Lyle B. Stewart, P.C.
3751 South Quebec Street
Denver, Colorado 80237
Tel. 303-267-0920
Fax. 303-267-0922
August 16, 1999
United States Securities and Exchange
Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Washington, D.C. 20459
Dear Madams and Sirs:
On behalf of my client, Medix Resources, Inc., and pursuant to Rule 101(a)(1)(i)
of Regulation S-T, filed herewith is its Form S-2 Registration Statement
registering 6,572,000 shares of its common stock to be sold by selling
shareholders. The related filing fee of $ 523.00 has been wire transferred to
the SEC's account at Mellon Bank.
If you have any questions about this filing, please contact the undersigned at
the telephone or fax numbers indicated above.
Very truly yours
/s/ Lyle B. Stewart
<PAGE>
As filed with the Securities and Exchange Commission on August __, 1999.
Registration No. 333-____
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
--------------------
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
MEDIX RESOURCES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Colorado 84-1087334
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
------------------------------- ----------------------
7100 E. Belleview Ave., Suite 301
Englewood, Colorado 80111
(303) 741-2045
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
JOHN P. YEROS
President and Chief Executive Officer
7100 E. Belleview Ave., Suite 301
Englewood, Colorado 80111
(303) 741-2045
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
------------------------------------------
Copies to:
LYLE B. STEWART, ESQ.
Lyle B. Stewart, P.C.
3751 S. Quebec Street
Denver, Colorado 80237
(303) 267-0920
------------------------------------------
Approximate date of commencement of proposed sale to the public: From time to
time after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: :
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to item 11(a)(1)
of this Form, check the following box: 9
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. 9
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. 9
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. 9
-------------------------------
CALCULATION OF REGISTRATION FEE
-------------------------------
Proposed
Title of Proposed Maximum
Securities Maximum Aggregate
to be Amount to be Offering Price Offering Amount of
Registered Registered Per Share (1) Price (1) Registration Fee
- ---------- ------------ -------------- ---------- ----------------
Common 6,572,000 $0.27 $1,774,440 $523
stock,
par
value
$.001
per share
(1) Estimated solely for the purpose of calculating the registration fee. In
accordance with Rule 457(c), the price shown is based upon the average of
the bid and the asked price of Medix's Common Stock on August 12, 1999, as
reported on the OTC Bulletin Board.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
SUBJECT TO COMPLETION
DATED AUGUST 17, 1999
PROSPECTUS
MEDIX RESOURCES, INC.
6,572,000 Shares of Common Stock
Some shareholders of Medix Resources, Inc. will have the right to offer and sell
up to 6,572,000 shares of our common stock under this Prospectus. Up to
3,476,000 of these shares may be issued upon conversion of currently outstanding
preferred shares. The remaining 3,096,000 shares are issuable upon exercise of
outstanding warrants.
Medix will not receive directly any of the proceeds from the sale of these
shares by the selling shareholders. Medix will pay the expenses of registration
of these shares.
The common stock is traded on the OTC Bulletin Board under the symbol "MDIX". On
August 12, 1999, the last sale price of the common stock was reported as $0.27.
The securities offered hereby involve a high degree of risk. See "RISK FACTORS"
beginning on page 3 for certain risks that should be considered by prospective
purchasers of the securities offered hereby.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is September __, 1999
<PAGE>
No dealer, salesman or other person has been authorized to give any information
or to make any representation not contained in or incorporated by reference in
this Prospectus and, if given or made, such information or representation must
not be relied upon as having been authorized by us, the selling shareholders or
any other person. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such an offer in such
jurisdiction. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that the
information herein is correct as of any time subsequent to the date hereof or
that there has been no change in our affairs since such date.
-----------------
TABLE OF CONTENTS
-----------------
Page
------
FORWARD-LOOKING STATEMENT................................................. 3
RISK FACTORS............................................................. 3
THE COMPANY............................................................... 9
USE OF PROCEEDS........................................................... 9
SELLING SHAREHOLDERS..................................................... 10
DESCRIPTION OF SECURITIES................................................. 11
PLAN OF DISTRIBUTION...................................................... 12
INDEMNIFICATION OF OFFICERS AND DIRECTORS................................ 13
AVAILABLE INFORMATION.................................................... 14
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE........................ 14
LEGAL MATTERS............................................................ 15
EXPERTS................................................................. 15
- 2 -
<PAGE>
FORWARD-LOOKING STATEMENTS
This Prospectus and the documents incorporated by reference into this Prospectus
contain forward-looking statements, which mean that they relate to events or
transactions that have not yet occurred, our expectations or estimates for
Medix's future operations, our growth strategies or business plans or other
facts that have not yet occurred. Such statements can be identified by the use
of forward-looking terminology such as "might", "may", "will", "could",
"expect", "anticipate", "estimate", "likely," "believe", or "continue" or the
negative thereof or other variations thereon or comparable terminology. The
following risk factors contain discussions of important factors that should be
considered by prospective investors for their potential impact on
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 and adversely from the
results expressed or implied by the forward-looking statements.
RISK FACTORS
An investment in our common stock:
o has a high degree of risk;
o is highly speculative;
o should only be considered by those persons or entities who can
afford to loose their entire investment.
In addition to the other information contained in this Prospectus, the following
risk factors should be carefully considered in evaluating our business and an
investment in our shares. The order in which the following risk factors are
presented does not indicate the relative magnitude of the risks described.
WE HAVE PRIOR OPERATING LOSSES AND A GOING CONCERN EXCEPTION FROM OUR AUDITORS
We reported net losses of ($5,422,000), ($515,000) and ($1,207,000) for the
years ended December 27, 1998, December 28, 1997 and December 29, 1996,
respectively, and ($1,199,000) for the six months ending June 27, 1999. At June
27, 1999, we had an accumulated deficit of ($14,360,000) and a working capital
deficit of ($2,088,000). We are currently delinquent in the payment of certain
of our current liabilities, including liabilities related to withholding tax
delinquencies. If any of those creditors instituted collection proceedings, we
could face financial failure if payments could not be made or extension
arrangements could not be negotiated. There is no assurance that we will achieve
a specific level of revenues, or that we will operate profitably in the future.
Our auditor's reports relating to the their audits of recent annual financial
statements have contained an explanatory paragraph describing that there is
substantial doubt about our ability to continue as a going concern.
OUR CONTINUING LOSSES AND OUR NEED FOR ADDITIONAL FINANCING
We had negative working capital of ($2,088,000) at June 27, 1999. We expect to
continue to experience loses, in the near term, as we attempt to develop our
Cymedix software products. The current operation of our business and our ability
to continue to develop our Cymedix software products will depend upon our
ability to obtain additional financing. We do not currently have a source of
funds for the funding of the development of our Cymedix software products. We
are attempting to meet our current cash flow needs by offering to sell our
medical staffing business, the financing of accounts receivable under terms that
have resulted in significant financing costs, and raising capital in the private
debt and equity markets. The sale of our medical staffing business, if it
occurs, will not be sufficient to fund our development budget for Cymedix. The
development and marketing of the Cymedix software products require substantial
capital investments. There can be no assurance that additional investments or
financings will be available to us as needed to support the development of
Cymedix products. Failure to obtain such capital on a timely basis could result
in lost business opportunities, the sale of the Cymedix business at a distressed
price or the financial failure of Medix.
- 3 -
OUR REVENUES ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS
Our operating results have experienced significant fluctuations in the past and
may do so in the future due to a number of factors including:
o the effect of regulatory and legislative developments on us;
o pricing trends in the healthcare staffing and the medical information
software industries;
o changes in third-party payor policies;
o availability of qualified personnel;
o reductions in demand for our services and products due to competition,
regulation and other factors;
o the ability of management to coordinate and implement a marketing
strategy; and
o costs associated with maintenance of quality control standards.
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 our ability to operate
profitably and our ability to continue as an operating entity. No assurances can
be given that we will be able to obtain sufficient debt or equity financing on
acceptable terms to enable us to survive periods of decreased cash flows.
THERE IS GREAT UNCERTAINTY IN THE HEALTHCARE INDUSTRY
The healthcare and medical services industry in the United States is in a period
of rapid change and uncertainty. Governmental programs have been proposed, and
some adopted, from time to time, to reform various aspects of the U.S.
healthcare delivery system. Some of these programs contain proposals to increase
government involvement in healthcare, lower reimbursement rates and otherwise
change the operating environment for our customers. In this process, healthcare
facilities are curtailing the use of interim staffing provided by vendors such
as us. We cannot predict with any certainty what impact, if any, proposals for
healthcare reforms might have on our business. As a result, major third party
payors of hospital services (insurance companies, Medicare and Medicaid) have
significantly revised payment procedures in an effort to contain healthcare
costs. These and other factors affecting the healthcare industry may have a
significant adverse impact on our operating results.
OUR DEPENDENCE ON CUSTOMER RELATIONSHIPS AND ABSENCE OF CUSTOMER AND CARE-GIVER
CONTRACTS
Our 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 our behalf. Although we have established customer and care giver
relationships in the markets in which we presently operate, there can be no
assurance these relationships will continue. None of the contracts by and
between us and our 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 we
will be the first interim staffing firm contacted by the hospital, this "first
call" right does not guarantee that we will achieve a specific level of, or any,
revenues as a result of such right. Likewise, contracts between us and our 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 we may not be
able to meet customer demand for qualified personnel, or that it can do so on a
cost-efficient basis.
- 4 -
OUR NEW SOFTWARE BUSINESS LINE
We acquired, through our subsidiary Cymedix Lynx Corporation, in January of
1998, a development stage medical software business. The uncertainties and risks
that accompany forward-looking statements are enhanced by our lack of experience
in this business. We had no experience in marketing of software products,
providing software support services, evaluating demand for products, financing a
software business and dealing with government regulation of software products.
As a developer of information systems, we will be required to anticipate and
adapt to evolving industry standards and new technological developments. The
market for our software products is characterized by:
o continued and rapid technological advances in both hardware and
software development;
o ongoing expenditures for research and development;
o the timely introduction of new products and enhancements to existing
products; and
o standards that are largely a function of user acceptance, and,
therefore, subject to change.
Our future success, if any at all, will depend in part upon our ability to
enhance existing products, to respond effectively to technology changes, and to
introduce new products and technologies to meet the evolving needs of its
clients in the health care information systems market. We are currently devoting
significant resources toward the development of products. There can be no
assurance that we will successfully complete the development of these products
in a timely fashion or that our current or future products will satisfy the
needs of the health care information systems market. Further, there can be no
assurance that products or technologies developed by others will not adversely
affect our competitive position or render its products or technologies
noncompetitive or obsolete.
RISKS OF INFRINGEMENT OF PROPRIETARY TECHNOLOGY
Our wholly-owned subsidiary, Cymedix Lynx Corporation, has been granted certain
patent rights, a trademark and copyrights relating to its software business.
The patent and intellectual property legal issues for software programs, such as
the Cymedix products, are complex and currently evolving. Since patent
applications are secret until patents are issued, in the United States, or
published, in other countries, we cannot be sure that it is first to file any
patent application. In addition, there can be no assurance that competitors,
many of which have far greater resources than we do, will not apply for and
obtain patents that will interfere with our ability to develop or market product
ideas that we have originated. Further, the laws of certain foreign countries do
not provide the protection to intellectual property that is provided in the
United States, and may limit our ability to market its products overseas. We
cannot give any assurance that the scope of the rights that we have been granted
to Cymedix are broad enough to fully protect our Cymedix software from
infringement.
- 5 -
Litigation or regulatory proceedings may be necessary to protect our
intellectual property rights, such as the scope of our patents. In fact, the
computer software industry in general is characterized by substantial
litigation. Such litigation and regulatory proceedings are very expensive and
could be a significant drain on our resources and divert resources from product
development. There is no assurance that we will have the financial resources to
defend our patent rights or other intellectual property from infringement or
claims of invalidity.
We also rely upon unpatented proprietary technology and no assurance can be
given that others will not independently develop substantially equivalent
proprietary information and techniques or otherwise gain access to or disclose
our proprietary technology or that we can meaningfully protect our rights in
such unpatented proprietary technology. We will use our best efforts to protect
such information and techniques, however, no assurance can be given that such
efforts will be successful. The failure to protect our intellectual property
could cause us to loose substantial revenues and to fail to reach its financial
potential over the long term.
OUR BUINESSES ARE HIGHLY COMPETITIVE
Medical Staffing Services
- -------------------------
The market for supplemental medical staffing and home care services is highly
competitive. Many of our existing and potential competitors have substantially
greater financial, marketing and personnel resources than we do and have
established reputations in the supplemental staffing industry. Accordingly, we
are 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 our larger competitors may gain an additional advantage
by offering enterprise-wide supplemental staffing for health care facilities.
Medical Personnel
- -----------------
In addition, our operations depend, to a significant degree, on its ability to
recruit qualified health care personnel. We face competition from other
companies in recruiting qualified health care personnel and there is no
assurance that qualified personnel will be available to us in the future or the
costs at which such personnel might be available. Our failure to recruit
qualified personnel, or a significant increase in our cost of such personnel,
could have a material adverse effect on our financial position and operations.
There can be no assurance that we 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.
Medical Information Software
- ----------------------------
Competition can be expected to emerge from established healthcare information
vendors and established or new Internet related vendors. The most likely
competitors are companies with a focus on clinical information systems and
enterprises with an Internet commerce or electronic network focus. Many of these
competitors will have access to substantially greater amounts of capital
resources than we have access to, for the financing of technical, manufacturing
and marketing efforts. Frequently, these competitors will have affiliations with
major medical product companies or software developers, who will assist in the
financing of such competitor=s product development. We will seek to raise
capital to develop Cymedix products in a timely manner, however, so long as our
operations remain underfunded, as they now are, we will be at a competitive
disadvantage.
Software Development Personnel
- ------------------------------
The success of the development of our Cymedix software is dependent to a
significant degree on our key management and technical personnel. We believes
that our success will also depend upon our ability to attract, motivate and
retain highly skilled, managerial, sales and marketing, and technical personnel,
including software programmers and systems architects skilled in the computer
languages in which our Cymedix products operate. Competition for such personnel
in the software and information services industries is intense. The loss of key
personnel, or the inability to hire or retain qualified personnel, could have a
material adverse effect on our results of operations, financial condition or
business.
- 6 -
WE HAVE PERSONNEL RISKS
Medical staff providers, like us, 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. We have 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 us of money
damages or fines. From time to time, we become involved in litigation for
injuries or damages caused by the acts of its staff. See "Legal Proceedings" in
item 1 of Part II of our most recent Form 10-QSB, filed with the SEC. While we
maintain insurance providing coverage for certain negligent acts in an amount we
believe is customary for the industry, there can be no assurance that our
insurance policies will be sufficient so as to offset any claims received. In
addition, such policies exclude certain acts, usually involving criminal
behavior from coverage. 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 Medix would have a material
adverse effect on our business.
SECURITIES LAW ISSUES
We raised substantial amounts of capital in private placements from time to
time. The securities offered in such private placements were not registered with
the Securities and Exchange Commission or any state agency in reliance upon
exemptions from such registration requirements. Such exemptions are highly
technical in nature and if we inadvertently failed to comply with the
requirements of any of such exemptive provisions, investors would have the right
to rescind their purchase of our securities or sue for damages. If one or more
investors were to successfully seek such rescission or institute such suit,
Medix could face severe financial demands that could material and adversely
affect our financial position.
IMPACT OF SHARES ELIGIBLE FOR FUTURE SALE
As of August 5, 1999, we had 22,944,850 shares of common stock outstanding. Of
these shares, approximately 4,560,247 shares are restricted and not freely
transferable. As of the date hereof, approximately 14,112,249 shares were
issuable upon the exercise of outstanding options or warrants and the conversion
of preferred stock. The exercise prices of options and warrants to acquire
common stock presently outstanding range from $0.15 per share to $5.00 per
share. During the respective terms of the outstanding options, warrants,
preferred stock and other outstanding underlying securities, 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 outstanding warrants may adversely affect the terms on which we 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 we would
otherwise be able to obtain capital on terms more favorable than could be
obtained through the exercise or conversion of such securities.
- 7 -
VOLATILITY OF OUR STOCK PRICE
Historically, our common stock has experienced significant price fluctuations.
This has been caused by factors such as:
o quarterly fluctuations in operating results;
o negative announcements by our company or others;
o regulatory, legislative or other developments affecting our company or
the health care industry generally;
o conversion of our preferred stock into common stock at conversion
rates based on current market prices of our common stock; and
o market conditions specific to the health care industry and general
market conditions.
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 that may be unrelated to our operating
performance may adversely affect the price of our common stock.
APPLICATION OF PENNY STOCK RULES TO OUR COMMON STOCK
Trading of our common stock is subject to the penny stock rules under the
Securities Exchange Act of 1934, as amended, unless an exemption from such rules
is available. Broker-dealers making a market in our common stock will be
required to provide disclosure to their customers regarding the risks associated
with our common stock, the suitability for the customer of an investment in our
common stock, the duties of the broker-dealer to the customer and information
regarding bid and ask prices for our common stock and the amount and description
of any compensation the broker-dealer would receive in connection with a
transaction in our common stock. The application of these rules will likely
result in fewer market makers making a market of our common stock and further
restrict the liquidity of our common stock.
ABSENCE OF COMMON STOCK DIVIDENDS
We are required to pay dividends on our 1996 Preferred Stock, and, in certain
circumstances, on our other classes of Preferred Stock. We have not had
earnings, but if earnings were available our, it is our general policy to retain
any earnings for use in our operation. Therefore, we do not anticipate paying
any cash dividends on our common stock in the foreseeable future. Any payment of
cash dividends on our common stock in the future will be dependent upon our
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. We anticipate that our future financing agreements
will prohibit the payment of common stock dividends without the prior written
consent of our lender(s).
- 8 -
<PAGE>
THE COMPANY
GENERAL
Medix Resources, Inc., a Colorado corporation, formerly known as International
Nursing Services, Inc., currently operates in two principal lines of business,
healthcare staffing services and medical information software.
Doing business as National Care Resources and TherAmerica, Inc., we provide
skilled nursing, therapists, rehabilitation and other medical personnel for
supplemental staffing in home care and in a broad spectrum of health care and
educational facilities. Our supplemental staffing services are provided through
a pool of approximately 900 caregivers including licensed and registered nurses,
rehabilitation, physical, respiratory, occupational and speech therapists,
medical social workers, home care aides and other unlicensed personnel. Our
supplemental and home care staff currently serves over 300 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. We operate through offices located
in Houston and San Antonio, Texas, Emeryville and Ontario, California, and
Englewood, Colorado. We currently provide supplemental staffing services and
therapists in Texas, Colorado and California. Travel nurses and therapists are
provided in seventeen states and the District of Columbia.
We acquired Cymedix in January of 1998. Cymedix has developed an Internet-based
communications and information management product, which we began marketing to
medical professionals nationwide. Growth of the medical information management
marketplace is being driven by the need to share significant amounts of clinical
and patient information between physicians, their outpatient service providers,
hospitals, insurance companies and managed care organizations. This market is
one of the fastest-growing sectors in healthcare today, commanding a projected
two-thirds of health care capital investments. The Cymedix software is a secure
medical communications product, with patent application pending, that makes use
of the Internet. Using the Cymedix software, medical professionals can order,
prescribe and access medical information from insurance companies and managed
care organizations, as well as from any participating outpatient service
provider such as a laboratory, radiology center, pharmacy or hospital. We will
provide the software free of charge to physicians and clinics, and will collect
user fees whenever these products are sold on the Internet. The product=s
relational database technology provides physicians with a permanent, ongoing
record of each patient's name, address, insurance or managed care affiliation,
referral status, medical history, personalized notes and an audit trail of past
encounters. Physicians can electronically order medical procedures, receive and
store test results, check patient eligibility, make medical referrals, request
authorizations, and report financial and encounter information in a
cost-effective, secure and timely manner.
Our principal executive office is located at 7100 East Belleview Ave.,
Englewood, Colorado 80111, and its telephone number is (303) 741-2045.
USE OF PROCEEDS
The net proceeds from the sale of shares will be received by the selling
shareholders. Medix will not receive any of the proceeds from any sale of the
shares by the selling shareholders.
- 9 -
<PAGE>
SELLING SHAREHOLDERS
The table below sets forth information as of August 5, 1999 with respect to the
selling shareholders, including names, holdings of shares of common stock prior
to the offering of the shares, the number of shares being offered for each
account, and the number and percentage of shares of common stock to be owned by
the selling shareholders immediately following the sale of the shares, assuming
all of the offered shares are sold.
Shares of
Common Shares
Stock of
Owned Common Shares of Common Stock
Before Stock to be
the being Beneficially Owned After
Name Offering Offered the Offering
- ---------------------------- ---------- --------- ------------------------
Number Percentage
----------- -----------
Ananian, Fred ............. 60,000 60,000 0 0%
Banov, Robert ............. 100,000 100,000 0 0%
Baron, Eric ............... 128,000 128,000 0 0%
Baron, Eugene ............. 124,000 124,000 0 0%
Bergquist, Dennis & Leslie 100,000 100,000 0 0%
Bernabei, John ............ 125,000 125,000 0 0%
Black Hills Investment
Corporation .............. 200,000 200,000 0 0%
Brock, David .............. 125,000 125,000 0 0%
Brown, Lisa Dake .......... 100,000 100,000 0 0%
Carl Fricke Trust ......... 80,000 80,000 0 0%
Cohen, Darryl ............. 200,000 200,000 0 0%
Colwell, John ............. 100,000 100,000 0 0%
Counterpoint Capital
Management, L.L.C ........ 200,000 200,000 0 0%
Counterpoint Master, L.L.C 700,000 700,000 0 0%
Dimare, Marcy ............. 40,000 40,000 0 0%
Duck Partners ............. 400,000 400,000 0 0%
Elmes, Tim &Tristina,
JTWROS ................... 40,000 40,000 0 0%
Frigg Ltd. ................ 200,000 200,000 0 0%
Hackett, D. Kim ........... 40,000 40,000 0 0%
Harmonic Money Purchase
Pension Plan ............. 100,000 100,000 0 0%
Higgins, Nicola ........... 40,000 40,000 0 0%
Hoffman, Craig ............ 100,000 100,000 0 0%
Kaufman, Peter ............ 200,000 200,000 0 0%
Klem, Michael ............. 20,000 20,000 0 0%
Knepper, Michael .......... 60,000 60,000 0 0%
Martineau, Steven ......... 50,000 50,000 0 0%
McCullogh, Robert ......... 250,000 250,000 0 0%
McKenzie Webster Limited .. 200,000 200,000 0 0%
Millenco, LP .............. 520,000 520,000 0 0%
Neiman, Brian ............. 40,000 40,000 0 0%
Oberrotman, Alain ......... 100,000 100,000 0 0%
Peterson, James P ......... 160,000 160,000 0 0%
Prufeta, John ............. 500,000 500,000 0 0%
Richard B & Jacqueline M
Wasson TTEES FBO
Wasson Family Trust ...... 520,000 520,000 0 0%
Rockwell Investment LTD ... 100,000 100,000 0 0%
Smokowski, Kevin .......... 250,000 250,000 0 0%
Stone, Jay ................ 100,000 100,000 0 0%
Stone, Kendall ............ 100,000 100,000 0 0%
Weatherford, Randy ........ 100,000 100,000 0 0%
--------- ---------
Total 6,572,000 6,572,000 0
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<PAGE>
RELATIONSHIP BETWEEN MEDIX AND THE SELLING SHAREHOLDERS
The selling shareholders have or will acquire the shares of common stock
indicated above in one of the following ways: (i) upon the conversion of
preferred stock issued by us in 1999, (ii) upon the exercise of warrants issued
with such preferred stock, and (iii) upon the exercise of warrants issued to a
creditor.
DESCRIPTION OF SECURITIES
Our authorized capital consists of 50,000,000 shares of common stock, par value
$.001 per share, and 2,500,000 shares of preferred stock. As of August 5, 1999,
we had outstanding 22,944,850 shares of common stock, 5 shares of 1996 Preferred
Stock, 12 shares of 1997 Preferred Stock, 300 shares of 1999 Series A Preferred
Stock and 1,138 shares of 1999 Series B Preferred Stock. As of such date, our
common stock was held of record by approximately 417 persons and beneficially
owned by approximately 2,100 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. Currently, the Board of directors consists of six directors, who
serve for staggered terms of three years, with at least two directors elected at
every annual meeting. 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 Medix, holders of the common stock will be entitled
to receive on a pro rata basis all assets of Medix 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 derivative securities are or will be, as the case may
be, duly and validly issued, fully paid and non-assessable.
TRANSFER AGENT
We have retained American Securities Transfer, Inc., 12039 W. Alameda Parkway,
Suite Z-2, Lakewood, Colorado 80228, as Transfer Agent for the our common stock.
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PLAN OF DISTRIBUTION
This Prospectus has been prepared, as a part of a registration statement, to
satisfy our obligations to the selling shareholders to register the common stock
beneficially owned by them. These obligations were made to induce the selling
shareholders to invest in Medix.
Any distribution of shares by the selling shareholders, or by their pledgees,
donees, transferees or other successors in interest, may be effected from time
to time in one or more of the following transactions:
(a) to underwriters who will acquire the shares for their own account and
resell them in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices
determined at the time of sale (any public offering price and any
discount or concessions allowed or reallowed or paid to dealers may be
changed from time to time);
(b) through brokers, acting as principal or agent, in transactions (which
may involve block transactions) on one or more exchanges on which
shares are then listed, in special offerings, exchange distributions
pursuant to the rules of the applicable exchanges or in the
over-the-counter market, or otherwise, at market prices prevailing at
the time of sale, at prices related to such prevailing market prices,
at negotiated prices or at fixed prices;
(c) directly or through brokers or agents in private sales at negotiated
prices; or
(d) by any other legally available means.
In addition, any securities covered by this Prospectus that qualify for sale
pursuant to Rule 144 of the Securities Act ("Rule 144") may be sold under Rule
144 rather than pursuant to this Prospectus. All discounts, commissions or fees
incurred in connection with the sale of the common stock offered hereby will be
paid by the selling shareholders, except that the expenses of preparing and
filing this Prospectus and the related Registration Statement with the
Securities and Exchange Commission, and of registering or qualifying the common
stock will be paid by Medix.
The selling shareholders and such underwriters, brokers, dealers or agents, upon
effecting a sale of the shares, may be considered "underwriters" as that term is
defined by the Securities Act.
Underwriters participating in any offering made pursuant to this Prospectus (as
amended or supplemented from time to time) may receive underwriting discounts
and commissions, discounts or concessions may be allowed or reallowed or paid to
dealers, and brokers or agents participating in such transaction may receive
brokerage or agent's commissions or fees.
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If required at the time a particular offering of the shares is made, a
Prospectus Supplement would be distributed which would set forth the amount of
the shares being offered and the terms of the offering, including the purchase
price or public offering price, the name or names of any underwriters, dealers
or agents, the purchase price paid by any underwriter for the shares purchased
from the selling shareholders, any discounts, commissions and other items
constituting compensation from the selling shareholders and any discounts,
commissions or concessions allowed or reallowed or paid to dealers. To our
knowledge, as of the date of this Prospectus, none of the selling shareholders
have entered into any agreement, arrangement or understanding with any
particular broker or market maker with respect to the shares offered by them,
nor do we know the identity of the brokers or market makers which might
participate in such offering.
In order to comply with the securities laws of certain states, if applicable,
the shares will be sold in such jurisdictions, if required, only through
registered or licensed brokers or dealers. In addition, in certain states the
shares may not be sold unless the Shares have been registered or qualified for
sale in such state or an exemption from registration or qualification is
available and complied with.
We have agreed that Medix will bear all costs, expenses and fees in connection
with the registration of the shares being sold through this Prospectus.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Article 109 of the Colorado Business Corporation Act generally provides that a
corporation may indemnify its directors, officers, employees and agents against
liabilities and action, suit or proceeding whether civil, criminal,
administrative or investigative and whether formal or informal (a "Proceeding"),
by reason of being or having been a director, officer, employee, fiduciary or
agent Medix, if such person acted in good faith and reasonably believed that his
conduct, in his official capacity, was in the best interests of Medix (or, with
respect to employee benefit plans, was in the best interests of the participants
of the plan), and in all other cases that his conduct was at least not opposed
to Medix's best interests. In the case of a criminal proceeding, the director,
officer, employee or agent must have had no reasonable cause to believe that his
conduct was unlawful. Under Colorado Law, Medix may not indemnify a director,
officer, employee or agent in connection with a proceeding by or in the right of
Medix if the director is adjudged liable to Medix, or in a proceeding in which
the directors, officer employee or agent is adjudged liable for an improper
personal benefit.
Our Articles of Incorporation provide that we shall indemnify its directors, and
officers, employees and agents to the extent and in the manner permitted by the
provisions of the laws of the State of Colorado, as amended from time to time,
subject to any permissible expansion or limitation of such indemnification, as
may be set forth in any shareholders' or directors' resolution or by contract.
Insofar as indemnification for liabilities under the Act may be permitted to
directors, officers or persons controlling Medix pursuant to the foregoing
provisions, Medix has been informed that in the opinion of the Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
AVAILABLE INFORMATION
We are reporting company and file our annual, quarterly and current reports,
proxy material and other information with the Securities and Exchange
Commission. Reports, proxy statements and other information concerning Medix
filed with the Commission may be inspected and copied at the public reference
facilities maintained by the Commission at its office at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as at the Regional Offices of the
Commission at Citicorp Center, 300 West Madison Street, Chicago, Illinois 60661
and Seven World Trade Center, New York, New York 10048. Copies of such material
can be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Our SEC filings are
also available at the SEC's Website at "http:\\www.sec.gov".
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We have filed a registration statement on Form S-2 under the Securities Act of
1933, with respect to the securities offered pursuant to this Prospectus. 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 and the exhibits filed as a part thereof, which may be
found at the locations and Website referred to above.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" information that we file with
them, which means that we can disclose important information to you by referring
you to the documents filed with them that contains that information. The
information incorporated by reference is an important part of this Prospectus,
and the information that we file with the SEC after the date of this Prospectus
will automatically update and supercede the information contained in this
Prospectus or incorporated by reference into this Prospectus. We incorporate by
reference the documents listed below and any future filing we will make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934:
(a) a copy of our latest Annual Report on Form 10-KSB, which as of the
date of this Prospectus is our Form 10-KSB for the fiscal year ended
December 27, 1998;
(b) a copy of our latest Proxy Statement, which as of the date of this
Prospectus is our Proxy Statement for our 1999 Annual Meeting held on
June 11, 1999; and
(b) a copy of our latest Quarterly Report on Form 10-QSB, which as of the
date of this Prospectus is our Form 10-QSB for the fiscal quarter
ended June 27, 1999.
We are delivering with this Prospectus a copy of each of the above three
documents. All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year referred to in item (a) above
shall be deemed to be incorporated herein by reference and to be a part of this
Prospectus. All documents filed by us pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act, subsequent to the date of this Prospectus and prior
to the termination of the offering, shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the respective dates
of such filings. Any statement contained in a document incorporated or deemed to
be incorporated by reference in this Prospectus shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
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We will provide without charge to each person to whom a copy of this Prospectus
is delivered, upon oral or written request of any such person, a copy of any or
all of the documents incorporated herein by reference, other than the exhibits
to such documents (unless such exhibits are specifically incorporated by
reference into the information that this Prospectus incorporates). Requests
should be directed to John P. Yeros, Medix Resources, Inc., 7100 E. Belleview
Avenue, Suite 301, Englewood, Colorado 80111, telephone (303) 741-2045.
LEGAL MATTERS
The validity of the shares offered hereby is being passed upon for us by Lyle B.
Stewart, P.C., Denver, Colorado.
EXPERTS
The consolidated financial statements of Medix as of December 27, 1998, and for
each of the two years in the period ended December 27, 1998 appearing in the
Form 10-KSB have been audited by Ehrhardt Keefe Steiner & Hottman PC,
independent auditors, as stated in their report appearing therein, and have been
incorporated herein by reference in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing. With respect to the
unaudited interim consolidated financial information in our quarterly reports to
be filed in the future on Forms 10-QSB, the independent certified public
accountants will not have audited or reviewed such consolidated financial
information and will not have expressed an opinion or any other form of
assurance with respect to such consolidated financial information.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is a list of the estimated expenses to be incurred by the
Registrant in connection with the issuance and distribution of the Shares being
registered hereby.
SEC Registration Fee ............ $ 523
Blue Sky Filing Fees and Expenses 5,000*
Accountants' Fees and Expenses .. 2,000*
Legal Fees and Expenses ......... 5,000*
Miscellaneous ................... 0*
-------
TOTAL ........................... $12,523*
-------
* Estimated, subject to change.
The Company will bear all of the above expenses of the registration of the
Shares.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
See "INDEMNIFICATION OF OFFICERS AND DIRECTORS" in the Prospectus.
ITEM 16. EXHIBITS.
Exhibit
Number Description
- ------- -----------
5.1 Opinion of Lyle B. Stewart, P.C.
23.1 Consent of Ehrhardt Keefe Steiner & Hottman PC
23.2 Consent of Lyle B. Stewart, P.C. (included in Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
ITEM 17. UNDERTAKINGS.
A. 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:
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(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
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 and of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement.
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not
apply if the Registration Statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Securities and Exchange Commission (the
"Commission") by the Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the Act, each
such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
B. Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the 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.
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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-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Englewood, Colorado on August 16, 1999.
MEDIX RESOURCES, INC.
By /s/ John P. Yeros
John P. Yeros,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
Each person whose signature appears below in so signing also makes, constitutes
and appoints John P. Yeros and David Kinsella, and each of them, his or her true
and lawful attorney-in-fact, with full power of substitution, for him in any and
all capacities, to execute and cause to be filed with the Securities and
Exchange Commission any and all amendments and post-effective amendments to this
Registration Statement, with exhibits thereto and other documents in connection
therewith, and hereby ratifies and confirms all that said attorney-in-fact or
his substitute or substitutes may do or cause to be done by virtue hereof.
Signature Title Date
--------- ----- ----
President, Chief Executive August 16, 1999
/s/ John P. Yeros Officer and Director
John P. Yeros (Principal Executive Officer)
/s/ David Kinsella Controller (Principal August 16, 1999
David Kinsella Financial and
Accounting Officer)
/s/ Joel C. Newman Director August 16, 1999
Joel C. Newman
/s/ Thomas J. Oberle Director August 16, 1999
Thomas J. Oberle
/s/ John R. Prufeta Director August 16, 1999
John R. Prufeta
/s/ Douglas Stahl Director August 16, 1999
Douglas Stahl
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EXHIBIT INDEX
Exhibit
Number Description
- ------- ------------
5.1 Opinion of Lyle B. Stewart, P.C.
23.1 Consent of Ehrhardt Keefe Steiner & Hottman PC
23.2 Consent of Lyle B. Stewart, P.C.
(included in Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
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EXHIBIT 5.1
Lyle B. Stewart, P.C.
3751 S. Quebec Street
Denver, Colorado 80237
Tel. (303) 267-0920
Fax. (303) 267-0922
August 16, 1999
Board of Directors
Medix Resources, Inc.
7100 E. Belleview Ave., Suite 301
Englewood, CO 80111
Gentlemen:
We have acted as counsel to Medix Resources, Inc. (the "Company"), in connection
with the proposed sale by certain selling shareholders of up to 6,572,000 shares
of its common stock, par value $.001 per share, which sale is being registered
on Form S-2 (the "Registration Statement"), filed by the Company on or about the
date hereof with the Securities and Exchange Commission, under the Securities
Act of 1933, as amended.
In connection therewith, we have examined and relied upon such corporate records
and other documents, instruments and certificates and have made such other
investigation as we deem appropriate as basis for the opinion set forth below.
Based upon the foregoing, we are of the opinion that the shares of common stock
to be sold by the selling shareholders in the manner described in the
Registration Statement and the Prospectus relating thereto, will be legally
issued, fully paid and non-assessable.
We hereby consent to the use of our name in the Registration Statement and the
filing of this opinion as an exhibit to the Registration Statement.
Very truly yours,
/s/ Lyle B. Stewart, P.C.
Lyle B. Stewart, P.C.
OUR CONSENT
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Medix Resources, Inc. on
Form S2 - of our reported dated April 12, 1999 (except for Note 12 as to which
the date is June 11, 1999), appearing in the Prospectus, which is part of this
Registration Statement. We also consent to the reference to us under the
headings "Experts" in such Prospectus.
/s/ Ehrhardt Keefe Steiner & Hottman PC
Ehrhardt Keefe Steiner & Hottman PC
August 16, 1999
Denver, Colorado
