AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 6, 2002
Registration No. 333-89560
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
AMENDMENT NO. 1 TO FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------
CYBERCARE, INC.
(Exact name of registrant as specified in its charter)
Florida 65-0158479
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
CyberCare, Inc.
2500 Quantum Lakes Drive, Suite 1000
Boynton Beach, Florida 33426
(561) 742-5000
(Name, address, including zip code, and
telephone number, including area code, of
registrant's principal executive offices)
Dana J. Pusateri
Executive Vice President
CYBERCARE, INC.
2500 Quantum Lakes Drive, Suite 1000
Boynton Beach, Florida 33426
(561) 742-5000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Joel D. Mayersohn, Esq.
Atlas Pearlman, P.A.
350 East Las Olas Boulevard, Suite 1700
Fort Lauderdale, Florida 33301
(954) 763-1200
Approximate date of commencement of proposed sale to 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 (the "Securities Act"), other than securities offered
only in connection with dividend or interest reinvestment plans, check the
following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of each maximum maximum
class of securities Amount to be offering price aggregate Amount of
to be registered registered per unit offering price registration fee
-------------------- --------------- ------------------ -------------- ----------------
Common Stock, $0.0025 par value (1) 2,822,218 0.18 507,999 46.74
Total Registration Fee 2,822,218 $507,999 $46.74
========= ======== ======
(1) Shares issued pursuant to various contractual arrangements.
Estimated solely for purposes of calculating the registration
fee pursuant to Rule 457(c) under the Securities Act based on
the average of the closing bid and asked price of the Common
Stock as reported on the Nasdaq National Market on May 16,
2002.
There is being registered hereunder an indeterminate number of
shares of our common stock as may be issued from time to time to
certain selling stockholders that may become issuable as a result of
any stock splits, stock dividends or other similar events.
------------------------
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 or
until the Registration Statement shall become effective on such date as
the Commission, acting pursuant to said Section 8(a), may determine.
PROSPECTUS
SUBJECT TO COMPLETION, DATED JUNE__, 2002
CYBERCARE, INC.
2,822,218 shares of common stock
This prospectus relates to 2,822,218 shares of our common stock which
may be offered by certain selling security holders, of which all shares have
been issued pursuant to various contractual arrangements and are currently
outstanding.
Our Common Stock, par value $0.0025 per share, is traded on the Nasdaq
National Market under the trading symbol "CYBR". On May 16, 2002, the last
reported sale price for our common stock was $0.19 per share.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE
SHARES ONLY IF YOU CAN AFFORD A COMPLETE LOSS OF YOUR INVESTMENT. SEE "RISK
FACTORS" BEGINNING ON PAGE 8.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION ("SEC") NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED
IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is June__, 2002
TABLE OF CONTENTS
Page
Summary Information, Risk Factors and Ratio of Earnings to Fixed Changes
Business................................................................................... 5
Risk Factors............................................................................... 8
Cautionary Statement about Forward-Looking Information.............................................. 17
Use of Proceeds..................................................................................... 18
Securities to be Registered......................................................................... 18
Selling Security Holders............................................................................ 18
Plan of Distribution................................................................................ 20
Where You Can Find More Information................................................................. 21
Interests of Named Experts and Counsel
Legal Matters.............................................................................. 22
Experts.................................................................................... 22
Incorporation of Certain Information by Reference................................................... II-1
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (SEC) IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND
IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE
WHERE THE OFFER OR SALE IS NOT PERMITTED.
4
BUSINESS
The Company consists of the following three separate and distinct businesses:
A physical therapy and rehabilitation business focused on providing
occupational, physical and speech therapy services;
A pharmacy business whose operations primarily support assisted living
and similar long-term care facilities; and
A technology business focused on the development and commercialization
of patented products and services used in remote monitoring, care and
communication between patients, caregivers and other people included in
the healthcare continuum.
We provide physical, occupational, speech therapy and pain
rehabilitation services in clinics currently owned and/or operated. We currently
employ approximately 153 people in this segment. Each clinic typically has a
staff of three, including a licensed therapist, a licensed therapy assistant and
an administrative secretary/rehabilitation aide. We develop rehabilitation
clinics within specific geographic locations throughout Florida that we believe
will create synergies and operating efficiencies, as well as, satisfy the cost
containment requirements of significant payor sources. We offer comprehensive
rehabilitation services, including specialty services such as pain management.
We own and operate a pharmacy employing approximately 48 individuals
with its principal place of business in Lakeland, Florida. Through this segment,
we provide unit-dosed medications to over 4,000 residents in nearly 100
assisted-living facilities across central and west Florida. The Pharmacy also
has permits as a non-resident pharmacy to dispense to patients in other states.
Our technology business is a tele-monitoring solutions company
improving the delivery of care through its products and services.
Tele-monitoring involves the remote monitoring of patients and delivery of care
via specially designed hardware and software, through standard telephone lines
or using broadband connectivity. Tele-monitoring can be accomplished directly
(point-to-point) or in a network-based environment over the Internet. Our
product offerings enable health plans, home health organizations, disease
management agencies, employers, hospital and healthcare systems, HMOs, insurers
and other risk bearing organizations to better manage the cost of care through
wellness and disease management programs.
We create an online interactive community that incorporates all members
of the care team in the healthcare delivery process, resulting in cost
reductions and the improvement in the quality of patient care. Utilizing
patented technology for the remote monitoring and real-time interactive
communication between patients and caregivers, the CyberCare System(TM) allows
for effective and efficient electronic disease management, including automatic
data collection, case management, and personal interaction. The CyberCare
System(TM), which consists of the Electronic HouseCall(R) family of products
("EHC(TM)"), the CyberCare 24 Network(TM), and the Cyber HealthManager(TM),
provides a complete package of tele-monitoring products and services for
patients, caregivers and payors. We are committed to quality and our solutions
are global in nature. In addition to our domestic sales efforts, we intend to
market our products and services in foreign markets via a series of licensing
arrangements and joint venture partnerships with local organizations that
understand local health care delivery issues and which have a strong local
presence, appropriate infrastructure and relationships with industry and
government.
5
Our proprietary software application is the Electronic HouseCall(R)
application that runs on the EHC(TM) patient and provider Units that have
videoconferencing and medical measurement capabilities. This software
application was originally developed at Georgia Tech and further modified by us.
The software application implements the patented technology that is licensed to
us from Georgia Tech and the Medical College of Georgia. The patent (U.S. Patent
No. 5,987,519 titled "Telemedicine system using voice video and data
encapsulation and de-encapsulation for communicating medical information between
central monitoring stations and remote patient monitoring stations") secures all
telemedicine applications that use packet-based technology to simultaneously
exchange voice, video, and medical data. Also incorporated in the software
application is the technology secured by U.S. Patent No. 6,112,224 titled
"Patient monitoring station using a single interrupt resource to support
multiple measurement devices" as well as technology secured by multiple patents
pending.
Our CyberCare System is comprised of monitoring devices ("Units") and
peripheral medical devices designed for use by patients and Units designed for
use by care providers. Units and peripherals determined to be medical devices
have received marketing approval by the United States Food and Drug
Administration ("FDA") as described below. Other Units are not subject to FDA
regulatory approval or, because they have been determined to be line extensions
of a "cleared" Unit, do not require additional regulatory approval.
PATIENT UNITS
EHC100: This Unit is a general-purpose telecommunications device for use by
patients and is not regulated by the FDA. It uses standard telephone lines and
is intended for use by an unassisted patient in his or her residence. The Unit
allows the patient to use certain peripheral medical devices and take their own
vital signs measurements, such as blood pressure, blood glucose level and body
weight. The Unit then transmits the measurements to a database that resides on
the CyberCare 24 Network(TM) for review, analysis and appropriate action by a
care provider.
EHC1500: The EHC1500 is a variation of the EHC100 that uses a pocket PC
platform, thereby allowing greater portability and flexibility of use. It can be
configured to handle up to three peripheral medical devices, including a blood
pressure cuff, weight scale and blood glucose meter. It communicates and
transmits the vital signs data through the CyberCare 24 Network using a standard
telephone line or by wireless connection.
EHC400: This patient Unit has received FDA marketing clearance and uses
broadband telecommunication services to connect to the CyberCare 24 Network. It
allows the patient to interact with care providers (such as a physician, nurse,
physician assistant, care manager, etc.) situated in another location in a
"virtual housecall" through an audio-visual videoconference, and allows the
patient, using various peripheral medical devices, to collect and transmit his
or her own medical measurements (such as blood pressure, using a
sphygmomanometer; temperature, using an electronic oral thermometer; blood
oxygen saturation and pulse, using a pulse oximeter; blood glucose (sugar)
level, using a glucometer; body weight, using an electronic weight scale; and/or
heart, lung and bowel sounds, using an electronic stethoscope) through the
CyberCare 24 Network for immediate or later review by care providers.
EHC300: This patient Unit is similar to the EHC400, but only permits
audio-visual videoconferencing without the addition of peripheral medical
devices or vital sign data collection. It communicates with care provider Units
via the CyberCare 24 Network using standard telephone lines and has the
capability to engage in multipoint conferences with other Units through the
CyberCare 24 Network.
EHC350: Similar to the EHC400, this patient Unit combines the audio-visual
videoconferencing capabilities of the EHC300 with peripheral medical device
availability and patient vital signs data collection through a special
6
module to accommodate the peripheral devices. The Model 350 is equipped with a
module for accommodating the connection of peripheral devices and communicates
and transmits data through the CyberCare 24 Network using standard telephone
lines.
EHC2000: This is a more advanced, compact and lightweight version of the EHC400
which supports the use of peripheral medical devices including "plug and play"
USB ports. It also features a magnetic card reader and can use either standard
analog telephone lines or broadband telecommunications service to communicate
and transmit data via the CyberCare 24 Network.
EHC2050: This patient Unit is a variation of the EHC 2000 and uses standard
telephone lines to communicate and transmit data either using the routed
architecture of the CyberCare 24 Network or directly (in a "point-to-point"
manner) to a care provider using either an EHC650 or EHC1650 care provider Unit.
CARE PROVIDER UNITS
EHC600: The EHC600 care provider workstation Unit has received FDA marketing
clearance and uses broadband telecommunications service to allow care providers
to conduct a "virtual housecall" and interact with a remotely situated patient
in an audio-visual videoconference. Incorporating the Cyber HealthManager
software, this Unit also allows care providers to initiate collection of certain
patient vital signs measurements during a "virtual housecall" as well as review
patient vital sign measurements and snapshot images (such as for wound care
treatment) transmitted by a patient Unit through the CyberCare 24 Network. This
Unit enables the care provider to assess patient status, analyze patient data
and develop reports through its various software capabilities.
EHC650: This Unit has the same features as the EHC600, except that it
communicates directly with an EHC2050 patient Unit (in a "point-to-point"
manner) rather than through the routed architecture of the CyberCare 24 Network.
EHC1600: This care provider Unit is a laptop version of the EHC 600 workstation,
but uses either standard analog telephone lines or broadband telecommunications
service to communicate via the CyberCare 24 Network.
EHC1650: This model is similar to the EHC1600 except that it utilizes standard
analog telephone lines to communicate directly (in a "point-to-point" manner)
with patient Units having videoconferencing capabilities. The EHC1650 uses a
stand-alone database and can be connected with the CyberCare 24 Network as
needed for periodic software and database updates.
EHC1625: This care provider Unit is a scaled-down, hand-held version of the
EHC600 and uses pocket PC platform. It is a care management device that enables
the care provider to remotely monitor patient vital sign data transmitted from a
patient Unit. It does not permit direct interaction or video conferencing with a
patient. It is web-enabled and operates either in a wireless environment or
using standard analog telephone lines to communicate via the CyberCare 24
Network.
EHC3000 CARE MANAGEMENT SOFTWARE: This is a web-enabled software platform that
allows the care provider access, via the internet and a secure home page, to the
data on the CyberCare 24 Network database transmitted from patient Units. It
operates on any computer with internet access that utilizes an industry standard
browser and can provide electronic mail notifications to care providers
regarding a patient's condition based on programmable ranges and/or thresholds
determined by the care provider.
7
PERIPHERAL MEDICAL DEVICES AND SOFTWARE APPLICATIONS
A number of peripheral medical devices are used in connection with
certain EHC patient Units, some of which we obtain commercially from medical
device suppliers and others which we have developed ourselves. We have developed
certain medical devices and software applications as principle components of the
CyberCare System and have received FDA marketing clearance on such items as
follows:
Weight Scale - FDA marketing clearance obtained.
Blood Glucose Meter - FDA marketing clearance obtained.
Electronic Stethoscope - FDA marketing clearance obtained.
Blood Pressure Cuff (Sphygmomanometer) - FDA marketing
clearance obtained.
Pulse Oximeter - FDA marketing clearance obtained.
Electronic Oral Thermometer - FDA marketing clearance obtained.
Spirometer - Application for FDA marketing clearance in progress.
Medication Compliance Option - Application for FDA marketing clearance
in progress.
The CyberCare System has a very flexible configuration and system
design, allowing the EHC products to meet various application requirements and
conditions for different market segments. The products and services may be
combined in a fully network-based system or in a point-to-point configuration.
In addition to workstation type Units, the CyberCare System includes web-based,
mobile and hand-held EHC Units for both the caregiver and the patient. All the
EHC products conform to industry standards and may be integrated into customer
workflow and data management operating systems. Significant attention in the
design process has been devoted to security, confidentiality and privacy, as
well as to intended target markets. The CyberCare System helps the caregiver to
track clinical outcomes and improvements in medication and treatment compliance.
The CyberCare System has been designed to be implemented in
fee-for-service, case rate, episodic rate or capitation environments.
RISK FACTORS
Before you invest in our securities, you should be aware that there are
various risks. Additional risks and uncertainties not presently known to us or
that we currently believe to be immaterial may also adversely affect our
business and operations. You should carefully consider these risk factors,
together with all of the other information included in or incorporated by
reference into this prospectus before you decide to purchase our securities. If
any of the following risks develop into actual events, our business, financial
condition or results of operations could be materially adversely affected.
RISKS RELATED TO OUR BUSINESS
WE HAVE A HISTORY OF LOSSES AND A SUBSTANTIAL ACCUMULATED DEFICIT AND WE MAY
NEVER REACH PROFITABILITY
To date, we have been unable to generate revenue sufficient to be
profitable on a consistent basis. Consequently, we have sustained substantial
losses. Net loss for the three months ended March 31, 2002 was $7,263,000. Net
losses for the years ended December 31, 2001 and 2000 were $44,916,000 and
$28,698,000, respectively. Our accumulated deficits as of March 31, 2002,
December 31, 2001 and December 31, 2000 were $119,329,000, $112,066,000, and
$67,150,000, respectively. Our products and
8
services may never achieve the commercial acceptance necessary to achieve the
level of revenues needed to be profitable in the future or, if profitability is
achieved, that it will be sustained.
CERTAIN OF OUR ASSETS SERVE AS COLLATERAL TO INSURE THE PAYMENT OF CERTAIN OF
OUR DEBENTURES. IF WE SHOULD DEFAULT ON THE REPAYMENT OF THESE LOANS, THE
DEBENTURE HOLDERS COULD FORECLOSE ON OUR ASSETS
We granted lenders a security interest in certain material assets under
convertible debentures. If we should default under the provisions of the
debentures, the lender could seek to foreclose on these assets. If the lender is
successful, we would be unable to conduct our business as is presently conducted
and our ability to generate revenues and fund ongoing operations could be
materially adversely effected.
OUR FINANCIAL STATEMENTS ARE PREPARED ASSUMING THAT WE WILL CONTINUE AS A GOING
CONCERN
Our auditor's report on our financial statements states that the
Company has suffered recurring losses and operating cash flow deficiencies.
These conditions raise substantial doubt about the Company's ability to continue
as a going concern. We continue to explore the possibility of raising capital
through available sources, which include equity and debt raises. We are not
certain that we will be successful at raising funds through any sources and if
we are unsuccessful, we will be unable to generate sufficient revenues to
maintain our operations.
WE WILL NEED TO OBTAIN ADDITIONAL FINANCING AND WE CANNOT BE CERTAIN THAT
ADDITIONAL FINANCING WILL BE AVAILABLE WHEN NEEDED OR ON FAVORABLE TERMS
Our future capital requirements will depend on many factors, including,
but not limited to:
* the growth rate of our rehabilitation and pharmacy businesses;
* the market acceptance of the CyberCare System;
* the levels of promotion and marketing required to
attain a competitive position in the marketplace;
* the extent to which we invest in new technology and
improvements of existing technology; and
* the response of competitors to our introduction of the
CyberCare System and other new products and services.
To the extent that funds generated by certain Securities described in
this Registration Statement, together with existing resources, are insufficient
to fund our activities over the short and long-term, we will need to raise
additional funds through equity or debt financing or from other sources. The
sale of additional equity or convertible debt may result in additional dilution
to our stockholders. To the extent that we rely upon debt financing, we will
incur the obligation to repay the funds borrowed with interest and may become
subject to covenants and restrictions that restrict operating flexibility.
Failure to obtain necessary financing would have a material adverse effect on
our business, financial condition or results of operations.
WE MAY NOT BE ABLE TO PROTECT PATENTS AND PROPRIETARY TECHNOLOGY, WHICH COULD
HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS
Our ability to compete effectively in the tele-health industry will
depend on our success in developing and marketing our products and services
and/or acquiring other suitable businesses and protecting our
9
proprietary technology both in the United States and abroad. We currently have a
license for certain patents and have several patents pending. We intend to file
additional patent applications that we deem to be economically beneficial. If we
are not successful in obtaining and defending patents or demonstrating that our
technology is proprietary under trade secret laws, we will have limited
protection against those who might copy our technology. We may incur substantial
costs in defending any patent or license infringement suits or in asserting any
patent or license rights, including those granted by third parties. The
expenditure involved in asserting, obtaining or defending these intellectual
property rights may be more than we can afford.
Although we have and will continue to enter into confidentiality,
covenant not to compete and invention agreements with our employees,
consultants, partners and acquisition targets, such agreements may not be
honored or they may not be able to adequately protect our rights to our
non-patented trade secrets and know-how.
THIRD PARTIES MAY CLAIM THAT WE HAVE BREACHED THEIR INTELLECTUAL PROPERTY
RIGHTS, WHICH COULD RESULT IN SIGNIFICANT ADDITIONAL COSTS OR PREVENT US FROM
PROVIDING ALL OF OUR TECHNOLOGY SERVICES
Third parties may bring claims of copyright or trademark infringement,
patent infringement or misappropriation of creative ideas or formats against us
with respect to content that we distribute or our technology or marketing
techniques and terminology. Claims of this kind, even if without merit, could be
time-consuming to defend, result in costly litigation, divert management
attention, require us to enter into costly royalty or licensing arrangements or
prevent us from distributing certain content or utilizing important
technologies, ideas or formats.
Defending and prosecuting intellectual property suits, interference
proceedings and related legal and administrative proceedings are costly,
time-consuming and divert the attention of technical and management personnel.
Litigation may be necessary to enforce our patents or defend our patent rights,
to protect our trade secrets or know-how or to determine the enforceability,
scope and validity of the proprietary rights of others. If the outcome of any
such litigation or interference proceedings is adverse to us, it could subject
us to significant liabilities to third parties or require us to license disputed
rights from third parties or cease using such technology, which would have a
material adverse effect on our business, financial condition, results of
operations and future growth prospects. Patent and intellectual property
disputes in the medical device area have often been settled through licensing or
similar arrangements, which can include ongoing royalties. We may not obtain the
necessary licenses on satisfactory terms, if at all.
CHANGES IN PAYMENT FOR MEDICAL SERVICES COULD HARM OUR BUSINESS
We believe that trends in cost containment in the health care industry
will continue to result in a reduction in per-patient revenues which may impact
our health services segments. The federal government has implemented, through
the Medicare program, a payment methodology for healthcare services. This
methodology is a fee schedule that, except for certain geographical and other
adjustments, pays similarly situated caregivers the same amount for the same
services. The schedule is adjusted each year and is subject to increases or
decreases at the discretion of Congress. Reduced operating margins may not be
recouped by us through cost reductions, increased volume, introduction of
additional procedures or otherwise. Rates paid by non-governmental insurers,
including those that provide Medicare supplemental insurance, are based on
established physician, ambulatory surgery center and hospital charges, and are
generally higher than Medicare payment rates. A change in the makeup of the
patient mix of our practices and those that we manage that results in a decrease
in patients covered by private insurance or a shift in private pay payment
structures could adversely affect our business, financial condition or results
of operations.
10
CERTAIN PAYMENTS TO OUR PT&R SUBSIDIARY ARE SUBJECT TO RECOUPMENT BY MEDICARE
Our Physical Therapy and Rehabilitation subsidiary ("PT&R") received a
letter from the Center for Medicare and Medicaid Services ("CMS") and its
intermediary in April 2001 notifying it of the suspension of Medicare payments.
CMS alleged that certain patient complaints, which constituted less than 1% of
PT&R's Medicare patients, and other alleged regulatory non-compliance, justified
the payment suspension. During the suspension, the Medicare program continued to
process PT&R's claims, but held payment in escrow. In August 2001, the
suspension was lifted and payment for processed claims was released although
approximately $1,115,000 remained held in escrow, pending further review. CMS
completed its review and issued its formal determination in April 2002. CMS
determined that approximately $1,191,000 in overpayment was made. Approximately
$76,100 in repayment is required (together with an offset of the amounts held in
escrow) to satisfy the overpayment. PT&R has recorded an allowance for the
entire balance being held. PT&R disputes the overpayment and is submitting a
rebuttal to CMS's determination.
WE HAVE LIMITED EXPERIENCE CONDUCTING OPERATIONS INTERNATIONALLY, WHICH MAY MAKE
OVERSEAS EXPANSION MORE DIFFICULT AND COSTLY
We have begun the process of initiating business network operations in
several foreign countries. We are subject to differing laws, regulations and
business cultures which may adversely impact our business. We may also be
exposed to economic and political instability and international unrest. Although
we have and will continue to enter into agreements with our partners and
customers that attempt to minimize these risks, such agreements may not be
honored or we may not be able to adequately protect our interests.
We plan to expand our international operations in the future. There are
many barriers and risks to competing successfully in the international
marketplace, including:
* Costs of customizing products for foreign countries;
* Dependence on local vendors;
* Compliance with multiple, conflicting and changing laws, and
regulations and policies;
* Longer sales cycles;
* Import and export restrictions and tariffs.
As a result of these competitive barriers to entry and risks, we may
not be able to successfully market, sell and deliver our technology products and
services in international markets.
We may engage in hedging transactions in the future to manage or reduce
our foreign exchange risk. However, our attempts to manage our foreign currency
exchange risk may not be successful and, as a result, our net earnings could be
negatively affected by any unfavorable fluctuations in foreign currency exchange
rates.
Our foreign operations could also be subject to unexpected changes in
regulatory requirements, tariffs, and other market barriers and political and
economic instability in the countries where we operate. Due to our foreign
operations, we could be subject to such factors in the future and the impact of
any such events that may occur in the future could subject us to additional
costs or loss of sales, which could negatively affect our operating results.
THE NATURE OF OUR BUSINESS EXPOSES US TO PROFESSIONAL AND PRODUCT LIABILITY
CLAIMS, WHICH COULD MATERIALLY ADVERSELY IMPACT OUR OPERATIONS
Our various businesses and technology exposes us to both potential
professional and product liability risks , including the risks associated with
providing health care related services and tele-monitoring and
11
disease management products and services.
We carry reasonably adequate insurance to protect our services and
technology businesses against professional and product liability, including
errors and omissions in our technology and software design, unauthorized access
to our network and loss or interruption of service or system functions. These
various liabilities could materially adversely impact our business and
operations.
WE MAY LOSE REVENUE OR INCUR ADDITIONAL COSTS BECAUSE OF SYSTEM FAILURE
Any system failure that causes interruptions in our operations may have
an adverse effect on our business, financial condition or results of operations.
Our services are dependent on our own and other companies' abilities to
successfully integrate technologies and equipment. In connecting with other
companies' equipment and systems we take the risk of not being able to provide
service due to telecommunications failure. There is also the risk that our
equipment may malfunction or that we could make an error, which may negatively
affect our customers' service. Our hardware and other equipment may also suffer
damage from natural disasters and other catastrophic events, such as loss of
power and telecommunications failures. We have taken a number of steps to
prevent our service from being affected by natural disasters, including
development of redundant systems. Nevertheless, such steps and redundancies may
not prevent our system from becoming disabled in the event of a hurricane, power
outage or otherwise. The failure of our system resulting from the effects of a
natural or man-made disaster could have an adverse effect on our relationship
with our customers and our business, financial condition and results of
operation.
THE LOSS OF CERTAIN MEMBERS OF OUR MANAGEMENT TEAM COULD MATERIALLY ADVERSELY
AFFECT US
We are dependent, to a significant extent, on the continued efforts and
abilities of members of our management team, the majority of which have
employment contracts. The Company is the owner of one million dollar key man
life insurance policies insuring the lives of the Chief Executive
Officer/President and Executive Vice President.
We believe that our success in the technology segment will also depend
upon our ability to hire, train and retain other highly skilled personnel. We
compete in a new market and there are a limited number of people with skills
necessary to provide the services our clients demand. Competition for quality
personnel is intense. We cannot be sure that we will be successful in hiring,
assimilating or retaining the necessary personnel, and our failure to do so
could affect our business, financial condition and results of operation.
WE COMPETE WITH A NUMBER OF ESTABLISHED COMPANIES, SOME OF WHICH HAVE
SIGNIFICANTLY GREATER FINANCIAL, TECHNOLOGICAL AND MARKETING RESOURCES THAN WE
DO, AND WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY WITH THESE COMPANIES.
The tele-monitoring business, while relatively new and evolving, is
highly competitive. In addition, the health care industry in general and the
market for medical ancillary services specifically are also highly competitive.
We compete with ancillary services companies that are larger and have greater
financial resources than we do and we face competition from other companies that
provide tele-monitoring solutions, most of which are in the early stages of
development.
We believe that we compete effectively by providing superior technology
and tele-monitoring solutions and more personalized care to the patients and
customers we serve. We believe the primary competitors for EHC products are
small, privately-held companies, none of which have established a major market
position as of this time. Some larger companies, such as Panasonic, have also
recently announced initiatives in this
12
market. Key differentiating factors between us and our competitors in this
segment lie primarily in the breath and depth of our product offerings, our
patented technology and our developed software applications.
RISKS RELATED TO OUR INDUSTRY
WE CANNOT GUARANTEE YOU THAT OUR PRODUCTS WILL BE FULLY DEVELOPED OR ACCEPTED BY
THE HEALTH CARE INDUSTRY
Payors, physicians, medical providers or the medical community in
general may not accept and utilize our products and services. The extent that
and the rate at which our products achieve market acceptance and penetration
will depend on many variables, including the establishment and demonstration in
the medical insurance and payor communities of the clinical safety, efficacy and
cost-effectiveness of our products and services, the advantage of these products
over existing technology, third-party reimbursement practices and our
manufacturing, quality control, marketing and sales efforts. There can be no
assurance that similar risks will not confront any other products and services
we develop in the future. Failure of our products and services to gain market
acceptance would have a material adverse effect on our business, financial
condition, and results of operations.
WE ARE SUBJECT TO A SIGNIFICANT NUMBER OF HEALTH CARE INDUSTRY REGULATIONS AND
RELATED REGULATIONS, THE FAILURE TO COMPLY WITH COULD MATERIALLY ADVERSELY
AFFECT OUR OPERATIONS
We are subject to substantial potential liability resulting from a
variety of possible causes, including violation of numerous health care laws,
malpractice and product liability. Many of the health care laws to which we are
subject are broad in scope and difficult to interpret. If any actions or
lawsuits are brought against us in the future, such actions or lawsuits could
have a materially adverse effect on us. Violations of the state and federal
self-referral and anti-kickback laws and regulations could result in substantial
civil and/or criminal penalties and/or administrative sanctions for the
individuals or entities, including exclusion from participation in the Medicare
and Medicaid programs, as well as the suspension or revocation of professional
licensure. Such sanctions, if applied to us or any of our employees, could
result in significant loss of reimbursement and could have a material adverse
effect on us.
We attempt to minimize our potential liability through implementation
of and adherence to compliance policies and procedures, effective supervision
and personnel recruitment procedures. We also carry a variety of insurance
policies including policies insuring against certain negligent acts. Insurance
policies may not adequately cover our losses resulting from such potential
liability and we may be unable to continue to qualify for, or be able to afford
or obtain such insurance in the future.
The Health Insurance Portability and Accountability Act of 1996
("HIPAA"), among other things, mandates administrative simplification of
electronic data interchanges of health information, including standardizing
transactions, establishing uniform health care provider, payer and employer
identifiers and seeking protections for confidentiality and security of patient
data. Final regulations governing health care transaction security will become
effective for most entities in or after October 2002. Final regulations
governing privacy and confidentiality of individually identifiable health
information will become effective for most entities in or after February 2003.
HIPAA applies to our physical therapy and rehabilitation segment and to our
pharmacy segment. Many of the provisions of HIPAA do not directly apply to our
technology business since it is not included in the types of entities to which
HIPAA applies. However, because we may be considered a business associate of a
covered entity, and because the implementation of our CyberCare System for our
customers necessitates that we have interaction with patient users of the
system, our technology business will nonetheless have to comply with certain
aspects of the HIPAA regulations. We are
13
proceeding to assess where our current systems diverge from HIPAA's privacy and
security requirements and to implement protocols and procedures that will bring
such systems and areas into compliance before the deadlines identified in the
final regulations. We are unable at this time to assess the cost of
implementation of the administrative simplification requirements of HIPAA that
are applicable to our business.
RISK FACTORS ASSOCIATED WITH CONTRACTS AND SUB-CONTRACTS WITH THE U.S.
GOVERNMENT
It is our goal to introduce the CyberCare System for use by agencies or
authorities of the federal and state governments (such as the U.S. Veterans
Administration, Medicare, Medicaid, TRICARE, or other federally or state funded
health care programs) and we are currently engaged in the administration of
pilot programs for our CyberCare System with certain of these agencies and
authorities. Accordingly, a portion of our revenue may be derived from contracts
or subcontracts funded by the U.S. government or other state or local
governments. Therefore, our financial performance may be adversely affected by
changing government (federal, state or local) procurement practices and policies
as well as declines in government spending and funding. The factors that could
have a material adverse effect on our ability to win new contracts with the
federal, state or local governments, or retain existing contracts, include the
following: budgetary constraints; changes in government funding levels,
programs, policies or requirements; technological developments; the adoption of
new laws or regulations; and general economic conditions.
NEW LEGISLATIVE DEVELOPMENTS COULD RESULT IN FINANCIAL HARDSHIP
Legislation regarding health care reform may be introduced in the
future by Congress or state legislatures. Any such reforms at the federal or
state level could significantly alter patient-provider relationships. State and
federal agency rule-making addressing these issues is also expected. No
predictions can be made as to whether future health care reform legislation,
similar legislation or rule-making will be enacted or, if enacted, its effect on
us. Any federal or state legislation prohibiting investment interests in, or
contracting with, us by physicians or health care providers for which there is
no statutory exception or safe harbor would have a material adverse effect on
our business, financial condition and results of operations.
RISKS RELATED TO OUR STOCK
SUBSTANTIALLY ALL OF OUR SHARES ARE ELIGIBLE FOR RESALE, WHICH MAY HAVE A
DEPRESSIVE EFFECT ON THE MARKET PRICE OF OUR COMMON STOCK
As of March 31, 2002, we had 69,433,357 shares of our Common Stock
outstanding, of which substantially all can be sold under an effective
registration statement or under Rule 144. Under Rule 144, a person who has held
restricted securities for a period of one year may sell a limited number of
shares to the public in ordinary brokerage transactions. Sales under Rule 144
may have a depressive effect on the market price of our Common Stock due to the
potential increased number of publicly held securities. The timing and amount of
sales of Common Stock that are currently eligible to be resold pursuant to Rule
144 could have a depressive effect on the future market price of our Common
Stock.
IF WE ARE UNABLE TO MAINTAIN OUR NASDAQ LISTING, LIQUIDITY OF OUR COMMON STOCK
IN THE PUBLIC MARKET MAY BE ADVERSELY AFFECTED
In May 2002 we filed an Application with the Nasdaq Stock Market to
transfer trading of our securities to the Nasdaq SmallCap Market from the Nasdaq
National Market. This application will be reviewed by Nasdaq and, if approved,
will be awarded a grace period with respect to Nasdaq's $1.00 minimum bid price
14
requirement. We may also be eligible for an additional 180 calendar day grace
period, provided we meet the initial listing criteria for the Nasdaq SmallCap
Market. We believe that our application to transfer securities to the Nasdaq
SmallCap Market will be approved. If it is not approved it is likely our
securities will be quoted on the OTC Bulletin Board.
The OTC Bulletin Board is not considered an exchange. If the trading
price of securities remains less than $5.00 per share, our common stock will be
considered a "penny stock" and trading our common stock will be subject to the
requirements of Rule 15g-9 of the Securities Exchange Act of 1934. Under this
rule, broker/dealers who recommend low price securities to persons other than
established customers and accredited investors must satisfy special sales
practice requirements. The broker/dealer must make an individualized written
suitability determination for the purchaser and receive the purchaser's written
consent prior to the transaction. SEC regulations also require additional
disclosure in connection with any trades involving a "penny stock" including the
delivery, prior to any penny stock transaction, of a disclosure schedule
explaining the penny stock market and its associated risks. These requirements
could severely limit the liquidity of securities in the secondary market because
few brokers or dealers will likely undertake the compliance activities. In
addition to the applicability of the penny stock rules, other risks associated
with trading in penny stocks also will be price fluctuations and the lack of a
liquid market.
THE EXERCISE OF OPTIONS AND WARRANTS WILL BE DILUTIVE TO OUR EXISTING
STOCKHOLDERS
As of March 31, 2002, we had outstanding warrants and options to
purchase a total of 21,997,250 shares of our Common Stock at prices ranging from
between $0.50 and $31.50 per share. A total of 16,893,787 of the options are
fully vested. We are also authorized to issue up to an additional 7,391,528
options without shareholder approval under our Company stock option plans.
THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF OUR
SUBORDINATED DEBENTURES COULD NEGATIVELY EFFECT THE MARKET PRICE FOR OUR COMMON
STOCK
We have outstanding subordinated debentures which are convertible into
Common Stock at the holder's option at a conversion price equal to 90% of the
average closing price for the 20 days trading prior to the date of the
conversion notice, but no less than $3.25 per share. We also have outstanding
Senior Secured Convertible Notes which are convertible into Common Stock at the
holder's option at a conversion price of 85% of the average closing price on the
day prior to conversion, but not less than $0.30 per share, and no more than
$1.25 per share.
Because the conversion price for the Subordinated Debentures and Senior
Secured Convertible Notes are not fixed, the ultimate number of shares of Common
Stock issuable if the holders elect to convert the $15 million principal amount
of the Subordinated Debentures and Senior Secured Convertible Notes is unknown
at this time. Based upon minimum conversion prices of $0.30 per share and $3.25
per share, we would be obligated to issue 19,743,589 shares on conversion if all
$15 million of such securities were able to be converted.
WE ARE LEVERAGED AND MAY NOT BE ABLE TO OBTAIN ADDITIONAL CAPITAL ON ACCEPTABLE
TERMS
As of March 31, 2002, we had outstanding indebtedness to third party
lenders of $13,810,000, of which $11,500,000 is convertible into our common
stock. We will be required to pay this indebtedness, including any unconverted
portion, either through internally generated funds or third party financing or
through a refinancing of the indebtedness with the lenders. Our ability to repay
the indebtedness from internally
15
generated funds or through refinancing will depend in part upon our future
performance, which will be subject to economic, financial and other factors,
many of which are beyond our control. Our ability to access third party
financing to repay this indebtedness will also be substantially dependent on
conditions in the financial markets, which are subject to fluctuations and
factors outside of our control. Adequate funds may not be available when needed
or on terms favorable to us. If funding is insufficient, we may be required to
delay, reduce the scope of or eliminate some of our business programs or we may
default under our existing indebtedness, any of which will significantly harm
our business.
WE MAY ISSUE ADDITIONAL SHARES AND DILUTE YOUR OWNERSHIP PERCENTAGE
Some events over which you have no control could result in the issuance
of additional shares of our Common Stock or Preferred Stock, which would dilute
your ownership percentage in CyberCare. We may issue additional shares of Common
Stock or Preferred Stock:
* to raise additional capital or finance acquisitions;
* upon the exercise or conversion of outstanding options and
warrants
* upon the sale of shares of Common Stock pursuant to the
Private Equity Line Agreement;
* as interest payments for and/or upon conversion of certain
Subordinated Debentures and Senior Secured Convertible Notes
that have been issued; and/or
* in lieu of cash payment of dividends or for services rendered.
YOUR PERCENTAGE OF OWNERSHIP AND VOTING POWER AND THE PRICE OF OUR COMMON STOCK
MAY DECREASE BECAUSE WE HAVE ISSUED, AND IN THE FUTURE MAY ISSUE, A SUBSTANTIAL
NUMBER OF SHARES OF COMMON STOCK OR SECURITIES CONVERTIBLE INTO OR EXERCISABLE
FOR OUR COMMON STOCK
We have the authority to issue up to 200 million shares of our Common
Stock and 20 million shares of our Preferred Stock without stockholder approval.
We may also issue options and warrants to purchase shares of our Common Stock.
Future issuances could be at values substantially below the price paid for our
Common Stock by current stockholders. We may conduct additional future offerings
of our Common Stock, Preferred Stock, or other securities with rights to convert
the securities into shares of our Common Stock which may result in a decrease in
the value or market price of our Common Stock. Further, the issuance of
Preferred Stock could have the effect of delaying, deferring or preventing a
change of ownership without further vote or action by the stockholders and may
adversely affect the voting and other rights of the holders of Common Stock.
WE ANTICIPATE VOLATILITY IN OUR STOCK PRICE
The market price for securities in our industry historically has been
highly volatile. From January 1, 2001 through May 16, 2002, the price of our
Common Stock has fluctuated between $5.81 and $0.14 per share. The price of our
Common Stock may be subject to fluctuations in response to:
* quarter to quarter variations in operating results;
* vendor additions or cancellations;
* creation or elimination of funding opportunities;
* favorable or unfavorable coverage by securities analysts;
* the availability of products, technology and services; and
* other events or factors, many of which are beyond our control.
These broad market and industry factors may cause the price of our
Common Stock to decline, regardless of our actual operating performance.
16
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING INFORMATION
This prospectus and other materials we have filed or may file with the
Securities and Exchange Commission, as well as information included in oral
statements or other written statements made, or to be made, by us, contain, or
may contain disclosures which are "forward-looking statements".
This Registration Statement on Form S-3 contains forward-looking
statements. For this purpose, any statements contained herein that are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the foregoing, the words "could," "may," "will," "believes,"
"anticipates," "plans," "expects," "projects," "estimates," "intends,"
"continues," "seeks," "predicts," "expectations," variations of such words and
similar expressions are intended to identify forward-looking statements. These
forward-looking statements are not guarantees of future performance and involve
certain risks, uncertainties and assumptions ("Future Factors") that are
difficult to predict. As a result, because these statements are based on
expectations as to future performance and events and are not statements of fact,
actual events or results may differ materially from those expressed or forecast
in such forward-looking statements. Factors that might cause the Company's
actual results to differ materially from those indicated by such forward-looking
statements include, without limitation, those discussed in our filings with the
Securities and Exchange Commission, including but not limited to our most recent
proxy statement and "Risk Factors" in our most recent Form 10-K, as well as
Future Factors that may have the effect of reducing our available operating
income and cash balances.
Future Factors include risks associated with the uncertainty of future
financial results; government approval processes; changes in the regulation of
the health care and technology industries at either the federal or state levels;
changes in reimbursement for services by government or private payors;
competitive pressures in the health care and technology industries and the
Company's response thereto; delays or inefficiencies in the introduction,
acceptance or effectiveness of new products; the impact of competitive products
or pricing; the Company's relationships with customers and partners; cash
expenditures related to possible future acquisitions and expansions; on-going
capital expenditures; the Company's ability to obtain capital in favorable terms
and conditions; increasing price, products and services; U.S. and non-U.S.
competitors, including new entrants; rapid technological developments and
changes and the Company's ability to continue to introduce competitive new
products and services on a timely, cost-effective basis; the mix of products and
services; the availability of manufacturing capacity, components and materials;
the ability to recruit and retain talent; the achievement of lower costs and
expenses; credit concerns in the emerging service provider market; customer
demand for the Company's products and services; U.S. and non-U.S. government and
public policy changes that may affect the level of new investments and purchases
made by customers; changes in U.S. and non-U.S. governmental regulations;
protection and validity of patent and other intellectual property rights;
reliance on large customers and significant suppliers; the ability to supply
customer financing; technological implementation; and cost/financial risks in
the use of large, multiyear contracts; the Company's credit ratings; the outcome
of pending and future litigation; continued availability of financing, financial
instruments and financial resources in the amounts, at the times and on the
terms required to support the Company's future business; general industry and
market conditions and growth rates; and general U.S. and non-U.S. economic
conditions, including interest rate and currency exchange rate fluctuations.
You should not unduly rely on such forward-looking statements when
evaluating the information presented herein. These statements should be
considered only after carefully reading this entire Form S-3 and the documents
incorporated herein by reference.
17
USE OF PROCEEDS
We will receive no proceeds from the securities included in this
Registration Statement.
SECURITIES TO BE REGISTERED
GENERAL
Our authorized capital stock consists of 200,000,000 shares of Common
Stock and 20,000,000 shares of Preferred Stock. As of March 31, 2002, there were
69,433,357 shares of Common Stock issued and outstanding. This number of shares
of Common Stock does not include shares that could be issued upon conversion or
exercise of stock options, debentures and other derivative securities.
COMMON STOCK
Each holder of Common Stock is entitled to one vote for each share
owned of record on all matters voted upon by shareholders, and a majority vote
is required for all actions to be taken by shareholders. In the event of our
liquidation, dissolution or winding-up, the holders of shares of Common Stock
are entitled to share equally and ratably in our assets, if any, remaining after
the payment of all our debts and liabilities. Shares of Common Stock have no
preemptive rights, no cumulative voting rights and no redemption, sinking fund
or conversion provision. Holders of shares of Common Stock are entitled to
receive dividends if, as and when declared by our Board of Directors out of
funds legally available, therefore, subject to any dividend restrictions imposed
by our creditors. No dividend or other distribution (including redemptions or
repurchases of shares of capital stock) may be made if, after giving effect to
such distribution, we would not be able to pay our debts as they become due in
the normal course of business, or our total assets would be less than the
minimum of our total liabilities. If we realize net profits in the future, our
policy will likely be to retain such earnings for the operation and expansion of
our business.
TRANSFER AGENT AND REGISTRAR
Corporate Stock Transfer, Inc., of Denver, Colorado is the transfer
agent and registrar of our Common Stock.
SELLING SECURITY HOLDERS
OVERVIEW
This prospectus relates to periodic offers and sales of up to 2,822,218
shares of Common Stock by the selling security holders listed and described
below and their pledgees, donees and other successors in interest. The number of
shares we are registering is based on Common Shares issued in lieu of cash for
professional services and other contractual arrangements.
Accordingly, the number of shares we are registering for issuance may be higher
than the number we actually issue under those agreements.
18
SALES OF COMMON STOCK BY SELLING SECURITY HOLDERS
This registration statement relates to periodic offers and sales of up
to 2,822,218 shares of Common Stock by the selling security holders and their
pledgees, donees and other successors in interest. The following table sets
forth:
* the name of each selling security holder,
* the number of shares owned and
* the number of shares being registered for resale by each
selling security holder.
All of the shares being registered for resale under this registration
statement for the selling security holders may be offered hereby. Because the
selling security holders may sell some or all of the shares owned by them which
are included in this registration statement, and because there are currently no
agreements, arrangements or understandings with respect to the sale of any of
the shares, no estimate can be given as to the number of shares being offered
hereby that will be held by the selling security holders upon termination of any
offering made hereby. We have, therefore, for the purposes of the following
table assumed that the selling security holders will elect to sell all of the
shares owned by them which are being offered hereby.
Beneficial ownership is determined in accordance with the rules of the
SEC and generally includes voting or investment power with respect to securities
and includes any securities which the person has the right to acquire within 60
days through the conversion or exercise of any security or other right. The
information as to the number of shares of Common Stock owned by each selling
security holder is based upon the information contained in a record list of our
shareholders at February 28, 2002. For purposes of this filing, the Company has
made the assumption that all of the shares included in this Registration
Statement will be sold, however there is no contractual or other arrangements
requiring any of these shares to be sold.
NUMBER OF SHARES TO SHARES TO BE OWNED
Name of selling security holder SHARES OWNED BE OFFERED AFTER OFFERING
------------------------------- ------------ ---------- -----------------------
HP Associates (1) 416,000 416,000 --
Muller and Lipson, P.A. (2) 23,336 23,336 --
Daniel Sheppard (3) 5,000 5,000 --
Robert Ashburn (4) 85,455 45,455 40,000
George F. Slade and Linda W. Slade, Trustees
of the George F. Slade Revocable Trust (5) 869,566 869,566 --
Alan Townsend (6) 26,710 1,484 25,226
CGI Information Technology Services, Inc. (7) 500,000 500,000 --
Louis Capece, Jr. (8) 2,525,813 440,000 2,085,813
Thomas, Kayden, Horstemeyer and
Risley, LLP (9) 84,112 14,344 69,768
Santos, Lynott & Henry, P.A. (10) 7,033 7,033 --
Atlas Pearlman, P.A. (11) 500,000 500,000 --
--------- ---------- ----------
--
Totals 5,043,025 2,822,218 2,220,807
========= ========== ==========
(1) Shares issued as consideration under an agreement for equipment
purchases. Mr. Gregory Hutchison is the control person for H.P.
Associates.
(2) Shares issued as consideration for payment of legal fees. Mr. Gary
Lipson is a partner with Muller and Lipson, P.A.
(3) Shares issued as consideration under a contractual agreement.
(4) Shares issued as consideration under a contractual arrangement.
(5) Shares issued in settlement of litigation.
19
(6) Includes (1) 6,710 shares of our Common Stock presently issued and
outstanding; and (2) stock options to purchase 20,000 shares of our
Common Stock at an exercise price of $1.95.
(7) Shares issued in settlement of litigation. Mr. Satish K. Sanan is the
control person for CGI Information Technology Services, Inc.
(8) Shares issued as consideration under a contractual arrangement.
(9) Shares issued as consideration for payment of legal services. Mr. Scott
Horstemeyer is a partner in Thomas, Kayden, Horstemeyer and Risley,
LLP.
(10) Shares issued for payment of legal services. Mr. David Henry is a
partner in Santos, Lynott & Henry, P.A.
(11) Shares issued for payment of legal services. Mr. Charles Pearlman is a
partner in Atlas, Pearlman, P.A.
None of the selling security holders have, or within the past three
years have had, any position, office or other material relationship with us or
any of our predecessors or affiliates, except for Dr. George Slade, who was a
former owner and an employee of Tallahassee Sleep Disorder Center, Alan
Townsend, a Vice President of CyberCare Technologies, Inc. and other than as
described previously in this section.
We have agreed to pay the full costs and expenses in connection with
the issuance, offer, sale and delivery of the shares, including all fees and
expenses in preparing, filing and printing the registration statement and
prospectus and related exhibits, amendments and supplements thereto and mailing
of those items. We will not pay selling commissions and expenses associated with
any sale by the selling security holders.
PLAN OF DISTRIBUTION
GENERAL
The shares of Common Stock owned, or which may be acquired, by the
selling security holders may be offered and sold by means of this registration
statement from time to time as market conditions permit in the principal market,
or otherwise, at prices and terms then prevailing or at prices related to the
then-current market price, or in negotiated transactions. These shares may be
sold by one or more of the following methods, without limitation:
* a block trade in which a broker or dealer so engaged will
attempt to sell the shares as agent but may position and
resell a portion of the block as principal to facilitate the
transaction;
* purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this
registration statement;
* ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and
* face-to-face transactions between sellers and purchasers
without a broker/dealer.
In effecting sales, brokers or dealers engaged by the selling security
holders may arrange for other brokers or dealers to participate. Such brokers or
dealers may receive commissions or discounts from selling security holders in
amounts to be negotiated.
The selling shareholders and any broker/dealers who act in connection
with the sale of the shares hereunder may be deemed to be "underwriters" within
the meaning of the Securities Act and the 1934 Act, and any commissions received
by them and profit on any resale of the shares as principal might be deemed to
be underwriting discounts and commissions under the Securities Act. We have
agreed to indemnify the
20
selling security holders and any securities broker/dealers who may be deemed to
be an underwriter against certain liabilities, including liabilities under the
Securities Act.
We have advised the selling security holders that they and any
securities broker/dealers or others who may be deemed to be statutory
underwriters will be subject to the registration statement delivery requirements
under the Securities Act. We have also advised each selling security holder that
in the event of a "distribution" of the shares owned by the selling security
holder, such selling security holder, any "affiliated purchasers" and any
broker/dealer or other person who participates in such distribution, may be
subject to Rule 102 under the Securities Exchange Act of 1934 (the "1934 Act")
until their participation in that distribution is completed. Rule 102 makes it
unlawful for any person who is participating in a distribution to bid for or
purchase stock of the same class as is the subject of the distribution. A
"distribution" is defined in Rule 102 as an offering of securities "that is
distinguished from ordinary trading transactions by the magnitude of the
offering and the presence of special selling efforts and selling methods." We
have also advised the selling security holders and SIM that Rule 101 under the
1934 Act prohibits any "stabilizing bid" or "stabilizing purchase" for the
purpose of pegging, fixing or stabilizing the price of the common stock in
connection with this registration statement.
The selling security holders do not intend to distribute or deliver the
prospectus by means other than by hand or mail.
WHERE YOU CAN FIND MORE INFORMATION
We are required to file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
document we file at the SEC's public reference rooms at 450 Fifth Street, N.W.,
Washington, D.C., and at its offices in New York, New York and Chicago,
Illinois. Please call the SEC at 1-800-SEC-0330 for more information on the
operation of the public reference rooms. Copies of our SEC filings are also
available to the public from the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below, any of such documents filed since the date this
registration statement was filed and any future filings with the SEC under
Section 13(a), 13(c), 14 or 15(d) of the 1934 Act until the offering is
completed:
* our annual report on Form 10-K for the fiscal year ended
December 31, 2001;
* our quarterly report on Form 10-Q for the period ended March
31, 2002;
* our current reports on Form 8-K filed on April 15, 2002, April
18, 2002, April 26, 2002, and May 2, 2002;
You may request a copy of these filings, at no cost, by writing or
calling us at the following address and telephone number:
Corporate Secretary
CyberCare, Inc.
2500 Quantum Lakes Drive, Suite 1000
Boynton Beach, Florida 33426-8308
Telephone (561) 742-5000
21
LEGAL MATTERS
The validity of the issuance of the securities offered hereby will be
passed upon for us by Atlas Pearlman, P.A., Fort Lauderdale, Florida. Atlas
Pearlman, P.A. owns 500,000 shares of the Company's Common Stock.
EXPERTS
Ernst & Young LLP, Certified Public Accountants, have audited our
consolidated financial statements included in our Annual Report on Form 10-K for
the year ended December 31, 2001, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our financial statements are incorporated by reference in reliance on
Ernst & Young LLP's report, given on their authority as experts in accounting
and auditing.
22
2,822,218 SHARES
CYBERCARE, INC.
COMMON STOCK
JUNE __, 2002
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.*
Registration Fees - Securities and Exchange Commission $ 1,000*
Listing of Additional Shares - The Nasdaq Stock Market 35,000*
Cost of Printing 15,000*
Legal Fees and Expenses 15,000*
Accounting Fees and Expenses 15,000*
Blue Sky Fees and Expenses -*
Miscellaneous -*
---------
Total $81,000*
========
*Estimated
Item 15. Indemnification of Directors and Officers.
The Florida Business Corporation Act permits the
indemnification of directors, employees, officers and agents of a
Florida corporation. Our articles of incorporation and bylaws provide
that we shall indemnify to the fullest extent permitted by the Florida
Business Corporation Act any person whom we may indemnify under the
act.
The provisions of Florida law that authorize indemnification
do not eliminate the duty of care of a director, and in appropriate
circumstances equitable remedies including injunctive or other forms of
non-monetary relief will remain available. In addition, each director
will continue to be subject to liability for:
* violations of criminal laws, unless the director has
reasonable cause to believe that his or her conduct
was lawful or had no reasonable cause to believe his
conduct was unlawful,
* deriving an improper personal benefit from a
transaction,
* voting for or assenting to an unlawful distribution,
and
* willful misconduct or conscious disregard for our
best interests in a proceeding by or in our right to
procure a judgment in its favor or in a proceeding by
or in the right of a shareholder.
The statute does not affect a director's responsibilities
under any other law, including federal securities laws.
The effect of Florida law, our articles of incorporation, as
amended, and our bylaws, as amended, is to require us to indemnify our
officers and directors for any claim arising against those persons in
their official capacities if the person acted in good faith and in a
manner that he or she 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
or her conduct was unlawful.
II-1
To the extent indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers or control persons,
we have been informed that in the opinion of the SEC, this indemnification is
against public policy as expressed in the Securities Act and is unenforceable.
Item16. Exhibits and Consolidated Financial Statement Schedules.
Exhibit No. Description
5.1 Opinion of Atlas Pearlman, P.A. *
10.2 Letter of Agreement between Avnet, Inc. and CyberCare, Inc. dated
February 25, 2002 and March 5, 2002.*
10.3 Letter Agreement between Muller & Lipson, P.A. and CyberCare, Inc.
dated March 15, 2002.*
10.4 Letter of Agreement between Peach Consulting, Inc. and CyberCare, Inc.
dated March 18, 2002.*
10.5 Letter Agreement between Robert C. Ashburn & Associates, Inc. and
CyberCare, Inc. dated March 14, 2002.*
10.6 Letter Agreement between Thomas, Kayden, Horstemeyer and Risley, L.L.P.
and CyberCare, Inc. dated September 11, 2001.*
10.7 Memorandum of Agreement between George F. Slade and Linda W. Slade,
Trustees of the George F. Slade Revocable Trust and CyberCare, Inc.
dated March 18, 2002.*
10.8 Settlement Agreement and Mutual Release between CGI Information
Technology Services, Inc. F/K/A IMRglobal Corp. and CyberCare, Inc.
dated May 10, 2002.*
10.9 Letter Agreement between Santos, Lynott & Henry, P.A. and CyberCare,
Inc. dated May 23, 2002. *
10.10 Letter Agreement between Atlas Pearlman, P.A. and CyberCare, Inc. dated
May 31, 2002. *
10.11 Letter Agreement between Alan Townsend and CyberCare, Inc. dated May
28, 2002. *
10.12 Agreement to Reimburse between Louis Capece, Jr. and CyberCare, Inc.
dated January 15, 2002. *
23.1 Consent of Independent Certified Public Accountants*
23.2 Consent of Atlas Pearlman, P.A. (contained in Exhibit 5) *
24 Power of Attorney. Reference is made to signature page.
-----------------------
* Previously filed
Item 17. Undertakings.
CyberCare will:
1. File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
i. Include any prospectus required by section 10(a)(3) of
the Securities Act;
II-2
ii. Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement; and notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospects filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in the volume and price represent no
more than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement.
iii. Include any additional or changed material information
on the plan of distribution.
2. For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial BONA
FIDE offering.
3. File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
4. For purposes of determining any liability under the Securities Act,
each filing of the registrant's annual report pursuant to Section 13(a) of
Section 15(d) of the 1934 Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 159d) of the 1934 Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
5. Deliver or cause to be delivered with the prospectus, to each person
to whom the prospectus is sent or given, the latest annual report to security
holders that is incorporated by reference in the prospectus and furnished
pursuant to and meeting the requirements of Rule 14a-3 or rule 14c-3 under the
1934 Act; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, we certify that we have reasonable grounds to believe that we meet
all of the requirements for filing on Form S-3 and have duly caused this
Registration Statement to be signed on our behalf by the undersigned,
thereunto duly authorized, in the City of Boynton Beach and the State of
Florida, on the June 6, 2002.
CYBERCARE, INC.
By: /s/ ARTHUR P. KOBRIN
----------------------------------------
Arthur P. Kobrin
Principal Accounting Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Arthur P. Kobrin as his or her
attorney-in-fact, with the power of substitution, for him or her in any and
all capacities, to sign any amendment or post-effective amendment to this
Registration Statement on Form S-3 or abbreviated registration statement
(including, without limitation, any additional registration filed pursuant to
Rule 462 under the Securities Act of 1933) with respect hereto and to file
the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that said attorney-in-fact, or his or her substitute or substitutes, may
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/JOSEPH FORTE Chief Executive Officer, President, June 6, 2002
------------------------------------ and Director
Joseph Forte
/s/ ARTHUR P. KOBRIN Principal Accounting Officer June 6, 2002
---------------------------------
Arthur P. Kobrin
/s/DANA J. PUSATERI Executive Vice President June 6, 2002
--------------------------------- and Director
Dana J. Pusateri
/s/TERRY LAZAR* Director June 6, 2002
----------------------------------------
Terry Lazar
/s/ALAN ADELSON* Director June 6, 2002
---------------------------------------
Alan Adelson
/s/ZACHARIAH P. ZACHARIAH* Director June 6, 2002
---------------------------------
Zachariah P. Zachariah
* By Attorney In Fact
II-3