As filed with the Securities and Exchange Commission on May 13, 1998
Registration No. 333-_______
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
HEALTH FITNESS CORPORATION
(Name of Registrant as specified in its Charter)
Minnesota 41-1580506
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
Health Fitness Corporation
3500 W. 80th Street, Suite 130
Bloomington, Minnesota 55431
(612) 831-6830
(Address and Telephone Number of Registrant's Principal Executive Offices)
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Loren S. Brink, CEO
Health Fitness Corporation
3500 W. 80th Street, Suite 130
Bloomington, Minnesota 55431
(612) 831-6830
(Name, Address and Telephone Number of Agent for Service)
Copies to:
John F. Wurm, Esq.
Fredrikson & Byron, P.A.
900 Second Avenue South, Suite 1100
Minneapolis, Minnesota 55402
(612) 347-7000
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement as
determined by market conditions and other factors.
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 to be offered on
a delayed or continuous basis, pursuant to Rule 415 under the Securities Act of
1933, check the following box: [X]
If this Form is filed to register additional securities of an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: [ ]
<TABLE>
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CALCULATION OF REGISTRATION FEE
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
Title of Each Proposed Maximum Proposed Maximum
Class of Securities Amount to be Offering Price Aggregate Offering Amount of
to be Registered Registered per Unit Price Registration Fee
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
<S> <C> <C> <C> <C>
Common Stock (par 3,279,947 shares $1.563 (1) $5,126,557.16 (1) $1,512.33
value $0.01 per share)
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Common Stock (par 776,600 shares $2.25 - 3.60 (2) $1,809,585.00 (2) $533.83
value $0.01 per share)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, as amended, and
based upon the average of the high and low sale prices for such stock on May 11,
1998, as reported by the Nasdaq SmallCap Market.
(2) In accordance with Rule 457(g), the warrant exercise price to be paid by the
selling shareholders to acquire these shares. The exercise price with respect to
warrants to purchase 730,500 shares is $2.25 per share. The exercise price with
respect to warrants to purchase 46,100 shares is $3.60 per share.
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, as amended, or until this Registration Statement shall
become effective on such date as the Commissions, acting pursuant to aforesaid
Section 8(a), may determine.
<PAGE>
PRELIMINARY PROSPECTUS, DATED MAY 13, 1998
PROSPECTUS
HEALTH FITNESS CORPORATION
4,056,547 SHARES OF COMMON STOCK
This Prospectus relates to the offer and sale of up to 4,056,547 shares
of Common Stock (the "Shares"), par value $.01 per share, of Health Fitness
Corporation, a Minnesota corporation (the "Company" or "HFC"), by persons who
are currently shareholders of the Company's Common Stock or who may become such
holders upon exercise of warrants to purchase shares of Company Common Stock
(the "Selling Shareholders"). The Selling Shareholders may offer their Shares
from time to time through or to brokers or dealers in the over-the-counter
market at market prices prevailing at the time of sale or in one or more
negotiated transactions at prices acceptable to the Selling Shareholders. The
Company will not receive any proceeds from the sale of Shares by the Selling
Shareholders. See "Plan of Distribution."
The Company will bear all expenses of the offering (estimated at
$26,000), except that the Selling Shareholders will pay any applicable
underwriter's commissions and expenses, brokerage fees or transfer taxes, as
well as any fees and disbursements of counsel and experts for the Selling
Shareholders.
HFC's Common Stock is traded on the Nasdaq SmallCap Market under the
symbol of "HFIT." The closing sale price of the Common Stock on May 12, 1998 was
$1.50 per share.
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The Common Stock offered by this Prospectus is speculative and involves a high
degree of risk. See "Risk Factors" beginning on page 5.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRE- SENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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<PAGE>
No person is authorized to give any information or to make any
representations, other then those contained or incorporated by reference in this
Prospectus, in connection with the offering contemplated hereby, and, 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 any securities other than the
registered securities to which it relates or in any jurisdiction to any person
to whom it is unlawful to make such offer or solicitation in such jurisdiction.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
or incorporated by reference herein is correct as of any time subsequent to its
date.
AVAILABLE INFORMATION
Prior to this Offering, the Company has been subject to the reporting
requirements of the Securities Exchange Act of 1934 (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Commission. The Company has filed with the Washington, D.C. Office of the
Commission a Registration Statement under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the sale of the Shares. This Prospectus
does not contain all of the information set forth in the Registration Statement,
certain portions of which have been omitted as permitted by the rules and
regulations of the Commission. For further information with respect to the
Company and the Shares, reference is made to the Registration Statement,
including the exhibits thereto. Statements contained in this Prospectus as to
the contents of any contract or other document referred to are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement. The
Registration Statement and the Company's Exchange Act reports, proxy statements
and other information may be inspected by anyone without charge at the principal
office of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of all or any part of such material may be obtained upon payment of the
prescribed fees from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Registration Statement and the Company
Exchange Act filings may also be accessed through the Commission's Web site
(http://www.sec.gov).
DOCUMENTS INCORPORATED BY REFERENCE
The following document filed by the Company with the Commission are
hereby incorporated by reference in this Prospectus:
The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of the offering of the Shares shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the date of filing
of such documents.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the documents
incorporated herein by reference (not including the exhibits to such documents,
unless such exhibits are specifically incorporated by reference in such
documents). Requests for such copies should be directed to Charles E. Bidwell,
Chief Financial Officer, Health Fitness Corporation, 3500 W. 80th Street, Suite
130, Bloomington, Minnesota 55431, telephone (612) 831-6830.
<PAGE>
COMPANY SUMMARY
HFC and its wholly-owned direct and indirect subsidiaries are engaged
in the development, marketing and delivery of preventive and rehabilitative
health care products and services to corporations and individuals across the
United States.
The Company's preventive health care business develops and manages
corporate and hospital-based fitness centers, and through its Pro Source
Division, sells commercial and home fitness equipment, soft goods and fitness
supplies. The Company is the nation's largest manager of corporate fitness
centers and is one of the largest distributors of commercial exercise equipment.
The Company currently manages 129 corporate and 10 hospital-based fitness
centers in 27 states.
The Company's rehabilitative health care business owns and operates
physical therapy clinics; provides consulting, group buying and marketing
services to a network of independent physical therapy clinics; authors and sells
written materials to independent physical therapy clinics; and provides
occupational health consulting services to employers, insurers and others.
Unlike the fitness centers which it manages, the Company owns or leases the
equipment used in its physical therapy clinics. The Company currently leases the
space occupied by its physical therapy clinics. The Company currently owns and
manages 15 physical therapy clinics located in Iowa, Nebraska and Minnesota, and
also provides "on-site" physical therapy services at 12 fitness centers and work
sites in California, Georgia and Kentucky.
The Company intends to grow its preventive business through aggressive
national marketing and sales efforts and a leveraging of existing accounts
through the sale of additional products and services to existing accounts. The
Company intends to grow its rehabilitative business through sales to
corporations and through the acquisition of free-standing physical therapy
clinics in secondary markets in the Central United States.
The Company's strategy for building a strong, regional outpatient
rehabilitation business is predicated upon paying reasonable prices for sound
and profitable free-standing clinics in secondary markets in the Central United
States. With few exceptions, the Company's acquisition model requires that such
clinics: (i) operate on a pre-tax profit (adjusted for the Company's cost
structure) of 20% or greater; (ii) are recognized in the physical therapy
community as a leader of quality rehabilitation services; (iii) be positioned
for rapid revenue and profit growth through the integration of additional
products and services; and (iv) have no continuing ownership by physicians.
The Company also intends to continue to develop and implement advanced
systems for patient and clinic management and outcomes measurement to position
the Company as a leader in the rehabilitation industry. Existing clinic network
relationships will be used to identify acquisition candidates and provide added
value to the Company's corporate management clients.
The Company believes it is unique in terms of its ability to provide a
wide range of health care products and services to its corporate customers and
patients. The majority of services offered by the Company appeal to both the
preventive and rehabilitative markets. Management believes that the proper
positioning and marketing of its products and services should lead to synergies
that should result in increased revenues and profits per site.
The Company believes its core business segments (management of fitness
centers and operation of physical therapy clinics) will provide it with a
nationwide distribution network for marketing its comprehensive line of
additional products and services.
The Company was organized under Minnesota law in March of 1987. The
original predecessor business of the Company was founded by Mr. Loren S. Brink
in April 1981 as Health Fitness Consultants, Inc. That business was sold to
Abbott Northwestern Hospital ("Abbott") in November 1983 and it was operated as
a department of Abbott from 1983 through the first quarter of 1988. In April
1988, Mr. Brink and two investors reacquired that business from Abbott. In June
1997, the Company changed its name from Health Fitness Physical Therapy, Inc. to
Health Fitness Corporation.
<PAGE>
RISK FACTORS
An investment in the Securities offered hereby involves a high degree
of risk. The Securities offered hereby should not be purchased by persons who
cannot afford the entire loss of their investment. Prospective investors should
carefully consider the following factors, in addition to the other information
presented in this Memorandum, in evaluating the Company and its businesses. This
Memorandum contains certain forward-looking statements. The Company's actual
results could differ materially from the results currently anticipated by
management of the Company in such forward-looking statements as a result of a
variety of factors, including, but not limited to, "Risk Factors" described
below, and elsewhere, in this Memorandum.
Sufficiency of working capital:
The Company's ability to fund its working capital requirements in the
future is materially dependent upon its ability to generate cash flow from its
existing and future management contracts, equipment sales, consulting fees, fees
generated from its work site and free-standing physical therapy operations and
future debt and/or equity financings. Future potential acquisitions, and the
costs associated with the successful integration of such acquisitions, could
adversely affect Company cash flows from operating activities. In addition, the
Company materially relies on third party reimbursement for its physical therapy
services. If such third party payors defer or delay payment for any reason, the
Company's cash flows would be materially adversely affected. Historically, the
Company has experienced excessive account receivable aging from certain of its
physical therapy clinics. The Company attributes the majority of such
receivables to be the result of the poor performance of the clinics it sold in
1997. If the Company's existing operations would require more capital than
currently anticipated, or if revenues or expenses are greater than what are
currently anticipated, the Company may need additional financing in order to
maintain its operations and implement its physical therapy acquisition strategy.
Such sources of additional financing could include, but may not be limited to,
sales of the Company's debt or equity securities. No assurance can be given that
the Company will be able to secure any such financing when needed, or that such
financing, if obtained, would be on terms favorable or acceptable to the
Company.
Dependence upon successful execution of acquisition strategy; risks associated
with integration of free-standing physical therapy clinics:
A major element of the Company's business strategy is to acquire
free-standing outpatient physical therapy clinics primarily in secondary markets
throughout the central United States. Acquisitions have constituted, and the
Company expects them to constitute in the future, a significant portion of the
Company's growth. Since December 1991 to March 31, 1998, the Company has grown
from owning and operating one physical therapy clinic to owning and operating 15
free-standing clinics and 12 worksite physical therapy clinics. No assurance can
be given as to whether, when or on what terms, any possible acquisitions of
free-standing clinics may be completed, if at all.
The Company believes that competition for acquisitions will increase as
consolidation of the outpatient rehabilitation industry continues. Many of the
companies actively seeking such acquisitions are well established and have
substantially greater resources than the Company. Such interest may lead to
increased competition for attractive acquisition candidates. Accordingly, there
can be no assurance that existing outpatient rehabilitation clinics will
continue to be available to the Company in the secondary markets in the central
United States on terms and conditions favorable or acceptable to the Company, or
at all. The failure of the Company to be able to successfully locate, negotiate,
close and integrate such free-standing physical therapy acquisitions would
adversely affect the Company's future growth potential. In addition, the
Company's ability to secure the necessary financing to acquire such physical
therapy clinics on terms and conditions favorable to the Company will impact the
Company's ability to successfully execute its acquisition strategy. Federal and
state laws may prohibit or restrict the use by the Company of its securities as
consideration for the acquisition of clinics from referral sources or otherwise
prohibit or restrict the Company's ability to make acquisitions. Such
prohibitions and restrictions could restrict the Company's ability to make
acquisitions, which would adversely affect the Company's growth potential,
financial condition, results of operations and cash flows.
<PAGE>
Potential Impairment of Acquired Assets:
The Company periodically reviews the operating results of its acquired
free-standing clinics to determine if any impairment charges for underperforming
assets and/or clinic closing are necessary. It is reasonable to expect that such
actions will be required from time to time in the future as the Company
continues to grow through acquisitions. No assurance can be given that assets
acquired will never incur impairment charges or clinics acquired will not be
closed.
Risks associated with expansion and rapid growth:
The Company's growth strategy will require increased personnel
throughout the Company, expanded operational and financial systems and the
implementation of new and additional control procedures. There can be no
assurance that the Company will be able to manage expanded or newly integrated
operations effectively. The failure to implement such operational and financial
systems could have a material adverse affect on the Company's results of
operations, financial condition and cash flows.
Material dependence on referrals:
Although not the Company's primary strategy, the Company has acquired
in the past (and may acquire in the future) certain clinics from health care
professionals (such as physicians) who are the primary patient referral source
for such clinics. Under current and proposed federal and state legislation,
depending on the type of consideration paid by the Company and the nature of any
other financial relationships between the sellers, the seller and other referral
sources may be prohibited from referring patients to the clinic. In connection
with the acquisition of clinics from physicians in particular, the Company
typically enters into noncompetition agreements with the sellers for
approximately 60 months (although such sellers are not restricted from referring
patients to other clinics). There can be no assurance, however, that such
contracts would be enforced according to their terms and conditions and that the
sellers would not begin competing with the Company.
Potential adverse effects of existing and future government regulation:
The Company's physical therapy business is subject to extensive and
rapidly changing federal, state and local regulation governing licensure,
conduct of operations, payment of referral fees, purchase or leasing of
facilities and employment of therapists and other professionals by business
corporations.
Virtually all states in which the Company operates have enacted laws
and adopted regulations that restrict health care practitioners from referring
patients to health care facilities in which the practitioner has an ownership or
other financial interest. Other state laws and regulations often prohibit the
giving and accepting of referral fees or other consideration as compensation or
inducement for patient referrals. The Company believes that its operations are
structured to comply with all such laws and regulations currently in effect, as
well as laws and regulations enacted or adopted but not yet effective. There can
be no assurance, however, that enforcement authorities will not take a contrary
position. The Company also believes that, if it is subsequently determined that
the Company's operations do not comply with such laws or regulations, it could
restructure its operations to comply with such laws and regulations. There can
be no assurance, however, that the Company would be able to restructure its
operations. In addition, there can be no assurance that the states in which the
Company currently operates, or may operate in the future, will not enact similar
or more restrictive laws and that the Company will be able to operate or
restructure its operations to comply with such new legislation or regulations or
interpretations of existing or new legislation and regulations.
Additional federal restrictions became effective in 1995 for certain
designated health services (including physical therapy) that require notice to
governmental agencies of ownership on the part of physicians and members of
their families of debt or equity interests in providers of physical therapy,
such as the Company. Payment will not be made for services provided to Medicare
or Medicaid beneficiaries as a result of referrals from such physicians. This
law also regulates a wide variety of other relationships between referring
physicians and providers and imposes substantial penalties for violations of its
provisions. From time to time proposals are made to extend these restrictions to
all services provided, regardless of whether this source of payment is the
Medicare or Medicaid programs or some other public or private source of payment.
In the event such legislation at the state or national level were enacted, the
Company may be required to restructure its relationships with certain of its
referring physicians. There can be no assurance that the Company would be able
to do so without an adverse effect on its financial condition, operations or
cash flows.
<PAGE>
Possible limitations on third-party reimbursement:
The health care industry has experienced a material trend toward cost
containment as private and governmental payors seek to respond to, and control,
rapidly escalating health care costs. One response has been to place limitations
on reimbursement rates by capping or lowering fees and restricting the number of
treatments which will be reimbursed for any given condition. All states in which
the Company currently conducts business have fee schedules which limit the
reimbursement rates under workers' compensation programs. The Company expects
that legislation limiting the reimbursement of fees for various outpatient
services (including physical therapy and other related services) will become
more prevalent. Reimbursement for the Company's services may also be limited by
third party payors. Such payors often limit the amount of fees per visit,
regardless of the number or type of therapy applied to the patient, or otherwise
limit, by the terms of the managed care contract, the amount of fees that may be
charged. One method of governmental and third party payors has been to institute
what are known as "capitated" programs. Under capitated programs, payors
contract with providers for specific physical therapy services in return for set
prepaid fees per individual enrollee ("capitated" monthly fees). If the provider
has accurately analyzed and negotiated its capitated monthly fees, and the costs
in providing services are less than the demand for treatment, the provider
benefits from positive margins in cash flow resulting from the prepayment of the
capitated monthly fees. However, to the extent that the actuarial analysis
underlying such capitated fees is inaccurate and enrollees require more
treatment than is anticipated, aggregate capitated fees may be insufficient to
cover the costs of providing enrollees with the services required. Although the
Company could seek to negotiate stop-loss reinsurance to contractually shift the
risk of financial exposure beyond certain limits to an insurance carrier in the
event the Company determined to participate in such a capitated program, there
can be no assurance that the Company would be able to obtain such reinsurance.
In addition, the Company could be required to obtain licenses from certain
governmental authorities in order to participate in such capitated programs. The
Company does not currently have a license from any governmental authority to
offer such programs, and there can be no assurance that the Company would be
able to secure any such licenses when and if sought by the Company. Moreover, in
order to effectively manage such capitated contracts, the Company may need to
acquire and implement additional operational and informational systems.
The Company expects the trend toward third party payors limiting
reimbursement levels for various out-patient services, including outpatient
rehabilitation services, to continue. As a consequence, there can be no
assurance that reimbursement for the Company's rehabilitation services will
remain at current or anticipated levels. Any reduction or limits on
reimbursement levels for the Company's services would adversely affect the
profitability of, or demand for, the Company's services and could have a
material adverse effect on the Company's financial condition, results of
operations and liquidity. In addition, such payors are expected to continue to
develop programs designed to control and reduce the cost of health care services
that may adversely affect the profitability of, or demand for, the Company's
services.
State limitations imposed upon the corporate practice of medicine:
Certain states have legislation or regulations, or have interpreted
existing physical therapy licensing laws, to prohibit or restrict business
corporations, such as the Company, from practicing physical therapy through the
direct employment of physical therapists. In other states, the courts or state
officials have issued rulings or opinions stating or suggesting that health care
professionals may not lawfully provide services as employees of business
corporations such as the Company. For example, in Texas, an opinion of the
Attorney General suggests that unlicensed corporate entities may not engage in
the practice of physical therapy, although the Company believes that other Texas
regulators disagree with this conclusion and that this opinion has generally not
been followed, or enforced, in Texas. Similarly however, in California, the
Attorney General has opined that physical therapists may not be employed by
corporate employers, such as the Company. The Physical Therapy Examining
Committee of the California Board of Medical Quality Assurance, however, has
concluded that there is no such prescription under California law, and to the
best of the Company's knowledge, the Attorney General's opinion has not been
enforced to date. There can be no assurance that regulators, or others in Texas,
California and other states, will not seek to enforce, or adopt, this type of
restriction, or that other states in which the Company operates, or may operate
in the future, will not enact or enforce similar, or more restrictive,
legislation or regulations or that the Company can adapt its operations to
comply with such legislation and regulations.
<PAGE>
Material dependence upon existing management and physical therapy clinic
personnel:
The success of the Company is highly dependent on the services of Mr.
Loren S. Brink, its President and Chief Executive Officer, and upon Mr. Thomas
Coplin, President of Health Fitness Rehab. The loss of either Mr. Brink's or Mr.
Coplin's services would have a material adverse effect on the Company's
business. In January 1997, the Company entered into an "evergreen" three year
employment agreement with Mr. Brink. The Company is currently negotiating a long
term employment agreement with Mr. Coplin. No assurance can be given that such
long term employment agreement will be entered into between the Company and Mr.
Coplin or on terms, and conditions, acceptable to the Company. The failure by
the Company to enter into such long term employment agreement would have an
adverse effect on the Company's business. The Company owns and maintains a
key-man life insurance policy on Mr. Brink's life in the amount of $3.5 million.
The Company's operations are also dependent upon attracting and
retaining highly-qualified physical therapists. Although, to date, the Company
has not experienced significant difficulty in attracting and retaining qualified
physical therapists, it is generally accepted that the demand for physical
therapists exceeds the available supply. As the Company's operations expand, the
Company could experience difficulty recruiting and maintaining adequate staff.
Most of the Company's competitors are larger and have greater financial
resources, which may provide such competitors with an advantage in attracting
and retaining physical therapists. In addition, the Company's ability to attract
and retain physical therapists may be limited as the Company's ability to
increase its fees to cover such additional costs is restricted by the cost
containment pressures on health care providers. The inability to attract
therapists without substantially increasing their compensation could interfere
with the Company's business plans and adversely affect its results of operations
and cash flows.
Possible quarterly volatility in Company financial results:
The Company may experience, as other companies in the business of
owning and operating physical therapy clinics have experienced, a decrease in
revenue and income from operations in the third and fourth quarters of each year
as patient visits historically tend to decline during the summer and holiday
months. In addition, the timing, number and integration of the Company's
potential free-standing physical therapy acquisitions may cause financial
results of operations to vary on a quarterly basis. No assurance can be given
that the timing or integration of possible future acquisitions will not
materially adversely affect the Company's financial position, results of
operations and cash flows on a quarterly or annual basis.
Likely material changes in workers' compensation laws:
Workers' compensation coverage is a creation of state law, and thus, is
subject to material change by state legislatures and is materially influenced by
the political process in each state. Several states have mandated that employers
receive coverage only from funds operated by the state. New laws affecting the
workers' compensation system in Minnesota and any other state where the Company
may do business in the future (including laws that require all employers to
participate in state-sponsored funds or that mandate premium reductions) would
have a material adverse effect on the Company and its financial position,
results of operations and cash flows. Several bills to modify Minnesota's
workers' compensation laws have been introduced in the State legislature in the
past. The Company is not able, at this point in time, to predict the likelihood
that any of these bills will be enacted or the potential effect these bills
could have on the Company and its operations, if enacted into law.
<PAGE>
Possible risk in converting physical therapy "independent practices" to
"rehabilitation agency" status:
Under current Medicare standards, a facility certified as an
"independent practice" is subject to a $900 per capita limit in connection with
the provision of physical therapy services. In contrast, physical therapy sites
or facilities certified as "rehabilitation agencies" are not subject to such
$900 per capita reimbursement limitation. As a result, management views the
change in certification from an "independent practice" to a "rehabilitation
agency" as an important factor, despite the fact that only approximately 8% of
the Company's rehabilitation revenues are derived from Medicare or Medicaid.
Management believes a certain non-quantifiable stigma may apply to those
"independent practices" that have not yet, or do not in the future, convert to
such "rehabilitation agencies." As of March 31, 1998, ten of the Company's 15
free-standing physical therapy clinics had been certified as "rehabilitation
agencies." For four of the Company's free-standing physical therapy sites,
"rehabilitation agency" status is not applicable due to the nature of their
hospital contract business and the remaining site is currently in the
certification process. No assurance can be given that all or any portion to the
Company's future free-standing physical therapy clinics can or will be converted
to such "rehabilitation agency" status, nor can any assurance be given that the
failure to achieve such status will not have a material adverse effect on the
Company's rehabilitation business.
Competition:
There are a significant number of companies currently existing in, as
well as entering, the physical therapy market. The Company competes for physical
therapy business with other significantly larger physical therapy companies.
Most physical therapy companies that compete with the Company have greater
capital and financial resources, operational experience, marketing capabilities
and name recognition than the Company. The health fitness business is also very
competitive. The Company competes for management contracts for corporate and
hospital-based fitness centers with other health and fitness management
companies. There can be no assurance that the Company will be able to compete
successfully with these management and physical therapy companies.
Enhanced Nasdaq SmallCap Market(TM) ("SmallCap Market") Maintenance
Requirements:
In August 1997, the Securities and Exchange Commission ("SEC") approved
enhanced listing and maintenance requirements for companies listing their
securities on the Nasdaq SmallCap Market(TM) and the Nasdaq National Market(R).
The enhanced maintenance requirements for listing the Company's securities on
the SmallCap Market include a requirement that the Company have either (1) net
tangible assets of at least $2 million, (2) $500,000 of net income in the most
recent fiscal year or in two of the last three fiscal years, or (3) a market
capitalization of at least $35 million. Existing SmallCap Market companies were
given until February 23, 1998 to comply with such standards. The Company
believes that, as a result of the Company's private placement completed on
February 19, 1998, the Company is in compliance with the enhanced maintenance
requirements. If, however, the Company's net tangible assets fall below $2
million, the Company will fail to meet such requirements and the Company's
securities could be de-listed from the SmallCap Market. In such event, trading,
if any, in the Company's common stock would thereafter be conducted in the
over-the-counter markets or in the so called "pink sheets" or the Nasdaq's
electronic bulletin board. Consequently, the liquidity of the Company's
securities could be impaired, not only in the number of securities which could
be bought or sold, but also through delays and timing of transactions,
reductions in security analysts' and the news media's coverage of the Company,
and possibly, lower prices for the Company's securities than might otherwise be
attained.
Possible dilution and depressive effect on price of the Company's common stock
from common stock issued in connection with acquisitions:
In connection with the Company's strategy of aggressive growth through
acquisitions, the Company intends to issue shares of its common stock, as well
as grant certain earn-out provisions that may include the future issuance of the
Company's common stock. Although the aggregate number of such shares to be
issued in connection with existing and future acquisitions is not currently
ascertainable by the Company, such issuances may be material in the aggregate.
Such issuances of the Company's common stock in connection with acquisitions may
be dilutive to existing shareholders of the Company and sales of such securities
into the public market could have a depressive effect on the price of the
Company's common stock. No assurance can be given that such future issuances of
the Company's securities in connection with future acquisitions will not have a
materially dilutive effect on existing Company shareholders, nor that sales of
shares issued in such acquisitions will not materially adversely affect the
price of the Company's common stock.
<PAGE>
Risk of litigation and insufficiency of liability insurance:
Although the Company has had no history of material legal claims, the
Company may be subject to claims and lawsuits from time to time arising from the
operation of its business, including claims arising from accidents or from the
negligent provision of physical therapy services. Damages resulting from and the
costs of defending any such actions could be substantial. In the opinion of
management, the Company is adequately insured against personal injury claims,
professional liability claims and other business-related claims including, but
not limited to, claims related to the negligent provision of physical therapy
services. Nevertheless, there can be no assurance the Company will be able to
maintain such coverage, or that it will be adequate.
Restrictions and affirmative and negative covenants imposed by senior credit
facility:
Certain of the affirmative and negative covenants imposed upon the
Company by its senior secured lending facility restrict the Company's ability to
incur additional senior and subordinated debt. Furthermore, upon certain events
of default, such senior secured lender is entitled to demand immediate repayment
of their outstanding loans. In such circumstances, the Company may not be able
to access other sources of capital, on a timely basis, or on terms and
conditions favorable to the Company, or at all, with sufficient speed or
sufficient size to avoid the Company's senior secured lender from taking
material adverse action against the Company and its collateral.
Lack of proprietary protection; lack of barriers to entry:
Although the Company holds certain trademarks, tradenames and
intellectual property associated with its operations, the Company is primarily a
health care service business where patents or other intellectual property are
not applicable, or if applicable, do not provide material barriers to entry for
third parties or competitors to enter the Company's existing preventive and
rehabilitative lines of business and compete with the Company. Therefore, no
assurance can be given that other existing competitors, or health care companies
seeking to gain access to the Company's market or limit the Company's market
share, may not devote resources to effectively compete with the Company in the
future. No assurance can be given that if such competition occurs in the future
that the Company's financial position, results of operations or cash flows will
not be materially adversely affected.
Potential depressive effect on price of common stock arising from exercise and
sale of existing convertible securities:
At December 31, 1997, the Company had outstanding stock options and
warrants (not including the shares issuable under any contingent grants,
earn-out agreements or any future acquisition) to purchase an aggregate
2,586,063 shares of common stock. The exercise and sale of such outstanding
stock options and stock purchase warrants and sale of stock acquired thereby may
have a material adverse effect on the price of the Company's common stock. In
addition, the exercise and sale of such Company's common stock could occur at a
time when the Company would otherwise be able to obtain additional equity
capital on terms and conditions more favorable to the Company.
USE OF PROCEEDS
The Company is not selling any of the Shares and will not receive any
proceeds from the sale of the Shares by the Selling Shareholders.
<PAGE>
SELLING SHAREHOLDERS
Set forth below are the names of the Selling Shareholders, the number
of shares of Common Stock of the Company beneficially owned by each of them on
the date hereof, the number of shares offered hereby and the percentage of the
outstanding Common Stock to be owned if all the shares registered hereunder are
sold by the Selling Shareholders. To the knowledge of the Company, none of the
Selling Shareholders has had within the past three years any material
relationship with the Company except as set forth in the footnotes to the
following table. The shares offered hereby shall be deemed to include shares
offered by any pledgee, donee, transferee or other successor in interest of any
of the Selling Shareholders listed below, provided that this prospectus is
amended or supplemented if required by applicable law.
<TABLE>
<CAPTION>
%
Number of Shares Number of Owned
Beneficially Owned Shares After
Option & Warrant Offered Offering
Name Shares Shares (1) Hereby (2)
- --------------------------------------------- ------------------- --------------------- ------------- --------------
<S> <C> <C> <C> <C>
Rebecca A. Meehan 22,000 5,500 27,500 *
Steven R. Heath 11,000 2,750 13,750 *
Jeffrey Thull (3) 54,000 11,000 27,500 *
Patricia Thull (3) 54,000 11,000 27,500 *
G.A. Hall (4) 44,000 8,500 42,500 *
Mark Siewert and
Sheila Siewert JTWROS (5) 147,000 12,500 62,500 *
Randy Mayer (6) 52,000 7,500 37,500 *
Thomas H. Coplin (7) 92,570 11,750 33,750 *
Steven B. Johansen and
Bethany S. Brand JTWROS 29,000 5,500 27,500 *
Rodney A. Axtell and
Jonel R. Axtell JTWROS 16,000 2,750 13,750 *
Thomas R. Irwin 44,000 11,000 55,000 *
Brett I. Smith (8) 153,000 12,500 62,500 *
David A. Dent 85,170 19,400 45,000 *
Dennis M. Krump 22,000 5,500 27,500 *
Dennis Brandanger 36,000 2,750 13,750 *
Dennis Ryan, TTEE, Karen and
Dennis Ryan Family Trust 49,670 10,500 27,500 *
David Denham 48,670 10,500 27,500 *
Lowell P. Jacobsen 25,000 6,250 31,250 *
R. Peter Jacobson 10,000 2,500 12,500 *
Webster E. Barsness 5,000 1,250 6,250 *
Steven McClintick 2,000 500 2,500 *
Kevin Sunde 11,000 2,750 13,750 *
Dudley M. McLinn 18,000 4,500 22,500 *
Larry D. and Evelyn A. Anderson JTWROS 25,000 6,250 31,250 *
Stephen J. O'Malley 25,000 6,250 31,250 *
Robert and Catherine Bauers JTWROS 12,000 3,000 15,000 *
Egre E. Lewallen II 25,000 6,250 31,250 *
Jeffrey B. Hill 10,000 2,250 11,250 *
Miles E. Burd 12,000 3,000 15,000 *
Thomas C. Butterbrodt 40,000 10,000 50,000 *
Larry R. Cramer 25,500 6,375 31,875 *
Lew W. Throssel 12,000 3,000 15,000 *
Larry J. Fischer 10,000 2,500 12,500 *
David H. McCaffrey 11,000 2,750 13,750 *
Stephen L. Becher 49,000 11,000 55,000 *
Joe Semler, Jr. 32,000 5,500 27,500 *
Robert J. Werneke 22,000 5,500 27,500 *
Daryl Werneke 195,000 25,000 125,000 *
Burt H. Rowe, Jr. 44,000 11,000 55,000 *
Robert R. Hibbs 22,000 5,500 27,500 *
Charles E. Bidwell (9) 382,596 80,000 125,000 2.8%
Maria Xykis 22,000 5,500 27,500 *
Paul L. Heibel 28,500 5,500 27,500 *
Ben Reuben and Sophie Reuben JTWROS 44,000 11,000 55,000 *
Dr. Bruce W. Pierce 25,000 6,250 31,250 *
Dick Farley 50,000 12,500 62,500 *
William T. Simonet (10) 57,000 42,250 31,250 *
Robert W. Mehlhouse 23,000 5,500 27,500 *
JAS & Co. 22,000 5,500 27,500 *
Dale G. Ragan 136,400 34,100 170,500 *
Jake Kooiman 90,000 10,000 50,000 *
Robert W. Nuebel (11) 65,000 11,000 55,000 *
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
(continued)
Khuen Shing Yoong and
Virginia Yoong JTWROS 122,000 25,000 125,000 *
Ted R. Storlie and Jeff A. Kohlnhofer 11,000 2,750 13,750 *
Michael P. Mulligan 45,454 11,363.50 56,817.50 *
Robert K. Spinner (12) 19,000 67,500 12,500 *
Kenneth W. Johnson 17,829 4,457.25 22,286.25 *
Walter L. Nocito 25,000 6,250 31,250 *
Mardell, Groth & Carlson P.A.
PST FBO Dr. Frederick C. Groth 40,000 10,000 50,000 *
John Hawkins and Annette Hawkins JTWROS 30,000 7,500 37,500 *
Bahram Akradi 10,000 2,500 12,500 *
Michael T. Mulligan 45,454 11,363.50 56,817.50 *
Okabena Partnership K 141,000 35,250 176,250 *
Sheldon Schneider 22,000 5,500 27,500 *
Larson Capital Management 22,000 5,500 27,500 *
Mardell, Groth & Carlson P.A.
PST FBO Kurt W. Carlson 22,000 5,500 27,500 *
Kevin Miller 22,000 5,500 27,500 *
Richard L. Hexum Jr. 75,000 18,750 93,750 *
Russel Hrncir 16,500 4,125 20,625 *
Darrell P. Hart 35,500 8,250 41,250 *
Ivan R. Willey TTEE Ivan Willey
Declaration Trust 63,000 8,250 41,250 *
Clint Hill Partners 22,000 5,500 27,500 *
Bruce A. Christensen 22,000 5,500 27,500 *
Randy Morgan 11,000 2,750 13,750 *
Daniel W. Dryer 11,000 2,750 13,750 *
Bruce LeDuc (13) 21,983 3,000 15,000 *
John R. Musgjerd (14) 8,000 1,250 6,250 *
Wendy Weihe Storlie (15) 10,000 2,500 12,500 *
Cheryl Anne Musgjerd (16) 2,000 500 2,500 *
Jeff M. Slimak (17) 11,000 2,750 13,750 *
Thomas Vertin and Ronald Clark TENCOM 32,000 5,500 27,500 *
Leonard Hrncir and Martha Hrncir 16,500 4,125 20,625 *
Robert C. Rich 33,000 8,250 41,250 *
MPC Scherer Limited Partnership 34,100 5,500 27,500 *
Richard Galuska and Debbie Galuska 14,000 2,750 13,750 *
Donald M. Mattsson and Nora J. Mattsson 47,000 5,500 27,500 *
Dean H. Lenz and Wenda Lenz TTEE
Lenz Family TR 7,500 1,375 6,875 *
Brightstone Fund VIII (18) 318,182 79,545.50 397,727.50 *
Robert Bassen 22,000 5,500 27,500 *
Arne M. Cook 16,000 4,000 20,000 *
Wilbert Seefeldt 22,000 5,500 27,500 *
Raymond K. Newkirk 255,181 16,920.25 84,601.25 1.6%
John Raichert 11,000 2,750 13,750 *
Cerberus Partners L.P. (19) 312,497 0 312,947 *
David Lantz 0 5,000 5,000 *
Wayne Mills 0 34,800 34,800 *
Steve Barker 0 3,300 3,300 *
Dennis Hanish 0 3,000 3,000 *
</TABLE>
- -------------------------
* Less than 1.0%.
<PAGE>
(1) Shares that may be purchased upon exercise of options and warrants
which are exercisable as of the date hereof or within 60 days of such
date.
(2) The percentage of shares beneficially owned by each Selling Shareholder
is based on 11,786,116 shares of common stock outstanding as of the
date hereof.
(3) Includes 22,000 shares and presently exercisable warrants to acquire
5,500 shares held by Jeffrey Thull, 22,000 shares and presently
exercisable warrants to acquire 5,500 shares held by Patricia Thull,
and 10,000 shares held by a company controlled by Jeffrey Thull.
(4) Includes 22,000 shares and presently exercisable warrants to acquire
5,500 shares held by First Trust National Association as trustee for
the benefit of the G.A. Hall SEP/IRA. These shares and the shares
underlying these warrants are included in the number of shares offered
hereby.
(5) Includes 6,000 shares and presently exercisable warrants to acquire
1,500 shares held by First Trust National Association as trustee for
the benefit of the Mark Siewert SEP/IRA. These shares and the shares
underlying these warrants are included in the number of shares offered
hereby.
(6) Includes 30,000 shares and presently exercisable warrants to acquire
7,500 shares held by First Trust National Association as trustee for
the benefit of the Randy Mayer SEP/IRA. These shares and the shares
underlying these warrants are included in the number of shares offered
hereby.
(7) Includes 27,000 shares and presently exercisable warrants to acquire
6,750 shares held by First National Bank of Onaga as custodian for the
benefit of the Thomas H. Coplin IRA. These shares and the shares
underlying these warrants are included in the number of shares offered
hereby. Mr. Coplin is an executive officer of the Company, employed as
President of the Company's Rehabilitative Health Care business.
(8) Mr. Smith was a Director, Vice-President and Secretary-Treasurer of
Midlands Physical Therapy, Inc. until such company was acquired by the
Company. Mr. Smith is currently Managing Director of Midlands Physical
Therapy, Inc.
(9) Mr. Bidwell is a Director of the Company and a consultant to the
Company. Mr. Bidwell also serves as the Company's Chief Financial
Officer, Secretary and Treasurer.
(10) Dr. Simonet is a Director of the Company.
(11) Includes 39,000 shares and presently exercisable warrants to acquire
5,500 shares held by First Trust National Association as trustee for
the benefit of the Robert W. Nuebel SEP/IRA. 22,000 of these shares and
the shares underlying these warrants are included in the number of
shares offered hereby.
(12) Mr. Spinner is a Director of the Company.
(13) Includes 16,983 shares and presently exercisable warrants to acquire
4,000 shares held by First Trust National Association as trustee for
the benefit of the Bruce LeDuc SEP/IRA. 12,000 of these shares and the
shares underlying these warrants are included in the number of shares
offered hereby.
(14) Includes 6,000 shares and presently exercisable warrants to acquire
1,250 shares held by First Trust National Association as trustee for
the benefit of the John R. Musgjerd IRA. 5,000 of these shares and the
shares underlying these warrants are included in the number of shares
offered hereby.
(15) Includes 10,000 shares and presently exercisable warrants to acquire
2,500 shares held by First Trust National Association as trustee for
the benefit of the Wendy Weihe Storlie SEP/IRA. These shares and the
shares underlying these warrants are included in the number of shares
offered hereby.
(16) Includes 2,000 shares and presently exercisable warrants to acquire 500
shares held by First Trust National Association as trustee for the
benefit of the Cheryl Anne Musgjerd IRA. These shares and the shares
underlying these warrants are included in the number of shares offered
hereby.
(17) Includes 11,000 shares and presently exercisable warrants to acquire
2,750 shares held by First Trust National Association as trustee for
the benefit of the Jeff M. Slimak IRA. These shares and the shares
underlying these warrants are included in the number of shares offered
hereby.
(18) Brightstone Fund VIII is an investment fund managed by James A.
Bernards and George E. Kline. Mr. Bernards and Mr. Kline are Directors
of the Company as of the date hereof, but have declined to stand for
re-election at the Company's June 1998 Annual Meeting of Shareholders.
(19) Madeleine L.L.C., an affiliate of Cerberus Partners L.P., is the
Company's senior secured lender.
<PAGE>
PLAN OF DISTRIBUTION
All or a portion of the Shares offered by the Selling Shareholders
hereby may be sold from time to time by the Selling Shareholders or by pledges,
donees, transferees or other successors in interest. Such sales may be made in
the over-the-counter market or otherwise at prices and at terms then prevailing
or at prices related to the then current market price, or in negotiated
transactions. Shares beneficially owned by certain Selling Shareholders who are
officers or directors of the Company are subject to a lock-up arrangement
pursuant to which such Selling Shareholders are prohibited from selling such
Shares prior to August 18, 1998 without the consent of R.J. Steichen & Co. The
Shares may be sold by one or more of the following means: (a) ordinary brokerage
or market making transactions and transactions in which the broker or dealer
solicits purchasers; (b) block trades in which the broker or dealer so engaged
will attempt to sell the Shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction; and (c) purchases by a
broker or dealer as principal and resales by such broker or dealer for its
account pursuant to this Prospectus. In effecting sales, brokers or dealers
engaged by the Selling Shareholders may arrange for other brokers or dealers to
participate. Brokers or dealers will receive commissions or discounts from the
Selling Shareholders in amounts to be negotiated immediately prior to the sale.
Such brokers or dealers and any other participating brokers or dealers may be
deemed to be "underwriters" within the meaning of the Securities Act in
connection with such sales. In addition, any securities covered by this
Prospectus which qualify for sale pursuant to Rule 144 under the Act may be sold
under Rule 144 rather than pursuant to this Prospectus.
The Company and the Selling Shareholders have agreed to indemnify each
other against certain liabilities, including liabilities arising under the
Securities Act.
LEGAL MATTERS
Certain legal matters associated with the Shares being offered hereby
will be passed upon for the Company by Fredrikson & Byron, P.A., Minneapolis,
Minnesota.
EXPERTS
The consolidated financial statements incorporated in this prospectus
by reference from the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1997 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, 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.
TABLE OF CONTENTS
Page
Available Information 2
Documents Incorporated By Reference 2
Company Summary 3
Risk Factors 4
Use of Proceeds 9
Selling Shareholders 10
Plan of Distribution 14
Legal Matters 14
Experts 14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses in connection with this offering are as follows:
Securities and Exchange Commission Filing Fee $2,046
Legal Fees and Expenses $15,000
Accounting Fees and Expenses $5,000
Printing $2,000
Miscellaneous $1,954
=======
Total Expenses $26,000
=======
Item 15. Indemnification of Directors and Officers.
The Company's Restated Articles of Incorporation, its Restated Bylaws
and the provisions of the Minnesota Business Corporation Act, which govern the
actions of the Company, provide that present and former officers and directors
of the Company shall be indemnified against certain liabilities and expenses
which any of them may incur as a result of being, or having been, an officer of
the Company. Indemnification is contingent upon certain conditions being met,
including, that the person has not been previously indemnified by another party
for the same matter; has acted in good faith; has received no improper personal
benefit; and in the case of a criminal proceeding, has no reason to believe that
the conduct complained of was unlawful and reasonably believed that the conduct
complained of was in the best interests of the Company or in certain
circumstances reasonably believed that the conduct complained of was not opposed
to the best interests to the Company.
In addition, the Company's Restated Articles of Incorporation provide
that a director of the Company shall not be liable for monetary damages for a
breach of such director's fiduciary duty, except for a breach of the duty of
loyalty, actions not in good faith or in knowing violation of law, violations of
state securities laws, or for actions from which the director derived an
improper personal benefit.
Insofar as the indemnification of liabilities arising under the 1933
Act, as amended, may be permitted to directors, officers and controlling persons
of the Company pursuant to the provisions of its Restated Articles of
Incorporation, Restated Bylaws and the provisions of the Minnesota Business
Corporation Act, or otherwise, the Company has been advised by counsel that in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act, as amended, and is, therefore,
unenforceable.
Item 16. Exhibits.
See Exhibit Index on page following signatures.
<PAGE>
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities,
a post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) 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, represents a fundamental
change in the information set forth in the registration
statement; and
(iii) Include any additional 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 (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports file 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 Registration Statement.
(2) That for determining 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 that remain unsold at the termination of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 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 Securities
Act of 1933 and will be governed by the final adjudication of such issue.
(c) The undersigned Registrant further undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(d) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
<PAGE>
SIGNATURES
In accordance with 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 Bloomington, State of Minnesota, on May 12, 1998.
Health Fitness Corporation
By: /s/ Loren S. Brink
Loren S. Brink
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Charles E. Bidwell
Charles E. Bidwell
Secretary, Treasurer and Chief Financial Officer
(Principal Financial Officer)
By: /s/ Michael P. Wise
Michael P. Wise
Vice President and Corporate Controller
(Principal Accounting Officer)
POWER OF ATTORNEY
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. Each person whose signature to this
Registration Statement appears below hereby constitutes and appoints Loren S.
Brink and Charles E. Bidwell, and each of them, as his or her true and lawful
attorney-in fact and agent, with full power and substitution, to sign on his or
her behalf individually and in the capacity stated below and to perform any acts
necessary to be done in order to file all amendments and post-effective
amendments to this Registration Statement, and any and all instruments or
documents filed as part of or in connection with this Registration Statement or
the amendments thereto, and each of the undersigned does hereby ratify and
confirm all that said attorney-in-fact and agent, or his or her substitutes,
shall do or cause to be done by virtue hereof.
Signatures Title Date
/s/ Loren S. Brink Chairman of the Board, President and May 12, 1998
Loren S. Brink Chief Executive Officer
/s/ Charles E. Bidwell Chief Financial Officer, Secretary May 12, 1998
Charles E. Bidwell and Treasurer
/s/ William T. Simonet Director May 12, 1998
William T. Simonet, M.D.
/s/ Robert K. Spinner Director May 12, 1998
Robert K. Spinner
/s/ James A. Bernards Director May 12, 1998
James A. Bernards
Director
George E. Kline
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
HEALTH FITNESS CORPORATION
EXHIBIT INDEX TO FORM S-3
Exhibit
Number Description
5.1 Opinion and Consent of Fredrikson & Byron, P.A.
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Fredrikson & Byron, P.A. (included in Exhibit 5.1)
24.1 Powers of Attorney (included as part of the signature page hereto)
Fredrikson & Byron, P.A.
1100 International Centre
900 Second Avenue South
Minneapolis, MN 55402
May 12, 1998
Health Fitness Corporation
3500 West 80th Street, Suite 130
Bloomington, Minnesota 55431
RE: REGISTRATION STATEMENT ON FORM S-3 - EXHIBIT 5.1
Gentlemen/Ladies:
We have acted as counsel for Health Fitness Corporation (the "Company")
in connection with the Company's filing of a Registration Statement on Form S-3
(the "Registration Statement") relating to the registration under the Securities
Act of 1933 (the "Act") of an offering of 4,056,547 shares of Common Stock (the
"Shares") currently owned by selling shareholders of the Company and 4,056,547
shares of Common Stock (the "Warrant Shares") to be acquired by selling
shareholders upon the exercise of certain stock purchase warrants (the
"Warrants").
In connection with rendering this opinion, we have reviewed the
following:
1. The Company's Articles of Incorporation;
2. The Company's Bylaws; and
3. Certain corporate resolutions, including resolutions of the
Company's Board of Directors pertaining to the issuance by the
Company of the Warrants and the Shares.
Based upon the foregoing and upon representations and information
provided by the Company, we hereby advise you that in our opinion:
1. The Company's Articles of Incorporation validly authorize the
issuance of the Shares registered pursuant to the Registration
Statement.
2. The Shares to be sold by the selling shareholders named in the
Registration Statement are validly issued, fully paid and
nonassessable.
3. Upon exercise or conversion in accordance with the terms and
conditions of the Warrants, the Warrant Shares to be sold by
the selling shareholders named in the Registration Statement
will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" included in the Registration Statement and the related Prospectus.
Very truly yours,
FREDRIKSON & BYRON, P.A.
By /s/ John F. Wurm
John F. Wurm, Vice President
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Health Fitness Corporation on Form S-3 of our report dated April 8, 1998,
appearing in the Annual Report on Form 10-KSB of Health Fitness Corporation and
Subsidiaries for the year ended December 31, 1997 and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Minneapolis, Minnesota
May 12, 1998
