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As filed with the Securities and Exchange Commission on July 3, 1997
Registration No. 333-30283
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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TRANSWORLD HEALTHCARE, INC.
(Exact name of registrant as specified in its charter)
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New York 555 Madison Avenue 13-3098275
(State or other jurisdiction of New York, New York 10022 (I.R.S. Employer
incorporation or organization) (212) 750-0064 Identification No.)
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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Wayne A. Palladino
Transworld HealthCare, Inc.
555 Madison Avenue
New York, New York 10022
(212) 750-0064
(Name, address, including zip code, and
telephone number, including area code,
of registrant's agent for service)
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Copies of all communications, including communications sent
to agent for service, should be sent to:
Leslie J. Levinson, Esq.
Baer Marks & Upham LLP
805 Third Avenue
New York, New York 10022
(212) 702-5700
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement as determined by
market conditions and other factors.
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If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
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Proposed
Title of each class of securities Amount to be maximum Proposed maximum Amount of
to be registered registered offering price aggregate offering registration fee
per share price
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Common Stock, $ 0.01 par value(1)(7)........... 77,672 $ 10.30 $ 800,021.60 $ 242.43
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Common Stock(2)................................ 390,000 $ 10.19 $ 3,974,100.00 $ 1,204.27
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Common Stock(3)(7)............................. 69,000 $ 6.60 $ 455,400.00 $ 138.00
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Common Stock(4)(7)............................. 70,009 $ 10.30 $ 721,092.70 $ 218.51
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Common Stock(5)(7)............................. 80,000 $ 6.75 $ 540,000.00 $ 163.64
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Common Stock(6)(7)............................. 10,000 $ 7.50 $ 75,000.00 $ 22.73
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Total................................. $ 1,989.58(8)
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(1) Such 77,672 shares of Common Stock are issuable upon the exercise, in full,
of warrants. The exercise price of each such warrant is $10.30 per share.
(2) For purposes of calculating the registration fee pursuant to Rule 457(c),
the amount of the offering price per share is based upon the average of the
high and low sale price of the Registrant's Common Stock on June 25, 1997.
(3) Such 69,000 shares of Common Stock are issuable upon the exercise, in full,
of unit purchase warrants. The exercise price of such unit purchase warrant
is $6.60.
(4) Such 70,009 shares of Common Stock are issuable upon the exercise, in
full, of warrants contained in unit purchase warrants. The exercise price of
each such warrant is $10.30.
(5) Such 80,000 shares of Common Stock are issuable upon the exercise, in full,
of warrants. The exercise price of each such warrant is $6.75.
(6) Such 10,000 shares of Common Stock are issuable upon the exercise, in full,
of warrants. The exercise price of each such warrant is $7.50.
(7) Pursuant to Rule 416(a), this Registration Statement also covers an
indeterminable number of additional shares as may become issuable in
accordance with the terms of the warrants.
(8) This amount was previously paid.
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.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Subject to Completion, Dated July 3, 1997
PROSPECTUS
TRANSWORLD HEALTHCARE, INC.
696,681 SHARES OF COMMON STOCK
Of the 696,681 shares (the "Shares") of Common Stock, $.01 par value
(the "Common Stock"), of Transworld Healthcare, Inc., a New York corporation
(the "Company"), being offered hereby, 77,672 Shares are to be sold by certain
selling securityholders of the Company (the "Warrant Selling Securityholders")
upon the exercise of certain warrants (the "Selling Securityholders' Warrants");
69,000 Shares are to be sold upon the exercise of certain unit purchase warrants
(the "Representative's Warrants") by the registered holder thereof (the
"Representative's Warrants Holder"); 70,009 Shares are to be sold upon the
exercise of certain warrants included in the Representative's Warrants (the
"Included Warrants") by the registered holder thereof (the "Included Warrants
Holder"); 90,000 Shares are to be sold upon the exercise of certain consultant's
warrants (the "Consultant's Warrants") by the registered holder thereof (the
"Consultant's Warrants Holder"); and 390,000 Shares are to be sold by a certain
selling securityholder (the "Selling Shareholder"). The Warrant Selling
Securityholders, the Representative's Warrants Holder, the Included Warrants
Holder, the Consultant's Warrant Holder and the Selling Shareholder are herein
collectively referred to as the "Selling Securityholders."
The Selling Securityholders' Warrants were issued, and the Included
Warrants are issuable, upon exercise of Representative's Warrants issued in
connection with the Company's initial public offering. Each of the
Representative's Warrants entitles the holder to purchase one unit ("Unit"), at
a price of $6.60 per Unit, each Unit consisting of one share of Common Stock and
one warrant (the "Unit Purchase Warrants"). Each of the Selling Securityholders'
Warrants and the Included Warrants is exercisable to purchase one share of
Common Stock at $10.30 per Share. Of the 90,000 Consultant's Warrants, 80,000 of
such warrants are each exercisable to purchase one share of Common Stock at
$6.75 per Share and 10,000 of such warrants are each exercisable to purchase one
share of Common Stock at $7.50 per Share. See "Description of Securities" and
"Selling Securityholders."
The Common Stock is traded and quoted on the Nasdaq National Market
under the symbol "TWHH." On June 25, 1997, the last sale price of the Common
Stock as reported on the Nasdaq National Market was $10 1/8. See "Description of
Securities."
No underwriter is being utilized by the Company in connection with this
offering. The Company is bearing all costs relating to the registration,
offering and sale of the Shares offered hereby, other than commissions or
discounts of underwriters, broker-dealers or agents.
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THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGE 2.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The Selling Securityholders and any person participating in the
distribution of the Common Stock offered hereby will be subject to applicable
provisions of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations thereunder, including Regulation M, which
provisions may limit the timing of purchases and sales of the Common Stock. See
"Plan of Distribution."
The Shares offered hereby may be offered and sold from time to time
pursuant to Rule 415 under the Securities Act of 1933 (the "Securities Act"), by
the Selling Securityholders in transactions on the Nasdaq National Market, in
negotiated transactions, or a combination of such methods of sale. The Shares
may be sold at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. The Selling
Securityholders may effect such transactions by selling the Shares directly to
purchasers or through underwriters or broker-dealers who may act as agents or
principals. Such underwriters and broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the Selling Securityholders
or the purchasers of the Shares for whom such underwriters or broker-dealers may
act as agent or to whom they sell as principal, or both (which compensation as
to a particular underwriter or broker-dealer may be in excess of customary
compensation). See "Plan of Distribution."
The date of this Prospectus is ___________, 1997
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RISK FACTORS
This Prospectus contains certain forward-looking statements and
information that are based on the beliefs of management as well as assumptions
made by and information currently available to management. The statements
contained in this Prospectus relating to matters that are not historical facts
are forward-looking statements that involve risks and uncertainties, including,
but not limited to, future demand for the Company's products and services,
general economic conditions, government regulation, competition and customer
strategies, capital deployment, the impact of pricing and reimbursement and
other risks and uncertainties. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein as anticipated,
believed, estimated or expected.
The Shares being offered hereby involve a high degree of risk. Prior to
making an investment, prospective investors should carefully consider the
following factors as well as other information described elsewhere in this
Prospectus or incorporated herein by reference, relating to the business of the
Company and this Offering.
DEPENDENCE UPON REIMBURSEMENT BY THIRD-PARTY PAYORS; DELAYS IN REIMBURSEMENT
Substantially all of the Company's revenues are received from
third-party payors such as private insurance companies, self-insured employers,
health maintenance organizations ("HMOs") and governmental payors under Medicare
and Medicaid programs. The level of revenues and profitability of the Company,
like those of other health care companies, are affected by the continuing
efforts of third-party payors to contain or reduce the costs of health care by
lowering reimbursement or payment rates, increasing case management review of
services and negotiating reduced contract pricing and reimbursement caps.
Government reimbursement programs are subject to statutory and regulatory
changes, retroactive rate adjustments, administrative rulings and governmental
funding restrictions, any of which may materially increase or decrease payments
received by the Company for its services. In addition to being subject to
frequent changes in Federal and state laws governing Medicare and Medicaid
coverage and reimbursement policies, the Company is subject to governmental
audit of the reimbursements it receives under Medicare and Medicaid programs.
Any significant audit adjustment could have a material adverse effect on the
Company's business, financial condition, cash flows or results of operations. A
significant reduction in the coverage or payment rates of governmental or
private third-party payors or in the percentage of the Company's services
delivered to privately-insured patients, from whom the Company receives higher
reimbursement than from patients enrolled in Medicare or Medicaid, would have a
material adverse effect on the Company's revenues and profitability. There can
be no assurance that payments under governmental and private third-party payor
programs will remain at levels comparable to present levels or will, in the
future, be sufficient to cover the costs allocable to patients eligible for
reimbursement pursuant to such programs.
Medicare has released a policy relating to the coverage of respiratory
medications, which may reduce the number of patients qualifying for Medicare
coverage. This policy sets specific reimbursement rates for compounded, generic
and branded respiratory medications and requires, effective December 1, 1996,
that only licensed pharmacies may bill Medicare for certain Medicare reimbursed
medications, including, but not limited to, respiratory medications. While the
implementation of this policy should reduce the overall number of competitors in
the respiratory medications market over the next year or so, the Company cannot
predict at this time the extent of the positive or negative effect that this
policy may have on the number of patients serviced by the Company, its
pharmacy-based operations or the marketing opportunities created thereby.
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The United States Department of Health and Human Services ("HHS") is
studying, among other things, the feasibility of changing the Medicare
reimbursement system for home health care from cost reimbursement to prospective
payment (i.e., a fixed fee for services rendered per episode of illness). The
impact of such a change, if implemented, on the Company's results of operations
cannot be predicted at this time and will depend, to a large extent, on the
reimbursement methodology ultimately established. For the Company's fiscal year
ended October 31, 1996, approximately 49.8% and 11.8%, respectively, of the
Company's revenues were directly attributable to Medicare and Medicaid programs.
The United States Congress and President Clinton have each proposed significant
reductions in Medicare and Medicaid spending in connection with efforts to
balance the budget of the United States. Although the Company cannot predict
whether these or other Federal or state cost containment proposals will be
adopted, the adoption of any such proposals could have a material adverse effect
on the Company's business, financial condition, cash flows and results of
operations.
The Company generally collects payments from third-party payors within
an average of four months after services are rendered, but pays its accounts
payable and employees currently. Government payors, such as Medicaid programs
and, to a lesser extent, the Medicare program, tend to process claims more
slowly than private third-party payors. Delays in reimbursement may cause
working capital constraints on the Company's operations. In the past, the
Company has been able to obtain financing through bank borrowings and internally
generated funds to meet its working capital requirements. However, there can be
no assurance that bank borrowings or other suitable methods of financing will be
available when needed or, if available, will be on terms acceptable to the
Company. Any substantial delays in reimbursement could adversely affect the
Company's business, financial condition, cash flows and results of operations.
PENDING ACQUISITIONS; ACQUISITION AND EXPANSION STRATEGY; INTEGRATION OF NEW
BUSINESSES
The Company has entered into the Merger Agreement (as defined herein)
to acquire the balance of Health Management, Inc.'s ("HMI") common stock not
already owned by it. Completion of the acquisition of such HMI common stock (the
"HMI Acquisition") is subject to the satisfaction of various closing conditions,
including approval of the lenders under the Credit Facility (as defined herein),
receipt of certain regulatory approvals and approval by HMI shareholders. There
can be no assurance that the Merger Agreement will be completed in a timely
manner or at all. According to HMI, if the Merger Agreement is not consummated
or HMI does not continue satisfactory relationships with its suppliers, it is
likely that HMI will seek protection under the Federal bankruptcy laws. See
"Recent Developments."
In addition, in June 1994, the Company entered into two stock purchase
agreements, as amended, to acquire all of the issued and outstanding capital
stock of VIP Health Services, Inc. and Kwik Care, Ltd. (collectively, the "VIP
Companies"). The VIP Companies provide temporary nursing and related home health
services in the City of New York and surrounding areas through both a licensed
and a Medicare certified agency. The consummation of the acquisition of the VIP
Companies is subject to, among other things, various conditions including the
receipt of necessary governmental approvals (including the submission and
approval of a plan of financing), the approval of the lenders under the Credit
Facility, the accuracy at closing of various representations and warranties and
the compliance by the sellers with certain covenants and agreements contained in
the stock purchase agreements. The Company cannot predict when or whether all of
the requisite consents and approvals will be obtained or whether the transaction
will ultimately be consummated.
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Approximately $162 million (67.9%) of the Company's pro forma total
revenues for the year ended October 31, 1996 are attributable to HMI. Failure to
complete the acquisitions of HMI and the VIP Companies would have a material
adverse effect on the Company's near-term growth. HMI has been experiencing
certain financial and operational difficulties.
A principal component of the Company's business strategy involves
acquiring other alternate site health care providers that can be integrated with
its existing businesses. Since June 1992, the Company has completed the
acquisition of 12 alternate site health care providers. The Company's ability to
continue to expand its operations depends on a number of factors, including the
availability of desirable locations for additional facilities, the availability
of acquisition candidates and the ability of the Company to finance such
expansion. Although the Company frequently explores acquisition possibilities,
there can be no assurance that it will make any additional acquisitions or will
be able to obtain additional financing for acquisitions or the development of
additional facilities. The Company's $100 million senior secured credit facility
(the "Credit Facility") requires the consent of the lenders in order to
consummate acquisitions and there can be no assurance that any required consents
can or will be obtained. The Company's acquisition strategy places significant
demands on the Company's management, financial and other resources and there can
be no assurance that the Company will be able to successfully integrate pending
or future acquisitions or that the Company's acquisition and expansion strategy
will ultimately prove profitable to the Company. See "Recent Developments."
EXTENSIVE U.S. HEALTH CARE REGULATORY ENVIRONMENT
The Company's business is subject to extensive Federal and state
regulation. Federal regulation covers, among other things, Medicare and Medicaid
billing and reimbursement, reporting requirements, certification standards for
certain home health agencies and other types of health care providers,
limitations on ownership and other financial relationships between a provider
and its referral sources and approval by the Food and Drug Administration of the
safety and efficacy of pharmaceuticals and medical devices. In addition, the
requirements that the Company must satisfy to conduct its businesses vary from
state to state. The Company believes that its operations comply with applicable
Federal and state laws and regulations in all material respects. However,
changes in the law or new interpretations of existing laws could have a material
adverse effect on permissible activities of the Company, the relative costs
associated with doing business and the amount of reimbursement for the Company's
products and services paid by government and other third-party payors. The
unavailability of formal advance rulings in most regulated areas subjects the
Company to possible subsequent adverse interpretations and rulings in this
regard.
Political, economic and regulatory influences are subjecting the health
care industry in the United States to fundamental change. Although Congress has
failed to pass comprehensive health care reform legislation, the Company
anticipates that Congress and state legislatures will continue to review and
assess alternative health care delivery and payment systems and may in the
future propose and adopt legislation effecting fundamental changes in the health
care delivery system. The Company cannot predict the ultimate timing, scope or
effect of any legislation concerning health care reform. Any proposed Federal
legislation, if adopted, could result in significant changes in the
availability, delivery, pricing and payment for health care services and
products, including alternate site health care. Various state agencies also have
undertaken or are considering significant health care reform initiatives.
Although it is not possible to predict whether any health care reform
legislation will be adopted or, if adopted, the exact manner and the extent to
which the Company will be affected, it is likely that the Company will be
affected in some fashion, and there can be no assurance that any health care
reform legislation, if and
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when adopted, will not have a material adverse effect on the Company's business,
financial condition, cash flows or results of operations.
The Federal Medicare and Medicaid Anti-kickback Statute (the
"Anti-kickback Statute") prohibits certain conduct involving improper payments
in connection with the delivery of items or services covered by a number of
Federal and state health care programs. Among other things, these prohibitions
apply to anyone who knowingly and willfully solicits, receives, offers, or pays
any remuneration in return for referring an individual to another person for the
furnishing, or arranging for the furnishing, of any item or service that may be
paid, in whole or in part, by Medicare, Medicaid or other Federal health care
programs. To date, courts have interpreted the Anti-kickback Statute to apply to
a broad range of financial relationships between providers and referral sources,
including physicians and other direct health care providers, as well as persons
who do not have a direct role in the provision of health care services.
Violations of the statute may result in civil and criminal penalties, including
fines of up to $25,000 for each violation, exclusion from participation in the
Medicare and Medicaid programs and imprisonment for up to five (5) years.
The Federal "Stark Law," as amended (the "Amended Stark Law"), provides
that where a physician has a "financial relationship" with a provider of
"designated health services" (including, among other things, parenteral and
enteral nutrients, equipment and supplies, home health services, radiation
therapy, outpatient prescription drugs and home medical equipment, which are
products and services provided by the Company), the physician is prohibited from
referring a Medicare or Medicaid patient to the health care provider, and the
provider is prohibited from billing Medicare or Medicaid, for the designated
health service. Submission of a claim that a provider knows or should know is
for services for which payment is prohibited under the Amended Stark Law could
result in refunds of any amounts billed, civil money penalties of not more than
$15,000 for each such service billed, and possible exclusion from Medicare and
Medicaid programs.
The Office of Inspector General ("OIG") of HHS instituted "Operation
Restore Trust" in May 1995 in the five states with the highest Medicare
expenditures (California, Florida, New York, Texas and Illinois). Operation
Restore Trust is intended to counter health care fraud, waste and abuse in
targeted areas that HHS believes to be particularly vulnerable to fraud and
abuse, including home health care, nursing homes and durable medical equipment.
The OIG has issued "Fraud Alerts" relating to improper business practices in
home health care and the provision of medical supplies to nursing homes, and is
expected to issue additional Fraud Alerts in the future as a means of advising
the public of suspect business arrangements and practices in the health care
industry. In addition, providers of home health care, home medical equipment,
wound care supplies and other products and services are expected to be subject
to increased scrutiny for practices involving fraud and abuse.
Many states, including the states in which the Company operates, have
adopted statutes and regulations prohibiting payments for patient referrals and
other types of financial arrangements with health care providers, which, while
similar in certain respects to Federal legislation, vary from state to state.
Sanctions for violating these state restrictions may include loss of licensure
and civil and criminal penalties. Certain states also have begun requiring
health care practitioners to disclose to patients any financial relationship
with a provider, including advising patients of the availability of alternative
providers.
The Company continues to review all aspects of its operations and
believes that it complies in all material respects with applicable provisions of
the Anti-kickback Statute, the Amended Stark Law and applicable state laws,
although because of the broad and sometimes vague nature of these laws, there
can be no assurance that an enforcement action will not be brought against the
Company or that the Company
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will not be found to be in violation of one or more of these provisions. At this
time, the Company cannot anticipate what impact, if any, subsequent
administrative or judicial interpretation of the applicable Federal and state
laws may have on the Company's business, financial condition, cash flows or
results of operations.
EXTENSIVE UNITED KINGDOM HEALTH CARE REGULATORY ENVIRONMENT
As a result of the acquisitions of Omnicare plc ("Omnicare") and Allied
Medicare Limited ("Allied"), a portion of the Company's operations will be based
in the United Kingdom and subject to United Kingdom health care regulations. The
businesses of Omnicare and Allied are subject to detailed licensing regulations
and price controls. The United Kingdom health care industry is dominated by the
United Kingdom National Health Service ("NHS") and the timing and extent of
further growth in the private health care services market cannot be projected
with any degree of certainty. Substantially all of the revenue of each of
Omnicare and Allied is derived, directly or indirectly, through NHS
reimbursements. There can be no assurance that changes in United Kingdom health
care regulations will not have a material adverse effect on the Company's
financial condition. See "-- Risks Associated with International Sales" and
"Recent Developments."
RISKS ASSOCIATED WITH INTERNATIONAL SALES
As a result of the acquisitions of Omnicare and Allied, the Company
will have international operations and thereby become subject to the risks
inherent in international business activities, including unexpected changes in
regulatory requirements, tariffs, customs, duties, political risks and the
burdens of compliance with foreign laws and regulations. Moreover, any
significant fluctuation in the foreign currency exchange rates between the
currencies of the United States and the United Kingdom may adversely affect the
Company's business activities in the United Kingdom or the Company's business,
results of operations and financial condition in general. See "Recent
Developments."
COMPETITION
The health care industry is highly competitive and includes a large
number of providers. The Company competes with hospitals, nursing homes and
other businesses that provide all types of health care services, many of which
are larger and more established companies with significantly greater resources
and access to capital and greater name recognition than the Company. There are
relatively few barriers to entry in the markets that the Company serves.
The Company's operations depend, to a significant degree, on its
ability to recruit and retain qualified health care personnel. Competition from
other companies in the alternate site health care industry for qualified
personnel is intense, and there can be no assurance that the Company will be
able to recruit or retain qualified personnel in the future. Any failure by the
Company to recruit or retain qualified personnel could have a material adverse
effect on its business, financial condition, cash flows or results of
operations.
DEPENDENCE ON RELATIONSHIPS WITH REFERRAL SOURCES
The development and growth of the Company's business depends to a
significant extent on its ability to establish close working relationships with
hospitals, clinics, nursing homes, physician groups,
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HMOs and other health care payors and providers. Although the Company believes
that it has established adequate relationships in the markets in which it
operates, there can be no assurance that existing relationships can be
successfully maintained or that additional relationships can be successfully
developed and maintained in existing and future markets.
SUPPLIERS
The Company purchases its equipment and supplies, including drugs, home
medical equipment, nutritional solutions and other materials required in
connection with its therapies and specialized mail-order pharmacy and medical
supplies operations, from various suppliers.
HMI currently purchases Sandimmune(R) and Clozaril(R), drugs
manufactured solely by Novartis, A.G., principally through wholesalers. If HMI
were unable to purchase Sandimmune(R) or Clozaril(R) for any reason, its results
of operations would be materially and adversely affected. In addition as a
result of HMI's recent financial condition, it has been subject to less
favorable credit terms and credit limitations from certain of its suppliers.
Decreased credit availability and less favorable credit terms can have a
material adverse impact on results of operations and cash flows. However, upon
completion of the merger, HMI will be a wholly-owned subsidiary of the Company
and management anticipates that HMI's suppliers will resume customary credit
policies at that time. See "Recent Developments."
CHANGES IN TREATMENT
Certain of the Company's services and products, as well as certain of
the services and products provided by HMI, are largely dependent on physicians
continuing to prescribe the administration of certain drugs and services
provided by the Company or HMI and the continued reimbursement of such products
and services by third party payors, as the case may be. Alternative drug
delivery systems or services and alternative drugs may affect the continued
utilization of certain services or products. The Company cannot predict the
ultimate impact of any such changes on its or HMI's business, nor can it predict
the nature of future medical advances or their eventual impact on the Company's
or HMI's business.
DEPENDENCE ON KEY MANAGEMENT AND HEALTH CARE PROFESSIONALS
The Company is highly dependent upon its senior management team,
including Timothy M. Aitken, its Chairman and Chief Executive Officer, and its
staff of health care professionals. Mr. Aitken entered into a renewable one-year
employment agreement with the Company in January 1997. Competition for qualified
management personnel and health care professionals is substantial. The inability
to attract and to retain qualified personnel could adversely affect the
Company's business, financial condition, cash flows and results of operations.
See "Recent Developments."
SHARES ELIGIBLE FOR FUTURE SALE; OUTSTANDING WARRANTS AND OPTIONS
As of June 18, 1997, there are an aggregate of 15,120,660 shares of
Common Stock outstanding. Of such shares, 5,705,327 shares are generally freely
transferable without restriction or further registration under the Securities
Act, and the remaining shares are "restricted securities" as that term is
defined in Rule 144 under the Securities Act and may be sold only pursuant to a
registration statement
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under the Securities Act or an applicable exemption from registration
thereunder. See "Description of Securities."
Sales of a substantial number of shares of Common Stock in the public
market following this Offering could adversely effect prevailing market prices
for the Common Stock. The Company has granted registration rights to (i) holders
of warrants or shares covering an aggregate of 320,000 shares of Common Stock
(giving effect to the exercise of the warrants but without giving effect to any
anti-dilution adjustments) issued or issuable upon the exercise of the 160,000
Representative's Warrants issued in connection with the Company's initial public
offering, (ii) Paribas Principal, Inc., an affiliate of Banque Paribas, the
agent of the Company's prior senior secured credit facility with respect to
425,000 shares of Common Stock, (iii) Hyperion TW Fund L.P. (the "Fund") with
respect to 4,116,456 shares of Common Stock and (iv) Hyperion Partners II L.P.
("HPII") with respect to 5,298,877 shares of Common Stock as well as 3,000,000
shares of Common Stock issuable upon exercise of the warrants held by it. The
Company has also entered into a stock purchase agreement with HPII with respect
to an additional 1,234,176 shares of Common Stock, which shares will also be
subject to the registration rights agreement with HPII. See "Recent
Developments."
The sale of Common Stock pursuant to such registration rights and the
registration statement of which this Prospectus is a part, may adversely effect
the prevailing market price of the Shares.
As of the date of this Prospectus: 3,000,000 shares of Common Stock are
issuable upon exercise of warrants issued to HPII (the "HPII Warrants") in
connection with the Company's financings under a unit purchase agreement (the
"Unit Purchase Agreement") between the Company and HPII consummated in May and
July 1996; 1,100,000 shares of Common Stock are issuable upon exercise of the
Company's outstanding public Common Stock purchase warrants (the "Public
Warrants"); 216,681 shares of Common Stock are issuable upon exercise of the
Representative's Warrants (giving effect to the exercise of the Unit Purchase
Warrants included in the Representative's Warrants and any anti-dilution
adjustments); and 90,000 shares of Common Stock are issuable upon exercise of
the Consultant's Warrants. Also, in connection with a prior acquisition, the
Company has entered into a stock price support arrangement whereby payments made
by the Company under this arrangement may, at the Company's option, be made in
shares of Common Stock. See "Selling Securityholders."
NO SPECIFIC USE OF PROCEEDS; BROAD DISCRETION IN USE OF PROCEEDS
The Company has not designated any specific use for the net proceeds
from the exercise of the Selling Securityholders' Warrants, Representative's
Warrants, Included Warrants and the Consultant's Warrants hereunder. Rather, the
Company intends to use the net proceeds primarily for general corporate
purposes, including working capital and potential acquisitions and strategic
investments. Accordingly, management will have significant flexibility in
applying the net proceeds hereunder. See "Use of
Proceeds."
POSSIBLE VOLATILITY OF STOCK PRICE
The market price for the Common Stock could be subject to significant
fluctuations in response to variations in the Company's quarterly financial
performance, changes in analysts' earnings estimates and general conditions in
the health care and alternate site health care industries. The market price of
the Common Stock has fluctuated over the last two years and is likely to
continue to fluctuate in the future. In addition, the Nasdaq National Market
has, from time to time, experienced significant price
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<PAGE> 10
and volume fluctuations that are unrelated or disproportionate to the
operating performance of individual companies. Additional Common Stock
becoming eligible for sale under Rule 144 of the Securities Act or otherwise
may affect the volatility of the market price for Common Stock. See "-- Shares
Eligible for Future Sale; Outstanding Warrants and Options."
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<PAGE> 11
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares,
but will receive proceeds from the exercise of the Selling Securityholders'
Warrants, the Representative's Warrants, Included Warrants and Consultant's
Warrants. The actual number of Selling Securityholders' Warrants,
Representative's Warrants, Included Warrants and Consultant's Warrants to be
exercised and the amount of proceeds to be received therefrom cannot be
predicted with any degree of certainty. If all of the Selling Securityholders'
Warrants, Representative's Warrants, Included Warrants and Consultant's Warrants
are exercised, the Company will receive net proceeds of approximately
$2,592,000. The Company intends to utilize the net proceeds from the exercise of
the Selling Securityholders' Warrants, Representative's Warrants, Included
Warrants and Consultant's Warrants for general corporate purposes, including
possible acquisitions. Aside from the agreements to acquire HMI and the VIP
Companies, the Company has not entered into agreements with respect to any other
acquisitions. Pending the use of proceeds, the Company may repay a portion of
any outstanding indebtedness under its Credit Facility and make temporary
investments in bank certificates of deposit, short-term interest-bearing
investments, prime commercial paper, United States government obligations, money
market funds or other short-term securities.
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<PAGE> 12
THE COMPANY
The Company is a regional provider of a broad range of alternate site
health care services and products. The Company provides the following services
and products to patients in their homes or in an outpatient setting: (i) patient
services, including nursing and para-professional services and
radiation/oncology therapy; (ii) infusion therapy; and (iii) specialty
pharmaceutical and medical supplies, home medical equipment and respiratory
therapy (including disease state management products such as respiratory and
diabetic medications and supplies, wound care dressings and ostomy and orthotic
products). During the Company's fiscal year ended October 31, 1996, the Company
derived 25.1% of its revenues from patient services, 13.1% of its revenues from
infusion therapy and 61.8% of its revenues from specialized mail-order sales,
home medical equipment and respiratory therapy. The Company's home health care
and alternate site patient operations are concentrated in New York, New Jersey,
Florida and Maryland, and the Company's specialty pharmaceutical and medical
supplies operations provide products to patients nationwide. The Company
believes that as a full-service alternate site health care provider it can be
more responsive and flexible in dealing with the needs of referral sources,
patients and attending physicians, distinguishing it from competitors who
provide a more limited range of services.
The Company's principal executive offices are located at 555 Madison
Avenue, New York, New York 10022, and the Company's telephone number is (212)
750-0064.
RECENT DEVELOPMENTS
On November 13, 1996, the Company entered into several agreements
providing for the acquisition of HMI by the Company in a series of transactions
described herein. HMI, based in Buffalo Grove, Illinois, is a provider of
integrated pharmacy management services to patients with chronic medical
conditions and to health care professionals, drug manufacturers and third-party
payors involved in such patients' care. For the year ended April 30, 1996 and
the nine months ended January 31, 1997 (unaudited), HMI reported $158,860,000
and $120,030,000 of net sales and net losses of ($10,927,000) and ($31,348,000),
respectively. Included in net loss for the year end April 30, 1996 are charges
of $16,840,000, resulting from: (i) a write-off of medical device inventory
($2,840,000); (ii) an additional provision reflecting a change in the estimation
of the allowance for doubtful accounts ($8,400,000); (iii) costs associated with
organizational consolidation and other cost reduction programs ($3,600,000); and
(iv) professional fees related to certain shareholder litigation and restatement
of fiscal 1995 financial statements ($2,000,000). Included in the net loss for
the nine months ended January 31, 1997 are charges of $21,588,000, resulting
from: (i) an additional provision reflecting a change in estimation of the
allowance for doubtful accounts ($10,000,000); (ii) costs associated with
overpayments from New York State Medicaid ($1,400,000); (iii) costs and other
expenses related to the closing or sale of three retail pharmacies, including a
goodwill write-off ($2,813,000); and (iv) costs estimated for the settlement of
lawsuits ($7,375,000).
On November 13, 1996, the Company acquired from HMI's senior lenders
(collectively, the "Lenders") for a purchase price of $21,262,500, the senior
secured indebtedness of HMI under the credit agreement (the "HMI Credit
Agreement") dated March 31, 1995 between HMI, its subsidiaries and the Lenders.
In addition, subject to the terms and conditions of an agreement between the
Company and HMI dated November 13, 1996, as amended (the "Supplemental
Agreement"), the Company also agreed to lend to HMI from time to time, but only
until completion of the Stock Purchase Agreement (as defined below), up to
$5,000,000 for working capital purposes. HMI is currently in default under the
HMI Credit Agreement, but the Company has determined to forbear from exercising
its remedies under the HMI Credit Agreement until July 15, 1997. As of January
13, 1997, the Company had advanced
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<PAGE> 13
$4,649,285 to HMI for working capital purposes. On November 13, 1996, the
Company and HMI also entered into a stock purchase agreement, as amended (the
"Stock Purchase Agreement"), pursuant to which the Company acquired on January
14, 1997, 8,964,292 newly issued shares of HMI common stock representing
approximately 49% of HMI's outstanding common stock for a cash purchase price of
$8,964,292, which actual cash outlay was reduced by the $4,649,285 advanced for
working capital purposes pursuant to the Supplemental Agreement.
On November 13, 1996, the Company and HMI also entered into an
agreement and plan of merger, as subsequently amended (the "Merger Agreement"),
whereby HMI will be acquired by the Company at a purchase price of $.30 per
share for each outstanding share of HMI common stock not already owned by the
Company. Consummation of the HMI Acquisition is subject to the satisfaction of
various conditions, including approval of the lenders under the Credit Facility,
receipt of certain regulatory approvals and approval by HMI's shareholders.
On November 13, 1996, HMI also issued to the Company an option (the
"Option"), exercisable until January 14, 1998, to purchase newly issued shares
representing up to an additional 2% of HMI's then outstanding common stock for a
purchase price of $1.00 per share (less amounts advanced pursuant to the
Supplemental Agreement and not deducted under the Stock Purchase Agreement). At
the closing of the Stock Purchase Agreement, the Company and HMI also entered
into a registration rights agreement providing for the registration under the
Securities Act, commencing on the earlier of June 30, 1997 or the date on which
the Merger Agreement is terminated, of the shares of HMI common stock acquired
by the Company pursuant to the Stock Purchase Agreement and issuable upon
exercise of the Option.
The Company plans to undertake a detailed review of productivity
enhancing opportunities, as well as the carrying value of various assets, at
certain operations and subsidiaries of HMI. Accordingly, goodwill associated
with the acquisition of HMI will be reviewed for potential impairment, if any.
The Company anticipates that this review may result in restructuring and other
charges in the latter part of 1997. Based on the preliminary status of this
review, it is not currently practicable to estimate the amount of charges, if
any, that may result from these reviews.
In connection with the Company's pending acquisition of HMI, HPII has
purchased certain of HMI's trade payables aggregating approximately $18,000,000
at various discounts. The Company and HPII have entered into a stock purchase
agreement pursuant to which HPII will purchase at closing 1,234,176 shares of
Common Stock at a purchase price of $9.875 per share (representing an aggregate
purchase price of $12,187,488) in exchange for the assignment to the Company of
certain of such trade payables. Closing of the transaction is subject to, among
other things, approval of the Company's shareholders. The shares of Common Stock
issued pursuant to this agreement are also covered by the existing registration
rights agreement with HPII.
On January 8, 1997, the Company entered into a stock purchase agreement
with HPII pursuant to which HPII agreed, subject to the conditions stated
therein, to purchase 898,877 shares of Common Stock at a purchase price of
$11.125 per share for an aggregate purchase price of $10,000,000 (the
"Additional Shares"). The closing of the sale of the Additional Shares occurred
on April 21, 1997. The Additional Shares are also covered by the existing
registration rights agreement with HPII. See "Risk Factors -- Shares Eligible
for Future Sale; Outstanding Warrants and Options."
Effective March 26, 1997, the Company entered into a stock purchase
agreement with the Fund, an affiliate of HPII, pursuant to which the purchaser
agreed, subject to the conditions stated therein, to purchase 4,116,456 shares
of the Company's Common Stock (the "March Shares") at a purchase price of $9.875
per share for an aggregate purchase price of $40,650,000. The closing of the
sale of the
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<PAGE> 14
March Shares occurred on April 21, 1997. At the closing, the Company and the
Fund entered into a registration rights agreement containing substantially the
same terms and conditions as those contained in the existing registration rights
agreement with HPII.
On May 28, 1997 the board of directors of Transworld HealthCare (UK)
Limited ("Transworld UK"), a wholly owned subsidiary of the Company, and the
board of directors of Omnicare reached agreement on the terms of a recommended
cash offer to acquire all the issued and to be issued capital stock of Omnicare
for a purchase price of 167 pence per share. The Company announced on June 24,
1997 that Transworld UK had received valid acceptances for 9,340,083 ordinary
Omnicare shares, which, together with the 1,765,000 Omnicare shares already
owned by Transworld UK, represent an aggregate of approximately 93% of the
current outstanding share capital of Omnicare. The offer to purchase the balance
of the outstanding Omnicare shares remains open for acceptance until further
notice. The offer was also declared unconditional on such date as to acceptance,
with all other conditions having been fulfilled or waived. Omnicare provides
respiratory equipment and services to home care patients in the United Kingdom
under the terms of contracts and licenses with various United Kingdom National
Health Service ("NHS") agencies. Omnicare also dispenses a range of medical and
surgical products, principally ostomy products, to patients at home, as well as
providing those patients with advisory and other services through its network of
regional care centers.
On July 3, 1997, Transworld UK acquired all of the issued and
outstanding shares of Allied pursuant to an Agreement for Sale and Purchase
between Transworld UK and Vanessa Rosamunde Wynn Griffiths and David Wynn
Griffiths (the "Allied Agreement") for a purchase price of 36.2 million pounds
sterling, subject to adjustment as provided in the Allied Agreement. Allied
provides nursing and care giving services to home care patients in the United
Kingdom.
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<PAGE> 15
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following information, filed by the Company with the Securities and
Exchange Commission (the "Commission") pursuant to the Exchange Act, is
incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1996;
2. The Company's Quarterly Report on Form 10-Q for the quarter
ended January 31, 1997, as filed with the Commission on or about March 14,
1997;
3. The Company's Quarterly Report on Form 10-Q for the quarter
ended April 30, 1997, as filed with the Commission on or about June 13, 1997;
4. The Company's Report on Form 8-K dated October 28, 1996,
filed with the Commission on or about November 12, 1996;
5. The Company's Report on Form 8-K dated November 13, 1996,
filed with the Commission on or about November 26, 1996;
6. The Company's Report on Form 8-K dated January 14, 1997
filed with the Commission on or about January 22, 1997;
7. Amendment No. 1 on Form 8-K/A to the Company's Report on
Form 8-K dated January 14, 1997, filed with the Commission on or about March
21, 1997;
8. Amendment No. 2 on Form 8-K/A to the Company's Report on
Form 8-K dated January 14, 1997, filed with the Commission on or about March
27, 1997;
9. The Company's Report on Form 8-K dated April 1, 1997, filed
with the Commission on or about April 16, 1997;
10. The Company's Report on Form 8-K dated April 21, 1997, filed with
the Commission on or about May 6, 1997.
11. Amendment No. 3 on Form 8-K/A to the Company's Report on
Form 8-K dated January 14, 1997, filed with the Commission on or about June 10,
1997;
12. The Company's Report on Form 8-K dated June 27, 1997, filed
with the Commission on June 27, 1997;
13. Amendment No. 1 on Form 8-K/A to the Company's Report on
Form 8-K dated June 27, 1997, filed with the Commission on July 2, 1997;
14. The Company's Report on Form 8-K dated July 3, 1997, filed
with the Commission on July 3, 1997; and
15. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed on November 25, 1992 under the Exchange
Act, including any amendment or report filed for the purpose of updating such
description.
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<PAGE> 16
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act, subsequent to the date of this Prospectus and
prior to the termination of this Offering, shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents.
Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, including any beneficial owner, upon the written or
oral request of such person, a copy of any or all of the foregoing documents
incorporated herein by reference (other than the exhibits to such documents).
Requests should be directed to the Company, 555 Madison Avenue, New York, New
York 10022, Attention: Wayne A. Palladino, telephone number (212) 750-0064.
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<PAGE> 17
DESCRIPTION OF SECURITIES
GENERAL
The Company's authorized capital stock currently consists of 30,000,000
shares of Common Stock and 2,000,000 shares of preferred stock, par value $.01
per share (the "Preferred Stock"). As of June 18, 1997, there were 15,120,660
shares of Common Stock issued and outstanding (held by approximately 206
holders). No shares of Preferred Stock are issued or outstanding.
On December 7, 1992, the Company offered in its initial public offering
1,600,000 Public Units, each Public Unit consisting of one share of Common Stock
and one Public Warrant. As of June 18, 1997, there were 1,100,000 Public
Warrants issued and outstanding.
The Common Stock and the Public Warrants are quoted on the Nasdaq
National Market under the symbols "TWHH" and "TWHHW," respectively.
PREFERRED STOCK
The Preferred Stock may be issued in series, and shares of each series
will have such rights and preferences as are fixed by the Board of Directors in
resolutions authorizing the issuance of that particular series. In designating
any series of Preferred Stock, the Board of Directors may, without further
action by the holders of shares of Common Stock, fix the number of shares
constituting that series and fix the dividend rights, dividend rate, conversion
rights, voting rights (which may be greater or lesser than the voting rights of
the Common Stock), rights and terms of redemption (including any sinking fund
provisions), and the liquidation preferences of the series of Preferred Stock.
Holders of any series of Preferred Stock, when and if issued, may have priority
claims to dividends and to any distributions upon liquidation of the Company,
and other preferences over the holders of the Common Stock.
The Board of Directors may issue a series of Preferred Stock without
action by the shareholders of the Company. The issuance of Preferred Stock may
adversely affect the rights of the holders of shares of Common Stock. For
example, the issuance of Preferred Stock may be used as an "anti-takeover"
device without further action on the part of the shareholders. In addition, the
issuance of Preferred Stock may dilute the voting power of holders of shares of
Common Stock (such as by issuing Preferred Stock with supervoting rights) and
may render more difficult the removal of current management, even if such
removal may be in the shareholders' best interests. The Company has no current
plans to issue any Preferred Stock.
COMMON STOCK
Each share of Common Stock entitles the holder thereof to one vote.
Selling Securityholders of Common Stock have equal ratable rights to dividends
from funds legally available therefor, when, as and if declared by the Board of
Directors and are entitled to share ratably, as a single class, in all of the
assets of the Company available for distribution to holders of Common Stock upon
the liquidation, dissolution or winding up of the affairs of the Company.
Selling Securityholders of Common Stock do not have preemptive, subscription or
conversion rights. There are no redemption or sinking fund provisions for the
benefit of holders of the Common Stock in the Company's Restated Certificate of
Incorporation. All outstanding shares of Common Stock are, and those shares of
Common Stock issuable upon exercise of
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<PAGE> 18
the Selling Securityholders' Warrants, Representative's Warrants, Included
Warrants and Consultant's Warrants hereunder will be, validly issued, fully paid
and non-assessable.
PUBLIC WARRANTS
Each Public Warrant entitles the holder thereof to purchase one share
of Common Stock upon payment of the Public Warrant exercise price of $6.50 per
share. The Public Warrants are exercisable at any time until December 6, 1997,
provided that at such time a current prospectus relating to the Shares is in
effect and the Shares are qualified for sale or exempt from qualification under
applicable state securities laws.
The Public Warrants contain provisions that protect the holders thereof
against dilution by adjustment of the exercise price upon the occurrence of
certain events, such as stock dividends, stock splits, mergers, a sale of
substantially all of the Company's assets and other extraordinary events.
The Company is not required to issue fractional shares of Common
Stock, and in lieu thereof, will make a cash payment based upon the current
market value of such fractional shares. The holders of the Public Warrants do
not possess any rights as shareholders of the Company unless and until they
exercise the Public Warrants. During late 1993 and early 1994, the Company
purchased an aggregate of 500,000 Public Warrants in the open market.
CERTAIN OTHER WARRANTS
Representative's Warrants. In December 1992, in connection with the
Company's initial public offering, the Company issued Representative's Warrants
to purchase Units to the representative of the underwriters in that offering.
Pursuant to the terms thereof, holders of the Representative's Warrants were
entitled to purchase 160,000 shares of Common Stock at an exercise price of
$6.60 per share, and an additional 160,000 shares (through the exercise of the
warrant component of the Units included in the Representative's Warrants) at an
exercise price of $10.40 per share (currently $10.30 per share giving effect to
certain anti-dilution adjustments). As of June 18, 1997, holders of the
Representative's Warrants have purchased 104,872 shares. As a result of the
effect of anti-dilution provisions contained in the Representative's Warrants,
as of June 18, 1997 there were 216,681 shares of Common Stock issuable upon
exercise of the balance of the Representative's Warrants (including through the
exercise of the warrant component of the Units included in the Representative's
Warrants).
The Company has agreed with the holders of the Representative's
Warrants that, until December 14, 1997, upon the written demand of holders
representing a majority of those warrants, it will use its best efforts to
register under the Securities Act on two separate occasions, the securities
issuable upon exercise of those warrants. In addition, until December 7, 1999,
the Company has agreed to provide certain "piggyback" registration rights for
the holders of the Representative's Warrants. Holders of the Representative's
Warrants covering an aggregate of 160,000 shares of Common Stock exercised their
piggyback registration rights, and, as a result such shares were included in
registration statements filed with the Commission in June and August of 1995.
The Registration Statement, of which this Prospectus is a part,
relates, in part, to 77,672 Shares issuable upon exercise of Selling
Securityholders' Warrants, which were issued upon exercise of Representative's
Warrants; 69,000 Shares issuable upon exercise of outstanding Representative's
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<PAGE> 19
Warrants; and 70,009 Shares issuable upon exercise of the Included Warrants,
which are issuable upon exercise of outstanding Representative's Warrants.
HPII Warrants. Pursuant to the Unit Purchase Agreement, the Company
issued the HPII Warrants to purchase an aggregate of 3,000,000 shares of Common
Stock at an exercise price of $12.45 per share. The HPII Warrants expire on the
fifth anniversary from the date of issuance and are non-redeemable by the
Company. The HPII Warrants contain anti-dilution provisions and are subject to a
registration rights agreement. See "Risk Factors -- Shares Eligible for Future
Sale; Outstanding Warrants and Options."
Consultant's Warrants. In connection with certain consulting services
provided to the Company, the Company issued to two consultants, respectively,
Consultant's Warrants to purchase 80,000 Shares at an exercise price of $6.75
per share and Consultant's Warrants to purchase 10,000 Shares at an exercise
price of $7.50 per share. The Registration Statement, of which this Prospectus
is a part, relates, in part, to these 90,000 Shares.
THE COMPANY'S TRANSFER AGENT AND WARRANT AGENT
The Company's Transfer Agent for the Common Stock and Warrant Agent for
the Public Warrants is American Stock Transfer & Trust Company, New York, New
York.
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<PAGE> 20
SELLING SECURITYHOLDERS
The following Selling Securityholders are selling that number of Shares
set forth in the second column opposite each Selling Securityholder's name. The
information contained in this table and the related footnotes is presented as of
the date of this Prospectus and is provided to the best knowledge of the
Company. Except as otherwise described herein, the Selling Securityholders have
not held any position or office or had any other material relationship with the
Company within the past three years. The Shares offered pursuant to this
Prospectus may be offered from time to time by the Selling Securityholders named
below or any nominee. The Selling Securityholders are under no obligation to
sell all or any portion of such Shares, nor are the Selling Securityholders
obligated to sell any such Shares immediately under this Prospectus. The Company
will not receive any proceeds from the sale of Shares by the Selling
Securityholders.
<TABLE>
<CAPTION>
AMOUNT AND
PERCENTAGE
OF SHARES
SHARES OWNED OWNED AFTER
NAME PRIOR TO OFFERING SHARES OFFERED OFFERING
---- ----------------- -------------- ---------
<S> <C> <C> <C>
Michael M. LeConey(1) 25,000 25,000 *
Joseph DeFelice(2) 14,079 14,079 *
Robert Schneider(3) 32,311 32,311 *
Raymond L. Dirks(4) 145,291 145,291 *
Shaher Zaitoun(5) 80,000 80,000 *
The Equity Group, Inc.(6) 10,000 10,000 *
Paribas Principal, Inc.(7) 390,000 390,000 *
</TABLE>
- ---------------
* Because each of the Selling Securityholders may offer all or a portion of
his or its Shares pursuant to this Prospectus, and because this offering
is not being underwritten on a firm commitment basis, there can be no
assurance as to the amount of Shares that will be held by the Selling
Securityholders following the consummation of this offering.
(1) The 25,000 Shares offered hereby are not currently outstanding but are
issuable upon exercise of the Selling Securityholders' Warrants held by
Mr. LeConey at $10.30 per Share.
(2) The 14,079 Shares offered hereby are not currently outstanding but are
issuable upon exercise of the Selling Securityholders' Warrants held by
Mr. DeFelice at $10.30 per Share.
(3) The 32,311 Shares offered hereby are not currently outstanding but are
issuable upon exercise of the Selling Securityholders' Warrants held by
Mr. Schneider at $10.30 per Share.
(4) The 145,291 Shares offered hereby are not currently outstanding. Of such
Shares, 6,282 Shares are issuable upon the exercise of Selling
Securityholders' Warrants at $10.30 per Share, 69,000 Shares are issuable
upon the exercise of Representative's Warrants at $6.60 per Share and
70,009 Shares are issuable upon the exercise of the Included Warrants at
$10.30 per Share, all of which Warrants are held by Mr. Dirks.
(5) Mr. Zaitoun has previously provided consulting services to the Company. In
connection with such services, the Company issued Mr. Zaitoun warrants to
purchase 80,000 Shares at an exercise price of $6.75 per share. The 80,000
shares of Common Stock offered hereby are not currently outstanding but
are issuable upon exercise of the Consultant's Warrants held by Mr.
Zaitoun.
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<PAGE> 21
(6) The Equity Group, Inc. (the "Equity Group") previously provided certain
consulting services to the Company. In connection with such services, the
Company issued to the Equity Group warrants to purchase 10,000 Shares at
an exercise price of $7.50 per Share. The 10,000 Shares of Common Stock
offered hereby are not currently outstanding but are issuable upon
exercise of the Consultants' Warrants held by the Equity Group.
(7) Paribas Principal, Inc. is an affiliate of Banque Paribas which was the
agent of the Company's prior senior secured credit facility.
PLAN OF DISTRIBUTION
The sale of the Shares by the Selling Securityholders may be effected in
transactions on the Nasdaq National Market, in negotiated transactions, or a
combination of such methods of sale. The Shares may be sold at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Securityholders may effect such
transactions by selling the Shares directly to purchasers or through
underwriters or broker-dealers who may act as agents or principals. Such
underwriters or broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Securityholders or the
purchasers of the Shares for whom such underwriters or broker-dealers may act as
agent or to whom they sell as principal, or both (which compensation as to a
particular underwriter or broker-dealer may be in excess of customary
compensation).
Under applicable rules and regulations under the Exchange Act, subject to
certain exceptions, certain persons engaged in a distribution of securities may
not simultaneously engage in market making activities with respect to such
securities for a period of one (1) business day (if such securities have an
average daily trading volume ("ADTV") over a two month period of $100,000 and
the public float value of the issuer's equity securities is $25 million or more)
or five (5) business days (in all other cases), prior to the day of the pricing
of the securities that are the subject of the distribution. Trading in "actively
traded securities" by persons other than the issuer (or selling stockholder) and
affiliates is exempt from such restrictions. "Actively traded securities" are
securities with an ADTV of $1 million issued by issuers with a public float of
at least $150 million. In addition, and without limiting the foregoing, the
Selling Securityholders and any other person participating in such distribution
will be subject to applicable provisions of the Exchange Act, including without
limitation, Rules 100 through 105 of Regulation M promulgated under the Exchange
Act, which provisions may limit the timing of purchases and sales of any of the
Shares by the Selling Securityholders and any other such shareholders.
The Company has agreed to pay for all of the expenses incident to the
registration, offering and sale of the Shares to the public other than
commissions or discounts of underwriters, broker-dealers or agents.
An investor may only purchase the Shares being offered hereby if such
Shares are qualified for sale or are exempt from registration under the
applicable securities laws of the state in which such prospective purchaser
resides. The Company has not registered or qualified the Shares under any state
securities laws and, unless the sale of Shares to a particular investor is
exempt from registration or qualification under applicable state securities
laws, the sale of such Shares to an investor may not be effected until such
Shares have been registered or qualified with applicable state securities
authorities.
-20-
<PAGE> 22
INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted under the Business Corporation Law of the State of New York,
the Company's Restated Certificate of Incorporation provides that a director of
the Company will not be personally liable to the Company or its shareholders for
monetary damages for breach of a fiduciary duty owed to the Company or its
shareholders. By its terms and in accordance with the law of the State of New
York, however, this provision does not eliminate or otherwise limit the
liability of a director of the Company for any breach of duty based upon (i) an
act or omission (A) resulting from acts committed in bad faith or involving
intentional misconduct or involving a knowing violation of law or (B) from which
the director personally derived a financial benefit to which he was not legally
entitled, or (ii) an improper declaration of dividends or purchases of the
Company's securities.
The Company's Restated Certificate of Incorporation and By-Laws provide
that the Company shall indemnify its directors and officers to the fullest
extent permitted by New York law. The Company also has entered into
indemnification agreements with each of its directors and officers.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that, in the opinion of the Commission, such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
LEGAL MATTERS
Certain legal matters in connection with this Offering will be passed upon
for the Company by Baer Marks & Upham LLP, New York, New York. Leslie J.
Levinson, a partner in such firm, is the Secretary of the Company. In addition,
Mr. Levinson holds options to purchase an aggregate of 19,781 shares of Common
Stock.
EXPERTS
The consolidated financial statements and financial statement schedule of
the Company as of October 31, 1996 and 1995 and for the three years in the
period ended October 31, 1996, included in the Company's 1996 Annual Report on
Form 10-K incorporated by reference herein, have been audited by Coopers &
Lybrand L.L.P. ("Coopers & Lybrand"), independent accountants, as set forth in
their report thereon. The Company's consolidated financial statements and
financial statement schedule are incorporated herein in reliance on the report
of Coopers & Lybrand, on the authority of said firm as experts in accounting and
auditing.
The financial statements and schedules of HMI, incorporated by reference
in this Prospectus, have been audited by BDO Seidman, LLP, independent certified
public accountants, to the extent and for the periods set forth in their reports
(which contain an explanatory paragraph regarding HMI's ability to continue as a
going concern) incorporated herein by reference, and are incorporated herein in
reliance upon such reports given upon the authority of said firm as experts in
auditing and accounting.
-21-
<PAGE> 23
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy statements and other
information with the Commission. The reports, proxy statements and other
information filed by the Company with the Commission can be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices at 7 World Trade Center, New York, New York 10048, and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material also can be
obtained by mail from the public reference facilities of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition,
material filed by the Company also is available for inspection at the offices of
the National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006. The Company's Common Stock and Public Warrants are
quoted on the Nasdaq National Market. See "Incorporation of Certain Documents by
Reference" and "Description of Securities."
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the shares of Common Stock offered
by this Prospectus via the Electronic Data Gathering Analysis and Retrieval
system ("EDGAR") and may be found on the Commission's web site at
http://www.sec.gov. This Prospectus does not contain all the information set
forth in or annexed as exhibits to the Registration Statement. For further
information with respect to the Company and the shares of Common Stock offered
by this Prospectus, reference is made to the Registration Statement and to the
financial statements, schedules and exhibits filed as part hereof or
incorporated by reference herein. Copies of the Registration Statement, together
with such financial statements, schedules and exhibits, may be obtained from the
public reference facilities of the Commission at the addresses listed above,
upon payment of the charges prescribed therefor by the Commission. Electronic
filings made via EDGAR are publicly available through the Commission's web site
referenced above. Statements contained in this Prospectus as to the contents of
any contract or other document referred to are not necessarily complete and, in
each instance, reference is made to the copy of such contract or other
documents, each such statement being qualified in its entirety by such
reference. Copies of such contracts or other documents, to the extent that they
are exhibits to this Registration Statement, may be obtained from the public
reference facilities of the Commission, upon the payment of the charges
prescribed therefor by the Commission.
-22-
<PAGE> 24
TRANSWORLD HEALTHCARE, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
Pro Forma Combined Balance Sheet - April 30, 1997.................................................. F-4
Pro Forma Condensed Combined Statement of Operations - Year Ended October 31, 1996................. F-5
Pro Forma Condensed Combined Statement of Operations - Six Months Ended April 30, 1997............. F-6
Notes to Pro Forma Combined Balance Sheet.......................................................... F-7
Notes to Pro Forma Condensed Combined Statement of Operations...................................... F-9
</TABLE>
F-1
<PAGE> 25
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Combined Financial Statements give
effect to: (A) the Company's acquisition on November 13, 1996, of Health
Management, Inc.'s ("HMI") senior secured indebtedness (the "Indebtedness")
under the credit agreement between HMI and its senior lenders (the "HMI Credit
Agreement") for $21,262,500; (B) the Company's acquisition on January 14, 1997
of 8,964,292 newly issued shares (the "Newly Issued Shares") of HMI's common
stock, representing approximately 49% of HMI's outstanding common stock (after
giving effect to the purchase of the Newly Issued Shares) for $1 per share or
$8,964,292, which actual cash outlay was reduced by $4,649,685, advanced to HMI
for working capital purposes between November 12, 1996 and January 14, 1997;
(C) borrowings under the Company's $100 million senior secured revolving credit
facility (the "Credit Facility") to fund the transactions ((A) through (C) are
collectively referred to as the "Initial Transactions"); (D) the proposed
acquisition of the remaining 51% of HMI's outstanding common stock not already
owned by the Company (9,330,182 shares for $.30 per share or $2,799,055; (E)
the payment of the settlement of certain shareholder litigation of HMI; (F) the
issuance of 1,234,176 shares of the Company's Common Stock to Hyperion Partners
II L.P. ("HPII") as consideration for the acquisition of certain trade payables
of HMI previously acquired by HPII (subject to the approval of the Company's
shareholders) ((D) through (F) are collectively referred to as the "Subsequent
Transactions") and (G) the sale on April 21, 1997 of 898,877 shares of the
Company's Common Stock to HPII for a purchase price of $11.125 per share.
The Unaudited Pro Forma Combined Balance Sheet, as adjusted, presents
the Company's historical unaudited balance sheet as of April 30, 1997 and the
Subsequent Transactions as if they had occurred on April 30, 1997. The Pro
Forma Balance Sheet data for HMI was derived from the HMI Condensed
Consolidated Balance Sheet (unaudited) as of January 31, 1997.
The Unaudited Pro Forma Condensed Combined Statement of Operations for
the year ended October 31, 1996 presents the historical operations of the
Company and the Initial Transactions as if they had occurred on November 1,
1995. The Unaudited Pro Forma Condensed Combined Statement of Operations for
the year ended October 31, 1996, as adjusted, reflects the Subsequent
Transactions and the sale of the 898,877 shares to HPII as if they had occurred
on November 1, 1995. The equity in losses and the Pro Forma Statement of
Operations of HMI are derived from HMI's historical Statement of Operations for
the twelve months ended October 31, 1996 (unaudited). Such statement was
derived by taking HMI's audited historical Statement of Operations for the year
ended April 30, 1996, subtracting the historical operations for the six months
ended October 31, 1995 and adding the historical operations for the six months
ended October 31, 1996.
The Unaudited Pro Forma Condensed Combined Statement of Operations for
the six months ended April 30, 1997 presents the historical operations of the
Company (unaudited) and the Initial Transactions as if they had occurred on
November 1, 1995. The Unaudited Pro Forma Condensed Combined Statement of
Operations for the six months ended April 30, 1997, as adjusted, reflects the
subsequent Transactions and the sale of the 898,877 shares to HPII as if they
had occurred on November 1, 1995. The equity in losses and the Pro Forma
Statement of Operations of HMI are derived from HMI's historical Statement of
Operations (unaudited) for the six months ended January 31, 1997.
F-2
<PAGE> 26
The acquisition of the Newly Issued Shares is accounted for under the
equity method of accounting which will be reversed and fully consolidated upon
the acquisition of the remaining 51% of HMI. Pro forma adjustments include fair
value adjustments required under purchase accounting for the acquired assets
and liabilities of HMI and are subject to revision. The final allocation of
purchase price and the resulting amortization expense in the accompanying
Unaudited Pro Forma Condensed Combined Statement of Operations will differ
from the preliminary estimates due to the final allocation being based on: (i)
actual closing date amounts of assets and liabilities and (ii) final appraised
values of assets and liabilities.
The Company plans to undertake a detailed review of productivity
enhancing opportunities, as well as the carrying value of various assets, at
certain operations and subsidiaries of HMI, accordingly, goodwill associated
with the acquisition will be reviewed for potential impairment, if any. The
Company anticipates that this review may result in restructuring and other
charges in the latter part of 1997. Based on the preliminary status of this
review, it is not currently practicable to estimate the amount of charges, if
any, that may result from these reviews.
Pro forma adjustments are based on Management's estimates of the
financial effects of the Initial and Subsequent Transactions on the operations
of the combined companies for the periods presented. The Unaudited Pro Forma
Combined Financial Statements should be read in conjunction with the
accompanying notes and the Company's historical consolidated financial
statements and notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the historical consolidated
financial statements of HMI and notes thereto which are incorporated by
reference or included in this registration statement on Form S-3. The Unaudited
Pro Forma Combined Statement of Operations does not purport to present the
results of operations of the Company as if the transactions assumed herein
occurred at the beginning of fiscal 1996, nor is it indicative of the results
of operations which may be achieved in the future.
F-3
<PAGE> 27
TRANSWORLD HEALTHCARE, INC.
PRO FORMA COMBINED BALANCE SHEET
April 30, 1997
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Health
Transworld Management, Transworld
HealthCare, Inc. Inc. HealthCare, Inc.
April 30, January 31, Pro Forma Pro Forma
1997 1997 Adjustments As Adjusted
---- ---- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and temporary investments ................... $ 37,263 $ 3,122 $ (7,931) (a) $ 32,454
Accounts receivable,less allowance
for doubtful accounts................................. 32,599 28,377 - 60,976
Inventories........................................... 1,985 8,325 - 10,310
Prepaid income taxes.................................. 62 1,327 - 1,389
Deferred income taxes................................. - 2,917 (2,917) (b) -
Prepaid expenses and other current assets............. 7,337 142 - 7,479
------------ ------------- ------------ ----------
Total current assets.................................. 79,246 44,210 (10,848) 112,608
Property & equipment, net............................. 4,084 3,337 - 7,421
Advances to and investment in HMI..................... 31,508 - (31,508) (c) -
Intangible assets, net of accumulated amortization... 43,658 30,767 (5,021) (d) 69,404
Other assets.......................................... 7,001 141 - 7,142
------------- ------------- ------------ ----------
Total assets.......................................... $ 165,497 $ 78,455 $ (47,377) $ 196,575
============= ============= ============ ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt, including
obligations under capital leases and amounts
to affiliates......................................... $ 37 $ 31,709 $ (28,350) (e) $ 3,396
Accounts payable, including amounts to affiliates..... 4,401 20,284 (15,197) (f) 9,488
Accrued expenses and other current liabilities........ 5,607 3,205 2,000 (g) 10,812
Accrued unusual charges and settlement costs.......... - 8,508 (4,550) (h) 3,958
Acquisitions payable.................................. 96 - - 96
------------ ------------- ------------ ----------
Total current liabilities.................... 10,141 63,706 (46,097) 27,750
Long-term debt, including obligations
under capital leases.................................. 35,494 645 - 36,139
Deferred income taxes and other....................... 651 - - 651
------------ ------------- ------------ ----------
Total liabilities..................................... 46,286 64,351 (46,097) 64,540
------------ ------------- ------------ ----------
Stockholders' equity:
Preferred stock, $.01 par value;
authorized 2,000 shares, issued
outstanding-none...................................... - - - -
Common stock, $.01 par value;
authorized 30,000 shares, issued
and outstanding -15,104 shares........................ 151 549 (537) (i) 163
Additional paid-in capital............................ 112,799 45,958 (33,783) (j) 124,974
Retained earnings..................................... 6,261 (32,403) 33,040 (k) 6,898
---------- ------------- ------------ ----------
Total stockholders' equity............................ 119,211 14,104 (1,280) 132,035
---------- ------------- ------------ ----------
Total liabilities and stockholders' equity............ $ 165,497 $ 78,455 $ (47,377) $ 196,575
========== ============= ============ ==========
</TABLE>
F-4
<PAGE> 28
TRANSWORLD HEALTHCARE, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
Year Ended October 31, 1996
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Year Ended
October 31,
1996
Transworld Pro Forma
HealthCare, Inc. Adjustments
---------------- -----------
<S> <C> <C>
Net revenues . . . . . . . . . . . . . . . . . . . $ 76,304 $ -
Cost of revenues . . . . . . . . . . . . . . . . . 34,680 -
---------------- ----------------
Gross profit . . . . . . . . . . . . . . . . . . . 41,624 -
Selling, general and administrative
expenses . . . . . . . . . . . . . . . . . . . 33,552 -
Non-recurring charges . . . . . . . . . . . . . . - -
---------------- ----------------
Operating income (loss) . . . . . . . . . . . . . 8,072 -
Settlement and other costs . . . . . . . . . . . . - -
Interest income . . . . . . . . . . . . . . . . . (75) (1,410) (a)
Interest expense . . . . . . . . . . . . . . . . 4,427 2,116 (b)
Equity in losses of HMI . . . . . . . . . . . . . - 11,235 (c)
---------------- ----------------
Income (loss) before income taxes and
extraordinary loss . . . . . . . . . . . . . . 3,720 (11,941)
Provision (benefit) for income taxes . . . . . . . 1,702 (323) (d)
---------------- ----------------
Income (loss) before extraordinary loss $ 2,018 $ (11,618)
================ ================
Income per share of common stock
before extraordinary loss:
Primary . . . . . . . . . . . . . . . . . . . $ 0.26 -
Fully diluted . . . . . . . . . . . . . . . . $ 0.26 -
Weighted average number of shares
outstanding:
Primary . . . . . . . . . . . . . . . . . . . 7,741 -
Fully diluted . . . . . . . . . . . . . . . . 7,833 -
</TABLE>
<TABLE>
<CAPTION>
Twelve Months
Ended
October 31,
1996
Transworld Health Transworld
HealthCare, Inc. Management, Pro Forma HealthCare, Inc
Pro Forma Inc. Adjustments As Adjusted
--------- ---- ----------- -----------
<S> <C> <C> <C> <C>
Net revenues . . . . . . . . . . . . . . . . . . . . . $ 76,304 $ 161,554 $ - $ 237,858
Cost of revenues . . . . . . . . . . . . . . . . . . . 34,680 127,892 - 162,572
--------- ------------ --------- ---------
Gross profit . . . . . . . . . . . . . . . . . . . . . 41,624 33,662 - 75,286
Selling, general and administrative
expenses . . . . . . . . . . . . . . . . . . . . . 33,552 45,566 (1,113) (e) 78,005
Non-recurring charges . . . . . . . . . . . . . . . . . - 7,000 - 7,000
--------- ------------ --------- ---------
Operating income (loss) . . . . . . . . . . . . . . . . 8,072 (18,904) 1,113 (9,719)
Settlement and other costs . . . . . . . . . . . . . . - 7,200 - 7,200
Interest income . . . . . . . . . . . . . . . . . . . . (1,485) (38) 1,410 (f) (113)
Interest expense . . . . . . . . . . . . . . . . . . . 6,543 2,917 (2,457) (g) 7,003
Equity in losses of HMI . . . . . . . . . . . . . . . . 11,235 - (11,235) (h) -
--------- ------------ --------- ---------
Income (loss) before income taxes and
extraordinary loss . . . . . . . . . . . . . . . . (8,221) (28,983) 13,395 (23,809)
Provision (benefit) for income taxes . . . . . . . . . 1,379 (3,495) 5,358 (i) 3,242
--------- ------------ --------- ---------
Income (loss) before extraordinary loss . . . $ (9,600) $ (25,488) $ 8,037 $ (27,051)
========= ============ ========= =========
Income per share of common stock
before extraordinary loss:
Primary . . . . . . . . . . . . . . . . . . . . . . $ (1.24) - - $ (2.74)
Fully diluted . . . . . . . . . . . . . . . . . . . $ (1.23) - - $ (2.71)
Weighted average number of shares
outstanding:
Primary . . . . . . . . . . . . . . . . . . . . . . 7,741 - 2,133 (j) 9,874
Fully diluted . . . . . . . . . . . . . . . . . . . 7,833 - 2,133 (k) 9,966
</TABLE>
F-5
<PAGE> 29
TRANSWORLD HEALTHCARE, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
Six Months Ended April 30, 1997
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
April 30,
1997 Transworld
Transworld Pro Forma HealthCare, Inc.
HealthCare, Inc. Adjustments Pro Forma
---------------- ----------- ---------
<S> <C> <C> <C>
Net revenues . . . . . . . . . . . . . . . . . . . . . $ 40,966 $ - $ 40,966
Cost of revenues . . . . . . . . . . . . . . . . . . . 19,739 - 19,739
---------- ------------- ------------
Gross profit . . . . . . . . . . . . . . . . . . . . . 21,227 - 21,227
Selling, general and administrative
expenses . . . . . . . . . . . . . . . . . . . . . 17,004 - 17,004
Non-recurring charges . . . . . . . . . . . . . . . . . - - -
---------- ------------- ------------
Operating income (loss) . . . . . . . . . . . . . . . . 4,223 - 4,223
Settlement and other costs . . . . . . . . . . . . . . - - -
Interest income . . . . . . . . . . . . . . . . . . . . (1,108) 301 (a) (807)
Interest expense . . . . . . . . . . . . . . . . . . . 2,113 144 (b) 2,257
Equity in losses of HMI . . . . . . . . . . . . . . . . 296 13,388 (c) 13,684
---------- ------------- ------------
Income (loss) before income taxes and
extraordinary loss. . . . . . . . . . . . . . . . . 2,922 (13,833) (10,911)
Provision (benefit) for income taxes . . . . . . . . . 1,566 (196) (d) 1,370
---------- ------------- ------------
Income (loss) before extraordinary loss . . . $ 1,356 $ (13,637) $ (12,281)
========== ============= ============
Income per share of common stock
before extraordinary loss:
Primary . . . . . . . . . . . . . . . . . . . . . . $ 0.12 - $ (1.08)
Fully diluted . . . . . . . . . . . . . . . . . . . $ 0.12 - $ (1.08)
Weighted average number of shares
outstanding:
Primary . . . . . . . . . . . . . . . . . . . . . . 11,360 - 11,360
Fully diluted . . . . . . . . . . . . . . . . . . . 11,360 - 11,360
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended
January 31,
1997
Health Transworld
Management, Pro Forma HealthCare, Inc
Inc. Adjustments As Adjusted
---- ----------- -----------
<S> <C> <C> <C>
Net revenues . . . . . . . . . . . . . . . . . . . . . $ 79,507 $ - $ 120,473
Cost of revenues . . . . . . . . . . . . . . . . . . . 65,364 - 85,103
----------- -------------- ------------
Gross profit . . . . . . . . . . . . . . . . . . . . . 14,143 - 35,370
Selling, general and administrative
expenses . . . . . . . . . . . . . . . . . . . . . 30,626 (1,400)(e) 46,230
Non-recurring charges . . . . . . . . . . . . . . . . . 4,213 - 4,213
----------- -------------- ------------
Operating income (loss) . . . . . . . . . . . . . . . . (20,696) 1,400 (15,073)
Settlement and other costs . . . . . . . . . . . . . . 7,375 - 7,375
Interest income . . . . . . . . . . . . . . . . . . . . - 705 (f) (102)
Interest expense . . . . . . . . . . . . . . . . . . . 2,014 (1,466)(g) 2,805
Equity in losses of HMI . . . . . . . . . . . . . . . . - (13,388)(h) -
----------- -------------- ------------
Income (loss) before income taxes and
extraordinary loss. . . . . . . . . . . . . . . . . (30,085) 15,549 (25,151)
Provision (benefit) for income taxes . . . . . . . . . (25) 6,220 (i) 7,565
----------- -------------- ------------
Income (loss) before extraordinary loss . . . $ (30,060) $ 9,329 $ (32,716)
=========== ============== ============
Income per share of common stock
before extraordinary loss:
Primary . . . . . . . . . . . . . . . . . . . . . . - - $ (2.43)
Fully diluted . . . . . . . . . . . . . . . . . . . - - $ (2.43)
Weighted average number of shares
outstanding:
Primary . . . . . . . . . . . . . . . . . . . . . . - 2,088 (j) 13,448
Fully diluted . . . . . . . . . . . . . . . . . . . - 2,088 (k) 13,448
</TABLE>
F-6
<PAGE> 30
TRANSWORLD HEALTHCARE, INC.
NOTES TO PRO FORMA COMBINED BALANCE SHEET
April 30, 1997
(In thousands, except per share data)
(Unaudited)
<TABLE>
<S> <C> <C>
(a) Cash and temporary investments:
To record acquisition of 9,329 shares of HMI's common
stock for $.30 per share.................................. $ (2,799)
To record payment of settlement of certain shareholder
litigation................................................ (1,350)
To record payment of acquisition related costs (legal,
accounting and investment banking fees)................... (1,750)
To record payments on the intercompany debt from HMI to
the Company in March 1997................................. (2,032)
---------
$ (7,931)
=========
(b) Deferred income taxes:
To reverse HMI's historical deferred income taxes........... $ (2,917)
=========
(c) Advances to and investment in HMI:
To eliminate advances to and investments in HMI............. $ (31,508)
=========
(d) Intangible assets, net of accumulated amortization:
To record goodwill on the acquisition of HMI as follows:
Purchase price in cash for 8,964 (at $1.00 per share)
of newly issued shares of HMI representing 49% of
HMI purchased in January 1997........................... $ 8,964
Purchase price in cash for remaining 9,329 shares of
HMI (at $.30 per share) representing 51% of HMI
not already owned by the Company........................ 2,799
Acquisition related costs (legal, accounting and
investment banking fees; legal and tax contingencies)... 4,500
Historical liabilities assumed............................ 64,351
Fair value adjustments to historical liabilities assumed.. (10,097)
---------
Total cost of acquisition........................... 70,517
Less:
Historical assets....................................... 78,455
Fair value adjustments to historical assets (goodwill
and deferred taxes)................................... (33,684)
---------
Goodwill on the acquisition of HMI (thirty year
amortization)..................................... $ 25,746
=========
Historical HMI goodwill..................................... $ (30,767)
Acquired goodwill........................................... 25,746
---------
Adjustment to reduce goodwill to calculated amount.......... $ (5,021)
=========
</TABLE>
The Company has selected the thirty-year amortization period for goodwill based
on the likely period of time over which the related economic benefit will be
realized. The Company believes its estimated goodwill life is reasonable given
the continuing movement of patient care to noninstitutional settings, expanding
demand due to demographic trends, the emphasis of the Company on establishing
significant coverage in its local and regional markets, the consistent practice
with other alternate site health care companies and other factors. At the
balance sheet date, management assesses whether there has been permanent
impairment in the value of goodwill and the amount of any impairment by
comparing anticipated undiscounted future cash flows from operating activities
with the carrying value of goodwill. The factors considered by management in
deriving future cash flows include current operating results, trends and
prospects of acquired businesses as well as the effect of demand, competition,
market and other economic factors.
The Company plans to undertake a detailed review of productivity enhancing
opportunities, as well as the carrying value of various assets, at certain
operations and subsidiaries of HMI, accordingly, goodwill associated with the
acquisition will be reviewed for potential impairment, if any. The Company
anticipates that this review may result in restructuring and other charges in
the latter part of 1997. Based on the preliminary status of this review, it is
not currently practicable to estimate the amount of charges, if any, that may
result from these reviews.
F-7
<PAGE> 31
TRANSWORLD HEALTHCARE, INC.
NOTES TO PRO FORMA COMBINED BALANCE SHEET - (Continued)
April 30, 1997
(In thousands, except per share data)
(Unaudited)
<TABLE>
<S> <C> <C>
(e) Current portion of long-term debt, including obligations under capital leases and
amounts to affiliates:
To record fair value adjustment (discount) to HMI's senior secured indebtedness............... $ (7,087)
To record the elimination of intercompany debt between HMI and the Company, net of discount... (21,263)
--------
$(28,350)
========
(f) Accounts payable, including amounts to affiliates:
To record fair value adjustment (discount) to certain trade payables of HMI previously
acquired by HPII and sold to the Company.................................................... $ (3,010)
To record the elimination of intercompany trade payables between HMI and the Company, net of
discount.................................................................................... (12,187)
--------
$(15,197)
========
(g) Accrued expenses and other current liabilities:
Accrual of acquisition related costs (legal and tax contingencies)............................ $ 2,000
========
(h) Accrued unusual charges and settlement costs:
To record payment of settlement of certain shareholder litigation............................. $ (4,550)
========
(i) Common stock:
To eliminate HMI's historical common stock.................................................... $ (549)
To record the issuance of 1,234 shares of the Company's Common Stock to HPII ($0.01 per value)
as consideration for the acquisition of certain trade payables of HMI's previously acquired
by HPII..................................................................................... 12
--------
$ (537)
========
(j) Additional paid-in capital:
To eliminate HMI's additional paid-in capital................................................. $(45,958)
To record the issuance of 1,234 shares of the Company's Common Stock to HPII ($12,187-$12).... 12,175
--------
$(33,783)
========
(k) Retained earnings:
To eliminate HMI's historical retained deficit................................................ $ 32,403
To reverse equity in losses in HMI............................................................ 637
--------
$ 33,040
========
</TABLE>
F-8
<PAGE> 32
TRANSWORLD HEALTHCARE, INC.
NOTES TO PRO FORMA CONDENSED
COMBINED STATEMENT OF OPERATIONS
For the Year Ended October 31, 1996
(In thousands, except per share data)
(Unaudited)
<TABLE>
<S> <C> <C>
(a) Interest income:
To book adjustments to interest income to reflect:
Interest earned on HMI's senior secured indebtedness under the HMI Credit Agreement, at
face value ($28,350) at 9.75%, net of inter-company interest income (49%)..................... $ (1,410)
========
A change in interest rates by one-eighth of a percent (1/8%) would impact interest income by $18.
(b) Interest expense:
To book adjustments to interest expense to reflect interest charged on pro forma debt under the
Credit Facility as follows:
Interest expense on cash borrowed to acquire HMI's senior secured indebtedness ($21,263)
at 7% (rate at January 31, 1997, net of .5% unused commitment fee)............................ $ 1,488
Interest expense on cash borrowed to acquire 8,964 shares of HMI's common stock for a
cash purchase price of $8,964 at 7% (net of .5% unused commitment fee)........................ 628
--------
$ 2,116
========
A change in interest rates by one-eighth of a percent (1/8%) would impact interest expense by $38.
(c) Equity in losses of HMI:
To record the amortization of goodwill associated with the stock purchase of 49% of HMI's outstanding
common stock as follows:
Purchase price in cash for 8,964 (at $1.00 per share) of newly issued shares of HMI............. $ 8,964
Acquisition related costs (legal, tax and accounting contingencies)............................. 1,225
Historical liabilities assumed (49%)............................................................ 31,532
Fair value adjustments to historical liabilities assumed (49%).................................. (3,473)
--------
Total cost of acquisition............................................................... 38,248
Less:
Historical assets (49%)................................................................. 38,443
Fair value adjustments of historical assets (goodwill and deferred taxes) (49%)......... (16,505)
--------
Goodwill associated with the stock purchase of 49% of HMI's outstanding common stock............ $ 16,310
========
Amortization of goodwill straight line over thirty years................................................ $ 544
Elimination of HMI's goodwill amortization (49%)........................................................ (595)
To record 49% of HMI's ($25,488) historical net loss for the twelve months ended October 31, 1996....... 12,489
To record 49% of pro forma adjustments to HMI's expenses (net of tax effect using HMI's historical
effective tax rate for the period of 12%) as follows:
Elimination of transaction related legal expenses (49%)......................................... (11)
Elimination of inter-company interest expense (49%) on HMI's senior secured indebtedness........ (1,192)
--------
$ 11,235
========
(d) Provision (benefit) for taxes:
Adjustments to tax expense on net taxable income attributable to pro forma adjustments and to reflect a
consolidated effective tax rate indicative of the combined companies ($706 at 45.8%).................. $ (323)
========
</TABLE>
F-9
<PAGE> 33
TRANSWORLD HEALTHCARE, INC.
NOTES TO PRO FORMA CONDENSED
COMBINED STATEMENT OF OPERATIONS - (Continued)
For the Year Ended October 31, 1996
(In thousands, except per share data)
(Unaudited)
<TABLE>
<S> <C> <C>
(e) Selling, general and administrative expenses:
To record the amortization of goodwill associated with the acquisition of HMI ($25,746) straight line
over thirty years ................................................................................. $ 858
To record pro forma adjustments to HMI's selling, general and administrative expenses as follows:
Elimination of historical goodwill amortization.................................................... (1,214)
Elimination of transaction related legal expenses.................................................. (26)
Elimination of duplicate board of directors expenses............................................... (166)
Elimination of chief executive officer expenses.................................................... (350)
Elimination of duplicate public company expenses................................................... (215)
--------
$ (1,113)
========
(f) Interest income:
To reverse pro forma interest income earned on HMI's senior secured indebtedness, net of inter-
company interest income (49%)..................................................................... $ 1,410
========
A change in interest rates by one-eighth of a percent (1/8%) would impact interest income by $18.
(g) Interest expense:
To eliminate interest expense on HMI's senior secured indebtedness.................................... $ (2,457)
========
A change in interest rages by one-eighth of a percent (1/8%) would impact interest expense by $35.
(h) Equity in losses of HMI:
To reverse pro forma equity in losses of HMI.......................................................... $(11,235)
========
(i) Provision (benefit) for taxes:
Adjustment to tax expense attributable to pro forma adjustments at the statutory rate of 40%........... $ 5,358
========
(j) Primary earnings per share is calculated on the historical 7,741 weighted average shares of common
stock outstanding plus 899 additional shares sold and 1,234 additional shares issued to HPII...... 2,133 shares
========
(k) Fully diluted earnings per share is calculated on the historical 7,833 weighted average shares of
common stock outstanding plus 899 additional shares sold and 1,234 additional shares issued
to HPII............................................................................................ 2,133 shares
========
</TABLE>
The Company plans to undertake a detailed review of productivity
enhancing opportunities, as well as the carrying value of various assets, at
certain operations and subsidiaries of HMI, accordingly, goodwill associated
with the acquisition will be reviewed for potential impairment, if any. The
Company anticipates that this review may result in restructuring and other
charges in the latter part of 1997. Based on the preliminary status of this
review, it is not currently practicable to estimate the amount of charges, if
any, that may result from this reviews.
F-10
<PAGE> 34
TRANSWORLD HEALTHCARE, INC.
NOTES TO PRO FORMA CONDENSED
COMBINED STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1997
(In thousands, except per share data)
(Unaudited)
<TABLE>
<S> <C> <C>
(a) Interest income:
To book adjustments to interest income to reflect:
Interest earned on HMI's senior secured indebtedness under the HMI Credit Agreement, at
face value ($28,350) at 9.75% from November 1, 1996 through November 12, 1996 .............. $ (92)
Elimination of interest earned on cash loaned to HMI for working capital purposes ($4,649)
at 9.75% ................................................................................... 54
Elimination of inter-company interest (49%) of HMI's senior secured indebtedness ............... 339
-------
$ 301
=======
A change in interest rates by one-eighth of a percent (1/8%) would impact interest income by $9.
(b) Interest expense:
To book adjustments to interest expense to reflect interest charged on pro forma debt under the
Credit Facility from November 1, 1996 to the date of actual borrowing as follows:
Interest expense on cash borrowed to acquire HMI's senior secured indebtedness ($21,263)
at 7.16% (rate at April 30, 1997, net of .5% unused commitment fee) .................. $ 51
Interest expense on cash borrowed to loan to HMI for working capital purposes ($4,649)
at 7.16% (net of .5% unused commitment fee) ............................................ 29
Interest expense on cash borrowed to acquire 8,964 shares of HMI's common stock for a
cash purchase price of $8,964, which actual cash outlay was reduced by the $4,649
advanced for working capital purposes ($4,415) at 7.16% (net of .5% unused commitment
fee .................................................................................... 64
-------
$ 144
=======
A change in interest rated by one-eighth of a percent (1/8%) would impact interest expense by $19.
(c) Equity in losses of HMI:
To record the amortization of goodwill associated with the stock purchase of 49% of HMI's
outstanding common stock as follows:
Purchase price in cash for 8,964 (at $1.00 per share) of newly issued shares of HMI ........ $ 8,964
Acquisition related costs (legal, tax and accounting contingencies) ........................ 1,225
Historical liabilities assumed (49%) ....................................................... 31,532
Fair value adjustments to historical liabilities assumed (49%) ............................. (3,473)
-------
Total cost of acquisition .............................................................. 38,248
Less:
Historical assets (49%) ................................................................ 38,443
Fair value adjustments to historical assets (goodwill and deferred taxes) (49%) ........ (16,505)
-------
Goodwill associated with the stock purchase of 49% of HMI's outstanding common
stock .......................................................................... $16,310
=======
To record the following for the three months ended January 31, 1997:
Amortization of goodwill straight line over thirty years ....................................... $ 136
Elimination of HMI's goodwill amortization (49%) ............................................... (145)
Elimination of inter-company interest expense (49%) on HMI's senior secured indebtedness ....... (339)
To reverse 49% of HMI's ($1,299) historical net loss for the three months ended April 30, 1997 ..... (637)
To record 49% of HMI's ($30,060) historical net loss for the six months ended January 31, 1997 ..... 14,729
To record 49% of pro forma adjustments to HMI's expenses (not tax effected as HMI historically
booked no tax provision for the period) for the six months ended January 31, 1997 as follows:
Elimination of transaction related legal and accounting expenses (49%) ..................... (37)
Elimination of transaction related payments to executives (49%) ............................ (74)
Elimination of transaction related investment banking fees (49%) ........................... (245)
-------
$13,388
=======
</TABLE>
F-11
<PAGE> 35
TRANSWORLD HEALTHCARE, INC.
NOTES TO PRO FORMA CONDENSED
COMBINED STATEMENT OF OPERATIONS - (Continued)
For the Six Months Ended April 30, 1997
(In thousands, except per share data)
(Unaudited)
<TABLE>
<S> <C> <C>
(d) Provision (benefit) for taxes:
Adjustment to tax expense on net taxable income attributable to pro forma adjustments and to reflect a
consolidated effective tax rate indicative of the combined companies ($445 at 44%) .................. $ (196)
=========
(e) Selling, general and administrative expenses:
To record the amortization of goodwill associated with the acquisition of HMI ($25,746) straight line
over thirty years ................................................................................... $ 429
To record pro forma adjustments to HMI's selling, general and administrative expenses as follows:
Elimination of historical goodwill amortization ..................................................... (592)
Elimination of transaction related legal expenses ................................................... (79)
Elimination of transaction related payments to executives ........................................... (150)
Elimination of transaction related investment banking fees .......................................... (500)
Elimination of duplicate board of directors expenses ................................................ (200)
Elimination of chief executive officer expenses ..................................................... (204)
Elimination of duplicate public company expenses .................................................... (104)
---------
$ (1,400)
=========
(f) Interest income:
To eliminate remaining 51% of inter-company interest income earned (actual and pro forma) on HMI's
senior secured indebtedness under the HMI Credit Agreement, at face value ($28,350) at 9.75% ........ $ 705
=========
A change in interest rates by one-eighth of a percent (1/8%) would impact interest income by $9.
(g) Interest expense:
To eliminate inter-company interest expense on HMI's senior secured indebtedness under the HMI
Credit Agreement, at face value ($28,350) and on cash loaned to HMI for working capital purposes..... $ (1,466)
=========
A change in interest rates by one-eighth of a percent (1/8%) would impact interest income by $21.
(h) Equity in losses of HMI:
To reverse pro forma equity in losses of HMI ............................................................. $(13,388)
=========
(i) Provision (benefit) for taxes:
Adjustment to tax expense on net taxable income attributable to pro forma adjustments and to reflect a
consolidated effective tax rate indicative of the combined companies ................................ $ 6,220
=========
(j) Primary earnings per share is calculated on the historical 11,083 weighted average shares of common
stock outstanding plus 1,234 additional shares issued to HPII and 854 additional shares sold to HPII
on April 21, 1997 as if outstanding for the full six months ended April 30, 1997 .................... 2,088 shares
=========
(k) Fully diluted earnings per share is calculated on the historical 11,085 weighted average shares of common
stock outstanding plus 1,234 additional shares issued to HPII and 854 additional shares sold to HPII
on April 21, 1997 as if outstanding for the full six months ended April 30, 1997 .................... 2,088 shares
=========
The Company plans to undertake a detailed review of productivity enhancing opportunities, as well as the
carrying value of various assets, at certain operations and subsidiaries of HMI, accordingly, goodwill
associated with the acquisition will be reviewed for potential impairment, if any. The Company anticipates
that this review may result in restructuring and other charges in the latter part of 1997. Based on the
preliminary status of this review, it is not currently practicable to estimate the amount of charges,
if any, that may result from these reviews.
</TABLE>
F-12
<PAGE> 36
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
AN IMPRESSION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
---------------------------
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
Risk Factors......................................................................................................2
Use of Proceeds..................................................................................................10
The Company......................................................................................................11
Recent Developments..............................................................................................11
Incorporation of Certain
Documents by Reference.........................................................................................14
Description of Securities........................................................................................16
Selling Securityholders..........................................................................................19
Plan of Distribution.............................................................................................20
Indemnification of Directors
and Officers...................................................................................................21
Legal Matters....................................................................................................21
Experts..........................................................................................................21
Available Information............................................................................................22
</TABLE>
PROSPECTUS
696,681 SHARES OF
COMMON STOCK OF
TRANSWORLD HEALTHCARE, INC.
__________________, 1997
<PAGE> 37
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses to be borne by the Company in
connection with the sale and distribution of the Common Stock offered hereby.
All of the amounts shown are estimates (except for the SEC filing fee).
<TABLE>
<S> <C>
SEC filing fee......................................................................................$1,989.58
Legal fees and expenses.............................................................................10,000.00
Accounting fees and expenses........................................................................10,000.00
Printing expenses................................................................................... 5,000.00
Miscellaneous....................................................................................... 5,000.00
----------
Total fees and expenses........................................................................ $31,989.58
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(i) Article 7 of the Business Corporation Law of the State of New York,
in general, allows corporations to indemnify their officers and directors
against any judgment, fine, settlement and reasonable expenses incurred in any
non-derivative civil or criminal action, or against any settlement and
reasonable expenses in any derivative civil action, if the officer or director
acted in good faith and for a purpose he reasonably believed to be in, or not
opposed to, the best interests of the corporation. In the case of a criminal
action, the officer or director must have had no reasonable cause to believe
that his conduct was unlawful. Partial indemnification is allowed in cases where
the officer or director was partially successful in defeating the claim. Such
Article establishes procedures for determining whether the standard of conduct
has been met in the particular case, for timely notification to shareholders,
for prepayment of expenses and for payment pursuant to a court order or as
authorized by disinterested directors or the shareholders. Article 7 also
provides that it is not exclusive of any other rights to which an officer or
director may be entitled under the certificate of incorporation or by-laws or
pursuant to an agreement, resolution of shareholders or resolution of directors
which are authorized by the certificate of incorporation or by-laws; provided
that no indemnification may be made if a judgment or other final adjudication
adverse to the officer or director establishes that his acts were committed in
bad faith or were the result of active and deliberate dishonesty and were
material to the cause of action so adjudicated, or that he personally gained in
fact a financial profit or other advantage to which he was not legally entitled.
(ii) Article 8 of the Company's Restated Certificate of Incorporation
and Article 8 of the Company's By-Laws provide generally for indemnification of
all officers and directors to the fullest extent permitted under the
above-referenced New York statute.
(iii) The Company also has a policy insuring it and its directors and
officers against certain liabilities and has entered into indemnification
agreements with each of its officers and directors.
II-1
<PAGE> 38
ITEM 16. EXHIBITS.
4.1 Specimen Certificate of Common Stock (incorporated herein by
reference to Exhibit 4.1 to the Company's Registration
Statement (No. 33-50876) on Form S-1).
4.2 Warrant Agreement, including form of Warrant, dated December 7, 1992
(incorporated herein by reference to Exhibit 4.2 to the
Company's Registration Statement (No. 33-50876) on Form S-1).
4.3 Representative's Warrant Agreement, dated December 7, 1992, including
the form of Representative's Warrant (incorporated herein by
reference to Exhibit 1.2 to the Company's Registration Statement (No.
33-50876) on Form S-1)
5.1** Opinion of Baer Marks & Upham LLP as to the legality of the
securities being registered hereby.
23.1** Consent of Baer Marks & Upham LLP (included in Exhibit 5.1).
23.2* Consent of Coopers & Lybrand L.L.P., independent accountants of the
Company.
23.3* Consent of BDO Seidman, LLP, independent accountants of Health
Management, Inc.
24** Power of Attorney.
- ------------------------
* Filed herewith
** Previously filed
ITEM 17. UNDERTAKINGS.
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to include any material
information with respect to the plan of distribution not previously disclosed in
this Registration Statement or any material change to such information in this
Registration Statement.
(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 Company's annual report pursuant to Section 13(a) or
15(d) of the Exchange Act which is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating
II-2
<PAGE> 39
to the securities offered herein, 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 Company
pursuant to the foregoing provisions, or otherwise, the Company has been
advised, that in the opinion of the Commission, such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by any director, officer
or controlling person in connection with the securities being registered, the
Company 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 the public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-3
<PAGE> 40
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the
3rd day of July 1997.
TRANSWORLD HEALTHCARE, INC.
By: /s/ *
-----------------------------
Timothy M. Aitken
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities designated
and on the 3rd day of July 1997.
Signature Title
/s/ * Chairman of the Board and
- ---------------------------------- Chief Executive Officer
Timothy M. Aitken (Principal Executive Officer)
/s/ * President, Chief Operating Officer
- ---------------------------------- and Director
Robert W. Fine
/s/ Wayne A. Palladino Senior Vice President and Chief
- ---------------------------------- Financial Officer (Principal Financial
Wayne A. Palladino and Accounting Officer)
/s/ * Director
- ----------------------------------
Richard A. Yoken
/s/ * Director
- ----------------------------------
Lewis S. Ranieri
/s/ Wayne A. Palladino
- ----------------------------------
Wayne A. Palladino,
as attorney-in-fact
II-4
<PAGE> 41
INDEX TO EXHIBITS FILED WITH
FORM S-3 REGISTRATION STATEMENT
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION PAGE NUMBER
- -------------- ----------- -----------
<S> <C> <C>
23.2 Consent of Coopers & Lybrand L.L.P., independent
accountants of the Company.
23.3 Consent of BDO Seidman, LLP, independent accountants
of Health Management, Inc.
</TABLE>
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Amendment No. 1 to
the registration statement of Transworld HealthCare, Inc. (formerly, Transworld
Home HealthCare Inc.) on Form S-3 relating to 696,681 shares of Common Stock
(File No. 333-30283), of our report dated December 20, 1996, except as to the
information presented in the last five paragraphs in Note 12, for which the date
is January 14, 1997 on our audits of the consolidated financial statements and
financial statement schedule as of October 31, 1996 and 1995, and for each of
the three years in the period ended October 31, 1996, which report is included
in Transworld Home HealthCare, Inc.'s 1996 Annual Report on Form 10-K, which is
incorporated by reference in this Form S-3. Our report on such audits contains
an explanatory paragraph related to the adoption of the provisions of the
Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes," in fiscal 1994. We also consent
to the reference to our firm under the caption "Experts".
Coopers & Lybrand L.L.P.
New York, New York
July 2, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Transworld Healthcare, Inc.
Clark, New Jersey
We hereby consent to the incoroproation by reference in the Prospectus
constituting a part of this Registration Statement of our reports dated
July 22, 1996, except for Note 4(a) which is as of July 26, 1996, relating to
the consolidated financial statements and schedules of Health Management, Inc.
("HMI") (which contains an explanatory paragraph regarding HMI's ability to
continue as a going concern) appearing in the Company's Annual Report on Form
10-K for the year ended April 30, 1996.
We also consent to the reference to us under the caption "Experts"
in the Prospectus.
BDO Seidman, LLP
BDO Seidman, LLP
Mitchel Field, New York
June 27, 1997
