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RULE 424(b)(3)
FILE NO. 33-87704
1,000,000 Shares
DENSE-PAC MICROSYSTEMS, INC.
Common Stock
This Prospectus covers 1,000,000 shares of Common Stock, no par value
(the "Shares"), of Dense-Pac Microsystems, Inc. (the "Company") to be sold by
certain shareholders (the "Selling Shareholders"). See "Selling Shareholders."
The Selling Shareholders may from time to time sell all or a part of the Shares
at prices then prevailing in the market or at negotiated prices. See "Plan of
Distribution." None of the proceeds from the sale of the Shares will be
received by the Company.
The Selling Shareholders are affiliates of the Company and acquired
the Shares in a transaction exempt from registration under the Securities Act
of 1933, as amended (the "Securities Act"). Consequently, upon any sale of the
Shares, a Selling Shareholder, brokers executing sales on behalf of a Selling
Shareholder and dealers to whom the Shares may be sold may, under certain
circumstances, be considered "underwriters" within the meaning of Section 2(11)
of the Securities Act.
The Company's Common Stock is traded in the over-the-counter market
and is quoted on the NASDAQ Small Cap Market under the symbol "DPAC." On
September 29, 1995, the list sale price for the Common Stock was $4 7/8 per
share.
SEE "RISK FACTORS" FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN AS CONTAINED HEREIN IN CONNECTION WITH THE OFFERING
CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFERING BY THE SELLING SHAREHOLDERS OF ANY SECURITIES OTHER THAN THOSE TO
WHICH IT RELATES OR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
October 3, 1995
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and in
accordance therewith files reports and other information with the Securities
and Exchange Commission (the "Commission"). Reports, proxy statements and
other information filed by the Company can be inspected and copied at the
offices of the Commission at 450 Fifth Street, N.W., Washington, D.C., and at
its regional offices at 500 W. Madison, Suite 1400, Chicago, Illinois 60601,
and 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
This Prospectus does not contain all of the information set forth in
the Registration Statement concerning this offering which the Company has filed
with the Commission pursuant to the Securities Act. For further information,
reference is made to such Registration Statement and the exhibits thereto,
which may be obtained from the Commission's office in Washington D.C. at
prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by this reference the following
documents:
1. The Company's Annual Report on Form 10-KSB for the year ended
February 28, 1995;
2. The Company's Proxy Statement filed pursuant to Section 14 of
the Exchange Act in connection with the Company's 1995 Annual
Meeting of Shareholders;
3. The Company's Quarterly Report on Form 10-QSB for the quarter
ended May 31, 1995; and
4. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A, filed pursuant to Section
12 of the Exchange Act, and any amendments or reports filed
for the purpose of updating such description.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Shares shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
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The Company will provide without charge to each person (including any
beneficial owner) to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all the foregoing
documents incorporated herein by reference (other than exhibits to such
documents). Written or telephone requests should be directed to: William M.
Stowell, Secretary, Dense-Pac Microsystems, Inc., 7321 Lincoln Way, Garden
Grove, California 92641, telephone: (714) 898-0007.
THE COMPANY
The Company designs, develops, packages and sells a broad line of
standard and custom high density, semiconductor memory products for the
commercial, industrial and aerospace markets. The Company's products are
designed to improve performance and reliability at the system level by reducing
space, weight and power requirements. The Company procures silicon from a
variety of semiconductor foundries and incorporates the silicon die into high
density products utilizing the latest process technology and the Company's
advanced package designs. The Company's products range from monolithic
semiconductors to the patented, high density three-dimensional "Dense-Stack"
product line. The Company does not generally compete with chip manufacturers
who focus on the lowest cost consumer markets to keep volumes high. Instead,
the Company focuses on niche markets where the customer's requirements allow
the Company to utilize its unique engineering and packaging skills to maintain
a high value added content. Typical applications for the Company's products
are in the areas of communications, medical instrumentation, missiles, avionics
and space satellites.
The Company's executive offices are located at 7321 Lincoln Way,
Garden Grove, California 92641, and its telephone number is (714) 898- 0007.
RISK FACTORS
Purchase of the Shares involves a high degree of risk. Prospective
purchasers should carefully consider the following factors.
Loss History and Limited Liquidity
In the years ended February 28, 1993 and 1995, the Company incurred
net losses of $265,000 and $2,740,000, respectively. The loss in fiscal year
1995 was primarily due to development and pre-production costs associated with
the Company's second generation stack products and a one-time charge of $1.7
million in connection with the discontinuation of certain product lines.
Although the Company reported net income of $725,000 in the six month period
ended August 31, 1995, there can be no assurance that the Company will not
incur losses in the future. The Company has
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historically operated with limited cash resources which has restricted its
research and development efforts, product marketing and growth in general.
There can be no assurance that the Company will have adequate cash resources or
working capital to finance the growth of its business.
Parts Shortages and Dependence on Suppliers
The semiconductor industry is characterized by periodic shortages of
parts which have in the past and may in the future negatively affect the
Company's operations. The Company is dependent on various suppliers for
semiconductor devices used in its products, but it has no long-term supply
contracts with any of them. Due to the cyclical nature of the semiconductor
industry and competitive conditions, there can be no assurance that the Company
will not experience difficulties in meeting its supply requirements in the
future. Any inability to obtain adequate deliveries of parts, either due to
the loss of a supplier or industry-wide shortages, could delay shipments of the
Company's products, increase its cost of goods sold and have a material adverse
effect on its business, financial condition and results of operations.
Dependence on Defense-Related Business
The Company has historically derived a substantial portion of its
revenues from defense-related contracts. As a result, the Company's business
has been impacted by reductions in the federal defense budget and will continue
to be subject to risks affecting the defense industry, including changes in
governmental appropriations and changes in national defense policies and
priorities. The Company has sought to reduce its dependence on defense-related
business by developing products with commercial applications, although such
products generally have lower margins than defense-related products.
Patent Rights
The Company holds U.S. patents on certain aspects of its 3-D stacking
technology and has applied for additional patents. There can be no assurance
that the Company's patent applications will be approved, that any issued
patents will afford the Company's products any competitive advantage or will
not be challenged or circumvented by third parties, or that patents issued to
others will not adversely affect the development or commercialization of the
Company's products.
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Product Development and Technological Change
The semiconductor packaging industry is characterized by rapid
technological change and is highly competitive with respect to timely product
innovation. Memory products typically have a product life of only three to
five years. The Company believes that its future success depends on its
ability to rapidly achieve market acceptance of its 3-D stacking products, and
thereafter to develop new products or product enhancements to keep up with
technological advances and to meet customer needs. There can be no assurance
that the Company will be successful in its product development or marketing
efforts, or that the Company will have adequate financial or technical
resources for future product development and promotion.
Competition
Numerous companies are in the process of developing three-dimensional
products, including IBM, Irvine Sensors, Texas Instruments, Mitsubishi,
Motorola, Staktek, Cubic Memory and Thompson CSF in France. Many of such
companies have substantially greater financial, manufacturing and marketing
capabilities than the Company. The Company could also experience competition
from established and emerging computer memory companies. There can be no
assurance that the Company's products will be competitive with existing or
future products, or that the Company will be able to establish or maintain a
profitable price structure for its products.
Manufacturing Licenses
In order to obtain large orders for the Dense-Stack products from
OEMs, the Company may be required to provide royalty-free manufacturing
licenses to third parties as second sources to ensure that the customer's
requirements are met. Such second sources could then compete directly with the
Company for customers. As a result, the Company could become more dependent on
the efforts and abilities of its licensees, if any, to manufacture and market
its products.
Market for the Common Stock
The Company's Common Stock is traded in the NASDAQ Small Cap Market.
The Common Stock could be subject to substantial price fluctuations due to
financial, technological, economic or market conditions. The market price of
the Company's Common Stock could also be adversely affected by the availability
for sale of the Shares offered hereby.
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SELLING SHAREHOLDERS
The following table sets forth certain information with respect to the
shares of Common Stock of the Company owned by each Selling Shareholder and the
Shares to be offered pursuant to this Prospectus.
<TABLE>
<CAPTION>
Number of Shares Number of Number of Shares
Name of Selling Owned Before the Shares to be Owned After the
Shareholder Offering Offered (1) Offering (2)
----------------------- ---------------- ------------- ----------------
<S> <C> <C> <C>
Euroventures Benelux II B.V. 2,822,778 (3) 900,000 1,922,778
Trude C. Taylor (4) 275,667 (4) 100,000 175,667
</TABLE>
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(1) The Shares will be acquired upon the exercise of warrants issued in
consideration for loans made by the Selling Shareholders to the
Company in November 1994.
(2) Assumes all Shares offered are sold. After completion of the
offering, Euroventures Benelux II B.V. and Trude C. Taylor would
beneficially own 12.2% and 1.1%, respectively, of the Company's
outstanding Common Stock, based on the shares outstanding as of
October 3, 1995 plus the 1,000,000 Shares to be issued upon exercise
of warrants held by the Selling Shareholders.
(3) Euroventures Benelux II B.V. beneficially owns 17.9% of the Company's
Common Stock outstanding as of October 3, 1995 plus the 1,000,000
Shares to be issued upon exercise of warrants held by the Selling
Shareholders. Roger G. Claes, a director of the Company, is a partner
and managing director of Euroventures Benelux Team B.V., which manages
Euroventures Benelux II B.V.
(4) Mr. Taylor, a director of the Company, beneficially owns 1.7% of the
Company's Common Stock outstanding as of October 3, 1995 plus the
1,000,000 Shares to be issued upon exercise of warrants held by the
Selling Shareholders, including 27,500 shares subject to options
which are exercisable within 60 days.
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PLAN OF DISTRIBUTION
The Selling Shareholders have advised the Company that sales of the
Shares will be effected from time to time in transactions (which may include
block transactions) in the NASDAQ over-the-counter market, in negotiated
transactions or otherwise, at prices then prevailing or at negotiated prices.
The Selling Shareholders may effect such transactions by selling the Shares
directly to purchasers or to or through broker- dealers which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Shareholders and/or the
purchasers of the Shares for whom such broker-dealers may act as agents or to
whom they sell as principal, or both. The Selling Shareholders and any persons
who act as broker-dealers in connection with the sale of the Shares might be
deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act and any commission received by them, and any profit on the
resale of the Shares as principal, may under certain circumstances be deemed to
be underwriting discounts and commissions under the Securities Act.
The Selling Shareholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the Shares
against certain liabilities, including liabilities arising under the Securities
Act. The Company and the Selling Shareholders have agreed to indemnify each
other against certain liabilities in connection with the sale of the Shares,
including liabilities arising under the Securities Act.
The Company will pay all expenses incident to the offering and sale of
the Shares, other than commissions, discounts or concessions of underwriters,
dealers or agents, which are estimated to be approximately $7,000.00.
EXPERTS
The financial statements incorporated in this Prospectus by reference
from the Company's Annual Report on Form 10-KSB for the year ended February 28,
1995 have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and have
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
LEGAL MATTERS
The validity of the Shares has been passed upon for the Company by
Helen W. Melman, Esq., Santa Monica, California.
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