As filed with the Securities and Exchange Commission on June 29, 1999
Registration No. 333-76491
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-3/A
AMENDMENT#2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
MEDICAL INDUSTRIES OF AMERICA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 65-0158479
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1903 SOUTH CONGRESS AVENUE, SUITE 400
BOYNTON BEACH, FL 33426
(561) 737-2227
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
Michael F. Morrell
Chief Executive Officer
Medical Industries of America, Inc.
1903 S. Congress Avenue, Suite 400
Boynton Beach, FL 33426
(561) 737-2227
(NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
Please send copies of all communications to:
E. Nicholas Davis III, Esq.
Medical Industries of America, Inc.
1903 S. Congress Avenue, Suite 400
Boynton Beach, FL 33426
(561) 737-2227
Approximate date of commencement of proposed sale to the public: From time to
time after the effectiveness of the 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 under 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
- -------------------------------------------------------------------------------
PROPOSED PROPOSED
MAXIMUM MAXIMUM
OFFERING AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO PRICE OFFERING
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE(1) PRICE(1)
- -------------------------------------------------------------------------------
Common Stock -- $0.0025 par value
per share 15,214,376 $.96875 $14,738,927
- -------------------------------------------------------------------------------
(1) Estimated solely for the purpose of determining the registration fee in
accordance with Rule 457(c) under the Securities Act. The maximum price per
share information is based on the average of the high and the low sale prices of
the Registrant's common stock, $0.0025 par value per share, reported on the
NASDAQ Small Cap Exchange on April 12, 1999, less maximum shares upon conversion
at market price.
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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
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.
PROSPECTUS Subject to Completion
June 29, 1999
AMENDED
MEDICAL INDUSTRIES OF AMERICA, INC.
COMMON STOCK
15,214,376 SHARES
Medical Industries of America, Inc. is registering 3,599,758 shares of
common stock listed on page 16 under this prospectus. The Company is also
registering 11,614,618 shares of common stock underlying stock options, warrants
and convertible debentures.
BEFORE PURCHASING SHARES OF OUR COMMON STOCK YOU SHOULD CAREFULLY REVIEW
THE RISK FACTORS SECTION OF THIS PROSPECTUS WHICH BEGINS ON PAGE 1.
Our common stock is listed on the NASDAQ Small Cap Market ("NASDAQ")
with the ticker symbol: "MIOA." On April 12, 1999, the closing price of one
share of our common stock on the NASDAQ was $.96875.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------------------
The date of this Prospectus is June 29, 1999
<PAGE>
WE HAVE NOT AUTHORIZED ANY PERSON TO PROVIDE INFORMATION OR MAKE ANY
REPRESENTATION ABOUT THIS OFFERING THAT IS NOT IN THIS PROSPECTUS. PROSPECTIVE
INVESTORS SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. THIS
PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT SEEKING AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS PROHIBITED.
INFORMATION IN THIS PROSPECTUS IS CORRECT ONLY AS OF ITS DATE, REGARDLESS OF
WHEN ANY LATER OFFER OR SALE OCCURS.
TABLE OF CONTENTS
Page
----
RISK FACTORS......................................................... 1
THE COMPANY.......................................................... 10
USE OF PROCEEDS...................................................... 16
SELLING SHAREHOLDERS................................................. 16
PLAN OF DISTRIBUTION................................................. 19
AVAILABLE INFORMATION................................................ 19
VALIDITY OF COMMON STOCK............................................. 19
Our principal executive offices are located at 1903 South Congress
Avenue, Suite 400, Boynton Beach, FL 33426 and our telephone number is (561)
737-2227.
-i-
<PAGE>
RISK FACTORS
GENERAL
The health care industry in general and the medical ancillary
service business in particular is subject to extensive federal, state and local
regulation relating to licensure, conduct of operations, ownership of
facilities, environment rules, pricing and reimbursement policies. Although the
Company believes that its current operations comply with applicable regulations,
the Company believes that the health care industry will continue to change,
requiring it to modify its agreements and operations from time to time. While
the Company believes it will be able to structure its agreements and operations
in accordance with applicable law, there can be no assurance that the subsequent
adoption of laws or interpretations of existing laws will not regulate, restrict
or otherwise adversely affect the Company's business.
HISTORY OF LOSSES; ACCUMULATED DEFICIT. To date the Company has been
unable to generate revenue sufficient to be profitable. Consequently, the
Company has sustained substantial losses. Net losses for the years ended
December 31, 1997 and 1998, were $1,526,152 and $7,380 ,957, respectively.
Accumulated deficit for the years ended December 31, 1997 and 1998, were
$(21,937,441) and $(29,318,394), respectively. There can be no assurance that
the Company will ever achieve the level of revenues needed to be profitable in
the future or, if profitability is achieved, that it will be sustained.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING. The Company's
capital requirements in connection with its business plans will be significant.
The Company believes that net proceeds of future anticipated securities
offerings, and giving effect to revenues which are projected to be realized from
operations, should be sufficient to fund ongoing operations and its business
plan. Notwithstanding, there is no assurance that such anticipated offering will
be undertaken, and if undertaken, will be successful or that such proceeds
derived therefrom, will in fact be sufficient to fund operations and meet the
needs of the Company's business plans. To the extent that the Company undertakes
such financings or uses capital stock as consideration, the Company's
shareholders will experience future ownership dilution.
RISKS OF GROWTH AND EXPANSION. The Company's aggressive growth strategy
will result in significant additional demands on its infrastructure, and will
place a significant strain on the Company's management, administrative,
operational, financial and technical resources, and increased demands on its
systems and controls. There can be no assurance that the Company's resources
will be adequate to support future operations and growth. The inability to
continue to upgrade the operating and financial control systems, the emergence
of unexpected expansion difficulties or failure to manage the Company's proposed
expansion properly could have a material adverse effect on the Company's
business, financial condition and results of operations.
The laws and regulations applicable to financial arrangements in the
health care
1
<PAGE>
industry are complex and may be subject to varying interpretations. This section
summarizes the principal federal and state statutes and regulations which are
applicable to the Company's business.
AIR AMBULANCE OPERATIONS. The Company's air ambulance business subjects
it to significant federal and international government regulations relating to
airline safety, capital requirements, maintenance, scheduling, etc. Due to the
nature of aircraft operations, applicable regulations and Company policy, the
Company incurs substantial expenses associated with the maintenance of its
aircraft fleet. Although the Company believes that its current operations comply
with applicable regulations, there can be no assurance that the subsequent
adoption of laws or interpretations of existing laws will not regulate, restrict
or otherwise adversely affect the Company's business.
DEPENDENCE UPON MANAGEMENT. The Company will be dependent to a
significant extent on the continued efforts and abilities of its Chairman,
Michael F. Morrell. Notwithstanding its ownership of a one million dollar
key-man life insurance policy on Mr. Morrell, if the Company were to lose the
services of Mr. Morrell before a qualified replacement could be obtained, its
business could be adversely affected.
POTENTIAL LIABILITY AND INSURANCE. The Company, because it operates in
the healthcare industry, is subject to substantial potential liability resulting
from a variety of possible causes, including breach of numerous healthcare laws,
malpractice, and product liability. While the Company currently is not a party
to any regulatory action or material litigation, if any actions or lawsuits in
the future are brought against the Company, such actions or lawsuits may have a
materially adverse effect on the Company even if such lawsuits are without
merit. The Company attempts to minimize its potential liability through
effective case supervision and personnel recruitment procedures. The Company
also carries a variety of insurance policies including policies insuring against
certain negligent acts, although there can be no assurance that such insurance
policies will adequately cover the Company's losses resulting from liability, or
that the Company will continue to qualify for, or be able to afford or obtain,
insurance in the future.
THIRD-PARTY REIMBURSEMENT. The Company's services are purchased by
patients and medical institutions which provide healthcare services to their
patients. Such institutions or patients typically bill or seek reimbursement
from various third-party payors such as Medicare, Medicaid, other governmental
programs and private insurance carriers for the charges associated with the
provided healthcare services. The Company believes that its market success will
ultimately depend largely upon obtaining favorable coverage and reimbursement
policies from such programs and carriers.
GOVERNMENT REGULATION. The healthcare industry is subject to extensive
federal and state government regulation. In addition to the referral and
reimbursement regulations, regulations include certificate of need, licensure of
healthcare facilities, services and equipment and restrictions on physician
investments in healthcare entities to which they refer patients. Although the
Company believes that its current operations comply with applicable regulations,
there can be no assurance that the subsequent adoption of laws or
interpretations of existing
2
<PAGE>
laws will not regulate, restrict or otherwise adversely affect the Company's
business.
DEPENDENCE ON RELATIONSHIPS WITH PHYSICIAN PARTNERS; RISKS OF CONFLICTS
OF INTEREST AND DISPUTES. The Company's business depends upon, among other
things, the efforts and success of the physicians who refer patients and provide
services to the Company's businesses and the strength of the Company's
relationships with such physicians. The Company's business, financial condition
and results of operations could be adversely affected by the failure of these
physicians to refer patients, maintain the quality of medical care or otherwise
adhere to required professional guidelines.
DEPENDENCE ON PHYSICIAN REFERRALS. The Company's rehabilitation, sleep
and pain businesses are dependent upon revenues received as a result of
referrals made by physicians. There can be no guarantee that any physician will
choose to refer patients to the Company. In addition, physicians affiliated with
the Company are not required to refer patients. In the event that, for any
reason, physicians do not use the ancillary medical service businesses operated
by the Company, such loss of patients could have a material adverse effect on
the business, financial condition and results of operation of the Company.
Furthermore, it is possible that third-party payors may refuse to approve
referrals to ancillary medical care facilities owned by the Company, but rather
require that such referrals be made to other facilities. Such a requirement
could have a material adverse effect on the business, financial condition and
results of the operations of the Company.
Further, the Company's physical rehabilitation companies derive a
significant portion of their revenue from Medicare patients. Recent adjustments
to Medicare's allowances with respect to rehabilitation services have
significantly limited the amount of revenues that the Company may derive from
services rendered to Medicare patients. There is no assurance that future
changes to Medicare's reimbursement policy will not have a significant adverse
effect on revenues derived from these sources.
MEDICARE AND MEDICARE FRAUD AND ABUSE. Federal law prohibits the offer,
payment, solicitation or receipt of any form of remuneration in return for, or
in order to induce: (i) the referral of a person in connection with the
provisions if medical services; (ii) the furnishing or arranging for the
furnishing of items or services reimbursable under Medicare and Medicaid
programs; and (iii) the purchase, lease, order, arranging or recommending of any
items or service reimbursable under Medicare or Medicaid (the "Anti-Kickback
Law"). Pursuant to the Anti-Kickback Law, the federal government has announced a
policy of increased scrutiny of joint ventures and other transactions among
health care providers in an effort to reduce potential fraud and abuse relating
to Medicare costs. The applicability of this provisions to many business
transactions in the health care industry will be subject to continuing judicial
and regulatory interpretation. Although the Company believes operations and
structure do not violate the Anti-Kickback Law, there can be no assurance that
its activities will not be challenged by regulatory authorities. If such
challenge were successful, it could have a material adverse effect on the
business, financial condition and results of operations of the Company.
Noncompliance with the Anti-Kickback Law can result in exclusion from Medicare
and Medicaid programs and civil and criminal penalties.
3
<PAGE>
LEGISLATIVE DEVELOPMENTS. In addition, proposed legislation regarding
health care reform has been introduced before many state legislatures. Any such
reforms at the federal or state level could significantly alter patient-provider
relationships. State and federal agency rule-making addressing these issues is
also expected. No predictions can be made as to whether future health care
reform legislation, similar legislation or rule-making will be enacted or, if
enacted, its effect on the Company. Any federal or state legislation prohibiting
investment interests in, or contracting with, the Company by physicians or
health care providers for which there is not statutory exception or safe harbor
would have a material adverse effect on the Company business, financial
condition and results of operations.
MANAGED CARE. There can be no assurance that the Company will be able to
obtain managed care contracts. The future inability of the Company to obtain
managed care contracts in its markets could have a material adverse effect on
its business, financial condition or results of operation. In addition, federal
and state legislative proposals have been introduced that could substantially
increase the number of Medicare and Medicaid recipients enrolled in HMOs and
other managed care plans. The Company will derive a substantial portion of its
revenue from Medicare and Medicaid. In the event such proposals are adopted,
there can be no assurance that the Company will be able to obtain contracts from
HMOs and other managed care plans serving Medicare and Medicaid enrollees.
Failure to obtain such contracts could have a material adverse effect on the
business, financial condition and results of operations of the Company.
LICENSES. Although the Company's cardiac catheterization services
generally are not subject to health care licensing requirements (it contracts
directly with hospitals), the Company must adhere to the same standards as the
hospitals it contracts with, including standards for sanitation, safety and
personnel qualifications. The Company is also required to register its X-ray
equipment and pay annual registration fees to state radiation control agencies.
The Company believes that its cardiac catheterization operations are in
compliance with applicable registration and hospital license requirements.
RISK WITH RESPECT TO COMPUTER TECHNOLOGIES AND YEAR 2000 COMPLIANCE. The
Company is aware of the issues associated with the programming code in existing
computer systems as the year 2000 approaches. Many existing computer programs
use only two digits to identify a year in the date field. The issue is whether
such code exists in mission-critical applications and if that code will produce
accurate information with relation to date-sensitive calculations after the turn
of the century. The Company is assessing the extent of the necessary
modifications to its computer software and anticipates that the cost of such
modifications will not be material to the Company. Because of the many
uncertainties associated with the year 2000 compliance issues, and because the
Company's assessments are necessarily based on information from third-party
vendors, payors and suppliers, there can be no assurance that the Company's
assessment is correct as to either the materiality or the effect of such
compliance.
4
<PAGE>
OMNIBUS BUDGET RECONCILIATION ACT OF 1993
On August 10, 1993, President Clinton signed into law the Omnibus Budget
Reconciliation Act of 1993 ("OBRA `93") which contained numerous provisions that
significantly affect health care providers who participate in the Medicare and
Medicaid programs. The principal impact of OBRA `93 in the health care area is
(i) to expand the existing prohibition against the referral of patients to
entities with which the referring physician has a financial relationship
(self-referral), and (ii) to curtail the cost of the Medicare program by
limiting reimbursement.
MEDICARE AND MEDICAID FRAUD AND ABUSE
The Anti-Kickback Law prohibits the offer, payment, solicitation or
receipt of any form of remuneration in return for, or in order to induce: (i)
the referral of a person; (ii) the furnishing or arranging for the furnishing of
items or services reimbursable under Medicare or Medicaid programs; or (iii) the
purchase, lease or order or arranging or recommending purchasing, leasing or
ordering of any item or service reimbursable under Medicare or Medicaid.
Pursuant to the Anti-Kickback Law, the federal government has announced a policy
of increased scrutiny of joint ventures and other transactions among health care
providers in an effort to reduce potential fraud and abuse relating to Medicare
costs. The applicability of these provisions to many business transactions in
the health care industry has not yet been subject to judicial and regulatory
interpretation. Noncompliance with the Anti-Kickback Law can result in exclusion
from Medicare and Medicaid programs and civil and criminal penalties. Several of
the Company's subsidiaries currently derive a significant portion of their
revenues from Medicare or Medicaid payments.
Significant prohibitions against physician referrals have been enacted
by Congress. These prohibitions, commonly known as "Stark II" amended prior
physician self-referral legislation known as "Stark I" by substantially
enlarging the field of physician-owned or physician-interested entities to which
the referral prohibitions apply. Stark II prohibits a physician from referring
Medicare or Medicaid patients to an entity providing "designated health
services" in which the physician has an ownership or investment interest, or
with which the physician has entered into a compensation arrangement, unless a
statutory exemption applies. The designated health services include, for
example, prosthetic devices, clinical laboratory services, radiology (such as
ultrasound, MRI and CT), home health, physical and occupational therapy,
prescription drugs and inpatient and outpatient hospital services. The penalties
for violating Stark II include a prohibition on payment by these government
programs and civil penalties of as much as $15,000 for each referral violation
and $100,000 for participation in a "circumvention scheme." To the extent that
the Company or any subsidiary is deemed to be subject to the prohibitions
contained in Stark II, the Company believes its activities fall within the
permissible activities defined in Stark II.
While several of the Company's subsidiaries receive referrals with
respect to certain of these designated healthcare services, the Company does not
provide any compensation or financial incentive for such referrals and further
believes that it is in full compliance with Stark as well as state law
requirements. Any fees paid are intended by the Company to be consistent
5
<PAGE>
with fair market value in arm's-length transactions for the nature and amount of
services rendered and therefore, would not constitute unlawful remuneration
under Anti-Kickback Law and regulations. For these reasons, among others, the
Company does not believe that fees payable would be viewed as remuneration for
referring and influencing referrals of patients or services covered by such
programs as prohibited by statute. If the Company is deemed to be in a position
to make, influence or receive referrals from or to physicians, the operations of
the Company could be subject to scrutiny under federal and state anti-kickback
and anti-referral laws.
In Florida, which does not prohibit the corporate practice of medicine,
the Company through a wholly owned subsidiary, owns practices and employs
physicians. Thus, with respect to such practices, the Company is a provider of
services and would be capable of receiving referrals from other physicians
affiliated with the Company in those markets. In these circumstances, the
Company either will not accept referrals involving designated health services
from other physicians affiliated with the Company, or will form group practices
comprised of Company practices in that market.
In addition, the Company also believes that the methods used to acquire
the assets of existing practices and ancillary services do not violate
anti-kickback and anti-referral laws and regulations. Specifically, the Company
believes the consideration paid by the Company to physicians to acquire such
assets is consistent with fair market value in arm's-length transactions and not
intended to induce the referral of patients. Should this or any other Company
practice be deemed to constitute an arrangement designed to induce the referral
of Medicare or Medicaid patients, then such could be viewed as possibly
violating anti-kickback and anti-referral laws and regulations. A determination
of liability under any such laws could have a material adverse effect on the
Company's business, financial condition or results of operations.
FEE-SPLITTING; CORPORATE PRACTICE OF MEDICINE
The laws of many states prohibit physicians from splitting fees with
non-physicians (or other physicians) and prohibit non-physician entities from
practicing medicine. These laws vary from state to state and are enforced by the
courts and by regulatory authorities with broad discretion. Although the Company
believes its operations are in material compliance with existing applicable
laws, the Company's business operations have not been the subject of judicial or
regulatory interpretation; thus, there can be no assurance that review of the
Company's business by courts or regulatory authorities will not result in
determinations that could adversely affect the operations of the Company or that
the health care regulatory environment will not change so as to restrict the
Company's existing operations or their expansion. In addition, the regulatory
framework of certain jurisdictions may limit the Company's expansion into such
jurisdictions if the Company is unable to modify its operational structure to
conform with such regulatory framework.
A determination in any state that the Company is engaged in the
corporate practice of medicine or any unlawful fee-splitting arrangement could
render any management agreement between the Company and a practice located in
such state unenforceable or subject to
6
<PAGE>
modification, which could have a material adverse effect on the Company. There
can be no assurance that regulatory authorities or other parties will not assert
that the Company or a practice is engaged in the corporate practice of medicine
in such states or that the management fees paid to the Company by the managed
practices constitute unlawful fee-splitting or the corporate practice of
medicine. If such a claim were asserted successfully, the Company could be
subject to civil and criminal penalties, managed physicians could have
restrictions imposed upon their licenses to practice medicine, and the Company
or the managed practices could be required to restructure their contractual
arrangements. Such results or the inability of the Company or the managed
practices to restructure their relationships to comply with such prohibitions
could have a material adverse effect on the Company's financial condition and
results of operations.
CHANGES IN PAYMENT FOR MEDICAL SERVICES
The Company believes that trends in cost containment in the health care
industry will continue to result in a reduction in per-patient revenue for
Company practices. The federal government has implemented, through the Medicare
program, the RBRVS payment methodology for physician services. The RBRVS is a
fee schedule that, except for certain geographical and other adjustments, pays
similarly situated physicians the same amount for the same services. The RBRVS
is adjusted each year and is subject to increases or decreases at the discretion
of Congress. To date, the implementation of RBRVS has reduced payment rates for
certain procedures historically performed by Company physicians. There can be no
assurance that any reduced operating margins could be recouped by the Company
through cost reductions, increased volume, introduction of additional procedures
or otherwise.
Rates paid by non-governmental insurers, including those that provide
Medicare supplemental insurance, are based on established physician, ambulatory
surgery center and hospital charges, and are generally higher than Medicare
payment rates. A change in the makeup of the patient mix of Company practices as
well as the medical practices under Company management that results in a
decrease in patients covered by private insurance or a shift by private payors
to RBRVS or similar payment structures could adversely affect the Company's
business, financial condition or results of operations.
FLORIDA PATIENT SELF-REFERRAL ACT OF 1992
During its 1992 session, the Florida Legislature passed into law the
Patient Self-Referral Act of 1992 ("Self-Referral Act"). The Self-Referral Act
is far broader than OBRA since it is applicable to all types of health care
services and to all patients (not just Medicare and Medicaid beneficiaries).
Under the Self-Referral Act, "designated health services" are defined as
clinical laboratory, physical therapy, comprehensive rehabilitative, diagnostic-
imaging and radiation therapy services. The Company plans to purchase and
operate facilities that provide some or all of these designated health services.
All health care products and services not enumerated above, are classified as
"other health services."
7
<PAGE>
Under the Self-Referral Act, a physician is prohibited from referring a
patient for designated health services to an entity in which the physician is an
investor.
The Self-Referral Act also prohibits the referral by a physician of a
patient for other health services to an entity in which that physician is an
investor, unless the ownership of the entity meets one of two tests:
The physician's investment interest is in the registered securities of a
publicly traded corporation whose shares are traded on a national exchange or
over-the-counter market and which has net equity at the end of its most recent
fiscal quarter in excess of $50,000,000, or
For entities that do not qualify under the first test, no more than 50%
of the value of the investment interests in the entity may be held by investors
who are in a position to make referrals to the entity, and the terms under which
an investment interest is offered must be the same for referring investors and
non-referring investors. In addition, the terms under which an investment
interest is offered may not be related to the investor's volume of referrals to
the entity. Finally, the investor must not be required to make referrals or be
in the position to make referrals to the entity as a condition for becoming or
remaining an investor.
Entities that meet either test must also meet two additional tests.
First, the entity may not lend to or guarantee a loan to an investor who is in a
position to make referrals if the investor uses any part of that loan to obtain
the investment interest. Second, distributions of profits and losses to
investors must be directly proportional to their capital investment.
The Self-Referral Act also imposes certain disclosure obligations on the
Company and referring physicians. Under the Self-Referral Act, a physician may
not refer a patient to an entity in which he or she is an investor unless,
before doing so, the patient is given a written statement disclosing, among
other things, the physician's investment interest in the entity to which the
referral is made. The Self-Referral Act also imposes disclosure obligations on
the entities to which physicians refer patients.
Since the Company plans to purchase and operate facilities that provide
some or all of the "designated health services" and intends to network its
medical services, the Self Referral Act, and OBRA will have a significant
adverse impact on the Company's proposed plan of operations and may necessitate
(i) a change in the way the Company acquires its clinical care facilities, (ii)
a change in the corporate structure (i.e., a spin-off of the clinical care
companies coupled with an initial public offering in order to qualify for the
federal and state "Safe Harbor Standards"), (iii) a secondary offering for the
Company (in order to qualify for the federal and state "Safe Harbor Standards,"
or (iv) a merger with a company with substantially more assets than the Company
(in order to qualify for the "Safe Harbor" standards).
CERTIFICATE OF NEED
Some states, including Florida, require a "certificate of need" ("CON")
prior to the acquisition of medical equipment or provision of cardiac
catheterization services by hospitals. In Florida, a certificate of need is
required for cardiac catheterization services only if
8
<PAGE>
the hospital wishes to provide such services to in-patients. Typically,
obtaining a CON approval is a costly and lengthy process, and may involve
adversarial proceedings brought by competing facilities. The hospital or health
care provider, rather than the Company, must apply for and obtain the CON, where
required. As a result, the Company is unable to control or accurately predict
whether and how many potential customers will obtain CONs. The Company's ability
to provide cardiac catheterization services to hospitals and health care
providers is dependent upon those entities obtaining a CON for such services.
PROFESSIONAL LIABILITY INSURANCE
The Company currently maintains general and professional liability
insurance for its operations in the single limit amount and aggregate annual
limit amount of $5,000,000. There is no assurance that any potential claims will
or will not exceed this limit. While the Company's Mobile Labs are at a
customer's facility, they operate only under the direction of licensed
physicians on the customer's staff who direct the procedures, supervise the
Company's nurses and technologists, and interpret the results of the
examinations. The Company requires the users of the Mobile Labs to carry medical
malpractice insurance to cover the physicians using the Company's Mobile Labs.
COMPETITION
The health care industry in general, and the market for medical
ancillary services is highly competitive.
The Company competes with companies that are larger in size than the
Company and have access to considerably greater financial resources than the
Company. The Company competes by providing more personalized care to the
patients they serve as well as providing patient transportation and
pharmaceutical delivery.
In the interventional pain business segment, there are thousands of
small pain treatment centers, clinics and facilities. Only a portion of these
locations is accredited and follows standards for multi-disciplinary procedures.
In the sleep lab business segment, there are no clear market leaders or
major competition. Most of the independents are either labs in hospitals or
physicians interested in sleep that have started labs as an adjunct to their
local practice.
The air ambulance business segment has numerous smaller competitors with
short-range aircraft, but has limited competitors with aircraft capability of
performing international and, in particular, trans-Atlantic flights. Medjet in
Alabama, Kalitta in Detroit, and Sky Service in Toronto are the biggest
competitors in the international market.
In the pain rehabilitation business segment, there are numerous
competitors larger in size than the Company and which have access to
considerably greater financial resources than the Company.
9
<PAGE>
Pharmacy Care Specialists Inc. competes directly in the sale and
delivery of prescription drugs to individuals living in adult living facilities
("ALFs"). There are numerous competitors larger in size than the Company which
have access to considerably greater financial resources. The Company relies on
reputation and service to market its services.
MARKETING
The Company markets each of the services in various methods, including
customer and physician referrals, reputation in the community and third parties.
YGHN relies upon community reputation, customer referral, physician and
other medical resource referrals.
Ivanhoe relies upon physician referrals for its customer base. In
addition, the Company has in place a three-tier service system that enters local
communities and utilizes a screening program and an in-home lab program.
Global relies upon independent brokers, personal contacts and physician
referrals to approach new customers. The Company also staffs exhibit booths at
major industry-specific conventions to attract hospital groups, insurance
companies, assistance companies and managed care organizations.
Heart Labs relies heavily on referrals to perform high-tech procedures.
Most of the marketing for its Mobile Labs is based on the Company's reputation
in the medical community.
EMPLOYEES
As of March 12, 1999, the Company employed 300 persons, of which 195 are
full time. The Company's ability to provide its services is dependent upon the
Company recruiting, hiring and retaining qualified technical personnel. To date,
the Company has been able to recruit and retain sufficient qualified personnel.
None of the Company's employees is represented by a labor union. The Company has
not experienced any work stoppages and considers its relations with its
employees to be good.
THE COMPANY
GENERAL
The Company is in the business of developing integrated medical delivery
services by providing diversified medical technologies, physical and pain
rehabilitation, occupational and speech therapy, sleep apnea, diagnostic and
treatment services, pharmaceutical services and international air ambulance
transport.
The complete management team of the Company has been in place now for
less than
10
<PAGE>
two years. We decided that it was in the best interest of the Company and our
shareholders to re-evaluate the Company's direction, and, accordingly,
discontinue certain operations in 1998 and focus our attention on the
subsidiaries we felt could grow with profitable margins. These included the
pharmacy business, the pain and rehabilitation business, the sleep business, and
the air ambulance business.
During 1998 it became very clear to us that, in order for the Company to
obtain significant profit levels, utilization of technology and the Internet was
necessary. A significant amount of administrative and duplicative costs are
incurred in each and every aspect of healthcare activities. There are over 30
billion transactions annually in healthcare and only 10% are electronic.
Accordingly, we identified and entered into a Definitive Agreement with American
Enterprise Solutions, Inc. and signed letters of intent with Med Ventures, Inc.
and CyberCare, Inc. These acquisitions will significantly expand our ability to
address the healthcare issues facing society. The combination of these
companies, together with MIOA's existing operations, will generate revenue in
excess of $100,000,000 and give us a significant advantage in healthcare e
commerce by increasing shareholder value, profitability, and position us to
expand our operations in future years.
The Company intends to change the name of the Company to more closely
reflect our refocused company - around which each of our diversified medical
businesses will function as a support mechanism. Each of the diversified medical
businesses will support the further development and implementation of digital
information technology - this technology will make each of the businesses more
efficient. Digital technology will have a profound effect on our enterprises.
The Company is embarking upon an entirely new, but overdue, approach to the
delivery of quality healthcare in this country. We expect to emerge as an
innovator meeting the global trend toward fully digitized, fully integrated
medical services.
PENDING ACQUISITIONS
AESI. The Company and American Enterprise Solutions, Inc. ("AESI") have
entered into a Stock Exchange Agreement whereby upon the closing, AESI will
become a wholly-owned subsidiary of MIOA. The Exchange Agreement provides that
each shareholder of AESI will receive four (4) shares of MIOA's common stock for
each share of AESI stock they own. It is anticipated, based upon the number of
shares presently outstanding and pending acquisitions, that the shareholders of
AESI will own approximately 50 percent of MIOA.
AESI is a Florida corporation that designs, develops, implements and is
in the process of operating internet multi-media healthcare networks called
"Community Health Information Utilities" ("CHIUs"). These internet-base
utilities will allow for the electronic connecting of all healthcare-trading
partners. The healthcare trading partners include doctors, hospitals, consumers,
patients, employers, governments, managed-care companies, insurance companies
and all other providers and organizations. AESI also develops, manages and owns
community healthcare delivery systems, called "Community Health Enterprises"
("CHEs"). The CHEs are healthcare enterprises that create a single-source
delivery system by incorporating and integrating all healthcare delivery
services into single-source delivery system. At the core of each enterprise is a
CHIU.
11
<PAGE>
The CHIU is designed to provide, over the internet, clinical pathways
and quality assurance applications and systems to maximize the flow of patient
data and increase the ability of the physician, hospital, ancillary service and
diagnostic center to service the patient. It is believed that the integration of
the entire healthcare delivery system, through the use of these technologies,
will create substantial reductions in healthcare costs and provide improved
profits over existing healthcare models.
Management believes, although no assurance can be given, the acquisition
of AESI will catapult the Company into the healthcare internet business allowing
the Company to utilize the benefits of advanced internet technologies to improve
the quality of healthcare services while increasing profitability. It is
anticipated that the Internet will provide the Company and its clients the
opportunity to reduce costs and provide additional profit centers. The Company's
strategic plan in respect to the use of the Internet along with its new
proprietary technologies is to re-empower patients and doctors in the management
of their healthcare.
The closing of the contemplated transaction is conditioned upon
completion of satisfactory due diligence and unqualified audits and regulatory
and shareholder approval. Accordingly, no assurance can be given that the
acquisition will be completed or, if completed, that the combined companies will
be successful.
MED VENTURES. On December 21, 1998 and modified in April 1999, the
Company entered into a formal letter of intent to acquire privately held Med
Ventures, Inc. ("Med Ventures") headquartered in Columbia, South Carolina. Med
Ventures was organized in 1996 and currently owns, operates and manages
pulmonary clinics, multi-specialty clinics, a medical management company, and a
Telemedicine center. Med Ventures has represented to the Company that its
current annual revenues run rate is approximately $12,000,000 with estimated
income before taxes of approximately $1,500,000.
CYBERCARE. On March 31, 1998, the Company and CyberCare, Inc.
("CyberCare") entered into a letter of intent whereby the Company will acquire
all the issues and outstanding common stock of CyberCare. The terms of the
letter of intent provide that the CyberCare shareholders will receive one (1)
share of the Company's common stock for each share of stock they own in
CyberCare. There are presently approximately 6,700,000 shares of capital stock
of CyberCare issued and outstanding. The Company's common stock was valued for
purposes of this acquisition at $1.50 per share. Additional shares will be
issued if such market value is not maintained at certain times.
CyberCare is an Internet-based solution and interactive system that
provides products and services to support remote delivery of care, patient
monitoring and education to the U.S. healthcare market. CyberCare's patented
routing technology, product and business strategy create the opportunity to
capture a significant share of the growing market for remote interactive
healthcare delivery.
CyberCare's product offering includes two major components: (i) a
portable, computer-based system, assembled from off-the-shelf components and
interfaced through the Company's proprietary software, called the Personal Care
Management System (PCMS); and (ii) network
12
<PAGE>
services that operate in a routed TCP/IP environment (the Internet protocol),
delivering audio and video two-way interaction between patients and providers.
In addition, the system offers automatic collection, transmission and storage of
vital sign data (e.g., blood pressure, heart rate, blood-oxygen level, lung
function, weight and blood glucose levels, etc.) and patient records. An
operating prototype of the system has been successfully clinically tested for
over six months.
CyberCare will receive revenues from the sale of its PCMS device and
monthly recurring network access fees. Other potential sources of revenues,
which are not forecasted in the Company's financial projections, are clinical
drug studies, advertising, and database management services to support direct
marketing activities.
CyberCare's initial product system has been targeted specifically for
the high-cost, chronically ill patient (e.g., congestive heart failure, chronic
obstructive pulmonary disease, diabetes, asthma, etc.) population. These
patients represent less than 1% of the U.S. population (approximately 2.2
million people out of the total population of 270 million) but cost the U.S.
healthcare system approximately 30% of total healthcare costs. Preventive
services for this patient population represent an untapped market segment
estimated to be greater than $4 billion in the U.S. alone.
The most important issues facing the providers and payers responsible
for the care management of these chronically ill patients today are reducing
costs, increasing provider productivity and improving the quality of care. The
average targeted chronically ill patient costs the payers (insurance companies,
HMOs, Medicare and Medicaid) $70,000 to $100,000 annually. These costs are due
to patients cycling repeatedly through the health care system and consuming a
disproportionate share of medical resources (emergency room visits, hospital
rooms, lab tests, medications, convalescent homes, and frequent doctor visits).
This cycle is due to four primary causes: (i) undetected clinical deterioration;
(ii) improper use of prescribed medications; (iii) inadequate patient education;
and (iv) social isolation.
Independent studies now show that increasing patient and provider
interaction using telecommunication-based products and services to support
remote delivery of care, patient monitoring and education can reduce overall
per-member/per-month medical costs for the chronically ill patient population by
30%(1). This represents a potential net cost savings to payers of $37 billion to
$57 billion annually. CyberCare has created an internet-based healthcare
delivery system for these high-cost, chronically ill patients that will
dramatically improve patient health while significantly reducing per-patient
costs.
CyberCare has two proprietary routing applications filed covering key
aspects of the systems, including the Internet application for delivery of care
management services. Five additional claims are being prepared for an additional
patent application. In addition, copyright applications are also being filed to
protect CyberCare's proprietary software.
Other electronic distribution systems have been developed and sold to
segments of this
- ---------------------
(1) The Remington Report, "Tele-home care in a managed care setting," Barry
K. Baines, MD
13
<PAGE>
market. However, all the current competition is made up of small companies with
technologies that do not utilize the Internet TCP/IP protocol. The competition's
products can support only point-to-point transmissions between a patient and a
provider; they do not support the following functions offered as part of
CyberCare's system: intelligent routing, mixed protocol access, multi-point
audio and video, automated collection and logging of vital sign data, and data
storage.
CyberCare plans to modularize and adapt its product offering to include
components and proprietary software which can be used with off-the-shelf IBM
compatible PCs. This approach will allow the Company to offer access to its
remote interactive health care delivery network at a reduced cost. The reduction
in cost will allow other secondary markets to open (i.e., approximately 5
million additional U.S. patients with acute illness, long-term health
conditions, permanent disability, or terminal illness). CyberCare plans to offer
these "modular" systems during the third calendar quarter of 2000.
CyberCare's CEO, John Haines, has over twenty years of senior-level
experience in the telecommunications and healthcare industries. Experienced
senior executives in computer science and engineering, sales and marketing,
regulatory and quality assurance, and finance are working with CyberCare.
The closing of the CyberCare transaction is conditioned upon: (i) the
parties entering into a mutually agreeable acquisition agreement; (ii)
completion of satisfactory due diligence and audits; and (iii) Board of
Directors approval.
14
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from this offering. All shares
are being registered for the benefit of shareholders and option, warrant and
securities holders.
SELLING SHAREHOLDERS
The selling shareholders acquired their shares of our common stock from
us in exchange for an equity interest in businesses that the Company acquired,
private securities offerings, or other transactions, and many of them are active
in the management of one of our subsidiaries. The Company has agreed with each
of the selling shareholders and pursuant to terms of various agreements that the
Company would register a portion or all of their shares upon their request or
upon a registration. Registration of these shares does not necessarily mean that
the selling shareholders will sell all or any of the shares.
In addition, we are also registering shares of common stock underlying
stock options, warrants and convertible debentures.
In addition, one or more of the selling shareholders may donate or
transfer as gifts some or all of their shares, or may transfer their shares for
no value to other beneficial owners. The selling shareholders will include these
donees or transferees as selling shareholders in a prospectus supplement if the
donees or transferees wish to use this prospectus to re-offer the shares.
The shares listed below represent all of the shares that each selling
shareholder currently beneficially owns, the number of shares each of them may
offer and the number of shares each of them will own after the offering assuming
they sell all of the shares and that they acquire no additional shares before
the completion of this offering.
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED AND OWNED AND
OWNERSHIP SHARES OWNERSHIP
PERCENTAGE PRIOR BEING PERCENTAGE AFTER
SELLING SHAREHOLDER TO OFFERING OFFERED OFFERING
- ------------------- ----------- ------- --------
Arthur Kobrin 87,200 87,200 87,200*
Dana Pusateri 12,200 12,200 12,200*
Dominion Capital Fund 52,219 52,219 52,219*
Dr. A. Razzak Tai 400,000 400,000 400,000
E. Nicholas Davis - Family
Trust 300,000 100,000 300,000
Eric Conn 8,333 8,333 8,333*
Eve Kobrin 100,000 100,000 100,000*
George Slade/Linda Slade 60,750 60,750 60,750*
Glen Barber 30,375 30,375 30,375*
Jim Shanks 25,000 25,000 25,000*
Juan Cocuy 12,200 12,200 12,200*
Kathy Wikle 133,954 133,954 133,954*
Leneah R. Davis 12,200 12,200 12,200*
Linda Moore 131,145 131,145 131,145*
Martin Santiago 12,200 12,200 12,200*
Michael Morrell 1,831,145 1,006,145 1,831,145
Paul Pershes 1,712,200 1,012,200 1,712,200
Peter Nasca Associates 20,000 20,000 20,000*
15
<PAGE>
Richard Hoffman 12,200 12,200 12,200*
Ron Mills 133,954 133,954 133,954*
Rusty Capece 12,200 12,200 12,200*
Southeast Research
Partners/GKN 15,625 15,625 15,625*
Sovereign Partners Limited
Partnership 169,908 169,908 169,908*
Zakeni Limited 39,750 39,750 39,750*
*Percentage ownership is less than 1%.
HOLDER OF STOCK UNDERLYING
OPTIONS, WARRANTS SHARES
AND CONVERTIBLE BEING
SECURITIES REGISTERED
- ------------------ ----------
Ben Adler 25,000**
Dr. Sheila Nagar 25,000**
Eugene Friedman 25,000**
Howard Schraub 25,000**
Julian Herskowitz 12,500**
Philip Gaines 25,000**
Ronald Nash 50,000**
Stanley Katz 12,500**
Alan Gibstein 15,000**
Cindy & Neil Doljin 15,000**
James Copeland/ Leslie Investments 20,000**
Jeff Levine 20,000**
Marvin D. Taylor 10,000**
Norman Swenson 10,000**
Quintin Villa 10,000**
Rona Gibstein 5,000**
Elliot Smith 5,334**
Gregg Smith 2,940**
Ken Rickel 3,226**
Patricia Oppito 11,500**
Roni Rogan 2,000**
Raquel Schraub 4,000**
Ronald Nash 11,000**
Alexander Gancia 48,000**
Corporate Builders 144,000**
Rene Eichenberger 48,000**
Mirkin & Woolf 100,000**
J.W. Genesis Financial Services
Capital Markets 100,000**
Sands Brothers & Co., LTD. 500,000**
Southeast Research Partners 150,000**
Dominion Capital Fund 50,010**
Sovereign Partners Limited
Partnership 174,990**
Zakeni Limited 75,000**
Sholom Weiss 125,000**
State Street Securities 350,000**
Dominion Capital Fund 495,263**
Sovereign Partners Limited
Partnership 1,841,196**
Zakeni Limited 848,159**
Jean Johnstone 10,000**
Robert Segarra 50,000**
Michael F. Morrell 130,000**
Michael & Linda Morrell 50,000**
16
<PAGE>
Dr. David Vastola 60,000**
Paul C. Pershes 50,000**
Gail Pershes 30,000**
Dr. Martin Heilbraun 20,000**
Juan Cocuy 40,000**
Dana Pusateri 100,000**
Theodore Orlando 20,000**
Richard Hoffman 60,000**
Robert Wasserman 20,000**
Dr. Aldo Berti 50,000**
Thomas Crane 110,000**
Eric Conn 80,000**
Terry Lazar 120,000**
Arthur & Sheryl Kobrin 20,000**
Dr. Ira Wendroff 20,000**
Eugene Friedman 100,000**
Steven Siegelaub 100,000**
Steven Daiagi 200,000**
Turkhill, Ltd. 1,000,000**
Amexcorp, Ltd. 1,000,000**
Danvers Investments Corp. 600,000**
Advantage List & Marketing 20,000**
Michael F. Morrell 65,000**
Michael & Linda Morrell 25,000**
Dr. David Vastola 30,000**
Paul C. Pershes 25,000**
Gail Pershes 15,000**
Dr. Martin Heilbraun 10,000**
Juan Cocuy 20,000**
Dana Pusateri 50,000**
Theodore Orlando 10,000**
Richard Hoffman 30,000**
Robert Wasserman 10,000**
Dr. Aldo Berti 25,000**
Thomas Crane 55,000**
Eric Conn 40,000**
Terry Lazar 60,000**
Arthur & Sheryl Kobrin 10,000**
Dr. Ira Wendroff 10,000**
Eugene Friedman 50,000**
Steven Siegelaub 50,000**
Steven Daiagi 100,000**
Turkhill, Ltd. 500,000**
Amexcorp, Ltd. 500,000**
Danvers Investments Corp. 300,000**
Advantage List & Marketing Corp. 10,000**
Jim Shanks 10,000*
A. Razzak Tai 150,000*
* Exhibit attached
** Previously filed as an exhibit to the Company's Form S-3/A filed April 23,
1999
17
<PAGE>
PLAN OF DISTRIBUTION
The Company is registering the shares on behalf of the selling
shareholders, option, warrant and convertible security holders. "Selling
shareholders," as used in this prospectus, includes donees and pledgees selling
shares received from a named selling shareholder after the date of this
prospectus. The selling shareholders may offer their shares of our common stock
at various times in one or more of the following transactions:
o in the over-the-counter market
o in private transactions other than in the over-the-counter market
o in connection with short sales of the shares of our common stock
o by pledge to secure debts and other obligations
o in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions in
standardized or over-the-counter options
o in a combination of any of the other five transactions listed here
The selling shareholders may sell their shares at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at fixed prices.
The selling shareholders may use broker-dealers to sell their shares. If
this happens, broker-dealers will either receive discounts or commissions from
the selling shareholders, or they will receive commissions from purchasers of
shares for whom they acted as agents.
Selling shareholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of that rule.
AVAILABLE INFORMATION
The Company files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
document the Company files with the SEC at the SEC's public reference rooms in
Washington, DC, New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from the SEC's Website at
"http://www.sec.gov." Our common stock is listed on the NASDAQ Small Cap Market
under the symbol "MIOA."
WHERE YOU CAN FIND MORE INFORMATION
The SEC allows us to "incorporate by reference" the information the
Company files with them, which means that the Company can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and the
information that the Company files later with the SEC will automatically update
and supersede this information. The Company incorporates by reference the
documents listed below:
(1) Our Annual Report on Form 10-KSB for the fiscal years ended
December 31, 1998 and 1997, filed on April 15, 1999 and amended
June 29, 1999.
18
<PAGE>
(2) Our Quarterly Report on Form 10-QSB for the period ended March
31, 1999, filed on May 14, 1999 and amended June 29, 1999.
(3) 8-K filed April 23, 1999 and amended June 21, 1999.
(4) 8-K filed June 1, 1999 and amended June 25, 1999.
In addition, this prospectus incorporates by reference any future
filings the Company will make with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities and Exchange Act of 1934 from the date of the initial
filing of the Registration Statement that includes this prospectus until the
termination of the offering. Information in this prospectus supersedes related
information in the documents listed above and information in subsequently filed
documents supersedes related information in both this prospectus and the
incorporated documents.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Medical Industries of America, Inc.
1903 S. Congress Avenue, Suite 400
Boynton Beach, FL 33426
Attention: Investor Relations
(561) 737-2227
This prospectus is part of a registration statement that the Company has
filed with the SEC. You should rely only on the information or representations
provided in this prospectus. The Company has not authorized nor have any of the
selling shareholders authorized anyone to provide you with different
information. The selling shareholders are not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information in this prospectus is accurate as of any date other than
the date on the front of the document.
VALIDITY OF COMMON STOCK
For the purpose of this offering, Mirkin & Woolf, P.A., is providing an
opinion on the validity of the shares.
19
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following statement sets forth the estimated amounts of expenses to
be borne by us in connection with the offering described in this Registration
Statement. None of the expenses will be borne by the security holders.
Securities and Exchange Commission
Registration Fee........................................... $ 4,097
Legal Fees and Expenses...................................... $ 2,500
Accounting Fees and Expenses................................. $ 5,000
Miscellaneous Expenses....................................... $ 3,000
Total Expenses....................................... $ 14,597
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 607.0850(1) of the Florida Business Corporation Act, as amended
(the "Florida Act"), provides that, in general, a Florida corporation may
indemnify any person who was or is a party to any proceeding (other than an
action by, or in the right of, the corporation), by reason of the fact that he
is or was a director, officer, employee, or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against liability incurred in connection with such proceeding,
including any appeal thereof, if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal action or proceeding, he had no
reasonable cause to believe his conduct was unlawful.
In the case of proceedings by or in the right of the corporation,
Section 607.0850(2) of the Florida Act provides that, in general, a corporation
may indemnify any person who was or is a party to any such proceeding by reason
of the fact that he is or was a director, officer, employee or agent of the
corporation against expenses and amounts paid in settlement actually and
reasonably incurred in connection with the defense or settlement of such
proceeding, including any appeal thereof, provided that such person acted in
good faith an in a manner he reasonably believed to be in, or not opposed to,
the best interests of the corporation, except that no indemnification shall be
made in respect of any claims as to which such person is adjudged liable unless
a court of competent jurisdiction determines upon application that such person
is fairly and reasonably entitled to indemnity.
Section 607.0850 further provides that to the extent a director,
officer, employee or agent of a corporation is successful on the merits or in
the defense of any proceeding referred to in subsections (1) or (2) of Section
607.0850 or in the defense of any claim, issue or matter therein, he shall be
indemnified against expenses actually and reasonably incurred by him in
connection therewith; that the corporation may advance such expenses; that
indemnification provided for by Section 607.0850 shall not be deemed exclusive
of any other rights to which
II-1
<PAGE>
the indemnified party may be entitled; and that the corporation may purchase and
maintain insurance on behalf of such person against any liability asserted
against him or incurred by him in any such capacity or arising out of his status
as such, whether or not the corporation would have the power to indemnify him
against such liabilities under such Section 607.0850.
Section 607.0850 of the Florida Act further provides that, in general,
indemnification or advancement of expenses shall not be made to or on behalf of
any director, officer, employee or agent if a judgment or other final
adjudication establishes that such person's actions, or omissions to act, were
material to the cause of action so adjudicated and constitute: (i) a violation
of the criminal law, unless such person had reasonable cause to believe his
conduct was lawful or had no reasonable cause to believe his conduct was
unlawful; (ii) a transaction from which such person derived an improper personal
benefit; (iii) in the case of a director, a circumstance under which the
director has voted for or assented to a distribution made in violation of the
Florida Act or the corporation's articles of incorporation; or (iv) willful
misconduct or a conscious disregard for the best interests of the corporation in
a proceeding by or in the right of the corporation to procure a judgment in
favor or in a proceeding by or in the right of a shareholder.
The Company's Articles of Incorporation and Bylaws provide that the
Company shall indemnify its directors and officers to the fullest extent
permitted by Florida law.
The Company has purchased liability insurance policies covering certain
directors and officers in certain circumstances.
ITEM 16. EXHIBITS
NUMBER DESCRIPTION OF EXHIBIT LOCATION
- ------ ---------------------- --------
4 Warrant, Option & Other Agreements Page II-6
5 Opinion and Consent of Counsel Page II-8
23.1 Consent of Independent Public Accountants Page II-9
23.2 Consent of Independent Public Accountants Page II-10
ITEM 17. UNDERTAKINGS.
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 (other than as
provided in the proviso and instructions to Item 512(a) of Regulation S-K) (i)
to include any prospectus required by Section 10(a)(3) of the Securities Act of
1933 (the "Securities Act"); (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; and (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.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act, 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) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a) or
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.
Insofar as indemnification for liabilities arising under the Securities
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 in the successful defense of any action, suit or proceeding) is asserted
by such officer, director 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.
II-3
<PAGE>
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 Boynton Beach, State of Florida, on June 29, 1999.
MEDICAL INDUSTRIES OF AMERICA, INC.
By: /s/Paul C. Pershes
Paul C. Pershes, President
Date: June 29, 1999
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment thereto has been signed below by the
following persons in the indicated capacities on June 29, 1999.
June 29, 1999 /s/ Michael F. Morrell
Michael F. Morrell
Chief Executive Officer & Director
June 29, 1999 /s/ Paul C. Pershes
Paul C. Pershes
Director
June 29, 1999 /s/ Theodore J. Orlando
Theodore J. Orlando
Director
June 29, 1999 /s/ Glen Barber
Glen Barber
Director
June 29, 1999 /s/Terry Lazar
Terry Lazar
Director
June 29, 1999 /s/ Linda Moore
Linda Moore
Senior Vice President
June 29, 1999 /s/ Arthur Kobrin
Arthur Kobrin
Chief Financial Officer
June 29, 1999 /s/ Dana Pusateri
Dana Pusateri
Director
June 29, 1999 /s/Louis R. Capece, Jr.
Louis R. Capece, Jr.
Director
II-4
<PAGE>
EXHIBIT INDEX
NUMBER TITLE OF EXHIBIT PAGE
------ ---------------- ----
4 Warrant, Option & Other Agreements II-6
5 Opinion and Consent of Counsel II-8
23.1 Consent of Independent Public Accountants II-9
23.2 Consent of Independent Public Accountants II-10
II-5
EXHIBIT 4
WARRANT & OPTION AGREEMENTS
4.1 Warrant Agreement**:
o Ben Adler
o Dr. Sheila Nagar
o Eugene Friedman
o Howard Schraub
o Julian Herskowitz
o Philip Gaines
o Ronald Nash
o Stanley Katz
4.2 Warrant Agreement**:
o Alan Gibstein
o Cindy & Neil Doljin
o James Copeland/Leslie Inestments
o Jeff Levine
o Marvin D. Taylor
o Norman Swenson
o Quintin Villa
o Rona Gibstein
4.3 Warrant Agreement**:
o Elliot Smith
o Gregg Smith
o Ken Rickel
o Patricia Oppito
o Roni Rogan
o Raquel Schraub
o Ronald Nash
4.4 Warrant Agreement**:
o Alexander Gancia
o Corporate Builders, LP
o Rene Eichenberger
4.5 Warrant Agreement - Mirkin & Woolf, P.A.**
4.6 Warrant Agreement - J.W. Genesis Financial Services Capital
Markets**
4.7 Warrant Agreement - Sands Brothers & Co.**
4.8 Warrant Agreement - Southeast Research Partners**
4.9 Warrant Agreement**:
o Dominion Capital Fund
o Sovereign Partners Limited Partnership
o Zakeni Limited
4.10 Not included
4.11 Warrant Agreement - Sholom Weiss**
4.12 Option Agreement - State Street**
4.13 Debenture Agreement (for Underlying Shares)**:
o Dominion Capital Fund
o Sovereign Partners Limited Partnership
o Zakeni Limited
4.14 Option Agreement - Jean Johnstone**
4.15 Consulting Agreement - Robert Segarra**
4.16 Debenture Agreement (for Underlying Shares)**-
o Michael F. Morrell
o Michael & Linda Morrell
o Dr. David Vastola
o Paul C. Pershes
o Gail Pershes
II-6
<PAGE>
o Dr. Martin Heilbraun
o Juan Cocuy
o Dana Pusateri
o Theodore Orlando
o Richard Hoffman
o Robert Wasserman
o Dr. Aldo Berti
o Thomas Crane
o Eric Conn
o Terry Lazar
o Arthur & Sheryl Kobrin
o Dr. Ira Wendroff
o Eugene Friedman
o Steven Siegelaub
o Steven Daiagi
o Turkhill, Ltd.
o Amexcorp, Ltd.
o Danvers Investments Corp.
o Advantage List & Marketing Corp.
4.17 Warrant Agreement** -
o Michael F. Morrell
o Michael & Linda Morrell
o Dr. David Vastola
o Paul C. Pershes
o Gail Pershes
o Dr. Martin Heilbraun
o Juan Cocuy
o Dana Pusateri
o Theodore Orlando
o Richard Hoffman
o Robert Wasserman
o Dr. Aldo Berti
o Thomas Crane
o Eric Conn
o Terry Lazar
o Arthur & Sheryl Kobrin
o Dr. Ira Wendroff
o Eugene Friedman
o Steven Siegelaub
o Steven Daiagi
o Turkhill, Ltd.
o Amexcorp, Ltd.
o Danvers Investments Corp.
o Advantage List & Marketing Corp.
4.18 Stock Option Agreement - Jim Shanks
4.19 Stock Option Agreement - A. Razzak Tai
**Previously filed as an exhibit to the Company's Form S-3/A dated
April 23, 1999
II-7
<PAGE>
EXHIBIT 4.18
MEDICAL INDUSTRIES OF AMERICA, INC.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT dated this 4th day of March, 1999 (the "Grant Date") by
and between MEDICAL INDUSTRIES OF AMERICA, INC., a Florida corporation located
at 1903 S. Congress Avenue, Suite 400, Boynton Beach, Florida (the "Company"),
and JIM SHANKS (the "Optionee").
RECITALS:
A. The Company has duly adopted with subsequent shareholder approval a stock
option plan known as the MEDICAL INDUSTRIES OF AMERICA, INC. 1996 EMPLOYEE STOCK
OPTION PLAN (the "Plan").
B. The Plan provides for the granting of incentive stock options as defined in
Section 422 of the Internal Revenue Code, as amended (the "Code") and
non-qualified stock options by a Committee to be appointed by the Board of
Directors of the Company (the "Committee") to employees of the Company or of its
parent or subsidiaries, if any, to purchase shares of common stock of the
Company, no par value (the "Stock"), in accordance with the terms and provisions
thereof.
C. The Committee considers the Optionee to be a person who is eligible for a
grant of stock options under the Plan, and has determined that it would be in
the best interest of the Company to grant the incentive stock option documented
herein.
NOW, THEREFORE, based on the foregoing and for good and valuable consideration,
the Company and Optionee hereby agree as follows:
1. INCORPORATION OF TERMS AND PROVISIONS OF PLAN.
(a) All of the terms, provisions, conditions and restrictions
contained in the Plan, including any and all rules and regulations adopted under
the Plan by the Committee (the "Plan Provisions"), are hereby incorporated in
this Agreement and the Optionee agrees to be bound by all of the Plan Provisions
and by all of the terms and conditions of this Agreement. This Agreement does
not set forth all of the terms and conditions of the Plan; copies of the Plan
may be obtained upon written request without charge from the Company.
(b) All capitalized terms used in this Agreement without definition
shall have the meaning defined for it in the Plan, if any.
2. GRANT OF OPTION. Subject to the provisions of this Agreement and to the Plan
Provisions, the Company hereby grants to the Optionee an option (the "Option")
to purchase from the Company ten thousand (10,000) shares of common stock (the
"Option Shares") at a price of seventy five cents ($.75) per share, the fair
market value (the "Exercise Price"). The Option is intended by the parties
hereto to be, and shall be treated as an incentive stock option (as such term is
defined under Code Section 422).
3. EXERCISE OF OPTION.
(a) No portion of the Option may be exercised by the Optionee on or
at any time after the second (2nd) anniversary of the Grant Date.
<PAGE>
(b) The Option may be exercised in whole or in part at any time
after the date hereof in accordance with the Plan Provisions and this Section by
the Optionee's tendering the Exercise Price (or a proportionate part thereof if
the Option is partially exercised) to the Company, together with a written
notice of intent to exercise in the form attached hereto as Exhibit "A" to the
Company specifying the number of Option Shares the Optionee wishes to purchase
pursuant to the Option.
4. SHARE CERTIFICATES. Upon receipt of the Exercise Price (or the requisite
portion thereof), the Company shall cause one or more stock certificates
evidencing the Optionee's ownership of the Option Shares so purchased by the
Optionee to be issued to the Optionee subject, however, to the Plan Provisions.
5. INVESTMENT SECURITIES. The Optionee represents and warrants to the Company
that any Option Shares purchased by the Optionee upon the exercise hereof will
be acquired for investment and not for distribution within the meaning of the
Securities Act of 1933, as amended, provided, however, that the foregoing
representation and warranty shall be inoperative if such Option Shares are
registered under such Act.
6. DEFAULT OF OPTIONEE. Should the Optionee at any time breach any Plan
Provision or any provision of this Agreement, the Option granted hereunder shall
be null and void. This provision shall be in addition to and not in lieu of any
other remedies which the Company may have at law and/or in equity.
7. MISCELLANEOUS PROVISIONS.
(a) Unless otherwise specifically provided herein, all notices to be
given hereunder shall be in writing and sent to the parties by certified mail,
return receipt requested, which shall be addressed to each party's respective
address, as set forth in the first paragraph of this Agreement, or to such other
address as such party shall give to the other party hereby by a notice given in
accordance with this Section and, except as otherwise provided in this
Agreement, shall be effective when deposited in the United States mail properly
addressed and postage prepaid. If such notice is sent other than by the United
States mail, such notice shall be effective when actually received by the party
being noticed.
(b) This Agreement may not be assigned in whole or in part by either
of the parties hereto.
(c) Both parties hereto shall execute and deliver such other
instruments and do such other acts as may be necessary to carry out the intent
and purposes of this Agreement.
(d) Whenever the context may require, any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms and the singular
form of nouns and pronouns shall include the plural and vice versa.
(e) The captions contained in this Agreement are inserted only as a
matter of convenience and in no way define, limit or extend the scope of this
Agreement or the intent of any of the provisions hereof.
(f) This Agreement and the Plan constitute the entire understanding
between the parties hereto concerning the grant of incentive stock options to
the Optionee under the Plan and shall not be terminated, except in accordance
with its terms or the Plan Provisions, or amended except in accordance with the
Plan Provisions or in a writing executed by both of the parties hereto.
-2-
<PAGE>
(g) The waiver of a breach of any term or condition of this
Agreement shall not be deemed to constitute the waiver of any other breach of
the same or any other term or condition.
(h) The invalidity or unenforceability, in whole or in part, of any
covenant, promise or undertaking, or any section, subsection, paragraph,
sentence, clause, phrase or word or of any provision of this Agreement shall not
affect the validity or enforceability of the remaining portions thereof.
(i) This Agreement shall be binding upon and inure to the benefit of
the heirs, successors, estate and personal representatives of the Optionee and
the successors and assigns of the Company.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
Witnesses: MEDICAL INDUSTRIES OF AMERICA, INC.
/S/ ROBIN WILLIAMS By:/S/ PAUL C. PERSHES
Paul C. Pershes, President
/S/ ELAINE SHANKS By:/S/ JIM SHANKS
Jim Shanks
-4-
<PAGE>
EXHIBIT 4.19
MEDICAL INDUSTRIES OF AMERICA, INC.
NON-QUALIFIED STOCK OPTION
STOCK OPTION AGREEMENT
1. GRANT OF OPTION. As of the 17th day of June, 1999, Medical Industries of
America, Inc., a Florida corporation (the "Company"), hereby ratifies the
grant to A. Razzak Tai (the "Optionee"), of non qualified stock options
(the "Options") to acquire 150,000 shares of common stock, $.0025 par
value, of the Company (the "Shares).
2. EXERCISE PRICE AND SCHEDULE. The exercise price per share of the Shares
(the "Option Price") and the exercise schedule (the "Option Period") in
respect to these Options are reflected in Exhibit "A" attached hereto.
3. METHOD OF EXERCISING OPTIONS. All payments of the Option Price shall be
made at the principle office of Company. The Options (or any part or
installment thereof), to the extent then exercisable, shall be exercised
by giving written notice to the Company at its principle office stating
which Option is being exercised, specifying the number of Shares as to
which such Option is being exercised and accompanied by payment in full of
the aggregate exercise price therefor (a) in cash or by certified check or
, if elected by Optionee, (b) in such other consideration or in such
manner as may be determined by the Compensation Committee of the Company
(the "Committee"), which other method, in the discretion of the Committee
may include, payment of the Option Price, in whole or in part (i) with
Company stock or (ii) by the Company retaining the Shares to be delivered
upon exercise of the Option that numbers of Shares having a Fair Market
Value on the date of exercise equal to the Option Price for the number of
Shares with respect to which the Optionee exercised the Option. The date
of exercise of the option shall be the date of delivery as provided in
paragraph 13 hereof. Notwithstanding anything in the foregoing to the
contrary, the Committee's discretion or consent shall not be unreasonably
delayed or withheld in regard to the Optionee's election as to any of the
above methods of payment of the Option Price. In the event of any failure
to pay for the number of Shares specified in such notice on the date set
forth therein, as the same may be extended as provided above, the exercise
of the Option with respect to such number of Shares shall be treated as if
it had never been made. As soon as reasonably practical after the Optionee
has validly exercised the Option, the Company shall cause the appropriate
number of Shares to be issued and delivered to the Optionee.
The term "FAIR MARKET VALUE" of a Share on any day shall be (a) if the
principal market for the common stock of the Company is a national
securities exchange, the average of the highest and lowest sales price per
share of common stock on such day as reported by such exchange or on a
composite tape reflecting transaction on such exchange, (b) if the
principal market for the common stock is not a national securities
exchange and the common stock is quoted on The Nasdaq Stock Market
("NASDAQ"), and (i) if actual sales price information is available with
respect to the common stock, the average of the highest and lowest sales
prices per share of common stock on such day on Nasdaq, or (ii) if such
information is not available, the average of the highest bid and lowest
asked price per share of common stock on such day on Nasdaq, or (c) if the
principal market for the common stock is not a national securities
exchange and the common stock is not quoted on Nasdaq, the average of the
highest bid and lowest asked price per share of Common
<PAGE>
Stock on such day as reported on the OTC Bulleting Board Service or by
National Quotation Bureau, Incorporated or a comparable service; PROVIDED
HOWEVER, that if clauses (a), (b) and (c) of this Section are all
inapplicable, or if not trades have been made or no quotes are available
for such day, the fair market value of the common stock shall be
determined by the Board of Directors of the Company by any method
consistent with applicable regulations adopted by the U.S. Treasury
Department relating to stock options.
4. CAPITAL ADJUSTMENTS.
(a) The existence of the Options shall not affect in any way the right or
power of the Company or its shareholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or
consolidation of the Company or to issue any securities, bonds,
debentures, or preferred or prior preference stock ahead of or affecting
the common stock of the Company, or any sale or transfer of all or part of
its assets or business, or any other corporate act or proceeding, whether
of a similar character or otherwise.
(b) In the event of a stock dividend, recapitalization, merger in which
the Company is the surviving corporation, split-up, combination or
exchange of shares or the like which result in a change in the number or
kind of shares of common stock which is outstanding immediately prior to
such event, the aggregate number of the kind shares subject to this Option
and the exercise price thereof, shall be appropriately adjusted in the
same manner as the number and kind of shares of a stockholder of the
Company who owned the same number and kind of shares immediately prior to
such event, and the Option Price of the Options shall be adjusted so that
the Option Price of each outstanding unexercised Option remains the same.
Such adjustments shall be made by the Board of Directors of the Company,
whose determination shall be conclusive and binding on all parties, unless
such determination is the result of an evident miscalculation of figures
or was the result of fraud, corruption or other undue means.
(c) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities
convertible into shares of capital stock of any class, either in
connection with direct sales or upon the exercise of rights or warrants to
subscribe therefor, or upon conversation of shares or obligations of the
Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to
the number of or Option Price then subject to any outstanding Option.
(d) In case of any consolidation of merger of the Company with or into
another corporation or the conveyance of all or substantially all of the
assets of the Company to another corporation or the conveyance of all or
substantially all of the assets of the Company to another corporation or a
share exchange transaction involving not less than 50% of the issued and
outstanding Common Stock of the Company, each Option shall thereafter be
convertible into the number of shares of stock or other securities or
property to which a holder of the number of shares of common stock
deliverable upon conversion of the Options would have been entitled upon
such consolidation, merger, conveyance or exchange; and, in any such case,
appropriate adjustment shall be made in the application of the provisions
herein set forth with respect to the rights and interest thereafter of the
holder of the Options, to the end that the provisions set forth herein
shall thereafter be
2
<PAGE>
applicable, as nearly as reasonably may be, in relations to any shares of
stock or other property thereafter deliverable upon the conversion of such
Option.
5. RIGHTS PRIOR TO PURCHASE OF STOCK. The Optionee shall have no right as a
shareholder with respect to any of the Shares covered by the Options until
the Optionee has made full payment for the Shares being purchased and said
Shares have been issued and delivered to the Optionee. No adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights for which
the record date is prior to the date of such Shares are fully paid for,
issued and delivered.
6. CERTAIN RESTRICTIONS. Optionee will acquire Optionee's Shares for
Optionee's own account, for investment only and without a view to resale
or distribution except in compliance with the Securities Act of 1933, as
amended, ("ACT") and any applicable state securities laws, and upon the
acquisition of the Shares Optionee will enter into such written
representations, warranties and agreements as Optionor may reasonably
request in order to comply with the Act, any applicable state securities
and this Agreement.
7. SHARES RESERVED. The Company shall at all times during the Option Period
reserve and keep available such numbers of Shares as will be sufficient to
satisfy the requirements of this Agreement.
8. TRANSFERABILITY. The Options may not be transferred except by will or the
laws of descent and distribution and, during the lifetime of the Optionee,
may be exercised only by the Optionee. Except as provided in the preceding
sentence, no Option nor any interest in the Options shall be subject to
encumbrance, assignment, alienation, transfer or anticipation either by
voluntary or involuntary act of the Optionee or the Optionee's heir or
beneficiary or by the operation of law, nor shall such Options or right be
subject to the demands or claims of any creditor of such period or be
liable in any way for such person's death obligations or liabilities.
Additionally, neither the Optionee nor any person or entity shall have any
interest in any specific asset or assets or stock of the Company by reason
of the granting of the Options.
9. INCIDENTAL REGISTRATION. The Company agrees that if at any time it shall
propose to file a registration statement under the Securities Act of 1933,
as amended (the "Securities Act") on a form suitable for sales by its
shareholders, it will give written notice to such effect to the Optionee
at least thirty (30) days prior to such filing, and, at the written
request of the Optionee, made within ten (10) days after the receipt of
such notice, will include therein at Company's costs and expense (except
for the fees and expenses of counsel to the Optionee and underwriting
discounts, commissions and filing fees attributable to the Shares included
therein) such of the Shares underlying the Options held by Optionee as he
shall request; provided, however, that if the offering being registered by
the Company is underwritten and if no other outstanding shares of the
Company's common stock are included therein and if the representative of
the underwriters certifies that the inclusion therein of the Shares would
materially and adversely effect the sale of the securities to be sold by
the Company thereunder, the public offering of the Shares included in such
registration statement either shall be delayed for a period of ninety (90)
days after the commencement of the underwritten public offering, provided
that the representative of the underwriters certifies in writing that such
delay would not materially and adversely effect the sale of the securities
to be sold by the Company or, if the representative of the
3
<PAGE>
underwriters will not so certify, the Optionee shall not be permitted to
participate in such registration except to the extent, and then only in
proportion thereto, that other shareholders of the Company possessing
similar registration rights are entitled to participate.
10. TERMINATION OF OPTION. Any unexercised portion of this Option shall
automatically and without notice terminate and become null and void at the
end of the Option Period.
11. LAW GOVERNING. This Agreement shall be governed in accordance with and
governed by the internal laws of the State of Florida.
12. INTERPRETATION. The Optionee accepts this Option subject to all the terms
and provisions of this Agreement. The undersigned Optionee hereby accepts
as binding, conclusive and final all decisions or interpretations of the
Compensation Committee of the Company upon any questions arising under
this agreement.
13. NOTICES. Any notice under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or when delivered
to a commercial courier service, or when deposited in the United States
mail, registered, postage prepaid, and addressed, in the case of the
Company, to the Company's Secretary at 1903 S. Congress Avenue, Suite 400,
Boynton Beach, Florida 33426, or if the Company should move its principle
office, to such principle office, and, in the case of the Optionee, to the
Optionee's last permanent address as shown on the Company's records,
subject to the right of either part to designate some other address at any
time hereafter in a notice satisfying the requirements of this Section.
IN WITNESS WHEREOF, the parties have set their hand and seals effective as of
the day first set forth above.
MEDICAL INDUSTRIES OF AMERICA, INC.:
By: /s/ E. NICHOLAS DAVIS, III
OPTIONEE:
/s/ A. RAZZAK TAI,
A. Razzak Tai
4
<PAGE>
EXHIBIT "A"
NO. OF OPTIONS OPTION PRICE OPTION PERIOD
105,000 $ .50 At anytime prior to or on
02/01/02
16,667 $ 1.25 At anytime prior to or on
02/01/02
28,333 $ .91 At anytime prior to or on
02/01/02
5
EXHIBIT 5
OPINION AND CONSENT OF COUNSEL
MIRKIN & WOOLF, P.A.
South Trust Center - Suite 580
1700 Palm Beach Lakes Blvd.
West Palm Beach, Florida 33401
Phone 561-687-4460
Fax 561-687-3447
June 24, 1999
Medical Industries of America, Inc.
1903 South Congress Avenue, Suite 400
Boynton Beach, FL 33426
Re: Medical Industries of America, Inc.
Ladies and Gentlemen:
This opinion is furnished to you in connection with a registration
statement on Form S-3 (the "Registration Statement"), filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended, for the
registration of 15,214,376 shares of Common Stock, $.0025 par value (the
"Shares"), of Medical Industries of America, Inc., a Florida corporation (the
"Company").
For purposes of this opinion, we have examined and relied upon such
documents, records, certificates and other instruments as we have deemed
necessary.
We express no opinion as to the applicability of compliance with or
effect of Federal law or the law of any jurisdiction other than the corporate
laws of the State of Florida.
Based on the foregoing, we are of the opinion that the Shares have been
duly authorized, validly issued, fully paid and non-assessable.
We hereby consent to your filing this opinion as an exhibit to the
Registration Statement and to the use of our name therein and in the related
prospectus under the caption "Validity of Common Stock".
It is understood that this opinion is to be used only in connection with
the offer and sale of the Shares while the Registration Statement is in effect.
Very truly yours,
/s/ Mirkin & Woolf, P.A.
MIRKIN & WOOLF, P.A.
II-8
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have issued our report dated March 26, 1999 accompanying the
consolidated financial statements of Medical Industries of America, Inc. and
subsidiaries included in Form 10-KSB/A for the year ended December 31, 1998,
which is incorporated by reference in this Registration Statement. We consent to
the incorporation by reference in the Registration Statement of the
aforementioned report and to the use of our name as it appears under the caption
"Experts."
/s/Grant Thornton LLP
GRANT THORNTON LLP
Fort Lauderdale, Florida
June 29, 1999
II-9
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have issued our report dated March 26, 1999, accompanying the financial
statements of Medical Industries of America, Inc. contained in the Registration
Statement on Form S-3/A. We consent to the use of the aforementioned report in
the Registration Statement, and to the use of our name as it appears under the
caption "Experts."
/s/ Grant Thornton LLP
GRANT THORNTON LLP
Fort Lauderdale, Florida
June 29, 1999
II-10
