As filed with the Securities and Exchange Commission on July 26, 1999.
Registration No.
============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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SCIENCE DYNAMICS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 22-2011859
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1919 Springdale Road
Cherry Hill, New Jersey 08003-1069
(609) 424-0068
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Alan C. Bashforth, President
1919 Springdale Road
Cherry Hill, New Jersey 08003-1069
(609) 424-0068
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy To:
Stephen M. Robinson, Esq.
Stephen M. Robinson, P.A.
172 Tuckerton Road
Medford, NJ 08055
-----------------------
Approximate date of commencement of proposed sale to the public: On such date
as the selling stockholders shall elect to commence sales to the public
following 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|
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 earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
=============================================================================
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Title of each Number of Proposed
class of shares to maximum Proposed maximum Amount of
securities to be offering price aggregate registration
be registered registered per share(1) offering price fee
- -----------------------------------------------------------------------------
Common Stock
par value $.01
per share 2,000,000 $.84375 $1,687,500 $469.13
=============================================================================
</TABLE>
(1) Based on the average of the bid and ask prices of the Common
Stock quoted on the Nasdaq OTC Bulletin Board on July 22,1999 of
$.8125 and $.875 per share, solely for the purpose of calculating the
registration fee 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 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.
1
Subject to Completion
Dated July 26, 1999
Prospectus
Science Dynamics Corporation
Common Stock
2,000,000 Shares
This is an offering of 2,000,000 shares for the benefit of the selling
stockholders. They may elect from time to time to sell their shares but are
not required to do so. We will not receive any of the sale proceeds. We are
paying all the expenses of the offering.
Our Common Stock is traded on the Nasdaq Over the Counter Bulletin Board
under the symbol "SIDY". Our Common Stock has been traded publicly since
April 22, 1981. The last reported bid price of our common stock on July 22,
1999 was $.8125 per share.
Investing in the Company involves a high degree of risk. You should
purchase shares only if you can afford a complete loss. You should carefully
read and review this prospectus including the "Risk Factors" beginning on
page 6 before deciding whether to buy shares in this Offering.
The Securities and Exchange Commission has not approved or disapproved of
these securities or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
Prospectus dated July , 1999.
2
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TABLE OF CONTENTS
Page
----
Incorporation of Certain Information
by Reference.............................3
Prospectus Summary ......................4
Risk Factors ............................6
Use of Proceeds.........................11
Selling Stockholders ...................11
Plan of Distribution ...................12
Disclosure of Commission Position on
Indemnification For Securities Act
Liabilities...........................13
Legal Matters ..........................13
Experts.................................13
Where You Can Find More Information.....13
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the Commission will automatically update and supersede this information.
We incorporate by reference the following documents filed by us with
the SEC:
o Our Annual Report on Form 10-KSB for the year ended December 31, 1998
filed with the SEC on March 31, 1999;
o All other reports and other documents filed by us pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 ("Exchange Act") since
the December 31, 1998 Form 10-KSB;
o All documents and reports subsequently filed by us 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 which may be offered hereby have been sold or
which deregisters all securities then remaining unsold.
At your request, we will provide you, without charge, with a copy of
any information incorporated by reference in this prospectus. If you want
more information, write or call us at:
Science Dynamics Corporation
1919 Springdale Road
Cherry Hill, New Jersey 08003-1069
(609) 424-0068
You may also obtain information from the SEC as described in "Where You
Can Find More Information."
3
PROSPECTUS SUMMARY
We have provided you with a summary of important information on our
business. You should read all the information in this prospectus for a more
complete understanding. Some of the information has been incorporated from
our SEC filings. You can obtain copies of this incorporated information from
us without charge as described beginning on page 3. Please be sure to read
"Risk Factors" beginning on page 6 for a description of the high risk
involved in acquiring our shares.
THE COMPANY
Principal Executive Science Dynamics Corporation
Offices: 1919 Springdale Road
Cherry Hill, New Jersey 08003-1069
(609) 424-0068
Our Business:
Science Dynamics Corporation was incorporated in the State of Delaware
May 1973 and commenced operations in July 1977. During the past 21 years we
have developed, designed and marketed a variety of Telecommunications
systems, including intelligent call processing platforms which provide
telecommunications service capabilities to the public switched telephone
network. These platforms are sophisticated software based systems, which
satisfy a wide range of computer telephony integration applications. In
November 1996, we acquired the intellectual property of Innovative
Communications Technology (ICT) and under the direction of the new
CEO/President embarked on transforming Science Dynamics into a predominately
software design and system integration Company.
Over the past two years, the challenge was to expand the product
offerings and migrate into additional markets within the Computer Telephony
Integration (CTI) industry. We believe that communicating via packet
networks such as ATM and Frame Relay, is becoming the preferred strategy for
both public networks and business enterprises. Our focus is to address niche
market opportunities in Data Network Companies, Telephone Service
Distributors and Regional Bell Operating Companies (RBOC's), such as
BellSouth, Ameritech, US West, Southwestern Bell and large independent
telephone operating companies, such as GTE, Sprint and Citizens.
Our development is driven by user needs for cost effective, easy to
use multiservice products that provide an array of telecommunications
solutions and services to the customers. These opportunities are primarily
in the areas of Voice over Internet Protocol, Inmate Systems, Video over
Frame Relay, Voice Announcements, Interactive Communications, Intelligent
Network Control and Administration. Our strategy today is to deliver quality
software products and services that empower its customers to improve their
applications and deploy quality services worldwide.
BUSINESS DEVELOPMENT
- ---------------------
Science Dynamics has focused its strategy to be a provider of key
enabling technologies required for the convergence of traditional and new
communications media and infrastructures.
4
Communications media today must include traditional Telephony (an area for
which Science Dynamics has 21 years experience), Data services (to include
the Internet) and Video services. Current infrastructures based on PDH
(Plesiochronous Digital Hierarchy) technology are quickly being replaced with
SDH (Synchronous Digital Hierarchy) technologies more suited to larger
bandwidth packet data transmissions.
Management believes communicating via packet data networks such as
IP(Internet Protocol), ATM (Asynchronous Transfer Mode), and Frame Relay is
becoming a preferred strategy for both corporate and public network planners.
Predictions have been made that data traffic will soon exceed telephone
traffic. At the same time, more and more companies are seeing the value of
transporting voice and fax over data networks to reduce telephone and
facsimile costs and to set the stage for advanced multimedia applications.
IP's ability to run over any network medium has led to its widespread
adoption around the world. Its popularity, though, goes far beyond the
Internet, to encompass the majority of data networks worldwide. Providing
high quality telephony over IP networks is one of the key steps in the
convergence of voice, fax, video, and data communications services.
Science Dynamics has now proven IP Telephony to be both feasible and cost
effective with several customer trials. New products, such as the
IntegratorC-2400(r) Gatekeeper, will continue to play a very important role
in positioning SDC in this fast growing market.
THE OFFERING
Securities Offered: 2,000,000 shares. The shares are being offered by the
selling stockholders. See "Plan of Distribution."
Shares Outstanding: There were 16,661,449 shares issued and outstanding
as of July 22, 1999.
Estimated Offering
Expenses: $8,000.
Risk Factors: Investing in our shares is very risky. Investors
should be able to bear the complete loss of their
investment.
Use of Proceeds: The proceeds of this offering will be paid to the
selling stockholders. None of the proceeds will be
paid to the Company. See "Use of Proceeds."
Trading Symbol: "SIDY"
5
RISK FACTORS
WE HAVE HAD LOSSES AND THERE MAY BE FURTHER LOSSES
We incurred net losses of $1,022,030 for the year ended December 31, 1997 and
$1,036,306 for the year ended December 31, 1998. We cannot assure you that
we can sustain or increase profitability on a quarterly or annual basis in
the future. If revenues grow more slowly than we anticipate, or if operating
expenses exceed our expectations or cannot be adjusted accordingly, our
business, results of operations and financial condition will be materially
and adversely affected.
OUR MARKETS ARE COMPETITIVE
Due to the diversified nature of the products and target markets, our
competition varies greatly by product line. Our Inmate Products division
holds a respectable portion of the Inmate market with the Commander system.
We compete against three other primary vendors in this area but the system
captures a sizable share of the target market.
We have limited competition in the Video-Over-Frame market. Competing
products include integrated Frame Relay Codec, an ISDN over Frame Relay
product and the use of H.323 packetized LAN Video, a different concept which
crosses into our market.
Our IP products will compete in a marketplace that is populated by larger
companies who have significantly more resources for development, marketing
and deployment. We may not be able to compete successfully against current
or future competitors, and competitive pressures could significantly harm us.
RISKS OF BUSINESS COMBINATIONS AND STRATEGIC ALLIANCES
We may expand our operations or market presence by entering into business
combinations, investments, joint ventures or other strategic alliances with
other companies. These transactions create risks such as:
- Difficulty assimilating the operations, technology and personnel
of the combined companies,
- Disruption of our ongoing business,
- Problems retaining key technical and managerial personnel,
- Expenses associated with amortization of goodwill and other
purchased intangible assets,
- Additional operating losses and expenses of acquired
businesses, and
- Impairment of relationships with existing employees,
customers and business partners.
We may not succeed in addressing these risks.
WE MAY NEED ADDITIONAL FUNDS TO EXPAND OUR SALES AND MARKETING ACTIVITIES,
RESEARCH AND DEVELOPMENT, AND STRATEGIC ALLIANCES.
Based on current levels of operations and planned growth, we anticipate that
our existing capital resources, together with cash generated from operations
will enable us to maintain our operations for the next 12 months. We may
require additional funds to sustain and expand our sales and marketing
activities, research and development, and our strategic alliances,
particularly if a well-financed competitor emerges or if there is a rapid
technological shift in the telecommunications industry. There can be no
assurance that financing will be available in amounts or on terms acceptable
to us, if at all. The inability to obtain sufficient funds from operations
and external sources would have a material adverse effect on our business.
6
WE DEPEND ON KEY PERSONNEL.
We depend on the continues services and on performance of our senior
management and other key personnel, particularly Alan C. Bashforth, our
President, and Joy C. Hartman, our Secretary, Treasurer and Chief Financial
Officer. Our success also depends on our ability to retain and motivate our
other officers and key employees. The loss of the services of any of our
executive officers or other key employees could harm our business. We have
employment agreements with only two of our key personnel, our President and
Chief Financial Officer. We have obtained a $2,000,000 key person life
insurance policy on the life of Mr. Bashforth, naming us as beneficiary under
policy. Our future success also depends on our ability to attract and retain
and motivate other highly skilled engineering, technical, sales, marketing
and customer service personnel. Competition for such personnel is intense,
and there can be no assurance that we will be able to successfully attract,
assimilate or retain sufficiently qualified personnel which could harm our
business.
WE ARE RELIANT UPON CERTAIN SUPPLIERS, THE LOSS OF ANY OF WHICH COULD BE
DISRUPTIVE TO OUR BUSINESS, REDUCE OUR OPPORTUNITIES FOR PROFITABILITY AND
CAUSE THE PRICE OF OUR STOCK TO FALL.
Although most of the components used in our products are available from a
number of different suppliers on an off-the-shelf basis, certain components
are purchased from sole source suppliers. If such a supplier should cease to
deliver a component, another source would have to be developed. Acquiring a
substitute part or module may require a hardware or software change in the
unit in order to provide satisfactory performance, adding costs and delays of
unknown amount and duration.
OUR REVENUES ARE GENERATED AMONG A RELATIVELY SMALL NUMBER OF CUSTOMERS. THE
LOSS OF ANY ONE OR MORE OF THESE CUSTOMERS WOULD GREATLY REDUCE OUR
OPPORTUNITIES TO ACHIEVE AND SUSTAIN PROFITABILITY AND MAY CAUSE A REDUCTION
IN THE MARKET PRICE OF OUR STOCK.
A majority of our sales have been attributable to a relatively small number
of customers. For example, our major customers, independent and Bell
Operating Companies, accounted for 82.95%, 4.69% and 3.45% of total revenue
in 1998. If one or more of our large-volume customers were to discontinue
doing business with us, our results of operations would be materially and
adversely affected. In addition, the irregular timing of large orders and
their materiality to our total revenues for any given reporting period has
caused, and is expected to cause, substantial volatility in our operating
results. However, with the introduction of the new product lines, we have
expanded our customer base globally and should be less reliant on any single
market or territory.
7
WE MAY BE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY
We regard substantial elements of our products as proprietary and
attempt to protect them by relying on patent, trademark, service mark, trade
dress, copyright, and trade secret laws and restrictions, as well as
confidentiality procedures and contractual provisions. Any steps we take to
protect our intellectual property may be inadequate, time consuming, and
expensive. In addition, despite our efforts, we may be unable to prevent
third-parties from infringing upon or misappropriating our intellectual
property. Any such infringement or misappropriation could have a material
adverse effect on our business, results of operations, and financial
condition. Currently issued patents or any new patent applications may not
provide us with any competitive advantages, or may be challenged by third
parties. Effective trademark, copyright, and trade secret protection may not
be available in every country in which our products are distributed. In
addition, our competitors may independently develop similar technology that
substantially limits the value of our intellectual property.
OTHERS MAY BRING INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS AGAINST US
In addition to the technology we have developed internally, we also have
acquired or licensed technologies from other companies. Our internally
developed technology or the technology we acquired or licensed may infringe
on a third party's intellectual property rights and such third parties may
bring claims against us alleging infringement of their intellectual property
rights. Any such infringement or claim of infringement could have a material
adverse affect on our business, result of operations, and financial
condition.
8
In recent years, there has been significant litigation in the United
States involving patents and other intellectual property rights. We are not
currently involved in any intellectual property litigation. We may, however,
be a party to litigation in the future to protect our intellectual property
or as a result of an alleged infringement of others' intellectual property.
Such claims and any resulting litigation could subject us to significant
liability for damages and invalidation of our proprietary rights. Such
litigation, regardless of its success, likely would be time-consuming and
expensive to defend and would divert management time and attention. Any
potential intellectual property litigation could also force us to do one or
more of the following:
- Cease selling, incorporating, or using products or services
that incorporate the challenged intellectual property;
- Obtain from the holder of the infringed intellectual property
right a license to sell or use the relevant technology, which
license may not be available on reasonable terms, or at all; and
- Redesign those products or services that incorporate such
technology.
Any of these results could have a material adverse effect on our business,
results of operations, and financial condition.
WE MAY NEVER PAY DIVIDENDS ON OUR COMMON STOCK, IN WHICH EVENT PURCHASERS'
ONLY RETURN ON THEIR INVESTMENT, IF ANY, WILL OCCUR ON THE SALE OF OUR STOCK.
We have never declared or paid a cash dividend. We presently intend to
retain any future earnings for use in the business and do not presently
intend to pay cash dividends in the foreseeable future.
INDEMNIFICATION AND LIMITATION OF LIABILITY OF OUR OFFICERS AND DIRECTORS MAY
INSULATE THEM FROM ACCOUNTABILITY TO STOCKHOLDERS AT SUBSTANTIAL COST TO
SCIENCE DYNAMICS
9
Our by-laws include provisions whereby our officers and directors are to
be indemnified against liabilities to the fullest extent permissible under
Delaware law. Our by-laws also limit a director's liability for monetary
damages for breach of fiduciary duty, including gross negligence. In
addition, we have agreed to advance the legal expenses of our officers and
directors who are required to defend against claims. These provisions and
agreements may have the effect of reducing the likelihood of suits against
directors and officers even though such suits, if successful, might benefit
us and our stockholders. Furthermore, your investment in may be adversely
affected if we pay the cost of settlement and damage awards against directors
and officers.
A LARGE BLOCK OF SHARES CAN BE SOLD UNDER RULE 144.
Owners of a large block of shares which were previously restricted can be
sold under Rule 144. The sale of a large number of these shares could lower
the price of our shares or make it harder to attract new investors.
YEAR 2000 ISSUES
The Year 2000 issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
Year 2000 as 1900 or some other date, resulting in errors when information
using Year 2000 dates is processed. In addition, similar problems may arise
in some systems, which use certain dates in 1999 to represent something other
than a date. The effects of the Year 2000 issue may be experienced before,
on, or after January 1, 2000 and may range from minor errors to significant
systems failure, which could affect our ability to conduct normal business
operations. It is not possible to be certain that all aspects of the Year
2000 issue affecting us, including those relating to the efforts of
customers, suppliers, or other third parties will be fully resolved. We
cannot predict the effects of the year 2000 problem on such entities or the
economy in general, or the resulting effects on us. As a result, if
preventative or corrective actions by those companies with which we do
business are not made in a timely manner, year 2000 non-compliance could have
a material adverse affect on our business, financial condition and results of
operations.
The evaluation of the our products to date has found one installed product
that is not compliant due to a purchased integrated circuit (I.C.). This IC
has been discontinued and the manufacturer will not provide a replacement.
The discontinued I.C. is designed into multiple circuits and the cost of
retrofit to the older systems is prohibitive. Efforts to date have entailed
working with customers to determine if older installations are still in
service. At this juncture the problem appears to be of minor significance,
as the systems are years old and outdated by today's technology. However,
our customers may make claims against us which may result in significant
costs and uncertainty.
10
Special Note Regarding Forward-looking Statements
Some of the statements contained in this prospectus, including
information incorporated by reference, discuss future expectations, contain
projections of future results of operations or financial condition or state
other "forward-looking" information. Those statements are subject to known
and unknown risks, uncertainties and other factors that could cause the
actual results to differ materially from those contemplated by the
statements. The forward-looking information is based on various factors and
was derived using numerous assumptions. Important factors that may cause
actual results to differ from projections include the risk factors set forth
above.
USE OF PROCEEDS
All of the shares which may be sold pursuant to this prospectus will be
sold from time to time by the selling stockholders for their own accounts or
by pledgees, donees, transferees or other successors in interest thereof.
The Company will receive no proceeds from any such sales of shares.
SELLING STOCKHOLDERS
The following table sets forth the number of shares of Common Stock
beneficially owned by each of the selling stockholders as of the date hereof,
the number of shares owned by them covered by this prospectus and the amount
and percentage of shares to be owned by each selling stockholder after the
sale of all of the shares offered by this prospectus. None of the selling
stockholders has had any position, office or other material relationship with
the Company within the past three years other than as a result of the
ownership of the shares or other securities of the Company. The information
included below is based on information provided by the selling stockholders.
Because the selling stockholders may offer some or all of their shares, no
definitive estimate as to the number of shares that will be held by the
selling stockholders after such offering can be provided and the following
table has been prepared on the assumption that all shares of Common Stock
offered hereby will be sold.
Shares
Owned Percentage of
Shares of After Shares Owned
Beneficially Shares Offering After Offering
Name Owned Offered (1) (1)(2)
- -------------------------- --------- ------- -------- -------------
Bresler Family Investments 1,283,166 600,000 683,166 4.10%
Wistar Morris, III and
Martha H. Morris (3) 703,000 600,000 103,000 0.62%
Skye Capital Partners Ltd. 500,000 500,000 0 0.00%
Aberfoyle, Limited 260,000 260,000 0 0.00%
Trudy M. Self 45,200 40,000 5,200 0.03%
- ----------
(1) Assumes sale of all shares offered by the selling stockholders.
(2) Based on 16,661,449 shares of Common Stock outstanding on July 22,
1999.
(3) Wistar Morris III and Martha H. Morris are husband and wife. Wistar
Morris III owns 380,000 shares and Martha H. Morris owns 323,000 shares.
11
PLAN OF DISTRIBUTION
The shares are being registered in order to facilitate their sale from
time to time by the selling stockholders, or by pledgees, donees, transferees
or other successors in interest thereof, as market conditions permit in one
or more transactions. No underwriting arrangements have been entered into by
the selling stockholders. In addition, as none of the selling stockholders
have advised the Company whether or not they have any current intention of
selling any of the shares, the Company is unable to predict whether or when
any of the selling stockholders will determine to proceed with sales of the
shares, as such determination will be made solely at the discretion of each
selling stockholder. The distribution of the shares by the selling
stockholders and/or their pledgees, donees, transferees or other successors
in interest, may be effected in one or more transactions that may take place
on the over-the-counter market, including ordinary brokers transactions,
privately negotiated transactions or through sales to one or more dealers for
resale of the shares as principals, or a combination of such methods of sale,
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The shares may be sold by
one or more of the following methods, without limitation: (a) a block trade
in which a broker or dealer so engaged will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this
prospectus; (c) ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and (d) face-to-face transactions between sellers
and purchasers without a broker-dealer. In effecting sales, brokers or
dealers engaged by the selling stockholder may arrange for other brokers or
dealers to participate. Such brokers or dealers may receive commissions or
discounts from the selling stockholders in amounts to be negotiated
immediately prior to the sale. The selling stockholders and such brokers and
dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act, in connection with
such sales. The Company has agreed to bear all expenses of registration of
the shares.
The Company will receive no proceeds from any sales of the shares
offered hereby by the selling stockholders. The Company has agreed to pay
the filing fees, costs and expenses associated with the registration
statement excluding fees of counsel to the selling stockholders, but
including fees relating to compliance with state blue sky requirements,
commissions and discounts of underwriters, dealers or agents, if any, and any
stock transfer taxes.
The Company has agreed to indemnify the selling stockholders, or their
transferees or assignees against certain liabilities, including liabilities
under the Securities Act.
12
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 145 of the General Corporation Law of Delaware grants each
corporation organized thereunder the power to indemnify its officers,
directors, employees and agents on certain conditions against liabilities
arising out of any action or proceeding to which any of them is a party by
reason of being such officer, director, employee or agent. The Certificate
of Incorporation also provides for the indemnification, to the fullest extent
permitted by the General Corporation Law of Delaware, of such persons.
Insofar as indemnification for liabilities arising under the Securities Act,
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 Commission such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.
LEGAL MATTERS
The validity of the shares offered hereby is being passed upon for the
Company by Stephen M. Robinson, P.A., 172 Tuckerton Road, Medford, NJ 08055.
EXPERTS
The consolidated financial statements and schedule incorporated by
reference in this prospectus and elsewhere in the registration statement have
been audited by Peter C. Cosmas Co., CPAs, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon authority of the said firm as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement which includes this prospectus
covering this offering with the Securities and Exchange Commission ("SEC").
This prospectus does not contain all the information included in the
registration statement. You can request a copy of the registration statement
and the exhibits from us to get a more complete description of our Company
and this offering. We have provided our address, telephone number and e-mail
address in the section "Incorporation of Certain Information by Reference" if
you wish to obtain free copies of the registration statement and exhibits.
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any reports, statements
or other information we file at the SEC's public reference room in Washington
D.C., New York, New York and Chicago, Illinois. You can also request copies
of these documents, upon payment of a duplicating fee, by writing to the SEC.
Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference rooms. Our SEC filings are also available
to the public on the SEC Internet site at http:\\www.sec.gov. The
registration statement, of which this prospectus forms a part, including all
exhibits, has been filed in electronic form with the SEC through EDGAR.
13
============================================================================
Until ___________, all dealers that effect transactions in these securities
may be required to deliver a prospectus.
We have not authorized any person to give any information or to make any
representations other than those contained in this prospectus. You must not
rely upon any information or representation not contained or incorporated by
reference in this prospectus as if we had authorized it. If any person does
make a statement that differs from what is in this prospectus, you should not
rely on it. This prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the securities to
which they relate nor does this prospectus constitute an offer to sell or the
solicitation of an offer to buy securities in any state or other jurisdiction
to any person to whom it is unlawful to make such offer or solicitation in
such jurisdiction. The information contained in this prospectus is accurate
as of the date of its cover. When we deliver this prospectus or make a sale
pursuant to this prospectus, we are not implying that the information is
current as of the date of the delivery of the sale.
=============================================================================
2,000,000 Shares
SCIENCE DYNAMICS CORPORATION
Common Stock
_______________
PROSPECTUS
_______________
May , 1999
=============================================================================
14
INFORMATION NOT REQUIRED IN THE PROSPECTUS
The Company will bear no expenses in connection with any sale or other
distribution by the selling stockholders of the shares being registered other
than the expenses of preparation and distribution of this registration
statement and the prospectus included in this registration statement. Such
expenses are set forth in the following table. All of the amounts are
estimates except the Securities and Exchange Commission filing fee.
Item 14. Other Expenses of Issuance and Distribution.
SEC registration fee .....................$ 469.13
Accounting fees and expenses..............$2,500.00
Legal fees and expenses.................. $5,000.00
Printing expenses.........................$ 100.00
Miscellaneous.............................$ 30.87
Total................................. $8,100.00
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law (the "DGCL")
provides that a corporation may indemnify its directors and officers, as well
as other employees and individuals, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement in connection with
specified actions, suits or proceedings, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation - a "derivative action"), if they acted in good faith and in
a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful. A
similar standard is applicable in the case of derivative actions, except that
indemnification only extends to expenses (including attorneys' fees) incurred
in connection with the defense or settlement of such actions, and the statute
requires court approval before there can be any indemnification in which the
person seeking indemnification has been found liable to the corporation. The
statute provides that it is not exclusive of other indemnification that may
be granted by a corporation's charter, bylaws, disinterested director vote,
stockholder vote, agreement or otherwise.
The Registrant's Bylaws require that the Corporation shall indemnify to
the full extent authorized by law any person made or threatened to be made a
party to any action, suit or proceeding, whether criminal, civil,
administrative or investigative, by reason of the fact that he, his testator
or intestate is or was a director, officer or employee of the Corporation or
any predecessor of the Corporation or serves or served any other enterprise
as a director, officer or employee at the request of the Corporation or any
predecessor of the Corporation.
15
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability for (1) any
breach of the director's duty of loyalty to the corporation or its
stockholders, (2) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) payments of
unlawful dividends or unlawful stock repurchases or redemptions, or (4) any
transaction from which the director derived an improper personal benefit.
The Registrant's Certificate of Incorporation provides that to the full
extent that the DGCL, as it now exists or may hereafter be amended, a
director of the Registrant shall not be liable to the Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director.
Any amendment to or repeal of such provision shall not adversely affect any
right or protection of a director of the Registrant existing at the time of
such repeal or modification.
Insurance for the Registrant's directors and officers, against expenses
and liabilities in connection with the defense of actions, suits or
proceedings to which they may be parties by reason of having been directors
or officers of the Registrant, is provided by the Registrant.
Item 16. Exhibits.
Exhibit Description
- -------- -----------
1 Not Applicable
2 Not Applicable
4 Not Applicable
5 Opinion of Stephen M. Robinson, P.A., filed herewith
8 Not Applicable
15 Not Applicable
23.1 Consent of Peter C. Cosmas Co., CPAs, filed herewith
23.2 Consent of Stephen M. Robinson, P.A. (included in the opinion
filed as Exhibit No. 5)
24 Not Applicable
25 Not Applicable
26 Not Applicable
27 Not applicable
16
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities,
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, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information
set forth in the registration statement;
(iii) To include any additional or changed material information
with respect to the plan of distribution:
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required in a post-effective amendment is incorporated by
reference from periodic reports filed with the Commission by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act").
(2) That, for the purpose of determining any liability under the
Securities Act, the undersigned will treat each such post-effective amendment
as a new registration statement of the securities offered, and the offering
of the securities at that time to be the initial bona fide offering thereof.
(3) To file a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Company's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Exchange Act) 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 may be permitted to directors, officers and controlling
persons of the Company, pursuant to the provisions described in Item 15
above, or otherwise, the Company 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 Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by any such director, officer or
controlling person in connection with the securities being registered, the
Company 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 of whether or not such indemnification is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
17
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be the initial bona fide offering thereof.
18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cherry Hill in the
State of New Jersey on July 26, 1999.
SCIENCE DYNAMICS CORPORATION
By /s/ Alan C. Bashforth
--------------------------------------
Alan C. Bashforth
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement on Form S-3 has been signed by the following persons
in the capacities and on the dates indicated.
Signature Date
/s/ Lyndon A. Keele July 26, 1999
- ----------------------------------
Lyndon A. Keele
Chairman of the Board of Directors
/s/ Alan C. Bashforth July 26, 1999
- ----------------------------------
Alan C. Bashforth
President, Chief Executive Officer,
and Director
/s/ Joy C. Hartman July 26, 1999
- ----------------------------------
Joy C. Hartman
Treasurer, Secretary, and
Director
/s/ Kenneth P. Ray July 26, 1999
- ----------------------------------
Kenneth P. Ray
Director
/s/ Sheldon Hofferman July 26, 1999
- ----------------------------------
Sheldon Hofferman
Director
/s/ Anand Kumar July 26, 1999
- ----------------------------------
Anand Kumar
Director
July 26, 1999
Exhibit 5.1
[Letterhead of STEPHEN M. ROBINSON, P.A.]
July 26, 1999
Science Dynamics Corporation
1919 Springdale Road
Cherry Hill, NJ 08003
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Science Dynamics Corporation, a
Delaware corporation (the "Company") in connection with the registration
pursuant to a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended, of an aggregate of
2,000,000 shares of Common Stock of the Company, par value $.01 per share
("Common Stock").
In connection with this opinion, we have examined originals, or
copies certified to our satisfaction, of the Certificate of Incorporation of
the Company, as amended, the By-Laws of the Company, as amended, the minutes
and other records of the proceedings of the Board of Directors and of the
stockholders of the Company, and such other documents, corporate and public
records, agreements, and certificates of officers of the Company and of
public and other officials, and we have considered such questions of law, as
we have deemed necessary as a basis for the opinions hereinafter expressed.
In such examination we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
to original documents of all documents submitted to us as certified or
photostatic copies.
Based on and subject to the foregoing, we hereby advise you that,
in our opinion, the shares of Common Stock to be sold pursuant to the
Registration Statement have been duly authorized and have been validly
issued, fully-paid and nonassessable.
We hereby consent to the use and filing of this opinion in
connection with the Registration Statement and to the reference to our firm
under the caption "Legal Matters" in the Registration Statement and in the
related Prospectus.
Very truly yours,
STEPHEN M. ROBINSON, P.A.
/s/ Stephen M. Robinson
By: Stephen M. Robinson
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Science Dynamics Corporation:
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated February 16,
1999 included in Science Dynamics Corporation's Form 10-KSB for the year
ended December 31, 1998 and to all references to our firm included in this
registration statement.
Peter C. Cosmas Co., CPAs
/s/ Peter C. Cosmas Co., CPAs
370 Lexington Avenue
Suite 1205
New York, NY 10017
July 26, 1999
