As filed with the Securities and Exchange Commission on May 9, 1996
Registration No. 33-97202
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
-------------------
PMR CORPORATION
(Exact name of registrant as specified in its charter)
---------------------
Delaware 23-2491707
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
3990 Old Town Avenue, Suite 206A
San Diego, California 92110
Telephone (619) 295-2227
--------------------------
(Address, including zip code, and telephone number,
including area code of registrant's principal executive office
and principal place of business)
--------------------------
Allen Tepper
3990 Old Town Avenue, Suite 206A
San Diego, California 92110
--------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------------
Copies to:
Stephen M. Cohen, Esquire
Buchanan Ingersoll Professional Corporation
Two Logan Square
18th and Arch Street, 12th Floor
Philadelphia, PA 19103
(215) 665-3873
<PAGE>
Approximate date of commencement of proposed sale to the public: As
soon as practicable following the date on which this Registration Statement
becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, please check the following box: /X/
------------------------------
The Company hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Company shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
======================================================================================================================
Proposed
Maximum
Title of Each Proposed Maximum Aggregate Amount of
Class of Securities Amount to be Offering Price Per Offering Registration
to be Registered Registered Share(1)(2) Price(2) Fee
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Common Stock
$.01 par value(3) 1,388,087 $10.625 $14,748,424 -4-
- ----------------------------------------------------------------------------------------------------------------------
TOTAL 1,388,087 $14,748,424 -4-
======================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(2) Fee calculated upon the basis of the closing price of the Company's Common
Stock on May 7, 1996 of $10.625, which date is within five (5) business
days prior to the date of filing of this Registration Statement.
(3) Represents shares of the Company's Common Stock which may be offered by
certain Selling Stockholders. See "Selling Stockholders."
(4) Paid upon initial filing.
<PAGE>
SUBJECT TO COMPLETION DATED May 9, 1996
PRELIMINARY
PROSPECTUS
- ----------
PMR CORPORATION
1,388,087 Shares of Common Stock
offered by certain Selling Stockholders
This Prospectus relates to 1,388,087 shares of Common Stock which
consist of 97,087 shares of Common Stock previously issued by the Company in
connection with a private placement transaction, 700,000 shares of Common Stock
issuable, if at all, upon the conversion of an outstanding class of Series C
$2.50 Convertible Preferred Stock (the "Series C Preferred Stock") and 591,000
shares of Common Stock issuable, if at all, upon the exercise of common stock
purchase warrants (the "Warrants") issued by the Company in conjunction with the
Series C Preferred Stock, which shares of Series C Preferred Stock and Warrants
were issued in private placement transactions, and all of which may be offered
by the Selling Stockholders identified in this Prospectus or in a related
supplement. See "SELLING STOCKHOLDERS."
The shares of Common Stock may be offered by the Selling Stockholders
or by donees, pledgees, transferees, or other successors in interest for sale
from time to time by the holders in regular brokerage transactions on NASDAQ,
either directly or through brokers or to dealers, in private sales or negotiated
transactions, or otherwise, at prices related to then prevailing market prices.
The Company will not receive any of the proceeds of the sale of shares of Common
Stock by the Selling Stockholders. All expenses of the registration of such
securities will be borne by the Company. The Selling Stockholders, and not the
Company, will pay or assume all applicable brokerage commissions or other costs
of sale as may be incurred in the sale of such securities. See "SELLING
STOCKHOLDERS."
The Company will assume no responsibility for the sale of the shares of
Common Stock of the Selling Stockholders, nor can there be any assurances that a
liquid trading market will exist for the sale of the shares of Common Stock to
be offered by the Selling Stockholders. See "RISK FACTORS."
The Company's Common Stock is included on the National Market System of
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") under the symbol "PMRP." The closing price of the Company's Common
Stock as reported by NASDAQ on May 7, 1996 was $10.625.
2
<PAGE>
No person is authorized to give any information or to make any
representations, other than as contained herein, in connection with the offer
made in this Prospectus, and any information or representation not contained
herein must not be relied upon as having been authorized by the Company or the
Selling Stockholders. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the Common Stock offered
by this Prospectus, nor does it constitute an offer to sell or a solicitation of
any offer to buy any shares of Common Stock offered hereby to any person in any
jurisdiction where it is unlawful to make such an offer or solicitation to such
person. Neither the delivery of this Prospectus nor any sale hereunder shall
under any circumstances create any implication that information contained herein
is correct as of any time subsequent to the date hereof.
--------------------------
PURCHASE OF THESE SECURITIES MAY INVOLVE MATERIAL RISKS. A DISCUSSION
OF THESE RISK FACTORS APPEARS ON PAGES 5 - 10.
--------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATIONS TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
=============================================================================================================================
Underwriting Proceeds to
Discounts the Selling
Class of Price to and Security
Security Public Commissions Holders
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shares of
Common Stock _____ (1) $14,748,424(2)
=============================================================================================================================
</TABLE>
(1) This does not take into account the costs of this Offering, including among
others, printing and professional fees, estimated at $30,000, which will be
borne entirely by the Company.
(2) Represents the anticipated sale by the Selling Security Holders at $10.625
per share, the last reported sales price reported on The NASDAQ National
MarketSM on May 7, 1996. There can be no assurances, however, that the
Selling Security Holders will be able to sell their shares at this price,
or that a liquid market will exist for the Company's Common Stock. The
Company will receive no proceeds upon the sale of shares of Common Stock by
the Selling Security Holders.
The date of this Prospectus is May 9, 1996.
3
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "1934 Act"), and in accordance therewith
files reports and other information with the Securities and Exchange Commission
(the "Commission"). Reports and other information filed by the Company with the
Commission may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's Regional Offices at: Seven
World Trade Center, Suite 1300, New York, New York 10048 and Northwest Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material may be obtained upon written request addressed to the Commission
at the Public Reference Section, at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, the Common Stock is listed on NASDAQ
and reports and other information concerning the Company may also be inspected
at the offices of The National Association of Securities Dealers, Inc. at 1735 K
Street, N.W., Washington, DC 20006.
In addition, the Company will provide without charge to each person to
whom this Prospectus is delivered, upon either the written or oral request of
such person, the Annual Report to Stockholders for the Company's latest fiscal
year and a copy of any or all of the documents incorporated herein by reference
other than exhibits to such documents. See "INCORPORATION OF DOCUMENTS BY
REFERENCE". Such requests should be directed to Allen Tepper, Chief Executive
Officer, PMR Corporation, 3990 Old Town Avenue, Suite 206A, San Diego,
California 92110.
4
<PAGE>
THE COMPANY
PMR Corporation (the "Company") engages principally in the development
and management of psychiatric partial hospitalization programs (the "Programs"),
which are ambulatory treatment programs that include major diagnostic, medical,
psychiatric, psychosocial and prevocational treatment modalities designed for
patients with serious mental disorders who require coordinated, intensive,
comprehensive and multidisciplinary treatment not typically provided in an
outpatient clinic setting. These programs have been designed to be operated by
or in conjunction with Hospitals or Community Mental Health Centers. In
addition, the Company through its subsidiary, Twin Town Outpatient, provides
outpatient chemical dependency treatment services from detoxification to
recovery for the managed care market.
The Company's strategic goals continue to evolve as management has
responded to rapid changes and anticipated additional changes in the health care
field, in general, and in mental health care, in particular. Increased pressure
on health care costs, intense competition among health care insurers and
providers, reduced usage of certain mental health care services and a
consolidation of large health care organizations, among other factors, have lead
management to conclude that it is no longer feasible to remain solely a
developer and manager of psychiatric partial hospitalization programs.
In addition to the development of new partial hospitalization programs,
the Company continues to expand its focus so that it can position itself to
manage a complete mental health benefit for seriously and persistently mentally
ill ("SPMI") individuals and to compete within the managed care segment of the
industry.
The Company is developing a network of agencies that provide case
management services to manage what it believes to be the core providers for the
SPMI population in behavioral health care under a managed care scenario. It has
entered into agreements with case management agencies in the State of Tennessee
in preparation for the expansion of the State's managed care Medicaid Programs
to the SPMI population for behavioral health.
The Company anticipates continuing to add and develop new products and
service systems to better enable itself to compete in the rapidly-changing
mental health care environment.
The Company was incorporated in Delaware on January 7, 1988. Its
executive offices are located at 3990 Old Town Avenue, Suite 206A, San Diego,
California 92110, and its telephone number is (619) 295-2227.
5
<PAGE>
RISK FACTORS
An investment in shares of Common Stock being offered by this
Prospectus may involve a material degree of risk. Accordingly, prospective
investors should consider carefully the following risk factors, in addition to
the other information concerning the Company and its business contained
elsewhere in this Prospectus, before purchasing shares of Common Stock offered
hereby.
1. Substantial Losses incurred during Fiscal 1995. The Company's
results of operations for the fiscal year ended April 30, 1995 ("Fiscal 1995")
reflected a loss of $2,352,000 or $.70 per share. This compared to a profit of
$797,000 or $.24 per share for the fiscal year ended April 30, 1994 ("Fiscal
1994") and $864,000 or $.30 per share for the fiscal year ended April 30, 1993
("Fiscal 1993").
Results for Fiscal 1995 were adversely affected by a number of factors,
including a decrease in Program census, increase in operating expenses as a
percentage of gross revenues, and a charge to revenue associated primarily with
an increase in the estimate of reserve for contract settlement of approximately
$2 million.
Revenues during Fiscal 1995 were adversely effected by the reserve for
contract settlement and a decrease in Program census from Fiscal 1994 of
approximately 18%. This decrease was as a result of, and in response to, the
more restrictive admission practices and treatment standards established by
fiscal intermediaries for Medicare and associated with the Focused Medical
Review experienced by the Company during Fiscal 1995. (See "RISK FACTOR #2").
Management believes that the change to the reserve for contract
settlement that occurred in Fiscal 1995 is not likely to recur. Further, the
Company has responded to the issues raised during its Focused Medical Review by
modifying admission and treatment criteria. Accordingly, management is
optimistic that Program census has stabilized and will continue to reflect
upward trends.
Although there can be no assurances to this effect, management believes
that the loss incurred during Fiscal 1995 was a result of a confluence of events
which are not likely to recur and should not reflect a trend towards continuing
losses.
2. Possible Uncertainties Associated With Focused Medical Review of
Certain Claims for Medicare Reimbursement. The Company's revenues are primarily
derived from payments for its management and
6
<PAGE>
administration of the Programs pursuant to contracts with Hospitals or CMHCs
(the "Contracts"). Since a substantial percentage of the patients admitted to
the Programs rely upon Medicare for payment, the Programs are predominantly
dependent upon continued Medicare funding.
Medicare is a federal health care program created in 1965 as part of
the federal Social Security system. It is administered by the U.S. Department of
Health and Human Services which has established the Health Care Financing
Administration ("HCFA") to promulgate rules and regulations governing the
Medicare program.
HCFA has published criteria which partial hospitalization services must
meet in order to qualify for Medicare funding. In Transmittal Letter No. 1303
(effective January 2, 1987) and in subsequent criteria published in Section
230.50 of the Medicare Coverage Manual, HCFA requires partial hospitalization
services to be (1) incident to a physician's service, (2) reasonable and
necessary for the diagnosis or treatment of the patient's condition, and (3)
provided by a physician with a reasonable expectation of improvement of the
patient from the treatment.
The Company became aware during the fourth quarter of Fiscal 1994 that
Medicare fiscal intermediaries had begun a Focused Medical Review of claims for
partial hospitalization services which continued through Fiscal 1995. This
process follows HCFA guidelines for Focused Medical Review and targets claims
for services which are at risk of inappropriate Program payment. This process
often occurs when HCFA identifies significant increases in payment for certain
types of services as has been the case with the partial hospitalization benefit,
particularly when CMHCs were authorized to provide partial hospitalization
services under Medicare Part B, effective October 1, 1991. To the extent claims
for services have been denied in Programs managed by the Company, the great
majority of the denied claims have been appealed and the reversal rate has been
favorable. The appeal process continues for a significant number of the denied
claims. Generally, to the extent that a denied claim is not reversed, the
Company is not entitled to a fee with respect to the denied claim. Management
believes that the Company's reserve for contract settlement should be adequate
to offset the negative impact of unsuccessful appeals of denied claims.
3. Possible Disallowance of Certain Management Fees. The Company has
warranted the reimbursement of its management fee charged to certain hospitals
and CHMCs whose partial hospitalization programs are managed by the Company.
This may result in a charge upon the Company's working capital in the event that
its management fee is not fully allowed upon audit of the
7
<PAGE>
hospital or CMHC's cost reimbursement report by a fiscal intermediary.
The Company has been advised by HCFA that certain Program-related costs
are not allowable for reimbursement. Although the Company believes that its
management fee is fully reimbursable, there can be no assurances that upon
regulatory or judicial review, the Company's position will be sustained. If the
Company's management fee is not fully allowed, the Company may be responsible
for reimbursement of the amounts disallowed. Even though the Company's financial
statements provide a reserve for any such payments, a short-term obligation to
provide reimbursement could have a material adverse impact upon the Company's
liquidity and capital resources. Management believes, however, that this is
unlikely to occur. Certain factors are, in management's view, likely to lessen
the impact of any such material adverse effect, including the expectation that,
if claims arise, they will arise on a periodic basis over several years; that
any disallowance will merely be offset against the obligations owed by the
hospital or CMHC to the Company; and that, in certain instances, funds have
already been paid into escrow accounts to cover any such eventuality.
4. No Assurance of Dividends. Pursuant to the General Corporation Law
of the State of Delaware, dividends may only be declared by the Board of
Directors in its sole discretion, thus, dividend declarations may be withheld
for proper corporate purposes. Furthermore, dividends may only be declared to
the extent the Company has "surplus" or net profits. Thus, to the extent the
Company has neither, dividends may not be declared or paid. In addition, to the
extent earnings are retained to finance the continued development of the
Company's business, dividends may not be possible. Therefore, there can be no
assurance that the Company will be able to pay dividends. To date, the Company
has paid no dividends on its Common Stock.
5. No Assurance of Price Stability. The Company's Common Stock is
traded on the National Market System of NASDAQ. There can be no assurances as to
the future trading prices of the Common Stock. Trading of a Company's securities
depends upon a number of variables most of which are beyond the control of the
Company.
6. Substantial Voting Power of Principal Stockholders. The officers,
directors and other affiliates of the Company own over fifty (50%) percent of
its issued and outstanding Common Stock. Consequently, because of their
percentage control and the Company's lack of cumulative voting, it can be
expected that such persons will have a substantial impact on the determination
of the
8
<PAGE>
Company's Board of Directors and policies at least for the foreseeable future.
7. Significant Competition. There are many other companies engaged in
the psychiatric partial hospitalization industry, and some of these companies
are substantially more established and have greater financial and other business
resources than those presently possessed by the Company. Further, other such
companies may enter the Company's area of business in the future. There can be
no assurance that the Company will be able to compete successfully with such
companies.
8. Dependence Upon Key Personnel. The Company's ongoing profitability
may depend to a material extent upon the continued services of certain key
management personnel. The loss of the services of any such individual could
adversely affect the conduct of the Company's business. The Company presently
has no employment agreements with any of its management, including Allen Tepper,
President and Chief Executive Officer, and Susan Erskine, Secretary/Treasurer.
9. Certain Charter and By-Law Provisions. Certain of the Company's
Certificate of Incorporation and By-Law provisions allow the Company to issue
preferred stock with rights senior to those of the Common Stock and impose
various procedural and other requirements which could make it more difficult for
stockholders to effect certain corporate actions. Such provisions could limit
the price that certain investors might be willing to pay in the future for
shares of the Company's Common Stock.
10. Risks associated with future financing requirements -- Additional
Dilution possible. The Company may require additional equity or debt financings,
collaborative arrangements with corporate partners or funds from other sources
in order to continue the establishment, development, management and marketing of
psychiatric hospitalization programs. No assurance can be given that these funds
will be available for the Company for these purposes on acceptable terms, if at
all. Such financings may involve additional dilution to the Company's
Stockholders.
11. Terminable Contracts. The Company's Contracts with various hospital
and CMHCs represent its principal source of revenues. Each Contract is
terminable by either party with cause or without cause upon specified notice.
Consequently, through no fault, default or breach by the Company, the hospital
and the CMHCs each have unilateral authority to terminate the given Contract.
Termination of a Contract or Contracts may have an adverse effect upon the
Company, the extent of which shall be determined by the
9
<PAGE>
significance of the Contract(s) to the Company's revenue and contribution to
the Company's net income.
12. Reliance Upon Hospital and CMHCs. The Company derives principally
all of its revenues through the Contracts with the various hospital and CMHCs.
Although the Company undertakes certain due diligence efforts prior to
establishing any such affiliations, there can be no assurances that the hospital
or the CMHCs may not be subject to regulatory sanctions, probation or
limitations upon the scope or conduct of procedures conducted thereby, or are
otherwise subject to adverse financial conditions. To the extent any of the
hospital or CMHCs may be subject to adverse regulatory or financial conditions,
it is possible that any such conditions may cause such hospital or CMHCs to: (1)
close or reduce any of its existing services or programs; (ii) terminate the
contract with the Company; or (iii) become subject to an insolvency or
bankruptcy proceeding, any of which is likely to have an adverse impact on the
Company.
13. Governmental Regulations.
Federal statutes regulating Medicare and Medicaid
reimbursement provide criminal and civil sanctions for any person or entity to
knowingly and willfully solicit or receive or offer to pay any remuneration
(including any kickback, bribe or rebate), directly or indirectly, overtly or
covertly, in cash or in kind, in return for referring an individual or
purchasing, leasing, ordering, arranging for or recommending any goods,
facilities, services or item for which payment may be made, in whole or in part,
by Medicare or Medicaid funding. The sanctions for violating these laws can
include fines, imprisonment, and exclusion from participating in
federally-funded health care programs for a period of years or even permanently.
Such exclusion would have a material adverse effect on the Company and could be
extremely detrimental to the Company. Similar State laws exist as well. As a
result of a thorough, internal examination of the Company's operations,
management believes that the Company is in material compliance with applicable
regulatory and industry standards. However, no assurance can be given regarding
compliance in any particular factual situation, as there is no procedure for
obtaining advisory opinions from government officials. Moreover, there can be no
assurances that the regulations applicable to the Company's operations and its
arrangements with hospitals or CMHCs will not change in the future or that
future interpretations of existing laws or new laws will not result in the
Company's services under the Contracts being deemed a violation of federal
Medicare/Medicaid laws.
10
<PAGE>
USE OF PROCEEDS
The Company will realize no proceeds on the sale of Common Stock by the
Selling Stockholders.
SELLING STOCKHOLDERS
The following table sets forth the name of each Selling Stockholder,
the nature of his position, office, or other material relationship to the
Company for the past three years and the number of shares of Common Stock of
each such Selling Stockholder (1) owned of record as of May 6, 1996; (2) which
are to be offered hereunder; (3) which are to be owned by each such Selling
Stockholder assuming the sale of all shares offered hereunder; and (4) the
percentage of outstanding shares of Common Stock to be owned by each Selling
Stockholder after the sale of the shares to be offered hereunder. There can be
no assurance that any of the Selling Stockholders will offer for sale or sell
any or all of the Common Stock offered by them pursuant to this Prospectus.
<TABLE>
<CAPTION>
Amount of
Shares to be
Owned Percentage
After Sales of Common
of Shares Stock to be
Name and Relationship Number of Shares Number of Shares Offered Owned after
to PMR Corporation Owned as of 9/11/95 to be Offered Hereunder Sales
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Allen Tepper(1) 1,105,562 100,587 1,004,975 30.9%
Susan D. Erskine(2) 119,922 7,000 112,922 3.2%
Susan Yeagley-Sullivan(3) 16,920 7,000 9,920 *
Daniel Frank(4) 42,500 7,000 35,500 *
Richard Niglio(4) 42,500 7,000 35,500 *
Proactive Investment 849,088 26,500 822,588 23.1%
Managers, L.P.(5)
Proactive Partners, L.P.(6) 776,907 551,500 225,407 6.3%
Fremont Proactive Partners, 72,181 43,750 28,431 *
L.P.(6)
Lagunitas Partners, L.P.(7) 573,907 315,000 258,907 7.2%
Robert Ahnert 36,728 35,000 1,728 *
Donald T. Epstein and 35,000 35,000 -0- 0
Sandra Epstein
David Cohen 40,988 35,000 5,988 *
David Schwinger 35,000 35,000 -0- 0
Daniel H. Saidel and Joy B. 88,364 87,500 864 *
Saidel
11
<PAGE>
Monterey Trust "SIVAC" 43,750 43,750 -0- 0
Charles R. Tepper 31,629 10,500 11,334 *
Susan Keenan 15,090 7,000 8,090 *
Jeannine Larsen 15,649 7,000 8,649 *
Gerald McCleery 13,895 7,000 6,895 *
Sandra Harwayne 13,759 7,000 6,759 *
Ronald Slack 13,000 13,000 -0- 0
- --------------------
TOTAL 1,388,087
</TABLE>
- -------------------------------------------------
* Less than 1%
(1) Chairman, President and Chief Executive Officer.
(2) Director, Executive Vice-President, Secretary/Treasurer.
(3) Chief Financial Officer.
(4) Director.
(5) Proactive Investment Managers, L.P. is a limited partnership
of which Charles C. McGettigan serves as the General Partner.
Mr. McGettigan is a director of the Company.
(6) A limited partnership of which Proactive Investment Managers,
L.P. serves as the General Partner.
(7) Lagunitas Partners, L.P. is an affiliate of Proactive
Partners, L.P. and Fremont Proactive Partners, L.P., however,
Mr. McGettigan does not beneficially own or have sole voting
control over the shares held by Lagunitas Partners, L.P.
PLAN OF DISTRIBUTION
Selling Stockholders
The Selling Stockholders may be offering shares of Common Stock for
their own account, and not for the account of the Company. The Company will not
receive any proceeds from the sale of the shares of Common Stock by the Selling
Stockholders.
12
<PAGE>
The Selling Stockholders may be offering for sale up to 1,388,087
shares of common stock. This consists of 97,087 shares of Common Stock
previously issued by the Company in connection with a private placement
transaction, 700,000 shares of Common Stock issuable upon the conversion of an
outstanding class of Series C $2.50 Convertible Preferred Stock (the "Series C
Preferred Stock") and 591,000 shares of Common Stock issuable, if at all, upon
the exercise of common stock purchase warrants (the "Warrants") issued by the
Company in conjunction with the Series C Preferred Stock, each of which Series C
Preferred Stock and Warrants were issued in private placement transactions, and
all of which may be offered by the Selling Stockholders identified in this
Prospectus or in a related supplement.
All, but not less than all, of the shares of Series C Preferred Stock
may be redeemed at any time by the Company at its sole election and option at
$2.50 per share upon thirty (30) days' written notice to the holders, provided:
(i) the average "bid" and "ask" prices of the Common Stock exceed $7.50 for the
preceding thirty (30) trading days; and (ii) the shares of Common Stock issuable
upon redemption of the Series C Preferred Stock are subject to public resale
covered by an effective registration statement filed with the Securities and
Exchange Commission. Based upon recent trading prices, the Company may be in a
position to call for a redemption of the Series C Preferred Stock during May
1996, or thereafter, however, there can be no assurances that the average
trading price will remain sufficient for this purpose.
Each Selling Stockholder will, prior to any sales, agree (a) not to
effect any offers or sales of the Common Stock in any manner other than as
specified in this Prospectus, (b) to inform the Company of any sale of Common
Stock at least one business day prior to such sale and (c) not to purchase or
induce others to purchase Common Stock in violation of Rule 10b-6 under the
Exchange Act.
The Common Stock may be sold from time to time by the Selling
Stockholders or by pledgees, donees, transferees or other successors in
interest. Such sales may be made on NASDAQ, on the over-the-counter market or
otherwise at prices and at terms then prevailing or at prices related to the
then current market price, or in negotiated private transactions. The Common
Stock may be sold by one or more of the following: (a) a block trade in which
the 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 for its account pursuant to
this Prospectus; and (c) ordinary brokerage transactions and transactions in
which the broker solicits purchases. In effecting sales, brokers or dealers
engaged by the Selling Stockholders may arrange for other brokers
13
<PAGE>
or dealers to participate. Brokers or dealers will receive commissions or
discounts from Selling Stockholders in amounts to be negotiated immediately
prior to the sale. Such brokers or dealers and any other participating brokers
or dealers may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Act") in connection with such sales.
The Company will not receive any of the proceeds from the sale of these shares,
although it has paid the expenses of preparing this Prospectus and the related
Registration Statement. The Selling Stockholders have been advised that they are
subject to the applicable provisions of the Securities Exchange Act of 1934,
including without limitation, Rules 10b-5, 10b-6 and 10b-7 thereunder.
LEGAL MATTERS
The validity of the Common Stock being offered hereby, has been passed
upon for the Company by Buchanan Ingersoll Professional Corporation, Two Logan
Square, 18th and Arch Streets, 12th Floor, Philadelphia, Pennsylvania, 19103.
STATEMENT OF INDEMNIFICATION
The Company has adopted the provisions of Section 102(b)(7) of the
Delaware General Corporation Act (the "Delaware Act") which eliminates or limits
the personal liability of a director to the Company or its stockholders for
monetary damages for breach of fiduciary duty under certain circumstances.
Furthermore, under Section 145 of the Delaware Act, the Company may indemnify
each of its directors and officers against his expenses (including reasonable
costs, disbursements and counsel fees) in connection with any proceeding
involving such person by reason of his having been an officer or director to the
extent he acted in good faith and in a manner reasonably believed to be in, or
not opposed to the best interest of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The determination of whether indemnification is proper under the
circumstances, unless made by a court, shall be determined by the Board of
Directors. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, 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.
EXPERTS
The consolidated financial statements and schedule included in
Amendment No. 1 on Form 10-K/A to the PMR Corporation Annual Report
14
<PAGE>
(Form 10-K) for the year ended April 30, 1995, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements and schedule are, and audited financial statements to be included in
subsequently filed documents will be, incorporated herein in reliance upon such
reports of Ernst & Young LLP pertaining to such financial statements (to the
extent covered by consents filed with the Securities and Exchange Commission)
given upon the authority of such firm as experts in accounting and auditing.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission are
incorporated herein by reference:
(a) The Company's Registration Statement on Form 10 filed on July 31,
1992, as amended ("Form 10"), which contains descriptions of the Company's
Common Stock and certain rights relating to the Common Stock, including any
amendment or reports filed for the purpose of updating such descriptions;
(b) The Company's Annual Report on Form 10-K for the year ended April
30, 1995;
(c) The Company's 1995 Annual Report to Stockholders;
(d) The Company's definitive Proxy Statement for the Annual Meeting of
Stockholders to be held October 18, 1995;
(e) The Company's Quarterly Reports on Form 10-Q for the quarters ended
July 31, 1995, October 31, 1995 and January 31, 1996;
(f) The Company's Amended Annual Report on Form 10-K for the year ended
April 30, 1995, as filed with the Securities and Exchange Commission on May 9,
1996; and
(g) In addition to the foregoing, all documents subsequently filed by
the Company pursuant to Section 13(a), 13(c), 14 and 15(d) of the Act (prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities remaining
unsold), shall be deemed to be incorporated by reference herein and to be a part
hereof from the date of the filing of such reports and documents.
15
<PAGE>
ADDITIONAL INFORMATION
As of May 8, 1996, the Company had an aggregate of 10,000,000 shares of
Common Stock authorized of which 3,557,795 shares of Common Stock were issued
and outstanding. Further information concerning the Common Stock of the Company
may be found in the documents incorporated by reference above.
16
<PAGE>
No dealer, salesperson or other person has been authorized in connection with
this offering to give any information or to make any representations other than
those contained in this Prospectus. This Prospectus does not constitute an offer
or a solicitation in any jurisdiction to any person to whom it is unlawful to
make such an offer or solicitation. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create an implication
that there has been no change in the circumstances of the Company or the facts
herein set forth since the date hereof.
----------------------
TABLE OF CONTENTS
Page
Available Information.............................4
The Company.......................................5
Risk Factors......................................6
Use of Proceeds..................................11
Selling Stockholders.............................11
Plan of Distribution.............................12
Legal Matters....................................14
Statement of Indemnification.....................14
Experts..........................................14
Incorporation of Documents by
Reference......................................15
Additional Information...........................16
1,388,087 Shares of Common Stock
Offered by certain Selling Stockholders
PMR CORPORATION
------------------------------------
PROSPECTUS
------------------------------------
May 9, 1996
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the offering of shares pursuant to that portion
of the Registration Statement on Form S-3 are listed below. The Company will pay
each of these expenses.
Filing Fee -- Securities and Exchange
Commission.............................................$ 3,186.00
Accountants' Fee and Expenses*.........................$ 5,000.00
Fees and Expenses of the Company's
Counsel*...............................................$15,000.00
Printing and Engraving Expenses*.......................$ 2,500.00
Miscellaneous Expenses*................................$ 1,000.00
Total................................................$26,686.00
-------------------
* Estimated
Item 15. Indemnification of Directors and Officers.
The Company has adopted the provisions of Section 102(b)(7) of the
Delaware General Corporation Act (the "Delaware Act") which eliminate or limit
the personal liability of a director to the Company or its stockholders for
monetary damages for breach of fiduciary duty under certain circumstances.
Furthermore, under Section 145 of the Delaware Act, the Company may indemnify
each of its directors and officers against his expenses (including reasonable
costs, disbursements and counsel fees) in connection with any proceeding
involving such person by reason of his having been an officer or director to the
extent he acted in good faith and in a manner reasonably believed to be in, or
not opposed to the best interest of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The determination of whether indemnification is proper under the
circumstances, unless made by a court, shall be determined by the Board of
Directors.
18
<PAGE>
Item 16. Exhibits.
3.1 Certificate of Incorporation of the Company (Incorporated by Reference
to the Company's Registration Statement on Form S-18, Commission File
No. 33-20095-A filed under the Securities Act of 1933, as amended,
effective November 3, 1988 (the "Form S-18")).
3.2 By-Laws of the Company (Incorporated by reference to the Company's
Registration Statement on Form S-18).
3.3 Certificate of Amendment of Certificate of Incorporation of The
Company, filed November 17, 1989 (Incorporated by reference to the
Company's Registration Statement on Form S-1, Commission File No.
33-41871, filed under the Securities Act of 1933, effective November
18, 1991 (the "Form S-1")).
3.4 Certificate of Amendment of Certificate of Incorporation of Company,
filed May 8, 1991 (Incorporated by reference to the Company's
Registration Statement on Form S-1).
3.5 Certificate of Amendment of Certificate of Incorporation of Company,
filed July 9, 1991 (Incorporated by reference to the Company's
Registration Statement on Form S-1).
4.1 Common Stock Specimen Certificate (Incorporated by reference to the
Company's Registration Statement on Form S-18).
4.2 Form of Warrant Agreement with exercise price of $4.00 per share
(Incorporated by reference to the Company's Registration Statement on
Form S-3, Commission File No. 33-77848, filed under the Securities Act
of 1933, effective June 8, 1994 (the "Form S-3")).
4.3 Form of Warrant Agreement with exercise price of $6.00 per share
(Incorporated by reference to the Company's Registration Statement on
Form S-3).
4.4 Form of Warrant Agreement with exercise price of $8.40 per share
(Incorporated by reference to the Company's Registration Statement on
Form S-3).
4.5 Form of Warrant Agreement with exercise price of $3.00 per share.
(Incorporated by reference to the Company's Registration Statement on
Form S-3, Commission File No. 33-97202 filed with the Commission on
September 21, 1995 (the "1995 Form S-3").
4.6 Form of Warrant Agreement with exercise price of $4.50 per share.
(Incorporated by reference to the 1995 Form S-3).
4.7 Form of Warrant Agreement with exercise price of $6.00 per share.
(Incorporated by reference to the 1995 Form S-3).
19
<PAGE>
4.8 Form of Warrant Agreement with exercise price of $2.50 per share.
(Incorporated by reference to the 1995 Form S-3).
5 Opinion of Counsel.
23.1 Consent of Independent Auditors.
23.2 Consent of Buchanan Ingersoll Professional Corporation (Included in
their opinion filed under Exhibit 5). (Incorporated by reference to the
1995 Form S-3).
24 Power of Attorney (Included in the Registration Statement on the
Signature Page).
Item 17. Undertakings.
The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of the securities registered hereby, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended (the "1933 Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement; provided, however, that the undertakings set
forth in paragraphs (1)(i) and (1)(ii) above do not apply if the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Company
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934, as amended (the "1934 Act") that are incorporated by reference
in this Registration Statement.
(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for the purposes of determining any liability under the 1933
Act, each filing of the Company's annual report pursuant to Section 13(a) or
Section 15(d) of the 1934 Act that is incorporated
20
<PAGE>
by reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to the initial bona
fide offering thereof.
(5) The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the Prospectus, to each person to whom the prospectus is sent
or given, the latest annual report to stockholders that is incorporated by
reference in the Prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the 1934 Act; and, where interim
financial information required to be presented by Article 3 of Regulation S-X is
not set forth in the Prospectus, to deliver, or cause to be delivered to each
person to whom the Prospectus is sent or given, the latest quarterly report that
is specifically incorporated by reference in the prospectus to provide such
interim financial information.
(6) Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
21
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form S-3 and authorized this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned, on May
9, 1996.
PMR CORPORATION
By: /s/ Allen Tepper
-----------------------------
Allen Tepper
Chairman of the Board,
President and Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Amendment No. 2 to the Registration Statement was signed by the following
persons in the capacities and on the dates stated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Allen Tepper Chairman of the Board, May 9, 1996
- ----------------------------- President and
Allen Tepper Chief Executive Officer
(*) Vice President/
- ----------------------------- Secretary/Treasurer _________, 1996
Susan D. Erskine Director
(*) Director _________, 1996
- -----------------------------
Eugene Hill
(*) Director _________, 1996
- -----------------------------
Charles McGettigan
(*) Director _________, 1996
- -----------------------------
Richard Niglio
(*) Director _________, 1996
- -----------------------------
Daniel Frank
(*) Chief Financial Officer _________, 1996
- ----------------------------- (Principal Financial
Susan Yeagley Sullivan Officer)
(*) /s/ Allen Tepper
---------------------------
Allen Tepper, Attorney-in-Fact
</TABLE>
22
<PAGE>
EXHIBIT INDEX
Page
5 Opinion of Counsel. Filed herewith
23.1 Consent of Independent Auditors. Filed herewith
<PAGE>
EXHIBIT 5
May 9, 1996
PMR Corporation
3990 Old Town Avenue, Suite 206A
San Diego, California 92110
Re: The Corporation's Registration Statement on Form S-3
Gentlemen:
We have participated in the preparation of the Registration Statment on
Form S-3 (the "Registration Statement") filed with the Securities and Exchange
Commission by PMR Corporation (the "Corporation") for the purpose of registering
for resale under the Securities Act of 1933, 1,388,087 shares of Common Stock
of the Corporation, $0.1 par value, which consists of 97,087 shares of Common
Stock previously issued by the Company in connection with certain private
placement transactions, 700,000 shares of Common Stock issuable upon the
conversion of an outstanding class of convertivle preferred stock and 591,000
shares of Common Stock issuable upon the exercise of certain outstanding Common
Stock purchase warrants and options previously issued by the Company in private
placement transactions. As counsel to the Corporation, we have examined such
corporate records, certificates and other documents as we considered to be
relevant and necessary to express the opinion hereinafter set forth.
On the basis of the foregoing and of our consideration of such other legal
and factual matters as we have deemed appropriate, we are of the opinion that
the 97,087 shares of Common Stock of the Corporation, the 700,000 shares of
Common Stock issuable upon the conversion of the outstanding class of
convertible preferred stock and the 591,000 shares of Common Stock issuable upon
the exercise of the oustanding Common Stock purchase warrants and options,
covered by the Registration Statement have been duly authorized and, when the
warrants and options are exercised and upon the conversion of the convertible
preferred stock, will be legally issued, fully paid and non-assessable, assuming
that the applicable exercise price or conversion price is paid with respect to
each share of Common Stock prior to issuance of such warrants, options, and
convertible preferred stock, and full compliance with the terms of the warrants,
options and convertible preferred stock is otherwise made.
<PAGE>
This opinion is being delivered to you in compliance with Item 601(b)(5)(i)
of Regulations S-K of the Securities Act of 1933, as amended. This form consents
to the filing of this opinion as an exhibit to the Registration Statement.
Very truly yours,
BUCHANAN INGERSOLL
PROFESSIONAL CORPORATION
BY: /s/ Stephen M. Cohen
-----------------------------------
Stephen M. Cohen
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 2 to the Registration Statement (Form S-3 No. 33-97202) and related
Prospectus of PMR Corporation for the registration of 1,388,087 shares of its
common stock and to the incorporation by reference therein of our reports dated
June 23, 1995, with respect to the consolidated financial statements of PMR
Corporation included in the Amendment No. 1 on Form 10-K/A of PMR Corporation
to its Annual Report (Form 10-K) for the year ended April 30, 1995 and the
related financial statement schedule included therein, filed with the Securities
and Exchange Commission.
ERNST & YOUNG LLP
San Diego, California
May 2, 1996
<PAGE>
