Rule 424(b)(3)
SEC No. 33-59963
Supplement to Prospectus
September 27, 1995
LARSON DAVIS INCORPORATED
THIS COMPREHENSIVE SUPPLEMENT IS A PART OF AND SHOULD BE READ IN
CONJUNCTION WITH THE PROSPECTUS OF LARSON DAVIS INCORPORATED
(THE "COMPANY") DATED AUGUST 1, 1995 (THE "PROSPECTUS").
This comprehensive supplement incorporates and supersedes the
previous supplements to the Prospectus dated August 16, September 1,
September 8, September 20, and September 22, 1995. Capitalized
terms used but not defined herein have the same meaning as set
forth in the Prospectus.
Agreement in Principle
The Company has entered into an Agreement in Principle to acquire
technology held by Sensar Corporation, a privately-held Utah
corporation ("Sensar"), in exchange for the issuance of restricted
Common Stock, the payment of cash to redeem certain shares of
Sensar, and the assumption or payment of the liabilities of
Sensar.
Sensar holds rights to patented proprietary technology with respect
to a time of flight mass spectrometer designed to detect smaller
quantities of impurities in gas vapors than is possible with
competing instruments with a much quicker analysis time. Sensar
has a great deal of expertise in mass spectrometry, which is used
for chemical analysis, separation, isotope identification, and
impurity detection. Sensar has sold a very limited number of its
newly-developed analyzer. It is currently being used by Micron
and Atmel in connection with the fabrication of semiconductors,
and it is anticipated that future sales of this product will also
be in the semiconductor industry. Sensar also has conducted
research and development with respect to instrumentation with
applications outside the semiconductor industry, although these
technologies have not yet been reduced to marketable products.
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The technology was developed by Dr. Milton Lee at Brigham Young
University ("BYU"). BYU holds the patent on the mass spectrometry
technology exclusively licensed to Sensar as well as several
related technologies. The transaction with Sensar is conditioned
on the Company obtaining license rights to certain related
technologies from BYU.
Under the terms of the proposed transaction, the Company will
provide $260,000 and assume the line of credit of Sensar in the
amount of approximately $550,000 in order to redeem 1,900,000 shares
of currently outstanding Sensar stock. The Company will issue
shares of restricted Common Stock with respect to the remaining
4,549,142 shares, based on a negotiated price of $0.70 per share
of Sensar stock and the trading price of the Company's Common Stock
as of the closing. If the transaction were completed at $6.125,
the closing price of the Company's Common Stock as of September 21,
1995, the Company would issue 519,902 shares of Common Stock. In
addition, the Company will assume approximately $500,000 in
current liabilities of Sensar.
The Company will enter into employment agreements with Dr. Milton
Lee and Dr. Edgar Lee in connection with the closing. In addition,
the Company will make employment offers to two additional employees
of Sensar.
Dr. Milton L. Lee is a founder and chairman of the board of Sensar.
He is the H. Tracy Hall Professor of Chemistry at Brigham Young
University, where he has taught since 1976. Dr. Lee founded and
is the editor of the Journal of MicroColumn Separations and serves
on the editorial advisory boards of Chromatographia, Journal of
Supercritical Fluids, and Polycyclic Aromatic Compounds. Dr. Lee
is the co-author of two books and over 330 scientific publications.
Dr. Lee has received numerous awards for his contributions in
chemical analysis and is listed as the inventor on nine patents.
Dr. Lee is a member of the American Chemical Society, Sigma Xi, and
the Scientific Organizing Committee of the International Symposia
on Capillary Chromatography. He received his B.A. in Chemistry
from the University of Utah in 1971, and his Ph.D. in Analytical
Chemistry from Indiana University in 1975.
<PAGE>
Dr. Edgar D. Lee is a founder and vice-president of research of
Sensar and serves as an adjunct researcher at Brigham Young
University. Dr. Lee has extensive experience in a number of areas
of mass spectrometry and has co-authored 21 published articles and
45 technical papers in this field. Dr. Lee is also the co-holder
of three patents in his areas of expertise. Prior to founding
Sensar in 1990, Dr. Lee was employed at Midwest Research Institute
from December 1988 through August 1990, first as a mass
spectrometrist and later as a senior mass spectrometrist. While
at Midwest Research Institute, Dr. Lee was responsible for research,
development, and implementation of state-of-the-art mass
spectrometric techniques at its Center for Advanced Instrumentation.
Dr. Lee is a member of the American Chemical Society and the American
Society for Mass Spectrometry. He pursued undergraduate chemistry
studies at Utah State University and was awarded a B.A. in Chemistry
in 1984 from Brigham Young University. Dr. Lee received a Ph.D. in
Analytical Toxicology, with emphasis in Analytical Chemistry and
Instrumentation Engineering, in 1988 from Cornell University.
The closing of the transaction is subject to the completion of a
due diligence review of Sensar, the negotiation and execution of
definitive agreements, and the negotiation of licensing agreements
from BYU with respect to related technology. There can be no
assurance at this time that the transaction contemplated by the
Agreement in Principle will be consummated.
License Agreement
The Company has executed a definitive agreement with Harris Miller
Miller & Hanson, Inc. ("HMMH"), pursuant to the agreement in
principle described in the Prospectus. Under the terms of the
agreement the Company has granted an exclusive license to HMMH to
use the Company's ANOMS software in the airport noise and
operations monitoring industry. HMMH has also assumed the
management and implementation of the Company's current airport
noise monitoring contracts and pending bid proposals.
HMMH paid a one-time royalty fee to the Company of $125,000 on
closing, will pay a license fee of $12,500 per month, or an
aggregate of $150,000 per year, to the Company, and will pay a
royalty of 2.5% to 4% of the total revenues generated by HMMH from
the airport noise and operations monitoring business. HMMH will
bid and pursue future airport noise monitoring contracts and has
agreed to use its best efforts to specify use of the Company's
hardware in future contracts. The Company has agreed to provide
such hardware at a 25% discount from its standard pricing.
<PAGE>
In conjunction with this agreement, the Company will assign to HMMH
a contract recently awarded to the Company by the City of Chicago
for monitoring systems to be installed at O'Hara and Midway
airports, subject to approval by the City of Chicago. It is
anticipated that the Company will provide a estimated $1,000,000
to $1,200,000 of sound monitoring equipment and services in
connection with the City of Chicago contract.
The term of the agreement is for a period of ten years, although
HMMH has the option to terminate (and relinquish its license rights)
at any time after three years and the option to extend the term
for an additional five years.
Warrant Exercise
The Company has received an aggregate of $1,250,000 from the
exercise of all of the $2.50 Warrants and has issued the 500,000
shares of Common Stock subject to such Warrants. The Company
agreed to grant the holders of the $2.50 Warrants additional
warrants to acquire the same number of shares at $4.50 per share
of Common Stock (the "$4.50 Warrants") in consideration of the
early exercise of the $2.50 Warrants. As disclosed in the
Prospectus, the Company has agreed to pay 6% of the amount
received, or $75,000, to Neil Sullivan and Michael Cunniff as a
finder's fee. The Company has also agreed to pay Messrs. Sullivan
and Cunniff 3% of the amount it receives on the exercise of the
$4.50 Warrants. The holders of the $4.50 Warrants have demand
registration rights similar to those of the $2.50 and $3.50
Warrants and the Company is currently preparing a registration
statement for filing with the Securities and Exchange Commission
with respect to the resale of the Common Stock to be issued on
exercise of the $4.50 Warrants.
Additional Warrants
The Company has also entered into an agreement with the holders of
the $3.50 and $4.50 Warrants (who are all Selling Shareholders)
that if the $3.50 Warrants are exercised by October 1, 1995, and
the $4.50 Warrants exercised by November 1, 1995, the Company will
issue, pro rata in proportion to the number of $3.50 and $4.50
Warrants exercised, additional warrants to acquire up to 500,000
shares at $4.50 per share of Common Stock and 1,000,000 shares at
$5.75 per share of Common Stock. These warrants will be
exercisable for a period of two years subsequent to their issuance
and will contain demand registration rights substantially similar
to the rights associated with the $2.50, $3.50, and $4.50 Warrants.
<PAGE>
Plan of Distribution
On a trade date of August 16, 1995, Laura Huberfeld and Naomi
Bodner, Selling Shareholders named in the Prospectus, each sold
17,500 shares of the Common Stock of the Company to Bear, Stearns,
& Co., Inc., which acted as principal in this transaction. Such
shares were resold by Bear, Stearns & Co., Inc., as part of its
normal market making activity.
On a trade date of September 20, 1995, Laura Huberfeld and Naomi
Bodner, Selling Shareholders named in the Prospectus, sold 67,000
and 75,000 shares of the Common Stock of the Company, respectively,
to Bear, Stearns, & Co., Inc., which acted as principal in the
transaction. Such shares were or will be resold by Bear, Stearns
& Co., Inc., as part of its normal market making activity.
On a trade date of September 27, 1995, Laura Huberfeld and
Naomi Bodner, Selling Shareholders named in the Prospectus,
sold 10,552 and 2,552 shares of the Common Stock of the
Company, respectively, to Bear, Stearns, & Co., Inc., which
acted as principal in the transaction. Such shares were or
will be resold by Bear, Stearns & Co., Inc., as part of
its normal market making activity.
