UROHEALTH SYSTEMS INC, S-3/A, 1996-08-19

UROHEALTH SYSTEMS INC
S-3/A, 1996-08-19
PLASTICS PRODUCTS, NEC

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 19, 1996

REGISTRATION NO. 333-6397

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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AMENDMENT NO. 1

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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UROHEALTH SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C>
DELAWARE 98-0122944
(State or other jurisdiction of incorporation or
organization) (I.R.S. Employer Identification No.)
</TABLE>

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5 CIVIC PLAZA, SUITE 100
NEWPORT BEACH, CALIFORNIA 92660
(714) 668-5858
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

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CHARLES A. LAVERTY
CHIEF EXECUTIVE OFFICER
UROHEALTH SYSTEMS, INC.
5 CIVIC PLAZA, SUITE 100
NEWPORT BEACH, CALIFORNIA 92660
(714) 668-5858
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

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COPIES TO:

ROBERT M. MATTSON, JR., ESQ.
MORRISON & FOERSTER LLP
19900 MACARTHUR BLVD.
IRVINE, CALIFORNIA 92715
(714) 251-7500

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. /X/

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / __________________

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration 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. / / ____________________

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
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PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE OFFERING PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE(1) PRICE(1) FEE
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<S> <C> <C> <C> <C>
Common Stock, $.001 par
value........................ 3,500,362 shares $13.875 $45,567,523 $16,748(2)
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</TABLE>

(1) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457(c).

(2) Previously paid.

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED AUGUST 19, 1996

PROSPECTUS

3,500,362 SHARES

UROHEALTH SYSTEMS, INC.

COMMON STOCK
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The 3,500,362 shares of Common Stock offered hereby are being sold by the
Selling Stockholders. See "Selling Stockholders" and "Plan of Distribution."
UROHEALTH Systems, Inc. ("UROHEALTH" or the "Company") will not receive any of
the proceeds from the sale of the shares by the Selling Stockholders. The Common
Stock of the Company is listed on the American Stock Exchange under the symbol
"URO." On August 15, 1996, the last reported sale price of the Common Stock was
$14.25 per share. See "Price Range of Common Stock and Dividends."

SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF CERTAIN FACTORS
WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

This Prospectus relates to the public offering for resale, which is not
being underwritten, of the following securities of the Company by the holders
thereof (the "Selling Stockholders"): (i) 190,488 shares of Common Stock of the
Company acquired by John F. Woodhead in connection with the acquisition of
Allstate Medical Products, Inc. ("Allstate") by the Company; (ii) 129,808 shares
of Common Stock of the Company acquired by affiliates of Advanced Surgical, Inc.
("Advanced") in connection with the acquisition of Advanced by the Company;
(iii) 20,000 shares of Common Stock of the Company issuable upon exercise of a
warrant acquired by a consultant to the Company; (iv) 300,000 shares of Common
Stock of the Company acquired by Gerald W. Timm in connection with the
acquisition of Dacomed Corporation ("Dacomed") by the Company; (v) 178,572
shares of Common Stock of the Company acquired by former shareholders of
Endoscopic Imaging Systems, Inc. ("EIS") in connection with the acquisition of
EIS by the Company; (vi) 1,414,827 shares acquired by FoxMeyer Corporation upon
conversion of a convertible note and Series B Convertible Preferred Stock of the
Company owned by FoxMeyer; (vii) 366,667 shares of Common Stock of the Company
which can be acquired upon exercise of a warrant issued to a lender in
connection with a credit facility; and (viii) 900,000 shares of Common Stock of
the Company acquired by former shareholders of Osbon Medical Systems Ltd.
("Osbon") in connection with the acquisition of Osbon by the Company.

The Selling Stockholders directly, through agents designated from time to
time, or through dealers or underwriters also to be designated may sell the
Common Stock from time to time on terms to be determined at the time of sale.
The effectiveness of the Registration Statement of which this Prospectus
constitutes a part is expected to terminate on the earlier of July 31, 1997 and
the date on which all of the shares have been sold.

To the extent required, the names of additional Selling Stockholders, if
any, the respective purchase prices and public offering prices, the names of any
such agent, dealer or underwriter, and any applicable commissions or discounts
with respect to a particular offer will be set forth in an accompanying
Prospectus Supplement. See "Plan of Distribution."

The Company will not receive any proceeds from this offering. The aggregate
proceeds to the Selling Stockholders from the sale of the Common Stock will be
the purchase price less the aggregate agent's commissions and underwriter's
discounts, if any. The Company by agreement will pay substantially all of the
other expenses of this offering. See "Plan of Distribution" herein for a
description of the indemnification arrangements for the agents, dealers and
underwriters.

The Selling Stockholders and any broker-dealers, agents or underwriters
that participate with the Selling Stockholders in the distribution of the Common
Stock may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended (the "Securities Act"), and any commissions received by
them and any profit on the resale of the Common Stock purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act.

THE DATE OF THIS PROSPECTUS IS , 1996.
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AVAILABLE INFORMATION

Urohealth Systems, Inc. ("Urohealth" or the Company") is subject to the
information requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and, in accordance therewith, files reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the following regional offices of the Commission: Chicago Regional Office,
Northwestern Atrium Center, 500 West Madison, Suite 1400, Chicago, Illinois
60661; and New York Regional Office, 75 Park Place, 14th Floor, New York, New
York 10017. Copies of such material can be obtained at prescribed rates from the
Public Reference Section of the Commission at its principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. In addition, such material can be
inspected at the offices of the American Stock Exchange, 86 Trinity Place, New
York, New York 10006.

The Company has filed with the Commission a Registration Statement under
the Securities Act of 1933, as amended, with respect to the Common Stock offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. Statements
contained herein concerning the provisions of any documents are necessarily
summaries of such documents, and each such statement is qualified in its
entirety by reference to the copy of the applicable document filed with the
Commission. For further information concerning the Company and the Common Stock
offered hereby, reference is made to the Registration Statement, including the
exhibits and schedules thereto. The Registration Statement, including the
exhibits and schedules thereto, may be inspected without charge at the
Commission's principal office, 450 Fifth Street, N.W., Washington, D.C. 20549,
and copies of all or any part thereof may be obtained from the Commission's
Public Reference Section at prescribed rates.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company hereby incorporates by reference in this Prospectus the
following documents, which have been filed with the Commission pursuant to the
Exchange Act: (i) the Company's Transition Report on Form 10-K for the period
ended March 31, 1996; (ii) the Company's Current Report on Form 8-K, dated July
1, 1996, as amended by the Form 8-K/A filed on August 12, 1996; (iii) the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996; and
(iv) the description of the Company's Common Stock contained in the Company's
Registration Statement on Form 8-A, as amended December 11, 1995.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of this offering shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the date of filing of such
documents.

The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents referred to above which have been or may be
incorporated by reference in this Prospectus (excluding exhibits to the
information that is incorporated herein by reference unless such exhibits are
specifically incorporated by reference into the information that this Prospectus
incorporates). Requests for such copies should be directed to Kevin M. Higgins,
Senior Vice President and General Counsel, UROHEALTH Systems, Inc., 5 Civic
Plaza, Suite 100, Newport Beach, California 92660; telephone number (714)
668-5858.

Any statement contained in a document incorporated by reference shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently filed
incorporated document or in any accompanying prospectus supplement modifies or
supersedes such statement (but not to the extent that any statement and any such
other filed document is only summarized herein or in any other subsequently
filed document). Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.

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THE COMPANY

Urohealth is an emerging developer, manufacturer and distributor of
urological, gynecological and general surgical products with a urological and
gynecological focus. Since October 1994, a new management team has been
recruited to develop and implement a plan to position the Company as a medical
products company serving its target markets. Management saw an opportunity to
develop a medical products company which would be one of the first to utilize a
dedicated direct sales force to offer a broad selection of products designed to
serve patients suffering from incontinence, impotence and related urological and
gynecological problems. In fiscal 1996, the Company acquired four medical
products companies as part of its plan.

The Company's strategy is to: (i) offer a broad range of products to the
growing and what the Company believes are the underserved urological and
gynecological markets; (ii) acquire additional complementary products and
product lines, that can be sold through existing channels of distribution; and
(iii) utilize a dedicated direct sales force, rather than distributors, to sell
urological and gynecological products to their current target markets.

Through its acquisitions, the Company has increased its medical products
offerings from one in 1994 to a broad selection of products for urinary
incontinence, erectile dysfunction (impotence) and general surgery with a
urological and gynecological focus. The Company targets urologists and
gynecologists using its direct sales force. The Company's urinary incontinence
products include, among others, (i) a non-invasive incontinence management
system for female patients, (ii) an external male continence device, (iii) a
female pelvic muscle training device, and (iv) adult diapers and bed liners. The
Company's erectile dysfunction products include, among others, (i) the market
leading vacuum erection device, (ii) a disposable impotence screening device,
(iii) a microprocessor-controlled system designed to diagnose impotence and (iv)
a positionable penile prosthesis. The Company has additional products under
development. In addition, the Company offers approximately 100 products designed
for minimally invasive surgery procedures, which are marketed primarily to
gynecologists and urologists.

The principal executive offices of the Company are located at 5 Civic
Plaza, Suite 100, Newport Beach, California 92660, and the Company's telephone
number is (714) 668-5858.

RISK FACTORS

Prospective purchasers of the Common Stock offered hereby should consider
carefully the following factors, together with the other information contained
in or incorporated by reference in this Prospectus, prior to purchasing the
Common Stock offered hereby.

Operating Losses; No Assurance of Profitability; Liquidity. The Company
has only recently recorded its first quarterly net income. The Company reported
net losses for its fiscal years ended June 30, 1994 and 1995 and for the nine
months ended March 31, 1996 of approximately $20.1 million, $18.5 million and
$18.0 million, respectively. Substantially all of the Company's medical product
sales are derived from medical products of companies that the Company acquired.

The Company has historically experienced negative cash flow from
operations. There can be no assurance that its operating activities will
generate sufficient cash flow to meet the Company's needs in any future period.
In the event that the Company does not generate sufficient cash flow, the
Company may need to raise additional financing.

Future Operating Results Dependent on New Products. The future results of
operations of the Company will be dependent upon its ability to increase sales
of its existing medical products and their continued acceptance by the medical
community and third-party payors as useful and cost-effective. Such continued
acceptance will depend upon many factors, including the continued demonstration
of the utility and cost-effectiveness of the Company's products, the maintenance
of regulatory clearance in the United States and elsewhere and the continued
availability of third-party reimbursement. Failure of one or more of the
Company's products to continue to be accepted by the medical community could
have a material adverse effect on the Company. Substantially all of the
Company's medical product sales are derived from medical products of companies
that the Company acquired. There can be no assurance that the Company's medical

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products will be successfully marketed, that future products will be brought to
market in a timely manner or that existing products will generate significant
sales, the failure of which could prevent the Company from attaining
profitability.

Management of Growth. The Company made four significant acquisitions of
medical products companies during fiscal 1996, with revenues increasing from
$565,000 in medical product sales for the year ended June 30, 1995 to
approximately $39.0 million for the nine months ended March 31, 1996. The
Company expects to continue to acquire additional products and companies with
complementary product lines in the future. The Company's growth will place
significant demands on its financial and management resources. There can be no
assurance that the Company will be able to implement or sustain its acquisition
strategy or that its strategy will ultimately prove profitable to the Company.
In addition, the Company may be required to issue additional shares of Common
Stock or to use a portion of its cash balances to make such future acquisitions.

Reliance on Patents and Proprietary Rights. The success and future revenue
growth of the Company will depend, in part, on its ability to obtain or license
patents, protect trade secrets and operate without infringing on the rights of
others. The Company holds certain patent rights with respect to some of its
medical products and has filed, and expects in the future to file, additional
patent applications. The Company believes that some measure of patent protection
with respect to its products will be required to allow it to compete with large
medical products companies. There can be no assurance that the patents applied
for will be issued or that any patents issued to or licensed by the Company will
provide it with competitive advantages. In addition, the Company could incur
substantial costs in defending its proprietary rights. Although the Company
believes that its patents are valid, there can be no assurance that the validity
of any patent will be upheld if challenged. Further, there can be no assurances
as to the breadth and degree of protection of these rights or that other
companies will not independently develop products similar to the Company's
products that will not infringe on its rights but will compete directly with its
products. In addition, the laws of some foreign countries may not protect the
Company's proprietary rights to the same extent as the laws of the United
States.

The patents or proprietary rights of others may have an adverse effect on
the ability of the Company to do business in the future. The Company may be
required to obtain licenses to patents or proprietary rights of other parties in
order to produce and sell certain of their products. No assurance can be given
that any licenses required under any such patent or proprietary rights would be
made available on terms acceptable to the Company, if at all. If the Company
does not obtain or maintain such licenses, it could encounter delays in product
introductions while it attempts to design around or contest the validity of such
patents, or the Company could find that the development, manufacture or sale of
products requiring such licenses could be foreclosed, any of which could have a
material adverse effect on the Company.

The Company also relies on trade secret law and confidentiality agreements
to protect its unpatented proprietary know-how. However, much of the technology
used in the Company's products is widely known, and there can be no assurance
that such confidentiality agreements will provide meaningful protection for the
Company's trade secrets or other proprietary information. Moreover, in the
absence of patent protection, the Company's business may be adversely affected
by competitors who independently develop substantially equivalent technology.

Regulatory Approval Required for Product Marketing. Most of the Company's
medical products are subject to regulation by the United States Food and Drug
Administration ("FDA") and comparable agencies in foreign countries. The process
of receiving governmental approval may take a number of years and the
expenditure of substantial resources. The Federal Food, Drug and Cosmetic Act,
the Public Health Services Act and other federal statutes and regulations govern
or influence the testing, manufacture, safety, labeling, storage, recordkeeping,
approval, advertising and promotion of such products. Noncompliance with
applicable requirements can result in fines, recall or seizure of products,
total or partial suspension of production, refusal of the government to approve
product license applications or to allow the Company to enter into supply
contracts, and criminal prosecution. The FDA also has the authority to revoke
product licenses and establishment licenses previously granted. Failure to
comply with present or future regulatory requirements, or

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new information reflecting on the safety or effectiveness of an approved
product, can lead the FDA to withdraw its approval to market a product.

The FDA requires that a manufacturer introducing a new medical device or a
new indication for use of an existing medical device obtain either a 510(k)
premarket notification clearance or a premarket approval ("PMA") prior to the
market introduction. The 501(k) premarket notification clearance process is
significantly quicker and less costly than the PMA approval process. Through May
31, 1996, all of the Company's FDA marketing clearances have been obtained
through the FDA's 510(k) process. The Company believes that it is in material
compliance with the FDA's 510(k) requirements for new and modified devices. The
FDA has announced a program to review approvals (510(k) and PMAs) for certain
devices. There can be no assurance that upon any such review the FDA will agree
with the Company's determination regarding their 510(k)s. If the FDA were to
disallow a 510(k) marketing clearance for any device, the Company could be
required to file appropriate applications, either 510(k) or PMA, with the FDA or
to take the products in question off the market. If the FDA were to require
suspension of the sale of one or more of the products pending receipt of 510(k)
clearance or if the FDA were to refuse to grant 510(k) clearance, the Company's
business, results of operations and financial condition could be materially and
adversely affected. There can be no assurance that the Company will obtain
timely regulatory approval for its future products, or that existing approvals
will not be withdrawn. Moreover, regulatory approvals, if granted, may include
significant limitations on the indicated uses for which a product may be
marketed.

Healthcare Reform. Healthcare is an area of extensive and dynamic
regulatory change. In recent years, an increasing number of legislative
proposals have been introduced or proposed in Congress and in some state
legislatures that would effect major changes in the healthcare system, either
nationally or at the state level. Among the proposals under consideration are
cost controls on hospitals, insurance market reforms to increase the
availability of group health insurance to small businesses, requirements that
all businesses offer health insurance coverage to their employees and the
creation of a single government health insurance plan that would cover all
citizens. Key elements in many of the healthcare reform proposals included
various insurance market reforms, the requirement that businesses provide health
insurance coverage for their employees, reductions or smaller increases in
future Medicare and Medicaid reimbursement to providers and more stringent
governmental cost controls. None of these proposals have been adopted. There
continue to be efforts at the federal level to introduce various insurance
market reforms, expanded fraud and abuse and anti-referral legislation and
further reduction in Medicare and Medicaid reimbursement. A broad range of both
similar and more comprehensive healthcare reform initiatives is likely to be
considered at the state level. The costs of certain proposals would be funded in
part by reductions in payments by governmental programs, including Medicare and
Medicaid to healthcare providers. In addition, both public and private payors
are increasing pressures to limit increases in healthcare costs. These changes
could have a material adverse effect on the Company's business, results of
operations and financial condition.

Competition. The markets in which the Company competes are very
competitive and are characterized by rapidly evolving technology and product
obsolescence. The Company believes that its ability to develop and commercialize
new products and product enhancements is and will be critical to its continued
growth and eventual profitability. There are a substantial number of medical
products companies and such companies could develop or offer products which will
compete with those products which the Company currently markets or intends to
market. Most of these companies have marketing and distribution capabilities,
and virtually all of them have capital resources and research and development
staffs substantially greater than those of the Company. Moreover, it is
reasonable to expect additional entrants into the field. Any of these companies
could introduce competing products, which could cause a decline in sales or loss
of market acceptance of existing or future products of the Company. In addition,
increased competitive pressure could lead to intensified price-based competition
that could materially adversely affect the Company's business, results of
operations and financial condition. There can be no assurance that the Company
will be able to compete successfully in the future.

Dependence on Management. The success of the Company will depend on its
ability to attract and retain highly qualified personnel. In particular, the
loss of Charles A. Laverty, the Company's Chief Executive Officer, would have
material adverse effect on the Company's business if a suitable replacement
could not be

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found. The Company has an employment agreement with Mr. Laverty that provides
for a three-year term expiring on April 1, 1999. The agreement automatically
renews for additional three-year terms if not terminated by prior notice. Mr.
Laverty has agreed that for a period of 18 months after termination of his
employment that he will not compete with the Company. The Company has "key
person" insurance on the life of Mr. Laverty, however, there can be no assurance
that such insurance would be sufficient to compensate the Company for his loss.
There can be no assurance that the Company will be successful in attracting or
retaining key personnel. The loss of service of key personnel could have a
material adverse effect on the Company.

Warrants and Options; Potential Dilution and Adverse Impact on Additional
Financing. As of March 31, 1996, the Company had outstanding options and
warrants to purchase an aggregate of 7,052,535 shares of Common Stock, at a
weighted average exercise price of $9.74 per share. The Company is also
obligated to issue 260,163 warrants in connection with the settlement of
stockholders litigation. In addition, in May 1996, the Company issued (or
committed to issue) $50.0 million of the Company's 8.75% Convertible
Subordinated Debentures due 2006 (the "Convertible Debentures). The holders of
the Convertible Debentures would be entitled to receive 4,545,455 shares of
Common Stock if such holders elected to convert all of the Convertible
Debentures into Common Stock. To the extent that the outstanding options and
warrants are exercised, or convertible securities are converted, dilution of the
interests of the Company's stockholders may occur. For the life of such
warrants, options and convertible securities the holders will have the
opportunity to profit from a rise in the price of the underlying securities. The
existence of such warrants, options and convertible securities may adversely
affect the terms on which the Company can obtain additional financing, and the
holders of such warrants, options and convertible securities can be expected to
exercise them at a time when the Company would, in all likelihood, be able to
obtain additional capital by an offering of its unissued capital stock on terms
more favorable to the Company than those provided by such warrants, options and
convertible securities.

Limitation on Use of Tax Net Operating Loss Carryovers. As of March 31,
1996, the Company had accumulated net operating loss carryovers for U.S. federal
and state income tax purposes of approximately $42.0 million and $30.0 million,
respectively. These loss carryovers would expire, if not previously utilized
against income of the Company, in various years through 2011. The future income
tax benefit of these losses has not been given recognition in the consolidated
financial statements. Under Section 382 of the United States Internal Revenue
Code of 1986, as amended (the "Code"), and corresponding provisions of state tax
law, certain "ownership changes" with respect to the stock of a corporation
having unused net operating loss carryovers (a "loss corporation"), or with
respect to the stock of its parent corporation, may result in annual limitations
on utilizations of such loss carryovers against future income of the loss
corporation. In connection with the acquisition of Osbon, an ownership change
occurred for purposes of Section 382 of the Code, thereby subjecting the Company
to annual limitations on its ability to offset its existing loss carryovers
against its future income.

Products Liability Exposure. The medical products manufactured by the
Company have from time to time become the subject of products liability
litigation initiated by the patients using the products. In addition, the
Company will be subject to an increased risk of products liability claims as
additional products enter the market. The Company believes that its products
have been manufactured in accordance with industry standards, and believes it
has maintained adequate products liability insurance coverage. Nevertheless, an
increased volume of products liability litigation could have a material adverse
effect on the Company's business, results of operations and financial condition
in the future. There can be no assurance that the Company's insurance will be
sufficient or that it will be able to obtain such insurance in the future at
satisfactory rates and in adequate amounts, if at all. The Company cannot
predict the effect that any such future claims, regardless of their ultimate
outcome, might have on its business.

Pending Legal Proceedings. Class action litigation was filed against
Davstar (the Company's predecessor) and former management of Davstar in November
1992, in the United States District Court in Los Angeles, California alleging
federal securities law claims. The Company negotiated a settlement of the
pending stockholder action, without admitting any liability, and in March 1995,
the court approved the settlement. Under the terms of the settlement, the
Company will issue to the stockholder class and register

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pursuant to the Securities Act 260,163 warrants to purchase Common Stock
identical to the Company's currently outstanding publicly traded warrants having
an exercise price of $15.00 per share and an expiration date of March 20, 1997.
No cash payment is being made by the Company. The Company's insurance carrier
will make a cash payment to the stockholder class in the amount of $2.4 million.
Attorneys' fees and other costs awarded to the plaintiffs will, with the court's
approval, be paid to plaintiff's counsel from the settlement described above.
The settlement will include a release of class claims.

The Securities and Exchange Commission (the "Commission") also instituted
an investigation relating to the dissemination by Davstar's former management of
allegedly false and misleading press releases and one Annual Report on Form 10-K
concerning Davstar's products and future business prospects and the
dissemination by others of allegedly false and misleading research reports and
investment newsletters. The Commission has approved a settlement under which the
Company neither admits nor denies the findings of the Commission and under which
the Company is the subject of a cease and desist order. There were no monetary
sanctions sought against the Company as a part of the settlement. Under
indemnification agreements between the Company and Davstar's former President,
CEO and director, and a former consultant and employee of Davstar, the Company
may be liable for attorneys' fees and, in the case of former consultant and
employee, any civil penalties incurred in connection with Commission proceedings
in connection with the same events described above.

In April 1995, Advanced (which was acquired by the Company on December 29,
1995 by merging Advanced into Dacomed Corporation, a wholly-owned subsidiary of
the Company) was served with an amended consolidated class action complaint
filed in the United States District Court for the Southern District of New York
which names Advanced as one of the defendants in the class action lawsuit titled
"In re Blech Securities Litigation." The complaint relates primarily to the
alleged manipulation of the market prices of the securities of 24 corporations,
including Advanced (collectively, the "Issuers") by defendants D. Blech &
Company Incorporated, one the underwriters in the initial public offering of
Advanced in August, 1993, and David Blech, a former director of Advanced. The
complaint alleges that manipulation of such market prices was effected through
various improper and/or illegal securities trading practices in which 11 of the
Issuers, including Advanced, and various other corporate and individual
defendants allegedly participated. In September 1995, Advanced and the
plaintiffs in the litigation, through their attorneys, reached an agreement in
principle for the settlement of the class action with respect to Advanced, the
terms of which are set forth in a Stipulation of Settlement between such
parties. Pursuant to the terms of the Stipulation of Settlement, Advanced paid
$300,000 in settlement of such lawsuit. Such settlement provided, among other
things, for the dismissal with prejudice of the class action as against Advanced
and a release by all members of the settlement class of Advanced from claims
arising out of any matter alleged in such action.

The settlement is subject to court approval, and the court's dismissal of
the action as against Advanced without costs to any party. There can be no
assurance that the settlement will be approved by the court on the terms
provided for in the Stipulation of Settlement. In the event that the settlement
is not approved by the court, Dacomed (as the successor to Advanced) could incur
significant costs in defending and/or settling such lawsuit.

Volatility of Stock Price. The market price of the Company's Common Stock
is subject to significant fluctuations in response to variations in quarterly
operating results, general trends in the market for healthcare products, and
other factors. In addition, broad market fluctuations as well as general
economic or political conditions such as healthcare reform may adversely affect
the market price of the Company's Common Stock, regardless of the Company's
actual operating performance. The market price of the Company's Common Stock has
historically been very volatile. In the past, following periods of volatility in
the market price of a company's securities, securities class action litigation
has often been instituted against such a company. Such litigation, if instituted
against the Company, could result in substantial costs and a diversion of
management attention and resources.

Tax Liability. On July 24, 1995, the Company redomesticated from Canada to
the United States. As of July 24, 1995, the Company had loss carryovers for
Canadian income tax purposes of approximately $15.0 million, of which $4.0
million would expire in various years through 2003 and $11.0 million would
carryforward indefinitely. These losses will not be carried forward due to the
redomestication. Any potential Canadian tax liability arising from the
redomestication will be offset against the Company's Canadian loss carryovers.
Accordingly, no provision for any such potential liability has been included in
the Company's consolidated financial statements.

7
<PAGE> 9

PRICE RANGE OF COMMON STOCK AND DIVIDENDS

Urohealth's Common Stock is traded on the American Stock Exchange ("AMEX")
under the symbol "URO." The following table sets forth the high and low sales
prices per share for the periods indicated, as reported by AMEX. The information
in the table has been adjusted to give effect to the one-for-three reverse stock
split that was effective December 29, 1995. For current price information,
prospective purchasers are encouraged to consult publicly available sources.

<TABLE>
<CAPTION>
HIGH LOW
--- ---
<S> <C> <C>
FISCAL 1995:
First quarter....................................................... $15 3/8 $ 9 /16
Second quarter...................................................... $13 1/8 $ 5 5/8
Third quarter....................................................... $11 1/4 $ 4 1/2
Fourth quarter...................................................... $1011/16 $ 8 1/4
FISCAL 1996:
First quarter....................................................... $13 7/8 $ 9
Second quarter...................................................... $ 9 3/8 $ 6 /16
Third quarter....................................................... $13 1/8 $ 8 1/8
FISCAL 1997:
First quarter....................................................... $15 7/8 $12 1/8
Second quarter (through August 15, 1996)............................ $14 3/4 $10 5/8
</TABLE>

The Company has never paid cash dividends on its Common Stock and does not
anticipate that it will do so in the foreseeable future. The present policy of
the Company is to retain earnings, if any, to finance the anticipated growth of
its business. In addition, the Company is restricted from paying cash dividends
under the terms of the outstanding preferred stock of a subsidiary.

8
<PAGE> 10

SELLING STOCKHOLDERS

The Selling Stockholders are persons who acquired shares in connection with
the acquisitions by the Company of Allstate, Dacomed and Osbon, former
affiliates of Advanced, a consultant to the Company and an entity that provided
debt and equity financing to the Company. The shares covered by this Prospectus
are being registered to permit public secondary trading of the shares and the
Selling Stockholders may offer the shares for resale from time to time. See
"Plan of Distribution."

Except as described below, none of the Selling Stockholders has had a
material relationship with the Company within the past three years other than as
a result of the ownership of the Common Stock and other securities of the
Company.

The following table sets forth certain information with respect to the
number of shares owned by certain Selling Stockholders prior to and after the
offering (assuming each Selling Stockholder elects to sell all of its shares
being registered).

<TABLE>
<CAPTION>
SHARES PERCENT SHARES PERCENT
BENEFICIALLY BENEFICIALLY NUMBER BENEFICIALLY BENEFICIALLY
OWNED PRIOR OWNED PRIOR OF SHARES OWNED AFTER OWNED AFTER
TO OFFERING TO OFFERING(1) OFFERED OFFERING OFFERING(1)
----------- --------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
FoxMeyer Corporation................ 2,464,827(2) 16.2% 1,414,827 1,050,000 6.9%
Gerald W. Timm...................... 1,218,480(3) 8.6 300,000 918,480 6.5
Banque Indosuez..................... 916,667(4) 6.1 366,667 550,000 3.6
John J. Woodhead.................... 190,488 1.3 190,488 -- --
Biotechnology Investment Group
LLC............................... 129,808 * 129,808 -- --
Charles Q. Smith.................... 20,000 * 20,000 -- --
Julian W. Osbon..................... 3,000,000 21.2 540,000 2,460,000 17.3
James B. Osbon...................... 500,000 3.5 90,000 410,000 2.9
Robert E. Osbon..................... 500,000 3.5 90,000 410,000 2.9
Anthony D. Osbon.................... 500,000 3.5 90,000 410,000 2.9
Carolyn O. Heath.................... 500,000 3.5 90,000 410,000 2.9
Stephen J. Shapiro.................. 66,965 * 66,965 -- --
Alan Schempp........................ 44,643 * 44,643 -- --
Leon Daykhovsky..................... 22,321 * 22,321 -- --
Stephen A. Sonowski................. 44,643 * 44,643 -- --
</TABLE>

- ---------------

* Less than 1%.

(1) Excludes outstanding options and warrants and the Company's 8.75%
Convertible Subordinated Debentures due 2006 (the "Convertible Debentures").
The Convertible Debentures vote with the Common Stock of the Company on an
"as converted" basis, and if all converted would convert into 4,545,455
shares of Common Stock.

(2) Includes 1,414,827 shares of Common Stock and warrants to purchase 1,050,000
shares of Common Stock which are currently exercisable.

(3) Includes 101,540 shares held by Mr. Timm's spouse. Also includes 194,618
shares held in trusts for the benefit of the children of Mr. Timm and his
spouse.

(4) Includes (i) warrant to purchase 366,667 shares at an exercise price of
$9.15 per share; (ii) warrant to purchase 350,000 shares at an exercise
price of $9.15 per share; and (iii) warrant to purchase 200,000 shares at an
exercise price of $9.15 per share.

In July 1995, the Company sold to FoxMeyer Corporation ("FoxMeyer") 60,000
shares of Series B Preferred Stock for an aggregate purchase price of
$4,000,000. The Series B Preferred Stock had an aggregate redemption value and
conversion value of $6,000,000. The Series B Preferred Stock was entitled to
dividends at a rate per annum of $0.6250 per share for dividends paid by issuing
additional shares of Series B Preferred Stock. The Series B Preferred Stock was
convertible into Common Stock of the Company at $6.00 per share.

In July 1995 FoxMeyer also purchased from the Company for $1,000,000 a
Convertible Note with a face principal amount of $2,000,000. The note bore
interest at a rate per annum equal to 6.250% with respect to interest payments
made by delivering additional notes. The Convertible Note was convertible into
Common Stock of the Company of $6.00 per share.

In May 1996, FoxMeyer converted all of the Series B Preferred Stock and the
Convertible Note described above into Common Stock of the Company. In connection
with that transaction, the Company replaced existing warrants to purchase
800,000 shares of Common Stock of the Company with a new warrant

9
<PAGE> 11

to purchase 800,000 shares of Common Stock at a blended exercise price of $6.875
per share. In addition, the Company issued FoxMeyer a warrant to purchase
250,000 shares of Common Stock at an exercise price of $10.00 per share. The
Company also agreed to use its reasonable best efforts to maintain the two board
seats currently held by FoxMeyer nominees as a result of their ownership of
Series B Preferred Stock for the next two years.

Gerald W. Timm is a director of the Company. Dr. Timm was the founder of
Dacomed (which was acquired by the Company in July 1995), and he received his
shares of Common Stock of the Company listed in the above table in exchange for
the shares of Dacomed stock previously owned by him. In connection with the
acquisition of shares of Common Stock of the Company in the Dacomed merger, Dr.
Timm was granted certain registration rights with respect to the shares
acquired. Dr. Timm served as Executive Vice President of the Company from July
1995 until April 1996.

The shares of Common Stock listed in the above table as beneficially owned
by Banque Indosuez are shares issuable upon exercise of warrants beneficially
owned by Banque Indosuez. The warrants expire, if not previously exercised,
through 2001. The warrants were issued to Banque Indosuez in connection with
financings provided to the Company.

In July 1995, the Company acquired Allstate in a transaction pursuant to
which Mr. Woodhead received his shares of Common Stock listed in the above
table. In connection with that transaction, Mr. Woodhead was granted certain
registration rights with respect to the shares acquired. In addition, the
Company entered into a consulting agreement with Mr. Woodhead which expires in
1999, and which provided for payments of $200,000 in 1995 and $7,500 per month
for the remainder of the term.

The shares of Common Stock listed in the above table as beneficially owned
by Biotechnology Investment Group LLC were acquired in exchange for shares of
Advanced formerly held by them in connection with the acquisition of Advanced by
the Company on December 29, 1995.

The shares of Common Stock listed in the above table as beneficially owned
by Charles Q. Smith are shares issuable upon exercise of a warrant beneficially
owned by Charles Q. Smith entitling the holder to acquire 20,000 shares of
UROHEALTH Common Stock at an exercise price of $18.00 per share. The warrant
expires, if not previously exercised, on April 12, 1997. The warrant was granted
to Charles Q. Smith in connection with consulting services provided to the
Company.

In December 1995, the Company acquired Osbon in a transaction pursuant to
which Julian Osbon, James Osbon, Robert Osbon, Anthony Osbon and Carolyn Heath
acquired the shares of Common Stock listed in the above table. In connection
with that transaction, the former Osbon shareholders were granted certain
registration rights with respect to the shares acquired. Julian W. Osbon serves
as a director and President of Urohealth, and James B. Osbon serves as a
director and Vice President of Urohealth.

In connection with the consummation of the Osbon merger, the Company
entered into a three-year employment agreement with Julian W. Osbon which
provides for a minimum annual salary of $400,000. The Company also entered into
a three-year employment agreement with James Osbon providing for salary and
bonus comparable to the annual salary, bonus and commissions received by James
Osbon prior to the Osbon merger. Julian W. Osbon has a right of first refusal to
acquire three parcels of real estate currently owned by the Company. Urohealth
has no present intention of disposing of the property. Under the terms of the
Osbon Merger Agreement, Urohealth has agreed to continue to engage Charter
Advertising, a company wholly-owned by Julian W. Osbon, to perform advertising
services with respect to the Osbon products for a one-year period after the
Osbon Merger; provided, that the rates charged and services provided are
competitive with rates and services for similar services available from third
parties.

Under the terms of the Osbon Merger Agreement, Urohealth has agreed to
continue the funding of a non-profit, public benefit corporation established by
Geddings Osbon Sr. The non-profit corporation currently receives funding from
Osbon, and Julian W. Osbon serves on the Board of Directors of the non-profit
corporation. The minimum funding obligations of Urohealth under the Osbon Merger
Agreement are: (i) $500,000 for the first full fiscal year after the Osbon
Merger; and (ii) 2% of pre-tax profits with respect to Osbon operations for the
second, third and fourth fiscal years after the Osbon Merger.

Messrs. Shapiro, Schempp, Daykhovsky and Sonowski acquired an aggregate of
178,572 shares of Common Stock of the Company in connection with the acquisition
of Endoscopic Imaging Systems, Inc. ("EIS") by the Company in May 1996. Under
the Merger Agreement, the former EIS shareholders received the shares of Common
Stock of the Company listed above in exchange for all of the issued and
outstanding shares of EIS cpital stock. In addition, the former EIS shareholders
are entitled to an earn-out payment based

10
<PAGE> 12

on future sales of products acquired by the Company from EIS as a result of the
merger. Dr. Shapiro is also an employee of, and acts as a consultant to, the
Company.

PLAN OF DISTRIBUTION

The Common Stock offered hereby may be sold from time to time to purchasers
directly by any of the Selling Stockholders. Alternatively, any of the Selling
Stockholders may from time to time offer the Common Stock through underwriters,
dealers or agents who may receive compensation in the form of underwriting
discounts, concessions or commissions from the Selling Stockholders and/or the
purchasers of Common Stock for whom they may act as agent. The Selling
Stockholders and any underwriters, dealers or agents participating in the
distribution of Common Stock may be deemed to be underwriters, and any profit on
the sale of Common Stock by them and any discounts, commissions or concessions
received by any such underwriters, dealers or agents might be deemed to be
underwriting discounts and commissions under the Securities Act. At the time a
particular offer of Common Stock is made, if required, a Prospectus Supplement
will be distributed which will set forth the aggregate amount of Common Stock
being offered and the terms of the offering, including the name or names of any
underwriters, dealers or agents, any discounts, commissions and other items
constituting compensation from the Selling Stockholders and any discounts,
commissions or concessions allowed or reallocated or paid to dealers, including
the proposed selling price to the public. The Company will not receive any of
the proceeds from the sale by the Selling Stockholders of the Common Stock
offered hereby.

The Common Stock may be sold from time to time in one or more transactions
at a fixed offering price, which may be changed, or at varying prices determined
at the time of sale or at negotiated prices. Such prices will be determined by
the Selling Stockholders or by agreement between the Selling Stockholders and
underwriters or dealers.

Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of any of the Common Stock may not simultaneously
engage in market activities with respect to any of the Common Stock for a period
of nine business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, the Selling Stockholders will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Rules 10b-2, 10b-6 and
10b-7, which provisions may limit the timing of purchases and sales of any of
the Common Stock by the Selling Stockholders. All of the foregoing may affect
the marketability of the Common Stock.

Pursuant to agreements with the Selling Stockholders, the Company will pay
substantially all of the expenses incident to the registration, offering and
sale of the Common Stock to the public other than commissions and discounts of
underwriters, dealers or agents, and has agreed to indemnify the Selling
Stockholders against certain liabilities, including liabilities under the
Securities Act.

In order to comply with certain states' securities laws, if applicable, the
Common Stock will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In certain states the Common Stock may not be sold
unless the Common Stock has been registered or qualified for sale in such state
or an exemption from registration or qualification is available and is complied
with.

The Company has agreed to keep the Registration Statement of which this
Prospectus forms a part continuously effective until July 31, 1997 or such
shorter period which will terminate when all Common Stock covered by the
Registration Statement has been sold.

11
<PAGE> 13

LEGAL MATTERS

Certain legal matters will be passed upon for the Company by Morrison &
Foerster LLP, Irvine, California.

EXPERTS

The consolidated financial statements of UROHEALTH Systems, Inc.
("UROHEALTH") for the nine months ended March 31, 1996 and for the year ended
June 30, 1995 appearing in UROHEALTH's Transition Report (Form 10-K) for the
nine months ended March 31, 1996, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.

The consolidated financial statements of UROHEALTH as of June 30, 1994 and
for the year then ended have been audited, as to the combination only, by Ernst
& Young LLP. These consolidated financial statements included UROHEALTH Systems,
Inc., Dacomed Corporation, Allstate Products, Inc, Osbon Medical Systems, Ltd.
and Advanced Surgical Inc. The consolidated financial statements of UROHEALTH as
of June 30, 1994 and for the year then ended were audited by Doane Raymond,
Chartered Accountants. The consolidated financial statements of Dacomed
Corporation as of June 24, 1995, and for the fiscal year then ended and for the
fiscal year ended October 29, 1994, were audited by KPMG Peat Marwick, LLP,
independent accountants. The consolidated financial statements of Osbon Medical
Systems Ltd. as of September 30, 1994 and for the year then ended have been
audited by Cherry, Bekaert & Holland, independent certified public accountants.
The consolidated financial statements of Advanced Surgical Inc. for the year
ended December 31, 1994 and the year then ended, have been audited by Coopers &
Lybrand L.L.P., independent auditors, as set forth in their report, which
includes an explanatory paragraph related to Advanced's ability to continue as a
going concern. The financial statements referred to above are included in the
consolidated financial statements of UROHEALTH in reliance upon such reports
given upon the authority of such firms as experts in accounting and auditing.

The consolidated financial statements of Richard-Allan Medical Industries,
Inc. as of June 30, 1995 and 1994 and for the years then ended, appearing in
UROHEALTH'S Form 8-K/A filed with the Securities and Exchange Commission on
August 12, 1996 have been audited by Ernst & Young LLP, independent auditors, as
set forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.

The consolidated financial statements of Richard-Allan Medical Industries,
Inc. for the year ended June 30, 1993, appearing in UROHEALTH's Form 8-K/A filed
with the Securities and Exchange Commission on August 12, 1996 have been audited
by BDO Siedman LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such consolidated
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.

12
<PAGE> 14

- ------------------------------------------------------
- ------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY JURISDICTION WHERE, OR
TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE
DATE HEREOF.

---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Risk Factors.......................... 3
Price Range of Common Stock and
Dividends........................... 8
Selling Stockholders.................. 9
Plan of Distribution.................. 11
Legal Matters......................... 12
Experts............................... 12
</TABLE>

- ------------------------------------------------------
- ------------------------------------------------------

3,500,362 SHARES

UROHEALTH
SYSTEMS, INC.

COMMON STOCK

------------------------------
PROSPECTUS
------------------------------

JUNE , 1996

- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 15

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The expenses in connection with the offer and sale of the securities being
registered, other than underwriting discounts and commissions, are estimated as
follows:

<TABLE>
<CAPTION>
<S> <C>
Registration Fee........................................................... $16,748
Legal Fees and Expenses.................................................... 12,000
Blue Sky Fees and Expenses................................................. 5,000
Accounting Fees and Expenses............................................... 11,000
Printing and Engraving Expenses............................................ 10,000
Transfer Agent and Registrar Fees.......................................... 3,000
Miscellaneous.............................................................. 2,000
-------
Total.................................................................... $43,748
=======
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Reference is made to Section 145 ("Section 145") of the General Corporation
Law of the State of Delaware (the "DGCL") which provides for indemnification of
directors and officers in certain circumstances.

The Company's Certificate of Incorporation provides that a director of the
Company will not be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director of the Company
except for liability (i) for any breach of such director's duty of loyalty to
the Company or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the law, (iii)
under Section 174 of the DGCL (unlawful payment of dividends), or (iv) for any
transaction from which such director derived an improper personal benefit.

The Company is empowered by Section 145 of the DGCL, subject to the
procedures and limitations stated therein, to indemnify any person against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in the defense of any
threatened, pending or completed action, suit or proceeding in which such person
is made a party by reason of his or her being or having been a director or
officer of the Company. The statute provides that indemnification pursuant to
its provisions is not exclusive of other rights of indemnification to which a
person may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise.

The Company's Bylaws provide that the Company shall indemnify its
directors, and may indemnify its officers, to the full extent permitted by law.

The Registrant has entered into agreements with certain directors and
officers that require the Registrant to indemnify such persons against expenses,
judgments, fines, settlements and other amounts to the fullest extent permitted
by law incurred in connection with any proceeding to which any such person may
be made a party by reason of the fact that such person is or was a director or
officer of the Registrant or any of its affiliated enterprises, provided such
person acted honestly and in good faith with a view to the best interests of the
corporation.

There are directors' and officers' liability insurance policies presently
in force insuring directors and officers of the Registrant and its subsidiaries.

II-1
<PAGE> 16

ITEM 16. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ ----------------------------------------------------------------------------------
<C> <S>
3.1 Certificate of Incorporation of Urohealth Systems, Inc., as amended through May 9,
1996. Incorporated by reference to Exhibit 3.1 of the Company's Annual Report on
Form 10-K for the fiscal period ended March 31, 1996.
4.1 Form of Certificate for Common Stock. Incorporated by reference to Exhibit 4.1 of
the Company's Annual Report on Form 10-K for the fiscal period ended March 31,
1996.
4.2 Form of Warrant. Incorporated by reference to Exhibit 4.2 of the Registrant's Form
S-1 Registration Statement No. 33-45129 ("Form S-1 No. 33-45129").
4.3 Warrant Agreement. Incorporated by reference to Exhibit 4.3 of the Registrant's
Form S-1 No. 33-45129.
4.4 First Amendment to Warrant Agreement dated as of September 27, 1993. Incorporated
by reference to Exhibit 4.3.2 of the Registrant's Form S-3 Registrant Statement
No. 33-71248 ("Form S-3 No. 33-71248").
4.5 Second Amendment to Warrant Agreement dated as of October 29, 1993. Incorporated
by reference to Exhibit 4.3.3 of the Registrant's Form S-3 No. 33-71248.
4.6 Third Amendment to Warrant Agreement dated as of April 8, 1994. Incorporated by
reference to Exhibit 4.3.3 of the Registrant's Form S-3 Registration Statement No.
33-79250 ("Form No. 33-79250").
4.7 Rights Agreement. Incorporated by reference to Exhibit 4.1 to the Registrant's
Current Report on Form 8-K dated May 20, 1993 (the "May 20, 1993 Form 8-K").
4.8 Form of Rights Certificate. Incorporated by reference to Exhibit 4.2 to the
Registrant's May 20, 1993 Form 8-K.
5.1 Opinion of Morrison & Foerster LLP.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Doane Raymond.
23.3 Consent of Coopers & Lybrand L.L.P.
23.4 Consent of KPMG Peat Marwick LLP.
23.5 Consent of Cherry, Bekaert & Holland.
23.6 Consent of Ernst & Young LLP
23.7 Consent of BDO Seidman LLP
23.8 Consent of Morrison & Foerster LLP (included in Exhibit 5.1)
24.1 Power of Attorney of certain officers and directors (included in Part II to the
Registration Statement).**
</TABLE>

- ---------------

** Previously filed

ITEM 17. UNDERTAKINGS

(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933 (the "Act"), each
filing of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Exchange Act of 1934 (the "Exchange Act") (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

(b) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the provisions described in Item 15 above, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such

II-2
<PAGE> 17

indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

(1) For purposes of determining any liability under the Act, 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 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 Act, 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.

(d) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;

(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 the
securities offered would not exceed that which was registered) and any
deviation from the low or high and the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 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 paragraphs (d)(1)(i) and (d)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any
financial statements required by Rule 3-19 of this chapter at the start of
any delayed offering or throughout a continuous offering. Financial
statements and information otherwise

II-3
<PAGE> 18

required by Section 10(a)(3) of the Act need not be furnished, provided,
that the registrant includes in the prospectus, by means of a
post-effective amendment, financial statements required pursuant to this
paragraph (a)(4) and other information necessary to ensure that all other
information in the prospectus is at least as current as the date of those
financial statements. Notwithstanding the foregoing, with respect to
registration statements on Form F-3, a post-effective amendment need not be
filed to include financial statements and information required by Section
10(a)(3) of the Act or Rule 3-19 of this chapter if such financial
statements and information are contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the Form F-3.

II-4
<PAGE> 19

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Newport Beach, State of California, on August 16,
1996.

UROHEALTH SYSTEMS, INC.

By: /s/ CHARLES A. LAVERTY
-----------------------------------
Charles A. Laverty
Chairman and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- --------------------------------------------- ------------------------------- ----------------
<C> <S> <C>

/s/ CHARLES A. LAVERTY Chairman of the Board and Chief August 16, 1996
- --------------------------------------------- Executive Officer (Principal
Charles A. Laverty Executive Officer)

/s/ JAMES L. JOHNSON Executive Vice President and August 16, 1996
- --------------------------------------------- Chief Financial Officer
James L. Johnson (Principal Financial Officer)

/s/ JEFFREY J. DUNNIGAN Vice President-Finance August 16, 1996
- --------------------------------------------- (Principal Accounting Officer
Jeffrey J. Dunnigan

* Director August 16, 1996
- ---------------------------------------------
Abbey J. Butler

* Director August 16, 1996
- ---------------------------------------------
Robert N. Elkins

* Director August 16, 1996
- ---------------------------------------------
Melvyn J. Estrin

* Director August 16, 1996
- ---------------------------------------------
Lawrence Goelman
</TABLE>

II-5
<PAGE> 20

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- --------------------------------------------- ------------------------------- ----------------
<C> <S> <C>
* Director August 16, 1996
- ---------------------------------------------
Gerald W. Timm

* Director August 16, 1996
- ---------------------------------------------
Julian W. Osbon

* Director August 16, 1996
- ---------------------------------------------
James B. Osbon

* Director August 16, 1996
- ---------------------------------------------
Francis J. Tedesco

* Director August 16, 1996
- ---------------------------------------------
Mitchell J. Blutt, M.D.

Director , 1996
- ---------------------------------------------
Michael S. Gross

* Director August 16, 1996
- ---------------------------------------------
John Chamberlin

Director , 1996
- ---------------------------------------------
C. Sage Givens

*By: /s/ CHARLES A. LAVERTY
----------------------------------------
Charles A. Laverty
Attorney-in-Fact
</TABLE>

II-6
<PAGE> 21

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED PAGE
- ----------- ------------------------------------------------------------------- -------------
<S> <C> <C>
3.1 Certificate of Incorporation of Urohealth Systems, Inc., as amended
through May 9, 1996. Incorporated by reference to Exhibit 3.1 of
the Company's Annual Report on Form 10-K for the fiscal period
ended March 31, 1996.
4.1 Form of Certificate for Common Stock. Incorporated by reference to
Exhibit 4.1 of the Company's Annual Report on Form 10-K for the
fiscal period ended March 31, 1996.
4.2 Form of Warrant. Incorporated by reference to Exhibit 4.2 of the
Registrant's Form S-1 Registration Statement No. 33-45129 ("Form
S-1 No. 33-45129").
4.3 Warrant Agreement. Incorporated by reference to Exhibit 4.3 of the
Registrant's Form S-1 No. 33-45129.
4.4 First Amendment to Warrant Agreement dated as of September 27,
1993. Incorporated by reference to Exhibit 4.3.2 of the
Registrant's Form S-3 Registrant Statement No. 33-71248 ("Form S-3
No. 33-71248").
4.5 Second Amendment to Warrant Agreement dated as of October 29, 1993.
Incorporated by reference to Exhibit 4.3.3 of the Registrant's Form
S-3 No. 33-71248.
4.6 Third Amendment to Warrant Agreement dated as of April 8, 1994.
Incorporated by reference to Exhibit 4.3.3 of the Registrant's Form
S-3 Registration Statement No. 33-79250 ("Form No. 33-79250").
4.7 Rights Agreement. Incorporated by reference to Exhibit 4.1 to the
Registrant's Current Report on Form 8-K dated May 20, 1993 (the
"May 20, 1993 Form 8-K").
4.8 Form of Rights Certificate. Incorporated by reference to Exhibit
4.2 to the Registrant's May 20, 1993 Form 8-K.
5.1 Opinion of Morrison & Foerster LLP.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Doane Raymond.
23.3 Consent of Coopers & Lybrand L.L.P.
23.4 Consent of KPMG Peat Marwick LLP.
23.5 Consent of Cherry, Bekaert & Holland.
23.6 Consent of Ernst & Young LLP
23.7 Consent of BDO Seidman LLP
23.8 Consent of Morrison & Foerster LLP (included in Exhibit 5.1)
24.1 Power of Attorney of certain officers and directors (included in
Part II to the Registration Statement).**
</TABLE>

- ---------------

** Previously filed

<PAGE> 1

EXHIBIT 5.1

August 16, 1996

Urohealth Systems, Inc.

5 Civic Plaza, Suite 100

Newport Beach, California 92660

Ladies and Gentlemen:

At your request, we have examined Amendment No. 1 to the Registration
Statement on Form S-3 filed by Urohealth Systems, Inc., a Delaware corporation
(the "Company"), with the Securities and Exchange Commission on August 16, 1996
(Registration No. 333-6397) (the "Registration Statement"), relating to the
registration under the Securities Act of 1933, as amended, of up to 3,500,362
shares of the Company's Common Stock, $0.001 par value (the "Stock"), including
3,113,695 presently issued and outstanding shares and 386,667 shares issuable
upon exercise of currently outstanding warrants (the "Warrant Shares") being
offered by certain selling stockholders (the "Selling Stockholders").

As counsel to the Company, we have examined the proceedings taken by the
Company. In connection with the issuance and sale of the 3,113,695 shares of
Stock currently issued and outstanding and the 3,786,667 Warrant Shares that may
be issued upon exercise of currently outstanding warrants that may be sold by
the Selling Stockholders.

It is our opinion that the up to 3,113,695 shares of Stock that may be sold
by the Selling Stockholders are legally and validly issued and are fully paid
and nonassessable, and that upon acquisition of the Warrant Shares in accordance
with the terms of the instruments granting such warrants, the Warrant Shares
will be legally and validly issued, fully paid and nonassessable.

We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us in the Registration
Statement, the Prospectus constituting a part thereof and any amendments
thereto.

Very truly yours,

MORRISON & FOERSTER LLP

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in Amendment
No. 1 to the Registration Statement (Form S-3 No. 333-6397) and the related
Prospectus of UroHealth Systems, Inc. for the registration of 3,500,362 shares
of its common stock and to the incorporation by reference therein of our reports
dated June 4, 1996, with respect to the consolidated financial statements and
schedule of UroHealth Systems, Inc. included in its Transition Report (Form
10-K) for the nine months ended March 31, 1996, filed with the Securities and
Exchange Commission.

ERNST & YOUNG LLP

Orange County, California

August 16, 1996

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 33- ) and the related Prospectus
of UROHEALTH Systems, Inc. for the registration of 3,500,362 shares of its
common stock and to the incorporation by reference therein of our report dated
August 22, 1994, with respect to the consolidated statements of operations,
stockholders' equity and cash flows of UROHEALTH Systems, Inc. for the year
ended June 30, 1994, included in its Transition Report (Form 10-K) for the nine
months ended March 31, 1996, filed with the Securities and Exchange Commission.

[DOANE RAYMOND SIG]
Chartered Accountants

Toronto, Canada

August 15, 1996

<PAGE> 1

EXHIBIT 23.3

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the Registration Statement on
Form S-3 and the related Prospectus of UroHealth Systems, Inc. of our report,
which included an explanatory paragraph related to the Company's ability to
continue as a going concern, dated February 24, 1994 on our audit of the
consolidated financial statements of Advanced Surgical, Inc. as of and for the
year ended December 31, 1994, of which the results are included in the June 30,
1994 consolidated results of operations of UroHealth Systems, Inc. included in
its Transition Report on Form 10-K for the nine months ended March 31, 1996.

We also consent to the reference to our firm under the caption "Experts."

[SIG]
COOPERS & LYBRAND L.L.P.

2400 Eleven Penn Center
Philadelphia, Pennsylvania

August 15, 1996

<PAGE> 1

EXHIBIT 23.4

INDEPENDENT AUDITOR'S CONSENT

The Board of Directors
UROHEALTH Systems, Inc.

We consent to incorporation by reference in the Registration Statement (No.
33-xxxxx) on Form S-3 of our report dated October 10, 1995, relating to the
consolidated balance sheet of Dacomed Corporation as of June 24, 1995 and the
related consolidated statements of operations, stockholders' equity and cash
flows for the fiscal year then ended, and our report dated December 19, 1994,
relating to the consolidated statements of operations, stockholders' equity and
cash flows for Dacomed Corporation for the fiscal year ended October 29, 1994
and to the reference to our Firm under the heading "Experts" in the Registration
Statement.

[SIG]
KPMG Peat Marwick LLP

Minneapolis, Minnesota

August 15, 1996

<PAGE> 1

EXHIBIT 23.5

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-6397) and the related Prospectus of
UroHealth System, Inc. for the registration of 3,500,362 shares of its common
stock and the incorporation by reference therein of our report dated December 6,
1994, with respect to the financial statements of Osbon Medical Systems, Ltd.
for the year ended September 30, 1994, included in its Transition Report (Form
10-K) for the nine months ended March 31, 1996, filed with the Securities and
Exchange Commission.

[SIG]

CHERRY, BEKAERT & HOLLAND, L.L.P.

Augusta, Georgia

August 15, 1996

<PAGE> 1

EXHIBIT 23.6

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in Amendment
No. 1 to Registration Statement (Form S-3 No. 333-6397) and the related
Prospectus of UroHealth Systems, Inc. for the registration of 3,500,362 shares
of its common stock and to the incorporation by reference therein of our report
dated January 10, 1996, except Note F, as to which the date is May 1, 1996, and
Note K, as to which the date is July 5, 1996, with respect to the consolidated
financial statements of Richard-Allen Medical Industries, Inc. included in its
Form 8-K/A filed with the Securities and Exchange Commission on August 12, 1996.

ERNST & YOUNG LLP

Grand Rapids, Michigan

August 15, 1996

<PAGE> 1

EXHIBIT 23.7

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-6397) and the related Prospectus of
UroHealth System, Inc. for the registration of 3,500,362 shares of its common
stock and the incorporation by reference therein of our report dated August 23,
1993, relating to the consolidated statement of operations, stockholders'
equity, and cash flows for Richard-Allan Medical Industries for the fiscal year
ended June 30, 1993.

BDO SEIDMAN, LLP

Kalamazoo, Michigan

August 13, 1996