As filed with the Securities and Exchange Commission on October 17, 1995.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-----------------------
MEDICAL INNOVATIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
76-0280551
(I.R.S. Employer Identification No.)
-----------------------
ONE RIVERWAY, SUITE 2300
HOUSTON, TEXAS 77056
(713) 688-6600
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
-----------------------
Mark H. Fisher, President
One Riverway, Suite 2300
Houston, Texas 77056
(713) 688-6600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-----------------------
COPY TO:
John R. Boyer, Jr.
Boyer, Ewing & Harris Incorporated
Nine Greenway Plaza, Suite 3100
Houston, Texas 77046
(713) 871-2025
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
-----------------------
If the only securities being registered on this Form are to be offered
pursuant to dividend or reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
-----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH MAXIMUM MAXIMUM
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE (1) PRICE FEE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.0075 par value... 4,244,392 Shares $1.984375 $8,422,465.38 $2,904.30
==================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457. This estimate is based on the average of the closing
bid and asked prices of the Common Stock as reported by the National
Association of Securities Dealers Automated Quotation System on October 11,
1995.
-----------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
MEDICAL INNOVATIONS, INC.
CROSS-REFERENCE SHEET
PURSUANT TO RULE 404(A) AND ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
ITEM NO. AND CAPTION IN FORM S-3 LOCATION IN PROSPECTUS
-------------------------------- ----------------------
<S> <C> <C>
1. Forepart of Registration Statement and Outside Front
Cover page of Prospectus........................................ Otside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus...................................................... Inside Front and Outside Back Cover Pages
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges....................................... The Company; Risk Factors
4. Use of Proceeds................................................. Use of Proceeds
5. Determination of Offering Price................................. Plan of Distribution
6. Dilution........................................................ *
7. Selling Security Holders........................................ Selling Stockholders
8. Plan of Distribution............................................ Cover Page of Prospectus; Plan of Distribution
9. Description of Securities to be Registered...................... Description of Capital Stock
10. Interest of Named Experts and Counsel........................... *
11. Material Changes................................................ Recent Developments
12. Incorporation of Certain Information by Reference............... Incorporation of Certain Information
By Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities.................. *
</TABLE>
- ----------
* Omitted from Prospectus because item is inapplicable or the answer thereto
is negative.
<PAGE>
PROSPECTUS
4,244,392 SHARES
MEDICAL INNOVATIONS, INC.
COMMON STOCK
This Prospectus related to the subsequent sale and offer for sale on
the over-the-counter market or otherwise of up to 4,244,392 shares (the
"Shares") of Common Stock, $0.0075 par value ("Common Stock") of Medical
Innovations, Inc. (the "Company") by certain stockholders of the Company (the
"Selling Stockholders"). See "Selling Stockholders." The Company will not
receive any of the proceeds from the sale of the Shares. The Common Stock of
the Company is traded in the over-the-counter market under the symbol "MIXX."
On October 11, 1995, the average of the closing bid and asked prices of the
Common Stock, as reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), was $1.984375 per share.
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED PRIOR TO AN INVESTMENT IN THE
COMMON STOCK OFFERED HEREBY.
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 offering price will be the market price prevailing at the time of
sale or a negotiated price. See "Plan of Distribution." No underwriter is being
utilized in connection with this offering. All discounts, commissions or
concessions allowed to dealers, brokers or agents in connection with the sale of
the Shares will be paid by the Selling Stockholders. The Company is bearing
certain expenses in connection with the offering of the Shares, estimated at
approximately $24,000.00. See "Plan of Distribution" for further information
concerning the method by which the offering price for the Shares will be
determined and the possible sales expenses to be incurred by the Selling
Stockholders.
==============================================================================
Proceeds
Price to Estimated to Selling
Public Commissions Stockholders
- ------------------------------------------------------------------------------
Per Share......
- ------------------------------------------------------------------------------
Total..........
==============================================================================
THE DATE OF THIS PROSPECTUS IS OCTOBER 16, 1995.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports and other information
can be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W. Washington, D.C. 20549, and at regional
offices of the Commission at 7 World Trade Center, Suite 1300, New York, New
York 10048 and at Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661; and copies of such material can be obtained from
the Public Reference Section of the Commission, Washington, D.C. 20549 at
prescribed rates.
The Company has filed a Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act") with the Commission with respect to the securities offered by
this Prospectus. For further information about the Company and the securities
offered hereby, reference is made to the Registration Statement and to the
exhibits as a part thereof. Statements contained in this Prospectus as to the
contents of any contract or other document are not necessarily complete and, in
each instance, reference is made to the copy of such contract or document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which the Company previously filed with the
Commission, are incorporated and made a part of this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994.
2. The Company's Quarterly Report filed on Form 10-Q for the quarter
ended March 31, 1995.
3. The Company's Current Report on Form 8-K, dated May 19, 1995, as
amended to date.
4. The Company's Quarterly Report filed on Form 10-Q for the quarter
ended June 30, 1995.
5. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A, dated May 25, 1989.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering made by this Prospectus will be deemed to be
incorporated by reference in this Prospectus and will be part hereof from the
date of filing of such documents. Any statement contained herein or in any
document incorporated by reference herein that is modified or superseded by a
statement in any document subsequently filed by the Company will be deemed to be
modified or superseded to the same extent for purposes of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this prospectus is delivered, upon written
or oral request of such person, a copy of any and all information that has been
incorporated by reference herein (not including exhibits to the information that
is incorporated by reference unless such exhibits are specifically incorporated
by reference into the information that this Prospectus incorporates by
reference). Requests for copies should be directed to Mr. Mark H. Fisher,
President, Medical Innovations, Inc., One Riverway, Suite 2300, Houston, Texas
77056, telephone number (713) 680-6600.
2
<PAGE>
THE COMPANY
The Company is in the business of providing specialized and high-tech
home healthcare services, home medical equipment, homemaker services, and
intravenous therapies. This complement of home healthcare services is designed
to address the specific needs of patients in a variety of diagnostic groups,
including patients receiving treatment for cancer, diabetes, wounds, AIDS, and
high-risk pregnancies. The Company has a staff of full time nursing, homemaker,
pharmacy, and therapy personnel and access to carefully screened registries of
qualified clinicians, all of whom interact with physicians and implement a
customized plan of home healthcare for each patient.
The Company also is in the business of providing comprehensive home
healthcare management services under contractual arrangements with hospitals and
other providers. The home healthcare management division was formed in late
1993. In May 1995, the Company significantly expanded this division by adding
the operations of Hospital HomeCare Corporation ("HHCC"), a provider of hospital
home health management services.
The Company's executive offices are located at One Riverway, Suite
2300, Houston, Texas 77056, its telephone number is (713) 680-6800 and its
telecopy number is (713) 590-2520.
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE
OF RISK. THEREFORE, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS AS WELL AS THE OTHER INFORMATION CONTAINED IN THIS
PROSPECTUS IN EVALUATING THE COMPANY AND ITS BUSINESS.
GOVERNMENT REGULATION. The healthcare services provided by the Company
are subject to substantial regulation by the various states in which the Company
operates, and by various federal agencies. In particular, the Company's business
is subject to (i) state laws governing pharmacies, home health agencies, nursing
services, health planning and professional ethics, (ii) state and federal laws
relating to the provision of, and reimbursement for, services provided to
patients covered by Medicare, Medicaid or other government programs, (iii)
federal laws prohibiting physicians from referring Medicare and Medicaid
patients to any entity with which that physician (or any family member) has a
financial interest, and prohibiting such entity from billing for services
furnished pursuant to any such prohibited referral, (iv) federal and state laws
prohibiting the payment of remuneration for patient referrals, and (v) federal
laws and regulations that relate to businesses in general, including
occupational health and safety laws and environmental laws governing, among
other things, the disposal, transportation and handling of hazardous and
infectious wastes. The failure of the Company to comply with any such laws or
regulations could have a material adverse effect on the Company's ability to
provide services to patients or its ability to receive reimbursement for
services provided. The Company believes that it is in material compliance with
all applicable laws and regulations. However, there can be no assurance that
future legislation or the interpretation of existing laws and regulations will
not adversely impact the Company's business. In addition, if the Company expands
its operations into additional states, it will be subject to additional
regulatory and licensing requirements.
REIMBURSEMENT BY THIRD PARTY PAYORS; COLLECTIONS. Virtually all of the
Company's revenue is attributable to amounts received from third-party payors,
over 80% of which are currently Medicare, Medicaid and other government
programs. As a result of third-party payor payment procedures, the Company's
receivables are subject to lengthy collection periods. In addition,
reimbursement from government payors is subject to examination and retroactive
adjustment after reimbursement. The Company is also currently experiencing
certain difficulties in connection with the reimbursement of a material amount
of claims from the Medicaid intermediary in Nevada and the collection of a
material amount owed under an expired management contract. Accordingly, the
Company's cash flow may
3
at times be insufficient to meet its cash requirements. The Company at times has
been required to borrow short-term funds to meet its ongoing obligations and may
be required to do so in the future. If such funds are not available on favorable
terms, it may be necessary for the Company to limit its operations to those that
can be financed from its current operations and resources.
HEALTHCARE REFORM INITIATIVES In addition to extensive, existing
healthcare regulation, there have been numerous initiatives on the federal and
state levels for comprehensive reforms affecting the payment for and
availability of healthcare services. The United States Congress is currently
reviewing extensive Medicare reform, which may include drastic changes to the
healthcare industry as providers face pressure to contain costs associated with
Medicare. In addition, the Company anticipates that both Congress and state
legislatures will continue to review comprehensive reform legislation that may
effect fundamental changes in the nation's healthcare system. The scope of any
healthcare reform, whether at the federal or state level, is uncertain. The
profitability of the Company, however, could be adversely effected by any new
government regulation limiting the levels of reimbursement.
SUBSTANTIAL INDEBTEDNESS; LEVERAGE. The Company has total outstanding
indebtedness (including the current portion thereof) and total stockholders'
equity of approximately $12,183,000 and $8,692,000, respectively, as of June 30,
1995. In addition, only about one half of the Company's approximately
$29,589,000 in total assets as of June 30, 1995 consisted of tangible assets.
The level of the Company's indebtedness could have important consequences to the
purchasers of the Shares, including (without limitation) the following: (i) the
Company's ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions or other corporate purposes may be
impaired; (ii) a significant portion of the Company's cash flow from operations
is used, and will continue to be used, to make interest and scheduled principal
payments on its indebtedness, thereby reducing the funds available to the
Company to fund its operations and future business opportunities; (iii)
virtually all of the Company's indebtedness is at floating rates of interest,
which could result in higher interest expense in the event of an increase in
interest rates; (iv) the Company's credit facility with its bank contains
financial and other restrictive covenants that could limit the Company's
operating and financing flexibility and, if violated, would result in an event
of default that could preclude the Company's access to credit under its
revolving credit facility or otherwise have a material adverse effect on the
Company; and (v) the Company may be more vulnerable to general economic and
industrial downturns.
Of the Company's total indebtedness, approximately $11,077,000 is
payable within one year from June 30, 1995. Much of this indebtedness is under
credit facilities with the Company's bank that mature at various times over the
next year. Many of the Company's credit facilities are guaranteed by the
president and another director of the Company. In addition, the Company's note
with its bank in the principal amount of $5,450,000 (the "Bank Note"), which
matures on June 30, 1996, is secured by collateral pledged to the bank by the
president, another director and a stockholder of the Company. If the Company
cannot continue to supply the guarantees referenced above, or the collateral is
no longer available to secure the Bank Note, the Company will have great
difficulty in refinancing its current indebtedness. The Company currently
believes that such guarantees and collateral will be available as its credit
facilities mature and that it will be able to refinance such facilities. In the
past the Company has been able to refinance its bank debt as needed; however,
there can be no assurance that the bank facilities can be refinanced as such
facilities mature. If the Company cannot refinance its current indebtedness, it
is unlikely that the Company will be able to repay such credit facilities and
such payment default would have a material adverse effect on the Company.
ACQUISITIONS. The Company's recent growth to a large extent has been
the result of acquisitions. The Company is continually reviewing possible
acquisitions of operations that are complementary to the Company's existing
business. There can be no assurance that suitable acquisition candidates can be
found or that recent or future acquisitions will be successful. If the
4
Company is unable to find or consummate suitable acquisitions in the future, it
could impede future growth. In addition, even if the Company is able to complete
such acquisitions, there can be no assurance that such acquisitions will be
successfully integrated into the Company. Any such failure to adequately
integrate recent or future acquisitions may adversely impact operations or
profitability.
COMPETITION. The home healthcare industry includes thousands of
providers nationally and is intensely competitive. Although the market is highly
fragmented, there are several major providers of home healthcare services, home
medical equipment, homemaker services, and intravenous therapies and there are
increasing pressures toward market consolidation and vertical integration. There
are also several providers of home heathcare management services. The Company
currently competes, directly and indirectly, with services and products offered
by a variety of existing home healthcare companies, hospitals, physician groups
and other healthcare organizations. Many of the Company's competitors are larger
and have significantly greater resources than the Company. The increasing role
of third party payors in directing patients to specific companies and the
economies of scale associated with larger operations may result in further
market consolidation. Additionally, the present demand for the kinds of services
and products offered by the Company may cause others, including large hospitals,
healthcare companies and medical supply companies, to enter the market.
SHARES ELIGIBLE FOR SALE. Of the 15,923,880 shares of Common Stock
outstanding as of the date of this Prospectus, approximately 9,712,000 shares,
including 3,830,392 shares to be sold by Selling Stockholders hereunder, are
"restricted securities" as that term is defined under Rule 144 promulgated under
the Securities Act. In general, under Rule 144 a person (or persons whose shares
are aggregated) who has satisfied a two-year holding period, may sell within any
three-month period, a number of shares which does not exceed the greater of one
percent of the then outstanding shares of Common Stock or the average weekly
trading volume during the four calendar weeks prior to such sale. Rule 144 also
permits the sale of shares, without any quantity limitation, by a person who is
not an affiliate of the Company and who has beneficially owned the shares for a
minimum of three years. Of the restricted shares of Common Stock, the Company
believes that the two-year holding period requirement has been met as to
approximately 5,984,000 of the restricted shares held by existing stockholders.
In addition, an aggregate of 4,977,000 shares of Common Stock are issuable, or
reserved for issuance, under the Company's stock option plans and various stock
options and stock purchase warrants granted by the Company. The Company has
registered the issuance of 2,100,000 of those shares that are issuable upon
exercise of options granted, or to be granted, under the Company's stock option
plans and the resale of 414,000 shares issuable under stock purchase warrants is
being registered hereby. Any sale into the market of a substantial number of
these shares could adversely affect the prevailing market price of the Common
Stock and impair the future ability of the Company to raise capital through the
issuance of new securities.
DEPENDENCE ON KEY PERSONNEL. The operations of the Company are
dependent upon, among other things, the active participation of Mark H. Fisher,
its President and Chief Executive Officer, and its other executive officers and
key personnel. The Company has not obtained "key man" insurance on the life of
Mr. Fisher, but is currently in the process of obtaining such insurance in an
amount of not less than $1,000,000. The Company currently has key man insurance
in the amount of $1,000,000 on the life of Arthur L. Rice, President of HHCC and
a director. The Company does not have an employment agreement with Mr. Fisher or
with Thomas J. Kaled, Executive Vice President and a director, but does have
employment agreements with Mr. Rice, Larry V. Campbell, Chief Operating Officer,
David C. Horn, Chief Financial Officer, and Douglas S. Johnston, General Counsel
and Secretary. Failure of the Company to retain Mr. Fisher, or other executive
officers or key personnel, and to attract and retain additional qualified
personnel could adversely affect the Company's operations.
5
CONTROL CONSIDERATIONS. Prior to this offering approximately 57% of the
Company's outstanding shares of Common Stock were beneficially owned by officers
and directors of the Company, or their family members. Virtually all of the
remaining shares of Common Stock are held by the public. In addition, Mark H.
Fisher, President of the Company, and Harvey R. Houck, Jr., a director of the
Company, along with a stockholder of the Company, hold warrants that entitle the
holders to purchase all of the 100 shares of the Company's class A preferred
stock (the "Class A Stock") that, under certain circumstances, is entitled to
elect a majority of the Company's Board of Directors, for the purchase price of
$100.00 per share (the "Preferred Warrants"). The recipients of the Preferred
Warrants have executed a Voting Trust Agreement governing the Preferred Warrants
and any shares of preferred stock issued upon exercise of the Preferred
Warrants, which provides for Mr. Houck, as trustee, to vote all shares of the
preferred stock issued upon exercise of the Preferred Warrants. The Preferred
Warrants, however, are only exercisable upon default by the Company in payment
of certain debt guaranteed by the holders of the Preferred Warrants. As a
result, current management of the Company generally, and Messrs. Fisher and
Houck specifically, will exercise significant influence over the direction of
the Company and will be able to control its business and affairs for the
foreseeable future.
NO ASSURANCE OF A MARKET FOR COMMON STOCK; ILLIQUID SECURITIES. The
Common Stock is not listed on an exchange at this time. Therefore, there is
currently only a limited public market for the Company's Common Stock. No
assurance can be given that a market for the Common Stock will continue
subsequent to this offering or that purchasers will be able to resell their
securities at the respective exercise prices, or liquidate their investment
without considerable delay, if at all. If a market does continue, the price may
be highly volatile. Also, some brokerage firms may not effect transactions in
securities that trade below a stipulated price. Further, most lending
institutions will not permit the use of low-priced or thinly traded securities
as collateral for loans.
LIABILITY AND INSURANCE. The nature of the Company's business is such
that it is exposed to potential liabilities for personal injuries inherent in
healthcare operations. Claims against the Company, if successful, could result
in substantial damage awards. Although the Company maintains a level of
insurance that it considers adequate, there can be no assurance that any
particular claim will be covered, or will not exceed the coverage limits of,
such insurance, or that the Company will continue to be able to maintain such
insurance coverage on acceptable terms.
ABSENCE OF DIVIDENDS. The Company anticipates that any earnings will be
retained for the development of the Company's business, and that no dividends
will be paid on the Common Stock in the foreseeable future. Investors who need
immediate income from their investment should refrain from the purchase of the
securities being offered.
USE OF PROCEEDS
All of the Shares are being sold for the account of the Selling
Stockholders. The Company, therefore, will not receive any of the proceeds of
this offering.
PLAN OF DISTRIBUTION
The Company understands that the Shares will not be offered through
underwriters. The Selling Stockholders intend to offer the Shares (i) through
dealers or in ordinary broker transactions, (ii) direct sales to purchasers or
sales effected through an agent or (iii) combinations of any such methods. The
Shares will be sold at market prices prevailing at the time of sale or at
negotiated prices. The Company is not aware of any arrangements made by the
Selling Stockholders with any brokerage firm or otherwise regarding the sale of
the Shares prior to the date of this Prospectus. Dealers and brokers involved in
the offering and sale of the Shares may receive compensation in the form of
6
discounts or commissions from the Selling Stockholders or from the purchasers of
the Shares. The Selling Stockholders and any dealers or brokers that participate
in the distribution of the Shares may be deemed to be underwriters, and any
profit on the sale of the Shares or any discounts, commissions or concessions
received by any dealers or brokers might be deemed by the National Association
of Securities Dealers to constitute underwriting compensation for purposes of
the Association's Rules of Fair Practice.
SELLING STOCKHOLDERS
The following table sets forth the name of each of the Selling
Stockholders, the number of shares of Common Stock which may be regarded as
beneficially owned by such Selling Stockholders, and the number of Shares being
offered hereby by such Selling Stockholders.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO THE OFFERING NUMBER OF SUBSEQUENT TO THE OFFERING
----------------------- SHARES ---------------------------
SELLING STOCKHOLDER NUMBER PERCENT OFFERED NUMBER PERCENT
<S> <C> <C> <C> <C> <C>
Robert Gentile 380,952 (1) 2.4% 380,942 -0- *
Michael Mandel 101,967 (2) * 101,967 -0- *
M. H. Meyerson & Co., Inc. 350,000 (3) 2.2% 350,000 -0- *
The Monarch Trust 85,000 (4) * 85,000 -0- *
Arthur and Virginia Rice 2,033,609 (5) 12.8% 2,033,609 -0- *
Kenneth Rice 120,820 (6) * 120,820 -0- *
Lucille Rice Roberts 120,820 (6) * 120,820 -0- *
Lauretta Rice Colvin 493,612 (7) 3.1% 493,612 -0- *
Angela Rice McBride 493,612 (7) 3.1% 493,612 -0- *
The Wall Street Group, Inc. 64,000 (8) * 64,000 -0- *
- --------------
</TABLE>
* Less than 1%
(1) Includes 380,952 shares of Common Stock received in connection with the
Company's April 1994 acquisition of all of the outstanding stock of PRN
Home Health Care, Inc. and its affiliated companies. Mr. Gentile is
currently employed by the Company.
(2) Includes 101,967 shares of Common Stock received in connection with the
Company's September 1993 acquisition of all of the outstanding stock of
Advance Healthcare, Inc.
(3) Includes 350,000 shares of Common Stock to be issued pursuant to a
currently exercisable warrant granted pursuant to an April 1992 agreement
with the Selling Stockholder to provide investment banking services to the
Company for a two and one-half year term.
(4) Includes 85,000 shares of Common Stock issued in connection with the
Company's July 1995 acquisition of a minority interest in its Pensacola,
Florida operations from an affiliate of the Selling Stockholder. An
affiliate of the Selling Stockholder may receive potentially material
finder's fees from the Company if the Company enters into certain
transactions with five contacts identified by such affiliate.
(5) Includes 2,033,609 shares of Common Stock issued in May 1995 by the
Company in exchange for all of the outstanding stock of HHCC (the "HHCC
Merger"). Includes 101,680 shares of Common Stock held in escrow, which
shares will be transferred to Mr. and Mrs. Rice, subject to any right of
offset the Company may have against such shares for indemnification claims
relating to the HHCC Merger. Mr. Rice is a director of the Company and the
President of HHCC.
(6) Includes 120,820 shares received in connection with the HHCC Merger.
Includes 6,041 shares of Common Stock held in escrow, which shares will be
transferred to the Selling Stockholder, subject to any right of offset the
Company may have against such shares for indemnification claims relating
to the HHCC Merger. The Selling Stockholder is a sibling of Arthur Rice, a
director of the Company.
(7) Includes 493,612 shares received in connection with the HHCC Merger.
Includes 24,681 shares of Common Stock held in escrow, which shares will
be transferred to the Selling Stockholder, subject to any right of offset
the Company may have against such shares for indemnification claims
relating to the HHCC Merger. The Selling Stockholder is the daughter of
Arthur Rice, a director of the Company.
(8) Includes 64,000 shares of Common Stock to be issued pursuant to a
currently exercisable warrant granted pursuant to a May 1992 agreement
with the Selling Stockholder to provide public relations consulting
services to the Company. Also, in October 1993, the Company issued 47,837
shares of Common Stock to an affiliate of the Selling Stockholder as
payment for amounts owed by the Company to the Selling Stockholder for
public relations consulting services rendered, which shares were sold in
April 1995.
7
DESCRIPTION OF CAPITAL STOCK
The capital stock of the Company consists of 78,000,000 authorized
shares of which 75,000,000 are designated Common Stock, with a par value of
$.0075 per share, and 3,000,000 are designated preferred stock, with a par value
of $.01 per share (the "Preferred Stock").
COMMON STOCK
As of October 11, 1995, there were 15,923,880 shares of Common Stock
issued and outstanding, with an aggregate of 4,977,000 shares of Common Stock
reserved for issuance under the Company's stock option plans and various stock
options and stock purchase warrants granted by the Company.
The holders of Common Stock are entitled to receive such dividends, if
any, as may be declared from time to time by the Board of Directors in its
discretion from funds legally available therefor. Upon liquidation or
dissolution of the Company and the satisfaction of creditors and the preferences
and rights of holders of Preferred Stock outstanding, if any, the holders of
shares of Common Stock are entitled to receive all assets remaining available
for distribution to the stockholders. All of the outstanding shares of Common
Stock are fully paid and nonassessable, and the shares of Common Stock to be
outstanding upon completion of this offering will be fully paid and
nonassessable. All voting rights for directors are noncumulative, which means
that the holders of a majority of the shares of Common Stock entitled to vote at
a stockholder's meeting present in person or by proxy can elect all of the
directors if they choose to do so, and in such event, the holders of the
remaining shares will not be able to elect any directors. Holders of shares of
Common Stock are entitled to one vote per share on all matters to be voted on by
stockholders. A quorum for a meeting of stockholders consists of a majority of
the shares entitled to vote at such meeting present in person or by proxy. The
Common Stock has no preemptive, exchange or conversion rights.
STATUTORY BUSINESS COMBINATION PROVISION
Section 203 of the Delaware General Corporation Law ("Section 203")
restricts certain transactions between a corporation organized under Delaware
law (or its majority-owned subsidiaries) and any person holding 15% or more of
the corporation's outstanding voting stock, together with the affiliates or
associates of such person (an "Interested Stockholder"). Section 203 prevents,
for a period of three years following the date that a person becomes an
Interested Stockholder, the following types of transactions between the
corporation and the Interested Stockholder (unless certain conditions, described
below, are met): (i) mergers or consolidations, (ii) sales, leases, exchanges or
other transfers of 10% or more of the aggregate assets of the corporation, (iii)
issuances or transfers by the corporation of any stock of the corporation which
would have the effect of increasing the Interested Stockholder's proportionate
share of the stock of any class or series of the corporation, (iv) any other
transaction which has the effect of increasing the proportionate share of the
stock of any class or series of the corporation which is owned by the Interested
Stockholder, and (v) receipt by the Interested Stockholder of the benefit
(except proportionately as a stockholder) of loans, advances, guarantees,
pledges or other financial benefits provided by the corporation.
The three-year ban does not apply if either the proposed transaction or
the transaction by which the Interested Stockholder became an Interested
Stockholder is approved by the board of directors of the corporation prior to
the date such stockholder becomes an Interested Stockholder. Additionally, an
Interested Stockholder may avoid the statutory restriction if, upon the
consummation of the transaction whereby such stockholder becomes an Interested
Stockholder, the stockholder owns at least 85% of the outstanding voting stock
of the corporation without regard to those shares owned by the corporation's
officers and directors or certain employee stock plans. Business combinations
are
8
also permitted within the three-year period if approved by the board of
directors and authorized at an annual or special meeting of stockholders by the
holders of at least 66 2/3% of the outstanding voting stock not owned by the
Interested Stockholder. In addition, any transaction is exempt from the
statutory ban if it is proposed at a time when the corporation has proposed, and
a majority of certain continuing directors of the corporation have approved, a
transaction with a party who is not an Interested Stockholder of the corporation
(or who becomes such with board approval) if the proposed transaction involves
(i) certain mergers or consolidations involving the corporation, (ii) a sale or
other transfer of over 50% of the aggregate assets of the corporation or (iii) a
tender or exchange offer for 50% or more of the outstanding voting stock of the
corporation.
A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or bylaws by action of
its stockholders to exempt itself from coverage. Such bylaw or charter amendment
will not become effective until 12 months after the date it is adopted. The
Company has not adopted such a charter or bylaw amendment and therefore will be
covered by Section 203.
PREFERRED STOCK
The Board of Directors is authorized, without any further action by the
stockholders, to establish the terms and approve the issuance of shares of
Preferred Stock from time to time in such series, to divide such shares of
Preferred Stock into one or more classes or series and, in connection with the
creation of any such class or series, to fix the designation, powers and
relative, participatory, optional or other special rights of such class or
series, and the qualifications, limitations, or restrictions thereof. No shares
of Preferred Stock have been issued as of the date of this Prospectus, but the
Board of Directors has authorized the issuance of the 100 shares of Class A
Stock upon exercise of the Preferred Warrants. The Class A Stock is not
purchasable under the Preferred Warrants unless the Company is in default on the
Bank Note, which Bank Note is secured by collateral (marketable securities)
pledged to the bank by the holders of the Preferred Warrants, the holders of the
Preferred Warrants are in default under the related collateral maintenance
agreements, or the bank liquidates the collateral of the holders of the
Preferred Warrants. Although the Board has no current plans to authorize the
issuance of any additional shares of Preferred Stock, any such issuance could
have the effect of diluting the earnings per share and book value of existing
shares of Common Stock, and such additional shares could adversely affect the
voting power of the holders of Common Stock and otherwise could be used to
dilute the ownership of persons seeking to gain control of the Company.
For so long as the aggregate outstanding balance of the note issued to
the former shareholders of Physicians Visiting Nurse Service, Inc. in connection
with the Company's acquisition thereof (the "PVNS Note") and the Bank Note is
$3,250,000 or more, the holders of the outstanding shares of Class A Stock,
voting separately as a class, have the right to elect seven directors of the
Company with the holders of the Common Stock, voting separately as a class,
being entitled to elect six directors of the Company. For so long as the
aggregate outstanding balance of the PVNS Note and the Bank Note is less than
$3,250,000, the holders of the outstanding shares of Class A Stock, voting
separately as a class, have the right to elect three directors of the Company
with the holders of the Common Stock, voting separately as a class, being
entitled to elect six directors of the Company. At any time after the
outstanding balance of the PVNS Note and the Bank Note is less than $1,175,000
the Company may redeem all or any of the issued shares of the Class A Stock by
paying the holder or holders thereof $100.00 per share.
9
RECENT DEVELOPMENTS
Recently, the Company and Horizon/CMS Homecare Corporation ("Horizon")
entered into a five-year management contract under which the Company will
start-up and manage the home care nursing operations of Horizon's long-term care
centers and specialty and rehab hospitals throughout the nation. The agreement
with Horizon continues the Company's efforts to enter into home care management
contracts with large providers and follows the recently completed six-month
management contract with Century Health Services.
10
<PAGE>
No dealers, salesmen, or any other person has been authorized to give any
information or to make any representation not contained in this Prospectus and,
if given or made, such information or representation must not be relied upon as
having been so authorized. This Prospectus does not constitute an offer to sell
or a solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer in such
jurisdiction. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that the
information contained herein is correct as of any time subsequent to its date
hereof or that there has been no change in the affairs of the Company since such
date.
11
TABLE OF CONTENTS
Available Information........................ 2
Incorporation of Certain
Information by Reference................... 2
The Company.................................. 3
Risk Factors ................................ 3
Use of Proceeds.............................. 6
Plan of Distribution......................... 6
Selling Stockholders......................... 7
Description of Capital Stock................. 8
Recent Developments.......................... 10
4,244,392 SHARES
MEDICAL
INNOVATIONS
COMMON STOCK
PROSPECTUS
OCTOBER 16, 1995
12
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Expenses to be paid by the Company in connection with the distribution
of the securities being registered hereby are estimated as follows:
Registration fee ................................... $ 2,904.30
Reproduction and printing expenses ................. 5,000.00
Legal fees and expenses ............................ 10,000.00
Blue Sky filing fees and related expenses,
including counsel ............................ 2,000.00
NASD fee ........................................... 1,342.00
Accounting fees and expenses ....................... 3,000.00
Miscellaneous ...................................... 1,753.70
----------
Total ........................................ $24,000.00
----------
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
As permitted by the Delaware General Corporation Law (the "Delaware
Code"), the Registrant's Certificate of Incorporation provides that a director
of the Registrant shall have no personal liability to the Registrant or its
stockholders for monetary damages for breach or alleged breach of fiduciary duty
as a director. This provision has no effect on the liability of a director (i)
for any breach of the director's duty of loyalty to the Registrant or its
stockholders, (ii) for acts or omissions not in good faith or involving
intentional misconduct or knowing violations of law, (iii) under Section 174 of
Title 8 of the Delaware Code for illegal payment of dividends, stock
repurchases, or stock redemption, and (iv) for any transaction from which a
director derived an improper personal benefit.
Also pursuant to the Delaware Code, the Registrant's Certificate of
Incorporation sets forth the extent to which the Registrant is authorized to
indemnify its directors, officers, employees and agents. The Registrant may
indemnify any person subject to any action by reason of the fact that he is or
was a director, officer, employee or agent of the Registrant so long as he acted
in good faith and in a manner which he believed was not opposed to the best
interests of the Registrant and, with respect to any criminal action, he had no
reasonable cause to believe his conduct was unlawful. In any action by or in
right of the Registrant, however, indemnity may not be made for any claim, issue
or matter as to which such person is adjudged liable to the Registrant. To the
extent that a director, officer, employee or agent is successful on the merits
of any action described above, indemnification by the Registrant is mandatory.
Any determination that indemnification by the Registrant in a specific case is
proper must be made by the stockholders of the Registrant, a majority of
uninterested directors or independent legal counsel. The Registrant must advance
to officers and directors their expenses incurred in defending a civil or
criminal action in advance of the final disposition of such action upon
II-1
receipt of an undertaking by or on behalf of the director or officer to repay
such amounts if it is determined by a court of competent jurisdiction that he is
not entitled to be indemnified by the Registrant.
The Certificate of Incorporation also authorizes the Registrant to
purchase and maintain insurance, or make other financial arrangements, on behalf
of any director, officer, employee or agent of the Registrant for any liability
incurred by him in his capacity as such, whether or not the Registrant has the
authority to indemnify him against such liability. The Company maintains
directors and officers insurance in the amount of $1,000,000, with a $100,000
deductible for claims other than Securities and Exchange Commission claims, for
which there is a $250,000 deductible, that is effective through June 13, 1996.
ITEM 16. EXHIBITS
(A) EXHIBITS
An asterisk below indicates an exhibit previously filed with the Securities and
Exchange Commission as an exhibit to Registrant's Registration Statement on Form
S-18, Registration No. 33-22898-D (the "S-18"), such exhibit being incorporated
from the exhibits to the S-18 by reference. The number in parentheses following
the description of each such exhibit is the number of such exhibit in the S-18.
EXHIBIT NO. EXHIBIT TITLE
- ----------- -------------
*4.1 -- Specimen Unit Certificate (including Specimen Certificate for
Shares of Common Stock) (4.1(a))
5.1 -- Opinion of Boyer, Ewing & Harris Incorporated
24.1 -- Consent of Price Waterhouse
24.2 -- Consent of Boyer, Ewing & Harris Incorporated is contained in
Exhibit 5.1 to this Registration Statement
25.1 -- A power of attorney, pursuant to which amendments to this
Registration Statement may be filed, is included in the
signature pages contained in Part II of this Registration
Statement
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-2
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED, THE REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT ON FORM S-3
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THERETO DULY AUTHORIZED, IN THE
CITY OF HOUSTON, STATE OF TEXAS, ON OCTOBER 16, 1995.
MEDICAL INNOVATIONS, INC.
By: MARK H. FISHER
Mark H. Fisher,
Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Mark H. Fisher and David C. Horn, or any
of them, each with power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all subsequent pre- and post-effective amendments and supplements to this
Registration Statement, and to file the same, or cause to be filed the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each said attorney-in-fact and
agent full power to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that any said attorney-in-fact and agent or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLES DATE
---------- ------ ----
<S> <C> <C>
MARK H. FISHER Chairman of the Board of Directors, October 16, 1995
(MARK H. FISHER) President and Chief Executive Officer
(principal executive officer)
II-4
DAVID C. HORN Vice President, Treasurer and October 16, 1995
(DAVID C. HORN) Chief Financial Officer (principal
financial officer)
ROGER S. HUNTINGTON Controller (principal accounting officer) October 16, 1995
(ROGER S. HUNTINGTON)
THOMAS J. KALED Executive Vice President and Director October 16, 1995
(THOMAS J. KALED)
Director October ___, 1995
---------------------------
(LUIS T. CAMPOS, M.D.)
HARVEY R. HOUCK, JR. Director October 16, 1995
(HARVEY R. HOUCK, JR.)
PHILIP A. TUTTLE Director October 16, 1995
(PHILIP A. TUTTLE)
Director October ___, 1995
---------------------------
(ARTHUR L. RICE)
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
An asterisk below indicates an exhibit previously filed with the Securities and
Exchange Commission as an exhibit to Registrant's Registration Statement on Form
S-18, Registration No. 33-22898-D (the "S-18"), such exhibit being incorporated
from the exhibits to the S-18 by reference. The number in parentheses following
the description of each such exhibit is the number of such exhibit in the S-18.
EXHIBIT NO. EXHIBIT TITLE
- ----------- -------------
*4.1 -- Specimen Unit Certificate (including Specimen Certificate for Shares of
Common Stock) (4.1(a))
5.1 -- Opinion of Boyer, Ewing & Harris Incorporated
24.1 -- Consent of Price Waterhouse
24.2 -- Consent of Boyer, Ewing & Harris Incorporated is contained in
Exhibit 5.1 to this Registration Statement
25.1 -- A power of attorney, pursuant to which amendments to this Registration
Statement may be filed, is included in the signature pages contained
in Part II of this Registration Statement
<PAGE>
EXHIBIT 5.1
BOYER, EWING & HARRIS
INCORPORATED
Nine Greenway Plaza
Suite 3100
Houston, Texas 77046
(713) 871-2025
Telefax: (713) 871-2024
October 16, 1995
Medical Innovations, Inc.
One Riverway, Suite 2300
Houston, Texas 77056
Attn: Mr. Mark H. Fisher
Gentlemen:
We have acted as counsel for Medical Innovations, Inc., a Delaware
corporation (the "Corporation"), in connection with the registration with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"), of the resale of up to 4,244,392
shares of the Corporation's common stock, $.0075 par value (the "Common Stock"),
on behalf of various selling stockholders of the Corporation, including 414,000
shares of the Common Stock to be issued upon exercise of currently exercisable
warrants (the "Warrants").
We have made such inquiries and examined such documents as we have
considered necessary or appropriate for the purpose of giving the opinions
hereinafter set forth, including:
(i) the Certificate of Incorporation of the Corporation, as filed with
the Secretary of State of Delaware and as amended to date;
(ii) the Bylaws and stock ledgers and transfer books of the Corporation
and the records of the official proceedings of stockholders and
directors of the Corporation through the date of this opinion;
(iii) the Registration Statement of the Corporation on Form S-3,
including the related preliminary prospectus and other attachments, to
be filed with the Commission on October 17, 1995 (the "Registration
Statement"); and
(iv) such other documents as we have deemed necessary for the
expression of the opinions contained herein, including, but not limited
to, all of the Exhibits to the Registration Statement.
We have assumed the genuineness and authenticity of all signatures on
all original documents, the authenticity of all documents submitted to us as
originals, the conformity to originals of all documents submitted to us as
copies and the due authorization, execution, delivery or recordation of all
documents where due authorization, execution, delivery or recordation are
prerequisites to the effectiveness thereof.
Based upon the foregoing, and having regard for such legal
considerations as we deem relevant, we are of the opinion (limited, in all
respects, to the laws of the United States and the State of Delaware) that:
(i) the Corporation is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware;
(ii) upon payment of the cash consideration required to be paid for the
Common Stock to be issued upon exercise of the Warrants, as set forth
in, and in accordance with, the Registration Statement and the
Warrants, such Common Stock will be validly issued, fully paid and
nonassessable, and
(iii) all of the other Common Stock is validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion with the Commission as
an Exhibit to the Registration Statement.
Yours very truly,
BOYER, EWING & HARRIS INCORPORATED
<PAGE>
EXHIBIT 24.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
March 27, 1995 appearing on page F-2 of Medical Innovations, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1994. We also consent to
the incorporation by reference of our report dated May 19, 1995 on the financial
statements of Hospital HomeCare Corporation for the year ended March 31, 1995
appearing on page 4 of Medical Innovations, Inc.'s Current Report on Form 8-K/A
dated August 2, 1995.
PRICE WATERHOUSE LLP
Houston, Texas
October 16, 1995
