SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PROXYMED, INC.
(Exact name of Registrant as specified in its charter)
FLORIDA 65-0202059
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
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HAROLD S. BLUE
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
PROXYMED, INC.
2555 DAVIE ROAD, SUITE 110 2555 DAVIE ROAD, SUITE 110
FORT LAUDERDALE, FLORIDA 33317 FORT LAUDERDALE, FLORIDA 33317
(954) 473-1001 (954) 473-1001
(Address, including zip code, and telephone number, including (Name, address, including zip code, and telephone number,
area code, of registrant's principal executive offices) including area code, of agent for service)
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COPIES OF COMMUNICATIONS TO:
FRANK M. PUTHOFF, ESQ. SPENCER G. FELDMAN, ESQ.
EXECUTIVE VICE PRESIDENT AND GREENBERG TRAURIG
CHIEF LEGAL OFFICER METLIFE BUILDING
PROXYMED, INC. 200 PARK AVENUE, 15TH FLOOR
2555 DAVIE ROAD, SUITE 110 NEW YORK, NEW YORK 10166
FORT LAUDERDALE, FLORIDA 33317 (212) 801-9200
(954) 473-1001
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time as described in the Prospectus after the effective date
of this Registration Statement.
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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 (the "Securities Act"), 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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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED SHARE(1) PRICE(1) REGISTRATION FEE
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Common Stock ($.001 par value)..... 472,500 shares $11.94 $5,640,468.75 $1,568.05
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<FN>
(1) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(c) of the Securities Act of 1933 and based on the closing price
reported on the Nasdaq National Market on October 4, 1999.
</FN>
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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The information in this prospectus is not complete and may be changed.
These securities may not be sold until the registration statement filed with the
SEC is effective. This prospectus is not an offer to sell these securities and
it is not soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED OCTOBER 8, 1999
PROSPECTUS
472,500 SHARES
PROXYMED, INC.
COMMON STOCK
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The selling shareholders listed on page 17 are selling these shares for
their own accounts.
Our common stock is traded on the Nasdaq National Market under the
symbol "PILL."
The selling shareholders may offer the shares through public or private
transactions, on or off the Nasdaq National Market, at prevailing market prices
or at privately-negotiated prices.
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INVESTING IN THE COMMON STOCK INVOLVES SOME RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 6.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is October __, 1999
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PROXYMED, INC.
No one (including any salesman or broker) is authorized to provide oral
or written information about this offering that is not included in this
prospectus.
TABLE OF CONTENTS
PAGE
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About ProxyMed................................................. 3
Risk Factors................................................... 6
Where You Can Find More Information............................ 14
Forward-Looking Information.................................... 14
Use of Proceeds................................................ 15
Selling Shareholders........................................... 16
Plan of Distribution........................................... 18
Legal Opinion ................................................. 20
Experts........................................................ 20
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ABOUT PROXYMED
IN GENERAL
ProxyMed, Inc. is a healthcare information services company operating
in three primary business segments:
o healthcare electronic transaction processing services and communication
devices,
o network engineering services and
o prescription drug dispensing.
HEALTHCARE ELECTRONIC TRANSACTION PROCESSING SERVICES AND COMMUNICATION
DEVICES
We provide healthcare electronic transaction processing services and
related software products to physicians, independent physician associations,
insurance companies, managed care organizations, pharmacies, commercial and
hospital laboratories and nursing homes. Our electronic transaction processing
services support a broad range of both financial and clinical transactions. To
facilitate these services, we have developed and operate ProxyNet,(R) our
proprietary national electronic healthcare information network, which provides
physicians and other primary care providers with direct connectivity to one of
the industry's largest list of payers, the largest list of chain and independent
pharmacies and the largest list of clinical laboratories.
The healthcare industry generates billions of financial and clinical
transactions each year, including prescription orders, refill authorizations,
lab orders and results, radiology orders and results, medical insurance claims,
insurance eligibility inquiries, encounter notifications, and referral requests
and authorizations. We believe that the healthcare industry lags behind many
other transaction-intensive industries, such as the travel, securities and
banking industries, in the number of transactions processed electronically, with
the vast majority of healthcare transactions being performed manually and on
paper. For physicians, payers, labs and pharmacies to meet the financial and
clinical demands of an evolving managed care system, we believe that
participants in the healthcare system will need to process many of these types
of transactions electronically. Due to the number of participants, lack of
standards and complexity of establishing reliable and secure communication
networks, the healthcare industry needs companies such as ProxyMed, with its
secure, proprietary systems, to facilitate the processing of these transactions.
Physicians control most healthcare decisions and are a center point for
patient-related financial and clinical transactions generated each year. Because
of our broad range of both financial and clinical transaction capabilities, we
are positioned to provide "one-stop shopping" for all of a physician's
electronic transaction processing needs. ProxyMed's goal is to become the
nation's leading provider of physician office connectivity and transaction
processing services.
To gain access to the greatest number of physicians, we utilize the
following sales and distribution channels for our healthcare electronic
transaction processing and communication devices segment:
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DISTRIBUTION CHANNEL FOCUS IMPLEMENTATION
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ProxyMed Software ProxyMed has a direct sales force that Software and Communication Products:
and Communication serves physicians, payers, pharmacies and Financial - EZ-Claims software
Devices - Direct Sales labs. ProxyMed licenses its proprietary Pharmacy - PreScribe software
software products for use on physician Lab - ClinScan software and systems
desktops for access to ProxyNet, Lab - Kit series of intelligent
transaction creation and communication printers
between healthcare participants. Nursing home - ProxyCare software
Electronic Commerce ProxyMed has established its electronic Agreements:
Partners commerce partner program to work with the IDX Systems Corporation
nation's leading providers of physician Medical Manager Corp.
desktop software, so that they may enable Eclipsys Corporation
their existing applications to communicate Epic Systems Corporation
through ProxyNet to payers, pharmacies
and labs.
Gateway Agreements ProxyMed connects other electronic Gateways:
transaction processing networks to Kinetra, LLC
ProxyNet so that the participants on both National Data Corp.
networks can communicate with each other.
Internet/World Wide ProxyMed is establishing itself as a Services Planned for Release in First
Web provider of financial and clinical Quarter 2000:
electronic transaction processing services Lab Results Reporting
through the web, which may be accessed by Prescription Refill Authorization
any physician with an internet connection. Eligibility
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Physicians and nursing homes, which we describe as "front-end"
customers, pay recurring network access and database subscription fees, as well
as software license, purchases and service fees for our desktop equipment,
software and communication devices. Payers, laboratories and pharmacies, which
we describe as "back-end" customers, pay for transaction processing services on
a per transaction basis.
We generated a significant portion of our revenues from our other
business segments in prior years. In 1998, however, the electronic transaction
processing and communication devices segment accounted for the majority of our
revenues and is expected to increase as a percentage of revenues in 1999.
NETWORK ENGINEERING SERVICES
We provide client-server software development services, internet access
services and commercial software packages to public and private sector
organizations. We also sell and support a variety of systems integration
products and services from major network equipment manufacturers in a variety of
technological niches, including hubs, routers, switches, remote access devices,
servers, storage devices and network operating systems. This division is a full
service internet access provider with network facilities in Tallahassee, Tampa
and Fort Myers, Florida. We purchase computer hardware products for resale from
a variety of suppliers and are not dependent upon any one supplier.
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PRESCRIPTION DRUG DISPENSING
Our wholly-owned subsidiary, ProxyCare, Inc., is a pharmacy business
which dispenses and delivers unit dose oral prescription drugs to patients
residing in long-term care facilities, primarily in assisted care living
facilities in South Florida. Prescriptions are delivered monthly to such
facilities utilizing a variety of packaging systems, including
"Medicine-On-Time," which permits the dispensing of multiple prescriptions to
nursing home patients. We have considered from time to time selling this
subsidiary, but have no current agreements or understandings in this regard.
ACQUISITION PROGRAM
Since 1997, we have completed the following mergers and acquisitions:
o In March 1997, we acquired substantially all of the assets of
Clinical MicroSystems, Inc., a clinical laboratory software
company.
o In April 1997, we acquired substantially all of the assets of
Hayes Computer Systems, Inc., a network engineering services
company.
o In June 1997, we acquired from Walgreen Co., owner of the
Walgreen's pharmacy chain, the proprietary electronic
prescription software known as PreScribe.
o In November 1997, we acquired substantially all of the assets
of US HealthData Interchange, Inc., a provider of healthcare
financial electronic transaction processing services.
o In May 1998, we acquired all of the capital stock of WPJ,
Inc., which did business as Integrated Medical Systems, also a
provider of healthcare financial electronic transaction
processing services.
o In December 1998, we acquired all of the capital stock of Key
Communications Service, Inc., a provider of clinical
laboratory printer and communication devices.
o In January 1999, we acquired the electronic transaction
processing assets of Specialized Medical Management, Inc.,
also a provider of healthcare financial electronic transaction
processing services.
We have also hired Salomon Smith Barney as our financial advisor to
explore other possible strategic alternatives to raise shareholder value. During
the last several months, ProxyMed has been in discussions with several unrelated
parties in this regard. No assurance can be given as to when or if ProxyMed will
enter into any agreement as a result of these discussions.
* * * * *
Our principal executive offices are located at 2555 Davie Road, Suite
110, Fort Lauderdale, Florida 33317-7424, and our telephone number is (954)
473-1001.
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RISK FACTORS
In addition to the other information in this prospectus or incorporated
in this prospectus by reference, you should consider carefully the following
factors in evaluating ProxyMed and our business before purchasing the common
stock offered by this prospectus:
WE HAVE INCURRED LOSSES IN THE PAST AND WE EXPECT LOSSES IN THE FUTURE WHICH CAN
HAVE A DETRIMENTAL EFFECT ON THE LONG-TERM CAPITAL APPRECIATION OF OUR STOCK
We have incurred substantial losses, including losses of $11,788,000,
$18,517,000 and $2,854,000 for the fiscal years ended December 31, 1998, 1997
and 1996, respectively. The fiscal 1998 and 1997 losses included charges for
acquired in-process research and development technology totaling $743,000 and
$8,467,000, respectively, resulting from the Hayes Computer Systems and Clinical
MicroSystems acquisitions. As of June 30, 1999, we had an accumulated deficit of
$49,987,000. We expect to continue to incur substantial losses in the
foreseeable future. We can give no assurance that we will ever achieve
profitable operations. This could have a detrimental effect on the long-term
capital appreciation of our stock.
IF WE CANNOT OBTAIN NEEDED FUNDING BY THE END OF DECEMBER 1999, WE MAY HAVE TO
CURTAIL OUR OPERATIONS, SELL SOME OF OUR ASSETS OR TAKE ACTIONS THAT MAY DILUTE
YOUR FINANCIAL INTEREST
Our funding needs are significant for acquisitions and the development,
marketing and sale of our products and services. For example, we are required to
pay $750,000 on or before April 30, 2000 under the Clinical MicroSystems
acquisition agreement. We must pay at least half of this future payment in cash,
and pay the balance, if any, by delivering unregistered shares of our common
stock valued at the then market price. Also, we agreed to pay Walgreen's
$500,000 in cash in June 2000 under our agreement for the acquisition of
PreScribe. We believe that our existing cash reserves and expected cash receipts
will provide the funds necessary to satisfy cash requirements through at least
December 1999, based upon our current plans and assumptions, including increased
expenditures for marketing and research and development. In July 1999, we
established a $5.0 million working capital line of credit with Transamerica
Business Credit Corporation, against which we have borrowed $2.0 million as of
October 5, 1999. In the future, however, additional funds may not be
available when needed or, if available, not on terms acceptable to our
management. Current shareholders may be diluted as a result of additional
financing. If we do not obtain additional financing, we may be forced to reduce
planned expenditures, curtail our operations or sell some of our assets.
WE DEPEND ON CONNECTIONS TO INSURANCE COMPANIES AND OTHER PAYERS, AND IF WE LOSE
THESE CONNECTIONS OUR SERVICE OFFERINGS WOULD BE LIMITED AND LESS DESIRABLE TO
HEALTHCARE PARTICIPANTS
Our business is enhanced by the substantial number of payers, such as
insurance companies, Medicare and Medicaid agencies, laboratories and
pharmacies, to which we have electronic connections. These connections may
either be made directly or through a clearinghouse. We have attempted to enter
into suitable contractual relationships to ensure long-term payer connectivity;
however, we cannot assure that we will be able to maintain our links with all
these payers. In addition, we cannot assure that we will be able to develop new
connections, either directly or through clearinghouses, on satisfactory terms.
Lastly, some third-party payers provide systems directly to healthcare
providers, bypassing us and other third-party processors. Our failure to
maintain existing connections with payers and clearinghouses or to develop new
connections as circumstances warrant, or an increase in the utilization of
direct links between providers and payers, could cause our electronic
transaction processing system to be less
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desirable to healthcare participants, which would slow down the number of
transactions we process and get paid for.
EVOLVING INDUSTRY STANDARDS AND RAPID TECHNOLOGICAL CHANGES COULD RESULT IN OUR
PRODUCTS BECOMING OBSOLETE AND NO LONGER IN DEMAND
Rapidly changing technology, evolving industry standards and the
frequent introduction of new and enhanced internet-based services characterize
the market for our products and services. Our success will depend upon our
ability to enhance our existing services, introduce new products and services on
a timely and cost-effective basis to meet evolving customer requirements,
achieve market acceptance for new products or services and respond to emerging
industry standards and other technological changes. We cannot assure that we
will be able to respond effectively to technological changes or new industry
standards. Moreover, we cannot assure that other companies will not develop
competitive products or services, or that any such competitive products or
services will not cause our products and services to become obsolete and no
longer in demand.
THE ACCEPTANCE OF ELECTRONIC TRANSACTION PROCESSING IN THE HEALTHCARE INDUSTRY
IS STILL IN ITS EARLY STAGES; THUS, THE FUTURE OF OUR BUSINESS, INCLUDING OUR
NEW INTERNET-BASED SOLUTIONS, IS UNCERTAIN
Our strategy anticipates that electronic processing of healthcare
transactions, including transactions involving clinical as well as financial
information, will become more widespread and that providers and third-party
payers increasingly will use electronic transaction processing networks for the
processing and transmission of data. Electronic transmission of healthcare
transactions (and, in particular, the use of the internet to transmit them) is
still developing, and complexities in the nature and types of transactions which
must be processed have hindered, to some degree, the development and acceptance
of electronic transaction processing in this industry. We cannot assure that
continued conversion from paper-based transaction processing to electronic
transaction processing in the healthcare industry, using proprietary physician
management systems or the internet, will occur. The internet may prove not to be
a viable commercial marketplace for a number of reasons, including:
o inadequate development of the necessary infrastructure for
communication speed, access and server reliability;
o security and confidentiality concerns;
o lack of development of complementary products, such as
high-speed modems and high-speed communication lines;
o implementation of competing technologies;
o delays in the development or adoption of new standards and
protocols required to handle increased levels of internet
activity; and
o possible governmental regulation.
Growth in the demand for our new internet applications and services
depends on the adoption of internet solutions by healthcare participants, which
requires the acceptance of a new way of conducting business and exchanging
information. The healthcare industry, in particular, relies on legacy systems
that may be unable to benefit from our new internet-based platform. Customers
using legacy and client-
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server systems may refuse to adopt our new internet-based systems when they have
made extensive investment in hardware, software and training for older systems.
IF ELECTRONIC TRANSACTION PROCESSING PENETRATES THE HEALTHCARE INDUSTRY, WE MAY
FACE PRESSURE TO REDUCE OUR PRICES WHICH POTENTIALLY MAY LEAD TO FURTHER LOSSES
If electronic transaction processing extensively penetrates the
healthcare market or becomes highly standardized, it is possible that
competition among electronic transaction processors will focus increasingly on
pricing. This competition may put intense pressure on us to reduce our pricing
in order to retain market share. If we are unable to reduce our costs
sufficiently to offset declines in our prices, or if we are unable to introduce
new, innovative service offerings with higher prices, we will continue to incur
net losses.
PROPOSED HEALTHCARE LEGISLATION AND CHANGES TO EXISTING LAWS COULD CAUSE AN
EROSION OF OUR CURRENT COMPETITIVE STRENGTHS
Our customers are subject to extensive and frequently changing federal
and state healthcare laws and regulations. Political, economic and regulatory
influences are subjecting the healthcare industry in the United States to
fundamental changes. Potential reform legislation may include:
o mandated basic healthcare benefits;
o controls on healthcare spending through limitations on the
growth of private health insurance premiums and Medicare and
Medicaid reimbursement;
o the creation of large insurance purchasing groups; and
o fundamental changes to the healthcare delivery system.
The federal Health Insurance Portability and Accountability Act of
1996, known as HIPAA for short, 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 us and other financial network operators) as the compliance
facilitators for healthcare providers and payers. Clearinghouses are given the
freedom to utilize non-standard transactions and convert them to the mandated
standards on behalf of their customers. We intend to comply with the mandated
standards as soon as practicable after they have been adopted. Due to mandated
standards, however, there is a possibility that it will be easier for
competitors to offer electronic transaction processing services similar to ours,
which would make our competitive strength of accepting financial transactions in
multiple formats less of a differentiating factor for our customers.
We anticipate Congress and some state legislatures will continue to
review and assess alternative healthcare delivery systems and payment methods
and public debate of these issues will likely continue in the future. Due to
uncertainties as to these reform initiatives and their enactment and
implementation, we cannot predict which, if any, of such reform proposals will
be adopted, when they may be adopted or what impact they may have on us.
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BECAUSE WE ARE SMALLER AND HAVE FEWER FINANCIAL RESOURCES THAN MANY OF OUR
COMPETITORS, WE MAY NOT BE ABLE TO SUCCESSFULLY COMPETE IN THE VERY COMPETITIVE
HEALTHCARE ELECTRONIC TRANSACTION PROCESSING INDUSTRY
We face competition from many healthcare information systems companies
and other technology companies. Many of our competitors are significantly larger
and have greater financial resources than we do and have established reputations
for success in implementing healthcare electronic transaction processing
systems. We are also aware that other transaction processing companies have
targeted this industry for growth, including the development of new technologies
utilizing internet-based systems. We cannot assure that we will be able to
compete successfully with these companies or that these or other competitors
will not commercialize products, services or technologies that render our
products, services or technologies obsolete or less marketable.
We also believe that most physicians will ultimately subscribe to only
one electronic transaction processing service provider. Consequently, it is our
belief that the key to competitive success will be our ability to control
physicians' desktops by offering a comprehensive set of electronic financial and
clinical transactions and locking in the physicians to mutually beneficial
long-term agreements. However, we cannot assure that we will win this race to
provide "one-stop shopping," or 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 electronic transaction processing services and may elect to change
their electronic transaction processing services frequently rather than settling
long-term for one provider.
WE HAVE IMPORTANT BUSINESS RELATIONSHIPS WITH OTHER COMPANIES TO MARKET AND SELL
SOME OF OUR CLINICAL PRODUCTS AND SERVICES WHICH HAVE NOT RESULTED IN
SIGNIFICANT SALES YET AND IF THESE COMPANIES ARE UNSUCCESSFUL, WE WILL NEED TO
ADD THIS EMPHASIS INTERNALLY, WHICH WOULD DIVERT OUR EFFORTS AND RESOURCES FROM
OTHER PROJECTS
For the marketing and sale of some of our clinical products and
services, we entered into important business relationships with other companies,
through our electronic commerce partner program with physician office management
information system vendors and electronic medical record vendors and through
other agreements. These important business relationships, which have required
and will continue to require significant commitments of effort and resources,
have yet to generate substantial recurring revenue, and we cannot assure that
they will ever generate substantial recurring revenue. Most of these
relationships are on a non-exclusive basis, and we cannot assure that our
electronic commerce partners and other strategic partners, most of whom have
significantly greater financial and marketing resources than we do, will not
develop and market products and services in competition with us in the future or
will not otherwise discontinue their relationship with us. Also, our
arrangements with some of our partners involve negotiated payments to the
partners based on percentages of revenues generated by the partners. If the
payments prove to be too high, we may be unable to realize acceptable margins,
but if the payments prove to be too low, the partners may not be motivated to
produce a sufficient volume of revenues. The success of our important business
relationships will depend in part upon our partners' own competitive, marketing
and strategic considerations, including the relative advantages of alternative
products being developed and marketed by such partners. If any such partners are
unsuccessful in marketing our products, we will need to place added emphasis on
these aspects of our business internally, which would divert our planned efforts
and resources from other important projects.
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WE DEPEND ON GOVERNMENT SALES CONTRACTS WITH THE STATE OF FLORIDA FOR A LARGE
PART OF OUR TOTAL SALES BUT THESE CONTRACTS MAY BE CANCELLED AT ANY TIME
In fiscal 1998, approximately 87% of our network engineering revenues
were to agencies and departments of the State of Florida, and these revenues
represented approximately 32% of total revenues for fiscal 1998. In fiscal 1997,
approximately 91% of our network engineering services division revenues were to
agencies and departments of the State of Florida, representing approximately 65%
of total revenues for 1997. The State of Florida typically awards contracts on
an annual fiscal-year basis with early cancellation rights, and renewal of these
contracts will depend on many factors outside our control, including competitive
factors, changes in government personnel making contract decisions and political
factors. Although we are not aware of any decision by the state to discontinue
doing business with us, the loss or non-renewal of these government contracts
would likely cause our revenues to decline.
OUR CLINICAL TRANSACTION PRODUCTS AND SERVICES HAVE YET TO BE TESTED ON A LARGE
SCALE AND COULD FAIL UNDER A HEAVY CUSTOMER LOAD
The quality of our clinical transaction products and services is
important to our business. Although we have completed the development of most of
our clinical transaction products and services and our electronic transaction
processing network, which we believe efficiently perform the principal functions
for which they have been designed, our clinical transaction products and
services and the network are currently being utilized only by a limited number
of customers for these transactions. We cannot assure that, upon widespread
commercial use of our clinical transaction products and services, they will
satisfactorily perform all of the functions for which we have designed them or
that unanticipated technical or other errors will not occur which would result
in increased costs or material delays. Any of these errors could delay our
plans, result in harmful publicity or cause us to incur substantial remedial
costs.
COMPUTER NETWORK SYSTEMS LIKE OURS COULD SUFFER SECURITY AND PRIVACY BREACHES
THAT COULD HARM OUR CUSTOMERS AND US
We currently operate servers and maintain connectivity from multiple
facilities. Despite our implementation of network security measures, such as
limiting physical and network access to routers, our infrastructure may be
vulnerable to computer viruses, break-ins and similar disruptive problems caused
by customers or other users. Computer viruses, break-ins or other security
problems could lead to interruption, delays or cessation in service to our
customers. These problems could also potentially jeopardize the security of
confidential information stored in the computer systems of our customers, which
may deter potential customers from doing business with us 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 healthcare information services industry in general, and our
customer base and business in particular. A significant security breach could
result in loss of customers, damage to our reputation, direct damages, costs of
repair and detection and other unplanned expenses.
WE DEPEND ON UNINTERRUPTED COMPUTER ACCESS FOR OUR CUSTOMERS; ANY PROLONGED
INTERRUPTIONS IN OUR OPERATIONS COULD CAUSE OUR CUSTOMERS TO SEEK ALTERNATIVE
PROVIDERS OF OUR SERVICES
Our success is dependent on our ability to deliver high-quality,
uninterrupted computer networking and hosting, requiring us to protect our
computer equipment and the information stored in servers against damage by fire,
natural disaster, power loss, telecommunications failures, unauthorized
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intrusion and other catastrophic events. Although we plan to develop back-up
site capability and have a program to manage technology to reduce risks in the
event of a disaster, including periodic "back-ups" of our computer programs and
data, any damage or failure resulting in prolonged interruptions in our
operations could cause our customers to seek alternative providers of our
services. In particular, a system failure, if prolonged, could result in reduced
revenues, loss of customers and damage to our reputation, any of which could
cause our business to suffer. While we carry property and business interruption
insurance to cover operations, the coverage may not be adequate to compensate us
for losses that may occur.
FAILURE OF OUR CUSTOMERS AND BUSINESS PARTNERS TO BE YEAR 2000 COMPLIANT COULD
CAUSE THEIR FOCUS TO BE DIVERTED AWAY FROM OUR BUSINESS AND CAUSE OUR RESULTS OF
OPERATIONS TO BE STAGNANT
We are in the final stages of testing all of our products, systems and
equipment for potential Year 2000 problems. Despite testing by us and our
customers, our products, systems and equipment may contain undetected errors or
defects associated with Year 2000 date functions that could result in delay or
loss of revenue, diversion of development resources, damage to our reputation or
increased service and warranty costs, any of which could be expensive to deal
with. 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 it may impact us. To the extent that
we are not able to test the technology provided by third-party vendors, we have
requested representations from key vendors and our service providers that their
systems are Year 2000 compliant. Although we are not aware of any significant
operational issues or costs associated with preparing our internal systems for
the Year 2000, we may experience significant unanticipated problems and costs
caused by undetected errors or defects in the technology used in our internal
systems, which include our own software and hardware technology. We have
notified customers of our Year 2000 readiness plan and their responsibility to
assure that their own systems are Year 2000 compliant. We do not have
information concerning their Year 2000 compliance status. As is the case with
other similarly-situated companies, if our customers or electronic commerce
partners or their end-users fail to achieve Year 2000 compliance or divert
technology expenditures to address Year 2000 compliance problems, our business
may be less important to them and cause our results of operations to be
stagnant.
OUR PRODUCTS EMPLOY PROPRIETARY INFORMATION AND TECHNOLOGY WHICH MAY INFRINGE ON
THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES
In large part, our success is dependent on our proprietary information
and technology. We rely on a combination of contract, copyright, trademark and
trade secret laws and other measures to protect our proprietary information and
technology. We have federal trademark registrations for ClinScan, ProxyCare,
ProxyNet, ProxyScript and RxReceive and have filed a trademark application for
PreScribe, which is currently pending approval. We have no patents. We are in
the process of filing copyright registrations for 12 of our software products.
As part of our confidentiality procedures, we generally enter into nondisclosure
agreements with our employees, distributors and customers, and limit access to
and distribution of our software, databases, documentation and other proprietary
information. We cannot assure that the steps taken by us will be adequate to
deter misappropriation of our proprietary rights or that third parties will not
independently develop substantially similar products, services and technology.
Although we believe our 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, we and
other software developers may become increasingly subject to infringement
claims. These claims, with or without merit, could result in costly litigation
or might
11
<PAGE>
require us to enter into royalty or licensing agreements, which may not be
available on terms acceptable to us.
BECAUSE AN ERROR BY ANY PARTY IN THE PROCESS OF PRESCRIBING DRUGS AND FILLING
PRESCRIPTIONS COULD RESULT IN SUBSTANTIAL INJURY TO A PATIENT, OUR LIABILITY
INSURANCE MAY NOT BE ADEQUATE IN A CATASTROPHIC SITUATION
Our business exposes us to potential liability risks that are
unavoidably part of being in the healthcare electronic transaction processing
industry. Many of our products and services relate to prescribing drugs and
filling prescriptions, and an error by any party in the process could result in
substantial injury to a patient. As a result, our liability risks are
significant. We cannot assure that our insurance will be sufficient to cover
potential claims arising out of our current or proposed operations, or that our
present level of coverage will be available in the future at a reasonable cost.
A partially or completely uninsured claim against us, if successful and of
sufficient magnitude, would cause further net losses. Also, the inability to
obtain insurance of the type and in the amounts we require could generally
impair our ability to market our products and services.
WE MAY NOT BE ABLE TO RETAIN OUR KEY PERSONNEL WHO WE NEED TO SUCCEED AND
QUALIFIED HEALTHCARE INFORMATION SERVICES PERSONNEL ARE EXTREMELY DIFFICULT TO
ATTRACT
Our success is largely dependent on the personal efforts of Harold S.
Blue, our Chairman and Chief Executive Officer, John Paul Guinan, President of
our internet division, Danny Hayes, President of our network engineering
division, and Jeff K. Carpenter, President and Chief Executive Officer of Key
Communications, our subsidiary. Although we have entered into employment
agreements with these and a few other senior executives, the loss of any of
their services could cause our business to suffer. We have obtained for our
benefit "key person" insurance on the lives of Messrs. Blue, Guinan and
Carpenter in the amount of $1,000,000 for Messrs. Blue and Guinan and $2.0
million for Mr. Carpenter. Our success is also dependent upon our ability to
hire and retain qualified marketing, operations, development and other
personnel. Competition for qualified personnel in the healthcare information
services industry is intense, and we cannot assure that we will be able to hire
or retain the personnel necessary for our planned operations.
OUR MANAGEMENT AND BELLINGHAM OWN A SUBSTANTIAL AMOUNT OF OUR STOCK AND ARE
CAPABLE OF INFLUENCING OUR AFFAIRS
As of the date of this prospectus, our officers and directors
beneficially own approximately 18.9% of our outstanding common stock, and
Bellingham Industries Inc., an offshore investment fund, beneficially owns
approximately 32.7% of our outstanding common stock. As a result, these
shareholders substantially influence our management and affairs and, if acting
together, control most matters requiring the approval by our shareholders
including the election of directors, any merger, consolidation or sale of all or
substantially all of our assets and any other significant corporate
transactions. The concentration of ownership may delay or prevent a change of
control at a premium price.
OUR CORPORATE CHARTER CONTAINS AUTHORIZED, UNISSUED PREFERRED STOCK WHICH, IF
ISSUED, MAY INHIBIT A TAKEOVER AT A PREMIUM PRICE THAT MAY BE BENEFICIAL TO OUR
SHAREHOLDERS
Our Articles of Incorporation authorize the issuance of 2,000,000
shares of "blank check" preferred stock with such designations, rights and
preferences as our Board of Directors may determine from time to time. None of
these preferred shares are outstanding as of the date of this prospectus.
12
<PAGE>
Without shareholder approval, our Board of Directors is empowered to issue
shares of our preferred stock with dividend, liquidation, conversion, voting and
other rights that could lessen the value, voting power or other rights of
holders of common stock. Also, issuance of shares of our preferred stock could
be utilized, under some circumstances, as a method of discouraging, delaying or
preventing a change of control of this company at a premium price which would be
beneficial to our shareholders. Although we have no present intention to issue
any shares of our preferred stock, we cannot assure that we will not do so in
the future.
INVESTORS SHOULD NOT ANTICIPATE RECEIVING CASH DIVIDENDS ON OUR COMMON STOCK
We currently anticipate retaining all of our future earnings, if any,
for use in the operation and expansion of our business, and do not plan to pay
any cash dividends on shares of our common stock in the foreseeable future.
Potential investors who anticipate a need for dividends should not invest in
this stock.
OUR COMMON STOCK PRICE HAS FLUCTUATED CONSIDERABLY AND MAY NOT APPRECIATE IN
VALUE
The market price of shares of our common stock has fluctuated
substantially in recent years and is likely to fluctuate significantly from its
current level. In 1998, for example, the closing market price of our shares
ranged from a low of $5.25 per share to a high of $17.13 per share, and during
1999, our closing share price has ranged from a low of $9.63 per share to a high
of $19.25 per share. Future announcements concerning the introduction of new
products, services or technologies or changes in product pricing policies by us
or our competitors or changes in earnings estimates by analysts, among other
factors, could cause the market price of our common stock to fluctuate
substantially. Also, stock markets have experienced extreme price and volume
volatility in the last year. This volatility has had a substantial effect on the
market prices of securities of many public companies for reasons frequently
unrelated to the operating performance of the specific companies. These broad
market fluctuations may also cause declines in the market price of our common
stock. Investors seeking short-term liquidity should be aware that we cannot
assure that the stock price will appreciate in value or, as noted above, that
cash dividends will be paid.
SALES OF SHARES UNDERLYING OUR STOCK OPTIONS AND WARRANTS MAY DEPRESS THE PRICE
OF OUR COMMON STOCK
As of the date of this prospectus, we had outstanding stock options and
warrants to purchase an aggregate of 3,549,481 shares of our common stock at
exercise prices ranging from $3.06 to $14.50 per share. Stock options and
warrants to purchase 2,214,274 shares are vested as of this date. Holders of
these options are likely to exercise them, if at all, at a time when they could
otherwise obtain a price for the sale of shares of our common stock that is
higher than the option exercise price. Such exercise or the possibility of such
exercise may impede us if we later seek financing through the sale of additional
securities. Under effective shelf registration statements, holders may resell a
substantial number of the shares into which the stock options and warrants are
exercisable. In addition, we filed in May 1999 a shelf registration statement
with the SEC covering 1,968,106 shares of common stock, which is currently
effective. Sales of common stock made under the shelf registrations or Rule 144,
or otherwise, may have a depressive effect on the then prevailing market price
of our common stock.
13
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the public reference facilities of the SEC in Washington, D.C., Chicago,
Illinois and New York, New York. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our SEC filings are also
available to the public from the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we have
filed with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the following documents listed below and any future
filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934:
(1) Our Annual Report on Form 10-K for the year ended December 31,
1998, as amended by Amendments No. 1 and 2;
(2) Our Quarterly Reports on Form 10-Q for the quarter ended March
31, 1999, as amended by Amendments No. 1 and 2, and for the
quarter ended June 30, 1999;
(3) Our Current Report on Form 8-K dated December 31, 1998
(relating to the Key Communications merger);
(4) Our Current Report on Form 8-K dated May 19, 1998 (relating to
the Integrated Medical Systems acquisition);
(5) Our definitive Proxy Statement, dated May 24, 1999, filed in
connection with our 1998 Annual Meeting of Shareholders; and
(6) The description of our common stock contained in our
Registration Statement on Form 8-A filed with the SEC under
Section 12 of the Exchange Act, which was declared effective
August 5, 1993, including any amendments or reports filed for
the purpose of updating the description.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
ProxyMed, Inc.
2555 Davie Road, Suite 110
Fort Lauderdale, Florida 33317
Attn: Frank M. Puthoff, Esq.
Executive Vice President and Chief Legal Officer
Tel: (954) 473-1001, ext. 300
FORWARD-LOOKING INFORMATION
This prospectus, including the information incorporated by reference,
contains forward-looking statements made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of
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<PAGE>
1995. Actual results could differ materially from those projected in the
forward-looking statements as a result of the risk factors beginning on page 6
and others detailed from time to time in our periodic reports filed with the
SEC.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares of common
stock by any of the selling shareholders.
We estimate that our expenses in connection with the filing of this
registration statement will be approximately $25,000.
SELLING SHAREHOLDERS
GENERAL
In June 1999, we completed a private placement of 250,000 shares of
common stock and warrants to purchase 120,000 shares of common stock to 11
unaffiliated, accredited investors at $12.00 per share, or a total of
$3,000,000, before costs of approximately $60,000. The warrants may be exercised
at any time during their five-year term and have an exercise price of $10.00 per
share. A warrant to purchase 35,000 shares of common stock at an exercise of
$13.31 per share was issued to the placement agent. The shares and warrants were
purchased for investment purposes only. The 405,000 shares of common stock and
shares underlying the warrants are being registered in this prospectus. The
remaining shares of common stock being registered in this prospectus are held by
selling shareholders who received their shares in previous transactions.
None of the selling shareholders has held any position or office or had
any other material relationship with ProxyMed within the past three years. The
selling shareholders who purchased securities in the private placement are
participating in this offering pursuant to contractual registration rights
granted to them in the private placement. We have agreed to file and maintain
the effectiveness of the registration statement (of which this prospectus forms
a part) and to pay all fees and expenses incident to the registration of this
offering, including all registration and filing fees, all fees and expenses of
complying with state blue sky or securities laws, all costs of preparation of
the registration statement and fees and disbursements of our counsel and
independent public accountants.
15
<PAGE>
SELLING SHAREHOLDER TABLE
The table below lists, in each case as of October 5, 1999:
1. the name of each selling shareholder;
2. the number of shares each selling shareholder beneficially
owns;
3. how many shares of common stock the selling shareholder may
resell under this prospectus; and
4. assuming each selling shareholder sells all the shares listed
next to its name, how many shares of common stock each selling
shareholder will beneficially own after completion of the
offering.
Beneficial ownership is determined in accordance with rules promulgated
by the SEC, and the information is not necessarily indicative of beneficial
ownership for any other purpose. The shares of common stock deemed outstanding
include:
o 18,171,307 shares outstanding as of October 5, 1999; and
o shares issuable by ProxyMed pursuant to warrants and stock
options held by the respective person or group which may be
exercised within 60 days following the date of this
prospectus.
Warrants and stock options exercisable within 60 days are deemed to be
outstanding and to be beneficially owned by the person or group holding such
options for the purpose of computing the percentage ownership of such person or
group but are not treated as outstanding for the purpose of computing the
percentage ownership of any other person or group. This table is based upon
information supplied to us by officers, directors and principal shareholders.
Except as otherwise indicated, ProxyMed believes that the persons named in the
table have sole voting and investment power with respect to all shares of the
common stock shown as beneficially owned by them, subject to community property
laws where applicable.
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<PAGE>
We may amend or supplement this prospectus from time to time in the
future to update or change this list of selling shareholders and shares which
may be resold.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BEFORE BENEFICIAL OWNERSHIP
THE OFFERING SHARES THAT MAY BE AFTER THE OFFERING
--------------------------- SOLD IN THE -------------------------
SELLING SHAREHOLDER SHARES PERCENT OFFERING SHARES PERCENT
- ---------------------------------------- -------------- ---------- ------------------ ---------- -------------
<S> <C> <C> <C> <C> <C>
Rovest Partnership.................. 12,000 (1) * 12,000 - -
Edward J. Rosenthal Profit Sharing Plan 12,000 (1) * 12,000 - -
Francisco A. Garcia................. 6,000 (2) * 6,000 - -
Michael S. Falk..................... 220,528 (3) 1.2% 20,500 200,028 1.1%
Commonwealth Associates............. 251,120 (4) 1.4% 75,000 176,120 1.0%
Robert O'Sullivan................... 18,405 (5) * 11,000 7,405 *
Beth Lipman......................... 5,000 (6) * 500 4,500 *
Kabuki Partners..................... 3,000 (7) * 3,000 - -
Richard Rosenblatt.................. 7,350 (2) * 6,000 1,350 *
The Lennox Trust.................... 6,000 (2) * 6,000 - -
Joseph P. Wynne..................... 3,950 (8) * 3,000 950 *
CRM Madison Partners, L.P........... 36,000 (9) * 36,000 - -
CRM Retirement Partners, L.P........ 69,000 (10) * 69,000 - -
CRM U.S. Value Fund, Ltd............ 6,000 (2) * 6,000 - -
CRM Partners, L.P................... 99,000 (11) * 99,000 - -
Gerald and Daphna Cramer 1997
Charitable Remainder Unitrust.. 56,293 (12) * 35,000 21,293 *
Gerald B. Cramer 1997 Charitable
Remainder Unitrust............. 77,126 (12) * 35,000 42,126 *
Europlan Trust Company,
Ltd........................... 37,500 (13) * 37,500 - -
-------
Total 472,500
<FN>
- -------------------------
* Represents less than 1% of the outstanding common stock.
(1) Includes warrants to purchase 3,667 shares of common stock at an
exercise price of $10.00 per share.
(2) Includes warrants to purchase 1,833 shares of common stock at an
exercise price of $10.00 per share.
(3) Includes warrants to purchase 5,500 shares of common stock at an
exercise price of $10.00 per share. Also includes warrants to purchase
an aggregate of 200,028 shares of common stock at exercise prices
ranging from $4.17 to $12.10 per share, which are not being registered
in this offering.
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(4) Includes warrants to purchase 7,333 shares of common stock at an
exercise price of $10.00 per share, warrants to purchase 35,000 shares
of common stock at an exercise price of $13.31 per share, and warrants
to purchase 10,000 shares of common stock at an exercise price of
$11.44 per share issued in connection with our acquisition of
Specialized Medical Management in January 1999. Also includes warrants
to purchase an aggregate of 176,120 shares of common stock at exercise
prices ranging from $4.17 to $12.10 per share, which are not being
registered in this offering.
(5) Includes warrants to purchase 10,000 shares of common stock at an
exercise price of $11.44 per share issued in connection with our
acquisition of Specialized Medical Management in January 1999. Also
includes warrants to purchase an aggregate of 7,405 shares of common
stock at exercise prices ranging from $5.63 to $12.10 per share, which
are not being registered in this offering.
(6) Includes warrants to purchase 4,500 shares of common stock at an
exercise price of $5.63 per share, which are not being registered in
this offering.
(7) Includes warrants to purchase 917 shares of common stock at an exercise
price of $10.00 per share.
(8) Includes warrants to purchase 917 shares of common stock at an exercise
price of $10.00 per share. Also includes warrants to purchase 950
shares of common stock at an exercise price of $12.10 per share, which
are not being registered in this offering.
(9) Includes warrants to purchase 11,000 shares of common stock at an
exercise price of $10.00 per share.
(10) Includes warrants to purchase 21,083 shares of common stock at an
exercise price of $10.00 per share.
(11) Includes warrants to purchase 30,250 shares of common stock at an
exercise price of $10.00 per share.
(12) Includes warrants to purchase 14,167 shares of common stock at an
exercise price of $10.00 per share.
(13) Represents warrants to purchase shares of common stock at an exercise
price of $4.17 per share issued in connection with our licensing
agreement with Blue Cross/Blue Shield of Massachusetts in 1996.
</FN>
</TABLE>
PLAN OF DISTRIBUTION
The selling shareholders, including any donee, pledgee, transferee or
other successor in interest who is selling shares received from a selling
shareholder as a gift, pledge, partnership distribution or other non-sale
related transfer after the date of this prospectus, or their designated agents,
dealers or underwriters, may sell shares of our common stock in one or more
transactions, which may involve block transactions,
1. on the Nasdaq National Market,
2. on such other markets or exchanges on which our common stock
may from time to time be trading,
3. in privately-negotiated transactions,
4. through the writing of options on the shares of common stock
or short sales or
5. through any combination of these methods.
Sales may be at market prices at the time of sale, at prices related to
the market price or at negotiated prices. A selling shareholder may also attempt
to sell shares of common stock in block transactions to market makers or other
purchasers at a price per share which may be below the then current market
price. Some or all of the shares of common stock offered by this prospectus may
not be
18
<PAGE>
sold by the selling shareholders. There is no agreement between us and the
selling shareholders that restricts their right to sell shares of our common
stock at any time.
Offers to purchase the common stock may be solicited directly by the
selling shareholders or by brokers, dealers or agents designated by the selling
shareholders from time to time. Any such broker, dealer or agent, which may be
deemed to be an "underwriter" as that term is defined under the Securities Act,
involved in the offer or sale of the common stock pursuant to which this
prospectus is delivered, to the extent required, will be named, and any
applicable commissions or discounts with respect to the offer will be set forth,
in an amended or supplemented prospectus. Unless otherwise indicated in an
amended or supplemented prospectus, any such broker, dealer or agent will be
acting on a best efforts basis for the period of its appointment. The selling
shareholders cannot presently estimate the amount of commissions or discounts,
if any, that will be paid by them on account of their sale of common stock from
time to time.
Also, the selling shareholders and any other persons participating in
the sale or distribution of the shares of common stock will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder. These provisions may limit the timing of purchases and sales of any
shares of common stock by the selling shareholders or any other such person.
This may affect the marketability of the shares of common stock.
ProxyMed has agreed to indemnify the named selling shareholders against
liabilities they may incur because of an untrue or alleged untrue statement of a
material fact contained in this prospectus or the omission or alleged omission
to state in the prospectus a material fact required to be stated in the
prospectus, or necessary to make the statements in this prospectus not
misleading. However, we will not be required to indemnify any selling
shareholder for liabilities that we incur based on our reliance on written
information that the selling shareholder has furnished to us expressly for use
in this prospectus. Likewise, the selling shareholders have agreed to indemnify
ProxyMed against liabilities that we incur as a result of any statement or
omission made in this prospectus based on written information that the selling
shareholder has provided us for use in this prospectus.
We have agreed to use our best efforts to keep the registration
statement, of which this prospectus constitutes a part, effective until the
selling shareholders have sold all of the shares of their registered common
stock pursuant to an effective registration statement and delivery of this
prospectus and, when applicable, in accordance with Rule 144 under the
Securities Act.
If we are notified by a selling shareholder that any arrangement has
been made with a broker-dealer for the sale of shares of our common stock
through a block trade using one of the methods listed above, a supplement to
this prospectus will be filed, if required, disclosing:
o the name of each selling shareholder and of the participating
broker-dealer(s),
o the number of shares involved,
o the price at which such shares were sold,
o the commissions paid or discounts or concessions allowed to
such broker-dealer(s), where applicable,
o that such broker-dealers(s) did not conduct any investigation
to verify the information set out or incorporated by reference
in this prospectus and
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o other facts material to the transaction.
In addition, if we are notified by a selling shareholder that a donee,
pledgee, transferee or other successor in interest intends to sell more than 500
shares of our common stock, a supplement to this prospectus will be filed.
LEGAL OPINION
Greenberg Traurig, P.A., New York, New York and Miami, Florida, will
issue for us an opinion about the legality of the shares.
EXPERTS
The consolidated balance sheets of ProxyMed as of December 31, 1998 and
1997, and the related consolidated statements of operations, stockholders'
equity and cash flows of ProxyMed for each of the three years in the period
ended December 31, 1998, that are incorporated by reference in this prospectus
have been incorporated by reference in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on that firm's
authority as experts in accounting and auditing.
The balance sheets of Integrated Medical Systems as of December 31,
1997 and 1996, and the related statements of operations, stockholders' equity
and cash flows of Integrated Medical Services for each of the three years in the
period ended December 31, 1997, that are incorporated by reference in this
prospectus have been incorporated by reference in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on that firm's
authority as experts in accounting and auditing.
The balance sheets of Key Communications as of April 30, 1998 and 1997,
and the related statements of income, stockholders' equity and cash flows for
the years then ended, that are incorporated by reference in this prospectus have
been incorporated by reference in reliance on the report of McCauley, Nicolas &
Company, LLC, independent accountants, given on that firm's authority as experts
in accounting and auditing.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses in connection
with the sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimates
except the Securities and Exchange Commission registration fee.
<TABLE>
<CAPTION>
To be Paid
by the
Registrant
----------
<S> <C>
SEC registration fee.................................... $1,600
Accounting fees and expenses............................ 7,500
Legal fees and expenses................................. 7,500
Miscellaneous expenses.................................. 8,400
-------
Total.......................................... $25,000
=======
</TABLE>
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 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 ProxyMed or any by-law, agreement, vote of shareholders or
disinterested directors, or
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<PAGE>
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 ProxyMed's Restated Articles of Incorporation and
Article VII of ProxyMed's Bylaws provide for indemnification of the directors,
officers, employees and agents of ProxyMed (including the advancement of
expenses) to the fullest extent permitted by Florida law. In addition, ProxyMed
has contractually agreed to indemnify its directors and officers to the fullest
extent permitted under Florida law.
ProxyMed'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.
ITEM 16. EXHIBITS
The following exhibits are filed with this Registration Statement:
EXHIBIT NO. DESCRIPTION OF DOCUMENT
----------- -----------------------
2.1 Stock Purchase Agreement, dated April 24, 1998, between
ProxyMed, Inc. and WPJ, Inc. (1)
2.2 Merger Agreement, dated as of December 30, 1998, between
ProxyMed, Inc., ProxyMed Acquisition Corp. and Key
Communications Service, Inc. (2)
5.1 Opinion of Greenberg Traurig, P.A.
23.1 Consent of Greenberg Traurig, P.A. (included in the opinion
filed as Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP (ProxyMed).
23.3 Consent of PricewaterhouseCoopers LLP (WPJ).
23.4 Consent of McCauley, Nicolas & Company, LLC (Key).
24.1 Power of Attorney (set forth on signature page of the
Registration Statement).
- --------------------
(1) Incorporated by reference to the exhibits filed with Current Report on
Form 8-K dated May 19, 1998.
(2) Incorporated by reference to the exhibits filed with Current Report on
Form 8-K dated December 31, 1998.
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 of 1933; (ii) to reflect in the
prospectus any facts or events arising after the effective date of the
Registration Statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; and (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement; (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 the time shall be deemed to be the initial bona fide offering thereof; and
(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.
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<PAGE>
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the 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 of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been, settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that: (i) for the
purposes of determining any liability under the Securities Act, the information
omitted from the form of prospectus filed as part of this Registration Statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of the registration statement as of the time it was
declared effective; and (ii) for the purposes of determining any liability under
the Securities Act, each post-effective amendment that contains a form of
prospectus 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.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Fort Lauderdale, State of Florida, on October 8,
1999.
PROXYMED, INC.
By: /s/HAROLD S. BLUE
------------------------------
Harold S. Blue
Chairman of the Board
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Harold S. Blue, Bennett Marks and Frank
M. Puthoff, and each of them, his true and lawful attorney-in-fact and agent,
with full power of substitution, for him and in his name, in any and all
capacities, to sign all amendments (including post-effective amendments) to the
Registration Statement to which this power of attorney is attached, and to file
all those amendments and all exhibits to them and other documents to be filed in
connection with them, including any registration statement pursuant to Rule 462
under Securities Act of 1933, with the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
/s/HAROLD S. BLUE Chairman of the Board and October 8, 1999
- --------------------------- Chief Executive Officer
Harold S. Blue (principal executive officer)
/s/JOHN PAUL GUINAN Acting President of proxyMed.com
- --------------------------- and Director October 8, 1999
John Paul Guinan
/s/BENNETT MARKS Executive Vice President, October 8, 1999
- --------------------------- Chief Financial
Bennett Marks Officer and Director
(principal financial
and accounting officer)
/s/PETER A. A. SAUNDERS Director October 8, 1999
- ---------------------------
Peter A.A. Saunders
/s/KEVIN E. MOLEY Director October 8, 1999
- ---------------------------
Kevin E. Moley
/s/BERTRAM J. POLAN Director October 8, 1999
- ---------------------------
Bertram J. Polan
/s/EUGENE R. TERRY Director October 8, 1999
- ---------------------------
Eugene R. Terry
</TABLE>
24
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF DOCUMENT
----------- -----------------------
2.1 Stock Purchase Agreement, dated April 24, 1998, between
ProxyMed, Inc. and WPJ, Inc. (1)
2.2 Merger Agreement, dated as of December 30, 1998, between
ProxyMed, Inc., ProxyMed Acquisition Corp. and Key
Communications Service, Inc. (2)
5.1 Opinion of Greenberg Traurig, P.A.
23.1 Consent of Greenberg Traurig, P.A. (included in the opinion
filed as Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP (ProxyMed).
23.3 Consent of PricewaterhouseCoopers LLP (WPJ).
23.4 Consent of McCauley, Nicolas & Company, LLC (Key).
24.1 Power of Attorney (set forth on signature page of the
Registration Statement).
- --------------------
(1) Incorporated by reference to the exhibits filed with Current Report on
Form 8-K dated May 19, 1998.
(2) Incorporated by reference to the exhibits filed with Current Report on
Form 8-K dated December 31, 1998.
EXHIBIT 5.1
GREENBERG TRAURIG, P.A.
MetLife Building
200 Park Avenue, 15th Floor
New York, NY 10166
October 8, 1999
ProxyMed, Inc.
2555 Davie Road, Suite 110
Fort Lauderdale, Florida 33317
Dear Sirs:
We are acting as counsel to ProxyMed, Inc., a Florida
corporation (the "Company"), in connection with the Registration Statement on
Form S-3, filed on October 8, 1999 (the "Registration Statement"), under the
Securities Act of 1933, as amended (the "Act"), covering 472,500 shares of the
Company's common stock, par value $.001 per share (the "Shares"), which are
being registered in connection with the proposed sale of the Shares by the
persons listed as selling shareholders therein.
We have examined the originals, or certified, conformed or
reproduction copies, of all such records, agreements, instruments and documents
as we have deemed relevant or necessary as the basis for the opinion hereinafter
expressed. In all such examinations, we have assumed the genuineness of all
signatures on originals or certified copies and the conformity to original or
certified copies of all copies submitted to us as conformed or reproduction
copies. As to various questions of fact relevant to such opinion, we have relied
upon, and assumed the accuracy of, certificates and oral or written statements
and other information of or from public officials, officers or representatives
of the Company, and others.
Based upon the foregoing, we are of the opinion that the
Shares have been, or when issued, delivered and paid for will be, validly
issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to this firm under the
caption "Legal Opinion" in the prospectus forming a part of the Registration
Statement.
Very truly yours,
/s/ Greenberg Traurig, P.A.
GREENBERG TRAURIG, P.A.
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 February 24, 1999, on our audits of the
consolidated financial statements and financial statement schedule of ProxyMed,
Inc. and subsidiaries as of December 31, 1998 and 1997, and for each of the
three years ended December 31, 1998, which report appears in the annual report
on Form 10-K/A #2 for the fiscal year ended 1998 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 in
the registration statement under the caption "Experts."
PricewaterhouseCoopers LLP
Miami, Florida
October 7, 1999
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 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, which
appears in the Current Report on Form 8-K dated May 19, 1998. We also consent to
the reference to our firm in the registration statement under the caption
"Experts."
PricewaterhouseCoopers LLP
Miami, Florida
October 7, 1999
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this registration statement on
Form S-3 of our report dated July 28, 1998, on our audit of the balance sheet of
Key Communications Service, Inc. as of April 30, 1998, and our report dated July
31, 1997, on our audit of the balance sheet of Key Communications Service, Inc.
as of April 30, 1997, and the related statements of income, stockholders' equity
and cash flows for each of the years then ended. We also consent to the
reference to our firm in the registration statement under the caption "Experts."
McCauley, Nicolas & Company, LLC
New Albany, Indiana
October 7, 1999
