<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 4, 2000
REGISTRATION NO. 333-6711
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST EFFECTIVE AMENDMENT NO. 3
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
LTI HOLDINGS, INC.
(Name of Small Business Issuer in Its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 2671 58-2044990
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
5115 NEW PEACHTREE ROAD, SUITE 200
ATLANTA, GEORGIA 30341
(770) 454-7403
(Address and Telephone Number of Principal Executive Offices)
------------------------------
MICHAEL E. NOONAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
LTI HOLDINGS, INC.
5115 NEW PEACHTREE ROAD, SUITE 200
ATLANTA, GEORGIA 30341
(770) 454-7403
(Name, Address and Telephone Number of Agent for Service)
------------------------------
COPIES TO:
THOMAS L. HANLEY, ESQ.
CHARLES A. BERARDESCO, ESQ.
STEVEN E. FRIEDMAN, ESQ.
PIPER MARBURY RUDNICK & WOLFE LLP
1200 19TH STREET, NW
WASHINGTON, DC 20036
(202) 861-3900
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
PURSUANT TO RULE 416, THERE ARE ALSO BEING REGISTERED SUCH ADDITIONAL SHARES AS
MAY BECOME ISSUABLE PURSUANT TO ANTI-DILUTION PROVISIONS OF CLASS A WARRANTS AND
CLASS B WARRANTS, AS DESCRIBED HEREIN.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Post Effective Amendment No. 3 to Form SB-2 Registration Statement is
intended to update the prospectus forming part of the Registration Statement for
purposes of Section 10(a)(3) of the Securities Act of 1933 with respect to
issuances of the following securities, which were initially registered in
connection with the Registrant's underwritten initial public offering in
October 1996: (i) shares of common stock of LTI Holdings, Inc. (formerly
Laminating Technologies, Inc.) and redeemable class B warrants that are issuable
upon exercise of redeemable class A warrants, (ii) shares of common stock that
are issuable upon exercise of redeemable class B warrants, (iii) units issuable
upon exercise of unit purchase options initially issued to the underwriter and
certain other persons in connection with the initial public offering,
(iv) shares of common stock issuable upon exercise of unit purchase options,
(v) class A warrants issuable upon exercise of unit purchase options, and
(vi) class B warrants issuable upon exercise of unit purchase options.
<PAGE>
PROSPECTUS
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
LTI HOLDINGS, INC.
<TABLE>
<S> <C>
170,000 REDEEMABLE CLASS A 8,029,900 SHARES OF COMMON STOCK
WARRANTS TO PURCHASE COMMON STOCK ISSUABLE UPON EXERCISE OF REDEEMABLE
AND REDEEMABLE CLASS B WARRANTS CLASS A WARRANTS AND REDEEMABLE CLASS B WARRANTS
3,122,400 REDEEMABLE CLASS B 170,000 UNITS ISSUABLE UPON
WARRANTS TO PURCHASE COMMON STOCK EXERCISE OF UNIT PURCHASE OPTIONS
</TABLE>
This prospectus relates to an offering by LTI of:
- 2,952,400 shares of our common stock and 2,952,400 class B warrants that
may be issued upon the exercise of our outstanding class A warrants;
- 1,955,100 shares of our common stock that may be issued upon the exercise
of our outstanding class B warrants;
- 2,955,400 shares of our common stock that may be issued upon the exercise
of our class B warrants that may be issued upon the exercise of our
outstanding class A warrants;
- 170,000 units (each unit consisting of one share of our common stock, one
class A warrant and one class B warrant) that may be issued upon exercise
of our outstanding unit purchase options;
- 170,000 shares of our common stock and 170,000 class B warrants that may
be issued upon the exercise of our class A warrants that may be issued
upon the exercise of our unit purchase options; and
- 170,000 shares of our common stock that may be issued upon the exercise of
our class B warrants that may be issued upon the exercise of our class A
warrants that may be issued upon the exercise of our unit purchase
options.
Each class A warrant entitles the holder to purchase one unit, consisting of
one share of common stock and one class B warrant, at an exercise price of
$6.50, subject to adjustment. The shares of common stock and the class B
warrants comprising these units will be immediately separately transferable and
the units will not trade as a separate security. Each class B warrant entitles
the holder to purchase one share of common stock at an exercise price of $8.75,
subject to adjustment.
The class A warrants and the class B warrants are exercisable at any time on
or before October 8, 2001. The exercise prices of the class A and class B
warrants were determined by negotiation between us and D.H. Blair Investment
Banking Corp. at the time of our initial public offering, and are not
necessarily related to the company's asset value, net worth or other criteria of
value.
The class A and class B warrants may be redeemed by us for $.05 per warrant,
upon 30 days' written notice, if the average closing bid price of our common
stock exceeds $9.10 per share with respect to the class A warrants and $12.25
per share with respect to the class B warrants, in each case subject to certain
adjustments, for 30 consecutive business days ending within 15 days of the date
the warrants are called for redemption.
The units that may be issued upon the exercise of the unit purchase options
consist of one share of our common stock, one class A warrant and one class B
warrant. The unit purchase options are exercisable until October 8, 2001 at an
exercise price of $6.00 per unit, subject to adjustment.
Our common stock is traded on the OTC-Bulletin Board under the symbol
"LAMT." Our class A warrants are traded on the OTC-Bulletin Board under the
symbol "LAMTW." Our class B warrants are traded on the OTC-Bulletin Board under
the symbol "LAMTZ."
SEE THE SECTION ENTITLED "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION
OF RISKS ASSOCIATED WITH AN INVESTMENT IN THESE SECURITIES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS IS NOT AN OFFER TO SELL SECURITIES AND IT IS NOT SOLICITING
AN OFFER TO BUY SECURITIES IN ANY JURISDICTION WHERE OFFERS OR SALES ARE NOT
PERMITTED.
THE DATE OF THIS PROSPECTUS IS AUGUST , 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary.......................................... 3
Summary Financial Information............................... 6
Note Regarding Forward-Looking Statements................... 7
Risk Factors................................................ 8
Use of Proceeds............................................. 15
Dividend Policy............................................. 15
Market Price Data........................................... 15
Description of the Speedcom Merger.......................... 17
LTI Management's Discussion and Analysis of Financial
Condition
and Results of Operations................................. 22
Business of LTI............................................. 24
Speedcom Management's Discussion and Analysis of Financial
Condition
and Results of Operations................................. 26
Business of Speedcom........................................ 28
Management.................................................. 30
Certain Relationships and Related Transactions.............. 34
Principal Stockholders...................................... 35
Description of Securities................................... 37
Experts..................................................... 40
Where You Can Find More Information......................... 40
Index to Financial Statements............................... F-1
</TABLE>
LTI has not authorized anyone to give any information or make any statement
that is different from, or in addition to, that contained in this document or in
any of the materials that have been incorporated into this document. Therefore,
if anyone does give you information of this sort, you should not rely on it. If
you are in a jurisdiction where offers to sell, or solicitations of offers to
purchase, the securities offered by this document are unlawful, or if you are a
person to whom it is unlawful to direct these types of activities, then the
offer presented in this document does not extend to you. The information
contained in this document speaks only as of the date of this document unless
the information specifically indicates that another date applies.
<PAGE>
PROSPECTUS SUMMARY
YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION REGARDING US AND THE SECURITIES BEING SOLD IN THIS OFFERING AND THE
FINANCIAL STATEMENTS AND THE NOTES TO THOSE STATEMENTS APPEARING ELSEWHERE IN
THIS PROSPECTUS.
THE COMPANY
We were originally incorporated in Georgia, in March 1993, as New Cooler
Corp., and subsequently changed our name to Laminating Technologies, Inc. In
April 1996, we merged into Laminating Merger Corporation, a Delaware
corporation, and the post-merger company changed its name to Laminating
Technologies, Inc. On June 30, 1999, we sold all of our operating assets to
Packaging Atlanta Corporation and changed our name to LTI Holdings, Inc. Prior
to the asset sale, we were a development stage company organized to research,
develop, design and market value-added packaging and specialty display products
manufactured using a proprietary processing method known as "LTI
Processed-Registered Trademark-".
PROPOSED MERGER WITH SPEEDCOM
As we have announced, LTI has entered into an agreement to merge with
Speedcom Wireless International Corporation. If we complete the merger, Speedcom
stockholders will receive shares of LTI common stock in exchange for their
shares of Speedcom common stock according to formulas specified in the merger
agreement. Following completion of the merger, current Speedcom stockholders
will own shares, in the aggregate, representing approximately 92% of the equity
ownership interest in the post-merger combined company (subject to certain
adjustments based upon the cash position of LTI at the closing of the merger).
We cannot complete the merger unless the stockholders of LTI and Speedcom
approve the merger. We intend to call a special meeting of LTI stockholders in
September 2000 to consider and vote on the merger and related proposals
regarding a 1 for 4.26 reverse stock split of our pre-merger common stock and
certain changes to our certificate of incorporation. If approved by our LTI
stockholders, the reverse split will be implemented immediately prior to the
merger and the amended and restated certificate of incorporation will be
implemented upon completion of the merger. Completion of the merger is also
subject to a number of other conditions.
In view of the material effect the merger, if completed, will have on LTI,
we are including in this prospectus certain information regarding the merger,
Speedcom and the combined LTI-Speedcom. LTI has supplied all information
contained in this document relating to LTI and Speedcom has supplied all
information relating to Speedcom
At this time, we cannot assure you that the merger will be completed on the
terms described in this document or at all.
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
Speedcom was incorporated in Florida in 1994 as M-Com Network Systems,
Corporation. The company initially served as a reseller of computer equipment
and wireless communications equipment. In 1997, Speedcom changed its name to
Speedcom Wireless International Corporation and started selling its own branded
products. Speedcom does business under the tradenames Wave Wireless Networking
and Installguys.com.
3
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Securities offered by LTI..... 2,952,400 shares of common stock issuable upon the exercise
of outstanding class A warrants.
2,952,400 class B warrants issuable upon the exercise of
outstanding class A warrants.
1,955,100 shares of common stock issuable upon the exercise
of outstanding class B warrants.
2,952,400 shares of common stock issuable upon the exercise
of class B warrants issuable upon the exercise of
outstanding class A warrants.
170,000 units (each unit consisting of one share of our
common stock, one class A warrant and one class B warrant)
issuable upon the exercise of outstanding unit purchase
options.
170,000 shares of common stock issuable upon the exercise of
class A warrants issuable upon the exercise of outstanding
unit purchase options.
170,000 class B warrants issuable upon the exercise of
class A warrants issuable upon the exercise of outstanding
unit purchase options.
170,000 shares of common stock issuable upon the exercise of
class B warrants issuable upon the exercise of class A
warrants issuable upon the exercise of outstanding unit
purchase options.
Exercise of warrants.......... Each class A warrant is exercisable at any time on or before
October 8, 2001 to purchase one share of common stock and
one class B warrant at an exercise price of $6.50, subject
to adjustment.
Each class B warrant is exercisable any time on or before
October 8, 2001 to purchase one share of common stock for
$8.75, subject to adjustment.
Redemption of warrants........ Class A and class B warrants are subject to redemption for
$.05 per warrant, upon 30 days' written notice, if the
average closing bid price of the common stock exceeds $9.10
per share with respect to the class A warrants and $12.25
per share with respect to the class B warrants for 30
consecutive business days ending within 15 days of the date
the warrants are called for redemption.
Exercise of unit purchase
options..................... Each unit purchase option is exercisable at any time on or
before October 8, 2001 at an exercise price of $6.00 per
unit, subject to adjustment.
Use of proceeds............... If any of these securities are exercised, we intend to use
the proceeds from such exercises for working capital and
general corporate purposes.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
OTC-Bulletin Board symbols
Common Stock.............. LAMT
Class A warrants.......... LAMTW
Class B warrants.......... LAMTZ
</TABLE>
THE NUMBER OF SHARES, CLASS A AND B WARRANTS AND UNIT PURCHASE OPTIONS AND
THEIR EXERCISE PRICES DESCRIBED ABOVE DO NOT REFLECT THE EFFECT OF THE 1 FOR
4.26 REVERSE STOCK SPLIT BEING SUBMITTED FOR LTI STOCKHOLDER APPROVAL IN
CONNECTION WITH THE SPEEDCOM MERGER. THE AGREEMENTS PURSUANT TO WHICH SUCH
SHARES, CLASS A AND B WARRANTS AND UNIT PURCHASE OPTIONS ARE OR WILL BE ISSUED
EACH PROVIDE THAT IN THE EVENT OF A CHANGE IN LTI'S CAPITALIZATION, SUCH AS THE
PROPOSED 1 FOR 4.26 REVERSE STOCK SPLIT, THE NUMBER OF SHARES COVERED BY EACH
WARRANT AND UNIT PURCHASE OPTION WILL BE ADJUSTED SO AS TO MAINTAIN THE HOLDER'S
PROPORTIONATE INTEREST, AND THE APPLICABLE EXERCISE OR PURCHASE PRICE WILL ALSO
BE APPROPRIATELY ADJUSTED. UNLESS OTHERWISE NOTED, FINANCIAL AND OTHER
INFORMATION INCLUDED IN THIS DOCUMENT IS PRESENTED ON A PRE-SPLIT BASIS.
------------------------
We are a Delaware corporation with principal offices at 5115 New Peachtree
Road, Suite 200, Atlanta, Georgia 30341. Our telephone number is
(770) 454-7403.
Speedcom Wireless International Corporation is a Florida corporation with
principal offices at 1748 Independence Boulevard, C-5, Sarasota, FL 34234.
Speedcom's telephone number is (941) 358-9283.
5
<PAGE>
SUMMARY FINANCIAL INFORMATION
In the tables below, we are providing you with summary historical and pro
forma financial data of Speedcom to aid you in your analysis of the financial
aspects of the merger. We have prepared this information using the financial
statements of Speedcom for the two years ended December 31, 1999, and the six
months ended June 30, 1999 and 2000. The financial statements for the two fiscal
years ended December 31, 1999 have been audited by Ernst & Young LLP,
independent auditors. The financial statements for the six months ended
June 30, 1999 and 2000 have not been audited. The pro forma information assumes
that the merger occurred at the beginning of the respective period in the case
of operating information or at June 30, 2000 in the case of balance sheet
information.
When you read this summary financial data, it is important that you read
along with it the historical financial statements and related notes, and
"Speedcom Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this prospectus. Pro forma net loss
per share equals historical net loss per share because the contemplated exchange
ratio is on a one for one basis.
SUMMARY HISTORICAL AND PRO FORMA OPERATING INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------ -------------------------
1998 1999 1999 2000
----------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues..................................... $ 5,171,070 $5,052,043 $2,011,825 $4,000,982
=========== ========== ========== ==========
Net Loss..................................... $(1,265,178) $ (790,508) $ (344,644) $ (678,700)
=========== ========== ========== ==========
Net loss per share: basic and diluted........ $ (0.21) $ (0.13) $ (0.06) $ (0.10)
=========== ========== ========== ==========
Pro Forma Operating Information:
Pro forma net loss from continuing operations
per share: basic and diluted............... $ (0.13) $ (0.10)
========== ==========
</TABLE>
SUMMARY HISTORICAL AND PRO FORMA BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL JUNE 30,
DECEMBER 31, JUNE 30, 2000 PRO
1999 2000 FORMA
------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Cash..................................................... $ 108,564 $ 105,026 $1,871,707
========== ========== ==========
Total assets............................................. $1,463,059 $3,015,543 $4,790,454
========== ========== ==========
Total long-term obligations, including current
maturities............................................. $ 427,935 $ 137,913 $ 137,913
========== ========== ==========
Total stockholders' equity (deficit)..................... $ (348,362) $1,230,778 $2,827,661
========== ========== ==========
Cash dividends paid...................................... $ -- $ -- $ --
========== ========== ==========
Book deficit value per common share...................... $ (0.05) $ 0.18 $ 0.37
========== ========== ==========
</TABLE>
6
<PAGE>
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains or incorporates by reference statements that
constitute "forward-looking statements" within the safe harbor provisions of the
Private Securities Litigation Reform Act. These statements include statements
with respect to LTI's and Speedcom's financial condition, results of operations
and business and on the expected impact of the merger on the financial
performance of the combined companies. Words such as "anticipates," "expects,"
"intends," "plans," "believes," "seeks," "estimates" and similar expressions
generally identify forward-looking statements. These forward-looking statements
are not guarantees of future performance and are subject to certain risks and
uncertainties that could cause actual results to differ materially from the
results contemplated by the forward-looking statements.
Should one or more of these risks or uncertainties affect the business of
LTI or Speedcom or should underlying assumptions prove incorrect, actual
results, performance or achievements in 2000 and beyond could differ materially
from those expressed in, or implied by, such forward-looking statements.
7
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION PROVIDED OR INCORPORATED BY REFERENCE
IN THIS DOCUMENT, YOU SHOULD CONSIDER THE FOLLOWING FACTORS CAREFULLY IN
EVALUATING THE MERGER AND AN INVESTMENT IN OUR SECURITIES. YOU SHOULD ALSO REFER
TO "NOTE REGARDING FORWARD LOOKING STATEMENTS" ON PAGE 7.
RISKS RELATED TO LTI
LTI MAY BE ADVERSELY AFFECTED IF WE ARE UNABLE TO COMPLETE OUR PROPOSED MERGER
WITH SPEEDCOM.
We have agreed to the terms of a merger with Speedcom, and our current
business plan is dependent upon completing the merger. The merger might not be
completed for various reasons, including that our stockholders do not approve
it. If the merger is not completed, we will have to consider other alternatives
which might involve the acquisition or merger with companies that operate in
industries other than the telecommunications industry and/or do not present an
opportunity as attractive as Speedcom. You would have to rely on our management
to formulate a new business plan or locate and negotiate an agreement with
another company.
RISKS RELATED TO THE OFFERING
THERE HAS BEEN LIMITED PUBLIC MARKET FOR LTI COMMON STOCK AND WARRANTS, AND THE
PRICES ARE LIKELY TO BE HIGHLY VOLATILE.
Although the LTI common stock is currently quoted on the OTC-Bulletin Board,
at times during the recent past there has been only a limited market for those
shares and there is no assurance that an active market for the shares will
develop or that, if one develops, it will be maintained. It is likely that any
market that develops will be highly volatile and that the trading volume may be
limited. In addition, the LTI class A and class B warrants are currently quoted
on the OTC-Bulletin Board, and the market for those securities has historically
been more limited and more volatile than the market for our common stock.
IF LTI COMMON STOCK IS DEEMED TO BE A "PENNY STOCK," RESTRICTIONS ON
BROKER-DEALERS' ABILITY TO MAKE MARKETS IN THE COMMON STOCK ARE LIKELY TO
ADVERSELY AFFECT LIQUIDITY.
LTI's common stock may be covered by SEC rules regarding so-called "penny
stocks" if the common stock continues to be quoted on the OTC-Bulletin Board
rather than on the Nasdaq or an exchange, and does not maintain a market price
of at least $5 per share. These rules impose additional sales practice
requirements on broker-dealers who sell such securities to persons other than
established customers and "accredited investors." For transactions covered by
these rules, the broker-dealer must make a special suitability determination for
the purchaser and receive the purchaser's written agreement to the transaction
prior to the sale. As a result, the rules may affect the ability of broker-
dealers to sell shares of LTI common stock and also may affect the ability of
persons receiving shares of LTI common stock to sell them in the public market.
Costs of transactions in penny stocks may also be higher than the costs of
transactions in other stocks. After completion of the Speedcom merger, LTI
common stock will initially continue to be quoted on the OTC-Bulletin Board
rather than on the Nasdaq or an exchange, and assuming LTI stockholder approval
of the proposed 1 for 4.26 reverse stock split, is expected to command a market
price of $5 per share, the price required for a non-Nasdaq-quoted security to
avoid the SEC "penny stock" trading restrictions. However, there can be no
assurance that LTI's stock will continue to avoid "penny stock" restrictions in
the future.
8
<PAGE>
ALTHOUGH IT IS OUR INTENTION TO APPLY FOR LISTING OF THE COMMON STOCK ON THE
NASDAQ SMALLCAP MARKET FOLLOWING THE SPEEDCOM MERGER, WE CANNOT ASSURE YOU THAT
WE WILL BE ABLE TO DO SO.
LTI intends to apply for listing of its common stock on the Nasdaq SmallCap
Market after the merger with Speedcom is completed. The requirements for listing
on the Nasdaq SmallCap Market include a number of standards which LTI does not
currently meet, and it is uncertain whether the combined company will meet all
of the standards after the completion of the merger. There can be no assurance
that the company will meet the requirements for listing on the Nasdaq SmallCap
Market after the merger, or that it will be able to take the additional steps
necessary to meet those requirements. Further, we cannot assure you that, even
if the company is able to meet all of the requirements for the initial listing
of the common stock on the Nasdaq SmallCap Market, it will be able to satisfy
the continued listing requirements on an ongoing basis in the future. If LTI
fails to satisfy the initial listing requirements or fails to satisfy the
continued listing requirements in the future, the market price for, and
liquidity of, the common stock may be adversely affected.
WE MAY ATTEMPT TO REDEEM YOUR WARRANTS UNDER CERTAIN CIRCUMSTANCES.
The class A and B warrants may be redeemed by us at a redemption price of
$.05 per warrant upon not less than 30 days prior written notice if, with
respect to the class A warrants, the closing bid price of our common stock has
averaged in excess of $9.10 per share and, with respect to the class B warrants,
$12.25 per share, in each instance for 30 consecutive trading days ending within
15 days of the time we give you a redemption notice. Our attempt to redeem the
warrants could force holders (i) to exercise the warrants and pay the exercise
price therefor at a time when it may be disadvantageous for the holders to do
so; (ii) to sell the warrants at the then-current market price when they might
otherwise wish to hold the warrants; or (iii) to accept the nominal redemption
price which, at the time the warrants are called for redemption, is likely to be
substantially less than the market value of the warrants.
YOU MAY BE UNABLE TO EXERCISE YOUR WARRANTS OR UNIT PURCHASE OPTIONS UNLESS WE
MAINTAIN A CURRENT PROSPECTUS AND TAKE OTHER ACTION UNDER THE SECURITIES LAWS.
Holders of warrants and unit purchase options will be able to exercise those
securities only if a current prospectus under the Securities Act relating to the
securities underlying the warrants and unit purchase options is then in effect
and such securities are qualified for sale or exempt from qualification under
the applicable securities laws of the states in which the various holders of
warrants and unit purchase options reside. Although LTI has undertaken and
intends to use its best efforts to maintain a current prospectus covering the
securities underlying the warrants and unit purchase options, there can be no
assurance that we will be able to do so. The value of the warrants and unit
purchase options may be greatly reduced if a prospectus covering the securities
issuable upon the exercise of the warrants and unit purchase options is not kept
current or if the securities are not qualified, or exempt from qualification, in
the appropriate states. Persons holding warrants and unit purchase options who
reside in jurisdictions in which such securities are not qualified and in which
there is no exemption will be unable to exercise their securities and would
either have to sell their securities or allow them to expire unexercised.
9
<PAGE>
RISKS RELATED TO THE POST-MERGER COMPANY
THE MARKET PRICE OF THE COMPANY'S SECURITIES IS LIKELY TO BE VOLATILE.
The market price of the company's securities may fluctuate significantly
before and after the completion of the merger due to a variety of factors,
including:
- revenue or income below analysts' expectations;
- quarterly fluctuations in financial results;
- general business conditions in the wireless telecommunications industry;
- changes in prices for products of the company or its competitors;
- changes in revenue growth rates for the company or its competitors;
- the exercise of options and warrants to acquire common stock;
- sales of large blocks of common stock; and
- conditions in the financial markets generally and the markets for smaller
companies in particular, whose stock may experience extreme price and
volume fluctuations without regard to operating performance.
THE MARKET FOR WIRELESS NETWORKING IS AT AN EARLY STAGE OF DEVELOPMENT.
The wireless networking market is at an early stage of development and is
rapidly evolving. As is typical for a new and rapidly evolving industry, demand
and market acceptance for recently introduced wireless networking products and
services are subject to a high level of uncertainty. Market acceptance of
particular products cannot be predicted; however, it is likely that new wireless
LAN products will not be generally accepted unless they operate at higher speeds
and are sold at lower prices. While the number of businesses recognizing the
increased value of wireless solutions is increasing, it is not known whether
this market will continue to develop such that sufficient demand for our
products will emerge and become sustainable. Our prospects must be evaluated due
to the risks encountered by a company in the early stages of marketing new
products or services, particularly in light of the uncertainties relating to the
new and evolving markets in which we operate. There can be no assurance that we
will succeed in addressing any or all of these risks, and the failure to do so
would have a material adverse effect on our business, financial condition and
operating results.
THERE IS INTENSE COMPETITION IN THE WIRELESS LAN MARKET.
The market for our products is very competitive, and we expect that
competition will increase in the future, both with respect to our current
products and future products which we may develop. Within the wireless industry,
business is intensely competitive and is characterized by rapid technological
change, frequent introduction of new products and evolving industry standards.
Increased competition could adversely affect our revenues and profitability
through pricing pressure, loss of market share and other factors. We believe
that the principal competitive factors in the wireless LAN market include:
- expertise and familiarity with 2.4 GHz spread spectrum technology,
wireless data communication protocols and LAN technology;
- product performance, features, functionality and reliability;
- price/performance characteristics;
- timeliness of new product introductions;
10
<PAGE>
- adoption of emerging industry standards;
- customer service and support;
- size and scope of distribution network; and
- brand name.
While we believe that we are competitive in these regards, there can be no
assurance that we will be able to successfully compete as to these or other
factors or that competitive pressures we face will not materially and adversely
affect our business and operating results. We also cannot assure you that these
will continue to be competitive factors in the wireless LAN market and, if not,
whether we will be able to successively identify future competitive factors or
be successful competing as to those factors.
Within the wireless LAN industry, our primary competitors are Lucent
Technologies, Aironet (part of Cisco Systems) and BreezeCom. We also experience
competition from a number of smaller companies that provide wireless data
communication products, and we may encounter future competition from other
companies, both that have and have not announced their intentions to offer
competitive products and solutions. In addition, we could encounter future
competition from larger computer and networking equipment companies. We also
face competition from our OEM customers who have, or could acquire, their own
wireless data communications research and development capabilities.
We could also encounter future competition from companies that offer
products that replace or are alternatives to radio frequency wireless solutions
including, for example, products based on infra-red technology or laser
technology and systems that utilize existing telephone wires within a building
as a wired network backbone.
Many of our current and potential competitors have significantly greater
financial, marketing, technical and other resources than us and, as a result,
may be able to respond more quickly to new or emerging technologies or standards
and to changes in customer requirements, or to devote greater resources to the
development, promotion and sale of products or to deliver competitive products
at a lower end user price. Current and potential competitors have established or
may establish cooperative relationships among themselves or with third parties
to increase the ability of their products to address the needs of our existing
and prospective customers. Accordingly, it is possible that new competitors or
alliances among competitors may emerge and rapidly acquire significant market
share. Increased competition is likely to result in price reductions, reduced
operating margins and loss of market share, any of which could have a material
adverse effect on our business and operating results.
OUR RELIANCE ON LIMITED SOURCES OF COMPONENTS COULD ADVERSELY AFFECT OUR
BUSINESS.
Many of the key components necessary for the assembly of our products are
only available from a single supplier or from a limited number of suppliers. We
have experienced delays and shortages in the supply of components in the past
and could experience delays and shortages in the future. We generally do not
maintain a significant inventory of components and do not have long-term supply
contracts with our suppliers. Our reliance on sole or limited source suppliers
involves several risks, including:
- suppliers could increase component prices significantly, without notice
and with immediate effect;
- suppliers could discontinue the manufacture or supply of components or
delay delivery of components used in our products for reasons such as
inventory shortages, new product offerings, increased cost of materials,
destruction of manufacturing facilities, labor disputes and bankruptcy;
and
11
<PAGE>
- in order to compensate for potential component shortages or
discontinuance, we may in the future hold more inventory than is
immediately required, resulting in increased inventory costs.
If our suppliers are unable to deliver or ration components to us, we could
experience interruptions and delays in manufacturing and sales which could
result in cancellation of orders for our products or the need to modify our
products. This may cause substantial delays in our product shipments, increased
manufacturing costs and increased product prices. Further, we may not be able to
develop alternative sources for these components in a timely way, if at all, and
may not be able to modify our products to accommodate alternative components.
For example, we entered into a seven year contract with an important software
licensor on which three years remain. If this contract were to be terminated,
our ability to perform our business would be adversely affected.
These factors could damage our relationships with current and prospective
customers lasting longer than any underlying shortage or discontinuance. Any of
these risks, if realized, could materially and adversely affect our business,
operating results and financial condition.
EXPANDING OUR DISTRIBUTION CHANNELS MIGHT ADVERSELY AFFECT OUR BUSINESS.
To increase revenues, we believe we must increase the number of our
distribution partners. Our strategy includes an effort to reach a greater number
of end users through indirect channels. We are currently investing, and plan to
continue to invest, significant resources to develop these indirect channels.
This could adversely affect our operating results if these efforts do not
generate the revenues necessary to offset such investments. We will be dependent
upon the acceptance of our products by distributors and their active marketing
and sales efforts relating to our products. The distributors to whom we sell our
products are independent and are not obligated to deal with us exclusively or to
purchase any specified amount of our products. Because we do not generally
fulfill orders by end users of our products sold through distributors, we will
be dependent upon the ability of distributors to accurately forecast demand and
maintain appropriate levels of inventory.
We expect that our distributors will also sell competing products. These
distributors may not continue, or may not give a high priority to, marketing and
supporting our products. This and other channel conflicts could result in
diminished sales through the indirect channels and adversely affect our
operating results. Additionally, because lower prices are typically charged on
sales made through indirect channels, increased indirect sales could adversely
affect our average selling prices and result in lower gross margins.
WE MAY NOT BE ABLE TO MANAGE OUR GROWTH.
We have expanded our operations in recent years, and we anticipate that
further expansion will be required to address potential growth in our customer
base and market opportunities. This expansion has placed, and future expansion
is expected to place, a significant strain on our management, technical,
operational, administrative and financial resources. We have recently hired new
employees, including a number of key managerial and operations personnel, who
have not yet been fully integrated into our operations.
Our current and planned expansion of personnel, systems, procedures and
controls may be inadequate to support our future operations. We may be unable to
attract, retain, motivate and manage required personnel, including finance,
administrative and operations staff, or to successfully identify, manage and
exploit existing and potential market opportunities because of inadequate
staffing. We may also be unable to manage further growth in our multiple
relationships with our OEMs, distributors and other third parties. If we are
unable to manage growth effectively, our business, financial condition and
results of operations could be adversely affected.
12
<PAGE>
WE MAY FACE RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS AND SALES.
We anticipate that revenues from customers outside North America will
continue to account for a significant portion of our total revenues for the
foreseeable future. Expansion of our international operations has required, and
will continue to require, significant management attention and resources. In
addition, we remain heavily dependent on distributors to market, sell and
support our products internationally. Our international operations are subject
to additional risks, including the following:
- difficulties of staffing and managing foreign operations;
- longer customer payment cycles and greater difficulties in collecting
accounts receivable;
- unexpected changes in regulatory requirements, exchange rates, trading
policies, tariffs and other barriers;
- uncertainties of laws and enforcement relating to the protection of
intellectual property;
- language barriers;
- limits on our ability to sue and enforce a judgment for accounts
receivable;
- potential adverse tax consequences; and
- political and economic instability.
Similarly, we cannot accurately predict the impact that any future
fluctuations in foreign currency exchange rates may have on our operating
results and financial condition.
RAPID TECHNOLOGICAL CHANGE MAY ADVERSELY AFFECT THE MARKET ACCEPTANCE FOR OUR
PRODUCTS.
The markets for our products and the technologies utilized in the industry
in which we operate evolve rapidly and depend on key technologies, including
wireless LAN, wireless packet data, modern and radio technologies. These
technologies may be replaced with alternative technologies or may otherwise not
achieve market acceptance that we are seeking. In particular, there is
substantial risk that the wireless packet data technology underlying the
wireless Internet access and broadband wireless local loop products may not
achieve market acceptance for use in applications. Major changes could render
our products and technologies obsolete or subject to intense competition from
alternative products or technologies or by improvements in existing products or
technologies. For example, Internet access and wireless local loop equipment
markets may stop growing, whether as a result of the development of alternative
technologies, such as fiber optic, coaxial cable, satellite sytems or othewise.
Also, new or enhanced products developed by other companies may be
technologically incompatible to our products and render our products obsolete.
WE HAVE A HISTORY OF LOSSES, EXPECT FUTURE LOSSES AND MAY NEVER ACHIEVE OR
SUSTAIN PROFITABILITY.
We have incurred significant losses since our inception, and we expect to
continue to incur net losses for the foreseeable future. We intend to increase
our operating expenses, however our revenues may not grow or even continue at
their current level. If our revenues do not rapidly increase or if our expenses
increase at a greater pace than our revenues, we will never become profitable.
WE ARE DEPENDENT ON KEY PERSONNEL.
There are a limited number of executives, skilled design, process and
testing engineers and marketing professionals involved in the wireless data
communication industry. The competition for these employees is intense. It is
not uncommon for skilled professionals to move among the various competitors in
this industry, and we have taken steps to limit our employees from unfairly
competing with us or using our trade secrets. Our future growth depends in large
part on retaining our current
13
<PAGE>
employees and attracting new technical, marketing and management personnel. The
loss of key employees or failure to attract new key employees could materially
affect our business.
WE WILL HAVE LIMITS TO OUR MANUFACTURING CAPACITIES AND ABILITIES.
Speedcom currently has limited manufacturing capability and has no
experience in large scale manufacturing. If, after the completion of the merger,
our customers were to place orders for unexpectedly large quantities of our
products, Speedcom's present manufacturing capacity could be inadequate to meet
such demand. There can be no assurance that we will be able to develop or
contract for additional manufacturing capacity on acceptable terms on a timely
basis.
WE WILL BE SUBJECT TO EXTENSIVE AND UNPREDICTABLE GOVERNMENT REGULATION.
We will be subject to various FCC rules and regulations in the United
States. Current FCC regulations permit license-free operation in certain
FCC-certified bands in the radio spectrum. The combined company's spread
spectrum wireless products are intended for unlicensed operation primarily in
the 2.4-2.4835 GHz frequency bands. Operation in these frequency bands is
governed by rules set forth in Part 15 of the FCC regulations. The Part 15 rules
are designed to minimize the probability of interference to other users of the
spectrum and, thus, accord Part 15 systems secondary status. In the event that
there is interference between a primary user and a Part 15 user, a higher
priority user can require the Part 15 user to curtail transmissions that create
interference. In this regard, if users of the combined company's products
experience excessive interference from primary users, market acceptance of our
products could be adversely affected, thereby materially and adversely affecting
our business and results of operations. The FCC, however, has established
certain standards which create an irrefutable presumption of noninterference for
Part 15 users and we believe that our products will comply with these
requirements.
Our products also will be subject to regulatory requirements in
international markets and, therefore, we will need to monitor the development of
spread spectrum regulations in certain countries that represent potential
markets for our products. We have limited experience in gaining regulatory
approval outside of the United States. There can be no assurance that new
regulations will not be promulgated which could have a material adverse effect
on our business and results of operations, or that existing regulations outside
of the United States would not adversely affect our international marketing of
our products.
Regulatory changes, including changes in the allocation of available
frequency spectrum, could significantly impact our operations by restricting our
development efforts, rendering current products obsolete or increasing the
opportunity for additional competition. In September 1993 and in February 1995,
the FCC allocated additional spectrum for personal communications services. In
January 1997, the FCC authorized 300 MHz of additional unlicensed frequencies in
the 5 GHz frequency range. These changes in the allocation of available
frequency spectrum could create opportunities for other wireless networking
products and services. There can be no assurance that new regulations will not
be promulgated which could have a material adverse effect on our business and
results of operations.
14
<PAGE>
USE OF PROCEEDS
Holders of warrants and unit purchase options are not obligated to exercise
their securities and there can be no assurance that the holders of these
securities will choose to exercise all or any of them; therefore, LTI is not
assured of any particular level of proceeds from the sale of the securities
offered by this document. We intend to use the net proceeds received upon the
exercise of these securities, if any, for general corporate purposes and working
capital.
DIVIDEND POLICY
LTI has never paid any cash dividends with respect to its shares of common
stock and does not anticipate that dividends will be declared in the foreseeable
future. If the proposed merger with Speedcom is approved by LTI stockholders and
is completed, the company expects that all available cash will be utilized to
further the growth of its business following the merger.
MARKET PRICE DATA
LTI's common stock is traded on the OTC-Bulletin Board under the symbol
"LAMT." The common stock was listed on the Nasdaq SmallCap market under the same
symbol from October 9, 1996 to December 17, 1998, at which time it was delisted
for failing to meet certain Nasdaq continued listing requirements. The following
table presents certain historical trading information for the LTI common stock.
These quotations represent prices between dealers and do not include retail
mark-up, mark-down or commission or necessarily represent actual transactions.
The market for the common stock has been thin or illiquid at times, with no or
few trades occurring on a number of days.
<TABLE>
<CAPTION>
QUARTER ENDED HIGH LOW
------------- -------- --------
<S> <C> <C>
June 30, 1998............................................... $1.0000 $0.2500
September 30, 1998.......................................... 0.6870 0.1875
December 31, 1998........................................... 0.3437 0.1875
March 31, 1999.............................................. 0.3125 0.1875
June 30, 1999............................................... 0.5625 0.2400
September 30, 1999.......................................... 0.5938 0.4063
December 31, 1999........................................... 0.5625 0.3800
March 31, 2000.............................................. 0.8438 0.5000
June 30, 2000............................................... 3.1875 0.5938
September 30, 2000 (through August 3, 2000)................. 5.3750 2.1875
</TABLE>
As of June 30, 2000 there were approximately 92 holders of record of the LTI
common stock.
In addition to the common stock, LTI's class A warrants and class B warrants
are traded on the OTC-Bulletin Board under the symbol "LAMTW" and "LAMTZ,"
respectively. These warrants also were listed on the Nasdaq SmallCap market
under the same symbols until they were delisted for failing to meet certain
Nasdaq continued listing requirements.
If the proposed merger with Speedcom is approved by LTI stockholders and is
completed, LTI will be issuing approximately 7,438,036 shares of common stock as
consideration for the merger and up to 3,114,015 shares of common stock upon the
exercise of Speedcom options and warrants that will become LTI options and
warrants upon completion of the merger. The number of shares of LTI common stock
issuable to holders of Speedcom stock in the proposed merger will not be
affected by any changes in the market price of LTI common stock. Therefore, the
market value of the shares of LTI common stock that holders of Speedcom common
stock will receive in the merger may increase or decrease prior to the
completion of the merger because the market price of LTI is subject to
fluctuation but the exchange ratio is fixed.
15
<PAGE>
There is no established trading market for shares of any class of Speedcom
stock.
If the proposed merger with Speedcom is approved by LTI stockholders and is
completed, LTI expects that its common stock will continue to be quoted on the
OTC-Bulletin Board. LTI intends to change its trading symbol to reflect the
change in the company's name in connection with the merger. As discussed
elsewhere in this document, if the proposed merger with Speedcom is approved by
LTI stockholders and is completed, the company intends to apply for listing of
the common stock on the Nasdaq SmallCap Market. There can be no assurance,
however, that the combined company will meet the requirements for listing on the
Nasdaq SmallCap Market after the merger, or that it will be able to take the
additional steps necessary to meet those requirements.
16
<PAGE>
DESCRIPTION OF THE SPEEDCOM MERGER
GENERAL
If the merger is approved by LTI stockholders and is completed, Speedcom and
LTI will merge, with LTI surviving the merger. Upon completion of the merger,
shares of Speedcom common stock outstanding immediately prior to the merger will
be converted into shares of LTI common stock. We anticipate that the closing
date of the merger will occur as promptly as practicable after the LTI special
meeting of stockholders which will be called to consider and vote on the merger
and certain related proposals discussed below.
BACKGROUND OF THE MERGER
In connection with the completion of the sale of all of LTI's operating
assets to Packaging Atlanta Corporation last June, LTI's management began
focusing its efforts on identifying suitable candidates for a business
combination. At that time, the board of directors determined not to liquidate
LTI or otherwise distribute any of its remaining assets because the board
believed that a business combination with a suitable operating company had the
potential to create a greater value for LTI stockholders than a liquidation or
similar distribution.
Speedcom and LTI executed a letter of intent on June 5, 2000 and issued a
joint press release on June 6, 2000 announcing the proposed merger. On
August 4, 2000, LTI's board of directors approved the merger and authorized
management to execute the definitive merger agreement and to submit the merger
for stockholder approval. Speedcom and LTI executed the definitive merger
agreement on August 4, 2000 and also issued a joint press release that day
announcing the agreement.
WHAT SPEEDCOM SECURITYHOLDERS WILL RECEIVE IN THE MERGER
Common stockholders of Speedcom will receive one share of LTI common stock
for each share of Speedcom common stock that they own. This exchange ratio
assumes that LTI stockholders approve the proposed 1 for 4.26 reverse stock
split. Following completion of the merger, current Speedcom stockholders will
own shares, in the aggregate, representing approximately 92% of the equity
ownership interest in the post-merger company.
If, at the effective time of the merger, LTI has net cash of less than
$1.5 million, the number of shares of LTI common stock to be issued to the
Speedcom stockholders will be increased by an aggregate amount equal to (i) the
difference between $1.5 million and the net cash of LTI at the time the merger
becomes effective, divided by (ii) 4, multiplied by (iii) 11.5. In that event,
current Speedcom stockholders will own shares, in the aggregate, representing
more than approximately 92% of the equity ownership interest in the post-merger
company.
Each outstanding option and warrant to acquire shares of Speedcom common
stock will be converted into an option or a warrant, as appropriate, to acquire,
on substantially the same terms and conditions currently applicable to the
Speedcom option or warrant, the number of shares of LTI common stock equal to
the number of shares that the holder would have been entitled to receive in the
merger had such holder fully exercised the option or warrant immediately prior
to the effective date of the merger.
EFFECTIVE TIME OF THE MERGER
The effective time of the merger will occur upon the filing of a certificate
of merger with the Secretary of State of Delaware and the Secretary of State of
Florida or at such other time as specified in the certificate of merger. This
filing is expected to be made at the same time as the closing of the merger.
17
<PAGE>
THE MERGER AGREEMENT
The merger agreement contains various representations and warranties made by
LTI and Speedcom that are customary in this type of transaction. Some of these
representations and warranties are qualified as to materiality and with respect
to matters or items which are specifically disclosed to the other party. The
representations and warranties of each party will not be deemed waived or
otherwise affected by any investigation made by the other party and, except with
respect to breaches occurring prior to the effective time of the merger, do not
survive beyond the effective time of the merger.
The merger agreement also contains several covenants and agreements of LTI
and Speedcom, including certain covenants and agreements relating to:
- the conduct of their businesses pending completion of the merger;
- the preparation and filing by LTI of an appropriate proxy
statement/prospectus and registration statement with the SEC covering the
merger proposal and the securities that are issuable in connection with
the merger and upon the exercise of Speedcom options and warrants that
will become LTI options and warrants upon completion of the merger;
- the submission of the merger agreement and other related documents to
their respective stockholders for their consideration;
- the use of commercially reasonable best efforts to obtain all required
regulatory approvals and required third party consents necessary to
consummate the transactions contemplated by the merger agreement; and
- the taking of all actions necessary to complete the transactions
contemplated by the merger agreement.
The merger agreement provides that neither LTI nor Speedcom will permit any
of its employees, officers, agents or other affiliates to directly or indirectly
solicit or initiate any discussions or negotiations concerning a sale or merger,
unless a written proposal is submitted to LTI or Speedcom by a third party, and
the board of directors of LTI or Speedcom, as the case may be, determines in its
good faith judgment that continued compliance with the non-solicitation
provision set forth in the merger agreement may cause the board of directors to
breach or violate its fiduciary duties under applicable law.
In the event either party exercises its rights pursuant to the merger
agreement to terminate the merger agreement because of the receipt of a
third-party proposal and enters into a letter of intent or definitive agreement
to merge or otherwise combine with a third party on or prior to October 30,
2000, the terminating party is obligated to pay to the other party, immediately
upon the execution of such letter of intent or definitive agreement, a fee of
$100,000.
LTI and Speedcom are not obligated to complete the merger unless certain
conditions have been satisfied or waived, if waiver is permitted. Some of the
key conditions to completion of the merger include:
- the truth and accuracy of the representations and warranties of the
parties contained in the merger agreement;
- the performance by each party of all of the agreements and covenants
required by the merger agreement to be performed prior to the closing date
of the merger;
- no material adverse change in the financial condition, business, net
worth, assets, properties, or operations of either party shall have
occurred since the date of the merger agreement;
18
<PAGE>
- the receipt of all permits, authorizations, consents and approvals of
governmental authorities and other third parties that are necessary in
connection with the merger as contemplated by the merger agreement;
- stockholder approval;
- the registration statement filed with the SEC becoming effective in
accordance with the provisions of the Securities Act;
- the resignations of each of LTI's employees, directors and officers,
effective as of the closing date of the merger;
- LTI having a minimum net worth and total cash of not less than $1 million
as of the effective time of the merger;
- no final order, decree or ruling, or other action shall have been taken,
which restrains, enjoins or otherwise prohibits the merger or other
transactions contemplated by the merger agreement, and no litigation,
proceeding or investigation is pending or threatened, which may materially
and adversely affect the merger or other transactions contemplated by the
merger agreement; and
- LTI's receipt of an opinion of its financial advisor to the effect that
the merger is fair from a financial point of view to LTI's stockholders.
At any time prior to the effective time of the merger, each of LTI and
Speedcom may waive the compliance with any condition that may legally be waived.
Neither LTI nor Speedcom may, however, waive compliance with conditions that are
required by law to complete the merger, including (i) the requirement for
stockholder approval; (ii) the requirement for regulatory approval; and
(iii) the requirement that the registration statement be effective on the
closing date.
LTI and Speedcom may terminate the merger agreement at any time prior to the
effective time of the merger by mutual written consent. Either LTI or Speedcom
may terminate the merger agreement at any time prior to the effective time of
the merger:
- if the other party has materially breached any of its representations,
warranties or covenants and the breach is not cured within 15 days after
written notice of such breach;
- if the other party has failed to perform all conditions set forth in the
merger agreement prior to October 15, 2000, upon written notice of such
failure given on or after such date; or
- if the board of directors of either party determines in its good faith
judgment that continued compliance with the non-solicitation provision in
the merger agreement may result in a breach of fiduciary duty under
applicable law, upon written notice of such determination.
Subject to applicable legal restrictions, at any time prior to the effective
time of the merger, the parties may:
- amend the merger agreement;
- extend the time for the performance of any of the obligations or other
acts of the other party required in the merger agreement; and
- waive compliance with any of the terms and conditions contained in the
merger agreement.
After the stockholders of LTI and Speedcom have approved the merger
agreement, however, any amendment that by law would require stockholder approval
may be made only with such approval.
19
<PAGE>
OTHER PROPOSALS RELATING TO THE MERGER
In addition to the merger, LTI is also seeking stockholder approval of two
additional proposals that will be implemented if the merger is approved by LTI
stockholders and is completed.
REVERSE STOCK SPLIT
The LTI board of directors has approved a proposal to amend the LTI
certificate of incorporation to effect a 1 for 4.26 reverse stock split of LTI
common stock. If the merger and the reverse split are both approved by the LTI
stockholders, we intend to file an amendment to LTI's certificate of
incorporation immediately prior to the completion of the merger.
Upon the filing with the Secretary of State of Delaware of the amendment to
LTI's certificate of incorporation, each certificate representing LTI common
shares outstanding immediately prior to the reverse split, will be deemed
automatically, without any action on the part of LTI or its stockholders, to
represent .235 of the number of shares of LTI common stock outstanding
immediately prior to the reverse split. LTI will abandon the reverse split at
any time before its effectiveness if for any reason we deem it advisable. We
will abandon the proposed reverse split if the merger is not approved. We also
may consider abandoning the proposed reverse split if we determine, in our sole
discretion, that the reverse split might adversely affect our ability to raise
capital or the liquidity of our common stock, among other things.
As of June 30, 2000, the number of shares of LTI common stock issued and
outstanding was approximately 2,775,100 million, and after giving effect to the
reverse stock split and the issuance of shares in connection with the merger
with Speedcom, the number of outstanding shares will be approximately 8,089,468
million.
As of June 30, 2000, LTI had 8,789,900 shares of common stock reserved for
issuance under options and warrants and Speedcom had 3,114,015 shares of common
stock reserved for issuance under outstanding options and warrants. Following
completion of the merger and the reverse stock split, the combined company will
have outstanding options and warrants for approximately 5,177,372 shares and
1,055,226 shares available for grant under option plans. The plans and
agreements pursuant to which such options and warrants are or will be issued
each provide that in the event of a change in the capitalization, such as the
reverse split, the number of shares covered by each option and warrant will be
adjusted so as to maintain the holder's proportionate interest, and the
applicable exercise price will also be appropriately adjusted.
The following table summarizes the effects of the reverse split and the
mergers upon the common stock of LTI that will be (1) issued and outstanding,
(2) reserved for issuance under options, option plans, warrants and other
convertible securities, and (3) available for issuance.
<TABLE>
<CAPTION>
NUMBER OF SHARES
-------------------------------------------
ISSUED AND RESERVED FOR AVAILABLE FOR
TIME/TRANSACTION OUTSTANDING OPTIONS, ETC. ISSUANCE
---------------- ----------- ------------- -------------
<S> <C> <C> <C>
Before Reverse Split and Merger........................... 2,775,100 8,789,900 8,435,000
After Reverse Split and before Merger..................... 651,432 2,063,357 17,285,211
After Reverse Split and Merger............................ 8,089,468 5,177,372 17,796,412
</TABLE>
The reverse split may result in some stockholders owning "odd-lots" of less
than 100 shares of common stock. Brokerage commissions and other costs of
transactions in odd-lots are generally higher than the costs of transactions in
"round-lots" of even multiples of 100 shares.
LTI common stock is registered under Section 12(g) of the Securities
Exchange Act of 1934, and is traded on the OTC-Bulletin Board. As a result of
the registration under Section 12(g), LTI is subject to the periodic reporting
and other requirements of the Securities Exchange Act.
20
<PAGE>
AMENDMENTS TO THE LTI CERTIFICATE OF INCORPORATION
The LTI board of directors has approved a proposal to make certain
amendments to the current amended and restated certificate of incorporation of
LTI. If approved, these changes will be effected through the filing of a further
amended and restated certificate of incorporation. The approval of these changes
and the amended and restated certificate of incorporation is a condition to
closing of the merger. If the merger is not approved by LTI stockholders or does
not close for some other reason, we will not file the proposed amended and
restated certificate of incorporation and LTI's current certificate of
incorporation will continue to be applicable.
Some of the key proposed changes include:
- an increase in the authorized capital stock of the company to 40,000,000
shares of capital stock, 30,000,000 of which will be designated as common
stock and 10,000,000 of which will be designated as preferred stock;
- a change in the company's name to Speedcom Wireless Corporation; and
- the creation of classified board of directors.
NASDAQ SMALLCAP MARKET LISTING
If the merger with Speedcom is completed, LTI intends to apply for listing
of the common stock on the Nasdaq SmallCap Market after the merger. The Nasdaq
SmallCap Market listing requirements provide for a number of minimum standards,
including:
- minimum net tangible assets of $4 million OR minimum market capitalization
of $50 million OR minimum net income of $750,000;
- public float of at least 1 million shares;
- public float value of at least $5 million;
- minimum bid price of $4;
- three or more market makers;
- 300 or more "round lot" stockholders;
- minimum operating history of one year OR minimum market capitalization of
$50 million; and
- compliance with certain Nasdaq-mandated corporate governance standards.
LTI does not currently meet a number of these standards, and it is uncertain
whether the combined company will meet all of the standards after the completion
of the merger. We cannot assure you that the company will meet the requirements
for listing on the Nasdaq SmallCap Market after the merger, or that it will be
able to take the additional steps necessary to meet those requirements. Further,
the Nasdaq imposes certain continued listing requirements that would apply to
the company on an ongoing basis even after the company met all of the
requirements for the initial listing of the common stock on the Nasdaq SmallCap
Market. We cannot assure you that the company will be able to satisfy the
continued listing requirements on an ongoing basis in the future. If LTI fails
to satisfy the initial listing requirements or fails to satisfy the continued
listing requirements in the future, the market price for and liquidity of the
common stock may be adversely affected.
21
<PAGE>
LTI MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
LTI was a development stage company organized to develop, design and market
value-added packaging and specialty display products. Since its inception, LTI's
efforts were principally devoted to research, development and design of
products, marketing activities and raising capital. Due to an inability to find
a sufficient market for its products, LTI sold its operating assets as of
June 30, 1999 and currently does not have any operating business. Therefore,
readers should note that the following discussion of results of operations is
being provided for historical comparison purposes only and is not meant to
describe LTI's present business or planned future operations.
The following discussion should be read in conjunction with the LTI
financial statements and notes thereto included elsewhere in this prospectus.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 AND 2000.
Net sales decreased from approximately $553,000 in the three months ended
June 30, 1999 (1999 three months) to $0 in the three months ended June 30, 2000
(2000 three months). This decrease is due to LTI selling its operating assets as
of June 30, 1999.
Gross profit decreased from approximately $154,000 in the 1999 three months,
to $0 in the 2000 three months. The gross profit margin decrease is due to LTI
selling its operating assets as of June 30, 1999.
Selling, general and administrative expenses decreased 78% from the 1999
three months of approximately $471,000 to approximately $103,000 in the 2000
three months. This decrease is primarily due to the reduction in personnel due
to LTI selling its operating assets as of June 30, 1999.
Research and development expense decreased from approximately $46,000 in the
1999 three months to $0 in the 2000 three months. This decrease is due to LTI
selling its operating assets as of June 30, 1999.
Interest expense decreased approximately $1,000 from the 1999 three months
of approximately $1,000 to $0 in the 2000 three months. This decrease is due to
the payoff of an outstanding note. Interest income increased from approximately
$20,000 in the 1999 three months to approximately $26,000 in the 2000 three
months. This increase is primarily due to the amount of cash available for
investing, due to the sale of the assets, being greater in the 2000 three months
than in the 1999 three months.
Loss on sale of assets was approximately $335,000 for the 1999 three months.
This loss was recognized as a result of LTI selling substantially all of its
assets. There was no such activity in the 2000 three months.
Net loss decreased from approximately $680,000 or ($.24) per share in 1999
three months to approximately $76,000, or ($.03) per share, in 2000 three months
as a result of the foregoing factors.
FISCAL YEARS ENDED MARCH 31, 1999 AND 2000.
Net sales decreased from approximately $1,878,000 in the twelve months ended
March 31, 1999 (fiscal 1999) to $553,000 in the twelve months ended March 31,
2000 (fiscal 2000). This decrease is due to LTI selling its operating assets as
of June 30, 1999.
22
<PAGE>
Selling, general and administrative expenses decreased by 32% from
approximately $1,335,000 in fiscal 1999 to approximately $905,000 in fiscal
2000. This decrease is primarily due to the reduction in personnel due to LTI
selling its operating assets as of June 30, 1999.
Research and development expense decreased by 90% from approximately
$463,000 in fiscal 1999 to approximately $46,000 in fiscal 2000. This decrease
is due LTI selling its operating assets as of June 30, 1999.
Interest expense decreased by $4,000 from approximately $5,000 for fiscal
1999 to approximately $1,000 for fiscal 1999. The decrease is due to the
reduction in the outstanding balance of a note payable.
Investment income decreased from approximately $124,000 in fiscal 1999 to
approximately $94,000 in fiscal 2000. This decrease is primarily due to the
amount of cash available for investing being greater in fiscal 1999 than in
fiscal 2000.
Net loss increased 8% from approximately $967,000, or $.35 per share, in
fiscal 1999 to approximately $1,040,000, or $.37 per share, in fiscal 2000, as a
result of the foregoing factors.
LIQUIDITY AND CAPITAL RESOURCES
LTI received approximately $400,000 from the sale of its assets on June 30,
1999 and this cash was added to the existing cash balance. Since this time LTI's
cash has primarily been used to pay recurring general and administrative
expenses which run approximately $25,000 per month, excluding any fees for
legal, financial or other advisory services. LTI currently has cash and short
term investments of approximately $1.7 million.
At the time of LTI's initial public offering, certain common stockholders
had agreed to place 410,000 shares of LTI common stock into escrow. These escrow
shares would have been released from escrow only if certain financial conditions
or market prices for the common stock had been met or achieved. These financial
conditions or market prices were not achieved within the specified time and the
escrow shares have been canceled.
At June 30, 2000, LTI had net operating loss carry-forwards for Federal
income tax purposes of approximately $9,321,000. The net operating loss and
credit carry-forwards expire from March, 2009 through March, 2020. Additionally,
LTI's ability to utilize its net operating loss carry-forwards may be subject to
annual limitations pursuant to Section 382 of the Internal Revenue Code.
23
<PAGE>
BUSINESS OF LTI HOLDINGS
GENERAL
LTI Holdings sold all of its operating assets to Packaging Atlanta
Corporation in a transaction which closed June 30, 1999. At the present time,
LTI Holdings has no operating business and the company's management and Board of
Directors have been focusing on exploring opportunities to enter into a business
combination with an operating company. The description of the LTI Holdings'
business set forth below provides a discussion of our past business and is not
meant to describe present operations or planned future operations.
On June 6, 2000, we announced that we had executed a letter of intent to
merge with Speedcom.
OVERVIEW
Laminating Technologies, Inc. was incorporated in Georgia, in March 1993, as
New Cooler Corp., and subsequently changed its name to Laminating
Technologies, Inc. In April 1996, the Company was merged into Laminating Merger
Corporation, a Delaware corporation, which changed its name to Laminating
Technologies, Inc. In connection with the asset sale described above, we changed
our name to LTI Holdings, Inc.
Prior to the asset sale, LTI Holdings operated a development stage company
organized to research, develop, design and market value-added packaging and
specialty display products manufactured using a proprietary processing method
known as "LTI Processed-Registered Trademark-".
The LTI Processed-Registered Trademark- process can be utilized to produce a
wide variety of packaging products and specialty displays. Prior to the asset
sale, we produced a number of commercial products, including bakery dessert
discs, pads and trays, catering HOT 'N COOLER-Registered Trademark- containers,
frozen food shippers, point of purchase displays, pizza delivery boxes and
medical shippers.
PRODUCTS
On April 17, 1997, we announced "BAKE 'N SHIP-TM-", a new product line,
which was available for sale to the baking industry. BAKE 'N SHIP-TM- utilized
the our patented and proprietary process, resulting in a new material which was
ovenable and freezable with the strength and structure of corrugated material.
This was our first commercial product.
In February 1998, we introduced a new "HOT 'N COOLER-Registered Trademark-"
line of watertight containers that keep food and beverages hot or cold,
depending upon the application. Research conducted by an independent laboratory
showed that HOT 'N COOLER-Registered Trademark- cooled down faster (cans and
ice) than the traditional hard plastic, soft bag or styrofoam coolers.
Additionally, during testing, HOT 'N COOLER-Registered Trademark- was proven to
hold heat longer for food caterers of beans, ribs, chicken, etc.
STRATEGY
Prior to the asset sale, LTI Holdings' strategy focused on: (i) designing,
developing and marketing value-added, niche LTI Processed-Registered Trademark-
products both directly and indirectly to focused market segments,
(ii) leveraging these developed markets to and through vertically integrated
forest product companies creating strategic alliances, and (iii) obtaining
license agreements and/or royalty arrangements favorable to LTI Holdings
expanding both the uses and volume for LTI Processed-Registered Trademark-
products.
EMPLOYEES
We currently have two full-time employees and one part-time employee. None
of our employees is represented by a labor union and we believe that our
relations with employees is satisfactory. On April 1, 1997, we placed our
employees with Paradyme, a Professional Employer Organization. Under
24
<PAGE>
terms of the arrangement with Paradyme, our employees became employees of
Paradyme, entitling the employees to obtain superior benefits that we previously
could not offer to employees. While LTI Holdings must pay for the payroll cost
of the employees, and a fee for this service, using this service allowed us to
avoid the overhead and additional administrative costs typically associated with
these benefits.
PROPERTIES
LTI Holdings currently leases approximately 1,000 square feet of office
space in Atlanta, Georgia for its executive offices pursuant to a month-to-month
agreement for a monthly rent of $500.
LEGAL PROCEEDINGS
We are not involved in any material legal proceedings.
25
<PAGE>
SPEEDCOM MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Prior to June 30, 1997, Speedcom was an "S" corporation for federal income
tax purposes. Since that time, Speedcom has operated as a "C" corporation.
The following discussion should be read in conjunction with the financial
statements and notes thereto included elsewhere in this proxy
statement/prospectus.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 2000.
Net revenues increased 98.9% from approximately $2,012,000 in the six months
ended June 30, 1999 to approximately $4,001,000 in the six months ended
June 30, 2000. This increase was due to Speedcom executing its business plan in
a growing market for broadband wireless in 2000 coupled with Speedcom's poor
performance in the first half of 1999 due to its a capital constrained position.
Cost of installation revenues increased 86.2% from approximately $1,144,000
in the six months ended June 30, 1999 to approximately $2,130,000 in the six
months ended June 30, 2000, due primarily to increased sales of Speedcom's
equipment and services and a slight improvement in its gross margin.
Salaries and related, general and administrative and selling expenses
increased by 116.8% from approximately $1,154,000 in the first six months of
1999 to approximately $2,501,000 in the six months ended June 30, 2000. This
increase was primarily due to an increase in employee headcount and increased
spending on marketing and promotion, such as attendance at industry trade shows
coupled with an unusually low expense level in the first half of 1999 due to the
company operating in a capital constrained position. Additionally, Speedcom
incurred the cost of two years of financial audits in the first half of 2000 but
did not incur any expense for an audit in the first half of 1999.
Interest expense decreased by approximately $34,000, or 80.2%, from
approximately $42,000 for the six months ended June 30, 1999 to approximately
$8,000 for the six months ended June 30, 2000. This decrease was due to the
decrease in borrowings under Speedcom's factoring line as the result of an
infusion of equity in the first half of 2000 and continued amortization of
Speedcom's inventory based loan facility.
Net loss increased 96.9% from approximately $345,000, or $.06 per share, in
the first half of 1999 to approximately $679,000, or $.10 per share, in the
first six months of 2000, as a result of the foregoing factors.
FISCAL YEARS ENDED DECEMBER 31, 1998 AND 1999.
Net revenues decreased from approximately $5,171,000 in 1998 to
approximately $5,052,000 in 1999. This decrease was due to the company operating
in a capital constrained environment during the first half of 1999, offset by
growth in the market for wireless broadband equipment.
Cost of installation revenues increased from approximately $2,841,000 in
1998 to approximately $3,094,000 in 1999, an increase of 8.9% due primarily to
increased manufacturing and procurement costs and purchasing inefficiencies due
to financial capital constraints in the first half of 1999.
Salaries and related, general and administrative and selling expenses
decreased by 25.5% from approximately $3,316,000 in 1998 to approximately
$2,469,000 in 1999. This decrease was primarily due to the reduction in
discretionary spending on such items as marketing and promotion as well as
slight reductions in personnel in early 1999 due to lower sales.
26
<PAGE>
Interest expense increased by approximately $44,000 from approximately
$64,000 for 1998 to approximately $108,000 for 1999. The increase was due to the
increase in borrowings from shareholder, the execution of a note payable to a
supplier and increased use of factoring due to constrained cash flow.
Net loss decreased 37.5% from approximately $1,265,000, or $.0.21 per share,
in 1998 to approximately $791,000, or $.0.13 per share, in 1999, as a result of
the foregoing factors.
At December 31, 1999, Speedcom had net operating loss carry-forwards for
Federal income tax purposes of approximately $2,000,000. The net operating loss
and credit carry-forwards expire through the year 2019.
LIQUIDITY AND CAPITAL RESOURCES
Speedcom received approximately $990,000 from the sale of its common stock
during 1999 and this cash was added to the company's working capital. Speedcom's
working capital was reduced by approximately $118,400 due to operating losses.
As of December 31, 1999, Speedcom had cash and short term investments of
approximately $144,000.
Between January 1, 2000 and June 30, 2000, Speedcom raised approximately
$2,476,000 through the issuance of common stock and warrants. Subsequent to
June 30, 2000, Speedcom raised approximately $591,000 in additional funds
through the sale of common stock. Management of Speedcom believes that it has
sufficient working capital for Speedcom's business for the rest of 2000.
However, due to the growth of Speedcom, management believes that it will need to
raise additional capital in 2001. This additional capital could come from the
sale of common or preferred stock, the exercise of outstanding warrants, or from
borrowings. Speedcom has a $400,000 factoring facility in place with a financial
institution but has not utilized it since early in the first quarter of 2000.
Speedcom is currently in discussions with a number of financial institutions
regarding debt financing secured by receivables and inventory.
27
<PAGE>
BUSINESS OF SPEEDCOM
COMPANY OVERVIEW
Speedcom was incorporated in Florida in 1994 as M-Com Networking Systems
Corporation. The company initially served as a reseller of computer equipment
and wireless communications equipment. In 1997, Speedcom changed its name to
Speedcom Wireless International Corporation and started selling its own branded
products. Speedcom does business under the tradenames Wave Wireless Networking
and Installguys.com.
Speedcom creates high speed wireless local area networking solutions.
Speedcom's products utilize advanced radio frequency and data communication
technologies to connect users to computer networks ranging in size and
complexity from enterprise-wide local areas networks, LANs, to home networks.
Speedcom also develops and markets point-to point and point-to-multipoint bridge
products for fixed wireless networking between buildings in Metropolitan Area
Networks (MANs). Transmitting data at rates up to 100 megabytes per second, or
Mbps, over line-of-site distances measured in miles, Speedcom's wireless bridge
products provide users with a cost effective alternative to leased wirelines for
high speed network and internet access.
Speedcom sells its wireless bridge products in domestic and international
markets through both an indirect channel of distributors, resellers and
OEMs and a direct sales force.
INDUSTRY OVERVIEW
In recent years, organizations have shifted from centralized computing
environments to distributed client/server networks that frequently include
multiple interconnected LANs. Local area networks offer increased productivity
and reduced systems costs by enabling users to share information, applications
and resources such as printers, file servers and communication devices. Today,
businesses and organizations are increasingly reliant upon LANs as the primary
infrastructure for connecting PC users to the enterprise network. Modern
enterprises are providing Internet access through enterprise networks to LAN
users for applications such as e-mail, e-commerce and information browsing.
These LANs have been accessed from computers situated in fixed locations.
Networks located in multiple locations have traditionally been connected by
fiber-optic cables. Installing a new line connection to add access points to a
network is a costly and time consuming operation. In addition, the growing use
of portable computing devices has generated the need for semi-fixed access
networks. In response, organizations have begun to utilize wireless technologies
to open their wired computer infrastructure to semi-fixed users and to provide
an alternative to wired building-to-building or in-building connectivity.
Widespread acceptance of wireless networks beyond existing vertical markets
has been limited to date. However, recent developments collectively resulted in
the emergence and growth of wireless LAN solutions in broader networking
markets. Today, the desire for pervasive network and Internet connectivity, the
preference for mobile computing and the need to deploy and reconfigure networks
rapidly and cost-effectively are all factors contributing to the increase in
market demand for wireless LAN solutions. The rise of wireless internet service
providers (ISPs) has also created significant demand for fixed wireless
equipment. Many wireless ISPs are building out national wireless networks to
circumvent the incumbent telephone companies and gain market share.
Global regulatory changes are increasing the number of competitors providing
data and voice access to the global telecommunications network. The increased
competition is driving access service providers to upgrade their products and
increase their service offerings. Recent deregulation in the United States has
facilitated competition for local and long distance telephone services, data
transmission services and Internet services. Competitors include local exchange
carriers, internet service providers, cable operators and utilities. Access to
public telecommunications services has historically been provided via copper
wire. In the past several years, new technologies have emerged to provide
28
<PAGE>
greater communications capacity to subscribers via existing copper wire and
other wire alternatives. These digital systems, such as ISDN and DSL, offer a
higher capacity for data communications over copper wires. Market interest in
these systems has been fueled by the increasing demand for high-speed Internet
access. The public telecommunications infrastructure does not currently meet all
the public access demand. Wireless local loop systems have emerged as an
alternative to wired infrastructure for telephones and access to the Internet.
Instead of traditional wireline technologies, such as copper wire and fiber
optic cable, wireless local loop uses radio frequency communications to provide
alternative network access for both data and voice applications. Wireless local
loop technology is a promising and attractive solution for network access needs.
This is due to a variety of factors, including quick deployment, lower
infrastructure construction costs and lower operating costs than traditional
wireline access alternatives.
THE SPEEDCOM SOLUTION
Speedcom's wireless point-to-point and point-to-multipoint bridge products
provide fixed wireless networking, primarily outdoors between buildings.
Speedcom's products can reduce the overall cost of network connectivity through
reduced installation and infrastructure costs. Speedcom's products also
facilitate rapid deployment, temporary networks and semi-fixed connectivity to
the indoor and outdoor environments. Speedcom distinguishes itself from its
competitors by bundling a variety of components into a comprehensive package and
offering its customers not only the package, but full service as well.
BUSINESS STRATEGY
Speedcom's strategy is to continue providing a complete line of wireless
broadband products and services to sell to ISPs and private data network users.
Speedcom intends to accomplish this primarily through its existing product line
and the internal development of new products and services. Speedcom also intends
to promote the wider use of its products by establishing strategic relationships
with partners who can reach additional segments of the market. Speedcom may seek
to acquire one or more companies which complement Speedcom's product offerings
in order to facilitate the company's growth.
PRODUCTS/SERVICES
Speedcom offers a complete line of wireless broadband equipment. Speedcom's
high performance wireless bridge/router systems connect existing enterprise LANs
for point-to-point and point-to-multi-point, campus area, or metropolitan area
networks. Speedcom is developing additional products with smaller size, greater
functionality and greater ease of use for new markets. Speedcom expects to have
these products available for sale by the first quarter of 2001. Speedcom's
products can be reviewed at Speedcom's website, WWW.SPEEDLAN.COM. Speedcom also
offers complete wireless equipment installation and support services.
CUSTOMERS
No single customer accounts for 10% or more of Speedcom's revenues for the
years ended December 31, 1998 and 1999 or the six month periods ended June 30,
1999 and 2000.
EMPLOYEES
Speedcom currently has approximately 80 full time employees, 32 of whom are
sales personnel and 7 of whom are engineers. None of Speedcom's employees is
represented by a labor union and Speedcom believes that its relations with its
employees is good.
PROPERTIES
Speedcom currently leases approximately 18,000 square feet of office and
light industrial space in Sarasota, Florida and has small offices in Miami,
Florida; Dallas, Texas; San Diego, California; Mexico City, Mexico; Calgary and
Alberta, Canada; and Singapore. Speedcom has an option on approximately 3.22
acres at the Lakewood Ranch development in Sarasota, Florida where it intends to
build a 34,000 square foot building constructed to facilitate the company's
growth.
LEGAL PROCEEDINGS
Speedcom is not involved in any material legal proceedings.
29
<PAGE>
MANAGEMENT
INFORMATION REGARDING LTI'S CURRENT MANAGEMENT AND BOARD OF DIRECTORS
DIRECTORS AND EXECUTIVE OFFICERS
The names of the directors and executive officers of LTI Holdings, their
ages and certain other information are set forth as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- -------- ------------------------------------------
<S> <C> <C>
Michael E. Noonan 59 Chairman of the Board, President and Chief
Executive Officer
Donald L. Aldridge 42 Chief Financial Officer
Ronald L. Christensen 62 Director
William J. Warren 61 Director
</TABLE>
MICHAEL E. NOONAN was appointed Chairman of the Board, President and Chief
Executive Officer on February 1, 1996. From 1994 to February 1, 1996,
Mr. Noonan was self-employed as a business consultant. From 1989 to 1994,
Mr. Noonan was the Chief Executive Officer, President and sole shareholder of
Winning Image, Inc., an apparel marketing and manufacturing firm which was sold
to Terry Manufacturing Company. From 1986 to 1989, Mr. Noonan was a Senior Vice
President of Domestic and North American Operations at the Mead Packaging
Division of Mead Corporation.
DONALD L. ALDRIDGE has served as Chief Financial Officer on a part-time
basis since December of 1997. Until September 30, 1999 he was a Partner in Tatum
CFO Partners, LLP, which provides chief financial officer expertise to both
emerging growth companies and larger corporations. He had been a Partner with
Tatum since 1993. Prior to Tatum, Mr. Aldridge served as the Chief Financial
Officer of Southern Services, Inc. from 1990 to 1992. Mr. Aldridge is a
Certified Public Accountant who practiced with Deloitte & Touche prior to his
financial experience in industry. Mr. Aldridge has a Master's Degree in Business
Administration from Virginia Tech and a Bachelor's of Science Degree in
Accounting from Bob Jones University.
RONALD L. CHRISTENSEN has been a director since March 1996. From 1993 to the
present, Mr. Christensen has served as President and Chief Executive Office of
PrinTech Label Corporation, a printing and converting firm. Since 1983 he has
also served as President of Adrienne Associates, a consulting services company
to the printing and pressure sensitive materials industry. Mr. Christensen
graduated from Georgia Institute of Technology in 1960 with a Bachelor's Degree
in Chemical Engineering.
WILLIAM J. WARREN has been a director since March 1996. Mr. Warren founded
Mar-Lyn Container Corporation, a sheet converter, in 1967 and was the President
and majority shareholder of Mar-Lyn until the company was sold in April 1997.
Mr. Warren is now a management consultant for Lyn Marco. Mr. Warren graduated
from the University of California in 1961 with a Bachelor's Degree in Industrial
Management.
EXECUTIVE COMPENSATION--CURRENT LTI MANAGEMENT
The following table sets forth certain information covering the compensation
paid or accrued by LTI Holdings during the fiscal year indicated to its
President/Chief Executive Officer during the fiscal year ended March 31, 2000.
No other executive officer received compensation, including salary and bonus, in
excess of $100,000 during the fiscal year ended March 31, 2000.
30
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION --------------------
NAME AND FISCAL YEAR ------------------- NUMBER OF SECURITIES
PRINCIPAL POSITION ENDED MARCH 31 SALARY UNDERLYING OPTIONS
------------------ -------------- ------------------- --------------------
<S> <C> <C> <C>
Michael E. Noonan......................... 2000 $144,000
Chairman, President....................... 1999 $144,000
and Chief Executive Officer............... 1998 $144,000 91,319(1)
</TABLE>
------------------------
(1) Consists of 91,319 shares issuable upon exercise of options granted to
Mr. Noonan by Steve Gorlin.
The following table sets forth the number of securities underlying options,
the exercise price and the expiration date for stock options granted to the
President/Chief Executive Officer during the fiscal year ended March 31, 2000.
OPTION GRANTS IN FISCAL YEAR ENDED MARCH 31, 2000
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
PERCENT OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED EXERCISE
UNDERLYING TO EMPLOYEES PRICE EXPIRATION
NAME OPTIONS GRANTED IN FISCAL YEAR ($/SHARE) DATE
---- --------------- ---------------- --------- ----------
<S> <C> <C> <C> <C>
Michael E. Noonan............................ -- -- -- --
</TABLE>
The following table sets forth the number of exercisable and unexercisable
options as of March 31, 2000, and the value of such options for the
President/Chief Executive Officer.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTIONS VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN THE MONEY
UNEXERCISED OPTIONS OPTIONS AT
AT FISCAL YEAR END FISCAL YEAR END
SHARES ------------------- ---------------
ACQUIRED/ VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISED REALIZED UNEXERCISABLE UNEXERCISABLE
---- --------- -------- ------------------- ---------------
<S> <C> <C> <C> <C>
Michael E. Noonan........................... -- -- 91,319/0 $12,000/$0
</TABLE>
DIRECTOR'S COMPENSATION--CURRENT LTI BOARD OF DIRECTORS
Non-employee directors are entitled to compensation of $500 for each board
of directors meeting attended and are reimbursed for expenses actually incurred
in connection with such meeting. Directors are not precluded from serving LTI in
any other capacity and receiving compensation therefor.
In addition, directors are entitled to receive director options pursuant to
the 1996 Stock Option Plan. The provisions of this plan provide for the
automatic grant of non-qualified stock options to purchase shares of common
stock to directors who are not employees or principal stockholders of LTI.
Eligible directors were granted a director option to purchase 10,000 shares of
common stock on or about October 9, 1996 at a per share exercise price equal to
$5.00. Future eligible directors will be granted a director option to purchase
10,000 shares of common stock on the date that such person is first elected or
appointed a director. Each eligible director, other than directors who received
an initial
31
<PAGE>
director option since the last annual meeting, will be granted a director option
to purchase 1,000 shares of common stock on the day immediately following the
date of each annual meeting of stockholders, as long as such director is a
member of the board of directors. The exercise price for each share subject to a
director option shall be equal to the fair market value of the common stock on
the date of grant, except for directors who receive options and who own more
than ten percent of the voting power, in which case the exercise price shall be
not less than 110 percent of the fair market value on the date of grant.
Director options are exercisable in four equal annual installments, commencing
six months from the date of grant. Director options will expire on the earlier
of ten years after the date of grant or ninety days after the termination of the
director's service on the board.
EMPLOYMENT AND CONSULTING AGREEMENTS--CURRENT LTI MANAGEMENT
In July 1996, LTI Holdings entered into a one-year employment agreement with
Michael E. Noonan, Chairman and Chief Executive Officer. The agreement provides
for an annual base salary of $144,000 per year and is automatically renewable
for successive one-year terms unless either party gives six months' notice of
termination to the other. LTI Holdings may terminate the agreement without cause
and, upon such termination, Mr. Noonan will be entitled to receive his base
salary for a period of one year (subject to a fifty percent offset during the
second six months for salary received from subsequent employment). In addition,
if LTI Holdings exercises its right not to renew the agreement, Mr. Noonan will
be entitled to six months of severance pay. The agreement contains
confidentiality and non-competition provisions.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors and executive officers of LTI Holdings and the holders of ten percent
of LTI Holdings common stock to file with the SEC initial reports of ownership
and reports of changes in ownership of equity securities of LTI Holdings. Based
on management's review of copies of such reports received by it, or written
representations from reporting persons, LTI Holdings believes that during the
period from April 1, 1999 to March 31, 2000, its directors and executive
officers filed all reports on a timely basis.
INFORMATION REGARDING MANAGEMENT AND BOARD OF DIRECTORS OF LTI FOLLOWING
COMPLETION OF THE PROPOSED SPEEDCOM MERGER
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth the names, ages and positions of the persons
who will serve as executive officers and directors of the post-merger combined
company.
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- -------- ------------------------------------------------------------
<S> <C> <C>
Michael W. 43 Chairman and Chief Executive Officer, Director
McKinney
Bruce Sanguinetti 47 President and Director
Jay O. Wright 30 Chief Financial Officer and Director
R. Craig Roos 53 Vice Chairman and Director
</TABLE>
MICHAEL W. MCKINNEY, CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
DIRECTOR: Mr. McKinney founded Speedcom in 1994 and has served as its Chairman
and Chief Executive Officer for the past six years. Prior to forming Speedcom,
Mr. McKinney worked as an executive of AT&T and NCR Corporation for fourteen
years. Mr. McKinney holds a B.S. in Economics and Finance from Miami University,
Oxford, OH.
BRUCE SANGUINETTI, PRESIDENT AND DIRECTOR: Mr. Sanguinetti served as
President of BreezeCom, Incorporated from June 1995 to September 1999. In
October 1999, Mr. Sanguinetti left BreezeCom to
32
<PAGE>
become the President and CEO of Evietek Ventures. Prior to his involvement with
BreezeCom. Mr. Sanguinetti had served as executive vice president of sales and
marketing with Solectek Corporation from July 1994 to May 1995. He joined
Speedcom's board of directors in October 1999 and becomes Speedcom's President
effective September 1, 2000. Mr. Sanguinetti received his Bachelor's degree in
Business Administration from California State University.
JAY O. WRIGHT, CHIEF FINANCIAL OFFICER AND DIRECTOR: Mr. Wright joined
Speedcom in December 1999. Previously, he was a principal of FinanceMatrix.com,
a development stage business-to-business financial portal from January 1999
until December 1999. Mr. Wright was an investment banker with Merrill Lynch &
Co. in New York from May 1997 until January 1999. From September 1996 through
May 1997, he was a mergers & acquisitions attorney for Skadden, Arps, Slate,
Meagher & Flom LLP in New York. From June 1994 through September 1996, he was a
corporate attorney at Foley & Lardner, Chicago, Illinois. Mr. Wright received
his JURIS DOCTOR from The University of Chicago Law School in 1994 and his
Bachelor's degree in Business Administration, SUMMA CUM LAUDE, in 1991 from
Georgetown University.
R. CRAIG ROOS, VICE CHAIRMAN AND DIRECTOR: Mr. Roos joined Speedcom's board
of directors as vice chairman in February 2000. Mr. Roos is founder and sole
owner of Roos Capital Planners, Inc. which he formed in 1979. Mr. Roos serves on
the boards of several companies in the wireless and telecommunications industry.
He has previously served as Chairman of MobileMedia Corporation from 1993 until
1995. Mr. Roos also was a co-founder of Locate, a digital local access carrier
specializing in high speed T-1 level radio carrier technologies. Mr. Roos has
testified before the United States Congress on telecommunications issues and is
a former chairman of the Alternative Local Telecommunications trade association.
Mr. Roos has a B.A. in Economics from Davis & Elkins College and an MBA from
Fairleigh Dickinson University.
33
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
D.H. Blair Investment Banking Corp., the underwriter of LTI's 1996 initial
public offering, has the right to designate one individual for nomination to the
LTI board of directors for a period of five years after the completion of the
1996 initial public offering. The designee may be a director, officer, partner,
employee or affiliate of D.H. Blair. LTI has agreed to indemnify D.H. Blair
against certain liabilities, including liabilities under the Securities Act of
1933.
During the five-year period after the date of the 1996 initial public
offering, in the event D.H. Blair originates a financing or a merger,
acquisition or transaction to which LTI is a party, D.H. Blair will be entitled
to receive a finder's fee in consideration for origination of such transaction.
The fee is based on a percentage of the consideration paid in the transaction
ranging from 7 percent of the first $1,000,000 to 2 1/2 percent of any
consideration in the excess of $9,000,000.
LTI has agreed not to solicit warrant exercises other than through D.H.
Blair, unless D.H. Blair declines to make such solicitation. Upon any exercise
of the warrants after the one-year period after the 1996 initial public
offering, LTI will pay D.H. Blair a fee of 5 percent of the aggregate exercise
price of the warrants, if (i) the market price of the common stock on the date
the warrants are exercised is greater than the then exercise price of the
warrants; (ii) the exercise of the warrants was solicited by a member of the
NASD; (iii) the warrant holder designates in writing that the exercise of the
warrant was solicited by a member of the NASD and designates in writing the
broker-dealer to receive compensation for such exercise; (iv) the warrants are
not held in a discretionary account; (v) disclosure of compensation arrangements
was made both at the time of the 1996 initial public offering and at the time of
exercise of the warrants; and (vi) the solicitation of exercise of the warrant
was not in violation of Regulation M.
D.H. Blair received underwriting discounts and commissions of $909,075 and a
non-accountable expense allowance of $293,250 in connection with the 1996
initial public offering. In addition, in connection with the 1996 initial public
offering, we agreed to sell to D.H. Blair and its designees, for nominal
consideration, the option to purchase up to 170,000 initial public offering
units substantially identical to the units that we offered and sold in the 1996
initial public offering, except that the class A warrants and class B warrants
included therein are each subject to redemption by LTI, in accordance with the
terms of the related warrant agreement, at any time after these unit purchase
options have been exercised and the underlying warrants are outstanding.
In April 1996, Steve Gorlin, a principal stockholder of LTI, granted to
Michael E. Noonan, LTI's current Chairman, President and Chief Executive
Officer, options to purchase 91,319 shares of common stock owned by Mr. Gorlin.
The options were exercisable immediately at $0.68 per share and expire ten years
from the date of grant. Mr. Noonan has exercised those options. LTI has granted
Mr. Noonan demand and piggyback registration rights with respect to the shares
of common stock issuable upon exercise of these options.
34
<PAGE>
PRINCIPAL STOCKHOLDERS
The table below sets forth, as of July 31, 2000, according to information
available to the company, the stock ownership of the directors, executive
officers and principal stockholders of LTI (including all holders of greater
than 5% of LTI common stock). The table also shows the ownership of such persons
after giving effect to the proposed 1 for 4.26 reverse stock split and the
completion of the merger with Speedcom and the issuance of the shares of LTI
common stock to Speedcom stockholders in connection with the merger. The share
ownership and percentages listed in the table include any shares of LTI common
stock held by the listed stockholders that are subject to options currently
exercisable or exercisable within sixty days from the date of these tables. The
persons and entities listed have, to LTI's knowledge, sale, voting and
investment power with respect to all shares of LTI stock shown as being
beneficially owned by them, except as may otherwise be described in the
footnotes to the tables. Beneficial ownership is determined in accordance with
the rules and regulation of the SEC.
Unless otherwise indicated, the address of each affiliate named in the table
is c/o of LTI Holdings, Inc., 5115 New Peachtree Road, Suite 200, Atlanta, GA
30341.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF BENEFICIAL OWNERSHIP OF
LTI SHARES LTI SHARES
PRIOR TO THE MERGER(1) FOLLOWING THE MERGER(2)
--------------------------------------- -------------------------
NUMBER OF NUMBER OF PERCENT OF NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES (3) SHARES (4) CLASS SHARES CLASS
---------------- ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Michael E. Noonan...................... 116,271(5) 27,293 4.2% 27,293 *
Ronald L. Christensen.................. 10,750(6) 2,523 * 2,523 *
William J. Warren...................... 10,750(6) 2,523 * 2,523 *
Donald B. Sallee....................... 368,885(7) 86,592 13.3 86,592 *
Steven N. Bronson...................... 680,297(8) 159,694 24.5 159,694 1.9%
J. Morton Davis........................ 319,465(9) 74,991 11.1 74,991 *
Kinder Investments, L. P............... 308,300(10) 72,370 11.1 72,370 *
Steve Gorlin........................... 234,662(11) 55,084 9.2 55,084 *
Ruki Renov............................. 277,440(12) 64,126 9.1 64,126 *
Esther Stahler......................... 277,440(13) 65,126 9.1 65,126 *
All executive officers and directors as
a group
(3 persons).......................... 137,771(14) 32,339 4.6 32,339 *
</TABLE>
------------------------
* Less than 1%.
(1) Except as otherwise indicated, each of the parties listed above has sole
voting and investment power over the shares owned.
(2) Assumes implementation of 1 for 4.26 reverse stock split and issuance of
7,438,036 shares in the merger.
(3) Reflects share ownership prior to reverse split and issuance of shares in
the merger.
(4) Reflects share ownership following reverse split, but prior to issuance of
shares in the merger.
(5) Includes 91,319 shares issuable upon exercise of immediately exercisable
options granted to Mr. Noonan by Mr. Gorlin.
(6) As to each director, includes 10,750 immediately exercisable options to
purchase common stock. Does not include 250 shares (per director) issuable
upon exercise of options that that are not exercisable within sixty days.
(7) The address of Mr. Sallee is 980 South Powers Court, N. W., Atlanta, Georgia
30327.
35
<PAGE>
(8) The address of Mr. Bronson is 16 East 52nd Street, Suite 501, New York, New
York 10022.
(9) Represents 52,360 shares underlying a unit purchase option ("UPO") to
purchase 13,090 units owned by Mr. Davis, 52,360 shares underlying a UPO to
purchase 13,090 units owned by D. H. Blair Investment Banking Corp. and
214,745 shared owned by D. H. Blair Capital Corp. Mr. Davis is the chairman
of the board and sole stockholder of D. H. Blair Capital Corp. and D. H.
Blair Investment Banking Corporation. Mr. Davis has sole power to vote or
direct the vote, to dispose of or to direct the disposition of the shares
owned by D. H. Blair Capital Corp. and D. H. Blair Investment Banking Corp.
The address of Mr. Davis is 44 Wall Street, New York, New York 10005.
(10) Kinder Investments, L.P.; Peyser Associates, LLC, the general partner of
Kinder Investments; and Brian A. Wasserman, the managing member of Peyser
share voting power over the shares. The address of these parties is 1500
Hempstead Turnpike, East Meadow, New York 11554.
(11) Includes 91,319 share subject to options granted by Mr. Gorlin to Michael
E. Noonan. The address of Mr. Gorlin is 150 Gulf Shore Drive, Unit 601,
Destin, Florida 32541. Mr. Gorlin may be deemed a "founder" of the Company,
as such term is defined in the Securities Act of 1933.
(12) Includes 209,440 shares underlying a UPO to purchase 52,360 units owned
directly by Mrs. Renov and 68,000 shares underlying a UPO to purchase 17,000
units owned by D. H. Blair & Co., Inc. Each unit consists of one share of
LTI common stock, one class A common warrant and one class b warrant.
Mrs. Renov has sole voting power of and dispositive control over shares
owned by her and shares voting power of and dispositive control over shares
owned by D. H. Blair & Co. Mr. and Mrs. Renov, collectively, are principal
shareholders of D. H. Blair & Co. The address of Mrs. Renov is 172 Broadway,
Lawrence, New York 11559.
(13) Includes 209,440 shares underlying a UPO to purchase 52,360 units owned
directly by Mrs. Stahler and 68,000 shares underlying a UPO to purchase
17,000 units owned by D. H. Blair & Co. Mrs. Stahler has sole voting power
of and dispositive control over shares owned by her and has voting power of
and dispositive control over shares owned by D. H. Blair & Co. Mr. and
Mrs. Stahler, collectively, are principal shareholders of D. H. Blair & Co.
The address of Mrs. Stahler is 10 Lakeside Drive, Lawrence, New York 11559.
(14) Includes 112,819 shares issuable upon exercise of options that are
immediately exercisable. Does not include 500 shares issuable upon exercise
of options that are not exercisable within sixty days.
36
<PAGE>
DESCRIPTION OF SECURITIES
THE FOLLOWING DESCRIPTION DOES NOT PURPORT TO BE COMPLETE AND IS SUBJECT IN
ALL RESPECTS TO APPLICABLE DELAWARE LAW AND TO THE PROVISIONS OF LTI'S AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION AND BYLAWS, AS AMENDED TO THE DATE OF
THIS PROSPECTUS.
AS DISCUSSED ELSEWHERE IN THIS PROSPECTUS, IN CONNECTION WITH THE PROPOSED
MERGER WITH SPEEDCOM, LTI IS PROPOSING CERTAIN CHANGES TO ITS CURRENT
CERTIFICATE OF INCORPORATION. THESE CHANGES WILL BE REFLECTED IN AN AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION IF THE PROPOSALS ARE APPROVED. ANY
DIFFERENCES BETWEEN THE COMPANY'S CURRENT AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION OR BYLAWS AND THE PROPOSED AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION THAT ARE INTENDED TO BE IMPLEMENTED IN CONNECTION WITH THE CLOSING
OF THE SPEEDCOM MERGER AND THAT MAY HAVE A SUBSTANTIVE EFFECT ON THE COMPANY'S
SECURITIES ARE SUMMARIZED BELOW.
GENERAL
The authorized capital stock of LTI consists of 25,250,000 shares, of which
20,000,000 shares have been designated common stock, par value $.01 per share.
The remaining 5,250,000 shares are designated as preferred stock, par value $.01
per share, of which 250,000 shares were designated as series A convertible
preferred stock, all of which have been retired.
If the proposed amendments to the certificate of incorporation are approved
and the proposed amended and restated certificate of incorporation is filed and
becomes effective, the authorized capital stock of the company will consist of
40,000,000 shares, of which 30,000,000 shares will be designated common stock
$.001 par value per share, and the remaining 10,000,000 will be designated as
preferred stock, par value $.001 per share.
COMMON STOCK
Holders of LTI common stock have the right to cast one vote for each share
held of record on all matters submitted to a vote of holders of common stock,
including the election of directors. There is no right to cumulate votes for the
election of directors. Stockholders holding a majority of the voting power of
the capital stock issued and outstanding and entitled to vote, represented in
person or by proxy, are necessary to constitute a quorum at any meeting of LTI's
stockholders, and, under Delaware law, the vote by the holders of a majority of
such outstanding shares is required to effect certain fundamental corporate
changes such as liquidation, merger or amendment of LTI's certificate of
incorporation. Holders of common stock are entitled to receive dividends pro
rata based on the number of shares held, when, as and if declared by the board
of directors, from funds legally available therefor, subject to the rights of
holders of any outstanding preferred stock. In the event of the liquidation,
dissolution or winding up of the affairs of LTI, all company assets and funds
remaining after the payment of all debts and other liabilities, subject to the
rights of the holders of any outstanding preferred stock, shall be distributed,
pro rata, among the holders of the common stock. Holders of common stock are not
entitled to preemptive or subscription or conversion rights, and there are no
redemption or sinking fund provisions applicable to the common stock.
All of the outstanding shares of common stock are validly issued, fully paid
and nonassessable.
If the proposed amendments to the certificate of incorporation are approved
and the amended and restated certificate of incorporation is filed and becomes
effective the basic rights of holders of common stock will not differ
substantively from the rights of the holders of common stock under LTI's current
certificate of incorporation.
PREFERRED STOCK
At the time of LTI's initial public offering, all outstanding shares of
series A preferred stock were automatically converted into shares of LTI common
stock and were retired. Currently, there are no shares of preferred stock
outstanding.
37
<PAGE>
LTI is now authorized to issue up to 5,000,000 shares of "blank-check"
preferred stock, which amount will be increased to 10,000,000 shares if the
proposed amended and restated certificate of incorporation becomes effective.
The proposed amended and restated certificate of incorporation differs
stylistically from the current certificate of incorporation in that it will no
longer contain a description of the rights and preferences of the retired
series A preferred stock.
Under both the current certificate of incorporation and the proposed amended
and restated certificate of incorporation, the board of directors has the
authority to issue the preferred stock in one or more series and to fix the
number of shares and the relative rights, conversion rights, voting rights and
terms of redemption (including sinking fund provisions) and liquidation
preferences, without further vote or action by the stockholders. If shares of
preferred stock with voting rights are issued, such issuance could affect the
voting rights of the holders of the company's common stock by increasing the
number of outstanding shares having voting rights and/or by the creation of
class or series voting rights. If the board of directors authorizes the issuance
of shares of preferred stock with conversion rights, the number of shares of LTI
common stock outstanding could potentially be increased by up to the authorized
amount. Issuance of preferred stock could, under certain circumstances, have the
effect of delaying or preventing a change in control and may adversely affect
the rights of holders of common stock. Also, preferred stock could have
preferences over the common stock with respect to dividend and liquidation
rights. LTI has no current plans to issue any shares of preferred stock.
WARRANTS
LTI's initial public offering consisted of an offering of equity units
comprised of LTI common stock and warrants to acquire shares of common stock.
The warrants issued in the initial public offering were classified as class A
warrants and class B warrants.
REDEEMABLE WARRANTS CLASS A WARRANTS. Each class A warrant entitles the
registered holder to purchase one share of LTI common stock and one class B
warrant at an exercise price of $6.50 at any time until 5:00 P.M., New York City
time, on October 8, 2001. The class A warrants are redeemable by LTI on
30 days' written notice at a redemption price of $.05 per class A warrant if the
closing price of the common stock for any 30 consecutive trading days, ending
within 15 days of the notice of redemption, averages in excess of $9.10 per
share. In this context, "closing price" means the closing bid price if listed in
the over-the-counter market on Nasdaq or otherwise or the closing sale price if
listed on the Nasdaq National Market or a national securities exchange. All
class A warrants must be redeemed if any are redeemed.
As of June 30, 2000 a total of 2,952,400 class A warrants were outstanding.
REDEEMABLE CLASS B WARRANTS. Each class B warrant entitles the registered
holder to purchase one share of LTI common stock at an exercise price of $8.75
at any time after issuance until 5:00 P.M. New York City Time, on October 8,
2001. The class B warrants are redeemable by LTI on 30 days' written notice at a
redemption price of $.05 per class B warrant, if the closing price of the common
stock for any 30 consecutive trading days ending within 15 days of the notice of
redemption averages in excess of $12.25 per share. All class B warrants must be
redeemed if any are redeemed.
As of June 30, 2000 a total of 1,955,100 class B warrants were outstanding,
and a total of 2,952,400 class B warrants were issuable upon exercise of
outstanding class A warrants.
WARRANTS GENERALLY. The class A warrants and class B warrants are evidenced
by warrant certificates in registered form. The warrants provide for adjustment
of the exercise price and for a change in the number of shares issuable upon
exercise to protect holders against dilution in the event of a stock dividend,
stock split, combination or reclassification of the common stock or upon
issuance of shares of common stock at prices lower than the market price of the
common stock, with certain exceptions. LTI has reserved from its authorized but
unissued shares a sufficient number of shares of common stock for issuance upon
the exercise of the class A warrants and the class B warrants.
38
<PAGE>
If the proposed amendments to the certificate of incorporation are approved
and the amended and restated certificate of incorporation is filed and becomes
effective there will be no change in the class A warrants and class B warrants.
If, however, the proposed 1 for 4.26 reverse stock split is approved, the
warrants will be appropriately adjusted to provide for an upward change change
in the exercise price and a downward change in the number of shares into which
each warrant may be converted.
UNIT PURCHASE OPTIONS
In connection with LTI's 1996 initial public offering, LTI granted D.H.
Blair Investment Banking Corp., unit purchase options to purchase up to 170,000
units. The units consist of one share of LTI common stock, one class A warrant
and one class B warrant. These units were substantially identical to the units
sold by LTI in the 1996 initial public offering, except that the warrants
included in the unit purchase options are subject to redemption by LTI, in
accordance with the terms of the related warrant agreement, at any time after
the unit purchase options have been exercised and the underlying warrants are
outstanding. The unit purchase options are exercisable until October 8, 2001 at
an exercise price of $6.00 per unit (which is equal to 120% of the initial
public offering price per unit), subject to adjustment in certain events to
protect against dilution. The holders of the unit purchase options have certain
demand and piggyback registration rights.
REGISTRATION RIGHTS
Holders of the unit purchase options have demand and piggyback registration
rights relating to the options and the underlying securities. Michael Noonan,
LTI's current Chairman, President and Chief Executive Officer also has certain
demand and piggyback registration rights relating to certain shares of common
stock that he beneficially owns.
DELAWARE GENERAL CORPORATION LAW
Section 203 of the Delaware corporation statute provides that, subject to
certain exceptions specified therein, an "interested stockholder" of a Delaware
corporation shall not engage in any business combination, including mergers or
consolidations or acquisitions of additional shares of the corporation, with the
corporation for a three-year period following the date at which the stockholder
becomes an "interested stockholder" unless (i) prior to such date, the board of
directors of the corporation approved either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder," (ii) upon consummation of the transaction which resulted in the
stockholder becoming an "interested stockholder," the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at the
time that the transaction commenced (excluding certain shares), or (iii) on or
subsequent to such date, the business combination is approved by the board of
directors of the corporation and authorized at an annual or special meeting of
stockholders by the affirmative vote of at least 66 2/3% of the outstanding
voting stock which is not owned by the "interested stockholder." Except as
otherwise specified in Section 203, an "interested stockholder" is defined to
include (x) any person which is the owner of 15% or more of the outstanding
voting stock of the corporation, or is an affiliate or associate of the
corporation and was the owner of 15% or more of the outstanding voting stock of
the corporation at any time within three years immediately prior to the relevant
date and (y) the affiliates and associates of any such person. A corporation's
stockholders, by adopting an amendment to its certificate of incorporation or
bylaws, may elect not to be governed by Section 203, effective twelve months
after adoption. Neither the certificate of incorporation nor the bylaws
presently exclude LTI from the restrictions imposed by Section 203. Further,
neither the proposed amended and restated certificate of incorporation nor the
proposed amended and restated bylaws exclude LTI from the Section 203
restrictions.
39
<PAGE>
TRANSFER AGENT AND WARRANT AGENT
American Stock Transfer & Trust Company, New York, New York, serves as LTI's
transfer agent for the shares of common stock and warrant agent for the class A
and class B warrants.
PLAN OF DISTRIBUTION
The securities offered hereby are being offered directly by LTI pursuant to
the terms of the class A and class B warrants and the unit purchase options. No
underwriter is being used in connection with this offering. However, LTI has
agreed not to solicit warrant exercises other than through D.H. Blair, unless
D.H. Blair declines to make such solicitation. Upon any exercise of the warrants
after the first anniversary of the date of the 1996 initial public offering, LTI
has agreed to pay D.H. Blair a fee of 5% of the aggregate exercise price of the
warrants, if (i) the market price of LTI's common stock on the date the warrants
are exercised is greater than the then exercise price of the warrants; (ii) the
exercise of the warrants was solicited by a member of the NASD; (iii) the
warrant holder designates in writing that the exercise of the warrant was
solicited by a member of the NASD and designates in writing the broker-dealer to
receive compensation for such exercise; (iv) the warrants are not held in a
discretionary account; (v) disclosure of compensation arrangements was made both
at the time of the initial public offering and at the time of exercise of the
warrants; and (vi) the solicitation of exercise of the warrant was not in
violation of Regulation M.
The warrant and unit purchase options prices and other terms of the warrants
and unit purchase options were determined by negotiation between LTI and D.H.
Blair at the time of the 1996 initial public offering and are not necessarily
related to LTI's asset value, net worth or other established criteria of value.
EXPERTS
The consolidated financial statements of LTI as of March 31, 2000 and 1999
and for each of the two years in the period ended March 31, 2000, appearing in
this registration statement have been audited by Grant Thornton LLP, independent
certified public accountants, as stated in their reports appearing elsewhere
herein and have been so included in reliance upon the reports of such firm given
upon their authority as experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited our financial
statements at Decemer 31, 1999, and for each of the two years in the period
ended December 31, 1999, as set forth in their report. We've included our
financial statements in the prospectus and elsewhere in the registration
statement in reliance in reliance on Ernst & Young LLP's report, given on their
authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
LTI has filed a registration statement (including post-effective amendments
to the registration statement) with the SEC under the Securities Act that
registers the securities being offered by this document. The registration
statement, including the attached exhibits and schedules, contains additional
relevant information about LTI and its securities. The rules and regulations of
the SEC allow us to omit certain information included in the registration
statement from this prospectus.
In addition, LTI files annual, quarterly and other reports, proxy statements
and other information with the SEC under the Securities Exchange Act. You may
read and copy any reports, statements or other information at the SEC's Public
Reference Room, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. You
may also obtain copies of this information by mail from the Public Reference
Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549,
at prescribed rates. You may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an
Internet world wide web site that contains reports, proxy statements and other
information about issuers, like LTI, who file electronically with the SEC. The
address of the site is http://www.sec.gov.
LTI has supplied all information contained or incorporated by reference in
this document relating to LTI and Speedcom has supplied all information relating
to Speedcom.
40
<PAGE>
INDEX TO FINANCIAL STATEMENTS
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
<TABLE>
<S> <C>
Report of Independent Auditors--Ernst & Young LLP........... F-2
Balance Sheets as of December 31, 1999 and June 30, 2000
(unaudited)............................................... F-3
Statements of Operations for the years ended December 31,
1998 and
1999 and six months ended June 30, 1999 and 2000
(unaudited)............................................... F-4
Statements of Changes in Stockholders' Equity (Deficit) for
the years ended
December 31, 1998 and 1999 and six months ended June 30,
2000 (unaudited).......................................... F-5
Statements of Cash Flows for years ended December 31, 1998
and
1999 and six months ended June 30, 1999 and 2000
(unaudited)............................................... F-6
Notes to Financial Statements............................... F-7
</TABLE>
LTI HOLDINGS, INC. AND SUBSIDIARY
<TABLE>
<S> <C>
Report of Independent Auditors--Grant Thornton LLP.......... F-18
Consolidated Balance Sheets as of March 31, 2000 and 1999... F-19
Consolidated Statements of Operations for the years ended
March 31, 2000
and 1999.................................................. F-20
Consolidated Statements of Changes in Stockholders' Equity
for the years ended
March 31, 2000 and 1999................................... F-21
Consolidated Statements of Cash Flows for the years ended
March 31, 2000 and 1999................................... F-22
Notes to Consolidated Financial Statements.................. F-23
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
SPEEDCOM Wireless International Corporation
We have audited the accompanying balance sheet of SPEEDCOM Wireless
International Corporation as of December 31, 1999, and the related statements of
operations, changes in stockholders' equity (deficit) and cash flows for the
years ended December 31, 1998 and 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of SPEEDCOM Wireless
International Corporation as of December 31, 1999, and the results of its
operations and its cash flows for the years ended December 31, 1998 and 1999 in
conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Tampa, Florida
March 27, 2000
F-2
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, 2000
DECEMBER 31, JUNE 30, PRO FORMA
1999 2000 (NOTE 11)
------------ ----------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash................................................. $ 108,564 $ 105,026 $ 1,871,707
Restricted cash...................................... 35,671 -- --
Accounts receivable, net of allowances of $143,371
and $27,722 in 1999 and 2000, respectively......... 515,155 977,825 977,825
Inventories, net..................................... 553,004 1,076,188 1,076,188
Prepaid expenses and other current assets............ 7,182 161,322 169,552
----------- ----------- -----------
Total current assets................................... 1,219,576 2,320,361 4,095,272
Property and equipment, net............................ 199,199 647,669 647,669
Other assets, net...................................... 44,284 47,513 47,513
----------- ----------- -----------
Total assets........................................... $ 1,463,059 $ 3,015,543 $ 4,790,454
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable..................................... $ 817,092 $ 1,236,928 $ 1,237,256
Accrued expenses..................................... 362,134 286,168 463,868
Loans from stockholder............................... 45,639 -- --
Current portion of deferred revenue.................. 83,005 85,347 85,347
Current notes and capital leases payable............. 328,781 19,229 19,229
----------- ----------- -----------
Total current liabilities.............................. 1,636,651 1,627,672 1,805,700
Accrued expenses, net of current portion............... 12,000 -- --
Deferred revenue, net of current portion............... 63,616 38,409 38,409
Notes and capital leases payable....................... 99,154 78,684 78,684
Convertible subordinated debt.......................... -- 40,000 40,000
Stockholders' equity (deficit):
Preferred stock, $.001 par value, 10,000,000
undesignated shares authorized..................... -- -- --
Common stock, $.001 par value, 20,000,000 shares
authorized, 6,414,767, 6,931,999 and 7,583,431
shares issued and outstanding...................... 6,415 6,932 7,583
Additional paid-in capital........................... 2,062,879 4,415,202 6,011,434
Accumulated deficit.................................. (2,417,656) (3,096,356) (3,096,356)
Notes receivable..................................... -- (95,000) (95,000)
----------- ----------- -----------
Total stockholders' equity (deficit)................... (348,362) 1,230,778 2,827,661
----------- ----------- -----------
Total liabilities and stockholders' equity (deficit)... $ 1,463,059 $ 3,015,543 $ 4,790,454
=========== =========== ===========
</TABLE>
See accompanying notes.
F-3
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------ -------------------------
1998 1999 1999 2000
----------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Installation revenues...................... $ 5,147,233 $4,990,191 $1,985,579 $3,918,262
Extended services contract revenue......... 23,837 61,852 26,246 82,720
----------- ---------- ---------- ----------
5,171,070 5,052,043 2,011,825 4,000,982
Operating costs and expenses:
Cost of installation revenues, excluding
items stated separately below............ 2,840,619 3,094,205 1,143,672 2,129,727
Salaries and related....................... 1,871,287 1,822,054 829,428 1,714,608
General and administrative................. 1,018,281 391,803 284,341 550,403
Selling expenses........................... 426,685 255,094 39,760 235,736
Bad debts expense.......................... 129,216 78,827 -- 24,478
Depreciation and amortization.............. 31,697 44,366 17,700 30,000
Other...................................... 59,225 63,645 -- --
----------- ---------- ---------- ----------
6,377,010 5,749,994 2,314,901 4,684,952
----------- ---------- ---------- ----------
Loss from operations......................... (1,205,940) (697,951) (303,076) (683,970)
Other income (expense):
Interest expense, net...................... (63,927) (107,763) (41,568) (8,218)
Other income, net.......................... 4,689 15,206 -- 13,488
----------- ---------- ---------- ----------
(59,238) (92,557) (41,568) 5,270
----------- ---------- ---------- ----------
Net loss..................................... $(1,265,178) $ (790,508) $ (344,644) $ (678,700)
=========== ========== ========== ==========
Net loss per share:
Basic and diluted.......................... $ (0.21) $ (0.13) $ (0.06) $ (0.10)
=========== ========== ========== ==========
Shares used in computing basic and diluted
net loss per share......................... 6,007,450 6,158,001 6,092,586 6,899,138
=========== ========== ========== ==========
Unaudited pro forma basic and diluted net
loss per share (Note 11) $ (0.13) $ (0.10)
========== ==========
Shares used in computing unaudited pro forma
basic and diluted net loss per share....... 6,158,001 6,899,138
========== ==========
</TABLE>
See accompanying notes.
F-4
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1998 AND 1999
AND
SIX MONTHS END JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
-------------------- PAID-IN ACCUMULATED NOTE
SHARES AMOUNT CAPITAL DEFICIT RECEIVABLE TOTAL
--------- -------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1998...... 5,858,548 $5,859 $ 634,247 $ (361,970) $ -- $ 278,136
Sale of common stock.......... 90,693 90 132,841 -- -- 132,931
Issuance of common stock to
employees................... 143,015 143 359,421 -- -- 359,564
Net loss...................... -- -- -- (1,265,178) -- (1,265,178)
--------- ------ ---------- ----------- --------- -----------
Balance at December 31, 1998.... 6,092,256 6,092 1,126,509 (1,627,148) -- (494,547)
Sale of common stock for cash
(96,000 shares to be
issued)..................... 364,621 365 966,438 -- -- 966,803
Issuance of common stock for
services.................... 7,890 8 19,882 -- -- 19,890
Treasury shares purchased..... (50,000) (50) (49,950) -- -- (50,000)
Net loss...................... -- -- -- (790,508) -- (790,508)
--------- ------ ---------- ----------- --------- -----------
Balance at December 31, 1999.... 6,414,767 6,415 2,062,879 (2,417,656) -- (348,362)
Sale of common stock and
warrants for cash........... 641,239 641 2,475,709 -- -- 2,476,350
Issuance of stock for note and
consulting services......... 25,000 25 99,975 -- (95,000) 5,000
Treasury shares purchased..... (149,007) (149) (223,361) -- -- (223,510)
Net loss...................... -- -- -- (678,700) -- (678,700)
--------- ------ ---------- ----------- --------- -----------
Balance at June 30, 2000
(unaudited)................. 6,931,999 $6,932 $4,415,202 $(3,096,356) $ (95,000) $ 1,230,778
========= ====== ========== =========== ========= ===========
</TABLE>
See accompanying notes.
F-5
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
----------------------- --------------------------
1998 1999 1999 2000
----------- --------- ----------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss...................................... $(1,265,178) $(790,508) $(344,644) $ (678,700)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization............. 39,622 55,457 17,700 30,000
Bad debts................................. 129,216 78,827 -- 24,478
Provision for inventory obsolescence...... 11,000 44,576 -- 11,000
Gain on sale of assets.................... -- (3,350) (2,900) --
Stock-based compensation.................. 359,564 -- -- --
Common stock issued for services.......... -- 19,890 -- 5,000
Changes in operating assets and
liabilities:
Restricted cash......................... (12,869) 37,198 72,869 35,671
Accounts receivable..................... (100,187) 196,966 228,293 (487,148)
Inventories............................. (357,820) 237,992 300,440 (534,184)
Prepaid expenses and other assets....... 56,897 1,828 3,847 (154,140)
Other assets............................ (23,626) (12,082) (4,149) (3,229)
Accounts payable and accrued expenses... 1,021,057 (708,224) (465,136) 331,870
Deferred revenue........................ 90,371 56,250 45,872 (22,865)
----------- --------- --------- -----------
Net cash used in operating activities......... (51,953) (785,180) (147,808) (1,442,247)
INVESTING ACTIVITIES
Proceeds from sale of equipment............... -- 3,350 2,900 --
Purchases of equipment........................ (94,704) (74,547) (63,622) (478,470)
----------- --------- --------- -----------
Net cash used in investing activities......... (94,704) (71,197) (60,722) (478,470)
FINANCING ACTIVITIES
Net proceeds (payments) from factor........... (13,185) (115,584) 223,948 (111,731)
Proceeds from sale of common stock............ 132,931 966,803 -- 2,476,350
Proceeds (payments) from loans from
stockholder................................. 24,110 -- -- (45,639)
Borrowings of long-term debt.................. 16,087 223,300 223,300 40,000
Payments of long-term debt and capital
leases...................................... (15,998) (59,578) (11,421) (218,291)
Purchase of treasury stock.................... -- (50,000) -- (223,510)
----------- --------- --------- -----------
Net cash provided by financing activities..... 143,945 964,941 435,827 1,917,179
----------- --------- --------- -----------
Net increase (decrease) in cash............... (2,712) 108,564 227,297 (3,538)
Cash at beginning of year..................... 2,712 -- -- 108,564
----------- --------- --------- -----------
Cash at end of year........................... $ -- $ 108,564 $ 227,297 $ 105,026
=========== ========= ========= ===========
</TABLE>
See accompanying notes.
F-6
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
STATEMENTS OF CASH FLOWS (CONTINUED)
SUPPLEMENTAL CASH FLOWS DISCLOSURES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
----------------------- -------------------------
1998 1999 1999 2000
---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid for interest......................... $ 18,294 $28,667 $41,568 $ 8,218
SUPPLEMENTAL DISCLOSURES OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Increase in capital lease obligations.......... 59,296 8,501 -- --
Issuance of common stock to employees.......... 359,564 -- -- --
Common stock issued for services............... -- 19,890 -- 5,000
Common stock issued for note................... -- -- -- 95,000
</TABLE>
See accompanying notes.
F-7
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. BUSINESS
SPEEDCOM Wireless International Corporation (the Company) was incorporated
in Florida on March 16, 1994. The Company configures, assembles and installs
custom wireless networking equipment for business customers internationally.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INTERIM FINANCIAL DATA
The financial statements as of June 30, 2000 and for the six months ended
June 30, 1999 and 2000 and the related amounts in the notes to financial
statements are unaudited, but in the opinion of management reflect all normal
and recurring adjustments necessary for a fair presentation of the results of
those periods. Operating results for the six months ended June 30, 2000 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2000.
REVENUE RECOGNITION
The Company contracts with customers under short-term (generally two to
three weeks in duration) arrangements to configure, assemble and install
wireless communications products. The Company recognizes revenue on its wireless
communications products upon completion of the installation and customer
acceptance of title to the equipment. The Company also sells extended
maintenance agreements, for periods of one to three years. Revenue on extended
maintenance agreements is deferred and recognized on a straight-line basis over
the term of the agreement.
RISKS AND UNCERTAINTIES
The Company generates a significant amount of its revenues from customers in
foreign geographic areas (See Note 10. Segments and Geographic Information).
Generally, the conduct of business in foreign geographic areas possesses greater
risks than are present with domestic operations. Risks faced by the Company in
conducting business in foreign geographic areas include delays or refusals in
the payment of accounts receivable, refusal to return equipment from unaccepted
installations, and disruptions in installations. Management believes that it is
able to estimate and manage these risks. However, to date, the Company has not
experienced significant losses related to conducting business in foreign
geographic areas.
FACTORED ACCOUNTS RECEIVABLE
The Company accounts for its accounts receivable factoring arrangement as a
secured borrowing pursuant to Statement of Financial Accounting Standards (SFAS)
No. 125, ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND
EXTINGUISHMENT OF LIABILITIES (SFAS 125). As a result, the balances of accounts
receivable sold to the lending institution as of December 31, 1999 are shown as
assets of the Company, and the amounts advanced to the Company are shown as
being payable. The related service charge is reflected in interest expense in
the period that the accounts receivable are transferred. Cash balances retained
by the lending institution are reflected in the accompanying financial
statements as restricted. As of June 30, 2000, there were no borrowings
outstanding under this continuing arrangement.
F-8
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES
Inventories consist of telecommunications equipment, related component parts
used in the assembly of wireless network products and finished assemblies ready
for installation. Inventories are recorded at the lower of cost (using the
first-in, first-out method) or net realizable value. Labor and overhead costs
related to assemblies and installations in process are included in finished
assemblies.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and amortization are
provided using the straight-line method over the estimated useful lives of
depreciable assets ranging from three to five years. Leasehold improvements are
amortized over the shorter of the useful life of the asset or the term of the
related lease agreement.
FINANCIAL INSTRUMENTS
The Company's significant financial instruments included accounts
receivable, accounts payable and notes payable. The Company believes that the
carrying values of financial instruments in the accompanying balance sheet
approximate their respective fair values.
INCOME TAXES
The Company's sole taxing jurisdictions for income tax purposes are within
the United States. Currently, the Company follows the liability method of
accounting for income taxes in accordance with SFAS 109, ACCOUNTING FOR INCOME
TAXES. Under SFAS 109, deferred income taxes are recorded based upon differences
between the financial reporting and tax bases of assets and liabilities, and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to affect taxable income.
COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board (FASB) issued
SFAS 130, REPORTING COMPREHENSIVE INCOME. This standard requires that total
comprehensive income (loss) be disclosed with equal prominence as net income.
Comprehensive income is defined as changes in stockholders' equity exclusive of
transactions with owners, such as capital contributions and dividends. The
Company adopted this Standard in 1998 and implemented the standard for all years
presented. The Company's comprehensive losses were equal to net losses for all
periods presented.
STOCK-BASED COMPENSATION
The Company accounts for employee stock-based compensation using the
intrinsic method in accordance with Accounting Principles Board No. 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, (APB 25) and related Interpretations.
Accordingly, in cases where exercise prices equal or exceed fair market value,
the Company recognized no compensation expense for stock option grants. In cases
where exercise prices are less than fair value, compensation is recognized over
the period of performance or the vesting period. For purposes of stock-based
compensation, the fair value of awards has been determined relative to the sales
prices received in private placements of common stock by the Company. Pro forma
financial information, assuming that the Company had adopted the measurement
F-9
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
standard of SFAS 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, for all
stock-based compensation, is included in Note 7.
ADVERTISING COSTS
The Company's policy is to expense advertising costs as incurred. During the
years ended December 31, 1998 and 1999, the Company expensed $115,684 and
$16,637, respectively, in advertising expenses. Such amounts are included in
selling expenses.
LOSS PER SHARE
The Company has applied the provisions of SFAS 128, EARNINGS PER SHARE,
which establishes standards for computing and presenting earnings per share.
Basic earnings per share is computed by dividing net loss by the weighted
average number of shares outstanding for the period. The calculation of diluted
earnings per share includes the effect of dilutive common stock equivalents. No
dilutive common stock equivalents existed in any year presented.
RECENTLY ISSUED ACCOUNTING STANDARDS
On December 3, 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin (SAB) No. 101, "REVENUE RECOGNITION IN FINANCIAL
STATEMENTS", which provides guidance on the recognition, presentation and
disclosure of revenue in financial statements. The SAB will be effective during
the fourth quarter 2000. The Company has evaluated the impact of this SAB as it
relates to current operations and does not believe that adoption of SAB 101 will
have a material impact on revenues.
In March 2000, the FASB issued FASB Interpretation No. 44 "ACCOUNTING FOR
CERTAIN TRANSACTIONS INVOLVING STOCK COMPENSATION, an Interpretation of APB 25,
which requires variable accounting for certain stock option transactions. This
interpretation is effective July 1, 2000 but certain guidelines cover specific
events that occurred since either December 15, 1998 or January 12, 2000. The
Company has evaluated the impact of this interpretation on its financial
reporting of results of operations and does not believe that adoption of the
interpretation will have a material impact.
In June 2000, the FASB issued SFAS 138, "ACCOUNTING FOR CERTAIN DERIVATIVE
INSTRUMENTS AND CERTAIN HEDGING ACTIVITIES", an amendment of Statement 133,
which is effective for fiscal years beginning after June 15, 2000. The Company
does not anticipate that the adoption of this Statement will have a significant
effect on its results of operations of financial position.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amount reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
F-10
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. INVENTORIES
A summary of inventories at December 31, 1999 and June 30, 2000 is as
follows:
<TABLE>
<CAPTION>
1999 2000
-------- -----------
(UNAUDITED)
<S> <C> <C>
Component parts....................................... $458,385 $ 506,390
Completed assemblies.................................. 94,619 569,798
-------- ----------
$553,004 $1,076,188
======== ==========
</TABLE>
4. PROPERTY AND EQUIPMENT
A summary of property and equipment at December 31, 1999 is as follows:
<TABLE>
<CAPTION>
1999
--------
<S> <C>
Computer and office equipment............................... $215,069
Automobiles................................................. 43,637
Leasehold improvements...................................... 18,706
Furniture and fixtures...................................... 16,775
Construction in progress.................................... 29,526
--------
323,713
Less accumulated depreciation............................... (124,514)
--------
$199,199
========
</TABLE>
Property and equipment included computer and office equipment of $67,797
acquired under capital leases. Amortization and depreciation expense amounted to
$39,622 and $55,457 for the years ended December 31, 1998 and 1999,
respectively.
5. LOANS FROM STOCKHOLDER
A summary of unsecured stockholder loans at December 31, 1999 is as follows:
<TABLE>
<S> <C>
19% note payable originally due February 28, 1998........... $ 5,139
19% note payable originally due December 19, 1998........... 16,000
19% note payable originally due January 21, 1999............ 15,000
19% note payable originally due November 13, 1999........... 7,500
19% note payable originally due November 25, 1999........... 2,000
-------
$45,639
=======
</TABLE>
All notes were paid in 2000. Interest expense amounted to $8,730 and $10,989
for the years ended December 31, 1998 and 1999, respectively.
F-11
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. NOTES AND CAPITAL LEASES PAYABLE
A summary of notes and capital leases payable at December 31, 1999 is as
follows:
<TABLE>
<S> <C>
12% promissory note, originally due September 1999, in
default................................................... $175,000
Advances under accounts receivable factor arrangement....... 111,731
10.5% bank note payable in monthly installments through June
2003; secured by equipment and inventories................ 61,032
Capital lease obligations................................... 51,351
8%-10.6% equipment loans payable in monthly installments
through January 2003; secured by equipment................ 28,821
--------
427,935
Less current portion........................................ (328,781)
--------
$ 99,154
========
</TABLE>
The Company entered into a $200,000 promissory note with a vendor during
1999. Interest was required to be paid monthly and all outstanding principal and
accrued interest was payable in full on September 30, 1999. At December 31,
1999, the principal balance outstanding on the note was $175,000. Although in
default at the date of the financial statements, the note was paid in full
subsequent to year-end.
The Company has an accounts receivable factoring arrangement with a lending
institution that provides for the sale of certain accounts receivable balances
aggregating no more than $400,000. The lending institution charges a discount of
2.5% of the face value of the receivables purchased. The arrangement provides
for full recourse to the lending institution. Advances by the lending
institution amounted to $111,731 as of December 31, 1999. Subsequent to
December 31, 1999, the advances were repaid and no additional advances have been
taken on the continuing arrangement.
Aggregate maturities of notes and capital leases payable as of December 31,
1999 are as follows:
<TABLE>
<CAPTION>
NOTES LEASES
-------- --------
<S> <C> <C>
2000.................................................... $311,533 $ 26,149
2001.................................................... 27,396 24,041
2002.................................................... 25,125 12,455
2003.................................................... 12,530 6,212
2004 and thereafter..................................... -- --
-------- --------
Total maturities and payments........................... $376,584 $ 68,857
========
Less amount representing interest....................... (17,506)
--------
51,351
Less current portion.................................... (17,248)
--------
$ 34,103
========
</TABLE>
During January 2000, the Company issued a convertible subordinated note
payable for $40,000, 10% note due for payment in January 2003. The note is
convertible into 10,000 shares of common stock at any time during its term. The
note is subordinated to all other debt instruments.
F-12
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. INCOME TAXES
The deferred tax consequences of temporary differences in reporting items
for financial statement and income tax purposes are recognized, if appropriate.
Realization of the future tax benefits related to the deferred tax assets is
dependent on many factors, including the Company's ability to generate taxable
income within the net operating loss (NOL) carryforward period. Management has
considered these factors in reaching its conclusion as to the valuation
allowance for financial reporting purposes. Significant components of the
Company's deferred tax assets and liabilities as of December 31 are as follows:
<TABLE>
<CAPTION>
1999
---------
<S> <C>
Deferred income tax assets:
Allowances for doubtful accounts.......................... $ 53,951
Inventory obsolescence reserve............................ 20,913
Vacation and sick pay..................................... 20,865
Deferred revenue.......................................... 55,174
Net loss carryforward..................................... 768,447
---------
919,350
Valuation allowance......................................... (919,350)
---------
Net deferred income tax asset............................... $ --
=========
</TABLE>
The following table reconciles the assumed statutory tax rate with the
effective rate of the Company for the years ended December 31, 1998 and 1999:
<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Tax benefit at statutory rate.............................. (34.00)% (34.00)%
Reconciling items:
State income taxes....................................... (3.61)% (3.61)%
Non-deductible items..................................... 0.14 % 0.17 %
Change in valuation allowance............................ 37.49 % 37.44 %
------ ------
0.00 % 0.00 %
====== ======
</TABLE>
At December 31, 1999, the Company has NOL carryforwards for both federal and
state income tax purposes of approximately $2,000,000 that expire through the
year 2019.
8. STOCKHOLDERS' EQUITY
SALES AND ISSUANCE OF SECURITIES
During January 1998, the Company sold 60,000 shares of its $.001 par value
common stock for a per share price of $2. During the period from April 1998 to
June 1998, the Company sold 30,693 shares of its $.001 par value common stock
for a per share price of $3.00. The net proceeds on sales of stock during 1998
were $132,931.
During the period from January 1999 to September 1999, the Company sold
208,121 shares of its $.001 par value common stock at a per share price of
$2.25. During the period from October to December 1999, the Company sold 252,500
shares of its $.001 par value common stock at a per share
F-13
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. STOCKHOLDERS' EQUITY (CONTINUED)
price of $2.50. Of the total shares sold, 96,000 shares were unissued at
December 31, 1999. These shares were issued subsequent to December 31, 1999. The
net proceeds on sales of stock during 1999 were $966,803.
In addition to sales of stock for cash, during 1999 the Company issued 330
shares of its common stock to non-employees for services valued at $990 (using a
$3 per share value) and 7,560 shares of its common to non-employees for services
valued at $18,900 (using a $2.50 per share value). The value ascribed to the
common shares corresponds with the price per common share of the aforementioned
sales of common stock.
During January 2000 the Company sold 338,500 shares of common stock for
$4.00 per share. During February 2000, the Company sold 200,000 shares of common
stock for $3.25 per share. During May 2000, the Company sold 572 shares of
common stock for $3.50 per share. During June 2000, the Company sold 60,500
shares of common stock with detachable warrants to purchase up to 125,000 shares
of common stock at exercise prices ranging from $13.00 to $18.00 per share, for
$5.00 per unit. In addition, during June 2000 the Company sold 41,667 shares of
common stock with detachable warrants to purchase up to 100,000 shares of common
stock at $7.50 per share, for $6.00 per unit. Warrants included in the $5.00
unit have a term of two years; warrants included in the $6.00 unit have a term
of 120 days. Net proceeds on the sales of stock and warrants during the first
six months of 2000 amounted to $2,476,350.
In addition to sales of stock and warrants for cash, during May 2000 the
Company issued 25,000 shares of common stock to a board member in exchange for a
$95,000, 6% promissory note, due August 2000 and two months of consulting
services. A value of $100,000 was ascribed to the common stock issued, based
upon the then most recent sale of common stock at a price of $4.00 per share.
The value was allocated to the face value of the note receivable in the amount
of $95,000 (contra-equity) and deferred consulting services (expense) in the
amount of $5,000.
EMPLOYEE STOCK-BASED COMPENSATION
During the year ended December 31, 1998, the Company issued 143,015 shares
of its $.001 par value common stock to certain employees of the Company for
employment services. These shares had no restrictions and vested immediately.
The Company recognized compensation expense of $359,564 for the value of the
shares issued. The value ascribed to the common shares corresponded with the
price per share from sales of common stock closely preceding the issuance.
At December 31, 1999, the Company had 2,000,000 shares of common stock
reserved for issuance under employee incentive stock bonus, purchase or option
plans.
F-14
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. STOCKHOLDERS' EQUITY (CONTINUED)
Employee stock option activity was as follows at December 31:
<TABLE>
<CAPTION>
1999 1998
---------------------------- ---------------------------
WEIGHTED WEIGHTED
AVERAGE EXERCISE AVERAGE EXERCISE
OPTIONS PRICE OPTIONS PRICE
--------- ---------------- -------- ----------------
<S> <C> <C> <C> <C>
Outstanding--
Beginning of year......................... 952,950 $3.00 -- --
Granted at market price................... 575,474 3.00 952,950 $3.00
Expired or canceled....................... 26,550 3.00 -- --
--------- ----- ------- -----
Outstanding--end of year.................... 1,501,874 3.00 952,950 3.00
========= ===== ======= =====
Exercisable as of December 31............... 300,413 $3.00 91,750 $3.00
========= ===== ======= =====
</TABLE>
The weighted average fair value of the options granted during 1998 and 1999
is $.59 and $.21, respectively. The weighted average remaining contractual life
of the options as of December 31, 1998 and 1999 is 3.2 and 2.6 years,
respectively.
Pro forma information regarding the Company's stock option grants is
presented below. The fair market value for these options was estimated at the
date of grant using the "Minimum Value" method. The Minimum Value method
calculates the excess of the fair value of the stock at the date of grant over
the present value of both the exercise price and the expected dividend payments,
each discounted at the risk-free rate over the expected exercise life of the
option. In order to calculate the fair value, the following assumptions were
made: the expected dividend payment rate used was zero, the expected option life
used was five years in 1998 and 1999 and the risk free interest rate was assumed
to be 4.56% in 1998 and 5.23% in 1999. Because the options have a four-year
vesting period, the pro forma effect shown below is not reflective of the
reported net earnings or losses in future years.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows at December 31:
<TABLE>
<CAPTION>
1998 1999
----------- ---------
<S> <C> <C>
Reported net loss.................................... $(1,265,178) $(790,508)
Estimated fair value of options...................... (101,727) (138,451)
Pro forma net loss................................... $(1,366,905) $(928,959)
=========== =========
Reported net loss per share: Basic and Diluted....... $ (.21) $ (.13)
Effect for the fair value of options................. (.02) (.02)
----------- ---------
Pro forma net loss................................... $ (.23) $ (.15)
=========== =========
</TABLE>
During the period from January 1, 2000 to June 30, 2000, the Company issued
options to employees to purchase 18,000 shares of common stock at exercise
prices based upon the selling prices of common stock for cash.
F-15
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. STOCKHOLDERS' EQUITY (CONTINUED)
TREASURY STOCK PURCHASES
During the years ended December 31, 1998 and 1999, the Company repurchased
50,000 and 149,007 shares of its common stock, respectively, for cash. Treasury
stock is recorded at cost as a component of stockholders' deficit.
9. LEASES
The Company leases computer and office equipment under operating leases.
Rent expense under operating leases, amounted to $55,942 and $80,002 for the
years ended December 31, 1998 and 1999, respectively. Future noncancellable
lease payments under operating leases for each year ended December 31 are as
follows: 2000-$112,093; 2001-$3,659; 2002-$3,659; 2003-$3,659; and, 2004-$1,525.
10. SEGMENT AND GEOGRAPHIC INFORMATION
The Company operated during all periods in a single operating segment when
applying the management approach defined in Statements of Financial Accounting
Standards No. 131, DISCLOSURES ABOUT SEGMENTS.
The Company's business and principal operations are domiciled in North
America. The Company generated revenue in the following geographic areas: North
America, Latin America, Asia, Africa, Middle East, Europe and Australia.
Revenues from customers in foreign geographic areas represented 36%, 23%, 23%
and 26% of total revenues for the years ended December 31, 1998 and 1999 and the
six months ended June 30, 1999 and 2000, respectively. During 1998, 26% of the
Company's revenues were derived from customers located in Latin America. No
other foreign geographic area contributed 10% or greater of total revenues for
any period presented. The Company has no significant property in any foreign
geographic area.
11. MERGER (UNAUDITED)
During June 2000, the Company announced its intention to merge with LTI
Holdings, Inc. (LTI), a publicly traded shell company whose operations ceased in
June 1999. Pursuant to the terms of the preliminary merger agreement, LTI will
effect a 1 for 4.26 reverse stock split prior to the merger. The reverse stock
split will reduce the number of its outstanding common shares to approximately
650,000 and its outstanding options and warrants to approximately 2,068,000
(average post reverse split exercise price of $33.00 per share). The merger, as
currently contemplated, will be effected with the issuance by LTI of its common
stock, on a one-for-one basis, for the outstanding common shares of the Company.
If ultimately consummated, the shareholders of the Company will own
approximately 92% of the outstanding common stock of the combined company.
F-16
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
11. MERGER (UNAUDITED) (CONTINUED)
Since LTI is a non-operating shell company, the merger will be treated as a
recapitalization of the Company for accounting purposes. As a result, the
Company will record the transaction as the issuance of common stock for the net
monetary assets of LTI (principally cash and investments), accompanied by a
recapitalization of equity. The unaudited pro forma balance sheet as of
June 30, 2000 and the unaudited loss per share amounts for the year ended
December 31, 1999 and the six months ended June 30, 2000 reflect the effects of
the recapitalization as if it had occurred on those dates or the beginning of
those periods. For convenience, the pro forma results include the net monetary
assets of LTI as of its most recent fiscal year end, March 31, 2000.
12. SUBSEQUENT EVENT (UNAUDITED)
During July 2000, the Company sold common stock ranging from $5.00 per share
to $8.00 per share. Net proceeds from these sales amounted to approximately
$591,000.
F-17
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
LTI Holdings, Inc.
Atlanta, Georgia
We did not audit the accompanying financial statements as of June 30, 2000
and for the three month periods ended June 30, 2000 and 1999, and accordingly,
we do not express an opinion on them.
We have audited the accompanying consolidated balance sheets of LTI
Holdings, Inc. and Subsidiary as of March 31, 2000, and the related consolidated
statements of operations, changes in stockholders' equity and cash flows for the
years ended March 31, 2000 and 1999. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of LTI
Holdings, Inc. and Subsidiary as of March 31, 2000, and the consolidated results
of their operations, and their consolidated cash flows for the years ended
March 31, 2000 and 1999, in conformity with generally accepted accounting
principles.
/S/ Grant Thornton, LLP
Atlanta, Georgia
April 15, 2000
F-18
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
2000 2000
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS (NOTE B)
CURRENT ASSETS
Cash...................................................... $ 70,903 $ 1,673,335
Investments (Note A-2).................................... 1,695,778 --
Prepaid expenses.......................................... 8,230 --
----------- -----------
Other current assets...................................... -- 10,426
----------- -----------
Total current assets.................................. 1,774,911 1,683,761
----------- -----------
$ 1,774,911 $ 1,683,761
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable--trade................................... $ 328 $ 13,298
Accrued expenses.......................................... 177,700 149,897
----------- -----------
Total current liabilities............................. 178,028 163,195
COMMITMENTS AND OTHER MATTERS (Note G)...................... -- --
STOCKHOLDERS' EQUITY (Note C)
Series A convertible preferred stock, par value $.01,
5,000,000 shares authorized, none issued.................. -- --
Common stock, par value $.01, 20,000,000 shares authorized,
3,185,100 shares issued with 2,775,100 and 3,185,100
shares outstanding for the years ended 1999 and 1998,
respectively.............................................. 27,751 27,751
Additional paid-in capital.................................. 11,713,354 11,713,354
Accumulated deficit......................................... (10,144,222) (10,220,539)
Accumulated other comprehensive earnings (loss) (Note
A-2)...................................................... -- --
----------- -----------
Total stockholders' equity............................ 1,596,883 1,520,566
----------- -----------
$ 1,774,911 $ 1,683,761
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-19
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months
Years ended March 31, ended June 30,
------------------------ -------------------------
2000 1999 2000 1999
----------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales...................................... $ 553,002 $1,877,703 $ -- $ 553,002
Cost of goods sold............................. 399,341 1,283,642 -- 399,341
----------- ---------- --------- ---------
Gross profit............................... 153,661 594,061 -- 153,661
Selling, general and administrative expenses... 905,290 1,334,862 102,590 471,424
Research and development expense............... 46,142 463,182 -- 46,142
----------- ---------- --------- ---------
Operating loss............................. (797,771) (1,203,983) (102,590) (363,905)
Interest expense............................... (1,475) (5,136) -- (719)
Investment income.............................. 94,444 124,421 26,273 20,462
Cancellation of debt........................... -- 117,522 -- --
Loss on the sale of assets..................... (335,489) -- -- (335,489)
----------- ---------- --------- ---------
Net loss................................... $(1,040,291) $ (967,176) $ (76,317) $(679,651)
=========== ========== ========= =========
Net loss per common share
Basic........................................ $ (.37) $ (0.35) $ (0.03) $ (0.24)
=========== ========== ========= =========
Weighted average number of common shares
outstanding.................................. 2,775,100 2,775,100 2,775,100 2,775,110
=========== ========== ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-20
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED MARCH 31, 2000 AND 1999, AND
THE THREE MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK ACCUMULATED
PAR VALUE $.01 ADDITIONAL OTHER
--------------------- PAID-IN ACCUMULATED COMPREHENSIVE
SHARES AMOUNT CAPITAL DEFICIT EARNINGS (LOSS) TOTAL
---------- -------- ----------- ------------ --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1998...... 3,185,100 $31,851 $11,709,254 $ (8,136,755) $ -- $3,604,350
Net loss for the year ended
March 31, 1999............. -- -- -- (967,176) -- (967,176)
Other comprehensive loss
Unrealized net losses on
marketable securities.... -- -- -- -- (25,377) (25,377)
----------
Comprehensive loss........... (992,553)
---------- ------- ----------- ------------ ------- ----------
Balance, March 31, 1999...... 3,185,100 31,851 11,709,254 (9,103,931) (25,377) 2,611,797
Net loss for the year ended
March 31, 2000............. -- -- -- (1,040,291) -- (1,040,291)
Cancellation of forfeitable
shares returned to Treasury
(Note C-3)................. (410,000) (4,100) 4,100 -- -- --
Other comprehensive earnings
Unrealized gain on
marketable securities.... -- -- -- -- 25,377 25,377
----------
Comprehensive loss........... (1,014,914)
---------- ------- ----------- ------------ ------- ----------
Balance, March 31, 2000...... 2,775,100 27,751 11,713,354 (10,144,222) -- 1,596,883
Net loss for the three months
ended June 30, 2000........ -- -- -- (76,317) -- (76,317)
----------
Comprehensive loss........... (76,317)
---------- ------- ----------- ------------ ------- ----------
Balance, June 30, 2000
(unaudited)................ 2,775,100 $27,751 $11,713,354 $(10,220,539) $ -- $1,520,566
========== ======= =========== ============ ======= ==========
</TABLE>
The accompanying notes are an integral part of this statement.
F-21
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31, THREE MONTHS ENDED JUNE 30,
------------------------ ---------------------------
2000 1999 2000 1999
----------- ---------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss................................. $(1,040,291) $ (967,176) $ (76,317) $ (679,651)
Adjustments to reconcile net loss to net
cash used in operating activities:
Loss on disposal of assets............. 335,489 -- -- 335,489
Provision for doubtful accounts........ -- 8,210 -- --
Depreciation and amortization.......... 18,305 93,006 -- 18,305
Changes in operating assets and
liabilities:
Decrease (increase) in accounts
receivable......................... 68,998 (137,021) -- 68,998
Decrease (increase) in inventories... 38,907 (2,508) -- 38,907
Decrease (increase) in other assets
and prepaid expenses............... 51,741 92,069 (2,195) 11,882
Increase (decrease) in accounts
payable and accrued expenses....... 27,800 (160,531) (14,834) 27,800
----------- ---------- ----------- -----------
Net cash used in operating
activities....................... (499,051) (1,073,951) (93,346) (178,270)
----------- ---------- ----------- -----------
Cash flows from investing activities:
Acquisitions of fixed assets............. -- (173,606) -- --
(Purchase) sale of investments........... (102) 763,336 1,695,778 630,199
Proceeds from the sale of assets......... 399,625 -- -- 399,625
----------- ---------- ----------- -----------
Net cash provided by investing
activities....................... 399,523 589,730 1,695,778 1,029,824
----------- ---------- ----------- -----------
Cash flows from financing activities:
Repayment of notes payable............... (39,840) (44,441) -- (11,675)
----------- ---------- ----------- -----------
Net cash used in financing
activities....................... (39,840) (44,441) -- (11,675)
----------- ---------- ----------- -----------
Net increase (decrease) in cash............ (139,368) (528,662) 1,602,432 839,879
Cash at beginning of period................ 210,271 738,933 70,903 210,271
----------- ---------- ----------- -----------
Cash at end of period...................... $ 70,903 $ 210,271 $ 1,673,335 $ 1,050,150
=========== ========== =========== ===========
Supplemental Disclosures of
Cash Flow Information
Cash paid during the period for
interest............................. $ 1,475 $ 5,136 $ -- $ 1,475
</TABLE>
The accompanying notes are an integral part of these statements.
F-22
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
LTI Holdings, Inc. (formerly Laminating Technologies, Inc.) and subsidiary
(the "Company") was a development stage company formed to research, develop,
design and market packaging and specialty display products using the Company's
proprietary processing method. The Company was incorporated on March 29, 1993
and in April 1993 acquired substantially all of the assets and assumed
substantially all of the liabilities of Cool-R Enterprises, Inc. ("Cool-R"),
obtaining the rights to developed technology.
On December 17, 1998 the Company's stock and warrants were delisted. This
event occurred as a result of the Company's inability to maintain a certain bid
price and market capitalization requirements. The Company's stock is currently
traded on the NASD Supplemental Market under the symbol "LAMT".
The Company sold substantially all of its operating assets and changed its
name to LTI Holdings, Inc. as of June 30, 1999. The Company uses its remaining
cash to pay on-going general and administrative expenses and to seek suitable
business combination candidates. (See Note B.)
1. PRINCIPLES OF CONSOLIDATION
The accompanying financial statements have been prepared on a consolidated
basis. They include the accounts of the Company and its wholly owned subsidiary,
Revenue Process Development, Inc. All intercompany transactions and balances
have been eliminated in consolidation.
2. INVESTMENTS
Investments consist primarily of commercial paper. These investments are
accounted for as available for sale securities and are stated at fair value,
which approximates cost. Unrealized gains or losses on these investments are
included in accumulated other comprehensive earnings (loss).
3. INVENTORY
Inventory is recorded at lower of cost or market, using the first-in,
first-out (FIFO) cost flow method.
4. PROPERTY AND EQUIPMENT
Machinery, furniture and equipment, including property under capital lease
arrangements, are carried at cost. Depreciation is provided using the double
declining balance method over the estimated useful lives of the assets as
follows:
<TABLE>
<S> <C>
Machinery and equipment..................................... 3-10 years
Furniture and fixtures...................................... 5 years
</TABLE>
5. ADVERTISING EXPENSE
All advertising costs are expensed in the period incurred. Advertising
expense for the years ended March 31, 2000 and March 31, 1999 was approximately
$13,000 and $136,000, respectively.
F-23
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
6. STOCK BASED COMPENSATION
The Company's stock option plans are accounted for under the intrinsic value
method in which compensation expense is recognized for the amount, if any, that
the fair value of the underlying common stock exceeds the exercise price at the
date of grant.
7. INCOME TAXES
The Company accounts for income taxes using the asset and liability method.
Under this method, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates applied to taxable income. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date. A valuation allowance is provided for deferred
tax assets when it is more likely than not that the asset will not be realized.
8. LOSS PER SHARE
Basic net loss per common share is based upon the weighted average number of
common shares outstanding during the period. Diluted net loss per common share
is based upon the weighted average number of common shares outstanding less
contingently returnable shares plus dilutive potential common shares, including
options and warrants outstanding during the period.
9. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments recorded on the balance sheet include
cash, investments, accounts receivable, accounts payable and debt. Because of
their short maturities, the carrying amount of cash, investments, accounts
receivable and accounts payable approximates fair market value. The fair value
of the Company's long-term debt approximates carrying value based on quoted
market prices of similar issues or on the current rates offered to the Company
for debt of similar terms.
NOTE B--SALE OF OPERATING ASSETS AND CURRENT OPERATIONS
Since its inception, the Company has had limited sales and incurred
substantial operating losses from its principal operations. As of June 30, 1999,
the Company sold substantially all of its operating assets and entered into a
covenant not to compete. This covenant states that for a period of five years,
the Company shall refrain from, directly or indirectly, manufacturing, selling
or marketing and
F-24
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
NOTE B--SALE OF OPERATING ASSETS AND CURRENT OPERATIONS (CONTINUED)
distributing within the United States any products or services competitive with
the purchaser. The sale of the assets is summarized as follows:
<TABLE>
<S> <C>
Net book value of assets sold............................... $ 735,114
Proceeds received........................................... 399,625
---------
Loss from the sale of assets................................ $(335,489)
=========
</TABLE>
The Company is in the process of exploring opportunities to effect an
acquisition of the Company, by merger, exchange or issuance of securities, or
similar business combination.
NOTE C--STOCKHOLDERS' EQUITY
1. COMMON STOCK
Upon incorporation, the Company authorized 10,000,000 shares of its $.01 par
value common stock. The shares of common stock have unlimited voting rights. In
March 1996, the Company increased the number of authorized common shares to
20,000,000.
2. CONVERTIBLE PREFERRED STOCK
In September 1993, the Company authorized and issued 250,000 shares of its
$.01 par value Series A convertible preferred stock (the "Preferred") for
$500,000. In August 1994, the Company increased the number of authorized shares
of Preferred to 2,500,000. In March 1996, the Company increased the number of
authorized shares of the Preferred to 5,000,000.
2. CONVERTIBLE PREFERRED STOCK--CONTINUED
The Preferred has no voting rights. The holders of the Preferred were
entitled to cumulative quarterly dividends of $.05 per share due upon the
redemption of the shares. The liquidation value of each share of Preferred is
equal to $2.00 plus cumulative dividends.
Concurrent with the public offering in October 1996, the entire 250,000
shares of the Preferred then outstanding were converted into 184,486 shares of
common stock.
3. INITIAL PUBLIC OFFERING
In October and November 1996, the Company completed its initial public
offering and issued 1,955,000 units at a price of $5.00 per unit. Each unit
consists of one share of common stock, one Class A warrant and one Class B
warrant. Each Class A warrant entitles the holder to purchase one share of
common stock and one Class B warrant at an exercise price of $6.50. Each
Class B warrant entitles the holder to purchase one share of common stock at an
exercise price of $8.75. The warrants are redeemable by the Company, under
certain conditions, at any time after October 9, 1997. As a result of the
offering, the Company received net proceeds of approximately $7,988,000.
In connection with the offering, the underwriter required, as a condition of
the offering, that an aggregate of 410,000 shares of the Company's common stock
be designated as forfeitable shares ("forfeitable shares") and placed in escrow.
The forfeitable shares are neither assignable nor
F-25
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
NOTE C--STOCKHOLDERS' EQUITY (CONTINUED)
transferable until certain earnings or market criteria have been met. These
conditions were not met by March 31, 2000 and all shares were returned to the
Company as treasury shares for cancellation thereof as a contribution to
capital.
4. STOCK OPTIONS AND WARRANTS
In connection with the Company's initial public offering, the Company
granted to the underwriter an option to purchase 170,000 units at $6.00 per unit
exercisable for a three-year period commencing October 9, 1998.
The Company has outstanding 2,952,400 Class A warrants and 1,955,100
Class B warrants exercisable for a five year period commencing October 9, 1996.
5. SHARES RESERVED FOR ISSUANCE
The Company has 8,789,900 shares of common stock reserved for issuance as
follows:
<TABLE>
<S> <C>
Class A warrants............................................ 2,952,400
Class B warrants............................................ 4,907,500
Underwriter's Unit Purchase Option.......................... 680,000
1996 Stock Option Plan...................................... 250,000
---------
8,789,900
=========
</TABLE>
NOTE D--COMMITMENTS AND OTHER MATTERS
1. EMPLOYMENT CONTRACT
Effective June 1, 1996, the Company entered into a one-year employment
agreement with the Chairman and Chief Executive Officer of the Company. The
agreement provides for an annual base salary of $144,000 per year and is
automatically renewable for successive one-year terms unless either party gives
six months notice to the other. Upon termination, the Officer is entitled to
receive his base salary for a period of one year (subject to a 50% offset during
the second six months for salary received from subsequent employment).
2. OPERATING LEASE
During the year ended March 31, 1999, the Company terminated operating
leases for its office facility and a warehouse facility and began leasing an
office facility on a month to month basis. Total rental expense under operating
lease arrangements was approximately $35,992 and $123,519 for the years ended
March 31, 2000 and March 31, 1999, respectively.
F-26
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
NOTE E--NET LOSS PER COMMON SHARE
The following table sets forth the computation of basic and diluted loss per
share.
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
2000 1999
----------- ---------
<S> <C> <C>
Numerator for basic and diluted net loss per common
share--loss attributable to common stockholders.... $(1,040,291) $(967,176)
=========== =========
</TABLE>
The following table sets forth the computation of basic and diluted loss per
share.
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
2000 1999
--------- ---------
<S> <C> <C>
Denominator for basic net loss per common
share--weighted average shares outstanding........... 2,775,100 2,775,100
Effect of dilutive options and warrants................ -- --
--------- ---------
Denominator for diluted net loss per common share--
adjusted weighted average shares outstanding......... 2,775,100 2,775,100
========= =========
Basic net loss per share............................... $ (.37) $ (.35)
========= =========
</TABLE>
Because the common stock equivalents have an antidilutive effect, no diluted
loss per share is presented.
NOTE F--INCOME TAXES
The Company's temporary differences result in a net deferred income tax
asset which is reduced to zero by a related valuation allowance summarized as
follows:
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
2000 1999
---------- ----------
<S> <C> <C>
Deferred income tax assets
Net operating loss carryforward...................... $3,600,000 $3,220,000
Other................................................ 10,000 20,000
---------- ----------
Gross deferred tax assets............................ 3,610,000 3,240,000
Deferred tax asset valuation allowance............... (3,610,000) (3,240,000)
---------- ----------
Net deferred tax asset............................... $ -- $ --
========== ==========
</TABLE>
The net increase of the deferred tax asset valuation allowance for the year
ended March 31, 2000 was $370,000.
F-27
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
NOTE F--INCOME TAXES (CONTINUED)
At March 31, 2000, the Company had Federal net operating loss carryforwards
of approximately $9,321,000 available to reduce future taxable income which
expire as follows:
<TABLE>
<CAPTION>
NET
FISCAL OPERATING
YEAR LOSS
------ ----------
<S> <C>
2009........................................................ $1,289,000
2010........................................................ 1,439,000
2011........................................................ 1,303,000
2012........................................................ 2,084,000
2013........................................................ 1,281,000
2019........................................................ 921,000
2020........................................................ 1,004,000
----------
$9,321,000
==========
</TABLE>
Under Section 382 of the Internal Revenue Code, the Company is subject to an
annual limitation of approximately $350,000 on utilization of certain of its net
operating loss carryforwards because an ownership change of more than 50% has
occurred.
Reconciliations of statutory Federal tax rates to the effective tax rate for
the years ended March 31, 2000 and March 31, 1999, are as follows:
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
2000 1999
--------- ---------
<S> <C> <C>
Income tax benefit at 34%................................ (34)% (34)%
State taxes, net of Federal income tax effect............ (4) (4)
Tax benefit of losses not recognized..................... 38 38
--- ---
Effective tax rate....................................... --% --%
=== ===
</TABLE>
NOTE G--STOCK OPTION PLAN
In 1996, the Board of Directors adopted and the Company's stockholders
approved the Amended and Restated 1996 Stock Option Plan (the "Plan"). Pursuant
to the Plan, as amended, incentive stock options and nonqualified stock options
may be granted to purchase up to 250,000 shares of the Company's common stock
through March 2006. Incentive stock options are to be granted at a price not
less than the fair market value of the Company's common stock at the date of
grant. If a stockholder owns 10% or more of the Company's outstanding stock, the
exercise price may not be less than 110% of the fair market value of the
Company's common stock at the date of grant and its term must not exceeds five
years. Options may be granted to employees, consultants, and directors of the
Company and must be exercised within a ten-year period after the date granted.
Nonqualified stock options are exercisable at a price to be determined by the
Board of Directors for a period of ten years after the grant date.
Additionally, the provisions of the Plan provide for the automatic grant of
nonqualified stock options to purchase shares of common stock ("Director
Options") to directors of the Company who are
F-28
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
NOTE G--STOCK OPTION PLAN (CONTINUED)
not employees or principal stockholders of the Company ("Eligible Directors").
Each of the four Eligible Directors of the Company were granted Director Options
to purchase 10,000 share of common stock on July 15, 1996 at $5.00 per share.
Future Eligible Directors are to be granted a Director Option to purchase 10,000
shares of common stock on the date of election or appointment. Further,
commencing on the day immediately following the date of the annual meeting of
stockholders for the Company's fiscal year ending March 31, 1997, each Eligible
Director, other than directors who received an Initial Director Option since the
last annual meeting, are to be granted a Director Option to purchase 1,000
shares of common stock ("Automatic Grant") on the day immediately following the
date of each annual meeting of stockholders, as long as such director is a
member of the Board of Directors. The exercise price for each share subject to a
Director Option shall be equal to the fair market value of the common stock on
the date of grant, except for directors who receive incentive options and who
own more than 10% of the voting power, in which case the exercise price shall be
not less than 110% of the fair market value on the date of grant. Director
Options are exercisable in four equal annual installments, commencing six months
from the date of grant. Director Options expire the earlier of 10 years after
the date of grant or 90 days after the termination of the director's service on
the Board of Directors.
Stock options activity is summarized as follows:
<TABLE>
<CAPTION>
MARCH 31, 2000
-------------------
WEIGHTED
AVERAGE
EXERCISE
SHARES PRICE
-------- --------
<S> <C> <C>
Outstanding, beginning of year............................ 247,000 $3.09
Granted................................................... -- --
Exercised................................................. -- --
Forfeited................................................. 195,000 3.00
------- -----
Outstanding end of year................................... 52,000 3.43
======= =====
</TABLE>
The following table summarizes information about stock options outstanding
at March 31, 2000:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------- -------------------------
WEIGHTED
NUMBER AVERAGE WEIGHTED NUMBER WEIGHTED
OUTSTANDING AT REMAINING AVERAGE EXERCISABLE AT AVERAGE
EXERCISE MARCH 31, CONTRACTUAL EXERCISE MARCH 31, EXERCISE
PRICE 2000 LIFE (YEARS) PRICE 2000 PRICE
-------- -------------- ------------ -------- -------------- --------
<S> <C> <C> <C> <C> <C>
$ .75 20,000 7.99 $ .75 20,000 $ .75
4.00 -- 1.21 4.00 -- 4.00
5.00 30,000 5.04 5.00 30,000 5.00
6.75 2,000 7.39 6.75 1,542 6.71
------ ---- ----- ------ -----
52,000 3.93 $3.43 51,542 $3.37
====== ==== ===== ====== =====
</TABLE>
F-29
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
NOTE G--STOCK OPTION PLAN (CONTINUED)
The Company uses the intrinsic value method in accounting for its stock
option plans. In applying this method, no compensation cost has been recognized
in the accompanying financial statements. Had compensation cost for the
Company's stock option plans been determined based on the fair value at the
grant dates for awards under those plans, the Company's net loss and loss per
share would have resulted in the pro forma amounts indicated below:
<TABLE>
<CAPTION>
MARCH 31, 2000 MARCH 31, 1999
-------------- --------------
<S> <C> <C> <C>
Net loss As reported $(1,040,291) $ (967,176)
Pro forma (1,065,621) (1,102,739)
Basic net loss per $ (.37) $ (.35)
common share As reported (.38) (.40)
Pro forma
Diluted net loss per As reported $ (.37) $ (.35)
common share Pro forma (.38) (.40)
</TABLE>
For purposes of the pro forma amounts above, the fair value of each option
grant was estimated on the date of grant using the Black-Scholes options-pricing
model with the following weighted-average assumptions used for grants in the
years ended March 31, 2000 and 1999; expected volatility of 90%, risk-free
interest rates of 6.7%; and expected lives of 4 to 5 years.
NOTE H--SUBSEQUENT EVENT (UNAUDITED)
During June 2000, the Company announced its intention to merge with Speedcom
Wireless International Corporation ("Speedcom"), a privately held company which
manufactures, services and installs wireless broadband equipment for wireless
core systems, also referred to as backbones and secondary, offshoot
applications, also referred to as "last-mile" applications. Pursuant to the
terms of the preliminary merger agreement, the Company will effect a 1 for 4.25
reverse stock split prior to the merger. The reverse stock split will reduce the
number of its outstanding common shares to approximately 650,000 and its
outstanding options and warrants to approximately 2,068,000. The merger, as
currently contemplated, will be effected with the issuance by the Company of
approximately 7,700,000 shares of its common stock, on a one-for one basis, for
the outstanding common shares of Speedcom.
F-30
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware general corporation law ("Section 145") permits
indemnification of directors, officers, agents and controlling persons of a
corporation under certain conditions and subject to certain limitations. Our
certificate of incorporation and bylaws include provisions to require us to
indemnify our directors and officers to the fullest extent permitted by
Section 145, including circumstances in which indemnification is otherwise
discretionary. Section 145 also empowers us to purchase and maintain insurance
that protects our officers, directors, employees and agents against any
liabilities incurred in connection with their service in such positions. We have
also entered into separate indemnification agreements with our directors and
executive officers.
At present, there is no pending litigation or proceeding involving any of
our directors or officers as to which indemnification is being sought nor are we
aware of any threatened litigation that may result in claims for indemnification
by any officer or director.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses payable by us in
connection with the sale and distribution of the securities offered hereby,
other than the 5% D.H. Blair solicitation fee. All of the amounts shown are
estimated.
<TABLE>
<CAPTION>
AMOUNT
--------
<S> <C>
Legal fees and expenses..................................... $ 20,000
Accounting fees and expenses................................ 15,000
Printing expenses........................................... 10,000
--------
Total....................................................... $ 45,000
========
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the registrant has not sold any of its
securities without registration under the Securities Act.
II-1
<PAGE>
ITEM 27. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- ------------------------------------------------------------
<C> <S>
*1.1 Form of Underwriting Agreement
2.1(1) Asset Purchase Agreement between Packaging Atlanta
Corporation and Laminating Technologies Inc. dated April 26,
1999
2.2(2) Agreement and Plan of Merger by and between Speedcom
Wireless International Corporation and LTI Holdings, Inc.,
dated as of August 4, 2000
*3.1 Amended and Restated Certificate of Incorporation of LTI
Holdings, Inc.
*3.2 Amended and Restated Bylaws of LTI Holdings, Inc.
3.3(2) Form of Amended and Restated Certificate of Incorporation of
LTI Holdings, Inc., to be effective upon completion of the
merger with Speedcom Wireless International Corporation.
*4.1 Form of Bridge Note
*4.2 Form of Warrant Agreement
*4.3 Form of Underwriter's Unit Purchase Option
*5.1 Opinion and Consent of Bachner, Tally, Polevoy & Misher LLP
*10.1 Employment Agreement between the registrant and Michael E.
Noonan
*10.2 Registration Rights Agreement between the registrant and
Michael E. Noonan
*10.3 Escrow Agreement between the registrant, American Stock
Transfer & Trust Company and certain security holders of the
registrant
*10.3A Amendment to Escrow Agreement between the registrant,
American Stock Transfer & Trust Company and certain security
holders of the registrant
*10.4 Form of Debt Conversion Agreement between the registrant and
the Conversion Investors
*10.5 Memorandum of Understanding dated August 26, 1994, between
the Registrant and TMR, as amended
*10.6 Outsourcing Agreement dated September 1, 1994, between the
Registrant and TMR
*10.7 Amended and Restated 1996 Stock Option Plan
*10.8 Form of Indemnification Agreement
*23.1 Consent of Bachner, Tally, Polevoy & Misher, LLP Included in
Exhibit 5.1
23.2 Consent of Grant Thornton, LLP
23.3 Consent of Ernst & Young LLP
24.1 Power of Attorney (included on Signature Page)
</TABLE>
------------------------
* Previously filed.
(1) Incorporated by reference to the registrant's Definitive Proxy Statement
dated May 27, 1999.
(2) Incorporated by reference to the registrant's Registration Statement on
Form S-4 filed with the SEC on August 4, 2000.
II-2
<PAGE>
ITEM 28. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus 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) It will file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to: (i) include any
prospectus required by section 10(a)(3) of the Securities Act of 1933;
(ii) 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; and (iii) include any additional or changed material
information on the plan of distribution not previously disclosed in the
Registration Statement.
(4) It will file a post-effective amendment to remove from registration any of
the securities that remain unsold at the termination of the offering.
(5) 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 24 hereof, 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 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 thereof in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
In accordance with 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 SB-2 and authorized this post-effective
amendment to the registration statement to be signed on its behalf by the
undersigned, in the City of Atlanta, State of Georgia, on the 4th day of August,
2000.
<TABLE>
<S> <C> <C>
LTI HOLDINGS, INC.
By: /s/ MICHAEL E. NOONAN
-----------------------------------------
Michael E. Noonan
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
KNOW ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature
appears below makes, constitutes and appoints Michael E. Noonan and Donald L.
Aldridge, and each of them acting alone, his true and lawful attorney-in-fact,
with full power of substitution, for him in any and all capacities, to execute
and cause to be filed with the Securities and Exchange Commission any and all
amendments and post-effective amendments to this Registration Statement, or any
registration statement for this offering that is to be effective upon filing
pursuant to rule 462 under the Securities Act of 1933, with exhibits thereto and
other documents in connection therewith, and hereby ratifies and confirms all
that said attorney-in-fact or his or her substitute or substitutes may do or
cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
Chairman of the Board,
/s/ MICHAEL E. NOONAN President and Chief
------------------------------------------- Executive Officer August 4, 2000
Michael E. Noonan (Principal Executive Officer)
/s/ DONALD L. ALDRIDGE Chief Financial Officer
------------------------------------------- (Principal Financial Officer) August 4, 2000
Donald L. Aldridge
/s/ SHIRLEY A. PIGG Controller
------------------------------------------- (Principal Accounting Officer) August 4, 2000
Shirley A. Pigg
/s/ RONALD L. CHRISTENSEN Director
------------------------------------------- August 4, 2000
Ronald L. Christensen
/s/ WILLIAM J. WARREN Director
------------------------------------------- August 4, 2000
William J. Warren
</TABLE>
II-4
