SECURITIES EXCHANGE ACT OF 1934
Release No. 41554 / June 24, 1999
ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1139 / June 24, 1999
File No. 3-9920
|In the Matter of
MEDISYS TECHNOLOGIES, INC.
PURSUANT TO SECTION 21C OF
THE SECURITIES EXCHANGE ACT
OF 1934, MAKING FINDINGS,
The Commission deems it appropriate and in the public interest that cease-and-desist proceedings be instituted pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act"), with respect to Medisys Technologies, Inc. ("Medisys").
In anticipation of these proceedings, Medisys has submitted an Offer of Settlement ("Offer") which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or to which the Commission is a party, and without admitting or denying the findings contained herein, except that Medisys admits the jurisdiction of the Commission over it and the subject matter of this proceeding and the matters described in paragraphs III.A. and B. of this Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings and Imposing Cease-and-Desist Order ("Order"), Medisys has consented to the findings and sanctions set forth below.
Accordingly, IT IS ORDERED that proceedings pursuant to Section 21C of the Exchange Act be, and they hereby are, instituted.
On the basis of this Order and the Offer submitted by Medisys, the Commission finds that:
A. Respondent Medisys Technologies, Inc., is a Utah corporation headquartered in Baton Rouge, Louisiana; its common stock has been registered with the Commission pursuant to Section 12(g) of the Exchange Act since September 27, 1996.
B. On or about November 24, 1998, Medisys filed a preliminary proxy statement with the Commission. This proxy statement was to be distributed to Medisys' shareholders in connection with a special meeting to be held on December 22, 1998, at which shareholders would vote to approve Medisys' proposed acquisition of Phillips Pharmatec Labs, Inc. ("Phillips"), a privately-held corporation. The staff of the Commission notified Medisys that it did not intend to review the preliminary proxy statement. On or about December 10, 1998, Medisys filed a definitive proxy statement with the Commission.
C. In connection with a review of Medisys' Form 10-KSB for the year ended December 31, 1997, the staff of the Commission noted that the annual financial statements for Phillips included in the definitive proxy statement were unaudited and that pro forma financial statements for the combined companies for the most recent fiscal year had not been included.
D. On December 18, 1998, the staff of the Commission faxed a comment letter on the Form 10-KSB to Medisys. That comment letter noted, among other things, that the annual financial statements for Phillips included in the proxy materials should be audited financial statements and that Medisys should include in the proxy materials pro forma financial statements for the combined companies for the most recent fiscal year.
E. On December 22, 1998, Respondent Medisys conducted a shareholders meeting at which the shareholders of Medisys voted to approve the acquisition of Phillips.
F. On or about December 22, 1998, Medisys responded to the staff's comment letter. In its response, Medisys stated that it had provided to its shareholders proxy materials substantially in the form of the definitive proxy statement filed with the Commission on December 10, 1998, and that it had determined not to make any changes to its definitive proxy statement filed with the Commission on December 10, 1998, because it believed that there were no reasonable material differences which would arise between the definitive proxy materials filed with the Commission and the disclosure which would result if the proxy statement were to be amended in accord with the Commission's December 18, 1998, comments. Medisys further informed the Commission in the letter that it would provide "audited information" concerning Medisys' acquisition of Phillips in Forms 8-K and 10-KSB to be filed in the future.
G. Section 14(a) of the Exchange Act provides that registrants which are required to solicit proxies must comply with rules promulgated by the Commission governing such solicitations. Rule 14a-3 provides that person whose proxy is solicited must be concurrently furnished or have been previously furnished with a proxy statement containing the information specified by Schedule 14A. Schedule 14A, Note F, requires small business issuers to provide the financial information in Item 310 of Regulation S-B in lieu of the financial statements required in Schedule 14A. Item 310(c)(3)(iv) provides that, under certain circumstances in connection with a contemplated corporate acquisition, financial statements are required to be included in proxy materials. If financial statements are required by Item 310(c), then 310(c)(1)(iii) requires that any required annual financial statements be audited. Additionally, Item 310(d) requires that under certain circumstances pro-forma financial information for the combined companies for the most recent full fiscal year, is required of the company filing the proxy statement.
H. Rule 14a-9 proscribes the use of a proxy statement containing any statement which at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order the make the statements therein not false or misleading. Among other items of information which must be provided is the financial information expressly required by other proxy regulations.
I. By the conduct described in paragraphs A. through F. above, Medisys has violated Section 14(a) of the Exchange Act and Rules 14a-3 and 14a-9 thereunder.
In view of the foregoing, it is in the public interest to impose the sanctions agreed to in the Offer submitted by Medisys. Accordingly,
IT IS ORDERED, pursuant to Section 21C of the Exchange Act that the Respondent, Medisys Technologies, Inc., cease and desist from committing or causing any violations and any future violations of Section 14(a) of the Exchange Act and Rules 14a-3 and 14a-9 promulgated thereunder;
IT IS FURTHER ORDERED that Medisys provide each of its shareholders with a copy of the audited financial statements of Phillips for the year ended December 31, 1997, and pro forma financial statements for the combined companies for the year ended December 31, 1997, prior to the consummation of the transaction whereby Medisys is to acquire Phillips; and
IT IS FURTHER ORDERED that Medisys file with the Commission a report on Form 8-K which contains audited financial statements for Phillips for the year ended December 31, 1997, and pro forma financial statements for the combined companies for the year ended December 31, 1997.
By the Commission.
Jonathan G. Katz