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As filed with the Securities and Exchange Commission on April 11, 1995
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------
Form S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-----------------------
DATAMETRICS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-3545701
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
---------------------------------
21135 Erwin Street
Woodland Hills, California 91367
(818) 598-6200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
---------------------------------
SIDNEY E. WING Copies to:
President and Chief Executive Officer DAVID A. HAHN, ESQ.
Datametrics Corporation Latham & Watkins
21135 Erwin Street 701 "B" Street, Suite 2100
Woodland Hills, California 91367 San Diego, California 92101
(818) 598-6200 (619) 236-1234
(Name, address, including zip code,
and telephone number, including area code
of agent for service)
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
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 ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Title of Each Class Amount to be Proposed Maximum Proposed Maximum Amount of
of Securities to be Registered Offering Price Per Aggregate Offering Registration Fee
Registered Unit (1) Price (1)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 170,000 Shares $7.375 $1,253,750.00 $432.33
par value
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for purposes of calculating the amount of the registration
fee. Pursuant to Rule 457(c), based upon 170,000 shares of Common Stock
and the average of the high and low sales prices of the Common Stock on the
American Stock Exchange on April 6, 1995 of $7.375 per share.
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 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.
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PROSPECTUS
DATAMETRICS CORPORATION
170,000 shares of Common Stock, $.01 par value per share
This Prospectus relates to 170,000 shares of Common Stock, $.01 par
value per share (the "Common Stock"), of Datametrics Corporation (the "Company")
which may be offered from time to time by Cruttenden Roth, formerly Cruttenden &
Co., Inc. (the "Selling Stockholder"). Such shares of Common Stock are
hereinafter referred to as the "Securities." The Selling Stockholder holds a
Warrant (the "Warrant") to purchase the Securities pursuant to a Warrant
Agreement dated as of March 17, 1994 (the "Warrant Agreement") between the
Company and the Selling Stockholder. Information regarding the Selling
Stockholder and the circumstances under which the Selling Stockholder may
acquire the Securities is set forth in "Selling Stockholder and Plan of
Distribution" herein.
The Selling Stockholder may exercise the Warrant from March 17, 1995
and from time to time thereafter in whole or in part until it expires on March
23, 1999, and purchase the underlying Securities for $3.15 per share, which
represented 120% of the public offering price for the Company's Common Stock in
its public offering completed in March 1994. The Company and the Selling
Stockholder have entered into an agreement pursuant to which on the later of
March 17, 1995 and the effective date of the Registration Statement (the
"Registration Statement") of which this Prospectus is a part (such date being
the "Warrant Exercise Date"), the Selling Stockholder will exercise the Warrant
and pay the Company the aggregate exercise price of $535,500 in cash. See
"Selling Stockholder and Plan of Distribution." Thereafter, the Securities may
be offered and sold from time to time by the Selling Stockholder, or by
pledgees, transferees or other successors of the Selling Stockholder, in each
case in open market transactions, in private or negotiated transactions or in a
combination of such methods of sale, at fixed prices, at prices then prevailing
on the American Stock Exchange (the "AMEX") at the time of sale, at prices
related to such prevailing market prices, or at negotiated prices. To the
extent required, the amounts of the Securities to be sold, purchase prices,
public offering prices, the names of any agents, dealers or underwriters, and
any applicable commissions or discounts with respect to a particular offer will
be set forth in an accompanying Prospectus Supplement or, if appropriate, a
post-effective amendment to the Registration Statement. The Selling Stockholder
reserves the sole right to accept and, together with any agent of the Selling
Stockholder, to reject in whole or in part any proposed purchase of the
Securities. The Selling Stockholder will pay any sales commissions or other
seller's compensation applicable to such transactions. The Selling Stockholder
and agents who execute orders on its behalf may be deemed to be underwriters as
that term is defined in Section 2(11) of the Securities Act of 1933, as amended
(the "Securities Act") and a portion of any proceeds of sales and discounts,
commissions or other seller's compensation may be deemed to be underwriting
compensation for purposes of the Securities Act. See "Selling Stockholder and
Plan of Distribution."
The Company will not receive any of the proceeds from the sale of the
Securities by the Selling Stockholder. Prior to such sale of Securities,
however, the Company will have received $535,500 aggregate exercise price ($3.15
per share) under the Warrant referred to above. All such proceeds received by
the Company will be used for working capital and other general corporate
purposes.
The Company has agreed to pay all costs of the registration of the
Securities. Such costs, fees and disbursements are estimated to be
approximately $21,000.
SEE "RISK FACTORS" FOR CERTAIN CONSIDERATIONS RELEVANT TO AN
INVESTMENT IN THE SECURITIES.
The Common Stock to be registered hereunder is listed for trading on
the American Stock Exchange (Symbol: DC).
---------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS, ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------------------------------
The date of this Prospectus is April 11, 1995
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission by the Company can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located at Suite 1400, Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661 and at 7 World Trade
Center, New York, New York 10048. Copies of such material can be obtained from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Additional information with
respect to this offering may be provided in the future by means of supplements
or "stickers" to the Prospectus.
The Company has filed a Registration Statement on Form S-3 (the
"Registration Statement") with the Commission under the Securities Act of 1933,
as amended, covering the shares of Common Stock covered by this Prospectus. This
Prospectus omits certain information and exhibits included in that Registration
Statement, copies of which may be obtained upon payment of a fee prescribed by
the Commission or may be examined free of charge at the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Company's Common Stock is traded on the AMEX (Symbol: DC), and
reports and information concerning the Company can be inspected at the offices
of the AMEX, 86 Trinity Place, New York, New York 10006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended
October 30, 1994 (the "Form 10-K") and the Company's Quarterly Report on Form
10-Q for the quarter ended January 29, 1995, which were previously filed with
the Commission, are hereby incorporated by reference.
All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the filing of a post-effective amendment which indicates that all Securities
offered hereby have been sold or which deregisters all Securities then remaining
unsold shall be deemed to be incorporated by reference in this Prospectus and to
be a part of it from the respective dates of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference 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.
Copies of all documents which are incorporated herein by reference
(not including the exhibits to such documents, unless such exhibits are
specifically incorporated by reference into such documents or into this
Prospectus) will be provided without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon a written or oral
request to Datametrics Corporation, Attention: John J. Van Buren, Chief
Financial Officer, 21135 Erwin Street, Woodland Hills, California 91367,
telephone number (818) 598-6200.
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THE COMPANY
Datametrics Corporation (the "Company") designs, develops,
manufactures and sells high-speed non-impact printers, high-resolution non-
impact printer/plotters and ruggedized computers and computer workstations. For
the year ended October 30, 1994, approximately 85% of the Company's revenues
were derived from Department of Defense ("DOD") business and included contracts
with U. S. Government contractors and with the Department of Defense itself. In
the DOD business arena, the Company is dependent on being selected to supply
computers, computer workstations, printers, printer/plotters or keyboards by a
government contractor who has obtained a DOD contract which requires those
computer products, or by the DOD itself. See "Risk Factors."
The Company was organized under California law in October 1962 and
was re-incorporated in Delaware on April 15, 1987.
Since 1991, the Company has initiated efforts to reduce its dependency
on DOD spending. These non-DOD efforts have included, among others, the
development and sale of a high-speed color printer/plotter for use in the oil
exploration industry and an interface device (protocol converter) which enables
encrypted telephones to interface with commercial facsimile machines. The
Company's high-speed color printer technology is now being applied to the
commercial marketplace. To date, however, sales of the Company's high-speed
color printers for commercial applications have been negligible. See "Risk
Factors."
In August 1993, the Company acquired Rugged Digital Systems, Inc.
("Rugged Digital") of Santa Clara, California. Rugged Digital is a value-added
ruggedizer of Digital Equipment Corporation, Sun Microsystems Inc., Hewlett-
Packard Company, Silicon Graphics, Inc. and Cray Research computer devices and
peripherals. For fiscal 1994 revenue from these types of products represented
45% of the Company's total revenue.
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RISK FACTORS
Prospective investors should consider carefully, in addition to the
other information contained in and incorporated into this Prospectus, the
following factors before purchasing the shares of Common Stock offered hereby.
UNCERTAINTY OF COMMERCIAL IMPLEMENTATION OF COLOR PRINTER TECHNOLOGY
The Company's future success depends in large part on the timely and
successful development and marketing in commercial markets of products based
upon the Company's proprietary high speed color printer technology. Mass
commercial implementation of the Company's technology is highly uncertain and is
subject to a number of factors, including timing of development of the Company's
technology, the timing of development of competing color printing technologies,
the availability of adequate manufacturing capacity and distribution channels
and the availability of adequate working capital to finance development,
manufacture and marketing of the product.
Although the Company has sold color printers based upon its
proprietary technology to Halliburton Oil Logging Services for use in the oil
exploration industry and to Azon Corporation for specialty vehicle license plate
production, it has not yet sold any color printers into mass commercial markets
and does not yet have a printer ready to be manufactured for such markets. The
Company has currently developed prototypes of its mass commercial products and
is in the process of fabricating pre-production units for market evaluation. If
the Company is unable to complete these efforts in a timely manner, such failure
would have a material adverse effect on a successful introduction of a color
printer into commercial markets. In addition, competitors in the commercial
color printer market are rapidly improving the quality and price of their
current printers. If one or more of the Company's competitors were to introduce
a printer with a significantly enhanced combination of image quality, speed and
price characteristics before the Company introduced its printer, such
introduction could have a material adverse effect on the Company's ability to
market a printer into such markets. If such a competitor's product introduction
occurred after the Company had a printer on the market, such product
introduction could also have a material adverse effect on the success of the
Company's printer in such markets.
DEPENDENCE ON THIRD PARTY DISTRIBUTION CHANNELS TO ACCESS CERTAIN MASS
COMMERCIAL PRINTER MARKETS
Because the Company believes that time-to-market is an important
factor in addressing available commercial markets, such as short-run production
printing, its primary distribution strategy is to align itself with original
equipment manufacturers ("OEMs") possessing brand name recognition and
established distribution channels. Accordingly, the Company has been seeking
OEM alliances to provide such distribution capabilities. In March 1995, the
Company signed a multi-year agreement with A.B. Dick Company for the
distribution of the Company's CYMAX/tm/ line of high-speed color printers. The
Company is also seeking other OEM distribution alliances. There can be no
assurance that the Company will be successful in securing other such alliances
and, if so, what capabilities or resources any other such alliance will actually
provide to the Company.
Additionally, the Company is presently seeking to establish third
party distribution capabilities through national and/or regional distribution
networks for markets not specifically covered by OEM candidates. The
establishment of such a distribution channel is intended to be timely with the
availability of production products, therefore, such distribution is not yet
established. There can be no assurance that the Company will be successful in
establishing such a distribution channel. Accordingly, there can be no
assurance that the Company will be able to successfully develop and market its
color printer technology in certain mass commercial markets by these strategies.
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LOSS IN FIRST QUARTER; EXPECTED LOSS IN FISCAL YEAR 1995; IMPACT ON LIQUIDITY
The Company reported a net loss of $1,575,000 for the fiscal quarter
ended January 29, 1995, attributable primarily to the Company's significant
investment in its commercial color printer technology. As a result of the
Company's expected continued heavy investment in its CYMax commercial color
printer program, the Company expects to incur a significant loss for the fiscal
year 1995 which it is unable to quantify at this time. In addition, the Company
is currently seeking additional funding to provide the liquidity necessary to
maintain this expected heavy level of research and development. The status of
such additional funding is uncertain, and there can be no assurance that the
Company will obtain such additional funding.
DEPENDENCE ON DEPARTMENT OF DEFENSE CONTRACTS
The Company is currently highly dependent upon being selected to
supply printers, printer/plotters, ruggedized computers or workstations to
government contractors who have obtained DOD contracts which require those
products, or by the DOD itself. Accordingly, the Company is currently dependent
upon continued DOD spending on programs which include its products. For the
fiscal years ended October 25, 1992, October 31, 1993 and October 30, 1994,
direct and indirect DOD business represented approximately 72%, 69% and 85%,
respectively, of the Company's sales.
Since fiscal 1989, the Company has experienced generally declining
sales, principally as a result of an uncertain defense budget situation that
resulted in contract awards delays and reduced military program funding.
Management expects that these downward trends will continue for the foreseeable
future. The market for the Company's high-end military printers has been
particularly weak during this time period and is expected to continue to be weak
for the foreseeable future. This environment has resulted in substantial
decreases in the Company's backlog of funded orders. The Company's funded
backlog at the end of fiscal years 1990, 1991, 1992, 1993 and 1994 was
$16,439,000, $15,853,000, $6,795,000, $7,793,000 and $10,459,000, respectively.
Companies engaged primarily in supplying equipment and services,
directly or indirectly, to the United States government are subject to special
risks including dependence on government appropriations, termination without
cause, contract renegotiation and competition for the available DOD business.
In addition, many of the Company's contracts provide for the right to audit the
Company's cost records and are subject to regulations providing for contract
price reductions if defective cost or pricing information was provided by the
Company.
DEPENDENCE ON MAJOR CUSTOMERS
The Company's business is also substantially dependent on a relatively
small number of customers and defense programs. In fiscal 1994, the Company's
five largest customers in sales, Lockheed Corporation (21.5%), Raytheon Company
(13.5%), Rockwell International (10.7%), Martin Marietta Corporation (10.2%) and
the DOD (6.8%), accounted for an aggregate of 62.7% of total Company sales. The
loss of any one of these customers could have a material adverse effect on the
Company's result of operations and financial condition.
In particular, the Company has subcontracts with three different prime
contractors relating to the MILSTAR Communications Satellite Program, the DOD's
global communications system. Approximately $1.7 million of the Company's
funded backlog at October 30, 1994 related to the MILSTAR program.
FLUCTUATIONS IN QUARTERLY RESULTS
The Company's results of operations are subject to considerable
fluctuations from quarter to quarter due to changes in demand for the Company's
products and other factors, and there can be no assurance that the Company will
be profitable in any particular quarter. Demand for the Company's products in
each of the markets it serves can vary significantly from quarter to quarter due
to revisions in budgets or schedules for customer projects requiring the
Company's products, changes in demand for the customers' products which
incorporate or utilize the Company's products and other factors beyond the
Company's control. In addition, demand for products based upon the Company's
LAURA high speed color printer technology is highly uncertain given the emerging
nature of the Company's technology, other competing color printer products and
technologies and the commercial color printer market itself.
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COMPETITION
The Company competes in each market it serves with numerous other
companies, many of which have far greater name recognition and financial,
technological, marketing and customer service resources than the Company. The
principal competitive factors in the markets in which the Company participates
are product quality, performance and price. There can be no assurance that the
Company will be able to compete effectively in the markets for its products.
TECHNOLOGICAL OBSOLESCENCE
The markets served by the Company, particularly the commercial color
printer market, are characterized by rapid technological advances, downward
price pressure in the marketplace as technologies mature, changes in customer
requirements and frequent new product introductions and enhancements. The
Company's business requires substantial ongoing research and development efforts
and expenditures, and its future success will depend on its ability to enhance
its current products, reduce product costs and develop and introduce new
products that keep pace with technological developments in response to evolving
customer requirements. The Company's failure to anticipate or respond
adequately to technological development or introduction could result in a loss
of anticipated future revenues and impair the Company's competitiveness.
RISKS OF FOREIGN SALES
The Company believes that foreign sales may represent a significant
portion of the Company's future sales. Foreign sales are subject to numerous
risks, including political and economic instability in foreign markets,
restrictive trade policies of foreign governments, inconsistent product
regulation by foreign agencies or governments, the imposition of product tariffs
and the burdens of complying with a wide variety of international and U.S.
export laws and differing regulatory requirements. To date, the Company's
foreign sales have been transacted in U.S. dollars and many payments have been
supported by letters of credit. To the extent, however, that future foreign
sales are transacted in a foreign currency or not supported by a letter of
credit, the Company would be subject to the risk of losses due to foreign
currency fluctuations and difficulties associated with accounts receivable
collection.
RELIANCE ON CERTAIN SUPPLIERS
The Company is engaged in the assembly of electronic components and
fabricated parts in the manufacture of its products. The Company is generally
not dependent upon any one supplier for any raw material or component which it
purchases, and there are available alternative sources for such raw materials
and components. The Company is currently dependent, however, on certain OEM
suppliers for components used in its rugged computer devices and peripherals.
The Company has year-to-year renewable supply agreements with suppliers which
have been renewed in prior years. In the event any of these contracts are not
renewed, however, the Company business would be materially and adversely
impacted because the Company would have to purchase similar components upon
substantially less favorable terms and conditions.
DEPENDENCE ON KEY PERSONNEL
Management believes that the Company's success depends in part upon
its ability to attract and retain highly skilled management, technical, sales
and marketing personnel. None of the Company's employees has an employment
contract with the Company. The Company does not maintain key-man life insurance
on any of its personnel. Competition for such personnel is intense, and there
can be no assurance that the Company will be successful in attracting and
retaining such personnel.
LIMITED PROTECTION OF INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
The Company regards portions of the hardware designs and operating
software incorporated into its products as proprietary and attempts to protect
them with a combination of patent, copyright, trademark
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and trade secret laws, employee and third-party nondisclosure agreements and
similar means. Despite these precautions, it may be possible for unauthorized
third parties to copy certain portions of the Company's products or to "reverse
engineer" or otherwise obtain and use to the Company's detriment information
that the Company regards as proprietary. Moreover, the laws of some foreign
countries do not afford the same protection to the Company's proprietary rights
as do U.S. laws. There can be no assurance, therefore, that any of these
protections will be adequate or that the Company's competitors will not
independently develop technologies that are substantially equivalent or superior
to the Company's technologies.
POSSIBLE VOLATILITY OF STOCK PRICE
The trading price of the Company's Common Stock has from time to time
fluctuated widely and in the future may be subject to similar fluctuations in
response to quarter-to-quarter variations in the Company's operating results,
announcements of technological innovations or new products by the Company or its
competitors, general conditions in the industries in which the Company competes
and other events or factors. In addition, in recent years broad stock market
indices, in general, and the securities of technology companies, in particular,
have experienced substantial price fluctuations. Such broad market fluctuations
also may adversely affect the future trading price of the Common Stock. In
addition, sales of substantial amounts of Common Stock in the public market
following this offering could adversely affect the future trading price of the
Common Stock. See "Description of Capital Stock - Market Information."
POSSIBLE DILUTIVE EFFECT OF OUTSTANDING OPTIONS AND ADDITIONAL WARRANTS
As of March 2, 1995, there were 1,303,871 shares of Common Stock
reserved for issuance upon the exercise of stock options outstanding under the
Company's stock option plans at exercise prices ranging from $.75 to $5.75 per
share, of which options to purchase 653,608 shares are currently exercisable.
An additional 211,800 shares of Common Stock are reserved for issuance upon the
exercise of options available for future grant under such plans. In addition,
170,000 shares of Common Stock are reserved for issuance upon exercise of
warrants to be issued to the Selling Stockholder (the "Additional Warrants").
The Additional Warrants are exercisable for a period of five years beginning one
year after the Warrant Exercise Date and have a per share exercise price equal
to the closing market price of the Common Stock on AMEX on the Warrant Exercise
Date. See "Selling Stockholder and Plan of Distribution." To the extent the
trading price of Common Stock at the time of exercise of any such options or
Additional Warrants exceeds the exercise price, such exercise will have a
dilutive effect on the Company's stockholders.
POSSIBLE DILUTIVE EFFECT OF TERMS OF SERIES B PREFERRED STOCK
The original holders of the Company's Series B Preferred Stock are
entitled to receive warrants to purchase Common Stock at an exercise price of
$.50 per share if the Series B Preferred Stock remains outstanding on August 10,
1995. See "Description of Capital Stock." The Series B Preferred Stock is
redeemable for cash at any time in whole or in part, at the Company's option, at
a redemption price equal to 100% of the liquidation preference per share, plus
all accrued and unpaid dividends thereon, if any, to the date of redemption.
Because of this redemption right, the Company does not anticipate that it will
ever have to issue any warrants. In the event that the warrants are issued and
exercised, however, such exercise will have a dilutive effect on the Company's
stockholders.
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SELLING STOCKHOLDER AND PLAN OF DISTRIBUTION
All of the Securities offered hereby will be sold for the account of
the Selling Stockholder. Except as set forth below, the Selling Stockholder's
plan of distribution is set forth on the cover page of this Prospectus.
Additional information regarding the Selling Stockholder is as set forth below.
The Selling Stockholder acted as representative of the several
underwriters in connection with the Company's public offering of common stock in
1994. In such offering, the Company sold an aggregate of 2.3 million shares of
common stock for aggregate net proceeds of approximately $5.1 million. In
connection with the offering the Company sold the Selling Stockholder the
Warrant for a purchase price $170.00 ($.001 per share of common stock
purchasable under the Warrant). The Warrant exercise price is $3.15 per share
which is equal to 120% of the initial public offering price. The Warrant is
exercisable from March 17, 1995 until it expires on March 23, 1999. The Company
granted to Selling Stockholder the right to require the Company on one occasion
to register the 170,000 shares of Common Stock issuable upon exercise of the
Warrant. The Registration Statement of which this Prospectus is a part has been
prepared and filed by the Company pursuant to that obligation.
In February 1995, the Company and the Selling Stockholder entered into
an agreement pursuant to which the Selling Stockholder agreed to exercise the
Warrant on the later of March 17, 1995 or the effective date of the Registration
Statement (such date being the "Warrant Exercise Date"). On the Warrant
Exercise Date, the Selling Stockholder will exercise the Warrant and pay the
Company the aggregate exercise price of $535,500 in cash. In addition, on the
Warrant Exercise Date the Company will issue to the Selling Stockholder new
warrants (the "Additional Warrants") to purchase 170,000 shares of Common Stock.
The Additional Warrants will have an exercise price equal to the closing price
of the Common Stock on AMEX on the Warrant Exercise Date and will be exercisable
commencing one year from the Warrant Exercise Date through the fifth anniversary
of the Warrant Exercise Date. The Additional Warrants require the Company on
one occasion to use its best efforts to effect the registration of the 170,000
shares of Common Stock that may be issued upon exercise of the Additional
Warrants. Such registration right expires five years after the Warrant Exercise
Date. In addition, the holders of the Additional Warrants also have "piggyback"
registration rights with respect to such shares of Common Stock. Such
"piggyback" registration rights expire seven years after the Warrant Exercise
Date.
Except as set forth above, the Selling Stockholder has had no
position, office or other material relationship with the Company (or had any
such position, office or material relationship within the past three years), and
will not own greater than one percent of the Common Stock of the Company after
this offering, assuming all the Securities offered hereby are sold.
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DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 15,000,000 shares of Common Stock,
$.01 par value, of which 9,342,455 are issued and outstanding, and 5,000,000
shares of Preferred Stock, $.01 par value, of which 613,110 have been designated
as Series B Preferred Stock, 564,556 of which are issued and outstanding as of
March 1, 1995.
PREFERRED STOCK
The Board of Directors is authorized, without further action by the
stockholders, to issue from time to time shares of Preferred Stock in one or
more classes or series and to fix the designations, voting rights, liquidation
preferences, dividend rights, conversion rights, rights and terms of redemption
(including sinking fund provisions) and certain other rights and preferences of
the Preferred Stock. The issuance of shares of Preferred Stock under certain
circumstances could adversely affect the voting power of the holders of Common
Stock and may have the effect of delaying, deferring or preventing a change in
control of the Company. In connection with the acquisition of Rugged Digital,
the Company issued 613,110 shares of Series B Preferred Stock to holders of
Rugged Digital subordinated debt. Pursuant to resolution of certain claims of
the Company arising from the acquisition, the number of outstanding shares of
Series B Preferred Stock was reduced to 564,556. Series B Preferred Stock ranks
senior to the Common Stock and subordinate to all indebtedness of the Company.
In the event of any voluntary or involuntary liquidation, dissolution, or
winding up of the Company, the holders of the Series B Preferred Stock will be
entitled to receive an aggregate liquidation preference of $987,973 ($1.75 per
share) over the Common Stock. The Series B Preferred Stock is redeemable for
cash at any time in whole or in part, at the Company's option, at a redemption
price equal to 100% of the liquidation preference per share ($1.75 per share).
Pursuant to the agreements under which the Series B Preferred Stock
was issued, the original holders of the Series B Preferred Stock have a
contractual right to receive warrants to purchase Common Stock in the event that
the Series B Preferred Stock remains outstanding on August 10, 1995. Each
original holder of Series B Preferred Stock who owns shares of Series B
Preferred Stock on such date (the "Series B Warrant Issuance Date") shall
receive a warrant to purchase that number of shares of Common Stock (rounded to
the nearest whole share) equal to the product (1) a fraction, the numerator of
which is 200,000 and the denominator of which is 613,110, the aggregate number
of shares of Series B Preferred Stock issued in connection with the merger with
Rugged Digital, and (2) the number of shares of Series B Preferred Stock held by
such holder on the Series B Warrant Issuance Date. In addition, as long as any
shares of Series B Preferred Stock are outstanding, every three months following
the Series B Warrant Issuance Date (each, a "Subsequent Issuance Date"), the
Company shall issue and deliver to each of the original holders who owns shares
of Series B Preferred Stock a warrant to purchase the number of shares of Common
Stock (rounded to the nearest whole share) equal to the product of (1) a
fraction, the numerator of which is 25,000 and the denominator of which is
613,110, and (2) the number of shares of Series B Preferred Stock held by such
holder on the Subsequent Issuance Date. Each such warrant provides that the
exercise price for each share of Common Stock covered thereby is $.50, and that
it is exercisable for a period from issuance through 30 days after the date on
which no shares of Series B Preferred Stock remain outstanding. The warrant
rights apply only to shares of Series B Preferred Stock that are outstanding as
of the Warrant Issuance Date or a Subsequent Issuance Date, as the case may be,
and no such rights accrue with respect to shares of Series B Preferred Stock
which are redeemed or which otherwise cease to be outstanding prior to any such
date. The rights arising under the Warrants are personal to each original
holder of Series B Preferred Stock and may not be sold, assigned or otherwise
transferred, by operation of law or otherwise, to any other person or entity.
Because the Company has the right to redeem the Series B Preferred Stock at any
time at the liquidation preference, the Company does not anticipate that it will
ever issue any such warrants. There can be no assurance however, that the
Company will have sufficient financial resources to effect the redemption.
As of the date of this Prospectus, the Company has no plan or
arrangement for the issuance of any additional shares of Preferred Stock.
9
<PAGE>
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share on
all matters voted on by stockholders, and, except as otherwise required by law
or provided in any resolution adopted by the Board of Directors with respect to
any other series or class of the Common Stock or series of the Preferred Stock,
holders of such shares will exclusively possess all voting power. The Restated
Certificate of Incorporation of the Company does not provide for cumulative
voting for the election of directors. Subject to any preferential rights of any
other outstanding shares of the Preferred Stock designated by the Board of
Directors from time to time, when and as dividends or other distributions are
declared, whether payable in cash, in property or in securities of the Company,
the holders of shares of Common Stock will be entitled to share equally, share
for share, in such dividends or other distributions. The Common Stock has no
preemptive rights and no redemption, sinking fund or conversion provisions. All
shares of Common Stock are fully paid and nonassessable. As of February 17,
1995, there were 937 holders of the Company's Common Stock.
CERTAIN CHARTER PROVISIONS
The Company's Restated Certificate of Incorporation eliminates, to the
fullest extent permitted by law, the liability of its directors to the Company
and its stockholders for monetary damages for breach of the directors' fiduciary
duty. This provision is intended to afford the Company's directors the benefit
of the Delaware General Corporation Law, which provides that directors of
Delaware corporations may be relieved of monetary liability for breach of their
fiduciary duty of care, except under certain circumstances involving breach of a
director's duty of loyalty, acts or omissions not in good faith or involving
intentional misconduct or a knowing violation of law or any transaction from
which the director derived an improper personal benefit.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
The Company is subject to Section 203 of the Delaware General
Corporation Law ("Section 203"), which restricts certain transactions and
business combinations between a corporation and an "Interested Stockholder"
owning 15% or more of the corporation's outstanding voting stock for a period of
three years from the date the stockholder becomes an Interested Stockholder.
Subject to certain exceptions, unless the transaction is approved by the Board
of Directors and the holders of at least 66-2/3% of the outstanding voting stock
of the corporation (excluding shares held by the Interested Stockholder),
Section 203 prohibits significant business transactions such as a merger with,
disposition of assets to, or receipt of disproportionate financial benefits by,
the Interested Stockholder, or any other transaction that would increase the
Interested Stockholder's proportionate ownership of any class or series of the
corporation's stock. The statutory ban does not apply if, upon consummation of
the transaction in which any person becomes an Interested Stockholder, the
Interested Stockholder owns at least 85% of the outstanding voting stock of the
corporation (excluding shares held by persons who are both directors and
officers or by certain stock plans).
REGISTRAR AND TRANSFER AGENT
The Transfer Agent and Registrar for the Common Stock is Chemical
Trust Company of California. Its telephone number is (213) 621-8000.
Dividends may be paid on the Common Stock out of any funds legally
available for that purpose when declared by the Board of Directors. The Company
has not, however, paid cash dividends on its Common Stock since inception and
management does not anticipate that the Company will do so in the foreseeable
future. The present policy of the Board of Directors is to retain any earnings
to provide funds for use in the Company's business.
10
<PAGE>
MARKET INFORMATION
The following table sets forth the high and low sales prices for the
Common Stock on AMEX (Symbol: DC) for the fiscal periods indicated as reported
by AMEX.
<TABLE>
<CAPTION>
Fiscal Year Ended October 31, 1993 High Low
- -------------------------------------- -------- -------
<S> <C> <C>
1st Quarter $2 1/2 $1 1/16
2nd Quarter 2 5/8 1 1/2
3rd Quarter 1 13/16 1 1/4
4th Quarter 3 5/8 1 3/16
Fiscal Year Ended October 30, 1994
- --------------------------------------
1st Quarter $4 1/8 $2 9/16
2nd Quarter 3 1/4 2 3/8
3rd Quarter 3 3/16 2 9/16
4th Quarter 5 1/4 3 7/16
Fiscal Year Ending October 29, 1995
- --------------------------------------
1st Quarter $6 3/8 $ 3 3/4
2nd Quarter (through April 6, 1995) 8 3/8 5 1/8
</TABLE>
The Company cannot predict the market price for Common Stock upon
commencement or completion of this offering. Exercise of the Warrant and sales
of the Securities could cause the Common Stock to trade at levels lower than
would otherwise be anticipated.
LEGAL OPINION
The validity of the Common Stock offered hereby will be passed upon
for the Company by Latham & Watkins, San Diego, California.
EXPERTS
The financial statements of Datametrics Corporation incorporated by
reference in the Datametrics Corporation Annual Report (Form 10-K) for the year
ended October 30, 1994 have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
11
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is an itemized statement of expenses incurred in
connection with this Registration Statement. All such expenses will be paid by
the Company.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee... $ 432
Accounting fees....................................... 5,000
Company legal fees and expenses....................... $14,000
Blue Sky fees and expenses............................ $ 1,000
Miscellaneous expenses................................ $ 568
-------
TOTAL........................................... $21,000
</TABLE>
All of the above items except the registration fee are estimates.
Item 15. Indemnification of Directors and Officers.
As authorized by the Delaware General Corporation Law, the Company's
Restated Certificate of Incorporation and the Company's Restated By-Laws provide
that no director of the Company will be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director
except for liability (i) for any breach of the director's duty of loyalty to the
Company or its stockholders, (ii)for acts or omissions not in good faith which
involve intentional misconduct or a knowing violation of law, (iii) in respect
of certain unlawful dividend payments or stock redemptions or repurchases and
(iv) for any transaction from which the director derives an improper personal
benefit. The effect of this provision is to eliminate the rights of the Company
and its stockholders (through stockholders' derivative suits on behalf of the
Company) to recover monetary damages against a director for breach of the
fiduciary duty of care as a director (including breaches resulting from
negligent or grossly negligent behavior) except in the situations described in
clauses (i) though (iv) above. This provision does not limit or eliminate the
rights of the Company or any stockholders to seek non-monetary relief such as an
injunction or rescission in the event of a breach of a director's duty of care.
Item 16. Exhibits.
The Exhibit Index is attached hereto on page E-1.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, 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 this 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 this registration statement;
II-1
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement
or any material change to such information in this registration
statement;
Provided however, that the undertakings set forth in paragraphs (1)(i)
and (1)(ii) above do not apply if 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 this
Registration Statement.
(2) That, for the purposes 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 therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the Securities being registered which remain unsold at the
termination of the offering.
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 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to 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.
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 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
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on 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 Woodland Hills, State of California, on March 30,
1995
DATAMETRICS CORPORATION
By:/s/ Sidney E. Wing
------------------
Sidney E. Wing, President and Chief Executive Officer
Each person whose signature appears below authorizes Sidney E. Wing and
John J. Van Buren and either of them, with full power of substitution and
resubstitution, his true and lawful attorneys-in-fact, for him in any and all
capacities, to sign any amendments (including post-effective amendments) to this
Registration Statement and to file the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- -------------------------- ----------------------------- --------------
<S> <C> <C>
/s/ Garland S. White Chairman of the Board March 30, 1995
- --------------------------
Garland S. White
/s/ Sidney E. Wing President and Chief March 30, 1995
- -------------------------- Executive Officer
Sidney E. Wing (Principal Executive Officer)
/s/ John J. Van Buren Senior Vice President, Chief March 30, 1995
- -------------------------- Financial Officer and
John J. Van Buren Treasurer (Principal Financial
and Accounting Officer)
/s/ Dann V. Angeloff Director March 30, 1995
- --------------------------
Dann V. Angeloff
/s/ Richard A. Foster Director March 24, 1995
- --------------------------
Richard A. Foster
/s/ Burton L. Kaplan Director March 30, 1995
- --------------------------
Burton L. Kaplan
/s/ Richard W. Muchmore Director March 22, 1995
- --------------------------
Richard W. Muchmore
/s/ Kenneth K. Zeiger Director March 30, 1995
- --------------------------
Kenneth K. Zeiger
</TABLE>
II-3
<PAGE>
INDEX
-----
The following exhibits are filed as part of this Form S-3 Registration
Statement or are incorporated herein by reference. Where an exhibit is
incorporated by reference, the number which precedes the description of the
exhibit indicates the document to which the cross-reference is made.
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <C> <S>
1.0 Omitted (Inapplicable).
4.1 Warrant to purchase 170,000 shares of Common Stock of Datametrics
Corporation issued to Cruttenden & Company on March 24, 1994
(incorporated by reference to Exhibit 4.1 to Registrant's Form
S-2 Registration Statement (File No. 33-73344) filed on December
23, 1993) as amended by letter agreement dated February 17, 1995.
4.2 (1) Letter Agreement dated February 17, 1995 between Datametrics
Corporation and Cruttenden Roth
5.0 (1) Opinion and Consent of Latham & Watkins
8.0 Omitted (Inapplicable).
12.0 Omitted (Inapplicable).
15.0 Omitted (Inapplicable).
23.1 Consent of Latham & Watkins (included in Exhibit 5.0 hereto).
23.2 (1) Consent of Ernst & Young LLP.
25.0 (1) Powers of Attorney (included on the signature page hereto).
26.0 Omitted (Inapplicable).
27.0 Omitted (Inapplicable).
28.0 Omitted (Inapplicable).
29.0 Omitted (Inapplicable).
</TABLE>
- -------------------------
(1) Filed herewith.
E-1
<PAGE>
Exhibit 4.2
-----------
February 17, 1995
Mr. Sidney E. Wing
President and CEO
Datametrics Corporation
21135 Erwin Street
Woodland Hills, CA 91367
Dear Sid:
As per our recent conversations, we had agreed on a course of action for an
interim financing for Datametrics. We agree with the incremental approach.
1) The following transactions will occur on the later of March 17, 1995
and the effective date of the registration statement described below
(such date being the "Closing Date"). Cruttenden will exercise the
existing 170,000 warrants at a price of $3.15 per share. Cruttenden
will waive its net issuance rights and contribute the aggregate
warrant exercise price of $535,500 to the company. Cruttenden will
also formally exercise its demand registration rights on the
underlying common shares. As promptly as practicable following
execution of this agreement, Datametrics agrees to prepare and file
with the SEC a registration statement registering the shares issuable
upon exercise of the existing warrants. The parties agree that their
intent is to have this registration statement declared effective prior
to March 17, 1995. Datametrics shall bear all expenses of this
registration, except any underwriting discounts or commissions
attributable to sales of the underlying shares and fees and
disbursements of counsel (if any) to Cruttenden. Datametrics and
Cruttenden shall also take appropriate actions to confirm that the
exercise date for the warrants is March 17, 1995.
Also on the Closing Date, Cruttenden will receive 170,000 new five
year warrants. The exercise price will be the closing price on the
Closing Date. These warrants will carry similar terms and conditions
as the warrants being exercised above, except that Cruttenden will pay
for its registration expenses up to $20,000. Any amount in excess of
$20,000 for registration expenses will be born 50% to the account of
Cruttenden and 50% to the account of Datametrics.
E-2
<PAGE>
Mr. Sidney E. Wing
Datametrics Corporation
February 17, 1995
Page 2
2) In addition, during the term of this agreement, Cruttenden will use
its best efforts to arrange senior bank financing for Datametrics in
an amount and on terms acceptable to Datametrics. For the
introductions and advisory work associated with assembling the
financing package and aiding in the negotiations for the senior
lending facility, Cruttenden will receive a cash fee of 2% of total
credit facility, payable on the closing of such transaction. If the
Company introduces the bank, Cruttenden will receive a 1% fee,
Cruttenden will not receive a fee, if any one of the following banks
are used: Imperial Bank, Union Bank and Wells Fargo.
The term of this agreement will be the later of 60 days from the
execution of this Letter Agreement or April 15, 1995, whichever is
later.
If this understanding and Letter Agreement meet with your approval, please
execute this original and return one copy to us. Again, thank you for
permitting us this opportunity to work with you. Please contact me at (714)
757-5721 if you have any questions or require any further detail about this
financing.
Sincerely, Agreed by,
CRUTTENDEN ROTH DATAMETRICS CORPORATION
/s/ Byron C. Roth /s/ Sidney E. Wing
Byron C. Roth Sidney E. Wing
President President and CEO
cc: Dann V. Angeloff
E-3
<PAGE>
Exhibit 5.0
-----------
LATHAM & WATKINS
701 "B" Street, Suite 2100
San Diego, California 92101
April 10, 1995
Datametrics Corporation
21135 Erwin Street
Woodland Hills, California 91367
Re: Form S-3 Registration Statement; Resale by Cruttenden Roth of
170,000 Shares of Datametrics Common Stock, $.01 Par Value
----------------------------------------------------------
Ladies and Gentlemen:
In connection with (i) the issuance by Datametrics Corporation (the
"Company") of 170,000 shares of common stock, $.01 par value per share (the
"Shares") upon Cruttenden Roth's exercising 170,000 warrants to purchase common
stock, $.01 par value per share, of the Company dated March 24, 1994 (the
"Warrants"), and (ii) the registration of the resale by Cruttenden Roth of the
Shares under the Securities Act of 1933, as amended (the "Act"), by the Company,
on Form S-3, filed with the Securities and Exchange Commission (the
"Commission") on April 11, 1995, you have requested our opinion with respect to
the matters set forth below.
In our capacity as your counsel in connection with such registration,
we are familiar with the proceedings taken and proposed to be taken by the
Company in connection with the authorization, issuance and sale of the Shares,
and for the purposes of this opinion, have assumed such proceedings will be
timely completed in the manner presently proposed. In addition, we have made
such legal and factual examinations and inquiries, including an examination of
originals or copies certified or otherwise identified to our satisfaction of
such documents, corporate records and instruments, as we have deemed necessary
or appropriate for purposes of this opinion.
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, and the
conformity to authentic original documents of all documents submitted to us as
copies.
E-4
<PAGE>
Datametrics Corporation
April 10, 1995
Page 5
We are opining herein as to the effect on the subject transaction only
of the General Corporation Law of the State of Delaware, and we express no
opinion with respect to the applicability thereto, or the effect thereon, of the
laws of any other jurisdiction or any other laws, or as to any matters of
municipal law or the laws of any other local agencies within the state.
Subject to the foregoing, it is our opinion that, after being issued
to Cruttenden Roth in accordance with the terms of the Warrants, the Shares will
be legally and validly issued, fully paid and nonassessable.
We consent to your filing this opinion as an exhibit to the
Registration Statement and to the reference to our firm contained under the
heading "Legal Matters."
Very truly yours,
/s/ LATHAM & WATKINS
LATHAM & WATKINS
E-5
<PAGE>
Exhibit 23.2
Consent of Ernst & Young L.L.P., Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3, No. 33-00000), and related Prospectus of
Datametrics Corporation for the registration of 170,000 shares of its common
stock and to the incorporation by reference therein of our report dated December
9, 1994, except for the fourth paragraph of Note 6, as to which the date is
December 23, 1994, with respect to the financial statements and schedules of
Datametrics Corporation included or incorporated in its Annual Report (Form
10-K) for the year ended October 30, 1994, filed with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Woodland Hills, California
April 10, 1995
