As filed with the Securities and Exchange Commission on September 4, 1998
- --------------------------------------------------------------------------------
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
COMMUNICATIONS SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-0957999
(State or other jurisdiction (I.R.S. Employer
incorporation or organization Identification No.)
213 South Main Street
Hector, Minnesota 55342
(612) 848-6231
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Curtis A. Sampson, President Copy To:
Communications Systems, Inc. Richard A. Primuth
213 South Main Street Lindquist & Vennum, P.L.L.P.
Hector, Minnesota 55342 4200 IDS Center
(320) 848-6231 80 South Eighth Street
(Name, address, including zip code, and telephone Minneapolis, MN 55402
number, including area code, of agent for service) (612) 371-3211
Approximate date of commencement of proposed sale to public: From time to time
after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. __
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: X
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please 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 earliest 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: __
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Proposed Proposed
Maximum Maximum
Amount to be Offering Aggregate Amount of
Title of Each Class of Registered Price Offering Price Registration
Securities to be Registered Per Unit Fee
- -------------------------------------------------------------------------- -------------- ------------ --------------- -------------
<S> <C> <C> <C> <C>
Common Stock, $.05 par value 158,005 $10.875 $1,718,304 $507
- -------------------------------------------------------------------------- -------------- ------------ --------------- -------------
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
based on the average of the closing bid and asked prices of the
Company's Common Stock on the Nasdaq National Market on August 31, 1998
pursuant to Rule 457(c).
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment that specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PROSPECTUS
COMMUNICATIONS SYSTEMS, INC.
158,005 Shares of Common Stock
($.05 Par Value)
This Prospectus relates to the sale of up to 158,005 shares (the
"Shares") of Common Stock of Communication Systems, Inc. (the "Company") which
may be offered from time to time by the shareholders of the Company named herein
(the "Selling Shareholders"). The Company will not receive any of the proceeds
from the sale of the Shares by the Selling Shareholders. See "Use of Proceeds."
The Company will bear all expenses of this offering other than
underwriting discounts and commissions incurred in connection with the sale of
the Shares by the Selling Shareholders. The Company's Common Stock is traded on
the Nasdaq National Market under the symbol "CSII". The closing bid price of the
Company's Common Stock on August 31, 1998 was $10.875 per share, as reported by
Nasdaq.
THIS OFFERING INVOLVES CERTAIN RISKS. SEE " RISK FACTORS" BEGINNING ON PAGE 4 OF
THIS PROSPECTUS.
The Selling Shareholders have advised the Company that they intend to
sell the Shares from time to time in transactions on the Nasdaq National Market
at prices prevailing at the time of the sale or otherwise as set forth below.
The Selling Shareholders have also advised the Company that, as of the date
hereof, they have made no arrangement with any brokerage firm for the sale of
the Shares. The Selling Shareholders may be deemed to be "underwriters" within
the meaning of the Act, in which case any commissions received by a broker or
dealer may be deemed to be underwriting commissions or discounts under the Act.
See "Plan of Distribution."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE. <TABLE> <CAPTION>
========== ------------------ ------------------------- ---------------- ------------------------
Price to Public Underwriting Discounts Proceeds to Proceeds to Selling
and Commissions Issuer Shareholders
- ---------- ------------------ ------------------------- ---------------- ------------------------
<S> <C> <C> <S> <C>
Per Share $10.875(1) (2) None $1,718,304(1)
- ---------- ------------------ ------------------------- ---------------- ------------------------
Total $10.875(1) (2) None $1,718,304(1)
- --------- ------------------ ------------------------- ---------------- -------------------------
</TABLE>
(1) Estimated based on a per share price of $10.875 as of
August 31, 1998 and assuming the sale of all Shares
by the Selling Shareholders, with no adjustment for
commissions, discounts, brokerage and other fees that
may be paid by the Selling Shareholders, or expenses
of the offering to be paid by the Company.
(2) Commissions, discounts and brokerage fees will be
payable to the Selling Shareholders in such amounts
as the Selling Shareholders may agree to from time to
time.
The date of this Prospectus is September 4, 1998
1
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy and information
statements and other information can be inspected and copied at the public
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C., and the Commission's regional offices located at 7 World Trade
Center, 14th Floor, New York, New York 10048, and Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. Electronic
filings made through the Electronic Data Gathering Analysis and Retrieval System
are also publicly available through the Securities and Exchange Commission's Web
Site (http://www.sec.gov).
The Company has filed with the Commission a registration statement
under the Securities Act of 1933 with respect to the shares offered hereby. This
Prospectus does not contain all information set forth in such registration
statement. For further information with respect to the Company and the shares
offered hereby, reference is made to such registration statement, including the
exhibits and financial schedules filed as part thereof. Such information may be
inspected at the Chicago regional office of the Commission at Northwestern
Atrium Center, 500 West Madison, Suite 1400, Chicago, Illinois 60661 and at the
public reference facilities at 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies thereof may be obtained from the Commission at prescribed prices.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated by reference in this Prospectus: (i) the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997; (ii) the
Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998
and June 30, 1998; (iii) the Company's Proxy Statement dated April 9, 1998 for
the 1998 Annual Meeting of Shareholders on May 19, 1998, 1998; and (iv) the
description of the Company's Common Stock contained in the Company's Form S-1
Registration Statement, Registration No. 2-74377. All documents filed by the
Company pursuant to Sections 13(a), 13(c), 14 or 15 of the 1934 Act after the
date of this Prospectus and prior to the termination of the offering of
securities contemplated hereby shall also be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded hereby to the extent that a
statement contained herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus has been delivered, upon the written or oral request of such
person, a copy of any or all of the documents which are incorporated by
reference into this Prospectus, other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference in such documents.)
Requests for such copies should be directed to Communication Systems, Inc., 213
South Main Street, Hector, Minnesota 55342, telephone number (612) 848-6231.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus and
in documents incorporated herein by reference.
The Company
Communications Systems, Inc. is a Minnesota corporation organized in
1969 which, operating directly and through its subsidiaries located in
Minnesota, New Jersey, Puerto Rico, Costa Rica and Bethesda, Wales (herein
collectively called "CSI" or the "Company"), is principally engaged in the
manufacture and sale of modular connecting and wiring devices for voice and data
communications. The Company's product line, which is commonly referred to as
"telephone station apparatus," consists primarily of equipment which connects
telephones, data terminals and related customer premise equipment to the
telephone network. Telephone station apparatus is manufactured and marketed
under the "Suttle Apparatus" brand name in the United States and internationally
and through Austin Taylor Communications in the United Kingdom, Europe and other
foreign countries. Fiber optic connector products are manufactured and marketed
by Automatic Tool and Connector Co. in the United States and internationally.
The Company recently acquired JDL Technologies, Inc. ("JDL"), a Minnesota-based
company that provides a comprehensive range of information technology services,
including local and wide area network planning and design, hardware procurement,
configuration and integration services, Internet access software, and user
support and training.
CSI was incorporated in Minnesota in 1969. CSI's executive offices are
located at 213 South Main Street, Hector, Minnesota 55342. Its telephone number
is (612) 848-6231. CSI's Common Stock is quoted on the Nasdaq National Market
System ("NMS") under the symbol "CSII."
The Offering
The 158,005 Shares being offered by the Selling Shareholders were
issued by the Company on August 7, 1998 in an acquisition by the Company of the
outstanding stock of JDL Technologies, Inc. The closing bid price of the
Company's common stock on the Nasdaq National Market on August 7, 1998, the date
the Shares were issued, was $14.00 per share. The reason that resales of the
Shares are being registered is to permit the Shares to be resold by the Selling
Stockholders in the public market.
Common Stock offered by Selling Shareholders.......................... 158,005
Common Stock outstanding after offering (1)........................... 9,267,291
NASDAQ Symbol......................................................... CSII
(1) Excludes 664,188 shares of common stock issuable upon exercise of
outstanding warrants and outstanding stock options granted pursuant to the
Company's stock Plans.
Use of Proceeds
The Company will not receive any proceeds from sales of the Shares by
the Selling Shareholders. See "USE OF PROCEEDS."
Risk Factors
This offering involves investment risk. See "RISK FACTORS."
3
<PAGE>
RISK FACTORS
An investment in the securities offered hereby involves certain risks.
In addition to the other information in this Prospectus, the following factors
should be considered carefully in evaluating an investment in the shares of
Common Stock offered by this Prospectus.
This Prospectus, including the information set forth below and the
information incorporated into this Prospectus by reference, contains
forward-looking statements concerning possible or assumed future results of
operations or business developments which are typically preceded by the words
"believes," "expects," "anticipates," "intends" or similar expressions. For such
forward looking statements, the Company claims the protection of the safe harbor
for forward looking statements contained in the Private Securities Litigation
Reform Act of 1995. Prospective investors should understand that such forward
looking statements are subject to risks and uncertainties which could cause
actual results to differ significantly from those indicated in the forward
looking statements. Such risks and uncertainties include, but are not limited
to, the overall sales activity in the telecommunications market; buying patterns
of the Company's existing and prospective customers; the impact of new products
introduced by competitors; higher than expected expenses related to sales and
marketing initiatives; availability of adequate supplies of raw materials and
components; and other risks involving the Company's target markets generally. In
connection with the forward looking statements which appear in this Prospectus,
prospective purchasers of the Common Stock offered hereby should carefully
consider the following risk factors.
Business Strategy Risks
Risk Related to New Marketing Initiative
The market for connecting devices for business and network systems is
one of the fastest growing segments of the station apparatus industry. A major
element of the Company's business strategy is to substantially increase sales in
this market segment. To implement this strategy, the Company may incur expenses
for new product development and marketing disproportionate to the sales it will
be able to immediately recognize. There can be no assurance that future sales
will justify expenses related to this or any other new marketing initiatives.
Risk Related to Acquisitions
The Company's business strategy also includes expanding its existing
operations through acquisitions of additional companies in businesses which are
compatible with the Company's business. The Company actively reviews and
evaluates the purchase of such companies. The Company's competitors, as well as
other organizations which have greater financial resources than the Company may,
from time to time, bid on such companies. Therefore, there can be no assurance
that the Company will be successful in acquiring any of the companies with
respect to which it submits bids. Further, the contribution of any acquisition
to the Company's future revenues and profitability, and the realization of
economies of scale from any such acquisition, will depend to a large extent on
the Company's ability to integrate effectively the customer base, operations and
personnel of the acquired company, and there can be no assurance that the
Company will be able to do so successfully. Acquisitions generally involve
numerous other risks, including risks associated with unanticipated problems,
liabilities and contingencies, diversion of management attention from other
business concerns and possible adverse effects on earnings resulting from
increased goodwill amortization, increased interest costs and the issuance of
additional securities. Some or all of these risks could have a material adverse
effect on the Company's operations and financial performance.
4
<PAGE>
Competition
Suttle Apparatus encounters strong competition in all its station
apparatus product lines. The Company's principal competitors for sales to
telephone companies and independent contractors include: Lucent Technologies,
Ortronics, Leviton, Hubbell, Northern Telecom and AMP, Inc. Most of these
companies have greater financial resources than the Company. In addition,
distributors of the Company's apparatus products also market products for one or
more of these competitors. Lucent Technologies markets to telephone companies
and independent contractors directly and through telephone industry distributors
that also market the Company's products. In retail markets, the Company
experiences significant competition from importers of low-priced modular
products which market their products directly and through a number of
distributors to various retail outlets. The Company's results may be adversely
affected by the actions of its competitors, including the development of new
technologies, the introduction of new products or the reduction of prices. There
also can be no assurance that the Company will be able to take actions necessary
to maintain its competitive position.
Manufacturing and Sources of Supply
The Company's station apparatus products are manufactured using plastic
parts, wire subassemblies, fasteners, brackets, electronic circuit boards and
other components, most of which are fabricated by the Company. There are
multiple sources of supply for the materials and parts required and the Company
is not dependent upon any single supplier, except that Suttle's corrosion
resistant products utilize a moisture-resistant gel-filled fig available from
only Raychem Corporation. While the Company has not experienced significant
problems in the delivery of the gel-filled figs, the Company believes the
unavailability of such materials for any reason could have a material adverse
effect on the Company's financial statements.
Technological Change and New Product Development
The telecommunications market is characterized by rapidly changing
technology. The Company's future success will depend in part upon its ability to
enhance its current products and to develop new products that keep pace with
technological developments and respond to changes in customer requirements. Any
failure by the Company to respond adequately to technological changes and
customer requirements or any significant delay in new product introductions
could have a material adverse effect on the Company's business and results of
operations. In addition, there can be no assurance that new products to be
developed by the Company will achieve market acceptance.
Reliance on Key Personnel; Shared Management
The Company relies upon certain key management employees, including its
Chief Executive Officer, Curtis A. Sampson, and the loss of any of such
individuals could adversely affect the Company. The Company does not maintain
key person life insurance on any member of the Company's management. The Company
believes that its future success will depend on its ability to retain key
members of management and to attract experienced management in the future. There
can be no assurance that it will be able to do so. Certain members of the
Company's management, including the Company's Chief Executive Officer, Curtis A.
Sampson, devote only a portion of their working time to the affairs of the
Company. While the Company believes that this has not materially adversely
affected the Company to date, no assurance can be given that this will not have
an adverse impact on management of the Company in the future.
5
<PAGE>
Year 2000 Issues
The software used by most computer systems was originally designed to use
references to calendar dates on an abbreviated basis. Under this system,
references to the calendar year are abbreviated to the last two digits of the
year, i.e. 1997 is abbreviated as "97". Most software using this system does not
recognize that the year 2000, abbreviated as "00", follows 1999. This causes
computing errors in date sensitive processes.
The Company has surveyed its management information and manufacturing
control systems to locate computer systems which may be subject to this error.
The Company believes the systems used by its subsidiaries in Minnesota, New
Jersey, Puerto Rico and Costa Rica are Year 2000 compliant. The Company is in
the process of updating the systems used by its U.K. subsidiary to achieve
compliance. Cost to complete this update is estimated at $100,000. The Company
expects to be 100 percent compliant by December 31, 1998.
At the present time, none of the Company's products contain embedded
controllers or microprocessors which could be subject to Year 2000 problems. The
Company has also been in contact with its major customers and suppliers to
ensure that Year 2000 issues do not cause unforseen EDI problems. The Company
does not expect Year 2000 issues to have a material effect on the Company's
operations or financial results.
Anti-takeover Provisions
The Board of Directors is authorized to issue up to 3,000,000 shares of
authorized but undesignated Preferred Stock and to fix the powers, preferences,
rights and restrictions, including voting rights, of those shares without any
further vote or action by the Company's shareholders. The persons acquiring
Preferred Stock could have preferential rights with respect to voting,
liquidation, dissolution or dividends over existing shareholders. In addition,
the Company is authorized to issue 15,000,000 shares of common stock, of which
9,267,291 shares are outstanding and approximately 1,356,757 shares are reserved
for issuance upon exercise of options and warrants, and approximately 4,375,952
shares remain available for issuance. The Company's Articles of Incorporation
also require the approval of any "business combination" by holders of at least
80% of the voting power generally entitled to vote in the election of directors.
Furthermore, the staggered 3-year terms of the Board of Directors of the Company
have the effect of lengthening the time necessary to change the composition of
the Board. Finally, the Company is subject to certain provisions of the
Minnesota Business Corporation Act which limit the voting rights of shares
acquired in "control share acquisitions" and restrict certain "business
combinations." Accordingly, provisions of the Company's Articles of
Incorporation and the Minnesota Business Corporation Act, as well as the ability
of the Company to issue undesignated Preferred Stock and additional shares of
common stock, could operate or could be utilized to deter or delay a takeover or
other change in control of the Company.
USE OF PROCEEDS
The Company will not receive any proceeds from sales of the Shares by
the Selling Shareholders.
6
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock by the Selling Shareholders
as of September 1,1998, and as adjusted to reflect the sale of Shares held by
the Selling Shareholders.
<TABLE>
<CAPTION>
Shares to be Beneficially
Number of Shares Owned After the Offering (1)
Beneficially Owned Maximum Number of ------------------------------
Name Prior to Offering Shares to be Sold (1) Number Percent
- ----------------------------------- ------------------------- ------------------------- ---------------- -------------
<S> <C> <C> <C> <C>
Thomas J. Lapping 145,001 145,001 0 *
David M. Beck 520 520 0 *
Frederick R. Blocton 1,301 1,301 0 *
Clayton C. Bosquez 650 650 0 *
Norman Engel 520 520 0 *
Brenda Gustafson 650 650 0 *
Dennis Horrigan 130 130 0 *
David C. Hunt 650 650 0 *
Melissa A. Johnson 130 130 0 *
Thomas A. Kasperek 650 650 0 *
Jill S. Kirzeder 130 130 0 *
James A. Osborn 130 130 0 *
Allen A. Schmieder 910 910 0 *
Bruce W. Spicer 1,301 1,301 0 *
Thomas D. Varley 2,601 2,601 0 *
Lois M. Wells 130 130 0 *
John C. Wilkinson 2,601 2,601 0 *
- ------------------------------------------- ------- ------- -
TOTALS 158,005 158,005 0
- -------------------------------------------
(1) Assumes the sale of all Shares offered hereunder.
* Less than 1%.
</TABLE>
PLAN OF DISTRIBUTION
The Company has been advised that the Selling Shareholders may sell
Shares from time to time in one or more transactions (which may include block
transactions) on the Nasdaq National Market at market prices prevailing at the
time of the sale or at prices otherwise negotiated.
7
<PAGE>
The Shares may, without limitation, be sold by one or more of the
following: (i) a block trade in which the broker or dealer so engaged will
attempt to sell the securities as agent but may position and resell a portion of
the block as principal to facilitate the transaction; (ii) purchases by a broker
or dealer as principal and resale by such broker or dealer for its account
pursuant to this Prospectus; and (iii) ordinary brokerage transactions and
transactions in which the broker solicits purchasers.
The Company has been advised that, as of the date hereof, the Selling
Shareholders have made no arrangement with any broker for the sale of the
Shares. Underwriters, brokers or dealers may participate in such transactions as
agents and may, in such capacity, receive brokerage commissions from the Selling
Shareholders or purchasers of such securities. Such underwriters, brokers or
dealers may also purchase Shares and resell such Shares for their own account in
the manner described above. The Selling Shareholders and such underwriters,
brokers or dealers may be considered "underwriters" as that term is defined by
the Securities Act of 1933, although the Selling Shareholders disclaim such
status. Any commissions, discounts or profits received by such underwriters,
brokers or dealers in connection with the foregoing transactions may be deemed
to be underwriting discounts and commissions under the Securities Act of 1933.
LEGAL MATTERS
The validity of the CSI Common Stock offered hereby will be passed upon
by Lindquist & Vennum, P.L.L.P., Minneapolis, Minnesota. Richard A. Primuth, a
partner at the law firm, is the Secretary of the Company.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this Prospectus by reference from the Company's Annual Report on
Form 10-K for the year ended December 31, 1997 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
INDEMNIFICATION
The Company's Articles of Incorporation eliminate or limit certain
liabilities of its directors and the Company's Bylaws provide for
indemnification of directors, officers and employees of the Company in certain
instances. Insofar as exculpation of, or indemnification for, liabilities
arising under the Securities Act of 1933 may be permitted to directors, officers
or persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Securities and Exchange
Commission such exculpation or indemnification is against public policy as
expressed in the Act and is therefore unenforceable.
8
<PAGE>
No person has ben authorized to give any information or to make any
representations in connection with this offering other than those contained in
this Prospectus and, if given or made, such other information or representations
must not be relied upon as having been authorized by the Company. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
herein is correct as of any time subsequent to its date. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any
securities other than the registered securities to which it relates. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy such securities in any circumstances in which such offer or solicitation is
unlawful.
158,005 SHARES
COMMUNICATIONS SYSTEMS, INC.
----------------------------
PROSPECTUS
----------------------------
September 4, 1998
TABLE OF CONTENTS
Statement of Available Information . . . . . . . . . 2
Incorporation of Certain Documents by Reference . . . 2
Prospectus Summary . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . . . 6
Selling Shareholders. . . . . . . . . . . . . . . . 7
Plan of Distribution . . . . . . . . . . . . . . . 7
Legal Matters. . . . . . . . . . . . . . . . . . . . 8
Experts . . . . . . . . . . . . . . . . . . . . . . . 8
Indemnification . . . . . . . . . . . . . . . . . . 8
9
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14: Other Expenses of Issuance and Distribution
SEC registration fee ............................... $ 507
Nasdaq fee.......................................... 3,161
Blue Sky fees....................................... 500
Accounting fees and expenses ........................ 2,000
Legal fees and expenses ............................ 8,500
Miscellaneous ...................................... 132
Total ......................................... $14,800
Except for the SEC fee, all of the foregoing expenses have been estimated.
ITEM 15: Indemnification of Directors and Officers
Section 302A.521 of the Minnesota Statutes requires, among other
things, the indemnification of persons made or threatened to be made a party to
a proceeding by reason of acts or omissions performed in their official capacity
as an officer, director, employee or agent of the corporation against judgments,
penalties and fines (including attorneys' fees) if such person is not otherwise
indemnified, acted in good faith, received no improper benefit, reasonably
believed that such conduct was in the best interests of the corporation, and, in
the case of criminal proceedings, had no reason to believe the conduct was
unlawful. In addition, Section 302A.521, subd. 3, of the Minnesota Statutes
requires payment by the corporation, upon written request, of reasonable
expenses in advance of final disposition in certain instances if a decision as
to required indemnification is made by a disinterested majority of the Board of
Directors present at a meeting at which a disinterested quorum is present, or by
a designated committee of the Board, by special legal counsel, by the
Shareholders or by a court.
The Company's Bylaws provide for the indemnification of its directors,
officers, employees, and agents in accordance with, and to the fullest extent
permitted by, the provisions of the Minnesota Business Corporation Act, as
amended from time to time.
Item 16. Exhibits
Exhibit No. Description
5.1 Opinion and Consent of Lindquist & Vennum P.L.L.P., counsel to
the Company
23.1 Consent of Deloitte & Touche LLP, independent public accountants
23.2 Consent of Lindquist & Vennum P.L.L.P. (see Exhibit 5.1 above)
24 Powers of Attorney (included on signature page hereof)
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
10
<PAGE>
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the Prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement;
and
(iii) to include any material information with
respect to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement.
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant has
been advised that, in the opinion of the 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 of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe it meets all of
the requirements for filing a Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Hector, State of Minnesota, on the 1st day of
September, 1998.
COMMUNICATION SYSTEMS, INC.
By /s/ Curtis A.Sampson
Chairman of the Board, President and
Chief Executive Officer
POWER OF ATTORNEY
The undersigned officers and directors of Communication Systems, Inc.
hereby constitute and appoint Curtis A. Sampson and Paul N. Hanson our true and
lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution for us and in our stead, in any and all
capacities, to sign any or all amendments to this registration statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as such person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, each acting alone, or
his substitute or substitutes may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on September 1,
1998 in the capacities indicated.
Signature Title
/s/ Curtis A. Sampson Chairman of the Board, President
Curtis A. Sampson and Director (Principal Executive
Officer)
/s/ Paul N. Hanson Vice President, Treasurer and
Paul N. Hanson Chief Financial Officer (Principal
Financial Officer and Principal
Accounting Officer)
/s/ Paul J. Anderson Director
Paul J. Anderson
/s/ Edwin C. Freeman Director
Edwin C. Freeman
/s/ Luella Gross Goldberg Director
Luella Gross Goldberg
/s/ Frederick M. Green Director
Frederick M. Green
/s/ John C. Ortman Director
John C. Ortman
/s/ Joseph W. Parris Director
Joseph W. Parris
/s/ Gerald D. Pint Director
Gerald D. Pint
/s/ Wayne E. Sampson Director
Wayne E. Sampson
/s/ Edward E. Strickland Director
Edward E. Strickland
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Richard A. Primuth
612/371-3260
[email protected]
Exhibit 5.1
September 1, 1998
Communications Systems, Inc.
213 South Main Street
Hector, Minnesota 55342
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-3 to be filed
by Communications Systems, Inc. (the "Company") with the Securities and Exchange
Commission on September 4, 1998 relating to an offering of up to 158,005 shares
of Common Stock, par value $.05 per share, to be offered by the Selling
Shareholders, please be advised that as counsel to the Company, upon examination
of such corporate documents and records as we have deemed necessary or advisable
for the purposes of this opinion, it is our opinion that:
1. The Company has been duly incorporated and is validly
existing as a corporation in good standing under the
laws of the State of Minnesota.
2. The shares of Common Stock being offered by the
Selling Shareholders have been validly issued and are
fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the heading
"Legal Matters" in the Prospectus comprising a part of the Registration
Statement.
Very truly yours,
LINDQUIST & VENNUM P.L.L.P.
/s/ Lindquist & Vennum P.L.L.P.
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Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Communications Systems, Inc. on Form S-3 of our report dated February 20, 1998,
appearing in the Annual Report on Form 10-K of Communications Systems, Inc. for
the year ended December 31, 1997 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
September 2, 1998
/s/ Deloitte & Touche LLP
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