<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)
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. Jane M. Harm, Esq.
535 16th Street, Suite 920 Lohf, Shaiman & Jacobs, P.C.
Denver, Colorado 80202 950 S. Cherry Street, Suite 900
(303) 534-4500 Denver, Colorado 80246
(Address, including zip code, (303) 753-9000
telephone number, including
area code of registrant's agent
for service of process)
Approximate date of commencement of proposed sale to the public: From time to
------------
time after the effective date of this Registration Statement.
- ------------------------------------------------------------
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]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Title of each Proposed Proposed
class of maximum maximum
Securities to be Amount to be aggregate aggregate Amount of
registered registered price per share offering price registration fee
- ------------------ ------------ --------------- -------------- ----------------
Common Stock 1,445,733(1) $5.25(2) $7,590,098 $2,110(3)
</TABLE>
___________________
(1) Includes 615,200 shares of common stock currently outstanding, 509,481
shares of common stock issuable upon currently convertible 8% Senior
Subordinated Convertible Debentures Due in 2005 (the "Debentures"), and 321,052
shares of common stock issuable upon currently exercisable stock purchase
warrants (the "Warrants"). The number of shares of common stock issuable upon
conversion of the Debentures and Warrants is subject to certain adjustments.
(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 $5.25, the average of the high and low
prices reported on The Nasdaq SmallCap Stock Market /SM/ on December 11, 1998.
(3) Of which $1,273 was previously paid.
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>
PROSPECTUS
1,445,733 SHARES
OPTICAL SECURITY GROUP, INC.
COMMON STOCK, PAR VALUE $.005 PER SHARE
This Prospectus relates to the offer for sale of 1,445,733 shares (the "Shares")
of common stock, par value $.005 per share (the "Common Stock"), of Optical
Security Group, Inc., a Colorado corporation (the "Company"), including (a)
615,200 shares of Common Stock currently outstanding, (b) 509,481 shares of
Common Stock issuable upon currently convertible 8% Senior Subordinated
Convertible Debentures Due 2005 (the "Debentures"), (c) 321,052 shares of Common
Stock issuable upon currently exercisable stock purchase warrants (the
"Warrants"), ((a)-(c) collectively, the "Securities"). The Shares will be sold
from time to time after the date hereof by holders of the Securities, named in
the Prospectus or by their transferees 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 SHARES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE
3.
THE SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION (THE "COMMISSION") OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OF
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The Shares may be sold by the Selling Security Holders from time to time
directly to purchasers or through agents, underwriters, or dealers. See "Plan of
Distribution." If required, the names of any such agents or underwriters
involved in the sale of the Shares and the applicable agent's commission,
dealer's purchase price or underwriter's discount, if any, will be set forth in
an accompanying supplement to this Prospectus. The Selling Security Holders
will receive all of the net proceeds from the sale of the Shares and will pay
all underwriting discounts and selling commissions, if any, applicable to any
such sale. The Company is responsible for payment of all other expenses
incident to the offer and sale of the Shares. The Selling Security Holders and
any broker-dealers, agents or underwriters which participate in the distribution
of the Shares may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), and any commission
received by them and any profit in the resale of the Shares purchased by them
may be deemed to be underwriting commissions or discounts under the Securities
Act.
The Common Stock is traded on The Nasdaq SmallCap Stock Market /SM/ ("NASDAQ")
under the symbol "OPSC." On December 11, 1998, the high and low prices of the
Common Stock as quoted on NASDAQ were $5.50 and $5.00, respectively.
THE DATE OF THIS PROSPECTUS IS DECEMBER 21, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). In accordance with the
Exchange Act, the Company files reports, proxy statements, and other information
with 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 Seven 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 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 Shares offered hereby. This Prospectus does not contain all the information
set forth in the Registration Statement. Certain items are omitted 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.
The Company will provide, without charge, to each person to whom this Prospectus
is delivered, on the oral or written request of such person, a copy of any and
all information that has been incorporated by reference in this Prospectus
(other than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into the information that this Prospectus
incorporates). 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 facsimile number (303) 534-1010.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following document are incorporated herein by reference and made a part
hereof.
1. The Company's Annual Report on Form 10-KSB for the year ended
March 31, 1998
2. The Company's Quarterly Report on Form 10-QSB for the quarter ended
June 30, 1998.
3. The Company's Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1998.
4. The description of the Common Stock set forth in the Company's registration
statement under the Exchange Act on Form 8-A.
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 in a
document incorporated or deemed to be incorporated by reference in this
Prospectus shall be deemed modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein
2
<PAGE>
or in any 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.
FORWARD-LOOKING STATEMENTS
This Prospectus contains or incorporates by reference information regarding
anticipated future operations, business products, technological developments,
new products, and the like, contain predictions and projections which may
constitute forward-looking statements. The Private Securities Litigation Reform
Act of 1995, including provisions contained in Section 21E of the Securities
Exchange Act, provides a safe harbor for forward-looking statements. In order
to comply with the terms of the safe harbor, the Company notes that a variety of
factors could cause the Company's actual results and experience to differ
materially from the anticipate results or other expectations expressed in the
Company's forward-looking statements. The risk and uncertainties that may
affect the operation, performance, development and results of the Company's
business include the following:
(a) The Company may not be able to successfully accomplish its
acquisition strategy.
(b) The Company may not achieve the results anticipated in connection
with its plan to discontinue its lenticular business.
(c) Changes in demand for the Company's product and services.
(d) Changes in the level of operating expenses, competitive conditions
and product supply.
(e) Problems with suppliers, customers, its banking relationship, and
other matters related to the failure of technology to properly
process the change from year 1999 to 2000.
The Company in making its predictions has assumed that existing management will
remain in place. Investors are cautioned not to place undue reliance on the
forward-looking statements made herein.
3
<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 the Shares 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.
The Company Operates in a Highly Competitive Environment
- --------------------------------------------------------
The Company competes against companies that are larger, better funded, and/or
which possess other attributes contributing to a competitive advantage over the
Company, including longer operational histories, more established customer
relationships, more established and mature channels of product manufacture and
distribution, and better access to capital.
Competing (including new) Technologies
- --------------------------------------
The Company's holography-based technologies for product authentication compete
with other technologies such as sophisticated inks, radio frequency tagged
labels, chemical tagants, and other technologies for authenticating products.
Similarly, the Company's tamper-evident technologies compete with other methods
of addressing product tampering. New technological solutions to the problems
addressed by the Company's technologies are being developed continuously by
other companies. There can be no assurance that the Company's technologies will
become widely accepted as effective and economic approaches to product
authentication applications and eliminate product tampering.
Reliance on Key Management Personnel
- ------------------------------------
In order to compete successfully in its industry, the Company needs to be able
to attract and retain key management personnel. There can be no assurance that
the Company will be able to attract experienced management personnel in the
future. In addition, the future success of the Company will be largely
dependent on the efforts of Mr. Richard H. Bard, its chairman of the board and
chief executive officer. Although Mr. Bard has entered into an employment
contract with the Company to serve in his present office until March 31, 2001,
the loss of his services for any reason would have a material adverse effect on
the Company.
Limited Patent and Trademark Protection: Possible Company Infringement
- ----------------------------------------------------------------------
The Company's business depends in substantial part upon the continuing validity
and viability of its patents, trademarks, and other intellectual property. The
Company holds the patents for its tamper-resistant technology and its document
anti-counterfeiting technology. While the Company believes each of its patents
and trademarks is valid and enforceable, there can be no assurance that the
Company will be successful in any patent or trademark infringement action
against any infringers.
The Company is unaware that it is or may be infringing any intellectual property
rights of any third party. Nevertheless, in the event any infringement should
be discovered, the operations and prospects of the Company could be materially
adversely affected.
4
<PAGE>
Discontinuance of Lenticular Business
- -------------------------------------
In order to focus on its security business, on March 27, 1998, the Company
adopted a plan to segregate its dimensional printing business, and to sell, spin
off, or otherwise dispose of this business during the fiscal year ending March
31, 1999. As a result thereof, the Company took a write-off of approximately
$2.5 million on its financial statements for the fiscal year ended March 31,
1998. The Company's ability to spin off the lenticular business may be limited
due to restrictions in the Debentures limiting the Company's right to provide
funding to a spun-off entity. The impact of this decision is uncertain and
could be materially adverse to the Company's business and financial prospects.
The write-off in connection with this transaction could adversely affect trading
markets for the Company's Common Stock. If the Company spins off its lenticular
business into a new company and if all or part of current management is involved
in management of the new company, current management may have divided loyalties
and less time to devote to the efforts of the Company.
Control of the Company
- ----------------------
The current executive officers and directors will own beneficially approximately
43% of the Common Stock, assuming the complete conversion of all Debentures into
Common Stock at the current conversion price and the exercise of all Warrants at
the current exercise price without giving effect to other outstanding warrants,
options, or convertible securities held by persons other than executive officers
and directors. Holders of the Common Stock are not entitled to cumulate their
votes for the election of directors or otherwise. The current officers and
directors will continue to have a substantial role in the election of the
directors and, in general, the determination of the outcome of any matter
submitted to a vote of the Company's shareholders for approval.
Computerized Operations and the Year 2000
- -----------------------------------------
During recent years, there has been significant global awareness raised
regarding the potential disruption to business operations worldwide resulting
from the inability of current technology to process properly the change from the
year 1999 to 2000. Based on an internal review of its data processing,
operating, manufacturing and other computer-based systems, the Company does not
currently believe that it will experience any significant adverse effects or
material unbudgeted costs resulting therefrom. However, the Company cannot
provide any assurance in this regard with respect to whether and to what extent
the inability of current technology to process properly the change from the year
1999 to 2000 may have on the Company's suppliers and customers, and any such
costs or effects could materially and adversely affect the operations of the
Company.
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
8% Cumulative Convertible Exchangeable Preferred Voting Stock (the "Series B
Shares"). Although there is no
5
<PAGE>
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.
Risks Associated with Acquisition Strategy
- ------------------------------------------
The Company has acquired several businesses since 1994, including its latest
acquisition on May 29, 1998, of Advantage Technology, Inc. The Company's growth
strategy includes additional acquisitions. Management is continually evaluating
acquisition opportunities. As a result, the Company's future success is
dependent, in part, upon its ability to identify, finance, and acquire
attractive businesses, and then to successfully integrate and/or manage such
acquired businesses. Acquisitions involve special risks, including risks
associated with unanticipated problems, liabilities and contingencies, diversion
of management attention, and possible adverse effects on earnings resulting from
increased goodwill amortization, increased interest costs, the issuance of
additional securities, and difficulties relating to the integration of the
acquired businesses. Although the Company believes it can identify and
consummate the acquisitions of a sufficient number of businesses to successfully
implement its growth strategies, there can be no assurances that such will be
the case. Further, there can be no assurance that future acquisitions will not
have an adverse effect upon the Company's operating results.
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
position with 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.
6
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
Name of Selling Position Beneficially Owned Number of
Security Holder with Company Prior to the Offering/(1)/ Shares Offered/(2)/
- -------------------------------- ---------------- -------------------------- -------------------
<S> <C> <C> <C>
B.A.T.B., LLC -- 29,144 15,384
S.R.T.B., LLC -- 29,144 15,384
Guardian Ventures, Inc. -- 2,658 1,538
Eugene M. Bard -- 35,422 23,076
Richard D. Lamm Director 65,280 13,538
Renaissance Capital
Growth & Income III -- 76,923 76,923
Renaissance US Growth -- 170,256 170,256
and Income Trust, PLC
Van Moer, Santerre,
Luxembourg S.A. -- 23,076 23,076
Weghsteen & Driege -- 92,307 92,307
Bank Sal Oppenheim Jr. & Cie.
(Schweiz) AG -- 30,769 30,769
Michaux Gestion -- 30,769 30,769
Central Hispano Pensiones -- 117,000 117,000
Central Hispano Gestion -- 117,000 117,000
Vereins-und Westbank AG -- 38,461 38,461
Richard H. Bard Director 1,945,343 15,200
CSL Associates, L.P. -- 98,447 10,000
MassMutual Corporate
Value Partners II LLC -- 500,000/(3)/ 83,334
MassMutual High
Yield Partners II LLC -- 458,333/(3)/ 125,000
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
Name of Selling Position Beneficially Owned Number of
Security Holder with Company Prior to the Offering/(1)/ Shares Offered/(2)/
- -------------------------------- ---------------- -------------------------- -------------------
<S> <C> <C> <C>
MassMutual Life
Insurance Company -- 625,000/(4)/ 166,666
The Network Fund III, Ltd. -- 88,000 88,000
Irvine Capital Partners, L.P. -- 81,500 30,000
Value Investing Partners, Inc. /(5)/ 175,589 162,052
- ---------------
</TABLE>
/(1)/ For the purposes of determining "shares beneficially owned," the rules of
the Commission require that every person who has or shares the power to vote or
dispose of the shares of stock be reported as a "beneficial owner" of all shares
as to which such power exists. As a consequence, many persons may be deemed to
be the "beneficial owners" of the same securities. The Commission rules also
require that certain shares of stock that a person has a right to acquire within
60 days of such date, pursuant to the exercise of stock options or of
convertible securities, are deemed to be outstanding for the purpose of
calculating the percentage ownership of such owners, but are not deemed
outstanding for the purpose of calculating the percentage ownership of any other
person.
/(2)/ Assumes the conversion of all Debentures into Common Stock of the Company
at the current conversion rate and the exercise of all Warrants at the current
exercise price. The conversion rate of Debentures and the exercise price of
Warrants are subject to adjustments upon the occurrence of certain events.
/(3)/ Includes 333,333 shares beneficially owned by MassMutual Life Insurance
Company.
/(4)/ Includes 125,000 shares beneficially owned by MassMutual Yield Partners II
LLC and 166,667 shares beneficially owned by MassMutual Corporate Value Partners
Limited.
/(5)/ Value Investing Partners, Inc. acted as the placement agency for the
Company in the Company's 1996 and 1998 private offering.
Certain holders of the Securities acquired the Securities in a private offering
conducted by the Company in 1998. The offering was completed in June 1998.
Offers and sales in the private offering were made pursuant to a claim of
exemption under Regulation S, Rule 903, Regulation D, Rule 506, or,
alternatively, Section 4(2) of the Securities Act. Pursuant to the terms of the
purchase agreements entered into by the Company and such holders, the Company
agreed to use its best efforts to register the shares or underlying shares of
Common Stock.
Other holders of the Securities elected to include their shares or underlying
shares of Common Stock represented by the Securities pursuant to piggy-back
registration rights granted in connection with the issuance of the Securities.
8
<PAGE>
PLAN OF DISTRIBUTION
The Shares may be sold by the Selling Security Holders from time to time
directly to purchasers or through agents, underwriters, or dealers. The Selling
Security Holders will receive all of the net proceeds from the sale of the
Shares and will pay all underwriting discounts and selling commissions, if any,
applicable to any such sale. The Company is responsible for payment of all
other expenses incident to the offer and sale of the Shares. The Selling
Security Holders and any broker-dealers, agents or underwriters which
participate in the distribution of the Shares may be deemed to be "underwriters"
within the meaning of the Securities Act. Any commission received by them and
any profit in the resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
If the Company is notified by any Selling Security Holder 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 and the Selling Security Holders have agreed to indemnify each other
and other certain related parties for certain liabilities in connection with the
registration of the Shares.
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) June 23, 2000.
THE COMPANY
General
- -------
The Company manufactures and markets highly sophisticated holographic and other
security technologies used in a variety of security, document authentication,
product protection, anti tampering, and marketing applications. The Company
owns patents and copyrights for several of its technologies, products, and
processes, and holds licenses or other rights for others.
The Company's principal executive offices are located at 535 Sixteenth Street,
Suite 920, Denver, CO 80202, telephone number (303) 534-4500, facsimile number
(303) 534-1010.
9
<PAGE>
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 80246.
EXPERTS
The consolidated financial statements of the Company appearing in the Company's
Annual Report on Form 10-KSB for the year ended March 31, 1998, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon, included therein and incorporated herein by reference. Such
consolidated 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.
10
<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
Forward-Looking Statements. . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Selling Security Holders . . . . . . . . . . . . . . . . . . . . . . 6
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . 9
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Indemnification of Directors and Officers . . . . . . . . . . . . . . 10
1,445,733 SHARES
OPTICAL SECURITY
GROUP, INC.
______________
PROSPECTUS
______________
DECEMBER 21, 1998
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC registration fee $ 2,110.00
Legal fees and expenses 15,000.00 *
Accounting fees and expenses 20,000.00 *
Blue Sky fees and expenses 1,000.00 *
Printing costs 3,000.00 *
Miscellaneous 2,000.00 *
TOTAL $43,110.00*
_____________________
* Estimated
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 Amended and Second Restated
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
II-1
<PAGE>
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.
<TABLE>
<CAPTION>
ITEM 16. EXHIBITS
<S> <C> <C>
Exhibit Page
Number Exhibit Name Reference
- -------- ------------ ---------
5 Opinion of Lohf, Shaiman Filed herewith
& Jacobs, P.C.
23.1 Consent of Ernst & Young, LLP Filed herewith
23.2 Consent of Lohf, Shaiman & Jacobs, P.C. Included in Exhibit 5
</TABLE>
II-2
<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 to:
(i) include any prospectus required by Section 10(a)(3) of the
Securities Act unless such information is contained in periodic reports
filed by the Company pursuant to the Exchange Act incorporated by reference
in the Registration Statement;
(ii) 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 unless such information is contained in periodic
reports filed by the Company pursuant to the Exchange Act incorporated by
reference in the Registration Statement;
(iii) include any additional or changed material information on
the plan of distribution.
(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 end 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 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.
II-3
<PAGE>
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 16/th/ day of
December, 1998.
OPTICAL SECURITY GROUP, INC.
By: /s/ Mark T. Turnage
-----------------------------------------
Mark T. Turnage, President
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:
Date: December 16, 1998 By: /s/Richard H. Bard
-----------------------------------------
Richard H. Bard, Chief Executive
Officer and Director
Date: December 16, 1998 By: /s/Gerald A. Melfi
-----------------------------------------
Gerald A. Melfi, Principal Financial Officer
Date: December 16, 1998 By: /s/Mark T. Turnage
-----------------------------------------
Mark T. Turnage,
Director and President
Date: December 16, 1998 By: /s/Martin T. Hart
-----------------------------------------
Martin T. Hart, Director
Date: December 16, 1998 By: /s/J.R. Holland, Jr.
-----------------------------------------
J.R. Holland, Jr., Director
Date: December 16, 1998 By: /s/Richard D. Lamm
-----------------------------------------
Richard D. Lamm, Director
Date: December 16, 1998 By: /s/Bruce I. Raben
-----------------------------------------
Bruce I. Raben, Director
Date: December 16, 1998 By: /s/Yash P. Gupta
-----------------------------------------
Yash P. Gupta, Director
II-4
<PAGE>
LOHF, SHAIMAN & JACOBS, P.C.
ATTORNEYS AT LAW
900 CHERRY TOWER
950 SOUTH CHERRY STREET
DENVER, COLORADO 80246-2666
Telephone: (303) 753-9000
Facsimile: (303) 753-9997
December 16, 1998
Board of Directors
Optical Security Group, Inc.
535 Sixteenth Street, Suite 920
Denver, CO 80202
Re: Registration Statement on Form S-3 (S.E.C. File No. 333-67939)
Covering the Offering of 1,445,733 Shares of Common Stock of
Optical Security Group, Inc. by Certain Selling Security Holders
----------------------------------------------------------------
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 selling security holders of the Company of 1,445,733 shares
(the "Shares") of common stock, par value $.005 per share, of the Company (the
"Common Stock"). The Shares include: (a) 615,200 shares of Common Stock
currently issued and outstanding, 509,481 shares of Common Stock issuable upon
conversion of 8% senior subordinated convertible debentures due 2005
("Debentures"), and 321,052 shares of Common Stock issuable upon exercise of
stock purchase warrants ("Warrants"). The number of shares of Common Stock
issuable upon conversion of the debentures and exercise of the warrants is
subject to certain adjustments.
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 document, the Amended and Second
Restated Articles of Incorporation of the Company (the "Articles of
Incorporation"), Bylaws of the Company, minutes of meetings of the Company's
board of directors, and certificates of certain of the Company's officers, and
performed such other investigation as we have deemed necessary. We have relied
on the authenticity of the documents we have reviewed without further
investigation.
Exhibit 5
<PAGE>
Based on the foregoing, we are of the opinion:
1. The Company has been duly incorporated and is validly existing and in good
standing under the laws of the state of Colorado.
2. The Shares will, when sold by the selling security holders as provided in
the registration statement, be legally issued, fully paid, and non-
assessable.
We hereby consent to the use of our name and the references to our firm beneath
the caption "Legal Matters" in the registration statement and to the filing of a
copy of this opinion as Exhibit 5 thereto. This opinion speaks as of the above
date, and except as provided above, is for the sole use of the Company and may
not be relied on for any purpose by any other party.
Very truly yours,
LOHF, SHAIMAN & JACOBS, P.C.
/s/ Jane M. Harm
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Optical Security
Group, Inc. for the registration of 1,445,733 shares of its Common Stock and to
the incorporation by reference therein of our report dated May 29, 1998, with
respect to the consolidated financial statements of Optical Security Group, Inc.
included in its Annual Report (Form 10-KSB) for the year ended March 31, 1998,
filed with the Securities and Exchange Commission.
Denver, Colorado
December 16/th/ 1998 Ernst & Young LLP
Exhibit 23.1
