As filed with the Securities and Exchange Commission on May 14, 1997
Registration No. 333-26749
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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INTELLIGENT MEDICAL IMAGING, INC.
(Exact name of registrant as specified in its charter)
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Delaware 3841 65-0136178
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code No.) Identification No.)
John G. Igoe, Esq.
Edwards & Angell
4360 Northlake Boulevard, Suite 214 250 Royal Palm Way
Palm Beach Gardens, Florida 33410 Palm Beach, Florida 33480
(561) 627-0344 (561) 833-7700
(Address, including zip code, and telephone (Name, address, including zip
number, including area code, of registrant's code, and telephone number,
principal executive offices) including area code, of agent
for service)
Copy to:
Donald J. Murray, Esq.
Dewey Ballantine
1301 Avenue of the Americas
New York, NY 10019-6092
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Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _________
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ].
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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>
SUBJECT TO COMPLETION, DATED MAY 8, 1997
PROSPECTUS
5,880,724 Shares
INTELLIGENT MEDICAL IMAGING, INC.
Common Stock
$.01 Par Value
This prospectus relates to the resale of up to 5,880,724 shares (the "Shares")
of common stock, par value $.01 per share (the "Common Stock"), of Intelligent
Medical Imaging, Inc. ("IMI" or the "Company") which may be offered hereby from
time to time by any or all of the selling stockholders 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 Company has agreed to bear all of the expenses in connection with the
registration and resale of the Shares, including reasonable fees (not to exceed
$25,000 in the aggregate) and disbursements of one counsel to the Selling
Stockholders (other than selling commissions and the fees and expenses of any
other counsel or other advisors to the Selling Stockholders).
The Common Stock of the Company is quoted on the Nasdaq National Market under
the symbol "IMII". On May 13, 1997, the last reported sale price for the Common
Stock on the Nasdaq National Market was $4.75 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 PROSPECTIVE 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 May 14, 1997
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<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-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. 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.)
<PAGE>
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 5,880,724 shares of Common Stock
by the Selling Stockholders. 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.
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 $4.75, the closing price of the
Common Stock on May 13, 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
$2.43. 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 $4.75, the closing price of the Common Stock on May
13, 1997. 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 $4.75 represents an
immediate dilution to new investors of $2.43 per share. The following table
illustrates this per share dilution:
Deemed price per share.................................................. $ 4.75
Net tangible book value per share at March 31, 1997...................... $ 2.32
-----
Dilution per share to new investors...................................... $ 2.43
The foregoing table does 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
Beneficially Number of
Name and Position of Owned Prior to Shares Being Shares to be Beneficially
Selling Stockholder the Offering Offered Owned After the Offering
------------------- ------------ ------- ------------------------
Number Percent
------ -------
<S> <C> <C> <C> <C>
Steven P. Abramow and Robin E. Abramow 7,500 7,500 -0- -0-
Leon Abramson 30,000 30,000 -0- -0-
Robert D. Andrews, Lillian S. Andrews
and Delura Kindsfather 4,545 4,545 -0- -0-
Desiree Ardito Mufson 1,500 1,500 -0- -0-
Jerry L. Bainbridge and Fay E. Bainbridge 25,500 25,500 -0- -0-
Bruce N. Barron 9,000 9,000 -0- -0-
Berkman Associates, L.P. 51,000 51,000 -0- -0-
Robert A. Berlacher(1) 4,584 4,584
Harry J. Blumenthal, Jr. 15,000 15,000 -0- -0-
Warren H. Chambers and Shirley E. Chambers,
TIE 4,545 4,545 -0- -0-
Ming T. Chang 75,000 75,000 -0- -0-
Ming T. Chang, Custodian for Frank Z. Chang 25,500 25,500 -0- -0-
Ming T. Chang, Custodian for Lisa M. Chang 25,500 25,500 -0- -0-
Gene Cochran(2) 40,175 3,050 37,125 *
Robyn M. Collins 3,000 3,000 -0- -0-
Nicholas D. Collova, DDS(3) 45,714 45,714 -0- -0-
Bill R. Condrey and Jane B. Condrey, Trustees 12,600 12,600 -0- -0-
Constance A. Curran 50,000 50,000 -0- -0-
* Less than 1% of the outstanding Common Stock
(1) Includes 4,584 shares of Common Stock issuable upon the exercise of
warrants issued to Mr. Berlacher on December 4, 1995.
(2) Includes 37,125 shares issuable upon the exercise of outstanding stock
options exercisable within 60 days under the Company's Amended and Restated
1990 Stock Option Plan. Mr. Cochran is the Chief Financial Officer,
Treasurer, Secretary and a Director of the Company.
(3) Includes 45,714 shares of Common Stock issuable upon the exercise of
warrants issued to Mr. Collova on April 24, 1994.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Number of
Shares
Beneficially Number of
Name and Position of Owned Prior to Shares Being Shares to be Beneficially
Selling Stockholder the Offering Offered Owned After the Offering
------------------- ------------ ------- ------------------------
Number Percent
------ -------
<S> <C> <C> <C> <C>
Bart A. Didden and Mary Didden, JTWROS 25,000 25,000 -0- -0-
William P. Dioguardi 9,000 9,000 -0- -0-
Andrew Dunn and Tracie Dunn, JTWROS 9,000 9,000 -0- -0-
Eric Espenhahn(4) 822,623 519,270 303,353 2.7
Eric Espenhahn A/C/F John Hudson Espenhahn 8,000 8,000 -0- -0-
Karen Espenhahn 100,000 100,000 -0- -0-
Fiber Consultants Ltd. 15,000 15,000 -0- -0-
Anne Fitzmorris 300,000 300,000 -0- -0-
Anne Fitzmorris, Custodian for Tara Fitzmorris 90,000 90,000 -0- -0-
Frank W. and Laura Selma Fitzmorris 24,039 24,039 -0- -0-
Tyce M. Fitzmorris(5) 2,199,878 1,434,525 765,353 6.6
Diana M. Fritzsche 9,000 9,000 -0- -0-
Robert Fritzsche and Mae Fritzsche, JTWROS 5,001 5,001 -0- -0-
R. Wayne Fritzsche(6) 976,642 867,642 109,000 *
(4) Includes 195,353 shares issuable upon the exercise of outstanding stock
options exercisable within 60 days under the Company's Amended and Restated
1990 Stock Option 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. 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.
(5) Includes 195,353 shares issuable upon the exercise of outstanding stock
options exercisable within 60 days under the Company's Amended and Restated
1990 Stock Option 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 shares. Excludes 24,039 shares beneficially
owned by Mr. Fitzmorris' parents and 9,999 shares beneficially owned by Mr.
Fitzmorris' daughter and her spouse, as to which Mr. Fitzmorris disclaims
beneficial ownership. Mr. Fitzmorris is the Chairman of the Board of
Directors, the Chief Executive Officer and the President of the Company.
(6) Includes 213,489 shares issuable upon the exercise of warrants issued to
Mr. Fritzsche on June 29, 1994 and December 12, 1994, and 100,000 shares
held of record by Mr. Fritzsche's IRA Account. Also includes 9,000 shares
held of record by Mr. Fritzsche's wife (Diana Fritzsche), as to which Mr.
Fritzsche disclaims beneficial ownership. Does not include 36,000 shares
held of record by an irrevocable trust for the benefit of Mr. Fritzsche's
children. Mr. Fritzsche is a Director of the Company, and previously served
until October 1995 as Vice President - Corporate Development. In January
1994, the Company sold 385,764 shares of Common Stock to Mr. Fritzsche for
an aggregate purchase price of $2,500 ($.00648 per share). Said shares were
offered to Mr. Fritzsche in consideration for services rendered by Mr.
Fritzsche as a consultant under a Consulting Agreement with Company dated
as of January 1, 1994, which Consulting Agreement terminated on November
30, 1995. In June 1994, the Company issued to Mr. Fritzsche a 10% Secured
Convertible Promissory Note in the original principal amount of $300,000
payable on July 1, 1996, and convertible into 274,389 shares of Common
Stock at a conversion rate of $1.09 per share; the Note was converted in
April 1996. In June 1994, the Company also issued to Mr. Fritzsche warrants
to purchase an aggregate of 274,389 shares of Common Stock at an exercise
price of $1.09 which expire in July 1999. In December 1994, the Company
issued to Mr. Fritzsche warrants to purchase up to 7,500 shares of Common
Stock at an exercise price of $2.00 per share in consideration for Mr.
Fritzsche's guaranty of certain equipment lease financing provided by
Copelco Capital, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Number of
Shares
Beneficially Number of
Name and Position of Owned Prior to Shares Being Shares to be Beneficially
Selling Stockholder the Offering Offered Owned After the Offering
------------------- ------------ ------- ------------------------
Number Percent
------ -------
Donaldson, Lufkin & Jenrette Securities Corp.
Custodian f/b/o R. Wayne Fritzsche
<S> <C> <C> <C> <C>
IRA Account 100,000 100,000 -0- -0-
Robert T. Migliardi, Trustee,
R. Wayne Fritzsche Irrevocable Trust of 1995 36,000 36,000 -0- -0-
Jonathan Griggs 5,100 5,100 -0- -0-
Rubin Lewis Hanan 6,000 6,000 -0- -0-
C. Michael Hazard 75,000 75,000 -0- -0-
Stuart M. Herman 3,600 3,600 -0- -0-
Jerry Heymann 12,000 12,000 -0- -0-
John C. Iacuzzo 50,000 50,000 -0- -0-
Linda S. Iarussi 9,000 9,000 -0- -0-
David Israel 6,000 6,000 -0- -0-
Eli Jacobson 12,600 12,600 -0- -0-
Ellen R. James 9,000 9,000 -0- -0-
Ray L. James, DDS 12,501 12,501 -0- -0-
Christopher Blaine Jensen 510 510 -0- -0-
Derek Scott Jensen 510 510 -0- -0-
Tonya Melynn Jensen 3,900 3,900 -0- -0-
Wayne G. Johnson and Betty Curry Johnson,
Tenants in Common 49,998 49,998 -0- -0-
Gary Jones 1,500 1,500 -0- -0-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Number of
Shares
Beneficially Number of
Name and Position of Owned Prior to Shares Being Shares to be Beneficially
Selling Stockholder the Offering Offered Owned After the Offering
------------------- ------------ ------- ------------------------
Number Percent
------ -------
<S> <C> <C> <C> <C>
Elias N. Kulukundis Trust II 24,000 24,000 -0- -0-
Thomas J. Kumbatovic(7) 3,294 3,294 -0- -0-
Joshua H. Landes 3,000 3,000 -0- -0-
H. Ronald Levin 6,000 6,000 -0- -0-
Michael Levin 240 240 -0- -0-
John R. Lieberman 2,000 2,000 -0- -0-
Lighthouse Partners USA, LP 9,000 9,000 -0- -0-
Lisa Low, custodian for Chantal Low
U/G/M/A NY 56,965 56,965 -0- -0-
Lisa Low, custodian for Daniel Low U/G/M/A NY 56,965 56,965 -0- -0-
Nathan A. Low 185,812 185,812 -0- -0-
Clement A. Maccia, M.D., P.A. Profit
Sharing Plan 25,000 25,000 -0- -0-
Clement A. Maccia, Custodian for
Danielle M. Maccia 8,333 8,333 -0- -0-
Clement A. Maccia, Custodian for
Matthew J. Maccia 8,333 8,333 -0- -0-
Clement A. Maccia, Custodian for
Michael A. Maccia 8,333 8,333 -0- -0-
Manhattan Podiatry Profit Sharing and Trust
Plan, P.C. 7,500 7,500 -0- -0-
George W. Masters(8) 14,850 9,900 4,950 *
Ted Patrick McClendon 4,545 4,545 -0- -0-
James L. Melcher 6,000 6,000 -0- -0-
J. Don Migliardi 25,002 25,002 -0- -0-
Joseph R. Migliardi 7,746 7,746 -0- -0-
Robert T. Migliardi 9,000 9,000 -0- -0-
* Less than 1% of the outstanding Common Stock
(7) Includes 2,295 shares of Common Stock issuable upon exercise of warrants
issued to Mr. Kumbatovic on December 4, 1995.
(8) Includes 4,950 shares issuable upon the exercise of outstanding stock
options exercisable within 60 days under the Company's Amended and Restated
1990 Stock Option Plan.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Number of
Shares
Beneficially Number of
Name and Position of Owned Prior to Shares Being Shares to be Beneficially
Selling Stockholder the Offering Offered Owned After the Offering
------------------- ------------ ------- ------------------------
Number Percent
------ -------
Donaldson, Lufkin & Jenrette Securities Corp.,
<S> <C> <C> <C> <C>
Custodian f/b/o Joseph R. Migliardi 31,209 31,209 -0- -0-
John D. Miller(9) 4,219 2,250 1,669 *
Brian J. Moore, M.D. 12,501 12,501 -0- -0-
Nazario Paragano 25,002 25,002 -0- -0-
Pequot Scout Fund L.P. 75,000 75,000 -0- -0-
Jaime Pereira(10) 414,354 160,701 253,653 2.3
Jaime Pereira, Trustee Pereira Family Trust
FBO Alexander Pereira 1,500 1,500 -0- -0-
Jaime Pereira, Trustee Pereira Family Trust
FBO Alyssa Pereira 1,500 1,500 -0- -0-
Jaime Pereira, Trustee Pereira Family Trust
FBO Eduardo Quiros 1,500 1,500 -0- -0-
Jaime Pereira, Trustee Pereira Family Trust
FBO Felipe Quiros 1,500 1,500 -0- -0-
Porridge Partners #1 50,000 50,000 -0- -0-
Chris Nicole Prince 1994 Trust 20,000 20,000 -0- -0-
RBC, Inc. 21,000 21,000 -0- -0-
Marshall E. Rinker, III and Christine M. Rinker 4,545 4,545 -0- -0-
David Rochat 25,000 25,000 -0- -0-
David Rochat and Barbara Rochat 25,000 25,000 -0- -0-
Edmond P. Rochat, Jr. 25,000 25,000 -0- -0-
George F. Rochat 37,501 37,501 -0- -0-
Joel D. Scharfer 12,500 12,500 -0- -0-
Paul A. Scharfer(11) 21,986 21,986 -0- -0-
Peter Serratelli, Sr. and Rosaria Serratelli 15,000 15,000 -0- -0-
D. Geoffrey Shulman 12,501 12,501 -0- -0-
Denee Shipley 90,000 90,000 -0- -0-
C.E. Sigety and Tec Sigety 28,500 25,500 3,000 *
Robert O. Stellner(12) 33,281 30,281 3,000 *
9 Includes 969 shares issuable upon the exercise of outstanding stock options
exercisable within 60 days under the Company's Amended and Restated 1990
Stock Option Plan.
10 Includes 253,653 shares issuable upon the exercise of outstanding stock
options exercisable within 60 days under the Company's Amended and Restated
1990 Stock Option Plan. Does not include 6,000 shares held of record by
irrevocable trusts for the benefit of Mr. Pereira's nephews and nieces. Mr.
Pereira is the Vice President-Engineering of the Company.
11 Includes 10,212 shares of Common Stock issuable upon exercise of warrants
issued to Mr. Scharfer on July 24, 1995.
12 Includes 30,281 shares issuable upon the exercise of outstanding stock
options exercisable within 60 days under the Company's Amended and Restated
1990 Stock Option Plan.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Number of
Shares
Beneficially Number of
Name and Position of Owned Prior to Shares Being Shares to be Beneficially
Selling Stockholder the Offering Offered Owned After the Offering
------------------- ------------ ------- ------------------------
Number Percent
------ -------
<S> <C> <C> <C> <C> <C>
Richard B. Stone(13) 24,894 24,894 -0- -0-
Andrea P. Thau 1,000 1,000 -0- -0-
John Thomson 10,000 10,000 -0- -0-
Robert S. Thomson 25,000 25,000 -0- -0-
James S. Tisch, as custodian for Benjamin J. Tisch 10,002 10,002 -0- -0-
James S. Tisch, as custodian for Jessica S. Tisch 10,002 10,002 -0- -0-
James S. Tisch, as custodian for Samuel A. Tisch 10,002 10,002 -0- -0-
T. Jeffrey Toy 5,100 5,100 -0- -0-
T. Jeffrey Toy Trust, T. Jeffrey Toy, Trustee 7,500 7,500 -0- -0-
Ronald M. Urvater 6,000 6,000 -0- -0-
Timothy C. Wagner(14) 7,175 5,000 2,175 *
WBM Investors Limited Partnership 4,545 4,545 -0- -0-
William D. Whittaker(15) 361,000 361,000 -0- *
Yong Yan(16) 11,725 3,000 8,725 *
13 Includes 7,971 shares of Common Stock issuable upon the exercise of
warrants issued to Mr. Stone on July 24, 1995.
14 Includes 1,175 shares of Common Stock issuable upon the exercise of
outstanding stock options exercisable under the Company's Amended and
Restated 1990 Stock Option Plan.
15 Includes 300,000 shares issuable upon exercise of warrants exercisable
within 60 days. Mr. Whittaker is a Director of the Company.
16 Includes 8,725 shares of Common Stock issuable upon the exercise of
outstanding stock options exercisable under the Company's Amended and
Restated 1990 Stock Option Plan.
</TABLE>
<PAGE>
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.
Each of the Selling Stockholders represented that he or she was purchasing
the Shares from the Company without any present intention of effecting a
distribution of those Shares other than in compliance with the Securities Act.
In recognition of the fact, however, that investors may want to be able to
resell their shares when they consider appropriate, and in fulfillment of
certain contractual commitments to certain of the Selling Stockholders listed
above pursuant to registration rights agreements between the Company and such
Selling Stockholders described herein under "Registration Rights", the Company
has filed with the Commission a Registration Statement on Form S-3 (of which
this Prospectus is a part) with respect to the sale of the Shares by the Selling
Stockholders from time to time. The Company will prepare and file such
amendments and supplements to the Registration Statement as may be necessary to
keep it effective until the earlier of the resale of all Shares pursuant to the
Registration Statement or May 14, 1998.
The registration rights agreements entered into by the Company and certain
of the Selling Stockholders provide that, in general, the Company will indemnify
the Selling Stockholders for any losses incurred by them in connection with
actions arising from any untrue statement of material fact in the Registration
Statement or from any omission of a material fact required to be stated therein,
unless such statement or omission was made in reliance upon written information
furnished to the Company by the Selling Stockholders. Similarly, the
registration rights agreements provide that, in general, each Selling
Stockholder will indemnify the Company and its officers and directors for any
losses incurred by them in connection with any action arising from any untrue
statement of material fact in the Registration Statement or an omission of a
material fact required to be stated therein, if such statement or omission was
made in reliance on written information furnished to the Company by such Selling
Stockholders.
REGISTRATION RIGHTS
On June 21, 1991, the Board of Directors adopted the following policy
("Registration Rights Policy") relating to any proposed registration of the
Company's shares of Common Stock for sale pursuant to the Securities Act. In the
event of such registration, if the Board of Directors approves inclusion of any
shares held by stockholders, subject to any limitations imposed by the
underwriter, all of the Company's stockholders may participate on a pro rata
basis in proportion to the number of shares held of record on a fully diluted
basis (assuming the exercise of any warrants or options then exercisable) by
such stockholders who desire to participate as selling stockholders in such
registration.
Pursuant to an Amended and Restated Registration Rights Agreement
("Registration Rights Agreement") dated as of January 3, 1995 between the
Company and R. Wayne Fritzsche, Mr. Fritzsche, certain transferees of Mr.
Fritzsche and certain stockholders of the Company hold: (a) piggyback
registration rights to include their shares in a Company registration under the
Securities Act (other than on Form S-4 or Form S-8, unless such stockholders are
eligible to participate on a filed Form S-8), subject to pro rata underwriter
cutbacks; and (b) demand registration rights to include their shares in a shelf
registration on Form S-3 (or equivalent) upon the written request of holders of
at least 25% of the shares subject to options, warrants and convertible notes
(the "Initial Shares"). The Company agreed it will not grant new piggyback,
demand or other registration rights to any stockholders unless the holders of
existing piggyback and demand registration rights can participate in any
registration involving such new rights. Also, the Company agreed it would not
grant more favorable registration rights to any person unless it also conferred
comparable rights upon holders of shares then covered by the Registration Rights
Agreement and holders of Initial Shares. The Company also agreed that any new
grant of registration rights inconsistent with the rights of holders of shares
covered by the Registration Rights Agreement would be subject to the prior
written consent of the holders of a majority of shares covered by the
Registration Rights Agreement and the holders of a majority of the Initial
Shares.
Pursuant to a separate registration rights agreement, the Company granted
to investors ("Convertible Note Investors") who purchased the September
Convertible Notes, registration rights covering the shares underlying such
notes, comparable to the rights granted to purchasers of the Initial Shares.
Pursuant to separate registration rights agreements, the Company granted to
purchasers of Common Stock in the 1994/1995 Offering registration rights
comparable to the registration rights granted to the Convertible Note Investors.
In addition, the Company agreed to use its best efforts to include in any Form
S-1 registration statement for the Company's initial public offering all of the
3,000,000 shares sold in the 1994/1995 Offering for resale on a delayed basis.
The Company's obligation to use its best efforts to register such shares was
waived in connection with the Company's initial public offering by the holders
of such registrable shares. In consideration of such waiver, the Company agreed
to register such registrable shares on Form S-3 twelve months from the date of
consummation of the Company's initial public offering. Holders of all other
shares of Common Stock outstanding prior to the Company's initial public
offering or issuable upon the exercise of warrants or stock options granted or
issuable under the Company's stock option plans are eligible to include such
shares in such registration statement.
This registration statement complies with the Company's obligations to
register securities pursuant to the above-described registration rights
agreements.
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 Company has agreed to bear all of the expenses
in connection with the registration and resale of the Shares, including
reasonable fees (not to exceed $25,000 in the aggregate) and disbursements of
one counsel to the Selling Stockholders (other than selling commissions and the
fees and expenses of any other counsel or other advisors to the Selling
Stockholders).
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 5,880,724 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 May 14, 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
Registration Rights..................................19
Plan of Distribution.................................20
Legal Matters........................................21
Experts..............................................21
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses (other than sales commissions)
expected to be incurred in connection with the offerings described in this
Registration Statement. All amounts except the registration fee are estimated.
Registration Fee....................................................$ 8,170
Printing............................................................$ 2,000
Accounting Fees and Expenses........................................$10,000
Legal Fees and Expenses.............................................$50,000
Miscellaneous.......................................................$ 8,000
-------
TOTAL...................................$70,170
=======
- ----------------------
*To be furnished by amendment
The Registrant will bear all of the expenses of the registration of the
securities being offered.
Item 15. 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.
Reference is made to Section 4 of the Registration Rights Agreement filed
as Exhibit 1.1 to the Registration Statement for the Company's and Selling
Stockholders' respective agreements to indemnify each other and to provide
contribution in circumstances where indemnification is unavailable.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits:
Exhibit
Number Description of Document
1.1 Form of Registration Rights Agreement (incorporated by reference to
Exhibit 10.17 to Registration Statement No. 333-636).
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).
*Filed herewith
**Incorporated by reference to the same exhibit number in Registrant's
Registration Statement on Form S-3 (File No. 333-26749)
Item 17. 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 15 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. has duly caused this Amendment No. 1 to the 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 14th
day of May, 1997.
INTELLIGENT MEDICAL IMAGING, INC.
By: /s/ Tyce M. Fitzmorris
------------------------------------
Tyce M. Fitzmorris
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities indicated on May 14, 1997.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C>
/s/TYCE M. FITZMORRIS President and Chief Executive Officer, May 14, 1997
- ---------------------------- Chairman of the Board of Directors
Tyce M. Fitzmorris
/s/GENE COCHRAN Chief Financial Officer and Principal May 14, 1997
- ---------------------------- Accounting Officer, Director
Gene Cochran
WILLIAM D. WHITTAKER* Director May 14, 1997
- ----------------------------
William D. Whittaker
R. WAYNE FRITZSCHE* Director May 14, 1997
- ----------------------------
R. Wayne Fritzsche
GEORGE MASTERS* Director May 14, 1997
- ----------------------------
George Masters
JAMES SKINNER* Director May 14, 1997
- ----------------------------
James Skinner
JAMES E. DAVIS* Director May 14, 1997
- ----------------------------
James E. Davis
*By: /s/TYCE M. FITZMORRIS May 14, 1997
Tyce M. Fitzmorris
Attorney-In-Fact
</TABLE>
<PAGE>
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
May 14, 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
5,880,724 shares (the "Shares") of Common Stock, $.01 par value (the "Common
Stock") for resale by certain selling shareholders of the Company.
In connection with this opinion, we have examined the Registration
Statement on Form S-3 (No. 333-26749) filed with the Securities and Exchange
Commission ("SEC") pursuant to the rules and regulations promulgated under the
Securities Act of 1933, as amended, on May 8, 1997, as amended by Amendment No.
1 thereto, which will be filed on or about May 14, 1997 (the "Registration
Statement"), relating to the above-mentioned proposed public offering. 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, upon consummation
of the proposed public offering, the Shares of Common Stock, when sold by the
selling shareholders in the manner and for the consideration stated in the
Prospectus constituting a part of the Registration Statement, 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
