form-posam_032902
As filed with the Securities and Exchange Commission on April 3, 2002
Registration No. 333-63162
___________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
POST-EFFECTIVE AMENDMENT NO.1
TO
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________
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)
_________________
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|
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 APRIL 3, 2002
PROSPECTUS
MEDIX RESOURCES, INC.
10,450,000 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 10,450,000 shares of our common stock under
this Prospectus. Of these shares, up to 9,500,000 may be issued in connection
with the draw down of funds by Medix under an equity line of credit, up to
900,000 may be issued as payments for services rendered, and up to 50,000 may be
issued upon exercise of warrants to purchase our common stock. As of March 25,
2002, 4,468,629 shares issued under the equity line, and 542,847 shares issued
for services rendered have been sold in this offering.
Cornell Capital Partners, L.P. and Dutchess Private Equities Fund, L.P., two
of the selling shareholders named herein, who are providers of the equity line of
credit are statutory underwriters under Section 2a(11) of the Securities Act of
1933, as amended. See "Equity Line of Credit," "Selling Shareholders," and "Plan
of Distribution."
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
draws under the equity line and from the exercise of any 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 March 28, 2002, the closing price of the common stock was reported as
$0.47.
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 April __, 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
__________________
SUMMARY
RISK FACTORS
FORWARD-LOOKING STATEMENTS
THE COMPANY
EQUITY LINE OF CREDIT
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 10,450,000 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 March 25,
2002, we had 58,386,516 shares of our common stock outstanding, and approximately
26,023,837 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. See
"Equity Line of Credit." As of March 25, 2001, we had received $2,584,910 in
advances, from which offering expenses of $191,278 were paid, under the
financing, and had issued to the investors 4,468,629 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 $0.46 to $0.77 per share. See
"Risk Factors."
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), ($4,847,000) and
($5,422,000) for the years ended December 31, 2001, December 31, 2000, December
31, 1999 and December 27, 1998, respectively. At December 31, 2001 we had an
accumulated deficit of ($34,059,000) and a negative working capital of
($1,404,000). 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 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. 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 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 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 March 25, 2002, we had 58,386,516 shares of common stock outstanding.
As of that date, approximately 26,023,837 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 of our common stock from our equity line of credit, 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 additional shares with the SEC for sale by the providers of
the financing, of which 5,031,371 shares remain available for issuance
as of March 25, 2002. See "Summary." The resale of the common stock
that may be issued by us under the equity line of credit will
substantially increase the number of our publicly traded shares
("float"). If existing shareholders perceive that this increased float
is not accompanied by a commensurate increase in value to the Company,
then shareholder value--real or perceived--will be diluted. Such dilution
could cause holders of our shares of common stock to sell, thus
depressing the price of our common stock. Therefore, the very existence
of the equity line financing could depress the market price of our
common stock.
o The resale of the common stock that will be issued by us under our equity
line of credit financing could depress the market price of our common
stock. The terms of the equity line provide that we will sell shares of
our common stock to the providers of the financing at 91% of the average
of the three lowest of the daily volume-weighted average prices of our
common stock during the 22-trading day period immediately before our
request for the advance. Therefore, since all of the shares that are
issued by us in connection with advances under the equity line financing
will have a "built-in" discount of at least 9% upon issuance, this could
produce an impetus for the providers of the equity line to resell their
shares sooner or in greater quantity than they would otherwise. Such
resale could have the effect of depressing our share price.
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 wholly-owned subsidiary, Automated Design Concepts, Inc.
(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.
We had approximately $305,000 in cash as of March 31, 2002 with a net working
capital deficit of approximately $1,624,000. 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 March 31, 2002, we have used approximately $1,470,000 in our
operating activities, and raised approximately $1,887,000 from the exercise of
options and warrants, and the issuance of common stock, 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.
EQUITY LINE OF CREDIT
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
March 25, 2001, we had received $2,584,910 in advances, from which offering
expenses of $191,278 were paid, under the financing, and had issued to the
providers 4,468,629 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 $0.46 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. Our agreement with the
providers of our equity line financing contains mutual indemnities against loses,
costs and expenses arising out of misrepresentations, breaches of warranties and
agreements or other actions or inactions by the other party.
Advances will be made as requested by us, with 90% of an advance coming from
Cornell, and 10% coming from Dutchess. We will receive the amount we have
requested as an advance within 10 days of our request, subject to satisfying
standard closing conditions. The issuance of our shares of common stock to
Cornell and Dutchess in connection with the equity line financing will be exempt
from registration under the Securities Act of 1933 pursuant to Section 4(2)
thereof. The sale of such shares by those providers of our equity line financing
is being registered under this Registration Statement. We have agreed that our
executive officers and directors will not sell any shares of our common stock
during the ten trading days following any advance request by us.
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.
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 March 25, 2002,
we have paid an aggregate of $168,778 in such fees. Furthermore, our contracts
with Yorkville Advisors and Dutchess Advisors required us to, upon the effective
date of this Registration Statement, issue to Yorkville Advisors, 65,347 shares
of our common stock, and to Dutchess Advisors, 132,673 shares of our common stock
(of which 29,703 shares were directed to Dutchess), and on December 9, 2001,
issue to Yorkville Advisors 113,793 shares of our common stock, and to Dutchess
Advisors 231,034 shares of our common stock. In addition, through March 25,
2002, we have paid $15,000, in the aggregate, to counsels to Cornell and
Dutchess, and paid $7,500 for escrow fees and other expenses in connection with
this transaction.
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 advances under the equity line of credit and the exercise of warrants to
purchase the shares to be sold hereunder. If all these warrants are exercised,
Medix would receive proceeds of $25,000. Such proceeds will be used as working
capital.
SELLING SHAREHOLDERS
The table below sets forth information 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.
Shares of
Common
Stock Shares of Shares of Common
Name Beneficially Common Stock to be
Owned Stock Beneficially Owned
Before the Being After the Offering
Offering Offered --------------------
----------- --------- Number Percentage
-------- ----------
Cornell Capital Partners, 8,000,000 8,000,000 0 0%
L.P.
Dutchess Private Equities 1,500,000 1,500,000 0 0%
Fund, L.P.
Dutchess Advisors Limited 600,000 600,000 0 0%
Yorkville Advisors 300,000 300,000 0 0%
Management LLC
Fritz & Miller, P.C. 5,467 5,467 0 0%
Shapiro Forman Allen & 11,200 11,200 0 0%
Miller LLP
Guli R. Rajani 11,111 11,111 0 0%
Nicole S. Rajani 11,111 11,111 0 0%
Ajay G. Rajani 11,111 11,111 0 0%
---------- ----------
Total 10,450,000 10,450,000
Relationship Between Medix and the Selling Shareholders
The selling shareholders have or will acquire the shares of common stock
indicated above in one of the following ways: (i) upon advancing funds to the
Company under a equity line financing, (ii) in payment of certain of the
Company's fee obligations in connection with the equity line financing, and (iii)
upon the exercise of warrants issued 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 each of
the selling shareholders, which was part of the inducement for them to invest in
the Company.
Cornell Capital Partners, L.P. and Dutchess Private Equities Fund, L.P., who
are the providers of the equity line financing, are statutory underwriters under
Section 2a(11) of the Securities Act of 1933, as amended. The principals of
Cornell Capital Partners, L.P. are Yorkville Advisors Management LLC, its general
partner, and Mark Angelo, Joseph Donohue, Robert Ferrell, Matthew Beckman and
Meir Levin. The principals of Dutchess Private Equities Fund, L.P. are Dutchess
Capital Management LLC, its general partner, and Michael A. Novielli and Douglas
H. Leighton, managing members and principal owners of the general partner.
The other selling shareholders received their warrants to purchase shares as a
result of the settlement of a litigation against us, Guli R. Rajani v. Medix
Resources, Inc. Mr. Rajani was issued warrants to purchase 137,500 shares of our
common stock at the exercise price of $0.50 per share. 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. The remaining
shares covered by Mr. Rajani's settlement warrants are being registered in
another registration statement.
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 March 25,
2002, we had outstanding 58,386,516 shares of common stock, 1 share of 1996
Preferred Stock, 50 shares of 1999 Series B Preferred Stock and 375 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.
Cornell Capital Partners, L.P. and Dutchess Private Equities Fund, L.P.,
and their affiliates, Yorkville Advisors Management LLC and Dutchess Advisors
Limited, are each an "underwriter" under Section 2a(11) of the Securities Act of
1933, in connection with the resale of common stock under the Equity Line of
Credit Agreement. Cornell Capital Partners, L.P.and Dutchess Private Equities
Fund, L.P. will pay us 91% of the average of the 3 lowest closing bid price of
our common stock for the 22 days immediately preceding the advance date. The
discount on the purchase of the common stock to be received by them will be an
underwriting discount. We retained Yorkville Advisors Management, LLC and
Dutchess Advisors Limited as our consultants in connection with the equity line
of credit financing. See "Equity Line of Credit."
Other 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 and
copied 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, filed with the SEC on April 1, 2002;
(b) copies of the our Forms 8-K, filed with the SEC on January 18, March 4
and March 25, 2002.
We are delivering with this Prospectus a copy of the Form 10-K 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 superseded, 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.................................$2,491
Blue Sky Filing Fees and Expenses.....................1,000*
Accountants' Fees and Expenses........................2,000*
Legal Fees and Expenses..............................45,000*
Miscellaneous.............................................0*
TOTAL...............................................$50,491*
___________________
* 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 Equity Line of Credit Agreement, dated June 12,
2001, between the Company, Cornell Capital Partners, L.P., and
Dutchess Private Equities L.P.*
10.2 Registration Rights Agreement, dated June 12, 2001, between the
Company, Cornell Capital Partners, L.P., and Dutchess Private
Equities L.P.*
10.3 Escrow Agreement, dated June 12, 2001,
between the Company, Cornell Capital Partners, L.P., and
Dutchess Private Equities L.P., Butler Gonzalez LLP, and First
Union National Bank*
10.4 Consulting Services Agreement, dated June 12, 2001, between the
Company and Yorkville Advisors Management, LLC*
23.1 Consent of Ehrhardt Keefe Steiner & Hottman P.C.
23.2 Consent of Lyle B. Stewart, Esq. (included in Exhibit 5.1)*
24. Power of Attorney (included on signature page)
____________
* 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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in New York, New York on March 28, 2002.
MEDIX RESOURCES, INC.
By /s/Johm 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.
Each person whose signature appears below in so signing also makes, constitutes
and appoints John R. Prufeta and Gary L. Smith, and each of them, his or her true
and lawful attorney-in-fact, with full power of substitution, for him in any and
all capacities, to execute and cause to be filed with the Securities and Exchange
Commission any and all amendments and post-effective amendments to this
Registration Statement, with exhibits thereto and other documents in connection
therewith, and hereby ratifies and confirms all that said attorney-in-fact or his
substitute or substitutes may do or cause to be done by virtue hereof.
Signature Title Date
-------------------------------------------------------------------------------
/s/John R. Prufeta President, Chief Executive March 28, 2002
John R. Prufeta Officer and Director
(Principal Executive
Officer)
Executive Vice President
/s/Gary L. Smith and Chief Financial March 28, 2002
Gary L. Smith Officer (Principal
Financial and Accounting
Officer)
/s/David B. Skinner Director March 28,2002
David B. Skinner
/s/John T. Lane Director March 28, 2002
John T. Lane
/s/Samuel H. Havens Director March 28, 2002
Samuel H. Havens
/s/Joan E. Herman Director March 28, 2002
Joan E. Herman
/s/Patrick W. Jeffries Director March 28, 2002
Patrick W. Jeffries
/s/Guy L. Scalzi Director March 28, 2002
Guy L. Scalzi
EXHIBIT INDEX
Exhibit
Number Description
5.1 Opinion of Lyle B. Stewart, Esq.*
10.1 Equity Line of Credit Agreement, dated June 12,
2001, between the Company, Cornell Capital Partners, L.P., and
Dutchess Private Equities L.P.*
10.2 Registration Rights Agreement, dated June 12, 2001, between the
Company, Cornell Capital Partners, L.P., and Dutchess Private
Equities L.P.*
10.3 Escrow Agreement, dated June 12, 2001, between the Company,
Cornell Capital Partners, L.P., and Dutchess Private Equities
L.P., Butler Gonzalez LLP, and First Union National Bank*
10.4 Consulting Services Agreement, dated June 12, 2001, between the
Company and Yorkville Advisors Management, LLC*
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 (included on signature page)
___________
*Previously Filed