Lyle B. Stewart, P.C.
3751 South Quebec Street
Denver, Colorado 80237
Tel. 303-267-0920
Fax. 303-267-0922
March 10, 2000
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. (the "Company"), and pursuant
to Rule 101(a)(1)(i) of Regulation S-T, filed herewith is its Form S-2
Registration Statement registering 16,553,268 shares of its common stock to
be sold by selling shareholders. The related filing fee of $31,202 has been
wire transferred to the SEC's account at Mellon Bank. In no case, will the
Company request acceleration of the effectiveness of this Registration
Statement prior to the filing of its 1999 Form 10-KSB, which will include the
Company's audited 1999 financial statements. We expect to file the Form
10-KSB during the last week of this month, but in no case later than March
30, 2000.
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
As filed with the Securities and Exchange Commission on March 10, 2000
Registration No. 333-31684
- --------------------------------------------------------------------------------
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 84-1123311
(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)
David Kinsella, Secretary 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
---------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Title of Securities Proposed Maximum Proposed Maximum
to be Amount to be Offering Price Aggregate Offering Amount of
Registered Registered Per Share (1) Price (1) Registration Fee
- ------------------- ---------------- -------------------- --------------------- -----------------
<S> <C> <C> <C> <C>
Common stock, par
value $.001 per
share 16,553,268 $7.14 $118,190,334 $31,202
</TABLE>
- --------------------------------------------------------------------------------
(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 March 7, 2000, 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 March 10, 2000
PROSPECTUS
MEDIX RESOURCES, INC.
16,553,268 Shares of Common Stock
Some shareholders of Medix Resources, Inc. will have the right to offer
and sell up to 16,553,268 shares of our common stock under this Prospectus.
21,500 of these shares are currently outstanding, up to 3,990,000 of these
shares may be issued upon conversion of currently outstanding preferred shares,
up to 9,669,626 of these shares may be issued upon exercise of outstanding
warrants to purchase our common stock, and the remaining 2,872,142 shares may be
issued upon exercised of outstanding options to purchase our common stock.
Medix will not receive directly any of the proceeds from the sale of
these shares by the selling shareholders. However, Medix will receive the
proceeds from the exercise of any warrants or options to obtain the shares to be
sold hereunder. 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 March 7, 2000, the last sale price of the common stock was reported
as $ 7.22.
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 April __, 2000
<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 STATEMENTS..................................................3
RISK FACTORS...............................................................3
THE COMPANY.................................................................7
USE OF PROCEEDS.............................................................8
SELLING SHAREHOLDERS........................................................8
DESCRIPTION OF SECURITIES..................................................11
PLAN OF DISTRIBUTION.......................................................11
INDEMNIFICATION OF OFFICERS AND DIRECTORS..................................12
AVAILABLE INFORMATION......................................................13
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE..........................13
LEGAL MATTERS..............................................................14
EXPERTS....................................................................14
<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 ($2.368.000) for the nine months ending September 26, 1999. At
September 26, 1999, we had an accumulated deficit of ($15,529,000) and a working
capital deficit of ($2,440,000). 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 ($2,440,000) at September 26, 1999. In
the fourth quarter of 1999, we raised $ 2,589,000 through the private placement
of Units of preferred stock and warrants and, $488,000 (net of issue costs of
$12,000) through the issuance of a $500,000, 14% Convertible Promissory Note and
warrants to purchase 500,000 shares of the Company's common stock at $0.50 per
share and an additional $100,000 from the exercise of warrants. In the first
quarter of 2000, we raised 1,562,000 through the exercise of warrants through
March 7. However, 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. Currently,
we are not receiving any significant revenues from the sale of our Cymedix
software products. We are attempting to meet our current cash flow needs by
raising capital in the private debt and equity markets and through the exercise
of currently outstanding warrants. 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 -
<PAGE>
Lack of Revenues
Since our recent sale of our remaining temporary staffing business, we only
develop software for Internet-based communications and information management
for medical service providers, through our wholly-owned subsidiary, Cymedix Lynx
Corporation. Our pharmaceutical software package is currently under contract to
be tested by four different healthcare providers. However, our Cymedix software
business has not yet generated any significant revenues.
We acquired, through our subsidiary Cymedix Lynx Corporation, in January of
1998, a development stage medical software 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.
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. We cannot predict
with any certainty what impact, if any, proposals for healthcare reforms might
have on our business.
- 4 -
<PAGE>
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.
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 Business is Highly Competitive
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.
- 5 -
<PAGE>
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 March 7, 2000, we had 33,473,191 shares of common stock outstanding.
Of these shares, approximately 5,965,453 shares are restricted and not freely
transferable. As of that date, approximately 31,525,503 shares were issuable
upon the exercise of outstanding options, warrants or other rights, and the
conversion of preferred stock. The exercise prices of options, warrants or other
rights to acquire common stock presently outstanding range from $0.19 per share
to $4.97 per share. During the respective terms of the outstanding options,
warrants, preferred stock and other outstanding derivative 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, warrants or other rights may
dilute the book value per share of the common stock and put downward pressure on
the price 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.
Lack of Authorized Shares
At the date hereof, the Company's Articles of Incorporation authorize the
issuance of 50,000,000 shares of its Common Stock. We currently have 33,473,191
shares of Common Stock issued and outstanding. Currently outstanding options,
warrants, other rights to purchase common stock and convertible stock issued by
us would require the issuance of 31,525,503 shares of Common Stock if all such
options, warrants and convertible stock were exercised or converted. On February
14, 2000, we held a special meeting of shareholders to approve an amendment of
our Articles of Incorporation to increase the number of authorized shares of
Common Stock from 50,000,000 to 100,000,000. The meeting was adjourned to be
reconvened on March 20, 2000 because the company had not received a large enough
percentage of proxy votes to reach a quorum. It is possible that we could be
subject to litigation as a result of committing to issue shares in excess of our
authorized number of shares if such amendment is not approved.
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;
- 6 -
<PAGE>
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 internet companies, 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 may be 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, 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).
THE COMPANY
General
Medix Resources, Inc., a Colorado corporation, sold its supplemental
staffing business, which operated under the tradenames "National Care Resources"
and "TherAmerica" on February 19, 2000, and now only develops software for
Internet-based communications and information management for medical service
providers, through its wholly-owned subsidiary, Cymedix Lynx Corporation.
- 7 -
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 patented secure medical communications product, 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 pharmaceutical software package is currently under contract to be
tested by four different healthcare providers. However, we have not yet received
any substantial revenues from this or any other software product.
Our principal executive office is located at 7100 East Belleview Ave.,
Englewood, Colorado 80111, and its telephone number is (303) 741-2045.
Recent Developments
On February 19, 2000, we completed the sale of all of the assets of our
remaining staffing businesses. The purchase price we received in this sale was
$1,000,000 with $500,000 paid in cash and $500,000 in a subordinated promissory
note providing for interest at prime plus 1% with principal and interest to be
repaid on May 19, 2001. With this sale, we have no business operations other
than our development and sale of our Cymedix software products for the medical
and healthcare industry.
On November 12, 1999, an action was filed in Ventura County Superior
Court (#SC025169) against Medix Resources, Inc. and its wholly owned subsidiary,
Cymedix Lynx Corporation under the caption Leslie Wolf v. Medix Resources, Inc.,
Cymedix Lynx Corporation, John Yeros, Bill Lyons, alleging, among other things,
gender discrimination, breach of contract and wrongful termination. Plaintiff is
seeking damages in excess of $4,000,000. Medix Resources, Inc. does not believe
the claims have any merit and intends to vigorously defend this action. The
Company does not expect any resolution of this matter to have a material effect
on the Company's financial condition.
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. However, Medix will receive the proceeds
from the exercise of any warrants or options to obtain the shares to be sold
hereunder.
- 8 -
<PAGE>
SELLING STOCKHOLDERS
The table below sets forth information as of March 7, 2000 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
Stock
Beneficially Shares of
Owned Common Shares of Common Stock
Before the Stock Being to be Beneficially Owned
Name Offering Offered After the Offering
- --------------- -------------- ----------- --------------------------
Number Percentage
--------- ---------------
Allen, Jack 150,000 150,000 0 0%
Antoniello, LouAnn 10,000 10,000 0 0%
Appell, Eric 450,000 450,000 0 0%
Bergquist, Dennis &
Leslie 150,000 150,000 0 0%
Black Hills Investment
Corporation 480,000 480,000 0 0%
Brian McLean MD, Inc.
Employee Retirement
Trust Fund 300,000 300,000 0 0%
Brown, Andrew 300,000 300,000 0 0%
Brown, Lisa 150,000 150,000 0 0%
Castelli, Bruno 50,000 50,000 0 0%
Cavalcante, Joseph 30,000 30,000 0 0%
Charles Schwab & Co. FBO
Thomas J. Oberle, IRA 150,000 150,000 0 0%
Chimbel, Mark 10,000 10,000 0 0%
Cohen, Darryl 900,000 900,000 0 0%
Congregation Eitz Chaim 20,000 20,000 0 0%
Coover, Gary 150,000 150,000 0 0%
Counterpoint Master,
LLC 3,000,000 3,000,000 0 0%
Creative Management
Strategies, Inc. 25,000 25,000 0 0%
DeCesare, Dominic 20,000 20,000 0 0%
Diamond, Charles 720,000 720,000 0 0%
DiFatta, Tony 10,000 10,000 0 0%
Doyle, Clifford 10,000 10,000 0 0%
Faxon, David Jr. 10,000 10,000 0 0%
Folger, Rita 20,000 20,000 0 0%
Gardenville Corporation 250,000 250,000 0 0%
Geary Partners 525,000 525,000 0 0%
Gold, Nathan L. 8,000 8,000 0 0%
- 9 -
<PAGE>
Gotlieb, Ira 150,000 150,000 0 0%
Grupo Mersocur, S.A. 41,000 41,000 0 0%
Harmonic Research, Inc. 50,000 50,000 0 0%
Hoffman, Robert Craig 50,000 50,000 0 0%
Jenkins, Williams 50,000 50,000 0 0%
Katz, Marc 12,500 12,500 0 0%
Lane, John T. &
Elizabeth W. 150,000 150,000 0 0%
Lowy, David 50,000 50,000 0 0%
Marrouras, Edward 10,000 10,000 0 0%
Martella, Richard 10,000 10,000 0 0%
Martineau, Eugene 200,000 200,000 0 0%
McCullogh, Robert 300,000 300,000 0 0%
Merriman, Jon 300,000 300,000 0 0%
Meyer, Jonathan 100,000 100,000 0 0%
Munk, Yecheskel 116,000 116,000 0 0%
New York Healthcare,
Inc. 35,000 35,000 0 0%
Newman, Joeseph 50,000 50,000 0 0%
Palmershein, Jim 420,000 420,000 0 0%
Peller, Vladimir 10,000 10,000 0 0%
Presidio Partners 1,125,000 1,125,000 0 0%
Prufeta, John 150,000 150,000 0 0%
Saker, Wayne 40,000 40,000 0 0%
Schnepp, John 300,000 300,000 0 0%
Schoen, Robin 9,000 9,000 0 0%
Shapiro, Laurie 50,000 50,000 0 0%
Shorr, Steve 90,000 90,000 0 0%
SmallCaps Online,
L.L.C. 102,000 102,000 0 0%
Smokowski, Kevin 600,000 600,000 0 0%
Stewart, Lyle B. 25,000 25,000 0 0%
Sutton Hill Partnership 600,000 600,000 0 0%
Wasson, Richard B. &
Jacqueline M., TTEES
FBO Wasson Family
Trust 180,000 180,000 0 0%
Weatherford, Randy 50,000 50,000 0 0%
Wilkens, Edward 50,000 50,000 0 0%
Yeros, John P. 3,159,768 3,159,768 0 0%
Yeshiva Ketana of Long
Island 10,000 10,000 0 0%
Young, Harry 10,000 10,000 0 0%
---------- ---------- ---------- ----------
Total 16,553,268 16,553,268 0 0%
========== ========== ========== ==========
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 options granted to
employees, directors, consultants and advisors. Of the persons listed above
Messrs. Prufeta, . Lane, and Oberle, are executive officers or Directors of
Medix.
- 10 -
<PAGE>
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 March 7,
2000, we had outstanding 33,473,191 shares of common stock, 1 shares of 1996
Preferred Stock, , 100 shares of 1999 Series A Preferred Stock, 225 shares of
1999 Series B Preferred Stock and 1,995 shares of 1999 Series C Preferred Stock.
As of such date, our common stock was held of record by approximately 442
persons and beneficially owned by approximately 4,200 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 seven 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, tel. no. (303) 986-5400.
PLAN OF DISTRIBUTION
This Prospectus has been prepared, as a part of a registration statement,
to satisfy our obligations to the certain of 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);
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(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.
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.
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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".
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.
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<PAGE>
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 Annual Meeting 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 September, 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, or made herein, shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any subsequently filed document, which also
is or is deemed to be incorporated by reference herein, modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
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 David Kinsella, Secretary, 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. Lyle B. Stewart, P.C. has been granted
options to purchase 25,000 shares of the Company's Common Stock at an exercise
price of $0.26 per share. The shares resulting from the exercise of such options
are registered for sale under this Registration Statement.
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<PAGE>
EXPERTS
The consolidated financial statements of Medix as of December 27, 1998, and
for each of the two years in the period ended December 27, 1998 appearing in the
Form 10-KSB have been audited by Ehrhardt Keefe Steiner & Hottman PC,
independent auditors, as stated in their report appearing therein, and have been
incorporated herein by reference in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing. With respect to the
unaudited interim consolidated financial information in our quarterly reports
filed on Forms 10-QSB, the independent certified public accountants have not
audited or reviewed such consolidated financial information and do not express
an opinion or any other form of assurance with respect to such consolidated
financial information.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is a list of the estimated expenses to be incurred by the
Registrant in connection with the issuance and distribution of the Shares being
registered hereby.
SEC Registration Fee.................................$ 31,302
Blue Sky Filing Fees and Expenses.................... 1,000*
Accountants' Fees and Expenses....................... 5,000*
Legal Fees and Expenses.............................. 5,000*
Miscellaneous........................................ 0*
TOTAL................................................$ 42,302
- --------------------
* 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 P.C.
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 under takes:
(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, as amended (the "Act");
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<PAGE>
(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 March 10, 2000.
MEDIX RESOURCES, INC.
By: /s/ John R. Prefeta,
------------------------
John R. Prufeta,
President
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 R. Prufeta 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
- ------------------------ --------------------- -------------
/s/ John R. Prufeta President, Chief March 10, 2000
John R. Prufeta Executive Officer and
Director (Principal
Executive Officer)
/s/ David Kinsella Secretary and March 10, 2000
David Kinsella Controller (Principal
Financial and
Accounting Officer)
/s/ David Skinner Director March 10, 2000
David B. Skinner
/s/ John T. Lane
John T. Lane Director March 10, 2000
Samuel H. Havens Director March 10, 2000
Thomas J. Oberle Director March 10, 2000
/s/ David R. Pfeil Director March 10, 2000
David R. Pfeil
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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 P.C.
23.2 Consent of Lyle B. Stewart, P.C.
(included in Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
II-5
EXHIBIT 5.1
Lyle B. Stewart, P.C.
3751 S. Quebec Street
Denver, Colorado 80237
Tel. (303) 267-0920
Fax. (303) 267-0922
Board of Directors March 10, 2000
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
16,553,268 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.
EXHBIIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement (No. 333-______) 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
March 7, 2000
Denver, Colorado
