Filed Pursuant to Rule 424(B)(3)
Registration No. 333-81128
PROSPECTUS
1,898,262 SHARES
[PROXYMED LOGO]
COMMON STOCK
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This Prospectus relates to up to 1,898,262 shares of common stock of
ProxyMed, Inc. that may be sold from time to time by the selling shareholders
listed on pages 14 - 18, or their transferees, pledgees, donees or successors.
The selling shareholders may sell all or any portion of their shares of
common stock in one or more transactions through ordinary brokerage
transactions, in private, negotiated transactions, or through any other means
described in the section entitled "Plan of Distribution" beginning on page 20.
The selling shareholders are selling these shares for their own
accounts. We will not receive any of the proceeds from the sale of the shares by
the selling shareholders, but will pay all registration expenses. The selling
shareholders will pay all selling expenses, including all underwriting discounts
and selling commissions.
Our common stock is traded on the Nasdaq National Market under the
symbol "PILL". On February 14, 2002, the last reported sale price for our common
stock on the Nasdaq National Market was $17.55 per share.
Our principal executive offices are located at 2555 Davie Road, Suite
110, Fort Lauderdale, FL 33317-7424 and our telephone number is (954) 473-1001.
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INVESTING IN OUR COMMON STOCK INVOLVES SIGNIFICANT RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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THE DATE OF THIS PROSPECTUS IS FEBRUARY 15, 2002
YOU SHOULD RELY ONLY ON INFORMATION INCORPORATED BY REFERENCE OR PROVIDED IN
THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT. WE HAVE NOT AUTHORIZED ANYONE
ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION.
TABLE OF CONTENTS
Page
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FORWARD-LOOKING INFORMATION.............................................3
ABOUT PROXYMED..........................................................4
RISK FACTORS............................................................6
USE OF PROCEEDS........................................................14
SELLING SHAREHOLDERS...................................................14
PLAN OF DISTRIBUTION...................................................20
DESCRIPTION OF SECURITIES..............................................22
EXPERTS................................................................29
WHERE YOU CAN FIND MORE INFORMATION....................................29
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE......................29
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FORWARD-LOOKING INFORMATION
This Prospectus, including the information incorporated by reference,
contains forward-looking statements made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. These forward-looking
statements involve substantial risks and uncertainties. These forward-looking
statements can generally be identified as such because the context of the
statement includes words such as the we "believe" "anticipate", "expect",
"intends" or other words of similar import. Similarly, statements that describe
our future plans, objectives and goals are also forward-looking statements.
Further, certain forward-looking statements are based upon assumptions of future
events, which may not prove to be accurate. Our actual results, performance or
achievements could differ materially from those expressed or implied in these
forward-looking statements as a result of certain factors, including those risk
factors set forth on page 6 and elsewhere in this Prospectus, certain of which
may be detailed from time to time in our periodic reports filed with the
Securities and Exchange Commission (the "SEC").
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ABOUT PROXYMED
ProxyMed is an electronic healthcare transaction processing services
company providing connectivity services and related value-added products to
physicians, payers, pharmacies/pharmacy benefit managers, medical laboratories,
and other healthcare providers and suppliers. Our electronic transaction
processing services support a broad range of both financial and clinical
transactions. To facilitate these services, we operate ProxyNet(R), our secure,
proprietary national electronic information network, which provides physicians
and other primary care providers with direct connectivity to one of the
industry's largest list of payers, the largest list of chain and independent
pharmacies and the largest list of clinical laboratories. Our products and
services are provided from our four operating facilities located in Fort
Lauderdale, Florida; Santa Ana, California; New Albany, Indiana; and Atlanta,
Georgia.
The healthcare industry generates billions of financial and clinical
transactions each year, including new prescription orders, refill
authorizations, laboratory orders and results, medical insurance claims,
insurance eligibility inquiries, encounter notifications, and referral requests
and authorizations. We believe that the healthcare industry lags behind many
other transaction-intensive industries, such as the travel, securities and
banking industries, in the number of transactions processed electronically, with
the vast majority of healthcare transactions being performed manually and on
paper. For physicians, payers, labs and pharmacies to meet the financial and
clinical demands of an evolving managed care system, we believe that
participants in the healthcare system will need to process many of these types
of transactions electronically. Due to the number of participants, lack of
standards and complexity of establishing reliable and secure communication
networks, the healthcare industry needs companies such as ProxyMed, with its
secure, proprietary systems, to facilitate the processing of these transactions.
Our principal executive offices are located at 2555 Davie Road, Suite
110, Fort Lauderdale, Florida 33317-7424, and our telephone number is (954)
473-1001.
On August 17, 2001, we announced a 1-for-15 reverse stock split of our
common stock whereby each 15 shares of common stock were exchanged for one new
share of common stock. All share and per share amounts have been adjusted to
reflect this transaction.
Recent Developments
On December 13, 2001, we offered to convert the 203,799 shares
outstanding of our Series C 7% Convertible Preferred Stock (the "Series C
Preferred Stock") into shares of our common stock at a reduced conversion price
(the "Conversion Offer"). For the sixty-day period ending February 11, 2002, the
holders of the Series C Preferred Stock shares were able to convert such shares
at a reduced conversion price of $13.05 per share instead of the conversion
price of $15.00. As of February 11, 2002 holders of approximately 98.5% of the
outstanding Series C Preferred had converted their shares
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into common stock. As a result of the conversion, 1,338,617 common shares were
issued, plus an additional 200,019 common shares were issued as a result of the
reduction in the conversion price. Additionally, a non-cash, deemed dividend
charge of approximately $3.4 million was reflected in the net loss applicable to
common shareholders in the fourth quarter of 2001 for those shares converted
through December 31, 2001 and the Company expects to reflect non-cash, a deemed
dividend charge of approximately $600,000 in the first quarter of 2002 for any
shares converted after December 31, 2001.
In addition, holders of more than two-thirds of the outstanding Series
C Preferred voted to amend the Articles of Designation that govern the Series C
Preferred and the Subscription Agreement dated as of June 15, 2000. The
amendments eliminated certain rights of the Series C Preferred including
anti-dilution provisions, voting rights and certain restrictive covenants
assumed by us, and will apply to any remaining Series C Preferred shareholders.
As a result of the reduced conversion price in the Conversion Offer,
85,689 warrants with an exercise price of $15.00 per share issued in connection
with our Series B 6% Convertible Preferred Stock (the "Series B Preferred
Stock") were reset into 98,493 warrants with a new exercise price of $13.05 per
share as a result of anti-dilution provisions relating to the Series B Preferred
Stock. As a result of this reset a non-cash, deemed dividend charge of
approximately $207,800 was reflected in the loss applicable to common
shareholders in the fourth quarter of 2001.
On December 21, 2001, we sold 483,414 shares of our common stock at
$16.50 per share, or an aggregate of $7,976,331, in a private placement to nine
U.S. and Canadian institutional and accredited investors, resulting in net
proceeds to us of approximately $7,247,500 after costs of $728,800. Commonwealth
Associates, L.P. acted as placement agent in the transaction for which it
received 7% of the gross proceeds of the shares sold plus their actual
out-of-pocket expenses incurred in connection with the private placement.
* * *
As used in this Prospectus, unless the context requires otherwise,
"we", "us", "our", "ProxyMed" or the "Company" means ProxyMed, Inc.
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RISK FACTORS
In addition to the other information in this Prospectus or incorporated
in this Prospectus by reference, you should consider carefully the following
factors in evaluating ProxyMed and our business before purchasing the common
stock offered by this Prospectus.
WE HAVE INCURRED LOSSES IN THE PAST AND, WHILE WE EXPECT TO GENERATE POSITIVE
EARNINGS IN THE FUTURE, THERE IS NO ASSURANCE THAT WE MAY BE ABLE TO DO SO WHICH
COULD HAVE A DETRIMENTAL EFFECT ON THE MARKET PRICE OF OUR STOCK.
We have incurred substantial losses, including losses of $48,052,000,
$21,856,000, and $11,788,000 for the fiscal years ended December 31, 2000, 1999,
and 1998, respectively. As of December 31, 2000, we had an accumulated deficit
of $90,425,000. For the nine months ended September 30, 2001, we incurred losses
of $14,336,300, and we may be unable to generate positive earnings in the
future. This could have a detrimental effect on the market price of our stock.
WE MAY NEED TO RAISE ADDITIONAL CAPITAL IN THE FUTURE
We have monthly cash interest charges of approximately $41,000 and a
$7,000,000 debt payment due in May 2002. Based on our current level of revenues
and expenditures, we believe that our operations and net proceeds from the
December 2001 private placement will provide funding of this debt. However, we
may ultimately be required to raise additional funds through the issuance of
additional equity or debt in the public or private capital markets, the securing
of an asset-based line of credit, or the sale of non-core assets in order to
consummate any acquisitions and to fund specific research and development
projects. To the extent we can raise these additional funds by selling shares of
our common stock or other equity securities, such an event and certain other
events over which the participating holders have no control could result in the
dilution of such holders' ownership percentage in ProxyMed and could adversely
affect the market price of the common stock. Our ability to raise any additional
funds may be adversely affected if, among other things, we do not continue to
improve our operating performance or achieve increased market acceptance of our
products and services. There can be no assurance that any additional funding
will be available to us, or if available, that it will be available on
acceptable terms. If we are successful in obtaining additional financing, the
terms of the financing may have the effect of significantly diluting or
adversely affecting the holdings or the rights of the holders of our common
stock. Failure to obtain additional financing could have a material impact on
our financial position, our ability to operate in the ordinary course of
business, and our ability to successfully execute its business plan, and may put
us at a competitive disadvantage.
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WE HAVE IMPORTANT BUSINESS RELATIONSHIPS WITH OTHER COMPANIES TO MARKET AND SELL
SOME OF OUR CLINICAL PRODUCTS AND SERVICES WHICH HAVE NOT RESULTED IN
SIGNIFICANT SALES YET. IF THESE COMPANIES ARE UNSUCCESSFUL, WE WILL NEED TO ADD
THIS EMPHASIS INTERNALLY, WHICH MAY DIVERT OUR EFFORTS AND RESOURCES FROM OTHER
PROJECTS
For the marketing and sale of some of our clinical products and
services, we entered into important business relationships with physician office
management information system vendors and electronic medical record vendors and
through other agreements. These important business relationships, which have
required and may continue to require significant commitments of effort and
resources, have yet to generate substantial recurring revenue, and we cannot
assure that they will ever generate substantial recurring revenue. Most of these
relationships are on a non-exclusive basis, and we cannot assure that our
electronic commerce partners and other strategic partners, most of whom have
significantly greater financial and marketing resources than we do, will not
develop and market products and services in competition with us in the future or
will not otherwise discontinue their relationship with us. Also, our
arrangements with some of our partners involve negotiated payments to the
partners based on percentages of revenues generated by the partners. If the
payments prove to be too high, we may be unable to realize acceptable margins,
but if the payments prove to be too low, the partners may not be motivated to
produce a sufficient volume of revenues. The success of our important business
relationships will depend in part upon our partners' own competitive, marketing
and strategic considerations, including the relative advantages of alternative
products being developed and marketed by such partners. If any such partners are
unsuccessful in marketing our products, we will need to place added emphasis on
these aspects of our business internally, which may divert our planned efforts
and resources from other projects.
OUR LABORATORY COMMUNICATION DEVICES MAY BE REPLACED WITH WEB-BASED TECHNOLOGY
FOR LAB RESULTS DELIVERY, AND WE MAY NOT BE SUCCESSFUL IN CONVERTING OUR
CUSTOMERS TO OUR OWN INTERNET PORTAL, PROXYMED.COM, WHICH WOULD ADVERSELY IMPACT
OUR REVENUES
A key element of our Laboratory Services business strategy is to market
our laboratory results reporting devices and related services and our web-based
solutions directly to independent and hospital-based medical laboratories. As
the Internet becomes a more acceptable method of transmitting laboratory orders
and reporting results because of the efficiencies and savings believed to be
available, we are leveraging our 25-plus years of goodwill and reputation for
quality of products and superior service to migrate our customers over to our
own Internet portal, proxyMed.com. We expect others to develop similar web-based
solutions and compete aggressively in an attempt to capture our large customer
base. We have no assurances that we will be able to retain or continue to grow
our customer base. Further, even as to the continuing sales of our laboratory
communication devices, we are unable to control many of the factors that
influence our customers' buying decisions, including our customers' budgets and
procedures for approving expenditures, and the changing political, economic and
regulatory influences which affect the purchasing practices and operation of
healthcare organizations.
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THE ACCEPTANCE OF ELECTRONIC TRANSACTION PROCESSING IN THE HEALTHCARE INDUSTRY
IS STILL IN ITS EARLY STAGES; THUS, THE FUTURE OF OUR BUSINESS IS UNCERTAIN
Our strategy anticipates that electronic processing of healthcare
transactions, including transactions involving clinical as well as financial
information, will become more widespread and that providers and third-party
payers increasingly will use electronic transaction processing networks for the
processing and transmission of data. Electronic transmission of healthcare
transactions (and, in particular, the use of the Internet to transmit them) is
still developing, and complexities in the nature and types of transactions which
must be processed have hindered, to some degree, the development and acceptance
of electronic transaction processing in this industry. We cannot assure that
continued conversion from paper-based transaction processing to electronic
transaction processing in the healthcare industry, using proprietary physician
management systems or the Internet, will occur.
OUR CLINICAL TRANSACTION PRODUCTS AND SERVICES HAVE YET TO BE TESTED ON A LARGE
SCALE AND COULD FAIL UNDER A HEAVY CUSTOMER LOAD
The quality of our clinical transaction products and services is
important to our business. Although we have completed the development of most of
our electronic transaction processing network, which we believe efficiently
performs the principal functions for which it has been designed, our clinical
transaction products and services and the network are currently being utilized
only by a limited number of customers for these transactions. We cannot assure
that, upon widespread commercial use of our clinical transaction products and
services, they will satisfactorily perform all of the functions for which we
have designed them or that unanticipated technical or other errors will not
occur which would result in increased costs or material delays. Any of these
errors could delay our plans, result in harmful publicity or cause us to incur
substantial remedial costs.
SINCE AN ERROR BY ANY PARTY IN THE PROCESS OF PRESCRIBING DRUGS AND FILLING
PRESCRIPTIONS COULD RESULT IN SUBSTANTIAL INJURY TO A PATIENT, OUR LIABILITY
INSURANCE MAY NOT BE ADEQUATE IN A CATASTROPHIC SITUATION
Our business exposes us to potential liability risks that are
unavoidably part of being in the healthcare electronic transaction processing
industry. Since many of our products and services relate to prescribing and
refilling of drugs and the transmission of medical laboratory results, an error
by any party in the process could result in substantial injury to a patient. As
a result, our liability risks are significant.
We cannot assure that our insurance will be sufficient to cover
potential claims arising out of our current or proposed operations, or that our
present level of coverage will be available in the future at a reasonable cost.
A partially or completely uninsured claim against us, if successful and of
sufficient magnitude, would have significant adverse financial consequences. Our
inability to obtain insurance of the type and in the
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amounts we require could generally impair our ability to market our products and
services.
OUR PRODUCTS EMPLOY PROPRIETARY INFORMATION AND TECHNOLOGY WHICH MAY INFRINGE ON
THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES
In large part, our success is dependent on our proprietary information
and technology. We rely on a combination of contract, copyright, trademark and
trade secret laws and other measures to protect our proprietary information and
technology. We have no patents. We have twelve (12) copyright registrations
covering our various software and proprietary products. As part of our
confidentiality procedures, we generally enter into nondisclosure agreements
with our employees, distributors and customers, and limit access to and
distribution of our software, databases, documentation and other proprietary
information. We cannot assure that the steps taken by us will be adequate to
deter misappropriation of our proprietary rights or that third parties will not
independently develop substantially similar products, services and technology.
Although we believe our products, services and technology do not infringe on any
proprietary rights of others, as the number of software products available in
the market increases and the functions of those products further overlap, we and
other software and Internet developers may become increasingly subject to
infringement claims. These claims, with or without merit, could result in costly
litigation or might require us to enter into royalty or licensing agreements,
which may not be available on terms acceptable to us.
WE DEPEND ON CONNECTIONS TO INSURANCE COMPANIES AND OTHER PAYERS, AND IF WE LOSE
THESE CONNECTIONS, OUR SERVICE OFFERINGS WOULD BE LIMITED AND LESS DESIRABLE TO
HEALTHCARE PARTICIPANTS
Our business is enhanced by the substantial number of payers, such as
insurance companies, Medicare and Medicaid agencies to which we have electronic
connections. These connections may either be made directly or through a
clearinghouse. We have attempted to enter into suitable contractual
relationships to ensure long-term payer connectivity; however, we cannot assure
that we will be able to maintain our links with all these payers. In addition,
we cannot assure that we will be able to develop new connections, either
directly or through clearinghouses, on satisfactory terms. Lastly, some
third-party payers provide systems directly to healthcare providers, bypassing
us and other third-party processors. Our failure to maintain existing
connections with payers and clearinghouses or to develop new connections as
circumstances warrant, or to increase the utilization of direct links between
providers and payers, could cause our electronic transaction processing system
to be less desirable to healthcare participants, which would slow down or reduce
the number of transactions that we process and for which we are paid.
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EVOLVING INDUSTRY STANDARDS AND RAPID TECHNOLOGICAL CHANGES COULD RESULT IN OUR
PRODUCTS BECOMING OBSOLETE OR NO LONGER IN DEMAND
Rapidly changing technology, evolving industry standards and the
frequent introduction of new and enhanced Internet-based services characterize
the market for our products and services. Our success will depend upon our
ability to enhance our existing services, introduce new products and services on
a timely and cost-effective basis to meet evolving customer requirements,
achieve market acceptance for new products or services and respond to emerging
industry standards and other technological changes. We cannot assure that we
will be able to respond effectively to technological changes or new industry
standards. Moreover, we cannot assure that other companies will not develop
competitive products or services, or that any such competitive products or
services will not cause our products and services to become obsolete or no
longer in demand.
IF ELECTRONIC TRANSACTION PROCESSING PENETRATES THE HEALTHCARE INDUSTRY, WE MAY
FACE PRESSURE TO REDUCE OUR PRICES WHICH POTENTIALLY MAY CAUSE US TO NO LONGER
BE COMPETITIVE
If electronic transaction processing extensively penetrates the
healthcare market or becomes highly standardized, it is possible that
competition among electronic transaction processors will focus increasingly on
pricing. This competition may put intense pressure on us to reduce our pricing
in order to retain market share. If we are unable to reduce our costs
sufficiently to offset declines in our prices, or if we are unable to introduce
new, innovative service offerings with higher prices, we may not be competitive.
COMPUTER NETWORK SYSTEMS LIKE OURS COULD SUFFER SECURITY AND PRIVACY BREACHES
THAT COULD HARM OUR CUSTOMERS AND US
We currently operate servers and maintain connectivity from multiple
facilities. Despite our implementation of network security measures, such as
limiting physical and network access to routers, our infrastructure may be
vulnerable to computer viruses, break-ins and similar disruptive problems caused
by customers or other users. Computer viruses, break-ins or other security
problems could lead to interruption, delays or cessation in service to our
customers. These problems could also potentially jeopardize the security of
confidential information stored in the computer systems of our customers, which
may deter potential customers from doing business with us and give rise to
possible liability to users whose security or privacy has been infringed. The
security and privacy concerns of existing and potential customers may inhibit
the growth of the healthcare information services industry in general, and our
customer base and business in particular. A significant security breach could
result in loss of customers, damage to our reputation, direct damages, costs of
repair and detection and other unplanned expenses.
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WE DEPEND ON UNINTERRUPTED COMPUTER ACCESS FOR OUR CUSTOMERS; ANY PROLONGED
INTERRUPTIONS IN OUR OPERATIONS COULD CAUSE OUR CUSTOMERS TO SEEK ALTERNATIVE
PROVIDERS OF OUR SERVICES
Our success is dependent on our ability to deliver high-quality,
uninterrupted computer networking and hosting, requiring us to protect our
computer equipment and the information stored in servers against damage by fire,
natural disaster, power loss, telecommunications failures, unauthorized
intrusion and other catastrophic events. To mitigate this risk, we have
commenced the movement of our production computer networks to a secure,
third-party collocation site located in Atlanta, Georgia. This site has back-up
site capability and a program to manage technology to reduce risks in the event
of a disaster, including periodic "back-ups" of our computer programs and data.
While we still continue to operate production networks in our California and
Georgia facilities, any damage or failure resulting in prolonged interruptions
in our operations, such as the recent California rolling blackouts, could cause
our customers to seek alternative providers of our services. In particular, a
system failure, if prolonged, could result in reduced revenues, loss of
customers and damage to our reputation, any of which could cause our business to
suffer. While we carry property and business interruption insurance to cover
operations, the coverage may not be adequate to compensate us for losses that
may occur.
WE MAY NOT BE ABLE TO RETAIN KEY PERSONNEL OR REPLACE THEM IF THEY LEAVE
Our success is largely dependent on the personal efforts of Michael K.
Hoover, our Chairman of the Board and Chief Executive Officer and Nancy J. Ham,
our President and Chief Operating Officer. Although we have entered into
employment agreements with Mr. Hoover, Ms. Ham and other senior executives, the
loss of any of their services could cause our business to suffer. Our success is
also dependent upon our ability to hire and retain qualified operations,
development and other personnel. Competition for qualified personnel in the
healthcare information services industry is intense, and we cannot assure that
we will be able to hire or retain the personnel necessary for our planned
operations.
WE MAY ISSUE ADDITIONAL SHARES WHICH COULD ADVERSELY AFFECT THE MARKET PRICE OF
OUR COMMON STOCK
Certain 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 ProxyMed and could adversely affect
the market price of our common stock. We may issue additional shares of common
stock or preferred stock for many reasons including:
- to raise additional capital or finance acquisitions;
- upon the exercise or conversion or an exchange of outstanding
options, warrants and shares of convertible preferred stock;
or
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- in lieu of cash payment of dividends.
In addition, the number of shares of common stock that we are required
to issue in connection with our outstanding warrants may increase if certain
anti-dilution events occur (such as, certain issuances of common stock, options
and convertible securities).
PROPOSED HEALTHCARE LEGISLATION AND CHANGES TO EXISTING LAWS COULD CAUSE AN
EROSION OF OUR CURRENT COMPETITIVE STRENGTHS
Our customers are subject to extensive and frequently changing federal
and state healthcare laws and regulations. Political, economic and regulatory
influences are subjecting the healthcare industry in the United States to
fundamental change. Potential reform legislation may include:
- mandated basic healthcare benefits,
- controls on healthcare spending through limitations
on the growth of private health insurance premiums
and Medicare and Medicaid reimbursement,
- the creation of large insurance purchasing groups,
- fundamental changes to the healthcare delivery
system,
- FTC enforcement actions of existing privacy laws
relating to the Internet,
- federal and state privacy and confidentiality
statutes, regulations rules and guidelines covering
medical records and patient information.
The federal Health Insurance Portability and Accountability Act of
1996, known as HIPAA, mandates the use of standard transactions, standard
identifiers, security and other provisions for electronic claims transactions.
HIPAA specifically designates clearinghouses (including us and other financial
network operators) as the compliance facilitators for healthcare providers and
payers. On August 17, 2000, the U.S. Department of Health and Human Services
published final regulations to govern eight of the most common electronic
transactions involving health information. Under a recently revised bill passed
by the U.S. Congress, the deadline for certain aspects of HIPAA were extended to
October 16, 2003. In order to be allowed the extended deadline, we must present
a plan and justification for compliance by October 16, 2002. We believe that we
will be able to submit the required plan to extend the deadline, and we believe
that we will be in compliance by the 2003 deadline or sooner. We also expect,
but have no assurances, that our business partners or customers who may also be
covered by these regulations will also be in compliance by that date. Due to
mandated standards, however, there is a possibility that it will be easier for
competitors to offer electronic transaction processing services similar to ours,
which would make our competitive strength of accepting financial transactions in
multiple formats less of a differentiating factor for our customers.
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We anticipate Congress and state legislatures will continue to review
and assess alternative healthcare delivery systems and payment methods, as well
as internet and healthcare privacy legislation, and that public debate of these
issues will likely continue in the future. Due to uncertainties as to these
reform initiatives and their enactment and implementation, we cannot predict
which, if any, of such reform proposals will be adopted, when they may be
adopted or what impact they may have on us.
BECAUSE WE ARE SMALLER AND HAVE FEWER FINANCIAL RESOURCES THAN MANY OF OUR
COMPETITORS, WE MAY NOT BE ABLE TO SUCCESSFULLY COMPETE IN THE VERY COMPETITIVE
HEALTHCARE ELECTRONIC TRANSACTION PROCESSING INDUSTRY
We face competition from many healthcare information systems companies
and other technology companies. Many of our competitors are significantly larger
and have greater financial resources than we do and have established reputations
for success in implementing healthcare electronic transaction processing
systems. Other companies have targeted this industry for growth, including the
development of new technologies utilizing Internet-based systems. We cannot
assure that we will be able to compete successfully with these companies or that
these or other competitors will not commercialize products, services or
technologies that render our products, services or technologies obsolete or less
marketable.
INVESTORS SHOULD NOT ANTICIPATE RECEIVING CASH DIVIDENDS ON OUR COMMON STOCK
We currently anticipate retaining all of our future earnings, if any,
for use in the operation and expansion of our business, and do not plan to
declare any cash dividends on shares of our common stock in the foreseeable
future. Potential investors who anticipate a need for dividends should not
invest in our common stock.
OUR COMMON STOCK PRICE HAS FLUCTUATED CONSIDERABLY AND MAY NOT APPRECIATE IN
VALUE
The market price of shares of our common stock has fluctuated
substantially in recent years and is likely to fluctuate significantly from its
current level. During the period from January 1, 2001 through December 31, 2001,
our common stock closing price has ranged from a low of $10.21 per share to a
high of $22.52 per share. In 1998, our common stock closing price ranged from a
low of $78.75 per share to a high of $247.50 per share, during 1999, our common
stock closing price ranged from a low of $142.50 per share to a high of $288.75
per share, and during 2000, our common stock closing price ranged from a low of
$12.15 per share to a high of $166.88 per share. Future announcements concerning
our financial performance, conversion of shares of the Series C Preferred Stock
into common stock, warrant and option exercises, year-end selling for tax
losses, the announcement of strategic business relationships, the introduction
of new products, services or technologies or changes in product pricing policies
by us or our competitors or changes in earnings estimates by analysts, among
other factors, could cause the market price of our common stock to fluctuate
substantially. Stock markets have experienced extreme price and volume
volatility in the
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last year. This volatility has had a substantial effect on the market prices of
securities of many public companies, including those in the eHealth sector, for
reasons frequently unrelated to the operating performance of the specific
companies. These broad market fluctuations may also cause declines in the market
price of our common stock. Investors seeking short-term liquidity should be
aware that we cannot assure that the stock price will appreciate in value or, as
noted above, that cash dividends will be declared.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares of common
stock by any of the selling shareholders under this prospectus. Our registration
of this offering does not necessarily mean that the selling shareholders will
sell all or any of the shares offered hereby.
We estimate that our expenses in connection with the filing of this
registration statement will be approximately $42,500.
SELLING SHAREHOLDERS
The shares of common stock being offered by the selling shareholders
are issuable or have been issued to them (1) upon conversion of the Series C
Preferred Stock at a reduced conversion rate of $13.05 per share, (2) in
exchange for certain warrants in connection with an Exchange Agreement made as
of June 15, 2001, and/or (3) in a private placement and pursuant to a
Subscription Agreement made as of December 21, 2001, which such agreement
requires the issuance of additional shares of common stock if this Registration
Statement is not declared effective by the SEC on or before March 20, 2002. For
additional information about the Series C Preferred Stock, see Description of
Securities - Series C Preferred Stock.
We are registering the shares covered by this Prospectus on behalf of
the selling shareholders named below to permit the selling shareholders (or,
subject to applicable law, their pledgees, donees, distributees, transferees or
successors in interest) to offer these shares for resale from time to time.
The following table provides information regarding the ownership of our
common stock by the selling shareholders as of January 11, 2002, the number of
shares offered hereby to each shareholder and the selling shareholders'
ownership interest of our common stock assuming all of the shares offered hereby
are sold. Our registration of these shares does not necessarily mean that the
selling shareholders will sell all or any of the shares offered hereby.
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COMMON SHARES
BENEFICIALLY COMMON SHARES
OWNED PRIOR OFFERED COMMON
TO BY THIS SHARES AFTER PERCENTAGE
NAME OF SELLING SHAREHOLDER OFFERING PROSPECTUS OFFERING OF CLASS
--------------------------- -------- ---------- -------- --------
A. Thomas Hardy (1) 90,734 10,489 80,245 1.4%
Abrams VII Partnership 40,652 13,985 26,667 *
Adam M. Rosmarin 1,875 1,875 0 0.0%
Almed Elcott 556 556 0 0.0%
Alexander G. Rappaport 10,163 3,496 6,667 *
Alexandra Salas 592 592 0 0.0%
Allan MacDonald & Eileen MacDonald, as 5,081 1,748 3,333 *
Joint Tenants
Allen Notowitz 2,500 2,500 0 0.0%
Alvaro Tafur 1,250 1,250 0 0.0%
Alya Al Bahar & Lulwa Al Khaled, as Joint 5,081 1,748 3,333 *
Tenants
Anderson Wire Works, Inc. 7,663 996 6,667 *
Andre W. Iseli 5,081 1,748 3,333 *
Anne Falk (2) 1,101 1,101 0 0.0%
Anthony Giardina (2) 920 920 0 0.0%
Barry A. Kaplan 50,814 17,481 33,333 *
Barry Gray 10,163 3,496 6,667 *
Basil J. Asciutto 2,090 2,090 0 0.0%
Ben Rosenbloom 5,081 1,748 3,333 *
Beth Lipman (2) 1,425 1,425 0 0.0%
Brian Coventry (2) 1,201 1,201 0 0.0%
Brian Lantier 1,453 1,453 0 0.0%
Bruce Glaser (2) 4,850 4,850 0 0.0%
Bryon Voigt & Jacelyn Voigt, as Joint 1,250 1,250 0 0.0%
Tenants
C. Wyllys Cass, IV & Ellen M. Cass, as Joint 5,081 1,748 3,333 *
Tenants
Capital Ventures International 142,295 48,948 93,347 1.6%
Carl Kleidman (2) 11,500 11,500 0 0.0%
Carol R. Hill Spousal Trust (dated 12/22/99) 31,657 14,990 16,667 *
Charles A. Barnes, Jr. Revocable Living 3,831 498 3,333 *
Trust (dated 11/7/91)
Charles L. Wisseman, III 5,081 1,748 3,333 *
Chris Young 771 771 0 0.0%
Christopher Fox 15,244 5,244 10,000 *
Commonwealth Associates, LP (3) 226,103 211,024 15,079 *
ComVest Capital Partners, LLC (3) 57,945 46,911 11,034 *
Constantine S. Potamianos (2) 968 635 333 *
Conzett Europa Invest, Ltd. 15,244 5,244 10,000 *
Craig Blitz (2) 1,277 1,277 0 0.0%
Cranshire Capital, LP 7,500 7,500 0 0.0%
CRM Micro Cap Fund, LP (4) 33,699 10,845 22,854 *
CRM Partners, LP (4) 141,058 44,427 96,631 1.7%
CRM Retirement Partners, LP (4) 54,121 16,966 37,155 *
CRM US Value Fund Ltd. (4) 8,275 2,624 5,651 *
Daniel S. Och 30,489 10,489 20,000 *
David B. Heller 10,163 3,496 6,667 *
David Dercher & Su Ellen Dercher, as Joint 5,081 1,748 3,333 *
Tenants
David L. Cohen 15,244 5,244 10,000 *
David P. Faxon, Jr. 1,250 1,250 0 0.0%
David R. Nelson & Donna L. Nelson, as Joint 5,081 1,748 3,333 *
Tenants
David Stellway 3,831 498 3,333 *
Delaware Charter G&T c/o Rodney 7,663 996 6,667 *
15
COMMON SHARES
BENEFICIALLY COMMON SHARES
OWNED PRIOR OFFERED COMMON
TO BY THIS SHARES AFTER PERCENTAGE
NAME OF SELLING SHAREHOLDER OFFERING PROSPECTUS OFFERING OF CLASS
--------------------------- -------- ---------- -------- --------
Schorlemmer SEP IRA
Dolphin Offshore Partners (5) 53,333 53,333 0 0.0%
Domenic M. Strazzulla 1,250 1,250 0 0.0%
Domenick & Josephine Scaglione, as Joint 3,831 498 3,333 *
Tenants
Dominick DiCesare 5,081 1,748 3,333 *
Donald G. Drapkin (6) 37,533 3,496 34,037 *
Douglas & Evelyn Runckel, as Joint Tenants 3,831 498 3,333 *
Duane M. Fiedler 5,081 1,748 3,333 *
E&M RP Trust (dated 10/3/85) 63,797 30,044 33,753 *
Edward J. Rosenthal Profit Sharing Plan 5,081 1,748 3,333 *
(dated 1989)
Edwin M. Cooperman (2) (7) 14,857 460 14,397 *
Elite Sales, Inc. 3,831 498 3,333 *
Eric Erdman 5,081 1,748 3,333 *
Flynn Corporation 20,325 6,992 13,333 *
FM Grandchildren Trust (dated 7/18/96) 1,875 1,875 0 0.0%
Formula Unit Trust (8) 146,667 146,667 0 0.0%
Fotyfo Associates, LP 1,875 1,875 0 0.0%
Fred Manocherian 1,250 1,250 0 0.0%
Frederick B. Epstein 3,831 498 3,333 *
Garo A. Partoyan 5,081 1,748 3,333 *
Gary D. Schultz & Barbara A. Schultz, as 3,831 498 3,333 *
Joint Tenants
Gary Kanuit & Bradford Burns, as Tenants in 5,081 1,748 3,333 *
Common
Gerald & Daphna Cramer 1997 Charitable 33,218 8,740 24,478 *
Remainder Unitrust (dated 11/1/97) (4)
Gerald Cramer 1997 Charitable Remainder 33,218 8,740 24,478 *
Unitrust (dated 11/1/97) (4)
Gregg R. Goebel & Marilyn B. Goebel, as 3,831 498 3,333 *
Joint Tenants
H.D. Haley 1,875 1,875 0 0.0%
Hans Bodmer 10,163 3,496 6,667 *
Harvard Developments, Inc. 3,166 1,499 1,667 *
Harvard Investments, Inc. 15,828 7,495 8,333 *
Herman Sandler 3,750 3,750 0 0.0%
Howard Gittis 10,163 3,496 6,667 *
Howard Rosenbloom 5,081 1,748 3,333 *
Inder Tallur (2) 6,900 6,900 0 0.0%
Ingleside Company 102,713 35,320 67,393 1.2%
Inter Family Investments Co., Inc. 3,831 498 3,333 *
Intercontinental Investment Services, Inc. 3,831 498 3,333 *
Jacob Goldfield 40,948 20,548 20,400 *
James Nealis 5,081 1,748 3,333 *
Jerome Messana (2) 2,052 2,052 0 0.0%
Jesse N. Polan 2,500 2,500 0 0.0%
Jody Nelson 3,831 498 3,333 *
John A. Martell 15,325 1,992 13,333 *
John Dobson Foundation (9) 10,667 10,667 0 0.0%
Jon Brown 5,081 1,748 3,333 *
Jonathan L. Glashow 1,875 1,875 0 0.0%
Joseph Pallotta, Jr. 500 500 0 0.0%
Joseph P. Rienzi & Judith A. Rienzi, as Joint 5,747 747 5,000 *
Tenants
Joseph P. Wynne (2) 3,958 3,625 333 *
Just In Case, Ltd. 1,250 1,250 0 0.0%
Kanodia Partners, LP 10,163 3,496 6,667 *
16
COMMON SHARES
BENEFICIALLY COMMON SHARES
OWNED PRIOR OFFERED COMMON
TO BY THIS SHARES AFTER PERCENTAGE
NAME OF SELLING SHAREHOLDER OFFERING PROSPECTUS OFFERING OF CLASS
--------------------------- -------- ---------- -------- --------
Keith M. Rosenbloom (2) 12,711 12,711 0 0.0%
Kenneth B. Wilson 5,081 1,748 3,333 *
Kerry B. Skeen Revocable Trust U/T (dated 5,081 1,748 3,333 *
4/14/99)
Kim M. Schwencke 6,331 2,998 3,333 *
Kurt V. & Laura M. Reichelt, as Joint Tenants 5,081 1,748 3,333 *
Laurel Lester Mark 5,081 1,748 3,333 *
Lawrence W. McGary 5,081 1,748 3,333 *
Leo F. Mazzocchi, M.D. & Nancy T. Mazzocchi, 3,831 498 3,333 *
as Joint Tenants
Leroy Cramer Family Limited Partnership (4) 10,163 3,496 6,667 *
Mark Reichenbaum 20,326 6,992 13,333 *
Michael & Mona Barsa, as Joint Tenants with 5,081 1,748 3,333 *
Right of Survivorship
Michael Applebaum (2) 3,151 3,151 0 0.0%
Michael Bollag Charitable Remainder Unitrust 3,750 3,750 0 0.0%
(dated 1/7/92)
Michael K. Hoover (10) 484,888 34,962 449,926 7.9%
Michael S. Falk (2) (3) 125,763 112,503 13,260 *
Neal Holtvogt 5,081 1,748 3,333 *
Pamela Equities Corporation 1,875 1,875 0 0.0%
Paul F. Petrus 2,783 1,449 1,333 *
Paul O. Goldenheim 5,081 1,748 3,333 *
Paul Russo 5,081 1,748 3,333 *
Peggy Jordan 10,163 3,496 6,667 *
Pequot Navigator Offshore Fund, Inc. (11) 80,809 80,809 0 0.0%
Pequot Scout Fund, LP (11) 80,809 80,809 0 0.0%
Perg Proxy, LLC 94,014 32,341 61,673 1.1%
Peter Latour (2) 6,061 6,061 0 0.0%
Peter Palmieri (2) 1,703 1,703 0 0.0%
Philip R. Ladouceur (2) 460 460 0 0.0%
Porter Partners, LP 20,325 6,992 13,333 *
Reese-Cole Partnership, Ltd. 7,663 996 6,667 *
Richard Campanella (2) 920 920 0 0.0%
Richard Rosenblatt (2) 460 460 0 0.0%
Richard Yalen (2) 460 460 0 0.0%
RMC Capital, LLC (12) 293,052 126,112 166,940 2.9%
RML Burwick Family, LP 2,500 2,500 0 0.0%
Robert & Lois Silverman, as Joint Tenants 1,250 1,250 0 0.0%
Robert Hazan 1,250 1,250 0 0.0%
Robert Hoffman & Randy Weatherford, Tenants 5,081 1,748 3,333 *
in Common
Robert J. Spencer 5,081 1,748 3,333 *
Robert O'Sullivan (2) 13,922 13,922 0 0.0%
Robert P. Kouwe 10,163 3,496 6,667 *
Ron & Rosemarie Moschetta, as Joint Tenants 767 100 667 *
Ron Bloom (2) 1,150 1,150 0 0.0%
Ronald B. Booth 1,250 1,250 0 0.0%
Ronald Moschetta (2) 5,569 5,569 0 0.0%
Rovest Partnership 5,081 1,748 3,333 *
Rush and Co. 1,250 1,250 0 0.0%
Russia Wireless Holdings LLC (13) 20,267 20,267 0 0.0%
Salvatore A. Trupiano 5,081 1,748 3,333 *
Samuel R. Nussbaum 5,081 1,748 3,333 *
Sanjiv Patel & Shanthamallappa Ashok, as 5,081 1,748 3,333 *
Tenants in Common
Scott Greiper (2) 2,300 2,300 0 0.0%
Scott S. Prince 10,163 3,496 6,667 *
17
COMMON SHARES
BENEFICIALLY COMMON SHARES
OWNED PRIOR OFFERED COMMON
TO BY THIS SHARES AFTER PERCENTAGE
NAME OF SELLING SHAREHOLDER OFFERING PROSPECTUS OFFERING OF CLASS
--------------------------- -------- ---------- -------- --------
Seymour Wasserstrum 1,250 1,250 0 0.0%
Siam Partners II 63,797 30,044 33,753 *
Stephen T. Skoly & Richard K. Ouellette, as 5,081 1,748 3,333 *
Tenants in Common
Susan Hoffman (2) 250 250 0 0.0%
Sybesma Research, LLC 5,081 1,748 3,333 *
Tahoe Partnership 63,797 30,044 33,753 *
TGAAR Properties, Inc. 3,831 498 3,333 *
The Aubrey J. Ferrao Living Trust U/A/D 2,500 2,500 0 0.0%
6/26/98
Thom Waye (2) 2,808 2,475 333 *
Thomas Boova 5,081 1,748 3,333 *
Thomas Israel 10,163 3,496 6,667 *
Thomas J. Keeney 3,831 498 3,333 *
Thomas R. Kelley 5,081 1,748 3,333 *
Travis L. Provow 5,081 1,748 3,333 *
Verizon Master Trust (14) 80,000 80,000 0 0.0%
Virginia R. Nelson Trust (1/10/87) 1,250 1,250 0 0.0%
Vladik Vainberg (2) 1,022 1,022 0 0.0%
Walter F. Toombs 10,163 3,496 6,667 *
Wexford Clearing Services C/F Charles F.A. 3,831 498 3,333 *
Schroeder IRA
Wexford Clearing Services Corp. C/F FBO 1,250 1,250 0 0.0%
Thomas G. Keough IRA
Wexford Clearing Services Corp. C/F Janis 508 175 333 *
Campanella IRA
William Anthony Rice 7,198 4,198 3,000 *
William Kress Schapiro 2,500 2,500 0 0.0%
William T. McCaffrey 6,140 2,973 3,167 *
Wingate Investments, Ltd. 20,325 6,992 13,333 *
Zeke, LP (15) 133,333 133,333 0 0.0%
ZWD Investments, LLC 101,836 34,989 66,847 1.2%
- --------------
*Represents less than 1% of our common stock.
(1) Common shares beneficially owned prior to offering includes 48,643
common shares and 42,091 stock options owned directly by A. Thomas
Hardy, Senior Vice President - Laboratory Services and President of Key
Communications Service, Inc., our wholly-owned subsidiary.
(2) Includes common shares owned as a result of warrants assigned by
Commonwealth Associates as part of its compensation as private
placement agent in the Series C Preferred Financing and subsequently
exchanged into shares of common stock in August 2001.
(3) Michael W. Falk is a director of ProxyMed, Inc. and the principal owner
of the general partner of Commonwealth Associates, LP and ComVest
Capital Partners, LLC. Based on information available at the time of
this filing, common shares owned beneficially prior to offering include
a total of 401,453 shares of common stock and 8,358 warrants owned by
the group of Mr. Falk, Commonwealth and ComVest. For purposes of this
Prospectus, the combined percentage of class for Mr. Falk's holdings is
less than 1%.
(4) Based on information available at the time of this filing, common
shares beneficially owned prior to offering includes 99,247 shares of
common stock and 13,334 stock options owned beneficially by Gerald B.
Cramer, a director of ProxyMed, Inc., and various related parties
(including family members and trusts established by Mr. Cramer). Mr.
Cramer has an ownership interest in CRM Micro Cap Fund, LP; CRM
Partners, LP; CRM Retirement Partners, LP; and CRM US Value Fund, LP.
For purposes of this Prospectus, the combined percentage of class for
all of Mr. Cramer's holdings is approximately 4.5%.
18
(5) Includes 40,000 shares common shares issued pursuant to a Subscription
Agreement dated December 18, 2001 and 13,333 additional shares required
to be issued to the investor in the event this Registration Statement
is not declared effective by the SEC on or before March 20, 2002.
(6) Common shares beneficially owned prior to offering includes 703 common
shares (issued as dividends on Series C Preferred Stock) and 26,667
stock options owned directly by Donald G. Drapkin, a former director of
ProxyMed, Inc.
(7) Common shares beneficially owned prior to offering includes 450 common
shares, 613 warrants (assigned by Commonwealth Associates) and 13,334
stock options owned directly by Edwin M. Cooperman, a director of
ProxyMed, Inc.
(8) Includes 110,000 shares common shares issued pursuant to a Subscription
Agreement dated December 18, 2001 and 36,667 additional shares required
to be issued to the investor in the event this Registration Statement
is not declared effective by the SEC on or before March 20, 2002.
(9) Includes 8,000 shares common shares issued pursuant to a Subscription
Agreement dated December 18, 2001 and 2,667 additional shares required
to be issued to the investor in the event this Registration Statement
is not declared effective by the SEC on or before March 20, 2002.
(10) Common shares beneficially owned prior to offering includes 132,450
shares of common stock and 352,438 stock options owned directly by
Michael K. Hoover, Chairman of the Board and Chief Executive Officer of
ProxyMed, Inc.
(11) Includes 60,607 common shares issued pursuant to a Subscription
Agreement dated December 18, 2001 for each of Pequot Navigator Offshore
Fund, Inc. and Pequot Scout Fund, LP. Also included are 20,202 shares
additional shares required to be issued to each investor in the event
this Registration Statement is not declared effective by the SEC on or
before March 20, 2002. Additionally, based on information available at
the time of this filing, Pequot Management Capital, Inc. beneficially
owns 55,334 common shares. For purposes of this Prospectus, the
combined percentage of class for all of Pequot's holdings are 1.0%.
(12) Includes 29,000 shares common shares issued pursuant to a Subscription
Agreement dated December 18, 2001 and 9,667 additional shares required
to be issued to the investor in the event this Registration Statement
is not declared effective by the SEC on or before March 20, 2002.
(13) Includes 15,200 shares common shares issued pursuant to a Subscription
Agreement dated December 18, 2001 and 5,067 additional shares required
to be issued to the investor in the event this Registration Statement
is not declared effective by the SEC on or before March 20, 2002.
(14) Includes 60,000 shares common shares issued pursuant to a Subscription
Agreement dated December 18, 2001 and 20,000 additional shares required
to be issued to the investor in the event this Registration Statement
is not declared effective by the SEC on or before March 20, 2002.
(15) Includes 100,000 shares common shares issued pursuant to a Subscription
Agreement dated December 18, 2001 and 33,333 additional shares required
to be issued to the investors in the event this Registration Statement
is not declared effective by the SEC on or before March 20, 2002.
We have agreed to prepare and file any amendments and supplements to
the registration statement in which this Prospectus is included as may be
necessary to keep it effective until this Prospectus is no longer required for
the selling shareholders to sell their shares of common stock, and to indemnify
and hold the selling shareholders harmless against certain liabilities under the
Securities Act of 1933, as amended (the "Securities Act"), that could arise in
connection with the selling shareholders' sale of their shares. We have agreed
to pay all reasonable fees and expenses incidental to the filing of these
registration statements, but the selling shareholders will pay any brokerage
commissions, discounts or other expenses relating to the sale of their common
stock.
None of the selling shareholders has had any material relationship with
us within the past three years except for (1) Commonwealth, which has acted as
both underwriter and placement agent in previous private placements of our
equity and debt securities; (2) Michael Hoover, who has acted as our Chairman of
the Board of Directors and Chief Executive Officer; (3) Michael Falk, who has
acted as one of our directors; (4) Gerald
19
Cramer, who has acted as one of our directors; (5) Donald Drapkin, who had acted
as one of our directors until January 17, 2002; and (6) A. Thomas Hardy, who has
acted as our Senior Vice President - Laboratory Services and President of Key
Communications Service, Inc., our wholly-owned subsidiary.
PLAN OF DISTRIBUTION
The selling shareholders may sell the shares of common stock described
in this Prospectus directly or through underwriters, broker-dealers or agents.
The selling shareholders may also transfer, devise or give their shares by other
means not described in this Prospectus. As a result, pledgees, donees,
transferees or other successors in interest that receive such shares as a gift,
partnership distribution or other non-sale related transfer may offer shares of
common stock under this Prospectus. In addition, if any shares covered by this
Prospectus qualify for sale pursuant to Rule 144 under the Securities Act, as
amended, the selling shareholders may sell such shares under Rule 144 rather
than pursuant to this Prospectus.
The selling shareholders may sell shares of common stock from time to
time in one or more transactions:
- at fixed prices that may be changed,
- at market prices prevailing at the time of sale, or
- at prices related to such prevailing market prices or
at negotiated prices.
The selling shareholders may offer their shares of common stock in one
or more of the following transactions:
- on any national securities exchange or quotation
service on which the common stock may be listed or
quoted at the time of sale, including the Nasdaq
National Market,
- in the over-the-counter market,
- in privately-negotiated transactions,
- through options,
- by pledge to secure debts and other obligations,
- by a combination of the above methods of sale,
- to cover short sales made pursuant to this
Prospectus, or
20
- any other method permitted pursuant to applicable
law.
In effecting sales, brokers or dealers engaged by the selling
shareholders or affiliated with them may arrange for other brokers or dealers to
participate in the resales. The selling shareholders may enter in a block trade
in which a broker-dealer will attempt to sell a block of shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction. A broker-dealer may purchase such shares as principal and offer the
shares for resale for its account pursuant to this Prospectus. Broker-dealers
may agree with the selling shareholders to sell a specified number of these
shares at a stipulated price per share. The selling shareholders may enter into
hedging transactions with broker-dealers, and in connection with those
transactions, broker-dealers may engage in short sales of the shares. The
selling shareholders also may sell shares short and deliver the shares to close
out such short positions. The selling shareholders also may enter into option or
other transactions with broker-dealers that require the delivery to the
broker-dealer of the shares, which the broker-dealer may resell pursuant to this
Prospectus. The selling shareholders also may pledge the shares to a broker or
dealer, and upon a default, the broker or dealer may effect sales of the pledged
shares pursuant to this Prospectus.
Broker-dealers may receive commissions or discounts from the selling
shareholders (or, if any broker-dealer acts as agent for the purchaser of
shares, from the purchaser) in amounts to be negotiated. The selling
shareholders do not expect these commissions and discounts to exceed what is
customary in the types of transactions involved. The broker-dealer transactions
may include:
- purchases of the shares by a broker-dealer as
principal and resales of the shares by the
broker-dealer for its account pursuant to this
Prospectus;
- ordinary brokerage transactions; or
- transactions in which the broker-dealer solicits
purchasers.
If a material arrangement with any broker-dealer or other agency is
entered into for the sale of any shares of common stock through a block trade,
special offering, exchange distribution, secondary distribution, or a purchase
by a broker or dealer, a Prospectus supplement will be filed, if necessary,
pursuant to Rule 424(b) under the Securities Act disclosing the material terms
and conditions of these arrangements.
The SEC may deem the selling shareholders and any underwriters,
broker-dealers or agents that participate in the distribution of the shares of
common stock to be "underwriters" within the meaning of the Securities Act. The
SEC may deem any profits on the resale of the shares of common stock and any
compensation received by any underwriter, broker-dealer or agent to be
underwriting discounts and commissions under the Securities Act.
21
Under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), any person engaged in the distribution of the shares of common stock may
not simultaneously engage in market-making activities with respect to common
stock for five business days prior to the start of the distribution. In
addition, each selling shareholder and any other person participating in a
distribution will be subject to the Exchange Act, which may limit the timing of
purchases and sales of common stock by the selling shareholder or any other
person.
DESCRIPTION OF SECURITIES
Our authorized capital stock consists of 13,333,333 shares of common
stock, par value $.001 per share, and 2,000,000 shares of preferred stock, par
value $.01 per share, of which 15,000 shares have been designated Series B
Preferred Stock and 300,000 shares have been designated Series C Preferred
Stock. At February 14, 2002, 5,141,181 shares of common stock were issued and
outstanding and 3,000 shares of Series C Preferred Stock were issued and
outstanding.
Of the 5,141,181 shares of common stock outstanding on February 14,
2002, this amount does not include the 20,000 shares of common stock issuable
upon conversion of the outstanding Series C Preferred Stock, the 188,942 shares
of common stock issuable upon exercise of currently outstanding warrants, and
842,433 shares of common stock reserved for issuance upon exercise of currently
outstanding stock options.
The descriptions below of the terms of our common stock, Series B
Preferred Stock, Series C Preferred Stock and the related warrants are summaries
of the material terms only and do not purport to be complete. Such descriptions
are subject to and qualified by the actual agreements relating to our Series B
Preferred Stock, Series C Preferred Stock, such warrants, our amended Articles
of Incorporation and By-laws, all of which have been filed with the SEC and are
incorporated into this Prospectus by reference, and by applicable law.
Common Stock
The issued and outstanding shares of common stock are, and the shares
being offered by this Prospectus will be, validly issued, fully paid and
non-assessable. The holders of outstanding shares of common stock are entitled
to receive dividends out of assets legally available for them at such times and
in such amounts as the Board of Directors may from time to time determine. We
have not paid any dividends and do not expect to pay cash dividends on our
common stock in the foreseeable future.
All shares of common stock have equal voting rights and, when validly
issued and outstanding, have one vote per share in all matters to be voted upon
by the shareholders. Cumulative voting in the election of directors is not
allowed, which means that the holders of more than 50% of the outstanding shares
can elect all the directors if they
22
choose to do so and, in such event, the holders of the remaining shares will not
be able to elect any directors.
The shares have no preemptive, subscription, conversion or redemption
rights. Upon liquidation, dissolution or winding-up of ProxyMed, the holders of
common stock are entitled to receive pro rata the assets of ProxyMed which are
legally available for distribution to shareholders.
On August 17, 2001, we announced a 1-for-15 reverse stock split of our
common stock whereby each 15 shares of common stock were exchanged for one new
share of common stock.
On December 21, 2001, we sold 483,414 shares of our common stock at
$16.50 per share, or an aggregate of $7,976,331, in a private placement to nine
U.S. and Canadian institutional and accredited investors, resulting in net
proceeds to us of approximately $7,247,500 after costs of $728,800. Certain of
our executive officers, directors and controlling persons have agreed to a
lock-up on all shares of ProxyMed owned or beneficially owned by them until a
registration statement covering the shares sold in the private placement is
declared effective. Our registration statement covering the resale of these
shares must be declared effective by the SEC on or before March 20, 2002, or the
per share purchase price will be reduced by 5% for each month (or on a pro rata
basis for any portion thereof) thereafter until such time as the registration
statement is effective; provided, however, that the maximum reduction in the per
share purchase price shall be 25%. The reduction in the per share purchase
price, if any, shall be evidenced by the issuance of additional shares to the
investors within five days following the effective date of the registration
statement.
Preferred Stock
In addition to Series C Preferred Stock, our Board of Directors has the
authority to issue 1,731,900 additional shares of preferred stock in one or more
series and to fix the designation, relative powers, preferences and rights and
qualifications, limitations or restrictions of all shares of each such series,
including dividend rates, conversion rights, voting rights, redemption and
sinking fund provisions, liquidation preferences and the number of shares
constituting each such series, without any further vote or action by the
shareholders.
The issuance of preferred stock could decrease the amount of earnings
and assets available for distribution to holders of common stock or adversely
affect the rights and powers, including voting rights, of the holders of common
stock and could have the effect of delaying, deferring or preventing a change in
control of ProxyMed without further action by the shareholders.
23
Series B Preferred Stock
Pursuant to the terms of a Securities Purchase Agreement dated December
23, 1999, we issued 15,000 shares of Series B Preferred Stock in a private
placement to institutional investors.
In connection with the sale of Series B Preferred Stock, we issued
warrants (the "Old Warrants") to purchase up to 53,333 shares of common stock,
subject to adjustment in certain events. The original exercise price of the Old
Warrants was $144.60 per share, subject to adjustment in certain events. The Old
Warrants expire on December 23, 2002. In addition, in order to obtain the
consent of Transamerica Business Credit Corporation to the sale of Series B
Preferred Stock, a warrant to purchase 1,667 shares of common stock at an
original exercise price of $174.30 per share was issued to Transamerica (the
"Transamerica Warrant") on substantially the same terms as the Old Warrants. The
exercise price and number of shares of common stock which may be purchased upon
exercise of such warrants continue to be subject to further adjustment upon the
occurrence of certain dilution events including, without limitation, certain
issuances of common stock, stock options or convertible securities or certain
corporate transactions such as stock splits, mergers or asset sales.
Series B Preferred Stock converts into common stock at a floating rate
based on the market price of the common stock. The terms of Series B Preferred
Stock provide that the holders cannot exercise their rights to convert Series B
Preferred Stock prior to December 23, 2000, unless certain triggering events
occur. One such triggering event occurred as of May 1, 2000 when the closing
price of the common stock had been below $63.15 for 10 trading days, thus
causing the restriction on conversions to cease to be in effect.
Effective May 4, 2000, we entered into a Redemption and Exchange
Agreement (the "Redemption Agreement") with holders of 13,000 shares of Series B
Preferred Stock. Under the terms of the Redemption Agreement, we redeemed 13,000
shares of Series B Preferred Stock at 116.5% of the Conversion Amount (as
defined in the Articles of Amendment to our Articles of Incorporation) creating
Series B Preferred Stock (the "Series B Articles of Amendment"). As of October
4, 2001, the remaining holder of Series B Preferred Stock had converted all of
its 2,000 issued and outstanding shares of Series B Preferred Stock into an
aggregate of 125,661 shares of our common stock.
The Redemption Agreement also provided for the exchange of 46,222 of
the Old Warrants issued to the holders of Series B Preferred Stock subject to
the Redemption Agreement for warrants (the "Exchanged Warrants") with an
exercise price of $22.50 per share. In addition, such holders have received, in
the aggregate, 43,333 additional warrants (the "New Warrants") at an exercise
price of $22.50 per share. Effective April 24, 2001, we cancelled and exchanged
all outstanding Exchanged Warrants and New Warrants pursuant to Exchange
Agreements with these holders of the Series B Preferred Stock.
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In connection with the cancellation and exchange of these warrants, the
remaining holder of the Series B Preferred Stock and the holders of the Series C
Preferred Stock have agreed to waive certain anti-dilution rights afforded by
certain outstanding warrants, the Series B Preferred Stock and the Series C
Preferred Stock.
As a result of the reduced conversion price in the Conversion Offer,
85,689 warrants with an exercise price of $15.00 per share issued in connection
with our Series B 6% Convertible Preferred Stock were reset into 98,493 warrants
with a new exercise price of $13.05 per share as a result of anti-dilution
provisions relating to such warrants. As a result of this reset a non-cash,
deemed dividend charge of approximately $207,800 was reflected in the loss
applicable to common shareholders in the fourth quarter of 2001.
Complete copies of the Series B Articles of Amendment, the form of the
Old Warrants and the Securities Purchase Agreement are contained in our Current
Report on Form 8-K filed with the SEC on December 28, 1999, and are incorporated
herein by reference. Complete copies of the Redemption Agreement, the Exchanged
Warrants and the New Warrants are contained in our Current Report on Form 8-K
filed with the SEC on May 8, 2000, and are incorporated herein by reference.
Complete copies of the Exchange Agreements are contained in our Current Report
on Form 8-K filed with SEC on April 26, 2001 and are incorporated herein by
reference. The descriptions of these documents are summaries of the material
terms and conditions only and are qualified in their entirety by reference to
the complete documents which are publicly available from the SEC.
Series C Preferred Stock
Pursuant to the terms of a Subscription Agreement dated June 15, 2000,
we sold, in a private placement to institutional and individual investors (the
"Series C Preferred Financing"), a total of $24,310,000 of 7% Convertible Senior
Secured Notes (the "Notes") due January 1, 2001. Together with the Notes, we
issued five-year warrants for the purchase of an aggregate of 810,333 shares of
common stock at an exercise price of $15.00 per share. As described below, all
of the Notes have been converted into shares of Series C Preferred Stock. The
conversion price of the Series C Preferred Stock, the warrant exercise price,
and number of shares of common stock issuable upon exercise of the warrants are
subject to adjustment upon the occurrence of certain dilution events including,
without limitation, certain issuances of common stock, stock options or
convertible securities issued after June 2001, or certain corporate transactions
such as stock splits, mergers or asset sales. Certain of the forgoing
adjustments, however, are no longer applicable as explained more fully below.
As a result of completion of the redemption of the Series B Preferred
Stock pursuant to the Redemption Agreement, the Notes, plus accrued interest
thereon of approximately $20,000, automatically converted into 253,265 shares of
Series C Preferred Stock on June 30, 2000. Shares of Series C Preferred Stock
are immediately convertible into common stock at any time by the holder at an
initial conversion price of $15.00 per share. Shares of Series C Preferred are
subject to mandatory conversion if we
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raise more than $30 million in gross proceeds from the issuance of securities in
a private or public placement or if the closing stock price of our common stock
is trading at $45.00 for 20 consecutive trading days. If declared by our Board
of Directors in its sole discretion, the Series C Preferred Stock is entitled to
receive a 7% annual non-cumulative dividend, payable quarterly in cash or shares
of common stock at our option. If paid in common stock, the common stock is
valued at $15.00 per share, subject to adjustment. Commonwealth served as
private placement agent in the Series C Preferred Financing for which it
received, in addition to cash fees of $2,431,000, five-year warrants to purchase
552,867 shares of common stock at an exercise price of $15.00 per share. As part
of its compensation for financial advisory services in connection with the
Series C Preferred Financing, we paid cash fees of $250,000 and also issued to
Commonwealth a five-year warrant to purchase 66,667 shares of common stock at an
exercise price of $22.50 per share.
The investors in the Series C Preferred Financing agreed to a one-year
lockup on the transfer or sale of any shares of common stock received upon
conversion of Series C Preferred Stock and exercise of the related warrants
issued. Additionally, Commonwealth has agreed to a 15-month lockup on the sale
or transfer of the shares of common stock underlying the warrants issued in
connection with Series C Preferred Financing and certain officers of ProxyMed
have also agreed to a similar lockup on all common stock owned or acquired
during the 15-month period. At the discretion of Commonwealth, lockup periods
for all parties can be extended for a period of up to an additional 12 months or
may be terminated early.
In August 2000, we sold 10,000 shares of Series C Preferred Stock for
$1 million in a private placement and issued five-year warrants for the purchase
of 33,333 shares of common stock at an exercise price of $15.00 per share to Mr.
Michael K. Hoover, our new Chairman of the Board and Chief Executive Officer,
under terms substantially identical to the Series C Preferred Financing. Mr.
Hoover has also agreed to similar lockup terms agreed to in the Series C
Preferred Financing by other officers of ProxyMed, as noted above.
If declared by our Board of Directors in its sole discretion, the
quarterly dividend on Series C Preferred Stock may be paid in cash (to the
extent permitted by the terms of the Series B Preferred Stock) or common stock.
If paid in stock, the stock is valued at $15.00 per share, subject to
adjustment. Dividends on Series C Preferred Stock are non-cumulative.
In June 2001, we offered to exchange into shares of common stock (the
"Series C Exchange Offer") (i) 843,667 warrants (the "Investor Warrants") that
were issued to holders of the Series C Preferred, (ii) 552,867 warrants (the
"Agent's Warrants") that were issued to Commonwealth in connection with the
private placement of the Series C Preferred, and (iii) 66,667 warrants (the
"Advisory Warrants") that were issued to Commonwealth for certain advisory
services that Commonwealth provided to us. Under the terms of the Series C
Exchange Offer, we would issue 0.75 shares of its common stock for each Investor
Warrant, 0.75 shares of its common stock for each Agent's
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Warrant, and 0.625 shares of its common stock for each Advisory Warrant. The
Investor Warrants, the Agent's Warrants and the Advisory Warrants are
collectively known as the "Series C Warrants".
On August 15, 2001, we canceled and exchanged 1,412,033, or 96.5%, of
the 1,463,201 Series C Warrants for 1,050,692 shares of common stock. The shares
issued in this exchange are not yet registered but are required to be registered
in accordance with terms of the original Subscription Agreement, which we intend
this Registration Statement to cover. In connection with the cancellation and
exchange of the Series C Warrants, the exchanged shares are subject to an
additional lock-up period through February 15, 2002. Additionally, for this
transaction, we recorded a deemed dividend charge of $3,195,000 in the quarter
ended September 30, 2001.
As of January 11, 2002, 51,167 warrants issued in connection with the
Series C Preferred Financing remain outstanding and are convertible into an
aggregate of 51,167 shares of our common stock.
On December 13, 2001, we offered to convert the 203,799 shares
outstanding of our Series C 7% Convertible Preferred Stock (the "Series C
Preferred Stock") into shares of our common stock at a reduced conversion price
(the "Conversion Offer"). For the sixty day period ending February 11, 2002, the
holders of the Series C Preferred Stock shares were able to convert such shares
at a reduced conversion price of $13.05 per share instead of the conversion
price of $15.00. As of February 11, 2002 holders of approximately 98.5% of the
outstanding Series C Preferred had converted their shares into common stock. As
a result of the conversion, 1,338,617 common shares were issued, plus an
additional 200,019 common shares were issued as a result of the reduction in the
conversion price. Additionally, a non-cash, deemed dividend charge of
approximately $3.4 million was reflected in the net loss applicable to common
shareholders in the fourth quarter of 2001 for those shares converted through
December 31, 2001 and the Company expects to reflect non-cash, a deemed dividend
charge of approximately $600,000 in the first quarter of 2002 for any shares
converted after December 31, 2001.
In addition, holders of more than two-thirds of the outstanding Series
C Preferred voted to amend the Articles of Designation that govern the Series C
Preferred and the Subscription Agreement dated as of June 15, 2000. The
amendments eliminated certain rights of the Series C Preferred including
anti-dilution provisions, voting rights and certain restrictive covenants
assumed by us, and will apply to any remaining Series C Preferred shareholders.
Nevertheless, in the event of liquidation of ProxyMed, the remaining
holders of the Series C Preferred Stock will continue to be entitled to a
liquidation preference before any amounts are paid to the holders of common
stock or any other security junior to Series C Preferred Stock. The liquidation
preference is equal to an amount originally paid for the Series C Preferred
Stock ($100 per share) plus accrued and unpaid dividends on any outstanding
Series C Preferred Stock through the date of determination, if previously
declared by our Board of Directors in its sole discretion.
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The holders of Series C Preferred Stock are entitled to one vote per
share of common stock issuable upon the conversion of the Series C Preferred
Stock and, except as otherwise provided by law, will vote as a single class with
the holders of common stock on all matters submitted to a vote.
Complete copies of the following documents described herein are
available as indicated below and are incorporated herein by reference: (i) the
Series C Preferred Financing documents, which are contained in our Quarterly
Report on Form 10-Q/A for the quarterly period ended June 30, 2000, filed with
the SEC on August 31, 2000; and (ii) the Conversion Agreements and the
Designation and Subscription Amendment Agreements contained in our Current
Report on Form 8-K filed with the SEC on January 10, 2002. The descriptions of
these documents are summaries of the material terms and conditions only and are
qualified in their entirety by reference to the complete documents which are
publicly available from the SEC.
Certain Anti-Takeover Provisions
Under ProxyMed's Articles of Incorporation, there are approximately
6,925,600 unissued, unreserved shares of common stock and 1,731,900 shares of
preferred stock available for future issuance without shareholder approval. The
existence of authorized but unissued capital stock could have the effect of
making more difficult or discouraging an acquisition of ProxyMed deemed
undesirable by our Board of Directors.
We are subject to several anti-takeover provisions under Florida law
that apply to a public corporation organized under Florida law, unless the
corporation has elected to opt out of those provisions in its articles of
incorporation or bylaws. We have not elected to opt out of certain of those
provisions. The Florida Business Corporation Act prohibits the voting of shares
in a publicly-held Florida corporation that are acquired in a "control share
acquisition" unless the holders of a majority of the corporation's voting shares
(exclusive of shares held by officers of the corporation, inside directors or
the acquiring party) approve the granting of voting rights as to the shares
acquired in the control share acquisition or unless the acquisition is approved
by the corporation's board of directors. A "control share acquisition" is
defined as an acquisition that immediately thereafter entitles the acquiring
party to vote in the election of directors within each of the following ranges
of voting power: (i) one-fifth or more but less than one-third of such voting
power; (ii) one-third or more but less than a majority of such voting power; and
(iii) more than a majority of such voting power.
The Florida Business Corporation Act also contains an "affiliated
transaction" provision that prohibits a publicly-held Florida corporation from
engaging in a broad range of business combinations or other extraordinary
corporate transactions with an "interested shareholder" unless (i) the
transaction is approved by a majority of disinterested directors before the
person becomes an interested shareholder; (ii) the interested shareholder has
owned at least 80% of the corporation's outstanding voting shares for at least
five years; or (iii) the transaction is approved by the holders of two-thirds of
the corporation's voting shares other than those owned by the interested
28
shareholder. An interested shareholder is defined as a person who together with
affiliates and associates beneficially owns more than 10% of the corporation's
outstanding voting shares.
Nasdaq National Market
Our common stock is, and the shares being offered by this Prospectus
will be, traded in the Nasdaq National Market under the symbol "PILL".
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Registrar and
Transfer Company, Cranford, New Jersey.
EXPERTS
The validity of the common stock offered hereby will be passed on for
us by Holland & Knight LLP, 701 Brickell Avenue, Suite 3000, Miami, Florida
33131.
The consolidated financial statements as of December 31, 2000 and 1999
and for each of the three years in the period ended December 31, 2000,
incorporated by reference in this Prospectus have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
The balance sheet of MDP Corporation as of December 31, 2000, and the
related statements of operations, stockholder's equity and cash flows of MDP
Corporation for the year then ended, that are incorporated by reference in this
Prospectus have been incorporated by reference in reliance on the report of
Consent of Cerqueda, Morgan, Gault & Collins, LLP (formerly Pate, Cerqueda,
Morgan & Gault, LLP), independent accountants, given on that firm's authority as
experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference room at 450 N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Our SEC filings are also available to the public from the SEC's web site at
http://www.sec.gov.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we have
filed with it, which means that we can disclose important information to you by
referring you
29
to those documents. The information incorporated by reference is considered to
be part of this Prospectus, and information that we file later with the SEC will
automatically update and supersede this information. We incorporate by reference
into this Prospectus the following documents listed below and any future filings
that we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:
(1) Our Annual Report on Form 10-K for the year ended December 31,
2000 filed on March 28, 2001.
(2) Our Quarterly Report on Form 10-Q for the quarter ended March
31, 2001 filed on May 5, 2001.
(3) Our Quarterly Report on Form 10-Q for the quarter ended June
30, 2001 filed on August 7, 2001.
(4) Our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2001 filed on November 13, 2001.
(5) Our Current Report on Form 8-K filed on April 26, 2001.
(6) Our Current Report on Form 8-K filed on May 7, 2001.
(7) Our Current Report on Form 8-K filed on June 15, 2001.
(8) Our Current Report on Form 8-K/A filed on July 2, 2001.
(9) Our Current Report on Form 8-K filed on July 20, 2001.
(10) Our Current Report on Form 8-K filed on August 21, 2001.
(11) Our Current Report on Form 8-K filed on October 25, 2001.
(12) Our Current Report on Form 8-K filed on January 10, 2002.
(13) The description of our common stock contained in our
Registration Statement on Form 8-A declared effective on
August 5, 1993, including any other amendment or report filed
for the purpose of updating such information.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
ProxyMed, Inc.
2555 Davie Road, Suite 110
Fort Lauderdale, Florida 33317
Attn: Corporate Secretary
Telephone: (954) 473-1001, ext. 300
You should rely only on information incorporated by reference or
provided in this Prospectus and any prospectus supplement. No one (including any
salesman or broker) is authorized to provide oral or written information about
this offering that is not included in this Prospectus.
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