As filed with the Securities and Exchange Commission on June 18, 1997
Registration No. 333-_____
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________________________________
FORM S-8/S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________________________________________
INTELLIGENT MEDICAL IMAGING, INC.
(Exact name of registrant as specified in its charter)
______________________________________________________
Delaware 65-0136178
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4360 Northlake Boulevard, Suite 214
Palm Beach Gardens, Florida 33410
(561) 627-0344
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
______________________________________________________
Amended and Restated 1990 Stock Option Plan
(Full Title of Plan)
______________________________________________________
John G. Igoe, Esq.
Edwards & Angell
250 Royal Palm Way
Palm Beach, Florida 33480
(561) 833-7700
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
______________________________________________________
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
Title of Each Class of Amount to be Proposed maximum offering Proposed maximum aggregate Amount of
Securities to be Registered registered price per unit (1) offering price (1) registration fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 2,454,562 shares $4.4375 $10,892,119 $3,301
$.01 par value per share
===================================================================================================================================
</TABLE>
(1) These figures are estimates made solely for the purpose of calculating
the registration fee pursuant to Rule 457 under the Securities Act of
1933, as amended. The registration fee has been calculated in accordance
Rule 457(c) based upon the average of the bid and asked prices of the
Registrant's Common Stock on the Nasdaq National Market on June 16,
1997.
_____________________
PROSPECTUS
783,630 Shares
INTELLIGENT MEDICAL IMAGING, INC.
Common Stock
$.01 Par Value
This prospectus relates to the resale of up to 783,630 shares (the "Shares") of
common stock, par value $.01 per share (the "Common Stock"), of Intelligent
Medical Imaging, Inc. ("IMI" or the "Company"), issuable upon the exercise of
certain outstanding stock options under the Company's Amended and Restated 1990
Stock Option Plan (the "Plan"), which may be offered hereby from time to time by
any or all of the selling stockholders who are affiliates of the Company named
herein (collectively, the "Selling Stockholders"). The Selling Stockholders may
resell the Shares from time to time at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. See "Selling Stockholders" and "Plan of Distribution". The Company will
not receive any of the proceeds from the resale of the Shares.
The Common Stock of the Company is quoted on the Nasdaq National Market under
the symbol "IMII". On June 17, 1997, the last reported sale price for the
Common Stock on the Nasdaq National Market was $4.375 per share.
Certain Selling Stockholders who are affiliates of the Company and anyone
effecting sales on behalf of such Selling Stockholders may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended
("Securities Act"), and commissions or discounts given may be regarded as
underwriting commissions or discounts under the Securities Act.
SEE "RISK FACTORS," BEGINNING ON PAGE 5, FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROPROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is June 18, 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and information statements and other
information with the Securities and Exchange Commission (the "Commission").
Proxy statements, reports, information statements, and other information
concerning the Company can be inspected and copied at the Commission's office at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549 and the
Commission's Regional Offices located at Suite 1300, Seven World Center, Suite
1300, New York, New York 10048; and Northwestern Atrium Center, 500 Madison
Street, Suite 1400, Chicago, Illinois 60661. The Commission also maintains a web
site that contains reports, proxy and information statements and information
statements and other information filed electronically with the Commission, the
address of which is http://www.sec.gov. The Common Stock of the Company is
quoted on the Nasdaq National Market. Reports, proxy statements and information
statements and other information concerning the Company may be inspected at the
offices of the National Association of Securities Dealers, Inc. located at 1735
K Street, N.W., Washington D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-8/S-3 (including all amendments thereto, the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Common Stock offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information regarding the Company and the Common Stock offered hereby,
reference is hereby made to the Registration Statement and to the exhibits and
schedules filed therewith. Statements contained in this Prospectus regarding the
contents of any agreement or other document filed as an exhibit to the
Registration Statement are necessarily summaries of such documents, and in each
instance reference is made to the copy of such document filed as an exhibit to
the Registration Statement for a more complete description of the matters
involved. The Registration Statement, including the exhibits and schedules
thereto, may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, DC 20549 or
through its web site (http://www.sec.gov).
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission by the Company are
incorporated in this Prospectus by reference (File No. 1-14190):
1. Annual Report on Form 10-K for the fiscal year ended December 31, 1996.
2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1997.
3. The description of the Common Stock contained in a Registration Statement
on Form 8-A dated February 1, 1996, and any amendment or report filed for
the purpose of updating such description.
All reports and other documents filed by the Company with the Commission
after the date of this Prospectus and prior to the termination of the offering
of the Shares pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
shall be deemed to be incorporated by reference herein and to be a part hereof
from the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated in this Prospectus by reference shall
be deemed to be modified or superseded for the purpose of this Prospectus to the
extent that a statement contained in this Prospectus or in any other
subsequently filed document which also is or is deemed to be incorporated in
this Prospectus by reference modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
Such incorporation by reference shall not be deemed to specifically
incorporate by reference the information referred to in Item 402(a)(8) of
Regulation S-K.
ALL REPORTS AND OTHER DOCUMENTS FILED BY THE COMPANY WITH THE COMMISSION
PURSUANT TO SECTION 13(A), 13(C), 14 OR 15(D) OF THE EXCHANGE ACT AND ALL
DOCUMENTS INCORPORATED BY REFERENCE HEREIN (OTHER THAN EXHIBITS TO SUCH
DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO
THE INFORMATION THAT THE PROSPECTUS INCORPORATES) ARE AVAILABLE, WITHOUT CHARGE,
UPON WRITTEN OR ORAL REQUEST FROM ANY PERSON TO WHOM THIS PROSPECTUS IS
DELIVERED, TO INTELLIGENT MEDICAL IMAGING, INC., 4360 NORTHLAKE BOULEVARD, SUITE
214, PALM BEACH GARDENS, FLORIDA 33410, ATTENTION: CORPORATE SECRETARY
(TELEPHONE: (561) 627-0344.)
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere or incorporated by reference in this Prospectus.
This Prospectus may contain certain "forward-looking" information, as that term
is defined by (i) the Private Securities Litigation Reform Act of 1995 (the
"Act") and (ii) releases made by the Securities and Exchange Commission. Such
information involves risks and uncertainties. The Company's actual results may
differ materially from the results discussed in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in "Risk Factors."
THE COMPANY
IMI has developed and is marketing the Micro21 System(TM), an intelligent,
automated microscope system, for diagnostic use in hospital, commercial
reference and physician group practice laboratories. The Micro21 System is
designed to automate a broad range of manual microscopic procedures, potentially
enabling the laboratory to reduce costs and exposure to liabilities, enhance
analytical accuracy and consistency, increase the productivity of medical
technologists and improve patient care.
IMI was incorporated in the State of Florida in June 1989 and
reincorporated in the State of Delaware in January 1996. Its principal executive
offices are located at 4360 Northlake Boulevard, Suite 214, Palm Beach Gardens,
Florida 33410, and its telephone number is (561) 627-0344.
THE OFFERING
This Prospectus relates to the resale of the Shares issuable upon the
exercise of outstanding stock options granted under the Plan by certain Selling
Stockholders who are affiliates of the Company. Such Shares may be offered
hereby from time to time by any or all of the Selling Stockholders. The Company
will not receive any of the proceeds from the resale of the Shares of Common
Stock by the Selling Stockholders.
<PAGE>
RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. In evaluating the Company and its business, prospective
investors should carefully consider the following risk factors in addition to
the other information included herein.
HISTORY OF OPERATING LOSSES; UNCERTAINTY OF PROFITABILITY
The Company is in an early stage of product commercialization. The Company
has generated little revenue to date, has experienced operating losses since its
inception in 1989 and has not yet achieved profitability. Operating losses for
the years ended December 31, 1994, December 31, 1995 and December 31, 1996 were
approximately $2.2 million, $4.0 million, and $7.9 million respectively, and at
December 31, 1996, the Company had an accumulated deficit of approximately $15.3
million. There can be no assurance that the Company's product will achieve
meaningful market acceptance or that the Company will ever produce significant
levels of product revenue or achieve or sustain profitability. The Company may
encounter substantial delays and expenses relating to regulatory clearance,
research, development and testing for new procedures. In addition, delays or
expenses associated with the defense of potential patent infringement claims or
other unforeseen difficulties may limit the Company's ability to achieve
profitability. The likelihood of the Company's success must be considered in
light of these and other problems, expenses, difficulties, complications and
delays frequently encountered in connection with the formation of a new business
and the development and commercialization of new products.
RELIANCE ON THE MICRO21 SYSTEM; UNCERTAIN MARKET ACCEPTANCE
The Company has concentrated its efforts primarily on the development of
the Micro21 System and is dependent on the successful commercialization of this
product to generate revenues. The success of the Micro21 System is dependent
upon many variables, including its acceptance as a reliable, accurate and
cost-effective tool for microscopic analysis as well as the Company's
manufacturing capacity and marketing efforts. Currently, the medical industry
relies primarily on medical technologists for the performance of microscopic
cellular analysis procedures. There can be no assurance that the Micro21 System
will perform as expected or that the Micro21 System will achieve meaningful
market acceptance. The current model of the Micro21 System may not be cost
effective for lower volume laboratories. There can be no assurance that lower
priced models of the Micro21 System, which the Company plans to develop, will be
successfully developed by the Company or accepted by lower volume laboratories.
The FDA clearances obtained by the Company for the Micro21 System require
that a medical technologist analyze the images shown on the Micro21 System. The
need to continue to employ a medical technologist to perform a review may limit
market acceptance of the Micro21 System. While the Company intends to submit
applications to the FDA for additional procedures, there can be no assurance
that the Company will obtain FDA clearance for additional procedures, or that
the Company will successfully complete development of its NeuralVision software
for the performance of such additional procedures. The cost effectiveness of the
Micro21 System to an end user, and consequently meaningful market acceptance of
the Micro21 System, may depend on the Company's ability to develop and obtain
regulatory clearance for applications in addition to the currently cleared
procedures, and there can be no assurance that the Company will successfully
develop such procedures or obtain such clearances. The inability of the Company
to develop the Micro21 System to perform additional procedures, or the failure
by the Company to obtain regulatory approval with respect to such additional
procedures, could have a material adverse effect on the Company's business,
results of operations and financial condition.
UNCERTAINTY OF PRICING OF THE MICRO21 SYSTEM
The Company, through Coulter, has sold or leased only a limited number of
Micro21 Systems to end users. As a result, there can be no assurance whether the
prices for such sales and leases will be indicative of the prices at which the
Company will be able to sell or lease the current model of the Micro21 System to
end users in the future. In addition, the Company anticipates that the price of
the Micro21 System will vary depending on a variety of factors including the
level of acceptance in the marketplace, the number of microscopic procedures
implemented and the number of peripheral devices sold or leased with the Micro21
System. The Company may discount asking prices to facilitate early market
penetration or in response to market conditions, which may reduce the Company's
gross profit margins which could have a material adverse effect on the Company's
business, results of operations and financial condition.
LIMITED SALES, MARKETING AND SERVICE CAPABILITY; RISKS ARISING FROM
TERMINATION OF COULTER AGREEMENT AND COULTER SETTLEMENT AGREEMENT
In August 1995, the Company entered into an exclusive distribution
agreement (the "Coulter Agreement") with Coulter Corporation ("Coulter") for
worldwide sales, marketing and service of the Micro21 System. Prior to the
Company's termination of the Coulter Agreement (as described below), the Company
was dependent on its relationship with Coulter for sales, marketing and service
of its products. The Company terminated the Coulter Agreement in the fourth
quarter of 1996 because of Coulter's revocation of its commitment to purchase
$5,500,000 of Micro21 Systems during the third and fourth quarters of 1996 and
other actions by Coulter deemed by the Company to be in breach of the Coulter
Agreement. The parties settled this dispute as of March 27, 1997 pursuant to the
terms of a settlement agreement (the "Coulter Settlement Agreement"). The
dispute between the Company and Coulter has had and may continue to have an
adverse effect on sales and marketing and has been a factor in the return of
some Micro21 Systems placed with customers by Coulter for evaluation. The
Company anticipates that its business, results of operations and financial
condition will be adversely affected in 1997 as a result of the dispute with
Coulter and delays in building the Company's sales and marketing organization
and implementing its sales and marketing program following termination of the
Coulter Agreement. As a result of the dispute with Coulter, in the third quarter
of 1996, the Company commenced the build-up of its sales and service
organizations and its own sales and marketing efforts which, with the
recruitment of a Vice President of Sales, was accelerated in January 1997. From
October 1, 1996 to March 1, 1997 the Company's sales personnel have increased
from 5 to 17 and service personnel have increased from 3 to 7. However, the
Company has limited sales, marketing and service capability and experience.
There can be no assurance that the Company will be able to build and maintain a
suitable sales force or that its direct sales and marketing efforts will be
successful. Failure of the Company to develop an effective sales and marketing
organization for the Micro21 System could have a material adverse effect on the
Company's business, results of operations and financial condition. In addition,
while the Company intends to focus its marketing and sales efforts on direct
sales, the Company may continue to sell Micro21 Systems to Coulter pursuant to
the Coulter Settlement Agreement and to other distributors for resale to
customers, and substantial sales to distributors may be possible only at
transfer prices substantially lower than projected prices for direct sales.
LIMITED MANUFACTURING EXPERIENCE; RISK OF MANUFACTURING SCALE-UP
The Company's manufacturing experience to date has been limited. In order
to achieve significant revenue, the Company will have to produce the Micro21
System on a commercial scale. There can be no assurance that the Company will be
able to manufacture the Micro21 System in commercial-scale quantities at
commercially viable costs. The Company may encounter unexpected delays or costs
in scaling-up its manufacturing operations or in hiring and training additional
personnel to manufacture its products. The failure to scale-up manufacturing
successfully in a timely or cost-effective manner, future production problems or
interruptions in supply could have a material adverse effect on the Company's
business, results of operations and financial condition. Manufacturing cost
increases could have a material adverse effect on the Company's business,
results of operations and financial condition. Furthermore, the Company will be
required to adhere to applicable regulatory requirements, including regulations
as prescribed by the FDA from time to time, in the manufacture of the Micro21
System. Any failure to meet such requirements could delay or prohibit the
manufacturing of the Company's products, which could have a material adverse
effect on the Company's business, results of operations and financial condition.
RELIANCE ON SINGLE SOURCE SUPPLIERS
Certain key components of the Micro21 System are currently obtained from
single sources, are available only in limited quantities and require substantial
production lead times. The Company has in the past experienced delays in the
delivery of such components. Certain other components of the Micro21 System are
manufactured to the Company's specifications by single suppliers. There can be
no assurance that custom-made components from alternative vendors would be
available on terms satisfactory to the Company, if at all. If the Company were
to change suppliers of these components, it would likely experience an
interruption in supply, which could have a material adverse effect on the
Company's business, results of operations and financial condition. In addition,
the purchase of certain key components by the Company is based on internal
forecasts of future product sales. The preparation of such forecasts is based on
inexact methods and may vary considerably from actual results. The Company may
be required to maintain significant inventory and there can be no assurance that
purchases based on forecasting will be adequate to meet the Company's needs.
FLUCTUATIONS IN OPERATING RESULTS
The Company's results of operations have in the past and may in the future
be subject to significant fluctuation. Factors contributing to fluctuations in
operating results include the rate of acceptance of the Micro21 System by the
market, the timing of purchase orders, the timing of the introduction of new
procedures and products, if any, and the success and timing of obtaining
regulatory clearance. Such fluctuations could result in significant volatility
in, and could have a material adverse effect on, the market price for the Common
Stock.
DEPENDENCE ON TRADE SECRETS AND PROPRIETARY TECHNOLOGY
The Company's commercial success will depend in part on its ability to
protect and maintain its proprietary technology. The Company does not believe an
automated microscope system is patentable, and therefore does not intend to seek
patent protection for the Micro21 System, as a system. The Company does not hold
any patents and currently does not intend to seek patent protection for its
NeuralVision software as a whole. The Company relies principally on a
combination of trade secrets, proprietary knowledge, technological advances and
disclosure, confidentiality and non-competition agreements entered into with its
employees and certain consultants to protect its proprietary rights. No
assurance can be given that the Company's efforts will provide meaningful
protection for its unpatented proprietary technology against others who
independently develop or otherwise acquire substantially equivalent techniques
or gain access to, misappropriate or disclose the Company's proprietary
technology. In addition, there can be no assurance that any patent applications
filed by the Company will result in the issuance of patents or that any patents
issued to the Company will afford protection against competitors that develop
similar technology, or that a competitor will not reverse-engineer the Company's
software codes.
There can be no assurance that the Company's technology does not infringe
the proprietary rights of others. The Company has received, and may in the
future receive, notices claiming that the Company is infringing patents or other
proprietary rights. In 1991, the Company received a letter stating that the
Micro21 System may infringe a patent of Neuromedical Systems, Inc.
("Neuromedical"). The Company has investigated this matter and believes that the
Micro21 System does not infringe the specified patent. The Company has received
an opinion of its patent counsel that the Micro21 System does not infringe any
valid claims of such patent.
The Company settled its litigation with International Remote Imaging
Systems, Inc. ("IRIS") as of March 1, 1997 by entering into a settlement
agreement and related license agreement with IRIS (collectively, the "IRIS
Settlement Agreement"). Under the IRIS Settlement Agreement, IRIS granted the
Company a fully-paid, royalty-free license for worldwide direct sales of the
Micro21 System by the Company. The Company agreed to pay a 4% royalty on future
sales of the Micro21 System through third-party distributors in the United
States. The Company has the right, but not the obligation, to request a license
from IRIS for sales through third-party distributors outside of the United
States; however, the Company does not believe that the Micro21 System infringes
any foreign patents held by IRIS and the Company has no current plans to request
such a license. Notwithstanding the Company's belief, there can be no assurance
that IRIS or other parties will not threaten to take legal action against the
Company alleging infringement of patents by the Micro21 System.
Patent litigation can be costly and time consuming, and there can be no
assurance that the Company's litigation expenses will not increase in the
future. If the Company were determined to be infringing any patent, the Company
could be required to pay damages, alter its products or processes, obtain
licenses and/or cease certain activities. In addition, if patents are issued to
others which contain claims that cover subject matter made, used or sold by the
Company, the Company may be required to obtain licenses to these patents, to
develop or obtain alternative technology or to cease using such technology. If
the Company is required to obtain any licenses, there can be no assurance that
the Company will be able to do so on commercially favorable terms, if at all. A
finding of infringement against the Company or the Company's failure to obtain a
license to any technology that it may require to commercialize its products
could have a material adverse effect on the Company's operations and financial
condition.
COMPETITION AND TECHNOLOGICAL CHANGE
The markets in which the Company competes are highly competitive.
Competition exists and potential competition may arise from several sources,
including skilled medical technologists and manufacturers of clinical laboratory
equipment (including flow cytometer manufacturers such as Coulter), older
image-based systems and machine vision software.
The Company is aware of one other intelligent optical system utilizing
neural network software which is manufactured and developed by Neuromedical.
Neuromedical has received FDA clearance and commenced market launch of its
system. Neuromedical has notified the Company of its belief that the Micro21
System may infringe certain patents held by Neuromedical. The Company believes
that Neuromedical's product has been developed primarily for the Pap smear
procedure, a procedure for which the Company may, in the future, develop a
Micro21 System application. There can be no assurance that Neuromedical will not
adapt its system for other applications competing directly with the Company's
Micro21 System. The Company is aware that at least one other company, IRIS, has
developed and is marketing an optical system for performing the white blood cell
("WBC") differential (the "WBC Diff") and an automated system for urinalysis. In
addition, other companies, including NeoPath, Inc., are marketing or may market
intelligent optical systems applicable to microscopic testing procedures that
compete or may compete with the Micro21 System.
The clinical laboratory testing industry has undergone rapid and
significant technological change, and the Company expects that such change will
continue. Many current and potential competitors have substantially greater
financial resources than the Company, as well as extensive experience in
research and development, obtaining regulatory approvals and manufacturing and
marketing. There can be no assurance that existing technologies or technologies
under development by the Company's competitors will not be more effective,
easier to use or less expensive than those which have been or are being
developed by the Company or that any such technologies will not render the
Company's technology and products obsolete or otherwise non-competitive.
The Company's ability to react quickly to changing technology and other
competitive trends will be critical to the Company's success. The Company
intends to seek to develop, either internally or through licensing arrangements
with third parties with specialized slide preparation technology or related
microscopy expertise, products that can meet potential demand for a variety of
automated microscopic procedures. There can be no assurance that the Company's
competitors will not develop such products before the Company can, or that any
products developed by the Company, even if timely, will receive sufficient FDA
clearance or approval or will meet with greater market acceptance than those
manufactured by the Company's competitors.
In 1993, the Company established arrangements with XL Vision, Inc. ("XL
Vision") providing for XL Vision to provide design, engineering and
manufacturing services with respect to the Micro21 System. Under these
arrangements, XL Vision manufactured two Micro21 System prototype units for the
Company. In July 1994, the Company and XL Vision terminated these arrangements.
Pursuant to such termination, the Company granted to XL Vision a nonexclusive,
transferable license in the hardware, electrical, mechanical, structural and
circuit board portions of the June 1994 version of the Micro21 System and the
related machine control software. Such license did not include any rights
relating to the Company's neural network or image processing software programs.
In addition, the Company and XL Vision entered into a non-competition agreement
pursuant to which the Company agreed not to develop, market or sell products or
services related to certain immunocytochemical and nucleic acid probes, and XL
Vision agreed not to develop, market or sell products or services related to
certain microscopic and manual testing procedures. The non-competition agreement
expired in July 1996. There can be no assurance that XL Vision (or a sublicensee
thereof) will not attempt to utilize information it obtained in providing
services to the Company and the license granted to it by the Company to develop
products competitive with the Micro21 System.
PRODUCT LIABILITY AND UNCERTAINTY OF ADEQUATE INSURANCE;
POTENTIAL EXPOSURE TO CLAIMS
The Company's product is used to gather information for medical decisions
and diagnoses. Accordingly, the manufacture and sale of Micro21 Systems entails
an inherent risk of product liability arising from an inaccurate, or allegedly
inaccurate, test or diagnosis. There can be no assurance that product liability
insurance maintained by the Company would be sufficient to protect the Company
in the event of a product liability claim. Furthermore, there can be no
assurance that the Company will be able to obtain product liability insurance in
the future with adequate coverages or at acceptable costs. Any product liability
claim against the Company could have a material adverse effect on the Company's
business, results of operations and financial condition. In addition, under the
terms of the Coulter Settlement Agreement, the Company is required to indemnify
Coulter for injuries to person or property resulting from the design or
manufacture of Micro21 Systems sold to Coulter for distribution to end users.
The failure to comply with FDA regulations could have a material adverse effect
on the ability of the Company to defend against product liability lawsuits.
UNCERTAINTY OF THIRD PARTY REIMBURSEMENT AND
HEALTH CARE REFORM POLICIES AND COST CONTAINMENT MEASURES
The willingness of hospitals, laboratories and other health care providers
to purchase or lease the Micro21 System may depend on the extent to which such
providers limit capital expenditures due to cost reimbursement regulations,
including regulations promulgated by the Health Care Financing Administration
("HCFA") and other regulatory agencies, and general uncertainty about government
health care policy. In addition, sales volumes and prices of the Company's
products will depend in part upon the level of reimbursement available to
hospitals, laboratories and other health care providers for automated
microscopic blood tests from third-party payors, such as government and private
insurance plans, health maintenance organizations and preferred provider
organizations. There can be no assurance that existing reimbursement levels will
not be decreased in the future and that any such decrease will not reduce the
demand for, or the price of, the Company's products. Health care reform measures
adopted by the federal government or state governments could adversely affect
the price of medical devices in the United States or the amount of reimbursement
available, and, consequently, could have a material adverse effect on the
Company's business, results of operations and financial condition. Further, the
Company believes that pressure in the health care industry to control and
contain patient care costs has increased and will continue to increase. Such
pressure may result in a reduction in the number and type of clinical laboratory
microscopic procedures performed (i.e., a reduction in precautionary testing),
thus decreasing the cost savings and other benefits of the Micro21 System and,
accordingly, demand for the Micro21 System. No prediction can be made as to the
outcome of any reform initiatives or health care cost containment measures, or
their respective impacts on the Company.
GOVERNMENT REGULATION; NO ASSURANCE OF FUTURE REGULATORY APPROVAL
The Company's products are subject to stringent government regulation in
the United States and other countries. In the United States, the Federal Food,
Drug, and Cosmetic Act, as amended (the "FDC Act"), and other statutes and
regulations govern the testing, manufacture, labeling, storage, record keeping,
distribution, sale, marketing, advertising and promotion of such products.
Failure to comply with applicable requirements can result in fines, recall or
seizure of products, total or partial suspension of production, withdrawal of
existing product approvals or clearances, refusal to approve or clear new
applications or notices and criminal prosecution.
Prior to commercial distribution in the United States, most medical
devices, including the Company's products, must be cleared or approved by the
FDA. The regulatory process is lengthy, expensive and uncertain. The Company's
Micro21 System has been cleared by the FDA through the 510(k) pre-market
notification process as a Class II automated cell locating device for the
automated location and display of nucleated blood cells to assist medical
technologists in performing WBC Diffs and WBC morphological analysis and for the
display of up to 20 full screen images of fields of a blood sample on a slide to
assist a medical technologist in assessing red blood cell ("RBC") morphologies
and in estimating platelets. The Company also has received FDA clearances for
three additional commonly performed microscopic procedures, the reticulocyte
count, anti-nuclear antibodies ("ANA") and DNA procedures, each of which also
requires review by a medical technologist. The Company's business strategy
includes the development of additional applications for the Micro21 System to
perform additional cell location and classification functions. No assurance can
be given that the necessary permission from the FDA to market the Micro21 System
for such additional applications will not require the submission and approval of
additional 510(k) applications and/or pre-market approval ("PMA") applications.
The PMA approval process entails considerably greater time (i.e., several years)
and expense than does the 510(k) process, including the performance of clinical
trials to determine the safety and efficacy of the device. No assurance can be
given that the Company will obtain clearance or approval with respect to any
additional applications of the Company's technology. Furthermore, FDA clearance
of a 510(k) application or approval of a PMA application is subject to continual
review, and later discovery of previously unknown problems may result in
restrictions on a product's marketing or withdrawal of the product from the
market.
The FDA regulates computer software, such as the Company's NeuralVision
software, that performs the function of a regulated device or that is intimately
associated with a given device, such as control software for imaging or other
diagnostic devices. The FDA is in the process of reevaluating its regulation of
such software, and the Company cannot predict the extent to which the FDA will
regulate such software in the future. Should the FDA increase regulation of such
software, the Company's NeuralVision software platform may become subject to
more extensive regulatory processes and clearance requirements. No assurance can
be given that compliance with more extensive regulatory processes will be
achieved or that the necessary clearances for such software will be obtained by
the Company on a timely basis, if at all. The Company may, as a result, be
required to expend additional time, resources and effort in the areas of
software design, production and quality control to ensure compliance. Delay in
any FDA clearance with respect to such software could have a material adverse
effect on the Company's business, results of operations and financial condition.
The Company must also comply with regulations promulgated by the FDA from
time to time. The Company will be required to expend time, resources and effort
in product manufacturing and quality control to ensure compliance. If violations
of the applicable regulations are noted during FDA inspections of the Company's
manufacturing facilities and related software development facilities, the
continued marketing of the Company's products may be materially adversely
affected.
In addition, the Company has begun to market the Micro21 System in certain
foreign markets. Requirements for the sale of the Micro21 System vary widely
from country to country, ranging from simple product registrations to detailed
submissions such as those required by the FDA. To date, the Company has obtained
regulatory clearances or approvals to market the Micro21 System in the United
States, Canada and Japan; no regulatory clearances or approvals have yet been
applied for in any countries other than the United States, Canada and Japan, and
there is no assurance that any such approvals or clearances will be issued. The
ability to export into other countries may require obtaining ISO 9001
certification, which is analogous to compliance with FDA requirements, and CE
Mark certification. The Company has received CE Mark certification, and expects
to obtain ISO 9001 certification in July 1997, but there can be no assurance
that ISO 9001 certification will be obtained. The market for the Micro21 System
also could be affected by the Clinical Laboratory Improvement Amendments of 1988
("CLIA"). This law is intended to assure the quality and reliability of all
medical testing in the United States.
Any change in existing federal, state or foreign laws or regulations, or in
the interpretation or enforcement thereof, or the promulgation of any additional
laws or regulations could have a material adverse effect on the Company's
business, results of operations and financial condition.
DEPENDENCE ON KEY PERSONNEL; ABILITY TO MANAGE GROWTH
The Company depends to a substantial degree on the services of Tyce M.
Fitzmorris, Eric Espenhahn and Jaime Pereira, all of whom were instrumental in
founding the Company and in developing the Micro21 System. Mr. Fitzmorris serves
as the Company's Chairman, Chief Executive Officer and President. Mr. Espenhahn,
who serves as the Company's Vice President-Product Development, is primarily
responsible for the technical development of the Micro21 System and its
NeuralVision software. Mr. Pereira is a significant contributor to the
development of the NeuralVision software utilized in the Micro21 System and
serves as Vice President-Engineering. The Company has key man life insurance
policies on Messrs. Fitzmorris, Espenhahn and Pereira in the amounts of
$2,500,000, $1,250,000 and $1,250,000, respectively. In addition, as a result of
the dispute with Coulter, the Company believes that it is vital for the Company
to develop an effective sales and marketing organization on an accelerated
basis, and to that end, recently hired a Vice President of Sales and a number of
sales personnel. The loss of the services of any of Messrs. Fitzmorris,
Espenhahn or Pereira, or other key personnel, including the Vice President of
Sales, could have a material adverse effect on the Company's business, results
of operations and financial condition. The Company does not have employment
agreements, other than disclosure, confidentiality and non-competition
agreements, with any of its personnel.
The Company is highly dependent on the principal members of its management
and engineering staff, the loss of whose services might impede the achievement
of the Company's business objectives. As the Company grows, recruiting and
retaining additional qualified personnel to supervise and manage the Company's
research and development and manufacturing operations will be important to the
Company's success. Competition exists for qualified personnel, and there can be
no assurance that the Company will be able to retain and attract skilled and
experienced management, manufacturing, engineering and research and development
personnel on acceptable terms.
FUTURE CAPITAL NEEDS AND UNCERTAINTY OF ADDITIONAL FINANCING
The implementation of the Company's business strategy may require
significant expenditures of capital, and the Company may require additional
financing in the future. Additional funds may be sought through equity or debt
financings. There can be no assurance that commitments for such financings could
be obtained on favorable terms, if at all. Equity financing could result in
dilution to holders of Common Stock, and debt financing could result in the
imposition of significant financial and operational restrictions on the Company.
Lack of access to adequate capital on acceptable terms could have a material
adverse effect on the Company's business, results of operations and financial
condition.
CONTROL BY DIRECTORS AND EXECUTIVE OFFICERS
As of the date of this Prospectus, Mr. Fitzmorris, the Company's Chairman,
Chief Executive Officer and President, beneficially owned approximately 19.8% of
the outstanding shares of Common Stock, and the directors and executive officers
of the Company as a group beneficially owned approximately 39.9% of the
outstanding shares of Common Stock. Accordingly, directors and executive
officers will have significant influence over the policies and operations of the
Company, including the ability to replace Company's management or to alter the
conduct of the Company's business.
ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER, BY-LAW AND DELAWARE LAW PROVISIONS
Certain provisions of the Company's Certificate of Incorporation, By-laws
and Delaware law could, together or separately, discourage potential acquisition
proposals, delay or prevent a chance in control of the Company and limit the
price that certain investors might be willing to pay in the future for shares of
the Common Stock. These provisions provide, among other things, for the
issuance, without further stockholder approval, of preferred stock with rights
and privileges which could be senior to the Common Stock and advance notice
provisions and other limitations on the right of stockholders to call a special
meeting of stockholders, to nominate directors and to submit proposals to be
considered at stockholders' meetings. The Company also is subject to Section 203
of the Delaware General Corporation Law which, subject to certain exceptions,
prohibits a Delaware corporation from engaging in any of a broad range of
business combinations with any "interested stockholder" for a period of three
years following the date that such stockholder became an interested stockholder.
POSSIBLE VOLATILITY OF STOCK PRICE
Factors such as market acceptance of the Company's products, the timing of
purchase orders, announcements of technological innovations, the attainment of
(or failure to attain) milestones in the commercialization of the Company's
technology, the introduction of new products, or establishment of new
collaborative arrangements by the Company, its competitors or other third
parties, as well as claims of patent infringement or other material litigation,
government regulations, investor perception of the Company, fluctuations in the
Company's operating results and general market conditions in the industry may
cause the market price of the Common Stock to fluctuate significantly. In
addition, the stock market in general has recently experienced extreme price and
volume fluctuations, which have particularly affected the market prices of
technology companies for reasons frequently unrelated to the operating
performance of such companies. These broad market fluctuations may have a
material adverse effect on the market price of the Common Stock.
DILUTION; EFFECT OF OUTSTANDING OPTIONS AND WARRANTS
The existing stockholders of the Company acquired their shares of Common
Stock at an average cost substantially below $4.375, the closing price of the
Common Stock on June 17, 1997, which is the price assumed to be paid by the
purchasers for the purpose of calculating dilution to new investors.
Accordingly, investors in this offering will experience immediate and
substantial dilution in net tangible book value per share of the Common Stock of
$2.055. To the extent that outstanding options or warrants are exercised, there
will be further dilution to new investors. See "Dilution."
USE OF PROCEEDS
The Company will not receive any proceeds from the resale of shares of
Common Stock by the Selling Stockholders hereunder. See "Selling Stockholders"
and "Plan of Distribution."
DILUTION
Dilution is the amount by which the price paid by the purchasers of the
shares of Common Stock will exceed the net tangible book value per share of
Common Stock. The net tangible book value per share of Common Stock is
determined by subtracting the total liabilities of the Company from the total
book value of the tangible assets of the Company and dividing the difference by
the number of shares of Common Stock outstanding on the date as of which such
book value is determined. Since the Selling Stockholders may resell the shares
of Common Stock from time to time at market prices prevailing at the time of
sale, at the prices related to such prevailing market prices or at negotiated
prices, and such prices cannot be determined at this time, the price paid by the
purchasers used in calculating the dilution to new investors in the following
table has been deemed to be $4.375, the closing price of the Common Stock on
June 17, 1997, the day prior to the date of this Prospectus. At March 31, 1997,
the Company had a net tangible book value of approximately $25,340,380 or $2.32
per share. The price of $4.375 represents an immediate dilution to new investors
of $2.055 per share. The following table illustrates this per share dilution:
Deemed price per share....................................................$4.375
Net tangible book value per share at March 31, 1997....................... 2.320
----
Dilution per share to new investors.......................................$2.055
The foregoing tables do not take into account the exercise of outstanding
stock options or warrants after March 31, 1997. There were 1,757,873 shares of
Common Stock issuable upon exercise of options outstanding at March 31, 1997 at
a weighted average exercise price of $2.97 per share, 669,576 shares of Common
Stock issuable upon exercise of warrants outstanding at March 31, 1997 at a
weighted average exercise price of $1.16 per share, and 696,688 additional
shares of Common Stock reserved for issuance upon exercise of options that may
be granted in the future under the Company's stock option plans. To the extent
that these options or warrants are exercised, there will be further dilution to
new investors.
SELLING STOCKHOLDERS
Set forth below is information as to the Selling Stockholders, the number
of shares of Common Stock of the Company beneficially owned, the number of
shares which may be offered as set forth on the cover of this Prospectus
(assuming that certain options and warrants are exercised) and the number of
shares to be beneficially owned assuming all offered shares are sold.
<TABLE>
<CAPTION>
Number of
Shares Shares to be Beneficially
Beneficially Number of Owned After the Offering
Name and Position of Owned Prior Shares Being
Selling Stockholder to the offering Offered Number Percent
-------------------- --------------- ------------- ------ -------
<S> <C> <C> <C> <C>
GENE COCHRAN(1) 43,925(2) 65,250 3,050 *
JAMES E. DAVIS(3) 2,297(4) 5,250 0 0
ERIC ESPENHAHN(5) 835,647(6) 208,377 627,270 5.6
TYCE M. FITZMORRIS(7) 2,212,902(8) 208,377 2,004,525 18.0
GEORGE W. MASTERS(9) 16,500(10) 9,900 9,900 *
JAIME PEREIRA(11) 427,377(12) 266,675.5 160,701.5 1.4
JAMES SKINNER(13) 16,500(14) 19,800 0 0
- -----------------------------
</TABLE>
*Less than 1% of the outstanding Common Stock.
(1) Mr. Cochran is the Chief Financial Officer, Treasurer, Secretary and a
director of the Company.
(2) Includes 40,875 shares issuable upon the exercise of outstanding stock
options exercisable within 60 days under the Plan.
(3) Mr. Davis is a director of the Company.
(4) Includes 2,297 shares issuable upon exercise of outstanding stock
options exercisable within 60 days under the Plan.
(5) Mr. Espenhahn is the Vice-President Product Development of the Company.
Mr. Espenhahn served as a director of the Company from 1989 until July
1996.
(6) Includes 208,377 shares issuable upon the exercise of outstanding stock
options exercisable within 60 days under the Plan. Also includes 100,000
shares held of record by Mr. Espenhahn's wife (Karen Espenhahn) and
8,000 shares held of record by Mr. Espenhahn as custodian for his son
(John Hudson Espenhahn). Mr. Espenhahn disclaims beneficial ownership of
these securities.
(7) Mr. Fitzmorris is the Chairman of the Board of Directors, the Chief
Executive Officer and the President of the Company.
(8) Includes 208,377 shares issuable upon the exercise of outstanding stock
options exercisable within 60 days under the Plan. Also includes 570,000
shares held of record by Mr. Fitzmorris' wife (Anne Fitzmorris),
children and wife as custodian for one child, who have granted to Mr.
Fitzmorris irrevocable voting proxies and a purchase option with respect
to such shares. Mr. Fitzmorris disclaims beneficial ownership of such
securities. Excludes 24,039 shares beneficially owned by Mr. Fitzmorris'
parents, as to which Mr. Fitzmorris disclaims beneficial ownership.
(9) Mr. Masters is a director of the Company.
(10) Includes 6,600 shares issuable upon the exercise of outstanding stock
options exercisable within 60 days under the Plan.
(11) Mr. Pereira is the Vice-President Engineering of the Company.
(12) Includes 266,675.5 shares issuable upon the exercise of outstanding
stock options exercisable within 60 days under the Plan. Does not
include 6,000 shares held of record by irrevocable trusts for the
benefit of Mr. Pereira's nephews and nieces.
(13) Mr. Skinner is a director of the Company.
(14) Includes 16,500 shares issuable upon the exercise of outstanding stock
options exercisable within 60 days under the Plan.
Except as noted in the foregoing footnotes, none of the Selling
Stockholders has any position, office or other material relationship with the
Company or any of its affiliates within the past three years.
PLAN OF DISTRIBUTION
The Shares offered hereby may be resold from time to time by the Selling
Stockholders for their own accounts. The Company will receive none of the
proceeds from this offering.
The distribution of the Shares by the Selling Stockholders is not subject
to any underwriting agreement. The Shares covered by this Prospectus may be sold
by the Selling Stockholders or by pledgees, donees, transferees or other
successors in interest. The Shares offered by the Selling Stockholders may be
sold from time to time at the market price prevailing at the time of sale, at
prices relating to such prevailing market prices or at negotiated prices. In
addition, the Selling Stockholders may resell their Shares covered by this
Prospectus through customary brokerage channels, either through broker-dealers
acting as agents or brokers, or through broker-dealers acting as principals, who
may then resell the Shares, or at private sale or otherwise, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of underwriting discounts,
concessions, commissions, or fees from the Selling Stockholders and/or
purchasers of the Shares for whom such broker-dealers may act as agent or to
whom they sell as principal, or both (which compensation to a particular
broker-dealer might be in excess of customary commissions). Any broker-dealers
that participate with the Selling Stockholders in the distribution of Shares may
be deemed to be underwriters and any commissions received by them and any profit
on the resale of Shares positioned by them might be deemed to be underwriting
discounts and commissions within the meaning of the Securities Act, in
connection with such resales.
The Company will inform the Selling Stockholders that the antimanipulation
rules under the Securities Exchange Act of 1934 may apply to sales in the market
and will furnish the Selling Stockholders upon request with a copy of these
Rules. The Company will also inform the Selling Stockholders of the need for
delivery of copies of this Prospectus.
Any Shares covered by the Prospectus that qualify for resale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 rather than
pursuant to this Prospectus.
The Common Stock is quoted on the Nasdaq National Market under the symbol
"IMII".
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby has been passed
upon for the Company by Edwards & Angell, Palm Beach, Florida.
EXPERTS
The financial statements of Intelligent Medical Imaging, Inc. appearing in
Intelligent Medical Imaging, Inc.'s Annual Report (Form 10-K) for the year ended
December 31, 1996, have been audited by Ernst & Young LLP, independent certified
public accountants, as set forth in their report thereon included therein and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
The statement in this Prospectus under the caption "Risk Factors -
Dependence on Trade Secrets and Proprietary Technology" set forth in the fifth
sentence of the second paragraph under the caption "Risk Factors - Dependence on
Trade Secrets and Proprietary Technology" has been reviewed and approved by
Malin, Haley, DiMaggio & Crosby, P.A., Fort Lauderdale, Florida, serving as
patent counsel for the Company, and as an expert on such matters, and is
included herein in reliance upon that review and approval.
<PAGE>
No dealer, sales representative or any
other person has been authorized to give any
information or to make any representations in 783,630 Shares
connection with this offering other than
those contained in this Prospectus, and, if
given or made, such information or INTELLIGENT MEDICAL IMAGING, INC.
representations must not be relied upon as
having been authorized by the Company or any
of the Selling Stockholders. This Prospectus Common Stock
does not constitute an offer to sell, or a
solicitation of an offer to buy, any
securities other than the registered
securities to which it relates or an offer
to, or a solicitation of, any person in any ---------------------------
jurisdiction where such offer or solicitation
would be unlawful. Neither the delivery of
this prospectus nor any sale made hereunder Prospectus
shall, under any circumstances, create any
implication that there has been no change in
the affairs of the Company since the date
hereof or that the information contained June 18, 1997
herein is correct as of any time subsequent
to the date hereof.
TABLE OF CONTENTS
PAGE
Available Information.................................2
Incorporation of Certain Information
by Reference.........................................3
The Company...........................................4
Risk Factors..........................................5
Use of Proceeds......................................12
Dilution.............................................12
Selling Stockholders.................................13
Plan of Distribution.................................14
Legal Matters........................................14
Experts..............................................14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Commission by the Registrant are
incorporated by reference into this Registration Statement (File No. 1-14190):
(a) Annual Report on Form 10-K for the fiscal year ended December 31,
1996;
(b) Quarterly Report on Form 10-Q for the quarter ended March 31, 1997;
and
(c) The description of the Common Stock contained in the Registration
Statement on Form 8-A dated February 1, 1996, and any amendment or
report filed for the purpose of updating that description.
All reports and other documents filed by the Registrant with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the
filing of a post-effective amendment which indicates that all securities offered
herein have been sold or which de-registers all securities then remaining
unsold, shall be deemed to be incorporated by reference into this Registration
Statement and to be a part hereof from the date of filing such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference shall be deemed to be modified or superseded for the purpose of this
Registration Statement to the extent that a statement contained in any other
subsequently filed document which also is or is deemed to be incorporated into
this Registration Statement by reference modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF REGISTRANT'S SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law, as amended, provides
in regard to indemnification of directors and officers as follows:
"145. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE.
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made 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 only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee, or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum or (2) if there are no such directors or if such directors so
direct, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or director
in defending any civil, criminal, administrative or investigative action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys' fees) incurred
by other employees and agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee, or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnity its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plans; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(k) The Court of Chancery is hereby vested and has exclusive jurisdiction
to hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees)."
The Company's By-laws contain the foregoing provisions with regard to
indemnification of officers, directors, employees and agents.
The Company's Certificate of Incorporation provides that the Company's
directors shall not be liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except to the extent that
exculpation from liability is not permitted under the Delaware General
Corporation Law as in effect at the time such liability is determined.
The Company maintains an indemnification insurance policy covering all
directors and officers of the Company.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS:
Exhibit
Number Description of Document
4.1 Form of Stock Certificate (incorporated by reference to Exhibit 4.1 to
Registration Statement No. 333-636).
5.1 Opinion of Edwards & Angell regarding legality of the Common Stock.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Edwards & Angell (included in Exhibit 5.1).
23.3 Consent of Malin, Haley, DiMaggio & Crosby, P.A.
24.1 Power of Attorney (see page II-5 of Registration Statement).
ITEM 9. UNDERTAKINGS.
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. Notwithstanding the foregoing, any increase or decrease in the volume
of securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high and of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement; 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;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 and are incorporated by reference in this Registration
Statement.
(2) For the purpose of determining any liability under the Securities Act
of 1933, 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.
(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.
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 15(d) of the Securities
Exchange Act of 1934 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.
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 provisions described in Item 6 above, 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Intelligent
Medical Imaging, Inc. certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8/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 Palm Beach Gardens, State of Florida,
on this 18th day of June, 1997.
INTELLIGENT MEDICAL IMAGING, INC.
By: /s/ Tyce M. Fitzmorris
--------------------------------------
Tyce M. Fitzmorris
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Tyce M. Fitzmorris and Gene Cochran, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead in any
and all capacities, to sign any or all amendments to this Registration Statement
on Form S-8/S-3 (including post-effective amendments), and to file the same,
with all exhibits thereto, and other documents in connection therewith with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully and to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on June 18, 1997.
SIGNATURE TITLE DATE
/s/TYCE M. FITZMORRIS President and Chief Executive Officer, June 18, 1997
- ------------------------- Chairman of the Board of Directors
Tyce M. Fitzmorris
/s/GENE COCHRAN Chief Financial Officer and Principal June 18, 1997
- ------------------------- Accounting Officer, Director
Gene Cochran
/s/WILLIAM D. WHITTAKER Director June 18, 1997
- -------------------------
William D. Whittaker
/s/R. WAYNE FRITZSCHE Director June 18, 1997
- -------------------------
R. Wayne Fritzsche
/s/GEORGE MASTERS Director June 18, 1997
- -------------------------
George Masters
/s/JAMES SKINNER Director June 18, 1997
- -------------------------
James Skinner
/s/JAMES E. DAVIS Director June 18, 1997
- -------------------------
James E. Davis
Exhibit 5.1
Edwards & Angell
A Partnership Including Professional Corporations
Counsellors Since 1894 250 Royal Palm Way
Palm Beach, FL 33480-4309
(561) 833-7700
FAX (561) 655-8719
June 18, 1997
Intelligent Medical Imaging, Inc.
4360 Northlake Boulevard
Suite 214
Palm Beach Gardens, FL 33410
Ladies and Gentlemen:
We have acted as counsel for Intelligent Medical Imaging, Inc., a Delaware
corporation (the "Company") in connection with the registration of 2,454,562
shares (the "Shares") of Common Stock, $.01 par value (the "Common Stock")
issuable upon the exercise of outstanding stock options under the Company's
Amended and Restated 1990 Stock Option Plan (the "Plan"). The resale of up to
783,630 Shares by certain persons holding options issued under the Plan is
included within such registration.
In connection with this opinion, we have examined the Registration
Statement on Form S-8/S-3 filed with the Securities and Exchange Commission
("SEC") pursuant to the rules and regulations promulgated under the Securities
Act of 1933, as amended, on the date hereof (the "Registration Statement"),
relating to the above-mentioned registration. In addition, we have examined such
corporate records, certificates and other documents, and reviewed such questions
of law, as we have deemed necessary or advisable in order to enable us to render
the opinion contained herein.
In our examination of the foregoing documents, we have assumed the
genuineness of all signatures and the authenticity of all documents submitted to
us as originals, the conformity to unsigned documents of all documents submitted
to as certified or photostatic copies, and the authenticity of the originals of
such latter documents.
We assume that the appropriate action will be taken, prior to the offer and
sale of the Shares, to register and qualify the Shares for sale under all
appropriate State "Blue Sky" and securities laws.
Based upon the foregoing, we are of the opinion that the Shares of Common
Stock being registered under the Registration Statement, when issued and paid
for as contemplated by the Plan, assuming due execution of the certificates
therefor, will be legally issued, fully paid and non-assessable.
We consent to the filing of this opinion as an Exhibit to the Registration
Statement and to the use of our name under the caption "Legal Matters" in the
Prospectus constituting a part of the Registration Statement. In giving such
consent, we do not admit that we come within the category of persons whose
consent is required by Section 7 of the Act or the rules and regulations
promulgated thereunder.
Very truly yours,
/s/ Edwards & Angell
EDWARDS & ANGELL
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-8/S-3) pertaining to the Amended and Restated
1990 Stock Option Plan and related resale Prospectus of Intelligent Medical
Imaging, Inc. for the registration of 783,630 shares of its common stock and to
the incorporation by reference therein of our report dated February 3, 1997
(except for the fourth and twelfth paragraphs of Note 8, as to which the dates
are March 27, 1997 and March 7, 1997, respectively), with respect to the
financial statements and schedules of Intelligent Medical Imaging, Inc. included
in its Annual Report (Form 10-K) for the year ended December 31, 1996, filed
with the Securities and Exchange Commission.
West Palm Beach, Florida /s/ Ernst & Young LLP
June 17, 1997
Exhibit 23.3
MALIN, HALEY, DIMAGGIO & CROSBY, P.A.
PATENT, TRADEMARK & COPYRIGHT ATTORNEYS
REPLY TO:
EUGENE F. MALIN (1936-1990) SUITE 1609 ONE EAST BROWARD BLVD.
FORT LAUDERDALE, FLORIDA 33301
BARRY L. HALEY TELEPHONE (954)763-3303 FAX (954) 522-6307
DALE PAUL DIMAGGIO
KEVIN P. CROSBY
DANIEL STEVEN POLLEY MIAMI OFFICE:
DAVID PAUL LHOTA 2000 SOUTH DIXIE HIGHWAY, SUITE 203
MARK DAVID BOWEN TELEPHONE (305) 374-4082
CRISTINA PINHEIRO PALMER*
JOHN C. BLACK** WEST PALM BEACH OFFICE:
OF COUNSEL 500 AUSTRALIAN AVENUE SOUTH, SUITE 600
TELEPHONE (407) 832-6341
FLORIDA WATS 1 (800) 344-3303
* NEW YORK BAR ONLY
** ILLINOIS BAR ONLY
June 11, 1997
Intelligent Medical Imaging, Inc.
4360 Northlake Blvd.
Suite 214
Palm Beach Gardens, FL 33410
Att: Tyce M. Fitzmorris, President and Chief Executive Officer
Dear Mr. Fitzmorris:
We hereby consent to the use of our name, and the statement with respect to us,
under the caption entitled "EXPERTS" in the prospectus which is part of the
Registration Statement on Form S-8/S-3 filed by Intelligent Medical Imaging,
Inc.
Very truly yours,
MALIN, HALEY, DiMAGGIO & CROSBY, P.A.
/s/ Kevin P. Crosby
- --------------------------------------
Kevin P. Crosby
