As filed with the Securities and Exchange Commission on June 17, 1999
Registration No. 33-77629
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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IMAGING TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 33-0021693
(State or other jurisdiction (IRS employer
of incorporation or organization) Identification number)
15175 INNOVATION DRIVE
SAN DIEGO, CA 92128-3401
(619) 613-1300
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
BRIAN BONAR
15175 INNOVATION DRIVE
SAN DIEGO, CA 92128-3401
(619) 613-1300
(Name, address, including zip code, telephone number, including area code, of
agent for service)
COPY TO:
Martin Eric Weisberg, Esq.
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, NY 10036-8735
(212) 704-6050
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(b) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed
Maximum
Amount Aggregate Proposed Maximum
Title of each class of To Be Price Per Aggregate Offering Amount of
Securities to be registered Registered (1) Share Price Registration Fee
- ------------------------------ ---------------- ------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Common Stock, par value
$0.005 per share 270,000 $0.78125 (3) $210,938 $58.65
Common Stock, par value
$0.005 per share 560,000 (2) $0.78125 (4) $437,500 $121.63
- ------------------------------ ------------- -------------- ------------------- ----------------
830,000 $648,438 $180.28(5)
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</TABLE>
(1) Represents shares of common stock being registered for resale by certain of
the selling stockholders.
(2) Represents shares of common stock issuable upon exercise of warrants
evidencing the right to purchase shares of common stock. Pursuant to Rule
416, the shares of common stock offered hereby also include such presently
indeterminate number of shares of common stock that may be issued as a
result of anti-dilution provisions included in the warrants, including,
among others, stock splits, stock dividends and similar transactions.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, as amended, based on
the average ($0.78125) of the bid ($0.71875) and asked ($0.84375) price of
the common stock on the Nasdaq SmallCap Market on June 15, 1999.
(4) Estimated solely for the purpose of calculating the registration fee. In
accordance with Rule 457(g), the registration fee for these shares is
calculated based upon a price which represents the highest of: (i) the
price at which the warrants may be exercised; (ii) the offering price of
securities of the same class included in the registration statement; and
(iii) the price of securities of the same class, as determined by Rule
457(c).
(5) A filing fee of $16,327.56 was previously paid for the registration of
53,692,740 shares of common stock pursuant to the original filing of this
registration statement, file number 33-77629.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
An Exhibit Index appears on page E-1.
<PAGE>
The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not seeking an offer to buy these securities in
any state where the offer or sale is not permitted.
PROSPECTUS
IMAGING TECHNOLOGIES CORPORATION
54,522,740 SHARES OF COMMON STOCK
o The shares of common stock offered by this prospectus are
being sold by the stockholders listed in the section of this
prospectus called "selling stockholders". We will not receive
any proceeds from the sale of these shares. We could receive
up to $11,514,481 in proceeds from the exercise of 13,564,823
warrants, the underlying shares of which we are registering in
this prospectus, by the selling stockholders, which proceeds
would be used for our general corporate purposes. As of the
date of this prospectus, none of these warrants have been
exercised.
o Our common stock is traded on the Nasdaq SmallCap Market under
the symbol ITEC.
o On June 15, 1999, the closing bid price of our common stock on
the Nasdaq SmallCap Market was $0.84375.
THE SECURITIES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF
RISK. YOU SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING
"RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS.
--------------------------------------------------
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.
--------------------------------------------------
June __, 1999
<PAGE>
TABLE OF CONTENTS
Risk Factors.................................................................3
Forward-Looking Statements..................................................11
Use of Proceeds.............................................................11
Dividend Policy.............................................................11
Dilution....................................................................11
Shares Eligible for Future Sale.............................................13
Selling Stockholders........................................................14
Description of Securities...................................................20
Plan of Distribution........................................................21
Where You Can Find More Information.........................................22
Indemnification of Directors and Officers...................................23
Legal Matters...............................................................24
Experts.....................................................................24
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<PAGE>
RISK FACTORS
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY
CONSIDER THE RISKS DESCRIBED BELOW, TOGETHER WITH ALL OF THE OTHER INFORMATION
IN THIS PROSPECTUS, BEFORE DECIDING TO INVEST IN SHARES OF OUR COMMON STOCK.
RISKS ASSOCIATED WITH OUR PAST FINANCIAL RESULTS
WE COULD BE REQUIRED TO CUT BACK OR STOP OPERATIONS IF WE ARE UNABLE TO RAISE OR
OBTAIN NEEDED FUNDING
Our ability to continue operations will depend on our positive cash
flow, if any, from future operations and on our ability to raise additional
funds through equity or debt financing. We do not know if we will be able to
raise additional funding or if additional funding will be available on favorable
terms. We could be required to cut back or stop operations if we are unable to
raise or obtain needed funding.
Our cash requirements to run our business have been and will continue
to be significant. Since 1996, our negative cash flow from operations has been
as follows:
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Fiscal year ended: Negative Cash Flow
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o June 30, 1996 $1,263,000
o June 30, 1997 $4,063,000
o June 30, 1998 $7,100,000
Six Months ended: Negative Cash Flow
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o December 31, 1998 $2,820,000
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WE HAVE A HISTORY OF LOSSES AND IF WE DO NOT ACHIEVE PROFITABILITY WE MAY NOT BE
ABLE TO CONTINUE OUR BUSINESS IN THE FUTURE
As of December 31, 1998 we accumulated losses of approximately
$38,557,000. We anticipate incurring additional losses until we can successfully
market and distribute our products and develop new technologies and commercially
viable future products. If we are unable to do so, we will continue to have
losses and might not be able to continue our operations.
THE "GOING CONCERN" QUALIFICATION ON THE REPORT OF OUR INDEPENDENT ACCOUNTANTS
MAY HURT OUR ABILITY TO RAISE ADDITIONAL FINANCING
The report of our independent accountants on our June 30, 1998
consolidated financial statements contains an explanatory paragraph regarding
our ability to continue as an ongoing business. Our independent accountants
cited a significant decline in working capital and net worth, that raised
substantial doubt as to our
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ability to continue as an ongoing business. The "going concern" qualification
may reduce our ability to obtain necessary financing in the future to run our
business.
RISKS ASSOCIATED WITH OUR BUSINESS
OUR DIGITAL IMAGING PRODUCTS MAY NOT BE SUCCESSFULLY COMPLETED OR ACCEPTED BY
THE PUBLIC WHICH COULD RESULT IN LOWER REVENUES
Our success will depend on our ability to market our current products,
including our digital printers and our hardware and software products used in
digital imaging, and to rapidly introduce and market additional products. We
have no control over the demand for digital imaging products, including the
preferences of users and the capability of personal computers to run our digital
imaging software and hardware products and use our printers. We cannot assure
you that the products we introduce will achieve acceptance, or that other
digital imaging products companies will not develop and market products which
render our products obsolete or less competitive. Failure to obtain significant
customer satisfaction or market share for our products would significantly and
negatively affect our revenues.
WE MAY HAVE TO LOWER PRICES OR SPEND MORE MONEY TO EFFECTIVELY COMPETE AGAINST
OUR COMPETITORS
A key element of our business strategy is to provide
competitively-priced, quality products, however, if our competitors offer lower
prices, we could be forced to lower prices which would result in reduced margins
and a decrease in revenues. If we do not lower prices we could lose sales and
market share. In either case, if we are unable to compete against companies who
can afford to cut prices, we would not be able to generate sufficient revenues
to grow the company or reverse our history of losses.
MANY OF OUR CURRENT AND PROSPECTIVE COMPETITORS HAVE SIGNIFICANTLY GREATER
FINANCIAL, TECHNICAL, SALES AND MARKETING RESOURCES THAN WE DO
The success of our products in the marketplace depends on many factors,
including product performance, price, ease of use, support of industry
standards, and customer support and service. We cannot assure you that we will
be able to compete successfully given these factors. Our competitors may develop
products comparable or superior to ours and may adapt more quickly than we do to
new technologies, evolving industry trends and customer requirements. Therefore,
we may have to spend more money to effectively compete for market share,
including funds to expand our infrastructure, which is a capital and time
extensive process. In addition, if other companies aggressively compete against
us, we may have to spend more money on advertising, promotion, trade shows,
product development, marketing and overhead expenses, hiring and retaining
personnel, and developing new technologies. These higher expenses would hurt our
net income and profits.
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<PAGE>
SYSTEM FAILURES OF OUR CUSTOMERS OR SUPPLIERS MAY ARISE BECAUSE OF THE YEAR 2000
PROBLEM AND WOULD DISRUPT OUR BUSINESS
The concerns about the upcoming year 2000 have arisen because older
computer programs that used two digits rather than four to define the applicable
year could malfunction. Although we believe that our products and internal
computer systems will not be affected by the year 2000 problem, system failures
of our customers or suppliers due to the year 2000 problem could disrupt our
business. For example, software drivers used to modify and direct the output and
performance of our digital printers, although not using time- specific codes,
mirror time-specific codes resident in the applicable operating systems running
our systems, and, accordingly, if these operating systems are not year 2000
compliant, our products may not work and our business would be disrupted.
BECAUSE OF OUR SIGNIFICANT RESEARCH AND DEVELOPMENT COSTS, THE FAILURE TO
DEVELOP NEW PRODUCTS WOULD RESULT IN SUBSTANTIAL LOSSES
The development of sophisticated digital imaging products is a lengthy
and intensive process and is subject to unforeseen risks, delays, problems and
costs. Unanticipated technical or other problems may occur which would result in
delays in our development program. If we fail to complete development of new
products or enhance existing products, we could suffer complete loss of the
funds committed by us to those products or enhancements. The losses could be
substantial.
WE DEPEND ON OUR RELATIONSHIP WITH ADOBE AND TERMINATION OF THIS RELATIONSHIP
WOULD RESULT IN REDUCED REVENUES
Our relationship with Adobe as an authorized co-development partner in
implementing Adobe's PostScript(R) language on our printer controllers and in
our software products is an integral part of our business strategy. If this
relationship is not successful or Adobe decides to terminate this relationship
we would lose many of our customers which would result in a substantial loss of
revenues.
SINCE WE DEPEND ON ONE MANUFACTURER, WE MAY NOT BE ABLE TO ASSEMBLE OUR PRODUCTS
IF THE MANUFACTURER IS UNABLE TO MANUFACTURE OUR PRODUCTS
We presently outsource the production of most of our manufactured
products through one vendor located in California. This vendor assembles
products, using components purchased by us from other sources or from its own
inventory. If our present manufacturer does not have sufficient capacity to meet
projected market demand for our products, our production will stop and
replacement of the manufacturer could take several months and cause substantial
disruption to our operations.
WE DEPEND HEAVILY ON THIRD-PARTY SUPPLIERS TO PROVIDE US WITH COMPATIBLE
HARDWARE AND SOFTWARE FOR OUR DIGITAL IMAGING PRODUCTS
Many of our products use technology licensed from third-party
suppliers. We rely heavily on Adobe for upgrades and support of the
PostScript(R) language. In the case of our font products, we license the fonts
from outside suppliers, including Adobe, who also own the intellectual property
rights to the fonts. Our
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<PAGE>
reliance on third-party suppliers involves many risks, including our limited
control over potential hardware and software incompatibilities with our
products.
WE MAY NOT BE ABLE TO SUCCESSFULLY INTEGRATE OUR NEW ACQUISITIONS INTO OUR
BUSINESS
During 1998 fiscal year, we made a number of acquisitions to complement
our technical position in the imaging market, including CSI, a producer of color
management software and AMT, our master stocking distributor of printers and
supplies in the European Community and on the European continent. Our future
performance will depend in part on our ability to integrate and grow these
acquired businesses. If we do not integrate these businesses efficiently,
including the management structures of these diverse companies, there could be a
negative adverse effect.
Furthermore, over time we may realize that we need to divest unwanted
assets or products and assume unknown liabilities associated with these recent
acquisitions. In addition, client satisfaction or performance problems with an
acquired business could also have a material adverse effect on our reputation,
and any acquired business could significantly underperform relative to our
expectations. We are currently facing all of these challenges and our ability to
meet them over the long term has not been established. As a result, we cannot be
certain that we will be able to successfully or in a timely manner integrate
these acquired businesses and their products and technologies into our business,
which could have a material adverse effect on our overall financial performance.
WE RELY ON INDIRECT, INDEPENDENT DISTRIBUTION CHANNELS TO SELL OUR PRODUCTS AND
DISRUPTION OF THESE DISTRIBUTION CHANNELS WOULD RESULT IN REDUCED SALES AND
REVENUES
Our products are marketed and sold through established relationships
with value-added resellers, manufacturers' representative, retail vendors and
systems integrators. We have a network of dealers and distributors in the United
States and Canada, in the European Community and on the European continent, as
well as a growing number of resellers in Africa, Asia, the Middle East, Latin
America and Australia, which we support through our centralized manufacturing,
distribution and repair operations in San Diego and London. The sales of our
products are principally made through distributors which may carry competing
product lines. These distributors could reduce or discontinue sales of our
products, and they may not devote the resources necessary to provide effective
sales and marketing support of our products, which could materially and
adversely affect our sales.
In addition, we are dependent upon the continued viability and
financial stability of these distributors, many of which are small organizations
with limited capital who are substantially dependent on general economic
conditions and factors affecting particularly the digital imaging markets. Our
business could be materially adversely affected if our distributors fail to pay
amounts to us that exceed reserves that we have established.
WE CURRENTLY HOLD NO PATENTS IN OUR PRODUCTION PROCESSES AND COULD BE PROHIBITED
FROM MARKETING SOME OF OUR PRODUCTS
We currently hold no patents relating to the production of our
products. However, from time to time, some of our competitors have asserted that
we infringe on their patent rights. We expect that this will
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<PAGE>
continue. If we fail to establish that we have not violated the asserted rights,
we could be prohibited from marketing the products that incorporate any patented
technology and we could be liable for damages. We also could incur substantial
costs in redesigning our products or defending any legal action taken against
us.
THE FINANCIAL CRISIS IN ASIA RESULTED IN THE CANCELLATION OF ORDERS AND
SUBSTANTIAL LOSSES, AND OUR OTHER INTERNATIONAL OPERATIONS AND EXPORT SALES MAY
BE EFFECTED BY FUTURE TRENDS AND FOREIGN RESTRICTIONS
We conduct business globally and intend to pursue international markets
as key avenues for growth hoping to increase the percentage of sales generated
in international markets. In fiscal year 1998, we experienced contract
cancellations and write-offs of significant receivables related to the continued
economic deterioration in Asia. As we continue to expand our international
operations, our business and overall financial performance may be further
negatively affected by a variety of uncontrollable and changing factors,
including:
o foreign currency exchange fluctuations;
o regulatory, political or economic conditions in specific
countries and regions;
o difficulties in staffing and managing international
operations; and
o difficulties in collecting accounts receivable.
RISKS ASSOCIATED WITH OUR SECURITIES
WE HAVE A SUBSTANTIAL NUMBER OF SHARES RESERVED FOR FUTURE ISSUANCES WHICH COULD
CAUSE DILUTION OF STOCKHOLDER INTERESTS
The issuance of reserved shares would dilute the equity interest of
existing stockholders and could have a significant adverse effect on the market
price of our common stock. As of April 20, 1999, we had 55,009,986 shares of
common stock reserved for possible future issuances upon, among other things,
conversion of preferred stock and exercise of outstanding options and warrants.
See "Dilution."
In addition, we may seek additional financing which could result in the
issuance of additional shares of our capital stock and/or rights to acquire
additional shares of our capital stock. Those additional issuances of capital
would result in a reduction of your percentage interest in our company.
Furthermore, if the exercise price of the options or warrants or the conversion
ratio of the preferred stock was lower than the dollar value per share of common
stock at the time of the exercise or conversion, the dollar value per share of
common stock would decrease because the number of shares of common stock
outstanding would increase without a corresponding increase in the dollar amount
assigned to shareholders' equity.
The addition of a substantial number of shares of common stock,
including the shares offered by this prospectus, into the market or by the
registration of any other of our securities under the Securities Act may
significantly and negatively affect the prevailing market price for the common
stock. In addition, future sales of shares of common stock issuable upon the
exercise of outstanding warrants and options may have a
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<PAGE>
depressive effect on the market price of the common stock, as these warrants and
options would be more likely to be exercised at a time when the price of the
common stock is in excess of the applicable exercise price.
THE CONVERSION OF OUTSTANDING SERIES D AND E PREFERRED STOCK MAY HAVE A
SIGNIFICANT NEGATIVE EFFECT ON THE PRICE OF THE COMMON STOCK AND CAUSE THE
SELLING STOCKHOLDERS TO RECEIVE A GREATER NUMBER OF SHARES UPON SUBSEQUENT
CONVERSIONS OF THE PREFERRED STOCK
As of January and February 1999, we completed two transactions selling
Series D and E preferred stock to some of the selling stockholders listed in the
selling stockholders' table on page 16 of this prospectus. See "Selling
Stockholders" and "Description of Securities" for additional information. The
Series D preferred stock and Series E preferred stock are convertible at a
floating rate that will be below the market price of the common stock. As a
result, the lower the stock price at the time the holder converts, the more
common stock the holder will get upon conversion. To the extent the selling
shareholders convert and then sell their common stock, the common stock price
may decrease due to the additional shares in the market. This could allow the
selling stockholders to convert their convertible preferred stock into greater
amounts of common stock, the sales of which could further depress the stock
price. The conversion of the Series D and E preferred stock may result in
substantial dilution to the interests of other holders of common stock since
each holder of Series D and E preferred stock may ultimately convert and sell
the full amount of common stock issuable upon conversion of its preferred stock.
The following table describes the amount of shares of our common stock
into which the Series D and E preferred stock is convertible at various
percentages of the market price as of June 15, 1999 and the percentages of our
total outstanding common stock represented by conversion of Series D and E
preferred stock following the conversion and exercise of the warrants issued
pursuant to the private sale of the Series D and E preferred stock:
<TABLE>
<CAPTION>
Percentage of our outstanding
common stock represented by the
shares of common stock issuable
upon conversion of the Series D and
Number of shares E preferred stock following
of conversion and exercise of the
common stock warrants issued pursuant to the
issuable upon private sale of the Series D and E
Percentage of market conversion of the preferred stock (assuming these
price per share of our Conversion Series D and E warrants are exercised at
common stock price preferred stock $.875 per share)
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<S> <C> <C> <C>
At $0.84375 per share, market
price at June 15, 1999 $0.50 per share 16,410,000 54.6%
At $0.63281 per share (75% of
market price at June 15, 1999) $0.50 per share 16,410,000 54.6%
At $0.42188 per share (50% of $0.42188 per
market price at June 15, 1999) share 19,448,644 57.5%
At $0.21094 per share (25% of $0.21094 per 38,897,314 69.7%
market price at June 15, 1999) share
</TABLE>
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<PAGE>
However, each selling stockholder owning Series D preferred stock may
not convert its Series D preferred stock if, as a result, the selling
stockholder would own more than 9.99% of the then outstanding common stock. This
restriction, however, does not prevent a selling stockholder from converting
some of its Series D preferred stock, up to 9.99% of the outstanding common
stock, and then selling all or a portion if its common stock, and then
converting more of its Series D preferred stock, up to 9.99% of the outstanding
common stock, at a later date. In this way, a selling stockholder owning Series
D preferred stock could sell more than 9.99% of the outstanding common stock
while never holding more than 9.99% at any one time.
SHORT SELLING OF OUR COMMON STOCK COULD RESULT FROM SIGNIFICANT DOWNWARD
PRESSURE ON THE PRICE OF OUR COMMON STOCK
Significant downward pressure on the price of the common stock could
occur as the selling stockholders convert their shares of Series D and E
preferred stock into common stock and sell material amounts of common stock. In
response, a selling stockholder and others may engage in short sales by
borrowing common stock at the current market price in hope of buying the common
stock in the future at a lower price. Short selling may depress the price of the
common stock.
WE ARE CONTROLLED BY OUR MANAGEMENT AND OTHER RELATED PARTIES
As of April 20, 1999, our chairman of the board of directors and our
officers, directors and related parties, as a group, beneficially own
approximately 22.1% and 24.9%, respectively, of our outstanding common stock.
These amounts include common stock issuable upon the exercise of warrants and/or
options as well as indirect ownership of common stock. As a result, these
stockholders will be able to exercise significant influence over matters
requiring stockholder approval, including the election of directors and approval
of significant corporate transactions.
OUR STOCK PRICE IS EXTREMELY VOLATILE AND MAY DECREASE RAPIDLY
The trading price and volume of our common stock has historically been
subject to wide fluctuation in response to variations in actual or anticipated
operating results, announcements of new products or technological innovations by
us or our competitors, and general conditions in the digital imaging and
computer industries. In addition, stock markets generally have experienced
extreme price and volume trading volatility in recent years. This volatility has
had a substantial effect on the market prices of securities of many
high-technology companies for reasons frequently unrelated to the operating
performance of the specific companies. These broad market fluctuations may
significantly and negatively affect the market price of our common stock.
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YOUR EQUITY INTEREST IN US MAY BE DILUTED BY THE ISSUANCE OF PREFERRED STOCK
WITH GREATER RIGHTS THAN THE COMMON STOCK WHICH WE CAN SELL OR ISSUE AT ANY TIME
The sale or issuance of any shares of preferred stock having rights
superior to those of the common stock may result in a decrease in the value or
market price of the common stock. The issuance of preferred stock could have the
effect of delaying, deferring or preventing a change of ownership without
further vote or action by the stockholders and may adversely affect the voting
and other rights of the holders of common stock.
If a currently proposed resolution is passed by our stockholders later
this year, our board of directors will be authorized to issue up to 100,000
shares of preferred stock. The board has the power to establish the dividend
rates, preferential payments on our liquidation, voting rights, redemption and
conversion terms and privileges for any series of preferred stock.
IF WE CANNOT MEET THE NASDAQ SMALLCAP MARKET MAINTENANCE REQUIREMENTS AND NASDAQ
RULES, NASDAQ MAY DELIST THE COMMON STOCK WHICH COULD NEGATIVELY AFFECT THE
PRICE OF THE COMMON STOCK AND YOUR ABILITY TO SELL THE COMMON STOCK
In the future, we may not be able to meet the listing maintenance
requirements of the Nasdaq SmallCap Market and Nasdaq rules, which require,
among other things, minimum net tangible assets of $2 million, a minimum bid
price for our common stock of $1.00, and shareholder approval prior to the
issuance of securities in connection with a transaction involving the sale or
issuance of common stock equal to 20 percent or more of a company's outstanding
common stock before the issuance for less than the greater of book or market
value of the stock. Although we currently comply with Nasdaq's listing
maintenance requirements, it is possible we may not meet the requirements in the
future as in the past we have not always been in compliance and are presently
subject to a six month review period with Nasdaq. For example, the dilution
resulting from the issuance of the convertible preferred stock discussed above
and subsequent conversion and sale of common stock could have a substantial
depressive effect on the common stock bid price causing it to decrease below
$1.00. If we were no longer in compliance with Nasdaq rules and were unable to
receive a waiver or achieve compliance, and if our common stock were to be
delisted from the SmallCap market, an investor in our company may find it more
difficult to sell our common stock. This lack of liquidity also may make it more
difficult for us to raise capital in the future.
IF NASDAQ DELISTS OUR COMMON STOCK YOU WOULD NEED TO COMPLY WITH THE PENNY STOCK
REGULATIONS WHICH COULD MAKE IT MORE DIFFICULT TO SELL YOUR COMMON STOCK
In the event that our securities are not listed on the SmallCap,
trading of the common stock would be conducted in the "pink sheets" or through
the NASD's Electronic Bulletin Board and covered by Rule 15g-9 under the
Securities Exchange Act of 1934. Under this rule, broker/dealers who recommend
these securities to persons other than established customers and accredited
investors must make a special written suitability determination for the
purchaser and receive the purchaser's written agreement to a transaction prior
to sale. Securities are exempt from this rule if the market price is at least
$5.00 per share.
Although the Securities and Exchange Commission adopted regulations
that generally define a penny stock as any equity security that has a market
price of less than $5.00 per share, our common stock, albeit currently less than
$5,00 per share, does not constitute penny stock because our common stock is
quoted on
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Nasdaq and our net tangible assets currently exceed $2.0 million. If in the
future our common stock falls within the definition of penny stock, these
regulations would require the delivery, prior to any transaction involving our
common stock, of a disclosure schedule explaining the penny stock market and the
risks associated with it. Furthermore, the ability of broker/dealers to sell the
common stock and the ability of purchasers in this offering to sell their
securities in the secondary market would be limited. As a result, the market
liquidity for the common stock would be severely and adversely affected. We
cannot assure you that trading in our securities will not be subject to these or
other regulations in the future which would negatively affect the market for
these securities.
FORWARD-LOOKING STATEMENTS
This prospectus contains some forward-looking statements which involve
substantial risks and uncertainties. These forward-looking statements can
generally be identified by the use of forward-looking words like "may," "will,"
"except," "anticipate," "intend," "estimate," "continue," "believe" or other
similar words. Similarly, statements that describe our future expectations,
objectives and goals or contain projections of our future results of operations
or financial condition are also forward-looking statements. Our future results,
performance or achievements could differ materially from those expressed or
implied in these forward-looking statements as a result of certain factors,
including those listed under the heading "Risk Factors" and in other cautionary
statements in this prospectus.
USE OF PROCEEDS
The selling stockholders are selling all of the shares covered by this
prospectus for their own accounts. Accordingly, we will not receive any proceeds
from the resale of the shares. We will receive proceeds from the exercise of the
warrants, but, to date, none of the warrants have been exercised. However, if
all the warrants of which we are registering the underlying shares on this
prospectus were exercised as of April 20, 1999, we would receive approximately
$11,514,481 in proceeds. We would use any of these net proceeds from the sale of
these warrants for general corporate purposes, including working capital. We
will bear all expenses relating to this registration except for (a) brokerage or
underwriting discounts, commissions and expenses and (b) any fees and
disbursements over $5,000, if any, paid to the counsels of some of the selling
shareholders who are employed to review this prospectus, which the selling
stockholders will pay.
DIVIDEND POLICY
We have never declared nor paid cash dividends on our common stock. We
currently anticipate that we will retain all available funds for use in the
operation of our business. Because of this expectation, we do not anticipate
paying any cash dividends on our common stock in the foreseeable future.
DILUTION
As of April 20, 1999, we had issued and outstanding:
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<PAGE>
o 19,820,915 shares of our common stock,
o 875 shares of Series D preferred stock,
o 881 shares of Series E preferred stock, and
o 420.5 shares of 5% convertible preferred stock.
At that date, there were an additional 55,009,986 shares of our common
stock reserved for possible future issuances pursuant to the various documents
described below:
<TABLE>
<CAPTION>
Number of
Common Shares
Type of Security into which Equity
Convertible or Type of Agreement may be
Exercisable into Shares Pursuant to which Convertible or Conversion Ratio or Exercise Price
of Common Stock Securities Issued Exercisable of Security
---------------- ------------------- ----------- -----------------------------------
<S> <C> <C> <C>
SERIES D PREFERRED STOCK Series D preferred 8,400,000 4,000 shares of common stock per
stock purchase share of Series D preferred stock
agreement
SERIES E PREFERRED STOCK Series E preferred 20,317,000 10,000 shares of common stock per
stock purchase share of Series E preferred stock
agreement
5% CONVERTIBLE PREFERRED securities purchase 60,002 142.69203 shares of common stock
STOCK agreement per share of 5% convertible preferred
stock
WARRANTS ISSUED Series D preferred 4,200,000 $0.875 per share of common stock
PURSUANT TO THE PRIVATE stock agreement
SALE OF SERIES D
PREFERRED STOCK
WARRANTS ISSUED Series E preferred 10,158,750 $0.875 per share of common stock
PURSUANT TO THE PRIVATE stock agreement
SALE OF SERIES E
PREFERRED STOCK
WARRANTS lease letter agreement 100,000 $1.50 per share of common stock
WARRANTS letter of credit 150,000 $1.28 per share of common stock
reimbursement
agreement
WARRANTS subordinated note (a) 300,000 (a) $2.025 per share of common stock
purchase agreement
(b) 190,000 (b) $1.09 per share of common stock
WARRANTS settlement and mutual (a) 100,000 (a) $4.00 per share of common stock
release agreement
(b) 200,000 (b) $2.025 per share of common stock
-12-
<PAGE>
Number of
Common Shares
Type of Security into which Equity
Convertible or Type of Agreement may be
Exercisable into Shares Pursuant to which Convertible or Conversion Ratio or Exercise Price
of Common Stock Securities Issued Exercisable of Security
---------------- ------------------- ----------- ------------
WARRANTS placement agent 2,753,750 $0.40 per share of common stock
arrangements
WARRANTS warrant agreement 1,315,333 $0.80 per share of common stock
WARRANTS warrant agreement 60,000 $0.40 per share of common stock
WARRANTS warrant agreements 180,740 $1.00 per share of common stock
WARRANTS real estate services 10,000 $1.50 per share of common stock
agreements
WARRANTS various third party 3,648,162 $1.00-$7.50 per share of common
agreements stock
STOCK OPTIONS various stock option 699,082 $1.00-$8.45 per share of common
plans stock
STOCK OPTIONS 1998 stock option plan 1,500,000 not yet determined
CONVERTIBLE PROMISSORY subordinated note 666,667 $1.0125 per share of common stock
NOTES purchase agreement
</TABLE>
SHARES ELIGIBLE FOR FUTURE SALE
Of the 19,820,915 shares of our common stock outstanding as of April
20, 1999, approximately 13,230,915 shares were presently freely transferable
without restriction under the Securities Act.
Of the remaining 6,590,000 shares of our common stock, 5,150,000 of
these shares will become unrestricted on the effective date of the registration
statement of which this prospectus is a part, and 1,440,000 of these shares are
already freely tradeable as they were acquired more than two years ago or in the
market or are already registered.
"Restricted securities" may be sold:
(1) under a prospectus under an effective registration
statement under the Securities Act,
(2) in compliance with the exemption provisions of Rule
144, or
(3) under another exemption under the Securities Act.
Rule 144 permits sales of "restricted securities" by any person,
whether or not an affiliate, after one year. At that time, sales can be made
subject to this rule's volume and other limitations and after two years by
-13-
<PAGE>
non-affiliates without adhering to Rule 144's volume or other limitations.
Shares of our common stock owned by our "affiliates" which are not "restricted
securities" may be sold at any time by complying with Rule 144's volume and
other limitations.
In general, an "affiliate" is a person with the power to manage and
direct our policies. The Securities and Exchange Commission has stated that,
generally, executive officers and directors of an entity are deemed affiliates
of the entity.
SELLING STOCKHOLDERS
We will issue the shares of common stock covered by this prospectus to
the selling stockholders pursuant to the private sales of Series D and E
preferred stock, an exchange agreement, a letter of credit reimbursement
agreement, common stock purchase agreement, a subordinated note purchase
agreement, settlement and mutual release agreement, debt forgiveness letter
agreements, various warrant agreements, partial settlement agreement, placement
agent arrangements, employment settlement agreements and lease letter agreement.
This prospectus covers the resale by the selling stockholders of:
o 28,717,500 shares of our common stock to be issued upon the
conversion of the Series D and E preferred stock, which amount
of shares is an estimate and is not a prediction of the actual
number of shares of common stock we will issue upon conversion
of the Series D and E preferred stock;
o 14,358,750 shares of our common stock to be issued upon the
exercise of the warrants issued pursuant to the private sales
of Series D and E preferred stock and the exchange agreement;
o 150,000 shares of our common stock to be issued upon the
exercise of the warrants issued pursuant to the letter of
credit reimbursement agreement;
o 500,000 shares of our common stock issued pursuant to the
common stock purchase agreement;
o 650,000 shares of our common stock issued pursuant to the
employment settlement agreements;
o 490,000 shares of our common stock to be issued upon exercise
of the warrants issued pursuant to the subordinated note
purchase agreement;
o 300,000 shares of our common stock to be issued upon exercise
of the warrants issued pursuant to the settlement and mutual
release agreement;
o 2,000,000 shares of our common stock issued pursuant to debt
forgiveness letter agreements;
-14-
<PAGE>
o 1,566,073 shares of our common stock to be issued upon
exercise of the warrants issued pursuant to various warrant
agreements;
o 2,000,000 shares of our common stock issued pursuant to the
partial settlement agreement;
o 270,000 shares of common stock issued pursuant to settlement
agreements;
o 100,000 shares of our common stock to be issued upon exercise
of the warrants issued pursuant to the lease letter
agreement;
o 2,753,750 shares of our common stock to be issued upon
exercise of warrants issued pursuant to placement agent
arrangements; and
o 666,667 shares of our common stock to be issue upon
conversion of convertible promissory notes.
We are registering the shares of common stock offered in this
prospectus with the Securities and Exchange Commission to permit public
secondary trading. As a result, the selling stockholders may offer all or part
of the shares for resale to the public from time to time.
The table on the following page lists information regarding the selling
stockholders' ownership of shares of our common stock, assuming the conversion
of the Series D and E preferred stock at 4,000 shares of common stock per share
of Series D preferred stock and 10,000 shares of common stock per share of
Series E preferred stock, and the exercise of all the warrants, and as adjusted
to reflect the sale of the shares of our common stock. Information concerning
the selling stockholders may change from time to time. To the extent that the
selling stockholders or any of their representatives advise us of changes, and
if required, we will report the changes in a supplement to this document. See
"Plan of Distribution". Except as set forth in the footnotes to the selling
stockholders' table below, to our knowledge, no selling stockholder has held any
position or office, or has had any material relationship, with us or any parties
related to us within the past three years.
The number of shares of common stock indicated is an estimate and
includes 175% of the number of shares that would be issuable upon conversion of
1,200 shares of the Series D preferred stock and 1,161 shares of the Series E
preferred stock based on the closing price of the common stock when the
preferred stock was sold plus the shares issuable upon exercise of warrants
(which are subject to adjustment) evidencing the right to purchase shares of
common stock issued in connection with the private sales of Series D and E
preferred stock. The actual number of shares of common stock could be materially
more than this estimated number depending upon factors that we cannot predict at
this time.
The "Amount Offered" and "Amount Beneficially Owned Following Offering"
columns assume no sales are effected by the selling stockholders during the
offering period other than under this registration statement.
-15-
<PAGE>
<TABLE>
<CAPTION>
Shares from
Shares from Converted
Converted and and
Total Exercised Series D Exercised
Amount and E Preferred Series D and Total
Beneficially Stock and Related E Preferred Amount Percentage
Name of Selling Stockholder Owned Prior Warrants Stock and Beneficially Beneficially
(the natural person who to Offering Beneficially Related Owned Owned
exercises control over as of March Owned (as of Amount Warrants Following Following
the shares of Common Stock) 16, 1999 March 16, 1999) Offered Offered Offering Offering
- ----------------------------- ----------- ----------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balmore Funds S.A. 3,937,500 3,937,500 5,250,000(1) 5,250,000(1) 0 0
(Francois Morax)
Austost Anstalt Schaan 3,937,500 3,937,500 5,250,000(1) 5,250,000(1) 0 0
(Thomas Hackl)
Nesher, Inc. (John Clarke) 1,050,000 1,050,000 1,312,500(2) 1,312,500(2) 0 0
Guarantee & Finance Corp. 525,000 525,000 1,050,000(3) 1,050,000(3) 0 0
(Ricardo Durling)
Harry J. Saal Trust UTA Dated 8,383,083(4) 6,483,750 8,279,823(5) 6,483,750 103,260 (6) *
7/19/72 (Harry J. Saal)
Saal Family Charitable Lead 1,490,017 866,250 866,250 866,250 623,767 *
Trust UTA Dated 2/25/98
(Leonard J. Shustek)
Manor Investment (Miriam Freilich) 131,250 131,250 131,250 131,250 0 0
Guilherme Duque 262,500 262,500 262,500 262,500 0 0
Manchester Asset Management 1,562,500(7) 1,312,500(7) 2,218,750(7) 1,968,750(7) 0 0
(Anthony L.M. Inder Rieden)
Gilston Corporation, Ltd. 1,312,500 1,312,500 1,968,750 1,968,750 0 0
(Dawn Davies)
R.T. Mercer 681,250 656,250 656,250 656,250 25,000 *
Cashco FLP (David Lieberman) 525,000 525,000 525,000 525,000 0 0
The Cuttyhunk Fund, Limited 2,625,000 2,625,000 2,625,000 2,625,000 0 0
(Christopher Lewis)
Middleton Securities, Ltd. 682,500 682,250 682,500 682,250 0 0
(John Dyrud)
Olympus Securities, Ltd. 3,208,750(8) 3,018,750 3,168,750(9) 3,018,750 40,000(10) *
NP Partners 3,208,750(8) 3,018,750 3,168,750(9) 3,018,750 40,000(10) *
Filter International Corp. 3,899,521(11) 2,625,000 3,325,000(11) 2,625,000 574,521 2.5
(A C. Davies)
BET Trust (Frank Kavanaugh) 1,063,750(12) 393,750(13) 823,750(12) 393,750(13) 240,000 1.2
Pacific Investments Trust 1,063,750(14) 393,750(13) 823,750(14) 393,750(13) 240,000 1.2
(George Krajacic)
Greenhaven International Ltd. 262,500 262,500 262,500 262,500 0 0
(Abbas Padldar)
Carl C. Perkins 131,250 131,250 131,250 131,250 0 0
Skip Braden 131,250 131,250 131,250 131,250 0 0
American Industries, Inc. 3,172,099(15) 0 3,172,099(15) 0 0 0
(Howard Hedinger)
Ellison C. Morgan 334,568(16) 0 334,568(16) 0 0 0
Carmel Mountain #8 Associates 50,000(17) 0 50,000(17) 0 0 0
L.P. (Roger Joseph) ,
Carmel Mountain 50,000(17) 0 50,000(17) 0 0 0
Environmental LLC (Bruce Tabb)
Software Technology, Inc. 4,915,000(18) 2,625,000 3,625,000 2,625,000 1,290,00(18) 5.7
(Woo Young Kim)
DK Capital LLC (Frank Kavanaugh) 1,063,750(19) 393,750(13) 823,750(20) 393,750(13) 240,000 1.2
Mark Osman 152,300(21) 0 80,000 0 72,300(21) *
Carmine J. Bua (22) 40,000 0 40,000 0 0 0
Gerry Berg 235,000(23) 0 40,000 0 195,000(23) *
Joseph Pfeuffer 86,000(24) 0 40,000 0 46,000(24) *
Christopher McKee 60,833(25) 0 40,000 0 20,833(25) *
David Carver 60,000(26) 0 20,000 0 40,000(26) *
Paul Barber (27) 20,000 0 20,000 0 0 0
Dale Richmond (28) 20,000 0 20,000 0 0 0
Daniel Caldwell (29) 128,000 0 20,000 0 108,000 *
Alan Hier 1,575,000 1,575,000 1,575,000 0 0 0
Brian Dror 262,500 252,500 262,500 0 0 0
Fred Nesseri 0 0 25,000(30) 0 0 0
C. Niven Bonar (31) 67,500 0 67,500 0 0 0
Pauline M. Bonar(32) 67,500 0 67,500 0 0 0
-16-
<PAGE>
Phyllis A. Leonardi (33) 40,000 0 40,000 0 0 0
John M. Leonardi (34) 40,000 0 40,000 0 0 0
Frank J. Leonardi, Jr. (35) 40,000 0 40,000 0 0 0
Patricia M. Leonardi (36) 40,000 0 40,000 0 0 0
Hiram T. French 0 0 150,000(37) 0 0 0
J. Steve Tiritilli 5,000(38) 0 5,000(38) 0 0 0
John P. Mulder 5,000(38) 0 5,000(38) 0 0 0
Edward W. Savarese 275,000(39) 0 500,000(40) 0 287,500(41) 1.5
Bi Coastal Consulting Corp. 650,000(42) 0 650,000 0 0 0
(Peter Benz)
Libra Finance (Seymour Braun) 752,250(43) 0 752,250 0 0 0
Talbiya Ltd. (David Grin) 331,500(44) 0 331,500 0 0 0
Imperial Bancorp (Michael Berrier) 60,000(45) 0 60,000 0 0 0
Doron Ben Yehezkel 0 0 100,000(46) 0 0 0
Timothy E. McCanna 0 0 170,000(47) 0 0 0
- ------------------------------
* Represents less than one percent.
</TABLE>
(1) Includes 875,000 shares of common stock issuable pursuant to conversion
of Series D preferred stock and 437,500 shares of common stock issuable
upon the exercise of warrants which would be issued within two business
days of the declaration of effectiveness by the SEC of the registration
statement of which this prospectus is a part.
(2) Includes 175,000 shares of common stock issuable pursuant to conversion
of Series D preferred stock and 87,500 shares of common stock issuable
upon the exercise of warrants which would be issued within two business
days of the declaration of effectiveness by the SEC of the registration
statement of which this prospectus is a part.
(3) Includes 350,000 shares of common stock issuable pursuant to conversion
of Series D preferred stock and also 175,000 shares of common stock
issuable upon the exercise of warrants which would be issued within two
business days of the declaration of effectiveness by the SEC of the
registration statement of which this prospectus is a part.
(4) Includes also 1,796,073 shares of common stock issuable upon the exercise
of warrants. Includes also 100,000 shares of common stock issuable upon
the conversion of stock options. Harry J. Saal is our Chairman of the
Board of Directors.
(5) Includes also 1,796,073 shares of common stock issuable upon the exercise
of warrants.
(6) Includes 100,000 shares of common stock issuable upon the exercise
of stock options.
(7) Includes also 250,000 shares of common stock issuable upon the exercise
of other warrants. Manchester Asset Management has been retained by us
for consulting services within the last three years.
(8) Includes 190,000 shares of common stock issuable upon the exercise of
warrants. The 2,012,500 shares of common stock issuable pursuant to
conversion of Series E preferred stock and 1,006,250 of the shares of
common stock issuable upon the exercise of warrants would only become
beneficially owned by this investor if the terms and conditions of an
exchange agreement, dated February 19, 1999, by and among Olympus
Securities, Ltd., NP Partners and us are met. As of March 16, 1999 the
terms and conditions of this exchange agreement had not been met and
therefore the shares of common stock issuable pursuant to the exchange
agreement had not been issued and accordingly were not beneficially owned
by this investor. Citadel Limited Partnership is the managing general
partner of NP Partners and the trading manager of Olympus Securities,
Ltd. and consequently has voting control and investment discretion over
securities held by NP Partners and Olympic Securities, Ltd. The ownership
for each of Olympus Securities, Ltd. and NP Partners does not include the
ownership information for the other entities. Citadel Limited Partnership
disclaims beneficial ownership of the securities held by NP
-17-
<PAGE>
Partners and Olympus Securities, Ltd. Each of NP Partners and Olympic
Securities, Ltd. disclaims beneficial ownership of the securities held by
the other entities.
(9) Includes also 150,000 shares of common stock issuable upon the exercise
of other warrants. The 2,012,500 shares of common stock issuable pursuant
to conversion of Series E preferred stock and 1,006,250 of the shares of
common stock issuable upon the exercise of warrants would only become
beneficially owned by this investor if the terms and conditions of an
exchange agreement, dated February 19, 1999, by and among Olympus
Securities, Ltd., NP Partners and us are met. As of March 16, 1999 the
terms and conditions of this exchange agreement had not been met and
therefore the shares of common stock issuable pursuant to the exchange
agreement had not been issued and accordingly were not beneficially owned
by this investor.
(10) Includes 40,000 shares of common stock issuable upon the exercise of
warrants.
(11) Includes 700,000 shares of common stock issuable upon the exercise of
warrants. Filter International Corp. Has been retained by us for
consulting services within the last three years.
(12) Frank Kavanaugh, a former director and officer of ours as well as a
current employee of ours. Includes also 430,000 shares of common stock
beneficially owned by DK Capital LLC, of which Frank Kavanaugh is
President and A.L. Dubrow is Chairman of the Board and of which 70,000
shares of common stock are issuable upon the exercise of warrants.
Furthermore, includes also 175,000 shares of common stock issuable
pursuant to conversion of Series E preferred stock and 87,500 shares of
common stock issuable upon the exercise of warrants beneficially owned by
Pacific Investments Trust, of which the children of Frank Kavanaugh are
the beneficial owners. Includes also 240,000 shares of common stock
beneficially owned by A.L. Dubrow.
(13) Includes also 175,000 shares of common stock issuable pursuant to
conversion of Series E preferred stock and 87,500 shares of common stock
issuable upon the exercise of warrants beneficially owned by Pacific
Investments Trust, of which the children of Frank Kavanaugh are the
beneficial owners.
(14) Includes 87,500 shares of common stock issuable pursuant to conversion of
Series E preferred stock and 43,750 shares of common stock issuable upon
the exercise of warrants beneficially owned by BET Trust, of which Frank
Kavanaugh is Trustee. In addition, includes also 430,000 shares of common
stock and 70,000 shares of common stock issuable upon the exercise of
warrants beneficially owned by DK Capital LLC.
(15) Includes 340,000 shares of common stock issuable upon exercise of
warrants. Includes also 432,099 shares of common stock issuable upon
conversion of a convertible subordinated promissory note. The information
contained in this footnote is based solely upon the information contained
in a Schedule 13 D/A dated April 5, 1999 filed with the SEC and the
Company by American Industries, Inc.
(16) Includes 234,568 shares of common stock issuable upon conversion of a
convertible subordinated promissory note.
(17) Includes 50,000 shares of common stock issuable upon the exercise of
warrants.
(18) Includes 170,000 shares of common stock issuable upon the
exercise of warrants.
(19) Includes 70,000 shares of common stock issuable upon the exercise of
warrants issued to DK Capital LLC. Frank Kavanaugh, the President of DK
Capital LLC, is a former director and officer of ours and is a current
employee of ours. A.L. Dubrow, Chairman of the Board of Directors of DK
Capital LLC, is a current director and employee of ours and is the
beneficial owner of 240,000 shares of common stock which are included in
this number. Includes also 175,000 shares of common stock issuable
pursuant to conversion of Series E preferred stock and 87,500 shares of
common stock issuable upon the exercise of warrants beneficially owned by
the Pacific Investments Trust, of which the children of Frank Kavanaugh
are the beneficial owners. Furthermore, includes also 87,500 shares of
common stock issuable pursuant to conversion of Series E preferred stock
and 43,750 shares of common stock issuable upon the exercise of warrants
beneficially owned by BET Trust, of which Frank Kavanaugh is Trustee.
(20) Includes 70,000 shares of common stock issuable upon the exercise of
warrants to DK Capital LLC. Frank Kavanaugh, the President of DK Capital
LLC, is a former director and officer of ours and is a current employee
of ours. A.L. Dubrow, Chairman of the Board of Directors of DK Capital
LLC, is a current director and employee of ours and the beneficial owner
of 240,000 shares of common stock. Includes also 175,000 shares of common
stock issuable pursuant to conversion of Series E preferred stock and
87,500 shares of common stock issuable upon the exercise of warrants
beneficially owned by Pacific Investments Trust, of which the children of
Frank Kavanaugh are the beneficial owners. Furthermore, includes also
87,500 shares of common stock issuable pursuant to conversion of Series E
preferred stock and 43,750 shares of common stock issuable upon the
exercise of warrants beneficially owned by BET Trust, of which Frank
Kavanaugh is Trustee.
-18-
<PAGE>
(21) Includes 70,000 shares of common stock issuable upon the exercise of
warrants. Mark A. Osman has been retained by us as outside legal counsel
on various matters and at various times and our subsidiaries within the
past three years.
(22) Carmine J. Bua has been retained by us as outside legal counsel on
various matters within the past four years.
(23) Includes 190,000 shares of common stock issuable upon the exercise of
warrants. Gerry Berg was our Vice President of Operations and acting
chief financial officer from February 1998 to August 1998, and served as
our Senior Vice President of Worldwide Business Development and acting
Secretary from August 1998 to February 1999.
(24) Includes 45,000 shares of common stock issuable upon the exercise of
warrants. Joseph J. Pfeuffer currently is our Senior Vice President of
Engineering.
(25) Includes 20,833 shares of common stock issuable upon the exercise of
warrants. Christopher McKee currently is our Vice President of Finance
and Operations.
(26) Includes 40,000 shares of common stock issuable upon the exercise of
warrants. David Carver is a member of our Board of Directors.
(27) Paul Barber currently is our Director of Sales for North America.
(28) Dale Richmond currently is our Vice President of Marketing.
(29) Daniel Caldwell currently is the Vice President of our Software Products
Division.
(30) Includes 25,000 shares of common stock acquired after March 16, 1999.
(31) C. Niven Bonar is a son of Brian Bonar, our current Chief Executive
Officer and President.
(32) Pauline M. Bonar is a daughter of Brian Bonar, our current Chief
Executive Officer and President.
(33) Phyllis A. Leonardi is the daughter of Frank J. Leonardi, the Senior Vice
President of our Sales and Marketing Division, and the mother of Frank J.
Leonardi, Jr., one of our inside sales support representatives.
(34) John M. Leonardi is a son of Frank J. Leonardi, the Senior Vice President
of our Sales and Marketing Division, and a brother of Frank J. Leonardi,
Jr., one of our inside sales support representatives.
(35) Frank J. Leonardi, Jr. is one of our inside sales support representatives
and a son of Frank J. Leonardi, the Senior Vice President of our Sales
and Marketing Division.
(36) Patricia M. Leonardi is a daughter of Frank J. Leonardi, the Senior Vice
President of our Sales and Marketing Division, and a sister to Frank J.
Leonardi, Jr., one of our inside sales support representatives.
(37) Includes 150,000 shares of common stock acquired after March 16, 1999.
Hiram T. French was the President of Color Solutions, Inc., one of our
subsidiaries.
(38) Includes 5,000 shares of common stock issuable upon the exercise of
warrants.
(39) Includes 275,000 shares of common stock issuable upon the exercise of
warrants. Edward W. Savarese has been our Chief Executive Officer, an
Executive Vice President for Strategic Business Affairs and a Manager of
Strategic Business Affairs for us and was a former member of our Board of
Directors.
(40) Includes 500,000 shares of common stock acquired after March 16, 1999.
(41) Includes 287,500 shares of common stock issuable upon the exercise of
warrants beneficially owned by Dr. Savarese as of April 20, 1999.
(42) Includes 650,000 shares of common stock issuable upon the exercise of
warrants. Bi Coastal Consulting Corp. has been retained by us for
consulting services within the last three years.
(43) Includes 752,250 shares of common stock issuable upon the exercise of
warrants. Libra Finance has been retained by us for consulting services
within the last three years.
(44) Includes 331,500 shares of common stock issuable upon the exercise of
warrants. Talbiya Ltd. has been retained by us for consulting services
within the last three years.
(45) Includes 60,000 shares of common stock issuable upon the exercise of
warrants. Imperial Bancorp's subsidiary Imperial Bank has a line of
credit and an installment loan with us.
(46) Includes 100,000 shares of common stock acquired after March 16, 1999.
Doron Ben Yehezkel has been a Vice President of Engineering for NewGen
Imaging Systems, Incorporated, one of our subsidiaries, within the past
three years.
(47) Includes 170,000 shares of common stock acquired after March 16, 1999.
Timothy E. McCanna has been a Vice President of OEM Sales for us within
the last three years.
-19-
<PAGE>
DESCRIPTION OF SECURITIES
SERIES D AND E PREFERRED STOCK
As of January 13 and February 2, 1999, pursuant to separate securities
purchase agreements and an exchange agreement, we agreed to sell 1,200 shares of
Series D preferred stock with accompanying Series D warrants and up to 1,161
shares of Series E preferred stock with accompanying Series E warrants. Each
share of Series D preferred stock coupled with 2,000 Series D warrants and each
share of Series E preferred stock coupled with 5,000 Series E warrants, were
sold for $2,000 and $5,000, respectively. Certificates of designation filed with
the Secretary of State of Delaware govern the particular terms and conditions of
the Series D and E preferred stock. The following is a brief description of key
terms of the Series D and E preferred stock.
CONVERSION RIGHTS
A holder of Series D or E preferred stock shall have the right to
convert its shares of Series D or E preferred stock at any time after informing
us of its intention to convert its Series D or Series E preferred stock pursuant
to a notice of conversion.
The actual number of shares of common stock into which each share of
the Series D and E preferred stock may be converted is determined by dividing
the respective purchase price of a share of Series D and E preferred stock,
$2,000 and $5,000, respectively, by an amount equal to the lesser of: (a) $0.50
and (b) an amount equal to 70% of the average market price of the three trading
days with the lowest market prices in the 30 trading days immediately preceding
and investor's notice of conversion. Currently, a holder may convert each share
of Series D and E preferred stock into 4,000 and 10,000 shares of common stock,
respectively.
DIVIDENDS
The holders of Series D and E preferred stock are not entitled to
receive any dividends.
VOTING RIGHTS
Each of the Series D and E preferred stockholders has the right to
vote, except as otherwise required by Delaware law, on all matters which
stockholders of our common shares have a right to vote on. Each Series D and
Series E preferred stockholder has a right to cast one vote for each whole share
of our common stock into which each Series D and Series E preferred share held
by that stockholder is convertible on the prescribed record date for the
determination of stockholders entitled to vote on the matters at issue. However,
no Series D stockholder is entitled to vote more than 9.99% of the number of
shares entitled to be voted on any single matter at issue.
SERIES D AND E WARRANTS
Each selling stockholder who purchased Series D and E preferred stock
in the private sales received one Series D or E warrant for each dollar invested
in those preferred stocks. These warrants have an exercise price of $.875 and an
exercise term of five years from the date of issuance, meaning that
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<PAGE>
the exercise term will expire on various dates in spring 2004. In the event we
issue shares of common stock at a price below the market price, the exercise
price of the warrants will be adjusted downward resulting in the issuance of
additional shares upon exercise of the warrants. However, shares of common stock
issued upon conversion of the Series D or E preferred stock will not result in
the downward adjustment of the exercise price of the warrants. In addition, the
exercise price of the warrants and the number of shares of common stock issuable
upon exercise of the warrants may be adjusted upon the occurrence of, among
other things, a merger or sale of our company, recapitalization, reorganization
or reclassification of our capital.
PLAN OF DISTRIBUTION
The selling stockholders may offer their shares of common stock at
various times in one or more of the following transactions:
o On any U.S. securities exchange on which our common stock may be
listed at the time of sale;
o In the over-the-counter market;
o In transactions other than on U.S. securities exchanges or in the
over-the-counter market;
o In connection with short sales; or
o In a combination of any of the above transactions.
The selling stockholders may offer their shares of common stock at
prevailing market prices, at prices related to the prevailing market prices, at
negotiated prices or at fixed prices.
The selling stockholders may use broker-dealers to sell their shares of
common stock. If this occurs, broker-dealers will either receive discounts or
commission from the selling stockholder, or they will receive commissions from
the purchasers of shares of common stock for whom they acted as agents. These
brokers may act as dealers by purchasing any and all of the shares covered by
this prospectus either as agents for others or as principals for their own
accounts and reselling these securities under the prospectus.
The selling stockholders and any broker-dealers or other persons acting
on the behalf of parties that participate in the distribution of the shares may
be considered underwriters under the Securities Act. Because of this
possibility, any commissions or profits they receive on the resale of the shares
may be considered underwriting discounts and commissions under the Securities
Act.
As of the date of this prospectus, we are not aware of any agreement,
arrangement or understanding between any broker or dealer and any of the selling
stockholders with respect to the offer or sale of the shares under this
prospectus. If we become aware of any agreement, arrangement or understanding,
to the extent required under the Securities Act, we will file a supplemental
prospectus to disclose:
(1) the name of any of the broker-dealers;
(2) the number of shares involved;
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<PAGE>
(3) the price at which the shares are to be sold;
(4) the commissions paid or discounts or concessions
allowed to the broker-dealers, where applicable;
(5) that the broker-dealers did not conduct any
investigation to verify the information set out in
this prospectus, as supplemented; and
(6) other facts material to the transaction.
The registration agreements relating to the private sales of Series D
and E preferred stock, the registration rights agreement relating to the
settlement and mutual release agreement and the subordinated note agreement have
reciprocal indemnification provisions between us and each selling stockholder to
indemnify each other against liabilities, including liabilities under the
Securities Act, which may be based upon, among other things, any untrue
statement or alleged untrue statement of a material fact or any omission or
alleged omission of a material fact. The letter of credit reimbursement
agreement provides that we must indemnify the selling stockholders party to that
agreement for liabilities caused by our failure to follow the terms and
conditions of that agreement.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any document we file at the Securities and Exchange Commission's public
reference rooms in Washington, DC, New York, NY, and Chicago, IL. Please call
the Securities and Exchange Commission at 1-800-SEC-0330 for further information
on the public reference rooms. Our Securities and Exchange Commission filings
are also available to the public from the Securities and Exchange Commission's
website at "http://www.sec.gov."
We have filed a registration statement on Form S-3 with the Securities
and Exchange Commission to register shares of our common stock. This prospectus
is part of that registration statement and, as permitted by the Securities and
Exchange Commission's rules, does not contain all of the information included in
the registration statement. For further information about us, this offering and
our common stock, you may refer to the registration statement and its exhibits
and schedules as well as the documents described below. You can review and copy
these documents at the public reference facilities maintained by the Securities
and Exchange Commission or on the Securities and Exchange Commission's website
as described above.
This prospectus may contain summaries of contracts or other documents.
Because they are summaries, they will not contain all of the information that
may be important to you. If you would like complete information about a contract
or other document, you should read the copy filed as an exhibit to the
registration statement or incorporated in the registration statement by
reference.
The Securities and Exchange Commission 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 we incorporate by reference is considered to be an important part of
this prospectus, and information that we file with the Securities and Exchange
Commission at a later date will
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<PAGE>
automatically update or supersede this information. We incorporate by reference
the following documents as well as any future filing we will make with the
Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934:
1. Our annual report on Form 10-K for the fiscal year ended June 30,
1998;
2. Our definitive proxy statement on Schedule 14A for the annual
meeting of shareholders scheduled for on or about May 27, 1999;
3. Our quarterly reports on Form 10-Q for the periods ended September
30, 1998, December 31, 1998 and March 31, 1999;
4. Our current report on Form 8-K filed on February 26, 1999; and
5. Our registration statement on Form 8-A containing the description
of our common stock, filed on July 6, 1984.
You may request a copy of these filings, at no cost, by writing to:
Imaging Technologies Corporation, 15175 Innovation Drive, San Diego, CA
92128-3401 Attention: Philip J. Englund, Senior Vice President and General
Counsel.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law allows companies to
indemnify their directors and officers against expenses, judgments, fines and
amounts paid in settlement under the conditions and limitations described in the
law.
Article Seventh of our certificate of incorporation provides that the
registrant shall indemnify all persons whom it may indemnify pursuant to Section
145 of the Delaware General Corporation Law to the full extent permitted by
Section 145. Article Ninth of our certificate of incorporation provides that no
director of our shall be personally liable to the corporation or its
stockholders for monetary damages for any breach of fiduciary duty by the
director as a director, except for a breach of the director's duty of loyalty to
the corporation or its stockholders, for any acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, an
unlawful stock purchase or payment of a dividend under Delaware law or for any
transaction from which the director derived an improper personal benefit.
Article X of our bylaws provides that the registrant shall indemnify
its officers, directors and employees. The rights to indemnity thereunder
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors, and administrators
of the person. In addition, expenses incurred by a director or officer in
defending any action, suit or proceeding by reason of the fact that he or she is
or was a director or officer of the registrant shall be paid by the registrant
unless the officer or director is adjudged liable for negligence or misconduct
in the performance of his or her duties.
We have entered into indemnification agreements with all of our
officers and directors. In some cases, the provisions of these indemnification
agreements may be broader than the specific indemnification
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<PAGE>
provisions contained in our certificate of incorporation or otherwise permitted
under Delaware law. Each indemnification agreement may require us to indemnify
an officer or director against liabilities that may arise by reason of his
status or service as an officer or director, or against liabilities arising from
the director's willful misconduct of a culpable nature.
We maintain a directors and officers liability policy with Carolina
Casualty that contains an aggregate limit of liability of $5,000,000.
Furthermore, we maintain an excess directors and officers liability policy with
Philadelphia Insurance Company for liability in excess of $5,000,000 that
contains an aggregate limit of liability of $5,000,000 and also an excess
directors and officers liability policy with Fireman's Fund for liability in
excess of $10,000,000 that contains an aggregate limit of $5,000,000. All of
these policies expire on October 1, 1999.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers and controlling persons
pursuant to these provisions, or otherwise, we have been advised that, in the
opinion of the Securities and Exchange Commission, this type of indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
LEGAL MATTERS
Parker Chapin Flattau & Klimpl, LLP, New York, New York will pass upon
the validity of the shares of common stock sold pursuant to this prospectus.
EXPERTS
The audited consolidated financial statements, including the related
notes to those statements, for the year ended June 30, 1998 incorporated by
reference in this prospectus and elsewhere in the registration statement, are
based on the report (which contains an explanatory paragraph relating to the
ability of our company to continue as a going concern, as described in Note 1 to
the financial statements) of Boros & Farrington APC, independent accountants,
given on the authority of that firm as experts in accounting and auditing.
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<PAGE>
- --------------------------------------------------------------------------------
WE HAVE NOT AUTHORIZED ANY DEALER, 54,522,740 SHARES OF COMMON STOCK
SALESPERSON OR ANY OTHER PERSON TO GIVE
ANY INFORMATION OR TO REPRESENT ANYTHING
NOT CONTAINED IN THIS PROSPECTUS. YOU
MUST NOT RELY ON ANY UNAUTHORIZED
INFORMATION. THIS PROSPECTUS DOES NOT
OFFER TO SELL OR BUY ANY SHARES IN ANY IMAGING TECHNOLOGIES
JURISDICTION WHERE IT IS UNLAWFUL. THE CORPORATION
INFORMATION IN THIS PROSPECTUS IS
CURRENT AS OF JUNE __, 1999.
TABLE OF CONTENTS PAGE
------------------
Risk Factors 3 PROSPECTUS
Forward-Looking Statements 11 ------------------
Use of Proceeds 11
Dividend Policy 11
Dilution 11
Shares Eligible For Future Sale 13
Selling Stockholders 14
Description of Securities 20
Plan of Distribution 21
Where You Can Find More Information 22 June __, 1999
Indemnification of Directors and
Officers 23
Legal Matters 24
Experts 24
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses which will be paid
by us in connection with the issuance and distribution of the securities being
registered on this registration statement. The selling stockholders will not
incur any of the expenses set forth below. All amounts shown are estimates.
Securities and Exchange Commission Registration Fee $ 16,328
Legal Fees and Expenses 30,000
Accounting Fees and Expenses 5,000
Miscellaneous Expenses 5,000
---------------
Total 56,328
===============
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
provides, in general, that a corporation incorporated under the laws of the
State of Delaware, such as the registrant, may indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (other than a derivative action by or in
the right of the corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another enterprise, against expenses (including attorney's fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful. In the case of a derivative action, a Delaware corporation
may indemnify any such person against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the defense
or settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery of the State of Delaware or any other court in which such
action was brought determines such person is fairly and reasonable entitled to
indemnity for such expenses.
Our certificate of incorporation provides that directors shall not be
personally liable for monetary damages to our company or our stockholders for
breach of fiduciary duty as a director, except for liability resulting from a
breach of the director's duty of loyalty to our company or our stockholders,
intentional misconduct or willful violation of law, actions or inactions not in
good faith, an unlawful stock purchase or payment of a dividend under Delaware
law, or transactions from which the director derives improper personal benefit.
Such limitation of liability does not affect the availability of equitable
remedies such as injunctive relief or rescission. Our certificate of
incorporation also authorizes us to indemnify our officers, directors and other
agents to the fullest extent permitted under Delaware law. Our bylaws provide
that the registrant shall indemnify our officers, directors and employees. The
rights to indemnity thereunder continue as to a person who has ceased
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<PAGE>
to be a director, officer, employee or agent and shall inure to the benefit of
the heirs, executors, and administrators of the person. In addition, expenses
incurred by a director or officer in defending any action, suit or proceeding by
reason of the fact that he or she is or was a director or officer of our company
shall be paid by the registrant unless such officer, director or employee is
adjudged liable for negligence or misconduct in the performance of his or her
duties.
This means that our certificate of incorporation provides that a
director is not personally liable for monetary damages to us or our stockholders
for breach of his or her fiduciary duties as a director. A director will be held
liable for a breach of his or her duty of loyalty to us or our stockholders, his
or her intentional misconduct or willful violation of law, actions or in actions
not in good faith, an unlawful stock purchase or payment of a dividend under
Delaware law, or transactions from which the director derives an improper
personal benefit. This limitation of liability does not affect the availability
of equitable remedies against the director including injunctive relief or
rescission. Our certificate of incorporation authorizes us to indemnify our
officers, directors and other agent to the fullest extent permitted under
Delaware law. We have entered into indemnification agreements with all of our
officers and directors. In some cases, the provisions of these indemnification
agreements may be broader than the specific indemnification provisions contained
in our certificate of incorporation or otherwise permitted under Delaware law.
Each indemnification agreement may require us to indemnify an officer or
director against liabilities that may arise by reason of his status or service
as an officer or director, or against liabilities arising from the director's
willful misconduct of a culpable nature.
We maintain a directors and officers liability policy with Carolina
Casualty that contains an aggregate limit of liability of $5,000,000.
Furthermore, we maintain an excess directors and officers liability policy with
Philadelphia Insurance Company for liability in excess of $5,000,000 that
contains an aggregate limit of liability of $5,000,000 and also an excess
directors and officers liability policy with Fireman's Fund for liability in
excess of $10,000,000 that contains an aggregate limit of $5,000,000. All of
these policies expire on October 1, 1999.
ITEM 16. EXHIBITS.
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ---------- ---------------------------------------------------------------------
4.1 Certificate of Designation, Powers, Preferences and Rights of the
Series of Preferred Stock to be Designated Series D Convertible
Preferred Stock. Incorporated by reference to Exhibit 4.1 to the
Company's Report on Form 10-Q for the period ended December 31,
1998.
4.2 Certificate of Designation, Powers, Preferences and Rights of the
Series of Preferred Stock to be Designated Series E Convertible
Preferred Stock. Incorporated by reference to Exhibit 4.2 to the
Company's Report on Form 10-Q for the period ended December 31,
1998.
4.3 Letter of Credit Reimbursement Agreement. Incorporated by reference
to Exhibit 10.2 to the Company's Report on Form 10-Q for the period
ended December 31, 1998.
4.4 Securities Purchase Agreement. Incorporated by reference to Exhibit
10.6 to the Company's Report on Form 10-Q for the period ended
December 31, 1998.
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<PAGE>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ---------- ---------------------------------------------------------------------
4.5 Registration Rights Agreement. Incorporated by reference to Exhibit
10.4 to the Company's Report on Form 10-Q for the period
ended December 31, 1998.
4.6 Registration Rights Agreement. Incorporated by reference to Exhibit
10.7 to the Company's Report on Form 10-Q for the period ended
December 31, 1998.
4.7 Exchange Agreement. Incorporated by reference to Exhibit 10.9 to the
Company's Report on Form 10-Q for the period ended December 31,
1998.
4.8 Form of Warrant. Incorporated by reference to Exhibit 10.5 to the
Company's Report on Form 10-Q for the period ended December 31,
1998.
4.9 Form of Warrant to Purchase 50,000 shares of Common Stock of ITEC
at $1.50 per share, dated March 5, 1999, between ITEC and Carmel
Mountain Environmental L.L.C. Incorporated by reference to Exhibit
4.9 to the original filing of this registration statement, file number
333-72629.
4.10 Form of Warrant to Purchase 50,000 Shares of Common Stock of
ITEC at $1.50 per share, dated March 5, 1999, between ITEC and
Carmel Mountain #8 Associates, L.P. Incorporated by reference to
Exhibit 4.10 to the original filing of this registration statement,
file number 333-72629.
4.11 Lease Letter Agreement, dated March 1, 1999, by and among ITEC,
Carmel Mountain #8 Associates, L.P. and Carmel Mountain
Environmental L.L.C. Incorporated by reference to Exhibit 4.11 to the
original filing of this registration statement, file number 333-72629.
4.12 Form of Warrant to Purchase 5,000 Shares of Common Stock of ITEC
at $1.50 per share, dated March 5, 1999 between ITEC and John P.
Mulder. Incorporated by reference to Exhibit 4.12 to the original
filing of this registration statement, file number 333-72629.
4.13 Form of Warrant to Purchase 5,000 Shares of Common Stock of ITEC
at $1.50 per share, dated March 5, 1999 between ITEC and Steve
Tiritilli. Incorporated by reference to Exhibit 4.13 to the original
filing of this registration statement, file number 333-72629.
4.14 Partial Settlement Agreement, dated March 30, 1999, by and between
ITEC and the party listed on the signature page thereto. Incorporated
by reference to Exhibit 4.14 to the original filing of this
registration statement, file number 333-72629.
4.15 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Software Technology, Inc. Incorporated by
reference to Exhibit 4.15 to the original filing of this registration
statement, file number 333-72629.
4.16 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Mark A. Osman. Incorporated by reference to
Exhibit 4.16 to the original filing of this registration statement,
file number 333-72629.
4.17 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Carmine J. Bua, III. Incorporated by reference to
Exhibit 4.17 to the original filing of this registration statement,
file number 333-72629.
II-3
<PAGE>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ---------- ---------------------------------------------------------------------
4.18 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Frank Leonardi. Incorporated by reference to
Exhibit 4.18 to the original filing of this registration
statement, file number 333-72629.
4.19 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Brian Bonar. Incorporated by reference to Exhibit
4.19 to the original filing of this registration statement, file
number 333-72629.
4.20 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and A.L. Dubrow, including assignment of rights
documentation. Incorporated by reference to Exhibit 4.20 to the
original filing of this registration statement, file number 333-72629.
4.21 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Frank Kavanaugh, including assignment of rights
documentation. Incorporated by reference to Exhibit 4.21 to the
original filing of this registration statement, file number 333-72629.
4.22 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Gerry Berg. Incorporated by reference to Exhibit
4.22 to the original filing of this registration statement, file
number 333-72629.
4.23 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Joseph Pfeuffer. Incorporated by reference to
Exhibit 4.23 to the original filing of this registration statement,
file number 333-72629.
4.24 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Christopher McKee. Incorporated by reference to
Exhibit 4.24 to the original filing of this registration statement,
file number 333-72629.
4.25 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and David Carver. Incorporated by reference to Exhibit
4.25 to the original filing of this registration statement, file
number 333-72629.
4.26 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Paul Barber. Incorporated by reference to Exhibit
4.26 to the original filing of this registration statement, file
number 333-72629.
4.27 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Dale Richmond. Incorporated by reference to
Exhibit 4.27 to the original filing of this registration statement,
file number 333-72629.
4.28+ Debt Forgiveness Agreement, dated December 30, 1998, by and
between ITEC and Daniel Caldwell.
4.29 Common Stock Purchase Agreement. Incorporated by reference to
Exhibit 10.1 to the Company's Report on Form 10-Q for the period
ended September 30, 1998.
4.30 Form of Subordinated Note Purchase Agreement. Incorporated by
reference to Exhibit 10.2 to the Company's Report on Form 10-Q for
the period ended September 30, 1998.
4.31 Settlement and Mutual Release Agreement. Incorporated by reference
to Exhibit 10.7 to the Company's Report on Form 10-Q for the period
ended September 30, 1998.
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<PAGE>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ---------- ---------------------------------------------------------------------
4.32 Registration Rights Agreement. Incorporated by reference to Exhibit
10.6 to the Company's Report on Form 10-Q for the period
ended September 30, 1998.
4.33 Form of Convertible Subordinated Promissory Note. Incorporated by
reference to Exhibit 10.4 to the Company's Report on Form 10-Q for
the period ended September 30, 1998.
4.34 Form of Common Stock Purchase Warrant. Incorporated by reference
to Exhibit 10.12 to the Company's Report on Form 10-Q for the period
ended September 30, 1998.
4.35 Form of Common Stock Purchase Warrant. Incorporated by reference
to Exhibit 10.9 to the Company's Report on Form 10-Q for the period
ended September 30, 1998.
4.36 Form of Common Stock Purchase Warrant. Incorporated by reference
to Exhibit 10.5 to the Company's Report on Form 10-Q for the period
ended September 30, 1998.
4.37 Form of Standard Warrant Agreement. Incorporated by reference to
the Company's Report on Form 10-KSB for the period ended June 30,
1998.
4.38+ Employment Settlement Agreement, dated April 1999, by and between
ITEC and Hiram French.
4.39+ Employment Settlement Agreement, dated April, 1999, by and
between ITEC and Edward W. Savarese.
4.40+ Form of Warrant to Purchase 60,000 Shares of Common Stock of
ITEC at $2.50 per share, dated June 23, 1998, between ITEC and
Imperial Bank.
4.41+ Agreement and Mutual Release, dated June 10, 1999, by and
between ITEC and the entities listed on the signature page
hereto.
4.42+ Settlement Agreement, dated June 1999, by and between ITEC
and the party listed on the signature page thereto.
5.1+ Opinion of Parker Chapin Flattau & Klimpl, LLP.
23.1+ Consent of Parker Chapin Flattau & Klimpl, LLP (included in Exhibit
5.1).
23.2 Consent of Boros & Farrington APC. Incorporated by reference to
Exhibit 23.2 to the original filing of this registration statement,
file number 333-72629.
24.1 Powers of Attorney of certain directors and officers of Imaging
Technologies Corporation incorporated by reference to page II-8 of
this filing.
+ To be filed by amendment.
II-5
<PAGE>
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:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in the volume
of securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high and of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424 (b) if, in the aggregate the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the 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
of controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bonafide offering thereof.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
No.1 to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Diego, State of
California, on June 16, 1999.
IMAGING TECHNOLOGIES CORPORATION
By: /s/ Philip Englund
-------------------------------------
Philip Englund
Senior Vice President and
Corporate Secretary
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman of the Board June 16, 1999
- ------------------------------------------
Harry J. Saal
President, Chief Executive
Officer and Director (Acting
* Chief Financial Officer) June 16, 1999
- ------------------------------------------
Brian Bonar
* Director June 16, 1999
- ------------------------------------------
A.L. Dubrow
* Director June 16, 1999
- ------------------------------------------
David M. Carver
Senior Vice President, General
/s/ Philip Englund Counsel and Secretary June 16, 1999
- ------------------------------------------
Philip Englund
Vice President Finance and
Operations (Chief Accounting
* Officer) June 16, 1999
- ------------------------------------------
Christopher W. McKee
Vice President and Chief
/s/ Charles J. Olson II Financial Officer June 16, 1999
- ------------------------------------------
Charles J. Olson II
* By: /s/ Philip Englund
- ------------------------------------------
Philip Englund
Attorney-in-fact
</TABLE>
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<PAGE>
ITEM 16. EXHIBITS.
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ---------- --------------------------------------------------------------------
4.1 Certificate of Designation, Powers, Preferences and Rights of the
Series of Preferred Stock to be Designated Series D Convertible
Preferred Stock. Incorporated by reference to Exhibit 4.1 to the
Company's Report on Form 10-Q for the period ended December 31,
1998.
4.2 Certificate of Designation, Powers, Preferences and Rights of the
Series of Preferred Stock to be Designated Series E Convertible
Preferred Stock. Incorporated by reference to Exhibit 4.2 to the
Company's Report on Form 10-Q for the period ended December 31,
1998.
4.3 Letter of Credit Reimbursement Agreement. Incorporated by reference
to Exhibit 10.2 to the Company's Report on Form 10-Q for the period
ended December 31, 1998.
4.4 Securities Purchase Agreement. Incorporated by reference to Exhibit
10.6 to the Company's Report on Form 10-Q for the period ended
December 31, 1998.
4.5 Registration Rights Agreement. Incorporated by reference to Exhibit
10.4 to the Company's Report on Form 10-Q for the period ended
December 31, 1998.
4.6 Registration Rights Agreement. Incorporated by reference to Exhibit
10.7 to the Company's Report on Form 10-Q for the period ended
December 31, 1998.
4.7 Exchange Agreement. Incorporated by reference to Exhibit 10.9 to
the Company's Report on Form 10-Q for the period ended December 31,
1998.
4.8 Form of Warrant. Incorporated by reference to Exhibit 10.5 to the
Company's Report on Form 10-Q for the period ended December 31,
1998.
4.9 Form of Warrant to Purchase 50,000 shares of Common Stock of ITEC at
$1.50 per share, dated March 5, 1999, between ITEC and Carmel
Mountain Environmental L.L.C. Incorporated by reference to Exhibit
4.9 to the original filing of this registration statement, file
number 333- 72629.
4.10 Form of Warrant to Purchase 50,000 Shares of Common Stock of
ITEC at $1.50 per share, dated March 5, 1999, between ITEC and
Carmel Mountain #8 Associates, L.P. Incorporated by reference to
Exhibit 4.10 to the original filing of this registration statement,
file number 333-72629.
4.11 Lease Letter Agreement, dated March 1, 1999, by and among ITEC,
Carmel Mountain #8 Associates, L.P. and Carmel Mountain
Environmental L.L.C. Incorporated by reference to Exhibit 4.11 to
the original filing of this registration statement, file number
333-72629.
4.12 Form of Warrant to Purchase 5,000 Shares of Common Stock of ITEC at
$1.50 per share, dated March 5, 1999 between ITEC and John P.
Mulder. Incorporated by reference to Exhibit 4.12 to the original
filing of this registration statement, file number 333-72629.
E-1
<PAGE>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ---------- --------------------------------------------------------------------
4.13 Form of Warrant to Purchase 5,000 Shares of Common Stock of ITEC
at $1.50 per share, dated March 5, 1999 between ITEC and
Steve Tiritilli. Incorporated by reference to Exhibit 4.13 to
the original filing of this registration statement, file
number 333-72629.
4.14 Partial Settlement Agreement, dated March 30, 1999, by and between
ITEC and the party listed on the signature page thereto.
Incorporated by reference to Exhibit 4.14 to the original filing of
this registration statement, file number 333-72629.
4.15 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Software Technology, Inc. Incorporated by reference
to Exhibit 4.15 to the original filing of this registration
statement, file number 333-72629.
4.16 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Mark A. Osman. Incorporated by reference to
Exhibit 4.16 to the original filing of this registration statement,
file number 333-72629.
4.17 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Carmine J. Bua, III. Incorporated by reference to
Exhibit 4.17 to the original filing of this registration statement,
file number 333-72629.
4.18 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Frank Leonardi. Incorporated by reference to
Exhibit 4.18 to the original filing of this registration statement,
file number 333-72629.
4.19 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Brian Bonar. Incorporated by reference to Exhibit
4.19 to the original filing of this registration statement, file
number 333-72629.
4.20 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and A.L. Dubrow, including assignment of rights
documentation. Incorporated by reference to Exhibit 4.20 to the
original filing of this registration statement, file number
333-72629.
4.21 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Frank Kavanaugh, including assignment of rights
documentation. Incorporated by reference to Exhibit 4.21 to the
original filing of this registration statement, file number
333-72629.
4.22 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Gerry Berg. Incorporated by reference to Exhibit
4.22 to the original filing of this registration statement, file
number 333-72629.
4.23 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Joseph Pfeuffer. Incorporated by reference to
Exhibit 4.23 to the original filing of this registration statement,
file number 333-72629.
4.24 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Christopher McKee. Incorporated by reference to
Exhibit 4.24 to the original filing of this registration statement,
file number 333-72629.
E-2
<PAGE>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ---------- --------------------------------------------------------------------
4.25 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and David Carver. Incorporated by reference to
Exhibit 4.25 to the original filing of this registration
statement, file number 333-72629.
4.26 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Paul Barber. Incorporated by reference to Exhibit
4.26 to the original filing of this registration statement, file
number 333-72629.
4.27 Debt Forgiveness Agreement, dated as of December 30, 1998, by and
between ITEC and Dale Richmond. Incorporated by reference to
Exhibit 4.27 to the original filing of this registration statement,
file number 333-72629.
4.28+ Debt Forgiveness Agreement, dated December 30, 1998, by and
between ITEC and Daniel Caldwell.
4.29 Common Stock Purchase Agreement. Incorporated by reference to
Exhibit 10.1 to the Company's Report on Form 10-Q for the period
ended September 30, 1998.
4.30 Form of Subordinated Note Purchase Agreement. Incorporated by
reference to Exhibit 10.2 to the Company's Report on Form 10-Q for
the period ended September 30, 1998.
4.31 Settlement and Mutual Release Agreement. Incorporated by reference
to Exhibit 10.7 to the Company's Report on Form 10-Q for the period
ended September 30, 1998.
4.32 Registration Rights Agreement. Incorporated by reference to Exhibit
10.6 to the Company's Report on Form 10-Q for the period ended
September 30, 1998.
4.33 Form of Convertible Subordinated Promissory Note. Incorporated by
reference to Exhibit 10.4 to the Company's Report on Form 10-Q for
the period ended September 30, 1998.
4.34 Form of Common Stock Purchase Warrant. Incorporated by reference
to Exhibit 10.12 to the Company's Report on Form 10-Q for the period
ended September 30, 1998.
4.35 Form of Common Stock Purchase Warrant. Incorporated by reference
to Exhibit 10.9 to the Company's Report on Form 10-Q for the period
ended September 30, 1998.
4.36 Form of Common Stock Purchase Warrant. Incorporated by reference
to Exhibit 10.5 to the Company's Report on Form 10-Q for the period
ended September 30, 1998.
4.37 Form of Standard Warrant Agreement. Incorporated by reference to
the Company's Report on Form 10-KSB for the period ended June 30,
1998.
4.38+ Employment Settlement Agreement, dated April 1999, by and between
ITEC and Hiram French.
4.39+ Employment Settlement Agreement, dated April, 1999, by and
between ITEC and Edward W. Savarese.
4.40+ Form of Warrant to Purchase 60,000 Shares of Common Stock of
ITEC at $2.50 per share, dated June 23, 1998, between ITEC and
Imperial Bank.
4.41+ Agreement and Mutual Release, dated June 10, 1999, by and
between ITEC and the entities listed on the signature page
hereto.
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<PAGE>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ---------- --------------------------------------------------------------------
4.42+ Settlement Agreement, dated June 1999, by and between ITEC and the
party listed on the signature page thereto.
5.1+ Opinion of Parker Chapin Flattau & Klimpl, LLP.
23.1+ Consent of Parker Chapin Flattau & Klimpl, LLP (included in Exhibit
5.1).
23.2 Consent of Boros & Farrington APC. Incorporated by reference to
Exhibit 23.2 to the original filing of this registration statement,
file number 333-72629.
24.1 Powers of Attorney of certain directors and officers of Imaging
Technologies Corporation incorporated by reference to page II-8 of
this filing.
+ To be filed by amendment.
E-4
