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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 31,1999
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Optical Security Group, Inc.
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(Exact name of registrant as specified in its charter)
Colorado 0-17531 84-1094032
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(State of other (Commission File No.) (IRS Employer
jurisdiction of Identification No)
Incorporation)
535 16th Street, Suite 920, Denver, Colorado 80202
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(Address of principal executive offices)
Registrant's Telephone number, including area code (303) 534-4500
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(Former name or former address, if changed since last report)
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ITEM 5 - OTHER EVENTS
On March 31, 1999 (the "Closing"), Optical Security Group, Inc. (the
"Registrant") disposed of substantially all of the assets of its subsidiary,
Dimensional Printing Industries, Inc. ("DPI"), to Optipak, Inc., a Colorado
corporation ("Buyer"). DPI was engaged in the design manufacture, marketing,
sale and distribution of commercial lenticular products in the United States and
elsewhere. The Registrant had previously announced on April 1, 1998, that it
intended to sell, spin off, or otherwise dispose of DPI in order to concentrate
on security product sales, its core business. Unirock Management Corporation
assisted the Registrant with the transaction and opined as to the fairness of
the transaction to the Registrant's board of directors.
The purchase price for the transferred assets was $900,000.00, the
estimated net book value of the assets, less the face amount of the liabilities
assumed by the Buyer. The purchase price was paid in cash at Closing, subject
to adjustment following delivery of DPI's final balance sheet. Additionally, in
the event of a sale of the Buyer, or a merger or a similar transaction wherein
the Buyer is not the surviving entity, during the period ending seven years
following the Closing, DPI is entitled to receive up to 19% of the net
consideration received by the Buyer in connection with such transaction. Such
percentage amount is subject to reduction based on changes in Buyer's
capitalization.
The Buyer is also required to pay DPI a royalty on products sold by the
Buyer for a period of five years following the Closing. The minimum royalty
amount is $250,000.00 per year. Upon the occurrence of certain acquisition
transactions involving DPI or the Registrant, the Buyer has the right to buy out
the royalty obligation by paying DPI the minimum royalty amount due for the
balance of the royalty period.
DPI and the Registrant are required to provide to the Buyer certain
transitional management services for a 60-day period following the closing.
This period may be extended at the Buyer's request with its agreement to pay for
services during the extended period.
Mr. Richard H. Bard, a director, chief executive officer, and shareholder
of the Registrant, is an officer, director and majority shareholder of the
Buyer.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OPTICAL SECURITY GROUP, INC.
Date: April 15, 1999 By: /s/ Mark T. Turnage
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Mark T. Turnage, President
Date: April 15, 1999 By: /s/ Gerald A. Melfi
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Gerald A. Melfi, Principal
Financial Officer
