<PAGE> 1
As Filed with the Securities and Exchange Commission on May 24, 2000
Registration No. 333-92413
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3; AMENDMENT NO. 3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Exact name of registrant as specified in charter
------------------------------------------------
MSI HOLDINGS, INC.
<TABLE>
<S> <C> <C>
State or jurisdiction of Address, including zip code, and telephone number, including area I.R.S. Employer
incorporation or organization code, of registrant's principal executive offices Identification Number
----------------------------- ------------------------------------------------- ---------------------
UTAH MSI HOLDINGS, INC. 87-0280886
1121 E. 7TH STREET
AUSTIN, TEXAS 78702
(512) 476-6925
Name, address, including zip code, and telephone number, including With a copy to:
area code, of agent for service ---------------
------------------------------- GARY L. WOOLFOLK
ROBERT J. GIBBS VIAL HAMILTON, KOCH & KNOX, L.L.P.
1121 E. 7TH STREET 1717 MAIN STREET, SUITE 4400
AUSTIN, TEXAS 78702 DALLAS, TEXAS 75201
(512) 476-6925 (214) 712-4344
</TABLE>
Approximate date of commencement of proposed sale to the public
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
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 registrations 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. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
--------------------------- ------------- ------------------- ------------------------ ----------------
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered registered unit offering price aggregate offering price registration fee
--------------------------- ------------- ------------------- ------------------------ ----------------
Common stock
$0.10 par value (1) 3,148,720 (2) $9.875 (3) $20,273,890 (4) $5,636.14 (5)
--------------------------- ------------- ------------------- ------------------------ ----------------
</TABLE>
<PAGE> 2
(1) Such securities have been registered for issuance by the
registrant on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, as amended.
(2) Consists of 3,103,720 shares previously covered by this
filing, through amendment number 2 and 45,000 shares added
pursuant to this Amendment No. 3.
(3) Estimated solely for the purpose of computing the amount of
registration fee in accordance with Rule 457(c) promulgated
under the Securities Act.
(4) Consists of $19,829,515 previously set forth in this filing,
through amendment number 2, plus $444,375 calculated for
purpose of this Amendment No. 3 at $9.875 (the closing price
on May 16, 2000).
(5) Wire transfers of $5,512.61 were previously submitted in
connection with this filing, through amendment number two.
Remittance for the balance of $123.54 has been sent by wire
transfer.
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, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE> 3
SUBJECT TO COMPLETION, DATED MAY 24, 2000
PROSPECTUS
MSI HOLDINGS, INC.
1121 E. 7th Street
Austin, Texas 78702
(512) 476-6925
3,148,720 SHARES OF COMMON STOCK
The shares of common stock of MSI Holdings, Inc., covered by this
prospectus are offered by the shareholders listed under "Selling Shareholders"
on page 10. We will not receive any of the proceeds from the shares offered by
the selling shareholders.
In addition to the shares covered by this prospectus, we have
registered or are in the process of registering an additional 20,524,293 shares
of our common stock. These additional shares are being offered for sale
contemporaneously with the shares covered by this prospectus.
Trading symbol: MSIA Market: OTC-BB
---------------------------------------------
THE COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVES A HIGH DEGREE OF
RISK. YOU SHOULD PURCHASE SHARES ONLY IF YOU CAN AFFORD A COMPLETE LOSS. SEE
"RISK FACTORS" BEGINNING ON PAGE 2.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------------------------------
, 2000
<PAGE> 4
Additional information, including "Risk Factors" and our financial
statements for the year ended March 31, 1999 and notes to the financial
statements, is incorporated in to this prospectus by reference to our Form
10-KSB/A filed with the SEC. You are urged to read this prospectus and the
10-KSB/A in their entirety. All references to "MSHI," "we," "us," and "our,"
mean MSI Holdings, Inc., and its subsidiaries.
RISK FACTORS
You should carefully consider the following factors in evaluating us and
our business before purchasing the shares of common stock offered by this
prospectus.
RISKS RELATED TO OUR BUSINESS
WE ARE OPERATING UNDER AN UNPROVEN BUSINESS MODEL AND MAY PROVE TO BE
LESS ATTRACTIVE THAN CURRENTLY ANTICIPATED, OR EVEN INFEASIBLE.
Our success depends on unproven products. Our revenues are generated by
providing customers with bandwidth and related services. Our products are
relatively new to the marketplace. Our success depends on our products achieving
wide acceptance in the market at competitive prices. We may be unable to attain
expected demand levels, curtail expenses or successfully achieve other
benchmarks necessary for the success of our business plan.
Our forecasts for future demand and operations are based on the
successful development of a market for our products and services. Given the
relative novelty of our products and services, there is limited data available
on which to base a reliable forecast.
THERE IS LIMITED INFORMATION ON WHICH TO EVALUATE OUR OPERATIONS.
FORECASTS OF OUR PERFORMANCE MAY BE INACCURATE AND ACTUAL RESULT MAY
VARY SIGNIFICANTLY FROM CURRENT EXPECTATIONS.
Since March 1999, we have changed the focus of our business from
providing hardware and systems integration services to providing a suite of
high-speed Internet access, data transport and networking services, co-location
services and web site hosting services. Because of our limited operating history
in providing our current product mix, there is limited operating and financial
data about our business for you to use in evaluating us or our performance.
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WE HAVE INCURRED NET LOSSES SINCE OUR INCEPTION AND ANTICIPATE
CONTINUING LOSSES. AS A SHAREHOLDER, YOUR INVESTMENT MAY BE LOST IF WE
FAIL TO BECOME PROFITABLE.
To date, we have had limited revenues and have not shown a profit in our
operations. As of December 31, 1999, our accumulated deficit was approximately
$32.3 million. Approximately $19.9 million of the deficit relates to losses from
operations. The remaining $12.4 million of deficit relates to losses incurred
due to discounts recorded on issuances and conversions of common and preferred
stock. We cannot predict when profitability might be achieved, if at all. If we
are able to become profitable, we may not be able to sustain it. If we are
unable to obtain profitability or sustain it, we may have to discontinue
operations.
WE MAY BE UNABLE TO MANAGE COMPLICATIONS THAT ARISE DURING THE BUILD OUT
OF ADDITIONAL DATA CENTERS WHICH MAY ADVERSELY AFFECT OUR CASH FLOW AND
PROFITABILITY PROJECTIONS.
We are planning to build out up to 15 new data centers across a wide
range of geographic regions. The build out of data centers is a key element of
our business strategy. Each data center takes approximately 30 to 90 days to
complete. Any delay in the build out of new data centers would significantly
harm our expansion plans. Many of the risks associated with significant
expansion projects are beyond our control and could delay the build out of
additional data centers. These risks include cost estimation errors or overruns,
equipment and material delays or shortages, and the inability to obtain
necessary permits on a timely basis, if at all.
WE MAY BE UNABLE TO MANAGE THE INCREASED EXPENSES OF DEVELOPING AND
OPERATING THE NEW DATA CENTERS WHICH MAY RENDER US UNABLE TO SATISFY
CURRENT AND FUTURE OBLIGATIONS.
If completed, new data centers will result in substantial new operating
expenses. Moreover, a failure to institute adequate financial and managerial
controls, reporting systems and procedures for multiple facilities would
significantly harm our operations. Failure to manage the data center's increased
expenses could result in our inability to service existing obligations.
WE HAVE HAD RECENT CHANGES IN MANAGEMENT. OUR CURRENT MANAGEMENT MAY BE
UNABLE TO LEAD US INTO PROFITABILITY.
Several member of our calendar year 1999 management team are no longer
with us. We are continuing to build a new management team. This team has not had
the opportunity to work together in the past. There is no assurance the new
management team will be able to successfully lead us into profitability.
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WE WILL BE UNABLE TO EFFECTIVELY COMPETE IF WE ARE UNABLE TO ATTRACT AND
RETAIN KEY PERSONNEL.
Our future success depends on highly qualified technical, sales,
marketing and customer service personnel. The industry in which we compete has a
high level of employee mobility and aggressive recruiting of skilled personnel.
We face intense competition for qualified personnel in software development,
network engineering and product management. If we are unable to attract and
retain qualified personnel, our ability to compete will be compromised.
OUR POSSIBLE EXPOSURE TO INFRINGEMENT CLAIMS MAY UNEXPECTEDLY INCREASE
OUR EXPENSES, ADVERSELY AFFECTING OUR CASH FLOWS AND PROFITABILITY.
Our management personnel were previously employees of other
telecommunications companies. Our management personnel may have had contracts
with the prior companies. In many cases, these individuals conduct activities
for us in areas similar to those in which they were involved before joining us.
As a result, we or our employees could be subject to allegations of violation of
trade secrets, breach of contract or unfair competition. These claims may
distract our management and employees from their duties and require reallocation
of our resources. Moreover, an unfavorable ruling may hinder our ability to use
technology we need to conduct our business. Liability and defense costs under
these claims could increase our expenses and adversely affect our ability to
compete.
OUR OPERATIONS DEPEND ON OUR ABILITY TO MAINTAIN FAVORABLE RELATIONSHIPS
WITH THIRD PARTY SUPPLIERS. WE CAN NOT ASSURE THE CONTINUITY OF THOSE
RELATIONSHIPS.
We have entered into several alliance and contractual agreements to
utilize third parties' and networks for our products and services. We are
dependent on the continued availability of these infrastructures and networks
for our growth and development. If we are unable to maintain or replace our
relationships with our suppliers, we will be unable to provide the current level
of services to our customers. Our failure to consistently provide our current
levels of service could result in a reduction of our client base and sales
volume.
SYSTEM FAILURES COULD DISRUPT OUR SERVICES AND CAUSE US TO LOSE
CUSTOMERS.
Our target market is particularly sensitive to service failures. Service
failures may reduce or terminate the services we supply to our customers. Any
reduction or termination of our services could cause our customers to switch
their business to our competitors and may hinder our ability to obtain new
customers. Our system is vulnerable to damage from human error, power loss,
facility failures, fire, earthquake, floods, telecommunications failure,
break-ins, sabotage, and vandalism. Moreover, we do not presently have a
disaster recovery plan, carry any business interruption insurance or have any
secondary off-site systems.
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<PAGE> 7
These risks are aggravated by the fact that substantially all of our
communications and computer hardware is located within a single facility in
Austin, Texas.
RISKS RELATED TO OUR INDUSTRY
OUR GROWTH AND PERFORMANCE MAY BE HINDERED IF INTERNET USE FAILS TO
INCREASE AS PREDICTED.
Demand for our services could be reduced if the market for
business-related Internet solutions fails to further develop. Critical issues
concerning the commercial use of the Internet remain unresolved and may hinder
the growth of Internet use. These issues are particularly critical in the
business sector -- our target market. If demand for our services fails to
materialize at the anticipated levels, our revenues will also fail to reach
expectations.
THE MARKET FOR OUR PRODUCTS AND SERVICES IS HIGHLY COMPETITIVE, AND WE
MAY NOT BE ABLE TO COMPETE EFFECTIVELY.
The market for our products and services is rapidly evolving. Our market
is also intensely competitive, partly due to relatively low barriers to entry.
Many of our competitors and potential competitors have longer operating
histories, greater name recognition and substantially greater financial,
technical and marketing resources than us. Moreover, our competitors may be able
to negotiate contracts with suppliers on more favorable terms than we can. Some
of these competitors may also provide products with some performance advantages
over our products. Given the fierce competition in our industry and our
comparatively limited resources, we may not be able to compete effectively.
OUR SERVICES ARE SUBJECT TO UNCERTAIN GOVERNMENT REGULATION. CHANGES IN
LAWS OR REGULATIONS COULD RESTRICT THE WAY WE OPERATE OUR BUSINESS.
We operate in an environment of unstable and evolving regulations.
Changes in applicable laws or regulations could impact our operations, and
impact our costs, service requirements and the scope of competition. Incumbent
local carriers are likely to pursue efforts to affect the applicable laws and
regulations in a manner that would be more favorable to them and that may be
against our interests. The likely means to affect the laws include litigation in
courts, administrative proceedings with the FCC and state telecommunications
regulators and lobbying the U.S. Congress. We may choose to expend significant
resources to participate in regulatory proceedings at the federal or state
level. The expenses associated with participating in and complying with an
evolving regulatory framework may increase our operating expenses beyond
expectations. Despite our possible expenditures, we cannot assure any favorable
results.
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<PAGE> 8
DEMAND FOR OUR PRODUCTS AND OUR PROJECTED INCOME WILL FAIL TO MEET
EXPECTATIONS IF DIGITAL SUBSCRIBER LINE SERVICES ARE NOT ACCEPTED BY
BUSINESSES AT PROFITABLE PRICES
The market for high-speed Internet access, data transport and networking
services using copper telephone lines is in the early stages of development. If
the market for our digital subscriber line services fails to develop, grows more
slowly than anticipated or becomes saturated with competitors, our operations
and future revenue stream may not achieve our expectations. We cannot accurately
predict the rate at which this market will grow or whether new or increased
competition will result in market saturation. The failure to materialize at the
expected levels may reduce our anticipated revenues.
INTERNET SECURITY CONCERNS MAY HINDER THE DEVELOPMENT OF ELECTRONIC
COMMERCE AND DEMAND FOR OUR PRODUCTS AND SERVICES.
A significant barrier to commerce and communications over the Internet
has been the need for the secure transmission of confidential information.
Security breaches or the inadvertent transmission of computer viruses could
expose us to litigation and possible liability. We may incur significant costs
to protect against the threat of security breaches or to alleviate problems
caused by breaches. A party who is able to penetrate our network security could
misuse our users' personal information and our users might sue us or bring
claims against us. If any well- publicized compromise of security occurs,
Internet usage and the demand for our services could decline.
RISKS RELATED TO THE OFFERING
SOME SHAREHOLDERS HAVE SUBSTANTIAL CONTROL OVER US. INVESTORS IN THIS
OFFERING MAY HAVE NO EFFECTIVE VOICE IN OUR MANAGEMENT.
If you purchase our common stock, you may not have an effective voice in
our management. As of March 31, 2000, our current directors and executive
officers owned approximately 3.4% of the outstanding shares of our common stock.
Also as of March 31, 2000, Entrepreneurial Investors, Ltd. owned approximately
17.2% of the outstanding shares of our common stock.
These shareholders may continue to exert significant influence over our
business and affairs and will possess substantial control over our operations.
They may have the ability to amend corporate filings, elect a majority of our
board of directors and control matters requiring approval by our shareholders.
They will also have the ability to delay or prevent a change in control of our
company and to discourage a potential acquirer for us or our securities.
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<PAGE> 9
OUR ARTICLES OF INCORPORATION AND BYLAWS CONTAIN PROVISIONS THAT COULD
DELAY OR PREVENT A CHANGE IN CONTROL. OUR SHAREHOLDERS' ABILITY TO
EXPEDITIOUSLY CHANGE MANAGEMENT MAY BE COMPROMISED.
Provisions of our articles of incorporation and bylaws could make it
more difficult for a third party to acquire control of our company, even if a
change in control would be beneficial to shareholders. Our articles of
incorporation allow our board of directors to issue preferred stock with terms
set by the board of directors and without shareholder approval. The preferred
stock could be issued quickly with terms that delay or prevent a change in
control or make removal of management more difficult. Also, the issuance of
preferred stock may cause the market price of our common stock to decrease.
WE HAVE A LIMITED MARKET FOR OUR COMMON STOCK AND OUR STOCK PRICE IS
VOLATILE. AN INVESTMENT IN OUR STOCK MAY HAVE LIMITED LIQUIDITY.
Our stock presently trades on the Over-The-Counter Bulletin. Trading on
the Over-The- Counter Bulletin is sporadic and highly volatile. The market
prices of Internet-related stocks tend to be more volatile than the market as a
whole. The market price of our common stock has fluctuated in the past and may
continue to be volatile in the future. There can be no assurance that an active
trading market will develop or be maintained. Failure to develop or maintain an
active trading market could negatively affect the price of our securities, as
well as affect your ability to sell your shares.
AS AN INCREASING AMOUNT OF OUR COMMON STOCK BECOMES ELIGIBLE FOR SALE,
THE MARKET PRICE FOR YOUR SHARES MAY DECREASE.
Sales in the public market of substantial amounts of common stock or the
perception that substantial sales may occur could materially and adversely
affect the market price of our common stock. These sales or perceptions could
also limit our ability to raise capital through an offering of equity
securities. An increasing number of shares eligible for sale may place downward
sell pressures on our market price. The adverse affect on the market price of
our common stock may occur even if the results of our operations are positive.
As of March 31, 2000, we had 36,502,875 shares of common stock outstanding. The
following table illustrates the shares of common stock eligible for future sale
if all outstanding warrants and options were exercised.
<TABLE>
<CAPTION>
Fully Diluted %
------------- -----
<S> <C> <C>
Total shares 44,826,429 100.0
Eligible for future sale 36,134,718 80.6
Subject to Rule 144 restrictions 8,691,711 19.4
</TABLE>
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<PAGE> 10
A WARNING ABOUT FORWARD-LOOKING STATEMENTS
The prospectus may contain forward-looking statements. Any statement in
this prospectus, other than a statement of historical fact, may be a
forward-looking statement.
You can generally identify forward-looking statements by looking for
words like may, will, expect, intend, estimate, anticipate, believe or continue.
Variations on those or similar words, or the negatives of those or similar
words, also may indicate forward-looking statements.
The discussions in this prospectus and in the documents incorporated by
reference contain forward-looking statements. Although we believe that the
expectations reflected in this prospectus are reasonable, we cannot assure you
that our expectations will be correct. Our actual results may differ
significantly from the results discussed in the forward-looking statements. This
prospectus includes a discussion entitled "Risk Factors," discussing important
factors that could cause our actual results to differ materially from our
expectations. These risk factors and other more remote risks are further
discussed in the "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business" sections of the 10-KSB/A and in our
Form 8-K dated February 17, 2000.
The forward-looking statements in this prospectus are accurate only as
of its date. If our expectations change, or if new events, conditions or
circumstances arise, we are not required to, and may not, update or revise any
forward-looking statement in this prospectus.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of common
stock offered by this prospectus. However, we will receive proceeds from the
exercise of the options and warrants, the underlying shares of which are being
registered in this registration statement. The exercise price received by us
from issuance of the shares of common stock underlying the warrants and options
will be used for general corporate purposes. The proceeds received and to be
received upon exercise of the warrants and options are:
<TABLE>
<CAPTION>
As of
March 31, 2000
--------------
<S> <C>
Proceeds received $ 81,500.00
Proceeds receivable if remaining options and
warrants are exercised $ 649,453.00
------------
Total proceeds from options and warrants $ 730,953.00
============
</TABLE>
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PRICE RANGE OF COMMON STOCK
The table below reflects the high and low closing sale price of our
common stock for the periods indicated, as reported by the OTC Bulletin Board.
<TABLE>
<CAPTION>
QUARTER ENDED HIGH LOW
- ------------- ---------- -------
<S> <C> <C>
March 31, 1998......................................... $ 2.560 $ 0.750
June 30, 1998.......................................... 8.430 2.500
September 30, 1998..................................... 12.000 5.500
December 31, 1998...................................... 7.250 6.187
March 31, 1999......................................... 10.062 3.500
June 30, 1999.......................................... 10.750 4.250
September 30, 1999..................................... 6.187 4.000
December 31, 1999...................................... 7.125 4.000
March 31, 2000......................................... $ 44.500 $ 6.000
</TABLE>
On May 16, 2000, the closing sale price for a share of our common stock,
as reported on the OTC Bulletin Board, was $9.875.
SELLING SHAREHOLDERS
The following table lists the ownership of the common stock included in
this registration statement, assuming conversion of the series E preferred stock
and assuming the exercise of the warrants and options covered by the shares
contained in this registration statement. Percentage ownership calculations are
based upon the 36,502,875 shares of common stock outstanding as of March 31,
2000. Unless otherwise indicated, the total shares reflected are comprised of
shares issued and outstanding.
<TABLE>
<CAPTION>
RELATION TO
NAME MSHI TOTAL SHARES PERCENT
---- ----------- ------------ -------
<S> <C> <C> <C>
Rainer Bischoff 80,000
Cornelius Dornier 65,000
Daniel Dornier (1) director 80,000
David Dornier 50,000
Gabrielle Dornier 30,000
Silvius Dornier 100,000
Graf Von Hardenberg 100,000
Andreas Preuschoff 10,000
Rainer Doerflinger 15,000
Greenwich AG (2) 603,340 1.65%
Frank C. Erwin 30,000
Will B. Houston (3) 20,000
James E. Thorp (4) 593,666 1.63%
</TABLE>
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<PAGE> 12
<TABLE>
<CAPTION>
RELATION TO
NAME MSHI TOTAL SHARES PERCENT
---- ----------- ------------ -------
<S> <C> <C> <C>
Edward R. Coleman 10,000
Jim Troxel 100,000
G. Robert Barker 5,000
Beatrice Schaefer 100,000
Heinz Winzeler 120,840
Equity Services, Ltd. (5) 181,674
Pinecrest Associates, Inc.(6) 150,000
Panther Consulting, Inc. (7) 150,000
Peninsular Corp. (8) 50,000
Jaime Munoz (9) former officer 44,000
Tejas Holdings, Inc.(10) consultant 83,000
Capital Solutions, Inc. (11) consultant 1,200
Ronnie D. Henry (12) consultant 25,000
Carolyn S. Henry (12) 10,000
Randall N. Williamson (12) 5,000
Benjamin A. Siddons (12) 5,000
Austex Enterprises (12) (13) 5,000
Hemisphere Trading Co. (14) 69,500
Terama Company Limited (15) 50,000
Amador DeLeon, Jr. (16) former employee 2,500
MMH Investment, Inc. (17) consultant 150,000
Robert Hersch (18) former officer 10,000
Roger Lane former employee 40,000
Ashley LeMarie (19) consultant 2,000
John Walters (19) consultant 2,000
</TABLE>
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(1) Consists of:
o 79,950 shares of common stock; and
o 50 shares of common stock issuable upon conversion of 5 shares of
series E preferred.
(2) Greenwich AG is a German corporation. Rainer Bischoff is its chief
executive officer and has voting and investment control over its
shares.
(3) Consists of:
o 10,000 shares of common stock; and
o 10,000 shares of common stock issuable upon conversion of 1,000
shares of series E preferred.
(4) Consists of:
o 543,666 shares of common stock; and
o 50,000 shares of common stock issuable upon conversion of 5,000
shares of series E preferred.
(5) Ms. Lynn Turnquest is ESL's managing director and has voting and
investment control over its shares. Equity Services Ltd. is owned by
four foreign corporations:
o Aspen Investments, Inc., a Panama corporation;
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<PAGE> 13
o Mercer, Inc., a Nevis corporation;
o Nesting, Inc., a Nevis corporation; and
o Penninsular Inc., a Nevis corporation.
Ms. Turnquest is the managing director for Aspen, Mercer and Nesting
and has voting and investment control over each entity. Robert E.
Cordes is Penninsular's president and has voting and investment
control over its shares.
The shares included on behalf of ESL consist of:
o 88,340 shares of common stock; and
o 93,334 shares of common stock covering placement agent's options.
(6) Sylvia Seymour is Pinecrest's president and has voting and investment
control over its shares.
(7) D.A. Kent is Panther's president and has voting and investment control
over its shares.
(8) Penninsular is a Nevis corporation. Robert E. Cordes is Penninsular's
president and has voting and investment control over its shares.
(9) Consists of 44,000 shares previously issued to Mr. Munoz, a former
officer of ours.
(10) Mike Hale is the president and chief executive officer of Tejas
Holding and has voting and investment control over its shares. Tejas'
shares listed herein consist of: o 33,000 shares issued for consulting
services; and o 50,000 shares covering options granted in conjunction
with settlement of a dispute regarding the consulting agreement and
compensation thereunder.
(11) Michael King is the president and chief executive officer of Capital
Solutions and has voting and investment control over its shares. These
shares consist of 1,200 shares previously issued for consulting
services.
(12) Consist of 50,000 shares of common stock issued upon the exercise of
the warrants granted to Henry & Associates, a consultant.
(13) Austex Enterprises is a Texas partnership. Its general partner is
Stara Corp and Stara's president is Stephen R. Smith. As president of
Austex's general partner, Mr. Smith has voting and investment control
over Austex's shares. The shares listed herein were transferred to
Austex from Henry & Associates.
(14) Hemisphere is a Liberian corporation. Robert E. Cordes is its
president and has voting and investment control over its shares.
(15) Consists of 50,000 shares acquired from and previously issued to
Phoenix Energy Partners in satisfaction of an over-subscription for
the series D preferred stock. D. A. Kent is Terama's president and has
voting and investment control over its shares
(16) Consists of 2,500 shares issued to a former employee in settlement of
a dispute over compensation.
(17) Consists of 150,000 shares of common stock previously issued to a
consultant. Robert Hersch is MMH's president and has voting and
investment control over its shares.
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<PAGE> 14
(18) Consists of 10,000 shares of common stock to Robert Hersch, a former
officer.
(19) Consists of 4,000 shares issued for the benefit of the Volo Group, a
consultant.
PLAN OF DISTRIBUTION
The shares of common stock may be offered and sold from time to time by the
selling shareholders, or by pledges, donees, transferees or other successors in
interest. We have no control over the selling shareholders in making their
decisions to offer, sell or transfer their shares at prices related to the then
current market price or in negotiated transactions. The shares may be sold by
the selling shareholders in one or more transactions at the then prevailing
market prices or in privately negotiated transactions. The shares may be sold by
one or more of the following methods:
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
o purchases and resale by a broker-dealer for its account under this
prospectus;
o private sales; and
o block trades 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.
We have not been advised by the selling shareholders that they have, as of
the date of this prospectus, made any arrangements relating to the distribution
of the shares covered by this prospectus. In effecting sales, broker-dealers
engaged by the selling shareholders may arrange for other broker-dealers to
participate and broker-dealers may receive commissions or discounts from the
selling shareholders in amounts to be negotiated immediately before sale.
In offering the shares, the selling shareholders and any broker-dealers and
any other participating broker-dealers who execute sales for the selling
shareholders may be underwriters within the meaning of the Securities Act. An
underwriter is someone who acquired shares from us or an affiliate of ours with
a view towards distributing the shares to the public. Since these individuals
may be underwriters, any profits realized by the selling shareholders and the
compensation of the broker-dealers involved may be underwriting discounts and
commissions.
Any shares covered by this prospectus which qualify for sale under Rule 144
may be sold under Rule 144 rather than under this prospectus.
-12-
<PAGE> 15
THE SECURITIES OFFERED
We are authorized to issue up to 50,000,000 shares of common stock, and
up to 10,000,000 shares of preferred stock. As of March 31, 2000, there were
36,502,875 shares of common stock outstanding.
The following is a summary of the material provisions and terms of our
articles and bylaws that might be important to you as a shareholder. You should
refer to our articles of incorporation and bylaws for a complete statement of
your rights as a stockholder. Both the articles of incorporation and the bylaws
are filed with the SEC as Exhibit No. 3 to our registration statement, file
#33-24265-LA.
As a holder of our common stock you will have one vote per share on all
matters voted on by stockholders, including elections of directors. Unless
required by law or provided in any resolution adopted by the board of directors
about any series of preferred stock, only holders of our common stock have
voting rights. The articles of incorporation do not provide for cumulative
voting. Cumulative voting is the ability to cast as many votes for a director as
the shareholder has shares of stock multiplied by the numbers of directors to be
elected, in the election of directors. The articles of incorporation also do not
provide for preemptive rights. A preemptive right is a shareholder's right to
acquire new shares issued by a company to preserve their proportional interest.
Owners of our common stock will receive dividends if the board declares them out
of available funds. However, we do not expect to declare or pay dividends on our
common stock.
The transfer agent for our common stock is Interwest Transfer Company,
Inc.
-13-
<PAGE> 16
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 at
the SEC's public reference rooms located at:
<TABLE>
<S> <C>
Securities and Exchange Commission or Securities and Exchange Commission
450 Fifth Street, N.W. 801 Cherry Street, 19th Floor
Washington, D.C. 20549 Ft. Worth, Texas 76102
</TABLE>
Further information on the SEC's public reference rooms, is available from the
SEC at 1-800-SEC-0330. Our SEC filings are also available on the Internet at
http://www.sec.gov.
The SEC allows us to incorporate by reference information from other
documents that we file with them, which means that we can disclose important
information by referring 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 make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 before the sale of all the shares covered by
this prospectus:
o Annual report on Form 10-KSB/A for the year ended March 31, 1999;
o All other reports filed with the SEC in compliance with Sections
13(a) or 15(d) of the Exchange Act since the end of the fiscal
year ended March 31, 1999; and
o The description of our common stock contained in our registration
statement on Form 10, filed with the SEC on October 27, 1975,
file number M862263.
We will deliver to each person, including any beneficial owner,
receiving this prospectus, a copy of any or all of the information that has been
incorporated by reference and not delivered with this prospectus. You may
request a copy of these filings, at no cost, by writing or telephoning:
MSI Holdings, Inc.
1121 E. 7th Street
Austin, Texas 78702
Attn: Robert J. Gibbs
Telephone: (512) 476-6925
-14-
<PAGE> 17
INDEMNIFICATION
Our revised articles of incorporation state that we may indemnify each
of our directors, officers, employees, or agents to the full extent permitted by
the laws of the state of Utah. In summary, the Utah Revised Business Corporation
Act:
o authorizes any corporation to indemnify directors and officers
against any judgments, fines, amounts paid in settlement and
reasonable expenses, including attorney's fees, incurred by
reason of his having been a corporate director or officer;
o confers on the director or officer an absolute right to
indemnification for expenses, including attorney's fees, actually
and reasonably incurred to the extent he is successful on the
merits or defense of any claim, issue, or matter;
o allows a corporation to pay attorney's fees and other litigation
expenses on behalf of a director or officer in advance of the
final disposition of the action, provided the director or officer
undertakes to reimburse the corporation, if it is ultimately
determined that he is not entitled to be indemnified by the
corporation or if the advances exceed the indemnification to
which he is entitled; and
o recognizes that a director or officer may be entitled to
additional indemnification under the corporation's certificate or
articles of incorporation, bylaws, agreements, or by
shareholders' vote.
However, the indemnification authorized by the Utah Revised Business
Corporation Act is limited to those situations where:
o the director or officer acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests
of the corporation;
o if in criminal proceedings, the director or officer had no
reasonable cause to believe his conduct was unlawful; and
o either the board of directors, acting through a quorum of
disinterested directors or on the advice of independent legal
counsel, has or the shareholders have made a determination that
indemnification is proper in the circumstances.
Moreover, we may not indemnify a director if the director is adjudged
liable to us or has derived an improper personal benefit in an action in which
the director is adjudged liable. We may also purchase and maintain insurance to
provide indemnification.
Though indemnification for liabilities arising under the Securities Act
may be permitted to members of the board of directors, officers, employees, or
person controlling us under the provisions outlined above, we have been advised
that in the opinion of the Securities and
-15-
<PAGE> 18
Exchange Commission indemnification for liabilities arising under the Securities
Act is against public policy as expressed in the Securities Act and is,
therefore, unenforceable.
LEGAL MATTERS
The validity of the shares offered by this prospectus has been passed
upon for us by Vial, Hamilton, Koch & Knox, L.L.P., Dallas, Texas.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our annual report on Form 10-KSB/A for the year
ended March 31, 1999, as reflected in their report which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
Brown, Graham and Company, P.C., independent auditors, have audited our
consolidated financial statements included in our annual report on Form 10-KSB/A
for the year ended March 31, 1998, as reflected in their report which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Brown Graham and Company, P.C.'s report contains an explanatory
paragraph describing conditions that raise substantial doubt about our ability
to continue as a going concern as described in note 1 to the consolidated
financial statements. Our financial statements are incorporated by reference in
reliance on Brown, Graham and Company, P.C.'s report, given on their authority
as experts in accounting and auditing.
-16-
<PAGE> 19
3,148,720 SHARES
MSI HOLDINGS, INC.
Common Stock
----------
PROSPECTUS
----------
You should rely on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. The statements and representations contained
within this prospectus are true and correct as of the date indicated on the
cover page. The delivery of this prospectus does not, under any circumstances,
create the implication that there has been no change since that date. This
prospectus is not an offer to sell or a solicitation of an offer to buy any
securities other than those registered securities to which the prospectus
relates. Moreover, this prospectus does not constitute an offer to sell or a
solicitation of an offer to buy in any circumstances in which such an offer or
solicitation is unlawful.
We will bear all of the cost of preparing and printing the registration
statement, prospectus and any prospectus supplements and all filing fees and
legal and accounting expenses associated with registration under federal and
state securities laws, which are estimated at $60,000.
------------
<TABLE>
<CAPTION>
Table of Contents
Page
<S> <C>
Risk Factors 2
A Warning about Forward-looking Statements 8
Use of Proceeds 8
Price Range of Common Stock 9
Selling Shareholders 9
Plan of Distribution 12
The Securities Offered 13
Where You Can Find More Information 14
Indemnification 15
Legal. Matters 16
Experts 16
</TABLE>
<PAGE> 20
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses payable by us in
connection with the sale and distribution of the securities being registered.
All amounts are estimates except the SEC registration fee.
<TABLE>
<S> <C>
Filing Fee-Securities and Exchange Commission................$ 5,000
Accountants' Fees and Expenses...............................$ 20,000
Fees and Expenses of Counsel for the Registrant..............$ 20,000
Printing and Communication Expenses..........................$ 10,000
Blue Sky Fees and Expenses...................................$ 3,500
Miscellaneous Expenses.......................................$ 1,500
---------
Total.................................................$ 60,000
=========
</TABLE>
The selling security holders are bearing no portion of the expenses of
the offering pursuant to agreement.
ITEM 15. Indemnification of Directors and Officers.
The registrant's revised articles of incorporation and by-laws permit
the registrant to indemnify its directors and officers to the fullest extent
authorized under the Utah Business Corporation Act ("UBCA"). In general, a Utah
corporation may indemnify a director or officer who was, is or is threatened to
be made, a named defendant or respondent in a proceeding by virtue of his
position in the corporation if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, in the case of criminal proceedings, had no reasonable cause
to believe his conduct was unlawful. A Utah corporation may indemnify a
director, officer, employee, or agent ("fiduciary") in an action brought by or
in the right of the corporation only if such fiduciary was not found liable to
the corporation, unless or only to the extent that a court finds him to be
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions (set forth in Item 14
above), or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
<PAGE> 21
ITEM 16. Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT DESCRIPTION LOCATION
- ------- ------------------- --------
<S> <C> <C>
4 Specimen of Securities(1) Incorporated by reference to Exhibit Nos. 1A and
1B of Registrant's Form 8-A Registration
Statement (File #0-8146)
4.1 Certificate of Designation for Series E Incorporated by reference to Form 10-QSB/A
Preferred Shares (1) filed November 12, 1998, for the period ended
June 30, 1998
4.2 Amendment to the Certificate of Designation Incorporated by reference to Form 10-QSB filed
for Series E Preferred Shares (1) August 16, 1999, for the period ended June 30,
1999
5 Legal Opinion of Vial, Hamilton, Koch &
Knox, L.L.P.(3)
23.1 Consent of Ernst & Young, LLP (2) Exhibit 23.1
23.2 Consent of Brown, Graham and Company, Exhibit 23.2
P.C. (2)
23.3 Consent of Vial, Hamilton, Koch & Knox, Exhibit 23.3
L.L.P.(2)
</TABLE>
- -------------
(1) Previously filed with the Securities and Exchange Commission and
incorporated by reference pursuant to Rule 12b-32 of the Securities
Exchange Act of 1934.
(2) Filed herewith.
(3) To be filed by amendment.
ITEM 17. Undertakings.
The Undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material
change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered in that post-effective amendment, and the offering of those
securities at that time shall be deemed to be the initial bona fide
offering of those securities.
(3) To remove from registration by means of post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
<PAGE> 22
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form S-3 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Austin,
State of Texas, on May 18, 2000.
MSI HOLDINGS, INC.
By: /s/ ROBERT J. GIBBS
-----------------------------------
Robert J. Gibbs, President & CEO
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment thereto has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROBERT J. GIBBS
- ---------------------------------
Robert J. Gibbs President, CEO and Director May 22, 2000
/s/ DOUGLAS W. BANISTER
- --------------------------------- Vice President and
Douglas W. Banister Chief Financial Officer May 22, 2000
- ---------------------------------
Chris Brickler Director May ___, 2000
/s/ BLANDINA CARDENAS
- ---------------------------------
Blandina Cardenas Director May 19, 2000
- ---------------------------------
Ernesto Chavarria Director May ___, 2000
/s/ DANIEL DORNIER
- ---------------------------------
Daniel Dornier Director May 22, 2000
- ---------------------------------
Steve Metzger Director May ___, 2000
/s/ HUMBERT B. POWELL
- ---------------------------------
Humbert B. Powell, III Director May 22, 2000
/s/ DAVINDER SETHI
- ---------------------------------
Davinder Sethi Director May 22, 2000
</TABLE>
<PAGE> 23
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT DESCRIPTION
- ------- -------------------
<S> <C>
4 Specimen of Securities(1)
4.1 Certificate of Designation for Series E
Preferred Shares (1)
4.2 Amendment to the Certificate of Designation
for Series E Preferred Shares (1)
5 Legal Opinion of Vial, Hamilton, Koch &
Knox, L.L.P.(3)
23.1 Consent of Ernst & Young, LLP (2)
23.2 Consent of Brown, Graham and Company,
P.C. (2)
23.3 Consent of Vial, Hamilton, Koch & Knox,
L.L.P.(2)
</TABLE>
- -------------
(1) Previously filed with the Securities and Exchange Commission and
incorporated by reference pursuant to Rule 12b-32 of the Securities
Exchange Act of 1934.
(2) Filed herewith.
(3) To be filed by amendment.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the registration statement amendment number 3 (Form S-3, Registration No.
333-92413) and related prospectus of MSI Holdings, Inc. for the registration of
3,148,720 shares of its common stock and to the incorporation by reference
therein of our report dated September 28, 1999, except for notes 1, 13 and 15,
as to which the date is February 29, 2000, with respect to the consolidated
financial statements and schedules of MSI Holdings, Inc. included in its Annual
Report (Form 10-KSB/A) for the year ended March 31, 1999, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG, LLP
- -------------------------------
Ernst & Young, LLP
Austin, Texas
May 19, 2000
<PAGE> 1
EXHIBIT 23.2
CONSENT OF BROWN, GRAHAM AND COMPANY, P.C.
To the Board of Directors of MSI Holdings, Inc., a Utah corporation:
We consent to the use of our report, incorporated by reference herein,
dated June 9, 1998, as restated on September 24, 1999, and to the reference to
our firm under the heading "Experts" in the registration statement amendment
number 3 on Form S-3 for the above named company.
/s/ BROWN, GRAHAM AND COMPANY, P.C.
- -----------------------------------------
Brown, Graham and Company, P.C.
Georgetown, Texas
May 19, 2000
<PAGE> 1
Exhibit 23.3
CONSENT OF VIAL, HAMILTON, KOCH & KNOX, L.L.P.
To the Board of Directors of MSI Holdings, Inc.
We consent to the use of our name under the heading Legal Matters in the
registration statement amendment number 3 on form S-3 for the above named
company.
Vial, Hamilton, Koch & Knox, L.L.P.
/s/ Gary Woolfolk
Dallas, Texas
May 19, 2000
