<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
DSI TOYS, INC.
------------------------------------------------------
(Name of Issuer)
Common Stock, Par Value $.01 Per Share
------------------------------------------------------------
(Title of Class of Securities)
232968 10 7
------------------------------------
(CUSIP Number)
E. Thomas Martin
MVII, LLC
654 Osos Street
San Luis Obispo, California 93401
(805) 545-7900
--------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
December 17, 1999
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [ ].
<PAGE> 2
- -------------------------------
CUSIP NO. 232968 10 7
- -------------------------------
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MVII, LLC 77-0509866
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
4,194,238
SHARES -----------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
1,417,086(1)(2)
OWNED BY -----------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
4,194,238
REPORTING -----------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,611,324(1)(2)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
61.4%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
- --------------------------------------------------------------------------------
</TABLE>
(1) Includes 96,774 shares of Common Stock payable to Reiling (as defined
herein) upon satisfaction of certain post-closing conditions in connection with
the Merger (as defined herein).
(2) Includes stock options held by certain Reporting Persons (as defined herein)
to purchase an aggregate of 6,000 shares of Common Stock at $8.00 per share
exercisable at any time.
<PAGE> 3
- ----------------------
CUSIP NO. 232968 10 7
- ----------------------
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
BARRY B. CONRAD
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
N/A
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
0
SHARES -----------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
2,000(1)
OWNED BY -----------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
2,000(1)
REPORTING -----------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,000(1)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
</TABLE>
(1) Includes stock options to purchase 2,000 shares of Common Stock at $8.00 per
share exercisable at any time.
<PAGE> 4
- ----------------------
CUSIP NO. 232968 10 7
- ----------------------
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
M. D. DAVIS
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
N/A
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
0
SHARES -----------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
323,951
OWNED BY -----------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
323,951
REPORTING -----------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
323,951
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
</TABLE>
<PAGE> 5
- ----------------------
CUSIP NO. 232968 10 7
- ----------------------
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
JOSEPH N. MATLOCK
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
N/A
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
0
SHARES -----------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
229,964(1)
OWNED BY -----------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
229,964(1)
REPORTING -----------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
229,964(1)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
</TABLE>
(1) Includes stock options to purchase 2,000 shares of Common Stock at $8.00 per
share exercisable at any time.
<PAGE> 6
- ----------------------
CUSIP NO. 232968 10 7
- ----------------------
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RUST CAPITAL, LTD. 74-2755439
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
N/A
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
TEXAS
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
0
SHARES -----------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY -----------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
0
REPORTING -----------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
</TABLE>
<PAGE> 7
- ----------------------
CUSIP NO. 232968 10 7
- ----------------------
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
DOUGLAS A. SMITH
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
N/A
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
0
SHARES -----------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
261,171(1)
OWNED BY -----------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
261,171(1)
REPORTING -----------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
261,171(1)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
</TABLE>
(1) Includes stock options to purchase 2,000 shares of Common Stock at $8.00 per
share exercisable at any time.
<PAGE> 8
This Amendment No. 1 (this "Amendment") amends and supplements the
Statement on Schedule 13D relating to the common stock, par value $.01 per share
(the "Common Stock"), of DSI Toys, Inc., a Texas corporation (the "Company")
previously filed jointly on June 10, 1999 by MVII, LLC ("MVII"), Douglas A.
Smith ("Smith"), Barry B. Conrad ("Conrad"), M. D. Davis ("Davis"), Joseph N.
Matlock ("Matlock"),and Rust Capital, Ltd. ("Rust Capital") as a group pursuant
to Rule 13d-1(k)(1) and (2) (MVII, Conrad, Davis, Matlock, Rust Capital and
Smith are collectively referred to herein as the "Reporting Persons" with
respect to the ownership of the Common Stock of the Company).
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Item 3 is hereby amended as follows:
MVII used working capital to fund the Common Stock purchases described
in Item 5 below.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 is hereby amended as follows:
On July 1, 1999, the Company issued 100,000 shares of Common Stock to
MVII pursuant to a contingency contained in the Stock Purchase and Sale
Agreement dated April 15, 1999 by and between the Company and MVII (the "Stock
Purchase Agreement"). MVII did not use any funds to purchase such shares other
than the funds previously used to purchase 566,038 shares of Common Stock from
the Company at $2.12 per share on April 15, 1999 and 1,792,453 shares of Common
Stock from the Company at $2.12 per share on June 1, 1999 under the terms of the
Stock Purchase Agreement.
On July 22, 1999, MVII purchased 13,646 shares of Common Stock from J.
Russell Denson, a former executive with the Company, at $4.11 per share pursuant
to a stock purchase agreement.
On September 14, 1999, MVII exercised its right of first refusal
contained in the Shareholders' and Voting Agreement dated April 15, 1999, but
effective as of June 1, 1999, by and among the Company and the Reporting Persons
(the "Primary Voting Agreement"), to purchase 72,101 shares of Common Stock from
Conrad at $3.25 per share. As a result of such transaction, Conrad ceased to
beneficially own any Common Stock by virtue of record ownership, but does hold
stock options to purchase 2,000 shares of Common Stock at $8.00 per share
exercisable at any time.
On September 17, 1999, MVII purchased 50,000 shares of Common Stock
from Howard G. Peretz, a former executive with the Company, at $3.25 per share
pursuant to a stock purchase agreement.
On December 17, 1999, Rust Capital sold 291,421 shares of Common Stock
to E. Thomas Martin ("Martin") at $3.00 per share. Martin purchased such shares
pursuant to MVII's right of first refusal contained in the Primary Voting
Agreement, which was assigned by MVII to Martin on December 15, 1999. As a
result of such transaction, Rust Capital (i) ceased to beneficially own, by
virtue of record ownership or otherwise, any Common Stock, (ii) ceased to be a
party to the Primary Voting Agreement, and (iii) ceased to be a member of the
Rule 13d-1(k)(1) and (2) group formed by the Reporting Persons.
On January 7, 2000, the Company acquired all of the issued and
outstanding shares of common stock of Meritus Industries, Inc., a New Jersey
corporation ("Meritus"), pursuant to a merger in which Meritus merged with and
into the Company (the "Merger"). Under the terms of the Merger, Walter and Susan
Reiling (collectively, "Reiling") received 600,000 shares of Common Stock of the
Company (including, for purposes of this Schedule 13D, 96,774 shares of Common
Stock payable by the Company pursuant to the terms and conditions of a Closing
and Holdback Agreement between the Company, Meritus, Meritus Industries, Ltd.
and Reiling (the "Holdback Shares")). In connection with the Merger, the
Company, MVII and Reiling entered into a Shareholders' and Voting Agreement (the
"Reiling Voting Agreement") pursuant to which, among other things, (i) the
parties agreed that the number of directors that comprise the Board of Directors
of the Company shall be increased from six to seven within 30 days of the
Merger, (ii) MVII granted Reiling
<PAGE> 9
the right to elect one of the directors that MVII was previously entitled to
elect to the Company's Board of Directors pursuant to the terms of the Primary
Voting Agreement, and (iii) MVII and Reiling are required to vote the number of
shares of Common Stock they own for the election of the individuals nominated by
MVII and Reiling in accordance with the Reiling Voting Agreement. Reiling also
executed an irrevocable proxy appointing MVII as proxy for the limited purpose
of authorizing MVII to vote Reiling's shares of Common Stock (a) for the
election of directors to the Company's Board of Directors; (b) with respect to
any matter affecting the size or composition of the Company's Board of
Directors; (c) with respect to any matter relating to the creation or
composition of any committee of the Company's Board of Directors; and (d) with
respect to any proposal to amend or modify the Company's bylaws or articles of
incorporation for the sole purpose of affecting the matters described in (b) and
(c) above.
Accordingly, at the conclusion of the above transactions, MVII has the
sole power to vote and the sole power to dispose of 4,194,238 shares of Common
Stock which it holds of record. Under the terms of the Primary Voting Agreement,
MVII has the shared power to vote 817,086 shares of Common Stock, and under the
terms of the Reiling Voting Agreement, MVII has the shared power to vote 600,000
shares of Common Stock (after giving effect to the to the issuance of the 96,774
Holdback Shares). Therefore, MVII beneficially owns 5,611,324 shares of Common
Stock by virtue of its record ownership, the Primary Voting Agreement (including
options held by Conrad, Matlock and Smith to purchase an aggregate of 6,000
shares of Common Stock at $8.00 per share exercisable at any time (the
"Options")) and the Reiling Voting Agreement, representing 61.4% of the
outstanding Common Stock of the Company. As described above, Conrad no longer
beneficially owns any Common Stock by virtue of record ownership, but does hold
stock options to purchase 2,000 shares of Common Stock at $8.00 per share
exercisable at any time. Rust Capital no longer beneficially owns, by virtue of
record ownership or otherwise, any Common Stock. The Common Stock ownership
interests of Smith, Davis and Matlock are unchanged.
As a group (which now excludes Rust Capital), the Reporting Persons
are the beneficial owners of an aggregate of 5,011,324 shares of Common Stock
(including the Options), and such beneficial ownership constitutes 54.9% of the
total outstanding Common Stock of the Company. Without giving effect to the
Options and the shares underlying the Options, the ownership interest of the
Reporting Persons represents, in the aggregate, 54.8% of the outstanding Common
Stock of the Company. MVII additionally is the beneficial owner of 600,000
shares of Common Stock (including the Holdback Shares) as a result of the
Reiling Voting Agreement, to which the other Reporting Persons are not parties.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
The Reporting Persons have agreed, as evidenced by their signatures
below, to jointly prepare and file this Amendment reporting each Reporting
Person's ownership of Common Stock of the Company, and the Reporting Persons
hereby affirm that this Amendment is being filed on behalf of the undersigned.
The Reporting Persons have agreed to jointly prepare and file this Amendment as
a result of being parties to the Primary Voting Agreement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following exhibits are filed with this Amendment:
Exhibit 1. Primary Voting Agreement dated April 15, 1999,
among the Company and the Reporting Persons
(incorporated by reference to Exhibit 1 contained in
the Statement on Schedule 13D filed by the Reporting
Persons on June 10, 1999).
Exhibit 2. Reiling Voting Agreement dated January 7, 2000,
among the Company, MVII and Reiling (incorporated by
reference to Exhibit 3 contained in the Statement on
Schedule 13D filed by Reiling on January 18, 2000).
Exhibit 3. Irrevocable Proxy dated January 7, 2000 between
MVII and Reiling (incorporated by reference to
Exhibit 4 contained in the Statement on Schedule 13D
filed by Reiling on January 18, 2000).
<PAGE> 10
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
MVII, LLC
Dated: January 21, 2000 By: /s/ E. Thomas Martin
-------------------------------
E. Thomas Martin, Manager
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
Dated: January 21, 2000 /s/ Barry B. Conrad
-----------------------------------
Barry B. Conrad
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
Dated: January 21, 2000 /s/ M. D. Davis
-----------------------------------
M. D. Davis
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
Dated: January 21, 2000 /s/ Joseph N. Matlock
-----------------------------------
Joseph N. Matlock
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
RUST CAPITAL, LTD.
By: RUST INVESTMENT CORPORATION,
its general partner
Dated: January 21, 2000 By: /s/ Jack R. Crosby
---------------------------
Jack R. Crosby, President
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
Dated: January 21, 2000 /s/ Douglas A. Smith
-----------------------------------
Douglas A. Smith
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
Exhibit 1. Primary Voting Agreement dated April 15, 1999,
among the Company and the Reporting Persons
(incorporated by reference to Exhibit 1 contained in
the Statement on Schedule 13D filed by the Reporting
Persons on June 10, 1999).
Exhibit 2. Reiling Voting Agreement dated January 7, 2000,
among the Company, MVII and Reiling (incorporated by
reference to Exhibit 3 contained in the Statement on
Schedule 13D filed by Reiling on January 18, 2000).
Exhibit 3. Irrevocable Proxy dated January 7, 2000 between
MVII and Reiling (incorporated by reference to
Exhibit 4 contained in the Statement on Schedule 13D
filed by Reiling on January 18, 2000).
</TABLE>
