form_s2a-052402
As filed with the Securities and Exchange Commission on May 24, 2002 Registration No. 333-73572
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
PRE-EFFECTIVE AMENDMENT NO.3
TO
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MEDIX RESOURCES, INC.
(Exact Name of Registrant as Specified in Its Charter)
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Colorado 84-1123311
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
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The Graybar Building
420 Lexington Ave., Suite 1830
New York, New York 10170
(212) 697-2509
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
Lyle B. Stewart, Esq.
Lyle B. Stewart, P.C.
3751 S. Quebec Street
Denver, CO 80237
(303) 267-0920
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
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Approximate date of commencement of proposed sale to the public: From time to
time after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only
in connection with dividend or interest reinvestment plans, check the following box: |X|
CALCULATION OF REGISTRATION FEE
Title of Securities Proposed Proposed
to be Amount to be Offering Price Aggregate Offering Amount of
Registered Registered Per Share Price Registration Fee
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Common stock, par value 447,500 (1) $0.75(1) $335,625(1) $84.00(1)
$.001 per share 48,750 (2) $0.47(2) $22,913(2) $2.11(2)
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(1) This amount was registered and the fee was paid on November 16, 2001, when the Registration
Statement was filed.
(2) This amount was registered and the fee was paid on April 3, 2002, when Amendment No. 2 was filed
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay
its effective date until the Registrant shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until this Registration Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
SUBJECT TO COMPLETION
DATED May 24, 2002
PROSPECTUS
MEDIX RESOURCES, INC.
496,250 Shares of Common Stock
The shareholders of Medix Resources, Inc. named herein will have the right to offer and sell up to an
aggregate of 496,250 shares of our common stock under this Prospectus.
Medix will not receive directly any of the proceeds from the sale of these shares by the selling
shareholders. However, Medix will receive the proceeds of the exercise of the options and warrants to
purchase the shares to be sold hereunder. Medix will pay the expenses of registration of these shares.
The common stock is traded on the American Stock Exchange under the symbol "MXR". On May 15, 2002,
the closing price of the common stock was reported as $0.53.
Medix has available to it an equity line of credit that permits it to draw funds for its operations,
from time to time, and issue shares of its common stock to the providers of such facility in connection
with such draws. The shares issued are registered so that they can be sold to the public upon issuance.
Currently, 4,796,763 shares are registered for sale by the equity line of credit providers in connection
with future draws. See "Equity Line Financing."
The securities offered hereby involve a high degree of risk. See "RISK FACTORS" beginning on page 3
for certain risks that should be considered by prospective purchasers of the securities offered hereby.
Neither the Securities and Exchange Commission nor any state securities commission has approved or
disapproved of the 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 May 24, 2002
No dealer, salesman or other person has been authorized to give any information or to make any
representation not contained in or incorporated by reference in this Prospectus and, if given or made, such
information or representation must not be relied upon as having been authorized by us, the selling
shareholders or any other person. This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any of the securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such an offer in such jurisdiction. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create any implication that the information herein is
correct as of any time subsequent to the date hereof or that there has been no change in our affairs since
such date.
TABLE OF CONTENTS
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SUMMARY
RISK FACTORS
FORWARD-LOOKING STATEMENTS
THE COMPANY
EQUITY LINE FINANCING
USE OF PROCEEDS
SELLING SHAREHOLDERS
DESCRIPTION OF SECURITIES
PLAN OF DISTRIBUTION
INDEMNIFICATION OF OFFICERS AND DIRECTORS
AVAILABLE INFORMATION
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
LEGAL MATTERS
EXPERTS
SUMMARY
This Prospectus covers the offering and sale of up to 496,250 shares of our common stock to the public
by certain selling shareholders listed under the heading "Selling Shareholders" further back in this
Prospectus. As of May 15, 2002, we had [62,923,624] shares of our common stock outstanding, and
approximately [27,842,337] shares were issuable upon the exercise of outstanding options, warrants or other
rights, and the conversion of outstanding preferred stock.
We are developing software products for Internet-based communications and information management by
medical service providers. We have no revenue from operations and are funding the development of our
software products through the sales of our securities. We have granted a security interest in all of our
intellectual property assets to secure a financing. See "The Company-Recent Developments" and "Risk
Factors."
Because of our continuing losses, and the lack of a certain source of capital to fund our development
of software products, our independent accountants included a "going concern" exception in their audit
report on our audited financial statements for the year 2001. The "going concern" exception signifies that
significant questions exist about our ability to continue in business. See "Risk Factors."
Currently, we are funding our development and deployment activities through an equity line of credit
financing, which is not an assured source of funds. The equity line of credit is provided by Cornell
Capital Partners, L.P. and Dutchess Private Equities Fund, L.P. (the "providers"), which jointly provide
the facility under a single agreement. The agreement provides that we may draw down up to $10,000,000 over
its two-year term, ending June 12, 2003, subject to the conditions for the draws being satisfied, which can
not be assured. We issue shares of our common stock to the providers of such facility in connection with
such draws. The shares issued are registered so that they can be sold to the public immediately upon
issuance. We have made 17 draws on the equity line of credit since August of 2001. As of May 15, 2002,
we had received $2,681,099 in advances, from which offering expenses of $198,511 were paid, and had issued
to the providers 4,703,237 shares of our common stock relating to the advances. An additional 542,847
shares have been issued to affiliates of the providers as fees for arranging the equity line facility.
Currently, 4,796,763 shares are registered for sale by the providers in connection with future draws. The
shares issued pursuant to the equity line advances to date have been priced from $0.41 to $0.77 per share.
See "Risk Factors" and "Equity Line Financing."
Our principal executive office is located at 420 Lexington Avenue, Suite 1830, New York, NY 10170, and
its telephone number is (212) 697-2509. Our principal administrative office is at 7100 East Belleview
Ave., Greenwood Village, CO 80111, and its telephone number is (303) 741-2045.
RISK FACTORS
An investment in our common stock:
o has a high degree of risk;
o is highly speculative;
o should only be considered by those persons or entities who can afford to lose their entire
investment.
In addition to the other information contained in this Prospectus, the following risk factors should be
carefully considered in evaluating our business and an investment in our shares. The order in which the
following risk factors are presented does not indicate the relative magnitude of the risks described.
Our continuing losses endanger our viability and have caused our accountants to issue a "going concern"
exception in their annual audit report.
We reported net losses of ($10,636,000), ($5,415,000) and ($4,847,000) for the years ended December 31,
2001, 2000 and 1999, respectively, and a net loss of ($1,677,000) for the quarter ending March 31, 2002.
At March 31, 2002, we had an accumulated deficit of ($35,737,000) and a negative working capital of
($1,396,000). Our Cymedix(R)products are still in the testing and deployment stage and have not generated
any significant revenue to date. We are funding our operations through the sale of our securities. Our
independent accountants have included a "going concern" exception in their audit reports on our audited
2000 and 2001 financial statements. See our Form 10-K, as amended, for the fiscal year ended December 31,
2001.
Our need for additional financing is acute and failure to obtain it could lead to the financial failure
of our company.
We expect to continue to experience losses, in the near term, until such time as our Cymedix(R)software
products can be successfully deployed with customers and produce revenue. The continuing development,
marketing and deployment of the Cymedix software products will depend upon our ability to obtain additional
financing. Our Cymedix(R)products are still in the testing and deployment stage and have not generated any
significant revenue to date. We are funding our operations through the sale of our securities. There can
be no assurance that additional investments or financings will be available to us as needed to support the
development and deployment of Cymedix products. Failure to obtain such capital on a timely basis could
result in lost business opportunities, the sale of the Cymedix business at a distressed price or the
financial failure of our company. See "The Company-Recent Developments."
We have granted a security interest in all of our intellectual property assets to secure a financing,
which means if we default in our obligations to the lender, we may loss these assets in the foreclosure
process.
The use of secured borrowings increases the risk of loss of the assets used to secure the
borrowing. If an event of default occurs under the security agreement, the lender will be able to
foreclose on the assets used to secure the borrowing and sell those assets to the highest bidder. In
addition, it is generally believed that foreclosure sales, which are "distress sales", will not maximize
the proceeds that are paid for the assets being sold. The loan we entered into is secured by the grant of
a security interest in all Medix's intellectual property, including its patent, copyrights and trademarks.
While Medix can cure a payment default by the forced conversion of the loan into its common stock, a
bankruptcy or similar event of default will trigger the foreclosure provision of the security agreement.
See "The Company-Recent Developments."
We are a development stage company, which means our products and services have not yet proved
themselves commercially viable and therefore our future is uncertain.
o We develop software for Internet-based communications and information management for medical
service providers, through our wholly-owned subsidiary, Cymedix Lynx Corporation. Our Cymedix(R)
products are still in the testing and deployment stage and have not generated any significant
revenue to date. We are funding our operations through the sale of our securities. Our ability
to continue to sell our securities can not be assured.
o We are still in the process of gaining experience in marketing software products, providing
software support services, evaluating demand for products, financing a software business and
dealing with government regulation of software products. While we are putting together a team
of experienced executives, they have come from different backgrounds and may require some time
to develop an efficient operating structure and corporate culture for our company. We believe
our structure of multiple offices serves our customers well, but it does present an additional
challenge in building our corporate culture and operating structure.
We rely on healthcare professionals for the quality of the information that is transmitted through our
interconnectivity systems, and we may not be paid for our services by third-party payors if that quality
does not meet certain standards.
The success of our products and services in generating revenue may be subject to the quality and
completeness of the data that is generated and stored by the physician or other healthcare professional and
entered into our interconnectivity systems, including the failure to input appropriate or accurate
information. Failure or unwillingness by the healthcare professional to accommodate the required
information quality may result in the payor refusing to pay Medix for its services.
Our market is rapidly changing and the introduction of software services and products into that market
has been slow, which may cause us to be unable to develop a profitable market for our services and products.
o As a developer of software products, we will be required to anticipate and adapt to evolving
industry standards and new technological developments. The market for our software products is
characterized by continued and rapid technological advances in both hardware and software
development, requiring ongoing expenditures for research and development, and timely
introduction of new products and enhancements to existing products. The establishment of
standards is largely a function of user acceptance. Therefore, such standards are subject to
change. Our future success, if any, will depend in part upon our ability to enhance existing
products, to respond effectively to technology changes, and to introduce new products and
technologies that are functional and meet the evolving needs of our clients in the healthcare
information systems market.
o The introduction of software products in our market has been slow due to the large number of small
practitioners who are resistant to change and the costs associated with change, particularly in
a period of rising pressure to reduce costs in the market. We are currently devoting
significant resources toward the development of products. There can be no assurance that we
will successfully complete the development of these products in a timely fashion or that our
current or future products will satisfy the needs of the healthcare information systems market.
Further, there can be no assurance that products or technologies developed by others will not
adversely affect our competitive position or render our products or technologies noncompetitive
or obsolete.
As a provider of medical software products and services, we may become liable for product liability
claims beyond the levels of our insurance that could have a materially adverse impact on our financial
condition.
Certain of our products provide applications that relate to patient medical histories and treatment
plans. Any failure by our products to provide accurate, secure and timely information could result in
product liability claims against us by our clients or their affiliates or patients. We maintain insurance
that we believe currently is adequate to protect against claims associated with the use of our products,
but there can be no assurance that our insurance coverage would adequately cover any claim asserted against
us. The limits of that coverage is $2,000,000 in the aggregate and $1,000,000 per occurrence. A
successful claim brought against us in excess of our insurance coverage could have a material adverse
effect on our results of operations, financial condition or business. Even unsuccessful claims could
result in the expenditure of funds in litigation, as well as diversion of management time and resources.
Our industry, the healthcare industry, continually experiences rapid change and uncertainty that could
result in issues for our business planning or operations that could severely impact on our ability to
become profitable.
The healthcare and medical services industry in the United States is in a period of rapid change and
uncertainty. Governmental programs have been proposed, and some adopted, from time to time, to reform
various aspects of the U.S. healthcare delivery system. Some of these programs contain proposals to
increase government involvement in healthcare, lower reimbursement rates and otherwise change the operating
environment for our customers. Particularly, the Health Insurance Portability and Accountability Act of
1996, and the regulations that are being promulgated thereunder, are causing the healthcare industry to
change its procedures and incur substantial cost in doing so. Although we expect these regulations to have
the beneficial effect of spurring adoption of our software products we cannot predict with any certainty
what impact, if any, these and future healthcare reforms might have on our business.
We rely on intellectual property rights, such as patents, copyrights, trademarks and unprotected
propriety technology in our business operations and to create value in our company, however, protecting
intellectual property frequently requires litigation and close legal monitoring and may adversely impact
our ability to become profitable.
o Our wholly-owned subsidiary, Cymedix Lynx Corporation, has been granted certain patent rights,
trademarks and copyrights relating to its software business. These patents and copyrights have
been assigned by our subsidiary to the parent company, Medix. The patent rights and
intellectual property legal issues for software programs, such as the Cymedix(R)products, are
complex and currently evolving. Since patent applications are secret until patents are issued,
in the United States, or published, in other countries, we cannot be sure that we are the first
to file any patent application. In addition, there can be no assurance that competitors, many
of which have far greater resources than we do, will not apply for and obtain patents that will
interfere with our ability to develop or market product ideas that we have originated.
Further, the laws of certain foreign countries do not provide the protection to intellectual
property that is provided in the United States, and may limit our ability to market our products
overseas. While we have no prospects for marketing or operations in foreign countries at this
time, future opportunities for growth in foreign markets, for that reason, may be limited. We
cannot give any assurance that the scope of the rights that we have been granted are broad
enough to fully protect our Cymedix software from infringement.
o Litigation or regulatory proceedings may be necessary to protect our intellectual property rights,
such as the scope of our patent. In fact, the computer software industry in general is
characterized by substantial litigation. Such litigation and regulatory proceedings are very
expensive and could be a significant drain on our resources and divert resources from product
development. There is no assurance that we will have the financial resources to defend our
patent rights or other intellectual property from infringement or claims of invalidity. We have
been notified by a party that it believes our pharmacy product may infringe on patents that it
holds. We have retained patent counsel who has made a preliminary investigation and determined
that our product does not infringe on the identified patents. At this time no legal action has
been instituted.
o We also rely upon unprotected proprietary technology and no assurance can be given that others will
not independently develop substantially equivalent proprietary information and techniques or
otherwise gain access to or disclose our proprietary technology or that we can meaningfully
protect our rights in such unpatented proprietary technology. We will use our best efforts to
protect such information and techniques, however, no assurance can be given that such efforts
will be successful. The failure to protect our intellectual property could cause us to lose
substantial revenues and to fail to reach its financial potential over the long term.
Because our business is highly competitive and there are many competitors who are financially stronger
than we are, we are at risk of being outperformed in staffing, marketing, product development and customer
services, which could severely limit our ability to become profitable.
o eHealth Services. Competition can be expected to emerge from established healthcare information
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vendors and established or new Internet related vendors. The most likely competitors are
companies with a focus on clinical information systems and enterprises with an Internet commerce
or electronic network focus. Many of these competitors will have access to substantially
greater amounts of capital resources than we have access to, for the financing of technical,
manufacturing and marketing efforts. Frequently, these competitors will have affiliations with
major medical product or software development companies, who may assist in the financing of
such competitor's product development. We will seek to raise capital to develop Cymedix
products in a timely manner, however, so long as our operations remain underfunded, as they now
are, we will be at a competitive disadvantage.
o Software Development Personnel. The success of the development of our Cymedix software is
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dependent to a significant degree on our key management and technical personnel. We believe
that our success will also depend upon our ability to attract, motivate and retain highly
skilled, managerial, sales and marketing, and technical personnel, including software
programmers and systems architects skilled in the computer languages in which our Cymedix
products operate. Competition for such personnel in the software and information services
industries is intense. The loss of key personnel, or the inability to hire or retain qualified
personnel, could have a material adverse effect on our results of operations, financial
condition or business.
We have relied on the private placement exemption to raise substantial amounts of capital, and could
suffer substantial losses if that exemption was determined not to have been properly relied upon.
We have raised substantial amounts of capital in private placements from time to time. The securities
offered in such private placements were not registered with the SEC or any state agency in reliance upon
exemptions from such registration requirements. Such exemptions are highly technical in nature and if we
inadvertently failed to comply with the requirements of any of such exemptive provisions, investors would
have the right to rescind their purchase of our securities or sue for damages. If one or more investors
were to successfully seek such rescission or institute such suit, Medix could face severe financial demands
that could material and adversely affect our financial position.
The impact of shares of our common stock that may become available for sale in the future may result in
the market price of our stock being depressed.
As of May 15, 2002, we had [62,923,624] shares of common stock outstanding. As of that date,
approximately [27,842,337] shares were issuable upon the exercise of outstanding options, warrants or other
rights, and the conversion of preferred stock. Most of these shares will be immediately saleable upon
exercise or conversion under registration statements we have filed with the SEC. The exercise prices of
options, warrants or other rights to acquire common stock presently outstanding range from $0.19 per share
to $4.97 per share. During the respective terms of the outstanding options, warrants, preferred stock and
other outstanding derivative securities, the holders are given the opportunity to profit from a rise in the
market price of the common stock, and the exercise of any options, warrants or other rights may dilute the
book value per share of the common stock and put downward pressure on the price of the common stock. The
existence of the options, conversion rights, or any outstanding warrants may adversely affect the terms on
which we may obtain additional equity financing. Moreover, the holders of such securities are likely to
exercise their rights to acquire common stock at a time when we would otherwise be able to obtain capital
on terms more favorable than could be obtained through the exercise or conversion of such securities. See
also the impact of our equity line of credit financing discussed in the following paragraphs.
Because of dilution to our common stock outstanding from our equity line of credit and other
financings, the market price of our stock may be depressed.
o In connection with our equity line of credit financing, we have registered 9,500,000 shares with
the SEC for sale by the providers of the financing, of which 4,796,763 shares remain available
for issuance as of May 15, 2002. See "Equity Line Financing."
o The shares are issued to the equity line providers at a floating price based on a discount to
market price of the common stock. As a result, the lower the stock price around the time the
equity line is drawn on, the more common shares the holder gets.
o To the extent that the equity line providers sells our common stock, the market price of the common
stock may decrease due to the additional shares in the market. This could allow the providers
to receive a greater amount of the stock in future draws on our equity line of credit, the sale
of which could further depress the stock price.
o The significant downward pressure on the price of our common stock as the equity line providers
receive common stock in connection with draws on our equity line of credit and then sell
material amounts of the stock, could encourage short sales, which could place further downward
pressure on the price of our common stock.
o The issuance of the common stock in connection with our equity line of credit may result in
substantial dilution to the common stock holdings of other holders of our common stock.
o Any agreement to sell, or convert debt or equity securities into, common stock at a future date and
at a price based on the then current market price will provide an incentive to the investor or
third parties to sell the common stock short to decrease the price and increase the number of
shares they may receive in a future purchase, whether directly from us or in the market. Both
our equity line of credit and our outstanding $1,000,000 convertible promissory note are priced
at a discount to the market price at the time of a future draw or conversion. See "The Company
- Recent Developments."
o
Because of market volatility in our stock price, investors may find that they have a loss position if
emergency sales become necessary.
Historically, our common stock has experienced significant price fluctuations. This has been caused by
one or more of the following factors:
o unfavorable announcements or press releases relating to the technology sector;
o regulatory, legislative or other developments affecting our company or the health care industry
generally;
o conversion of our preferred stock and convertible debt into common stock at conversion rates based
on current market prices or below of our common stock and exercise of options and warrants at
below current market prices;
o sales by those financing our company through an equity line of credit or convertible securities
which have been registered with the SEC and may be sold into the public market immediately
upon receipt; and
o market conditions specific to technology and internet companies, the health care industry and
general market conditions.
In addition, in recent years the stock market has experienced significant price and volume
fluctuations. These fluctuations, which are often unrelated to the operating performance of specific
companies, have had a substantial effect on the market price for many health care related technology
companies. Factors such as those cited above, as well as other factors that may be unrelated to our
operating performance may adversely affect the price of our common stock.
The application of the "penny stock" rules to our common stock may depress the market for our stock.
Trading of our common stock may be subject to the penny stock rules under the Securities Exchange Act
of 1934, as amended, unless an exemption from such rules is available. Broker-dealers making a market in
our common stock will be required to provide disclosure to their customers regarding the risks associated
with our common stock, the suitability for the customer of an investment in our common stock, the duties of
the broker-dealer to the customer and information regarding bid and ask prices for our common stock, and
the amount and description of any compensation the broker-dealer would receive in connection with a
transaction in our common stock. The application of these rules may result in fewer market makers making a
market of our common stock and further restrict the liquidity of our common stock.
We do not anticipate paying any cash dividends on our common stock in the foreseeable future.
We have not had earnings, but if earnings were available, it is our general policy to retain any
earnings for use in our operation. Therefore, we do not anticipate paying any cash dividends on our common
stock in the foreseeable future. Any payment of cash dividends on our common stock in the future will be
dependent upon our financial condition, results of operations, current and anticipated cash requirements,
plans for expansion, as well as other factors that the Board of Directors deems relevant. We anticipate
that our future financing agreements will prohibit the payment of common stock dividends without the prior
written consent of those providers.
FORWARD-LOOKING STATEMENTS
This Prospectus and the documents incorporated by reference into this Prospectus contain
forward-looking statements, which mean that they relate to events or transactions that have not yet
occurred, our expectations or estimates for Medix's future operations, our growth strategies or business
plans or other facts that have not yet occurred. Such statements can be identified by the use of
forward-looking terminology such as "might," "may," "will," "could," "expect," "anticipate," "estimate,"
"likely," "believe," or "continue" or the negative thereof or other variations thereon or comparable
terminology. The following risk factors contain discussions of important factors that should be considered
by prospective investors for their potential impact on forward-looking statements included in this
Prospectus and in the documents incorporated by reference into this Prospectus. These important factors,
among others, may cause actual results to differ materially and adversely from the results expressed or
implied by the forward-looking statements.
THE COMPANY
General
Medix Resources, Inc., a Colorado corporation, sold its supplemental staffing business, which operated
under the tradenames "National Care Resources" and "TherAmerica" on February 19, 2000, and now principally
develops software for Internet-based communications and information management for medical service
providers, through its wholly-owned subsidiary, Cymedix Lynx Corporation.
We acquired the Cymedix business in January of 1998. Cymedix has developed Internet-based
communications and information management product, which we began marketing to medical professionals in
select markets nationwide. Growth of the medical information management marketplace is being driven by the
need to share significant amounts of clinical and patient information between physicians, their outpatient
service providers, hospitals, insurance companies and managed care organizations. This market is one of
the fastest-growing sectors in healthcare today, commanding a projected two-thirds of health care capital
investments. The Cymedix(R)software contains patented elements that can be used to develop secure medical
communications products that make use of the Internet. Using the Cymedix software, medical professionals
can order, prescribe and access medical information from participating insurance companies and managed care
organizations, as well as from any participating outpatient service provider, such as a laboratory,
radiology center, pharmacy or hospital. We will provide the software at minimal charges to physicians and
clinics, and will collect user fees whenever these products are used to provide services on the Internet.
The products' relational database technology will provide physicians with a permanent, ongoing record of
each patient's name, address, insurance or managed care affiliation, referral status, medical history,
personalized notes and an audit trail of past encounters. Physicians will be able to electronically order
medical procedures, receive and store test results, check patient eligibility, make medical referrals,
request authorizations, and report financial and encounter information in a cost-effective, secure and
timely manner.
Our principal executive office is located at The Graybar Building, 420 Lexington Ave., Suite 1830
New York, NY 10170, and its telephone number is (212) 697-2509. Our principal administrative office is at
7100 East Belleview Ave., Greenwood Village, CO 80111, and its telephone number is (303) 741-2045. We also
have offices in California and Georgia.
Recent Developments
The introduction of our next generation of proprietary, point-of-care products, Cymedix(R)III, is
proceeding with our six active sponsors. Our improved suite of software products is based upon a robust
and device-neutral architecture that leverages proven workstation, handheld and wireless technologies and
is being installed and tested for Pharmacy, Laboratory and PlanConnect services. We continue to be in the
development and testing phase with each of our active contracts, and therefore receive no revenue. Revenue
will begin when we reach certain milestones under each contract and we enter the production phase of the
contract. The marketing and development of our Cymedix suite of software products is our sole business at
this time, and a substantial portion of our net operating loss is due to such efforts. We are funding such
expenses as well as our administrative expenses through the sale of our securities. We have no significant
debt financing available to us.
During 2001, our Automated Design Concepts Division (ADC) ceased operations in
connection with our cost reduction program, which had been brought on by our inability to raise budgeted
capital. It was determined that the business of the subsidiary was not part of our core business
operations and therefore did not justify our continued financial support. In connection with the
termination of our subsidiaries operations we took a write-off of goodwill in the amount of $443,000. We
also determined that our license of proprietary software from Zirmed.com had no value to us and had no more
than a nominal market value. As a result, we wrote-off the unamortized value of the related intangible
asset, which was $668,000. We had acquired ADC in early 2000 from an officer and director of the Company
for cash and stock valued at $474,000. He resigned his positions with us on March 2, 2001.
During 2001, net cash used in operating activities was approximately $5,397,000. During the year, we
raised approximately $5,205,000 from the exercise of options and warrants, and the issuance of common
stock, net of offering expenses, and debt. Since December 31, 2001 to May 10, 2002, we have used
approximately $2,086,000 in our operating activities, and raised approximately $3,473,000 from the exercise
of options and warrants, and the issuance of common stock and warrants, net of offering expenses, and
debt. We have been delinquent, from time to time, in the payment of our current obligations,
including payments of withholding and other tax obligations. We continue in discussions and
negotiations with institutional sources regarding debt and equity financings to fund our operations and to
permit us to remove the "going concern" qualification in our auditor's report in connection with the audit
of our annual financial statements. There can be no assurance that additional investments or
financings will be available to us as needed. Failure to obtain such capital on a timely basis could
result in lost business opportunities, the sale of the Cymedix business at a distressed price or our
financial failure.
We executed an Amended and Restated Common Stock Purchase Warrant with Wellpoint Pharmacy Management,
dated February 18, 2002, to restructure our obligations to issue warrants to Wellpoint. Under that
Warrant, we are obligated to issue up to 7,000,000 shares of our common stock at exercise prices of $0.30
per share for 3,000,000, $0.50 per share for 3,000,000 shares and $1.75 per share for 1,000,000 shares, if
various performance related vesting requirements are satisfied by Wellpoint. Currently, Wellpoint has
satisfied certain of these requirements giving Wellpoint the right to purchase 1,850,000 shares of our
common stock at $0.30 per share have been earned by Wellpoint. Wellpoint's rights to purchase our shares
under the Warrant expire on September 8, 2004. The Warrant grants to Wellpoint certain registration rights
to require us to register with the SEC the shares issued to Wellpoint for resale to the public. In the
Warrant, Wellpoint has agreed to restrict sales to the public of these shares during the first year after
they have been issued to 200,000 shares per month and 100,000 shares in any five trading days. The
Warrant contains anti-dilution provisions providing that the number of shares that may be purchased by
Wellpoint under the Warrant my be adjusted in certain circumstances.
We entered into a secured convertible loan agreement with WellPoint, dated February 19, 2002,
pursuant to which we borrowed $1,000,000 from WellPoint Health Networks Inc. The loan becomes payable on
February 19, 2003, if not converted into our common stock. The loan earns annual interest at a floating
rate of 300 basis points over prime, as it is adjusted from time to time, which is also payable at maturity
and may be converted into common stock. Conversion into common stock is at the option of either WellPoint
or Medix at a contingent conversion price. The conversion price will be either (i) at the price at which
additional shares are sold to other private placement investors if Medix obtains written commitments for at
least an additional $4,000,000 of equity by the close of business on September 30, 2002, from persons not
affiliates of WellPoint, and if such sales are closed by the maturity date of the loan, or (ii) at a price
equal to 80% of the then-current Fair Market Value (as defined below) if Medix is unable to obtain a
written commitment for the additional equity investment by the close of business on September 30, 2002 or
close the sales by the maturity date. For this purpose, "Fair Market Value" shall be the average closing
price of Medix common stock for the twenty trading days ending on the day prior to the day of the
conversion. The loan is secured by the grant of a security interest in all Medix's intellectual property,
including its patent, copyrights and trademarks. While Medix can cure a default in the repayment of the
loan at the fixed maturity date by the forced conversion of the loan into its common stock, a cross
default, breach of representation or warranty, and bankruptcy or similar event of default will trigger the
foreclosure provision of the security agreement.
On May 15, 2002, we completed a private placement of our securities for $1,381,000. In connection
therewith, we are issuing 3,452,500 shares of common stock and warrants to purchase a equal number of
shares of common stock at the exercise price of $0.50 per share.
EQUITY LINE FINANCING
Agreement
We have entered into an Equity Line of Credit Agreement with Cornell Capital Partners, L.P.
("Cornell"), and Dutchess Private Equities Fund, L.P. ("Dutchess"), dated as of June 12, 2001. Under the
agreement, the two providers have committed to advance to us funds in an amount of up to $10,000,000, as
requested by us, over a 24-month period in return for common stock issued by us to the providers. As of
May 15, 2002, we had received $2,681,099 in advances, from which offering expenses of $198,511 were paid,
under the financing, and had issued to the providers 4,703,237 shares of our common stock relating to the
advances and an additional 542,847 shares to their affiliates as fees for arranging the equity line
facility. The shares issued pursuant to the equity line advances to date have been priced from $0.41 to
$0.77 per share.
The amount that may be advanced at any time under the equity line is limited as follows (which
conditions may be waived by the providers):
o There must be thirteen stock market trading days between any two of our requests for advances.
o We can only request an advance if the volume weighted average price of the common stock, as
reported by Bloomberg L.P. for the day before our request, is equal to or greater than the
volume weighted average price as reported by Bloomberg L.P. for the 22 trading days before we
make a request.
o We will not be able to receive an advance amount that is greater than 175% of the average
daily volume of our common stock over the 40 trading days prior to our advance request
multiplied by the purchase price (calculated as provided in the next sentence).
The purchase price of our common stock issued in each advance will be equal to 91% of the three lowest
daily volume weighted average prices during the 22 trading days before we make a request for an advance.
Registration Rights
We have agreed to maintain an effective registration statement for the sale of the shares issued to the
providers of our equity line financing, as described above. If, at any time, the number of shares
available under a registration statement is insufficient to cover all securities issued to the providers,
we have agreed to use our best efforts to cause an amendment or new registration statement containing those
shares to be declared effective. Our agreement with the providers of our equity line financing contains
mutual indemnities against loses, costs and expenses arising out of the violation of by the other party of
state and Federal securities laws. Insofar as indemnification for liabilities under the Securities Act of
1933, as amended, may be permitted under such agreement, we have been informed that in the opinion of the
U.S. Securities and Exchange Commission, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable. Our agreements as to registration rights are only with the
providers of our equity line financing and we have no obligations to assist or indemnify any other holder
of the shares sold by them or to any underwriter designated by such holders.
Currently, 4,796,763 shares are registered for sale by the providers in connection with future draws.
If additional shares are to be issued under the equity line of credit, they would have to be registered
with the SEC and listed on the AMEX. Listing of additional shares on the AMEX would require a vote of our
shareholders under the AMEX rules the limit the number of shares that can be issued in below market
transactions.
Compensation
We are selling our shares to the providers of our equity line financing at a 9% discount from the
market price as described above. Yorkville Advisors's Management, LLC, an affiliate of Cornell, has been
and will be paid by us 2.31% of each amount advanced to us under the equity line financing. Dutchess
Advisors Limited, an affiliate of Dutchess, has been and will be paid by us 4.69% of each amount advanced
to us under the equity line financing. Through May 15, 2002, we have paid an aggregate of $175,511 in such
fees. Furthermore, for their assistance in arranging our equity line facility, we have issued to Yorkville
Advisors and Dutchess Advisors 179,140 shares and 363,707 shares, respectively, of our common stock, which
was also registered for sale under the above-described registration statement. In addition, through May 15,
2002, we have paid $15,000, in the aggregate, to counsels to Cornell and Dutchess, and paid $8,000 for
escrow fees and other expenses in connection with this transaction.
Potential Dilution
We have made 17 draws under the equity line since August 15, 2001, received $2,681,099 in advances and
issued 4,703,237 shares of common stock to the equity line providers. The issue price of that stock has
been between $0.41 and $0.77 during a period when the market prices on the draw dates has ranged from $0.52
to $0.94.
The following table is intended to indicate the future impact of our equity line on the number of
shares of our common stock outstanding, assuming the draw down of all the remaining availability under the
equity line, all at one time, for hypothetical variations in the price of our common stock. The numbers in
the table are hypothetical and it is highly unlikely that we will draw down all of the amount available
under the equity line at one time. As of May 15, 2002, the closing price of our common stock on the AMEX
was $0.53 per share, and the number of shares of our common stock outstanding was 62,923,624 shares.
Under our equity line of credit, the purchase price of our common stock issued to the equity line
providers is contractually set at 91% of the average of the three lowest daily volume weighted average
prices ("VWAPs") during the 22 trading days before a draw is made. On May 10, 2002, the average of the
three lowest VWAPs for the prior 22-trading day period was $0.385. On that date, we had $7,318,901
available to be drawn down under the equity line. In the following table we present the number of shares
that could be issued, and the issue price thereof, in six different hypothetical situations, if the average
of the three lowest VWAPs for the pricing of the shares to be issued in an equity line draw down were 25%,
50% and 75% above and below that average on May 10, 2002
Assumed average Price to equity Number of shares that Shares shown in the
of three lowest line could be issued if prior column are
VWAPs providers remaining availability percentage of the
was drawn at the price assumed resulting
in the prior column outstanding shares
$0.0963 $0.0875 83,644,583 58.45%
$0.1925 $0.1752 41,780,511 41.26%
$0.2888 $0.2628 27,853,674 31.90%
$0.4813 $0.4379 16,712,204 21.94%
$0.5775 $0.5226 14,006,059 19.06%
$0.6738 $0.6131 11,937,284 16.72%
USE OF PROCEEDS
The net proceeds from the sale of shares will be received by the selling shareholders. Medix will not
receive any of the proceeds from any sale of the shares by the selling shareholders. However, Medix will
receive the proceeds from the exercise of warrants and options to purchase the shares to be sold
hereunder. If all related warrants and options are exercised, Medix would receive proceeds of $234,625.
However, rights to exchange the equity value of some warrants and options in the exercise of other warrants
and options could reduce the amount received in cash upon the exercise the warrants and options referred to
in this Prospectus. Any such proceeds will be used as working capital.
SELLING SHAREHOLDERS
The table below sets forth information as of May 15, 2002, with respect to the selling shareholders,
including names, holdings of shares of common stock prior to the offering of the shares, the number of
shares being offered for each account, and the number and percentage of shares of common stock to be owned
by the selling shareholders immediately following the sale of the shares, assuming all of the offered
shares are sold. We have been informed that the voting and investment control of Nais Corporation is
exercised by its sole shareholder, Mrs. Pauline Winter, and its board of directors, Mrs. Winter, Mr. Eric
Ehrenhaus, Dr. Michael Ehrenhaus and Ms. Fawn Spirgel.
Shares of
Common Stock
Beneficially Shares of Shares of Common Stock to
Owned Before Common Stock be Beneficially Owned
Name the Offering Being Offered After the Offering
------------ ------------- ------------
Number Percentage
------ ----------
Michael I. Ruxin 243,750 243,750 0 0
Nais Corporation 250,000 90,000 160,000 *
Lyle B. Stewart 200,000 75,000 125,000 *
Fritz & Miller, P.C. 15,035 9,568 5,467 *
Shapiro Forman Allen & Miller LLP 30,800 19,600 11,200 *
Guli R. Rajani 30,555 19,444 11,111 *
Nicole S. Rajani 30,555 19,444 11,111 *
Ajay G. Rajani 30,555 19,444 11,111 *
------ ------
Total 831,250 496,250
---------
*less than 1%
Relationship Between Medix and the Selling Shareholders
The selling shareholders have or will acquire the shares of common stock indicated above upon the
exercise of warrants or options issued for services rendered or in settlement of litigation. None of the
persons listed above are affiliates or controlled by affiliates of the Company. We have a separate
contractual obligation to file this registration with certain of the selling shareholders.
All of the other selling shareholders, other than Mr. Stewart, received their shares as a result of the
settlement of three litigations with us, Michael I. Ruxin v. Cymedix Lynx Corporation, and Medix Resources,
-------------------------------------------------------------------
Inc., Guli R. Rajani v. Medix Resources, Inc., and Yecheskel Munk and the Nais Corporation v. Medix
---- ---------------------------------------- ----------------------------------------------------
Resources, Inc. f/k/a International Nursing Services, Inc. They were all discussed in our 2000 Form
---------------------------------------------------------------
10-KSB. In the first two cases the settlement involved issuing warrants to the plaintiffs giving them the
right to purchase 243,750 and 137,500 shares, respectively, of our common stock at the exercise price of
$0.50 per share. In the third litigation, the plaintiff Nais Corporation was issued 90,000 shares of our
common stock in the negotiated settlement of the matter. In each settlement the case against us was
dismissed with prejudice. Mr. Rajani has directed a portion of the warrants he received in the settlement
to his wife and son and to the counsel who represented him in his litigation against us. 50,000 shares
covered by Mr. Rajani's settlement warrants were registered in an earlier registration statement declared
effective by the SEC.
Mr. Stewart, our outside legal counsel, has received a compensatory grant of options under our 1999
Stock Option Plan covering the shares registered in his name. They are exercisable at $0.92 per share.
DESCRIPTION OF SECURITIES
Our authorized capital consists of 100,000,000 shares of common stock, par value $.001 per share, and
2,500,000 shares of preferred stock. As of May 15, 2002, we had outstanding [62,923,624] shares of common
stock, 1 share of 1996 Preferred Stock, 50 shares of 1999 Series B Preferred Stock and 100 shares of 1999
Series C Preferred Stock. As of such date, our common stock was held of record by approximately 400
persons and beneficially owned by approximately 9,000 persons.
Common Stock
Each share of common stock is entitled to one vote at all meetings of shareholders. Shareholders are
not permitted to cumulate votes in the election of directors. Currently, the Board of Directors consists
of six directors, who serve for staggered terms of three years, with at least two directors elected at
every annual meeting. All shares of common stock are equal to each other with respect to liquidation
rights and dividend rights. There are no preemptive rights to purchase any additional common stock. In
the event of liquidation, dissolution or winding up of Medix, holders of the common stock will be entitled
to receive on a pro rata basis all assets of Medix remaining after satisfaction of all liabilities and
preferences of the outstanding preferred stock. The outstanding shares of common stock and the shares of
common stock issuable upon conversion or exercise of derivative securities are or will be, as the case may
be, duly and validly issued, fully paid and non-assessable.
Transfer Agent and Registrar
We have retained Computershare Trust Company, Inc., 350 Indiana Street, Suite 800, Golden, Colorado
80401, as Transfer Agent and Registrar, for the our common stock, at telephone number (303) 262-0600.
PLAN OF DISTRIBUTION
The selling shareholders and any of their pledgees, donees, assignees and successors-in-interest may,
from time to time, sell any or all of their shares of Common Stock on any stock exchange, market or trading
facility on which the shares are traded. These sales may be at fixed or negotiated prices. The selling
shareholders may use any one or more of the following methods when selling shares:
o ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
o an exchange distribution in accordance with the rules of the applicable exchange;
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the selling shareholders to sell a specified number of such shares at
a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling shareholders may also sell shares under Rule 144 under the Securities Act, if available,
rather than under this prospectus.
The selling shareholders may also engage in short sales against the box, puts and calls and other
transactions in securities of the Company or derivatives of Company securities and may sell or deliver
shares in connection with these trades. The selling shareholders may pledge their shares to their brokers
under the margin provisions of customer agreements. If a selling shareholder defaults on a margin loan, the
broker may, from time to time, offer and sell the pledged shares. The selling shareholders have advised the
Company that they have not entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their shares other than ordinary course brokerage
arrangements, nor is there an underwriter or coordinating broker acting in connection with the proposed
sale of shares by the selling shareholders.
Broker-dealers engaged by the selling shareholders may arrange for other brokers-dealers to participate
in sales. 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.
Selling shareholders and any broker-dealers or agents that are involved in selling the shares may be
deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such
event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares
purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
The Company is required to pay all fees and expenses incident to the registration of the shares,
including fees and disbursements of counsel to certain of the selling shareholders. Otherwise, all
discounts, commissions or fees incurred in connection with the sale of the common stock offered hereby will
be paid by the selling shareholders. The Company has agreed to indemnify certain selling shareholders
against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
Upon the Company being notified by a selling shareholder that any material arrangement has been entered
into with a broker-dealer for the sale of shares through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus
will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of
each such selling shareholder and of the participating broker-dealer(s), (ii) the number of shares
involved, (iii) the price at which such shares were sold, (iv) the commissions paid or discounts or
concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not
conduct any investigation to verify the information set out or incorporated by reference in this
prospectus, and (vi) other facts material to the transaction.
In order to comply with the securities laws of certain states, if applicable, the shares will be sold
in such jurisdictions, if required, only through registered or licensed brokers or dealers. In addition,
in certain states the shares may not be sold unless the shares have been registered or qualified for sale
in such state or an exemption from registration or qualification is available and complied with.
The Company has advised the selling shareholders that the anti-manipulative provisions of Regulation M
promulgated under the Exchange Act may apply to their sales of the shares offered hereby.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Article 109 of the Colorado Business Corporation Act generally provides that Medix may indemnify its
directors, officers, employees and agents against liabilities in any action, suit or proceeding whether
civil, criminal, administrative or investigative and whether formal or informal (a "Proceeding"), by reason
of being or having been a director, officer, employee, fiduciary or agent of Medix, if such person acted in
good faith and reasonably believed that his conduct, in his official capacity, was in the best interests of
Medix (or, with respect to employee benefit plans, was in the best interests of the participants of the
plan), and in all other cases that his conduct was at least not opposed to Medix's best interests. In the
case of a criminal proceeding, the director, officer, employee or agent must have had no reasonable cause
to believe that his conduct was unlawful. Under Colorado Law, Medix may not indemnify a director, officer,
employee or agent in connection with a proceeding by or in the right of Medix if the director is adjudged
liable to Medix, or in a proceeding in which the directors, officer employee or agent is adjudged liable
for an improper personal benefit.
Our Articles of Incorporation provide that we shall indemnify its directors, and officers, employees
and agents to the extent and in the manner permitted by the provisions of the laws of the State of
Colorado, as amended from time to time, subject to any permissible expansion or limitation of such
indemnification, as may be set forth in any shareholders' or directors' resolution or by contract.
Insofar as indemnification for liabilities under the Securities Act of 1933, as amended (the
"Securities Act"), may be permitted to directors, officers or persons controlling Medix pursuant to the
foregoing provisions, Medix has been informed that in the opinion of the Commission, such indemnification
is against public policy as expressed in the Securities Act and is therefore unenforceable.
AVAILABLE INFORMATION
We are a reporting company and file our annual, quarterly and current reports, proxy material and other
information with the SEC. Reports, proxy statements and other information concerning Medix filed with the
Commission may be inspected at the Public Reference Room maintained by the Commission at its office, 450
Fifth Street, N.W., Washington, D.C. 20549. Copies of such material can be obtained from the Public
Reference Room of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The public may obtain information about the Public reference room in Washington, D.C. by calling the SEC at
1-800-SEC-0330. Our SEC filings are also available at the SEC's Website at "http://www.sec.gov".
We have filed a registration statement under the Securities Act, with respect to the securities offered
pursuant to this Prospectus. This Prospectus does not contain all of the information set forth in the
registration statement, certain parts of which are omitted in accordance with the rules and regulations of
the Commission. For further information, reference is made to the registration statement and the exhibits
filed as a part thereof, which may be found at the locations and Website referred to above.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" information that we file with them, which means that we
can disclose important information to you by referring you to the documents filed with the SEC that
contains that information. The information incorporated by reference is an important part of this
Prospectus, and it is important that you review it before making your investment decision. We hereby
incorporate by reference the documents listed below:
(a) a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2001, as amended,
and as filed with the SEC on May 24, 2002;
(b) a copy of our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2002, as filed
with the SEC on May 15, 2002;
(c) copies of the our Forms 8-K, filed with the SEC on January 18, March 4, and March 25, April
12, 2002, and May 24, 2002.
We are delivering with this Prospectus a copies of the Form 10-K and Form 10-Q referred to above. Any
statement contained in a document incorporated or deemed to be incorporated by reference in this
Prospectus, or made herein, shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any subsequently filed document, which also is or is
deemed to be incorporated by reference herein, modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superceded, to constitute a part of
this Prospectus.
All other documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Securities Exchange Act of 1934, as amended, subsequent to the date of this Prospectus and prior to the
termination of the Offering pursuant to this Prospectus shall be deemed to be incorporated by reference and
to be a part of this Prospectus from the date of filing of such documents.
We will provide without charge to each person, including any beneficial owner, to whom a copy of this
Prospectus is delivered, upon oral or written request of any such person, a copy of any or all of the
documents incorporated herein by reference, other than the exhibits to such documents (unless such exhibits
are specifically incorporated by reference into the information that this Prospectus incorporates).
Requests should be directed to Investor Relations Department, Medix Resources, Inc., 7100 E. Belleview
Avenue, Suite 301, Greenwood Village, Colorado 80111, telephone (303) 741-2045.
LEGAL MATTERS
The validity of the shares offered hereby is being passed upon for us by Lyle B. Stewart, P.C. Lyle B.
Stewart, P.C. has been granted options to purchase 25,000 shares of Medix common stock at an exercise price
of $0.26 per share, and Mr. Stewart, individually, has been granted options to purchase 100,000 and 75,000
shares of Medix common stock at exercise prices of $3.38 and $0.92 per share, respectively.
EXPERTS
The consolidated financial statements of Medix as of December 31, 2001, and for each of the three years
in the period ended December 31, 2001 appearing in our 2001 Form 10-K have been audited by Ehrhardt Keefe
Steiner & Hottman P.C., independent auditors, as stated in their report appearing therein, and have been
incorporated herein by reference in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is a list of the estimated expenses to be incurred by the Registrant in connection with
the issuance and distribution of the Shares being registered hereby.
SEC Registration Fee.............. .....$242
Blue Sky Filing Fees and Expenses...........0*
Accountants' Fees and Expenses..........1,000*
Legal Fees and Expenses................35,000*
Miscellaneous...................... 0*
----------
TOTAL.................................$36,242*
* Estimated, subject to change.
The Company will bear all of the above expenses of the registration of the Shares.
Item 15. Indemnification of Directors and Officers.
See "INDEMNIFICATION OF OFFICERS AND DIRECTORS" in the Prospectus.
Item 16. Exhibits.
Exhibit
Number Description
------- -----------
5.1 Opinion of Lyle B. Stewart, Esq.*
10.1 Participation Agreement, dated as of April 2, 2001, between Medix and Kaiser
Foundation Health Plan of Georgia, Inc. (Portions of this Exhibit have been omitted
pursuant to a request for confidential treatment filed with the Office of the
Secretary of the SEC)*
10.2 Agreement, dated as of October 18, 2001, between Medix and Merck-Medco Managed
Care, L.L.C. (Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment filed with the Office of the Secretary of the
SEC)*
10.3 Vendor Services Agreement, dated as of September 28, 2001, between Medix
and Express Scripts, Inc. (Portions of this Exhibit have been omitted pursuant to a
request for confidential treatment filed with the Office of the Secretary of the
SEC)*
10.4 Binding Letter of Intent for Pilot and Production Programs, dated
September 8, 1999, between Medix, Cymedix and Professional Claims Services, Inc.
(d/b/a WellPoint Pharmacy Management) (Portions of this Exhibit have been omitted
pursuant to a request for confidential treatment filed with the Office of the
Secretary of the SEC)*
10.5 Pilot Agreement, dated as of December 28, 1999, between Cymedix and
Professional Claims Services, Inc. (d/b/a WellPoint Pharmacy Management) (Portions
of this Exhibit have been omitted pursuant to a request for confidential treatment
filed with the Office of the Secretary of the SEC)*
10.6 Agreement For Internet Medical Communications Network, dated March 2, 2000, between
Cymedix and Loyola University Medical Center. (Portions of this Exhibit have been
omitted pursuant to a request for confidential treatment filed with the Office of the
Secretary of the SEC)*
10.7 Amended and Restated Common Stock Purchase Warrant, as amended February 18,
2002, issued to Professional Claims Services, Inc (d/b/a WellPoint Pharmacy
Management)*
10.8 Securities Purchase Agreement, dated February 19, 2002, between Medix and
WellPoint Health Networks Inc.*
10.9 General Security Agreement, dated February 19, 2002, among Medix,
Cymedix and WellPoint Health Networks Inc.*
23.1 Consent of Ehrhardt Keefe Steiner & Hottman P.C.
23.2 Consent of Lyle B. Stewart, Esq. (included in Exhibit 5.1)*
24.1 Power of Attorney*
-----------------
* Previously Filed
Item 17. Undertakings.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933, as amended (the "Act");
(ii) To reflect in the prospectus any facts or events arising after the effective
date of the Registration Statement (or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the information set forth in
the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the plan of distribution
not previously disclosed in the Registration Statement or any material change to such information
in the Registration Statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if the Registration
-------- -------
Statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to
the Securities and Exchange Commission (the "Commission") by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Act, each such
post-effective amendment shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being
registered which remain unsold at the termination of the offering.
B. Insofar as indemnification for liabilities arising under the Act may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it
has reasonable grounds to believe that it meets all of the requirements for filing on Form S-2 and has duly
caused this Amendment to Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in New York, New York on May 20, 2002.
MEDIX RESOURCES, INC.
By _ /s/John R. Prufeta_
--------------------
John R. Prufeta,
President and CEO
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has
been signed below by the following persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
_/s/John R. Prufeta*_ President, Chief Executive May 24, 2002
---------------------
John R. Prufeta Officer and Director (Principal
Executive Officer)
/s/Patricia A. Minicucci Executive Vice President, May 24, 2002
-------------------------
Patricia A. Minicucci Acting Chief Financial Officer
( Acting Principal Financial
and Accounting Officer)
__/s/John T. Lane*__ Director May 24, 2002
------------------
John T. Lane
/s/David B. Skinner* Director May 24, 2002
------------------------
David B. Skinner
_/s/Samuel H. Havens*_ Director May 24, 2002
----------------------
Samuel H. Havens
/s/Joan E. Herman* Director May 24, 2002
-------------------
Joan E. Herman
/s/Patrick W. Jeffries* Director May 24, 2002
---------------------
Patrick W. Jeffries
/s/Guy L. Scalzi* Director May 24, 2002
-----------------
Guy L. Scalzi
*John R. Prufeta, by signing his name hereto, does sign this document on behalf of himself and each of Ms.
Herman and Messrs. Lane, Havens, Skinner, Scalzi and Jeffries in the capacities indicated immediately
above, pursuant to powers of attorney duly executed by each such person and filed with the Securities and
Exchange Commission.
/s/John R. Prufeta
------------------
John R. Prufeta
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
5.1 Opinion of Lyle B. Stewart, Esq.*
10.1 Participation Agreement, dated as of April 2, 2001, between Medix, Cymedix and
Kaiser Foundation Health Plan of Georgia, Inc. (Portions of this Exhibit have been
omitted pursuant to a request for confidential treatment filed with the Office of the
Secretary of the SEC)*
10.2 Agreement, dated as of October 18, 2001, between Medix and Merck-Medco Managed
Care, L.L.C. (Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment filed with the Office of the Secretary of the
SEC)*
10.3 Vendor Services Agreement, dated as of September 28, 2001, between Medix
and Express Scripts, Inc. (Portions of this Exhibit have been omitted pursuant to a
request for confidential treatment filed with the Office of the Secretary of the
SEC)*
10.4 Binding Letter of Intent for Pilot and Production Programs, dated
September 8, 1999, between Medix, Cymedix and Professional Claims Services, Inc.
(d/b/a WellPoint Pharmacy Management) (Portions of this Exhibit have been omitted
pursuant to a request for confidential treatment filed with the Office of the
Secretary of the SEC)*
10.5 Pilot Agreement, dated as of December 28, 1999, between Cymedix and
Professional Claims Services, Inc. (d/b/a WellPoint Pharmacy Management) (Portions
of this Exhibit have been omitted pursuant to a request for confidential treatment
filed with the Office of the Secretary of the SEC)*
10.6 Agreement For Internet Medical Communications Network, dated March 2, 2000, between
Cymedix and Loyola University Medical Center. (Portions of this Exhibit have been
omitted pursuant to a request for confidential treatment filed with the Office of the
Secretary of the SEC)*
10.7 Amended and Restated Common Stock Purchase Warrant, as amended February 18,
2002, issued to Professional Claims Services, Inc (d/b/a WellPoint Pharmacy
Management)*
10.8 Securities Purchase Agreement, dated February 19, 2002, between Medix and
WellPoint Health Networks Inc.*
10.9 General Security Agreement, dated February 19, 2002, among Medix,
Cymedix and WellPoint Health Networks Inc.*
23.1 Consent of Ehrhardt Keefe Steiner & Hottman P.C.
23.2 Consent of Lyle B. Stewart, Esq.
(included in Exhibit 5.1)*
24.1 Power of Attorney*
--------
*Filed previously