As filed with the Securities and Exchange Commission on April 18, 2002
Registration no. 333-__________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
Registration Statement
Under the Securities Act of 1933
CYBERCARE, INC.
(Exact name of Registrant as specified in its charter)
Florida 65-0158479
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification Number)
organization)
Steven M. Cohen
2500 Quantum Lakes Drive, Suite 1000 Chief Financial Officer
Boynton Beach, Florida 33426 2500 Quantum Lakes Drive, Suite 1000
(561) 742-5000 Boynton Beach, Florida 33426
(Address, including zip code, and (561) 742-5000
telephone number, including (Name, address, including zip code,
area code, of registrant's and telephone number, including
principal executive offices) area code, of agent for service)
CYBER-CARE RETIREMENT SAVINGS PLAN
(Full Title of the Plan)
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COPY TO:
Joel D. Mayersohn, Esq.
Atlas Pearlman, P.A.
350 E. Las Olas Boulevard, Suite 1700
Ft. Lauderdale, Florida 33301
Phone (954) 763-1200
Fax (954) 766-7800
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CALCULATION OF REGISTRATION FEE
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TITLE OF PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE AMOUNT BEING OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE
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Common Stock, par value
$.0025 per share 106,389 $.19 $20,214 $18.60
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TOTAL $18.60
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(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended, the
number of shares of the issuer's Common Stock registered hereunder will be
adjusted in the event of stock splits, stock dividends or similar
transactions.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h), on the basis of the average high
and low prices as reported by the Nasdaq National Market on April 16,
2002.
PROSPECTUS
CYBERCARE, INC.
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106,389 SHARES
COMMON STOCK
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This prospectus is a part of a registration statement covering an
aggregate of 106,389 shares of Common Stock of CyberCare, Inc. ("CyberCare",
"we", "us" or "our"). The shares are being issued pursuant to Cyber-Care's
Retirement Savings Plan (the "Plan"). Individuals who are issued shares covered
by this prospectus are sometimes collectively referred to as "selling security
holders." Selling security holders may sell all or a portion of the shares
covered by this prospectus, from time to time, in the over-the-counter market,
in negotiated transactions, directly or through brokers or otherwise, and at
market prices prevailing at the time of such sales at negotiated prices.
We will not receive any portion of the proceeds resulting from the sale of
the shares offered by the selling security holder under this prospectus. We will
pay all costs and expenses incurred in connection with the registration of the
shares. The selling security holders will pay the costs associated with any
subsequent sales of the registered shares, including any concessions,
commissions, fees and applicable transfer taxes.
Our common stock is quoted on the Nasdaq National Market under "CYBR." On
April 16, 2002, the last reported sales price of CyberCare was $.16 per share.
AN INVESTMENT IN THE SECURITIES OFFERED BY THIS PROSPECTUS INVOLVES A
HIGH DEGREE OF RISK. CONSIDER CAREFULLY THE RISK FACTORS APPEARING ON PAGE 7.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OF THE
SECURITIES TO BE ISSUED UNDER THIS PROSPECTUS OR DETERMINED THAT THIS PROSPECTUS
IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this prospectus is April 18, 2002
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TABLE OF CONTENTS
Where You Can Find More Information....................................... 1
Incorporation of Documents By Reference................................... 1
Forward-Looking Information............................................... 1
Business ................................................................. 3
Risk Factors.............................................................. 7
Description of Plan....................................................... 17
Selling Security Holders.................................................. 18
Plan of Distribution...................................................... 20
Resale of Shares by Affiliates............................................ 21
Description of Securities................................................. 22
Legal Matters............................................................. 23
Experts................................................................... 23
Indemnification........................................................... 23
WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ABOUT CYBERCARE THAT DIFFERS FROM, OR ADDS TO, THE INFORMATION IN
THIS PROSPECTUS OR IN OUR DOCUMENTS THAT ARE PUBLICLY FILED WITH THE SECURITIES
EXCHANGE COMMISSION. ACCORDINGLY, IF ANYONE DOES GIVE YOU DIFFERENT OR
ADDITIONAL INFORMATION YOU SHOULD NOT RELY ON IT.
IF YOU ARE IN A JURISDICTION WHERE IT IS UNLAWFUL TO BUY THE SECURITIES
OFFERED BY THE PROSPECTUS, OR IF YOU ARE A PERSON TO WHOM IT IS UNLAWFUL TO
DIRECT SUCH ACTIVITIES, THEN THE OFFER PRESENTED BY THIS PROSPECTUS DOES NOT
EXTEND TO YOU.
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WHERE YOU CAN FIND MORE INFORMATION
We are required to file annual, quarterly and special reports, proxy
statements and other information with the Securities Exchange Commission
("SEC"). You may read and copy any document we file at the SEC's public
reference rooms at 450 Fifth Street, N.W., Washington, D.C., and at its offices
in New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for more information on the operation of the public reference
rooms. Copies of our SEC filings are also available to the public from the SEC's
web site at HTTP://WWW.SEC.GOV.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below, any of such documents filed since the date this
registration statement was filed and any future filings with the SEC under
Section 13(a), 13(c), 14 or 15(d) of the 1934 Act until the offering is
completed:
* Proxy statement filed on May 9, 2001, for our annual meeting of
shareholders.
* Quarterly reports on Forms 10-Q for the periods ended March 31,
2001, June 30, 2001, and September 30, 2001.
* Current reports on Form 8-K filed on June 1, 2001, June 28, 2001,
September 17, 2001, October 15, 2001, October 31, 2001, January 15,
2002, January 16, 2002, February 11, 2002, March 7, 2002, April 15,
2002 and April 17, 2002.
* Annual report on Form 10-K for the year ended December 31, 2001.
You may request a copy of these filings, at no cost, by writing or calling
us at the following address and telephone number:
Corporate Secretary
CyberCare, Inc.
2500 Quantum Lakes Drive, Suite 1000
Boynton Beach, Florida 33426-8308
Telephone (561) 742-5000
FORWARD-LOOKING INFORMATION
This Prospectus and other materials we have filed or may file with the
Securities and Exchange Commission, as well as information included in oral
statements or other written statements made, or to be made, by us, contain, or
may contain disclosures which are "forward-looking statements."
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For this purpose, any statements contained herein that are not statements
of historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words "could," "may," "will," "believes,"
"anticipates," "plans," "expects," "projects," "estimates," "intends,"
"continues," "seeks," "predicts," "expectations," variations of such words and
similar expressions are intended to identify forward-looking statements. These
forward-looking statements are not guarantees of future performance and involve
certain risks, uncertainties and assumptions ("Future Factors") that are
difficult to predict. As a result, because these statements are based on
expectations as to future performance and events and are not statements of fact,
actual events or results may differ materially from those expressed or forecast
in such forward-looking statements. Factors that might cause CyberCare's actual
results to differ materially from those indicated by such forward-looking
statements include, without limitation, those discussed in our filings with the
Securities and Exchange Commission, including but not limited to our most recent
proxy statement and "Risk Factors" and included elsewhere in this Prospectus, as
well as Future Factors that may have the effect of reducing our available
operating income and cash balances.
Future Factors include risks associated with the uncertainty of future
financial results; government approval processes; changes in the regulation of
the healthcare and technology industries at either the federal or state levels;
changes in reimbursement for services by government or private payors;
competitive pressures in the healthcare and technology industries and
CyberCare's response thereto; delays or inefficiencies in the introduction,
acceptance or effectiveness of new products; the impact of competitive products
or pricing; CyberCare's relationships with customers and partners; cash
expenditures related to possible future acquisitions and expansions; on-going
capital expenditures; CyberCare's ability to obtain capital on favorable terms
and conditions; increasing prices of products and services; U.S. and non-U.S.
competitors, including new entrants; rapid technological developments and
changes and CyberCare's ability to continue to introduce competitive new
products and services on a timely, cost-effective basis; the mix of products and
services; the availability of manufacturing capacity, components and materials;
the ability to recruit and retain talent; the achievement of lower costs and
expenses; credit concerns in the emerging service provider market; customer
demand for CyberCare's products and services; U.S. and non-U.S. government and
public policy changes that may affect the level of new investments and purchases
made by customers; changes in U.S. and non-U.S. governmental regulations;
protection and validity of patent and other intellectual property rights;
reliance on large customers and significant suppliers; the ability to supply
customer financing; technological implementation; and cost/financial risks in
the use of large, multiyear contracts; CyberCare's credit ratings; the outcome
of pending and future litigation; continued availability of financing, financial
instruments and financial resources in the amounts, at the times and on the
terms required to support CyberCare's future business; general industry and
market conditions and growth rates; and general U.S. and non-U.S. economic
conditions, including interest rate and currency exchange rate fluctuations.
You are cautioned not to unduly rely on such forward-looking statements
when evaluating the information presented herein. These statements should be
considered only after carefully reading this entire Prospectus and the documents
incorporated herein by reference.
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BUSINESS
CyberCare, Inc. was incorporated in September 1989 in the State of
Florida. Our principal executive offices are located at 2500 Quantum Lakes
Drive, Suite 1000, Boynton Beach, Florida 33426, and our telephone number is
(561) 742-5000. CyberCare consists of the following three separate and distinct
businesses:
Pharmacy business whose operations primarily support assisted living and
similar long-term care facilities;
Physical therapy and rehabilitation business focuses on providing
occupational, physical and speech therapy services; and
Technology business focuses on the development and commercialization of
patented products and services used in remote monitoring, care and
communication between patients, caregivers and other people included in
the healthcare continuum.
Our technology division is a tele-health solutions company improving the
delivery of care through its products and services. Tele-health involves the
remote monitoring of patients and delivery of care via specially designed
hardware and software, through standard telephone lines and/or broadband
connectivity, either directly or in a network-based environment over the
Internet. Product offerings enable health plans, home health, disease management
agencies, employers, hospital systems, HMOs, insurers and other risk bearing
organizations to better manage the cost of care through wellness and disease
management programs.
We create an online interactive community that incorporates all members of
the care team in the healthcare delivery process, resulting in cost reductions
and the improvement in the quality of patient care. Utilizing patented
technology for the remote monitoring and real-time interactive communication
between patients and caregivers, the CyberCare System(TM) allowS for effective
and efficient electronic disease management, including automatic data
collection, case management, and personal interaction. The CyberCare System(TM),
which consists of the Electronic HouseCall(R) family of products ("EHC(TM)"),
the CyberCare 24 Network(TM), and the CyberHealth ManagEr(TM), provides a
complete package of tele-health products and services for patients, caregivers
and payors. We are committed to quality and our solutions are global in nature.
In addition to our domestic sales efforts, we intend to market our products and
services in foreign markets via a series of licensing arrangements and joint
venture partnerships with local organizations that understand local health care
delivery issues and which have a strong local presence, appropriate
infrastructure and relationships with industry and government.
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Our proprietary software application is the Electronic HouseCall(R)
application that runs on the EHC(TM) patient and provider Units that havE
videoconferencing and medical measurement capabilities. This software
application was originally developed at Georgia Tech and further modified by us.
The software application implements the patented technology that is licensed to
us from Georgia Tech and the Medical College of Georgia. The patent (U.S. Patent
No. 5,987,519 titled "Telemedicine system using voice video and data
encapsulation and de-encapsulation for communicating medical information between
central monitoring stations and remote patient monitoring stations") secures all
telemedicine applications that use packet-based technology to simultaneously
exchange voice, video, and medical data. Also incorporated in the software
application is the technology secured by U.S. Patent No. 6,112,224 titled
"Patient monitoring station using a single interrupt resource to support
multiple measurement devices" as well as technology secured by multiple patents
pending.
Our CyberCare System is comprised of monitoring devices ("Units") and
peripheral medical devices designed for use by patients and Units designed for
use by care providers. Units and peripherals determined to be medical devices
have received marketing approval by the United States Food and Drug
Administration ("FDA") as described below. Other Units are not subject to FDA
regulatory approval or, because they have been determined to be line extensions
of a "cleared" Unit, do not require additional regulatory approval.
PATIENT UNITS
EHC100: This Unit is a general-purpose telecommunications device for use by
patients and is not regulated by the FDA. It uses standard telephone lines and
is intended for use by an unassisted patient in his or her residence. The Unit
allows the patient to use certain peripheral medical devices and take their own
vital signs measurements, such as blood pressure, blood glucose level and body
weight. The Unit then transmits the measurements to a database that resides on
the CyberCare 24 Network(TM) for review, analysis anD appropriate action by a
care provider.
EHC1500: The EHC1500 is a variation of the EHC100 that uses a pocket PC
platform, thereby allowing greater portability and flexibility of use. It can be
configured to handle up to three peripheral medical devices, including a blood
pressure cuff, weight scale and blood glucose meter. It communicates and
transmits the vital signs data through the CyberCare 24 Network using a standard
telephone line or by wireless connection.
EHC400: This patient Unit has received FDA marketing clearance and uses
broadband telecommunication services to connect to the CyberCare 24 Network. It
allows the patient to interact with care providers (such as a physician, nurse,
physician assistant, care manager, etc.) situated in another location in a
"virtual housecall" through an audio-visual videoconference, and allows the
patient, using various peripheral medical devices, to collect and transmit his
or her own medical measurements (such as blood pressure, using a
sphygmomanometer; temperature, using an electronic
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oral thermometer; blood oxygen saturation and pulse, using a pulse oximeter;
blood glucose (sugar) level, using a glucometer; body weight, using an
electronic weight scale; and/or heart, lung and bowel sounds, using an
electronic stethoscope) through the CyberCare 24 Network for immediate or later
review by care providers.
EHC300: This patient Unit is similar to the EHC400, but only permits
audio-visual videoconferencing without the addition of peripheral medical
devices or vital sign data collection. It communicates with care provider Units
via the CyberCare 24 Network using standard telephone lines and has the
capability to engage in multipoint conferences with other Units through the
CyberCare 24 Network.
EHC350: Similar to the EHC400, this patient Unit combines the audio-visual
videoconferencing capabilities of the EHC300 with peripheral medical device
availability and patient vital signs data collection through a special module to
accommodate the peripheral devices. The Model 350 is equipped with a module for
accommodating the connection of peripheral devices and communicates and
transmits data through the CyberCare 24 Network using standard telephone lines.
EHC2000: This is a more advanced, compact and lightweight version of the EHC400
which supports the use of peripheral medical devices including "plug and play"
USB ports. It also features a magnetic card reader and can use either standard
analog telephone lines or broadband telecommunications service to communicate
and transmit data via the CyberCare 24 Network.
EHC2050: This patient Unit is a variation of the EHC 2000 and uses standard
telephone lines to communicate and transmit data either using the routed
architecture of the CyberCare 24 Network or directly (in a "point-to-point"
manner) to a care provider using either an EHC650 or EHC1650 care provider Unit.
CARE PROVIDER UNITS
EHC600: The EHC600 care provider workstation Unit has received FDA marketing
clearance and uses broadband telecommunications service to allow care providers
to conduct a "virtual housecall" and interact with a remotely situated patient
in an audio-visual videoconference. Incorporating the Cyber HealthManager
software, this Unit also allows care providers to initiate collection of certain
patient vital signs measurements during a "virtual housecall" as well as review
patient vital sign measurements and snapshot images (such as for wound care
treatment) transmitted by a patient Unit through the CyberCare 24 Network. This
Unit enables the care provider to assess patient status, analyze patient data
and develop reports through its various software capabilities.
EHC650: This Unit has the same features as the EHC600, except that it
communicates directly with an EHC2050 patient Unit (in a "point-to-point"
manner) rather than through the routed architecture of the CyberCare 24 Network.
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EHC1600: This care provider Unit is a laptop version of the EHC 600 workstation,
but uses either standard analog telephone lines or broadband telecommunications
service to communicate via the CyberCare 24 Network.
EHC1650: This model is similar to the EHC1600 except that it utilizes standard
analog telephone lines to communicate directly (in a "point-to-point" manner)
with patient Units having videoconferencing capabilities. The EHC1650 uses a
stand-alone database and can be connected with the CyberCare 24 Network as
needed for periodic software and database updates.
EHC1625: This care provider Unit is a scaled-down, hand-held version of the
EHC600 and uses pocket PC platform. It is a care management device that enables
the care provider to remotely monitor patient vital sign data transmitted from a
patient Unit. It does not permit direct interaction or video conferencing with a
patient. It is web-enabled and operates either in a wireless environment or
using standard analog telephone lines to communicate via the CyberCare 24
Network.
EHC3000 CARE MANAGEMENT SOFTWARE: This is a web-enabled software platform that
allows the care provider access, via the internet and a secure home page, to the
data on the CyberCare 24 Network database transmitted from patient Units. It
operates on any computer with internet access that utilizes an industry standard
browser and can provide electronic mail notifications to care providers
regarding a patient's condition based on programmable ranges and/or thresholds
determined by the care provider.
PERIPHERAL MEDICAL DEVICES AND SOFTWARE APPLICATIONS
A number of peripheral medical devices are used in connection with certain
EHC patient Units, some of which we obtain commercially from medical device
suppliers and others which we have developed ourselves. We have developed
certain medical devices and software applications as principle components of the
CyberCare System and have received FDA marketing clearance on such items as
follows:
Weight Scale - FDA marketing clearance obtained.
Blood Glucose Meter - FDA marketing clearance obtained.
Electronic Stethoscope - FDA marketing clearance obtained.
Blood Pressure Cuff (Sphygmomanometer) - FDA marketing clearance obtained.
Pulse Oximeter - FDA marketing clearance obtained.
Electronic Oral Thermometer - FDA marketing clearance obtained.
Spirometer - Application for FDA marketing clearance in progress.
Medication Compliance Option - Application for FDA marketing clearance
in progress.
The CyberCare System has a very flexible configuration and system design,
allowing the EHC products to meet various application requirements and
conditions for different market segments. The products and services may be
combined in a fully network-based system or in a point-to-point configuration.
In addition to workstation type Units, the CyberCare System includes
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web-based, mobile and hand-held EHC Units for both the caregiver and the patient
so they are not constrained by the boundaries of home, office or expensive stand
alone equipment. All the EHC products conform to industry standards and may be
integrated into customer workflow and data management operating systems.
Significant attention in the design process has been devoted to security,
confidentiality and privacy, as well as to intended target markets. The
CyberCare System helps the caregiver to track clinical outcomes and improvements
in medication and treatment compliance.
The CyberCare System has been designed to be implemented in
fee-for-service, case rate, episodic rate or capitation environments.
OUR OTHER BUSINESSES
We provide physical, occupational, speech therapy and pain rehabilitation
services in clinics currently owned and/or operated. We currently employ
approximately 153 people in this segment. On average, each physical therapy
clinic typically has a staff of three, including a fully licensed therapist, a
licensed therapy assistant and an administrative secretary/rehabilitation aide.
We develop rehabilitation clinics within specific geographic locations
throughout Florida that we believe will create synergies and operating
efficiencies and satisfy the cost containment requirements of significant payor
sources. Our rehabilitation services include specialty programs, like pain
management, coupled with traditional services, such as comprehensive
rehabilitation.
Our Pharmacy is a pharmacy employing approximately 48 individuals with its
principal place of business in Lakeland, Florida. Through this segment, we
provide unit-dosed medications to over 4,000 residents in 85 assisted-living
facilities across central and west Florida by delivering directly to the
facilities serviced. Our Pharmacy also has permits to dispense to patients in
other states as a non-resident pharmacy.
We are currently evaluating the above two businesses for growth,
profitability and cash flow. Upon the completion of the evaluation, we will make
a determination whether to maintain these businesses as part of the consolidated
group or, if we receive an offer to purchase these businesses which is in the
best interest of our shareholders, we will sell the businesses.
RISK FACTORS
RISKS RELATED TO OUR BUSINESS
WE HAVE A HISTORY OF LOSSES AND A SUBSTANTIAL ACCUMULATED DEFICIT AND WE MAY
NEVER REACH PROFITABILITY
To date, we have been unable to generate revenue sufficient to be
profitable on a consistent basis. Consequently, we have sustained substantial
losses. Net losses for the years ended December 31, 2001, 2000 and 1999 were
$44,916,000, $28,698,000 and $10,808,000, respectively. Our
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accumulated deficits as of December 31, 2001 and 2000 were $112,066,000 and
$67,150,000, respectively. Our products and services may never achieve the
commercial acceptance necessary to achieve the level of revenues needed to be
profitable in the future or, if profitability is achieved, that it will be
sustained.
WE WILL NEED TO OBTAIN ADDITIONAL FINANCING AND WE CANNOT BE CERTAIN THAT
ADDITIONAL FINANCING WILL BE AVAILABLE WHEN NEEDED OR ON TERMS FAVORABLE TO US
OR OUR STOCKHOLDERS
Our future capital requirements will depend on many factors, including but
not limited to:
* the market acceptance of the CyberCare System;
* the levels of promotion and marketing required to attain a
competitive position in the marketplace;
* the extent to which we invest in new technology and improvements
of existing technology; and
* the response of competitors to our introduction of the CyberCare
System and other new products and services.
To the extent that funds generated through the exercise of stock options
and warrants, sale of common shares under our private equity line agreement with
Strategic Investment Management, S.A., together with existing resources, are
insufficient to fund our activities over the short and long term, we will need
to raise additional funds through equity or debt financing or from other
sources. The sale of additional equity or convertible debt may result in
additional dilution to our stockholders. To the extent that we rely upon debt
financing, we will incur the obligation to repay the funds borrowed with
interest and may become subject to covenants and restrictions that restrict
operating flexibility. Failure to obtain necessary financing could have a
material adverse effect on our business, financial condition or results of
operations.
WE MAY NOT BE ABLE TO PROTECT PATENTS AND PROPRIETARY TECHNOLOGY, WHICH COULD
HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS
Our ability to compete effectively in the tele-health industry will depend
on our success in developing and marketing our products and services and/or
acquiring other suitable businesses and protecting our proprietary technology
both in the United States and abroad. We currently have a license for certain
patents and have several patents pending. We intend to file additional patent
applications that we deem to be economically beneficial. If we are not
successful in obtaining and defending patents or demonstrating that our
technology is proprietary, we will have limited protection against those who
might copy our technology. We may incur substantial costs in defending any
patent or license infringement suits or in asserting any patent or license
rights, including those granted by third parties. The expenditure involved in
asserting, obtaining or defending these intellectual property rights may be more
than we can afford.
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Although we have and will continue to enter into confidentiality, covenant
not to compete and invention agreements with our employees, consultants,
partners and acquisition targets, such agreements may not be honored or they may
not be able to adequately protect our rights to our non-patented trade secrets
and know-how.
THIRD PARTIES MAY CLAIM THAT WE HAVE BREACHED THEIR INTELLECTUAL PROPERTY
RIGHTS, WHICH COULD RESULT IN SIGNIFICANT ADDITIONAL COSTS OR PREVENT US FROM
PROVIDING ALL OF OUR SERVICES
Certain products, which are components of the CyberCare System, were the
subject of a patent infringement complaint filed March 2, 2001 by the Cybernet
Systems Corporation ("Cybernet") in the United States District Court for the
Eastern District of Michigan. The complaint alleged that at least our EHC 600
Provider Units, EHC 500 and EHC 400 Patient Units, and EHC 200 Videoconferencing
Unit infringed Cybernet's U.S. Patent No. 6,050,940, issued April 18, 2000, for
"General-Purpose Medical Instrumentation". The complaint was never served on us
and the lawsuit was dismissed by court order on July 5, 2001 based on the
plaintiff's failure to prosecute the case. Had the lawsuit been pursued, we
strongly believe we have good and valid defenses to Cybernet's charges of
infringement, including, but not limited to, that each of the accused products
do not infringe any of the Cybernet patent claims. We are not aware of other
claims or threats of claims regarding patent infringement or alleged
infringement.
Third parties may bring claims of copyright or trademark infringement,
patent infringement or misappropriation of creative ideas or formats against us
with respect to content that we distribute or our technology or marketing
techniques and terminology. Claims of this kind, even if without merit, could be
time-consuming to defend, result in costly litigation, divert management
attention, require us to enter into costly royalty or licensing arrangements or
prevent us from distributing certain content or utilizing important
technologies, ideas or formats.
Defending and prosecuting intellectual property suits, interference
proceedings and related legal and administrative proceedings are costly,
time-consuming and divert the attention of technical and management personnel.
Litigation may be necessary to enforce our patents or defend our patent rights,
to protect our trade secrets or know-how or to determine the enforceability,
scope and validity of the proprietary rights of others. If the outcome of any
such litigation or interference proceedings is adverse to us, it could subject
us to significant liabilities to third parties or require us to license disputed
rights from third parties or cease using such technology, which would have a
material adverse effect on our business, financial condition, results of
operations and future growth prospects. Patent and intellectual property
disputes in the medical device area have often been settled through licensing or
similar arrangements, which can include ongoing royalties. We may not obtain the
necessary licenses on satisfactory terms, if at all.
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CHANGES IN PAYMENT FOR MEDICAL SERVICES COULD HARM OUR BUSINESS
We believe that trends in cost containment in the health care industry
will continue to result in a reduction in per-patient revenues which may impact
our health services segments. The federal government has implemented, through
the Medicare program, a payment methodology for physician services. This
methodology is a fee schedule that, except for certain geographical and other
adjustments, pays similarly situated physicians the same amount for the same
services. The schedule is adjusted each year and is subject to increases or
decreases at the discretion of Congress. Reduced operating margins may not be
recouped by us through cost reductions, increased volume, introduction of
additional procedures or otherwise. Rates paid by non-governmental insurers,
including those that provide Medicare supplemental insurance, are based on
established physician, ambulatory surgery center and hospital charges, and are
generally higher than Medicare payment rates. A change in the makeup of the
patients that we serve that results in a decrease in patients covered by private
insurance or a shift in private pay payment structures could adversely affect
our business, financial condition or results of operations.
CERTAIN PAYMENTS TO OUR PT&R SUBSIDIARY HAVE BEEN HELD IN ESCROW
Our Physical Therapy and Rehabilitation subsidiary ("PT&R") received a
letter from the Center for Medicare and Medicaid Services ("CMS") and its
intermediary in April 2001 notifying us of the suspension of Medicare payments.
CMS alleged that certain patient complaints, which constituted less than 1% of
PT&R's Medicare patients, and other alleged regulatory non-compliance, justified
the payment suspension. During the suspension, the Medicare program continued to
process PT&R's claims, but held payments in escrow. In August 2001, the
suspension was lifted and payments for processed claims were released, although
approximately $1,114,548 remains held in escrow, pending further review.
CyberCare has learned that CMS has completed its review and a formal
determination is expected shortly, which is anticipated to include a release of
the escrowed amount as offset by an amount for denied claims. The denied claims
may be appealed through the CMS administrative appeal process. As of December
31, 2001, the Company has recorded an allowance for uncollectibles in the amount
of $500,000 against the balance being held.
WE ARE THE SUBJECT OF SECURITIES CLASS ACTION LITIGATION
We are currently the subject of a consolidated class action lawsuit
against us and certain of our executive officers alleging violations of federal
securities laws. The action seeks unspecified damages and costs. Securities
litigation could result in substantial costs to us and could divert management's
attention and resources away from our operations and development. Although we
have insurance coverage for this consolidated action which we believe will be
adequate to cover defense costs, an exception or exclusion to coverage may apply
or such coverage may not in fact cover all defense costs. We believe that we
have meritorious defenses to these suits, but we may not prevail in this
litigation. Since this consolidated action is in the early stages, we cannot
predict the outcome of this litigation or determine the full potential impact it
may have on our liquidity or financial condition. We, and our executives,
believe the claims made in the complaint lack merit.
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We are engaged, as disclosed herein, in other ongoing litigation. We are
unable to estimate the financial impact on CyberCare's financial statements of
other ongoing litigation.
WE HAVE LIMITED EXPERIENCE CONDUCTING OPERATIONS INTERNATIONALLY, WHICH MAY MAKE
OVERSEAS EXPANSION MORE DIFFICULT AND COSTLY
We have begun the process of initiating business network operations in
several foreign countries. We are subject to differing laws, regulations and
business cultures which may adversely impact our business. We may also be
exposed to economic and political instability and international unrest. Although
we have and will continue to enter into agreements with our partners and
customers that attempt to minimize these risks, such agreements may not be
honored or we may not be able to adequately protect our interests.
We plan to expand our international operations in the future. There are
many barriers and risks to competing successfully in the international
marketplace, including:
* Costs of customizing products for foreign countries;
* Foreign currency risks;
* Dependence on local vendors;
* Compliance with multiple, conflicting and changing laws, and
regulations and policies;
* Longer sales cycles;
* Import and export restrictions and tariffs.
As a result of these competitive barriers to entry and risks, we may not
be able to successfully market, sell and deliver our products and services in
international markets.
We may engage in hedging transactions in the future to manage or reduce
our foreign exchange risk. However, our attempts to manage our foreign currency
exchange risk may not be successful and, as a result, our net earnings could be
negatively affected by any unfavorable fluctuations in foreign currency exchange
rates.
Our foreign operations could also be subject to unexpected changes in
regulatory requirements, tariffs, and other market barriers and political and
economic instability in the countries where we operate. Due to our foreign
operations, we could be subject to such factors in the future and the impact of
any such events that may occur in the future could subject us to additional
costs or loss of sales, which could negatively affect our operating results.
THE NATURE OF OUR BUSINESS EXPOSES US TO PROFESSIONAL AND PRODUCT LIABILITY
CLAIMS, WHICH COULD MATERIALLY ADVERSELY IMPACT OUR OPERATIONS
11
Our business and technology exposes us to potential professional and
product liability risks which are inherent to such business and products,
including the risks associated with providing tele-health and disease management
products and services through a virtual private network which is reliant upon
telecommunications pipelines and connections provided by third parties which
may, from time to time, experience interruption of service. We carry reasonably
adequate insurance to protect against professional and product liability,
including errors and omissions in our technology and software design,
unauthorized access to our network and loss or interruption of service or system
functions, which could materially adversely impact our business and operations.
WE MAY LOSE REVENUE OR INCUR ADDITIONAL COSTS BECAUSE OF SYSTEM FAILURE
Any system failure that causes interruptions in our operations may have
an adverse effect on our business, financial condition or results of operations.
Our services are dependent on our own and other companies' abilities to
successfully integrate technologies and equipment. In connecting with other
companies' equipment we take the risk of not being able to provide service due
to telecommunications failure. There is also the risk that our equipment may
malfunction or that we could make an error, which may negatively affect our
customers' service. Our hardware and other equipment may also suffer damage from
natural disasters and other catastrophic events, such as loss of power and
telecommunications failures. We have taken a number of steps to prevent our
service from being affected by natural disasters, including development of
redundant systems. Nevertheless, such steps and redundancies may not prevent our
system from becoming disabled in the event of a hurricane, power outage or
otherwise. The failure of our system resulting from the effects of a natural or
man-made disaster could have an adverse effect on our relationship with our
customers and our business, financial condition and results of operation.
THE LOSS OF CERTAIN MEMBERS OF OUR MANAGEMENT TEAM COULD MATERIALLY ADVERSELY
AFFECT US
We are dependent, to a significant extent, on the continued efforts and
abilities of members of our management team, the majority of which have
employment contracts. CyberCare is the owner of $1,000,000 key man life
insurance policies on the lives of our President and Executive Vice President.
We have had a high degree of success attracting key personnel. Currently, we are
not aware of any key personnel who plan to retire or leave CyberCare in the near
future. Our former Chairman and CEO, Michael F. Morrell and former Corporate
Secretary, Linda Moore resigned in February 2002 and on March 27, 2002, Jack
Hight resigned from his position as Interim Chairman of the Board. If we were to
lose the services of any of our key employees without obtaining qualified
replacements, our business could be materially adversely affected.
We believe that our success will also depend upon our ability to hire,
train and retain other highly skilled personnel. We compete in a new market and
there are a limited number of people with skills necessary to provide the
services our clients demand. Competition for quality personnel is
12
intense. We cannot be sure that we will be successful in hiring, assimilating or
retaining the necessary personnel, and our failure to do so could affect our
business, financial condition and results of operations.
WE COMPETE WITH A NUMBER OF ESTABLISHED COMPANIES, SOME OF WHICH HAVE
SIGNIFICANTLY GREATER FINANCIAL, TECHNOLOGICAL AND MARKETING RESOURCES THAN WE
DO, AND WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY WITH THESE COMPANIES
The tele-health solutions business is relatively new and evolving. We
compete with companies in the tele-health and monitoring business and from other
industries. The health care industry in general and the market for medical
ancillary services specifically are highly competitive. We compete with
ancillary services companies that are larger and have greater financial
resources than we do. We face competition from companies that provide
tele-health solutions, most of which are in the early stages of development.
We believe that we compete effectively by providing superior technology
and tele-health solutions and more personalized care to the patients and
customers we serve. We believe the primary competitors for EHC products are
small, privately-held companies, none of which have established a major market
position as of this time. Some larger companies, such as Panasonic and Agilent,
have also recently announced initiatives in this market. Key differentiating
factors between us and our competitors in this segment lie primarily in our
tele-health solutions architecture that utilizes our patented technology and our
developed software applications.
RISKS RELATED TO OUR INDUSTRY
WE CANNOT GUARANTEE YOU THAT OUR PRODUCTS WILL BE FULLY DEVELOPED OR ACCEPTED
BY THE HEALTH CARE INDUSTRY
Payors, physicians, medical providers or the medical community in general
may not accept and utilize our products and services. The extent, and the rate
at which, our products achieve market acceptance and penetration will depend on
many variables, including the establishment and demonstration in the medical
insurance and payor communities of the clinical safety, efficacy and
cost-effectiveness of our products and services, the advantage of these products
over existing technology, third-party reimbursement practices and our
manufacturing, quality control, marketing and sales efforts. There can be no
assurance that similar risks will not confront any other products and services
we develop in the future. Failure of our products and services to gain market
acceptance would have a material adverse effect on our business, financial
condition, and results of operations.
WE ARE SUBJECT TO A SIGNIFICANT NUMBER OF HEALTH CARE INDUSTRY REGULATIONS AND
RELATED REGULATIONS, THE FAILURE TO COMPLY WITH, COULD MATERIALLY ADVERSELY
AFFECT OUR OPERATIONS
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We are subject to substantial potential liability resulting from a variety
of possible causes, including violation of numerous health care laws,
malpractice and product liability. Many of the health care laws to which we are
subject are broad in scope and difficult to interpret. If any actions or
lawsuits are brought against us in the future, such actions or lawsuits could
have a materially adverse effect on us. Violations of the state and federal
anti-kick back or self-referral laws and regulations could result in substantial
civil and/or criminal penalties and/or administrative sanctions for the
individuals or entities, including exclusion from participation in the Medicare
and Medicaid programs, as well as the suspension or revocation of professional
licensure. Such sanctions, if applied to us or any of our employees, could
result in significant loss of reimbursement and could have a material adverse
effect on us.
We attempt to minimize our potential liability through implementation of
and adherence to compliance policies and procedures, effective supervision and
personnel recruitment procedures. We also carry a variety of insurance policies
including policies insuring against certain negligent acts. Insurance policies
may not adequately cover our losses resulting from such potential liability and
we may be unable to continue to qualify for, or be able to afford or obtain such
insurance in the future.
The Health Insurance Portability and Accountability Act of 1996 ("HIPAA"),
among other things, mandates administrative simplification of electronic data
interchanges of health information, including standardizing transactions,
establishing uniform health care provider, payer and employer identifiers and
seeking protections for confidentiality and security of patient data. Final
regulations governing healthcare transaction security were published in the
August 17, 2000 FEDERAL REGISTER, and will become effective for most entities in
or after October 2002. Final regulations governing privacy and confidentiality
of individually identifiable health information were published in the December
20, 2000 FEDERAL REGISTER, and will become effective for most entities in or
after February 2003. Many of the provisions of HIPAA do not directly apply to
our technology business since it is not included in the types of entities to
which HIPAA applies. However, because we may be considered a business associate
of a covered entity, and because the implementation of our EHC(TM) system for
our customerS necessitates that we have interaction with patient users of the
system, we will nonetheless have to comply with certain aspects of the HIPAA
regulations in order to assure compliance by our customers. HIPAA also applies
to our physical therapy and rehabilitation segment, as well as our pharmacy
segment. We are proceeding to assess where our current systems diverge from
HIPAA's privacy and security requirements and to implement protocols and
procedures that will bring such systems and areas into compliance before the
deadlines identified in the final regulations. We are unable at this time to
assess the cost of implementation of the administrative simplification
requirements of HIPAA that are applicable to our business.
14
RISK FACTORS ASSOCIATED WITH CONTRACTS AND SUB-CONTRACTS WITH THE U.S.
GOVERNMENT
It is our goal to introduce the CyberCare System for use by agencies or
authorities of the federal and state governments (such as the U.S. Veterans
Administration, Medicare, Medicaid, TRICARE, or other federally or state funded
health care programs) and we are currently engaged in the administration of
pilot programs for our CyberCare System with certain of these agencies and
authorities. Accordingly, a portion of our revenue may be derived from contracts
or subcontracts funded by the U.S. government or other state or local
governments. Therefore, our financial performance may be adversely affected by
changing government (federal, state or local) procurement practices and policies
as well as declines in government spending and funding. The factors that could
have a material adverse effect on our ability to win new contracts with the
federal, state or local governments, or retain existing contracts, include the
following: budgetary constraints; changes in government funding levels,
programs, policies or requirements; technological developments; the adoption of
new laws or regulations; and general economic conditions.
NEW LEGISLATIVE DEVELOPMENTS COULD RESULT IN FINANCIAL HARDSHIP
Legislation regarding health care reform may be introduced in the future
by Congress or state legislatures. Any such reforms at the federal or state
level could significantly alter patient-provider relationships. State and
federal agency rule-making addressing these issues is also expected. No
predictions can be made as to whether future health care reform legislation,
similar legislation or rule-making will be enacted or, if enacted, its effect on
us. Any federal or state legislation prohibiting investment interests in, or
contracting with, us by physicians or health care providers for which there is
no statutory exception or safe harbor would have a material adverse effect on
our business, financial condition and results of operations.
RISKS RELATED TO OUR STOCK
SUBSTANTIALLY ALL OF OUR SHARES ARE ELIGIBLE FOR PUBLIC RESALE, WHICH MAY HAVE A
DEPRESSIVE EFFECT ON THE MARKET PRICE OF OUR COMMON STOCK
As of December 31, 2001, we had 67,827,992 shares of Common Stock
outstanding, of which substantially all can be sold under an effective
registration statement or under Rule 144. Under Rule 144, a person who has held
restricted securities for a period of one year may sell a limited number of
shares to the public in ordinary brokerage transactions. Sales under Rule 144
may have a depressive effect on the market price of our Common Stock due to the
potential increased number of publicly held securities. The timing and amount of
sales of Common Stock that are currently eligible to be resold pursuant to Rule
144 could have a depressive effect on the future market price of our Common
Stock.
THE ISSUANCE OF SHARES OF COMMON STOCK UNDER A PRIVATE EQUITY LINE AGREEMENT
WILL BE DILUTIVE TO OUR EXISTING STOCKHOLDERS
Pursuant to the terms of a private equity line agreement, we may issue up
to $30,000,000 of shares of our Common Stock to Strategic Investment Management,
S.A. at a price equal to
15
approximately 85% of the market price of the Common Stock. By raising additional
funds and issuing additional common shares under the private equity line, our
stockholders may experience dilution and various investors engaging in short
selling activities might also affect the market price of our common shares. As a
result of a decrease in our common stock price, we could face de-listing, a
damaged capital structure and a reduction in the availability of additional
financing.
CyberCare has the ability to draw down funds from the private equity line
subject to the terms and conditions of the equity line agreement. The amount
that CyberCare will be able to draw down is dependent on CyberCare's stock price
and volume. If the stock price decreases, this will require CyberCare to issue
more shares (and vice versa) and if the trading volume decreases, then the
amount of shares to be put will be minimized, thus limiting the amount of
funding (and vice versa).
Due to our current stock price, the NASDAQ Stock Market Inc. ("Nasdaq")
has notified us that on February 20, 2002, the price of our common stock had
closed for the previous consecutive 30 days below the minimum $1.00 per share
requirement under its Marketplace Rules. Consequently, CyberCare has until May
21, 2002 to regain compliance. CyberCare is currently evaluating all possible
actions.
If CyberCare is unable to maintain its current listing or move to an
alternative exchange, we will not be able to "Put" any additional shares under
the Private Equity Line. In addition, even if we are able to maintain our
listing and based upon the current stock price, CyberCare may not be willing to
"Put" any additional shares.
THE EXERCISE OF OPTIONS AND WARRANTS WILL BE DILUTIVE TO OUR EXISTING
STOCKHOLDERS
As of December 31, 2001, we had outstanding warrants and options to
purchase a total of 23,602,370 shares of our Common Stock at prices ranging from
between $0.50 and $31.50 per share, 16,726,000 shares of which are fully vested.
We are also authorized to issue up to an additional 6,103,000 options without
shareholder approval under our existing stock option plans.
THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF OUR
SUBORDINATED DEBENTURES COULD NEGATIVELY EFFECT THE MARKET PRICE FOR OUR COMMON
STOCK
We have various outstanding subordinated debentures which are convertible
into Common Stock at the holders' option at conversion prices equal to between
85% and 90% of the average closing price either on the date of the conversion
notice or for the 20 days trading prior to the date of the conversion notice,
but in no event will the conversion price be less than $.30 per share or more
than $3.25 per share.
Because the conversion prices are not fixed the ultimate number of shares
of Common Stock issueable if the holders elect to convert the principal amount
of the subordinated debentures are
16
unknown at this time. Based upon the minimum conversion price for each
subordinated debenture, we would be obligated to issue 11,410,256 shares on
conversion if all the subordinated debentures were converted.
WE MAY ISSUE ADDITIONAL SHARES AND DILUTE YOUR OWNERSHIP PERCENTAGE
Some events over which you have no control could result in the issuance of
additional shares of our Common Stock or Preferred Stock, which would dilute
your ownership percentage in CyberCare. We may issue additional shares of Common
Stock or Preferred Stock:
* to raise additional capital or finance acquisitions;
* upon the exercise or conversion of outstanding options and warrants;
* upon the sale of shares of Common Stock pursuant to the Private Equity
Line Agreement;
* as interest payments for and/or upon conversion of certain Subordinated
Debentures that have been issued; and/or
* in lieu of cash payment of dividends or for services rendered.
YOUR PERCENTAGE OF OWNERSHIP AND VOTING POWER AND THE PRICE OF OUR COMMON STOCK
MAY DECREASE BECAUSE WE HAVE ISSUED, AND IN THE FUTURE MAY ISSUE, A SUBSTANTIAL
NUMBER OF SHARES OF COMMON STOCK OR SECURITIES CONVERTIBLE INTO OR EXERCISABLE
FOR OUR COMMON STOCK
We have the authority to issue up to 200,000,000 shares of our Common
Stock and 20,000,000 shares of our Preferred Stock without stockholder approval.
We may also issue options and warrants to purchase shares of our Common Stock.
Future issuances could be at values substantially below the price paid for our
Common Stock by current stockholders. We may conduct additional future offerings
of our Common Stock, Preferred Stock, or other securities with rights to convert
the securities into shares of our Common Stock which may result in a decrease in
the value or market price of our Common Stock. Further, the issuance of
Preferred Stock could have the effect of delaying, deferring or preventing a
change of ownership without further vote or action by our stockholders and may
adversely affect the voting and other rights of the holders of Common Stock.
WE ANTICIPATE VOLATILITY IN OUR STOCK PRICE
The market price for securities in our industry historically has been
highly volatile. From January 1, 2000 through April 16, 2002, the price of our
Common Stock has fluctuated between $39.75 and $0.16 per share. The price of our
Common Stock may be subject to fluctuations in response to:
* quarter to quarter variations in operating results;
* vendor additions or cancellations;
17
* creation or elimination of funding opportunities;
* favorable or unfavorable coverage by securities analysts;
* the availability of products, technology and services; and
* other events or factors, many of which are beyond our control.
These broad market and industry factors may cause the price of our Common
Stock to decline, regardless of our actual operating performance.
DESCRIPTION OF THE PLAN
The Plan is Cyber-Care's Retirement Savings Plan. The Plan, which
was established on January 1, 1999, under Section 401(k) of the Internal Revenue
Code of 1986, allows eligible employees to set aside a portion of their salary,
ranging from 1% to 20%, on a tax-deferred basis.
The Plan is currently administered by Principal Life Insurance Company. In
general, an employee becomes eligible to participate in the Plan upon attaining
the age of 21 and following three months of service to us.
Under the Plan, CyberCare matches employees' contributions up to 50% of an
employees' contributions up to a maximum of 4% of the employees' annual salary.
CyberCare, at its option, may make payment of its matching contributions in
cash, or in common stock of Cyber-Care. On an annual basis, we issue shares of
our common stock in the name of the administrator, who holds the shares for the
benefit of our employees, as their interests appear on the books and records of
the administrator. The number of shares to be issued is determined annually, on
December 31 of each year, by dividing the dollar amount of CyberCare's matching
contribution obligation by the fair market value of its common stock on December
31 of that year. The shares beneficially owned by each employee will be held by
the administrator until the earlier of: (1) termination of the employee's
employment by CyberCare, other than by reason of retirement and (2) the
employee's voluntary withdrawal from the Plan. Upon the occurrence of either
such event, the employee's shares will be sold by the administrator and the
proceeds disbursed to the employee as provided in the Plan.
This prospectus covers the issuance of shares of our common stock under
the Plan, and the resale of those shares by persons who are our affiliates.
Since the number of shares we may issue under the Plan cannot accurately be
estimated, the registration statement, of which this prospectus forms a part,
may be amended from time-to-time to register additional shares that we issue
under the Plan. This prospectus may also be amended from time-to-time to update
information about our affiliates using this prospectus for resales of shares
issued to them under the Plan.
SELLING SECURITY HOLDERS
The information under this heading relates to resales of shares covered by
this prospectus
18
by persons who are our "affiliates" as that term in defined under federal
securities laws. Shares covered by this prospectus that are owned by our
affiliates are "control" shares under federal securities laws.
The following table sets forth as of the date of this prospectus:
o the name of each affiliated selling security holder,
o the number of shares of common stock owned beneficially, directly or
indirectly, by each affiliated selling security holder,
o the maximum number of shares to be offered by each affiliated
selling security holder pursuant to this prospectus,
o the number of shares of our common stock to be owned by each
affiliated selling security holder following sale of the shares, and
o the percentage of our common stock to be owned by the affiliated
selling security holder following completion of such offering (based
on 69,873,357 shares of our common stock outstanding as of the date
of this prospectus), and adjusted to give effect to the issuance of
shares upon the exercise of the named selling security holder's
options or warrants, but no other person's options or warrants.
Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to securities and
includes any securities which the person has the right to acquire within 60 days
through the conversion or exercise of any security or other right. The
information as to the number of shares of our common stock owned by each
affiliated selling security holder is based upon our books and records and the
information provided by our transfer agent.
We may amend or supplement this prospectus from time to time to update
the disclosure set forth in the table. Because the selling security holders
identified in the table may sell some or all of the shares owned by them
which are included in this prospectus, and because there are currently no
agreements, arrangements or understandings with respect to the sale of any of
the shares, no estimate can be given as to the number of shares available for
resale hereby that will be held by the affiliated selling security holders
upon termination of the offering made hereby. We have therefore assumed, for
the purposes of the following table, that the affiliated selling security
holders will sell all of the shares owned by them which are being offered
hereby, but will not sell any other shares of our common stock that they
presently own. IT IS OUR UNDERSTANDING THAT THE INDIVIDUALS LISTED HAVE NOT
SOLD AND HAVE NO PRESENT INTENTION TO SELL ANY OF THE SHARES OWNED BY THEM.
19
NUMBER OF SHARES NUMBER OF NUMBER OF SHARES PERCENTAGE OF
OWNED PRIOR TO SHARES OWNED AFTER THE BENEFICIAL
NAME AND POSITION OFFERING OFFERED HEREBY OFFERING OWNERSHIP
------------------- ------------------- ---------------- -------------------- -----------------
Joseph Forte,
Chief Executive Officer and
President 506,867 1,865 505,002 Less Than 1%
Arthur Kobrin,
Treasurer 474,378 2,821 471,557 Less Than 1%
Steven Cohen,
Chief Financial Officer 100,981 981 100,000 Less Than 1%
Rodger Hochman,
General Counsel 105,065 3,541 101,524 Less Than 1%
Total 1,187,291 9,208 1,178,083 1.4%
In accordance with SEC Regulations, and notwithstanding the number of
affiliated selling security holder's shares that are covered by this prospectus,
each affiliated selling security holder is limited in the number of shares he or
she may resell under this prospectus during any three month period, up to the
number of shares that does not exceed the greater of: (1) one percent of the
then outstanding shares of common stock of CyberCare, or (2) the average weekly
trading volume during the four calendar weeks preceding the date of receipt of
the order to execute the transaction by the broker or the date of execution of
the transaction directly with the broker.
PLAN OF DISTRIBUTION
The information under this heading relates to resales of shares covered by
this prospectus by persons who are our "affiliates" as that term in defined
under federal securities laws.
The shares covered by this prospectus may be resold and distributed from
time to time by the selling security holders in one or more transactions. Any
such transactions may be effected at market prices prevailing at the time of
sale, at prices related to such prevailing market prices, at negotiated prices
or at fixed prices. Usual and customary or specifically negotiated brokerage
fees or commissions may be paid by the selling security holders in connection
with sales of securities.
The selling security holders may sell shares in one or more of the
following methods, which may include crosses or block transactions:
20
o through the "pink sheets", on the Nasdaq National Market, or on such
exchanges or over-the-counter markets on which our shares may be
listed from time-to-time, in transactions which may include special
offerings, exchange distributions and/or secondary distributions,
pursuant to and in accordance with the rules of such exchanges,
including sales to underwriters who acquire the shares for their own
account and resell them in one or more transactions or through
brokers, acting as principal or agent;
o in transactions pursuant to Rule 144;
o in transactions other than on such exchanges or in the
over-the-counter market, or a combination of such transactions,
including sales through brokers, acting as principal or agent, sales
in privately negotiated transactions, or dispositions for value by
any selling security holder to its partners or members, subject to
rules relating to sales by affiliates;
o through the issuance of securities by issuers other than us,
convertible into, exchangeable for, or payable in our shares; or
o through the writing of options on our shares, whether or not such
options are listed on an exchange, or other transactions requiring
delivery of our shares, or the delivery of our shares to close out a
short position.
In making sales, brokers or dealers used by the selling security holders
may arrange for other brokers or dealers to participate. The selling security
holders who are our affiliates and others through whom such securities are sold
may be "underwriters" within the meaning of the Securities Act for the
securities offered, and any profits realized or commission received may be
considered underwriting compensation. Information as to whether an
underwriter(s) who may be selected by the selling security holders, or any other
broker-dealer, is acting as principal or agent for the selling security holders,
the compensation to be received by underwriters who may be selected by the
selling security holders, or any broker-dealer, acting as principal or agent for
the selling security holders and the compensation to be received by other
broker-dealers, in the event the compensation of other broker-dealers is in
excess of usual and customary commissions, will, to the extent required, be set
forth in a supplement to this prospectus. Any dealer or broker participating in
any distribution of the shares may be required to deliver a copy of this
prospectus, including the supplement, if any, to any person who purchases any of
the shares from or through a dealer or broker.
In connection with distributions of the shares or otherwise, selling
security holders may enter into hedging transactions with broker-dealers. In
connection with the transactions, broker-dealers may engage in short sales of
the shares in the course of hedging the positions they assume with selling
security holders. Selling security holders may also sell shares short and
deliver the Shares to close out the positions. Selling security holders may also
enter into option or other transactions with broker-dealers which require the
delivery to the broker-dealer of the shares, which the broker-dealer
21
may resell under this prospectus. The selling security holders may also pledge
the shares to a broker or dealer and upon a default, the broker or dealer may
effect sales of the pledged shares under this prospectus.
We have advised the selling security holders that, at the time a resale of
the shares is made by or on behalf of a selling security holder, a copy of this
prospectus is to be delivered.
We have also advised the selling security holders that during the time as
they may be engaged in a distribution of the shares included herein they are
required to comply with Regulation M of the Exchange Act. With certain
exceptions, Regulation M precludes any selling security holders, any affiliated
purchasers and any broker-dealer or other person who participates in the
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase any security which is the subject of the distribution
until the entire distribution is complete. Regulation M also prohibits any bids
or purchase made in order to stabilize the price of a security in connection
with the distribution of that security.
Sales of securities by the selling security holders, or even the potential
of these sales, may have an adverse effect on the market price for shares of our
common stock.
There is no assurance that the selling security holders will sell all or
any of the shares, which may be offered hereby.
RESALE OF SHARES BY AFFILIATES
The shares covered by the registration statement, of which this prospectus
forms a part, may be resold freely, except that any selling security holder who
is our affiliate, as that term is defined in the Securities Act and the rules
and regulations thereunder, is limited in the number of shares that may be
resold during any three month period to the greater of: (1) one percent of the
number of shares of our common stock that are outstanding and (2) the average
weekly trading volume in our common stock over the four calendar weeks preceding
the date of sale.
Generally, our affiliates consist of our executive officers, directors
and/or owners of 10% or more of our outstanding common stock. Employees not
within the scope of the preceding sentence will generally not be considered our
affiliates.
DESCRIPTION OF SECURITIES
GENERAL
The following description of our capital stock and provisions of our
Articles of Incorporation is a summary thereof and is qualified by reference to
our Articles of Incorporation, copies of which may be obtained upon request. Our
authorized capital consists of 200,000,000 shares of common stock, with a par
value of $.0025 per share, of which approximately [ ] shares are issued and
22
outstanding as of the date of this prospectus, and (2) Preferred Stock of which
no shares are outstanding as of the date of this prospectus.
COMMON STOCK
Holders of shares of common stock are entitled to share, on a ratable
basis, such dividends as may be declared by the board of directors out of funds,
legally available therefor. Upon our liquidation, dissolution or winding up,
after payment to creditors, our assets will be divided pro rata on a per share
basis among the holders of our common stock.
Each share of common stock entitles the holders thereof to one vote.
Holders of common stock do not have cumulative voting rights which means that
the holders of more than 50% of the shares voting for the election of directors
can elect all of the directors if they choose to do so, and, in such event, the
holders of the remaining shares will not be able to elect any directors. Our
By-Laws require that only a majority of our issued and outstanding shares need
be represented to constitute a quorum and to transact business at a
stockholders' meeting. Our common stock has no preemptive, subscription or
conversion rights and is not redeemable by us.
PREFERRED STOCK
Although none is currently issued and outstanding, we may issue preferred
stock from time to time, with such designations, preferences, conversion rights,
cumulative, relative, participating, optional or other rights, including voting
rights, qualifications, limitations or restrictions as are determined by our
board of directors.
COMMON STOCK PURCHASE WARRANTS
As of December 31, 2001, we had outstanding warrants and options to
purchase a total of 23,602,370 shares of our Common Stock at prices ranging from
between $0.50 and $31.50 per share, 16,726,000 shares of which are fully vested.
We are also authorized to issue up to an additional 6,103,000 options without
shareholder approval under our existing stock option plans.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is Corporate Stock
Transfer, 3200 Cherry Creek Drive, Suite 430, Denver Colorado 80209, (303)
282-4800.
LEGAL MATTERS
The validity of the issuance of the securities offered hereby will be
passed upon for us by Atlas Pearlman, P.A., Ft. Lauderdale, Florida.
23
EXPERTS
Ernst & Young LLP, Certified Public Accountants, have audited our
consolidated financial statements included in our Annual Report on Form 10-K for
the year ended December 31, 2001, as set forth in their report, which are
incorporated by reference in this registration statement. Our financial
statements are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
INDEMNIFICATION
Section 607.0850(1) of the Florida Business Corporation Act, as amended
(the "Florida Act"), provides that, in general, a Florida corporation may
indemnify any person who was or is a party to any proceeding (other than an
action by, or on behalf of, the corporation), by reason of the fact that he is
or was a director, officer, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against liability incurred in connection with such proceeding,
including any appeal thereof, if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal action or proceeding, he had no
reasonable cause to believe his conduct was unlawful.
In the case of proceedings by or in the right of the corporation, Section
607.0850(2) of the Florida Act provides that, in general, a corporation may
indemnify any person who was or is a party to any such proceeding by reason of
the fact that he is or was a director, officer, employee or agent of the
corporation against expenses and amounts paid in settlement actually and
reasonably incurred in connection with the defense or settlement of such
proceeding, including any appeal thereof, provided that such person acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the corporation, except that no indemnification shall be
made in respect of any claims as to which such person is adjudged liable unless
a court of competent jurisdiction determines upon application that such person
is fairly and reasonably entitled to indemnity.
Section 607.0850 further provides that to the extent a director, officer,
employee or agent of a corporation is successful on the merits or in the defense
of any proceeding referred to in subsections (1) or (2) of Section 607.0850 or
in the defense of any claim, issue or matter therein, he shall be indemnified
against expenses actually and reasonably incurred by him in connection
therewith; that the corporation may advance such expenses; that indemnification
provided for by Section 607.0850 shall not be deemed exclusive of any other
rights to which the indemnified party may be entitled; and that the corporation
may purchase and maintain insurance on behalf of such person against any
liability asserted against him or incurred by him in any such capacity or
arising out of his status as such, whether or not the corporation would have the
power to indemnify him against such liabilities under such Section 607.0850.
24
Section 607.0850 of the Florida Act further provides that, in general,
indemnification or advancement of expenses shall not be made to or on behalf of
any director, officer, employee or agent if a judgment or other final
adjudication establishes that such person's actions, or omissions to act, were
material to the cause of action so adjudicated and constitute: (i) a violation
of the criminal law, unless such person had reasonable cause to believe his
conduct was lawful or had no reasonable cause to believe his conduct was
unlawful; (ii) a transaction from which such person derived an improper personal
benefit; (iii) in the case of a director, a circumstance under which the
director has voted for or assented to a distribution made in violation of the
Florida Act or the corporation's articles of incorporation; or (iv) willful
misconduct or a conscious disregard for the best interests of the corporation in
a proceeding by or in the right of the corporation to procure a judgment in
favor or in a proceeding by or in the right of a shareholder.
CyberCare's Articles of Incorporation and Bylaws provide that CyberCare
shall indemnify its directors and officers to the fullest extent permitted by
Florida law.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
25
106,389 Shares
CyberCare, Inc.
Common Stock
-------------------------
PROSPECTUS
-------------------------
-------------------------
April 18, 2002
-------------------------
You should only rely on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. The selling security holders are offering to sell,
and seeking offers to buy, shares of common stock only in jurisdictions where
offers and sales are permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or of any sale of common stock.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
There is available without charge, upon written or oral request,
documents incorporated by reference in Section 10(a) of the prospectus. Also
available without charge, upon written or oral request, those documents required
to be delivered to employees pursuant to Rule 428(b) (ss. 230.428(b)). For
copies of any such documents, please write to: CyberCare, 2500 Quantum Lakes
Drive, Suite 1000, Boynton Beach, Florida 33426-8308, Attn. Arthur Kobrin,
Treasurer, (561) 742-5113.
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by CyberCare with the SEC are
incorporated herein by reference:
* Proxy statement filed on May 9, 2001, for our annual meeting of
shareholders.
* Quarterly reports on Forms 10-Q for the periods ended March 31,
2001, June 30, 2001, and September 30, 2001.
* Current reports on Form 8-K filed on June 1, 2001, June 28, 2001,
September 17, 2001, October 15, 2001, October 31, 2001, January 15,
2002, January 16, 2002, February 11, 2002, March 7, 2002, April 15,
2002 and April 17, 2002.
* Annual report on Form 10-K for the year ended December 31, 2001.
All documents subsequently filed by the registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment to the registration statement which indicates that all
shares of common stock offered have been sold or which deregisters all of such
shares then remaining unsold, shall be deemed to be incorporated by reference in
the registration statement and to be a part thereof from the date of filing of
such documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 607.0850(1) of the Florida Business Corporation Act, as amended
(the "Florida Act"), provides that, in general, a Florida corporation may
indemnify any person who was or is a party to any proceeding (other than an
action by, or in the right of, the corporation), by reason of the fact that he
is or was a director, officer, employee, or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against liability incurred in connection with such proceeding,
including any appeal thereof, if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal action or proceeding, he had no
reasonable cause to believe his conduct was unlawful.
In the case of proceedings by or in the right of the corporation, Section
607.0850(2) of the Florida Act provides that, in general, a corporation may
indemnify any person who was or is a party to any such proceeding by reason of
the fact that he is or was a director, officer, employee or agent of the
corporation against expenses and amounts paid in settlement actually and
reasonably incurred in connection with the defense or settlement of such
proceeding, including any appeal thereof, provided that such person acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the corporation, except that no indemnification shall be
made in respect of any claims as to which such person is adjudged liable unless
a court of competent jurisdiction determines upon application that such person
is fairly and reasonably entitled to ndemnity. Section 607.0850 further provides
that to the extent a director, officer, employee or agent of a corporation is
successful on the merits or in the defense of any proceeding referred to in
subsections (1) or (2) of Section 607.0850 or in the defense of any claim, issue
or matter therein, he shall be indemnified against expenses actually and
reasonably incurred by him in connection therewith; that the corporation may
advance such expenses; that indemnification provided for by Section 607.0850
shall not be deemed exclusive of any other rights to which the indemnified party
may be entitled; and that the corporation may purchase and maintain insurance on
behalf of such person against any liability asserted against him or incurred by
him in any such capacity or arising out of his status as such, whether or not
the corporation would have the power to indemnify him against such liabilities
under such Section 607.0850.
Section 607.0850 of the Florida Act further provides that, in general,
indemnification or advancement of expenses shall not be made to or on behalf of
any director, officer, employee or agent if a judgment or other final
adjudication establishes that such person's actions, or omissions to act, were
material to the cause of action so adjudicated and constitute: (i) a violation
of the criminal law, unless such person had reasonable cause to believe his
conduct was lawful or had no reasonable cause to believe his conduct was
unlawful; (ii) a transaction from which such person derived an improper personal
benefit; (iii) in the case of a director, a circumstance under which the
director has voted for or assented to a distribution made in violation of the
Florida Act or the corporation's
articles of incorporation; or (iv) willful misconduct or a conscious disregard
for the best interests of the corporation in a proceeding by or in the right of
the corporation to procure a judgment in favor or in a proceeding by or in the
right of a shareholder.
CyberCare's Articles of Incorporation and Bylaws provide that CyberCare
shall indemnify its directors and officers to the fullest extent permitted by
Florida law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Any restricted securities to be offered or resold pursuant to this
registration statement were issued pursuant to an exemption under Section 4(2)
of the Securities Act, as a non-public offering of securities.
ITEM 8. EXHIBITS
The following exhibits are filed as part of this registration
statement:
EXHIBIT NO. IDENTIFICATION OF EXHIBIT
5.1(1) Opinion Regarding Legality
10.1(1) Cyber-Care Retirement Savings Plan
23.1(1) Consent of Counsel (included in Exhibit 1.1)
23.2(1) Consent of Ernst & Young LLP, independent certified public
accountants
(1) Filed herewith
ITEM 9. 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;
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 SEC pursuant to
Rule 424(b) of the Securities Act if, in the
aggregate, the changes in volume and price represent
no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective
registration statement; and
iii. To include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the registration statement.
Provided, however, that paragraphs (a)(1)(i) and (ii)
do not apply if the registration statement is on Form
S-3 or Form S-8, 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 SEC by the registrant pursuant to
Section 13 or 15(d) of the Exchange Act that are
incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities 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) The undersigned registrant hereby undertakes that, for purposes of
determining liability under the Securities Act, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described in Item 6 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities 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
Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boynton Beach, State of Florida, on April 18, 2002.
CYBERCARE, INC.
By: /s/ STEVEN M. COHEN
--------------------
Steven M. Cohen, Chief Financial Officer
Pursuant to the requirements of the Securities Act, this registration
statement has been signed below by the following persons in the capacities and
on the dates indicated:
SIGNATURE TITLE DATE
/s/ JOSEPH FORTE Chief Executive Officer, April 18, 2002
------------------------ President and Director
Joseph Forte
/s/ DANA PUSATERI Executive Vice President and April 18, 2002
------------------------ Director
Dana Pusateri
/s/ TERRY LAZAR Director April 18, 2002
------------------------
Terry Lazar
/s/ PETER MURPHY Director April 18, 2002
------------------------
Peter Murphy
/s/ ALAN ADELSON Director April 18, 2002
------------------------
Alan Adelson
/s/ ZACHARIAH P. ZACHARIAH Director April 18, 2002
--------------------------
Zachariah P. Zachariah