File No. 333-30316
PROSPECTUS
POSITRON CORPORATION
78,732,990 SHARES
COMMON STOCK
The selling stockholders identified in this prospectus are offering
78,732,990 shares of common stock, 27,560,000 of which underlie warrants to
purchase common stock which have not yet been exercised. All these securities
are being registered for resale only. Positron will not receive any of the
proceeds from the sale of shares by the selling stockholders.
Positron's common stock is traded on the over-the-counter securities market
("pink sheets"), and quoted on the NASD's Electronic Bulletin Board under the
symbol "POSC.OB" As of August 8, 2000, the last reported sales price for the
common stock on the Electronic Bulletin Board was $0.60 per share.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 3.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS August 10, 2000
Relates to Form SB-2
Registration No. 333-30316
Filed under Rule 424(b)(3) and (c)
SUPPLEMENT TO PROSPECTUS OF POSITRON CORPORATION
The following information supplements the prospectus, dated February 25,
2000, and as supplemented on April 28, 2000 and thereafter on May 16, 2000, of
Positron Corporation related to 78,732,990 shares of its Common Stock. This
further supplement should be read in conjunction with the prospectus and initial
supplement.
The following information was included in our quarterly report on Form
10QSB for the three months ended June 30, 2000, as filed with the Securities and
Exchange Commission on August 8, 2000.
THE DATE OF THIS SUPPLEMENT IS August 10, 2000
UNAUDITED FINANCIAL INFORMATION
The financial data presented below for the three months ended, and as of,
June 30, 2000 are derived from our unaudited consolidated financial statements.
Such unaudited consolidated financial statements reflect all adjustments which
are, in the opinion of management, necessary and of a normal recurring nature to
present fairly the operating results for the interim periods reported. The
results of operations for the three months ended June 30, 2000 are not
necessarily indicative of the results to be expected for the fiscal year ending
December 31, 2000. The consolidated balance sheet at December 31, 1999 has been
derived from the audited financial statements at that date but does not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. This information should be read
in conjunction with the consolidated financial statements and notes thereto
included elsewhere in the prospectus.
<PAGE>
POSITRON CORPORATION
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
June December
30, 2000 31, 1999
ASSETS (Unaudited) (Note)
------ ------------ ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,623 $ 7,180
Accounts receivable, net 79 101
Inventories 3,153 683
Prepaid expenses 44 108
Other current assets 308 150
------------ ----------
Total current assets 8,207 8,222
Plant and equipment, net 216 110
------------ ----------
Total assets $ 8,423 $ 8,332
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable, trade and accrued liabilities $ 3,229 $ 3,766
Customer deposits 900 --
Unearned revenue 77 168
------------ ----------
Total current liabilities 4,206 3,934
Other liabilities 34 45
------------ ----------
Total liabilities 4,240 3,979
------------ ----------
Stockholders' equity:
Series A Preferred Stock: $1.00 par value; 8% cumulative,
convertible, redeemable; 5,450,000 shares
authorized; 980,942 shares issued and outstanding
at June 30, 2000 and December 31, 1999. 981 981
Common Stock: $0.01 par value; 100,000,000 shares
authorized; 57,969,177 and 57,534,710 shares issued and
57,909,021 and 57,474,554 shares outstanding at June 30, 2000
and December 31, 1999, respectively. 580 575
Additional paid-in capital 54,211 53,917
Subscription receivable (30) (30)
Accumulated deficit (51,544) (51,075)
Treasury Stock: 60,156 shares at cost (15) (15)
------------ ----------
Total stockholders' equity 4,183 4,353
------------ ----------
Total liabilities and stockholders' equity $ 8,423 $ 8,332
============ ==========
</TABLE>
Note: The balance sheet at December 31, 1999 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. See accompanying notes.
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3
<PAGE>
POSITRON CORPORATION
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------- ----------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
System sales $ 1,200 $ -- 2,000 $ --
Upgrades -- 61 -- 138
Service and component 341 392 710 703
---------- ---------- ---------- ----------
Total revenue: 1,541 453 2,710 841
---------- ---------- ---------- ----------
Costs of sales and services:
System sales 929 -- 1,327 --
Upgrades -- 21 -- 49
Service and component 156 133 271 247
---------- ---------- ---------- ----------
Total costs of sales and services: 1,085 154 1,598 296
---------- ---------- ---------- ----------
Gross profit 456 299 1,112 545
---------- ---------- ---------- ----------
Operating expenses:
Research and development 362 60 617 129
Selling and marketing 270 -- 518 --
General and administrative 200 145 595 236
---------- ---------- ---------- ----------
Total operating expenses 832 205 1,730 365
---------- ---------- ---------- ----------
Income (loss) from operations (376) 94 (618) 180
Other income (expense)
Interest income (expense) 64 (48) 149 (100)
---------- ---------- ---------- ----------
Total other income (expense) 64 (48) 149 (100)
---------- ---------- ---------- ----------
Net income (loss) $ (312) $ 46 $ (469) $ 80
========== ========== ========== ==========
Basic earnings (loss) per common share $ (0.01) $ 0.00 $ (0.01) $ 0.00
Weighted average number of basic
common shares outstanding 57,692 15,726 57,583 15,652
Diluted earnings (loss) per common share $ (0.01) $ 0.00 $ (0.01) $ 0.00
Weighted average number of diluted
common shares outstanding 57,692 16,396 57,583 16,322
</TABLE>
See accompanying notes
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4
<PAGE>
POSITRON CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Series A
Preferred Stock Common Stock Additional Sub- Accum- Trea-
--------------- -------------- Paid-In scription ulated Sury
Shares Amount Shares Amount Capital Receivable Deficit Stock Total
------ ------- ------ ------- -------- ------------ --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
December
31, 1999 981 $ 981 57,535 $ 575 $ 53,917 $ (30) $(51,075) $ (15) $4,353
Net loss (469) (469)
Conversion
of debt to
equity 434 5 294 299
------ ------- ------ ------- -------- ------------ --------- ------- -------
Balance at
June
30, 2000 981 $ 981 57,969 $ 580 $ 54,211 $ (30) $(51,544) $ (15) $4,183
====== ======= ====== ======= ======== ============ ========= ======= =======
</TABLE>
See accompanying notes
================================================================================
5
<PAGE>
POSITRON CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------- ----------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (312) $ 46 $ (469) $ 80
Adjustment to reconcile net income (loss)
to net cash used in operating activities
Depreciation 19 9 34 24
Changes in operating assets and
liabilities:
Accounts receivable 775 1 22 (102)
Inventory (2,152) -- (2,470) 6
Prepaid expenses 31 -- 64 --
Other current assets 85 -- (158) --
Accounts payable, trade and
accrued liabilities (322) (25) (238) (44)
Customer deposits 900 -- 900 --
Unearned revenue (32) (37) (91) 30
Other liabilities (5) -- (11) --
---------- ---------- ---------- ----------
Net cash used in operating activities (1,013) (6) (2,417) (6)
Cash flows from investing activities:
Capital expenditures (124) -- (140) --
---------- ---------- ---------- ----------
Net cash used in investing activities (124) -- (140) --
---------- ---------- ---------- ----------
Net decrease in cash and cash equivalents (1,137) (6) (2,557) (6)
Cash and cash equivalents, beginning 5,760 8 7,180 8
of period ---------- ---------- ---------- ----------
Cash and cash equivalents, end of period $ 4,623 $ 2 $ 4,623 $ 2
========== ========== ========== ==========
</TABLE>
See accompanying notes
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6
<PAGE>
POSITRON CORPORATION
SELECTED NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
-----------------------
The accompanying unaudited interim financial statements have been prepared
in accordance with generally accepted accounting principles and the rules
of the U.S. Securities and Exchange Commission, and should be read in
conjunction with the audited financial statements and notes thereto
contained in the Company's Annual Report of Form 10-KSB for the year ended
December 31, 1999. In the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary for a fair
presentation of financial position and the results of operations for the
interim periods presented have been reflected herein. The results of
operations for interim periods are not necessarily indicative of the
results to be expected for the full year. Notes to the financial statements
which would substantially duplicate the disclosure contained in the audited
financial statements for the most recent fiscal year ended December 31,
1999, as reported in the Form 10-KSB, have been omitted.
2. COMPREHENSIVE INCOME
---------------------
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standard ("SFAS") No. 130, "Reporting Comprehensive Income."
Comprehensive income includes such items as unrealized gains or losses on
certain investment securities and certain foreign currency translation
adjustments. The Company's financial statements include none of the
additional elements that affect comprehensive income. Accordingly,
comprehensive income and net income are identical.
3. EARNINGS PER SHARE
--------------------
Basic earnings per common share are based on the weighted average number of
common shares outstanding in each year and after preferred stock dividend
requirements. Diluted earnings per common share assume that any dilutive
convertible preferred shares outstanding at the beginning of each year were
converted at those dates, with related interest, preferred stock dividend
requirements and outstanding common shares adjusted accordingly. It also
assumes that outstanding common shares were increased by shares issuable
upon exercise of those stock options for which market price exceeds
exercise price, less shares which could have been purchased by the Company
with related proceeds. The convertible preferred stock and outstanding
stock options and warrants were not included in the computation of diluted
earnings per common share for 2000 since it would have resulted in an
antidilutive effect.
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------- --------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
--------- --------- --------- ---------
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
Numerator:
Net income (loss) $ (312) $ 46 $ (469) $ 80
Denominator:
Denominator for basic earnings per
share-weighted average shares 57,692 15,726 57,583 15,652
Effect of dilutive securities:
Convertible Series A preferred stock -- 670 -- 670
--------- --------- --------- ---------
Dilutive potential common shares -- 670 -- 670
--------- --------- --------- ---------
Denominator for diluted earnings per
share-adjusted weighted average
shares and assumed conversions 57,692 16,396 57,583 16,322
========= ======== ========== =========
Basic earnings (loss) per share $ (0.01) $ 0.00 $ (0.01) $ 0.00
========= ======== ========== =========
Diluted earnings (loss) per share $ (0.01) $ 0.00 $ (0.01) $ 0.00
========= ======== ========== =========
</TABLE>
7
<PAGE>
4. INCOME TAX
-----------
The difference between the Federal statutory income tax rate and the
Company's effective income tax rate is primarily attributable to increases
in valuation allowances for deferred tax assets relating to net operating
losses.
5. IMATRON TRANSACTION
--------------------
In May 1998, the Company entered into an agreement (the "Imatron
Transaction") with Imatron Inc. ("Imatron"), pursuant to which in January
1999, Imatron acquired a majority ownership of the Company. In conjunction
with the Imatron Transaction, Imatron made working capital advances to the
Company of $600,000 to enable the Company to meet a portion of its current
obligations.
Upon consummation of the Imatron Transaction in January 1999, Imatron
acquired a majority ownership of the outstanding common stock of the
Company on a fully-diluted and as-if-converted basis (excluding
out-of-the-money warrants and options determined at the time of issuance of
the shares of Imatron) and was issued nine million shares of the Company's
common stock in return for a nominal cash payment in the amount of $100.
Imatron, in addition to providing limited working capital financing, has
agreed to support the Company's marketing program particularly with regard
to Imatron's affiliate, Imatron Japan, Inc. by agreeing to make all
reasonable efforts to cause the placement of 10 POSICAM systems over the
next three years. During 1998 the Company shipped a POSICAM system to
Imatron Japan as the first delivery under a three-year distribution
agreement entered into during 1997. Imatron Japan, an affiliate of Imatron,
is a major distributor for Imatron's Ultrafast CT and for the products of
certain other high technology companies. Imatron owns a 24 percent minority
interest in Imatron Japan.
Imatron has also agreed to help facilitate the recapitalization of the
Company and to support its re-entry into the medical imaging market by
using its best efforts, after the share issuance closing date, to arrange
for additional third-party equity financing for the Company over an
eighteen-month period in an aggregate amount of at least $8,000,000.
In connection with the Imatron Transaction, the Company, Imatron and two
then current lenders to the Company, Uro-Tech and ProFutures, entered into
certain agreements whereby (a) ProFutures waived all past defaults and
extended the maturity of the ProFutures Loan in return for a $50,000
payment and the issuance of warrants to purchase 1,150,000 shares of the
Company's common stock at $0.25 per share. The ProFutures Loan was
subsequently repaid in November 1998; (b) Imatron agreed to subordinate its
loan to the ProFutures Loan, (c) Uro-Tech agreed to subordinate its loan
(with a current balance of approximately $792,000 plus accrued interest
payable of approximately $272,000 at December 31, 1998) to Imatron's loan.
In August of 1999, Imatron successfully completed raising a net $11.4
million of equity capital for the Company. This reduced Imatron's current
ownership in the company to approximately 18%. Consistent with the
completion of the financing, the Company has repaid the Imatron bridge loan
plus interest and paid the Uro-tech loan plus interest. The Company's
President has resigned as Imatron's CFO and Imatron no longer has operating
or voting control of the Company.
================================================================================
8
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company is including the following cautionary statement in this Quarterly
Report on Form 10-QSB to make applicable and utilize the safe harbor provision
of the Private Securities Litigation Reform Act of 1995 regarding any
forward-looking statements made by, or on behalf of, the Company. Forward-
looking statements include statements concerning plans, objectives, goals,
strategies, future events or performance and underlying assumptions and
other statements which are other than statements of historical facts. Certain
statements contained herein are forward-looking statements and, accordingly,
involve risks and uncertainties which could cause actual results or outcomes to
differ materially from those expressed in the forward-looking statements.
The Company's expectations, beliefs and projections are expressed in good faith
and are believed by the Company to have a reasonable basis, including without
limitations, management's examination of historical operating trends, data
contained in the Company's records and other data available from third parties,
but there can be no assurance that management's expectation, beliefs or
projections will result, or be achieved, or be accomplished.
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2000
--------------------------------------------------------------------------------
& 1999.
--------
We generated a loss of $312,000 for the three months ended June 30, 2000
compared to income of $46,000 for the three months ended June 30, 1999. Our
current year loss was primarily the result of the hiring of additional personnel
and increased operating expenses as we resumed full operation and production.
We generated revenue of $1,200,000 during the three months ended June 30, 2000
on one system sale versus no system sales revenue for the same period in 1999.
We received no upgrade revenue for the quarter versus $61,000 in 1999. In
addition, service and component sales revenue decreased $51,000 to $341,000 in
2000 from $392,000 during the same period in 1999 due to a decrease in service
work. Service revenue decreases are attributable to normal fluctuations in
service.
Our gross profit for the three months ended June 30, 2000 increased $157,000 to
$456,000 compared to $299,000 for the same three months in 1999. This increase
was due primarily to the sale of a system during the quarter ended June 30,
2000.
Total operating expense increased $627,000 to $832,000 for the three months
ended June 30, 2000 from $205,000 for the same three months in 1999. The
increase results primarily from significant staff additions and related
operating expenditures in all areas as we went back into full operation and
production.
Net interest income was $64,000 for the three months ended June 30, 2000 as
compared to net interest expense of $48,000 for the same three months in 1999
due primarily to the investment interest in 2000 on proceeds of equity funding
from August of 1999. During the second quarter of 1999, interest was paid on
the Imatron and Uro-Tech loans.
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2000 &
--------------------------------------------------------------------------------
1999.
-----
We generated a loss of $469,000 for the six months ended June 30, 2000 compared
to income of $80,000 for the six months ended June 30, 1999. Our current year
loss was primarily the result of the hiring of additional personnel and
increased operating expenses as we resumed full operation and production.
We generated revenue of $2,000,000 during the six months ended June 30, 2000 on
the sale of two systems versus no system sales revenue for the same period in
1999. We received no upgrade revenue during 2000 versus $138,000 for the six
months ended June 30, 1999. In addition, service and component sales revenue
increased $7,000 to $710,000 in 2000 from $703,000 during the same period in
1999 due to increased service work. Service revenue increases are attributable
to normal fluctuations in service.
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9
<PAGE>
Our gross profit for the six months ended June 30, 2000 increased $567,000 to
$1,112,000 compared to $545,000 for the same six months in 1999. This increase
was due primarily to the sale of two systems during the six months ended June
30, 2000.
Total operating expense increased $1,365,000 to $1,730,000 for the six months
ended June 30, 2000 from $365,000 for the same period in 1999. The increase
results primarily from significant staff additions and related operating
expenditures in all areas as we went back into full operation and production.
Net interest income was $149,000 for the six months ended June 30, 2000 as
compared to net interest expense of $100,000 for the same six months in 1999,
due primarily to the investment interest earned in the first six months of 2000
on proceeds of equity funding from August of 1999. During the first six months
of 1999, interest was paid on the Imatron and Uro-Tech loans.
FINANCIAL CONDITION
--------------------
As a result of the equity funding in August 1999, (see 5. Imatron Transaction
above), we began hiring personnel and incurring increasing operating expenses as
we resumed full operation and production. Our return to full operation resulted
in the sale of two systems in 2000, but also resulted in increased overhead and
operating expenses.
Despite the sale of the two systems, we have previously been unable to sell our
POSICAMTM systems in sufficient quantities to be profitable and there is no
guarantee that we will reach a system sales level that will generate profits on
a consistent basis. Consequently, we have sustained substantial accumulated
losses. Due to the sizeable selling prices of our systems and the limited
number of systems sold or placed in service each year, our revenues have
fluctuated significantly year-to-year. We have an accumulated deficit of
$51,544,000 at June 30, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
POSITRON CORPORATION
(Registrant)
Date: August 8, 2000 /s/ Gary H. Brooks
----------------------
Gary H. Brooks
President
(Duly Authorized Officer and
Principal Accounting Officer)
<PAGE>
