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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 18, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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IMAGYN MEDICAL TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 98-0122944
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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5 CIVIC PLAZA, SUITE 100
NEWPORT BEACH, CALIFORNIA 92660
(949) 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
IMAGYN MEDICAL TECHNOLOGIES, INC.
5 CIVIC PLAZA, SUITE 100
NEWPORT BEACH, CALIFORNIA 92660
(949) 668-5858
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
KEVIN M. HIGGINS., ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
IMAGYN MEDICAL TECHNOLOGIES, INC.
5 CIVIC PLAZA, SUITE 100
NEWPORT BEACH, CALIFORNIA 92660
(949) 668-5858
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>
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE(1) OFFERING PRICE(1) FEE
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<S> <C> <C> <C> <C>
Common Stock, $.001 par value.................. 2,250,000 shares $5/16 $703,125 $295.00
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</TABLE>
(1) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457(c).
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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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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
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SUBJECT TO COMPLETION, DATED SEPTEMBER 18, 1998
PROSPECTUS
IMAGYN MEDICAL TECHNOLOGIES, INC.
2,250,000 SHARES OF COMMON STOCK
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The registration statement (the "Registration Statement") of which this
Prospectus is a part, registers the offer and sale by the holders named herein
or by their transferees, pledgees, donees or successors (the "Selling Security
Holders") of 2,250,000 shares of Common Stock ("Common Stock") of Imagyn Medical
Technologies, Inc. ("Imagyn" or the "Company"). The holders acquired the
outstanding Common Stock offered hereby from the Company in connection with term
financing provided by affiliates of the Selling Security Holders to the Company
under the terms of the Company's Amended and Restated Credit Agreement. See
"Selling Security Holders" and "Plan of Distribution." The Company will not
receive any of the proceeds from the sale of the shares of Common Stock offered
hereby. See "Use of Proceeds." The Common Stock of the Company is listed on The
Nasdaq SmallCap Market under the symbol "IMTI." On , 1998, the last
reported sale price of the Common Stock was $ per share. See "Risk
Factors" and "Price Range of Common Stock and Dividends."
The Selling Security Holders 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 August 24, 2003
and the date on which all of the shares of Common Stock have been sold.
To the extent required, 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 or by filing a post-effective amendment to
the registration statement of which this Prospectus is a part. See "Plan of
Distribution."
The Company will not receive any proceeds from this offering. The aggregate
proceeds to the Selling Security Holders 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 Security Holders and any broker-dealers, agents or underwriters
that participate with the Selling Security Holders 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.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS
WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES OFFERED
HEREBY.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION, HAS APPROVED OR DISAPPROVED OF THESE SECURITIES
OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1998.
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WHERE YOU CAN FIND MORE INFORMATION
Imagyn Medical Technologies, Inc. ("Imagyn" or the "Company") files annual,
quarterly and current reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC"). These reports, proxy statements
and other information can be read and copied at the public reference facilities
maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at certain SEC regional offices. For additional information on the
public reference rooms you can call the SEC at 1-800-SEC-0330. In addition, the
SEC maintains a site on the World Wide Web at http://www.sec.gov that contains
reports, proxy statements and other information regarding the Company.
The Company has filed with the SEC a Registration Statement under the
Securities Act of 1933, as amended (the "Securities Act"), 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 SEC. 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 read and copied at the
public reference facilities of the SEC or may be obtained from the SEC's
internet website, as described above.
The SEC's rules allow the Company to "incorporate by reference" information
into this Prospectus, which means that the Company can disclose important
financial and other information to you by referring you to another document
filed separately with the SEC. The Company incorporates by reference in this
Prospectus the following documents, which have been previously been filed with
the SEC: (i) the Company's Annual Report on Form 10-K, as amended, for the year
ended March 31, 1998 (Commission file no. 1-11150); (ii) the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998 (Commission file no.
1-11150); (iii) the Company's Current Report on Form 8-K, dated September 14,
1998 (Commission file no. 1-11150); and (iv) the description of the Company's
Common Stock contained in the Company's Registration Statement on Form 8-A dated
November 22, 1996 (Commission file no. 1-11150).
The Company also incorporates by reference all documents that the Company
may file pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended, after the date of this Prospectus and before
the termination of this offering. These documents include Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q , Current Reports on Form 8-K and proxy
statements, all of which will be deemed to be incorporated by reference into
this Prospectus 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, Imagyn Medical Technologies, Inc., 5
Civic Plaza, Suite 100, Newport Beach, California 92660; telephone number (949)
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. 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
OVERVIEW
Imagyn is a developer, manufacturer and distributor of products for the
urology, minimally invasive and general surgery, and gynecology markets (the
"Target Markets"). The Company has a broad offering of products used by
healthcare professionals for patients suffering from impotence, incontinence and
other gynecological and urological disorders, and other conditions requiring
minimally invasive and general surgery. In October 1994, the Company adopted and
began to implement a strategic plan which took advantage of consolidation
opportunities in the highly fragmented medical products industry. Management's
strategy was to position the Company to benefit from the competitive advantages
and operating efficiencies inherent in an infrastructure which combines an
experienced management team, sophisticated and efficient manufacturing
facilities and a large sales force.
The Company's strategy is to: (i) expand the range of products to its
growing Target Markets; (ii) leverage its sales force to increase sales of its
existing, newly acquired and recently developed products, including sales
through distributors and group purchasing organizations; (iii) further
capitalize on efficiencies and synergies available by continuing to consolidate
manufacturing of existing and acquired products into the Company's existing
manufacturing operations; (iv) continue to acquire and develop additional
innovative products and product lines, including products to serve the
gynecology market; and (v) develop and expand an international sales and
marketing presence to capitalize on opportunities it identifies in selected
developed countries.
RECENT DEVELOPMENTS
On August 24, 1998, the Company and its senior lenders amended and restated
the Company's senior credit facility. In connection with the amendment, the
Company entered into a $57.5 million amended credit agreement that is comprised
of a $43 million revolving facility and a $14.5 million term facility. The
amended facility made available to the Company $14.5 million of term financing.
The amended credit facility expires on December 30, 1998 and may be extended
for two additional one-year periods on each December 30th, provided that no
event of default occurred during the preceding year (the "Expiration Date"). In
no event will the term of the amended credit facility extend beyond December 30,
2000. The borrowings under the amended credit facility are secured by
substantially all of the assets of the Company and its subsidiaries. The Company
is required to meet certain covenants under the amended credit agreement,
including financial covenants.
The $43.0 million revolving portion of the amended credit facility bears
interest at prime plus 1.50% or LIBOR plus 3.25%. The Company pays a fee of 0.5%
on the unused portion of the revolving credit facility. The borrowing
availability under the revolving portion of the amended credit facility is
calculated using a borrowing base. The borrowing base is equal to 80% of
eligible accounts receivable plus $39.0 million (the "Additional Amount"). The
Additional Amount will be reduced in an amount equal to the net cash proceeds
received by the Company in connection with certain asset sales. The Company is
required to pay the revolving lender each month an amount equal to 1/2% of the
Additional Amount, for each month in which the borrowings under the revolving
portion of the credit facility exceed 80% of eligible accounts receivable. The
Company is not permitted to prepay the principal amount of any term loans until
the revolving loans have been repaid in full.
The $14.5 million term portion of the amended credit facility was fully
funded in August 1998, and bears interest at a rate of 15% per annum. In
connection with funding the term portion of the amended credit facility, the
Company paid a 2% commitment fee and a 2% arrangement fee to the term lenders.
In addition, the Company pays a quarterly maintenance fee of $50,000 to the term
lenders. Under the term portion of the amended credit facility, interest is
payable monthly and the principal balance is payable on the Expiration Date.
In connection with obtaining the term financing under the amended credit
agreement, the Company issued to affiliates of the term lenders 2,250,000 shares
of Common Stock of the Company (50% of the shares are held in escrow and will be
returned to the Company for cancellation upon certain contingencies being
satisfied). The initial term lenders are the Selling Security Holders
identified in this Prospectus. The Company has also agreed to file a
registration statement to register the resale of the shares, and to use its best
efforts to have the registration
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statement declared effective. In the event that the Company fails to comply with
certain registration obligations, the Company has agreed to pay to the term
lenders a one-time extension fee equal to 2% of the term loans, and to pay an
additional 2.5% interest on outstanding term loans retroactive to the original
funding date.
RISK FACTORS
In considering whether to purchase the Common Stock offered hereby you
should consider carefully the following information, together with the other
information contained in or incorporated by reference in this Prospectus.
Liquidity Risks; Going Concern Qualification. The Company is a party to a
$57.5 million senior secured credit facility, consisting of a $43 million
revolving facility and a $14.5 million term facility. As of September 11, 1998,
the Company had borrowed $48.1 million under the credit facility and had
approximately $9.4 million of availability under the revolving facility.
While the restructuring of the Company's senior credit facility in late
August 1998 has provided the Company with capital to fund its near term
liquidity requirements, the Company continues to explore alternatives to deal
with its liquidity needs going forward, including the sale of non-strategic
assets and continued consolidation and cost cutting initiatives.
As a result of the Company's liquidity situation in July 1998, the Company's
independent auditors included an explanatory paragraph in the independent
auditors report included in the Company's Annual Report on Form 10-K for the
year ended March 31, 1998 stating that there is substantial doubt about the
Company's ability to continue as a going concern. The existence of the
explanatory paragraph may materially adversely affect the Company's
relationships with its creditors and suppliers, and therefore could have a
material adverse affect on the Company's business, financial condition and
results of operations.
Significant Leverage. The Company has substantial indebtedness and
significant debt service obligations. At June 30, 1998 the Company had
approximately $251.5 million of outstanding liabilities, approximately $182.9
million of total assets, approximately $108.3 million of total tangible assets
and a stockholders' deficit of $68.6 million.
The Company's ability to satisfy its debt obligations will depend upon its
ability to satisfactorily deal with its liquidity requirements, and future
operating performance, which will be affected by prevailing economic conditions
and financial, business and other factors, certain of which are beyond its
control, as well as the availability of borrowings under its existing senior
credit facility or successor credit facilities or the proceeds of asset sales.
The Company will require substantial amounts of cash to fund scheduled payments
of principal and interest on its outstanding indebtedness as well as future
capital expenditures and any increased working capital requirements. The Company
historically has had negative cash flow from operations. In order to have
positive cash flow from operations and meet its various financial requirements,
including debt service, the Company must experience substantial growth and
improvements in its results of operations.
There can be no assurance that the Company will have positive cash flow from
operations in the future. If the Company is unable to meet its cash requirements
out of cash flow from operations or from available borrowings, there can be no
assurance that it will be able to obtain alternative financing or that it will
be permitted to do so under the terms of the senior credit facility, the
indenture relating to the Company's Senior Subordinated Notes (the "Note
Indenture"), or other debt instruments. In the absence of such financing, the
Company's ability to respond to changing business and economic conditions, to
make future acquisitions, to absorb adverse operating results or to fund capital
expenditures or research and development may be adversely affected. Finally, it
is anticipated that in order to pay the principal balance of the senior credit
facility and Senior Subordinated Notes at maturity, the Company will have to
obtain alternative financing.
The Company's high degree of leverage could have important consequences
including, without limitation, the following: (i) a substantial portion of the
Company's net cash provided by operations will be committed to the payment of
the Company's interest expense and principal repayment obligations and will not
be available to the Company for its operations, capital expenditures or other
purposes; (ii) the Company's ability to obtain additional
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financing in the future for working capital or capital expenditures may be
limited; (iii) the Company will be more highly leveraged than most of its
competitors, which may place it at a disadvantage and limit the Company's
flexibility in reacting to changes in its business; and (iv) a portion of the
Company's borrowings under the senior credit facility bear interest at variable
rates, which could result in higher interest expense if interest rates rise.
Operating Losses; No Assurance of Profitability; Liquidity. The Company
reported net losses for the nine months ended March 31, 1996, the years ended
March 31, 1997 and 1998, and the three months ended June 30, 1998, of $24.4
million, $91.5 million, $88.5 million and $ 18.8 million, respectively. There
can be no assurance that the Company will be profitable in any future period.
The net cash used in operating activities by the Company for the nine months
ended March 31, 1996, for the years ended March 31, 1997 and 1998, and for the
three months ended June 30, 1998 was $18.1 million, $61.3 million, $82.6 million
and $ 12.6 million, respectively. There can be no assurance that the operating
activities of the Company will generate sufficient cash flow to meet its
liquidity needs in any future period. The future capital requirements of the
Company will depend upon many factors, including the success of its sales and
marketing efforts, new product development, future acquisitions of companies and
products and the Company's ability to manage costs. In addition, other than
certain permitted indebtedness (under the Note Indenture), including
indebtedness under the senior credit facility, the Company will need substantial
improvement in results of operations in order to incur additional indebtedness
under the terms of the Note Indenture. If adequate funds are not available, the
Company may be required to delay, scale back or eliminate its product
development efforts, which could have a material adverse effect on the Company's
business, results of operations or financial condition.
Limitations Imposed by Certain Indebtedness. The documents governing the
indebtedness of the Company (including the Note Indenture and the senior credit
facility) contain significant covenants that limit the Company's and its
subsidiaries' ability to engage in various transactions and, in the case of the
senior credit facility, require satisfaction of specified financial performance
criteria. In addition, under each of the foregoing documents, the occurrence of
certain events (including, without limitation, failure to comply with the
foregoing covenants, material inaccuracies of representations and warranties,
certain defaults under or acceleration of other indebtedness and events of
bankruptcy or insolvency) would, in certain cases after notice and grace
periods, constitute an event of default permitting acceleration of the
indebtedness covered by such documents. The limitations imposed by the documents
governing the outstanding indebtedness of the Company and its subsidiaries are
substantial, and failure to comply with them could have a material adverse
effect on the Company and its subsidiaries. Under the terms of the senior credit
facility, the Company is precluded from making the interest payment due
September 30, 1998 on the Company convertible subordinated debentures, unless
certain milestones are achieved. If the Company fails to achieve the milestones,
and does not make the required interest payment within the grace period, the
failure would constitute an event of default under the convertible subordinated
debentures. The occurrence of an event of default under the convertible
subordinated debentures would constitute an event of default under the Company's
senior credit facility, and would become an event of default under the Company's
Senior Subordinated Notes, if either the senior lender or the holders of the
convertible subordinated debentures elected to accelerate the maturity of debt
held by them.
Year 2000 Issues. The "Year 2000" issue is the result of computer programs
using two digits rather than four digits to define the applicable year. Because
of this programming convention, software, hardware or firmware may recognize a
date using "00" as the year 1900 rather than the year 2000. Use of non-compliant
programs could result in system failures, miscalculations or errors causing
disruptions of operations or other business problems, including, among others, a
temporary inability to process transactions and invoices or engage in similar
normal business activities.
In late calendar year 1997, the Company undertook to examine its systems for
Year 2000 compliance with a view toward replacing non-compliant systems and
creating an integrated Year 2000 compliant system. The Company has determined
that its integrated Management Information System is Year 2000 compliant. This
system provides for the Company's management of operations and managerial and
financial reporting requirements. In addition, the Company is undertaking a
comprehensive program to address the Year 2000 issue with respect to the
following non-system areas: (i) network switching, (ii) the Company's
non-information technology systems (such as buildings, plant, equipment and
other infrastructure systems that may contain embedded microcontroller
technology), (iii) the status of major vendors, third party network service
providers and other material service providers (insofar as they
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relate to the Company's business), and (iv) the status of major customers
(insofar as they relate to the Company's business). The Company's efforts to
assess its non-system areas related to Year 2000 compliance involve (i) a
wide-ranging assessment of the Year 2000 problems that may effect the Company,
(ii) the development of remedies to address the problems discovered in the
assessment phase, and (iii) testing of the remedies.
The Company has begun to analyze contingency plans to handle worst case Year
2000 scenarios that the Company believes reasonably could occur and, if
necessary, intends to develop a timetable for completing such contingency plans.
The Company currently estimates the total costs related to bringing the
internal systems associated with networks, and telecommunication equipment into
compliance in the range of $150,000 to $200,000. It is estimated that
approximately $120,000 of these costs will be capitalized to the extent
permitted under generally accepted accounting principles.
Although the Company's efforts to be Year 2000 compliant are intended to
minimize the adverse effects of the Year 2000 issue on the Company's business
and operations, the actual effects of the issue will not be known until 2000.
Difficulties in completing the Company's compliance program or the failure of
its major vendors, third party network service providers, and other material
service providers and customers to adequately address their respective Year 2000
issues in a timely manner could have a material adverse effect on the Company's
business, results of operations, and financial condition.
Future Operating Results Dependent on Products. The future operating results
of the Company will be dependent upon its ability to increase sales of existing
medical products and the continued acceptance of such products by the medical
community and third-party payors as useful and cost-effective. Historically, the
Company has been highly dependent on the sale of vacuum erection devices for the
treatment of male impotence. The market for medical products is characterized by
rapid technological change and product obsolescence. In particular, competition
in the market for treatment of male impotence is especially intense and has
increased substantially in recent years. The recent introduction of new
drug-based treatments for impotence, such as the oral medication Viagra(R) (a
registered trademark of Pfizer Corporation), have adversely impacted the
Company's historical business for vacuum erection devices. Competitors and
others may develop and introduce new products, devices or approaches for
treatment of the conditions targeted by the Company that could render one or
more of the Company's products obsolete or noncompetitive. The future operating
results of the Company will also be dependent, therefore, upon its ability to
develop or acquire new products that are competitive in the markets it serves.
Product acceptance will depend upon many factors, including the continued
demonstration of the utility and cost-effectiveness of products of the Company,
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 or
the inability to develop new products 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 has acquired. As the
Company has acquired businesses and technologies, it has acquired a number of
related products under development which will require additional research and
development efforts by the Company in an attempt to bring such products to
market.
While members of management of the Company have experience in developing
products internally, the Company has not historically developed a significant
number of medical products internally. There can be no assurance that the
Company's medical products will be successfully developed and marketed, that
required regulatory approvals from the Food and Drug Administration or
equivalent foreign authorities for any indication will be obtained or that any
products, if produced, will be capable of being produced in commercial
quantities at reasonable costs, that such future products will be brought to
market in a timely manner or that existing products will generate significant
sales, the failure of any of which could have a material adverse effect on the
Company 's business, operating results or financial condition.
Concentration of Credit Risk; Extended Payment Terms. The Company sells
several product lines that are considered "capital equipment" by hospitals and
other purchasers. From time to time, the Company offers certain customers
extended payment terms to facilitate sales of these products. The Company may in
the future grant similar extended payment terms. The Company's typical payment
terms require payment from 30 to 90 days. As of June 30, 1998, the Company had a
total of $3.7 million of accounts receivable on extended payment terms with
Integrated Medical Resources, Inc. ("IMR") for sales of the Company's Rigiscan
product pursuant to terms under which the payments are due over 15-36 months.
Over the fifteen month period ended June 30, 1998, the Company
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did not sell any products to IMR on extended terms. IMR is a public company
traded on the Nasdaq under the symbol "IMRI." Bruce Hazuka, Executive Vice
President -- Chief Operating Officer of the Company, is a member of the board of
directors of IMR.
Uncertainty Relating to Third-Party Reimbursement. In the United States,
healthcare providers, such as hospitals and physicians, that purchase the
Company's products and other medical devices, generally rely on third-party
payors, including private health insurance plans and federal Medicare and state
Medicaid, to reimburse all or part of the cost of the procedure in which the
medical device is being used. Reimbursement has traditionally been available in
the United States for vacuum erection devices manufactured by the Company and
sold by prescription to patients under a specific reimbursement code. The
majority of the remaining Company products are used in procedures for which
reimbursement is generally available, however, there are no specific
reimbursement codes for the Company's products. There can be no assurance that
reimbursement will be available for procedures performed using the Company's
existing products or future products. In the event that reimbursement is not
available for procedures using such products, the market acceptance for such
products in the United States could be materially and adversely affected. In
addition, certain healthcare providers are moving toward a managed care system
in which such providers contract to provide comprehensive healthcare for a fixed
cost per covered individual. The Company is unable to predict what changes will
be made in the reimbursement methods utilized by third-party healthcare payors,
and the Company could be adversely affected by changes in reimbursement policies
of governmental or private healthcare payors, particularly to the extent any
such changes affect reimbursement for procedures in which its products are used.
Failure by physicians, hospitals and other users of the Company's products to
obtain sufficient reimbursement from healthcare payors for procedures in which
their products are used or adverse changes in governmental and private third-
party payors' policies toward reimbursement for such procedures would have a
material adverse effect on the Company's business, financial condition and
results of operations.
Market acceptance of the Company's products in international markets may be
dependent in part upon the availability of reimbursement within prevailing
healthcare payment systems. Reimbursement and healthcare payment systems in
international markets vary significantly by country, and include both government
sponsored and private health insurance. There can be no assurance that any
international reimbursement approvals will be obtained in a timely manner, or at
all. Failure to receive international reimbursement approvals could have a
material adverse effect on market acceptance of the Company's products in
international markets and therefore could have a material adverse effect on the
Company's business, financial condition and results of operations.
Reliance on Patents and Proprietary Rights. The commercial success and
future revenue growth of the Company will depend, in part, on its ability to
operate without infringing on the rights of others both in the United States and
abroad and not breaching technology licenses that cover technology used in its
products. The Company owns or has authority to use United States and foreign
patent rights with respect to some of its medical products and has filed, and
expects in the future to file, patent applications. It is uncertain whether any
third party patents will require the Company to develop alternative technology
or to alter its products or processes, obtain licenses or cease certain
activities. If such licenses are required, there can be no assurance that the
Company will be able to obtain such licenses on commercially favorable terms, if
at all. Failure by the Company to obtain a license to any technology that it may
require to commercialize its products could have a material adverse effect on
the Company. 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 Company will
continue to develop or acquire products or processes that are patentable or that
patents applied for will be issued or that any patents issued to or licensed by
the Company will not be challenged, invalidated or circumvented, or that the
rights granted thereunder will provide it with competitive advantages. In
addition, the Company could incur substantial costs in defending its proprietary
rights and there can be no assurance that a competitor's technology or product
would be found to infringe such 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 asserted by the
Company against any party. Further, there can be no assurances as to the breadth
and degree of protection that will be afforded the Company's patent rights or
that other companies will not independently develop similar but non-infringing
competitive products. Moreover, 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. In addition, there is currently pending before Congress
legislation providing for changes to the patent law which may adversely affect
the patent and proprietary rights of pharmaceutical, biopharmaceutical and
biomedical firms. If
7
<PAGE> 10
such pending legislation is adopted, the extent to which such changes would
affect the operations of the Company cannot be ascertained.
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 its products. No assurance can be given
that the Company's technology can be developed and commercialized without a
license to such patents or proprietary rights or 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. Furthermore, there can be no assurance that
competitors or potential competitors will not independently develop similar or
alternative products to those of the Company, duplicate any of the Company's
products or technologies, or design around the patented technologies developed
by the Company or its licensors, any of which could have a material adverse
effect on the Company's business, results of operations or financial condition.
The Company also relies on trade secrets, know-how, continuing technological
innovations and licensing opportunities to develop and maintain its competitive
position. There can be no assurance that others will not independently create
substantially equivalent proprietary information or otherwise gain access to or
disclose such information of the Company. It is the Company's policy to require
certain of its employees, contractors and consultants to execute confidentiality
agreements to protect its unpatented proprietary technology and know-how. There
can be no assurance that such confidentiality agreements will not be breached,
that the Company would have adequate remedy for such breach, or that the
Company's trade secrets will not otherwise become known through independent
discovery by competitors. Moreover, in the absence of patent protection, the
Company's business may be adversely affected by competitors who independently
develop substantially equivalent technology.
Regulatory Matters. Most of the Company's medical products are subject to
regulation for safety and efficacy by, among other governmental entities, the
United States Food and Drug Administration and corresponding agencies of state
and foreign countries in which the Company sell its products. The process of
receiving governmental approval may take a number of years and the expenditure
of substantial resources. There can be no assurance that even after such time
and expenditures, regulatory approval will be obtained for any of the products
developed by the Company. If regulatory approval of a product is granted, such
approval may entail limitations on the indicated uses for which the product may
be marketed. Further, discovery of previously unknown problems with a product,
manufacturer or its manufacturing facilities may result in restrictions on such
product or manufacturer, including withdrawal of the product from the market.
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. Product development and approvals within this
regulatory framework take a number of years and involve the expenditure of
substantial resources. Noncompliance with applicable requirements may have a
material adverse effect on the Company and can result in fines, warning letters,
recall or seizure of products, total or partial suspension of production,
refusal by the government to approve product license applications or 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 respond to the 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 Company incurs substantial costs in complying with
regulatory requirements.
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 being
introduced into the market. The 510(k) premarket notification clearance process
is significantly quicker and less costly than the PMA process. Substantially all
of the Company's FDA marketing clearances have been obtained through the FDA's
510(k) process; however, certain other products will require PMAs. The PMA
process is significantly more complex and time consuming than the 510(k)
notification process. The PMA process may take several years or longer and
requires the submission of extensive supporting data and clinical information.
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)s and PMAs) for certain devices. There can
8
<PAGE> 11
be no assurance that upon any such review the FDA will agree with the Company's
determination regarding its 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.
Competition. The markets in which the Company operates 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. There
are a substantial number of medical products companies and such companies could
develop or offer products which would compete with products which the Company
currently markets or intends to market. Some of these companies have marketing
and distribution capabilities, and many 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. There can be no assurances that technological change,
including the development of new treatment modalities, will not place one or
more of the Company's existing or future products at a competitive disadvantage.
In addition, increased competitive pressure could lead to intensified
price-based competition that could materially adversely affect the Company's
business, results of operations or 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, could have a
material adverse effect on the Company's business if a suitable replacement
could not be 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 either
party by prior notice. The Company has "key person" insurance on the life of Mr.
Laverty in the amount of $5.0 million; however, there can be no assurance that
such insurance would be sufficient to compensate the Company for his absence.
There can be no assurance that the Company will be successful in attracting or
retaining key personnel.
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, as
additional products of the Company enter the market, the Company will be subject
to an increased risk of products liability claims. While the Company believes
that its products have been manufactured in accordance with industry standards,
and believes it has maintained adequate products liability insurance coverage,
any adverse claim or series of claims or adverse publicity resulting from a
claim, regardless of whether such claims are covered by insurance, could have a
material adverse effect on the Company's business, results of operations or
financial condition.
Potential Tax Liability. In connection with the redomestication of the
Company from Canada to the State of Delaware in July 1995, The Company has filed
a final Canadian tax return reporting the "deemed sale" of assets of Davstar
Industries Ltd. (the Canadian parent company). The Company anticipates that the
Canadian tax authorities will review the tax status of the former entity,
Davstar Industries Ltd., as a result of its redomestication from Canada to the
United States and believes that all or at least a significant amount of any
potential Canadian tax liability arising from the redomestication would be
offset against the Company's Canadian loss carryforwards. However, the Canadian
tax authorities could attempt to assign a greater value to the Company than used
in the Company's estimates, which could result in some amount of Canadian tax
that cannot be presently determined being assessed in a future period. No
provision for any liability that may result from the ultimate resolution of this
tax matter has been included in the accompanying consolidated financial
statements of the Company.
Limitation on Use of Tax Net Operating Loss Carryovers. As of March 31,
1998, the Company had accumulated net operating loss carryovers for U.S. federal
and state income tax purposes of approximately $178.0 million and $104.0
million, respectively. These loss carryovers would expire, if not previously
utilized against income of the
9
<PAGE> 12
Company, in various years through 2012. 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 Medical Systems Ltd. in December 1995, 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. In connection with the
acquisition of Microsurge on March 31, 1997, an additional ownership change
occurred. The Company believes this additional ownership change will not reduce
the December 29, 1995 Section 382 limitation, but will place limitations on the
maximum annual utilization of operating loss carryforwards generated subsequent
to such date.
Warrants and Options; Potential Dilution and Adverse Impact on Additional
Financing. The Company has a significant number of outstanding options and
warrants. In May and July 1996, the Company issued $50.0 million of the
Company's 8.75% Convertible Subordinated Debentures due 2006 (the "Debentures")
which are convertible into the Company Common Stock at a conversion price,
subject to adjustment, of $10.90 per share. The holders of the Debentures would
be entitled to receive 4,587,156 shares of Common Stock if such holders elected
to convert all of the 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.
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.
Rights Agreements; Anti-takeover Effects. The Company has adopted a
Preferred Share Purchase Rights Plan, pursuant to a Rights Agreement dated as of
May 20, 1993 (the "Rights Agreement"). The Rights Agreement provides for the
type of plan commonly called a "poison pill." The Rights Agreement is intended
to prevent abusive hostile takeover attempts. However, the Rights Agreement
could have the effect of deterring or preventing an acquisition of the Company
even if a majority of the Company's stockholders would be in favor of such
acquisition, and could also have the effect of making it more difficult for a
person or group to gain control of the Company or to change existing management.
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 Common Stock, regardless of the Company's actual
operating performance. The market price of the Company's Common Stock has
historically been very volatile.
Potential Transfer to OTC. The Company has been notified by the Nasdaq
Stock Market that the Company no longer satisfies the continued listing criteria
for the Nasdaq SmallCap Market. The Company has requested a hearing to present
its reasons for continued listing on the Nasdaq SmallCap Market. If the Company
fails to achieve the minimum continued listing requirements or is not otherwise
granted a waiver, the Company's Common Stock will no longer trade on the Nasdaq
SmallCap Market and instead will trade in the over-the-counter (OTC) bulletin
board market.
Absence of Dividends. The Company has never paid any cash dividends and does
not anticipate paying cash dividends in the foreseeable future. In addition, the
Company is restricted in its ability to pay dividends under outstanding credit
facilities.
Forward-Looking Statements May Prove Inaccurate. The Company has made
forward-looking statements in this document (and in certain documents that are
incorporated by reference into this document) that are subject to risks and
uncertainties. These statements are based on the beliefs and assumptions of the
Company's management, and on information currently available to such management.
Forward-looking statements include the information
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<PAGE> 13
concerning possible or assumed future results of operations of the Company, and
statements preceded by, followed by or that include the words "believes,"
"anticipates," "intends," "expects" and words of similar import. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company or industry results to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
liquidity risks; risks relating to historical operating losses; general economic
and business conditions, both domestic and foreign; industry capacity;
development of products; proprietary rights; demographic changes; existing
government regulations and changes in, or the failure to comply with, government
regulations; legislative proposals for healthcare reform; liability and other
claims asserted against the Company; competition; the loss of any significant
customers; changes in operating strategy or development plans; the ability to
attract and retain qualified personnel; the significant indebtedness of the
Company; and other factors referenced herein. Given these uncertainties, the
Company stockholders are cautioned not to place undue reliance on any
forward-looking statements. All forward-looking statements in this document are
made as of the date hereof, based on information available to the Company as of
the date hereof, and the Company assumes no obligation to update any
forward-looking statement.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Common Stock
offered herein by the Selling Security Holders.
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<PAGE> 14
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Company's Common Stock is traded on the Nasdaq SmallCap Market under the
symbol "IMTI." From November 26, 1996 until March 24, 1998, the Company's Common
Stock was traded on the Nasdaq National Market. Prior to November 26, 1996, the
Company's Common Stock was traded on the American Stock Exchange. The following
table sets forth the high and low closing sales prices per share for the periods
indicated. For current price information, prospective purchasers are encouraged
to consult publicly available sources.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
FISCAL 1997:
First quarter ............................. $16 $11 3/4
Second quarter ............................ $15 1/4 $ 9 1/2
Third quarter ............................. $13 1/4 $ 7 1/4
Fourth quarter ........................... $11 7/8 $ 7 1/4
FISCAL 1998:
First quarter ............................. $10 1/4 $ 4 3/4
Second quarter ............................ $ 6 1/8 $ 4
Third quarter ............................. $ 6 $ 2 9/32
Fourth quarter ............................ $ 3 1/8 $ 1 13/32
FISCAL 1999:
First quarter ............................. $ 1 1/2 $ 1/2
Second quarter (through September 15, 1998) $ 22/32 $ 9/32
</TABLE>
The Company has received notice from the Nasdaq that the Company does not
currently satisfy the continued listing criteria for inclusion of the Company's
Common Stock on the Nasdaq SmallCap Market. The Company has requested a hearing
to present its reasons for continued listing on the Nasdaq SmallCap Market. If
the Company fails to achieve the minimum continued listing requirements or is
not otherwise granted a waiver, the Company's Common Stock will no longer trade
on the Nasdaq SmallCap Market and instead will trade in the over-the-counter
(OTC) bulletin board market.
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 outstanding indebtedness.
12
<PAGE> 15
SELLING SECURITY HOLDERS
The shares of Common Stock offered hereby were originally issued and sold by
the Company in August 1998 to the Selling Security Holders in a private
placement to accredited investors (as defined in Rule 501(a) under the
Securities Act). The shares covered by this Prospectus are being registered to
permit public secondary trading of the shares of Common Stock and the Selling
Security Holders may offer the Common Stock for resale from time to time;
provided, that 1,250,000 of the shares registered hereunder may not be offered
for sale until after November 22, 1998. See "Plan of Distribution."
Except for participation in the term financing as described above under "The
Company - Recent Developments," none of the Selling Security Holders 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 as of September 15, 1998, the respective
number of shares of Common Stock beneficially owned by each Selling Security
Holder. The term Selling Security Holders includes the holders listed below and
the beneficial owners of the Common Stock and their transferees, pledgees,
donees or other successors. The table has been prepared based upon information
furnished to the Company by or on behalf of the Selling Security Holders.
<TABLE>
<CAPTION>
NAME OF SELLING SECURITY HOLDER COMMON STOCK BENEFICIALLY OWNED PERCENTAGE OWNERSHIP
<S> <C> <C>
Elliott Associates, L.P. 562,500 shares 1.45%
Westgate International, L.P. 562,500 shares 1.45%
Elliott Associates, L.P. (1) 562,500 shares (2) 1.45%
Westgate International, L.P. (1) 562,500 shares (2) 1.45%
------------------
2,250,000 shares
</TABLE>
- ---------
(1) These shares are owned of record by Kleinberg, Kaplan, Wolff & Cohen, P.C.,
as escrow agent, pursuant to an escrow agreement, dated August 28, 1998,
among the Selling Security Holders, the Company and the escrow agent.
(2) These shares are contingently issuable to the named Selling Security
Holders. Depending upon the outcome of certain contingencies, the shares
held by the escrow agent will either be returned to the Company or
delivered to the named Selling Security Holders. If delivered to the
Selling Security Holders, these shares will be available for sales under
this Prospectus.
The information concerning the Selling Security Holders may change from time
to time. If required, such changes will be set forth in Prospectus Supplements.
Because the Selling Security Holders may offer all or some portion of the Common
Stock pursuant to this Prospectus, and because there are currently no
agreements, arrangements or understandings with respect to the sale of Common
Stock, no estimate can be given as to the amount of Common Stock that will be
held by the Selling Security Holders upon termination of this offering.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company is authorized to issue up to 100,000,000 shares of Common Stock,
$.001 par value, and 5,000,000 shares of Preferred Stock, $.001 par value of
which 250,000 shares have been designated as Series A Junior Participating
Preferred Stock (the "Series A Preferred Shares"). As of September 15, 1998,
there were 38,687,325 shares of Common Stock issued and outstanding and no
preferred stock issued or outstanding.
COMMON STOCK
13
<PAGE> 16
Each holder of Common Stock is entitled to one vote for each share held of
record on each matter submitted to a vote of stockholders. There are no
cumulative voting rights. Accordingly, the holders of a majority of the shares
of Common Stock (and the Debentures described below) entitled to vote in any
election of directors may elect all of the directors standing for election.
Subject to any preferences which may be granted to the holders of Preferred
Stock, each holder of Common Stock is entitled to receive ratably such
dividends, if any, as may be declared by the Board of Directors out of funds
legally available therefor, as well as any distributions to the stockholders
upon liquidation, dissolution or winding up of the Company. Each holder of
Common Stock is entitled to share ratably in all assets of the Company remaining
after payment of all debts and other liabilities and subject to the prior rights
of any outstanding Preferred Stock. Holders of Common Stock have no conversion,
redemption, subscription or preemptive rights or other rights to subscribe for
additional shares. The outstanding shares of Common Stock are validly issued,
fully paid and nonassessable. The rights, preferences and privileges of holders
of Common Stock are subject to, and may be adversely affected by, the rights of
the holders of shares of any series of Preferred Stock which the Company may
designate and issue in the future.
PREFERRED STOCK
The Board of Directors is authorized to issue the Preferred Stock in one or
more series and to fix the rights, preferences, privileges and restrictions,
including the dividend rights, conversion rights, voting rights, rights and
terms of redemption, redemption price or prices, liquidation preferences and the
number of shares constituting any series or the designations of such series,
without any further vote or action by the stockholders of the Company. The
issuance of Preferred Stock may have the effect of delaying, deferring or
preventing a change in control of the Company without further action of the
stockholders of the Company. The issuance of Preferred Stock with voting and
conversion rights may adversely affect the voting power of the holders of Common
Stock of the Company, including the loss of voting control to others.
The Company has adopted a Preferred Share Purchase Rights Plan (the "Rights
Plan") which is designed to deter coercive or certain takeover tactics, to
prevent a person or group from gaining control of the Company without offering
fair value to all stockholders and to deter other abusive takeover tactics which
are not in the best interest of stockholders. In May 1993, the Company executed
the Rights Plan with its transfer agent and 250,000 Series A Preferred Shares
were designated for potential issuance under the Rights Plan. Under the terms of
the Rights Plan each share of Common Stock is accompanied by one right; each
right entitles the registered stockholder to purchase from the Company
one-hundredth of a share of Series A Junior Participating Preferred Stock, $.001
par value, at an exercise price of $200. The rights only become exercisable ten
days after a public announcement that an acquiring person (as defined in the
Rights Plan) has acquired 20% or more of the outstanding shares of Common Stock
of the Company or a person or group offers to acquire 35% or more of the
outstanding Common Stock or ten days after the Company determines that a person
is an Adverse Person (as defined in the Rights Plan). The Company can redeem the
Rights for $.01 per Right at any time until ten days after the rights become
exercisable (the 10-day period can be extended by the Company). The Rights Plan
will expire on June 30, 2003 unless earlier redeemed by the Company. If,
subsequent to the rights becoming exercisable, the Company is acquired in a
merger or other business combination at any time when there is a 20% or more
holder, the rights will then entitle a holder to buy shares of common stock of
the acquiring company with a market value equal to twice the exercise price of
each right. Alternatively, if the 20% holder acquires the Company by means of a
merger in which the Company and its stock survive, or if any person acquires 35%
or more of the Company's Common Stock, each right now owned by a 20% or more
stockholder, will become exercisable for Common Stock of the Company having a
market value equal to twice the exercise price of the right.
VOTING DEBENTURES
The holders of the Debentures are entitled to vote on all matters submitted
to a vote of the stockholders of the Company, voting together with the holders
of the Common Stock (and any other shares of capital stock of the Company
entitled to vote at a meeting of stockholders) as one class. Each Debenture is
entitled to a number of votes equal to the number of shares of Common Stock into
which the Debenture could then be converted. As of June 30, 1998, there was
$50.0 million aggregate principal amount of Debentures outstanding which would
convert into 4,587,156 shares of Common Stock.
14
<PAGE> 17
DELAWARE ANTI-TAKEOVER LAW
Section 203 of the Delaware General Corporation Law ("Section 203")
provides, in general, that a stockholder acquiring more than 15% of the
outstanding voting shares of a corporation subject to the statute (an
"Interested Stockholder") but less than 85% of such shares may not engage in
certain "Business Combinations" with the corporation for a period of three years
subsequent to the date on which the stockholder became an Interested Stockholder
unless (i) prior to such date the corporation's Board of Directors approved
either the Business Combination or the transaction in which the stockholder
became an Interested Stockholder or (ii) the Business Combination is approved by
the corporation's board of directors and authorized by a vote of at least
two-thirds of the outstanding voting stock of the corporation not owned by the
Interested Stockholder.
Section 203 defines the term "Business Combination" to encompass a wide
variety of transactions with or caused by an Interested Stockholder in which the
Interested Stockholder receives or could receive a benefit on other than a pro
rata basis with other stockholders, including mergers, certain asset sales,
certain issuances of additional shares to the Interested Stockholder,
transactions with the corporation which increase the proportionate interest of
the Interested Stockholder, or transactions in which the Interested Stockholder
receives certain other benefits.
REGISTRATION RIGHTS
The Company is required under the Registration Agreement with the Selling
Security Holders to file a shelf registration statement under the Securities Act
covering the resale of the 2,250,000 shares of Common Stock (the "Shares") owned
by the Selling Security Holders on or before October 8, 1998 and to use its best
efforts to cause the registration statement to be declared effective under the
Securities Act on or before December 22, 1998. The Company is obligated to keep
the registration statement effective until the earliest of (i) such time as all
the Shares have been sold thereunder, and (ii) five years after its effective
date. Each holder of Shares that sells such Shares pursuant to the registration
statement generally will be required to be named as a selling securityholder in
the related prospectus and to deliver a prospectus to the purchaser, will be
subject to certain of the civil liability provisions under the Securities Act in
connection with such sales and will be bound by certain provision of the
Registration Agreement which are applicable to such holder (including certain
indemnification obligations). In addition, each holder of Shares will be
required to deliver information to be used in connection with the registration
statement in order to have its Shares included in the registration statement.
The Company has granted registration rights to the holders of the Debentures
with respect to both the Debentures and the shares of Common Stock into which
the Debentures may be converted. Pursuant to such rights, the Company may, on no
more than one occasion and when requested by the holders of not less than 51% of
the aggregate principal amount of the Debentures outstanding at such time the
request is made, be required to register the Debentures for resale under the
Securities Act. In addition, the Company may, on no more than three occasions,
be required to register the shares of Common Stock into which the Debentures may
be converted. Such registration may only be required of the Company if the
registration is requested with respect to not less than 20% of the shares of
Common Stock underlying the Debentures. Finally, shares of Common Stock into
which the Debentures may be converted may also participate in any other
registered offering initiated by the Company for its own account or for shares
of Common Stock owned by other stockholders of the Company.
The Company has granted registration rights to Avatex Corporation ("Avatex")
in connection with financing transactions. At any time, the holders of not less
than 20% of the shares of Common Stock received or to be received in connection
with these transactions may, on two occasions, require the Company to register
such shares of Common Stock for resale under the Securities Act. In addition,
shares of Common Stock issued or to be issued in connection with these
transactions may also participate in any other registered offering initiated by
the Company for its own account or for shares of Common Stock owned by other
stockholders of the Company.
The Company has granted certain piggyback registration rights with respect
to shares of Common Stock to be received upon exercise of warrants issued to a
lender in connection with loans to the Company and granted piggyback and demand
registration rights to another lender with respect to shares issuable upon
exercise of a warrant issued in connection with the Company's former credit
facilities.
TRANSFER AGENT AND REGISTRAR
15
<PAGE> 18
American Stock Transfer and Trust Company is the transfer agent and
registrar for the Common Stock.
PLAN OF DISTRIBUTION
The Common Stock offered hereby may be sold from time to time to purchasers
directly by any of the Selling Security Holders. Alternatively, any of the
Selling Security Holders 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 Security
Holders and/or the purchasers of Common Stock for whom they may act as agent.
The Selling Security Holders 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 Security Holders 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 Security Holders 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 Security Holders or by agreement between the Selling Security
Holders 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 Security Holders will
be subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Regulation M, which
provisions may limit the timing of purchases and sales of any of the Common
Stock by the Selling Security Holders. All of the foregoing may affect the
marketability of the Common Stock.
Pursuant to agreements with the Selling Security Holders, 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
Security Holders 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 Securities 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 August 24, 2003 or such
shorter period which will terminate when all Common Stock covered by the
Registration Statement has been sold.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Kevin M.
Higgins, Esq.
16
<PAGE> 19
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this prospectus by reference from Imagyn Medical Technologies,
Inc.'s Annual Report on Form 10-K for the year ended March 31, 1998, have been
audited by Deloite & Touche LLP, independent auditors, as stated in their report
(which report expressed an unqualified opinion and included an explanatory
paragraph relating to the Company's ability to continue as a going concern),
which is incorporated herein by reference, and have been so incorporated in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
The consolidated financial statements and financial statement schedule not
separately included herein of the Company (before giving effect to the business
combination with Imagyn Medical, Inc. which occurred on September 29, 1997 and
was accounted for as a pooling of interests) as of March 31, 1997, and for the
nine months ended March 31, 1996 and for the year ended March 31, 1997, included
in the Company's Annual Report on Form 10-K for the year ended March 31, 1998,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their reports thereon included therein and incorporated herein by reference. The
consolidated financial statements referred to above are incorporated herein by
reference in reliance upon such reports given upon the authority of such firms
as experts in accounting and auditing.
The consolidated financial statements of Imagyn Medical, Inc. (not
separately included herein), as of March 31, 1997 and for the year ended March
31, 1997 and for the nine months ended March 31, 1996, incorporated by reference
herein from the Company's Annual Report on Form 10-K for the year ended March
31, 1998 have been audited by PricewaterhouseCoopers LLP, independent auditors,
as set forth in their report thereon included therein and incorporated by
reference herein. Such report is incorporated by reference herein in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
The consolidated financial statements of Microsurge, Inc. (not separately
included herein), as of March 31, 1997 and for the year ended March 31, 1997 and
for the nine months ended March 31, 1996, incorporated by reference herein from
the Company's Annual Report on Form 10-K for the year ended March 31, 1998 have
been audited by PricewaterhouseCoopers LLP, independent auditors, as set forth
in their report thereon included therein and incorporated by reference herein.
Such report is incorporated by reference herein in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
17
<PAGE> 20
================================================================================
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 SECURITIES 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>
Where You Can Find More Information..........
The Company..................................
Risk Factors.................................
Use of Proceeds..............................
Price Range of Common Stock and
Dividends..................................
Selling Security Holders.....................
Description of Capital Stock.................
Plan of Distribution.........................
Legal Matters................................
Experts......................................
</TABLE>
================================================================================
IMAGYN MEDICAL
TECHNOLOGIES, INC.
2,250,000 SHARES OF COMMON STOCK
----------------------
PROSPECTUS
----------------------
, 1998
================================================================================
<PAGE> 21
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>
<S> <C>
Registration Fee................................................... $295
Legal Fees and Expenses............................................ *
Blue Sky Fees and Expenses......................................... *
Accounting Fees and Expenses....................................... *
Printing and Engraving Expenses.................................... *
Transfer Agent and Registrar Fees.................................. *
Miscellaneous...................................................... *
Total............................................................ $ *
====
</TABLE>
* to be filed by amendment
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 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> 22
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------ -------
<S> <C>
3.1 Certificate of Incorporation of Imagyn Medical Technologies,
Inc., as amended through September 29, 1997. Incorporated by
reference to Exhibit 3.1 of the Company's Form S-3
Registration Statement No. 333-12723.
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 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").
4.3 Form of Rights Certificate. Incorporated by reference to
Exhibit 4.2 to the Registrant's May 20, 1993 Form 8-K.
4.4 Warrant Agreement, dated April 10, 1997, between Urohealth
Systems, Inc. and The Bank of New York, as warrant agent.
Incorporated by reference to Exhibit 4.4 of the Company's
Current Report on Form 8-K dated April 28, 1997.
4.5 Warrant Registration Rights Agreement, dated April 10, 1997,
between Urohealth Systems, Inc. and Bear, Stearns & Co. Inc.
Incorporated by reference to Exhibit 4.5 of the Company's
Current Report on Form 8-K dated April 28, 1997.
5.1 Opinion of Kevin m. Higgins, Esq.*
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Ernst & Young LLP
23.3 Consent of PricewaterhouseCoopers LLP
23.4 Consent of PricewaterhouseCoopers LLP
23.5 Consent of Kevin M. Higgins, Esq. (included in Exhibit 5.1)*
24.1 Power of Attorney of certain officers and directors (included
in Part II to the Registration Statement).
</TABLE>
- ------------
*to be filed by amendment.
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 indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(c) The undersigned registrant hereby undertakes that:
II-2
<PAGE> 23
(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 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-3
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Newport Beach, State of California, on September 18,
1998.
IMAGYN MEDICAL TECHNOLOGIES, INC.
By: /s/ CHARLES A. LAVERTY
-------------------------------------
Charles A. Laverty
Chairman and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby authorizes and appoints
Charles A. Laverty, Michael A. Montevideo and Kevin M. Higgins, jointly and
severally, as attorneys-in-fact and agents, each acting alone, with full powers
of substitution, to sign on his or her behalf, individually and in the
capacities stated below, and to file any and all amendments, to this
registration statement and exhibits and other documents in connection therewith,
with Securities and Exchange Commission, granting to said attorneys-in-fact and
agents full power and authority to perform any other act on behalf of the
undersigned required to be done in the premises.
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ CHARLES A. LAVERTY Chairman of the Board and Chief September 18, 1998
- ---------------------------------------- Executive Officer (Principal Executive
Charles A. Laverty Officer)
/s/ MICHAEL A. MONTEVIDEO Senior Vice President and Chief September 18, 1998
- ---------------------------------------- Financial Officer (Principal financial
Michael A. Montevideo and accounting officer)
/s/ JOHN CHAMBERLIN
- ---------------------------------------- Director September 18, 1998
John Chamberlin
- ---------------------------------------- Director September 18, 1998
James W. Biondi
/s/ LAWRENCE GOELMAN
- ---------------------------------------- Director September 18, 1998
Lawrence Goelman
- ---------------------------------------- Director September 18, 1998
Philip D. Green
/s/ MICHAEL S. GROSS
- ---------------------------------------- Director September 18, 1998
Michael S. Gross
/s/ RICHARD R. NEWHAUSER
- ---------------------------------------- Director September 18, 1998
Richard R. Newhauser
</TABLE>
II-4
<PAGE> 25
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
<S> <C> <C>
/s/ FRANCIS J. TEDESCO
- ---------------------------------------- Director September 18, 1998
Francis J. Tedesco
</TABLE>
II-5
<PAGE> 26
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
------ ----------- -------------
<S> <C> <C>
3.1 Certificate of Incorporation of Imagyn Medical Technologies,
Inc., as amended through September 29, 1997. Incorporated by
reference to Exhibit 3.1 of the Company's Form S-3 Registration
Statement No. 333-12723.
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 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").
4.3 Form of Rights Certificate. Incorporated by reference to
Exhibit 4.2 to the Registrant's May 20, 1993 Form 8-K.
4.4 Warrant Agreement, dated April 10, 1997, between Urohealth
Systems, Inc. and The Bank of New York, as warrant agent.
Incorporated by reference to Exhibit 4.4 of the Company's
Current Report on Form 8-K dated April 28, 1997.
4.5 Warrant Registration Rights Agreement, dated April 10, 1997,
between Urohealth Systems, Inc. and Bear, Stearns & Co. Inc.
Incorporated by reference to Exhibit 4.5 of the Company's
Current Report on Form 8-K dated April 28, 1997.
5.1 Opinion of Kevin M. Higgins, Esq. *
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Ernst & Young LLP
23.3 Consent of PricewaterhouseCoopers LLP
23.4 Consent of PricewaterhouseCoopers LLP
23.5 Consent of Kevin M. Higgins, Esq. (included in Exhibit 5.1)*
24.1 Power of Attorney of certain officers and directors (included
in Part II to the Registration Statement).
</TABLE>
- ------------
* to be filed by amendment.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Imagyn Medical Technologies, Inc. (the Company) on Form S-3 of our report dated
July 13, 1998 (which report expresses an unqualified opinion and includes an
explanatory paragraph relating to the Company's ability to continue as a going
concern), appearing in and incorporated by reference in the Annual Report on
Form 10-K of Imagyn Medical Technologies, Inc. for the year ended March 31, 1998
and to the reference to us under the heading "Experts" in the Prospectus, which
is part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Costa Mesa, California
September 17, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Imagyn Medical
Technologies, Inc. for the registration of 2,250,000 shares of its Common Stock
and to the incorporation by reference therein of our reports, dated July 8,
1997, with respect to the consolidated financial statements and schedule of
UROHEALTH Systems, Inc. (before giving effect to the business combination with
Imagyn Medical, Inc. which occurred on September 29, 1997, and was accounted for
as a pooling of interests) included in the Annual Report (Form 10-K) for the
year ended March 31, 1998, filed with the Securities and Exchange Commission.
/s/ Ernst & Young, L.L.P.
Orange County, California
September 17, 1998
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
Imagyn Medical Technologies, Inc. on Form S-3 (File No. 333-_________ ) of our
report dated January 27, 1998 included in Imagyn Medical Technologies, Inc's
Annual Report on Form 10-K for the year ended March 31, 1998 on our audits of
the consolidated financial statements of Imagyn Medical, Inc. as of March 31,
1997 and for the nine month period ended March 31, 1996 and the year ended March
31, 1997 (not separately included therein). We also consent to the reference to
our firm under the caption "Experts."
/s/ PricewaterhouseCoopers LLP
Newport Beach, California
September 17, 1998
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
Imagyn Medical Technologies, Inc. on Form S-3 (File No. 333- ______ ) of our
report dated May 9, 1997 included in Imagyn Medical Technologies Inc's Annual
Report on Form 10-K for the year ended March 31, 1998 on our audits of the
financial statements of Microsurge, Inc. as of March 31, 1997 and for the year
ended March 31, 1997 and the nine months ended March 31, 1996 (not separately
included therein). We also consent to the reference to our firm under the
caption "Experts."
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
September 17, 1998
