<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Form S-3/A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
OPTICAL SECURITY GROUP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Colorado 84-1094032
(State of other jurisdiction of Incorporation) (IRS Employer Identification No.)
535 16th Street, Suite 920
Denver, Colorado 80202
(303) 534-4500
(Address, including zip code, and telephone number including
area code of registrant's principal executive offices.)
Catherine M. Gotwalt, Secretary Copy to:
Optical Security Group, Inc. Charles H. Jacobs, Esq.
535 16th Street, Suite 920 Jane M. Harm, Esq.
Denver, Colorado 80202 Lohf, Shaiman & Jacobs, P.C.
(303) 534-4500 950 S. Cherry Street, Suite 920
(Address, including zip code, telephone number, including Denver, Colorado 80222
area code of registrant's agent for service of process) (303) 753-9000
</TABLE>
Approximate date of commencement of proposed sale to the public: From time to
------------
time after the effective date of this Registration Statement.
- ------------------------------------------------------------
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1993, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]_______________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
Title of each class of Proposed maximum Proposed maximum
Securities to be Amount to be aggregate price per _ aggregate offering Amount of
registered registered share price registration fee
- ---------------------- ------------ ------------------- ------------------ ----------------
Common Stock 1,657,002(1) $5.88(2) $9,743,171.76 $3,359.71
</TABLE>
(1) Includes 412,346 shares of common stock currently outstanding and 1,244,656
shares issuable upon currently convertible Series B 8% cumulative convertible
exchangeable preferred voting stock ("Series B Shares"). The number of shares of
common stock issuable upon conversion of the Series B Shares is subject to
certain adjustments. (See "Description of Common Stock.")
(2) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended. The proposed
maximum offering price is based upon $5.88, the average of the bid and asked
prices reported on the NASDQ market system on September 24, 1996.
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, as amended, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to Section
8(a), may determine.
<PAGE>
CROSS REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS
OF INFORMATION REQUIRED BY FORM S-3
FILED AS PART OF REGISTRATION STATEMENT
<TABLE>
<CAPTION>
Item
Number
in Form
S-3 Item Caption in Form S-3 Caption in Prospectus
- ------- ------------------------ ---------------------
<S> <C> <C>
1 Forepart of Registration Statement and Cover Page
Outside Front Cover Page of Prospectus
2 Inside Front and Outside Back Cover Pages Inside Front Cover Page;
of Prospectus Table of Contents
3 Summary of Information; Risk Factors and Prospectus Summary;
Ratio of Earnings to Fixed Charges Risk Factors
4 Use of Proceeds Use of Proceeds
5 Determination of Offering Price Cover Page
6 Dilution Inapplicable
7 Selling Security Holders Selling Security Holders
8 Plan of Distribution Plan of Distribution
9 Description of Security to be Registered Inapplicable
10 Interests of Named Experts and Counsel Legal Matters; Experts
11 Material Changes The Company
12 Incorporation of Certain Information by Incorporation of Certain
Reference Information by Reference
13 Disclosure of Commission Position on Indemnification of
Indemnification for Securities Act Directors and Officers
Liabilities
</TABLE>
<PAGE>
PROSPECTUS
1,657,002 Shares
OPTICAL SECURITY GROUP, INC. [LOGO OF OPTICAL
SECURITY GROUP
Common Stock, Par Value $.005 Per Share APPEARS HERE]
This prospectus relates to the offer for sale of 1,657,002 shares (the "Shares")
of common stock (the "Common Stock"), including 1,244,656 shares of Common Stock
issuable upon conversion of Series B 8% Cumulative Convertible Exchangeable
Preferred Voting Stock (the "Series B Shares"), of Optical Security Group, Inc.,
a Colorado corporation (the "Company"), from time to time after the date hereof
by certain stockholders of the Company or by their transferees, pledgees,
donees, or successors (collectively, the "Selling Security Holders" and
individually, a "Selling Security Holder"). The Company will not receive any
proceeds from the sale of the Shares offered hereby.
THE SECURITIES BEING SOLD HEREWITH ARE SPECULATIVE AND INVOLVE A HIGH DEGREE
OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE __.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
EXCHANGE COMMISSION OR ANY STATE'S SECURITY COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE'S SECURITY COMMISSION PASSED UPON THE
ACCURACY OF ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Shares will be offered by the Selling Security Holders for resale by this
Prospectus from time to time after the date hereof in one or more transactions
in the over-the-counter market at prices obtainable at the time of sale or in
privately negotiated transactions at prices determined by negotiation. The
Selling Security Holders may effect such transactions by selling these Shares to
or through broker dealers, and such broker dealers may receive compensation in
the form of underwriting discounts, concessions or commissions (which
commissions may be in excess of customary commissions). (See "PLAN OF
DISTRIBUTION.") Any broker-dealers that participate in the distribution of the
Shares may be deemed to be underwriters and any commissions received by them and
any profit on the resale of shares sold by them may be deemed to be underwriting
discounts and commissions under the Security Act of 1933, as amended (the
"Security Act"). Each of the Selling Security Holders may also be deemed to be
an underwriter as defined in the Securities Act.
The Company's Common Stock is traded in the over-the-counter market and quoted
on the NASDAQ SmallCap Market System under the symbol "OPSC." Prior to this
offering, however, the public market for the Company's Common Stock has been
highly illiquid, and there can be no assurance that a more viable public market
will develop in the future. On September 24, 1996, the bid and asked price of
the Company's Common Stock as quoted on NASDAQ were $6.13 and $5.63,
respectively.
Expenses relating to the offering are estimated to be $25,000.00
to be paid by the Company.
The date of this Prospectus is October 17,1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
in accordance therewith files reports, proxy statements, and other
information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information
filed by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's Regional Offices at 500
West Madison Street, Chicago, Illinois 60661 and 7 World Trade Center,
Suite 1300, New York, New York 10048. Copies of such materials can be
obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. Such
information may also be accessed on the World Wide Web at
http://www.sec.gov.
The Company has filed with the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, a Registration Statement under the Securities
Act, with respect to the securities offered hereby. This Prospectus does
not contain all the information set forth in the Registration Statement,
certain items of which are contained in Schedules and Exhibits to the
Registration Statement as permitted by the Rules and Regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement, including the Schedules and Exhibits filed as a
part thereof, which may be obtained from the Commission upon payment
of the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-KSB for the year ended
March 31, 1996, proxy statement dated July 26, 1996, and Quarterly
Report on Form 10-QSB for the quarter ended June 30, 1996 are
incorporated herein by reference and made a part hereof.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act after the date of
this Prospectus and prior to the termination of the offering of the Shares
shall be deemed to be incorporated by reference in this Prospectus and
to be a part hereof from the date of filing of such documents. Any
statement contained herein or a document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document
which also is or deemed to be incorporated by reference 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 a part of this Prospectus.
2
<PAGE>
The Company will provide, without charge, to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the oral or
written request of such person, a copy (without exhibits, unless such
exhibits are specifically incorporated by reference into the information
that this Prospectus incorporates) of any and all information that has
been incorporated by reference in this Prospectus. Written or telephone
requests for such information should be directed to Catherine M.
Gotwalt, Secretary, Optical Security Group, Inc., 535 Sixteenth Street,
Suite 920, Denver, Colorado 80202, telephone number (303) 534-4500.
3
<PAGE>
PROSPECTUS SUMMARY
This summary is qualified in its entirety by the detailed information and
financial statements and notes thereto appearing elsewhere or incorporated by
reference in this Prospectus.
THE COMPANY
The Company is primarily engaged in developing, producing, and marketing
products that contain its optical imaging technology. This technology involves
sophisticated holographic origination and embossing techniques and dimensional
printing that incorporates graphic design, depth of field (3D) and motion.
The Company's principal executive offices are located at 535 Sixteenth
Street, Suite 920, Denver, CO 80202 [telephone number (303) 534-4500].
THE OFFERING
Shares offered by Selling Security Holders 1,657,002
Common Stock outstanding at September 15, 1996/1/ 4,279,208
NASDAQ symbol OPSC
Proceeds to the Company None
______________________
/1/ Assumes the conversion of all Series B Shares into Common Stock of the
Company at the current conversion rate. See "DESCRIPTION OF CAPITAL STOCK -
Series B Shares."
RISK FACTORS
The Offering involves a high degree of risk. Prospective investors should
carefully consider the factors set forth under "Risk Factors."
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The following financial summary should be read in conjunction with
the financial statements for the fiscal years ended March 31, 1996,
1995, and 1994 and for the quarters ended June 30, 1995 and 1996,
and accompanying notes, appearing elsewhere in this Prospectus or
incorporated herein by reference.
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------------
March 31, March 31, March 31,
1994 1995/(1)/ 1996/(2)/
<S> <C> <C> <C>
Statement of Operations Data:
Net sales $ 112,461 $3,656,432 $8,953,740
Net income (loss) (918,702) (1,179,626) 2,692
Net income (loss) per share ($.50) ($0.44) ($0.01)
Net loss applicable to
common stock (918,702) (1,179,626) (39,111)
Common dividend per share -- -- --
Preferred dividend per share -- -- $6.25
Weighted average common
stock outstanding 1,843,097 2,667,541 3,023,282
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
June 30, June 30,
1995 1996
<S> <C> <C>
Statement of Operations Data:
Net sales $2,630,564 $2,326,574
Net income (loss) 14,995 102,896
Net income (loss) per share -- ($0.01)
Net loss applicable to common stock 14,995 (42,175)
Common dividend per share -- --
Preferred dividend per share -- $19.43
Weighted average common stock
outstanding 3,007,428 3,034,552
Balance Sheet Data: June 30, 1996
-------------
Working capital $ 5,251,381
Total assets 8,681,305
Total long-term debt 10,050
Shareholders' equity 7,847,704
</TABLE>
______________________
/1/ Reflects the acquisition of and the results of operations of ELEF, Plc for
eleven months and The Diffraction Company for five months. Such businesses were
acquired during the fiscal year.
/2/ Reflects the full-year results of operations of ELEF, Plc and The
Diffraction Company, which were acquired in the prior fiscal year.
5
<PAGE>
RISK FACTORS
The Shares involve a high degree of risk and no one should invest in these
Shares who cannot afford a complete loss of his or her entire investment.
Several risk factors regarding these securities are set forth below. However,
the investor is cautioned that this list is not necessarily complete and that
the investor should consult with his or her professional advisor prior to
investing in these Shares.
Recent Expansion
- ----------------
Although the Company was incorporated in 1988, the focus of the Company's
business has changed substantially since the addition of new management in 1993
and the acquisition of ELEF, Plc, and the assets of The Diffraction Company in
1994. The Company faces many general risks associated with operating a new
business.
Operating Losses
- ----------------
For the year ended March 31, 1996, the Company reported an operating loss of
$9,473 and net income of $2,692. In the year ended March 31, 1995, the Company
incurred an operating loss of $933,605 and a net loss of $1,179,626. While the
Company's revenues have increased substantially since the acquisition of ELEF,
Plc and The Diffraction Company, there can be no assurance that the Company will
be able to generate sufficient operating revenues. In the past, the Company had
been successful in obtaining additional financing to continue and expand
operations. There is no guarantee that operating revenues will be sufficient or
that additional financing will be available in the future to continue the
Company's operations.
Reliance on Key Management Personnel
- ------------------------------------
Because of the Company's size and limited financial resources, it does not have
second level management personnel to replace key management personnel or their
services. To attract key management personnel the Company has been required to
include stock options and other incentives to enhance their compensation
packages. There can be no assurance that the Company can attract experienced
management personnel by any other reasonable means. In addition, the future
success of the Company will be largely dependent on the efforts of Mr. Richard
H. Bard, its president, chairman of the board and chief executive officer.
Although Mr. Bard has entered into an employment contract with the Company, the
loss of his services for any reason would have a material adverse effect on the
Company. There can be no assurance that the terms and length of Mr. Bard's
continuing employment contract or the employment contracts of other key
personnel, will be sufficient to ensure their continued employment with the
Company or that they satisfactorily perform the duties required by such
contracts. The Company has no key man insurance on Mr. Bard, or any other
employee or director of the Company.
6
<PAGE>
Competition and Technology Uncertain
- ------------------------------------
The Company competes against companies that are larger, better funded
and which possess other attributes contributing to a competitive advantage
over the Company, including longer operational histories, more
established customers and supplier relationships, more established and
mature channels of product manufacture and distribution, and better
access to capital. In addition, the Company relies on agents and certain
relationships to market its products in many parts of the world. There
can be no assurance that these relationships will remain in place or be
successful. The Company could not, without materially impairing
profitability, replace these relationships with personnel of its own in the
event any such relationships were terminated or substantially modified.
The Company's holographic-based technologies for product authentication
compete with other technologies such as sophisticated inks, radio
frequency tagged labels, chemical taggants, and other products. In certain
cases, the Company's holographic-based technologies may not be
considered an effective solution to product authentication problems.
Similarly, the Company's tampering technologies compete with other
methods of addressing product tampering. There can be no assurance
that the Company's technologies are or will become widely accepted as
effective and economical approaches to product authentication
applications and to elimination of product tampering.
Limited Patent and Trade Mark Protection; Possible Company Infringement
- -----------------------------------------------------------------------
The Company's business depends in substantial part upon the continuing
validity and viability of its patents, trademarks, copyrights, and other
intellectual property. The Company holds patents for its tamper-resistant
technology and its document anti-counterfeiting technology and copyrights
on many of its diffraction and holographic security patterns. While the
Company believes each of its patents, trademarks, and copyrights is valid
and enforceable, there can be no assurance that the Company will be
successful in any patent, trademark, or copyright infringement actions
against any infringers. Additionally, the Company is unaware that it is,
or may be, infringing upon any intellectual property right of any third
party. Nevertheless, in the event any infringement should be discovered,
the operation prospects of the Company could be materially adversely
affected.
International Scope of Company's Business
- -----------------------------------------
The Company and its subsidiaries operate in numerous foreign markets
and countries including Canada, Europe, Asia, the Middle East, South
America, and Mexico. The Company has not obtained patent, trademark,
or other protection in every foreign country in which it has customers or
potential markets. There can be no assurance that such protection will
be available when sought by the Company. In addition, the Company's
future depends substantially upon its ability to continue to serve
customers in diverse locations. Its ability to do so may be effected
materially by changes in governments, domestic and foreign trading
negotiations, tariffs, domestic and foreign tax law and administration, and
other such matters which cannot reasonably be foreseen by the Company
and which the Company cannot prevent. There can be no assurance that
the Company will be able to continue to market, sell, and distribute its
product internationally.
7
<PAGE>
Preferred Stock Authorized
- --------------------------
The Company's Amended and Restated Second Articles of Incorporation
(the "Articles of Incorporation") authorize the issuance of a maximum of
2,500,000 shares of preferred stock, par value $.01 per share ("Preferred
Stock"). The board of directors has the authority to divide the Preferred
Stock into series and to fix and determine the relative rights and
preferences of the shares of any such series. Currently, the only Preferred
Stock designated is the Series B Shares. Although there is no plan to
issue any other series of Preferred Stock at any time in the foreseeable
future, the terms of any additional series of preferred stock may operate
to the disadvantage of holders of the Shares.
Series B Shares
- ---------------
The Series B Shares have certain dividend and liquidation rights which
may impact the Company's ability to pay dividends on the Shares or make
any payments to the holders of the Shares in the event of liquidation.
Additionally, the holders of the Series B Shares have the right upon
default of the payment of dividends to exchange the Series B Shares for
debentures. In the event of dissolution and liquidation, holders of the
debentures would be entitled to payment before holders of the Company's
capital stock. See "DESCRIPTION OF CAPITAL STOCK-Series B
Shares."
Control of the Company
- ----------------------
After completion of this Offering, the current officers and directors will
own beneficially approximately 41% of the Common Stock assuming all
of the Shares are sold hereunder. Thus, the current officers and directors
will continue to have a substantial role in the election of directors and, in
general, the determination of the outcome of any matter submitted to a
vote of the Company shareholders for approval.
Shares Eligible for Resale
- --------------------------
Of the presently outstanding shares of Common Stock, excluding the
Shares registered in this Offering, approximately 1,508,467 shares are
"restricted securities" as that term is defined by Rule 144 promulgated
under the Securities Act, and may be sold only in compliance with such
Rule or pursuant to registration under the Securities Act or pursuant to
another exemption therefrom. The Company is unable to predict the
effect that sales made under Rule 144, pursuant to future registration
statements or otherwise, may have on the prevailing market price for the
Company's securities, although it is likely that sales of a large number of
securities would materially affect the market price. In addition, the
Company has issued options and warrants to purchase Common Stock. If
such options or warrants are exercised, the number of shares of Common
Stock outstanding that are restricted securities will be increased.
Furthermore, the Company has granted to certain holders registration
rights for Common Stock not covered by this Offering. The Company is
unable to predict the effect that registration of such shares will have on
the prevailing market price for the Common Stock.
8
<PAGE>
USE OF PROCEEDS
The Company will not receive any portion of the proceeds of the resale of the
Shares by the Selling Security Holders.
SELLING SECURITY HOLDERS
The following chart sets forth the names of the Selling Security Holders, their
relationship to the Company, the number of Shares of Common Stock owned
beneficially prior to the Offering, and the number of Shares offered in the
Offering. In view of the fact that the Selling Security Holders may continue to
hold all or a part of the Shares offered hereunder and because currently there
are no agreements, arrangements or undertakings with respect to the sale of the
Shares, no estimate can be given for each Selling Security Holder as to the
number of Shares beneficially owned after the Offering or the percentage of
Shares owned after the Offering.
<TABLE>
<CAPTION>
Number of Shares Number of
Name of Selling Beneficially Owned Shares
Security Holder (1) Prior to the Offering Offered (2)
- ------------------- --------------------- -----------
<S> <C> <C>
Richard H. Bard(3) 1,153,599(4) 213,087
Hunt Capital Group, Inc.(5) 718,928(6) 486,913
Christopher W. Wynd(7) 15,974(8) 5,990
Constance W. Wynd(7) 15,974(8) 5,990
Hugh C. Wynd(7) 96,107(9) 36,040
Catherine M. Wynd(7) 15,974(8) 5,990
Matthew B. Wynd(7) 15,974(8) 5,990
Peter H.L. Woodd(10) 67,760(11) 36,986
Charlotte C. Woodd(10) 5,060(12) 1,840
Peter H.L. Woodd and
Charlotte C. Woodd (10) 15,180(13) 5,520
Reredos FT A/C (10) 11,000(14) 4,000
Reredos LIT A/C (10) 11,000(14) 4,000
Robert W. Baird & Co., Inc. 5,000 5,000
Massachusetts Mutual Life
Insurance Co. 166,666 166,666
Mass Mutual Corporate
Value Partners Ltd. 83,333 83,333
Delaware Charter Guarantee &
Trust Co.
FBO Richard Fleming, IRA (15) 41,575 4,166
NIB Strating Financial
Markets N.V. 2,500 2,500
</TABLE>
9
<PAGE>
Number of Shares Number of
Name of Selling Beneficially Owned Shares
Security Holder (1) Prior to the Offering Offered (2)
- ------------------- --------------------- -----------
Ferri SA (For Delecourt) 125,000 125,000
Bankhaus Krentschker & Co. 16,666 16,666
Van Moer Santerre 8,333 8,333
Credit Lyonnais (Swisse) S.A. 28,333 28,333
C.A.M.A.T. 50,000 50,000
Swedbank (Luxembourg) S.A. 30,000 30,000
Creditanstalt-Bankverein 11,666 11,666
Bank J. Vontobel & Co. AG 19,166 19,166
Bank der Osterreichischen 23,332 23,332
Michaux Gestion 50,000 50,000
Giuseppe Ciardi 25,000 25,000
Banque SCS Alliance S.A. 16,666 16,666
Bank Sal Oppenheim 6,666 6,666
Octavian Nominees Limited 125,000 125,000
Ellis A.G. 4,166 4,166
Marie-Pascale Molema 4,166 4,166
Pierce Lambert 4,166 4,166
Sultan Al-Shehail 8,333 8,333
Tudor Investments Ltd. 3,333 3,333
Cameo Trust Corporation Limited 8,333 8,333
Barwick Limited 14,666 14,666
_________________________________
(1) Except as expressly set forth in the footnotes to the table, no Selling
Security Holder has had a relationship with the Company within the past
three years.
(2) Assumes the conversion of all Series B Shares into Common Stock
of the Company at the current conversion rate. The conversion rate is
subject to adjustment upon the occurrence of certain events. See
"DESCRIPTION OF CAPITAL STOCK - Series B Shares."
(3) Mr. Bard is a director, president and chief executive officer of the
Company.
(4) Includes 533,334 shares of Common Stock issuable upon exercise of
Stock Options, 43,000 shares of Common Stock issuable upon exercise of
Warrants, 150,000 shares of Common Stock held by Richard H. Bard,
IRA, and 20,000 shares of Common Stock held as custodian for minor
child.
10
<PAGE>
(5) J.R. Holland, Jr., a director of the Company, is the manager and president
of Hunt Capital Group, L.L.C. ("Hunt"). Mr. Holland has no ownership interest in
Hunt and disclaims beneficial ownership of shares held by Hunt.
(6) Includes 200,000 shares of Common Stock issuable upon the exercise of
warrants.
(7) Catherine M. Wynd, Christopher W. Wynd, and Matthew B. Wynd are siblings.
Their parents are Constance W. Wynd and Hugh C. Wynd. The Wynds were the owners
of The Diffraction Company and acquired their shares of Common Stock in
connection with the Company's acquisition of The Diffraction Company's assets.
Hugh C. Wynd was a member of the Company's advisory board from October 26, 1994,
until the board was discontinued on June 18, 1996.
(8) Includes 9,984 shares of Common Stock issuable upon exercise of warrants.
(9) Includes 60,067 shares issuable upon exercise of Warrants.
(10) Peter H. L. Woodd is married to Charlotte C. Woodd. Reredos F/T AC and
Reredos LIT A/C are trustees under certain trusts for benefit of Mr. Woodd and
his family members. Mr. and Mrs. Woodd and Reredos F/T AC and Reredos LIT A/C
were the owners of ELEF, Plc and acquired their interests in the Company in
connection with the Company's acquisition of ELEF, Plc. Mr. Woodd served as an
officer and director of the Company from May 1, 1994, to November 1, 1995, and
as a consultant to the Company from November 1, 1995, to April 30, 1996.
(11) Includes 30,774 shares of Common Stock issuable upon exercise of warrants.
(12) Includes 3,220 shares of Common Stock issuable upon exercise of warrants.
(13) Includes 9,660 shares of Common Stock issuable upon exercise of warrants.
(14) Includes 7,000 shares of Common Stock issuable upon exercise of warrants.
(15) Mr. Fleming served on the Company's advisory board from July 25,1994, until
the board was discontinued on June 18, 1996. He also served as vice president of
the Company from January 1994 to June 1994.
11
<PAGE>
PLAN OF DISTRIBUTION
These Shares will be offered by the Selling Security Holders for resale by this
Prospectus from time to time after the date hereof in one or more transactions
in the over-the-counter market, in negotiated transactions or private
transactions, or otherwise, or a combination of such methods of sale, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. The Selling Security Holders may effect
such transactions by selling their Shares to or through broker-dealers, and such
broker-dealers may receive commissions in the form of underwriting discounts,
concessions or commissions (which compensation may be in excess of customary
commissions).
If the Company is notified by Selling Security Holders that any material
arrangement has been entered into with an underwriter or broker-dealer for the
Shares, a supplemental prospectus will be filed, if required, disclosing such of
the following information as the Company believes appropriate: (1) the name of
the participating underwriters, (2) the number of Shares involved, (3) the price
at which such Shares are to be sold, (4) the commissions paid or discounts or
concessions allowed to such underwriters, and (5) other facts material to the
transaction.
The Company has been advised by the Selling Security Holders that they may
continue to hold some of the Shares for investment purposes. However, the
Selling Security Holders have not determined how many Shares they will hold for
investment and how many Shares they will sell.
The Company has agreed to use its best efforts to take all actions necessary to
allow the distribution pursuant to this Prospectus to continue until the earlier
of (i) the sale of all of the Shares hereunder, or (ii) January 19, 1999.
DESCRIPTION OF CAPITAL STOCK
Common Stock
- ------------
The Company is authorized to issue 15,000,000 shares of Common Stock, par value
$.005 per share. As of September 15, 1996, 3,034,552 shares of Common Stock were
issued and outstanding. Each share of Common Stock is entitled to one vote at
all meetings of shareholders. All shares of Common Stock are equal to each other
with respect to liquidation rights and dividend rights. In the event of
liquidation, dissolution or winding up of the Company, holders of the Common
Stock will be entitled to receive, on a pro rata basis, all assets of the
Company remaining after satisfaction of all liabilities and all liquidation
preferences granted to holders of the Preferred Stock. The Company has never
paid any dividends on its Common Stock.
12
<PAGE>
Preferred Stock
- ---------------
The Company is authorized to issue 2,500,000 shares of Preferred Stock. The
Company's Articles of Incorporation grant the board of directors of the Company
the authority to divide the Preferred Stock into series and to fix and determine
the relative rights and preferences of the shares of any such series so
established, to the full extent permitted by the laws of the State of Colorado
and the Articles of Incorporation, with respect to, among other things (a) the
number of shares of Preferred Stock to constitute such series and the
distinctive designations thereof, (b) the rate and preference of dividends, if
any, the time of the payment of dividends, whether dividends are cumulative, and
the dates from which any dividend shall accrue, (c) whether shares of Preferred
Stock may be redeemed, and, if so, the redemption price and the terms and the
price of their redemption, (d) the liquidation preferences payable on the
Preferred Stock in the event of involuntary or voluntary liquidation, (e)
sinking fund or other provisions, if any, for the redemption or purchase of the
Preferred Stock, (f) the terms and conditions by which the Preferred Stock may
be converted, if the Preferred Stock of any series are issued with the privilege
of conversion, and (g) voting rights, if any. Currently, the Company has
designated Series B Shares. The Series B Shares provide that the Company may not
create a series of Preferred Stock superior in right to the Series B Shares.
Series B Shares
- ---------------
Holders of the Series B Shares are entitled to 8% cumulative dividends payable
quarterly and to convert their Series B Shares into shares of Common Stock at
any time prior to redemption by the Company or exchange for debentures, all as
described below. The conversion price of the Series B Shares is $6.00 per share
of Common Stock. For conversion purposes, Series B Shares are valued at
$1,000.00 per share, plus accrued but unpaid dividends. The conversion price is
subject to a one time adjustment in March of 1998 if the trading price for the
Company's Common Stock falls below the conversion price; however, the adjusted
conversion price will not be less than $4.00 per share.
The conversion price, or adjusted conversion price is subject to adjustment upon
the occurrence of certain events, including: (a) payment by the Company of a
dividend or distribution on its Common Stock, (b) subdivision or split of the
Company's outstanding Common Stock, (c) combination of the outstanding Common
Stock into a smaller number of shares, (d) reclassification of the Common Stock,
or (e) issuance of Common Stock at a price less than the trading price of the
Common Stock at the time of issuance or issuance of stock purchase warrants or
securities carrying conversion privileges on more favorable terms than the
Series B Shares.
The holders of the Series B Shares are entitled to vote on all matters in like
manner to the holders of the Common Stock, and are entitled to one vote for each
share of Common Stock issuable upon conversion of the Series B Shares. Upon
liquidation, the Series B Shares are entitled to an amount equal to the
redemption price, plus accrued dividends before payment is made on stock ranking
junior to the Series B Shares.
13
<PAGE>
On or after March 30, 1998, the Company may redeem the Series B
Shares if the closing bid and asked prices of the Common Stock is 150%
of the conversion price for 30 consecutive trading days commencing not
more than 60 days prior to the date a redemption notice is mailed. The
redemption price for each Series B Share is as follows:
Date Redeemed Redemption Price
------------- ----------------
After March 30, 1998 but prior
to January 19, 1999 $ 1,090.00
On or after January 19, 1999 but prior
to January 19, 2000 1,075.00
On or after January 19, 2000 but prior
to January 19, 2001 1,060.00
On or after January 19, 2001 but prior
to January 19, 2002 1,040.00
On or after January 19, 2002 but prior
to January 19, 2003 1,020.00
On or after January 19, 2003 but prior
to January 19, 2004 1,000.00
plus cumulative dividends up to the date of the redemption.
Pursuant to the terms of the Series B Shares, payment of dividends or
other payments (excluding payments on liquidation) on the Company's
Common Stock are prohibited unless the Company also declares and pays
dividends on the shares of Common Stock issuable upon conversion of
the Series B Shares and unless there are no accrued and unpaid dividends
on the Series B Shares.
The Company has the right to require the exchange of the Series B
Shares for debentures any time after January 19, 1997, upon 10 days prior
written notice to the holders of the Series B Shares. In addition, the
holders of the Series B Shares have the right to exchange their Series B
Shares for debentures in the event the Company fails to declare and pay
required dividends on the Series B Shares, and such payment is not made
within 10 days following the dividend payment date. The exchange rate
for any such exchange is set at $1,000.00 principal amount of debenture
for each Series B Share surrendered. Cumulative dividends will be added
to the principal amount of debentures unless the Company pays such
cumulative dividends in cash at the time of exchange. The debentures
will bear interest at the rate of 8% per annum, payable quarterly, and will
be convertible into shares of Common Stock on the same terms and
conditions as the Series B Shares.
14
<PAGE>
If the Company requires the exchange of the Series B Shares for
debentures before January 19, 2000, the principal amount due on the
debentures must be paid in three annual installments beginning on
January 19, 2001, and ending January 19, 2003. If the Company requires
the exchange of the Series B Shares for debentures after January 19,
2000, or if a holder of the Series B Shares exercises such holder's right to
exchange the Series B Shares for debentures, the principal amount of the
debentures must be paid in three annual installments beginning on the
one-year anniversary of such exchange and ending on the three-year
anniversary of such exchange.
The debentures will be subordinated in right of payment to any senior
indebtedness of the Company. If the Company is in default on the
debentures, the holders of 15% in principal amount of the debentures
then outstanding may declare the principal of all such debentures to be
due and payable. The debentures will prohibit the Company from
merging into another entity or transferring all, or substantially all, of its
assets unless (a) the Company will be the surviving entity, or the successor
entity will be a United States corporation or shall expressly assume all of
the obligations of the Company under the debentures, (b) no event of
default shall have occurred and be continuing, and (c) the assuming
corporation has a net worth not less than the consolidated net worth of
the Company.
The debentures will also prohibit the Company from (a) declaring or
paying any dividends unless the Company also pays additional interest on
the debentures in an amount equal to the amount of dividend that would
be payable to the holders of the debentures had such holders converted
the debentures into shares of Common Stock; (b) purchasing, redeeming
or otherwise acquiring or retiring for value any equity interest of the
Company or its subsidiaries; (c) permitting any wholly-owned subsidiary
to declare or pay any dividend on or make any distribution to the holders
of any of its shares of capital stock; or (d) permitting any subsidiary to
purchase, redeem or otherwise acquire or retire for value any equity
interest of such subsidiary, if at the time of such action an event of
default shall have occurred and be continuing or shall occur as a result
thereof or if upon giving effect to such payment the aggregate amount
expended exceeds certain amounts.
Pursuant to the terms of Subscription Agreements between the Company
and the purchasers of the Series B Shares, the Company agreed to file
with the Commission a registration statement for the sale of the shares of
Common Stock underlying the Series B Shares and to use its best efforts
to have such registration statement declared effective.
Stock Option Plans
- ------------------
At the Company's annual meeting held August 16, 1996, the shareholders
approved amendments to the Company's Incentive Stock Option Plan and
Non-Qualified Stock Option Plan, increasing the number of shares
authorized under each plan to 2,000,000 shares of Common Stock.
15
<PAGE>
Transfer Agent
- --------------
The Company's transfer agent is American Securities Transfer and Trust,
Inc., located at 938 Quail Street, Suite 101, Lakewood, Colorado 80215.
THE COMPANY
General
- -------
The Company is engaged primarily in developing, producing and
marketing products that include its optical imaging technology. This
technology includes sophisticated holographic originations used in security
label applications and embossing techniques and dimensional printing that
incorporates graphic design, depth of field (3D) and motion used for
product promotion and packaging enhancement.
The Company's principal executive offices are located at 535 Sixteenth
Street, Suite 920, Denver, Colorado 80202, and its telephone number is
(303) 534-4500.
Recent Developments
- -------------------
Effective June 21, 1996, the Company entered into an eight year, exclusive
license agreement (the "Agreement") with Alpha Dot Systems, LLC ("Alpha Dot").
Alpha Dot holds an exclusive license from PT Licensing, LLC ("PT") to
manufacture, distribute and sublicense products using proprietary technology and
processes for the miniaturization, micro-printing, replication, application and
retrieval of informa tion in microdots, microstrips of indicia and tags under
the trademarks or tradenames "Alpha Dot" and "Identify America" and others (the
"Licensed Products"). The Licensed Products are used to authenticate and
identify products to which they are attached and into which they are
incorporated.
In connection with the Agreement, the Company (a) acquired a 12 1/2% ownership
interest in PT, (b) obtained a right of first refusal to acquire the membership
interests or assets of Alpha Dot, and (c) loaned $100,000.00 to Alpha Dot. The
loan is evidenced by a promissory note and is convertible by the Company into
membership interests of Alpha Dot at any time after June 21, 1998. The
conversion price is based upon 80% of the fair market value of Alpha Dot at the
time of the exercise of the conversion privilege. The note is secured by all of
Alpha Dot's tangible and intangible property, including its right under its
exclusive sale, distribution and manufacturing agreements with PT.
Effective July 1, 1996, the board of directors appointed Frank M. Vrechek as
senior vice president-operations. Mr. Vrechek's initial compensation is $100,000
per year. He also received options to purchase 100,000 shares of Common Stock
under the Company's Incentive Stock Option Plan, at an exercise price of $5.87
per share. The options vest in increments of 25,000 shares on July 1, 1997, July
1, 1998, July 1, 1999 and July 1, 2000. Mr. Vrechek owned and operated a private
company engaged in product importing from 1979 until the company's sale in 1995.
16
<PAGE>
On July 17, 1996, the Company merged two of its subsidiaries, VisiLink, Inc. and
Optical Security Industries, Inc., into the Company, with the Company being the
surviving corporation. Additionally, on July 17, 1996, the Company's wholly-
owned subsidiary, Light Fantastic, Inc., changed its name to Optical Security
Industries, Inc. Currently, the Company's two principal operating subsidiaries
are Optical Security Industries, Inc., a Colorado corporation, which does
business under the trade name OpSec U.S., and Optical Security Industries
International, Plc, a United Kingdom corporation, which does business under the
name OpSec International.
LEGAL MATTERS
The validity of the Shares being offered hereby will be passed upon for the
Company by Lohf, Shaiman & Jacobs, P.C., 900 Cherry Tower, 950 South Cherry
Street, Denver, Colorado 80222.
EXPERTS
The financial statements of Optical Security Group, Inc. appearing in Optical
Security Group, Inc.'s Annual Report (Form 10-KSB) for the year ended March 31,
1996, have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon, included therein and incorporated herein by reference.
Such financial statements are incorporated herein by reference in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Bylaws of the Company provide for indemnification of officers and directors
to the maximum extent allowable under Colorado law. The Company has also agreed
to indemnify the Selling Security Holders from certain liabilities including
those arising under the Securities Act. Insofar as the indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers or persons controlling the Company pursuant to such provisions, the
Company has been advised that in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
17
<PAGE>
No person is authorized to give any information or to make any representation
other than those contained in this Prospectus, and if given or made, such
information or representation must not be relied upon as having been authorized.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any security other than the Shares offered by this Prospectus or an
offer to sell or a solicitation of an offer to buy the Shares in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus nor
any sale made hereunder shall under any circumstance create any implication that
there has been no change in the affairs of the Company since the date hereof or
that the information herein is correct as of any time subsequent to its date.
TABLE OF CONTENTS
Available information . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of certain
documents by reference . . . . . . . . . . . . . . . . . . . . . . . . 2
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Selling Security Holders . . . . . . . . . . . . . . . . . . . . . . . 9
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 12
Description of Capital Stock . . . . . . . . . . . . . . . . . . . . . 12
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Indemnification of
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . 17
1,657,002 SHARES
OPTICAL SECURITY
GROUP, INC.
__________
PROSPECTUS
__________
October 17, 1996
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee $ 3,359.71
Legal fees and expenses 12,000.00
Accounting fees and expenses 5,000.00
Blue Sky fees and expenses 1,000.00
Printing costs 3,000.00
Miscellaneous 640.29
----------
TOTAL $25,000.00
==========
</TABLE>
______________________
* Estimated
<PAGE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
This description is qualified in its entirety by the provisions in the Company's
Articles of Incorporation and Bylaws and the relevant sections of Colorado law.
As authorized under Colorado law, the Company's Articles of Incorporation
eliminate the personal liability of a director to the Company and its
shareholders for monetary damages for any breach of fiduciary duty as a
director, except for liability of a director to the Company and its shareholders
for monetary damages for any breach of the director's duty of loyalty to the
Company or to its shareholders, acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, unlawful
distributions, or any transaction from which the director directly or indirectly
derives proper personal benefit. This provision does not limit or eliminate the
rights of the Company or any shareholder to seek non-monetary relief such as an
injunction or recision in the event of a breach of director's duty of care.
The Company's Bylaws provide that the Company shall indemnify any individual or
entity who was, is, or is threatened to be made, a named defendant or respondent
in a proceeding by reason of the fact that he or she is or was a director,
officer, or employee of the Company and any individual who, while a director,
officer or employee of the Company is or was serving at the request of the
Company as a director, officer, partner, trustee, employee, fiduciary, or agent
of any other foreign or domestic corporation or of any partnership joint
venture, trust or other enterprise against liability incurred, relating to or as
a result of the proceeding to the extent permitted by law including
circumstances in which indemnification would be (1) discretionary under Colorado
law or limited or (2) subject to particular standards of conduct under Colorado
law. The Bylaws also provide that the Company shall pay to the fullest extent
permitted by law including circumstances in which advancement of expenses would
be (a) discretionary under Colorado law or (b) limited or subject to a
particular standards of conduct under Colorado law, amounts to cover expenses
incurred by the party in, relating to, or as a result of such proceeding, in
advance of its final disposition.
The Company has purchased and maintains insurance for its officers and directors
against certain liabilities, including liabilities under the Securities Act. The
effect of such insurance, subject to certain exclusions, is to indemnify any
officer or director of the Company against expenses, judgments, fines, attorney
fees and other amounts paid in settlements incurred by him.
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page
Number Exhibit Name Reference
------- ------------ ---------
<S> <C> <C>
3.2.4 Amended and Second Restated Filed previously
Articles of Incorporation
5 Opinion of Lohf, Shaiman Filed herewith
& Jacobs, P.C.
23.1 Consent of Ernst & Young, LLP Filed previously
</TABLE>
<PAGE>
ITEM 17. UNDERTAKINGS
(a) The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the Prospectus any facts or events arising
after the effective date of the Registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration statement;
(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.
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Company pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(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.
(b) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the provisions discussed in Item 14 of this
registration statement, or otherwise, the Company has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against
<PAGE>
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Company Registrant
certifies that it has reasonable grounds to believe that it meets all
requirements for filing on Form S-3-and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city and county of Denver, Colorado on this 16th day of
October, 1996.
OPTICAL SECURITY GROUP, INC.
By: /s/Richard H. Bard
--------------------------
Richard H. Bard, President
<PAGE>
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
<S> <C>
Date: October 16, 1996 By:/s/Richard H. Bard
---------------------------------
Richard H. Bard, Chief Executive
Officer and Director
Date: October 16, 1996 By:/s/Gerald A. Melfi
---------------------------------
Gerald A. Melfi
Chief Accounting Officer
Date: October 16, 1996 By:/s/Mark Bar
---------------------------------
Mark Bar, Director
Date: October 16, 1996 By:/s/Yoram Curiel
---------------------------------
Yoram Curiel, Director
Date: October 16, 1996 By:/s/Martin T. Hart
---------------------------------
Martin T. Hart, Director
Date: October 16, 1996 By:/s/J.R. Holland, Jr.
---------------------------------
J.R. Holland, Jr., Director
Date: October 16, 1996 By:/s/Richard D. Lamm
---------------------------------
Richard D. Lamm, Director
Date: October 16, 1996 By:/s/Bruce I. Raben
---------------------------------
Bruce I. Raben, Director
Date: October 16, 1996 By:/s/John J. Tipton
---------------------------------
John J. Tipton, Director
</TABLE>
<PAGE>
LOHF, SHAIMAN & JACOBS, P.C.
Attorneys at Law
950 South Cherry St., #900
Denver, Colorado 80222
Facsimile (303) 753-9997
--------------
Telephone: (303) 753-9000
October 16, 1996
Board of Directors
Optical Security Group, Inc.
535 16th Street, Suite 920
Denver, CO 80202
United States of America
Re: Registration Statement on Form S-3 (S.E.C. File No. 333-12703) Covering
Public Offering of 1,657,002 Shares of Common Stock of Optical Security
Group, Inc.
Gentlemen:
We have acted as counsel for Optical Security Group, Inc., a Colorado
corporation (the "Company"), in connection with the proposed offering to the
public by certain security holders of the Company of 1,657,002 shares of common
stock including 412,346 shares of common stock currently issued and outstanding
(the "Shares") and 1,244,656 shares of common stock (the "Conversion Shares")
issuable upon conversion of Series B 8% Cumulative Convertible Exchangeable
Preferred Voting Stock (the "Series B Shares").
In such capacity, we have examined, originals or copies of such documents,
corporate records, and other instruments as we have deemed necessary for
purposes of this opinion including among other documents, the Articles of
Incorporation and bylaws, as amended, of the Company, minutes of meetings of the
Company's board of directors and shareholders, and certificates of certain of
the Company's officers.
For purposes of this opinion, we have assumed the legal capacity of all persons
other than the Company executing all documents and instruments examined by us.
We have further assumed that all signatures are genuine, that all documents
submitted to us as originals are complete and authentic, that all documents and
instruments submitted to us as copies conform to authentic original
Exhibit 5.1
<PAGE>
Optical Security Group, Inc.
October 16, 1996
Page 2
of such documents, and that all statements of fact made to us by the Company and
representatives of the Company and any other parties to the transaction
referenced above are true and correct, and there have been no material changes
in the facts represented to us in such statements prior or subsequent to the
date thereof.
Based on the foregoing, and subject to such further examinations as we have
deemed relevant and necessary, we are of the opinion that:
1. The Company is a corporation duly organized and validly existing in
good standing under the laws of the state of Colorado.
2. The Shares and the Series B Shares have been legally and validly
authorized under the Articles of Incorporation, as amended, of the
Company, and (a) the Shares constitute duly and validly issued and
outstanding and fully paid and non-assessable shares of common stock
of the Company, and (b) when issued upon conversion of the Series B
Shares in compliance with the Company's Articles of Incorporation, as
amended, and applicable securities laws, the Conversion Shares will
constitute duly and validly issued and outstanding and fully paid and
non-assessable common stock of the Company.
We hereby consent to the use of our name and to the references to our Firm
beneath the caption "Legal Matters" in the prospectus forming a part of the
Registration Statement and to the filing of a copy of this opinion as Exhibit
No. 5.1 thereto.
Very truly yours,
LOHF, SHAIMAN & JACOBS, P.C.
By:/s/ Charles H. Jacobs
---------------------------
Charles H. Jacobs
