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As filed with the Securities and Exchange Commission on February 26, 1999
Registration No. 333-35663
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
POST-EFFECTIVE AMENDMENT NO. 3
TO
FORM S-1
ON
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
NETMED, INC.
(Exact name of Registrant as specified in its charter)
Ohio 5047 31-1282391
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction Classification Code Number) Identification No.)
of incorporation
or organization)
------------------------
6189 Memorial Drive
Dublin, Ohio 43107
(614) 793-9356
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
------------------------
David J. Richards, President
NetMed, Inc.
6189 Memorial Drive
Dublin, Ohio 43017
(614) 793-9356
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
Copies of Correspondence to:
William J. Kelly, Jr., Esq.
Porter, Wright, Morris & Arthur
41 South High Street
Columbus, Ohio 43215
(614) 227-2136
------------------------
Approximate date of commencement of proposed sale of the securities to the
public:___________________ From time to time after the Effective Date of this
Registration Statement, as determined by market conditions.
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 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, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THIS POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(C) OF THE
SECURITIES ACT OF 1933 MAY DETERMINE.
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PROSPECTUS
1,500,000 SHARES
NETMED, INC.
6189 Memorial Drive
Dublin, Ohio 43017
(614) 793-9356
COMMON STOCK
This prospectus covers the resale of common shares which we may issue to CPR
(USA), Inc., LibertyView Fund, LLC, and LibertyView Plus Fund if they convert
their Series A, 6% Convertible Preferred Stock into shares of common stock.
Our common stock is currently listed on the American Stock Exchange under the
symbol "NMD." On February 24, 1999, the last reported sale price of our common
stock on the American Stock Exchange was $0.1875 per share.
THERE ARE RISK FACTORS THAT SHOULD BE CONSIDERED BEFORE PURCHASING SHARES IN
THIS OFFERING. SEE "RISK FACTORS" BEGINNING ON PAGE 3.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is February 26, 1999.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary........................................................... 3
Risk Factors................................................................. 3
Available Information........................................................ 7
Information Incorporated By Reference........................................ 8
Forward Looking Statements................................................... 9
The Company.................................................................. 9
Recent Developments.......................................................... 10
Use of Proceeds.............................................................. 11
Selling Shareholder.......................................................... 11
Plan of Distribution......................................................... 12
Description of Capital Stock................................................. 12
Certain Provisions Of Articles and Regulations............................... 13
Experts...................................................................... 15
Legal Matters................................................................ 16
</TABLE>
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PROSPECTUS SUMMARY
This prospectus covers the resale of common shares of NetMed, Inc. by
CPR (USA), Inc., LibertyView Fund, LLC, and LibertyView Plus Fund. All of the
selling shareholders are affiliates of Banque CPR. We will refer to these
selling shareholders as "CPR" throughout this prospectus.
We may issue the shares to CPR if they convert their Series A, 6%
Convertible Preferred Stock. Pursuant to an exchange agreement between us and
CPR on January 22, 1999, 97,662 shares of preferred stock were issued in
exchange for debentures issued by us in August, 1997. We expect to record
approximately $455,000 in issuance costs in connection with the exchange, which
will be reflected as a preferred dividend on our financial statements for the
quarter ending March 31, 1999. This preferred dividend charge does not effect
our cash flows.
The shares may be offered from time to time by CPR. We will pay all
expenses of the registration. However, any brokers' or underwriters' fees or
commissions will be paid by CPR. We will not receive any proceeds from the sale
of the shares by CPR.
CPR has not advised us of any specific plans for the distribution of the
shares covered by this prospectus. However, we anticipate that the shares will
be sold from time to time primarily in transactions on the American Stock
Exchange at the then current market price, although sales may also be made in
negotiated transactions or otherwise. CPR and the brokers and dealers through
whom sale of the shares may be made may be deemed to be "underwriters" within
the meaning of the Securities Act of 1933 and their commissions or discounts and
other compensation may be regarded as underwriters' compensation. See "Plan of
Distribution."
RISK FACTORS
Investment in the securities being sold involves a high degree of risk,
including, but not limited to, the risk factors described below. Prospective
investors should carefully consider the following risk factors, in addition to
the other information in this prospectus, in evaluating an investment in the
securities sold.
WE ARE DEPENDENT ON NEUROMEDICAL SYSTEMS, INC.
BECAUSE THEY OWN THE TECHNOLOGY WE SELL
While Neuromedical Systems has granted us exclusive rights with respect to
the marketing of the PAPNET Testing System and service in certain geographic
territories, we have no ownership rights in the PAPNET technology. Our PAPNET
business is dependent upon a number of factors, many of which are controlled by
Neuromedical Systems. These factors include:
* maintaining the PAPNET Testing System's compliance with FDA and other
regulatory requirements
* maintenance of the technological advantages of the PAPNET Testing System
* maintenance of product liability insurance
* the ability to manufacture and deliver the equipment required to operate
the PAPNET Testing System
We obtain all of the information relating to the PAPNET Testing System
and service from Neuromedical Systems, and in most cases cannot independently
verify this information. Therefore, we are dependent on Neuromedical Systems to
accurately report the results of clinical studies and other data relating to the
capabilities and performance of the PAPNET Testing System.
FINANCIAL PROBLEMS AT NEUROMEDICAL SYSTEMS COULD IMPACT OUR LICENSE
Neuromedical Systems is in a stage of development that will likely
require additional funding for its operations. In the event that Neuromedical
Systems should fail to perform in any of these areas, or in any others that
could affect its licensees, such failure could have an adverse effect on us and
our business.
Additional risks relating to the business of Neuromedical Systems which
may have an impact on
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us are set forth in Neuromedical Systems's periodic
reports filed with the SEC, including its Annual Report on Form 10-K.
OUR LICENSE AGREEMENTS LIMIT THE MARKETING OF THE OUR SERVICES
Our marketing rights for the PAPNET Testing System and the revenues
generated by these activities are governed by the terms of our license from
Neuromedical Systems. The license imposes significant territorial and other
restrictions on our marketing rights.
These restrictions may limit our potential for growth and our ability to attract
new customers.
ISSUANCE OF ADDITIONAL EQUITY SECURITIES COULD DILUTE YOUR INTEREST
Terms of our preferred shares issued by an OxyNet subsidiary include
the right to exchange these for our common stock. This may have a dilutive
effect on our common shareholders. See "Recent Developments."
If we issue equity securities to raise funds, each current
shareholder's interest may be reduced. Further, such equity securities may have
rights, preferences or privileges senior to the common shares.
WE HAVE NEVER PAID DIVIDENDS
We have not paid and do not anticipate paying any cash dividends in the
foreseeable future. We intend to retain future earnings for the development and
expansion of our business. We have accumulated substantial losses since our
inception. There can be no assurance that our operations will result in
sufficient revenues to enable us to operate at profitable levels or to generate
positive cash flow.
THE CONCENTRATION OF OWNERSHIP OF THE COMMON
SHARES MAY LIMIT YOUR ABILITY TO INFLUENCE MATTERS
Our directors, executive officers and principal shareholders (5% or
greater) collectively beneficially own or have the right to acquire under
currently exercisable options approximately 25% of the outstanding common
shares. As a result, these shareholders will be able to exercise significant
influence over matters requiring shareholder approval, including the election of
directors and approval of significant corporate transactions. Such concentration
of ownership may have the effect of delaying or preventing a change in control.
We had 11,987,605 common shares outstanding as of December 31, 1998.
Approximately 1,925,000 shares are held by affiliates of NetMed who will be
entitled to resell them only pursuant to a registration statement under the
Securities Act of 1933 or an applicable exemption from registration. In August
1997, we sold $3 million in principal amount of debentures convertible into
common shares at a discount to the market price at the time of conversion. The
debentures that were not converted into common stock were exchanged for
preferred stock on January 22, 1999. If the $1,467,619.29 in stated value of the
preferred stock issued in the exchange were converted at the prevailing market
price on that date approximately 7,827,000 additional shares of common stock
would be issued. This prospectus covers the resale of such shares to the public.
If CPR converts its preferred stock into more common shares than are registered
under the registration statement of which this prospectus is a part, we have
agreed to file an new registration statement to permit resale of the balance of
the common shares that may be issued on conversion of the preferred stock. Such
resales may adversely affect the pricing and volatility of trading in the common
shares. See "Selling Shareholders."
POSSIBLE DELISTING OF OUR SHARES FROM THE AMERICAN STOCK EXCHANGE
Although the common shares are currently listed for trading on the
American Stock Exchange, trading volume has been limited. There can be no
assurance that there will continue to be an active and liquid trading market.
The stock market has experienced extreme price and volume fluctuations and
volatility that has particularly affected the market prices of many technology,
emerging growth and developmental stage companies. Such fluctuations and
volatility have often been unrelated or disproportionate to the operating
performance of such companies. Factors such as announcements of the introduction
of new or enhanced services or related products by us or our competitors may
have a significant impact on the market price of the common shares.
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In August 1998, the staff of the American Stock Exchange recommended
that the common shares be delisted from trading on the Exchange because of our
failure to meet minimum financial requirements for continued listing. We
appealed this determination to the Board of Governors of the Exchange, which has
permitted our continued listing on the Exchange until March 31, 1999, when our
listing will be again reviewed. There can be no assurance that our common shares
will continue to be listed on the Exchange. If the common shares are delisted,
it is likely that the common shares will be quoted on the National Association
of Securities Dealers, Inc. (Nasdaq) Bulletin Board.
EXTREME VOLATILITY OF MEDICAL TECHNOLOGY COMPANIES' SECURITIES
Market prices of securities of medical technology companies, including
our common shares, have experienced significant volatility from time to time.
There may be volatility in the market price of our common shares due to factors
that may not relate to our performance. Various factors and events, such as
announcements by us or our competitors concerning new product developments,
governmental approvals, regulations or actions, developments or disputes
relating to patent or proprietary rights and public concern over product
liability may have a significant impact on the market price of our common
shares.
ADDITIONAL SALES REQUIREMENTS FOR LOW STOCK PRICE AND THE PENNY STOCK RULES
If the Exchange delisted our common shares, trading in the shares could
become subject to Rule 15g-9 under the Securities Exchange Act of 1934. This
rule imposes additional sales practice requirements on broker-dealers who sell
so-called "penny" stocks to persons other than established customers and
"accredited investors." Generally, accredited investors are individuals with a
net worth of more than $1,000,000 or annual incomes exceeding $200,000, or
$300,000 together with their spouses. For transactions covered by this rule, a
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction before
sale. Consequently, the rule may adversely affect the ability of broker-dealers
to sell our shares in the secondary market.
Subject to some exceptions, the Commission's regulations define a
"penny stock" to be any non-exchange listed equity security that has a market
price of less than $5.00 per share, or with an exercise price of less than $5.00
per share. Unless exempt, the rules require delivery, prior to any transaction
in a penny stock, of a disclosure schedule relating to the penny stock market
and the associated risks. The rules also require disclosure about commissions
payable to both the broker-dealer and the registered representative and current
quotations for the securities. Finally, the rules require that broker-dealers
send monthly statements disclosing recent price information for the penny stock
held in the account and information on the limited market in penny stocks.
If our common shares became subject to the rules applicable to penny
stocks, the market liquidity for our common shares could be adversely affected.
GOVERNMENT REGULATION OF OUR SERVICES CAN SLOW
DOWN OR IMPEDE OUR ABILITY TO SELL OUR EXISTING OR
NEW SERVICES
Both our and Neuromedical Systems' services, products and manufacturing
activities are subject to extensive and rigorous government regulation,
including the provisions of the Medical Device Amendment to the Federal Food,
Drug and Cosmetic Act. Sales to some foreign countries are also subject to
government regulations. Failure to comply with applicable regulatory
requirements can result in fines, suspensions of approvals, seizures or recalls
of products, operating restrictions and criminal prosecutions. Furthermore,
changes in existing regulations or adoption of new regulations could prevent us
or Neuromedical Systems from obtaining, or affect the timing of, future
regulatory approvals. The effect of governmental regulation may be to delay for
a considerable period of time or to prevent the marketing and/or full
commercialization of future products or services that we or Neuromedical Systems
may develop and/or impose costly requirements on us or Neuromedical Systems.
The process of obtaining required regulatory approvals can be lengthy,
expensive and uncertain. Moreover, regulatory approvals, if granted, may include
significant limitations on the indicated uses for which a product may be
marketed. The FDA
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actively enforces regulations prohibiting marketing without
compliance with the premarket approval provisions of products and conducts
periodic inspections to determine compliance with Good Manufacturing Practice
regulations. There can be no assurance that either we or Neuromedical Systems
will be able to obtain regulatory approvals of any products on a timely basis or
at all. Delays in receipt of or failure to receive such approvals or loss of
previously received approvals would adversely affect the marketing of
Neuromedical Systems' and our proposed products. There can also be no assurance
that additional regulations will not be adopted or current regulations amended
in such a manner as will materially adversely effect Neuromedical Systems or
NetMed.
THIRD PARTY REIMBURSEMENT FOR OUR SERVICES MAY
AFFECT THE PRICING AND ATTRACTIVENESS OF OUR
SERVICES
In the United States, many Pap smears are currently paid for by the
patient. Further, the level of reimbursement by third-party payers that do
provide reimbursement differ considerably. Third-party payers, such as,
Medicare/Medicaid, private health insurance, health maintenance organizations,
health administration authorities in foreign countries and other organizations
may affect the pricing or relative attractiveness of our products and services
by regulating the maximum amount of reimbursement for products or services
provided by us or by not providing any reimbursement at all. Restrictions on
reimbursement may limit the price which we can charge for our products and
services or reduce the demand for them. In the case of PAPNET testing, if the
level of such reimbursement is significantly below what laboratories charge
patients to perform the test, the size of the potential market available to us
may be reduced. There can be no assurance of the extent to which costs of PAPNET
testing will become reimbursable or that the level of reimbursement will be
sufficient to permit us to generate substantial revenues in our PAPNET business.
LACK OF OPERATING HISTORY AND ABSENCE OF EARNINGS
We are in the early stage of our operations. Therefore we are subject
to risks incident to any new business, including the absence of earnings. We
have to date had limited income from operations, and as of September 31, 1998
have a retained deficit of $6,380,911. We have to date focused our efforts
primarily on the marketing of the PAPNET(R) Testing System, a product we license
from Neuromedical Systems, although we also intend to complete development and
begin selling a medical oxygen concentration system for home use, known as the
OxyNet(R) system . Until a successful commercial launch of the oxygen product
(which is not assured) we will be dependent upon the successful marketing of the
PAPNET System for revenues.
LACK OF ADEQUATE FUNDS; NEED FOR ADDITIONAL CAPITAL
We will likely incur substantial expenditures during 1999 to complete
development and commercialization of the OxyNet oxygen concentrator. We do not
currently have adequate funds to accomplish this objective, and anticipate that
we may need to raise additional capital in 1999. We are unsure whether capital
will be available at that time.
DEPENDENCE ON MAINTAINING PATENTS AND CONFIDENTIALITY
The technologies underlying the PAPNET System and the OxyNet oxygen
concentrator are protected by various patents. There can be no assurance that
these patents will afford protection from material infringement by third parties
or that such patents will not be challenged. We and Neuromedical Systems also
rely on trade secrets and proprietary know-how, which we seek to protect, in
part, through confidentiality agreements with employees, consultants and other
parties. All of our employees, with the exception of clerical employees, are
required to sign a confidentiality agreement with us. To date, all employees
required to sign confidentiality agreements have done so. There can be no
assurance that these agreements will not be breached, that there will be
adequate remedies for any breach or that our trade secrets will not otherwise
become known to, or independently developed by, competitors. Litigation is
currently pending between Neuromedical Systems and a competitor over alleged
infringement of Neuromedical Systems's patents.
There has been extensive litigation in the medical device industry
regarding patents and other intellectual property rights. Although patent and
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intellectual property disputes in the medical device area have often been
settled through licensing or similar arrangements, costs associated with such
arrangements may be substantial. There can be no assurance that necessary
licenses would be available to Neuromedical Systems or us on satisfactory terms
or at all. Adverse determinations as to the PAPNET and OxyNet patents could:
* limit or destroy the value of our license rights to these technologies
* subject us to significant liabilities from third parties
* require us to seek licenses from third parties
* prevent us from manufacturing or selling these products
Any of these determinations could have a material adverse effect on our
business, financial condition and results of operations.
WE ARE DEPENDENT UPON THE SALE OF THE PAPNET SYSTEM
Until successful completion and sale of the OxyNet system, if ever, our
performance will depend upon sale of the PAPNET System. The extent of, and rate
at which, market acceptance and penetration are achieved are functions of many
variables including, but not limited to:
* price
* effectiveness
* acceptance by patients, physicians and laboratories
* manufacturing
* slide processing and training capacity
* reimbursement practice
* marketing and sales efforts
There can be no assurance that the PAPNET System will achieve or maintain
acceptance in our target markets.
INTENSE COMPETITION FROM DEVELOPING SYSTEMS
We are aware of several companies that either have developed or are
developing systems that are competitive with the PAPNET System and other
technologies targeted for development by us. The sale of such products could
have a material adverse effect on our business, financial condition and results
of operations. Competitors may have substantially greater financial,
manufacturing, marketing and technical resources, and represent significant
potential long-term competition. Competitors may succeed in developing products
that are more effective or less costly than any that may be developed by
Neuromedical Systems or us. New developments are expected to continue at a rapid
pace in both industry and academia. There can be no assurance that research and
development by others will not render Neuromedical Systems' or our current and
contemplated products obsolete. Competition may increase further as a result of
advances that may be made in the commercial applicability of technologies and
greater availability of capital for investment in these fields.
FAILURE OR INACCURACY OF THE PAPNET SYSTEM COULD LEAD TO PRODUCT LIABILITY
Our business could expose us to the risks inherent in the production
and distribution of medical diagnostic and treatment equipment. Although
Neuromedical Systems has attempted to reduce the exposure to product liability
risk by disclosing the demonstrated range of accuracy of the PAPNET Testing
System, there can be no assurance that we will not be exposed to liability
resulting from the failure or inaccuracy of the PAPNET System. We currently
carry no product liability insurance. However, Neuromedical Systems is required,
under the terms of the Licenses, to name us as an additional insured on its
product liability policies. There can be no assurance that Neuromedical Systems
will have the resources necessary to purchase and maintain the insurance, that
such insurance will be sufficient to cover potential claims, or that
Neuromedical Systems will have adequate resources to indemnify us from any
uninsured loss.
AVAILABLE INFORMATION
This prospectus, which constitutes a part of a registration statement
on Form S-3 filed by us with the Securities and Exchange Commission under the
Securities Act, omits certain of the information set forth in the registration
statement. Reference is hereby made to the registration statement and to the
exhibits thereto for further information with respect to us and the securities
offered hereby. Copies of the registration statement and the exhibits thereto
are on file at the offices of the Securities and Exchange Commission and may be
obtained upon payment of the prescribed fee or may be examined without charge at
the public reference facilities of the Securities and Exchange Commission
described below.
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Statements contained herein concerning the provisions of documents are
necessarily summaries of such documents, and each statement is qualified in its
entirety by reference to the copy of the applicable document filed with the
Securities and Exchange Commission.
We are subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith file reports, proxy statements
and other information with the Securities and Exchange Commission. Such reports,
proxy statements and other information can be inspected and copied at the Public
Reference Section of the Securities and Exchange Commission at:
Securities and Exchange Securities and Exchange Commission
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549
and at the following regional offices of the Securities and Exchange Commission:
Midwest Regional Office
Citicorp Center
500 West Madison Street
Suite 1400
Chicago, IL 60661-2511
Northeast Regional Office
7 World Trade Center
Suite 1300
New York, NY 10048
Copies of such material can also be obtained at prescribed rates by writing to
the Public Reference Section of the Securities and Exchange Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. Such reports and other information
filed with the Securities and Exchange Commission may also be available at the
Securities and Exchange Commission's site on the World Wide Web at
http://www.sec.gov.
Our common shares is listed on the American Stock Exchange, and copies
of our reports, proxy statements and other information filed with the Securities
and Exchange Commission under the Exchange Act, and other information concerning
us, can be inspected at the American Stock Exchange.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We hereby incorporate by reference into this prospectus the following
documents previously filed with the Securities and Exchange Commission pursuant
to the Exchange Act:
(1) Our Annual Report on Form 10-K for the fiscal year ended December
31, 1997, filed with the Securities and Exchange Commission on March 27, 1998,
and our Form 10-K/A, filed with the Securities and Exchange Commission on April
30, 1998 (the information under the heading "Recent Developments" should be read
in conjunction with our financial statements contained in our annual report on
Form 10-K for the fiscal year ended December 31, 1997);
(2) Our Definitive Proxy Statement for the Annual Meeting of the
Shareholders, filed with the Securities and Exchange Commission on April 16,
1998;
(3) Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
1998, filed with the Securities and Exchange Commission on May 15, 1998, the
quarter ended June 30, 1998, filed with the Securities and Exchange Commission
on August 14, 1998, and the quarter ended September 30, 1998, filed with the
Securities and Exchange Commission on November 13, 1998; and
(4) Our Current Reports on Form 8-K, filed with the Securities and
Exchange Commission on April 14, 1998, July 21, 1998, September 9, 1998,
September 10, 1998, and November 5, 1998.
In addition, all documents filed by us pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this prospectus
and prior to termination of the offering of the Shares offered hereby shall be
deemed to be incorporated by reference into this prospectus and to be a part
hereof from the respective date of fling of such documents with the Securities
and Exchange Commission.
Any statement contained herein, or any document, all or a portion of
which is incorporated or deemed to be incorporated by reference herein, shall be
deemed to be modified or superseded for purposes of the registration statement
and this prospectus to the extent that a statement contained herein, or in any
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subsequently filed document that also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute part of the registration statement or this prospectus. All
information appearing in this prospectus is qualified in its entirety by the
information and financial statements (including notes thereto) appearing in the
documents incorporated herein by reference. This prospectus incorporates
documents by reference which are not presented herein or delivered herewith.
These documents (other than exhibits thereto, unless such exhibits are
specifically incorporated by reference in such documents) are available without
charge, upon written or oral request by any person to whom this prospectus has
been delivered, by directing such request to NetMed, Inc., 6189 Memorial Drive,
Dublin, Ohio 43017, Attention: President, telephone: (614) 793-9356.
FORWARD LOOKING STATEMENTS
Statements in this prospectus which relate to other than strictly
historical facts, including statements about our plans and strategies, as well
as management's expectations about new and existing products, technologies and
opportunities, market growth, demand for and acceptance of new and existing
products (including the Papnet(R) Testing System and the OxyNet(R) oxygen
concentration device), aRe forward looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. The words
"believe," "expect," "anticipate," "estimate," "project," and similar
expressions identify forward-looking statements that speak only as of the date
hereof. Investors are cautioned that such statements involve risks and
uncertainties that could cause actual results to differ materially from
historical or anticipated results due to many factors including, but are not
limited to, our current reliance on a single product marketed under license from
Neuromedical Systems, the corresponding dependence on Neuromedical Systems'
patents and proprietary technology, government regulation, continuing losses
from operations and negative cash flow, limited marketing and sales history, the
impact of third party reimbursement decisions, the challenges of research and
development of new products, and other risks detailed herein under the caption
"Risk Factors." We undertake no obligation to publicly update or revise any
forward-looking statements.
THE COMPANY
We are an Ohio corporation engaged in the business of acquiring,
developing and marketing medical and health-related technologies. Our principal
business activity is the marketing of the PAPNET(R) Testing System, which is a
proprietary product of Neuromedical Systems. The PAPNET Testing System is a
semi-automated cancer detection system for the review of cell, tissue or body
fluid specimens, including cervical cytology specimens. Slides containing
cytology specimens are processed using the PAPNET Testing System (either by the
laboratory at its own facilities or at one of Neuromedical Systems's central
facilities) which produces processed images for evaluation by the laboratory's
cytotechnologists. Neuromedical Systems provides approximately one week of
training to cytotechnologists from laboratories using the PAPNET System on the
operation of the image review equipment and the interpretation of the images.
We were originally organized in 1989 for the purpose of acquiring the
exclusive territorial rights to market Neuromedical Systems' proprietary
products in Ohio. In 1990, we acquired from Neuromedical Systems marketing
rights for Kentucky and the Chicago, Illinois metropolitan area. On December 16,
1996, we completed a merger with Cytology Indiana, Inc., Indiana Cytology Review
Company, ER Group, Inc., CCWP Partners, Inc., and Carolina Cytology, Inc., which
had held the rights to market the PAPNET Testing System in the states of
Missouri, Georgia and North Carolina. We were the surviving corporation in the
merger. Upon completion of the merger, we changed our name from Papnet of Ohio,
Inc. to NetMed, Inc.
In addition to exploiting our rights under the license agreement with
Neuromedical Systems, our corporate mission is to become a well diversified
health care technology company founded upon proprietary products that offer a
distinct market advantage. Our intention is to follow the example of our initial
investment, the PAPNET technology, in pursuing other opportunities in healthcare
technology. Specifically, we intend to make early investments in selected
healthcare technologies and apply our management and marketing resources to
develop and implement strategies designed to significantly increase the value of
the investment over a period of two to four years.
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In pursuit of this strategy, in early 1997 we entered into an agreement
with CeramPhysics, Inc. of Westerville, Ohio, pursuant to which we obtained the
right to acquire 95% ownership of a Ceram subsidiary that holds an exclusive
world-wide license to Ceram's patented oxygen generation technology for all
applications of the technology except oxygen sensors and fuel cells. Our
acquisition of this interest was completed on April 3, 1998. It is our intention
to incorporate the element into an oxygen generation device (the OxyNet(R)
System) that we expect to manufacture and market to the home health care
industry. See "Recent Developments."
Our principal offices are located at 6189 Memorial Drive, Dublin, Ohio
43017, and our telephone number at that address is (614) 793-9356.
RECENT DEVELOPMENTS
On April 3, 1998, we acquired from Ceram Oxygen Technologies, Inc. ("COTI")
95 common shares, representing 95 percent of COTI's outstanding common shares
immediately following the closing, in exchange for a cash payment of $50,000 and
delivery of a note in the principal amount of $150,000. The note provides for
three equal principal payments of $50,000 on each of June 1, July 1, and August
1, 1998, together with interest at the rate of 8.5 percent per annum. Following
this transaction, COTI's name was changed to "OxyNet, Inc." The remaining 5
percent of OxyNet's outstanding common equity is owned by Ceram of Westerville,
Ohio. COTI holds an exclusive world-wide license to Ceram's patented oxygen
generation technology for all applications of the technology except oxygen
sensors and fuel cells. The consideration was applied by OxyNet to payment of a
$200,000 license fee owed to Ceram, with $50,000 being paid in cash, and the
balance by assignment of the note.
The acquisition was made pursuant to a February, 1997 agreement among
us, COTI and Ceram, whereby we agreed to make advances to COTI to complete the
fabrication and testing of a ceramic element incorporating the licensed
technology. Pursuant to the agreement, through April 3, 1998, we had advanced
$363,470 to COTI for this purpose. The agreement also provided that upon
completion of an acceptance test of the ceramic element satisfactory to us, we
had the right to acquire 95% of the equity of COTI for $200,000.
It is our intention to incorporate the ceramic element into an oxygen
generation device (the OxyNet(R) System) that we expect to manufacture and
market to the home health care industry. We believe this system will be lighter,
quieter, more reliable and less costly to operate than current systems. We
expect to demonstrate a prototype of the system before the end of March 1999 and
to begin marketing a commercial version of the device in 1999. We also expect to
develop other applications for the technology, including military and industrial
applications. In August, 1998, OxyNet completed the private placement of 500
shares of Series A 8% Convertible Preferred Shares for gross proceeds of
$500,000. These proceeds will be used for further development of the OxyNet
product. The OxyNet shares are convertible into common shares of OxyNet on a one
share for one share basis. If there is not an initial public offering of the
common shares of OxyNet within 18 months from the date of issuance of the OxyNet
shares, the OxyNet shares may be exchanged at their original stated value, plus
accrued dividends, for our common shares. This is a one time right to exchange
the OxyNet shares for our common shares and is only available for a period of 30
days following the issuance date. The exercise of these exchange rights may
result in further dilution to holders of our common shares.
In December, 1998, we entered into a letter of intent with MG Generon,
a member of the Messer Group of companies, to jointly develop applications of
the OxyNet technology. The letter of intent contemplates that the parties will
execute a definitive agreement within 60 days. As of the date of this
prospectus, we our continuing our negotiations with Messer, and no definitive
agreement has been executed.
On January 22, 1999, we entered into an exchange agreement with the
holders of the preferred stock whereby the preferred stock was issued in
exchange for certain debentures issued by us in August, 1997. We expect to
record approximately $455,000 in issuance costs in connection with the exchange,
which will be reflected as a preferred dividend on our financial statements for
the quarter ending March 31, 1999. This preferred dividend charge does not
effect our cash flows.
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<PAGE> 12
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares by CPR.
SELLING SHAREHOLDERS
This prospectus relates to the resale of up to 1,500,000 of our common
shares by CPR upon conversion of the preferred stock held by them. CPR, Liberty
View Fund, and Liberty View Plus are under the common management and control of
Banque CPR, a French broker-dealer. Except for the ownership of the preferred
stock (and any shares on conversion thereof and shares previously acquired upon
conversion of the debentures), CPR has not had any material relationship within
the past three years with us. The shares are being registered to permit public
secondary trading of the shares, and CPR may offer the shares for resale from
time to time. See "Plan of Distribution."
The shares being offered by CPR through this prospectus are issuable by
us to them upon conversion of the preferred stock. The preferred stock and any
dividends accrued thereon may be converted into shares at any time. The
preferred stock is entitled to cumulative annual dividends at the rate of 6% of
stated value payable in common shares at the time of each conversion, and is
convertible into shares of our common stock based on the "Conversion Price" at
the time of conversion. The Conversion Price is an amount equal to 75% of the
average closing bid price of our common shares on the American Stock Exchange
for the previous three business days ending on the day before the conversion
date. The Conversion Price is subject to equitable adjustment upon the
occurrence of certain events, such as stock splits, stock dividends,
reclassifications or combinations.
CPR is precluded by our Amended and Restated Articles of Incorporation
from converting shares of preferred stock which would, at any point in time,
allow CPR to own more than 4.99% of our common stock. However, CPR may, over
time, convert preferred stock into common shares representing, in the aggregate,
more than 4.99% of our common shares so long as they do not exceed 4.99%
ownership in our common shares at any one point in time.
If the $1,467,619.29 in stated value of the preferred stock issued in
the exchange were converted at the prevailing market price on that date
approximately 7,827,000 additional shares of common stock would be issued.
However, this prospectus covers the resale of only up to 1,500,000 shares to the
public. If CPR converts preferred stock into more common shares than are
registered under the registration statement of which this prospectus is a part,
we have agreed to file an new registration statement to permit resale of the
balance of the common shares that may be issued on conversion of the preferred
stock.
Column two of the following table, entitled "Number of Shares
Beneficially Owned," represents the aggregate number of shares (approximately
7,827,000) that would be issuable at the prevailing market price on the exchange
date, divided proportionately between CPR, Liberty View Fund, and Liberty View
Plus. Column three, entitled "Number of Shares Being Offered Hereby," reflects
the aggregate number of shares of common stock that could be sold by CPR,
Liberty View Fund, and Liberty View Plus during the effectiveness of this
registration statement. CPR has confirmed to us in writing that they disclaim
beneficial ownership of the preferred stock (and the common shares issuable upon
conversion) held by each other.
<TABLE>
<CAPTION>
Number of Shares Number of Shares
Number of Shares Being Offered Owned After
Name of Selling Shareholder Beneficially Owned Hereby Offering
<S> <C> <C> <C>
- - ------------------------------ ---------------------------- --------------------------- ----------------------------
CPR (USA), Inc. 5,731,371 1,098,342 4,633,029
- - ------------------------------ ---------------------------- --------------------------- ----------------------------
LibertyView Fund, LLC 1,571,259 301,111 1,270,148
- - ------------------------------ ---------------------------- --------------------------- ----------------------------
LibertyView Plus Fund 524,673 100,547 424,126
- - ------------------------------ ---------------------------- --------------------------- ----------------------------
</TABLE>
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<PAGE> 13
As required by the exchange agreement and related
registration rights agreement, in recognition of the fact that CPR may wish to
be legally permitted to sell any shares acquired upon conversion of the
preferred stock when they deem appropriate, we have filed with the Securities
and Exchange Commission under the Securities Act a post-effective amendment to
Form S-1 on Form S-3, of which this prospectus forms a part, with respect to the
resale of the shares by CPR from time to time on the American Stock Exchange or
in privately-negotiated transactions.
PLAN OF DISTRIBUTION
The shares being offered by CPR will be sold in one or more
transactions (which may involve block transactions) on the American Stock
Exchange or in privately-negotiated transactions. The sale price to the public
may be the market price prevailing at the time of sale, a price related to such
prevailing market price or such other price as each selling shareholder
determines from time to time. A selling shareholder shall have the sole and
absolute discretion not to accept any purchase offer or make any sale of shares
if it deems the purchase price to be unsatisfactory at any particular time.
CPR may also sell the shares of common stock directly to market makers
acting as principals and/or to broker-dealers acting as agents for themselves or
their customers. Brokers acting as agents for CPR will receive usual and
customary commissions for brokerage transactions, and market makers and block
purchasers purchasing the shares will do so for their own account and at their
own risk. It is possible that CPR will attempt to sell shares of common stock in
block transactions to market makers or other purchasers at a price per share
which may be below the then market price. There can be no assurance that all or
any of the shares offered hereby will be issued to, or sold by, CPR. CPR and any
brokers, dealers or agents, upon effecting the sale of any of the shares offered
hereby, may be deemed "underwriters" as that term is defined in the Securities
Act.
CPR has agreed that they will not pay more than the normal brokerage
compensation and that they will not enter into arrangements for special selling
efforts without first advising us and cooperating in the disclosure of the same
in a revised or supplemental prospectus.
CPR, alternatively, may sell all or any part of the shares offered
hereby through an underwriter. CPR has not entered into any agreement with a
prospective underwriter and there is no assurance that any such agreement will
be entered into. If CPR enters into such an agreement or agreements, the
relevant details will be set forth in a supplement or revisions to this
prospectus.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 20,000,000 common shares,
without par value, 250,000 shares of voting preferred stock, and 250,000 shares
of nonvoting preferred stock. There are currently outstanding 11,673,422 shares
of common stock, and 97,771 shares of preferred stock. All outstanding shares of
common stock are fully paid and non-assessable.
COMMON STOCK
Holders of validly issued and outstanding shares of common stock are
entitled to one vote per share of record on all matters to be voted upon by
shareholders. At a meeting of shareholders at which a quorum is present, a
majority of the votes cast decides all questions, unless the matter is one upon
which a different vote is required by express provision of law or our articles
of incorporation or code of regulations. Our articles eliminate the right of
shareholders to cumulate their votes in the election of directors. Shareholders
have no preemptive or other rights to subscribe for additional shares nor any
other rights to convert their common stock into any other securities.
Subject to the preferences that may be applicable to the holders of any
outstanding shares of preferred stock, holders of common stock are entitled to
such dividends as may be declared by the board of directors out of funds legally
available therefor. The payment by us of dividends, if any, rests within the
discretion of its board of directors and will depend upon our operating results,
financial condition and capital expenditure plans, as well as other factors
considered relevant by the board of directors. We may enter into bank credit
agreements which include financial covenants restricting the payment of
dividends. See "Dividend Policy."
Upon our liquidation, dissolution or winding-up, the assets legally
available for
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<PAGE> 14
distribution to shareholders are distributable ratably among the
holders of common stock at that time outstanding, subject to prior distribution
rights of our creditors and preferential rights of any outstanding shares of
preferred stock.
PREFERRED STOCK
Our articles authorize the board of directors to issue up to 250,000
shares of voting preferred stock and up to 250,000 shares of nonvoting preferred
stock in one or more series and to establish such relative dividend, redemption,
liquidation, conversion and other powers, preferences, rights, qualifications,
limitations and restrictions as the board of directors may determine without
further approval of our shareholders. The issuance of preferred stock by the
board of directors could be used, under certain circumstances, as a method of
delaying or preventing a change in control and could permit the board of
directors, without any action by holders of common stock, to issue preferred
stock which could have a detrimental effect on the rights of holders of common
stock, including loss of voting control. In certain circumstances, this could
have the effect of decreasing the market price of our common shares.
The issuance of any series of preferred stock, and the relative powers,
preferences, rights, qualifications, limitations and restrictions of such
series, if and when established, will depend upon, among other things, our
future capital needs, the then-existing market conditions and other factors
that, in the judgment of the board of directors, might warrant the issuance of
preferred stock.
On October 27, 1998, the directors authorized the creation of 100,000
shares of voting preferred stock to be known as the "Series A, 6% Convertible
Preferred Stock." Of these shares, 97,711 were issued to CPR pursuant to the
exchange agreement on January 22, 1999.
CERTAIN PROVISIONS OF ARTICLES AND REGULATIONS
The following brief description of certain provisions of our articles
and regulations does not purport to be complete and is subject in all respects
to the provisions of the articles and regulations, copies of which have been
filed as exhibits to the registration statement of which this prospectus is a
part.
CLASSIFIED BOARD OF DIRECTORS
Our regulations provide for the board of directors to be divided into
three classes (unless there are fewer than 9 directors in which case there will
be two classes) of directors serving staggered three-year terms. As a result,
approximately one-third of the board of directors will be elected each year.
Classification of the board of directors expands the time required to change the
composition of a majority of directors and may tend to discourage a proxy
contest or other takeover bid for us.
DIRECTORS' RESPONSE TO ACQUISITION PROPOSALS
Our articles provide that the board of directors must base our response
to any "Acquisition Proposal" on the board of directors' evaluation of what is
in our best interest. In evaluating what is in our best interest, the board of
directors must consider all relevant factors including, without limitation, the
best interest of the shareholders which, for this purpose, requires the board of
directors to consider, among other factors, not only the consideration offered
in the Acquisition Proposal in relation to the then current market price of our
stock, but also in relation to our current value in a freely negotiated
transaction and in relation to the board of directors' then estimate of our
future value as an independent entity or as the subject of a future Acquisition
Proposal; and such other factors as the board of directors determines to be
relevant, including, among other factors, our long-term and short-term interests
and our subsidiaries and their businesses and properties and the social, legal
and economic effects upon the employees, suppliers, customers, creditors and
other affected persons, firms and corporations and on the communities and
geographical areas in which we and our subsidiaries operate or are located.
"Acquisition Proposal" is defined in the articles as any proposal for our
consolidation or merger with another corporation, any share exchange involving
our outstanding capital stock, any liquidation or dissolution of us, any
transfer of all or a material portion of our assets and any tender offer or
exchange offer for any of our outstanding stock.
DIRECTOR AND OFFICER INDEMNIFICATION
Our articles provide that we may indemnify any director, officer, or
any former director or officer, and any person who is or has served at our
request as a director, officer or trustee of another corporation, partnership,
joint venture, trust or other
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<PAGE> 15
enterprise (and his or hers heirs, executors and administrators) against
expenses, including attorney fees, judgments, fines and amounts paid in
settlement, actually and reasonably incurred by him by reason of the fact that
he is or was such director, officer, incorporator or trustee in connection with
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, or investigative, to the full extent and according to
the procedures and requirements set forth in the Ohio General Corporation Law as
the same may be in effect from time to time. The indemnification provided shall
not be deemed to restrict our right to
* indemnify employees, agents and others as permitted by law,
* purchase and maintain insurance or provide similar protection on behalf of
the directors, officers or such other persons against liabilities asserted
against them or expenses incurred by them arising out of their service to
us, and
* enter into agreements with such directors, officers, employees, agents or
others indemnifying them against any and all liabilities asserted against
them or incurred by them arising out of their service to us as contemplated
herein.
REMOVAL OF DIRECTORS
Our regulations provide that any director or the entire board of
directors may be removed from office at any time, but only for cause and only by
the affirmative vote of the holders of at least 80% of all of our outstanding
shares of capital stock entitled to vote on the election of directors at a
meeting of shareholders called for that purpose, except that if the board of
directors, by an affirmative vote of at least 66 2/3% of the entire board,
recommends removal of a director to the shareholders, such removal may be
effected by the affirmative vote of the holders of at least a majority of the
outstanding shares of our capital stock present in person or represented by
proxy and entitled to vote on the election of directors at a meeting of
shareholders called for that purpose. These provisions, when coupled with
provisions of the regulations authorizing only the board of directors to fill
vacant directorships, will preclude our shareholders from removing incumbent
directors without cause, and simultaneously gaining control of the board of
directors by filling the vacancies with their own nominees.
The term "cause" is not defined in our articles or the Ohio General
Corporation Law. Consequently, any question concerning the legal standard for
"cause" would have to be judicially determined and such a determination could be
difficult, expensive and time consuming.
MEETINGS OF SHAREHOLDERS
Our regulations provide that annual meetings of shareholders shall be
held at such time and on such business day as the board of directors may
determine. Except as otherwise provided by law or by our articles, a quorum for
any meeting of the shareholders is a majority of the capital stock issued and
outstanding and entitled to vote at the meeting. Special meetings of
shareholders may be called by the Chairman of the Board, President or Chief
Executive Officer or by the board of directors by action at a meeting or a
majority of the directors without a meeting or by shareholders holding 50% or
more of the voting power entitled to elect directors.
ADVANCE NOTICE REQUIREMENTS FOR SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Our regulations provide that shareholders seeking to bring business
before a meeting of shareholders, or to nominate candidates for election as
directors at a meeting of shareholders, must provide timely notice thereof in
writing. To be timely, a shareholder's notice must be delivered to, or mailed
and received at, our principal executive office, not less than 30 days nor more
than 60 days prior to the scheduled meeting (or, if less than 40 days' notice of
the meeting is given to shareholders not later than the close of business on the
tenth day following the earlier of
* the day on which such notice of the date of the meeting was mailed, or
* the day on which public disclosure of the date of the special meeting was
made).
Our regulations also specify certain requirements pertaining to the form
and substance of a shareholder's notice. These provisions may preclude some
shareholders from making nominations for directors at an annual or special
meeting or from bringing other matters before the shareholders at a meeting.
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<PAGE> 16
VOTING REQUIREMENTS
Our regulations provide that certain provisions in the regulations may
not be altered, amended or repealed in any respect, and new provisions
inconsistent therewith may not be adopted unless such action is approved by the
affirmative vote of the holders of at least 80% of all of our outstanding shares
of capital stock entitled to vote on such matter at a meeting of shareholders
called for that purpose.
SHAREHOLDER NOMINATIONS AND PROPOSALS
Our regulations also specify certain requirements pertaining to the
form and substance of a shareholder's notice. These provisions may preclude some
shareholders from making nominations for directors at an annual or special
meeting or from bringing other matters before the shareholders at a meeting.
Although our articles and regulations do not give the board of
directors any power to approve or disapprove shareholder nominations for the
election of directors or proposals for action, the foregoing provisions may have
the effect of precluding a contest for the election of directors or the
consideration of shareholder proposals if the proper procedures are not
followed, and of discouraging or deterring a third party from conducting a
solicitation of proxies to elect our own slate of directors or to approve our
own proposal, without regard to whether consideration of such nominees or
proposals might be harmful or beneficial to us and our shareholders. On the
other hand, by requiring advance notice of nominations by shareholders, these
shareholder notice procedures afford the board an opportunity to consider the
qualifications of the proposed nominees and, to the extent deemed necessary or
desirable by the board, to inform shareholders about such qualifications. By
requiring advance notice of other proposed business, the shareholder notice
procedures provide a more orderly procedure for conducting annual meetings of
shareholders and, to the extent deemed necessary or desirable by the board,
provide the board with an opportunity to inform shareholders, prior to such
meeting, of any business proposed to be conducted at the meeting, together with
any recommendations by the board or statements as to the board's position
regarding action to be taken with respect to such business, so that shareholders
can better decide whether to attend the meeting or to grant a proxy regarding
the disposition of any such business.
OHIO GENERAL CORPORATION LAW
Certain provisions of the General Corporation Law of Ohio and of our
articles and regulations, summarized in the following paragraphs, may be
considered to have an anti-takeover effect and may delay, deter or prevent a
tender offer, proxy contest or other takeover attempt that a shareholder might
consider to be in such shareholder's best interest, including such an attempt as
might result in payment of a premium over the market price for shares held by
shareholders.
Section 1701.59 of the Ohio General Corporation Law provides that a
director shall not be found to have violated his duties under the Ohio General
Corporation Law unless it is proved by clear and convincing evidence that the
director has not acted in good faith, in a manner he reasonably believes to be
in or not opposed to the best interests of the corporation, or with the care
that an ordinary prudent person in a like position would use under similar
circumstances. Further, such section provides that a director shall be liable in
damages for any action he takes or fails to take as a director only if it is
proved by clear and convincing evidence that his action or failure to act
involved an act or omission undertaken with deliberate intent to cause injury to
the corporation or with reckless disregard for the best interests of the
corporation.
Chapter 1704 of the Ohio General Corporation Law prohibits certain
transactions between a Ohio corporation and an "interested shareholder." Chapter
1704 allows for a corporation to exclude itself from Chapter 1704 by exempting
itself in its articles of incorporation. We have not included such an exemptive
provision in our articles.
EXPERTS
Our financial statements as of December 31, 1996 and 1997, and
for each of the three years in the period ended December 31, 1997, appearing in
our 1997 Annual Report on Form 10-K have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon appearing therein and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
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<PAGE> 17
LEGAL MATTERS
The validity of the shares offered hereby has been passed upon for us by
Porter, Wright, Morris & Arthur, 41 South High Street, Columbus, Ohio 43215.
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<PAGE> 18
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON, OR ANY OTHER PERSON TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
REGARDS TO THE OFFER MADE IN THIS PROSPECTUS. ANY SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY US, CPR,
LIBERTY VIEW FUND, AND LIBERTY VIEW PLUS OR ANY UNDERWRITER, DEALER, OR AGENT.
THIS PROSPECTUS ONLY OFFERS THE REGISTERED SECURITIES TO WHICH IT RELATES. THIS
PROSPECTUS IS NOT AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY
PERSON IN ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.
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 AFTER THE DATE OF THIS PROSPECTUS.
----------------
1,500,000 SHARES
NETMED, INC.
COMMON STOCK
----------------
PROSPECTUS
----------------
February 26, 1999
<PAGE> 19
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses relating to the registration of the Shares of Common Stock
being offered hereby, other than underwriting discounts and commissions, will be
borne by the Registrant. The following table shows the amount of such expenses
in connection with the sale and distribution of the Shares registered on October
2, 1997:
<TABLE>
<CAPTION>
Item Amount
<S> <C>
Securities and Exchange Commission
Registration Fee $1,988.64
Legal Fees and Expenses 10,000.00
Accounting Fees and Expenses 2,500.00
Miscellaneous Expenses 1,500.00
Total $15,988.64
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the Ohio General Corporation Law, Article NINTH of the
Registrant's Amended and Restated Articles of Incorporation ("Articles")
provides that a director, officer, incorporator, or any former officer or
director of the Registrant shall be indemnified by the Registrant to the fullest
extent permitted by the Ohio General Corporation Law.
Indemnification of directors, officers, employees and agents is
required under Section 1701.13 of the Ohio General Corporation Law in those
cases where the person to be indemnified has been successful on the merits or
otherwise in defense of a lawsuit. Indemnification is permitted in third party
actions where the indemnified person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and in criminal actions where he had no reasonable cause to believe
his conduct was unlawful. Indemnification is also permitted in lawsuits brought
by or on behalf of the corporation if the standards of conduct described above
are met, except that no indemnification is permitted in respect to any matter in
which the person is adjudged to be liable for negligence or misconduct in the
performance of his duty to the corporation unless a court shall determine that
indemnification is fair and reasonable in view of all the circumstances of the
case. In cases where indemnification is permissive, a determination as to
whether the person met the applicable standard of conduct must be made either by
the court, disinterested directors, by independent legal counsel, or by the
shareholders. Such indemnification rights are specifically not deemed to be
exclusive of other rights of indemnification by agreement or otherwise and the
corporation is authorized to advance expenses incurred prior to the final
disposition of a matter upon receipt of an undertaking to repay such amounts on
a determination that indemnification was not permitted in the circumstances of
the case.
Under Section 1701.13 of the Ohio General Corporation Law, a
corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee, or agent of the corporation, or who, while
serving in such capacity, is or was at the request of the corporation, a
director, officer, employee or agent of another corporation or legal entity or
of an employee benefit plan, against liability asserted against or incurred by
such person in any such capacity whether or not the corporation would have the
power to provide indemnity under Section 1701.13 of the Ohio General Corporation
Law.
II-1
<PAGE> 20
The above discussion of the Registrant's Articles and of Section
1701.13 of the Ohio General Corporation Law is not intended to be exhaustive and
is respectively qualified in our entirety by such Articles of Incorporation and
statute.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
NUMBER DESCRIPTION
<S> <C>
4.1 Articles FOURTH, SIXTH, SEVENTH, EIGHTH, TENTH, and
ELEVENTH, of the Registrant's Amended and Restated
Articles of Incorporation and Articles I, V and VII
of the Registrant's Amended and Restated Regulations.
(Previously filed as Exhibit 4(b) to the registration
statement on Form S-4, Registration No. 333-8199, and
incorporated herein by reference.)
5 Opinion of Porter, Wright, Morris & Arthur.
(Previously filed as Exhibit 5 to the registration
statement on Form S-1, Registration No. 333-35663,
and incorporated herein by reference.)
23 Consent of Ernst & Young LLP.*
24.1 Powers of Attorney. (Previously filed as Exhibit 24
to the registration statement on Form S-1,
Registration No. 333-35663, and incorporated herein
by reference.)
24.2 Power of Attorney for Susan M. O'Toole. (Previously
filed as Exhibit 24.2 to Post-Effective Amendment
No. 2 to Form S-1 on Form S-3, Registration No.
333-35663, and incorporated herein by reference.)
99.1 Convertible Debenture Exchange Agreement, dated
October 27, 1998, among the Registrant, CPR (USA)
Inc., LibertyView Fund, LLC, and LibertyView Plus
Fund. (Previously filed as Exhibit 99.1 to
Post-Effective Amendment No. 2 to Form S-1 on Form
S-3, Registration No. 333-35663, and incorporated
herein by reference.)
99.2 Registration Rights Agreement, dated October 27,
1998, among the Registrant, CPR (USA) Inc.,
LibertyView Fund, LLC, and LibertyView Plus Fund.
(Previously filed as Exhibit 99.2 to Post-Effective
Amendment No. 2 to Form S-1 on Form S-3, Registration
No. 333-35663, and incorporated herein by reference.)
99.3 Amended and Restated Agreement, dated November 23,
1998, between Neuromedical Systems, Inc. and the
Registrant. (Previously filed as Exhibit 99.3 to
Post-Effective Amendment No. 2 to Form S-1 on Form
S-3, Registration No. 333-35663, and incorporated
herein by reference.)
* To be filed by Amendment.
</TABLE>
II-2
<PAGE> 21
ITEM 17. UNDERTAKINGS.
(a) 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 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 our 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.
(b) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) It will file, during any period in which offers or sales
are being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered)and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Securities and Exchange
Securities and Exchange Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) 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.
PROVIDED, HOWEVER, that the undertakings set forth in
paragraphs 3(i) and (ii) above do not apply if information required to
be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in this registration statement.
II-3
<PAGE> 22
(4) It will remove from registration by means of a
post-effective amendment any of the securities being registered that
remain unsold at the termination of the offering.
(c) 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 Act 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-4
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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
Post-Effective Amendment No. 3 to the registration statement of Form S-1 to be
signed on our behalf by the undersigned, thereunto duly authorized, in the City
of Dublin, State of Ohio, on February 25, 1999.
NETMED, INC.
By: /s/ Kenneth B. Leachman
--------------------------------
Kenneth B. Leachman, Executive Vice President -Finance
and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
*David J. Richards President, Director ) February 25, 1999
- - --------------------------------------
David J. Richards (Principal Executive Officer) )
)
)
)
/s/ Kenneth B. Leachman Executive Vice President-Finance, ) February 25, 1999
- - --------------------------------------
Kenneth B. Leachman Treasurer (Principal Financial and )
Accounting Officer) )
)
)
*S. Trevor Ferger Director ) February 25, 1999
- - --------------------------------------
S. Trevor Ferger )
)
)
*Cecil J. Petitti Director ) February 25, 1999
- - --------------------------------------
Cecil J. Petitti )
)
)
*Michael S. Blue Director ) February 25, 1999
- - --------------------------------------
Michael S. Blue )
)
)
*Robert J. Massey Director ) February 25, 1999
- - --------------------------------------
Robert J. Massey )
)
)
*James F. Zid Director ) February 25, 1999
- - --------------------------------------
James F. Zid )
)
</TABLE>
*By: /s/ Kenneth B. Leachman
-------------------------------
Kenneth B. Leachman
Attorney-in-fact for each of the persons indicated
II-5
<PAGE> 24
EXHIBIT
NUMBER DESCRIPTION
4.1 Articles FOURTH, SIXTH, SEVENTH, EIGHTH, TENTH, and
ELEVENTH, of the Registrant's Amended and Restated
Articles of Incorporation and Articles I, V and VII
of the Registrant's Amended and Restated Regulations.
(Previously filed as Exhibit 4(b) to the registration
statement on Form S-4, Registration No. 333-8199, and
incorporated herein by reference.)
5 Opinion of Porter, Wright, Morris & Arthur.
(Previously filed as Exhibit 5 to the registration
statement on Form S-1, Registration No. 333-35663,
and incorporated herein by reference.)
23 Consent of Ernst & Young LLP.*
24.1 Powers of Attorney. (Previously filed as Exhibit
24.1 to the registration statement on Form S-1,
Registration No. 333-35663, and incorporated herein
by reference.)
24.2 Power of Attorney for Susan M. O'Toole. (Previously
filed as Exhibit 24.2 to Post-Effective Amendment
No. 2 to Form S-1 on Form S-3, Registration No.
333-35663, and incorporated herein by reference.)
99.1 Convertible Debenture Exchange Agreement, dated
October 27, 1998, among the Registrant, CPR (USA)
Inc., LibertyView Fund, LLC, and LibertyView Plus
Fund. (Previously filed as Exhibit 99.1 to
Post-Effective Amendment No. 2 to Form S-1 on Form
S-3, Registration No. 333-35663, and incorporated
herein by reference.)
99.2 Registration Rights Agreement, dated October 27,
1998, among the Registrant, CPR (USA) Inc.,
LibertyView Fund, LLC, and LibertyView Plus Fund.
(Previously filed as Exhibit 99.2 to Post-Effective
Amendment No. 2 to Form S-1 on Form S-3, Registration
No. 333-35663, and incorporated herein by reference.)
99.3 Amended and Restated Agreement, dated November 23,
1998, between Neuromedical Systems, Inc. and the
Registrant. (Previously filed as Exhibit 99.3 to
Post-Effective Amendment No. 2 to Form S-1 on Form
S-3, Registration No. 333-35663, and incorporated
herein by reference.)
* To be filed by Amendment.
II-6
