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Filed pursuant to Rule 424(b)(3)
Registration No. 333-46420
PROSPECTUS
1,199,815 Shares
ODETICS, INC.
Class A Common Stock
This prospectus relates to the public offering, which is not being
underwritten, of 1,199,815 shares of our Class A common stock and associated
purchase rights, which are held by some of our current stockholders. The prices
at which the selling stockholders may sell the shares will be determined by the
prevailing market price for the shares or in negotiated transactions. We will
not receive any of the proceeds from the sale of these shares.
We have two classes of common stock outstanding, the Class A common stock
and the Class B common stock. The rights, preferences and privileges of each
class of common stock are identical in all respects except for voting rights.
The holders of the Class A common stock are entitled to elect 25% of the Board
of Directors rounded up to the nearest whole number or two directors. The
holders of the Class A common stock and the Class B common stock, voting
together as a single class, are entitled to elect the balance of the Board or
six directors. On all other matters to be addressed by a stockholder vote, the
holders of Class A common stock have one-tenth of one vote per share held and
the holders of Class B common stock have one vote per share held.
Our Class A common stock and our Class B common stock are quoted on the
Nasdaq National Market under the symbol "ODETA" and "ODETB," respectively. On
September 19, 2000, the last reported sale price for the Class A common stock
was $16.25 per share and the last reported sale price for the Class B common
stock was $16.625.
_______________________________
You should carefully consider the risk factors beginning on page 3 of this
prospectus before purchasing any of the Class A common stock offered by this
prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
The date of this prospectus is September 29, 2000.
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ODETICS
Odetics serves as an incubator of high technology companies, each with its
own marketplace, customers and products. These operations share a common
corporate overhead for support for facilities, human resources, benefits and
certain accounting, finance and executive management services. We are pursuing
our incubator business strategy to nurture and develop each of these operations
with the ultimate goal of achieving a tax-free spin-off of each entity to our
stockholders.
We currently define our business segments as video products, telecom
products and ITS. Our video products segment includes our Broadcast, Inc.
subsidiary and our Gyyr Incorporated subsidiary. Our telecom products segment
includes our Zyfer, Inc. subsidiary and our Mariner Networks, Inc. subsidiary.
Our ITS segment consists of our Iteris, Inc. subsidiary.
Our principal executive offices are located at 1515 South Manchester
Avenue, Anaheim, California 92802, and our telephone number is (714) 774-5000.
RISK FACTORS
Our business is subject to a number of risks, some of which are discussed
below. Other risks are presented elsewhere in this report. You should consider
the following risks carefully in addition to the other information contained in
this report before purchasing the shares of our common stock. If any of the
following risks actually occur, they could seriously harm our business,
financial condition or results of operations. In such case, the trading price of
our common stock could decline, and you may lose all or part of your investment.
Our Quarterly Operating Results Fluctuate as a Result of Many Factors. Our
quarterly operating results have fluctuated and are likely to continue to
fluctuate due to a number of factors, many of which are not within our control.
Factors that could affect our revenues include the following:
. our significant investment in research and development for our
subsidiaries and divisions;
. our ability to develop, introduce, market and gain market acceptance
of new products applications and product enhancements in a timely
manner;
. the size and timing of significant customer orders;
. the introduction of new products by competitors;
. the availability of components used in the manufacture of our
products;
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. our ability to control costs;
. changes in our pricing policies and the pricing policies by our
suppliers and competitors as well as increased price competition in
general;
. the long lead times associated with government contracts or required
by vehicle manufacturers;
. our success in expanding and implementing our sales and marketing
programs;
. technological changes in our target markets;
. our relatively small level of backlog at any given time;
. the mix of sales among our divisions;
. deferrals of customer orders in anticipation of new products,
applications or product enhancements;
. the Asian economic crisis and instability;
. currency fluctuations and our ability to get currency out of certain
foreign countries; and
. general economic and market conditions.
In addition, our sales in any quarter may consist of a relatively small
number of large customer orders. As a result, the timing of a small number of
orders may impact our quarter to quarter results. The loss of or a substantial
reduction in orders from any significant customer could seriously harm our
business, financial condition and results of operations.
Because of the factors listed above and other risks discussed in this
report, our future operating results could be below the expectations of
securities analysts and/or investors. If that happens, the trading price of our
common stock could be adversely affected.
We Have Experienced Substantial Losses and Expect Future Losses. We have
experienced operating losses of $11.2 million for the three months ended June
30, 2000, $38.7 million for the year ended March 31, 2000 and $18.3 million for
the year ended March 31, 1999. We may not be able to achieve profitability on a
quarterly or annual basis in the future. Most of our expenses are fixed in
advance, and we generally are unable to reduce our expenses significantly in the
short-term to compensate for any unexpected delay or decrease in anticipated
revenues. In addition, in order to implement our incubator strategy
successfully, we expect to continue to make significant investments in each of
our business units. As a result, we may
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continue to experience losses, which could cause the market price of our common
stock to decline.
Our Incubator Strategy is Expensive and May Not Be Successful. We have
initiated a business strategy called our incubator strategy, which is expensive
and highly risky. The goal of this strategy is to nurture and develop companies
that can be spun-off to our stockholders. This strategy has in the past required
us to make significant investments in our business units, both for research and
development, and also to develop a separate infrastructure for each of our
divisions, sufficient to allow the division to function as an independent public
company. We expect to continue to invest heavily in the development of our
divisions with the goal of conducting additional public offerings. We may not
recognize the benefits of this investment for a significant period of time, if
at all. Our ability to complete an initial public offering of any of our
divisions and/or spin-off our interest to our stockholders will depend upon many
factors, including:
. the overall performance and results of operations of the particular
business unit;
. the potential market for our business unit;
. our ability to assemble and retain a broad, qualified management team
for the business unit;
. our financial position and cash requirements;
. the business unit's customer base and product line;
. the current tax treatment of spin-off transactions and our ability to
obtain favorable determination letters from the Internal Revenue
Service; and
. general economic and market conditions, including the receptivity of
the stock markets to initial public offerings.
We may not be able to complete a successful initial public offering or
spin-off of any of our divisions in the near future, or at all. During fiscal
2000, we attempted to complete the initial public offering of Iteris. We aborted
the offering due to adverse market conditions. Even if we do complete additional
public offerings, we may decide not to spin-off a particular business unit, or
to delay the spin-off until a later date.
We Must Keep Pace with Rapid Technological Change to Remain Competitive.
Our target markets are in general characterized by the following factors:
. rapid technological advances;
. downward price pressure in the marketplace as technologies mature;
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. changes in customer requirements;
. frequent new product introductions and enhancements; and
. evolving industry standards and changes in the regulatory environment.
We believe that we must continue to make substantial investments to support
ongoing research and development in order to remain competitive. In particular,
we will need to modify certain of our products to accommodate the anticipated
deployment of digital television and the corresponding phase-out of analog
transmissions. We will also have to continue to develop and introduce new
products that incorporate the latest technological advancements in hardware,
storage media, operating system software and applications software in response
to evolving customer requirements. Our recent shift towards providing more
software solutions may create additional challenges for us, particularly in
Broadcast. Our business and results of operations could be adversely affected if
we do not anticipate or respond adequately to technological developments or
changing customer requirements.
Our Future Success Depends on the Successful Development and Market
Acceptance of New Products. We believe our revenue growth and future operating
results will depend on our ability to complete development of new products and
enhancements, achieve broad market acceptance of these products and
enhancements, and reduce our product costs. We may not be able to introduce any
new products or any enhancements to our existing products on a timely basis, or
at all. In addition, the introduction of any new products could adversely affect
the sales of our certain of our existing products.
Our future success will also depend in part on the success of several
recently introduced products including:
. Roswell, our automated facility management system for broadcast
television stations;
. Bowser, our visual asset manager;
. MicroStation, our integrated disk recorder and automation system;
. Vortex, our high performance dome product;
. Digi Scan Pro, our advanced digital multiplexer;
. DVMS, our family of digital time-lapse recorders;
. Vantage One and Vantage Edge, our single camera traffic detection
systems;
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. AutoVue, our lane departure warning system; and
. Dexter, our networking access device.
Market acceptance of our new products depends upon many factors, including
our ability to resolve technical challenges in a timely and costeffective
manner, the perceived advantages of our new products over traditional products
and the marketing capabilities of our independent distributors and strategic
partners. Our business and results of operations could be seriously harmed by
any significant delays in our new product development. We have experienced
delays in the past in the introduction of new products, particularly with our
Roswell system. Certain of our new products could contain undetected design
faults and software errors or "bugs" when first released by us, despite our
testing. We may not discover these faults or errors until after a product has
been installed and used by our customers. Any faults or errors in our existing
products or in our new products may cause delays in product introduction and
shipments, require design modifications or harm customer relationships, any of
which could adversely affect our business and competitive position.
We currently anticipate that we will outsource the manufacture of our
AutoVue product line to a single manufacturer. This manufacturer may not be able
to produce sufficient quantities of this product in a timely manner or at a
reasonable cost, which could materially and adversely affect our ability to
launch or gain market acceptance of AutoVue.
We May Need Additional Capital in the Future and May Not Be Able to Secure
Adequate Funds on Terms Acceptable to Us. While we recently raised approximately
$17.1 million in September 2000 in a private placement of Odetics Class A common
stock to the selling shareholders named in this prospectus, we may need to raise
additional capital in the near future, either through additional bank borrowings
or other debt or equity financings. Our capital requirements will depend on many
factors, including:
. market acceptance of our products;
. increased research and development funding, and required investments
in our divisions;
. increased sales and marketing expenses; and
. potential acquisitions of businesses and product lines; and additional
working capital needs.
If our capital requirements are materially different from those currently
planned, we may need additional capital sooner than anticipated. If additional
funds are raised through the issuance of equity securities, the percentage
ownership of our stockholders will be reduced and such securities may have
rights, preferences and privileges senior to our common stock. Additional
financing may not be available on favorable terms or at all. If adequate funds
are not available or are not available on acceptable terms, we may be unable to
develop or enhance our
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products, expand our sales and marketing programs, take advantage of future
opportunities or respond to competitive pressures.
We Have Significant International Sales and Are Subject to Risks Associated
with Operating in International Markets. International product sales represented
approximately 20% of our total net sales and contract revenues for the three
months ended June 30, 2000, approximately 19% for the fiscal year ended March
31, 2000, approximately 27% for the fiscal year ended March 31, 1999 and
approximately 34% for the fiscal year ended March 31, 1998. International
business operations are subject to inherent risks, including, among others:
. unexpected changes in regulatory requirements, tariffs and other trade
barriers;
. longer accounts receivable payment cycles;
. difficulties in managing and staffing international operations;
. potentially adverse tax consequences;
. the burdens of compliance with a wide variety of foreign laws;
. reduced protection for intellectual property rights in some countries;
. currency fluctuations and restrictions; and
. political and economic instability.
We believe that international sales will continue to represent a
significant portion of our revenues, and that continued growth and profitability
may require further expansion of our international operations. Our international
sales are currently denominated primarily in U.S. dollars. As a result, an
increase in the relative value of the dollar could make our products more
expensive and potentially less price competitive in international markets. We do
not engage in any transactions as a hedge against risks of loss due to foreign
currency fluctuations.
Any of these factors may adversely effect our future international sales
and, consequently, on our business and operating results. Furthermore, as we
increase our international sales, our total revenues may also be affected to a
greater extent by seasonal fluctuations resulting from lower sales that
typically occur during the summer months in Europe and other parts of the world.
Our Operating Results Have Been Adversely Affected by the Asian Economic
Crisis. Our telecommunications products are sold principally to LGIC of Korea.
As a result of economic instability in Asia, particularly in Korea, our sales in
this region declined over 60% in fiscal year 1999 as compared to fiscal 1998.
While sales to LGIC in fiscal 2000 increased, the aggregate sales to LGIC in
fiscal 2000 were still significantly below fiscal 1998 sales. It is
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possible that these sales could be further impacted by the currency devaluations
and related economic problems in this region, and sales in this region could
continue to decline.
We Need to Manage Growth and the Integration of Our Acquisitions. Over the
past three years, we have significantly expanded our operations and made several
substantial acquisitions of diverse businesses, including Intelligent Controls,
Inc., International Media Integration Services, Ltd., Meyer Mohaddes Associates,
Inc., Viggen Corporation, certain assets of the Transportation Systems business
of Rockwell International, and the Security Products Division of Digital Systems
Processing, Inc. A key element of our business strategy involves expansion
through the acquisition of complementary businesses, products and technologies.
Acquisitions may require significant capital infusions and, in general,
acquisitions also involve a number of special risks, including:
. potential disruption of our ongoing business and the diversion of our
resources and management's attention;
. the failure to retain or integrate key acquired personnel;
. the challenge of assimilating diverse business cultures;
. increased costs to improve managerial, operational, financial and
administrative systems and to eliminate duplicative services;
. the incurrence of unforeseen obligations or liabilities;
. potential impairment of relationships with employees or customers as a
result of changes in management; and
. increased interest expense and amortization of acquired intangible
assets.
Our competitors are also soliciting potential acquisition candidates, which
could both increase the price of any acquisition targets and decrease the number
of attractive companies available for acquisition.
Acquisitions, combined with the expansion of our business divisions and
recent growth has placed and is expected to continue to place a significant
strain on our resources. To accommodate this growth, we anticipate that we will
be required to implement a variety of new and upgraded operational and financial
systems, procedures and controls, including the improvement of our accounting
and other internal management systems. All of these updates will require
substantial management effort. Our failure to manage growth and integrate our
acquisitions successfully could adversely affect our business, financial
condition and results of operations.
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We Depend on Government Contracts and Subcontracts and Face Additional
Risks Related to Fixed Price Contracts. A significant portion of the sales by
Iteris and a portion of our sales by Zyfer were derived from contracts with
governmental agencies, either as a general contractor, subcontractor or
supplier. Government contracts represented approximately 24% and 24% of our
total net sales and contract revenues for the year ended March 31, 2000 and the
three months ended June 30, 2000, respectively. We expect revenue from
government contracts will continue to increase in the near future. Government
business is, in general, subject to special risks and challenges, including:
. long purchase cycles;
. competitive bidding and qualification requirements;
. performance bond requirements;
. delays in funding, budgetary constraints and cut-backs; and
. milestone requirements, and liquidated damage provisions for failure
to meet contract milestones.
In addition, a large number of our government contracts are fixed price
contracts. As a result, we may not be able to recover for any cost overruns.
These fixed price contracts require us to estimate the total project cost based
on preliminary projections of the project's requirements. The financial
viability of any given project depends in large part on our ability to estimate
these costs accurately and complete the project on a timely basis. In the event
our costs on these projects exceed the fixed contractual amount, we will be
required to bear the excess costs. These additional costs adversely affect our
financial condition and results of operations. Moreover, certain of our
government contracts are subject to termination or renegotiation at the
convenience of the government, which could result in a large decline in our net
sales in any given quarter. Our inability to address any of the foregoing
concerns or the loss or renegotiation of any material government contract could
seriously harm our business, financial condition and results of operations.
The Markets in Which We Operate Are Highly Competitive and Have Many More
Established Competitors. We compete with numerous other companies in our target
markets and we expect such competition to increase due to technological
advancements, industry consolidations and reduced barriers to entry. Increased
competition is likely to result in price reductions, reduced gross margins and
loss of market share, any of which could seriously harm our business, financial
condition and results of operations. Many of our competitors have far greater
name recognition and greater financial, technological, marketing and customer
service resources than we do. This may allow them to respond more quickly to
new or emerging technologies and changes in customer requirements. It may also
allow them to devote greater resources to the development, promotion, sale and
support of their products than we can. Recent consolidations of end users,
distributors and manufacturers in our target markets have exacerbated this
problem. As a result of the foregoing factors, we may not be able to compete
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effectively in our target markets and competitive pressures could adversely
affect our business, financial condition and results of operations.
We Cannot Be Certain of Our Ability to Attract and Retain Key Personnel and
We Do Not Have Employment Agreements with Any Key Personnel. Due to the
specialized nature of our business, we are highly dependent on the continued
service of our executive officers and other key management, engineering and
technical personnel, particularly Joel Slutzky, our Chief Executive Officer and
Chairman of the Board, and Gregory A. Miner, our Chief Operating Officer and
Chief Financial Officer. We do not have any employment contracts with any of our
officers or key employees. The loss of any of these persons would seriously harm
our development and marketing efforts, and would adversely affect our business.
Our success will also depend in large part upon our ability to continue to
attract, retain and motivate qualified engineering and other highly skilled
technical personnel. Competition for employees, particularly development
engineers, is intense. We may not be able to continue to attract and retain
sufficient numbers of such highly skilled employees. Our inability to attract
and retain additional key employees or the loss of one or more of our current
key employees could adversely affect upon our business, financial condition and
results of operations.
We May Not be Able to Adequately Protect or Enforce Our Intellectual
Property Rights. If we are not able to adequately protect or enforce the
proprietary aspects of our technology, competitors could be able to access our
proprietary technology and our business, financial condition and results of
operations will likely be seriously harmed. We currently attempt to protect our
technology through a combination of patent, copyright, trademark and trade
secret laws, employee and third party nondisclosure agreements and similar
means. Despite our efforts, other parties may attempt to disclose, obtain or use
our technologies or solutions. Our competitors may also be able to independently
develop products that are substantially equivalent or superior to our products
or design around our patents. In addition, the laws of some foreign countries do
not protect our proprietary rights as fully as do the laws of the United States.
As a result, we may not be able to protect our proprietary rights adequately in
the United States or abroad.
We have engaged in litigation in the past and litigation may be necessary
in the future to enforce our intellectual property rights or to determine the
validity and scope of the proprietary rights of others. Litigation may also be
necessary to defend against claims of infringement or invalidity by others. An
adverse outcome in litigation or any similar proceedings could subject us to
significant liabilities to third parties, require us to license disputed rights
from others or require us to cease marketing or using certain products or
technologies. We may not be able to obtain any licenses on terms acceptable to
us, or at all. Any of these results could adversely affect on our business,
financial condition and results of operations. In addition, the cost of
addressing any intellectual property litigation claim, both in legal fees and
expenses, and the diversion of management resources, regardless of whether the
claim is valid, could be significant and could seriously harm our business,
financial condition and results of operations.
The Trading Price of Our Common Stock Is Volatile. The trading price of our
common stock has been subject to wide fluctuations in the past. We may not be
able to increase or sustain the current market price of our common stock in the
future. The market price of our
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common stock could continue to fluctuate in the future in response to various
factors, including, but not limited to:
. quarterly variation in operating results;
. shortages announced by suppliers;
. announcements of technological innovations or new products;
. acquisitions or businesses, products or technologies;
. changes in pending litigation;
. our ability to spin-off any division;
. applications or product enhancements by us or by our competitors; and
. changes in financial estimates by securities analysts.
The stock market in general has recently experienced volatility, which has
particularly affected the market prices of equity securities of many high
technology companies. This volatility has often been unrelated to the operating
performance of these companies. These broad market fluctuations may adversely
affect the market price of our common stock.
We Are Controlled by Certain of Our Officers and Directors. As of September
7, 2000, our officers and directors beneficially owned approximately 28% of the
total combined voting power of the outstanding shares of our Class A common
stock and Class B common stock. As a result of their stock ownership, our
management will be able to significantly influence the election of our directors
and the outcome of corporate actions requiring stockholder approval, such as
mergers and acquisitions, regardless of how our other stockholders may vote.
This concentration of voting control may have a significant effect in delaying,
deferring or preventing a change in our management or change in control and may
adversely affect the voting or other rights of other holders of common stock.
Our Stock Structure and Certain Anti-Takeover Provisions May Affect the
Price of Our Common Stock. Certain provisions of our certificate of
incorporation and our stockholder rights plan could make it difficult for a
third party to acquire us, even though an acquisition might be beneficial to our
stockholders. These provisions could limit the price that investors might be
willing to pay in the future for shares of our common stock. Our Class A common
stock entitles the holder to one-tenth of one vote per share and our Class B
common stock entitles the holder to one vote per share. In addition, holders of
the Class B common stock are presently entitled to elect six of our nine
directors. The disparity in the voting rights between our common stock, as well
as our insiders' significant ownership of the Class B common stock, could
discourage a proxy contest or make it more difficult for a third party to effect
a change in our
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management and control. In addition, our Board of Directors is authorized to
issue, without stockholder approval, up to 2,000,000 shares of preferred stock
with voting, conversion and other rights and preferences superior to those of
our common stock, as well as additional shares of Class B common stock. Our
future issuance of preferred stock or Class B common stock could be used to
discourage an unsolicited acquisition proposal.
In March 1998, we adopted a stockholder rights plan and declared a dividend
of preferred stock purchase rights to our stockholders. In the event a third
party acquires more than 15% of the outstanding voting control of our company or
15% of our outstanding common stock, the holders of these rights will be able to
purchase the junior participating preferred stock at a substantial discount off
of the then current market price. The exercise of these rights and purchase of a
significant amount of stock at below market prices could cause substantial
dilution to a particular acquiror and discourage the acquiror from pursuing our
company. The mere existence of the stockholder rights plan often delays or makes
a merger, tender offer or proxy contest more difficult.
We Do Not Pay Cash Dividends. We have never paid cash dividends on our
common stock and do not anticipate paying any cash dividends on either class of
our common stock in the foreseeable future.
We May Be Subject to Additional Risks. The risks and uncertainties
described above are not the only ones facing our company. Additional risks and
uncertainties not presently known to us or that we currently deem immaterial may
also adversely affect our business operations.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file with the
SEC at the SEC's public reference room at 450 Fifth Street, N.W., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. Our SEC filings are also available to the public at the
SEC's web site at http://www.sec.gov.
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 you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended. This prospectus is part of a
registration statement we filed with the SEC (Registration No. 333-46420).
The documents we incorporate by reference are:
1. Our Annual Report on Form 10-K for the fiscal year ended March 31, 2000;
2. Our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
2000;
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3. Our definitive Proxy Statement filed with the SEC on July 28, 2000 in
connection with our 2000 Annual Meeting of Stockholders;
4. Our Current Report on Form 8-K for an event as of July 31, 2000 (as filed
on August 16, 2000);
5. The description of our Class A common stock contained in our registration
statement on Form 8-A filed with the SEC on October 14, 1987 under Section
12 of the Exchange Act, including any amendment or report filed for the
purpose of updating such; and
6. The description of our preferred stock purchase rights contained in our
registration statement on Form 8-A filed with the SEC on May 1, 1998 under
Section 12 of the Exchange Act, including any amendment or report filed for
the purpose of updating such description.
All reports and other documents we subsequently file under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, after the
date of this prospectus and prior to the termination of this offering will be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such reports and documents. Any statement incorporated 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 statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this prospectus.
We will provide without charge to each person to whom this prospectus is
delivered, upon written or oral request of such person, a copy of any or all of
the foregoing documents incorporated herein by reference. We will not provide
copies of exhibits to such documents unless such exhibits are specifically
incorporated by reference into such document. Requests for documents should be
submitted in writing to the Secretary, at Odetics, Inc., 1515 South Manchester
Avenue, Anaheim, California 92802 or by telephone at (714) 774-5000.
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference in this
prospectus contain forward-looking statements. These forward-looking statements
are based on our current expectations, estimates and projections about our
industry, management's beliefs and certain assumptions made by us. Words such as
"anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates"
and variations of these words or similar expressions are intended to identify
forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and assumptions that
are difficult to predict. Therefore, our actual results could differ materially
from those expressed or forecasted in any forward-looking statements as a result
of a variety of factors, including those set forth in "Risk Factors" below and
elsewhere in, or incorporated by reference into, this prospectus. We undertake
no obligation to update publicly any forward-looking statements for any reason,
even if new information becomes available or other events occur in the future.
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USE OF PROCEEDS
The selling stockholders will receive all of the net proceeds from the sale
of the Class A common stock offered by this prospectus. Accordingly, we will not
receive any proceeds from sales of these shares.
SELLING STOCKHOLDERS
The following table sets forth the number of shares of our Class A Common
Stock owned by each of the selling stockholders. All information contained in
the table below is based upon their beneficial ownership as of September 7,
2000. We are not able to estimate the number of shares that will be held by the
selling stockholders after completion of this offering because the selling
stockholders may offer all or some of the shares and because there currently are
no agreements, arrangements or understandings with respect to the sale of any of
the shares.
<TABLE>
<CAPTION>
Shares Beneficially
Number of Shares Number of Shares Owned After Offering(1)
----------------------------
Selling Stockholder Beneficially Owned Being Offered Number Percentage(2)
------------------------------ -------------------- ----------------- -------- --------------
<S> <C> <C> <C> <C>
SACC Partners, L.P..................... 35,063 35,063 -- *
Riley Family Trust..................... 42,531 17,531 25,000 *
Bryant Riley........................... 148,346 66,585 81,761 *
Donaldson, Lufkin & Jenrette
Securities Co.......................... 350,631 350,631 -- *
Eugene R. Brodsky(5)................... 352,063 35,063 317,000 3.4
Milfam 1............................... 348,163 35,063 313,100 3.3
Joel & Judith D. Slutzky Trust(3)(4)(5) 756,249(6) 70,126 686,123(6) 7.3
Ralph R. Mickelson(4)(7)............... 93,206 7,012 86,194 *
Pyramid Trading Limited Partnership(4). 106,000 105,000 1,000 *
John Silberman......................... 17,531 17,531 -- *
Jacob Kiferbaum(4)..................... 17,531 17,531 -- *
Robert & Annette Lichtenstein(4)....... 93,100 70,100 23,000 *
Blue Capital Group LLC................. 70,126 70,126 -- *
Irv Kessler............................ 210,378 210,378 -- *
Catalyst Investment Management Co.(4).. 155,419 50,000 105,419 1.1
Potomac Capital Partners, LLP.......... 97,075 42,075 55,000 *
------------------------------------------------------------------
Total............ 2,893,412 1,199,815 1,693,597 18.0
</TABLE>
_________________
* Represents beneficial ownership of less than 1% of the outstanding shares
of Class A common stock.
(1) This table assumes that all shares owned by the selling stockholders which
are offered by this prospectus are being sold. The selling stockholders
reserve the right to accept or reject, in whole or in part, any proposed
sale of shares. The selling stockholders also may offer and sell less than
the number of shares indicated. The
15
<PAGE>
selling stockholders are not making any representation that any shares
covered by this prospectus will or will not be offered for sale.
(2) Based on 9,417,157 shares of Class A Common Stock outstanding as of
September 7, 2000.
(3) Mr. Slutzky presently serves as Chairman of the Board and Chief Executive
Officer of Odetics, Chairman of the Board and Vice President of the Gyyr
Incorporated subsidiary, Chairman of the Board of the Iteris, Inc.
subsidiary, Director and Vice President of the Mariner Networks, Inc.
subsidiary, Chairman of the Board and Chief Executive Officer of the
Broadcast, Inc. subsidiary, and Chairman of the Board of the Zyfer
subsidiary.
(4) In March 1999, Odetics completed the issuance and sale of an aggregate of
1,499,851 shares of its Class A common stock in a private placement at a
purchase price equal to $6.625 per share. The following selling
stockholders participated in that previous private placement: Joel Slutzky
purchased 232,303 shares at an aggregate purchase price of $1,539,007,
Ralph R. Mickelson purchased 15,094 shares at an aggregate purchase price
of $99,998, Pyramid Trading Limited Partnership purchased 233,963 shares at
an aggregate purchase price of $1,550,005, certain affiliates of Catalyst
Investment Management Co. purchased an aggregate of 122,316 shares at an
aggregate purchase price of $810,344, Robert Lichtenstein purchased 196,227
shares at an aggregate purchase price of $1,300,004, and Jacob Kiferbaum
purchased 30,189 shares at an aggregate purchase price of $200,002.
In March 1999, the stockholders of Odetics approved and ratified the
issuance of the Class A common stock to the officers and directors of
Odetics participating in such private placement and Odetics has filed a
Registration Statement on Form S-3 with the SEC to register all of such
shares.
(5) Messrs. Slutzky and Brodsky made capital contributions of $2,500,000 and
$500,000 respectively, to Manchester Capital LLC, representing membership
interests of 50% and 10%, respectively. Mr. Slutzky's contribution includes
a $2,000,000 investment by Mr. Slutzky's trust but does not include a
$500,000 investment made by Mr. Slutzky's adult son. In July 1999, Odetics
sold an option to Manchester Capital for an aggregate purchase price of
$5,000,000 to purchase certain real property of Odetics consisting of
approximately 14 acres located at 1515 South Manchester Avenue, Anaheim,
California. Odetics repurchased the option on August 4, 2000 for an
aggregate repurchase price of $5,600,000.
(6) Includes 69,996 shares issuable upon exercise of options that are currently
exercisable or will become exercisable within 60 days after September 7,
2000. Excludes 332,179 shares held in trust for the benefit of the children
and relatives of Mr. Slutzky as to which Mr. Slutzky has no investment or
voting power and disclaims any beneficial ownership.
(7) Mr. Mickelson previously served as a member of the Board of Directors of
Odetics from 1975 until 2000.
This prospectus also covers any additional shares of Class A common stock
which become issuable in connection with the shares being registered by reason
of any stock dividend, stock split, recapitalization or other similar
transaction effected without the receipt of consideration which results in an
increase in the number of our outstanding shares of Class A common stock. In
addition, this prospectus covers the preferred stock purchase rights which
currently trade with the Class A common stock and entitle the holder to purchase
additional shares of Class A common stock under certain circumstances.
16
<PAGE>
Except as indicated above, we are not aware of any material relationship
between our company and any selling stockholder within the past three years
other than as a result of the ownership of the stockholder's shares. All of the
selling stockholders acquired the shares offered by this prospectus in
connection with our private placement in September 2000. Pursuant to the
Securities Purchase Agreements between us and each of the selling stockholders
dated September 6, 2000, we agreed to effect a shelf registration (of which this
prospectus is a part) of all of these shares in order to permit the selling
stockholders to sell these shares from time to time in the public market or in
privately-negotiated transactions. We have agreed to prepare and file any
amendments and supplements to the registration statement relating to these
shares as may be necessary to keep the registration statement effective until
the earlier of:
(i) the date on which all of the shares being registered have been sold by
the selling stockholders under the registration statement and no further
securities may be issued in the future; or
(ii) the date on which all of the shares may be immediately sold by the
selling stockholders without registration and without restriction as to the
number of shares to be sold, pursuant to Rule 144 or otherwise.
We have also agreed to pay for all expenses of this offering other than
fees and expenses of counsel for the selling stockholders and any underwriting
discounts and commissions and brokerage commissions and fees.
PLAN OF DISTRIBUTION
We are registering all 1,199,815 shares on behalf of certain selling
stockholders. All of the selling stockholders acquired their shares from us in
connection with a private placement we conducted in September 2000. We will not
receive any of the proceeds from this offering.
The selling stockholders named in this prospectus or pledgees, donees,
transferees or other successors-in-interest selling shares received from a named
selling stockholder as a gift, partnership distribution or other non-sale
related transfer after the date of this prospectus may sell these shares from
time to time. The selling stockholders will act independently of Odetics in
making decisions with respect to the timing, manner and size of each sale. The
sales may be made on one or more exchanges or in the over-the-counter market or
otherwise, at prices and at
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<PAGE>
terms then prevailing or at prices related to the then current market price, or
in negotiated transactions. The selling stockholders may effect such
transactions by selling the shares to or through broker-dealers. The shares may
be sold by one or more of, or a combination of, the following:
. a block trade in which the broker-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;
. purchases by a broker-dealer as principal and resale by such broker-
dealer for its account under this prospectus;
. an exchange distribution in accordance with the rules of such
exchange;
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers; or
. in privately negotiated transactions.
To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. In effecting sales,
broker-dealers engaged by the selling stockholders may arrange for other broker-
dealers to participate in the resales.
The selling stockholders may enter into hedging transactions with broker-
dealers in connection with distributions of the shares or otherwise. In such
transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with selling stockholders. The
selling stockholders also may sell shares short and redeliver the shares to
close out such short positions. The selling stockholders may enter into option
or other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares under this prospectus. The selling stockholders also may
loan or pledge the shares to a broker-dealer. The broker-dealer may sell the
shares so loaned, or upon a default the broker-dealer may sell the pledged
shares under this prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling stockholders. Broker-dealers
or agents may also receive compensation from the purchasers of the shares for
whom they act as agents or to whom they sell as principals, or both.
Compensation as to a particular broker-dealer might be in excess of customary
broker-dealers or the selling stockholders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act of 1933, as amended,
in connection with sales of the shares. Accordingly, any such commission,
discount or concession received by them and any profit on the resale of the
shares purchased by them may be deemed to be underwriting discounts or
commissions under the Securities Act. Because selling stockholders may be deemed
to be "underwriters" within the meaning of Section 2(11) of the Securities Act,
the selling stockholders will be subject to the prospectus delivery requirements
of the Securities Act.
18
<PAGE>
In addition, any securities covered by this prospectus which qualify for sale
under Rule 144 promulgated under the Securities Act may be sold under Rule 144
rather than under this prospectus. The selling stockholders have advised us that
they have not entered into any agreements, understandings or arrangements with
any underwriters or broker- dealers regarding the sale of their securities.
There is no underwriter or coordinating broker acting in connection with the
proposed sale of shares by selling stockholders.
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares may not simultaneously engage in
market making activities with respect to our common stock for a period of two
business days prior to the commencement of such distribution. In addition, each
selling stockholder will be subject to applicable provisions of the Exchange Act
and the associated rules and regulations under the Exchange Act, including
Regulation M, which provisions may limit the timing of purchase and sales of
shares of our common stock by the selling stockholders. We will make copies of
this prospectus available to the selling stockholders and have informed them of
the need for delivery of copies of this prospectus to purchasers at or prior to
the time of any sale of the shares.
We will file a supplement to this prospectus, if required, under Rule
424(b) under the Securities Act upon being notified by a selling stockholder
that any material arrangement has been entered into with a broker-dealer for the
sale of shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer. Such supplement will
disclose:
. the name of each such selling stockholder and of the participating
broker-dealer(s),
. the number of shares involved,
. the price at which such shares were sold,
. the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable,
. that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this
prospectus, and
. other facts material to the transaction.
In addition, upon being notified by a selling stockholder that a donee or
pledgee intends to sell more than 500 shares, we will file a supplement to this
prospectus.
19
<PAGE>
We will bear all costs, expenses and fees in connection with the
registration of the shares. The selling stockholder will bear all commissions
and discounts, if any, attributable to the sales of the shares. The selling
stockholders may agree to indemnify any broker-dealer or agent that participates
in transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act. The selling stockholders
have agreed to indemnify certain persons, including broker-dealers and agents,
against certain liabilities in connection with the offering of the shares,
including liabilities arising under the Securities Act.
INDEMNIFICATION
Under Section 145 of the Delaware General Corporation Law, we can indemnify
our directors and officers against liabilities they may incur in their
capacities as officers and directors, including for liabilities under the
Securities Act. Our bylaws provide that we will indemnify our directors and
officers to the fullest extent permitted by law. Our bylaws also require us to
advance litigation expenses upon our receipt of an undertaking by the director
or officer to repay such advances if it is ultimately determined that the
director or officer is not entitled to indemnification. The bylaws further
provide that rights conferred under such bylaws do not exclude any other right
such persons may have or acquire under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
Our certificate of incorporation provides that, under Delaware law, our
directors will not be liable for monetary damages for breach of the directors'
fiduciary duty of care to us and our stockholders. This provision in the
certificate of incorporation does not eliminate the duty of care, and in
appropriate circumstances equitable remedies such as injunctive or other forms
of non-monetary relief will remain available under Delaware law. In addition,
each director will continue to be subject to liability for breach of the
director's duty of loyalty to us or our stockholders, for acts or omissions not
in good faith or involving intentional misconduct or knowing violations of law,
for actions leading to improper personal benefit to the director, and for
payment of dividends or approval of stock repurchases or redemptions that are
unlawful under Delaware law. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws.
We have also entered into agreements to indemnify our directors, the
directors of certain of our subsidiaries and certain of our officers in addition
to the indemnification provided for in the certificate of incorporation and
bylaws. These agreements, among other things, indemnify our directors and
certain of our officers for certain expenses, attorneys' fees, judgments, fines
and settlement amounts incurred by such person in any action or proceeding,
including any action by or for us, on account of services as our director or
officer, or as a director or officer of any other company or enterprise to which
the person provides services at our request.
LEGAL MATTERS
The legality of the shares offered hereby will be passed upon for Odetics
by Brobeck, Phleger & Harrison LLP, Irvine, California.
20
<PAGE>
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended March 31, 2000, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our consolidated financial statements and schedule are incorporated
by reference in reliance on Ernst & Young LLP's report, given on their authority
as experts in accounting and auditing.
21
<PAGE>
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We have not authorized any person to make a statement that differs from what is
in this prospectus. If any person does make a statement that differs from what
is in this prospectus, you should not rely on it. This prospectus is not an
offer to sell, nor is it seeking an offer to buy, these securities in any state
in which the offer or sale is not permitted. The information in this prospectus
is complete and accurate as of its date, but the information may change after
that date.
____________________________
TABLE OF CONTENTS
Page
----
Odetics............................................................. 3
Risk Factors........................................................ 3
Where You Can Find More Information................................. 13
Forward-Looking Statements.......................................... 14
Use of Proceeds..................................................... 15
Selling Stockholders................................................ 15
Plan of Distribution................................................ 17
Indemnification..................................................... 20
Legal Matters....................................................... 20
Experts............................................................. 21
ODETICS, INC.
1,199,815 Shares
of
Class A Common Stock
_______________________________
PROSPECTUS
_______________________________
September 29, 2000
================================================================================
