<page 1>
Registration No. 333 --
As filed with the Securities and Exchange Commission on August 2, 1996
__________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________________________________________________
Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
INTERSYSTEMS,INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3256265
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8790 Wallisville Road, Houston, Texas 77029 (713) 675-0307
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Fred S. Zeidman, President, InterSystems, Inc. 8790
Wallisville Road, Houston, Texas 77029 (713) 675-0307
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
With copies to:
Clare J. Attura, Esq.,
537 Steamboat Road, Greenwich, CT 06830 FAX (203) 629-1961
Approximate date of commencement of proposed sale to the public: From time
to time after the Registration Statement becomes effective.
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 (the "Act"), 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 Act, please check the following box and
list the Act registration statement number of the earlier registration
statement for the same offering. [ ] ______________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Act, check the following box and list the 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 1 of 24 Pages; Exhibits begin on page 22
<PAGE> 2
CALCULATION OF REGISTRATION FEE
___________________________________________________________________________
Title of Each Proposed
Class of Maximum Proposed
Securities Amount Offering Maximum Amount of
to be to be Price Aggregate Registration
Registered Registered Per Unit(1) Price Fee
___________________________________________________________________________
Common Stock 1,760,000 $1.375 (3) $2,420,000 $ 834.42
Common Stock 780,000(2) $1.80 (4) $1,404,000 $ 484.10
Common Stock 35,000(2) $3.50 (5) $ 122,500 $ 42.24
Common Stock 36,250(2) $1.375 (6) $ 49,844 $ 17.19
Total 2,611,250 $1,377.95
____________________________________________________________________________
(1) Estimated solely for purposes of calculation of the registration fee.
(2) Pursuant to Rule 416 promulgated under the Securities Act of 1933, as
amended (the "Act"), this Registration Statement covers such additional
shares of Common Stock to be offered or issued to prevent dilution as a
result of future stock splits, stock dividends or similar transactions.
(3) Pursuant to Rule 457(c), the offering price with respect to the
Placement Shares and the Zeidman Shares is based upon the average of the
high and low prices reported on the American Stock Exchange on July 30, 1996
(being within 5 business days prior to the date of the filing of this
registration statement).
(4) Pursuant to Rule 457(g), the offering price with respect to the Fund
Warrant Shares is based upon the price at which the Warrants may be
exercised.
(5) Pursuant to Rule 457(g), the offering price with respect to the Fund
Warrant Shares is based upon the price at which the Fund Warrants may be
exercised.
(6) Pursuant to Rule 457(g), the offering price with respect to the Fund Fee
Shares is based upon the average of the high and low prices reported on the
American Stock Exchange on July 30, 1996 (being within 5 business days prior
to the date of the filing of this registration statement).
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 the Registration
Statement shall become effective on such date as the Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.
Page 2 of 24 Pages; Exhibits begin on page 22
<page 3>
PROSPECTUS
INTERSYSTEMS, INC.
________________________________________
2,611,250 Shares of Common Stock
________________________________________
This Prospectus relates to the offer and sale of 2,611,250 shares of
common stock of InterSystems, Inc. (the "Company"), $.01 par value per share
(the "Common Stock") for the account of the Selling Stockholders identified
herein as follows:
1,560,000 shares (the "Placement Shares") sold by the Company in a
private placement of 39 Units which commenced in December 31, 1995 and
closed in January 1996. Each Unit consisted of 40,000 shares of Common
Stock and 20,000 Common Stock Purchase Warrants expiring January 15,
2000 (the "Warrants") for a purchase price of $55,000 per Unit;
780,000 shares (the "Warrant Shares") issuable upon exercise of the
Warrants;
200,000 shares (the "Zeidman Shares") sold by the Company in a private
placement to Mr. Fred Zeidman, President of the Company at a price of
$1.00 per share, being the closing price of the Common Stock on the
American Stock Exchange (the "AMEX") on June 24, 1993, the date of the
sale;
35,000 shares (the "Fund Warrant Shares") issuable to The Mezzanine
Financial Fund, L.P. (the "Fund"), a lender to the Company, upon
exercise at $3.50 per share of 35,000 Common Stock Purchase Warrants
expiring December 31, 1999 (the "Fund Warrants"); and
36,250 shares (the "Fund Fee Shares") issuable to the Fund upon
conversion of a $36,250 indebtedness on account of an enhancement fee
owing to the Fund from the Company in connection with a loan (the "Fund
Fee"), at a conversion price of not less than $1.00 per share.
The Placement Shares, the Warrant Shares, the Zeidman Shares, the Fund
Warrant Shares and the Fund Fee Shares are hereinafter collectively referred
to as the "Securities."
The Warrants became exercisable at $1.80 per share commencing on the
later of (i) July 15, 1996 or (ii) such date as the Warrant Shares were
approved for listing on the AMEX, which occurred in February 1996. The
Warrants are redeemable by the Company at a price of $.05 per warrant, upon
not less than 30 days' prior notice, at such time as (i) the closing sales
price of the Common Stock (as reported by the AMEX) is at least $2.50 on
each of 30 consecutive trading days at a time when the Warrant Shares are
registered under the Securities Act of 1933, as amended (the "Act").
Page 3 of 24 Pages; Exhibits begin on page 22
<page 4>
The Fund Warrants and the Fund Fee were awarded to the Fund in
connection with a loan made by the Fund to the Company in September 1994,
which was repaid in full in February 1996. The Fund Warrants were earned at
the rate of 2,000 per month during the term of the loan, and the Fund Fee
was earned at the inception of the loan. The maximum amount outstanding at
any one time under the loan was $650,000. The Fund's right to convert the
Fund Fee expires on February 16, 1997.
The Securities being offered hereby are being offered to permit the
sale of the Securities by the Selling Stockholders and the issuance of
registered stock by the Company upon the exercise of the Warrants, the Fund
Warrants and upon conversion of the Fund Fee. Additionally, the Securities
offered by the Selling Stockholders may be sold from time to time by the
Selling Stockholders, or by pledgees, transferees or other successors in
interest, on the AMEX (or such other exchange on which the Securities are
listed at the time of sale) in the over-the-counter market or otherwise, at
prices and at terms then prevailing or at prices related to the then current
market price, or in privately negotiated transactions.
Addtionally, this Prospectus has been prepared for use, with the prior
consent of the Company, by certain holders of the Warrants who will acquire
shares of Common Stock upon exercise and who may wish to sell such shares in
transactions in which they may (because of their relationship to the
Company) be deemed to be underwriters within the meaning of the Act.
This Prospectus also relates to such additional shares of Common Stock
which may be issuable pursuant to the anti-dilution provisions of the
Warrants and the Fund Warrants, which shares are being registered pursuant
to Rule 416 promulgated under the Act.
Other than proceeds equal to the aggregate exercise price of Warrants
exercised, if any, the Company will not receive any proceeds from the sale
of Common Stock offered hereby. The Company's Common Stock is presently
listed on the AMEX under the symbol "II." The closing price for the Common
Stock on the AMEX on July 30, 1996 was $1.375.
_________________________________________
SEE "SPECIAL CONSIDERATIONS" FOR
CERTAIN MATTERS TO BE CONSIDERED BY PROSPECTIVE INVESTORS.
_________________________________________
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.
________________________________________
The date of this Prospectus is August 2, 1996.
Page 4 of 24 Pages; Exhibits begin on page 22
<page 5>
No person is authorized in connection with the offering made by this
Prospectus to give any information or to make any representations not
contained or incorporated by reference in this Prospectus, and any
information or representation not contained or incorporated by reference in
this Prospectus must not be relied upon as having been authorized by the
Company. This Prospectus is not an offer to sell, or a solicitation of an
offer to buy, by any person in any jurisdiction in which it is unlawful for
that person to make an offer or solicitation. Neither the delivery of this
Prospectus or any sale made under this Prospectus shall, under any
circumstance, create any implication that the information in this Prospectus
is correct as of any time subsequent to the date of this Prospectus.
AVAILABLE INFORMATION
InterSystems, Inc. (the "Company") is subject to the informational
requirements of the Securities Exchange Act of 1934 (the "1934 Act") and, in
accordance therewith, files reports, proxy and information statements and
other information with the Securities and Exchange Commission ( the
"Commission"). Such reports, proxy and information statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549; and at the regional offices of the Commission at:
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511 and 7 World Trade Center, Suite 1300, New York, New York 10001.
Copies of such material can be obtained from the Public Reference Section of
the Commission, in Washington, D.C. at prescribed rates. In addition, the
Common Stock is listed on the American Stock Exchange, 86 Trinity Place, New
York, N.Y. 10006, and reports, proxy and information statements and other
information can be inspected at the offices of the Exchange.
-----------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates by reference into this Prospectus the following
documents and portions of documents:
1. The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1995.
2. The Company's Quarterly Report on Form 10-QSB for the fiscal quarter
ended March 31, 1996.
3. All other reports filed pursuant to Section 13(a) or Section 15(d) of the
1934 Act since the date of this Prospectus.
4. The definitive Proxy Statement of the Company date June 1, 1995, relating
to the 1995 Annual Meeting of Shareholders.
5. A description of the Common Stock as set forth in Registration Statement
Form 8-A filed with the Commission on February 2, 1987.
Page 5 of 24 Pages; Exhibits begin on page 22
<PAGE> 6
All other reports filed pursuant to Section 13(a), 13(c), 14 or 15(d) of
the 1934 Act prior to the termination of this offering shall be deemed to be
incorporated by reference in this Prospectus and to be a part of this
Prospectus from the date of filing thereof.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus
to the extent that a statement contained herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute part of this
Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of that person, a copy
of all other documents incorporated by reference into the Registration
Statement of which this Prospectus is a part, other than exhibits to those
documents. Requests should be directed to Daniel T. Murphy, InterSystems,
Inc., 537 Steamboat Road, Greenwich, CT 06830 (telephone: (203) 629-1400).
-----------------------
THE COMPANY
The Company is engaged in the design, manufacture and sale of
specialized materials handling equipment, the sale and distribution of
commercial rolling doors and hurricane resistant shutters, and in providing
custom compounding services for resin producers.
The Company's two principal lines of business today consist of the
operations of its wholly-owned subsidiary, InterSystems, Inc., a Nebraska
corporation ("InterSystems Nebraska"), which designs, manufactures and sells
specialized materials handling equipment, and, beginning in late 1995, sells
and distributes commercial rolling doors and hurricane resistant shutters,
and the custom resin compounding operations conducted by its wholly-owned
subsidiary, Chemtrusion, Inc. ("Chemtrusion"). For each of the two years
ended December 31, 1995, approximately 76% of the Company's revenues were
attributable to the business of InterSystems Nebraska and approximately 24%
of the Company's revenues were attributable to the business of Chemtrusion.
InterSystems, Inc. was organized under the laws of the state of Delaware
in 1984. As used herein, "Company" refers to InterSystems, Inc. and its
subsidiaries, unless the context indicates otherwise. The Company's
principal executive offices are located at 8790 Wallisville Road, Houston,
Texas 77029 and its telephone number at that location is (713) 675-0307.
Page 6 of 24 Pages; Exhibits begin on page 22
<PAGE> 7
SPECIAL CONSIDERATIONS
All prospective investors should consider carefully, among other things,
the following factors before purchasing any securities offered hereby:
Recent Operating Losses; Limited Capital. For the years ended December
31, 1994 and 1995, the Company had losses from continuing operations of
$732,000 and $695,000, respectively. The Company had a loss from operations
of $303,000 for the first three months of 1996, as compared to a net loss of
$250,000 for the comparable period in 1995.
The capital needs of the Company's newly formed subsidiary, Tropical
Systems, Inc. ("TSI"), are significant. While original estimates of the
cost of clearing title to the assets of Tropical Manufacturing Group, Inc.
to be purchased by TSI remain at approximately $250,000, additional working
capital is needed to maintain the day to day operating expenses of this
division while marketing and sales are being developed to cover future cash
flow and working capital needs. For the year ended December 31, 1995, TSI
recorded revenues of $852,000 and a net loss from operations of $231,000.
For the three months ended March 31, 1996, TSI operated at a loss of
$152,275, and has continued to operate at a loss through the date of this
Prospectus. Working capital needs for this subsidiary through the end of
1996 are currently estimated at a minimum of approximately $500,000. No
assurance can be given that sufficient sales will be developed by TSI to
meet its working capital needs, or that the Company will be able to raise
sufficient funds needed to fund TSI for the foreseeable future. If neither
situations occur, the Company may be forced to discontinue operating TSI.
The recent history of losses subjects the Company and its subsidiaries
to a number of risks, including limited access to capital, uncertain markets
and competition. There can be no assurance that the Company's existing
capital and cash flow from operations will be sufficient to meet its working
capital needs, or the working capital needs of its subsidiaries, in the
future should operating losses continue, nor can there be any assurance that
the Company will be profitable in the future.
Capital may be needed by the Company to call the Warrants, or to redeem
the Shares comprising the units offered in the Company's December 1995
private placement in accordance with the terms of those securities. The
maximum amount required to call the Warrants will be $39,000 (although
$1,404,000 will be realized by the Company assuming that all of the
Warrants, once called, will be exercised), and the maximum amount required
to redeem all the Shares will be $2,808,000. Furthermore, an additional
$13,750 may be needed to call another class of common stock purchase
warrants outstanding. Should the Company decide to call any outstanding
warrants, or should the holders of Units require the Company to redeem the
Shares, the Company may be required to undertake a financing to raise
sufficient capital to complete any such call or redemption. No assurance
can be given that the Company will be able to successfully complete such a
financing or otherwise raise the necessary funds.
Page 7 of 24 Pages; Exhibits begin on page 22
<PAGE> 8
Control by Helm Resources, Inc. Helm Resources, Inc. ("Helm") currently
owns approximately 24% of the Common Stock. Four officers and directors of
Helm, who are also officers and directors of the Company, in the aggregate
own approximately another 4.4% of the Common Stock. Such a concentration of
effective voting power and control could serve to perpetuate management.
The overlap of directors of the both companies creates inherent conflicts of
interests. For example, in connection with the possible acquisition of
Interpak Holdings, Inc. from Helm, this transaction and other similar
transactions may indirectly benefit directors and officers of the Company
who are also directors, officers and security holders of Helm, although the
Board of Directors of the Company has recently elected Mr. William Lurie and
Mr. Leonard Friedman as independent directors to the Board, and has
appointed Mr. Lurie Chairman of the Acquisition Committee which will
evaluate and negotiate the possible acquisition.
In addition, Helm provides management services to the Company. The
allocated expenses for such management services, based on certain formulas
which management deems to be reasonable, amounted to $36,000 and $52,920 for
1994 and 1995. The Company also pays approximately $30,000 per month in
salary and benefits to certain individuals who are employees of both Helm
and ISI pursuant to their employment agreements with the Company. These
expenses have continued during 1996, and are expected to continue in the
future.
Reliance on Key Personnel. Mr. Scott Owens, President of Chemtrusion,
is integral to the operation of that subsidiary, and at the present time
that company does not have in place an assistant to Mr. Owens who could
assume his responsibilities should Mr. Owens leave the employ of the Company
or otherwise be unable to perform his duties.
Customer Dependence. During 1995, one customer, Montell U.S.A., Inc.,
accounted for approximately 75%, respectively, of Chemtrusion's revenues and
20% of the Company's revenues. The loss of this customer would have a
material adverse effect on the compounding business and the Company's
revenues, and there can be no assurance that Chemtrusion could fill the
production capacity resulting from such loss.
Market for the Common Stock; Shares Eligible for Future Sale. The
Common Stock is currently traded on the American Stock Exchange. However,
there is no assurance that an active trading market in the Common Stock will
continue. Accordingly, no assurance can be given that a holder of the
Common Stock will be able to sell the Common Stock in the future or as the
price at which the Common Stock might trade. The liquidity of the market
will depend upon the number of holders thereof, the interest of the
securities dealers in making a market in the Common Stock and other factors
beyond the Company's control.
Page 8 of 24 Pages; Exhibits begin on page 22
<PAGE> 9
There are currently 6,378,343 shares of Common Stock outstanding. In
addition, 1,587,215 shares of Common Stock are or will become issuable upon
conversion of outstanding debentures, 1,690,352 shares of Common Stock are
issuable upon exercise of warrants that are outstanding or reserved for
issuance, 325,000 shares of Common Stock are reserved for issuance under the
Company's employee stock option plan (121,228 of which are subject to
currently outstanding options) and 450,000 shares of Common Stock are
issuable upon the exercise of other outstanding options. The shares of
Common Stock and shares issuable upon conversion or exercise of other
outstanding securities of the Company will be eligible for immediate resale
in the public market without restriction. Future sales of substantial
amounts of Common Stock in the public market following this offering could
adversely affect the market price of the Common Stock. It is anticipated
that a significant amount of Common Stock would be issued to Helm in
connection with the possible purchase of Interpak Holdings.
Dividend Policy. The Company has not paid any cash dividends during the
past several years. The Company currently intends to retain all of its
earnings to support the development of its business and does not anticipate
paying any cash dividends for the forseeable future. Furthermore,
InterSystems Nebraska is a party to a credit and security agreement
providing for a revolving line of credit up to $1.75 million which prohibits
the declaration or payment of cash dividends by InterSystems Nebraska. This
prohibition has the practical effect or restricting the payment of dividends
on the Company's common stock.
Anti-Takeover Provisions. The Company's Certificate of Incorporation
and By-Laws include provisions that may have the effect of delaying or
preventing a change in control of the Company. The Company's Certificate of
Incorporation authorizes the issuance of up to 5,000,000 shares of preferred
stock. As a result, the Board of Directors could, without stockholder
approval, issue preferred stock with voting, liquidation preference,
dividend and other rights superior to those of the Common Stock. The
issuance of such preferred stock could adversely affect the voting power of
holders of the Common Stock and could be used to prevent a third party from
acquiring control of the Company. In addition, the Company's Certificate of
Incorporation provides for the Board of Directors to be divided into three
classes of directors serving staggered three year terms, with the number of
directors in each class to be as nearly equal as possible. The vote of two-
thirds of the outstanding shares of stock entitled to vote on the matter is
required to remove a director from office. A staggered board and the super
majority vote required for the removal of directors are additional factors
which could make it more difficult for stockholders to change control of the
Company.
Contingent Liabilities of the Trading Business. In April 1993 the
Company completed the sale of its trading business to Bamberger Acquisition
Corp. ("BAC"), a newly formed Delaware corporation owned by six individuals
who were then members of the Company's senior management. In connection
with the sale, BAC did not assume all of the liabilities of the trading
business. In addition, with respect to those liabilities which were
assumed, the Company remains liable, together with BAC, to all secured and
unsecured creditors (including lessors), vendors and trade creditors of the
trading business who did not release the Company following consummation of
the sale. As of December 31, 1995, such contingent liabilities (which by
such date consisted of lease obligations
Page 9 of 24 Pages; Exhibits begin on page 22
<PAGE> 10
only) were estimated to be approximately $654,000. In circumstances
where the Company has a continuing liability together with BAC for such
obligations, the Company would have a contractual right to indemnification
from BAC for any liabilities actually incurred. No assurance can be given
that such indemnity could be easily and quickly enforced by the Company.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the
Securities by the Selling Stockholders hereby, except that it will receive
the aggregate exercise price of the Warrants, estimated to be approximately
$1,404,000 and the aggregate exercise price of the Fund Warrants, estimated
to be $122,500. In addition, should the Fund decide to convert the Fund
Fee, it will eliminate $36,250 of Company indebtedness. The shares of
Common Stock underlying the Warrants, the Fund Warrants and the Fund Fee are
being registered pursuant to a contractual obligation on the part of the
Company to register these shares to provide the holders thereof with freely
tradable Common Stock upon exercise. The Company does not know whether any
of the Warrants or Fund Warrants will be exercised, or the Fund Fee
converted, and therefore has made no specific plans to utilize the proceeds,
if any, from such exercise. If any Warrants or Fund Warrants are exercised,
or if the Fund Fee is converted, the Company intends to use the proceeds for
general corporate purposes.
[The rest of this page intentionally left blank.]
Page 10 of 24 Pages; Exhibits begin on page 22
<PAGE> 11
SELLING STOCKHOLDERS
The following tables (Table 1: Private Placement Securities and Table 2:
Zeidman and Fund Securities) provide information with respect to the name of
each Selling Stockholder (Column 1), the number and percentage of shares of
Common Stock held by each Selling Stockholder prior to the offering,
including shares offered hereby and shares of Common Stock which the Selling
Stockholder has the right to acquire within 60 days (Column 2), the number
of Placement or Zeidman Shares which are offered hereby (Column 3), the
number of Warrant Shares, Fund Warrant Shares and/or Fund Fee Shares which
are offered hereby (Column 4) and the number and percentage of shares of
Common Stock which will be held by each Selling Stockholder after the
offering, including shares which the Selling Stockholder has the right to
acquire within 60 days (Column 5). Because the Selling Stockholders may
sell all or a portion of their Shares offered hereby, and the fact that this
offering is not being underwritten on a firm commitment basis, the amount of
securities that may be owned after the offering assumes that the Selling
Stockholders will offer and sell all of Shares offered for sale hereby and
not acquire any other securities issued by the Company.
Table_1:_Private_Placement_Securities
<TABLE>
<S> <C> <C> <C> <C>
Shares/% Placement Warrant Shares/%
Name of Beneficially Shares Shares Benefically
Selling Owned Prior Offered Offered Owned After
Stockholder to Offering(1) hereby hereby Offering
Stanley J. Arkin 60,000/* 40,000 20,000 -
Ashton Investments Ltd. 120,000/1.9 80,000 40,000 -
Matthew A. Berdon, 60,000/* 40,000 20,000 -
Trustee, Matthew A.
Berdon IRA R/O
Robert H. Elman 60,000/* 40,000 20,000 -
S. Marcus Finkle 282,500/4.3(2) 120,000 60,000 102,500/1.6
First New Hampshire 30,000/* 20,000 10,000 -
Investment Services
TTEE William Welsh IRA
Paul Getty 180,000/2.8 120,000 60,000 -
Alan Goldstein 30,000/* 20,000 10,000 -
Josef Grunwald 120,000/1.9 80,000 40,000 -
Walter J. Lack 120,000/1.9 80,000 40,000 -
Nancy Levy 30,000/* 20,000 10,000 -
Marvin Kaplan 60,000/* 40,000 20,000 -
Page 11 of 24 Pages; Exhibits begin on page 22
<PAGE> 12
Mark D. Margolis 60,000/* 40,000 20,000 -
Astrid C. Mehlich 51,142/*(3) 8,000 4,000 39,142/*
U/W May C. Mehlich F/B/O 25,661/*(4) 8,000 4,000 13,661/*
William O. Mehlich Trust
Peter Carlson Mehlich 12,000/* 8,000 4,000 -
Irrev. Trust, Anne C.S.
Mehlich, T'ee
Robert W. Mehlich 46,526/*(5) 8,000 4,000 34,526/*
Robert W. Mehlich Jr. 12,000/* 8,000 4,000 -
Trust d/t/d 1987
William O. Mehlich 51,142/*(6) 8,000 4,000 39,142/*
Richard Osterer 12,000/* 8,000 4,000 -
Marjorie Phillips 60,000/* 40,000 20,000 -
Cheryl M. Schmitz 39,892/*(7) 8,000 4,000 27,892/*
Roger W. Schmitz Trust 12,000/* 8,000 4,000 -
d/t/d 12/16/87
Michael & Cheryl
Schmitz, Trustees
Frederick M. Schmitz 12,000/* 8,000 4,000 -
1987 Trust
Michael & Cheryl
Schmitz, Trustees
Rose Segal Trust 30,000/* 20,000 10,000 -
FBO Florence Cohen
The InterGroup Corp.(9) 288,000/4.5 192,000 96,000 -
William Timberman 120,000/1/9 80,000 40,000 -
Tradewind Fund I, L.P. 240,000/3.8 160,000 80,000 -
c/o Harbor Capital Mgt.
Tamar Valenta 60,000/* 40,000 20,000 -
Morris & Gayle Weitz 12,000/* 8,000 4,000 -
John Winfield (8) 288,000/4.5 192,000 96,000 -
Stephen & Jaclyn
Zimmerman 18,650/* 8,000 4,000 6,650/*
</TABLE>
Page 12 of 24 Pages; Exhibits begin on page 22
<PAGE> 13
Table 2: Zeidman and Fund Securities
<TABLE>
<S> <C> <C> <C> <C>
Fund Fee/
Fund
Shares/% Zeidman Warrant Shares/%
Name of Beneficially Shares Shares Benefically
Selling Owned Prior Offered Offered Owned After
Stockholder to Offering(1) hereby hereby Offering
Fred S. Zeidman(9) 645,000/9.5 200,000 - 445,000/6.5
The Mezzanine
Financial_Fund, L.P.(10) 71,250/1.1 - 71,250 -
* less than 1%
</TABLE>
(1) Except as otherwise indicated, each named holder has, to the best of the
Company's knowledge, sole voting and investment power with respect to the
shares indicated. Also includes shares that may be acquired within 60 days
by any of the named persons upon exercise of any right.
(2) Includes 37,500 shares issuable upon exercise of the Company's common
stock purchase warrants exercisable at $3.50 per share and expiring December
31, 1999 (the "Dividend Warrants") and 65,000 shares issuable upon exercise
of common stock purchase warrants exercisable at $1.50 per share and expiring
June 30, 2000 ("June 2000 Warrants").
(3) Includes 19,231 shares issuable upon conversion of the Company's 8%
Convertible Subordinated Debentures due August 31, 2003 (the "8% Debentures),
13,661 shares issuable upon conversion of the Company's 10% Convertible
Subordinated Debentures due June 30, 2001 (the "10% Debentures") and 6,250
shares isuable upon exercise of Dividend Warrants.
(4) Includes 13,661 shares issuable upon conversion of 10% Debentures
(5) Includes 14,615 shares issuable upon conversion of 8% Debentures, 13,661
shares issuable upon conversion of 10% Debentures and 6,250 shares issuable
upon exercise of the Dividend Warrants.
(6) Includes 19,231 shares issuable upon conversion of 8% Debentures, 13,661
shares issuable upon conversion of 10% Debentures and 6,250 shares issuable
upon exercise of Dividend Warrants.
(7) Includes 14,231 shares issuable upon conversion of 8% Debentures and
13,661 shares issuable upon conversion of 10% Debentures.
(8) Mr. Winfield is the Chairman of the Board, President and controlling
stockholder of The InterGroup Corporation.
(9) Mr. Zeidman is the President and a director of the Company. His holdings
include 400,000 shares issuable upon exercise of options to purchase 200,000
shares of Common Stock at $2.00 per share and options to purchase 200,000
shares of Common Stock at $3.00 per share and 15,000 June 2000 Warrants.
(10) Messrs. Herbert M. Pearlman, David S. Lawi and Walter M. Craig, Jr.,
directors of the Company, are limited partners of, and Mr. Craig is President
of, the Fund.
Page 13 of 24 Pages; Exhibits begin on page 22
<PAGE> 14
PLAN OF DISTRIBUTION
This Prospectus relates to the offer and sale by the Selling
Stockholders of 1,560,000 Placement Shares, 200,000 Zeidman Shares, 780,000
Warrant Shares, 35,000 Fund Warrant Shares and 36,250 Fund Fee Shares ) (the
Warrant Shares, the Fund Warrant Shares and the Fund Fee Shares are
hereinafter collectively referred to as the "Warrant Securities"). From
time to time, the Company may amend this Prospectus by Prospectus
Supplements or post-effective amendments to the Registration Statement of
which this Prospectus is a part, to offer shares of Common Stock obtained
upon exercise of the Warrant Securities by certain persons who may, by
virtue of their relationship to the Company, be deemed to be underwriters
within the meaning of the Act.
The shares of Common Stock issuable upon exercise of the Warrant
Securities will be issued and distributed by the Company pursuant to the
terms and conditions of those securities. Such Common Stock is being
registered pursuant to the Act pursuant to the Company's contractual
obligation to the holders of the Warrant Securities and offered by the
Company hereby to permit the issuance by the Company of registered stock
upon the exercise of the Warrant Securities in accordance with their terms.
Additional shares of Common Stock may be issuable pursuant to the anti-
dilution provisions of the Warrant Securities which shares are being
registered hereby pursuant to Rule 416 promulgated under the Act. If all of
the Warrants and Fund Warrants are exercised and the Fund Fee converted, the
Company will receive aggregate cash proceeds estimated to be approximately
$1,526,500 and the elimination of $36,250 in debt. See "Use of Proceeds."
All remaining securities covered by this Prospectus are being offered
for the accounts of the respective holders of the Placement Shares and the
Zeidman Shares listed under the caption "Selling Stockholders."
Consequently, the Company will not receive any of the proceeds from the sale
of the Placement Shares and the Zeidman Shares offered hereby.
The Securities may be sold from time to time by the Selling
Stockholders, or by their pledgees, transferees or other successors in
interest, on the American Stock Exchange (or such other exchange on which
the Securities are listed at the time of sale), in the over-the-counter
market or otherwise, at prices and at terms then prevailing or at prices
related to the then current market price, or in privately negotiated
transactions. The Securities may be sold by various methods, including, but
not limited to one or more of the following: (a) directly in a privately
negotiated transaction, (b) a block trade in which the broker or dealer so
engaged will attempt to sell Securities as agent but may position and resell
a portion of the block as principal to facilitate the transaction, (c)
purchases by a broker or dealer as principal and resale by the broker or
dealer for its own account pursuant to this Prospectus, (d) a transaction on
the American Stock Exchange in accordance with the rules of such exchange,
(e) and ordinary brokers transactions and transactions in which the broker
solicits the purchasers. In effecting sales, brokers or dealers engaged by
the Selling Stockholders may arrange for other brokers or dealers to
participate. Alternatively, the Selling Stockholder may from time to time
offer the Securities through underwriters, dealers or agents who may receive
compensation in the form
Page 14 of 24 Pages; Exhibits begin on page 22
<PAGE> 15
of underwriting discounts, concessions, or commissions from the Selling
Stockholders and/or purchasers of Securities for whom they act as agents.
In addition any of the Securities which qualify for sale pursuant to Rule
144 under the Securities Act of 1933, as amended (the "Act"), or otherwise
pursuant to an applicable exemption under the Act, may be sold other that
pursuant to this Prospectus.
The Selling Stockholders and any such underwriters, dealers or agents
that participate in the distribution of Securities may be deemed to be
underwriters, and any profit on the sale of the Securities by them and any
discounts, commissions or concessions received by them may be deemed to be
underwriting discounts and commissions under the Act. The Company will not
receive any of the proceeds of the offering of the Securities hereunder for
the account of the Selling Stockholders. See "Use of Proceeds."
If required by law, at the time a particular offer of Securities is
made, a supplement to this Prospectus will be distributed which will
identify and set forth the aggregate amount of Securities being offered and
the terms of the offering, including the name or names of any underwriters,
dealers or agents, the purchase price paid by any underwriter for Securities
purchased from the Selling Stockholder, any discounts, commissions and other
items constituting compensation from the Selling Stockholder and/or the
Company and any discounts, commissions or concessions allowed or reallowed
or paid to dealers, including the proposed selling price to the public.
Such supplement to this Prospectus and, if necessary, a post-effective
amendment to the Registration Statement of which this Prospectus is a part,
will be filed with the Commission to reflect the disclosure of additional
information with respect to the distribution of the Securities.
The Selling Stockholders have entered into indemnification
agreements with the Company pursuant to which the Company will be
indemnified against failure by the Selling Stockholders to deliver a
Prospectus if required, as well as against certain civil liabilities,
including liabilities under the Act or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), incurred in connection with any untrue (or
alleged untrue) statement of a material fact or ommission of a material fact
in this Registration Statement to the extent such liability relates to
information supplied by the Selling Stockholder for inclusion in the
Registration Statement or Prospectus.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the Securities may not simultaneously
engage in market making activities with respect to the Securities for a
period of nine business days prior to the commencement of such distribution.
In addition and without limiting the foregoing, certain of the Selling
Stockholders and any person participating in the distribution of the
Securities will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including without limitation Rules 10b-
6 and 10b-7, which provisions may limit the timing of purchases and sales of
the Securities by the Selling Stockholders. All of the foregoing may affect
the marketability of the Securities.
In order to comply with certain states' securities laws, if
applicable, the Securities will be sold in such jurisdictions only through
Page 15 of 24 Pages; Exhibits begin on page 22
<PAGE> 16
registered or licensed brokers or dealers. In certain states the
Securities may not be sold unless the Securities have been registered or
qualify for sale in such state, or unless an exemption from registration or
qualification is available and complied with.
The Company will pay all of the expenses incident to the
registration and certain other expenses related to this offering of the
Securities, other than underwriting commissions and discounts, normal
commission expenses and brokerage fees, applicable transfer taxes and
attorneys' fees of Selling Stockholders' counsel, which will be borne by
the Selling Stockholders.
LEGAL MATTERS
Certain legal matters relating to the validity of the Common Stock
being registered hereby have been passed upon for the Company by St. John &
Wayne, Two Penn Plaza East, Newark, New Jersey 07105.
EXPERTS
The consolidated financial statements of the Company incorporated by
reference in this Prospectus have been audited by BDO Seidman, LLP,
independent certified public accountants, to the extent and for the periods
set forth in their report incorporated herein by reference, and is
incorporated herein in reliance upon such report given upon the authority of
said firm as experts in auditing and accounting.
Page 16 of 24 Pages; Exhibits begin on page 22
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses of
InterSystems, Inc. in connection with the distribution of the securities
being registered pursuant to this Registration Statement.
<TABLE>
<S> <C>
Registration Fee............................. $1,377.95
Legal Fees and Expenses...................... 3,500.00
Blue Sky Fees and Expenses................... -
Accounting Fees and Expenses................. 1,500.00
Transfer Agent's Fees and Expenses............ -
Printing and Engraving Expenses.............. -
Miscellaneous Expenses....................... 500.00
TOTAL................................... $6,877.95
</TABLE>
Item 15. Indemnification of Directors and Officers.
Section 145(a) of the General Corporation Law of the State of
Delaware (the "General Corporation Law") provides, in general, that a
corporation shall have power to 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, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation),
by reason of the fact that he is or was a director or officer of the
corporation. Such indemnity may be against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred in connection with such action, suit or proceeding, if
the indemnitee acted in good faith and in a manner reasonably believed to be
in or not opposed to the best interests of the corporation and with respect
to any criminal action or proceeding, the indemnitee must not have had
reasonable cause to believe his conduct was unlawful.
Section 145(b) of the General Corporation Law provides, in general,
that a corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgement in its favor by reason of the fact that he is or was a director or
officer of the corporation (including attorney's fees) acutally and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interest of the corporation.
Section 145(g) of the General Corporation Law provides in general
that a corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director or officer of the corporation
against any liability asserted against him or incurred by him in any
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under the provisions of the law.
Page 17 of 24 Pages; Exhibits begin on page 22
<PAGE> 18
Article Eighth of the Registrant's Certificate of Incorporation and
Section Six of the Registrants's By-Laws give a director or officer the
right to be indemnified by the Registrant to the fullest extent permitted
under Delaware law.
Item 16: Exhibits
4.1 Form of Common Stock Purchase Warrants due January 15, 2000
(filed as Exhibit 4.6 to the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1995)
4.2 Form of Common Stock Purchase Warrant expiring December 31, 1999
(filed as an exhibit to Company's Form 10-K for the year ended
December 31, 1991)
5.1 Opinion of St. John & Wayne, legal counsel to the Company *
13.1 The Company's Annual Report on Form 10-KSB for the year ended
December 31, 1995 (1)
13.2 The Company's Quarterly Report on Form 10-QSB for the quarter
ended March 31, 1996 (1)
23.1 Consent of BDO Seidman, LLP. *
23.2 Consent of St. John & Wayne (included in Exhibit 5.1) *
24.1 Power of Attorney (included on Signature Page) *
_________________
* filed herewith
(1) Incorporated by reference to such document as filed with the Commission.
Item 17. Undertakings
The 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) [Not applicable];
(ii) [Not applicable];
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.
Page 18 of 24 Pages; Exhibits begin on page 22
<PAGE> 19
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(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.
(4) That for the 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 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 bona fide offering thereof.
(5) The registrant hereby undertakes to deliver or cause to be delivered
with the prospectus, to each person to whom the prospectus is sent or given,
the registrant's latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or 14c-3 under the Securiites
Exchange Act of 1934, and where interim financial information required to be
presented by Article 3 of Regulation S-X is not set forth in the prospectus,
to deliver, or cause to be delivered to each person to whom the prospectus
is sent or given, the latest quarterly report on Form 10-Q, that is
specifically incorporated by reference in the prospectus to provide such
interim financial information.
Insofar as indemnification of liabilities arising under the Securities
Act of 1933 may be permitted to Directors, Officers and controlling persons
of the Registrant, pursuant to the foregoing provisions, 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 said Act and is therefore unenforceable. In the event that an
agreement for an 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 a successful defense of
any action, suit or proceeding), is asserted by a Director, Officer or
controlling person in connection with the Securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in said Act and will be governed by the final
adjudication of such issue.
Page 19 of 24 Pages; Exhibits begin on page 22
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City
of Houston, State of Texas on this 31st day of July, 1996.
INTERSYSTEMS, INC.
By:/s/_Fred_S._Zeidman___
Fred S. Zeidman, President, Chief
Executive Officer
and Director
(principal executive officer)
By:/s/ Daniel T. Murphy
Daniel T. Murphy
Vice President
(principal financial officer)
By:/s/ W. Chris Mathers
W. Chris Mathers
Controller
(principal accounting officer)
Each person whose signature appears below constitutes and appoints
Fred Z. Zeidman, Daniel T. Murphy and W. Chris Mathers true and lawful
attorneys-in-fact and agents, each acting alone, with full powers of
substitution and resubstitution, for him and in his name, place an
stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agents, each acting alone, full
powers and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agents,
each acting alone, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on July 31, 1996.
<TABLE>
<S> <C>
Signature Title
/s/ Walter M. Craig, Jr Director
Walter M. Craig, Jr.
Page 20 of 24 Pages; Exhibits begin on page 22
<PAGE> 21
____________________ Director
Leonard Freidman
/s/ David S. Lawi Director
David S. Lawi
_________________ Director
William Lurie
/s/ Daniel T. Murphy Executive Vice President and
Daniel T. Murphy Chief Financial Officer and
Director
/s/_Herbert_M._Pearlman Chairman of the Board of
Herbert M. Pearlman Directors
_______________________ Director
John E. Stieglitz
/s/ Fred S. Zeidman President, Chief Executive
Fred S. Zeidman Officer and Director
</TABLE>
Page 21 of 24 Pages; Exhibits begin on page 22
<PAGE> 22
Exhibit 5.1
St. John & Wayne
Attorneys At Law
Two Penn Plaza East
Newark, New Jersey 07105-2249
(201) 491-3300
August 2, 1996
InterSystems, Inc.
8790 Wallisville Road
Houston, Texas 77029
RE: InterSystems, Inc.
Form S-3 Registration Statement Covering 2,611,250 Shares of
Common Stock
Gentlemen:
We have acted as counsel for InterSystems, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and
filing by the Company of the captioned Registration Statement on Form S-
3 filed under the Securities Act of 1933, as amended (the "Act")(the
"Registration Statement"). Terms used herein and not otherwise defined
shall have the meaning ascribed thereto in the Registration Statement.
In that connection, we have examined the Certificate of
Incorporation and the By-Laws of the Company, the minutes of the
various meetings and consents of the Board of Directors of the Company,
and such other documents, certificates, records, authorizations,
proceedings, statutes and judicial decisions as we have deemed
necessary to form the basis of the opinion expressed below. In such
examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the
conformity to originals of all documents submitted to us as copies
thereof. As to various questions of fact material to such opinion, we
have relied upon statements and certificates of officers and
representatives of the Company and others.
Page 22 of 24 Pages; Exhibits begin on page 22
<PAGE> 23
InterSystems, Inc.
August 2, 1996
Page 2
Based upon the foregoing, we are of the opinion that:
1. The Company has been duly organized and is validly existing as a
corporation under the laws of the State of Delaware.
2. The outstanding Securities have been duly authorized and are
validly issued, fully paid and non-assessable.
3. The Securities which are not outstanding, when exercised in
accordance with the terms of (a) the Warrants, or the Fund Warrants,
upon the Company's receipt of the applicable exercise price or other
consideration therefor stated in such Warrants or such Fund Warrants,
as the case may be; or (b) the documents evidencing the right to
receive and convert the Fund Fee into Fund Fee Shares, will be validly
issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the
caption "Legal Matters" in the Prospectus comprising a part of the
Registration Statement.
By giving the foregoing consent, we do not come within the category
of persons whose consent is required under Section 7 of the Act or are
otherwise within the category of persons described in Section 11(a)(4)
of the Act.
Very truly yours,
ST. JOHN & WAYNE
Page 23 of 24 Pages; Exhibits begin on page 22
<PAGE> 24
Exhibit 23.1
Consent of Independent
Certified Public Accountants
InterSystems, Inc.
Houston, Texas
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated
February 27, 1996, relating to the consolidated financial statements of
InterSystems, Inc. appearing in the Company's Annual Report on Form 10-
KSB for the year ended December 31, 1995.
We also consent to the reference to us under the caption "Expert" in
the Prospectus.
BDO Seidman, LLP
Houston, Texas
August 2, 1996
Page 24 of 24 Pages; Exhibits begin on page 22
