ELECTRONICALLY TRANSMITTED TO THE SECURITIES AND EXCHANGE COMMISSION ON
MAY 5, 1999
REGISTRATION NO. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
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.)
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 (Name, address, including zip code,
telephone number, including and telephone number, including
area code, of registrant's area code, of agent for service)
principal executive offices)
-----------------
COPIES OF COMMUNICATIONS TO:
FRANK M. PUTHOFF, ESQ. SPENCER G. FELDMAN, ESQ.
EXECUTIVE VICE PRESIDENT AND GREENBERG TRAURIG, P.A.
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
------------------
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.
------------------
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.[ ]
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. [ ]
-------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------ ----------------------- ---------------------- ---------------------- -------------------
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
- ------------------------------------------ ----------------------- ---------------------- ---------------------- -------------------
<S> <C> <C> <C> <C>
Common Stock ($.001 par value)..... 1,968,106 shares $15.375 $30,259,629 $8,412.18
- ------------------------------------------ ----------------------- ---------------------- ---------------------- -------------------
</TABLE>
(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 May 4, 1999.
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.
================================================================================
<PAGE>
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 MAY 5, 1999
PROSPECTUS
1,968,106 SHARES
PROXYMED, INC.
COMMON STOCK
---------------
This prospectus relates to the public offering, which is not being
underwritten, of 1,968,106 shares of common stock of ProxyMed, Inc. These shares
are being sold by the selling shareholders listed on page 15 of this prospectus,
for each of their own accounts. All of the shares of common stock the selling
shareholders may sell are currently issued and outstanding. We will not receive
any proceeds from the sale of shares by the selling shareholders. We issued the
shares of common stock to the selling shareholders, who are the former
stockholders of Key Communications Service, Inc., in connection with our merger
with Key in December 1998, and we are registering such shares in accordance
with our obligation to do so as stated in the Merger Agreement.
Our common stock is traded on the Nasdaq National Market under the
symbol "PILL." On May 4, 1999, the closing market price of our common stock
was $15.375 per share.
The selling shareholders or their designated agents, dealers or
underwriters 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.
---------------
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 6.
---------------
The shares have not been approved or disapproved by the SEC or any
state securities commission, nor have these organizations determined that this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
---------------
The date of this prospectus is May __, 1999
<PAGE>
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
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
About ProxyMed.......................................................... 3
Risk Factors............................................................ 6
Where You Can Find More Information..................................... 14
Forward Looking Information............................................. 15
Use of Proceeds......................................................... 15
Selling Shareholders.................................................... 15
Plan of Distribution.................................................... 17
Legal Opinion .......................................................... 18
Experts................................................................. 18
</TABLE>
2
<PAGE>
ABOUT PROXYMED
IN GENERAL
ProxyMed, Inc. is a healthcare information services company operating in
three primary business segments:
o healthcare EDI (electronic data interchange) and communication devices,
o network integration services and
o prescription drug dispensing.
HEALTHCARE EDI AND COMMUNICATION DEVICES SEGMENT
ProxyMed provides healthcare EDI products and services to physicians,
independent physician associations, insurance payers, pharmacies, commercial and
hospital laboratories and nursing homes. Our connectivity solutions and
transaction processing services support a broad range of both clinical and
financial transactions. To facilitate these services, we have developed and
operate ProxyNet(TM), a national electronic healthcare information network,
which provides physicians with direct connectivity and PC-based interfaces to
one of the industry's largest list of payers, largest list of chain and
independent pharmacies and largest list of clinical laboratories.
The healthcare industry generates billions of clinical and financial
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 travel, securities and banking,
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 clinical and financial
demands of an evolving managed care system, we believe that all participants in
the healthcare system will need to process all of these types of transactions
electronically. We also believe that because of 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 clinical and financial transactions generated each year. Because
of our broad range of both clinical and financial transaction capabilities, we
are positioned to provide "one-stop shopping" for all of a physician's
transaction processing requirements. 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 maintain the
following four sales and distribution channels for our healthcare EDI and
communication devices segment:
3
<PAGE>
<TABLE>
<S> <C> <C>
- ---------------------------- -------------------------------------------- -------------------------------------
ProxyMed Software ProxyMed has a nationally deployed sales Software and Communication Products:
And Communication force which calls directly on physicians, Financial - EZ-Claim software
Devices payers, pharmacies and labs. ProxyMed Pharmacy - PreScribe software
licenses its proprietary software products Lab - ClinScan software & systems
for use on physician desktops for access Lab - Kit series of intelligent
to ProxyNet, transaction creation and printers
communication between healthcare Nursing Home - ProxyCare software
participants.
- ---------------------------- -------------------------------------------- --------------------------------------------
Electronic Commerce ProxyMed has established its ECP program Agreements:
Partners to work with the nation's leading Medical Manager Corp.
providers of physician desktop software, IDX Systems Corporation
so that they may enable their existing Eclipsys Corporation
applications to communicate through Epic Systems Corporation
ProxyNet to payers, pharmacies and labs.
- ---------------------------- -------------------------------------------- --------------------------------------------
Gateway Agreements ProxyMed connects other EDI networks to Gateways:
ProxyNet so that the participants on both Kinetra
networks can communicate with each other. National Data Corp.
- ---------------------------- -------------------------------------------- --------------------------------------------
Internet/World Wide ProxyMed is establishing itself as an ASP Services Planned
Web Application Service Provider (ASP) of for Release Summer 1999:
clinical and financial EDI services hosted Lab Results Reporting
on the web, which may be accessed by any Prescription Refill Authorization
physician with an Internet connection.
- ---------------------------- -------------------------------------------- --------------------------------------------
</TABLE>
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.
In prior years, a significant portion of our revenue was generated by
our other business segments. In 1998, however, the EDI and communication devices
segment accounted for the majority of our revenues and is expected to increase
as a percentage of revenues in 1999.
NETWORK INTEGRATION SERVICES SEGMENT
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. Our Internet access
division provides a wide range of Internet related products and services. We are
a full service Internet access provider with points of presence 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.
PRESCRIPTION DRUG DISPENSING SEGMENT
Our wholly-owned subsidiary, ProxyCare, Inc., is a pharmacy business
operated by us since 1994 in South Florida that 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 a unique
4
<PAGE>
packaging system called "Medicine-On-Time," which is licensed
from an unaffiliated third party. We are currently studying whether this segment
fits within our long-term business plan.
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 laboratory software company.
o In April 1997, we acquired substantially all of the assets of Hayes
Computer Systems, Inc., a network integration 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 U.S.
HealthData Interchange, Inc., a provider of healthcare financial
EDI services.
o In May 1998, we acquired all of the capital stock of WPJ, Inc., which
did business as Integrated Medical Services, also a provider of
healthcare financial EDI services.
o In December 1998, we acquired all of the capital stock of Key
Communications Service, Inc., a provider of laboratory
communication devices.
o In January 1999, we acquired the EDI assets of Specialized Medical
Management, Inc., also a provider of healthcare financial EDI
services.
Further, 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 discussion with a
few 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.
* * * * *
We were incorporated in the State of Florida in 1989. Our principal
executive offices are located at 2555 Davie Road, Suite 110, Fort Lauderdale,
Florida 33317-7424. Our telephone number is (954) 473-1001. Our Internet address
is http://www.proxymed.com.
5
<PAGE>
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
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 Clinical MicroSystems and Hayes
Computer Systems acquisitions. As of March 31, 1999, we had an accumulated
deficit of $45,597,000. We expect to continue to incur substantial losses in the
foreseeable future due primarily to the amortization of goodwill and other
intangible assets as a result of some of our recent acquisitions. No assurance
can be given that we will ever achieve profitable operations.
OUR CASH NEEDS ARE SIGNIFICANT AND WE WILL NEED ADDITIONAL FUNDING
Our funding needs for acquisitions and the development, marketing and
sale of our products and services are significant. For example, under the Hayes
Computer Systems acquisition agreement, we are required to pay $1,000,000 on or
before June 30, 1999, provided that pre-tax operating income for the network
integration services segment exceeds $250,000 for the 12 months ending April 30,
1999, and under the Clinical MicroSystems acquisition agreement, we are required
to pay $750,000 on or before April 30, 2000. Each of these future payments, to
the extent required, must be paid at least half in cash, with the balance, if
any, paid by delivering unregistered shares of our common stock valued at the
then market price. Also, under our agreement for the acquisition of PreScribe,
we agreed to pay Walgreen's $500,000 in cash in each of June 1999 and 2000. We
believe, based upon our current plans and assumptions, that our existing cash
reserves and expected cash receipts will provide the funds necessary to satisfy
these cash requirements through at least June 1999. As a result, we realize that
we must seek additional financing to fund our business operations and
acquisitions after June 1999. At this time, however, we have no arrangements
for, or sources of, additional financing. No assurance can be given that
additional funds will be available when we need or, if available to us, will be
available on terms acceptable to our management. We also note that any such
additional financing may result in significant dilution to current shareholders.
If needed financing is not obtained, we may be forced to curtail our operations
or sell some of our assets.
OUR ACQUISITION PROGRAM POSES SPECIAL RISKS AND FINANCIAL CONSEQUENCES TO US
As earlier discussed, we are engaged in an acquisition program which
has the chance of resulting in substantial changes in our operations and
financial condition. We have identified several potential merger and acquisition
targets; however, as of the date of this prospectus, we have not entered into
any binding agreement for a future acquisition. No assurance can be given that
we will complete any acquisition or that any acquisition which is completed will
prove favorable to us. Unless required by applicable law or regulation, we do
not intend to seek shareholder approval for any such acquisition. Actual
acquisitions, including the ones described under the heading "About ProxyMed -
Continuing Acquisition Program" above, could prove unsuccessful for a variety of
reasons. Although the agreements entered into by these acquisitions contain
numerous representations and warranties by the sellers concerning the respective
businesses and assets acquired, no assurances can be given that these
representations and warranties will prove to have been true and correct or that
our due diligence investigation of these businesses and assets will prove to
have uncovered all material adverse facts relating to the acquired businesses
and assets.
6
<PAGE>
The consideration given by us in any acquisition may involve cash,
notes or a significant number of shares of our common stock, and these
components could be substantial if we complete several acquisitions. In some
instances, an acquisition may adversely affect our operations, depending on many
factors, including initial cash needs and the accounting treatment of the
acquisition. We also face and expect in the future to face increased competition
for acquisition opportunities, which may inhibit our ability to complete
suitable acquisitions and increase the cost of completing them. To the extent
that our strategy results in the acquisition of more businesses, these
acquisitions could pose us with a number of special risks and financial
consequences, including
o diversion of management's attention,
o difficulties in the assimilation of the operations and personnel
of the acquired companies,
o difficulties in the incorporation of acquired products and
services into our existing product and service lines,
o adverse short-term effects on reported operating results,
o charges for in-process research and development,
o amortization charges for acquired intangible assets (including
goodwill),
o loss of key employees and
o difficulty of presenting a unified corporate image.
No assurance can be given that we 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 us. If we are unable to manage growth effectively, our operating results
could be materially and adversely affected.
WE MAY FACE A SIGNIFICANT STRAIN IN MANAGING OUR GROWTH
Our business plan anticipates significant growth in our customer base,
continued development of our product and service lines and acquisitions. This
growth and continued development, if it materializes, could place a significant
strain on our management, employees and operations. In the event of this
expansion, we would have to continue to implement and improve our operating
systems and to expand, train and manage our employee base. If we are unable to
implement and improve these operating systems and manage our employee base
effectively, we could be materially and adversely affected.
MARKET ACCEPTANCE OF SOME OF OUR CLINICAL EDI PRODUCTS AND SERVICES STILL
REMAINS UNCERTAIN
The healthcare information services segment of the healthcare 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. In our case, we commenced marketing activities for
some of our new products and services, principally our clinical EDI products and
services, approximately
7
<PAGE>
three years ago and have focused more on our electronic commerce partner, or ECP
program since mid-1996. We have not conducted and do not intend to conduct any
independent marketing or other concept feasibility studies to determine the
potential commercial viability of our clinical EDI products and services in any
markets. Achieving market acceptance of some of our clinical EDI products and
services will continue to require substantial marketing efforts and spending
significant funds to create awareness and demand by physician groups, pharmacies
and other health care participants. No assurance can be given that we will be
able to demonstrate that the benefits of these clinical EDI products and
services justify the costs to commercialize them. While we believe that a
substantial market is developing for online clinical EDI transactions, no
assurance can be given that this market will develop or that we will be able to
obtain a significant share of it.
WE MAY BE SIGNIFICANTLY AFFECTED BY GOVERNMENT REGULATION
Our customers are subject to extensive and frequently changing federal
and state laws and regulations. A primary feature of our clinical EDI products
and services is the ability to electronically transmit (either by
computer-to-facsimile or computer-to-computer) prescriptions or laboratory
orders and results to and from a doctor's office and a pharmacy or a laboratory,
respectively. The ability of a pharmacist to fill an electronically transmitted
prescription is governed by federal and state law. 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. In addition, in a limited number of additional states where
electronic transmission of computer-generated prescriptions is not specifically
addressed, the state boards of pharmacy have generally taken the position that
electronic prescriptions are permissible.
Similarly, the ability of laboratories or physicians (typically
referred to as "End-Users") to electronically accept and transmit laboratory
orders and results is governed by federal and state law. The federal Office of
Inspector General and numerous states have published compliance plans for
clinical laboratories. The End-Users, and not us, are responsible for being in
compliance with federal and 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 our
products, ClinScan(TM), is designed to allow End-Users to install
medical-necessity verification functionality acquired directly from the
applicable government entity, we do not warrant that our products and services
are or will be medical-necessity compliant.
The federal Health Insurance Portability and Accountability Act of 1996
(known as HIPAA) provides a framework for the establishment of nationwide
security standards and the protection of health information. Regulations are
pending which, if enacted, provide for security standards for all electronic
health information. Also, all states have various laws and regulations
protecting the confidentiality of some patient medical records and information
which obligate parties, such as physicians, pharmacists, laboratories, hospitals
and other healthcare providers, payers, and healthcare clearinghouses such as
us, to maintain the confidentiality of this data. We have access to this data to
the extent that any data is transmitted to or from any healthcare provider or
payer through our proprietary electronic network. We have procedures in place to
maintain the confidentiality of data that passes through our electronic network.
However, no assurance can be given that any disclosure of this confidential data
will not occur anyway, which could materially and adversely affect our business.
Our institutional pharmacy dispensing 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. Also, the Florida Department of Professional Regulation inspects our
facilities to ensure compliance with all applicable laws and regulations. Under
federal laws and regulations, our institutional pharmacy business must comply
with the Federal Food,
8
<PAGE>
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.
We believe that we are in compliance in all material respects with the
federal and state laws and regulations governing our operations and have
obtained all licenses necessary for the operation of our business. However, no
assurance can be given that we will not be materially and adversely affected by
existing or new regulatory requirements or interpretations or by any failure by
us to be in compliance.
PROPOSED HEALTHCARE LEGISLATION COULD IMPACT THE WAY WE DO BUSINESS IN THE
FUTURE
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 health care benefits,
o controls on health care 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 health care delivery system.
In addition to security standards, 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 us and other financial EDI network operators) as the
compliance facilitators for providers and payers. Clearinghouses are given the
freedom to utilize non-standard transactions and convert them to the mandated
standards on behalf of their clients. We intend to comply with the mandated
standards as soon as practicable after they have been adopted and published.
However, the success of our compliance efforts may be dependent on the success
of providers, payers and others in dealing with the standards.
WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY IN THE HEALTHCARE INFORMATION
SERVICES INDUSTRY
We face competition from many healthcare information services 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 information service systems. We are also
aware that other companies have targeted this industry for growth, including the
development of new technologies utilizing an Internet-based system. No assurance
can be given 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 subscribe to only one online
content service provider. Consequently, it is our belief that the key to
competitive success will be our ability to win the "race" with competitors to
control physicians' desktops by offering a comprehensive set of online clinical
and financial transactions and locking in the physicians to mutually beneficial
long-term relationships. However, no assurance can be given 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 online services and may elect to change their online
services frequently rather than settling long-term for one provider. If this
were to happen, we could be materially and adversely affected.
9
<PAGE>
WE HAVE STRATEGIC RELATIONSHIPS TO MARKET AND SELL SOME OF OUR CLINICAL EDI
PRODUCTS AND SERVICES WHICH HAVE NOT RESULTED IN SIGNIFICANT SALES
For the marketing and sale of some of our clinical EDI products and
services, we signed strategic relationships with other companies, through our
ECP program with physician office management information system (known as POMIS)
vendors and electronic medical record (known as EMR) vendors and through other
agreements. These strategic relationships, which have required and will continue
to require significant commitments of effort and resources, have yet to generate
substantial recurring revenue, and no assurance can be given that they will ever
generate substantial recurring revenue. Most of these relationships are on a
non-exclusive basis, and no assurance can be given that our ECP 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 strategic 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
could be materially and adversely affected.
WE DEPEND ON GOVERNMENT SALES IN FLORIDA FOR A LARGE PART OF TOTAL SALES
For fiscal 1998, approximately 87% of the network integration services
segment's sales were to agencies and departments of the State of Florida, and
this segment's sales represented approximately 37% of total sales for fiscal
1998. No assurance can be given that we 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 these contracts
will depend on many factors outside our control, including competitive factors,
changes in government personnel making contract decisions and political factors.
The loss or non-renewal of these government contracts could have a material and
adverse effect on us.
OUR CLINICAL EDI PRODUCTS AND SERVICES HAVE YET TO BE TESTED ON A LARGE SCALE
The quality of our clinical EDI products and services is important to
our business plans and prospects. Although we have completed the development of
most of our clinical EDI products and services and our electronic network, which
we believe efficiently perform the principal functions for which they have been
designed, our clinical EDI products and services and the network are currently
being utilized only by a limited number of customers for such clinical related
transactions. No assurance can be given that, upon widespread commercial use of
our clinical EDI products and services, 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. Any of these errors could delay our plans, result in harmful publicity
or cause us to incur substantial remedial costs, all of which could have a
material and adverse effect on us.
COMPUTER NETWORK SYSTEMS LIKE OURS FACE SECURITY AND PRIVACY CONCERNS
We currently operate servers and maintain connectivity from our
facilities in Fort Lauderdale and Tallahassee, Florida and Santa Ana,
California. Despite the implementation of network security measures by us, 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
10
<PAGE>
cessation in service to our customers. Also, such inappropriate use could also
potentially jeopardize the security of confidential information stored in the
computer systems of our 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 healthcare information services industry in
general and our customer base and revenues 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 expenses. The occurrence of any
one of these events could have a material and adverse effect on us.
WE DEPEND ON UNINTERRUPTED COMPUTER ACCESS FOR OUR CUSTOMERS
Our success is dependent on our ability to deliver high-quality,
uninterrupted computer 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 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 that causes prolonged interruptions in our operations could have a
material and adverse effect on our 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 our reputation, any of which
could in turn have a material and adverse effect on us. While we carry property
and business interruption insurance to cover operations, the coverage may not be
adequate to compensate for losses that may occur.
WE NEED TO DEVELOP NEW TECHNOLOGIES THAT ARE ACCEPTABLE TO OUR CUSTOMERS
The market for our products and services is characterized by ongoing
technological development and evolving industry standards, including
Internet-based systems. Our success will depend on our ability to enhance
current products and services and introduce new products and services that
address technological and market developments and satisfy the increasingly
sophisticated needs of our customers. No assurance can be given that we will be
successful in developing, 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 our new products and
services will be accepted by customers. From time to time, we or our competitors
may announce new products, services or technologies that have the potential to
replace our existing products, services and technologies. No assurance can be
given that the announcement of new products, services or technologies will not
cause customers to defer purchases of our existing products and services, which
could materially and adversely affect us.
FAILURE OF OUR CUSTOMERS AND PARTNERS TO BE YEAR 2000 COMPLIANT COULD NEGATIVELY
IMPACT OUR BUSINESS
We are in the process 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 materially and
adversely affect our business, operating 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 we may be affected. 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 material
operational issues or costs associated with preparing our internal systems for
the Year 2000, we may experience material
11
<PAGE>
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 ECP partners or their end-users fail to achieve Year 2000 compliance or
divert technology expenditures to address Year 2000 compliance problems, our
business, operating results or financial condition could be materially and
adversely affected.
OUR PRODUCTS EMPLOY PROPRIETARY INFORMATION WHICH MAY INFRINGE ON THE
INTELLECTUAL PROPERTY RIGHTS OF OTHERS
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 ProxyScript /trademark/
and PreScribe /trademark/ and have filed applications for ClinScan /trademark/,
ProxyNet /trademark/, ProxyCare /trademark/ and RxReceive /trademark/. We have
no patents. 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. No assurance can be given 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, software developers may become increasingly subject to
infringement claims. ProxyMed is the defendant in a lawsuit filed April 28, 1999
by Advanced Health Corporation, alleging patent infringement. The suit alleges
that our PreScribe 2000 /trademark/ product includes particular operating
features covered by Advanced Health's patents. We do not believe the product
infringes these patents, and we intend to vigorously oppose the lawsuit.
Further, the product in question is in development and has not been released.
Thus, in the event any infringement exists, we believe any damages assessed are
unlikely to be material. Also, the product may be redesigned if necessary to
reduce its potential for infringement. However, at this early stage, there can
be no assurance that this or other lawsuits will not affect our prospects. Any
such claims, with or without merit, could result in costly litigation or might
require us to enter into royalty or licensing agreements. Such royalty or
licensing agreements, if required, may not be available on terms acceptable to
us or at all. Any successful infringement claim could have a material and
adverse effect on us.
WE MAINTAIN LIABILITY INSURANCE WHICH MAY NOT BE ADEQUATE OR ALWAYS AVAILABLE
Our business exposes us to potential liability risks that are
unavoidably part of being in the healthcare information services industry.
Because many of our products and services relate to prescribing drugs and
filling prescriptions, 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 maintain the following insurance polices:
o A general liability insurance policy that includes a $1,000,000
per occurrence limit of liability and a $2,000,000 aggregate limit
of liability. The general liability coverage for our institutional
prescription drug business includes druggist professional
liability.
o A $10,000,000 umbrella policy above and beyond the general
liability limits.
o An electronic data processing errors and omissions insurance
policy with a $2,000,000 limit of liability per occurrence and
in the aggregate.
We believe that our present insurance coverage is adequate for the
products and services currently marketed. No assurance can be given that such
insurance will be sufficient to cover potential claims arising out of our
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 us, if successful and of sufficient magnitude, could
have a material and adverse effect on us. Also, the inability to obtain
insurance of the type and in the amounts required could generally impair our
ability to market our products and services.
12
<PAGE>
WE DEPEND ON OUR KEY PERSONNEL AND ABILITY TO HIRE OTHERS
Our success is largely dependent on the personal efforts of Harold S.
Blue, our Chairman and Chief Executive Officer, John Paul Guinan, our
Co-President, Danny Hayes, President of our network integration services
segment, and Jeff K. Carpenter, President and Chief Executive Officer of Key,
our new subsidiary. Although we have entered into employment agreements with
these and a few other senior executives, the loss of any of their services could
have a material and adverse effect on us. We have obtained "key person"
insurance on the lives of Messrs. Blue and Guinan in the amount of $1,000,000
each. 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 there can be no assurance that we will be able to hire or retain
the personnel necessary for our planned operations.
MANAGEMENT AND BELLINGHAM OWN A SUBSTANTIAL AMOUNT OF OUR STOCK AND MAY
INFLUENCE OUR AFFAIRS
As of the date of this prospectus, our officers and directors
beneficially own approximately 25.5% of our outstanding common stock, and
Bellingham Industries Inc., an offshore investment fund ("Bellingham"),
beneficially owns approximately 36.2% of our outstanding common stock. As a
result, these shareholders will be able to substantially influence the
management and affairs of ProxyMed and, if acting together, would be able to
influence 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 of ProxyMed
at a premium price.
WE DO NOT ANTICIPATE PAYING COMMON STOCK DIVIDENDS
We currently anticipate retaining all of our future earnings, if any,
for use in the operation and expansion of our business, and do not anticipate
paying any cash dividends on shares of our common stock in the foreseeable
future.
OUR CHARTER CONTAINS AUTHORIZED, UNISSUED PREFERRED STOCK THAT MAY INHIBIT A
TAKEOVER
There are 1,870,000 shares of "blank check" preferred stock authorized
under our Articles of Incorporation with such designations, rights and
preferences as may be determined from time by our Board of Directors. None of
such shares are outstanding as of the date of this prospectus. As a result, our
Board of Directors is empowered, without shareholder approval, to issue shares
of our preferred stock with dividend, liquidation, conversion, voting and other
rights that could adversely affect the value, voting power or other rights of
the holders of common stock. Also, issuance of shares of our preferred stock
could be utilized, under certain circumstances, as a method of discouraging,
delaying or preventing a change of control of this company which could be
beneficial to our shareholders. Although we have no present intention to issue
any shares of our preferred stock, no assurance can be given that we will not do
so in the future.
OUR COMMON STOCK PRICE HAS FLUCTUATED CONSIDERABLY AND MAY CONTINUE TO DO SO
The market price of shares of our common stock has fluctuated
substantially since our August 1993 initial public offering. No assurance can be
given that the market price of our common stock will not significantly fluctuate
from its current level. Future announcements concerning the introduction of new
products, services or technologies, new strategic alliances, 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
13
<PAGE>
and volume volatility in recent years. 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 adversely affect the market price of our
common stock too.
OUR STOCK OPTIONS AND WARRANTS MAY HAVE A DEPRESSIVE EFFECT ON OUR COMMON
STOCK PRICE
As of the date of this prospectus, we had outstanding stock options and
warrants to purchase an aggregate of 2,769,210 shares of our common stock at
exercise prices ranging from $3.17 to $13.63 per share. Stock options and
warrants to purchase 1,965,128 shares are vested as of this date. These options
are likely to be exercised, if at all, at a time when we could otherwise obtain
a price for the sale of shares of our common stock that is higher than the
option exercise price per share. Such exercise or the possibility of such
exercise may impede us if we later seek financing through the sale of additional
securities. A substantial number of these shares may be resold under pending
shelf registration statements.
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;
(2) Our definitive Proxy Statement, dated May 21, 1998, filed in
connection with our 1998 Annual Meeting of Shareholders; and
(3) 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
14
<PAGE>
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 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 $37,000.
SELLING SHAREHOLDERS
GENERAL
The selling shareholders currently hold a total of 1,968,106
unregistered shares and 90,000 previously registered shares of our common stock,
which they received in our December 1998 merger with Key. The selling
shareholders are the former stockholders of Key. Each of the selling
shareholders has remained with Key following the merger and has retained his
respective title. Jeff K. Carpenter continues to be the President and Chief
Executive Officer of Key, while A. Thomas Hardy and Carl W. Garmon continue to
be its Executive Vice President and Chief Financial Officer and its Executive
Vice President of Marketing, respectively. No selling shareholder has held any
position or office or had any other material relationship with ProxyMed (other
than in connection with and following the Key merger) within the p ast three
years. The selling shareholders are participating in this offering pursuant to
contractual registration rights granted to them in the merger transaction. In
connection with the transaction, 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 May 4, 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. 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.
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 SHARES THAT MAY BE BENEFICIAL OWNERSHIP AFTER
BEFORE THE OFFERING SOLD IN THE THE OFFERING
-------------------- ---------------------------
SELLING SHAREHOLDER(1) SHARES PERCENT OFFERING SHARES PERCENT
- ---------------------- ------ ------- -------- ------ -------
<S> <C> <C> <C> <C> <C>
Jeff K. Carpenter 730,036(2) 4.1% 656,036 74,000 *
A. Thomas Hardy 730,035(2) 4.1% 656,035 74,000 *
Carl W. Garmon 730,035(2) 4.1% 656,035 74,000 *
---------
1,968,106
- ----------
</TABLE>
* Less than one percent.
(1) The address for each of Messrs. Carpenter, Hardy and Garmon is 2633 Grant
Line Road, New Albany, Indiana 47151.
(2) Includes 30,000 previously registered shares of our common stock, as
well as stock options to purchase 44,000 shares of our common stock, all of
which are currently exercisable.
16
<PAGE>
PLAN OF DISTRIBUTION
The selling shareholders, including any donee, pledgee or other
successor in interest who is selling shares received from a named selling
shareholder 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 sold by the selling shareholders. There is no agreement between us and
the named 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 named 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 named selling shareholder has provided us for use in this prospectus. No
named selling shareholder, however, will be liable to us for amounts in excess
of the net proceeds from the sale of 10% of the
17
<PAGE>
number of shares each received in the acquisition and are registered for resale
pursuant to 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
earlier of 18 months or when the named 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
o other facts material to the transaction.
In addition, if we are notified by a selling shareholder that a donee,
pledgee 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 audited financial statements incorporated by reference in this
Registration Statement on Form S-3 have been audited by various independent
accountants. The companies and periods covered by these audits are indicated in
the individual accountants' reports. Such financial statements have been so
included in reliance upon the reports of the various independent accountants
given on the authority of such firms as experts in auditing and accounting.
18
<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................................. $8,412
Accounting fees and expenses......................... 11,000
Legal fees and expenses.............................. 15,000
Miscellaneous expenses............................... 2,588
--------
Total....................................... $ 37,000
========
</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 otherwise. Section 607.0850 also provides that a
corporation may maintain insurance against liabilities for which indemnification
is not expressly provided by the statute.
II-1
<PAGE>
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 the Company (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:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT
----------- -----------------------
<S> <C>
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).
- --------------------
</TABLE>
(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.
(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.
II-2
<PAGE>
(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.
II-3
<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 May 5,
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 May 5, 1999
- --------------------------- Chief Executive Officer
Harold S. Blue (principal executive officer)
/s/ John Paul Guinan
- --------------------------- Co-President and Director May 5, 1999
John Paul Guinan
/s/ Bennett Marks
- --------------------------- Co-President, May 5, 1999
Bennett Marks Chief Financial
Officer and Director
(principal financial
and accounting officer)
/s/ Peter A.A. Saunders
- --------------------------- Director May 5, 1999
Peter A.A. Saunders
/s/ Samuel X. Kaplan
- --------------------------- Director May 5, 1999
Samuel X. Kaplan
/s/ Bertram J. Polan
- --------------------------- Director May 5, 1999
Bertram J. Polan
/s/ Eugene R. Terry
- --------------------------- Director May 5, 1999
Eugene R. Terry
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT PAGE
----------- ----------------------- ----
<S> <C> <C>
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).
- --------------------
</TABLE>
(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
May 5, 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 May 5, 1999 (the "Registration Statement"), under the
Securities Act of 1933, as amended (the "Act"), covering 1,968,106 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 hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our reports dated February 19, 1999, relating to the
financial statements and financial statement schedule, which appeared in
ProxyMed, Inc.'s Annual Report on Form 10-K for the year ended December 31,
1998. We also consent to the reference to our firm under the heading "Experts."
PricewaterhouseCoopers LLP
Miami, Florida
May 5, 1999
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated April 17, 1998, relating to the
financial statements, which appear in ProxyMed, Inc.'s Form 8-K dated May 19,
1998 (SEC File 000-22052). We also consent to the reference to our firm under
the heading "Experts."
PricewaterhouseCoopers LLP
Miami, Florida
May 5, 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 under the caption "Experts."
McCauley, Nicolas & Company, LLC
New Albany, Indiana
May 5, 1999
