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Filed pursuant to Rule 424(b)(3)
SEC File No. 333-05025
PROSPECTUS
200,000 Shares
OF COMMON STOCK
MEDICALCONTROL, INC.
This Prospectus relates to the public offering by the Seller Stockholder
(as hereinafter defined) of up to 200,000 shares of common stock, $.01 par value
per share (the "Common Stock"), of MedicalControl, Inc., a Delaware corporation
(the "Company"). The 200,000 shares of Common Stock (collectively, the
"Shares"), when sold, will be sold by and for the account of the Selling
Stockholder named herein (the "Seller Stockholder"). See "Selling Stockholder."
The Company will not receive any of the proceeds from the sale of the Shares by
the Selling Stockholder.
The Selling Stockholder directly or through agents, dealers or underwriters
may sell the Shares from time to time on terms to be determined at the time of
sale. To the extent required, the Shares to be sold, purchase price, offering
price, the name of any agent, dealer or underwriter and any applicable
commission or discount with respect to a particular offer or sale will be set
forth in an accompanying prospectus supplement. The aggregate proceeds to the
Selling Stockholder from the sale of the Shares sold by it pursuant to this
Prospectus will be the purchase price of such Shares less any commissions. See
"Plan of Distribution." The Selling Stockholder reserves the sole right to
accept or to reject, in whole or in part, any proposed purchase of its Shares.
All expenses relating to the distribution of the Shares are to be borne by the
Company, other than commissions, concessions and discounts of underwriters,
dealers or agents of the Selling Stockholder.
The Selling Stockholder, and any dealers, agents or underwriters that
participates with the Selling Stockholder in the distribution of the Shares, may
be deemed to be "underwriters" within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"), and any commissions received by them and any
profit on the resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
The Common Stock is listed on the Nasdaq National Market. On February 27,
1998, the closing sales price of the Common Stock as reported on the Nasdaq
National Market was $5.25 per share.
PURCHASE OF THE SHARES IS SPECULATIVE, INVOLVES A HIGH DEGREE OF RISK AND
SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE
INVESTMENT. SEE "RISK FACTORS."
_____________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIESAND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
____________
THE DATE OF THIS PROSPECTUS IS MARCH 2, 1998
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AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act with respect to the Shares offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement and exhibits thereto, certain items of which are omitted
in accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the securities offered by this
Prospectus, reference is made to such Registration Statement and the exhibits
thereto. Each statement made in this Prospectus concerning a document filed as
an exhibit to the Registration Statement is qualified in its entirety by
reference to such exhibit for a complete statement of its provisions.
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549; 219 South Dearborn Street, Chicago,
Illinois 60604; 7 World Trade Center, New York, New York 10048; and 5757
Wilshire Boulevard, Los Angeles, California 90036. 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.
The Company furnishes annual reports to its stockholders which include
audited financial statements. The Company may also furnish quarterly financial
statements to its stockholders and such other reports as may be authorized by
its Board of Directors.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are hereby incorporated by reference in this Prospectus:
(1) The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1996 (including its consolidated balance sheets as of December 31,
1996 and 1995, consolidated statements of operations, stockholders' equity and
cash flows for the years then ended, together with the report of independent
public accountants, contained on pages F-1 through F-15) filed pursuant to
Section 13 (a) of the Exchange Act;
(2) The Company's Report on Form 10-QSB for the fiscal quarter ended
September 30, 1997;
(3) The Company's definitive Proxy Statement for the Annual Meeting of
Stockholders of the Company held May 14, 1997;
(4) The description of the Common Stock that is contained in the Company's
Registration Statement on Form 8-A, as amended, under the Exchange Act (File No.
1-11922) and its Registration Statement on Form SB-2 under the Securities Act
(File No. 33-58334-FW), including any amendments or reports filed for the
purpose of updating such descriptions; and
(5) All other reports and subsequent reports filed pursuant to Section
13(a) or 15(d) of the Exchange Act.
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All documents filed by the Company pursuant to Section 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 of the Shares shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the respective
dates of filing of such documents, excluding those portions of such documents
not deemed filed. Any statement contained in this Prospectus, in a supplement
to this Prospectus or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein, in any
subsequently filed supplement to this Prospectus or in any subsequently filed
document that also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, on the written or oral
request of any such person, a copy of any or all of the documents referred to
above which have been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents unless such exhibits are specifically
incorporated by reference in such documents. Written or oral requests for such
copies should be directed to J. Ward Hunt, President, MedicalControl, Inc., 8625
King George Drive, Suite 300, Dallas, Texas 75235, telephone (214) 630-6368.
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RISK FACTORS
The Shares being offered by this Prospectus involve a high degree of risk.
Prior to investing in the Shares, prospective investors should consider
carefully the following risks and speculative factors, together with other
information in this Prospectus.
RECENT REVENUE DECLINE
For the year ended December 31, 1996, the Company had a 14% decline in
revenues compared to the year ended December 31, 1995. There can be no
assurance that revenue will not further decline or profitable operations can be
sustained on a quarterly or annual basis in the future. The Company completed
three acquisitions in 1994 (one of which was subsequently sold) which expanded
the nature and scope of the Company's operations. In view of the Company's
significant growth by acquisitions during 1994 and subsequent sale of a
subsidiary in 1995, the Company believes that period-to-period comparisons of
its financial results may not be necessarily meaningful and should not be relied
upon as an indication of future performance.
DEPENDENCE ON KEY CLIENTS
The Company has contracts with several clients, which account for a
substantial portion of its total revenues. The Company's two largest clients,
in the aggregate, accounted for approximately 17%, 12%, and 16%, respectively,
of the Company's net revenues for the fiscal years ended December 31, 1996, 1995
and 1994. The loss of any one or more of these principal customers could have a
material adverse effect on the operating results of the Company. Subject to
anticipated fluctuations in the relative contribution of each of these clients,
the Company expects that the combined volume of these clients as a percentage of
revenues through 1998 will be comparable with prior periods. Although there can
be no assurance, the Company does not expect the net results of the change in
volumes of both clients will have a material effect on the Company's results
from operation.
COMPETITION
The Company competes with national and local organizations who have
developed PPOs and TPAs as well as with major insurance carriers. The industry
is highly competitive and significant consolidation has occurred within the
industry, creating stronger competitors. The current competitive environment
may limit the Company's ability to price its products at levels the Company
believes are appropriate. The Company's managed care division also faces
competition from hospitals, healthcare facilities and other healthcare providers
who have combined and formed their own networks to contract directly with
employer groups and other prospective customers for the delivery of healthcare
services. Large employer groups have demanded a variety of healthcare options,
such as traditional indemnity insurance, HMOs, point-of-service plans and PPOs,
offered either through self-funding or third parties. The Company competes with
providers of all of these products, many of which have substantially greater
financial resources than the Company. The Company believes that a limited
number of companies provide all of the services offered by the Company within
the geographic areas in which the Company presently operates. The Company's
managed care division may encounter competition from companies with broader
networks, narrower networks (which allow for greater cost control and lower
prices), greater market share or more established marketplace name or
reputation. These competitive factors could adversely effect the Company's
financial results. The Company's TPA division may encounter competition from
larger TPAs with greater resources and regional TPAs with greater market
penetration. Both divisions of the Company will be subject to significant
competition in any new geographic areas they may enter.
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"Indemnity insurance" is the "traditional" insurance plan that pays
specific benefit to an insured individual to reimburse them for a portion of the
cost of medical care. Reimbursement for medial care in this situation is based
on the providers' regular charges to the public and the insureds are not limited
with regard to choice of providers. "Health maintenance organizations" ("HMOs")
are managed healthcare plans that require its members, with the exception of
certain medical emergency situations, to use the services of specific designated
physicians, hospitals or other providers for their healthcare needs.
Restriction of access to a limited number of providers allows the HMO to control
the utilization of services and resources in the delivery of care. One of the
methodologies employed by HMOs to reward providers with cost-effective
management of care is through "capitation." "Capitation" is a provider payment
methodology that reimburses each provider a fixed monthly fee per member per
month for the total cost of all care for enrolled patients regardless of
utilization. "Point of service" plans offer an individual the choice to seek
services from a participating provider or any other provider of their choice
each time services are rendered. Utilization of a participating provider will
provide the member with a higher level of reimbursement than the use of a non-
participating provider. "Preferred provider organizations", including the
Company, offer employers and healthcare purchasers access to a broad network of
facilities and physicians who have agreed, by contract, to provide services at a
fixed rate or at discounted rates from their standard fees. In such PPO
arrangements, the cost of care is borne by the self-insured employer or benefit
plan and not the PPO.
The major competitors of the Company vary depending on the market served by
the Company on behalf of its particular clients. In general, the Company
typically encounters competition from large insurance companies and Blue Cross
plans when the Company solicits new clients for business.
GOVERNMENT REGULATION AND HEALTHCARE REFORM
The managed healthcare industry is not highly regulated at present. Since
1993, many competing proposals have been introduced in Congress and various
state legislatures have called for general healthcare market reforms to increase
the access and availability of group health insurance and to require that all
businesses offer health insurance coverage to their employees. It is uncertain
what additional healthcare reform legislation, if any, will ultimately be
implemented or whether other changes in the administration or interpretation of
governmental healthcare programs will occur. It is impossible to predict if
proposals calling for broad insurance market reform will be reintroduced in
Congress or in any state legislature in the future, or if any such proposal may
be enacted. Additionally, the adoption of a publicly-financed, single payor,
national or state health plan may have a material adverse effect on the
Company's business. At both the federal and state levels, there is also growing
interest in legislation to regulate how managed care companies interact with
providers and health plan members. The Company cannot predict what effect
federal or state healthcare legislation or private sector initiatives will have
on its PPO or TPA operations, although management of the Company believes the
Company may benefit from some proposals which favor the growth of managed care.
There can be no assurance that future healthcare reforms or PPO regulations will
not be adopted which would have a material adverse effect on the Company.
The Employee Retirement Income Security Act of 1974 ("ERISA"), governing
employee benefit plans, permitted employers, among other mandates, to self-
insure their health insurance by acting as a quasi-insurer. Employers viewed
the ability to underwrite their own health claims as a result of ERISA as an
opportunity to better control health costs. Regulation of TPAs falls under the
auspices of the United States Department of Labor, which has strict, enforceable
guidelines relative to the operation of TPAs. In addition, TPAs are subject to
licensing and regulation on the state level. Typically, the only state
requirements are a completed application and proof of a fidelity bond in the
amount of $500,000. The Company's wholly owned subsidiary, Diversified Group
Administrators, Inc. ("DGA") is licensed as a
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TPA in the states of Texas, Pennsylvania, Tennessee, California, Illinois,
Kentucky, West Virginia and New Mexico and has filed for ERISA exemptions where
required.
The Company anticipates that federal and state legislatures will continue
to review and assess alternative healthcare systems and payment methodologies.
The Company is unable to determine to what extent PPOs and TPAs will be part of
any managed care initiatives of the federal and state governments or private
sector initiatives, as there is increasing emphasis on market-driven
modifications. Further, the Company is unable to determine the favorable or
unfavorable impact, if any, they would have on the Company's operations.
DEPENDENCE ON HEALTHCARE PROVIDERS
The Company's PPO profitability and long-range business plans are dependent
upon attracting and retaining qualified physicians, hospitals and other
healthcare providers under discount and other pricing terms which permit the
Company to compete with other managed care companies and insurance companies on
favorable terms. The Company believes there is increasing competition from
HMOs, PPOs and other healthcare plans for physicians, hospitals and other
healthcare providers. There can be no assurance that the Company will be
successful in maintaining existing relationships or attracting necessary
healthcare providers.
CANCELLATION RIGHTS ON CONTRACTS
Although the Company generally enters into written contracts with its
clients, the majority of such contracts, including the contracts with the
Company's major clients, permit cancellation upon 30 to 90 days' notice.
Additionally, the Company's contracts with its clients do not require minimum
payments or minimum levels of services. The exercise of such cancellation
rights by, or a significant reduction in the volume of services requested by,
the Company's largest clients or by a number of the Company's other clients
could have a material adverse effect on the Company. See "Risk Factors
Dependence on Key Clients." Two clients comprising 3% of revenue in 1995
terminated in 1996. Approximately 26 clients representing 14.6% ($2,240,093) of
1996 revenues terminated its contract with the Company during 1997 and the first
two months of 1998. There can be no assurance that the Company will maintain
its current client relationships or that the clients will not decrease its
volume or change its fee structure.
DEPENDENCE ON COMPANY'S SENIOR MANAGEMENT
The Company's success depends to a significant extent upon J. Ward Hunt,
President and Chief Executive Officer and Robert O. Brooks, Executive Vice
President and Chief Operating Officer. Neither Mr. Hunt nor Mr. Brooks is
currently subject to an employment agreement and there can be no assurance that
either of them will remain in the employ of the Company in the future. The loss
of Mr. Hunt's or Mr. Brooks' services could have a material adverse effect on
the Company. The Company does not carry key man life insurance on the life of
Mr. Hunt or Mr. Brooks. The Company believes that its future success will also
depend on its ability to continue to attract and retain key employees.
Competition for qualified personnel in the Company's industry is intense.
MANAGEMENT INFORMATION SYSTEMS; PROPRIETARY TECHNOLOGY
The Company's management information systems (the "MIS") is a critical
component in its operations because the information processed and derived
through the MIS enables the Company to negotiate price discounts for provider
services and monitor utilization and other cost factors. In addition, the MIS
is critical to the timely, efficient processing and/or review of provider
claims. The Company relies on a combination of trade secrets and copyright
protections to establish and protect its proprietary
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rights to the MIS. There can be no assurance, however, that the legal
protections and the precautions taken by the Company will be adequate to prevent
misappropriation of the Company's technology. In addition, these protections and
precautions will not prevent development by independent third parties of
competitive technology or products, and some companies have already developed
products which, to some extent, perform functions similar to those performed by
the MIS.
RELIANCE ON DATA PROCESSING
Certain aspects of the business of the Company are dependent upon its
ability to store, retrieve, process and manage data and to maintain and upgrade
its data processing capabilities. Interruption of data processing capabilities
for any extended length of time, loss of stored data, programming errors or
other computer problems could have a material adverse effect on the business of
the Company. There can be no assurance that the Company will not experience
problems, delays or unanticipated costs in the use of its current system. Any
difficulties in reviewing claims in a timely manner may adversely affect the
Company's ability to attract and retain clients and/or healthcare providers and
may also adversely affect the Company's ability to monitor its financial and
operational performance.
CONTROL OF THE COMPANY
Currently, The Answer Partnership, Ltd. (the "Parent") owns 2,640,000
shares, or 67.6%, of the Common Stock. As a result, the Parent in essence
elects the entire Board of Directors of the Company and controls the direction
and operations of the Company. Following completion of this offering, the
Parent's ownership interest will continue to permit the Parent to continue to
control the governance of the Company and to elect all of its directors. J.
Ward Hunt, President of the Company, controls the Parent due to his position as
its managing partner.
CONFLICTS OF INTEREST
The Company is a party to a loan arrangement with Mr. Hunt, the Company's
Chairman of the Board, principal shareholder, President and Chief Executive
Officer, as more particularly described in "Certain Transactions". From time to
time during the term and course of such arrangement, the officers and directors
of the Company may be faced with potential conflicts of interest between the
Company and Mr. Hunt. The officers and directors of the Company are limited
only by their fiduciary duty under Delaware law to conduct themselves in a
manner that is fair to the shareholders of the Company, the requirements under
Delaware law of disclosure to the Board of Directors of transactions that
involve interested director(s) and approval by a majority of the disinterested
directors, and disclosure of interested transactions to shareholders (for
transactions that require shareholder approval) and approval by a majority of
the disinterested shareholders (for transactions that require shareholder
approval). Management undertakes to abide by Delaware law and its fiduciary
duty of fairness to shareholders if faced with conflicts in this ongoing
relationship with Mr. Hunt. The Company has established no other guidelines or
procedures for resolving potential conflicts. Failure by management to resolve
conflicts of interest in favor of the Company may have a materially adverse
affect on the Company.
POSSIBLE ANTI-TAKEOVER EFFECTS OF CERTAIN CERTIFICATE OF INCORPORATION AND BYLAW
PROVISIONS
The Company's Certificate of Incorporation and Bylaws contain provisions
that may discourage acquisition bids for the Company. The Company has
substantial authorized but unissued capital stock available for issuance. The
Company's Certificate of Incorporation contains provisions which authorize the
Board of Directors, without the consent of stockholders, to issue additional
shares of Common Stock and issue shares of Preferred Stock in series, including
establishment of the rights, powers and preferences, including voting rights, of
holders of the Preferred Stock, and grant authority to the Board to
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amend the Company's Bylaws. Additionally, the Company's Bylaws empower the Board
to increase or decrease the number of directors, subject to certain limitations,
and specify that directors will generally hold office until the next annual
meeting of stockholders. These provisions may have the effect, either alone or
in combination with each other, of (i) limiting the price that certain investors
might be willing to pay in the future for the Common Stock, (ii) delaying,
deferring or otherwise discouraging an acquisition or change in control of the
Company deemed undesirable by the Board of Directors or (iii) adversely
affecting the voting power of stockholders who own Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE
All of the 2,640,000 shares of Common Stock owned by the Parent are
eligible for sale under the Securities Act and Rule 144 promulgated thereunder.
In addition, the Company has registered the sale of an aggregate of 1,071,225
unregistered shares of Common Stock on behalf of selling stockholders. Any
future sales of substantial amounts of Common Stock in the open market or the
availability of such shares could adversely affect the market for the Common
Stock.
AUTHORIZATION OF PREFERRED STOCK
The Company's Certificate of Incorporation authorizes the issuance of
4,000,000 shares of Preferred Stock. The Board of Directors is empowered,
without stockholder approval, to issue Preferred Stock with dividend,
liquidation, conversion, voting or other rights which could adversely affect the
voting power or other rights of the holders of the Common Stock. The Preferred
Stock could be utilized, under certain circumstances, as a method of
discouraging, delaying or preventing a change in control of the Company.
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THE COMPANY
MedicalControl, Inc. (the "Company") is a holding company of healthcare
cost management and administrative services companies. The Company is comprised
of three major subsidiaries, one providing managed care services, primarily
through its preferred provider networks ("MedicalControl"), one providing third
party administration ("TPA") services ("DGA") and one providing repricing and
administrative services for preferred provider organizations ("PPOs") and
certain healthcare providers ("PMSI"). MedicalControl contracts with hospitals,
physicians and ancillary providers to provide access to comprehensive healthcare
services on behalf of its clients and their employees or members at negotiated,
discounted rates. Using PMSI's proprietary system, MedicalControl reprices
resulting network provider claims to reflect negotiated terms as well as
providing healthcare data analyses, reporting and related healthcare cost
containment programs. DGA provides employers that self-fund their employee
benefit plans a complete range of administrative and consulting services
supporting such benefit plans. PMSI has developed a proprietary software system
that reprices network provider claims to reflect negotiated terms and provides
data analyses, reporting and cost containment information.
Prior to the Company's expansion into claims administration services, the
Company had derived its revenues primarily from PPO network access fees. In
1994, the Company expanded its products and service offerings to clients through
the acquisition of two third party administrators. By offering TPA services and
other managed care services, the Company positioned itself to more effectively
compete with larger insurance companies and other managed care companies by
integrating its products so that clients may choose to purchase most of their
healthcare services from one company. DGA also offers MedicalControl access to
a cluster of self-insured clients who are candidates for MedicalControl's
preferred provider networks.
Over the past three years, MedicalControl has experienced significant
change. MedicalControl has hired a new management team focused on expanding its
products and service offerings as well as improving efficiencies and operations.
MedicalControl believes one of the keys to meeting its goals for growth is
delivering the highest levels of quality customer service. MedicalControl is
attempting to meet and to exceed the needs of its customers, while also
achieving the Company's internal goals and objectives.
MedicalControl intends to expand through internal growth of the PPO,
through acquisitions and by entering new markets. MedicalControl intends to
increase the penetration of its target markets by offering clients a more
complete range of managed healthcare services designed to minimize the cost of
providing employee healthcare and other health benefit programs. MedicalControl
is also seeking to expand through acquisitions of other PPOs or related managed
care services companies. There can be no assurance that the Company will be
able to increase revenues or earnings through acquisitions, operating
efficiencies or otherwise.
DGA provides services to self-funded benefit plans, insurance companies,
provider-based organizations and other benefit management organizations. DGA
provides complete benefit review, design and administration services to assist
and direct comprehensive employee benefit programs and risk management
activities. DGA currently administers over 300 self-funded plans, one fully-
insured plan and over 50 risk management plans, with clients ranging from 50 to
3,000 employees. Current total covered lives exceed 80,000 located in 49
states. DGA intends to continue to market its products to self-insured
employees. In 1998, DGA introduced a new fully-insured product available
through an insurance company.
The Company is a Delaware corporation, incorporated in October 1989. Unless the
context otherwise requires, the term the "Company" refers to MedicalControl,
Inc. and its wholly-owned subsidiaries.
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Effective January 1, 1998, the Company transferred its managed care operations
to MedicalControl and its repricing and administrative services operations to
PSMI. All references to operations of MedicalControl or PMSI prior to January 1,
1998, were operations of the Company. The Company's executive offices are
located at 8625 King George Drive, Suite 300, Dallas, Texas 75235 and its
telephone number is (214) 630-6368.
USE OF PROCEEDS
The Company will not receive any part of the proceeds form the sale of the
Shares by the Selling Stockholder.
SELLING STOCKHOLDER
The Shares offered hereby may be offered for sale from time to time by the
Selling Stockholder. The following table provides certain information with
respect to the shares of Common Stock of the Company (including the Shares) held
by the Selling Stockholder.
<TABLE>
<CAPTION>
Shares Beneficially Owned
Number of Shares Number of Shares After the Offering (2)
Name of Beneficially Owned Registered for ----------------------
Selling Shareholder As of March 2, 1998 Sale Hereby Number Percent (3)
------------------- ------------------- ----------- ----------------------
<S> <C> <C> <C> <C>
J. Ward Hunt 3,240,000(1) 200,000 3,040,000 67.4
And
The Answer
Partnership, Ltd. (4)
</TABLE>
_____________
(1) Includes 300,000 shares of Common Stock which Mr. Hunt has the right to
acquire within 60 days of March 2, 1998 by the exercise of vested stock
options and 240,000 shares of Common Stock which The Answer Partnership,
Ltd. has the right to acquire within 60 days of March 2, 1998 by the
exercise of vested stock options.
(2) Assumes the sale of all the Shares offered hereby.
(3) The percentage shown includes shares of Common Stock actually owned and
shares of Common Stock that the person had the right to acquire within 60
days of March 2, 1998. In calculating the percentage of ownership, all
shares of Common Stock which the person had the right to acquire within 60
days of March 2, 1998 are deemed to be outstanding for the purpose of
computing the percentage of shares of Common Stock owned by such person.
(4) J. Ward Hunt has served as President of the Company since January 1989 and
as Chief Executive Officer and Chairman of the Board of Directors since
December 1989
The Answer Partnership, Ltd. (the "Partnership") is a Texas limited
partnership that is owned 62.5% by J. Ward Hunt and 37.5% by The Essential
Endowment Trust (the "Trust"). Each of them owns a 1% general partnership
interest in the Partnership, with the balance of their respective interests
being held as limited partnership interests. The Partnership was organized
effective as of July 3, 1992, for purposes of acquiring all of the then-
issued and outstanding Common Stock of the Company. Mr. Hunt, President
and Chief Executive Officer of the Company, is the Managing Partner of the
Partnership and controls the day-to-day management of
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the Partnership. The Trust is a Texas irrevocable trust which was formed
effective as of July 2, 1992, for the primary benefit of the three children
of Mr. Hunt and for purposes of acquiring an interest in the Partnership.
The Trust serves as a non-managing general partner of the Partnership. In
the event that Mr. Hunt should withdraw, or cease to serve, as Managing
Partner, the successor Managing Partner under the terms of the partnership
agreement for the Partnership would be Hilre Lucille Hunt and Thomas R.
Corbett, as Co-Trustees of the Trust. The Partnership is authorized to
invest generally in any type of property and to hold or develop and to
sell, exchange or otherwise dispose of all or any part of the Partnership
property and carry on any other business or businesses and exercise any and
all powers as may be permitted by law.
PLAN OF DISTRIBUTION
The Company will receive none of the proceeds from this offering. The
Shares may be sold from time to time to purchasers directly by the Selling
Stockholder. Alternatively, the Selling Stockholder may from time to time offer
the Shares through underwriters, dealers or agents, who may receive compensation
in the form of underwriting discounts, concessions or commissions from the
Selling Stockholder or the purchasers of Shares for whom they may act as agent.
The Selling Stockholder and any underwriters, dealers or agents that participate
in the distribution of Shares may be deemed to be "underwriters" within the
meaning of the Securities Act and any profit on the sale of Shares by them and
any discounts, commissions or concessions received by any such underwriters,
dealers or agents might be deemed to be underwriting discounts and commissions
under the Securities Act.
At the time a particular offering of Shares is made, a Prospectus
Supplement, if required, will be distributed which will set forth the number of
Shares being offered and the terms of the offering, including the name or names
of any underwriters, dealers or agents, any discounts, commissions and other
terms constituting compensation from the Selling Stockholder and any discounts,
commissions or concessions allowed or reallowed or paid to dealers. The Selling
Stockholder may use brokers or dealers in connection with the sale of Shares
contemplated by this Prospectus and such brokers or dealers may receive fees or
commissions in connection therewith. The Shares may be sold from time to time
in one or more transactions at a fixed offering price, which may be changed, at
varying prices (including market prices or prices related thereto) determined at
the time of sale or at negotiated prices.
To comply with the securities laws of certain jurisdictions, if applicable,
the Shares will be offered or sold in such jurisdictions only through registered
or licensed brokers or dealers. In addition, in certain jurisdictions the
Shares may not be offered or sold unless they have been registered or qualified
for sale in such jurisdictions or an exemption from registration or
qualification is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Common Stock of the Company may not
simultaneously engage in market-making activities with respect to such Common
Stock of the Company during such distribution or for a period of two business
days prior to the commencement of such distribution. In addition to and without
limiting the foregoing, the Selling Stockholder will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including without limitation Rules 10b-6 and 10b-7, which provisions may limit
the timing of purchases and sales of any of the Common Stock of the Company by
the Selling Stockholder.
The Company will pay the expenses incident to the offering and sale of the
Shares to the public, other than commissions, concessions and discounts of
underwriters, dealers or agents.
11
<PAGE>
LEGAL MATTERS
Andrew N. Bernstein, P.C., Greenwood Village, Colorado, has acted as securities
counsel to the Company in connection with this Prospectus.
EXPERTS
The financial statements incorporated by references in this Prospectus and
elsewhere in the Registration Statement, to the extent and for the periods
indicated in their reports thereto, have been audited by Arthur Anderson LLP,
independent public accountants, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in auditing and accounting.
12
<PAGE>
====================================== =======================================
200,000 SHARES OF
NO DEALER, SALESPERSON OR ANY COMMON STOCK
OTHER PERSON IS AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN CONTAINED
IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR THE
SOLICITATION OF AN OFFER TO BUY, THE
SECURITIES OFFERED HEREBY TO ANY MEDICALCONTROL, INC.
PERSON IN ANY STATE OR OTHER
JURISDICTION IN WHICH SUCH OFFER OF
SOLICITATION IS UNLAWFUL. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT
TO THE DATE HEREOF.
Page
----
Available Information........... 2
Incorporate of Certain
Documents by Reference......... 2
Risk Factors.................... 4 ----------------
The Company..................... 9 PROSPECTUS
Use of Proceeds.................10 ----------------
Selling Stockholder.............10
Plan of Distribution............11
Legal Matters...................12
Experts.........................12
March 2, 1997
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