<PAGE>
Registration No. 33- 92166
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST EFFECTIVE AMENDMENT NO. 1
ON
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933(*)
MARK SOLUTIONS, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 11-2864481
(State of (I.R.S. Employer
Incorporation) Identification Number)
1515 Broad Street Parkway Technical Center
Bloomfield, New Jersey 07003
(201)893-0500
(Address, including Zip Code and Telephone Number
of Registrant's Principal Executive Offices)
Carl Coppola, President
Mark Solutions, Inc.
1515 Broad Street
Bloomfield, New Jersey 07003
(201) 893-0500
(Name, Address, including Zip Code, and Telephone Number of Agent for Service)
A copy to:
Timothy J. McCartney, Esq.
9 Elsa Way
Richboro, Pennsylvania 18954
(215) 396-7156
Approximate date 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 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, check the following box: [XX]
[COVER PAGE 1 OF 2 PAGES]
<PAGE>
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration Statement number of the earlier effective
registration statement for the same offering. [ ] _________________________.
If this Form is a post effective amendment filed pursuant to Rule 462(c) under
the Securities Act, please 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 [ ].
(*) This Registration Statement also constitutes post-effective Amendment No. 3
to Registrant's Registration Statement on Form S-4 (File No. 33-61176) declared
effective by the Securities and Exchange Commission on October 8, 1993 and post-
effective amendment to Registrant's Registration Statement on Form S-18 (File
No. 33-10596-NY) declared effective by the Securities and Exchange Commission on
October 4, 1991.
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 Commission, acting pursuant to said Section 8(a),
may determine.
[COVER PAGE 2 OF 2 PAGES]
<PAGE>
MARK SOLUTIONS, INC.
CROSS REFERENCE SHEET
Between Items in Part I of Form S-3 and Prospectus
Registration Statement
Item Number and Caption Location in Prospectus
----------------------- ----------------------
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus...... Facing Page; Cross
Reference Sheet; Outside
Front Cover of Prospectus
2. Inside Front and Outside Back Cover
Page of Prospectus.......................... Available Information;
Table of Contents
3. Summary Information, Risk Factors, Ratio
of Earnings to Fixed Charges................ Summary; Summary Selected
Financial Data; Risk
Factors
4. Use of Proceeds............................. Use of Proceeds
5. Determination of Offering Price............. Not Applicable
6. Dilution.................................... Dilution
7. Selling Security Holders.................... Selling Shareholders;
Certain Outstanding
Warrants
8. Plan of Distribution........................ Plan of Distribution
9. Description of Securities to be Registered.. Description of Securities
10. Interests of Named Experts and Counsel...... Legal Matters; Experts
11. Material Changes ........................... Not Applicable
12. Incorporation of Certain Information
by Reference ............................... Incorporation of Certain
Documents by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................. Not Applicable
<PAGE>
Prospectus
MARK SOLUTIONS, INC.
4,588,170 Shares of Common Stock
This prospectus is being delivered to holders of the warrants to purchase
shares of common stock, $.01 par value (the "Common Stock") of Mark Solutions,
Inc. ("Mark") described below. Mark is offering up to 375,600 shares to holders
of the Class A Warrants pursuant to the exercise of such warrants.
In addition, of the shares of Common Stock being offered by this
prospectus, 4,212,570 shares may be sold by selling shareholders including
2,993,280 shares which may be acquired by the selling shareholders pursuant to
the exercise of outstanding warrants. See "Selling Shareholders" and "Certain
Outstanding Warrants". The Selling Shareholders may sell such shares in the open
market or in privately negotiated transactions. While Mark will receive proceeds
from the exercise of the Warrants, Mark will receive no proceeds from the resale
of Common Stock by the Selling Shareholders.
All of the foregoing shares have been registered under prior registration
statements.
Mark currently has 4,300,880 shares of Common Stock underlying outstanding
warrants, of which 3,308,880 are registered pursuant to registration statements
of which this prospectus forms a part. Mark registered these shares pursuant to
agreements and understandings with the holders of the Warrants. The registration
of the Common Stock underlying the Warrants will facilitate the exercise of the
Warrants. To the extent the Warrants are exercised, Mark will receive proceeds
for working capital purposes.
Class A Warrants. The 375,600 outstanding redeemable common stock purchase
warrants expiring on December 31, 1996 (the "Class A Warrants"). Each Class A
Warrant represents the rights to purchase one share of Common Stock at a price
of $3.25 per share.
Finance Warrants. The 1,446,158 outstanding common stock purchase warrants (the
"Finance Warrants") which were issued in connection with debt and equity
financings of Mark. The Finance Warrants expire on various dates beginning
January 15, 1997 and ending May 16, 1998 and each represents the right to
purchase one share of Common Stock at a price ranging from $ 2.50 to $ 15.00.
Consultant Warrants. The 685,000 outstanding common stock purchase warrants (the
"Consultant Warrants") which were issued to consultants. The Consultant Warrants
expire on various dates beginning August 8, 1996 and ending May 8, 1997 and each
represents the right to purchase one share of Common Stock at a price ranging
from $ 2.00 to $ 10.00.
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<PAGE>
Private Placement Warrants. The 198,572 outstanding common stock purchase
warrants (the "Private Placement Warrants") which were issued in connection with
Mark's unit offering in January and February 1995. The Private Placement
Warrants expire on February 14, 1997 and each represents the right to purchase
one share of Common Stock at a price of $ 2.00.
Employee/Director Warrants. The 154,383 outstanding common stock purchase
warrants (the "Employee/Director Warrants") which were issued to employees and
outside directors of Mark. The Employee/ Director Warrants expire on various
dates beginning April 25, 1997 and ending September 21, 1997 and each represents
the right to purchase one share of Common Stock at a price ranging from $ 3.25
to $ 4.50.
Miscellaneous Warrants. The 449,167 outstanding common stock purchase warrants
(the "Miscellaneous Warrants") issued in other business transactions. The
Miscellaneous Warrants expire on various dates beginning November 3, 1996 and
ending August 17, 1998 and each represents the right to purchase one share of
Common Stock at a price ranging from $ 2.625 to $10.50 per share.
The Class A Warrants, Note Warrants, Finance Warrants, Consultant Warrants,
Private Placement Warrants, Employee/Director Warrants and Miscellaneous
Warrants are collectively referred to as the "Warrants".
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND
SUBSTANTIAL DILUTION. See "Risk Factors" and "Dilution".
The Common Stock is traded on NASDAQ Small Cap Market under the symbol
"MCSI". The Class A Warrants are traded in the over-the-counter market and are
quoted in the National Daily Quotation Sheets. On June 28, 1996, the closing
price of the Common Stock and Class A Warrants was $ 6-1/2 per share and $ 2-1/8
per warrant, respectively.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE 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 July **, 1996.
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<PAGE>
No person is authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given or
made, such information or representations should not be relied upon as having
been authorized. This Prospectus does not constitute an offer to sell, or
solicitation of an offer to purchase, the securities offered by this Prospectus,
in any jurisdiction to or from any person to whom or from whom it is unlawful to
make such offer or solicitation of an offer in such jurisdiction. Neither the
delivery of this Prospectus nor any distribution of the securities being offered
pursuant to this Prospectus shall, under any circumstances, create an
implication that there has been no change in the information set forth herein
since the date of this Prospectus.
AVAILABLE INFORMATION
Mark has filed with the Commission a Registration Statement on Form S-3
(together with all amendments and exhibits thereto the "Registration Statement")
under the Securities Act with respect to the Common Stock offered hereby. As
permitted by the rules and regulations of the Commission, this Prospectus omits
certain information contained in the Registration Statement. For such
information, reference is made to the Registration Statement and the exhibits
thereto. Mark is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith Mark files reports and other information with the Commission.
The Registration Statement, reports and other information filed by Mark
with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices at 7 World
Trade Center, Suite 1300, New York, New York 10048, 1401 Brickell Avenue, Suite
200, Miami, Florida 33131, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, 1801 California Street, Suite 4800, Denver Colorado 80202 and
5670 Wilshire Boulevard, 11th Floor, Los Angeles, California 90036. Copies of
such material also can be obtained from the Public Reference Section of the
Commission, Washington, D.C. 20549 at prescribed rates.
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<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by Mark with the Commission
pursuant to the Exchange Act are incorporated and made a part of this Prospectus
by reference:
(1) Mark's Annual Report on Form 10-K for the year ended June 30,
1995;
(2) Mark's Quarterly Reports on Form 10-Q for the quarters ended September 30,
1995, December 31, 1995 and March 31, 1996;
(3) Mark's Current Report on Form 8-K dated October 13, 1995;
(4) Mark's Current Report on Form 8-K dated May 28, 1996; and
(5) The description of the Common Stock contained in the Registration Statement
on Form 8-A.
All documents filed by Mark pursuant to Section 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 contemplated by his Prospectus shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing such documents. Any statements contained herein or in a document
incorporated or deemed to be 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 or in any subsequently filed documents which also is
or is deemed to be incorporated by reference herein modified or supersedes such
earlier statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
Mark undertakes to provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus has been delivered, on
written or oral request of any such person, a copy of any or all of the
documents referred to above which have been or may be incorporated by reference
in the Prospectus, other than exhibits to such documents (unless such documents
are specifically incorporated by reference in such documents). Requests for such
copies should be directed to Ms. Cheryl Gomes, Mark Solutions, Inc., 1515 Broad
Street, Bloomfield, New Jersey 07003, Telephone Number (201) 893-0500.
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<PAGE>
TABLE OF CONTENTS
Page
Available Information . . . . . . . . . . . . . . . . . . 3
Incorporation of Certain Documents by Reference . . . . . 4
Summary . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Company . . . . . . . . . . . . . . . . . . . . . 6
Risk Factors. . . . . . . . . . . . . . . . . . . . . 6
Certain Information about Outstanding
Equity Securities of Mark. . . . . . . . . . . . . . 7
Summary Selected Financial Data . . . . . . . . . . . 8
Risk Factors. . . . . . . . . . . . . . . . . . . . . . . 9
Dilution. . . . . . . . . . . . . . . . . . . . . . . . . 12
Dividend Policy . . . . . . . . . . . . . . . . . . . . . 12
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . 13
Capitalization. . . . . . . . . . . . . . . . . . . . . . 13
Price Range of Common Stock and Class A Warrants. . . . . 14
Selected Financial Data . . . . . . . . . . . . . . . . . 15
Business . . . . . . . . . . . . . . . . . . . . . . . . 16
Management . . . . . . . . . . . . . . . . . . . . . . . 23
Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . . 25
Selling Shareholders . . . . . . . . . . . . . . . . . . 27
Certain Outstanding Warrants . . . . . . . . . . . . . . 27
Plan of Distribution . . . . . . . . . . . . . . . . . . 30
Description of Securities . . . . . . . . . . . . . . . . 31
Legal Matters . . . . . . . . . . . . . . . . . . . . . . 32
Experts . . . . . . . . . . . . . . . . . . . . . . . . . 32
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<PAGE>
SUMMARY
The following is a summary of certain information contained in this
Prospectus. This summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus and
the exhibits hereto. Certain capitalized items used and not otherwise defined in
this summary have the meanings ascribed to them elsewhere in this Prospectus.
THE COMPANY
Mark Solutions, Inc. ("Mark") is a Delaware corporation which operates its
various businesses through wholly-owned subsidiaries and a division.
Mark is engaged in the design, manufacture, assembly and/or distribution of
(i) modular steel cells for housing of the general prison population as well as
for use as infectious disease isolation units for correctional institutions and
health care facilities, (ii) a treatment booth for communicable diseases and
(iii) diagnostic support and archiving computer systems marketed under the name
"IntraScan".
Mark has succeeded to the businesses of Mark Correctional Systems, Inc.
under a reorganization (the "Reorganization") consummated on November 10, 1993
pursuant to an Agreement and Plan of Reorganization dated December 23, 1992, as
amended.
Mark was incorporated under the laws of the State of Delaware on September
29, 1986 under the name "Showcase Cosmetics, Inc." Mark's principal executive
office is located at Parkway Technical Center, 1515 Broad Street, Bloomfield,
New Jersey 07003 and its telephone number is (201) 893-0500.
RISK FACTORS
The securities of Mark involve a high degree of risk. Mark has experienced
operating losses and related working capital deficiencies over the past several
years. In addition, the success of Mark will be primarily dependent on the sale
of its modular steel products which have been subject to sporadic sales. See
"Risk Factors".
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<PAGE>
CERTAIN INFORMATION ABOUT OUTSTANDING EQUITY SECURITIES OF MARK
Common Stock ........................... 13,372,463 shares
Class A Warrants ....................... 375,600 warrants
Finance Warrants(1) .................... 1,446,158 warrants
Consultant Warrants(2) ................. 685,000 warrants
Private Placement Warrants ............. 198,572 warrants
Employee/Director Warrants(3) .......... 154,383 warrants
Miscellaneous Warrants(4) .............. 449,167 warrants
Other Warrants/Options(5) .............. 992,000 warrants
(1) Of such warrants 1,150,000 are exercisable at $ 4.25 per share; 200,000 are
exercisable at $ 2.50 per share; 70,000 are exercisable at $ 3.75 per share
and 26,158 are exercisable at $ 15.00 per share.
(2) Of such warrants 410,000 are exercisable at $ 5.00 per share; 200,000 are
exercisable at $ 2.00 per share; 50,000 are exercisable at $ 3.00 per share
and 25,000 are exercisable at $ 7.50 per share.
(3) Of such warrants 151,050 are exercisable at $ 3.25 per share and 3,333 are
exercisable at $ 4.50 per share.
(4) Of such warrants 250,000 are exercisable at $ 4.25 per share; 150,000 are
exercisable at $ 2.625 per share; 42,500 are exercisable at $ 3.25 per share
and 6,667 are exercisable at $ 10.50 per share.
(5) Of such warrants 305,000 are exercisable at $ 5.375 per share; 222,500 are
exercisable at $ 4.00 per share; 144,500 are exercisable at $ 3.25 per
share; 125,000 are exercisable at $ 6.00 per share; 100,000 are exercisable
at $ 5.625 per share; 75,000 are exercisable at $ 5.50 per share; 10,000 are
exercisable at $ 6.375 per share and 10,000 are exercisable at $ 4.25 per
share.
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<PAGE>
SUMMARY SELECTED FINANCIAL DATA
The following summary selected financial is based upon financial statements
incorporated herein and such summary information should be read in conjunction
with such financial statements and notes thereto.
Income Statement Data:
<TABLE>
<CAPTION>
Nine Months Ended
March 31 Fiscal Years Ended June 30
1996 1995 1995 1994 1993
----------------------------- --------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $ 3,206,371 $ 2,749,847 $ 6,125,573 $ 3,183,073 $ 5,309,660
Costs and
Expenses 6,464,898 5,228,489 10,952,303 7,033,374 6,634,648
(Loss) From Continuing
Operations (3,306,705) (2,472,656) (4,826,730) (3,915,050) (1,324,988)
(Loss) From Discontinued
Operations (104,503) (111,841) (277,438) (193,620) --
Net Income (Loss) (3,411,208) (2,584,497) (5,190,073) (4,138,130) (1,587,197)
Earnings (Loss) per Share ($ .27) ($ .25) ($ .48) ($ .47) ($ .18)
Weighted Average
Shares Outstanding 12,500,250 10,418,715 10,726,204 8,802,543 8,710,975
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Data:
At March 31 At June 30
1996 1995
---- ----
<S> <C> <C>
Working Capital (Deficit) $ 796,931 $ (48,112)
Total Assets 3,145,428 3,978,383
Total Liabilities 1,134,190 2,189,322
Stockholders' Equity 2,011,238 1,789,061
</TABLE>
-8-
<PAGE>
RISK FACTORS
Prospective investors in the Common Stock should give careful consideration
to the following risks in making a decision concerning the securities offered
hereby.
1. Poor Financial Condition; Going Concern Opinion. Mark has experienced
significant operating losses and working capital and liquidity deficiencies over
the past several years. Mark had net losses of $ 5,190,073 and $ 3,411,208 for
the fiscal year ended June 30, 1995 and the nine months ended March 31, 1996. In
addition, Mark had an accumulated deficit of $ 20,512,806 at March 31, 1996.
Mark has and will continue to experience such financial difficulties in the
foreseeable future absent significant increases in the sale of modular cells,
its principal product. Accordingly, based on past operating results there can be
no assurance that Mark will be able to operate profitably. The report of the
independent certified public accountants for the fiscal year ended June 30, 1995
includes an explanatory paragraph regarding substantial doubt about Mark's
ability to continue as a going concern due to the recurring losses from
operations. Mark's poor financial condition could adversely effect its ability
to raise additional working capital pursuant to private sales of its securities.
2. Limited Market; Contracts for Modular Cells. Mark has derived
substantially all of its revenue from the sale of its modular cells and disease
containment units to correctional institutions and management believes that the
sale of these products will continue to represent virtually all of Mark's
operating revenues through December 31, 1996. The correctional institution
market presents substantial sales obstacles. Unless the project is very small,
correctional institutions, like other government agencies, must submit proposed
projects to public bidding by prospective suppliers. The purchasing agency is
obligated to select from among the bidders based on objective criteria. On the
other hand, private purchasers generally do not require bidding and a vendor
such as Mark would have the opportunity to convince the purchaser to deal with
Mark to the exclusion of competitors.
Mark continually bids on and solicits joint venture opportunities regarding
construction projects utilizing its modular steel cell products. Mark currently
has contracts for it modular cells aggregating $ 1,984,505 in revenue.
3. Working Capital Requirements. The ultimate success of Mark may depend
upon its ability to raise additional equity or obtain debt financing until it
can improve its operating results. To date Mark has primarily met its working
capital requirements by the private issuance of its securities. Absent
significant
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<PAGE>
proceeds from the exercise of Warrants and improvement in the operations of
Mark, management believes that its present available working capital will be
utilized by September 30, 1996. Mark has been unable to secure commercial and
bank financing. In the event Mark must seek other sources of working capital, it
will most likely have to rely on additional private sales of its equity or debt
securities. While Mark has been successful in raising working capital through
private sources in the past, no assurance can be given that such sources will be
available, or, if available, on terms satisfactory to Mark. In the event
Warrants are not exercised, Mark will look to the private placement of its
securities both domestically and through Regulation S offerings to foreign
investors, which in the past have been at discounts to the market price of the
Common Stock and would result in dilution of the ownership of existing
securityholders. Mark will initially look to the exercise of the Warrants for
working capital. Therefore no significant efforts have been made to raise
additional capital pursuant to the private sale of securities; however if
sufficient Warrants are not exercised, Mark will attempt to effect such
placements in August 1996. If adequate working capital financing is not secured,
Mark will reduce overhead and personnel expenses and review its options
regarding the sale or suspension of some of its product lines.
4. Competition. The construction industry in general and the government
construction industry in particular are highly competitive. Due to the use of
concrete and other traditional construction methods in the substantial majority
(approximately 95%) of correctional facility construction, Mark competes for
market share with a number of major construction companies. Such competition is
not with respect to any particular project, but in efforts to convince the
purchasing agency to utilize steel cell construction rather than traditional
methods. With respect to those projects which incorporate modular steel cell
specifications in its design criteria, other companies are beginning to enter
the field. Some of these companies have greater financial resources than Mark.
In addition, a number of manufacturers which have greater financial and
marketing resources than Mark, and which currently produce sheet metal products,
could ultimately enter the modular cell business in competition with Mark.
Accordingly, there can be no assurance that Mark will be able to successfully
compete in the market for modular steel cells, which are Mark's most significant
product.
5. Dependence on Key Person. Mark is dependent upon the continued
services of Carl C. Coppola, its Chairman of the Board, President and Chief
Executive Officer. The loss of Mr. Coppola could have a material adverse effect
on Mark. Mark is the beneficiary of a term life insurance policy of $1,000,000
on the life of Mr. Coppola.
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<PAGE>
6. Bonding Qualifications. In connection with some government construction
projects, Mark is required to provide performance and completion bonds as a
condition to submission or participation in a bid. Due to Mark's financial
condition, it has experienced difficulty in obtaining such bonds and obtained
the required bonds for its only modular cell project through the assistance and
guarantee of another business entity owned by an outside director. To date Mark
has not limited its bidding activity nor lost any projects due to its limited
bonding capacity. However, as Mark is awarded multiple projects, the inability
to obtain bonds may limit the number of additional projects Mark can pursue and
have a material adverse effect on the operations of Mark.
7. Subcontractor Credit Risk. Mark's manufacturing operations are limited
to the steel modular cell for use as one component of correctional institution
projects. Therefore, Mark may not be the prime contractor on a project, but a
subcontractor. Under these circumstances, Mark usually will not have the direct
financial obligation of the government agency or other purchaser, but will be
primarily relying on the prime contractor regarding payment for its products.
This presents a greater credit risk to Mark.
8. Related Party Transactions. Mark has been a party to business
transactions with certain officers, Directors or their affiliates. Mark intends
to purchase goods and services in the ordinary course of business from related
parties and may determine based upon circumstances at that time to engage in
additional transactions with officers, Directors, principal shareholders or
affiliates. While Mark believes these transactions have been on terms no less
favorable than could be obtained from unaffiliated parties, such situations
present potential conflicts of interest.
9. No Dividends. Mark has never paid a cash dividend on its
Common Stock. Mark does not intend to pay in the foreseeable
future, cash dividends on the Common Stock but intends to retain
its earnings to finance growth.
10. Dilution on Exercise of Warrants. Assuming full exercise
of the Warrants to which this Prospectus relates certain of the
holders of the Warrants will incur an immediate dilution in
tangible book value of between $ 1.17 (59%) and $ 14.17 (94%) of
the exercise price. See "Dilution".
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<PAGE>
DILUTION
Dilution is a reduction in the value of the warrantholder's investment
measured by the difference between the exercise price and the book value of a
share of Common Stock. Book value is equal to stockholders' equity applicable to
Common Stock as shown on Mark's balance sheet divided by the number of shares
outstanding.
At March 31, 1996, Mark had a tangible book value of $ .08 per share. A
person exercising a Warrant will incur dilution to the extent that the exercise
price exceeds the tangible book value (offset by any increase in book value due
to the exercise of Warrants). Assuming full exercise of the Warrants to which
this Prospectus relates, at March 31, 1996 Mark would have a tangible book value
of $ .83 per share. The following table sets forth the range of immediate
dilution in tangible book value which would be incurred by the holders of the
Warrants.
Percentage of
Warrant Per Share Dilution Dilution from
Exercise Price per Share Exercise Price
-------------- --------- --------------
$ 2.00 $ 1.17 59%
3.00 2.17 72
4.00 3.17 79
7.50 6.67 89
10.00 9.17 92
15.00 14.17 94
DIVIDEND POLICY
Mark anticipates that for the foreseeable future it will not pay any cash
dividends on its Common Stock and will continue to retain earnings, if any, for
use in its business. Future dividend policy, however, will be determined by the
Board of Directors based upon conditions then existing, including Mark's
earnings and financial condition, capital requirements and other relevant
factors.
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<PAGE>
USE OF PROCEEDS
The net proceeds, if any, to be received by Mark from the exercise of the
Warrants, after paying fees and expenses estimated to be approximately $ 40,000
will be used to the extent available for general corporate purposes, including
working capital. The primary use of these proceeds will be to fund the selling,
general and administrative expenses as well as to finance new projects if and
when awarded. Pending utilization, Mark may invest the proceeds received in
certificates of deposit or other short-term interest bearing securities.
CAPITALIZATION
The following table sets forth the capitalization of Mark on March 31,
1996.
March 31
1996
----
Short-term obligations ................ $ -0-
Current maturities of
long-term obligations ............... 10,868
----------
Current portion of obligations
under capital lease .................. 5,584
----------
Total short-term obligations ........ $ 16,452
----------
Long-term obligations, excluding
current maturities .................. $ 22,882
Long-term portion of obligations
under capital lease .................. $ 31,920
----------
Total long-term obligations ......... $ 54,802
----------
Stockholders' equity:
Common Stock: $.01 par value;
25,000,000 shares authorized;
13,085,465 shares outstanding(1)...... 130,853
Additional paid-in capital........... 22,393,191
Retained earnings (deficit).......... (20,512,806)
------------
Total stockholders' equity......... 2,011,238
----------
Total short-term obligations, long-term
obligations and stockholders'
equity............................... $2,082,492
==========
(1) Does not include 4,300,880 shares reserved for issuance upon exercise of
outstanding warrants and options including the Warrants.
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<PAGE>
PRICE RANGE OF COMMON STOCK AND CLASS A WARRANTS
The following table sets forth for the calendar quarters indicated the high
and low bid prices of Mark's Common Stock and Class A Warrants. The Common Stock
trades on the NASDAQ system, Small Cap market. The Class A Warrants trade in the
over-the-counter market bulletin board and pink sheets.
Common Stock Class A Warrants
High Low High Low
---- --- ---- ---
1994
1st Quarter 9 3-3/4 3/8 3/8
2nd Quarter 6 3 3/8 3/8
3rd Quarter 4-3/8 3-1/4 3/8 3/8
4th Quarter 3-7/8 2-1/2 3/8 3/8
1995
1st Quarter 4-1/8 2 3/8 3/8
2nd Quarter 5-1/2 3-1/4 3/8 3/8
3rd Quarter 8-7/8 5-3/8 3-5/8 1-7/8
4th Quarter 8 5-1/4 4 2-1/2
1996
1st Quarter 8-1/4 5-1/2 3-1/2 3-1/4
2nd Quarter 8-3/8 5-1/4 3-5/8 3-1/8
On June 28, 1996 the closing bid and asked prices for the Common Stock were
$ 6-1/2 and $ 6-5/8 per share, respectively and the closing bid and asked prices
for the Class A Warrants was $ 2-1/8 per warrant.
Over-the-counter quotations reflect inter-dealer prices without retail
mark-up, mark-down or commission and do not necessarily represent actual
transactions.
As of June 30, 1996, there were 171 holders of record of the Common Stock
and one holder of record of the Class A Warrants. There are 16 market makers in
the Common Stock.
-14-
<PAGE>
SELECTED FINANCIAL DATA
The following Selected Financial Data is based upon financial statements
incorporated herein and such information should be read in conjunction with such
financial statements and notes thereto.
<TABLE>
<CAPTION>
Income Statement Data:
Nine Months Ended
March 31 Fiscal Years Ended June 30
------------------ -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
Revenues $ 3,206,371 $ 2,749,847 $ 6,125,573 $ 3,183,073 $ 5,309,660 $ 3,894,602 $ 492,348
----------- ------------ ----------- ------------ ------------ ---------- ------------
Costs and Expenses:
Cost of Sales 3,656,949 2,462,786 5,975,973 2,370,971 3,742,371 3,010,765 551,815
Selling, general &
administrative 2,807,949 2,761,765 3,872,392 3,592,081 2,334,159 1,271,725 858,909
Research & development -- 3,938 3,938 270,322 558,118 -- 386,600
Reduction of carrying
value of assets -- -- 1,100,000 800,000 -- -- --
Total Costs &
Expenses 6,464,898 5,228,489 10,952,303 7,033,374 6,634,648 4,282,490 1,797,324
----------- ------------ ----------- ------------ ------------ ---------- ------------
Operating Income
(Loss) (3,258,527) (2,478,642) (4,826,730) (3,850,301) (1,324,988) (387,888) (1,304,976)
----------- ------------ ----------- ------------ ------------ ---------- ------------
Net Other Income
(Expense) (48,178) 5,986 (85,905) (64,749) (262,209) (135,691) (181,018)
(Loss) From Continuing
Operations (3,306,705) (2,472,656) (4,912,635) (3,915,050) (1,587,197) (523,579) (1,485,994)
(Loss) From Discontinued
Operations (104,503) (111,841) (277,438) (193,620) -- -- --
Income Tax -- -- -- 29,460 -- -- --
Net Income (Loss) ($3,411,208) ($ 2,584,497) ($5,190,073) ($ 4,138,130) ($ 1,587,197) ($ 523,579) ($ 1,485,994)
=========== ============ =========== ============ ============ ========== ============
Earnings (Loss) per Share: ($ .27) ($ .25) ($ .48) ($ .47) ($ .18) ($ .06) ($ .17)
Weighted Average
Shares Outstanding 12,500,250 10,418,715 10,726,204 8,802,543 8,710,975 8,710,975 8,710,975
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Data:
At March 31, At June 30,
------------ -------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Working Capital (Deficit) $ 796,931 $ (48,112) $ 216,635 $ 379,484 $ 629,424 ($ 2,768,906)
Net Property & Equipment 256,887 318,491 369,939 503,112 473,111 663,816
Total Assets 3,145,428 3,978,383 4,953,651 4,460,174 2,096,427 938,759
Current Liabilities 1,079,388 2,169,657 909,693 938,603 958,065 3,007,272
Other Liabilities 54,802 19,665 8,313 16,377 2,194,591 218,874
Stockholders' Equity
(Impairment) 2,011,238 1,789,061 4,035,645 3,505,194 (1,056,229) (2,287,387)
</TABLE>
-15-
<PAGE>
BUSINESS
General
Mark Solutions, Inc. ("Mark") is a Delaware corporation which
operates its various businesses through wholly-owned subsidiaries
and a division.
Mark is engaged in the design, manufacture, assembly and/or distribution of
(i) modular steel cells for housing of the general prison population as well as
for use as infectious disease isolation units for correctional institutions and
healthcare facilities, (ii) a treatment booth for communicable diseases and
(iii) diagnostic support and archiving computer systems marketed under the name
"IntraScan".
Mark's modular cells meet or exceed all applicable building and safety code
requirements in the United States and can be manufactured and installed more
efficiently than traditional housing alternatives by virtue of lower labor and
construction costs and shorter installation time. Management also believes that
its prefabricated modular cell manufacturing process has other applications such
as temporary emergency housing and permanent shelters, although no assurances
can be given that such applications will be successfully developed and marketed.
Management believes that continued nationwide judicial and legislative
emphasis on an expedient easing of the overcrowding conditions of correctional
institutions, as well as the increase in the demand for isolation and treatment
quarters for both correctional institutions and healthcare facilities, due to
the rise in communicable diseases such as tuberculosis and the HIV virus,
present a significant growth opportunity for Mark. However, there can be no
assurance that any such business will develop.
Mark was incorporated under the laws of the State of Delaware on September
29, 1986 under the name "Showcase Cosmetics, Inc." Mark's principal executive
office is located at Parkway Technical Center 1515 Broad Street, Bloomfield, New
Jersey 07003 and its telephone number is (201) 893-0500.
-16-
<PAGE>
Industry and Segment Financial Data
The following table sets forth information regarding Mark's industry
segments and classes of products. Prior to the fiscal year ended June 30, 1994,
Mark derived substantially all of its revenues from the sale of its modular
steel cell products. Accordingly, no financial information about industry
segments is presented for prior periods. On October 10, 1995, Mark sold its
Bar-Lor Cosmetics business. See "Historical Development".
Fiscal Year Ended June 30,
1995 1994
---- ----
Sales to unaffiliated
customers:
Mark Correctional Systems:
Modular Cells ............ $ 5,949,490 $ 2,839,052
MarkCare Medical Systems:
IntraScan ................ $ 15,000 $ 137,512
Treatment Booths ......... $ 161,083 $ 176,083 $ 206,509 $ 344,021
----------- ---------
Bar-Lor Cosmetics ............ $ 917,934 $ 812,374
Operating Loss:
Mark Correctional Systems .... ($ 3,055,631) ($ 2,454,292)
MarkCare Medical Systems ..... ($ 671,099) ($ 582,592)
Bar-Lor Cosmetics ......... ($ 1,370,537) ($ 1,008,269)
Identifiable Assets:
Mark Correctional Systems ..... $ 3,505,086 $ 3,047,154
MarkCare Medical Systems ...... $ 268,795 $ 340,238
Bar-Lor Cosmetics .......... $ 459,817 $ 1,864,438
-17-
<PAGE>
Historical Development
Mark has succeeded to the businesses of Mark Correctional Systems, Inc., a
Delaware corporation ("MCS") and Showcase Cosmetics, Inc., a Delaware
corporation ("Showcase") under a reorganization (the "Reorganization")
consummated on November 10, 1993 pursuant to an Agreement and Plan of
Reorganization dated December 23, 1992, as amended.
On September 24, 1992 MCS acquired all of the assets, subject to
substantially all of the liabilities, of Mark Correctional Systems, Inc., a New
Jersey corporation, ("MCS New Jersey") for approximately 80% of the outstanding
Common Stock immediately after the asset purchase.
On November 20, 1992 MCS acquired all of the capital stock of Diversified
Imaging Technology Corporation, a Maryland corporation ("DIT"), which owned the
rights to the IntraScan I system. DIT subsequently changed its name to "MarkCare
Medical Systems, Inc."
("MarkCare").
On October 10, 1995, Mark sold its Bar-Lor Cosmetics business to Alan R.
Steiner, president of the cosmetics subsidiaries, for $ 100,000 in cash. The
sale was consummated pursuant to a stock purchase agreement whereby Mr. Steiner
purchased all of the outstanding shares of three Mark subsidiaries, Bar-Lor
Cosmetics, Ltd., Bar-Lor West, Inc. and Bar-Lor South, Inc.
On May 28, 1996, Mark acquired all of the capital stock of Simis Medical
Imaging, Limited, a privately held British company ("SMI") for $ 1,250,000
payable in Common Stock of Mark. At the initial closing, Mark issued an
aggregate of 108,696 shares of Common Stock representing $ 625,000 of the
purchase price. The balance of the purchase price will be paid in Common Stock
on November 28, 1996 and the number of shares to be issued will be calculated by
dividing $ 625,000 by the closing sales on November 25, 1996; provided, however,
the maximum number of shares to be issued by Mark is 1,000,000. In addition,
Christopher Cummins, one of the former shareholders of SMI has entered into a
three-year employment agreement with SMI which provides for, among other things,
(i) an annual salary of U.K. Pounds 60,000 in the initial year with U.K. Pound
5,000 increases in the succeeding two years and (ii) an annual bonus equal to
10% of the post tax profits of SMI. SMI is the developer of the IntraScan II
software which Mark has been marketing under an exclusive dealer agreement
covering North and South America.
-18-
<PAGE>
Mark Correctional Systems Division
Mark operates its modular steel cell and infectious disease isolation unit
business through its division, Mark Correctional Systems.
Modular Cells. Since the initial sale of its prefabricated modular steel
cells for housing the general prison population in 1989, Mark has manufactured
and sold 1,117 of its security prison cells for use in correctional institutions
in 12 states including New York, New Jersey, Michigan, Missouri, Washington and
Wisconsin.
Mark's 616 cell project for the State Prison of Southern Michigan in
Jackson, Michigan generated approximately $ 6,500,000 in revenue during the
period of March through September 1995. In addition Mark has other uncompleted
contracts for its modular cells aggregating $ 1,984,505. Other than as described
above, Mark currently has no significant orders for the modular cells.
Mark's modular cell is a prefabricated, installation-ready, lightweight
steel structure which is manufactured according to the construction and security
specifications of each correctional institution project in sizes from 60 to 100
square feet. Each modular cell can be equipped with lavatory facilities;
wall-mounted sleeping accommodations; desk and stool; lighting and ventilation
systems; and optional components such as fixed or operable windows and hinged or
sliding security doors. Each modular cell is constructed of durable low
maintenance, non-porous materials including a scratch resistant epoxy polymer
finish and is acoustically and thermally insulated.
The modular cell's lightweight construction requires less extensive and
costly foundation work than a traditional (e.g. concrete) cell, and is designed
with a self-contained exterior access panel which allows for simple ventilation,
plumbing and electrical connections. Each cell is load-bearing to allow for
multiple-story construction, and is manufactured to tolerances of 1/16 of an
inch, which results in more efficient and faster on-site installation.
Infectious Disease Isolation Units. Mark initially adapted its modular cell
design to the manufacturing of infectious disease isolation units in 1992 for a
court-ordered project at a New York City correctional institution on Rikers
Island. Mark focuses its marketing efforts of infectious disease isolation units
on correctional institutions and healthcare facilities.
In addition to the modular cell features, the infectious disease isolation
units are equipped with shower facilities and a
-19-
<PAGE>
protective anteroom for healthcare providers and other individuals coming in
contact with the occupant. To prevent the escape of contaminated air, each unit
is equipped with a negative pressure ventilation system which safely discharges
the air externally. Mark's epoxy polymer finish also allows for more effective
sterilization and cleaning of the unit.
Infectious disease isolation units are designed and manufactured according
to the specific requirements of the project, including security requirements of
correctional institutions. In addition, the units are subject to the guidelines
and regulations of OSHA, NIOSH, the Centers for Disease Control and Prevention
and applicable building codes including specific health guidelines which were
established to provide effective treatment of the patient and the safety of
medical providers including negative pressure requirements, filtration standards
and air flow systems.
MarkCare Medical Systems, Inc.
Mark operates its healthcare products business through MarkCare Medical
Systems, Inc., a wholly-owned Maryland subsidiary.
Treatment Booths. Mark publicly introduced its first prototype general use
treatment booth in August 1992. After design modifications were made to broaden
its treatment capabilities, Mark began manufacturing operations in December
1992.
The treatment booth is a single occupancy 70 cubic foot chamber used in the
observation and treatment of patients with communicable diseases such as
tuberculosis. The booth is designed to isolate patients in order to protect
healthcare workers during sputum induction and to improve the efficacy of the
dispensing of aerosolized drugs. In addition to incorporating the structural
elements and low maintenance material of its modular cell technology, Mark
equips the treatment booth with an air filtration system designed to provide for
up to 450 air changes per hour through a laminar flow design which is monitored
by a meter and alarm. The filtering process circulates air through a HEPA filter
which collects 99.9% of all airborne particles including germs and medicines.
The filtered air is then exposed to ultra-violet light for additional
decontamination and is discharged externally.
Mark has established safety and operational standards for its treatment
booths based on recommendations from board certified hygienists and other
medical professionals. Certification of booths is conducted by one of three
independent laboratories for compliance with Mark's internal standards and
manufacturers specifications.
-20-
<PAGE>
IntraScan I. Mark instituted its marketing plan for the IntraScan I system,
including its introduction at the Radiologist Society of North America
exposition, in December 1992. IntraScan I is marketed to radiologists,
gynecologists, urologists and small independent medical practices.
The IntraScan I system is a computer-based diagnostic support product for
use with all ultrasound equipment. IntraScan I is an archiving and image
enhancing system which enables medical technicians to manipulate ultrasound
images by enlarging and rotating images, as well as improving their clarity,
sharpness and resolution. This results in improved diagnostic capabilities as
compared to the images produced by ultrasound equipment alone. The information
archiving applications of IntraScan I can be networked, allowing effective
storage and transmission of information quickly between physicians and
healthcare facilities through computer modems.
The IntraScan I system consists of software programs protected by U.S.
copyrights and standard hardware computer equipment as to which Mark has no
proprietary interests. The computer hardware is comparable to a personal
computer in size and user operation and interfaces with the IntraScan I software
applications.
The IntraScan I system is integrated and marketed in conjunction with the
IntraScan II system.
IntraScan II. From 1993 to May 1996, Mark marketed the IntraScan II
"filmless" picture, archiving and communications system (PACS) under an
exclusive software dealer agreement with SMI covering North and South America.
On May 28, 1996, Mark acquired all of the capital stock of SMI for $ 1,250,000
payable in Common Stock of Mark. See "Historical Development". IntraScan II is
marketed to radiology departments, large healthcare facilities, hospitals and
outpatient imaging group practices.
IntraScan II is a computer-based image, archival and retrieval system that
interfaces with all medical imaging devices and can store and recall images in
digital format from imaging modalities including x-ray, computed tomography (CAT
Scan), computer radiology, nuclear medicine, ultra sound and magnetic resonance
imaging (MRI). While Mark is aware of similar systems in various stages of
development, management believes the IntraScan II is the only system which is
designed to be open platform allowing the software to interface with most
computer hardware and operating systems.
-21-
<PAGE>
IntraScan II has a high resolution display capability (512 X 512 to 4000 X
4000 pixels). The high resolution allows medical providers to make diagnoses
from computer digital images without the need for radiographic film. This
capability eliminates the processing time for film development allowing faster
diagnoses and significantly reduces the costs related to film development and
patient record storage.
The IntraScan II system allows image manipulation similar to the IntraScan
I system, including simulation of the multi-image view box which allows
side-by-side comparisons of images from different modalities (e.g. x-ray and CAT
Scan).
In addition, the IntraScan II system allows for networking between
departments within a healthcare facility or between institutions at different
locations by computer modems. This networking capability coupled with the high
resolution allows efficient and instant transfer of diagnostic quality images
for consultation and transportation of patient records.
The IntraScan II system consists of software programs protected by British
and United States copyrights and standard hardware computer equipment as to
which Mark has no proprietary interests.
-22-
<PAGE>
MANAGEMENT
Directors And Executive Officers
The following table sets forth the names and ages of the members of Mark's
Board of Directors and its executive officers.
Name Age Position
Carl C. Coppola(1) 56 Chairman of the Board,
President, Chief Executive
Officer, Chief Financial Officer
Frederick M. Bolio 31 Vice President-Engineering and
Manufacturing
Michael J. Rosenberg 52 Vice President-Sales and Marketing;
Richard Branca(2) 48 Director
Ronald E. Olszowy 50 Director
William Westerhoff(1) 59 Director
Michael Nafash 35 Director
- -----------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
All directors hold office until the next annual meeting of shareholders of
Mark (currently expected to be held during December 1996) and until their
successors are elected and qualified. Officers hold office until the first
meeting of directors following the annual meeting of shareholders and until
their successors are elected and qualified, subject to earlier removal by the
Board of Directors.
-23-
<PAGE>
Carl C. Coppola has been a Director, President and Chief Executive Officer of
Mark since November 10, 1993. Prior thereto and since 1984, Mr. Coppola served
in the identical capacities for MCS, Mark's predecessor company. For more than
30 years, Mr. Coppola has been President and Chief Executive Officer of Mark
Lighting Fixture Co., Inc., an unaffiliated entity.
Frederick M. Bolio has been Vice President-Engineering and Manufacturing of Mark
since June 23, 1994 and prior thereto was Engineering Manager of Mark since
December 1991. From 1988 to November 1991 Mr. Bolio was Senior Engineer at
Marino Industries Corp., a manufacturer of lightweight steel building products
and components.
Michael J. Rosenberg has been Vice President- Sales and Marketing of Mark and
MCS since 1990. From December 1987 to 1989 served as President of Aloe Creme
Laboratories, a cosmetics manufacturer.
Richard Branca has been a Director of Mark and MCS since November 18, 1992.
Since 1970 Mr. Branca has been President and Chief Executive Officer of Bergen
Engineering Co., a construction company.
Ronald E. Olszowy has been a Director of Mark and MCS since November 18, 1992.
Since 1966, Mr. Olszowy has been President and Chief Executive Officer of
Nationwide Bail Bonds, which provides bail, performance and fidelity bonds. Mr.
Olszowy has also been President of Interstate Insurance Agency since 1980.
William Westerhoff has been a Director of Mark and MCS since November 18, 1992.
Mr. Westerhoff has been retired since June 1992. Prior thereto and for more than
five years Mr. Westerhoff was, a partner of Sax, Macy, Fromm & Co., certified
public accountants.
Michael Nafash has been a Director of Mark since December 18, 1995. Mr. Nafash
is Chairman of the Board, President and Chief Executive Officer of Evolutions,
Inc. (OTC), an environmental oriented apparel company since February 1994. Since
June 1992 Mr. Nafash has been employed, including as Chief Financial Officer
from October 1993 to March 1995, by Pure Tech International, Inc.
(NASDAQ/NMS:PURT), a plastics and metal recycling company. Prior thereto Mr.
Nafash was a certified public accountant with Michaels, Nafash & Georgallas and
Weidenbaum Ryder & Co.
-24-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information with respect to each
beneficial owner of 5% or more of the Common Stock, each Director of Mark, and
all executive officers and Directors as a group as of June 30, 1996. The persons
named in the table have sole voting and investment power with respect to all
shares of Common Stock owned by them, unless otherwise noted.
Number of % of Shares
Shares Owned Outstanding
------------ -----------
Carl C. Coppola
c/o Mark Solutions, Inc.
1515 Broad Street
Bloomfield, NJ 07003 2,013,000(1) 14.8%
Joseph Salvani
1 Duran Avenue
Ridgewood, NJ 07450 1,159,956(2) 8.6
Walter Grossman
277 North Avenue
Westport, CT 06880 862,713(3) 6.5
William Westerhoff 55,000(4) (5)
Richard Branca 305,000(6) 2.2
Ronald E. Olszowy 105,000(4) (5)
Michael Nafash 66,850(7) (5)
All executive officers
and Directors as
a group (7 persons) 2,741,322(8) 19.5%
-25-
<PAGE>
(1) Includes 89,800 shares held in trust for the benefit of children of Mr.
Coppola. Mr. Coppola disclaims beneficial ownership of these shares. Also
includes 200,000 shares of Common Stock issuable upon exercise of warrants
which are presently exercisable.
(2) Includes 150,000 shares of Common Stock issuable upon exercise of warrants
which are presently exercisable.
(3) Includes 112,000 shares held in trust for the benefit of two children of
Mr. Grossman. Mr. Grossman disclaims beneficial ownership of these shares.
(4) Represents or includes 55,000 shares of Common Stock issuable pursuant to
options which are presently exercisable.
(5) Less than 1%
(6) Includes 205,000 warrants shares of Common Stock issuable pursuant to
options and warrants which are presently exercisable.
(7) Includes 40,850 shares of Common Stock owned by Evolutions, Inc., of which
Mr. Nafash is Chairman, President and Chief Executive Officer. Mr. Nafash
disclaims beneficial ownership of these shares. Includes 25,000 shares of
Common Stock issuable upon exercise of warrants which are presently
exercisable.
(8) Includes 690,572 shares of Common Stock issuable upon exercise of warrants
or options which are presently exercisable.
-26-
<PAGE>
SELLING SHAREHOLDERS
Of the 4,588,170 shares of Common Stock offered hereby, 1,279,290 are being
offered for the accounts of the following persons:
Securities Securities
Owned to be Owned
Before Securities After
Name Offering to be Sold Offering(1)
- ------------------ ----------- ---------- -------------
Frank Brosens 22,800 22,800 0
Water Jel Technologies, Inc. 295,000 195,000 100,000
Joseph Salvani(2) 1,009,956 273,213 736,743 (5.5%)
Walter Grossman(2) 750,713 273,213 477,500 (3.6%)
Noam Gottesman 100,000 100,000 0
Darius Tencza 91,000 91,000 0
Richard Branca(3) 100,000 65,000 35,000
Joseph Salvani, Sr. 97,000 65,000 32,000
Edmund R. Miller 30,000 30,000 0
Frank Henry 82,144 57,144 25,000
Davis Weinstock II 205,000 76,760 128,240
Walter and Rebecca Schacht 35,160 30,160 5,000
(1) Percentage of outstanding shares of Common Stock
(2) Principal Shareholder
(3) Director of Mark
CERTAIN OUTSTANDING WARRANTS
Of the 4,588,170 shares of Common Stock offered hereby 2,933,280 may be
offered by the following warrant holders subsequent to their purchase of shares
of Common Stock from Mark pursuant to the exercise of Warrants.
Number of
Shares Subject Exercise
Name to Warrants Price
---- ----------- -----
Finance Warrants
Chester Daniel, Inc. 13,079 $ 15.00
Brookehill Equities, Inc. 13,079 15.00
Babystar, Inc. 1,000,000 4.25
Yitz Grossman 150,000 4.25
Pure Tech International, Inc. 70,000 3.75
Carl Coppola 200,000 2.50
Consultant Warrants
Steven Markowitz 100,000 5.00
Joseph Sorbarra 100,000 5.00
Salvani Investments, Inc. 150,000 5.00
Cycle Contractors, Inc. 50,000 5.00
Aaron Lehman 25,000 7.50
Bertolini Printing, Inc. 10,000 5.00
AnReg Investment Corp. 200,000 2.00
Thomas Coughlin 50,000 3.00
-27-
<PAGE>
Private Placement Warrants
Noam Gottesman 50,000 2.00
Jonathan Green 50,000 2.00
James R. Paradise 40,000 2.00
Edmund R. Miller 30,000 2.00
Frank Henry 28,572 2.00
Employee/Directors Warrants
Richard Branca 30,000 3.25
Yitz Grossman 30,000 3.25
Ronald E. Olszowy 30,000 3.25
Simon Sinnreich 30,000 3.25
William Westerhoff 30,000 3.25
Alan Steiner 3,333 4.50
Michael Rosenberg 338 3.25
Leonid Futerman 239 3.25
John Reiling, Jr. 239 3.25
Frederick Bolio 234 3.25
Miscellaneous Warrants
Theodore Meisel 15,000 3.25
LMD Industries Inc. 27,500 3.25
LMD Industries Inc. 6,667 10.50
Pure Tech International, Inc. 250,000 4.25
Bergen Engineering Co., Inc. 150,000 2.625
Finance Warrants
In May 1993, Mark granted warrants to purchase shares of Common Stock to
Chester Daniel Inc. and Brookehill Equities, Inc. as compensation for acting as
placement agent for the private placement of Common Stock during April through
June 1993 which raised gross proceeds of $ 1,961,850.
In connection with a bridge loan of $ 1,500,000 made in October 1993 Mark
granted Pure Tech, Babystar and Yitz Grossman
warrants to purchase shares of Common Stock.
In connection with a bridge loan of $ 400,000 made in January 1995 Mark
granted Carl Coppola warrants to purchase shares of Common Stock.
Each of the foregoing issuances was effected in reliance of the
registration exemption provided for by Section 4(2) of the Securities Act as not
involving a public offering.
Consultant Warrants
On May 9, 1994 Mark granted to Steven Markowitz, Joseph Sobarra, Salvani
Investments, Inc., Cycle Contractors, Inc., Aaron Lehman and Bertolini Printing,
Inc. warrants to purchase shares of Common Stock as compensation for investment
relations, financial advisory and marketing services.
-28-
<PAGE>
On May 15, 1995 Mark granted to AnReg Investment Corp. warrants to purchase
shares of Common Stock as compensation for product marketing services to be
provided for a two-year period.
On April 26, 1995 Mark granted to Thomas Coughlin warrants to purchase
shares of Common Stock as partial compensation under a marketing consulting
agreement terminable on 30-days' written notice. Pursuant to the consulting
agreement, Mr. Coughlin will assist in the marketing of Mark's products
primarily to the correctional industry.
Each of the foregoing issuances was effected in reliance of the
registration exemption provided for by Section 4(2) of the Securities Act as not
involving a public offering.
Private Placement Warrants
In January through February 1995, Mark issued 641,549 warrants exercisable
at $ 2.00 per share to investors in Mark's private placement of 641,549 Units
consisting of two shares of Common Stock and one warrant which raised gross
proceeds of $ 2,245,424.
The sale of 511,549 of these Units was effected in reliance on the
registration exemption provided by Section 4(2) of the Securities Act pursuant
to Rule 506 of Regulation D. The sale of 130,000 of these Units was effected in
reliance on Regulation S promulgated under the Act as an offering to non U.S.
persons.
Employee/Directors Warrants
Each of Mark's nonemployee directors have been granted warrants to purchase
an aggregate of 30,000 shares of Common Stock at $ 3.25 per share for serving in
such capacity.
Mark assumed warrants to purchase 3,333 shares of Common Stock at $4.50 per
which were granted by its predecessor Showcase Cosmetics, Inc.
On April 26, 1995 Mark granted five of its employees warrants to purchase
shares of Common Stock as compensation for deferring an aggregate of $ 73,652 in
salary for nine months.
Miscellaneous Warrants
On October 23, 1993, Pure Tech granted Mark the right of first refusal to
manufacture and distribute a "reverse vending machine" for use in the disposal,
redemption and recycling of recyclable containers in exchange for warrants to
purchase 250,000 shares of Common Stock which are presently exercisable at $
3.75 per share.
-29-
<PAGE>
In connection with Mark's Jackson, Michigan modular cell project, Bergen
Engineering agreed to obtain and guarantee the necessary construction bonds
through its bonding company. As partial compensation for providing this
guarantee, Bergen Engineering received warrants to purchase shares of Common
Stock at $ 2.625 per share.
On August 17, 1993 Showcase Cosmetics, Inc. granted warrants to LMD
Industries, Inc. to purchase 6,667 shares of Common Stock in consideration of a
sale of $ 300,000 of inventory to Showcase Cosmetics, Inc. on highly favorable
payment terms. Mark assumed these warrant pursuant to the Reorganization.
On December 15, 1992 Mark granted warrants to purchase shares of Common
Stock to Theodore Meisel and LMD Industries, Inc. as partial consideration for a
10% $ 500,000 senior secured loan to Mark which was repaid by June 15, 1993.
Each of the foregoing issuances was effected in reliance of the
registration exemption provided for by Section 4(2) of the Securities Act as not
involving a public offering.
PLAN OF DISTRIBUTION
Of the 4,588,170 shares of Common Stock offered hereby, 4,212,570 are being
offered for the accounts of the Selling Shareholders. Mark will not receive any
proceeds from the sale of any shares of Common Stock by the Selling
Shareholders. The sale of shares of Common Stock by the Selling Shareholders may
be effected from time to time in transactions in the over-the-counter market, in
negotiated transactions, through the timing of options on the shares or through
a combination of such methods of sale, at fixed prices, which may be charged at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling Shareholders may
effect such transactions by selling the shares of Common Stock to or through
broker-dealers, and 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 of Common Stock for which such broker-dealer may act as
agent or to whom they sell as principal, or both (which compensation as to a
particular broker-dealer may be in excess of customary compensation). The
Selling Shareholders and any broker-dealers who act in connection with the sale
of the shares of Common Stock hereunder may be deemed to be" underwriters"
within the meaning of Section 2(11) of the Securities Act, and any commissions
received by them and profit on any sale of the shares of Common Stock as
principal might be deemed to be underwriting discounts and commissions under the
Securities Act.
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<PAGE>
DESCRIPTION OF SECURITIES
Common Stock
Mark is authorized to issue 25,000,000 shares of common stock, par value
$.01 per share of which 13,372,463 shares were outstanding as of June 30, 1996.
The holders of Common Stock have one vote per share on all matters (including
election of directors) without provision for cumulative voting. Thus, holders of
more than 50% of the shares voting for the election of directors can elect all
of the directors. The Common Stock is not redeemable and has no conversion or
preemptive rights. The Common Stock currently outstanding is, and the Common
Stock to be issued pursuant to the exercise of the Warrants will be, validly
issued, fully paid and non-assessable. In the event of the liquidation of Mark,
the holders of Common Stock will share equally in any balance of Mark's assets
available for distribution to them after satisfaction of creditors and the
holders of Mark's senior securities, if any.
Class A Warrants
Each Class A Warrant entitles the holder thereof to purchase one share of
Common Stock until December 31, 1996 at a price of $3.25 per share. The Class A
Warrants contain anti-dilution provisions regarding certain events, including
but not limited to stock dividends, split-ups and reclassifications.
Instructions pertaining to exercise of the Class A Warrants are provided on the
warrant certificates.
All or any portion of the Class A Warrants can be called for redemption by
Mark at a redemption price of $.01 per warrant any time during their exercise
term upon a minimum of 30 days' prior written notice mailed to the registered
holders of the Class A Warrants, subject to the right of the holders to exercise
their purchase rights between the date of any notice of redemption up to and
including the redemption date given by Mark. Any holders who do not exercise
their Class A Warrants prior to the date set for redemption will receive the
redemption price and will forfeit their rights to purchase the Common Stock
underlying the Class A Warrants.
Mark may, in its sole discretion, extend the term of the Class A Warrants
or reduce their exercise price, to the extent permitted by the Delaware General
Corporation Law. Mark may not, however, raise the exercise price, except as
required to reflect recapitalizations (e.g. reverse stock splits).
Holders of the Class A Warrants do not have any of the rights or privileges
of shareholders of Mark prior to the exercise of the warrants.
Other Warrants
The exercise price and expiration dates of the other Warrants are set forth
on the cover page of this Prospectus. Each of the Warrants contain anti-dilution
provisions regarding certain events,
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<PAGE>
including but not limited to stock dividends, split-ups and reclassifications.
Holders of the Warrants do not have any of the rights or privileges of
shareholders of Mark prior to the exercise of the warrants.
Registration Requirements
The Class A Warrants and the Note Warrants may not be exercised unless Mark
has on file a current registration statement pertaining to the underlying Common
Stock with the Commission.
The remaining Warrants may be exercised at any time, however the sale of
the Common Stock received upon exercise may only be sold pursuant to a current
registration statement or an exemption from such registration requirements.
Mark intends to use reasonable efforts to file post-effective amendments so
that holders will not be precluded from exercising the Warrants and subsequently
selling the underlying Common Stock. In the event that a post-effective
amendment is not filed when required and the period for exercise of specific
warrant is not extended, holders could be precluded from exercising their
warrant and could be deprived of the opportunity to profit from increases, if
any, in the market price of the Common Stock
Transfer Agent
The Transfer Agent for the Common Stock and the Class A
Warrants is Continental Stock Transfer & Trust Company, New York,
New York.
LEGAL MATTERS
Timothy J. McCartney, Esq. has acted as counsel for Mark and
has rendered an opinion on the validity of the shares of Common
Stock to be issued upon exercise of the Warrants.
EXPERTS
Mark's consolidated balance sheets as of June 30, 1995 and 1994 and the
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended June 30, 1995 incorporated by
reference in this Prospectus, have been incorporated herein in reliance on the
report, which includes an explanatory paragraph regarding the substantial doubt
about Mark's ability to continue as a going concern, of Sax Macy Fromm & Co.,
P.C., independent certified public accountants, given on the authority of that
firm as experts in accounting and auditing.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN FORM S-3 PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is a list of the estimated expenses to be incurred by the
Registrant in connection with the issuance and distribution of the securities
being registered hereby, other than underwriting discounts and commissions.
Item Amount
---- ------
Registration Fee.................................... $ 0
Accountants' Fees and Expenses...................... 5,000
Blue Sky Filing Fees and Expenses................... 10,000
Legal Fees and Expenses............................. 20,000
Miscellaneous....................................... 5,000
-------
Total........................................ $40,000
=======
Item 15. Indemnification of Directors and Officers.
Reference is made to Article Seven of the Certificate of Incorporation of
the Registrant and Section 145 of the Delaware General Corporation Law.
Article Seventh of the Certificate of Incorporation of the Registrant
provides for indemnification to the full extent permitted by Delaware law of all
persons whom it shall have the power to indemnify thereunder. Section 145 of the
General Corporation Law of the State of Delaware ("GCL") contains provisions
entitling directors and officers of the Registrant to indemnification from
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorney's fees, as the result of being or having been a director or officer of
the Registrant provided said officers or directors acted in good faith. GCL
Section 145 provides broad powers of indemnification of directors and officers
by their corporation. For example, the board of directors, the shareholders, or
independent legal counsel in some circumstances may authorize the corporation to
indemnify any officer or director again expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement, actually and reasonable
incurred by him in connection with any "threatened, pending or completed action,
suit or proceeding other than an action by or in the right of the corporation,
whether civil,
II-1
<PAGE>
criminal, administrative or investigative - by reason of the fact that he is or
was a director or officer of the corporation, if such director or officer acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful".
With respect to any threatened, pending or completed action or suit by or in the
right of a Delaware corporation, the corporation may in like manner indemnify
any officer or director against expenses (including attorneys' fees) actually
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 and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such personal shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the corporation, but
only if and to the extent that the Court of Chancery or the court in which the
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
the Court of Chancery or such other court shall deem proper.
Should a director or officer defend litigation arising out of his office
and be successful on the merits or otherwise in defense of the action, GCL
Section 145 provides that such officer or director shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
Finally, a corporation organized under the GCL shall have power to purchase
and maintain insurance on behalf of any director or officer against any
liability asserted against him and incurred by him in such capacity or arising
out of his status as an officer or a director, whether or not the corporation
would have the power to indemnify him against such liability under the before
described provisions of Section 145 of the GCL.
Item 16. Exhibits
The exhibits to this Registration Statement are
listed in the Exhibit Index hereto and are incorporated herein by
reference.
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<PAGE>
Item 17. Undertakings.
(A) Insofar as indemnification for liabilities arising under the
Act may be permitted to directors, officers and controlling persons, if any, 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 any such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless, in
the opinion of its counsel, the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(B) With respect to the common stock underlying the Warrants, 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 of 1933;
(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;
(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 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.
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<PAGE>
(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) The undersigned Registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE>
POWER OF ATTORNEY
Mark Solutions, Inc., and each of the undersigned do hereby appoint Carl
Coppola, its or their true and lawful attorney to execute on behalf of Mark
Solutions, Inc. and the undersigned 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.
<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 that it has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Town of Bloomfield, State of New Jersey, on July 8,
1996.
MARK SOLUTIONS, INC.
By: /s/ Carl Coppola
---------------------
(Carl Coppola, Chief
Executive Officer and
President)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Carl Coppola Chief Executive Officer July 8, 1996
- --------------------- President and Director
(Carl Coppola) (Principal Executive
Officer),Principal
Financial and
Accounting Officer
/s/ Richard Branca * Director July 8, 1996
- ------------------------
(Richard Branca)
/s/ Ronald E. Olszowy* Director July 8, 1996
- ------------------------
(Ronald E. Olszowy)
/s/ William Westerhoff* Director July 8, 1996
- ------------------------
(William Westerhoff)
/s/ Michael Nafash * Director July 8, 1996
- ------------------------
(Michael Nafash)
* By Carl Coppola as attorney-in-fact
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<PAGE>
EXHIBIT INDEX
Sequential
Exhibit Page No. if
Number Description applicable
- ------ ----------- ----------
2. a) -- Agreement and Plan of Reorganization
dated December 23, 1992, as amended,
between Mark, Showcase Cosmetics,
Inc. and Mark Acquisition Corp.
(Incorporated by reference to Exhibit
I to Mark's Proxy Statement/Prospectus,
under its former name "Showcase
Cosmetics, Inc.", dated October 8, 1993
to Form S-4 Registration Statement
[File No. 33-61176], referred to
herein as "Mark's Form S-4").
b) -- Stock Purchase Agreement between
Mark and Ian Baverstock, Jonathan
Newth, David Payne and Joanna Tubbs
dated April 5, 1996. (Incorporated
by reference to Exhibit 1 to Mark's
Current Report on Form 8-K - Date Of
Report May 28, 1996, referred to
herein as " Mark's Form 8-K").
c) -- Stock Purchase Agreement between
Mark and Christopher Cummins and
Moira Addington dated April 24,
1996. (Incorporated by reference
to Exhibit 2 to Mark's Form 8-K).
3. a) -- Certificate of Incorporation,
as amended (Incorporated by
reference to Exhibit 3.a) to
Mark's Form 10-K for the fiscal
year ended June 30, 1994)
b) -- By-laws (Incorporated by
reference to Showcase Exhibit
3 b) to Mark's Form S-4)
4. a) -- Specimen Stock Certificate
(Incorporated by reference to Mark
Exhibit 4 a) to Mark's Form S-4)
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<PAGE>
b) -- Form of Warrant Certificate
(Incorporated by reference to Mark
Exhibit 4 b) to Mark's Form S-4)
5. Opinion of Timothy J. McCartney, Esq. 44
----
23. a) -- Consent of Sax Macy Fromm & Co., P.C.
(included on page II-8)
b) -- Consent of Timothy J. McCartney,
Esq. (included in Exhibit 5)
24. Power of Attorney (included on page
II-5)
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<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
on Form S-3 of our report dated September 7, 1995 (except for Note 1, as to
which date is September 25, 1995), which report includes an explanatory
paragraph regarding the substantial doubt about Mark Solutions, Inc.'s ("Mark")
ability to continue as a going concern, on our audits of the consolidated
financial statements of Mark as of June 30, 1995 and 1994 and for the years
ended June 30, 1995, 1994 and 1993 appearing in Mark's Annual Report on Form
10-K for the year ended June 30, 1995. We also consent to the reference to us
under the heading "Experts" in the Prospectus which is part of the Registration
Statement.
Sax Macy Fromm & Co., P.C.
Certified Public Accountants
Clifton, New Jersey
July 8, 1996
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<PAGE>
EXHIBIT 5
TIMOTHY J. McCARTNEY*
Attorney-at-Law
9 Elsa Way
Richboro, Pennsylvania 18954
Telephone (215) 396-7156
Facsimile (215) 396-7157
* Member of N.Y. Bar
July 8, 1996
Mark Solutions, Inc.
1515 Broad Street
Bloomfield, New Jersey 07003
Gentlemen:
I have acted as counsel for Mark Solutions, Inc. (Mark") in connection with the
registration by Mark under the Securities Act of 1933, as amended (the
"Securities Act") of 4,588,170 shares of Mark Common Stock, $.01 par value (the
"Shares") under Registration Statement No. 33-92166 (the "Registration
Statement) and related Prospectus.
On the basis of such investigation as I have deemed necessary, I am of the
opinion that:
1. The 1,279,290 Shares listed under the caption "Selling Shareholders" in the
Prospectus have been fully authorized, legally issued, fully paid and
nonassessable.
2. The 3,308,880 Shares issuable under the Warrants have been fully authorized
and, when issued upon exercise of such Warrants, will be legally issued, fully
paid and nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to my name under the caption "Legal Matters" set
forth in the Prospectus.
Very Truly Yours,
Timothy J. McCartney
