As filed with the Securities and Exchange Commission on July 31, 1998
Registration No. ____________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-3
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
VASOMEDICAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-2871434
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
180 Linden Avenue Anthony Viscusi
Westbury, New York 11590 Vasomedical, Inc.
(516) 997-4600 180 Linden Avenue
(Address, including zip code and telephone Westbury, New York 11590
number, including area code, of registrant's (516) 997-4600
principal executive offices) Name, address and telephone
number, including area code,
of agent for service)
Copy to:
David H. Lieberman, Esq.
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
(516) 822-4820
Approximate date of commencement of proposed sale to public: From time to
time after the effective date of this Registration Statement.
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, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------------
Title of Each Class of Securities Amount to be Proposed Maximum Offering Proposed Maximum Amount of
to be Registered Registered Price Per Share (1) Aggregate Offering Price (1) Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.001 6,841,758 shs. $1.344 $9,195,323 $2,713
per share, reserved for issuance
upon conversion of Series B
Convertible Preferred Stock (2)(3)
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.001 883,068 shs. $1.344 $1,186,843 $350
per share, reserved for issuance
upon the exercise of Common
Stock Purchase Warrants (2) (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
<FN>
(1) Estimated solely for the purpose of calculating the registration fee, based on the closing price of the Common Stock reported
in the consolidated reporting system on July 23, 1998.
(2) This Registration Statement also covers the associated Share Purchase Rights reserved for issuance upon the exercise of the
securities.
(3) Pursuant to Rule 416, this Registration Statement also covers any additional shares of Common Stock which may become issuable
by virtue of the anti-dilution provisions of such securities.
</FN>
</TABLE>
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>
VASOMEDICAL, INC.
Cross Reference Sheet
Showing location in Prospectus of Information Required by Items on Form S-3
Item No. Prospectus Caption
- ---------------------------
1. Forepart of the Registration Outside Front Cover
Statement and Outside Front Cover Page Page of Prospectus
of Prospectus
2. Inside Front and Outside Back Cover Inside Front and Outside
Pages of Prospectus Back Cover Pages of
Prospectus
3. Summary Information, Risk Factors and *
Ratio of Earnings to Fixed Charges
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Outside Front Cover Page;
Selling Security Holders
6. Dilution *
7. Selling Security Holders Selling Security Holders
8. Plan of Distribution Outside Front Cover Page;
Plan of Distribution
9. Description of Securities to be *
Registered
10. Interests of Named Experts and Counsel Legal Opinion;
Experts
11. Material Changes *
12. Incorporation of Certain Documents Incorporation of
by Reference Certain Documents
By Reference
13. Disclosure of Commission Position on *
Indemnification for Securities Act
Liabilities
* Omitted since answer to item is negative or inapplicable
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION
Dated July 31, 1998
VASOMEDICAL, INC.
7,724,826 Shares of Common Stock, $.001 par value
The 7,724,826 shares of Common Stock, $.001 par value per share (the
"Shares"), of Vasomedical, Inc. (the "Company") being covered by this Prospectus
represent 4,561,172 shares issuable upon the conversion of Series C Convertible
Preferred Stock, and 588,712 issuable upon the exercise of Common Stock Purchase
Warrants. They are being offered by two (2) selling security Holders and any
pledgees, transferees, donees or other successors in interest thereof (the
"Selling Security Holders"). This Prospectus also covers 2,574,942 shares of
Common Stock associated with the Company's Share Purchase Rights, which are
reserved for issuance upon the exercise of the foregoing securities. The Shares
may be offered by the Selling Security Holders from time to time in transactions
on the Nasdaq, in privately negotiated transactions, or by a combination of such
methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Security Holders may effect such
transactions by selling the Shares to or through broker-dealers and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Security Holders or the purchaser of the Shares for
whom such broker-dealers may act as agent or to whom they sell as principal or
both (which compensation to a particular broker-dealer might be in excess of
customary commissions). See "Selling Security Holders" and "Plan of
Distribution."
None of the proceeds from the sale of the Shares by the Selling Security
Holders will be received by the Company, except to the extent that the Common
Stock Purchase Warrants are exercised. If all the Common Stock Purchase Warrants
are exercised at current exercise prices, the net proceeds to the Company from
this offering would be $1,225,000. The Company will bear the expenses in
connection with the offering, including filing fees and the Company's legal and
accounting fees, estimated at $19,000.
The Company's Common Stock is traded on the Nasdaq SmallCap Issues market
(Symbol: VASO). On July 23, 1998, the last reported sale price of the Company's
Common Stock as reported by NASDAQ was $1.344 per share.
---------------
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "CERTAIN INVESTMENT CONSIDERATIONS", PAGE 4.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
The date of this Prospectus is _______, 1998
<PAGE>
No person has been authorized to give any information or to make any
representations not contained in this Prospectus in connection with the offer
contained herein, and, if given or made, such information or representations
must not be relied upon as having been authorized by the Company or by any
agent, dealer or underwriter. This Prospectus does not constitute an offer of
any securities other than those to which it relates or an offer to sell, or a
solicitation of an offer to buy, those to which it relates in any state to any
person to whom it is not lawful to make such offer in such state.
TABLE OF CONTENTS
Page
- --------------------------------------------------------------------------------
Available Information . . . . . . . . . . . . . . 3
Incorporation of Certain Documents by Reference . 3
The Company . . . . . . . . . . . . . . . . . . . 4
Certain Investment Considerations . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . . 5
Description of Capital Stock. . . . . . . . . . . 6
Selling Security Holders. . . . . . . . . . . . . 7
Plan of Distribution. . . . . . . . . . . . . . . 8
Indemnification of Directors and Officers . . . . 10
Legal Matters . . . . . . . . . . . . . . . . . . 11
Experts . . . . . . . . . . . . . . . . . . . . . 11
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, DC, a Registration Statement under the Securities Act
of 1933, as amended (the "Act"), with respect to the Common Stock offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits relating thereto. For further
information with respect to the Company and the shares of Common stock offered
by this Prospectus, reference is made to such Registration Statement and the
exhibits thereto. 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 other document filed as an
exhibit to the Registration Statement for a full statement of the provisions
thereof; each such statement contained herein is qualified in its entirety by
such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained at the office
of the Commission at Room 1024, 450 Fifth Street, N.W., Washington, DC 20549 and
at the Commission's Regional Offices at Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World Trade
Center, New York, New York 10048. Copies of such material can be obtained from
the Public Reference Section of the Commission, Washington, DC 20549, at
prescribed rates, and from the Securities and Exchange Commission's web site at
the address http://www.sec.gov. Copies of such material can also be obtained at
the offices of the National Association of Securities Dealers, Inc. at 1735 K
Street, Washington, DC 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with the Commission
(File No. 0-18105) pursuant to the Exchange Act, are incorporated by reference
in this Prospectus and shall be deemed to be a part hereof:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended May
31, 1998.
(2) The Company's Proxy Statement dated December 4, 1997 for its 1997
Annual Meeting of Stockholders.
(3) The Registration Statement on Form 8-A dated May 11, 1995 with respect
to the Company's Share Purchase Rights.
(4) The Company's Form 8-K dated April 30, 1998.
All documents filed 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
this offering of Common Stock shall be deemed to be incorporated by reference in
this Prospectus and to be part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document that also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the documents incorporated by reference (except for
exhibits thereto unless specifically incorporated by reference therein).
Requests for such copies should be directed to the Secretary, Vasomedical, Inc.,
180 Linden Avenue, Westbury, New York 11590 (516) 997-4600.
<PAGE>
THE COMPANY
The Company is engaged in the commercialization of the EECP(R) enhanced
external counterpulsation system ("EECP"), a microprocessor-based medical device
for the non-invasive, atraumatic treatment of patients with coronary artery
disease. EECP is marketed worldwide to hospitals, clinics and other cardiac
health care providers. The Company has the worldwide exclusive marketing rights
(except in China) to EECP , which rights it acquired in fiscal 1992.
In addition to its marketing efforts, the Company has recently completed,
at several leading university hospitals, a clinical study for the purpose, among
other things, of gathering information to apply for medical reimbursement. EECP
has received marketing clearance from the Food and Drug Administration ("FDA")
under a 510(k) premarket notification.
The Company's executive offices are located at 180 Linden Avenue, Westbury,
New York 11590, and its telephone number is (516) 997-4600.
CERTAIN INVESTMENT CONSIDERATIONS
The following information, in addition to other information in this
Prospectus and in the documents incorporated herein by reference, should be
considered carefully by potential purchasers in evaluating the Company, its
business and an investment in shares of the Common Stock offered hereby.
1. Need for Additional Funds. Management believes that its working capital
position at July 31, 1998, and the ongoing commercialization of EECP , will make
it possible for the Company to support its internal overhead expenses and to
implement its new development and business plans at least through May 31, 1999.
While the Company intends to finance its future cash requirements from the sale
and lease of EECP systems, there is no assurance that the Company can be
successful in these efforts.
2. Dependence on Limited Products. Currently, EECP is the Company's only
product. The Company is concentrating substantially all of its efforts on EECP
for which it has recently concluded a multicenter clinical study and is
incurring marketing expenses. Although the Company generated revenue from EECP
in fiscal 1998, there is no assurance that the Company will continue to generate
enough revenue to fund internal working capital requirements beyond May 31,
1999.
3. Historical and Anticipated Losses. The Company was incorporated in July
1987 and, to date, has had limited revenues. For the years ended May 31, 1998,
1997, and 1996, the Company sustained net losses of $5,031,000, $4,516,000, and
$2,643,000, respectively. The Company recognized $5,225,000, $2,097,000 and
$2,683,000 in revenues for the years ended May 31, 1998, 1997 and 1996,
respectively.
4. Uncertainty of Market Acceptance of the Company's Products. With respect
to EECP , management believes that it represents a new and innovative treatment
for patients suffering from coronary heart disease. Additional efforts will be
required to confirm that this procedure is effective and safe and to acquaint
potential purchasers, such as doctors, hospitals, suppliers of medical equipment
and other potential purchasers of the device. The Company cannot guarantee
acceptance by the medical community.
5. Dependence on Key Personnel. The Company is substantially dependent upon
the efforts of its executive officers, particularly Dr. John Hui. The Company
maintains limited key-man life insurance. Despite the existence of employment
agreements with Dr. Hui and others, there are no assurances that Company's key
executives will continue their employment with the Company.
<PAGE>
6. Technological Obsolescence. The Company is engaged in an area
characterized by extensive research and development activities. New developments
are expected to continue at a rapid pace and there can be no assurance that new
discoveries will not render the Company's products, processes and devices
uneconomical or obsolete. The likelihood of success for the Company's products
must be considered in light of the problems, expenses, difficulties,
complications and delays frequently encountered in connection with the
development of new medical processes, devices and products and their level of
acceptance by the medical community.
7. Competition. There are other companies engaged in development,
manufacture and/or marketing of products intended for the same uses as the
Company's products, processes and devices. These companies' products may receive
more widespread commercial acceptance than the Company's EECP because of greater
financial resources and marketing capabilities.
8. Future Sales of Common Stock. Of the Company's Common Stock currently
outstanding, approximately 1,707,000 shares are "restricted securities" as that
term is defined in Rule 144 under the Securities Act and, under certain
circumstances, may be sold without registration pursuant to that Rule. An
additional 22,456,856 shares are covered by currently effective registration
statements, of which 12,239,684 shares are included in the Company's outstanding
shares at July 23, 1998. The restricted securities, the previously registered
securities, as well as the 7,724,826 shares of Common Stock registered hereunder
represent approximately 35% of the Company's outstanding Common Stock on a
fully-diluted basis. Their sale, or even potential sale, pursuant to Rule 144,
its prior registration statement, this registration statement or otherwise,
would likely have an adverse effect on the market price of the Company's Common
Stock.
9. Government Regulation. The development, testing, production and
marketing of the Company's products are subject to regulation by the FDA as
devices under 1976 Medical Device Amendments to the Federal Food, Drug and
Cosmetic Act. Additionally, the Company's products may be subject to regulation
by similar agencies in other states and foreign countries. While the Company
believes that it has complied with all applicable laws and regulations, no
assurance can be given that continued compliance with such laws or regulations,
including any new laws or regulations, will not impose additional costs on the
Company which could adversely affect its financial performance and results of
operations.
10. Discretion in Application of Net Proceeds. To the extent that the
Common Stock Purchase Warrants are fully exercised, the Company will receive net
proceeds from this offering of approximately $1,225,000. Management of the
Company has certain discretion over the use and expenditure of these proceeds.
As a result, the success of the Company may be substantially dependent upon the
discretion and judgment of the management of the Company with respect to the
application and allocation of such net proceeds.
USE OF PROCEEDS
The Company will not receive any proceeds from this offering, except to the
extent that the Common Stock Purchase Warrants are exercised. If all the Common
Stock Purchase Warrants are exercised at current exercise prices, the net
proceeds to the Company from this offering would be $1,225,000. If such proceeds
are received, the Company intends to use all such proceeds to support further
expansion of its marketing activities for EECP , conduct new clinical studies
designed to confirm additional therapeutic claims and general working capital.
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Capital Stock
The Company's authorized capital stock consists of 110,000,000 shares of
common stock, $.001 par value per share ("Common Stock") and 1,000,000 shares of
Serial Preferred Stock, $.01 par value per share, of which 500,000 shares have
been designated as Series A, 150,000 shares have been designated as Series B
Convertible Preferred Stock, and 175,000 shares have been designated as Series C
Convertible Preferred Stock (the "Series C Preferred Stock").
Common Stock
General. The Company has 110,000,000 authorized shares of common stock,
$.001 par value.
Voting Rights. Each share of Common Stock entitles the holder thereof to
one vote, either in person or by proxy, at meetings of shareholders. The
Company's Board consists of three classes, each of which serves for a term of
three years. At each annual meeting of the stockholders, the directors in only
one class will be elected. The holders are not permitted to vote their shares
cumulatively. Accordingly, the holders of more than fifty percent (50%) of the
issued and outstanding shares of Common Stock can elect all of the directors of
the Company.
Dividend Policy. All shares of Common Stock are entitled to participate
ratably in dividends when and as declared by the Company's Board of Directors
out of the funds legally available therefor. Any such dividends may be paid in
cash, property or additional shares of Common Stock. The Company has not paid
any cash dividends since its inception and presently anticipates that all
earnings, if any, will be retained for development of the Company's business and
that no dividends on the shares of Common Stock will be declared in the
foreseeable future. Any future dividends will be subject to the discretion of
the Company's Board of Directors and will depend upon, among other things,
future earnings, the operating and financial condition of the Company, its
capital requirements, general business conditions and other pertinent facts.
Therefore, there can be no assurance that any dividends on the Common Stock will
be paid in the future.
Miscellaneous Rights and Provisions. Holders of Common Stock have no
preemptive or other subscription rights, conversion rights, redemption or
sinking fund provisions. In the event of the liquidation of dissolution, whether
voluntary or involuntary, of the Company, each share of Common Stock is entitled
to share ratably in any assets available for distribution to holders of the
equity of the Company after satisfaction of all liabilities; subject to the
rights of holders of Preferred Stock.
<PAGE>
Serial Preferred Stock
The Board of Directors is authorized by the Company's Certificate of
Incorporation to authorize and issue one or more series of Serial Preferred
Stock, $.01 par value. To date, 500,000 shares of Series A Preferred Stock have
been issued by the Company, which shares have been converted to 1,000,000 shares
of Common Stock, 150,000 shares have been designated and issued as Series B
Convertible Preferred Stock, of which 107,500 shares have been converted to
1,309,600 shares of Common Stock, and 175,000 shares have been designated and
issued as Series C Convertible Preferred Stock. No additional shares of
Preferred Stock have been authorized for issuance by the Board and the Company
has no present plans to issue any such shares. In the event that the Board of
Directors does issue additional Preferred Stock, it may exercise its discretion
in establishing the terms of the Preferred Stock. In the exercise of such
discretion, the Board of Directors may determine the voting rights, if any, of
the series of Preferred Stock being issued, which could include the right to
vote separately or as a single class with the Common Stock and/or other series
of Preferred Stock; to have more or less voting power per share than that
possessed by the Common Stock or other series of Preferred Stock; and to vote on
certain specified matters presented to the stockholders or on all of such
matters or upon the occurrence of any specified event or condition. On
liquidation, dissolution or winding up of the Company, the holders of Preferred
Stock may be entitled to receive preferential cash distributions fixed by the
Board of Directors when creating the particular series thereof before the
holders of the Common Stock are entitled to receive anything. Preferred Stock
authorized by the Board of Directors could be redeemable or convertible into
shares of any other class or series of stock of the Company.
The issuance of Preferred Stock by the Board of Directors could adversely
affect the rights of holders of shares of Common Stock by, among other things,
establishing preferential dividends, liquidation rights or voting power. The
issuance of Preferred Stock could be used to discourage or prevent efforts to
acquire control of the Company through the acquisition of shares of Common
Stock.
SELLING SECURITY HOLDERS
The Selling Security Holders are (i) JNC Opportunity Fund Ltd. ("JNC"), the
purchaser of the Series C Preferred Stock and 413,712 Common Stock Purchase
Warrants ("Warrants") (which are exercisable at $2.08 per share) in connection
with the placement of the Series C Preferred Stock, and (ii) Wharton Capital
Partners, Ltd., who received 175,000 Warrants in connection with the placement
of the Series C Preferred Stock. Except as otherwise disclosed herein, none of
the Selling Security Holders has had any position, office or other material
relationship with the Company or its predecessors or affiliates within the past
three years.
The following table sets forth the names of the Selling Security Holders,
the number of shares of Common Stock beneficially owned by each of the Selling
Security Holders, and the number of shares which may be offered for resale
pursuant to this Prospectus. For the purpose of calculating the number of shares
of Common Stock beneficially owned by the holder of the Series C Preferred
Stock, the number of shares of Common Stock calculated to be issuable upon
conversion is based on a conversion price of $.81 per share (without taking into
account shares issuable as dividends or under Share Purchase Rights). The
conversion price for the Series C Preferred Stock is the lower of (i) $2.08 per
share, or (ii) 85% of the average closing bid price on the Nasdaq SmallCap
Issues Market of the Common Stock for the five (5) trading days immediately
preceding the date of conversion. Also, the holder was granted one Warrant for
every six (6) shares issuable upon conversion (determined at closing) to
purchase one (1) share of Common Stock at $2.08 per share. Holders of the Series
C Preferred Stock are entitled to receive quarterly dividends at a rate of 5%
per annum, payable in cash or, subject to certain conditions, shares of Common
Stock. The actual number of shares issuable upon conversion of the Series C
Preferred Stock, shares underlying the associated Warrants and shares available
<PAGE>
for resale under this Prospectus could be materially greater based upon the
market price of the Common Stock at the time or times of conversion. The number
of shares shown as being offered hereunder by the holder of the Series C
Preferred Stock is the number of shares registered by the Registration Statement
of which this Prospectus is a part with respect to shares issuable upon
conversion of and as dividends on the Series C Preferred Stock, as well as
shares underlying associated Warrants and Share Purchase Rights, pursuant to the
terms of the Registration Agreement.
The information included below is based upon information provided by the
Selling Security Holders. Because the Selling Security Holders may offer all,
some or none of their shares, no definitive estimate as to the number of shares
that will be held by the Selling Security Holders after such offering can be
provided.
<TABLE>
<CAPTION>
Number of shares of Common Stock
Beneficially Owned Prior to the
Selling Security Holder Offering
- -------------------------------------------------------------------
<S> <C>
JNC Opportunity Fund Ltd. 9,629,909 (1) (2) (3)
Wharton Capital Partners, Ltd. 431,250 (4)
-------------------
10,061,159
-------------------
<FN>
(1) Represents shares issuable upon a hypothetical conversion of 175,000 shares
of Series C Preferred Stock, with a stated value of $3,500,000, acquired on
April 30, 1998, 413,712 shares issuable upon the exercise of warrants, 217,199
shares issuable as dividends and 2,487,442 shares issuable pursuant to Share
Purchase Rights. Also represents shares issuable upon a hypothetical conversion
of 42,500 shares of Series B Convertible Preferred Stock, with a stated value of
$850,000, previously acquired on June 25, 1997, 340,000 shares issuable upon the
exercise of warrants, 99,999 shares issuable as dividends and 722,528 shares
issuable pursuant to Share Purchase Rights.
(2) The number of shares of Common Stock registered pursuant to the registration
statement of which this Prospectus is a part and the number of shares of Common
Stock offered hereby have been determined by agreement between the Company and
JNC. Because the number of shares of Common Stock that will ultimately be issued
to JNC upon conversion of the Series C Preferred Stock is dependent upon the
conversion formula described above, such number of shares (and therefore, the
number of shares of Common Stock offered hereby) cannot be determined at this
time.
(3) JNC has contractually agreed not to use its conversion rights with respect
to the Series C Preferred Stock to obtain in excess of 4.9% of the total
outstanding shares of Common Stock.
(4) Represents shares issuable upon the exercise of warrants and Share Purchase
Rights.
</FN>
</TABLE>
PLAN OF DISTRIBUTION
The shares of Common Stock offered hereby may be offered for resale by the
Selling Security Holders (or their donees, transferees or successors in
interest) from time to time in transactions for their own account (which may
include block transactions) on any national securities exchange or quotation
service on which the Common Stock may be listed or quoted at the time of sale,
<PAGE>
in the over-the-counter market, in transactions otherwise than on such exchanges
(including privately negotiated transactions) or in the over-the-counter market,
through the writing of options, or a combination of such methods of sale, at
fixed prices (which may be changed), at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Security Holders may effect such transactions by selling the
shares of Common Stock to or through broker-dealers, and such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the Selling Security Holders and/or the purchasers of shares for whom such
broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation as to a particular broker-dealer might be in excess of
customary commissions). From time to time the Selling Security Holder may engage
in short sales, including short sales against the box, puts and calls and other
transactions in securities of the Company or derivatives thereof, and may sell
and deliver the Common Stock in connection therewith. Further, except as set
forth herein, the Selling Security Holders are not restricted as to the number
of shares which may be sold at any one time, and it is possible that a
significant number of shares could be sold at the same time, which may have a
depressive effect on the market price of the Company's Common Stock. The Selling
Security Holders may also pledge shares of Common Stock as collateral for margin
accounts, and such shares could be resold pursuant to the terms of such
accounts. The Selling Security Holders and any dealers or agents participating
in the distribution of the Common Stock may be deemed to be "underwriters" as
defined in the Securities Act and any profit on the sale of the Common Stock by
them and any discounts, commissions or concessions received by any such dealers
or agents might be deemed to be underwriting discounts and commissions under the
Securities Act. The Company will not receive any proceeds of the sales of the
Common Stock by the Selling Security Holders.
To comply with the securities laws of certain jurisdictions, if applicable,
the Common Stock will be offered or sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain jurisdictions
the Common Stock may not be offered or sold unless they have been registered or
qualified for sale in such jurisdictions or an exemption from registration or
qualification is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Common Stock may not simultaneously engage in
market-making activities with respect to such securities for a period of two to
nine business days prior to the commencement of such distribution. In addition
to and without limiting the foregoing, each Selling Security Holder and any
other person participating in a distribution will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including without limitation Rules 10b-6 and 10b-7, which provisions may limit
the timing of purchases and sales of any of the securities by the Selling
Security Holders or any such other person. All of the foregoing may affect the
marketability of the Common Stock and the brokers' and dealers' ability to
engage in market-making activities with respect to these securities.
All expenses of the registration of the Common Stock will be paid by the
Company, including, without limitation, Commission filing fees and expenses of
compliance with state securities or "blue sky" laws; provided, however, that the
Selling Security Holders will pay all underwriting discounts and selling
commissions, if any. The Selling Security Holders will be indemnified by the
Company against certain civil liabilities, including certain liabilities under
the Securities Act, or will be entitled to contribution in connection therewith.
The Company will be indemnified by the Selling Security Holders against certain
civil liabilities, including certain liabilities under the Securities Act, or
will be entitled to contribution in connection therewith.
<PAGE>
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under provisions of the by-laws of the Company, each person who is or was a
director or officer of the Company shall be indemnified by the Company as of
right to the full extent permitted or authorized by the General Corporation Law
of Delaware, including against liabilities under the Securities Act of 1933.
Under such law, to the extent that such person is successful on the merits
of defense of a suit or proceeding brought against him by reason of the fact
that he is a director or officer of the Company, he shall be indemnified against
expenses (including attorneys' fees) reasonably incurred in connection with such
action. If unsuccessful in defense of a third-party civil suit or a criminal
suit is settled, such a person shall be indemnified under such law against both
(1) expenses (including attorneys' fees) and (2) judgments, fines and amounts
paid in settlement if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the Company, and
with respect to any criminal action, had no reasonable cause to believe his
conduct was unlawful.
If unsuccessful in defense of a suit brought by or in the right of the
Company, or if such suit is settled, such a person shall be indemnified under
such law only against expenses (including attorneys' fees) incurred in the
defense or settlement of such suit if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Company except that if such a person is adjudged to be liable in such suit for
negligence or misconduct in the performance of his duty to the Company, he
cannot be made whole even for expenses unless the court determines that he is
fairly and reasonably entitled to indemnity for such expenses.
The officers and directors of the Company are covered by officers and
directors liability insurance. The policy coverage is $5,000,000, which includes
reimbursement for costs and fees. There is a maximum deductible for officers and
directors under the policy of $75,000 for each claim. The Company has entered
into Indemnification Agreements with each of its officers and directors. The
Agreements provide for reimbursement for all direct and indirect costs of any
type or nature whatsoever (including attorneys' fees and related disbursements)
actually and reasonably incurred in connection with either the investigation,
defense or appeal of a Proceeding, as defined, including amounts paid in
settlement by or on behalf of an Indemnitee.
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 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 whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with this offering will be passed upon
for the Company by Blau, Kramer, Wactlar & Lieberman, P.C., Jericho, New York
11753. David H. Lieberman owns 20,000 shares of Common Stock and warrants to
purchase 37,500 shares of Common Stock at $2.18 per share.
EXPERTS
The consolidated financial statements incorporated by reference in this
Prospectus and elsewhere in the Registration Statement, to the extent and for
the periods indicated in their reports, have been audited by Grant Thornton LLP,
independent certified public accountants, and are included herein in reliance
upon the authority of said firm as experts in accounting and auditing in giving
said Reports.
<PAGE>
No dealer, salesperson, or other person has been authorized by the Company
to give any information or to make any representations other than those
contained in this Prospectus and, if given or made, such other information or
representations must not be relied upon as having been so authorized by the
Company. This Prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, any securities other than the securities to which it
relates, or an offer to or solicitation of any person in any jurisdiction in
which such offer or solicitation would be unlawful. Neither delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that the information herein is correct as of any time subsequent
to the date hereof.
VASOMEDICAL, INC.
7,724,826 Common Shares
PROSPECTUS
Dated: ________, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
<TABLE>
<S> <C>
Securities and Exchange Commission Filing Fee. . . . $ 3,063
Nasdaq Additional Listing Fee . . . . . . . . . . . 7,500
Legal Fees . . . . . . . . . . . . . . . . . . . . . 5,000
Accounting Fees . . . . . . . . . . . . . . . . . . 2,500
Miscellaneous . . . . . . . . . . . . . . . . . . . 937
---------
Total . . . . . . . . . . . . . . . . . . . . . $ 19,000
=========
</TABLE>
The Company will pay all of these expenses.
Item 15. Indemnification of Directors and Officers
Under provisions of the by-laws of the Company, each person who is or was
a director or officer of the Company shall be indemnified by the Company as of
right to the full extent permitted or authorized by the General Corporation Law
of Delaware.
Under such law, to the extent that such person is successful on the
merits of defense of a suit or proceeding brought against him by reason of the
fact that he is a director or officer of the Company, he shall be indemnified
against expenses (including attorneys' fees) reasonably incurred in connection
with such action. If unsuccessful in defense of a third-party civil suit or a
criminal suit is settled, such a person shall be indemnified under such law
against both (1) expenses (including attorneys' fees) and (2) judgments, fines
and amounts paid in settlement if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Company, and with respect to any criminal action, had no reasonable cause to
believe his conduct was unlawful.
If unsuccessful in defense of a suit brought by or in the right of the
Company, or if such suit is settled, such a person shall be indemnified under
such law only against expenses (including attorneys' fees) incurred in the
defense or settlement of such suit if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Company except that if such a person is adjudged to be liable in such suit for
negligence or misconduct in the performance of his duty to the Company, he
cannot be made whole even for expenses unless the court determines that he is
fairly and reasonably entitled to indemnity for such expenses.
The officers and directors of the Company are covered by officers and
directors liability insurance. The policy coverage is $5,000,000, which includes
reimbursement for costs and fees. There is a maximum deductible for officers and
directors under the policy of $75,000 for each claim. The Company has entered
into Indemnification Agreements with each of its officers and directors. The
Agreements provide for reimbursement for all direct and indirect costs of any
type or nature whatsoever (including attorneys' fees and related disbursements)
actually and reasonably incurred in connection with either the investigation,
defense or appeal of a Proceeding, as defined, including amounts paid in
settlement by or on behalf of an Indemnitee.
<PAGE>
Item 16. Exhibits
5 Opinion of Blau, Kramer, Wactlar & Lieberman, P.C.
23.1 Consent of Blau, Kramer, Wactlar & Lieberman, P.C. (included in Exhibit 5
hereof)
23.2 Consent of Grant Thornton LLP
24 Power of Attorney
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended (the
"Act"), each filing of the registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to 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.
(b) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than 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 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.
(c) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material
change to such information in the registration statement;
(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; and
(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.
<PAGE>
SIGNATURES
Pursuant to 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 for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf thereunto duly authorized, in Westbury, New
York on the 31st day of July, 1998.
VASOMEDICAL, INC.
By: /s/ Anthony Viscusi
--------------------------------
Anthony Viscusi, President, Chief Executive
Officer and Director (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Anthony Viscusi and Joseph A. Giacalone, and each
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities
indicated on July 31, 1998.
Signatures Title
- ---------- -----
/s/ Alexander G. Bearn Director
- ----------------------
Alexander G. Bearn
/s/ David S. Blumental Director
- ----------------------
David S. Blumenthal
/s/ Francesco Bolgiani Director
- ----------------------
Francesco Bolgiani
/s/ Abraham E. Cohen Chairman of the Board
- --------------------
Abraham E. Cohen
/s/ Joseph A. Giacalone Secretary and Treasurer (Principal
- ----------------------- Financial and Accounting Officer)
Joseph A. Giacalone
/s/ John C.K. Hui Senior Vice President and Director
- -----------------
John C. K. Hui
/s/ Kenneth W. Rind Director
- -------------------
Kenneth W. Rind
/s/ E. Donald Shapiro Director
- ---------------------
E. Donald Shapiro
/s/ Anthony Viscusi President, Chief Executive Officer and
- ------------------- Director (Principal Executive Officer)
Anthony Viscusi
/s/ Zhen-sheng Zheng Director
- --------------------
Zhen-sheng Zheng
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Vasomedical, Inc.
Form S-3 Registration Statement
E X H I B I T I N D E X
Page No. in Sequential
Exhibit Numbering of all Pages,
Number Exhibit Description including Exhibit Pages
- --------------------------------------------------------------------------------
5 Opinion of Blau, Kramer, Wactlar & Lieberman, P.C. . .
23.1 Consent of Blau, Kramer, Wactlar & Lieberman, P.C. . . See Exhibit 5
23.2 Consent of Grant Thornton LLP . . . . . . . . . . . .
24 Power of Attorney . . . . . . . . . . . . . . . . . . See signature page
EXHIBIT 5
[Letterhead of Blau, Kramer, Wactlar & Lieberman, P.C.]
July 31, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Gentlemen:
We have acted as counsel to Vasomedical, Inc., a Delaware corporation (the
"Company"), in connection with the Registration Statement on Form S-3 of the
Company, to be filed with the Securities and Exchange Commission on July 31,
1998 (the "Registration Statement"), relating to the registration under the
Securities Act of 1933, as amended, of 7,724,826 shares of the Company's Common
Stock, par value $.001 per share (the "Shares"), and the associated Share
Purchase Rights (the "Rights") to be sold pursuant to such Registration
Statement by certain security holders described in the Registration Statement.
In this connection, we have reviewed: (i) the Restated Certificate of
Incorporation and by-laws of the Company, as currently in effect; (ii) the
Registration Statement; (iii) the Rights Agreement dated as of May 11, 1995 (the
"Rights Agreement"), between the Company and American Stock Transfer & Trust
Company as Rights Agent; (iv) certain resolutions adopted by the Board of
Directors of the Company; and (v) such other documents, records and other
matters as we have deemed necessary or appropriate in order to give the opinions
set forth herein. We are familiar with the proceedings heretofore taken by the
Company in connection with the authorization, registration, issuance and sale of
the Shares and associated Rights. We have, with your consent, relied as to
factual matters on certificates or other documents furnished by the Company or
its officers and by governmental authorities and upon such other documents and
data that we have deemed appropriate. We have assumed the authenticity of all
documents submitted to us as originals and the conformity to original documents
of all documents submitted to us as copies.
We are members of the Bar of the State of New York and express no opinion
as to the laws of any jurisdiction other than the laws of the State of New York
and the General Corporation Law of the State of Delaware.
<PAGE>
Based on such examination and review and subject to the foregoing, we are
of the opinion that: (i) the Shares, when sold in the manner set forth in the
Registration Statement, will be legally issued, fully paid and nonassessable;
and (ii) the Rights issued together with the Shares, assuming issuance of the
Rights in accordance with the terms of the Rights Agreement, will be validly
issued and binding obligations of the Company and entitled to the benefits of
the Rights Agreement.
We consent to the use of this opinion as an Exhibit to the Registration
Statement and to the reference to us under the caption "Legal Matters" in the
Prospectus that is a part of the Registration Statement. In giving such consent,
we do not hereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Blau, Kramer, Wactlar & Lieberman, P.C.
BLAU, KRAMER, WACTLAR & LIEBERMAN, P.C.
Exhibit 23.2
Consent of Independent Certified Public Accountants
We have issued our report dated July 28, 1998, accompanying the consolidated
financial statements of Vasomedical, Inc. and Subsidiary included in the Annual
Report on Form 10-K for the year ended May 31, 1998 which is incorporated by
reference in this Registration Statement. We consent to the incorporation by
reference in the Registration Statement of the aforementioned report and to the
use of our name as it appears under the caption "Experts".
/s/ Grant Thornton LLP
GRANT THORNTON LLP
Melville, New York
July 31, 1998
