As filed with the Securities and Exchange Commission on July 1, 1998
Registration Statement No. 333-
SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PROXYMED, INC.
(Exact name of small business issuer as specified in its charter)
Florida 65-0202059
(State of Incorporation) (I.R.S. Employer Identification Number)
2501 Davie Road, Suite 230
Ft. Lauderdale, Florida 33317
Telephone: (954) 473-1001
Telecopy: (954) 473-0620
(Address and telephone number of registrant's principal executive offices)
Harold S. Blue, Chief Executive Officer
ProxyMed, Inc.
2501 Davie Road, Suite 230
Ft. Lauderdale, Florida 33317
Telephone: (954) 473-1001
Telecopy: (954) 473-0620
(Name, address and telephone number of agent for service)
Copies to:
Robert B. Macaulay, Esq.
Mitrani, Rynor, Adamsky, Macaulay & Zorrilla, P.A.
2200 SunTrust International Center
One Southeast Third Avenue
Miami, Florida 33131
Telephone: (305) 358-0050
Telecopy: (305) 358-0550
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
PROPOSED
MAXIMUM PROPOSED MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS TO BE PRICE PER OFFERING REGISTRATION
OF SECURITIES TO BE REGISTERED REGISTERED SHARE(1) PRICE(1) FEE
===================================================================================================================================
<S> <C> <C> <C> <C>
Common Stock, $.001 par value, for sale
from time to time by Selling
Shareholders...................................... 3,708,394 $10.66 $39,531,480 $11,661.79
===================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and based upon the average of the high and low
sale prices per share of the registrant's common stock on June 30,
1998, as reported by the Nasdaq National Market.
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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
<PAGE>
PROXYMED, INC.
3,708,394 Shares
COMMON STOCK
This Prospectus covers 3,708,394 shares (the "Shares") of common stock,
par value $.001 per share (the "Common Stock"), of ProxyMed, Inc. (the
"Company"), which may be offered (the "Offering") for sale by persons (the
"Selling Shareholders") who have acquired such shares in transactions not
involving a public offering, including 194,978 Shares which may be offered for
sale by certain of the Selling Shareholders who may acquire such Shares pursuant
to the exercise of outstanding warrants. These warrants provide for appropriate
anti-dilutive adjustments in the number of shares of Common Stock issuable upon
their exercise, and, pursuant to Rule 416 promulgated under the Securities Act
of 1933, as amended (the "Act"), any additional shares of Common Stock issued
pursuant to such adjustments shall be deemed Shares whose resale is covered by
this Prospectus. The Shares are being registered under the Act on behalf of the
Selling Shareholders in order to permit the public sale or other distribution of
the Shares.
The Shares may be offered and sold from time to time by the Selling
Shareholders through ordinary brokerage transactions, in negotiated transactions
or otherwise, at market prices prevailing at the time of sale or at negotiated
prices. The Company will not realize any proceeds from the sale of the Shares by
the Selling Shareholders and will bear certain expenses in connection with the
registration of the Shares. See "Selling Shareholders" and "Plan of
Distribution."
The Common Stock trades on the Nasdaq National Market under the symbol
"PILL." On June 30, 1998, the last reported sale price of the Common Stock was
$10.50.
THE SECURITIES OFFERED HEREBY INVOLVE A SUBSTANTIAL DEGREE OF RISK AND
SHOULD NOT BE PURCHASED BY ANYONE WHO CANNOT AFFORD THE LOSS OF HIS ENTIRE
INVESTMENT. SEE "RISK FACTORS" AT PAGE 7 OF THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-----------------------------
The date of this Prospectus is July 1, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, electronically files reports and other information with
the Securities and Exchange Commission (the "Commission"). Information, as of
particular dates, concerning directors and officers, their remuneration, options
granted to them, and the principal holders of securities of the Company, is
disclosed in proxy statements distributed to the shareholders. Such reports,
proxy statements and other information filed by the Company may be inspected and
copied at the public reference facilities of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the regional offices of the Commission
located at 7 World Trade Center, New York, New York 10048, and at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, at
prescribed rates. The Commission maintains a Web site (http://www.sec.gov) that
contains reports, proxy and information statements and other information
regarding the Company and other issuers that file electronically with the
Commission. The Company's Common Stock is listed on the Nasdaq National Market,
and copies of the above-described information may also be inspected at the
Operations and Report facilities of the National Association of Securities
Dealers at 1735 K Street, N.W., Washington D.C. 20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 (herein, together with all amendments, if any, thereto, the
"Registration Statement") under the Act with respect to the Shares offered by
this Prospectus. This Prospectus, which forms a part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto, certain portions of which have
been omitted as permitted by the rules and regulations of the Commission. For
further information with respect to the Company and the shares of Common Stock
offered hereby, reference is hereby made to the Registration Statement and to
the exhibits and schedules thereto, if any, which are available for inspection
at the public reference facilities and regional offices of the Commission and at
the offices of Nasdaq referred to above, and copies of all or any part thereof
may be obtained from such offices, upon the payment of prescribed fees.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Securities and
Exchange Commission are incorporated herein by reference:
(a) Annual Report on Form 10-K for the year ended December 31, 1997;
(b) Quarterly Report on Form 10-Q for the three months ended March 31,
1998;
(c) Current Reports on Form 8-K reporting events dated May 19, 1998,
November 19, 1997, and April 30, 1997; and
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(d) The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A declared effective on
August 5, 1993.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of the offering of the Common Stock offered hereby shall be
deemed to be incorporated by reference herein and to be a part hereof on the
date of filing such documents. Any statement contained in a document or
information incorporated or deemed to be incorporated herein by reference 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
that also is, or is deemed to be, incorporated herein by reference, 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 making of a modifying or superseding statement shall not be deemed
an admission that the modified or superseded statement, when made, constituted a
misrepresentation, an untrue statement of a material fact or an omission to
state a material fact that is required to be stated or that is necessary to make
a statement not misleading in light of the circumstances in which it was made.
The Company shall furnish without charge to each person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents incorporated herein by reference, except for the
exhibits to such documents. Requests should be made to Frank M. Puthoff, Chief
Legal Officer, at ProxyMed, Inc., 2501 Davie Road, Suite 230, Ft. Lauderdale,
Florida 33317, telephone number (954) 473-1001.
IN CONNECTION WITH THIS OFFERING, CERTAIN BROKERS OR DEALERS, WHO MAY BE DEEMED
UNDERWRITERS, MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMPANY'S
COMMON STOCK ON NASDAQ IN ACCORDANCE WITH RULE 103 OF REGULATION M. SEE "PLAN OF
DISTRIBUTION."
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains "forward-looking statements" within the
meaning of the federal securities laws. These forward-looking statements include
assumptions, beliefs and opinions relating to the Company's growth strategy
based upon management's ability to successfully develop, implement, market and
sell its secure network transaction processing services, software programs and
clinical databases to physicians and other healthcare providers. This strategy
assumes that physicians will prefer "one-stop shopping" for these products and
services and that the Company will be able to successfully develop, acquire,
maintain and upgrade competitive clinical and financial
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transaction sets and successfully integrate them with the Company's existing
products and services. This strategy also assumes that the Company will be able
to successfully develop and execute its strategic relationships, especially with
the providers of information systems to physicians under the Company's
electronic commerce partner program, and with pharmacy chains, independent
pharmacy owners and pharmacy information system vendors. Many known and unknown
risks, uncertainties and other factors, including general economic conditions,
healthcare reform initiatives, millennium compliance issues that may arise, and
risk factors detailed herein and from time to time in the Company's Securities
and Exchange Commission ("SEC") filings, may cause these forward-looking
statements to be incorrect, and may cause actual results to be materially
different from any future results expressed or implied by these assumptions,
opinions and beliefs. Such risks, uncertainties and other factors include, among
other things, those disclosed in this Prospectus under the caption "Risk
Factors." The forward-looking statements contained herein speak only as of the
date hereof, and the Company undertakes no obligation to publicly update or
revise any of those forward-looking statements.
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THE COMPANY AND RECENT DEVELOPMENTS
ProxyMed, Inc. (together with its subsidiaries, the "Company"), is a
healthcare information systems ("HCIS") company providing clinical and financial
electronic data interchange ("EDI") transaction processing services to
physicians and other healthcare providers.
The Company is physician centered -- it seeks to satisfy the
connectivity needs of physicians and other healthcare providers by providing
"one-stop shopping" for EDI transactions through ProxyNet(TM), its secured
proprietary national healthcare information network. To provide these services,
the Company has established and is continuing to develop and upgrade its
physical network infrastructure and data centers located at the Company's Fort
Lauderdale, Florida, and Santa Ana, California, facilities.
The Company believes that most physicians, in order to efficiently and
economically access and utilize needed clinical and financial information,
eventually will subscribe to just one online content service providing access to
all required data. Although a significant portion of the Company's current
revenues is generated by its network integration services segment, the Company
believes that a an increasing share of its future revenues will be generated by
recurring fees from clinical and financial transaction processing through
ProxyNet, by sales of subscriptions to its clinical databases and by licensing
its software programs and providing related services.
The Company has commenced a significant acquisition program. In March
and April 1997, the Company completed acquisitions of substantially all of the
assets of Clinical MicroSystems, Inc. ("CMS"), a laboratory software company,
and Hayes Computer Systems, Inc. ("HCS"), a network integration company,
respectively. In June 1997, the Company acquired from Walgreen Co., owner of the
Walgreen's pharmacy chain ("Walgreen's"), the proprietary electronic
prescription software known as PreScribe(R) . In November 1997, the Company
acquired substantially all of the assets of U.S. HealthData Interchange, Inc.
("USHDI"), a provider of financial EDI services to the healthcare marketplace.
On May 19, 1998, the Company acquired all of the capital stock of WPJ,
Inc., a California corporation d/b/a Integrated Medical Services ("IMS"), a
provider of healthcare financial EDI services. IMS operates a healthcare EDI
network that enables physicians and other healthcare providers, payors and
employers to exchange financial information. IMS electronically receives, edits,
formats and transmits data needed to process and pay insurance claims.
Additional transactions currently include HMO encounters, claims status,
remittance advices, member eligibility rosters and health plan enrollment.
Providers using the IMS network include physicians, clinics, hospitals and
laboratories. IMS processed more than 30 million electronic claims and encounter
transactions in 1997 involving more than 35,000 providers, located primarily in
California. The IMS network includes government payors such as Medicare and
Medicaid as well as more than 500 commercial payors, including Blue Cross/Blue
Shield and major insurance companies. IMS has been in operation for more than
eight years and maintains operating facilities in Santa Ana,
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California, and development and engineering facilities in Spokane,
Washington. As consideration for the IMS acquisition, the Company paid
$20,620,000 in cash and issued 481,836 shares of Common Stock to IMS
shareholders.
During 1997, IMS generated revenues of $4,310,731 and net income of
$685,370. During the first quarter of 1998, IMS had revenues of $1,071,840 and
net income of $57,347. In March 1998, a significant customer canceled its
contract with IMS. Sales to this customer were approximately 9.7% and 10.8% of
net IMS revenues in 1997 and the first quarter of 1998, respectively.
The IMS acquisition was financed pursuant to a private placement of
2,313,416 shares of Common Stock at a price of $11.00 per share, which were sold
on May 19 and June 1, 1998 (the "Private Placement"). The Private Placement
yielded net proceeds of $24,250,000, of which $20,620,000 were utilized to pay
the cash portion of the purchase price. The Company intends to use the
$3,630,000 balance of the net proceeds of the Private Placement for other
acquisitions and/or working capital.
In March and April 1998, the Company entered into software license
agreements with Omnicare, Inc., and PharMerica, Inc., for ProxyCare(TM), the
Company's prescription management and formulary compliance system for long-term
care facilities. Each licensee paid $1,000,000 to the Company upon execution of
the agreement and agreed to pay $800,000 to the Company within 90 days
thereafter. Each licensee also agreed to purchase ongoing network services and
database subscriptions at negotiated rates.
The Company was incorporated in the State of Florida in 1989. The
Company's executive offices are located at 2501 Davie Road, Suite 230, Fort
Lauderdale, Florida 33317-7424, and its telephone number is (954) 473-1001. The
Company's Internet address is http://www.proxymed.com.
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RISK FACTORS
An investment in the Shares is highly speculative, involves a high
degree of risk and should be made only by investors who can afford the loss of
their entire investment. Each prospective investor, prior to making an
investment decision, should carefully consider the following risk factors, in
addition to all of the other information provided in this Prospectus and the
documents incorporated herein by reference.
SUBSTANTIAL AND CONTINUING LOSSES; LIMITED REVENUES. The Company has
incurred substantial losses, including losses of $18,517,000, $2,854,000 and
$2,849,000 for the fiscal years ended December 31, 1997, 1996 and 1995,
respectively, and a loss of $1,713,000 for the quarter ended March 31, 1998. The
1997 loss includes charges for acquired in-process research and development
technology totaling $8,467,000 resulting from the CMS and HCS acquisitions. At
March 31, 1998, the Company had an accumulated deficit of $31,268,000. The
Company expects to continue to incur substantial losses in the foreseeable
future and there can be no assurance that the Company will ever achieve
profitable operations.
NO RELEVANT OPERATING HISTORY; SHIFT IN BUSINESS EMPHASIS. Since
mid-1995, the Company has emphasized the commercialization of its clinical EDI
products and services. Through May 1998, this activity has generated limited
revenues. In addition, since mid-1996, the Company has shifted a major part of
its focus away from the sale of certain software products and toward the
development of its electronic commerce partner ("ECP") program. Accordingly, the
Company has only a limited operating history upon which an evaluation of its
performance and prospects can be made. The Company is and will continue to be
subject to numerous risks, uncertainties, expenses, delays, problems and
difficulties in its attempt to establish a new business in a highly competitive
industry.
SIGNIFICANT CAPITAL REQUIREMENTS; NEED FOR SUBSTANTIAL ADDITIONAL
FINANCING. The Company's capital requirements in connection with potential
acquisitions and the development, marketing and sale of its products and
services are significant. In addition, (i) pursuant to the HCS acquisition
agreement, the Company will be required to pay $1,000,000 on or before each of
June 30, 1998, and June 30, 1999, provided that pre-tax operating income for the
HCS business exceeds $250,000 for the 12 months ended on the subject date, and
(ii) pursuant to the CMS acquisition agreement, the Company will be required to
pay $500,000 and $750,000 on or before April 30, 1999 and 2000, respectively.
Each of these future payments, to the extent required, must be paid at least 50%
in cash, with the balance, if any, paid in the form of unregistered Common Stock
valued at the then market price. In addition, pursuant to its agreement for the
acquisition of PreScribe, the Company agreed to pay Walgreen's $500,000 in cash
in each of June 1998, 1999 and 2000. The Company believes, based upon its
current plans and assumptions relating to its operations, that its existing
reserves and expected cash receipts will provide the funds necessary to satisfy
its cash requirements through December 1998, including the HCS and PreScribe
payments due in June 1998. Therefore, the Company must seek additional financing
to fund operations and/or acquisitions after
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December 1998. At this time the Company has no arrangements with respect to, or
sources of, additional financing. There can be no assurance that additional
funds will be available when needed or, if available, will be available on terms
acceptable to the Company. Any such additional financing may result in
significant dilution to existing shareholders. If needed financing is not
obtained, the Company may be forced to curtail or even cease operations.
ACQUISITION RISKS. The Company is engaged in an acquisition program
which could result in substantial changes in its operations and financial
condition. The Company has identified several potential acquisition targets;
however, as of the date of this Prospectus the Company has not entered into any
definitive agreement for a future acquisition. There can be no assurance that
the Company will complete any acquisition or that any acquisition which is
completed will prove favorable to the Company. The Company does not intend to
seek shareholder approval for any such acquisition unless required by applicable
law or regulation. Actual acquisitions, including the recently-completed CMS,
HCS, PreScribe, USHDI and IMS acquisitions, could prove unsuccessful for a
variety of reasons. Although the agreements entered into by the Company in
connection with the CMS, HCS, PreScribe, USHDI and IMS acquisitions contain
numerous representations and warranties by the sellers concerning the businesses
and assets acquired, no assurances can be given that these representations and
warranties will prove to have been true and correct or that the Company's due
diligence investigation of these businesses and assets will prove to have
uncovered all material adverse facts relating to the acquired businesses and
assets.
The consideration for any acquisition may involve cash, notes and/or a
significant number of shares of Common Stock, depending on the size of the
acquisition. The Company may issue a substantial number of shares of Common
Stock if it consummates several acquisitions. In addition, in certain instances,
an acquisition may adversely affect the Company's operations in the short term,
depending on many factors, including capital requirements and the accounting
treatment of such acquisitions. If any potential acquisition opportunities are
identified, there can be no assurance that the Company will complete such
acquisitions or, if any such acquisition does occur, that it will be successful
in enhancing the Company's business. The Company may in the future face
increased competition for acquisition opportunities, which may inhibit the
Company's ability to consummate suitable acquisitions and increase the cost of
completing acquisitions. In addition, to the extent that the Company's strategy
results in the acquisition of businesses, such acquisitions could pose a number
of special risks and financial consequences, including the diversion of
management's attention, difficulties in the assimilation of the operations and
personnel of the acquired companies and the incorporation of acquired products
and services into existing product and service lines, adverse short-term effects
on reported operating results, charges for in-process research and development,
the amortization of acquired intangible assets (including goodwill), the loss of
key employees and the difficulty of presenting a unified corporate image. There
can be no assurance that the Company will successfully identify, complete or
integrate any acquisitions or that any acquisitions, if completed successfully,
will perform as expected, will not result in significant unexpected liabilities,
or will ever contribute significant revenues or profits to the Company. If the
Company is unable to manage growth effectively, the Company's operating results
could be materially adversely affected.
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EMERGING BUSINESS; NEW CONCEPT; UNCERTAINTY OF MARKET ACCEPTANCE. The
HCIS segment of the health care industry is an emerging business. As is typical
in an emerging business, demand and market acceptance for newly introduced
products and services are subject to a high level of uncertainty. The Company
commenced marketing activities with respect to certain of its new products and
services, principally its clinical EDI products and services, approximately
three years ago and has focused more on its ECP program since mid-1996. The
Company has not conducted and does not intend to conduct any independent
marketing or other concept feasibility studies to determine the potential
commercial viability of its clinical EDI products and services in any markets.
Achieving market acceptance for the Company's clinical EDI products and services
will continue to require substantial marketing efforts and expenditure of
significant funds to create awareness and demand by physician groups,
pharmacies, MCOs and other health care payors. There can be no assurance that
the Company will be able to demonstrate that the benefits of the Company's
clinical EDI products and services justify the costs associated therewith or
that such benefits outweigh those associated with products and services offered
by the Company's competitors. While the Company believes that a substantial
market is developing for online clinical EDI transactions, there can be no
assurance that such market will develop or that the Company will be able to
obtain a significant share of the market.
GOVERNMENT REGULATION. The Company's products and services are not
directly subject to governmental regulations; however, the user base is subject
to extensive and frequently changing federal and state laws and regulations. A
primary feature of the Company's clinical EDI products and services is the
ability to electronically transmit (either by computer-to-facsimile or
computer-to-computer) prescriptions or laboratory results from a doctor's office
to a pharmacy or a laboratory, respectively. The ability of a pharmacist to fill
an electronically transmitted prescription is governed by federal and state law.
The United States Drug Enforcement Agency ("DEA") oversees the handling of
certain classes of drugs called "controlled substances." The United States
Congress has approved the dispensing of prescriptions transmitted via facsimile
of original, signed prescriptions for controlled substances other than for
Schedule II drugs (narcotics). Neither Congress nor the DEA has specifically
addressed electronic transmission of computer-generated prescriptions for
controlled substances. No assurance can be given that Congress or the DEA will
accept this method of transmitting prescriptions for controlled substances in
the future.
Similarly, the ability of laboratories or physicians ("End-Users") to
electronically accept and transmit laboratory orders is governed by federal and
state law. The federal Office of Inspector General and the various states have
published compliance plans for clinical laboratories. The End-Users, and not the
Company, are responsible for being in compliance with the federal and/or state
medical necessity guidelines, which set forth the steps that the End-Users
should implement in order to ensure that only claims for tests that are
medically necessary for the diagnosis and treatment of the patient are submitted
to Medicare for reimbursement. Although one of the Company's products, ClinScan,
is designed to allow End-Users to install medical necessity verification
functionality acquired directly from the applicable government entity, the
Company does not warrant nor represent that the Company's products and services
are or will be medical necessity compliant.
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State boards of pharmacy oversee the handling of all classes of drugs
within their states. A majority of the states have approved the dispensing of
prescriptions transmitted via facsimile, and many states have pharmacy laws and
regulations that permit the electronic dispensing of prescriptions. Nonetheless,
in a limited number of additional states where electronic transmission of
computer-generated prescriptions is not specifically addressed, the state boards
have generally taken the position that these prescriptions are permissible.
Accordingly, the Company may be able to market its prescription-related products
and services only in a limited number of states. Other state laws which may
affect the Company's ability to market its clinical EDI products and services in
certain states include certain state requirements that require licensing as
either a doctor or a pharmacy in order for a third party to send or receive a
prescription. A common carrier, such as a telephone company, is often excluded
from such requirements. The Company's ability to market in such states would
depend upon each state's willingness to deem the Company to be a common carrier
of such prescriptions, the assurance of which cannot be given.
In addition to certain state licensing requirements, each state has
various laws protecting the confidentiality of patient medical information,
including prescription and laboratory information. Although it is not uncommon
for a third party to have access to such information, such third party has an
obligation to maintain the confidentiality of such information and could be
subject to liability if that obligation is breached. The Company has procedures
in place to maintain the confidentiality of the information it receives as part
of its ProxyNet services; however, there can be no assurance that inadvertent
disclosure of information will not occur to the detriment of the Company's
business.
The Company's institutional pharmacy business must comply with the
Florida Pharmacy Act, rules of the Florida Board of Pharmacy, the Florida Drug
and Cosmetic Act and the Florida Comprehensive Drug Abuse Prevention and Control
Act. In addition, the Florida Department of Professional Regulation inspects the
Company's facilities to ensure compliance with all applicable laws and
regulations. Under federal laws and regulations, the Company's institutional
pharmacy business must comply with the Federal Food, Drug and Cosmetic Act and
the Federal Drug Abuse Act. These laws and regulations establish standards
concerning the labeling, packaging, advertising and adulteration of prescription
drugs and the dispensing of controlled substances and prescription drugs.
The Company believes that it is in substantial compliance with all
material federal and state laws and regulations governing its operations and has
obtained all licenses necessary for the operation of its business; however,
there can be no assurance that the Company will not be materially adversely
affected by existing or new regulatory requirements or interpretations,
including, but not limited to, those restricting the electronic transmission of
prescriptions.
PROPOSED HEALTHCARE DATA LEGISLATION. Federal legislation could
materially impact the manner in which the Company conducts its business. The
Health Insurance Portability and Accountability Act of 1996 ("HIPAA") mandates
the use of standard transactions, standard identifiers, security and other
provisions for electronic claims transactions by the year 2000. HIPAA
specifically designates clearinghouses (including financial EDI network
operators such as the
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Company) as the compliance facilitators for providers and payors. Clearinghouses
are given the freedom to utilize non-standard transactions and convert them to
the mandated standards on behalf of their clients. The Company intends to comply
with the mandated standards as soon as practicable after they have been adopted
and published; however, the success of the Company's compliance efforts may be
dependent on the success of providers, payors and others in dealing with the
standards.
Further, certain legislation regarding medical information privacy and
security which imposes restrictions on the ability of third-party processors to
transmit certain patient data without specific patient consent is pending in the
U.S. Congress (S.1368 and H.R.1815). Such legislation, or similar legislation at
the state level, could adversely affect the ability of third-party processors to
transmit certain data, including treatment and clinical data. The impact of the
foregoing or other legislation is difficult to predict and could materially
adversely affect the Company's business, operating results or financial
condition.
COMPETITION. The Company faces competition from many HCIS companies and
other specialty technology companies. Many of the Company's competitors are
significantly larger and have greater financial resources than the Company and
have established reputations for success in implementing HCIS systems. The area
of healthcare EDI transaction networks has been targeted by many companies,
including, but not limited to, Envoy Corporation, National Data Corporation, and
others. The Company is also aware that other EDI transaction processing
companies have targeted this industry as a growth market, which could in the
future utilize their networks to process electronic healthcare EDI transactions.
There can be no assurance that the Company will be able to compete successfully
or that competitors will not commercialize products or services that render the
Company's products and services obsolete or less marketable.
The Company believes that most physicians will subscribe to only one
online content service provider. Consequently, the Company believes that the key
to its competitive success will be its ability to win the "race" with its
competitors to control physicians' desktops by offering a comprehensive set of
online clinical and financial transactions and locking the physicians into
mutually beneficial long-term relationships. However, there can be no assurance
that the Company will win this race to provide "one-stop shopping," which the
Company believes physicians will prefer, and there also can be no assurance that
this belief about physicians' preference for "one-stop shopping" will prove
correct. Due to advances in technology, changes in attitudes and other factors,
physicians may ultimately prefer to use multiple online services and may elect
to change their online services frequently rather than settling long-term for
one provider. In the event this were to happen, the Company could be materially
adversely affected.
STRATEGIC RELATIONSHIPS. For the marketing and sale of its products and
services, the Company depends heavily on strategic relationships with other
companies, through its ECP program with physician office management information
system ("POMIS") vendors and electronic medical record ("EMR") vendors and
through certain other agreements. These strategic relationships, which have
required and will continue to require significant commitments of efforts and
resources, are all
11
<PAGE>
in their early stages and have yet to generate substantial recurring revenues,
and there can be no assurance that they will ever generate substantial recurring
revenues. Most of these relationships are on a non-exclusive basis, and there
can be no assurance that the Company's ECP and other strategic partners, most of
whom have significantly greater financial and marketing resources than the
Company, will not develop and market products and services in competition with
the Company in the future or will not otherwise discontinue their relationships
with the Company. In addition, the Company's arrangements with certain of its
partners involve negotiated payments to the partners based on percentages of
revenues generated by the partners. If the payments prove to be too high, the
Company may be unable to realize acceptable margins. Alternatively, if the
payments prove to be too low, the partners may not be motivated to produce a
sufficient volume of revenues. The success of the Company's strategic
relationships will depend in part upon its partners' own competitive, marketing
and strategic considerations, including the relative advantages of alternative
products being developed and/or marketed by such partners. If any such partners
are unsuccessful in marketing the Company's products, the Company could be
materially adversely affected.
HCS DEPENDENCE ON GOVERNMENT SALES. From the acquisition of HCS on
April 30, 1997, until March 31, 1998, approximately 88% of HCS's sales were to
agencies and departments of the State of Florida, and HCS's sales represented
approximately 71% of the Company's sales for 1997, and 34% of the Company's
sales for the first quarter of 1998. There can be no assurance that HCS will be
able to maintain this government business. State of Florida contracts are
typically awarded on an annual fiscal year basis with early cancellation rights,
and renewal of HCS's contracts will depend on many factors outside of HCS's
control, including competitive factors, changes in government personnel making
contract decisions, and political factors. The loss or non-renewal of HCS's
government contracts could have a material adverse effect on the Company.
UNCERTAINTY OF PRODUCT/SERVICE DEVELOPMENT; POSSIBLE DEFECTS. The
quality of the Company's network services, clinical databases and software
products and services is of critical importance to the Company's business plans
and prospects. Although the Company has completed the development of certain of
its clinical EDI products and services and its basic network, which the Company
believes efficiently perform the principal functions for which they have been
designed, such products and services and the network are currently being
utilized by a limited number of customers. There can be no assurance that, upon
widespread commercial use of the Company's clinical EDI products, services and
network, they will satisfactorily perform all of the functions for which they
have been designed or that unanticipated technical or other errors will not
occur which would result in increased costs or material delays. Appearance of
such errors could delay the Company's plans, result in harmful publicity or
cause the Company to incur substantial remedial costs, all of which could have a
material adverse effect on the Company.
SYSTEM SECURITY. The Company currently operates servers and maintains
connectivity from its facilities in Fort Lauderdale, Tallahassee, Florida, and
Santa Ana, California. Despite the implementation of network security measures
by the Company, such as limiting physical and network access to its routers, the
Company's infrastructure may be vulnerable to computer viruses, break-ins and
similar disruptive problems caused by its customers or other users. Computer
viruses,
12
<PAGE>
break-ins or other security problems could lead to interruption, delays or
cessation in service to the Company's customers. In addition, such inappropriate
use could also potentially jeopardize the security of confidential information
stored in the computer systems of the Company's customers, which may deter
potential customers and give rise to uncertain liability to users whose security
or privacy has been infringed. The security and privacy concerns of existing and
potential customers may inhibit the growth of the HCIS industry in general and
the Company's customer base and revenues in particular. A significant security
breach could result in loss of customers, damage to the Company's reputation,
direct damages, costs of repair and detection, and other expenses. The
occurrence of any of the foregoing events could have a material adverse effect
on the Company.
RISK OF SYSTEM FAILURE. The success of the Company is dependent upon
its ability to deliver high-quality, uninterrupted hosting, which requires that
the Company protect its computer equipment and the information stored in its
servers against damage by fire, natural disaster, power loss, telecommunications
failures, unauthorized intrusion and other catastrophic events. Although the
Company has a program of managing its technology to reduce its risks in the
event of a disaster, including periodic "back-ups" of its computer programs and
data, any damage or failure that causes prolonged interruptions in the Company's
operations could have a material adverse effect on its business, results of
operations and financial condition. In particular, a system failure, if
prolonged, could result in reduced revenues, loss of customers and damage to the
Company's reputation, any of which could in turn have a material adverse effect
on the Company. While the Company carries property and business interruption
insurance to cover its operations, the coverage may not be adequate to
compensate for losses that may occur.
NEW PRODUCTS AND SERVICES AND TECHNOLOGICAL CHANGE. The market for the
Company's products and services is characterized by ongoing technological
development and evolving industry standards. The Company's success will depend
upon its ability to enhance its current products and services and to introduce
new products and services which address technological and market developments
and satisfy the increasingly sophisticated needs of customers. There can be no
assurance that the Company will be successful in developing and/or acquiring and
marketing, on a timely basis, fully functional product and service enhancements
or new products and services that respond to the technological advances by
others, or that its new products and services will be accepted by customers.
From time to time, the Company or its competitors may announce new products,
services or technologies that have the potential to replace the Company's
existing product and service offerings. There can be no assurance that the
announcement of new product and service offerings will not cause customers to
defer purchases of existing Company products and services, which could
materially and adversely affect the Company.
YEAR 2000 ISSUES. The Company is in the process of testing all of its
products, systems and equipment for potential Year 2000 problems. Despite
testing by the Company and by current and potential customers, the Company's
products, systems and equipment may contain undetected errors or defects
associated with Year 2000 date functions which could result in delay or loss of
revenue, diversion of development resources, damage to the Company's reputation,
or increased service and warranty costs, any of which could materially adversely
affect the Company's business, operating
13
<PAGE>
results, or financial condition. Some commentators have predicted significant
litigation regarding Year 2000 compliance issues. Because of the unprecedented
nature of such litigation, it is uncertain whether or to what extent the Company
may be affected by it. To the extent that the Company is not able to test the
technology provided by third-party vendors, the Company plans to request
representations from its key vendors that their systems are Year 2000 compliant.
Although the Company is not aware of any material operational issues or costs
associated with preparing its internal systems for the Year 2000, the Company
may experience material unanticipated problems and costs caused by undetected
errors or defects in the technology used in its internal systems, which include
both the Company's own software and hardware technology. The Company does not
currently have information concerning the Year 2000 compliance status of many of
its customers. As is the case with other similarly situated companies, if the
Company's current or future customers or ECP partners fail to achieve Year 2000
compliance or divert technology expenditures to address Year 2000 compliance
problems, the Company's business, operating results or financial condition could
be materially adversely affected.
DEPENDENCE ON PROPRIETARY INFORMATION. The Company's success is
dependent, in large part, upon its proprietary information and technology. The
Company relies on a combination of contract, copyright, trademark and trade
secret laws and other measures to protect its proprietary information and
technology. The Company has federal trademark registrations for ProxyScript and
PreScribe and has filed such applications for ClinScan, ProxyNet, ProxyCare and
RxReceive. The Company has no patents. As part of its confidentiality
procedures, the Company generally enters into nondisclosure agreements with its
employees, distributors and customers, and limits access to and distribution of
its software, databases, documentation and other proprietary information. There
can be no assurance that the steps taken by the Company in this regard will be
adequate to deter misappropriation of its proprietary rights or that third
parties will not independently develop substantially similar products, services
and technology. Although the Company believes its products, services and
technology do not infringe on any proprietary rights of others, as the number of
software products available in the market increases and the functions of those
products further overlap, software developers may become increasingly subject to
infringement claims. Any such claims, with or without merit, could result in
costly litigation or might require the Company to enter into royalty or
licensing agreements. Such royalty or licensing agreements, if required, may not
be available on terms acceptable to the Company or at all. Any successful
infringement claim could have a material adverse effect on the Company.
PRODUCT LIABILITY AND AVAILABILITY OF INSURANCE. The Company's business
exposes it to potential liability risks that are inherent in the sale of HCIS
products and services. Because many of the Company's products and services
relate to the prescribing of drugs and the filling of prescriptions, an error by
any party in the process could result in substantial injury to a patient. As a
result, the Company's liability risks are significant. The Company maintains a
general liability insurance policy, which includes a $1,000,000 per occurrence
limit of liability and a $2,000,000 aggregate limit of liability. The general
liability coverage for the Company's institutional prescription drug business
includes druggist professional liability. The Company also has a $10,000,000
umbrella policy above and beyond the general liability limits. The Company also
14
<PAGE>
maintains an electronic data processing errors and omissions insurance policy
with a $2,000,000 limit of liability per occurrence and in the aggregate. The
Company believes that its present insurance coverage is adequate for the
products and services currently marketed. There can be no assurance, however,
that such insurance will be sufficient to cover potential claims arising out of
its current or contemplated operations or that the present level of coverage
will be available in the future at a reasonable cost. A partially or completely
uninsured claim against the Company, if successful and of sufficient magnitude,
could have a material adverse effect on the Company. In addition, the inability
to obtain insurance of the type and in the amounts required could generally
impair the Company's ability to market its products and services.
MANAGEMENT OF GROWTH. The Company's business plan anticipates, among
other things, significant growth in its customer base, continued development of
its product and service lines and acquisitions. This growth and continued
development, if it materializes, could place a significant strain on the
Company's management, employees and operations. In the event of this expansion,
the Company would have to continue to implement and improve its operating
systems and to expand, train and manage its employee base. If the Company is
unable to implement and improve these operating systems and manage its employee
base effectively, the Company could be materially adversely affected.
HEALTH CARE REFORM. Political, economic and regulatory influences are
subjecting the health care industry in the United States to fundamental changes.
Potential reforms may include mandated basic health care benefits, controls on
health care spending through limitations on the growth of private health
insurance premiums and Medicare and Medicaid reimbursement, the creation of
large insurance purchasing groups, and fundamental changes to the health care
delivery system. The Company anticipates Congress and certain state legislatures
will continue to review and assess alternative health care delivery systems and
payment methods and public debate of these issues will likely continue in the
future. Due to uncertainties regarding the ultimate features of reform
initiatives and their enactment and implementation, the Company cannot predict
which, if any, of such reform proposals will be adopted, when they may be
adopted or what impact they may have on the Company.
DEPENDENCE ON KEY PERSONNEL. The success of the Company is largely
dependent on the personal efforts of Harold S. Blue, its Chairman and Chief
Executive Officer, John Paul Guinan, its President , and Danny Hayes, its Senior
Vice President and the founder and former sole shareholder of HCS. Although the
Company has entered into employment agreements with Messrs. Blue, Guinan and
Hayes, the loss of any of their services could have a material adverse effect on
the Company. The Company has obtained "key person" insurance on the lives of
Messrs. Blue and Guinan in the amount of $1,000,000 each. The success of the
Company is also dependent upon its ability to hire and retain qualified
marketing, operations, development and other personnel. Competition for
qualified personnel in the HCIS industry is intense, and there can be no
assurance that the Company will be able to hire or retain the personnel
necessary for its planned operations.
15
<PAGE>
SIGNIFICANT INFLUENCE BY MANAGEMENT AND BELLINGHAM. As of June 15,
1998, the Company's officers and directors beneficially owned approximately
15.1% of the Company's outstanding Common Stock, and Bellingham Industries,
Inc., an offshore investment fund ("Bellingham") beneficially owned
approximately 41.7% of the Company's outstanding Common Stock. Accordingly,
management of the Company and Bellingham, individually or acting together, may
be able to exercise significant influence with respect to the election of the
directors of the Company, offers to acquire the Company and other matters
submitted to a vote by shareholders.
NO DIVIDENDS. The Company currently anticipates that it will retain all
of its future earnings, if any, for use in the operation and expansion of its
business, and does not anticipate paying any cash dividends on its Common Stock
in the foreseeable future.
AUTHORIZATION OF "BLANK CHECK" PREFERRED STOCK. The Company's Articles
of Incorporation authorize the issuance of 2,000,000 shares of "blank check"
preferred stock with such designations, rights and preferences as may be
determined from time by the Board of Directors. None of such shares are
outstanding as of the date of this Prospectus. Accordingly, the Board of
Directors is empowered, without shareholder approval, to issue shares of
preferred stock with dividend, liquidation, conversion, voting or other rights
that could adversely affect the value, voting power or other rights of the
holders of the Common Stock. In addition, issuance of the preferred stock could
be utilized, under certain circumstances, as a method of discouraging, delaying
or preventing a change in control of the Company which could be beneficial to
the Company's shareholders. Although the Company has no present intention to
issue any shares of its preferred stock, there can be no assurance that the
Company will not do so in the future.
VOLATILITY OF COMMON STOCK PRICE. The market price of the Common Stock
has fluctuated substantially since the Company's initial public offering in
August 1993. There can be no assurance that the market price of the Common Stock
will not significantly fluctuate from its current level. Future announcements
concerning the Company or its competitors, quarterly variations in operating
results, the introduction of new products and services or changes in product
pricing policies by the Company or its competitors, changes in earnings
estimates by analysts or changes in accounting policies, among other factors,
could cause the market price of the Common Stock to fluctuate substantially. In
addition, stock markets have experienced extreme price and volume volatility in
recent years. This volatility has had a substantial effect on the market prices
of securities of many smaller public companies for reasons frequently unrelated
to the operating performance of the specific companies. These broad market
fluctuations may adversely affect the market price of the Common Stock.
STOCK OPTIONS AND WARRANTS OUTSTANDING. As of the date of this
Prospectus, the Company had outstanding stock options and warrants to purchase
an aggregate of 2,721,699 shares of Common Stock at exercise prices ranging from
$3.06 to $13.50. As of the date of this Prospectus, options and warrants to
purchase 2,045,608 shares are vested. These options are likely to be exercised,
if at all, at a time when the Company otherwise could obtain a price for the
sale of shares of Common Stock which is higher than the option exercise price
per share. Such exercise or the
16
<PAGE>
possibility of such exercise may impede the Company if it later seeks financing
through the sale of additional securities.
FUTURE SALES OF COMMON STOCK. Of the Company's shares of Common Stock
currently outstanding, a substantial number of such shares are "restricted
securities" as that term is defined under Rule 144 under the Securities Act,
which, under certain circumstances, may be sold without registration with the
Commission under the Securities Act. An aggregate of 2,257,220 shares of the
Company's Common Stock issuable upon exercise of stock options and warrants are
presently being offered for sale under the Company's pending "shelf"
registration statements on Forms S-3 and S-8. The Company is unable to predict
the effect that sales of Common Stock made under these registration statements,
Rule 144 or upon the registration of Common Stock issued pursuant to the stock
options and warrants described above, or otherwise, may have on the then
prevailing market price of the Common Stock. The executive officers and
directors of the Company, who beneficially own an aggregate of 1,549,549 shares
of Common Stock, have agreed not to sell or otherwise dispose of such shares
before August 31, 1998, without the written consent of Commonwealth Associates,
which served as the Placement Agent in the Private Placement.
17
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of any Shares
of Common Stock by the Selling Shareholders but will pay all expenses related to
the registration of the Shares. The Company could receive up to $1,905,234 from
the exercise of the warrants whose underlying Shares are covered by this
Prospectus. Any proceeds of such warrant exercises will be used by the Company
as working capital.
SELLING SHAREHOLDERS
The following table sets forth information concerning the beneficial
ownership of Common Stock by the Selling Shareholders as of the date of this
Prospectus, the number of Shares included for sale in the Offering and the
beneficial ownership of Common Stock by such Selling Shareholders after the
Offering (assuming sale of all of the Shares offered by the Shareholders). Such
information was furnished to the Company by the Selling Shareholders. Except as
set forth in the footnotes to the table, (i) to the knowledge of the Company,
none of the selling shareholders has had, within the past three years any
material relationship with the Company, and (ii) all of the Shares were acquired
pursuant to the Private Placement.
<TABLE>
NAME SHARES OWNED PRIOR TO SHARES TO BE SOLD IN THE SHARES TO BE OWNED PERCENTAGE OF SHARES TO
THE OFFERING OFFERING AFTER THE OFFERING BE OWNED AFTER THE
OFFERING
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Abrams, Richard N. 9,090 9,090 0 0
- -------------------------------------------------------------------------------------------------------------------------
Alloy, Mark 9,089 9,089 0 0
- -------------------------------------------------------------------------------------------------------------------------
Anderson, Ferdinand R. 3,306 3,306 0 0
Jr.
- -------------------------------------------------------------------------------------------------------------------------
Ashford Capital Partners 44,090 44,090 0 0
- -------------------------------------------------------------------------------------------------------------------------
Beattie, Edwin J. 4,545 4,545 0 0
- -------------------------------------------------------------------------------------------------------------------------
Bellingham Industries 6,514,842 2,663,632 3,851,210 24.8
Inc. 1
- -------------------------------------------------------------------------------------------------------------------------
Bibicoff, Harvey 4,500 4,500 0 0
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------
1 Bellingham Industries Inc. ("Bellingham") is an offshore investment
fund. The shares of Common Stock beneficially owned by Bellingham are comprised
of (i) 1,363,632 shares purchased in the Private Placement, (ii) 2,325,000
shares purchased in privately negotiated transactions between April 1997 and
April 1998, (iii) currently exercisable warrants to purchase 100,000 shares,
which were issued in connection with such private transactions, (iv) currently
exercisable warrants to purchase 150,000 shares, which were purchased from an
unaffiliated third party in June 1997, and (v) 2,576,210 shares which were
purchased in open market transactions.
18
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Boatright, Mody K. 908 908 0 0
- -------------------------------------------------------------------------------------------------------------------------
British Life Reliance 107,500 27,500 80,000 *
Office Ltd.
- -------------------------------------------------------------------------------------------------------------------------
Buxton, Terence 16,500 16,500 0 0
- -------------------------------------------------------------------------------------------------------------------------
Callahan, Leslie G. 9,090 9,090 0 0
- -------------------------------------------------------------------------------------------------------------------------
Clariden Bank 30,000 30,000 0 0
- -------------------------------------------------------------------------------------------------------------------------
Commonwealth 219,266 94,978 124,288 *
Associates 2
- -------------------------------------------------------------------------------------------------------------------------
Conzett Europa 45,452 45,452 0 0
Investments
- -------------------------------------------------------------------------------------------------------------------------
David, Richard G. 9,090 9,090 0 0
- -------------------------------------------------------------------------------------------------------------------------
Decklebaum, Morris 4,545 4,545 0 0
- -------------------------------------------------------------------------------------------------------------------------
Dickerson, David E. & 9,090 9,090 0 0
Mary Jane
- -------------------------------------------------------------------------------------------------------------------------
E & M RP Trust 90,904 90,904 0 0
- -------------------------------------------------------------------------------------------------------------------------
Eades, John F. 19,545 4,545 15,000 *
- -------------------------------------------------------------------------------------------------------------------------
EDJ Limited 18,176 18,176 0 0
- -------------------------------------------------------------------------------------------------------------------------
Gaba, Ilya & Alice 4,545 4,545 0 0
- -------------------------------------------------------------------------------------------------------------------------
Glazier, Edwin M. 1,817 1,817 0 0
- -------------------------------------------------------------------------------------------------------------------------
Goldenheim, Paul 1,100 1,100 0 0
- -------------------------------------------------------------------------------------------------------------------------
Graves, H. Eugene 18,180 18,180 0 0
- -------------------------------------------------------------------------------------------------------------------------
Hare & Co. 22,000 22,000 0 0
- -------------------------------------------------------------------------------------------------------------------------
Hickey, William L. & 4,544 4,544 0 0
Pamela T.
- -------------------------------------------------------------------------------------------------------------------------
J-Mark Computer Corp. 4,544 4,544 0 0
- -------------------------------------------------------------------------------------------------------------------------
Jackson, Ann Street 9,090 9,090 0 0
- -------------------------------------------------------------------------------------------------------------------------
Jagmin, Anthony T. 9,090 9,090 0 0
Living Trust
- -------------------------------------------------------------------------------------------------------------------------
Jo-Bar Enterprises, 9,090 9,090 0 0
L.L.C.
- -------------------------------------------------------------------------------------------------------------------------
Keogh, Eugene P. 19,176 18,176 1,000 *
- -------------------------------------------------------------------------------------------------------------------------
Khulpateea, Neekianund 817 817 0 0
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------
2 Commonwealth Associates ("Commonwealth") served as Placement Agent in
the Private Placement and has provided investment banking services to the
Company in connection with several prior transactions since 1995. All of the
shares of Common Stock beneficially owned by Commonwealth are shares issuable
upon the exercise of currently exercisable warrants which were issued to
Commonwealth in connection with its prior services to the Company. The 94,978
Shares offered by Commonwealth are issuable upon the exercise of warrants issued
to Commonwealth as partial compensation for its services in connection with the
Private Placement. Some or all of such warrants may be assigned by Commonwealth
to its partners, officers and/or employees.
* Less than 1%
19
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
LCAC Family Partners, 1,817 1,817 0 0
LTD
- -------------------------------------------------------------------------------------------------------------------------
Lee, Daniel R. 45,454 45,454 0 0
- -------------------------------------------------------------------------------------------------------------------------
Leithauser, Charles 4,544 4,544 0 0
- -------------------------------------------------------------------------------------------------------------------------
Luck, John 4,500 4,500 0 0
- -------------------------------------------------------------------------------------------------------------------------
Manocherian, Greg 3,300 3,300 0 0
- -------------------------------------------------------------------------------------------------------------------------
Meislich, Herbert 4,544 4,544 0 0
- -------------------------------------------------------------------------------------------------------------------------
Miller, Patrick H. & Lee 9,090 9,090 0 0
M.
- -------------------------------------------------------------------------------------------------------------------------
Millstein, Gerald J. 1,817 1,817 0 0
- -------------------------------------------------------------------------------------------------------------------------
Monie, Vijaykumar 1,817 1,817 0 0
- -------------------------------------------------------------------------------------------------------------------------
Notowitz, Allen 9,090 9,090 0 0
- -------------------------------------------------------------------------------------------------------------------------
Palmer, Richard & 2,204 2,204 0 0
Lynne
- -------------------------------------------------------------------------------------------------------------------------
Partoyan, Garo A. 4,409 4,409 0 0
- -------------------------------------------------------------------------------------------------------------------------
Pellar, Richard J. 4,545 4,545 0 0
- -------------------------------------------------------------------------------------------------------------------------
Perl, Leon 1,817 1,817 0 0
- -------------------------------------------------------------------------------------------------------------------------
Pocisk, Anna M. 3,196 3,196 0 0
- -------------------------------------------------------------------------------------------------------------------------
Porter Partners, L.P. 90,946 90,946 0 0
- -------------------------------------------------------------------------------------------------------------------------
Priddy, Robert 45,000 45,000 0 0
- -------------------------------------------------------------------------------------------------------------------------
Pudlo, George H. & 1,817 1,817 0 0
Margaret L.
- -------------------------------------------------------------------------------------------------------------------------
Rosenblatt, Richard 1,350 1,350 0 0
- -------------------------------------------------------------------------------------------------------------------------
Salata, Orlando 4,545 4,545 0 0
- -------------------------------------------------------------------------------------------------------------------------
Salmon, Robert M. & 4,544 4,544 0 0
Margaret S.
- -------------------------------------------------------------------------------------------------------------------------
Schultz, Gary D. & 4,544 4,544 0 0
Barbara A.
- -------------------------------------------------------------------------------------------------------------------------
Schwickert, Kim 1,817 1,817 0 0
- -------------------------------------------------------------------------------------------------------------------------
Sheats, Fred B. 4,544 4,544 0 0
- -------------------------------------------------------------------------------------------------------------------------
Siam Partners II 45,452 45,452 0 0
- -------------------------------------------------------------------------------------------------------------------------
Skoly, Stephen T. Jr. 2,204 2,204 0 0
- -------------------------------------------------------------------------------------------------------------------------
Stern, Theodore & 9,090 9,090 0 0
Elizabeth
- -------------------------------------------------------------------------------------------------------------------------
Stone, Joel A. 9,090 9,090 0 0
- -------------------------------------------------------------------------------------------------------------------------
Tahoe Partnership I 73,620 45,452 28,168 *
- -------------------------------------------------------------------------------------------------------------------------
VMR High Octane Fund 18,000 18,000 0 0
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Voigt, Bryon & Jacelyn 2,271 2,271 0 0
- -------------------------------------------------------------------------------------------------------------------------
Voigt, Kevin J. & Cindy 2,271 2,271 0 0
G.
- -------------------------------------------------------------------------------------------------------------------------
Weldy, Donald D. II 2,204 2,204 0 0
- -------------------------------------------------------------------------------------------------------------------------
Zeke, LP 109,086 109,086 0 0
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold from time to time as market
conditions permit on the Nasdaq National Market, or otherwise, at prices and
terms then prevailing or at prices related to the then-current market price, or
in negotiated transactions. The Shares offered hereby may be sold by one or more
of the following methods, without limitation: (a) a block trade in which a
broker or dealer so engaged will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this Prospectus; (c) ordinary
brokerage transactions in which the broker solicits purchasers; and (d)
face-to-face transactions between sellers and purchasers without a
broker-dealer. In effecting sales, brokers or dealers engaged by the Selling
Shareholders may arrange for other brokers or dealers to participate. Such
brokers or dealers may receive commissions or discounts from the Selling
Shareholders in amounts to be negotiated immediately prior to the sale. Such
brokers or dealers and any other participating brokers or dealers may be deemed
to be "underwriters" within the meaning of the Securities Act in connection with
such sales. In addition, any securities covered by this Prospectus that qualify
for sale pursuant to Rule 144 under the Securities Act might be sold under Rule
144 rather than pursuant to this Prospectus.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of any of the Shares may not simultaneously
engage in market activities with respect to the Common Stock for the applicable
period under Regulation M prior to the commencement of such distribution. In
addition and without limiting the foregoing, the Selling Stockholders will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including without limitation Rules 10b-5 and Regulation
M, which provisions may limit the timing of purchases and sales of any of the
Shares by the Selling Stockholders. All of the foregoing may affect the
marketability of the Common Stock.
The Selling Shareholders will pay the expenses of their counsel, if
any, and the Company will pay the other expenses of this Offering, which
expenses are estimated to be $50,000.
21
<PAGE>
LEGAL MATTERS
The legality of the Common Stock offered hereby will be passed upon for
the Company by Mitrani, Rynor, Adamsky, Macaulay & Zorrilla, P.A., Miami,
Florida.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1997
and 1996, and the related consolidated statements of operations, stockholders'
equity and cash flows of the Company for each of the three years in the period
ended December 31, 1997, incorporated by reference in this Prospectus, have been
incorporated herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
The balance sheets of IMS as of December 31, 1997 and 1996, and the
related statements of operations, stockholders' equity and cash flows of IMS for
each of the three years in the period ended December 31, 1997, incorporated by
reference in this Prospectus, have been incorporated herein in reliance on the
report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
The balance sheet of Hayes Computer Systems, Inc. as of January 31,
1997, and the related statements of operations, stockholder's equity and cash
flows for the ten-month period then ended, incorporated by reference in this
Prospectus, have been incorporated herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
The balance sheets of USHDI as of March 31, 1997 and 1996, and the
related consolidated statements of operations and retained deficits and of cash
flows of USHDI for the years then ended, incorporated by reference in this
Prospectus, have been incorporated in reliance on the report of Deloitte &
Touche LLP, independent auditors, given on the authority of such firm as experts
in accounting and auditing.
22
<PAGE>
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus in connection with the offering
herein contained, and if given or made, such information or representation 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 any
security other than the registered securities to which it relates, or an offer
to sell or solicitation of an offer to buy any security by any person in any
jurisdiction in which such offer or solicitation would be unlawful. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstance, create an implication that there has been no change in the facts
herein set forth since the date hereof.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
Available Information.............................................................................................2
Incorporation of Certain
Information by
Reference.......................................................................................................2
Special Note Regarding
Forward-Looking
Statements......................................................................................................3
The Company.......................................................................................................5
Risk Factors and Recent Developments..............................................................................7
Use of Proceeds..................................................................................................18
Selling Shareholders.............................................................................................18
Plan of Distribution.............................................................................................21
Legal Matters....................................................................................................22
Experts..........................................................................................................22
</TABLE>
PROXYMED, INC.
Common Stock
PROSPECTUS
July 1, 1998
3,708,394 Shares
23
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses payable in connection with the issuance and distribution of
the securities being registered (estimated except in the case of the
registration fee) are as follows:
Amount
SEC registration............................................$11,661.79
Legal fees and expenses......................................12,000.00
Accounting fees and expenses.................................25,000.00
Miscellaneous.................................................1,338.21
Total.......................................................$ 50,000
---------
The above fees will be payable by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 607.0850 of the Florida Business Corporation Act empowers a
Florida corporation to indemnify any person who was or is a party to any
proceeding (other than an action by or in the right of such corporation) by
reason of the fact that such person is or was a director, officer, employee, or
agent of such corporation, or is or was serving at the request of such
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against liability
incurred in connection with such proceeding, including any appeal thereof, if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, such person had no reasonable
cause to believe his conduct was unlawful. A Florida corporation may indemnify
such person against expenses including amounts paid in settlement (not
exceeding, in the judgment of the board of directors, the estimated expense of
litigating the proceeding to conclusion) actually and reasonably incurred by
such person in connection with actions brought by or in the right of the
corporation to procure a judgment in its favor under the same conditions set
forth above, if such person acted in good faith and in a manner such person
believed to be in, or not opposed to, the best interests of the corporation,
except that no indemnification is permitted in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and to the extent the court in which such action or suit was
brought or other court of competent jurisdiction shall determine upon
application that, in view of all
II - 1
<PAGE>
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court shall deem proper.
To the extent such person has been successful on the merits or
otherwise in defense of any action referred to above, or in defense of any
claim, issue or matter therein, the corporation must indemnify such person
against expenses, including counsel (including those for appeal) fees, actually
and reasonably incurred by such person in connection therewith. The
indemnification and advancement of expenses provided for in, or granted pursuant
to, Section 607.0850 is not exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under the articles of
incorporation of the Company or any by-law, agreement, vote of shareholders or
disinterested directors, or otherwise. Section 607.0850 also provides that a
corporation may maintain insurance against liabilities for which indemnification
is not expressly provided by the statute.
Article VII of the Company's Restated Articles of Incorporation and
Article VII of the Company's Bylaws provide for indemnification of the
directors, officers, employees and agents of the Company (including the
advancement of expenses) to the fullest extent permitted by Florida law. In
addition, the Company has contractually agreed to indemnify its directors and
officers to the fullest extent permitted under Florida law.
The Company's employment agreements with its principal executive
officers limit their personal liability for monetary damages for breach of their
fiduciary duties as officers and directors, except for liability that cannot be
eliminated under the Florida Business Corporation Act.
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<PAGE>
ITEM 16. EXHIBITS.
EXHIBIT
NO. DESCRIPTION
- ------- -----------
5 Opinion of Mitrani, Rynor, Adamsky, Macaulay & Zorrilla, P.A.,
including its consent
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Coopers & Lybrand L.L.P.
23.4 Consent of Deloitte & Touche LLP
23.5 Consent of Mitrani, Rynor, Adamsky, Macaulay & Zorrilla, P.A. (included
in Exhibit 5 herewith)
24 Power of Attorney (included on the Signature Page on Page II-5)
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act; (ii) to reflect
in the prospectus any facts or events arising after the effective date of this
Registration Statement (or the most recent post-effective amendment hereof)
which, individually or in the aggregate, represent a fundamental change in the
information in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total dollar value
of securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement; provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if 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
Commission by the
II - 3
<PAGE>
Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in this Registration Statement
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.
(c) Insofar as indemnification for liabilities arising under the
Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Company certifies that it has reasonable grounds to believe that it meets all
requirements of filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Ft. Lauderdale, Florida on this 1st day of July,
1998.
PROXYMED, INC.
By: /s/ Harold S. Blue
--------------------------------
Harold S. Blue, Chairman of the
Board and Chief Executive Officer
Each person whose signature appears below in this Registration
Statement hereby constitutes and appoints Harold S. Blue and Bennett Marks, and
each of them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities (until
revoked in writing) to sign any and all amendments (including post-effective
amendments and amendments thereto) to this Registration Statement on Form S-3 of
the Company and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully for all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act, this
Registration Statement was signed by the following persons in the capacities and
on the dates indicated.
<TABLE>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
/s/ Harold S. Blue
- ------------------------- Chairman of the Board and Chief July 1, 1998
Harold S. Blue Executive Officer (principal
executive officer)
/s/ John Paul Guinan
- ------------------------- President and Director July 1, 1998
John Paul Guinan
II - 5
<PAGE>
/s/ Bennett Marks
- ------------------------- Executive Vice President- July 1, 1998
Bennett Marks Finance, Chief Financial
Officer and Director
(principal financial
and accounting officer)
/s/ Peter A. A. Saunders
- ------------------------- Director July 1, 1998
Peter A. A. Saunders
/s/ Samuel X. Kaplan
- ------------------------- Director July 1, 1998
Samuel X. Kaplan
/s/ Bertram J. Polan
- ------------------------- Director July 1, 1998
Bertram J. Polan
/s/ Eugene R. Terry
- ------------------------- Director July 1, 1998
Eugene R. Terry
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
LOCATED AT
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED PAGE
- ----------- ----------- -------------
<S> <C> <C>
5 Opinion of Mitrani, Rynor, Adamsky, Macaulay & Zorrilla, P.A.,
including its consent
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Coopers & Lybrand L.L.P.
23.4 Consent of Deloitte & Touche LLP
</TABLE>
II - 7
Proxymed, Inc.
July 1, 1998
Page 1
Exhibit 5
MITRANI, RYNOR, ADAMSKY, MACAULAY & ZORRILLA, P.A.
2200 SunTrust International Center
One Southeast Third Avenue
Miami, Florida 33131
Telephone (305) 358-0050
Telecopier (305) 358-0550
July 1, 1998
ProxyMed, Inc.
2501 Davie Road
Suite 230
Ft. Lauderdale, Florida 33317
RE: PROXYMED, INC. FORM S-3 REGISTRATION STATEMENT
Gentlemen:
We have acted as counsel to ProxyMed, Inc., a Florida corporation (the
"Company"), in connection with the preparation and filing by the Company with
the Securities and Exchange Commission of a Registration Statement on Form S-3
(the "Registration Statement") under the Securities Act of 1933, as amended. The
Registration Statement relates to an aggregate of 3,708,394 shares of the
Company's common stock, par value $.001 per share, 3,513,416 of which are issued
and outstanding (the "Shares") and 194,978 of which have been reserved for
issuance by the Company to certain of the Selling Shareholders named therein
upon the exercise of certain outstanding warrants (the "Warrant Shares").
We have examined original, photostatic or certified copies of such
records of the Company, including the Articles of Incorporation, the Bylaws and
minutes, the Registration Statement and other documents as we have deemed
relevant and necessary for purposes of the opinions hereinafter set forth. In
such examination, we have assumed the genuineness of all signatures, the
authenticity of all documents and instruments submitted to us as originals and
the conformity to authentic originals of all documents and instruments submitted
to us as certified or photostatic copies. As to various questions of fact
material to our opinions we have relied upon representations made to us by
various officers and directors of the Company and we have not conducted or
received independent verification of those facts.
Based on the foregoing, we are of the opinion that (i) the Shares have
been duly and validly authorized and are validly issued, fully paid and
nonassessable and (ii) the Warrant Shares have been duly and validly authorized,
and when the warrants with
<PAGE>
Proxymed, Inc.
July 1, 1998
Page 2
respect thereto are duly exercised and such Warrant Shares are issued against
payment therefor in accordance with the terms of such warrants, the Warrant
Shares will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement. In
giving such consent, we do not admit that we come within the category of persons
whose consent is required by Section 7 of the Securities Act or the Commission's
rules and regulations thereunder.
Sincerely,
/s/ MITRANI, RYNOR, ADAMSKY,
MACAULAY & ZORRILLA, P.A.
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement on
Form S-3 of our report dated February 24, 1998, on our audits of the
consolidated financial statements and financial statement schedule of ProxyMed,
Inc. and subsidiaries as of December 31, 1997 and 1996, and for each of the
three years ended December 31, 1997, 1996 and 1995 which report appears in the
annual report on Form 10-K for the fiscal year ended 1997 of ProxyMed, Inc. and
subsidiaries filed with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934. We also consent to the reference to our firm
under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
Miami, Florida
June 30, 1998
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement on
Form S-3 of our report dated April 17, 1998, on our audits of the financial
statements of WPJ, Inc., d/b/a Integrated Medical Systems, as of December 31,
1996 and 1997, and for the years ended December 31, 1995, 1996 and 1997. We also
consent to the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
Newport Beach, California
June 30, 1998
Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement on
Form S-3 of our report dated April 14, 1997, on our audit of the financial
statements of Hayes Computer Systems, Inc. as of January 31, 1997, and for ten
months ended January 31, 1997. We also consent to the reference to our firm
under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
Miami, Florida
June 30, 1998
Exhibit 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
ProxyMed, Inc. on Form S-3 of the report on the US Healthdata Interchange, Inc.
(A Wholly Owned Subsidiary of Avatex Corporation) Financial Statements as of and
for the years ended March 31, 1997 and 1996 and Independent Auditors' Report
dated July 8, 1997 appearing in and incorporated by reference in the annual
Report on Form 10-K of ProxyMed, Inc. for the years ended December 31, 1997 and
1996 and to the reference to Deloitte & Touche LLP under the heading "Experts"
in the Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
Dallas, Texas
June 24, 1998
