have the authority, in its discretion, to
determine the individuals to whom, and the time or times at which, Options shall
be granted, the character of such Options (whether ISOs or NQSOs), and the
number of shares of Common Stock to be subject to each Option, and to interpret
the Plan, to prescribe, amend and rescind rules and regulations relating to the
Plan, to determine the terms and provisions of option agreements that may be
entered into in connection with Options (which need not be identical), subject
to the limitation that option agreements granting ISOs must be consistent with
the requirements for the ISOs being qualified as "incentive stock options" as
provided in Section 422 of the Code, and to make all other determinations and
take all other actions necessary or advisable for the administration of the
Plan. In making such determinations, the Committee may take into account the
nature of the services rendered by such individuals, their present and potential
contributions to the Company's success, and such other factors as the Committee,
in its discretion, shall deem relevant. The Committee's determinations on the
matters referred to in this Paragraph shall be conclusive.
(b) Notwithstanding anything contained herein to the contrary, the Committee
shall have the exclusive right to grant Options to persons subject to Section 16
of the 1934 Act and set forth the terms and conditions thereof. With respect to
persons subject to Section 16 of the 1934 Act, transactions under the Plan are
intended to comply with all applicable conditions of Rule 16b-3, as amended from
time to time (and its successor provisions, if any), under the 1934 Act. To the
extent any provision of the Plan or action by the Board of Directors or
Committee fails to so comply, it shall be deemed null and void to the extent
required by law and to the extent deemed advisable by the Board of Directors
and/or such Committee.
5. Terms of Options.
Within the limits of the express provisions of the Plan, the Committee may
grant either ISOs or NQSOs. An ISO or an NQSO enables the optionee to purchase
from the Company, at any time during a specified exercise period, a specified
number of shares of Common Stock at a specified price (the "Option Price"). The
character and terms of each Option granted under the Plan shall be determined by
the Committee consistent with the provisions of the Plan, including the
following:
2
<PAGE>
(a) An Option granted under the Plan must be granted within 10 years from
the date the Plan is adopted, or the date the Plan is approved by the
stockholders of the Company, whichever is earlier.
(b) The Option Price of the shares of Common Stock subject to each ISO shall
not be less than the fair market value of such shares of Common Stock as of the
time such ISO is granted. Such fair market value shall be determined by the
Committee, and if the shares of Common Stock are then listed on any national
securities exchange or traded on the over-the-counter market, the fair market
value shall be the closing price on such exchange, or the mean of the closing
bid and asked prices of the shares of Common Stock on the over-the-counter
market, as reported by Nasdaq, the National Association of Securities Dealers
OTC Bulletin Board or the National Quotation Bureau, Inc., as the case may be,
on the day on which the Option is granted or, if there is no closing price or
bid or asked price on that day, the closing price or mean of the closing bid and
asked prices on the most recent day preceding the day on which the Option is
granted for which such prices are available. If an ISO is granted to an
individual who, immediately before the ISO is to be granted, owns directly or
through attribution) more than 10% of the total combined voting power of all
classes of capital stock of the Company or a subsidiary or parent of the
Company, the Option Price of the shares of Common Stock subject to such ISO
shall not be less than 110% of the fair market value per share of the shares of
Common Stock at the time such ISO is granted.
(c) The Option Price of the shares of Common Stock subject to an NQSO
granted pursuant to the Plan shall be determined by the Committee, in its sole
discretion.
(d) In no event shall any Option granted under the Plan have an expiration
date later than ten (10) years from the date of its grant, and all Options
granted under the Plan shall be subject to earlier termination as expressly
provided in Paragraph 6 hereof. If an ISO is granted to any
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individual who, immediately before the ISO is granted, owns (directly or through
attribution) more than 10% of the total combined voting power of all classes of
capital stock of the Company or of a subsidiary or parent of the Company, such
ISO shall by its terms expire and shall not be exercisable after the expiration
of five (5) years from the date of its grant.
(e) Unless otherwise provided in any option agreement under the Plan, and
except as otherwise provided below, an Option granted under the Plan shall
become exercisable, in whole at any time or in part from time to time, but in no
case may an Option (i) be exercised as to less than one hundred (100) shares of
Common Stock at any one time, or the remaining shares of Common Stock covered by
the Option if less than one hundred (100), and (ii) become fully exercisable
more than ten years from the date of its grant.
(f) An Option granted under the Plan shall be exercised by the delivery by
the holder thereof to the Company at its principal office (to the attention of
the Secretary) of written notice of the number of full shares of Common Stock
with respect to which the Option is being exercised, accompanied by payment in
full, in cash or by certified or bank check payable to the order of the Company,
of the Option Price for such shares of Common Stock, or, by the delivery of
unexercised Options and/or shares of Common Stock having a fair market value
equal to the Option Price, or by a combination of cash and such unexercised
Options and/or shares held by an optionee that have a fair market value equal to
the Option Price, and, in the case of a NQSO, by having the Company withhold
from the shares of Common Stock to be issued upon exercise of the Option that
number of shares having a fair market value equal to the tax withholding amount
due, or otherwise provide for withholding as set forth in Paragraph 9(c) hereof.
The Option Price may also be paid in full by a broker-dealer to whom the
optionee has submitted an exercise notice consisting of a fully endorsed Option,
or through any other medium of payment as the Committee, in its discretion,
shall authorize.
(g) The holder of an Option shall have none of the rights of a stockholder
with respect to the shares of Common Stock covered by such holder's Option until
such shares of Common Stock shall be issued to such holder upon the exercise of
the Option.
(h) All Options granted under the Plan shall not be transferable otherwise
than by will or the laws of descent and distribution, and any Option granted
under the Plan may be exercised during the lifetime of the holder thereof only
by the holder. No Option granted under the Plan shall be subject to execution,
attachment or other process.
(i) Subject to the provisions of Section 6 hereof, each Option shall become
exercisable with respect to one third of the total number of shares of Common
Stock subject to the Option on the date of its grant and with respect to each
additional one-third at the end of each one-year period thereafter during the
succeeding two years. Notwithstanding the foregoing, the Committee may in its
discretion (i) specifically provide for another time or times of exercise at the
time the Option is granted; (ii) accelerate the exercisability of any Option
subject to such terms and conditions as the Committee deems necessary and
appropriate; or (iii) at any time prior to the expiration or termination of any
Option previously granted, extend the term of any Option for such additional
period as the Committee in its discretion shall determine. In no event, however,
shall the aggregate term of any Option, including the original term of the
Option and any extensions thereof, exceed ten years. Subject to the foregoing,
and except as otherwise provided herein, all or any part of the shares
underlying the Option with respect to which the Option is exercisable may be
purchased commencing at the time and to the extent such Option became
exercisable or at any time or times thereafter during the term of the Option.
Mandatory grants of options to directors to Section 5 shall vest immediately
upon their grant.
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(j) The aggregate fair market value, determined as of the time any ISO is
granted and in the manner provided for by Subparagraph (b) of this Paragraph 5,
of the shares of Common Stock with respect to which ISOs granted under the Plan
are exercisable for the first time during any calendar year and under incentive
stock options qualifying as such in accordance with Section 422 of the Code
granted under any other incentive stock option plan maintained by the Company or
its parent or subsidiary corporations, shall not exceed $100,000. Any grant of
Options in excess of such amount shall be deemed a grant of a NQSO. In addition,
and notwithstanding anything contained herein to the contrary, in the event an
ISO granted hereunder does not, for any reason, at the time of grant or during
the term of the ISO satisfy all of the conditions under the Code with respect to
being deemed an ISO, then said ISO shall be deemed a NQSO, but only to the
extent, if applicable, said ISO exceeds any such conditions, and any said
determination that said ISO is deemed an NQSO shall not be deemed the grant of a
new Option hereunder.
(k) Whenever an optionee holding any Option outstanding under this Plan
(including Reload Options, as hereinafter defined, previously granted under this
Paragraph 5(k)), exercises the Option and makes payment of the Option Price
pursuant to Paragraph 5(b) hereof, in whole or in part, by tendering shares of
Common Stock previously held by the optionee, then the Company shall grant to
the optionee a Reload Option ("Reload Option"), for the number of shares of
Common Stock that is equal to the number of shares of Common Stock tendered by
the optionee in payment of the Option Price of the Option being exercised. The
Reload Option Price per share shall be an amount equal to the fair market value
per share of the Company's Common Stock, as determined as of the date of receipt
by the Company of the notice by the optionee to exercise the option, and as
determined in accordance with Paragraph 5(b) above. Subject to Paragraph 6
hereof, the term of the Reload Option shall expire and the Reload Option shall
no longer be exercisable, on the later to occur of (i) the expiration date of
the originally exercised Option or (ii) ten years from the date of grant of the
Reload Option. Any Reload Option granted under this Paragraph 5(b) shall vest
immediately upon grant. All other terms of the Reload Options granted hereunder
shall be identical to the terms and conditions of the original Option, the
exercise of which gives rise to the grant of the Reload Option. Notwithstanding
anything contained herein to the contrary, no Reload Options should be granted
hereunder if an optionee is no longer employed and/or retained by the Company as
of the date of the exercise of the Options giving rise to the grant of Reload
Options hereunder. In addition, and notwithstanding anything contained herein to
the contrary, in the event there is not a sufficient number of shares of Common
Stock authorized for issuance upon exercise of Reload Options under the Plan,
the Company shall use its best efforts to cause such number of authorized shares
of Common Stock underlying the Plan to be increased, provided, however, that if
the Company is unable to so cause such increase in the authorized number of
shares of Common Stock underlying the Plan to be effectuated, the ability of the
optionee to exercise such Reload Options may be delayed indefinitely, until such
time as the requisite number of shares of Common Stock is so authorized.
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6. Death, Termination of Employment, or Disability.
(a) Except as otherwise provided herein, upon termination of employment or
retention with the Company, a holder of an Option under the Plan may exercise
such Options to the extent such Options were exercisable as of the date of
termination at any time within three (3) months after the date of such
termination, subject to the provisions of Subparagraph (c) of this Paragraph 6.
For purposes hereof, termination of employment or retention shall include, but
shall not be limited to, termination due to retirement, layoffs, or the
permanent disability of the optionee. Notwithstanding anything contained herein
to the contrary, any Options granted hereunder to an optionee and then
outstanding shall immediately terminate in the event the optionee is convicted
of a felony committed against the Company, and the provisions of this
Subparagraph (a) shall not be applicable thereto. In addition, and anything
contained herein to the contrary notwithstanding, the term during which an
optionee may exercise Options subsequent to the date of termination may, in the
Committee's discretion, be modified, subject to applicable law and regulation,
from the term specified above, as of the date of grant and as specified in an
option agreement evidencing the grant of Options under the Plan.
(b) If the holder of an Option granted under the Plan dies (i) while
employed by the Company or a subsidiary or parent corporation or (ii) within
three (3) months after the termination of such holder's employment or retention,
such Options may, subject to the provisions of Subparagraph (c) of this
Paragraph 6, be exercised by a legatee or legatees of such Option under such
individual's last will or by such individual's personal representatives or
distributees at any time within six (6) months after the individual's death, to
the extent, except as otherwise provided herein, such Options were exercisable
as of the date of death or date of termination of employment, whichever date is
earlier.
(c) An Option may not be exercised pursuant to this Paragraph 6 except to
the extent that the holder was entitled to exercise the Option at the time of
termination of employment or retention or death, and in any event may not be
exercised after the original expiration date of the Option.
(d) Notwithstanding anything in this Plan to the contrary, any Options
granted hereunder and then outstanding shall become immediately exercisable in
full in the event the optionee's employment with the Company is terminated by
the Company subsequent to the consummation of a tender offer or exchange offer
made by any "person" within the meaning of Section 14(d) of the 1934 Act or
subsequent to a Change in Control, as defined below. For purposes of this
Subparagraph, a "Change in Control" shall have occurred if:
(1) any "person" within the meaning of Section 14(d) of the 1934 Act
becomes the "beneficial owner" as defined in Rule 13d-3 thereunder, directly
or indirectly, of more than 20% of the Company's Common Stock (or, with
respect to the holders of the Company's Common Stock on the effective date
of the Company's registration statement with respect to its initial public
offering, if any such "person" acquires more than 35% of the Common Stock).
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(2) any "person" acquires by proxy or otherwise the right to vote more
than 20% of the Company's Common Stock for the election of Directors (or,
with respect to the holders of the Company's Common Stock on the effective
date of the Company's registration statement with respect to its initial
public offering, if any such "person" acquires the right to vote more than
35% of the Common Stock for the election of Directors), other than
solicitation of proxies by the Incumbent Board (as hereinafter defined), for
any merger or consolidation of the Company or for any other matter or
question.
(3) during any two-year period, individuals who constitute the Board of
Directors of the Company (the "Incumbent Board") as of the beginning of the
period cease for any reason to constitute at least a majority thereof,
provided that any person becoming a Director during such period whose
election or nomination for election by the Company's stockholders was
approved by a vote of at least three quarters of the Incumbent Board (either
by specific vote or by approval of the proxy statement of the Company in
which such person is named as a nominee for Director without objection to
such nomination) shall be, for purposes of this clause (3), considered as
though such person were a member of the Incumbent Board.
(4) the Company's stockholders have approved the sale of all or
substantially all of the assets of the Company.
(5) Notwithstanding the foregoing, a Change of Control shall not occur
if the event causing the Change of Control is a repurchase by the Company of
its own shares (although subsequent acquisitions of shares of Common Stock
by any "person" owning more than the percentage interest set forth above
shall constitute a Change of Control).
(e) In addition, and notwithstanding anything contained herein to the
contrary, in the event an optionee dies during such time as the optionee is
employed or retained by the Company, then fifty percent (50%) of any outstanding
Options which have not vested and are not exercisable by the optionee as of the
date of death shall be automatically deemed vested and exercisable by the
optionee's estate and/or his legatees in accordance with Subparagraph 6(b)
hereof.
7. Leave of Absence.
For the purposes of the Plan, an individual who is on military or sick
leave or other bona fide leave of absence (such as temporary employment by the
Government) shall be considered as remaining in the employ of the Company or of
a subsidiary or parent corporation for ninety (90) days or such longer period as
such individual's right to re-employment is guaranteed either by statute or by
contract.
8. Adjustment Upon Changes in Capitalization.
(a) In the event that the outstanding shares of Common Stock are hereafter
changed by reason of recapitalization, reclassification, stock split,
combination or exchange of shares of Common Stock or the like, or by the
issuance of dividends payable in shares of Common Stock, an appropriate
adjustment shall be made by the Committee, in the aggregate number of shares of
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Common Stock available under the Plan, in the number of shares of Common Stock
issuable upon exercise of outstanding Options, and the Option Price per share.
In the event of any consolidation or merger of the Company with or into another
company, or the conveyance of all or substantially all of the assets of the
Company to another company, each then outstanding Option shall upon exercise
thereafter entitle the holder thereof to such number of shares of Common Stock
or other securities or property to which a holder of shares of Common Stock of
the Company would have been entitled to upon such consolidation, merger or
conveyance; and in any such case appropriate adjustment, as determined by the
Committee shall be made as set forth above with respect to any future changes in
the capitalization of the Company or its successor entity. In the event of the
proposed dissolution or liquidation of the Company, all outstanding Options
under the Plan will automatically terminate, unless otherwise provided by the
Board of Directors of the Company or any authorized committee thereof.
(b) Any adjustment in the number of shares of Common Stock shall apply
proportionately to only the unexercised portion of the Options granted
hereunder. If fractions of shares of Common Stock would result from any such
adjustment, the adjustment shall be revised to the next higher whole number of
shares of Common Stock.
9. Further Conditions of Exercise.
(a) Unless the shares of Common Stock issuable upon the exercise of an
Option under the Plan have been registered with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, prior to the exercise
of the Option, an optionee must represent in writing to the Company that such
shares of Common Stock are being acquired for investment purposes only and not
with a view towards the further resale or distribution thereof, and must supply
to the Company such other documentation as may be required by the Company,
unless in the opinion of counsel to the Company such representation, agreement
or documentation is not necessary to comply with said Act.
(b) The Company shall not be obligated to deliver any shares of Common
Stock until they have been listed on each securities exchange on which the
shares of Common Stock may then be listed or until there has been qualification
under or compliance with such state or federal laws, rules or regulations as the
Company may deem applicable. The Company shall use reasonable efforts to obtain
such listing, qualification and compliance.
(c) The Committee may make such provisions and take such steps as it may
deem necessary or appropriate for the withholding of any taxes that the Company
is required by any law or regulation of any governmental authority, whether
federal, state or local, domestic or foreign, to withhold in connection with the
exercise of any Option, including, but not limited to, (i) the withholding of
delivery of shares of Common Stock upon exercise of Options until the holder
reimburses the Company for the amount the Company is required to withhold with
respect to such taxes, (ii) the cancelling of any number of shares of Common
Stock issuable upon exercise of such Options in an amount sufficient to
reimburse the Company for the amount it is required to so
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withhold, or (iii) withholding the amount due from any such person's wages or
compensation due such person.
10. Termination, Modification and Amendment.
(a) The Plan (but not Options previously granted under the Plan) shall
terminate ten (10) years from the earliest of the date of its adoption by the
Board of Directors, or the date the Plan is approved by the stockholders of the
Company, or such date of termination, as hereinafter provided, and no Option
shall be granted after termination of the Plan.
(b) The Plan may from time to time be terminated, modified or amended by the
affirmative vote of the holders of a majority of the outstanding shares of
capital stock of the Company voting as a single class, and entitled to vote
thereon.
(c) The Board of Directors of the Company may at any time, prior to ten (10)
years from the earlier of the date of the adoption of the Plan by such Board of
Directors or the date the Plan is approved by the stockholders, terminate the
Plan or from time to time make such modifications or amendments of the Plan as
it may deem advisable; provided, however, that the Board of Directors shall not,
without approval by the affirmative vote of the holders of a majority of the
outstanding shares of capital stock of the Company, voting as a single class,
and entitled to vote thereon, increase (except as provided by Paragraph 8) the
maximum number of shares of Common Stock as to which Options may be granted
under the Plan, materially change the standards of eligibility under the Plan or
materially increase the benefits which may accrue to participants under the
Plan. Any amendment to the Plan which, in the opinion of counsel to the Company,
will be deemed to result in the adoption of a new Plan, will not be effective
until approved by the affirmative vote of the holders of a majority of the
outstanding shares of capital stock of the Company, voting as a single class,
and entitled to vote thereon.
(d) No termination, modification or amendment of the Plan may adversely
affect the rights under any outstanding Option without the consent of the
individual to whom such Option shall have been previously granted and/or
awarded.
11. Effective Date of the Plan.
The Plan shall become effective upon adoption by the Board of Directors of
the Company. The Plan shall be subject to approval by the affirmative vote of
the holders of a majority of the outstanding shares of capital stock of the
Company entitled to vote thereon within one year before or after adoption of the
Plan by the Board of Directors.
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12. Not a Contract of Employment.
Nothing contained in the Plan or in any option agreement executed pursuant
hereto shall be deemed to confer upon any individual to whom an Option is or may
be granted hereunder any right to remain in the employ of the Company or of a
subsidiary or parent of the Company or in any way limit the right of the
Company, or of any parent or subsidiary thereof, to terminate the employment of
any employee, or to terminate any other relationship with an Optionee, including
that of independent contractor or consultant. Notwithstanding anything contained
herein to the contrary, and except as otherwise provided at the time of grant,
all references hereunder to termination of employment shall with respect to
consultants and independent contractors mean the termination of retention of
their services with or for the Company.
13. Other Compensation Plans.
The adoption of the Plan shall not affect any other stock option plan,
incentive plan or any other compensation plan in effect for the Company, nor
shall the Plan preclude the Company from establishing any other form of stock
option plan, incentive plan or any other compensation plan.
This 1996 Employee Stock Option Plan was adopted
by the Company's Board of Directors on ______,
1996, and was approved by the Company's
stockholders on _________, 1996.
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Exhibit 10.2
DENTAL SERVICES OF AMERICA, INC.
1996 DIRECTOR STOCK OPTION PLAN
1. Purposes.
The DENTAL SERVICES OF AMERICA, INC. 1996 DIRECTOR STOCK OPTION PLAN (the
"Plan") is intended to provide the directors of DENTAL SERVICES OF AMRICA,
INC.,f/k/a Campbell Capital Corp. (the "Company") with an added incentive to
provide their services to the Company and to induce them to exert their maximum
efforts toward the Company's success. By thus encouraging directors and
promoting their continued association with the Company, the Plan may be expected
to benefit the Company and its stockholders. The Plan allows the Company to
grant Incentive Stock Options ("ISOs") (as defined in Section 422(b) of the
Internal Revenue Code of 1986, as amended [the "Code"]), and Non-Qualified Stock
Options ("NQSOs"), not intended to qualify under Section 422(b) of the Code
(ISOs and NQSOs hereinafter collectively the "Options"), to directors of the
Company, irrespective of whether they are employees of the Company.
2. Shares Subject to the Plan.
The total number of shares of Common Stock of the Company, $.001 par value
per share, that may be subject to Options granted under the Plan shall be the
greater of 300,000 shares or 5% of the number of shares of the Company's Common
Stock which are from time to time outstanding, in the aggregate, subject to
adjustment as provided in Paragraph 8 hereunder. The Company shall at all times
while the Plan is in force reserve such number of shares of Common Stock as will
be sufficient to satisfy the requirement of outstanding Options granted under
the Plan, except as otherwise provided below. In the event any Option granted
under the Plan shall expire or terminate for any reason without having been
exercised in full or shall cease for any reason to be exercisable in whole or in
part, the unpurchased shares subject thereto shall again be available for the
granting of Options under the Plan.
In a given fiscal year, the maximum number of Options that can be granted
hereunder to a single person shall be limited to 100,000 Options, as adjusted
for future stock dividends and/or stock splits. Further, such limitation shall
not be deemed exceeded in the event subsequent to the date of grant of Options
under the Plan, the Company effectuates a stock split and/or stock dividend
which results in an adjustment to the number of Options previously granted. The
aforesaid limitation is intended to comply with Section 162(m) of the Code. To
the extent any provision of the Plan or action by the Board of Directors or
Committee, as hereinafter defined, fails to comply with Section 162(m), it shall
be deemed null and void to the extent required by statute and to the extent
deemed advisable by the Board of Directors and/or such Committee.
<PAGE>
3. Eligibility.
ISOs may be granted under the Plan to one or more directors who are
employees of the Company or of a "subsidiary" or "parent" of the Company, as the
quoted terms are defined within Section 424 of the Code. An Officer is an
employee for the above purposes. NQSOs may be granted from time to time under
the Plan to one or more directors of the Company, irrespective of whether they
are employees of the Company.
4. Administration of the Plan.
(a) The Plan shall be administered by a Compensation Committee of the
Board of Directors of the Company (the "Committee") comprised of at least two
outside directors (as described under Rule 16b-3, promulgated under the
Securities Exchange Act of 1934 [the "1934 Act"]), and in accordance with the
requirement of Section 162(m) of the Code, appointed by the Board of Directors
of the Company. In the event such Committee is not comprised of said outside
directors, any Option granted hereunder shall not be deemed automatically null
and void, except as otherwise provided below. Within the limits of the express
provisions of the Plan, the Committee shall have the authority, in its
discretion, to determine the character of such Options (whether ISOs or NQSOs),
and to interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to the Plan, to determine the terms and provisions of option agreements
that may be entered into in connection with Options (which need not be
identical), subject to the limitation that option agreements granting ISOs must
be consistent with the requirements for the ISOs being qualified as "incentive
stock options" as provided in Section 422 of the Code, and to make all other
determinations and take all other actions necessary or advisable for the
administration of the Plan. In making such determinations, the Committee may
take into account the nature of the services rendered by such individuals, their
present and potential contributions to the Company's success, and such other
factors as the Committee, in its discretion, shall deem relevant. The
Committee's determinations on the matters referred to in this Paragraph shall be
conclusive.
(b) Notwithstanding anything contained herein to the contrary,
transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3, as amended from time to time (and its successor
provisions, if any), under the 1934 Act. To the extent any provision of the Plan
or action by the Board of Directors or Committee fails to so comply, it shall be
deemed null and void to the extent required by law and to the extent deemed
advisable by the Board of Directors and/or such Committee.
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5. Terms of Options.
Within the limits of the express provisions of the Plan, each Director of
the Company shall be awarded 10,000 five-year options as of October 1, 1996 and
a similar number of Options on each anniversary date thereof, provided as of
such anniversary date such optionee is still a Director of the Company. Each
Director who is the Chairman of one or more standing committees of the Board of
Directors as of each such grant date shall be awarded an additional 10,000 five-
year options for each committee for which he serves as Chairman as of such date,
and each Director who is a member of one or more standing committees (other than
the Chairman of such committee(s)) shall be awarded an additional 5,000 five-
year options for each committee of which he is a member as of such date.
Additionally, each Director of the Company who is a director on the date this
Plan is adopted by the Board of Directors shall be awarded 10,000 five-year
options on that date at an exercise price equal to the fair market value (as
defined in subparagraph (b) below) of the Common Stock as of such date, and each
Director who is appointed to the Board of Directors of the Company subsequent to
the date this Plan is adopted by the Board of Director shall receive a grant of
10,000 five-year options as of the date on which such person is appointed to the
Board of Directors, at an option exercise price equal to the fair market value
of the Common Stock as of the date such person is appointed to the Board of
Directors. Directors who are employees of the Company shall be awarded ISOs and
Directors who are not employed by the Company shall be awarded NQSOs. An ISO or
an NQSO enables the optionee to purchase from the Company, at any time during a
specified exercise period, a specified number of shares of Common Stock at a
specified price (the "Option Price"). The character and terms of each Option
granted under the Plan shall be subject to the following:
(a) An Option granted under the Plan must be granted within 10 years from
the date the Plan is adopted, or the date the Plan is approved by the
stockholders of the Company, whichever is earlier.
(b) The Option Price of the shares of Common Stock subject to each ISO
shall be the fair market value of such shares of Common Stock as of the time
such ISO is granted. Such fair market value shall be determined by the
Committee, and if the shares of Common Stock are then listed on any national
securities exchange or traded on the over-the-counter market, the fair market
value shall be the closing price on such exchange, or the mean of the closing
bid and asked prices of the shares of Common Stock on the over-the-counter
market, as reported by Nasdaq, the National Association of Securities Dealers
OTC Bulletin Board or the National Quotation Bureau, Inc., as the case may be,
on the day on which the Option is granted or, if there is no closing price or
bid or asked price on that day, the closing price or mean of the closing bid and
asked prices on the most recent day preceding the day on which the Option is
granted for which such prices are available. If an ISO is granted to an
individual who, immediately before the ISO is to be granted, owns directly or
through attribution) more than 10% of the total combined voting power of all
classes of capital stock of the Company or a subsidiary or parent of the
Company, the Option Price of the shares of Common Stock subject to such ISO
shall be equal to 110% of the fair market value per share of the shares of
Common Stock at the time such ISO is granted.
(c) The Option Price of the shares of Common Stock subject to an NQSO
granted pursuant to the Plan shall be the fair market value of the shares of
Common Stock, as determined above.
(d) In no event shall any Option granted under the Plan have an expiration
date later than ten (10) years from the date of its grant, and all Options
granted under the Plan shall be subject to earlier termination as expressly
provided in Paragraph 6 hereof. If an ISO is granted to any individual who,
immediately before the ISO is granted, owns (directly or through attribution)
more than 10% of the total combined voting power of all classes of capital stock
of the Company or of a subsidiary or parent of the Company, such ISO shall by
its terms expire and shall not be exercisable after the expiration of five (5)
years from the date of its grant.
(e) Unless otherwise provided in any option agreement under the Plan, and
except as otherwise provided below, an Option granted under the Plan shall
become exercisable, in whole at any time or in part from time to time, but in no
case may an Option (i) be exercised as to less than one hundred (100) shares of
Common Stock at any one time, or the remaining shares of Common
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Stock covered by the Option if less than one hundred (100), and (ii) become
fully exercisable more than ten years from the date of its grant.
(f) An Option granted under the Plan shall be exercised by the delivery by
the holder thereof to the Company at its principal office (to the attention of
the Secretary) of written notice of the number of full shares of Common Stock
with respect to which the Option is being exercised, accompanied by payment in
full, in cash or by certified or bank check payable to the order of the Company,
of the Option Price for such shares of Common Stock, or, by the delivery of
unexercised Options and/or shares of Common Stock having a fair market value
equal to the Option Price, or by a combination of cash and such unexercised
Options and/or shares held by an optionee that have a fair market value equal to
the Option Price, and, in the case of a NQSO, by having the Company withhold
from the shares of Common Stock to be issued upon exercise of the Option that
number of shares having a fair market value equal to the tax withholding amount
due, or otherwise provide for withholding as set forth in Paragraph 9(c) hereof.
The Option Price may also be paid in full by a broker-dealer to whom the
optionee has submitted an exercise notice consisting of a fully endorsed Option,
or through any other medium of payment as the Committee, in its discretion,
shall authorize.
(g) The holder of an Option shall have none of the rights of a stockholder
with respect to the shares of Common Stock covered by such holder's Option until
such shares of Common Stock shall be issued to such holder upon the exercise of
the Option.
(h) All Options granted under the Plan shall not be transferable otherwise
than by will or the laws of descent and distribution, and any Option granted
under the Plan may be exercised during the lifetime of the holder thereof only
by the holder. No Option granted under the Plan shall be subject to execution,
attachment or other process.
(i) Subject to the provisions of Section 6 hereof and except as set forth
below, each Option shall become exercisable with respect to one third of the
total number of shares of Common Stock subject to the Option on the date of its
grant and with respect to each additional one-third at the end of each one-year
period thereafter during the succeeding two years. Except as otherwise provided
herein, all or any part of the shares underlying the Option with respect to
which the Option is exercisable may be purchased commencing at the time and to
the extent such Option became exercisable or at any time or times thereafter
during the term of the Option. Mandatory grants of options to directors pursuant
to Section 5 shall vest immediately upon their grant.
(j) The aggregate fair market value, determined as of the time any ISO is
granted and in the manner provided for by Subparagraph (b) of this Paragraph 5,
of the shares of Common Stock
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with respect to which ISOs granted under the Plan are exercisable for the first
time during any calendar year and under incentive stock options qualifying as
such in accordance with Section 422 of the Code granted under any other
incentive stock option plan maintained by the Company or its parent or
subsidiary corporations, shall not exceed $100,000. Any grant of Options in
excess of such amount shall be deemed a grant of a NQSO. In addition, and
notwithstanding anything contained herein to the contrary, in the event an ISO
granted hereunder does not, for any reason, at the time of grant or during the
term of the ISO satisfy all of the conditions under the Code with respect to
being deemed an ISO, then said ISO shall be deemed a NQSO, but only to the
extent, if applicable, said ISO exceeds any such conditions, and any said
determination that said ISO is deemed an NQSO shall not be deemed the grant of a
new Option hereunder.
(k) Whenever an optionee holding any Option outstanding under this Plan
(including Reload Options, as hereinafter defined, previously granted under this
Paragraph 5(k)), exercises the Option and makes payment of the Option Price
pursuant to Paragraph 5(b) hereof, in whole or in part, by tendering shares of
Common Stock previously held by the optionee, then the Company shall grant to
the optionee a Reload Option ("Reload Option"), for the number of shares of
Common Stock that is equal to the number of shares of Common Stock tendered by
the optionee in payment of the Option Price of the Option being exercised. The
Reload Option Price per share shall be an amount equal to the fair market value
per share of the Company's Common Stock, as determined as of the date of receipt
by the Company of the notice by the optionee to exercise the option, and as
determined in accordance with Paragraph 5(b) above. Subject to the terms of the
Plan and applicable law and regulation, the term of the Reload Option shall
expire and the Reload Option shall no longer be exercisable, on the later to
occur of (i) the expiration date of the originally exercised Option or (ii) ten
years from the date of grant of the Reload Option. Any Reload Option granted
under this Paragraph 5(b) shall vest immediately upon grant. All other terms of
the Reload Options granted hereunder shall be identical to the terms and
conditions of the original Option, the exercise of which gives rise to the grant
of the Reload Option. Notwithstanding anything contained herein to the contrary,
no Reload Options should be granted hereunder if an optionee is no longer a
director of the Company as of the date of the exercise of the Options giving
rise to the grant of Reload Options hereunder. In addition, and notwithstanding
anything contained herein to the contrary, in the event there is not a
sufficient number of shares of Common Stock authorized for issuance upon
exercise of Reload Options under the Plan, the Company shall use its best
efforts to cause such number of authorized shares of Common Stock underlying the
Plan to be increased, provided, however, that if the Company is unable to so
cause such increase in the authorized number of shares of Common Stock
underlying the Plan to be effectuated, the ability of the optionee to exercise
such Reload Options may be delayed indefinitely, until such time as the
requisite number of shares of Common Stock is so authorized.
6. Death, Termination of Membership on the Board of Directors, or Disability.
(a) Except as otherwise provided herein, upon termination of membership on
the Company's Board of Directors, a holder of an Option under the Plan may
exercise such Options to the extent such Options were exercisable as of the date
of termination at any time within three (3) months after
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the date of such termination, subject to the provisions of Subparagraph (c) of
this Paragraph 6. Notwithstanding anything contained herein to the contrary, any
Options granted hereunder to an optionee and then outstanding shall immediately
terminate in the event the optionee is convicted of a felony committed against
the Company, and the provisions of this Subparagraph (a) shall not be applicable
thereto. In addition, and anything contained herein to the contrary
notwithstanding, the term during which an optionee may exercise Options
subsequent to the date of termination may, in the Committee's discretion, be
modified, subject to applicable law and regulation, from the term specified
above, as of the date of grant and as specified in an option agreement
evidencing the grant of Options under the Plan.
(b) If the holder of an Option granted under the Plan dies (i) while
serving as a member of the Company's Board of Directors or (ii) within three (3)
months after the termination of such holder's membership on the Company's Board
of Directors, such Options may, subject to the provisions of Subparagraph (c) of
this Paragraph 6, be exercised by a legatee or legatees of such Option under
such individual's last will or by such individual's personal representatives or
distributees at any time within six (6) months after the individual's death, to
the extent, except as otherwise provided herein, such Options were exercisable
as of the date of death or date of termination of membership on the Board of
Directors, whichever date is earlier.
(c) An Option may not be exercised pursuant to this Paragraph 6 except to
the extent that the holder was entitled to exercise the Option at the time of
termination of membership on the Company's Board of Directors, and in any event
may not be exercised after the original expiration date of the Option.
(d) Notwithstanding anything in this Plan to the contrary, any Options
granted hereunder and then outstanding shall become immediately exercisable in
full in the event the optionee's membership on the Board of Directors is
terminated by the Company subsequent to the consummation of a tender offer or
exchange offer made by any "person" within the meaning of Section 14(d) of the
1934 Act or subsequent to a Change in Control, as defined below. For purposes of
this Subparagraph, a "Change in Control" shall have occurred if:
(1) any "person" within the meaning of Section 14(d) of the 1934
Act becomes the "beneficial owner" as defined in Rule 13d-3 thereunder,
directly or indirectly, of more than 20% of the Company's Common Stock (or
with respect to the holders of the Company's Common Stock on the effective
date of the Company's registration statement with respect to its initial
public offering, if any such "person" acquires more than 35% of the Common
Stock).
(2) any "person," directly or indirectly, acquires by proxy or
otherwise the right to vote more than 20% of the Company's Common Stock for
the election of Directors (or with respect to the holders of the Company's
Common Stock on the effective date of the Company's registration statement
with respect to its initial public offering, if any such "person" acquires
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the right to vote more than 35% of the Company's Common Stock for the
election of Directors), other than solicitation of proxies by the Incumbent
Board (as hereinafter defined), for any merger or consolidation of the
Company or for any other matter or question.
(3) during any two-year period, individuals who constitute the Board
of Directors of the Company (the "Incumbent Board") as of the beginning of
the period cease for any reason to constitute at least a majority thereof,
provided that any person becoming a Director during such period whose
election or nomination for election by the Company's stockholders was
approved by a vote of at least three quarters of the Incumbent Board
(either by specific vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for Director without
objection to such nomination) shall be, for purposes of this clause (3),
considered as though such person were a member of the Incumbent Board.
(4) the Company's stockholders have approved the sale of all or
substantially all of the assets of the Company.
(5) Notwithstanding the foregoing, a Change of Control shall not be
deemed to have occurred if the event causing the Change of Control is a
repurchase by the Company of its own shares (although subsequent
acquisitions of shares of Common Stock by any "person" owning more than the
percentage interest set forth above shall constitute a Change of Control).
(e) In addition, and notwithstanding anything contained herein to the
contrary, in the event an optionee dies during such time as the optionee is a
member of the Company's Board of Directors, then fifty percent (50%) of any
outstanding Options which have not vested and are not exercisable by the
optionee as of the date of death shall be automatically deemed vested and
exercisable by the optionee's estate and/or his legatees in accordance with
Subparagraph 6(b) hereof.
7. Intentionally Omitted.
8. Adjustment Upon Changes in Capitalization.
(a) In the event that the outstanding shares of Common Stock are hereafter
changed by reason of recapitalization, reclassification, stock split,
combination or exchange of shares of Common Stock or the like, or by the
issuance of dividends payable in shares of Common Stock, an appropriate
adjustment shall be made by the Committee, in the aggregate number of shares of
Common Stock available under the Plan, in the number of shares of Common Stock
issuable upon exercise of outstanding Options, and the Option Price per share.
In the event of any consolidation
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or merger of the Company with or into another company, or the conveyance of all
or substantially all of the assets of the Company to another company, each then
outstanding Option shall upon exercise thereafter entitle the holder thereof to
such number of shares of Common Stock or other securities or property to which a
holder of shares of Common Stock of the Company would have been entitled to upon
such consolidation, merger or conveyance; and in any such case appropriate
adjustment, as determined by the Committee shall be made as set forth above with
respect to any future changes in the capitalization of the Company or its
successor entity. In the event of the proposed dissolution or liquidation of the
Company, all outstanding Options under the Plan will automatically terminate,
unless otherwise provided by the Board of Directors of the Company or any
authorized committee thereof.
(b) Any adjustment in the number of shares of Common Stock shall apply
proportionately to only the unexercised portion of the Options granted
hereunder. If fractions of shares of Common Stock would result from any such
adjustment, the adjustment shall be revised to the next higher whole number of
shares of Common Stock.
9. Further Conditions of Exercise.
(a) Unless the shares of Common Stock issuable upon the exercise of an
Option under the Plan have been registered with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, prior to the exercise
of the Option, an optionee must represent in writing to the Company that such
shares of Common Stock are being acquired for investment purposes only and not
with a view towards the further resale or distribution thereof, and must supply
to the Company such other documentation as may be required by the Company,
unless in the opinion of counsel to the Company such representation, agreement
or documentation is not necessary to comply with said Act.
(b) The Company shall not be obligated to deliver any shares of Common
Stock until they have been listed on each securities exchange on which the
shares of Common Stock may then be listed or until there has been qualification
under or compliance with such state or federal laws, rules or regulations as the
Company may deem applicable. The Company shall use reasonable efforts to obtain
such listing, qualification and compliance.
(c) The Committee may make such provisions and take such steps as it may
deem necessary or appropriate for the withholding of any taxes that the Company
is required by any law or regulation of any governmental authority, whether
federal, state or local, domestic or foreign, to withhold in connection with the
exercise of any Option, including, but not limited to, (i) the withholding of
delivery of shares of Common Stock upon exercise of Options until the holder
reimburses the Company for the amount the Company is required to withhold with
respect to such taxes, (ii) the canceling of any number of shares of Common
Stock issuable upon exercise of such Options in an amount sufficient to
reimburse the Company for the amount it is required to so
withhold, or (iii) withholding the amount due from any such person's wages or
compensation due such person.
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10. Termination, Modification and Amendment.
(a) The Plan (but not Options previously granted under the Plan) shall
terminate ten (10) years from the earliest of the date of its adoption by the
Board of Directors, or the date the Plan is approved by the stockholders of the
Company, or such date of termination, as hereinafter provided, and no Option
shall be granted after termination of the Plan.
(b) The Plan may from time to time be terminated, modified or amended by
the affirmative vote of the holders of a majority of the outstanding shares of
capital stock of the Company voting as a single class, and entitled to vote
thereon.
(c) The Board of Directors of the Company may at any time, prior to ten
(10) years from the earlier of the date of the adoption of the Plan by such
Board of Directors or the date the Plan is approved by the stockholders,
terminate the Plan or from time to time make such modifications or amendments of
the Plan as it may deem advisable; provided, however, that the Board of
Directors shall not, without approval by the affirmative vote of the holders of
a majority of the outstanding shares of capital stock of the Company, voting as
a single class, and entitled to vote thereon, increase (except as provided by
Paragraph 8) the maximum number of shares of Common Stock as to which Options
may be granted under the Plan, materially change the standards of eligibility
under the Plan or materially increase the benefits which may accrue to
participants under the Plan. Any amendment to the Plan which, in the opinion of
counsel to the Company, will be deemed to result in the adoption of a new Plan,
will not be effective until approved by the affirmative vote of the holders of a
majority of the outstanding shares of capital stock of the Company, voting as a
single class, and entitled to vote thereon.
(d) No termination, modification or amendment of the Plan may adversely
affect the rights under any outstanding Option without the consent of the
individual to whom such Option shall have been previously granted and/or
awarded.
11. Effective Date of the Plan.
The Plan shall become effective upon adoption by the Board of Directors of
the Company. The Plan shall be subject to approval by the affirmative vote of
the holders of a majority of the outstanding shares of capital stock of the
Company entitled to vote thereon within one year before or after adoption of the
Plan by the Board of Directors.
12. Not a Contract of Employment.
Nothing contained in the Plan or in any option agreement executed pursuant
hereto shall be deemed to confer upon any individual to whom an Option is or may
be granted hereunder any right to remain in the employ of the Company or of a
subsidiary or parent of the Company or confer any continued right to be a member
of the Company's Board of Directors, or in any way
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limit the right of the Company, or of any parent or subsidiary thereof, to
terminate the employment of any employee, or to terminate any other relationship
with an Optionee, including that of independent contractor or consultant.
Notwithstanding anything contained herein to the contrary, and except as
otherwise provided at the time of grant, all references hereunder to termination
of employment shall with respect to consultants and independent contractors mean
the termination of retention of their services with or for the Company.
13. Other Compensation Plans.
The adoption of the Plan shall not affect any other stock option plan,
incentive plan or any other compensation plan in effect for the Company, nor
shall the Plan preclude the Company from establishing any other form of stock
option plan, incentive plan or any other compensation plan.
This 1996 Director Stock Option Plan was adopted by the
Company's Board of Directors on ___________, 1996, and
was approved by the Company's stockholders on ______,
1996.
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EXHIBIT 21.1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Jurisdiction of
Name Incorporation
---- ---------------
Spencer Services, Inc. Delaware
International Capital Development Corp. Delaware
Dental Doctor Services, Inc. Florida
Portadent Technology Corp. Delaware
<PAGE>
EXHIBIT 23.2
[LETTERHEAD OF HARVEY JUDKOWITZ APPEARS HERE]
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
I hereby consent to the use in this registration statement of my reports as
follows:
Campbell Capital Corporation dated November 10, 1995
Dental Practice Administrators, Inc. dated May 31, 1996
Dental Services of America, Inc. dated September 8, 1996
and to the reference to me under the caption "Experts" in this prospectus.
/s/ Harvey Judkowitz
CPA
September 12, 1996
