As filed with the Securities and Exchange Commission
on October 10, 1996
Registration No. 333-12241
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
____________________
INTERNATIONAL NURSING SERVICES, INC.
(Exact Name of Registrant as Specified in Charter)
Colorado 7362 84-1123311
(State or (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Identification No.)
Incorporation or Classification
Organization) Code Number)
Robin M. Bradbury
Suite 400 Suite 400
360 South Garfield Street 360 South Garfield Street
Denver, Colorado 80209 Denver, Colorado 80209
(303) 393-1515 (303) 393-1515
(Address and telephone number (Address and telephone
of principal executive number of agent for
offices) service)
Copies to:
Thomas J. Moore, Esq.
Steven E. Segal, Esq.
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
633 Seventeenth Street, Suite 2800
Denver, Colorado 80202
(303) 291-2600
Approximate date of proposed sale to the public: From time to
time after the Registration Statement becomes effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or 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 (the "Securities Act"),
other than securities being offered only in connection with
dividend or interest reinvestment plans, please 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: [ ]
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
Amending the Prospectus, Part II, and the Exhibit Index
PROSPECTUS
8,293,133 Shares
INTERNATIONAL NURSING SERVICES
COMMON STOCK
This Prospectus relates to an aggregate of 8,293,133
shares (the "Shares") of Common Stock, par value $.001 (the
"Common Stock"), of International Nursing Services, Inc.
("International Nursing" or the "Company"), which may be
offered and sold from time to time for the account of the
persons who are identified herein under the heading "Selling
Shareholders" and any other person who obtains the right to
sell Shares hereunder (the "Selling Shareholders"). Certain
of the Shares are issuable or may be issuable to certain of
the Selling Shareholders upon (i) conversion of shares of the
Company's 1996 Convertible Preferred Stock, par value
$10,000.00 per share (the "1996 Preferred Stock"), (ii)
exercise of certain warrants to purchase shares of Common
Stock at an exercise price of $2.50 per share (the "Unit
Warrants"), (iii) Shares acquired upon conversion or exercise
of additional shares of 1996 Preferred Stock or Unit Warrants
acquired pursuant to the exercise of certain options (the
"Unit Options") received by the purchasers of the 1996
Preferred Stock and Unit Warrants, and (iv) exercise of
certain other warrants to purchase shares of Common Stock at
prices ranging from $1.88 to $2.06 (the "Warrants"). In
addition, certain of the Shares are currently held directly by
certain of the Selling Shareholders. THE COMPANY WILL NOT
RECEIVE ANY PROCEEDS FROM THE SALE OF ANY SHARES. The Company
will receive the amount of the respective exrecise prices upon
the exercise, if any, of any unit warrants or warrants. The
Company may also receive the amount of the exercise price
payable pursuant to the exercise of any Unit Options and any
subsequent exercise of Unit Warrants acquired pursuant to the
exercise of the Unit Options. See "Background of the
Offering," "Use of Proceeds," "Selling Shareholders" and "Plan
of Distribution."
The Shares may be sold from time to time directly by the
Selling Shareholders or by pledgees, donees, assignees,
transferees or other successors in interest. Alternatively,
the Shares may be offered from time to time by the holders to
or through brokers or dealers who may act solely as agent, or
who may acquire Shares as principal. The distribution of the
Shares may be effected in one or more transactions that may
take place on the Nasdaq SmallCap Market, including block
trades, ordinary broker's transactions, privately negotiated
transactions or through sales to one or more broker/dealers
for resale of such securities as principals, at market prices
prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Usual and
customary or specifically negotiated brokerage fees,
commissions or discounts may be paid by these holders in
connection with any such sales, which such fees, commissions
or discounts may be deemed to be "underwriting compensation"
within the meaning of the Securities Act of 1933, as amended
(the "1933 Act"). In connection with such sales, the Selling
Shareholders and any participating brokers or dealers may be
deemed "underwriters" as such term is defined in the 1933 Act.
The Company has agreed to bear all expenses other than
underwriting discounts and selling commissions, state and
local transfer taxes, and fees and expenses of counsel or
other advisors to the Selling Shareholders, in connection with
the preparation and filing of the Registration Statement of
which this Prospectus forms a part and the printing of this
Prospectus and otherwise in connection with the registration
of the Shares. The Company estimates such expenses at
$30,000. The Company's Common Stock is traded on the Nasdaq
SmallCap Market (symbol: NURS). On October 8, 1996, the
closing bid price per share of Common Stock as quoted on the
Nasdaq SmallCap Market was $2.1875.
_____________________________
AN INVESTMENT IN THE SHARES OFFERED HEREBY
INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED
BY PROSPECTIVE INVESTORS.
_____________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE 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 date of this Prospectus is October 10, 1996
NO DEALER, SALESMAN OR OTHER PERSON OR ENTITY HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY ANY OTHER PERSON OR ENTITY.
ALL INFORMATION CONTAINED HEREIN IS AS OF THE DATE OF THIS
PROSPECTUS. NEITHER THE DELIVERY OF THIS PROSPECTUS, NOR ANY
SALE, DISTRIBUTION OR RESALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE BUSINESS OR AFFAIRS OF THE COMPANY OR IN THE
FACTS HEREIN SET FORTH SINCE THE DATE HEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "1934
Act"), and in accordance therewith files reports, proxy
statements and other information with the Securities and
Exchange Commission (the "Commission"). 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,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549,
and at the Commission's regional offices located at 7 World
Trade Center, 13th Floor, New York, NY 10048 and 500 West
Madison Street, Chicago, Illinois 60661. Copies of such
material can be obtained from the Public Reference Section of
the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington DC 20549 at prescribed rates. The Company's
reports, proxy statements and other information filed with the
Commission may also be inspected at the office of the National
Association of Securities Dealers, Inc., 7135 K Street, N.W.,
Washington, DC 20006, on which the Company's Common Stock and
other securities are listed for trading.
The Company has filed with the Commission a registration
statement on Form S-3 (together with all amendments and
exhibits thereto) (collectively, the "Registration Statement")
under the 1933 Act with respect to the Common Stock offered
hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the Rules and
Regulations of the Commission. For further information,
reference is made to the Registration Statement. Each summary
in this Prospectus of information included in the Registration
Statement or any exhibit thereto is qualified in its entirety
by reference to such information or exhibit. The Registration
Statement and the exhibits thereto can be inspected and copied
at the public reference facilities and regional offices of the
Commission referenced above. The Company intends to publish
annual reports with financial information having been examined
and reported upon, with an opinion expressed, by an
independent certified public accountant.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the
Commission are incorporated herein by reference and made a
part of this Prospectus:
(1) The Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1995;
(2) The Quarterly Report on Form 10-QSB for the quarter
ended June 30, 1996;
(3) The Quarterly Report on Form 10-QSB for the quarter
ended March 31, 1996;
(4) The Current Report on Form 8-K/A filed September 17,
1996 and the Current Reports on Form 8-K dated July 17, 1996,
April 20, 1996, April 17, 1996, January 24, 1996, January 11,
1996 and January 5, 1996.
All documents filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act
subsequent to the date of this Prospectus and prior to the
termination of this offering, shall be deemed to be
incorporated by reference and made a part of this Prospectus.
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 other subsequently filed document that 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 A COPY OF THIS PROSPECTUS IS DELIVERED (INCLUDING ANY
BENEFICIAL HOLDER), UPON THE WRITTEN OR ORAL REQUEST OF SUCH
PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS THAT HAVE BEEN
INCORPORATED HEREIN BY REFERENCE, OTHER THAN EXHIBITS TO SUCH
DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
BY REFERENCE THEREIN). REQUESTS FOR SUCH COPIES SHOULD BE
DIRECTED TO: ROBIN M. BRADBURY, SUITE 400, 360 SOUTH GARFIELD
STREET, DENVER, CO 80209, TELEPHONE NUMBER (303) 393-1515.
RISK FACTORS
An investment in the Common Stock is highly speculative
and should only be considered by those persons or entities who
can afford to lose their entire investment. In addition to
the other information contained in this Prospectus, the
following risk factors should be carefully considered in
evaluating the Company and its business and an investment in
shares of the Company's Common Stock. The order in which the
following risk factors are presented does not indicate the
relative magnitude of the risks described. Certain statements
contained in this Prospectus or in documents incorporated by
reference into this Prospectus may constitute forward-looking
statements as defined under the Private Securities Litigation
Reform Act of 1995 in that they relate to events or
transactions that have not occurred, expectations or estimates
of the Company, growth strategies or business plans of the
Company or other events or facts that have not yet occurred.
The following risk factors contain discussions of important
factors that should be considered by prospective investors
related to forward-looking statements included in this
Prospectus and in the documents incorporated by reference into
this Prospectus. These important factors, among others, may
cause actual results to differ materially from the results
expressed or implied by the forward-looking statements.
PRIOR OPERATING LOSSES OF INTERNATIONAL NURSING; LACK OF
WORKING CAPITAL
International Nursing reported net losses of ($335,000)
and ($5,487,000) for the years ended December 31, 1995 and
1994, respectively. At June 30, 1996, International Nursing
had an accumulated deficit of ($5,571,000) and a working
capital deficit of ($604,000). The Company has had no
quarterly operating profits except for a minimal operating
profit in the first quarter of 1996. There is no assurance
that International Nursing will achieve a specific level of
revenues, or that the Company will operate profitably in the
future.
The Company may experience significant fluctuations in
future operating results due to a number of factors including,
among others, the effect of regulatory and legislative
developments on the Company, pricing trends in the flexible
staffing industry, availability of qualified medical
personnel, reductions in demand for the Company's interim or
home care staff due to competition, regulation and other
factors, the ability of management to coordinate and implement
a marketing strategy, costs associated with maintenance of
quality control standards, and success of the Company's
management in diversifying interim staffing and home care
operations. The impact of any of these factors could cause
operating results to decline significantly from prior periods.
Any significant decrease in revenues for any reason would have
an immediate adverse impact on the Company's operating results
and its ability to operate profitably. No assurances can be
given that the Company will be able to obtain sufficient debt
or equity financing, or on acceptable terms, to enable the
Company to meet its cash needs.
NEED FOR ADDITIONAL FINANCING
The Company had negative working capital of $(604,000)
at June 30, 1996. The current operation of the Company's
business and the ability of the Company to continue to expand
may depend upon its ability to obtain additional financing.
The Company is meeting its current cash flow needs through the
sale of equity and the financing of accounts receivable under
terms which have resulted in significant financing costs to
the Company. While the Company has recently renegotiated its
accounts receivable financing agreement to more favorable
terms, there can be no assurance that additional financing
will be available to the Company. In the absence of
financing, there can be no assurance that the Company can
continue to sell equity to finance its operations, if
necessary.
GOVERNMENT HEALTH CARE REFORM PROPOSAL; UNCERTAINTY IN HEALTH
CARE INDUSTRY
Several programs have been proposed to reform the United
States health care system. Some of these programs contain
proposals to increase government involvement in health care,
lower reimbursement rates and otherwise change the operating
environment for the Company's customers. Health care
facilities may react to these proposals and the uncertainty
surrounding such proposals by curtailing the use of flexible
staff. The Company cannot predict with any certainty what
impact, if any, proposals for health care reforms might have
on the Company's business. As part of health care reform,
recent federal and certain state legislative proposals have
included provisions extending health insurance benefits to
temporary employees. Due to the wide variety of national and
state proposals relating to health care presently under
consideration, the impact of such proposals cannot be
predicted.
The health care industry is subject to changing
political, economic and regulatory influences that may affect
the procurement practices and operations of hospitals and
other health care facilities. During the past several years,
the health care industry has been subject to an increase in
government regulation of, among other things, reimbursement
rates and certain capital expenditures. In addition, major
third party payors of hospital services (insurance companies,
Medicare and Medicaid) have significantly revised payment
procedures in an effort to contain health care costs. These
and other factors affecting the health care industry may have
a significant adverse impact on the Company's operating
results.
DEPENDENCE ON CUSTOMER RELATIONSHIPS; ABSENCE OF CUSTOMER AND
CARE-GIVER CONTRACTS
The Company's business is dependent on its ability to
establish and maintain close working relationships with
hospitals, clinics, nursing homes, physician groups, assisted
living facilities, health maintenance organizations,
educational institutions, third party payors and other
referral sources, and with care givers providing services on
behalf of the Company. Although the Company has established
customer and care giver relationships in the markets in which
it presently operates, there can be no assurance these
relationships will continue. None of the contracts by and
between the Company and its customers is exclusive, and these
contracts do not obligate the customers to utilize a
designated number of interim or home care staff for any
specific period of time. Although certain customer contracts
provide that the Company will be the first interim staffing
firm contacted by the hospital, this "first call" right does
not guarantee that the Company will achieve a specific level
of, or any, revenues as a result of such right. Likewise,
contracts between the Company and its care givers are
non-exclusive and do not obligate the care giver to render
services for any specific period of time. Accordingly, it is
possible that the Company may not be able to meet customer
demand for qualified personnel, or that it can do so on a
cost-efficient basis.
REGULATION AND DEPENDENCE ON CERTIFICATIONS
The Company's health care business is subject to
extensive and frequently changing regulation by federal, state
and local authorities. Regulation imposes a significant
compliance burden on the Company, including state licensing
and federal and state eligibility standards for certification
as a Medicare and Medicaid provider. In almost half the
states, in addition to licensing, home care providers must
receive a certificate of need ("CON") from the state in order
to directly provide Medicare and Medicaid services. CON
requirements and restrictions vary substantially from state to
state. The Company currently subcontracts its staff to
several CON providers doing business in the State of New York,
which is the only CON state in which the Company now conducts
business. The Company considers the CON providers to which it
subcontracts as sources of referrals, although there is no
assurance the Company will continue to receive referrals from
CON providers. The Company's inability to obtain or renew any
license, CON or certification could adversely affect the
Company's operations.
The Company's home care business has been certified by
the Health Care Financing Administration ("HCFA") to allow the
Company to receive reimbursement for nursing services and
supplies from Medicare. The Company estimates that
approximately ten percent of the Company's 1995 and six months
ended June 30, 1996 revenues were accounted for by home care
services, with the majority of home care reimbursements coming
from Medicare and Medicaid. The Company is subject to
continuing financial, audit and other requirements imposed by
HCFA and the State of Colorado in order to maintain its
certification. The Company has been in material compliance
with the financial, audit and other requirements imposed by
HCFA and the State of Colorado in the past, although there is
no assurance the Company will be successful in continuing to
meet these requirements. In the future, the Company may seek
to become certified by other states for the purpose of
receiving Medicare or Medicaid reimbursements for home care or
other services. The Company also anticipates seeking
accreditation from the Joint Commission on Accreditation of
Healthcare Organizations ("JCAHO") to evidence the Company's
commitment to high service standards. There is no assurance
such certification will be received. In the future, it is
possible that home care providers may be required to obtain
JCAHO or other certifications, the receipt of which by the
Company is not assured. The loss of any of the Company's
existing certifications or the loss of or failure to obtain
any certifications required in the future could have a
material adverse effect on the Company's financial position
and operations.
COMPETITION
The market for interim staffing and home care services
is highly competitive. Many of the Company's existing and
potential competitors have substantially greater financial,
marketing and personnel resources than the Company and have
established reputations in the flexible staffing industry.
Accordingly, the Company is at a disadvantage in competing
with such entities. It is likely that the current trend
toward increased consolidation in the health care industry
will accelerate. Some of the Company's larger competitors may
gain an additional advantage by offering enterprise-wide
interim staffing for health care facilities.
In addition, the Company's operations depend, to a
significant degree, on its ability to recruit qualified health
care personnel. The Company faces competition from other
companies in recruiting qualified health care personnel and
there is no assurance that qualified personnel will be
available to the Company in the future or the costs at which
such personnel might be available. The failure of the Company
to recruit qualified personnel, or a significant increase in
the Company's cost of such personnel, could have a material
adverse effect on the Company's financial position and
operations. There can be no assurance the Company will be
able to continue to compete successfully in the markets in
which it is active or in any markets it enters in the future.
EFFECT OF REIMBURSEMENT POLICIES
Management estimates that approximately 8% of the
Company's revenues are accounted for by reimbursements from
federal and state government-sponsored reimbursement programs
and approximately 92% are accounted for by payments from
hospitals, nursing homes and other third party payors. In
recent years, federal and state governments and insurance
companies have sought earlier discharge of patients following
the performance of medical procedures. The trend toward early
discharge may have a negative effect on the demand for certain
types of interim staffing at hospitals. As of December 31,
1995 and June 30, 1996, approximately 90% of the Company's
revenues were accounted for by interim staffing services and
approximately 10% of revenues were accounted for by home care
services. Management anticipates that the Company's services,
and the source of its revenues, will continue to reflect
health care industry trends, including those concerning
reimbursement policies. Should the Company be unsuccessful,
for any reason, in adjusting its mix of services in response
to changes in reimbursement policies, the Company's business
could be adversely affected.
DEPENDENCE ON KEY PERSONNEL
The Company's success depends to a significant extent on
John P. Yeros, Chairman of the Board and Chief Executive
Officer, of the Company. The loss of the services of Mr.
Yeros could have an adverse effect on the Company. The
Company has entered into an employment agreement with Mr.
Yeros that includes noncompetition covenants. The Company's
future success will depend in part upon its continuing ability
to attract and retain highly qualified personnel to manage the
future growth of the Company. There can be no assurance the
Company will be successful in attracting and retaining such
personnel.
FLUCTUATIONS IN OPERATING RESULTS AND CASH FLOW
Results of operations and the Company's cash flow have
fluctuated and may continue to fluctuate significantly from
quarter to quarter. Various factors may affect the results of
operations, including hospital budgetary cycles, increased
competition for qualified medical personnel, patient admission
fluctuations and seasonality. Likewise, the Company's cash
flow may fluctuate due to the adoption by hospitals and third
party payors of new or revised reimbursement policies, the
cost and availability of accounts receivable financing,
extension of more favorable credit terms to key customers and
various other factors. Should the Company encounter delays in
collecting from third party payors or its customers for any
reasons, the Company's results of operations and cash flow may
be materially adversely affected.
ABILITY TO MANAGE GROWTH; ACQUISITION STRATEGY
As part of its business strategy, the Company intends to
pursue rapid growth, including possible acquisitions of
related and complementary businesses. The Company's growth
strategy will require expanded client services and support,
increased personnel throughout the Company, expanded
operational and financial systems and the implementation of
new control procedures. There can be no assurance the Company
will be able to manage expanded operations effectively.
Moreover, failure to implement financial and other systems and
to add resources could have a material adverse impact on the
Company's results of operations and financial condition. The
Company's acquisitions could involve a number of risks,
including the diversion of management's attention to the
assimilation of the companies to be acquired, unforeseen
difficulties in the acquired operations, adverse short-term
effects on the Company's operating results, amortization of
acquired intangible assets and dilution in the ownership
interest of shareholders as a result of issuance of additional
Common Stock or preferred stock. The Company's limited
working capital may prevent the Company from concluding other
acquisitions for cash and may require the Company to seek to
pay for acquisitions through stock issuances or by obtaining
other financing, of which there is no assurance. There is no
assurance the Company will be successful in consummating any
acquisition transactions or the terms on which such
acquisitions might be consummated.
PERSONNEL RISKS
Flexible staff providers, such as the Company, are in
the business of employing people and placing them in the
workplace of other businesses. Attendant risks of such
activity include possible claims of discrimination and
harassment, employment of illegal aliens, unqualified or
unlicensed medical personnel and other similar claims. The
Company has policies, guidelines and screening procedures in
place to reduce its exposure to these risks. However, a
failure to follow these policies and guidelines may result in
negative publicity and the payment by the Company of money
damages or fines. Although the Company historically has not
had any significant problems associated with these risks,
there can be no assurance that the Company will not experience
such problems in the future. The Company may be the subject
of litigation for injuries or damages caused by the acts of
its staff. While the Company maintains insurance providing
coverage for certain negligent acts in an amount the Company
believes is customary for the industry, there can be no
assurance the Company's insurance policies will be sufficient
so as to offset any claims received. Moreover, costs of
insurance may escalate beyond anticipated levels, or certain
types of losses may be uninsurable or may exceed coverage.
Any substantial uninsured loss suffered by the Company would
have a material adverse effect on the Company.
CONTROL BY EXISTING SHAREHOLDERS
The Company's executive officers, directors and their
affiliates in the aggregate, beneficially own approximately
139,000 shares, or 3% of the Company's outstanding shares of
Common Stock (21% assuming the exercise of their currently
exercisable options to purchase the Company's Common Stock,
exercise of Warrants by the Selling Shareholders and
conversion of the Preferred Stock). These shareholders, if
acting together, may be able to control most matters requiring
approval by the shareholders of the Company, including the
election of a majority of the directors. The voting power of
these shareholders under certain circumstances could have the
effect of delaying or preventing a change in control of the
Company, even if such a change in control would be beneficial
to the Company's shareholders.
FUTURE SALES OF COMMON STOCK
A substantial number of the Company's outstanding shares
of Common Stock are "restricted securities" and may in the
future be sold in compliance with Rule 144 adopted under the
Act. Rule 144 generally provides that beneficial owners of
shares who have held such shares for two years may sell within
a three-month period a number of shares not exceeding 1% of
the total outstanding shares or the average trading volume of
the shares during the four calendar weeks preceding such sale.
Future sales of restricted Common Stock under Rule 144 could
negatively impact the market price of the Common Stock. In
addition, the Common Stock registered hereby may be sold from
time to time in one or more transactions that may take place
on the Nasdaq SmallCap Market, including block trades,
ordinary broker's transactions, privately negotiated
transactions or through sales to one or more broker/dealers
for resale of such securities as principals, at market prices
prevailing at the time of such sale, at prices related to such
prevailing prices or at negotiated prices. Future sales of
such Common Stock could negatively impact the market price of
the Common Stock. See "Plan of Distribution."
STOCK ISSUABLE PURSUANT TO OPTIONS, WARRANTS AND
REPRESENTATIVE'S WARRANTS
At the date hereof, the Company has reserved an
aggregate of approximately 11,045,729 shares of Common Stock
for issuance upon the exercise of outstanding options, Unit
Warrants, and Warrants, upon the conversion of the 1996
Preferred Stock and exercise of securities underlying Unit
Options. The exercise prices of the options and warrants
presently outstanding range from $.63 per share to $6.00 per
share. During the terms of the outstanding options, Warrants,
Unit Options, Unit Warrants and 1996 Preferred Stock, the
holders are given the opportunity to profit from a rise in the
market price of the Common Stock, and the exercise of any
options or warrants may dilute the book value per share of the
Common Stock. The existence of the options, conversion
rights, or any of the warrants may adversely affect the terms
on which the Company may obtain additional equity financing.
Moreover, the holders of such securities are likely to
exercise their rights to acquire Common Stock at a time when
the Company would otherwise be able to obtain capital on terms
more favorable than could be obtained through the exercise or
conversion of such securities.
PREFERRED STOCK ATTRIBUTES
Each share of Preferred Stock is convertible at any
time, unless previously redeemed, at the option of the holder
into 8,000 shares of Common Stock (subject to adjustment if
the price of the Common Stock falls below $1.67 per share for
five consecutive trading days prior to conversion). In the
event of liquidation, dissolution or winding up of the
Company, outstanding shares of 1996 Preferred Stock will be
entitled to receive $10,000 per share, together with any
accrued and unpaid dividends. Dividends on the 1996 Preferred
Stock will accrue at the annual rate of 10%, are cumulative
from the date of first issuance, and will be paid quarterly in
arrears commencing 90 days after issuance. Should the Company
liquidate, dissolve or wind up, the liquidation preferences
granted to the holders of the Preferred Stock may operate to
the significant disadvantage of holders of the Common Stock.
Moreover, cumulative dividends payable on the 1996 Preferred
Stock may adversely affect the Company's cash flow and working
capital. The redemption of the 1996 Preferred Stock could
also significantly reduce the Company's working capital should
the Company elect to redeem the 1996 Preferred Stock and have
the legal and financial ability to do so.
VOLATILITY OF STOCK PRICE; NONCOMPLIANCE WITH NASDAQ LISTING
REQUIREMENTS
Since commencing trading on the Nasdaq SmallCap Market,
the Company's Common Stock has experienced significant price
fluctuations. Factors such as quarterly fluctuations in
results of operations, negative announcements by the Company
or others, regulatory, legislative or other developments
affecting the Company or the health care industry generally,
market conditions specific to the health care industry and
general market conditions may cause the market price of the
Common Stock to fluctuate, perhaps substantially. The
conversion of the 1996 Preferred Stock into Common Stock or
exercise of the Warrants may also cause significant price
fluctuations in the Common Stock. In addition, in recent
years the stock market has experienced significant price and
volume fluctuations. These fluctuations, which are often
unrelated to the operating performance of specific companies,
have had a substantial effect on the market price for many
health care related companies. Factors such as those cited
above, as well as other factors which may be unrelated to the
operating performance of the Company, may adversely affect the
price of the Common Stock.
The regulations of the National Association of
Securities Dealers, Inc. require that stocks listed on the
Nasdaq SmallCap Market have (i) a minimum bid price per share
of $1 or (ii) maintain a market value of public float of $1
million and have $2 million in capital and surplus. The
Company currently meets the listing requirements. However,
there can be no assurance that the Company will continue to
meet such requirements or otherwise continue to be listed on
the Nasdaq SmallCap Market. If the Company's Common Stock is
no longer listed on the Nasdaq SmallCap Market, there can be
no assurance that there will be a market for the Company's
Common Stock or other equity securities, or as to the
liquidity or sustainability of any such market.
DESCRIPTION OF COMMON STOCK; ABSENCE OF COMMON STOCK DIVIDENDS
Each share of Common Stock is entitled to one vote at
all meetings of shareholders. Shareholders are not permitted
to cumulate votes in the election of directors. All shares of
Common Stock are equal to each other with respect to
liquidation rights and dividend rights. There are no
preemptive rights to purchase any additional Common Stock. In
the event of liquidation, dissolution or winding up of the
Company, holders of the Common Stock will be entitled to
receive on a pro rata basis all assets of the Company
remaining after satisfaction of all liabilities and
preferences of the outstanding 1996 Preferred Stock.
Although the Company is required to pay dividends on the
1996 Preferred Stock, the Company does not anticipate paying
any cash dividends on the Common Stock in the foreseeable
future. Any payment of cash dividends on the Common Stock in
the future will be dependent upon the Company's financial
condition, results of operations, current and anticipated cash
requirements, plans for expansion, as well as other factors
that the Board of Directors deems relevant. The Company
anticipates that any future financing agreements will prohibit
the payment of Common Stock dividends without the prior
written consent of the Company's lender(s).
PAYMENTS RELATING TO STOCK PRICE GUARANTEE
In connection with the Company's acquisition of Ellis
Home Health Services, Inc. ("Ellis") in April 1996, the
Company issued 256,250 shares of Common Stock to the former
owner of Ellis. The Company guaranteed that the seller of
Ellis would receive at least $4.00 per share on the sale of
these shares, and if the shares were sold for less than the
$4.00 per share, the Company agreed to either issue additional
shares or pay the shortfall in cash. Through August 31, 1996,
the former owner of Ellis had sold a number of shares of
Common Stock below the $4.00 guaranteed price. This has
resulted in the Company owing the former owner of Ellis,
pursuant to the guarantee, approximately $262,000 as of such
date, and the Company has previously paid the former owner of
Ellis approximately $60,000. Cash payments by the Company
pursuant to this guarantee will adversely affect the Company's
cash flow and could have a material adverse effect on the
Company's financial position.
THE COMPANY
The Company provides skilled nursing, rehabilitation and
other medical personnel for flexible staffing in home care and
in a broad spectrum of health care and educational facilities.
The Company's flexible interim staffing services are provided
through a pool of approximately 1,000 care givers including
licensed and registered nurses, rehabilitation, respiratory
and therapists, medical social workers, home care aides and
other unlicensed personnel. The Company's flexible, interim
staff currently serve over 500 hospitals, clinics, nursing
homes, physician groups, assisted living facilities, health
maintenance organizations and other health care institutions,
a variety of educational facilities and individual home care
clients. The Company's skilled nursing and rehabilitation
personnel provide patient care on a daily or per-shift basis
in health care and educational facilities and through long-
term travel nursing arrangements with hospitals and other
institutions. The Company's personnel also provide home care
on a shift, daily or long-term basis to patients restricted to
the home. The Company's interim staff currently serves
patients in New York, Texas, Colorado and five other states
and the Company's home care staff serves patients in New York
and Colorado.
The Company was incorporated in the State of Colorado in
April 1988 and has been engaged in the interim staffing
business since its inception. Its principal executive offices
are located at 360 South Garfield Street, Suite 400, Denver,
Colorado, and its telephone number is (303) 393-1515.
BACKGROUND OF THE OFFERING
This offering relates to the registration for resale of
up to 8,073,000 Shares which are issuable or may be issuable
to certain of the Selling Shareholders upon (i) conversion of
shares of the 1996 Preferred Stock, (ii) exercise of the Unit
Warrants, which were issued as part of units with the 1996
Preferred Stock, (iii) conversion or exercise, respectively,
of shares of 1996 Preferred Stock or Unit Warrants obtained
upon exercise of Unit Options, and (iv) exercise of the
Warrants. In addition, this offering relates to the
registration for resale of 220,133 Shares currently held
directly by certain of the Selling Shareholders, which such
Shares were issued to such Selling Shareholders pursuant to
exemptions from registration under the Securities Act of 1933,
as amended (the "1933 Act"). The transactions pursuant to
which the Selling Shareholders acquired Shares or the rights
to acquire Shares are summarized below.
In July and September of 1996, the Company issued an
aggregate of 244 units ("Units") in offerings (the "Unit
Offerings") under an exemption from registration provided
under Regulation D of the 1933 Act. Each Unit, priced at
$10,000, consisted of one share of 1996 Preferred Stock, one
Unit Warrant, and an option to acquire an additional Unit (the
"Unit Option"). The Company received net proceeds in the Unit
Offerings of $2,322,400 after deducting commissions of 5% on
the first $2,000,000 and 4% on the amount over $2,000,000,
which commissions were paid to David Klugman and Associates,
Inc. ("DKA"), who acted as the agent of the Unit Offerings.
Mr. David Klugman, a Selling Shareholder, is the president of
DKA. The Company used $1,550,000 of the net proceeds from the
July Unit Offering to pay for a portion of the Company's
acquisition of STAT Health Care Services, Inc., and used the
remainder for working capital purposes. Each share of 1996
Preferred Stock is convertible into the number of shares of
Common Stock determined by dividing $10,000, plus any accrued
but unpaid dividends, by the lesser of (i) $1.25 or (ii) 75%
of the average closing sales price during the last five
trading days prior to conversion, at any time until the third
anniversary date of the respective Unit issuance. Each Unit
Warrant is initially exercisable to purchase 8,000 shares of
Common Stock at $2.50 per share at any time until the third
anniversary date of the respective Unit issuance. Each Option
is exercisable to purchase an additional Unit for $10,000
until December 31, 1997. If all of the 1996 Preferred Stock
is converted (assuming dividends are paid in cash), all the
Unit Warrants exercised, all the Unit Options exercised (and
all the underlying 1996 Preferred Stock is converted and all
the underlying Unit Warrants are exercised), a total of
7,808,000 shares of Common Stock will be issued and the
Company will receive additional gross proceeds of $12,200,000.
The Company is obligated to pay DKA commissions on the
aggregate proceeds received by the Company in connection with
the Unit Offerings and exercise of securities issued in
connection therewith as follows: 5% on the first $2,000,000,
4% on the second $2,000,000, 3% on the third $2,000,000, 2% on
the fourth $2,000,000, and 1% on any additional amounts.
Through September 17, 1996, the Company had received an
aggregate of $2,440,000 gross proceeds in connection with the
Unit Offerings. The Company will not receive any proceeds
from the conversion of any 1996 Preferred Stock or the sale of
Common Stock by the Selling Shareholders. In connection with
the Unit Offering, the Company agreed to register under the
1933 Act the resale of all shares of Common Stock underlying
the securities related to the Units. Accordingly, the Company
has filed the Registration Statements of which this Prospectus
forms a part.
In connection with the Unit Offering, the Company issued
a Warrant to purchase 100,000 shares of Common Stock at an
exercise price of $1.88 per share, exercisable at any time
until July 17, 1999, to Mr. David Klugman in connection with
his assistance in the Unit Offerings. In connection
therewith, the Company agreed to register under the 1933 Act
the 100,000 shares of Common Stock underlying this Warrant.
The Company will receive $188,000 in gross proceeds if this
Warrant is fully exercised.
In July 1996, the Company completed the acquisition of
certain assets of STAT Health Care Services, Inc. The assets
were acquired for $1,550,000 cash received in connection with
the July Unit Offering, 200,000 shares of Common Stock and the
issuance of a warrant to purchase 125,000 shares of Common
Stock at an exercise price of $1.88 per share, exercisable at
any time until July 17, 1997. The 200,000 shares of Common
Stock and shares of Common Stock underlying this Warrant are
being registered in the Registration Statement of which this
Prospectus forms a part. The Company will receive $235,000 of
gross proceeds if this Warrant is fully exercised; however,
the Company will not receive any proceeds from the sale of the
200,000 shares of Common Stock held by STAT Health Care
Service, Inc. or the sale of shares of Common Stock acquired
upon exercise of its Warrant.
In 1995, the Company was named as a defendant in a
breach of contract lawsuit alleging that the Company owed a
merger and acquisition fee to Lumiere Securities, Inc.
("LSI"). In August 1996, the Company negotiated a settlement
to the lawsuit by agreeing to issue an aggregate of $53,000 of
Common Stock to LSI and its attorneys based on the average of
the closing bid prices of the Common Stock for the fourth
through seventh trading days prior to the initial date the
Registration Statement of which this Prospectus forms a part
was filed. Pursuant to this settlement, the Company will
issue an aggregate of 20,133 shares of Common Stock to LSI and
its attorneys, all of which are being registered hereunder.
The Company will not receive any proceeds from the sale of
these Shares by LSI and its attorneys.
The Company has issued a Warrant to purchase 20,000
shares of Common Stock at $2.06 exercisable until August 21,
1999 to a consultant to the Company and a Warrant to purchase
20,000 shares of the Company's Common Stock at $2.06
exercisable until August 21, 1999 to another consultant to the
Company. The Shares underlying these Warrants are being
registered pursuant to the Registration Statement of which
this Prospectus forms a part. The Company will receive gross
proceeds of $82,400 if these Warrants are exercised in full,
but will not receive any proceeds from the sale of Shares
obtained upon exercise of these Warrants.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale
of any shares of Common Stock held by Selling Shareholders.
If any of the warrants described above are exercised (which is
solely at the respective holder's option), the Company will
receive the applicable exercise price of the warrants. The
net proceeds to the Company, if any, from the exercise of such
warrants will be used for working capital.
SELLING SHAREHOLDERS
An aggregate of 8,293,133 shares of Common Stock may be
offered and sold pursuant to this Prospectus by the Selling
Shareholders. Except as otherwise indicated in this
Prospectus and with the exception of their ownership of
Company securities, the Selling Shareholders have no material
relationship with the Company. See "Background of the
Offering." The following table sets forth certain information
regarding the Selling Shareholders. The "Common Stock
beneficially owned" column assumes all underlying securities
described under "Background of the Offering" are converted
into or exercised for Common Stock. The "Common Stock
offered" and "Common Stock owned after sale" columns assume
the sale by the Selling Shareholders of all Common Stock
registered hereunder.
Common Stock Common Common Stock
beneficially Stock beneficially
Selling Shareholder owned (1) offered owned after sale
___________________ _________ _______ ________________
Number Percentage
______ __________
STAT Health Care 325,000(2) 325,000 -0- *%
Services, Inc.
Lumiere Securities, 12,080(3) 12,080 -0- *
Inc.
Charles F. Savage 8,053(3) 8,053 -0- *
Jim Gumina 20,000 20,000 -0- *
David Watamull 20,000 20,000 -0- *
David Klugman 548,000 548,000 -0- *
Millenco, LP 640,000 640,000 -0- *
Nais Corp. 640,000 640,000 -0- *
Newark Sales Corp. 800,000 800,000 -0- *
Saleslink Ltd. 192,000 192,000 -0- *
Seth Joseph Antine 48,000 48,000 -0- *
Chanie Lerner 64,000 64,000 -0- *
Clifton Management & 64,000 64,000 -0- *
Trading
Fred Rudy 32,000 32,000 -0- *
Ezer Mzion Inc. 320,000 320,000 -0- *
Cong. Ahavas Tzdokah 576,000 576,000 -0- *
Vchesed, Inc.
Rita Folger 128,000 128,000 -0- *
Jerome Bloom 32,000 32,000 -0- *
Jules Nordlicht 320,000 320,000 -0- *
Shekel Hakodesh 160,000 160,000 -0- *
Harry Adler 80,000 80,000 -0- *
Huberfeld/Bodner 320,000 320,000 -0- *
Family Foundation
Helenka Bodner 32,000 32,000 -0- *
Isaac & Bina Levy 40,000 40,000 -0- *
Philip & Rae 40,000 40,000 -0- *
Huberfeld
Laura Huberfeld 768,000 768,000 -0- *
Naomi Bodner 768,000 768,000 -0- *
Keren M. Y & C.B. 80,000 80,000 -0- *
Elias, Inc.
Ace Foundation Inc. 80,000 80,000 -0- *
Cong. Eitz Chaim 80,000 80,000 -0- *
Grupo Mercosur, S.A. 64,000 64,000 -0- *
Reuvain Schepansky 32,000 32,000 -0- *
Yecheskel Munk 128,000 128,000 -0- *
Ohr Somayach 80,000 80,000 -0- *
Tanenbaum Educational
Center
BHSY Special Projects 80,000 80,000 -0- *
Richard Stadtmauer 160,000 160,000 -0- *
Samuel Shapiro 16,000 16,000 -0- *
Wayne Saker 160,000 160,000 -0- *
Rachel Berenbaum 32,000 32,000 -0- *
Congregation B'nai 32,000 32,000 -0- *
Torah
Nathan L. Gold 32,000 32,000 -0- *
Moshe Mueller 48,000 48,000 -0- *
M&W Medical Supplies 32,000 32,000 -0- *
Ohr Somayach 64,000 64,000 -0- *
International
Mesivta of Long Beach 32,000 32,000 -0- *
Avrohom Kalmanowitz 32,000 32,000 -0- *
Karen Chaim Shlomo 32,000 32,000 -0- *
* Less than 1%.
(1) A total of 8,293,133 shares of Common Stock
registered hereby are held by the Selling Shareholders. A
total of 220,133 of such shares of Common Stock are held
directly. A total of 1,952,000 of such shares of Common Stock
may be issued upon the conversion of outstanding 1996
Preferred Stock (subject to adjustment if the price of the
Common Stock falls below $1.67 per share for five consecutive
trading days prior to conversion and upon certain other
circumstances). A total of 1,952,000 shares of Common Stock
registered hereby may be issued upon the exercise of the Unit
Warrants included in the Units previously issued by the
Company. A total of 3,904,000 shares of Common Stock
registered hereby may be issued upon the exercise 1996
Preferred Stock and Unit Warrants that may be acquired
pursuant to the Unit Options (244 Unit Options outstanding,
each of which is exercisable for one Unit consisting of one
share of 1996 Preferred Stock and a Unit Warrant). A total of
265,000 shares of Common Stock are issuable upon exercise of
various other Warrants with exercise prices ranging from $1.88
to $2.06. All of the foregoing underlying securities are
currently exercisable. See "Background of the Offering."
(2) Includes 200,000 shares directly beneficially owned.
(3) All such shares are directly beneficially owned.
DESCRIPTION OF SECURITIES
The Company's authorized capital consists of 15,000,000
shares of Common Stock, par value $.001 per share, and 2,500,000
shares of Preferred Stock. As of October 2, 1996, the Company
had outstanding 4,632,989 shares of Common Stock and 244
shares of 1996 Preferred Stock. As of such date, the Common
Stock was held of record by approximately 2,000 persons.
COMMON STOCK
Each share of Common Stock is entitled to one vote at all
meetings of shareholders. Shareholders are not permitted to
cumulate votes in the election of directors. All shares of
Common Stock are equal to each other with respect to
liquidation rights and dividend rights. There are no
preemptive rights to purchase any additional Common Stock. In
the event of liquidation, dissolution or winding up of the
Company, holders of the Common Stock will be entitled to
receive on a pro rata basis all assets of the Company
remaining after satisfaction of all liabilities and
preferences of the outstanding Preferred Stock. The
outstanding shares of Common Stock and the shares of Common
Stock issuable upon conversion or exercise of underlying
securities are or will be, as the case may be, duly and
validly issued, fully paid and non-assessable.
PREFERRED STOCK
The Board of Directors of the Company has adopted
Articles of Incorporation creating a class of preferred stock
consisting of 2,500,000 shares. Shares of preferred stock may
be issued from time to time in one or more series with such
designations, voting powers, if any, preferences and relative,
participating, optional or other special rights, and such
qualifications, limitations and restrictions thereof, as are
determined by resolution of the Board of Directors. In
connection with the Unit Offerings, the Company has designated
an aggregate of 488 shares of Preferred Stock as 1996
Convertible Preferred Stock, $10,000 par value per share (the
"1996 Preferred Stock" or "Preferred Stock").
The following summarizes certain terms and conditions of
the 1996 Preferred Stock:
Dividends. Holders of shares of 1996 Preferred Stock
are entitled to receive, when, as and if declared by the Board
of Directors out of funds at the time legally available
therefor, cash dividends at an annual rate of 10% per annum,
payable quarterly, on the last day of each fiscal quarter.
Liquidation Rights. In the event of any liquidation,
dissolution or winding up of the Company, holders of shares of
Preferred Stock are entitled to receive the liquidation
preference of $10,000 per share, plus an amount equal to any
accrued and unpaid dividends to the payment date, and no more,
before any payment or distribution is made to the holders of
Common Stock, or any series or class of the Company's stock
hereafter issued that ranks junior as to liquidation rights to
the Preferred Stock. However, the holders of the shares of
the Preferred Stock will not be entitled to receive the
liquidation preference of such shares until the liquidation
preference of any other series or class of the Company's stock
hereafter issued that ranks senior as to liquidation rights to
the Preferred Stock (the "Senior Liquidation Stock") has been
paid in full. The holders of Preferred Stock and all series
or classes of the Company's stock hereafter issued that rank
on a parity as to liquidation rights with the Preferred Stock
(the "Parity Stock") are entitled to share ratably, in
accordance with the respective preferential amounts payable on
such stock, in any distribution (after payment of the
liquidation preference of the Senior Liquidation Stock, if
any) which is not sufficient to pay in full the aggregate of
the amounts payable thereon. After payment in full of the
liquidation preference of the shares of the Preferred Stock,
the holder of such shares will not be entitled to any further
participation in any distribution of assets by the Company.
Neither a consolidation, merger or other business combination
of the Company with or into another corporation or other
entity nor a sale or transfer of all or part of the Company's
assets for cash, securities or other property will be
considered a liquidation, dissolution or winding up of the
Company.
Voting Rights. The holders of the Preferred Stock will
have no voting rights except as described below or as required
by law. In exercising any such vote, each outstanding share
of Preferred Stock will be entitled to one vote, excluding
shares held by the Company or any entity controlled by the
Company, which shares shall have no voting rights.
Redemption. If on July 1, 1998, (a) a registration
statement under the Act registering the Common Stock of the
Company into which the 1996 Convertible Preferred Stock is
convertible is not effective or (b) the Common Stock of the
Company is not then traded on a national securities exchange,
the Company shall, at the written election of the holder of
any outstanding shares of 1996 Preferred Stock received on or
before July 31, 1998, redeem such shares at the redemption
price per share of $10,000 plus any accrued and unpaid
dividends thereon, whether or not declared, to June 30, 1998.
Conversion Provisions. Subject to certain anti-dilution
adjustments, the holder of each share of 1996 Preferred Stock
may convert such share into the number of shares of Common
Stock determined by dividing $10,000, plus any accrued but
unpaid dividends, by the lesser of (i) $1.25 or (ii) 75% of
the average of the closing bid price per share of Common Stock
during the five trading days immediately prior to the date of
such conversion.
Other Provisions. As of October 8, 1996, there were 244
outstanding shares of 1996 Preferred Stock. The remaining
shares are reserved for issuance pursuant to the Unit Options.
The holders of shares of 1996 Preferred Stock have no preemptive
rights with respect to any securities of the Company.
TRANSFER AGENT
The Company has retained American Securities Transfer,
Inc., 1825 Lawrence Street, Suite 444, Denver, Colorado 80202,
as Transfer Agent and Registrar for the Company's Common
Stock.
PLAN OF DISTRIBUTION
This Prospectus may be used from time to time by the
Selling Shareholders to offer and sell an aggregate of
8,293,133 Shares. Shares may be sold from time to time
directly by the Selling Shareholders or by pledgees, donees,
transferees or other successors in interest. Alternatively,
Shares may be offered from time to time by the holders to or
through brokers or dealers who may act solely as agent, or who
may acquire Shares as principal. The distribution of Shares
may be effected in one or more transactions that may take
place on the Nasdaq SmallCap Market, including block trades,
ordinary broker's transactions, privately negotiated
transactions or through sales to one or more broker/dealers
for resale of such securities as principals, at market prices
prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Usual and
customary or specifically negotiated brokerage fees,
commissions or discounts may be paid by these holders in
connection with such sales, which such fees, commissions or
discounts may be deemed to be "underwriting compensation"
within the meaning of the 1933 Act. In addition, in
connection with such sales, the holders and any participating
brokers or dealers may be deemed "underwriters" as such term
is defined in the 1933 Act. The Company has agreed to bear
all expenses other than underwriting discounts and selling
commissions, state and local transfer taxes, and fees and
expenses of counsel or other advisors to the Selling
Shareholders, in connection with the preparation and filing of
the Registration Statement of which this Prospectus forms a
part and the printing of this Prospectus and otherwise in
connection with the registration of the Shares. The Company
estimates such expenses at $30,000. The Registration
Statement of which this Prospectus forms a part must be
current at any time during which a Selling Shareholder sells
Shares.
Selling Shareholders may also offer the Shares covered
by this Prospectus under other registration statements or
pursuant to exemptions from the registration requirements of
the 1933 Act, including sales which meet the requirements of
Rule 144 under the 1933 Act. Selling Shareholders should seek
advice from their own counsel with respect to the legal
requirements for such sales.
This Prospectus may be supplemented or amended from time
to time to reflect its use relating to the Common Stock for
resales by Selling Shareholders not named in this Prospectus
as such who obtain the right to sell Shares hereunder.
LEGAL MATTERS
The validity of the securities of the Company offered
will be passed on for the Company by LeBoeuf, Lamb, Greene &
MacRae, L.L.P., a limited liability partnership, 633
Seventeenth Street, Suite 2800, Denver, Colorado 80202.
EXPERTS
The financial statements of the Company appearing in the
Company's Annual Report (Form 10-KSB) for the year ended
December 31, 1995 have been audited by Ehrhardt, Keefe Steiner
& Hoffman, P.C., independent certified public accountants as
set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance
upon such report given upon the authority of such firm as
experts in accounting and auditing.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Amount Payable
Item by the Company
Registration Fee - Securities and Exchange $ 7,821.28
Commission
Nasdaq SmallCap filing fee $ 7,500
Legal Fees and Expenses $ 8,000*
Accounting Fees and Expenses $ 1,500*
Blue Sky Fees (including cost of counsel) $ 3,000*
Printing and Engraving $ 1,000*
Miscellaneous Expenses $ 1,178.72*
_________
Total $30,000
__________
_____________________
* Indicates estimate for the purpose of this filing.
Item 15. Indemnification of Directors and Officers.
The Colorado Business Corporation Act permits a
corporation organized thereunder to indemnify its directors
and officers for certain of their acts. The Articles of
Incorporation of the Company have been framed so as to conform
to the Colorado Business Corporation Act.
In general, any officer, director, employee or agent may
be indemnified against expenses, fines, settlements or
judgments arising in connection with a legal proceeding to
which such person is a party, if that person's actions were in
good faith, were believed to be in the Company's best interest
and were not unlawful. Unless such person is successful upon
the merits in such an action, indemnification may be awarded
only after a determination by independent decision of the
Board of Directors, by legal counsel or by a vote of the
shareholders that the applicable standard of conduct were met
by the person to be indemnified.
The circumstances under which indemnification is granted
in connection with an action brought on behalf of the Company
are generally the same as those set forth above; however, with
respect to such actions, indemnification is granted only with
respect to expenses actually incurred in connection with the
defense or settlement of the action. In such actions, the
person to be indemnified must have acted in good faith, in a
manner believed to have been in the Company's best interest
and with respect to which such person was not adjudged liable
for negligence or misconduct.
Indemnification may also be granted pursuant to the
terms of agreements which may be entered into in the future
pursuant to a vote of shareholders or directors. The
statutory provision cited above and the referenced portion of
the Articles of Incorporation also grant the power to the
Company to purchase and maintain insurance which protects it
officers and directors against any liabilities incurred in
connection with their services in such a position, and such a
policy may be obtained by the Company in the future.
Item 16. Exhibits.
The following is a list of Exhibits filed as part of
this Registration Statement and which are incorporated herein.
Exhibit No.
3.1 Certificate of Designation of 1996 Convertible Preferred
Stock.
3.2 Articles of Amendment to Articles of Incorporation.
4.1 Form of Unit Warrant.
5.1 Opinion and Consent of LeBoeuf, Lamb, Greene & MacRae,
L.L.P., regarding legality of the securities registered
hereby.
10.1 Form of Registration Rights/Purchase Agreement relating
to Unit Offering.
23.1 Consent of LeBoeuf, Lamb, Greene & MacRae, L.L.P.
(included in Exhibit 5.1).
23.2 Consent of Ehrhardt, Keefe Steiner & Hottman, P.C.,
independent certified public accountants for the
Company.
24. Power of Attorney.*
__________________________
*Previously filed.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to 424(b) of the Act if, in the aggregate, the change in
volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration
statement.
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do
not apply if the registration statement is on Form S-3 or Form
S-8, and the information required to be included in a post-
effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to section
14 or section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(4) That, for the purposes of determining any liability
under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) of
Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this registration statement shall
be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
thereof.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 (the "Act") may be permitted to
directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act, and is
therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on
Form S-3 and has duly caused this Registration Statement or
Amendment to be signed on its behalf by the undersigned
thereunto duly authorized in the City of Denver, State of
Colorado on October 10, 1996.
INTERNATIONAL NURSING SERVICES, INC.
By: /s/ John P. Yeros
John P. Yeros, Chief Executive
Officer
Each person whose signature appears below constitutes and
appoints John P. Yeros his attorney-in-fact, with full power
of substitution, for him in any and all capacities, to sign
any amendments to this Registration Statement, and to file the
same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that said attorney-in-fact, or
his substitute or substitutes, may do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement or Amendment has been signed
by the following persons in the capacities and on the dates
indicated below.
Signature Title Date
/s/ John P. Yeros Chairman of the Board and October 10,
John P. Yeros Chief Executive Officer 1996
(Principal Executive Officer)
/s/Robin M. Bradbury* Chief Financial Officer October 10,
Robin M. Bradbury (Principal Financial 1996
and Accounting Officer)
/s/ Colleen Dougherty-Gray* Director October 10,
Colleen Dougherty-Gray 1996
/s/ Charles Powell* Director October 10,
Charles Powell 1996
/s/ Thomas J. Oberle* Director October 10,
Thomas J. Oberle 1996
*By: /s/ John P. Yeros
John P. Yeros
Attorney-In-Fact
INDEX TO EXHIBITS
3.1 Certificate of Designation of 1996 Convertible Preferred
Stock.
3.2 Articles of Amendment to Articles of Incorporation.
4.1 Form of Unit Warrant.
5.1 Opinion and Consent of LeBoeuf, Lamb, Greene & MacRae,
L.L.P., regarding legality of the securities registered
hereby.
10.1 Form of Registration Rights/Purchase Agreement relating
to Unit Offering.
23.1 Consent of LeBoeuf, Lamb, Greene & MacRae, L.L.P.
(included in Exhibit 5.1).
23.2 Consent of Ehrhardt, Keefe Steiner & Hottman, P.C.,
independent certified public accountants for the Company.
24. Power of Attorney.*
________________________
*Previously filed.
EXHIBIT 3.1
CERTIFICATE OF DESIGNATION
OF
1996 CONVERTIBLE PREFERRED STOCK
OF INTERNATIONAL NURSING SERVICES, INC.
INTERNATIONAL NURSING SERVICES, INC., a corporation
organized under the laws of the State of Colorado (the "Company")
hereby designates a class of Preferred Stock as follows:
1. Designation and Amount.
360 shares of the authorized shares of Preferred Stock of
the Company are hereby designated "1996 Convertible Preferred
Stock" (the "1996 Convertible Preferred Stock"). All shares of
1996 Convertible Preferred Stock shall rank prior, as to both
payment of dividends and as to distribution of assets upon the
voluntary or involuntary liquidation, dissolution or winding up
of the Company to all of the Company's now or hereafter issued
common stock (the "Common Stock"), and any other series of
capital stock of the Company, other than the 12% Cumulative
Convertible Preferred Stock, that is not, by its terms, senior to
or pari passu with the 1996 Convertible Preferred Stock, and
shall rank junior to the 12% Cumulative Convertible Preferred
Stock of the Company.
2. Dividends.
(1) Except as specifically described herein, the registered
owners of 1996 Convertible Preferred Stock shall not be entitled
to receive any dividends. If no registration statement under the
Securities Act of 19933 (the "Act") registering the shares of
Common Stock of the Company into which the 1996 Convertible
Preferred Stock is convertible is effective on the date 180 days
after the date of issuance of the first shares of 1996
Convertible Preferred Stock to be issued (the "Original Issuance
Date") or if any such registration statement ceases to be
effective at any time prior to the third anniversary of the date
on which such registration statement first becomes effective, the
registered owners of 1996 Convertible Preferred Stock shall be
entitled to receive out of assets of the Company legally
available therefor, dividends for any period, if any, following
the Original Issuance Date during which such registration
statement is not effective at the rate of 10% per annum for the
first 90 days during which such registration statement is not
effective and at the rate of 18% per annum for each additional
day during which such registration statement is not effective.
Dividends shall accrue without interest and be cumulative and
shall be payable to the registered owners of 1996 Convertible
Preferred Stock out of assets of the Company legally available
therefore, quarterly in arrears on the last day of each fiscal
quarter of the Company. Dividends shall be payable to
shareholders of record on such record dates not exceeding 30 days
preceding each such dividend payment date, as shall be fixed for
that purpose by the Board of Directors in advance of such
dividend payment date.
(2) So long as any share of 1996 Convertible Preferred
Stock is outstanding, the Company shall not (a) declare or pay
any dividend or make any other distribution (other than dividends
payable solely in Common Stock or other capital stock ranking
junior as to dividend rights to the 1996 Convertible Preferred
Stock) on the Common Stock or any other class or series of
capital stock of the Company ranking, as to dividends, junior to
the 1996 Convertible Preferred Stock, or set funds aside
therefor, or (b) purchase, redeem or otherwise acquire, any of
the Common Stock, or any other class of capital stock of the
Company ranking junior as to dividends to the 1996 Convertible
Preferred Stock (other than in exchange for Common Stock or other
class of capital stock ranking junior as to dividends to the 1996
Convertible Preferred Stock) or set funds aside therefor.
(3) If at any time any dividend on any capital stock of the
Company ranking senior as to dividends to the 1996 Convertible
Preferred Stock ("Senior Dividend Stock") shall be in default, in
whole or in part, then no dividend shall be paid or declared and
set apart for payment on the 1996 Convertible Preferred Stock
unless and until all accrued and unpaid dividends with respect to
the Senior Dividend Stock shall have been paid or declared and
set apart for payment. No dividends shall be paid or declared
and set apart for payment on the 1996 Convertible Preferred Stock
or on any capital stock ranking pari passu with the 1996
Convertible Preferred Stock in the payment of dividends (the
"Parity Dividend Stock") for any period unless a pro rata
dividend has been, or contemporaneously is, paid or declared and
set apart for payment on the Parity Divided Stock or the 1996
Convertible Preferred Stock, as the case may be, so that the
amount of dividends paid or declared and set aside for payment
per share on the 1996 Convertible Preferred Stock and the Parity
Dividend Stock shall in all cases bear to each other the sam
ratio that accrued and unpaid dividend per share on the shares of
1996 Convertible Preferred Stock and the Parity Dividend Stock
bear to each other.
(4) Subject to the foregoing provisions, the holders of
Common Stock, the Parity Dividend Stock and each other class of
capital stock of the Company which is junior as to dividends to
the 1996 Convertible Preferred Stock shall be entitled to
receive, as and when declared by the Board of Directors out of
the remaining assets of the Company legally available therefor,
such dividends (payable in cash, capital shares or otherwise) as
the Board of Directors may from time to time determine.
(5) Any reference to "distribution" contained in this
Section II shall not be deemed to include any distribution made
in connection with any liquidation, dissolution, or winding up of
the Company.
3. Liquidation.
(1) In the event of any liquidation, dissolution or winding
up of the Company, whether voluntary or involuntary, then out of
the assets of the Company before any distribution or payment to
the holders of the Common Stock or any other class of capital
stock of the Company ranking junior as to liquidation preferences
to the 1996 Convertible Preferred Stock, but after distribution
to and subject to the rights of holders of capital stock of the
Company ranking senior as to liquidation rights to the Preferred
Stock, the holders of the 1996 Convertible Preferred Stock shall
be paid the Liquidation Value of the 1996 Convertible Preferred
Stock then outstanding and the holders of the 1996 Convertible
Preferred Stock shall be entitled to no other or further
distribution.
(2) The Liquidation Value of the 1996 Convertible Preferred
Stock shall be $10,000 per share plus the amount of any dividends
which have accrued thereon to the close of business on the date
of such liquidation, dissolution or winding up and remain unpaid,
whether or not such dividends have been earned or declared.
(3) After payment in full to the holders of (a) any capital
stock ranking senior as to liquidation rights to the 1996
Convertible Preferred Stock, (b) the 1996 Convertible Preferred
Stock and (c) any class of stock hereafter issued that ranks on a
parity as to liquidation rights with the 1996 Convertible
Preferred Stock, of the sums which such holders are entitled to
receive in such case, the remaining assets of the Company shall
be distributed among and paid to the holders of the Common Stock
and any other class of capital stock of the Company ranking
junior to the 1996 Convertible Preferred Stock.
(4) If the assets of the Company available for distribution
to its shareholders shall be insufficient to permit payment in
full to the holders of the 1996 Convertible Preferred Stock and
all other series of preferred shares ranking equally as to
liquidation preferences with the 1996 Convertible Preferred Stock
of sums which such holders are entitled to receive, then all of
the assets available for distribution to such holders shall be
distributed among and paid to such holders ratably in proportion
to the respective amounts that would be payable per share if such
assets were sufficient to permit payment in full.
(5) The consolidation or merger of the Company with any
other corporation or corporations or a sale of all or
substantially all of the assets of the Company shall not be
deemed a liquidation, dissolution or winding up of the Company
within the meaning of this Section III.
4. Redemption.
(1) If on July 1, 1998 (a) a registration statement under
the Act registering the Common Stock of the Company into which
the 1996 Convertible Preferred Stock is convertible is not
effective or (b) the Common Stock of the Company is not then
traded on NASDAQ or another national securities exchange, the
Company shall, at the written election of the holder of any
outstanding shares of 1996 Convertible Preferred Stock received
on or before July 31, 1998, redeem such shares of 1996
Convertible Preferred Stock at the redemption price per share of
$10,000 plus any accrued and unpaid paid dividends thereon,
whether or not declared, to June 30, 1998.
(2) The redemption price for any shares of 1996 Convertible
Preferred Stock to be redeemed hereunder shall be payable in
cash, out of funds legally available therefore, as soon as
practicable after July 31, 1998. If the Company has insufficient
funds legally available to pay the redemption price of all of the
shares of 1996 Convertible Preferred Stock tendered for
redemption, the Company shall redeem as many shares as it has
funds legally available therefore pro rata among the shareholders
tendering 1996 Convertible Preferred Stock for redemption and
shall continue to be obligated to redeem the remaining shares
tendered for redemption when and as funds become legally
available therefore, subject to the right of any tendering
shareholder to withdraw its election to have such shares
redeemed. Any election to have any shares of 1996 Convertible
Preferred Stock redeemed pursuant hereto shall be accompanied
with the certificates representing the shares being tendered for
redemption.
5. Voting Rights.
The holders of the 1996 Convertible Preferred Stock shall
have no voting rights except as required by law.
6. Conversion; Anti-dilution Provisions.
(1) Subject to the provisions of this Section VI, each
share of 1996 Convertible Preferred Stock may be converted at the
option of the holder thereof at any time after issuance thereof
through and including the third anniversary of the issuance
thereof into fully paid and non-assessable shares of Common Stock
of the Company, in the manner and upon the terms and conditions
hereinafter set forth in paragraphs (2) and (3) of this Section
VI.
(2) The holder of each share of 1996 Convertible Preferred
Stock may convert such share of 1996 Convertible Preferred Stock
into the number of shares of Common Stock determined by dividing
$10,000, plus any accrued but unpaid dividends on such share of
1996 Convertible Preferred Stock, by the lesser of (i) $1.25 or
(ii) 80% of the average of the closing bid price of one share of
Common Stock during the five trading days immediately prior to
the date of such conversion as determined pursuant to subsection
(3) of this Section IV of such conversion.
(3) In order to convert the 1996 Convertible Preferred
Stock into Common Stock, the holder thereof shall surrender at
the principal office of the Company (or at such other place as
the Board of Directors of the Corporation shall have reasonably
designated for the purpose) the certificate or certificates for
such 1996 Convertible Preferred Stock properly endorsed in blank
for transfer or accompanied by a proper instrument of assignment
or transfer in blank, together with a written request for
conversion stating the name or names in which such holder wishes
the certificate or certificates for such Common Stock to be
issued and, if the certificate or certificates are to be issued
in a name or names other than such holder, payment by such holder
of all applicable transfer taxes. The Company shall, as soon as
practicable thereafter, issue and deliver to such holder, or to
the nominee or nominees of such holder, a certificate or
certificates for the number of shares of Common Stock to which
such holder shall be entitled as aforesaid. The 1996 Convertible
Preferred Stock shall be deemed to be converted, and the person
or persons in whose name or names any certificate or certificates
for Common Stock shall be issuable upon such conversion shall be
deemed to have become for all purposes a holder or holders of
record of such Common Stock, at the close of business on the date
upon which the Company receives the written request for
conversion covering such shares (which may be delivered by
facsimile transmission). The Company will pay all issue taxes,
if any, incurred upon the issue of common Stock upon conversion
of the 1996 Convertible Preferred Stock, provided that the
Company will not pay any transfer or other taxes incurred by
reason of the issue of such Common Stock in a name or names other
than that in which such 1996 Convertible Preferred Stock so
converted were registered. No fractional shares shall be issued
upon conversion, and the Company shall pay cash in lieu of
issuing fractional shares based upon the closing bid price of one
share of Common Stock on the business day immediately preceding
the date of conversion. If more than one certificate
representing shares of 1996 Convertible Preferred Stock shall be
surrendered for conversion at one time by the same holder, the
number of full shares issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of 1996
Convertible Preferred Stock represented by such certificates, or
the specified portions thereof to be converted, so surrendered.
All 1996 Convertible Preferred Stock which shall have been
converted as provided in this Section VI shall no longer be
deemed to be outstanding and all rights with respect to such 1996
Convertible Preferred Stock shall forthwith cease and terminate
except for the right of the holders thereof to receive Common
Stock. Any 1996 Convertible Preferred Stock surrendered for
conversion shall be cancelled, retired and thereafter not
reissued.
(4) Protection Against Dilution.
(A) If at any time or from time to time after the date
of issuance of 1996 Convertible Preferred Stock, the Company
determines to distribute to the holders of the Common Stock (i)
securities other than Common Stock, or (ii) property other than
cash, without payment therefor, then, in each such case, the
Company shall provide written notice to each holder of the 1996
Convertible Preferred Stock at least 30 days prior to the
effective date of any such distribution. During such 30 day
period, the holder of the 1996 Convertible Preferred Stock may,
at its election, convert the 1996 Convertible Preferred Stock
into Common Stock of the Company and, if so converted, the
holders shall be entitled to receive such securities or property,
other than cash, which are distributable upon the Common Stock of
the Company at the effective date.
(B) In case the Company shall, after the date of
issuance of any 1996 Convertible Preferred Stock, (i) pay a
dividend or make a distribution on its capital shares in Common
Stock in capital stock or securities convertible into capital
stock, (ii) subdivide its outstanding shares of Common Stock into
a greater number of shares, (iii) combine its outstanding shares
of Common Stock into a smaller number of shares, or (iv) issue by
reclassification of its Common Stock any shares of capital stock
of the Company, the number of shares of Common Stock into which
the 1996 Convertible Preferred Stock may be converted in effect
immediately prior thereto shall be adjusted so that the holder of
any 1996 Convertible Preferred Stock surrendered for conversion
immediately thereafter would be entitled to receive the number of
shares of Common Stock or other capital shares of the Company
which he would have owned immediately following such action had
such 1996 Convertible Preferred Stock been converted immediately
prior thereto. An adjustment made pursuant to this subsection
shall become effective immediately after the record date of such
transaction. If, as a result of an adjustment made pursuant to
this subsection, the holder of any 1996 Convertible Preferred
Stock thereafter surrendered for conversion shall become entitled
to receive two or more classes of capital shares of the Company,
the Board of Directors shall determine the allocation of the
adjustment between or among such classes of capital shares.
(C) Whenever the number of shares of Common Stock into
which the 1996 Convertible Preferred Stock may be converted is
adjusted as provided in this Section VI and upon any modification
of the rights of a holder of 1996 Convertible Preferred Stock in
accordance with this Section VI, the Company shall promptly mail
to the holders of the 1996 Convertible Preferred Stock a
certificate of the chief financial officer or secretary of the
Company setting forth the number of shares of Common Stock into
which the 1996 Convertible Preferred Stock is convertible after
such adjustment or the effect of such modification, a brief
statement of the facts requiring such adjustment or modification
and the manner of computing such adjustment or modification.
(D) In case of any consolidation or merger to which
the Company is a party other than a merger or consolidation in
which the Company is the continuing corporation, or in case of
any sale or conveyance to another entity of the property of the
Company as an entirety or substantially as an entirety, or in the
case of any statutory exchange of securities with another
corporation (including any exchange effected in connection with a
merger of a third corporation into the Company), the holders of
1996 Convertible Preferred Stock shall have the right thereafter
to convert such 1996 Convertible Preferred Stock into the kind
and amount of securities, cash or other property which such
holders would have owned or have been entitled to receive
immediately after such consolidation, merger, statutory exchange,
sale or conveyance had such 1996 Convertible Preferred Stock been
converted immediately prior to the effective date of such
consolidation, merger, statutory exchange, sale or conveyance,
and effective provision shall be made in the Articles of
Incorporation of the resulting or surviving corporation or
otherwise so that the provisions set forth in this paragraph (D)
of Section VI for the protection of the conversion rights of the
1996 Convertible Preferred Stock shall thereafter be applicable,
as nearly as reasonably may be, to any such shares and other
securities and property deliverable upon conversion of the 1996
Convertible Preferred Stock remaining outstanding or other
convertible securities received by the holders in place thereof,
and any such resulting or surviving corporation shall expressly
assume the obligation to deliver, upon the exercise of the
conversion privilege, such shares, securities or property as the
holders of the 1996 Convertible Preferred Stock, or other
convertible securities receive in place thereof, shall be
entitled to receive pursuant to the provisions hereof, and to
make provisions for the protection of the conversion right as
above provided. The provisions of this subsection (D) shall
similarly apply to successive consolidation, merger, statutory
exchanges, sales or conveyances. Notice of any such
consolidations, mergers, statutory exchanges, sales or
conveyances and of said provisions so proposed to be made, shall
be mailed to the holders of 1996 Convertible Preferred Stock not
less than 30 days prior to such event. A sale of all or
substantially all of the assets of the Company for consideration
consisting primarily of securities shall be deemed a
consolidation or merger for the foregoing purposes.
(5) Reservation. The Company shall at all times
reserve and keep available out of its authorized but unissued
Common Stock, solely for the purpose of effecting the conversion
of 1996 Convertible Preferred Stock, the number of shares of
Common Stock from time to time issuable upon the conversion of
1996 Convertible Preferred Stock then outstanding and shall take
all such action and obtain all such permits or orders as may be
necessary to enable the Company lawfully to issue Common Stock
upon the conversion of 1996 Convertible Preferred Stock. In
addition, the Company shall also reserve and keep available such
other securities and property as may from time to time be
deliverable upon conversion of the 1996 Convertible Preferred
Stock and shall take all such action and obtain all such permits
or orders as may be necessary to enable the Company lawfully to
deliver such other securities and property upon the conversion of
such 1996 Convertible Preferred Stock. So long as any 1996
Convertible Preferred Stock shall be outstanding, the Company
will use its best efforts to take all corporate action necessary
in order that the Company may validly and lawfully issue fully
paid and nonassessable Common Stock upon conversion of the 1996
Convertible Preferred Stock, including, without limitation, the
calling of a special shareholders meeting for the purpose of
increasing the number of authorized but unissued shares of Common
Stock of the Company as may be necessary.
EXHIBIT 3.2
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Business
Corporation Act, the undersigned corporation adopts the
following Articles of Amendment to its Articles of
Incorporation:
FIRST: The name of the corporation is International Nursing
Services, Inc.
SECOND: The following amendment to the Articles of
Incorporation was adopted on September 10, 1996, as prescribed
by the Colorado Business Corporation Act, in the manner marked
with an X below:
X Such amendment was adopted by the board of directors
where shares have been issued, without shareholder action and
shareholder action was not required.
The first sentence of Part I of Section 6
of Article IV of the Articles of
Incorporation of the Company is hereby
amended and restated in its entirety as
follows:
"488 shares of the authorized shares of
Preferred Stock of the Company are hereby
designated "1996 Convertible Preferred
Stock" (the "Convertible Preferred
Stock").
THIRD: The manner, if not set forth in such amendment, in
which any exchange, reclassification, or cancellation of
issued shares provided for in the amendment shall be effected,
is as follows:
INTERNATIONAL NURSING SERVICES, INC.
____________________________________
By /s/ John P. Yeros
_________________________________
Its Chief Executive Officer
___________________________
Title
EXHIBIT 4.1
FORM OF UNIT WARRANT
Neither this Warrant nor the shares of Common Stock issuable on
exercise of this Warrant have been registered under the
Securities Act of 1933. None of such securities may be trans-
ferred in the absence of registration under such Act and regis-
tration or qualification under applicable state securities laws
or an opinion of counsel to the effect that such registrations or
qualifications are not required.
INTERNATIONAL NURSING SERVICES, INC.
WARRANT
DATED: July __, 1996
Number of Shares:
Holder:
Address:
THIS CERTIFIES THAT the holder of this Warrant (Holder) is
entitled to purchase from INTERNATIONAL NURSING SERVICES, INC., a
Colorado corporation (hereinafter called the "Company"), at $2.50
per share the number of shares of the Company's common stock set
forth above ("Common Stock"). This Warrant shall expire on the
third anniversary of the date of the date of issuance of this
Warrant, but such expiration shall be extended by one day for
each day after February 1, 1997 on which the registration
statement referred to in an agreement of even date herewith is
not in effect with respect to the shares purchasable under the
Warrant.
1. This Warrant and the Common Stock issuable on
exercise of this Warrant (the "Underlying Shares") may be
transferred, sold, assigned or hypothecated, only if registered
by the Company under the Securities Act of 1933 (the "Act") and
registered or qualified under any applicable state securities
laws, or if the Company has received from counsel to the Holder
who is reasonably satisfactory to the Company a written opinion
which is reasonably satisfactory to the Company to the effect
that registration of the Warrant or the Underlying Shares is not
necessary in connection with such transfer, sale, assignment or
hypothecation. The Warrant and the Underlying Shares shall be
appropriately legended to reflect this restriction and stop
transfer instructions shall apply.
2. The Holder is entitled to certain registration rights
under an agreement of even date herewith.
3. (A) Any permitted assignment of this Warrant shall be
effected by the Holder by (i) executing the form of assignment at
the end hereof, (ii) surrendering the Warrant for cancellation at
the office of the Company, accompanied by the opinion of counsel
to the Holder referred to above; and (iii) unless in connection
with an effective registration statement which covers the sale of
this Warrant and or the shares underlying the Warrant, delivery
to the Company of a statement by the transferee (in a form
acceptable to the Company and its counsel) that such Warrant is
being acquired by the transferee for investment and not with a
view to its distribution or resale; whereupon the Company shall
issue, in the name or names specified by the Holder (including
the Holder) new Warrants representing in the aggregate rights to
purchase the same number of Shares as are purchasable under the
Warrant surrendered. Such Warrants shall be exercisable
immediately upon any such assignment of the number of Warrants
assigned. The transferor will pay all relevant transfer taxes.
Replacement warrants shall bear the same legend as is borne by
this Warrant.
4. The term "Holder" should be deemed to include any permitted
record transferee of this Warrant.
5. The Company covenants and agrees that all shares of
Common Stock which may be issued upon exercise hereof will, upon
issuance, be duly and validly issued, fully paid and
non-assessable and no personal liability will attach to the
holder thereof. The Company further covenants and agrees that,
during the periods within which this Warrant may be exercised,
the Company will at all times have authorized and reserved a
sufficient number of shares of Common Stock for issuance upon
exercise of this Warrant and all other Warrants.
6. This Warrant shall not entitle the Holder to any voting rights
or other rights as a stockholder of the Company.
7. In the event that as a result of reorganization,
merger, consolidation, liquidation, recapitalization, stock
split, combination of shares or stock dividends payable with
respect to such Common Stock, the outstanding shares of Common
Stock of the Company are at any time increased or decreased or
changed into or exchanged for a different number or kind of share
or other security of the Company or of another corporation, then
appropriate adjustments in the number and kind of such securities
then subject to this Warrant and/or the exercise price of this
Warrant shall be made effective as of the date of such occurrence
so that both the position of the Holder upon exercise and the
total exercise price payable on such exercise will be the same as
they would have been had Holder owned immediately prior to the
occurrence of such events the Common Stock subject to this
Warrant. Such adjustment shall be made successively whenever any
event listed above shall occur and the Company will notify the
Holder of the Warrant of each such adjustment. Any fraction of a
share resulting from any adjustment shall be eliminated and the
price per share of the remaining shares subject to this Warrant
adjusted accordingly.
8. The rights represented by this Warrant may be exercised at any
time within the period above specified by (i) surrender of this
Warrant at the principal executive office of the Company (or such
other office or agency of the Company as it may designate by
notice in writing to the Holder at the address of the Holder
appearing on the books of the Company); (ii) payment to the
Company of the exercise price for the number of Shares specified
in the above-mentioned purchase form together with applicable
stock transfer taxes, if any; and (iii) unless in connection with
an effective registration statement which covers the sale of the
shares underlying the Warrant, the delivery to the Company of a
statement by the Holder (in a form acceptable to the Company and
its counsel) that such Shares are being acquired by the Holder
for investment and not with a view to their distribution or
resale.
The certificates for the Common Stock so purchased shall be
delivered to the Holder within a reasonable time, not exceeding
three business days after all requisite documentation has been
provided, after the rights represented by this Warrant shall have
been so exercised, and shall bear a restrictive legend with
respect to any applicable securities laws.
9. This Warrant shall be governed by and construed in
accordance with the laws of the State of Colorado. The Colorado
courts shall have exclusive jurisdiction over this instrument and
the enforcement thereof. Service of process shall be effective
if by certified mail, return receipt requested. All notices
shall be in writing and shall be deemed given upon receipt by the
party to whom addressed. This instrument shall be enforceable by
decrees of specific performances well as other remedies.
IN WITNESS WHEREOF, INTERNATIONAL NURSING SERVICES, INC. has
caused this Warrant to be signed by its duly authorized officers
under Its corporate seal, and to be dated as of the date set
forth above.
INTERNATIONAL NURSING SERVICES, INC.
By:
Title:
In the presence of:
EXHIBIT 10.1
FORM OF REGISTRATION RIGHTS/PURCHASE AGREEMENT
July 18, 1996
International Nursing Services, Inc.
360 South Garfield Street, Suite 640
Denver Colorado 80209
Gentlemen:
1. At a closing to occur at the offices of your company (the
Company) simultaneously herewith, the undersigned (Subscriber)
will for $10,000 per Unit (as defined below) purchase from you,
and you will sell, the number of Units set forth opposite Sub-
scriber's name below. Such purchase by Subscriber is part of an
offering in which an aggregate of 189 Units will be sold
simultaneously with such sale to Subscriber. Each Unit consists
of one share of the Company's 1996 Convertible Preferred Stock
with a conversion value of $10,000 (the Preferred) and 8,000
warrants to purchase a share of common stock of the Company at
$2.50 per share (each, a "Warrant" and, collectively, the
"Warrants"). The purchase price for these Units is being paid to
the Company, in cash, concurrently herewith.
2. (a) The Certificate of Designation for the Preferred
shall be in the form of Exhibit A. The Preferred and any accrued
but unpaid dividends thereon shall, at the option of the holder
and subject to the provisions of Section (b), be convertible at
any time prior to the third anniversary of the date of issue into
common stock of the Company ("Common Stock") at the lesser of
$1.25 per share or 75% of the average closing sales price of the
common stock on NASDAQ (or such other securities exchange where
the common stock may then be listed) during the last five trading
days prior to conversion. Dividends shall accrue on the Preferred
Stock from the date of issuance at 10% per annum, provided that
such rate shall be increased to 18% per annum during the period
(if any) after the 180th day after the date of this Agreement
and prior to the effectiveness of the Registration Statement (as
defined below). Dividends shall be payable on the last day of
each calendar quarter in cash. At the option of the Subscriber
and in addition to Subscriber s other remedies, the Company shall
redeem the Preferred at conversion value, together with accrued
dividends, on the second anniversary of the date of this
Agreement if the Company's common stock is not then trading on a
national securities exchange (including the NASDAQ National
Market System or the NASDAQ Small Cap Market or the New York
Stock Exchange or the American Stock Exchange, but excluding the
NASDAQ Bulletin Board or other NASDAQ or other listings) or if
the Registration Statement (as defined below) has not theretofore
been declared effective. The Preferred shall also be entitled to
priority over the common stock in liquidation.
(b) The Preferred shall be convertible at less than $0.875 only
to the extent that authorized but unissued shares of Common Stock
are available for such conversion taking into account unissued
shares reserved for issuance pursuant to outstanding warrants,
options, or other convertible securities, if any. The Company
shall at its annual meeting initially called for August 1996,
which meeting shall in fact be held in September 1996, seek
approval of an amendment of the Certificate of Incorporation of
the Company to authorize 10,000,000 additional shares of Common
Stock, the directors of the Company shall recommend to the
stockholders that they vote in favor of such amendment and such
increased number of authorized shares shall be reserved for
issuance on conversion of the Preferred and exercise of the
Warrants. If at any time or times thereafter there are
nevertheless not a sufficient number of authorized but unissued
shares of Common Stock available for the then conversion of the
Preferred and exercise of the Warrants, the Company shall
forthwith call a special stockholders meeting to approve the
amendment of the Certificate of Incorporation of the Company to
authorize such additional shares of Common Stock as shall be
required for such conversion and exercise, the directors of the
Company shall recommend to the stockholders that they vote in
favor of such amendment and such increased number of authorized
shares shall be reserved for issuance on conversion of the
Preferred and exercise of the Warrants. By separate agreement,
John Yeros has agreed to vote his shares in favor of each such
amendment. The period during which the Preferred shall be
convertible and during which the Registration Statement is
required to be effective shall each be extended by one day for
each day on which the Preferred shall not be convertible by
reason of the operation of this Section (b) and by an additional
day for each day after February 1, 1997 that the Registration
Statement shall not be effective.
(c) The Warrants shall be in the form of Exhibit B.
3. Subscriber is hereby granted the option (the "Option"),
exercisable by notice to the Company given at any time or times
before the expiration date set forth below, to purchase from the
Company a number of additional Units ("Option Units") equal in
the aggregate to not more than the number of Units for which
Subscriber subscribes in this Agreement. The purchase price for
each Option Unit shall be $10,000, and shall accompany Sub-
scriber's notice of exercise. The expiration date of the Option
shall be December 31, 1997 or, if later, the 30th day of the
effectiveness of the Registration Statement. Each Option Unit
shall in all respects be identical to the non-Escrow Units
subscribed for herein, provided that the date of issuance of the
Option Units shall be the date on which the Option was exercised
with respect thereto.
3a. The Company will on or before the 120th day after the
date of this Agreement file a registration statement on Form S-3
or, if Form S-3 is not then available, on such other SEC form as
the Company may select (the "Registration Statement") for the
public sale by the holders of the shares of common stock of the
Company which are issuable on conversion of the Preferred or upon
exercise of the Warrants (including any shares which were
theretofore issued or which may thereafter be issued on
conversion of Preferred or exercise of Warrants which were
theretofore issued upon exercise of the Option or which may
thereafter be issued should Subscriber thereafter exercise the
Option). The Company shall use its best efforts to cause the
Registration Statement to become effective not later than 90 days
after the date of filing, and to remain effective for three
years. The registration shall be accompanied by blue sky
clearances in such states as the holders may reasonably request.
The Company shall pay all expenses of the registration hereunder,
other than the holders' underwriting discounts. Registration
rights may be assigned to assignees of the Preferred, the
Warrants or the underlying stock.
4. (A) Subscriber represents and warrants that it is
purchasing the Units, and will purchase any Option Units, solely
for investment solely for its own account and not with a view to
or for the resale or distribution thereof. Subscriber
acknowledges receipt of a description attached hereto as Exhibit
C of certain risk factors concerning the Company and the Units,
and copies of the following information filed with the United
States Securities and Exchange Commission: (i) Annual Report on
Form 10-KSB for the fiscal year of the Company ended December 31,
1995, (ii) Quarterly Report on Form 10-QSB for the quarterly
period ended March 31, 1996, and (iii) Special Reports on Form
8-K dated December 28, 1995, January 10, 1996, January 15, 1996,
April 15, 1996 and April 19, 1996
(B) Subscriber understands that it may sell or otherwise transfer
the Units, the Preferred, the Warrants or the shares of Common
Stock issuable on conversion or exercise of the Preferred or the
Warrants only if such transaction is duly registered under the
Securities Act of 1933, as amended, under the Registration
Statement or otherwise, and is duly registered or qualified under
any applicable state securities laws, or if Subscriber shall have
received the favorable opinion of counsel to the holder, which
counsel and opinion shall be reasonably satisfactory to counsel
to the Company, to the effect that such sale or other transfer
may be made in the absence of registration under the Securities
Act of 1933, as amended, and in the absence of registration or
qualification under applicable state securities laws. The
certificates representing the aforesaid securities will be
legended to reflect these restrictions, and stop transfer
instructions will apply. Subscriber realizes that the Units are
not a liquid investment.
5. (A) Subscriber has not relied upon the advice of a
"Purchaser Representative" (as defined in Regulation D of the
Securities Act) in evaluating the risks and merits of this
investment. Subscriber has the knowledge and experience to
evaluate the Company and the risks and merits relating thereto.
(B) Subscriber represents and warrants that Subscriber is an
"accredited investor" as such term is defined in Rule 501 of
Regulation D promulgated pursuant to the Securities Act of 1933,
as amended, and shall be such on the date any shares are issued
to the holder; Subscriber acknowledges that Subscriber is able to
bear the economic risk of losing Subscriber's entire investment
in the shares and understands that an investment in the Company
involves substantial risks; Subscriber has the power and
authority to enter into this agreement, and the execution and
delivery of, and performance under this agreement shall not
conflict with any rule, regulation, judgment or agreement
applicable to the Subscriber; and Subscriber has invested in
previous transactions involving restricted securities.
6. This Agreement may not be changed or terminated except by
written agreement. It shall be binding on the parties and on
their personal representatives and permitted assigns. It sets
forth all agreements of the parties. It shall be enforceable by
decrees of specific performance (without posting bond or other
security) as well as by other available remedies.
Subscriber:
INTERNATIONAL NURSING SERVICES, INC.
By:
Title:
Number of Units:
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement of International Nursing Services, Inc. on Form S-3 of
our report dated March 27, 1996, included in the Annual Report on
Form 10-KSB of International Nursing Services, Inc. for the year
ended December 31, 1995. We also consent to the reference to our
firm under the caption "Experts" in such Registration Statement.
/s/ Ehrhardt Keefe Steiner & Hottman PC
October 10, 1996
Denver, Colorado
