As filed with the Securities and Exchange Commission on November 23, 1998
Registration No. 333-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
TELIDENT, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 3661 41-1533060
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification
Number)
TEN SECOND STREET N.E., SUITE 212
MINNEAPOLIS, MN 55413
(612) 623-0911
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
W. EDWARD MCCONAGHAY
TELIDENT, INC.
TEN SECOND STREET N.E., SUITE 212
MINNEAPOLIS, MN 55413
(612) 623-0911
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
BRIAN D. WENGER, ESQ.
BRETT D. ANDERSON, ESQ.
THOMAS F. STEICHEN, ESQ.
BRIGGS AND MORGAN, P.A.
2400 IDS CENTER
MINNEAPOLIS, MINNESOTA 55402
(612) 334-8400
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT AS DETERMINED BY
MARKET CONDITIONS.
---------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: |_|
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, 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: |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SHARE(1) PRICE(1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK ($0.08 PAR VALUE)...... 3,090,842 $1.047 $3,236,112 $900
================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and based upon the last reported sale price for
such stock on November 19, 1998, as reported by the Nasdaq SmallCap
Market.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a)
MAY DETERMINE.
================================================================================
<PAGE>
The information contained in this prospectus is not complete and may be amended.
These securities may not be sold until the related registration statement filed
with the SEC or any applicable state securities commission becomes effective.
This prospectus is not an offer to sell nor is it seeking an offer to buy any
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED NOVEMBER 23, 1998
PROSPECTUS
- --------------------------------------------------------------------------------
3,090,842 SHARES
TELIDENT, INC.
COMMON STOCK
- --------------------------------------------------------------------------------
The shareholders of Telident listed below are offering and selling
3,090,842 shares of common stock under this prospectus. We will not receive any
part of the proceeds from this offering.
We issued the securities covered by this prospectus to the selling
shareholders in connection with stock purchase agreements between us and the
selling shareholders. The selling shareholders will receive certain shares
covered by this prospectus upon the conversion of preferred stock and the
exercise of warrants. The precise number of shares of common stock which the
selling shareholders will receive upon conversion of preferred stock cannot be
determined at this time. Accordingly, the actual number of shares issued may be
higher or lower than the number specified above.
The selling shareholders may offer their shares through public or
private transactions, on or off the Nasdaq SmallCap Market, at prevailing market
prices or privately negotiated prices. No period of time has been fixed within
which the shares may be offered or sold.
Our common stock is quoted on the Nasdaq SmallCap Market and trades
under the ticker symbol "TLDT." On November 19, 1998, the average of the high
and low sale prices of one share of our stock on the Nasdaq SmallCap Market was
$1.06.
---------------
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
THE SHARES INVOLVE CERTAIN RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE
4.
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THE DATE OF THIS PROSPECTUS IS ____________, 1998
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to documents we file with the SEC. The information incorporated by
reference is considered to be part of this prospectus. Information that we file
later with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until the selling shareholders sell all of the
shares covered by this prospectus:
(1) Annual Report on Form 10-KSB for the year ended June 30, 1998;
(2) Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1998;
(3) Description of our common stock contained in our Registration
Statement on Form SB-2 (No. 333-04311) filed on May 22, 1996
(as amended);
(4) Current Report on Form 8-K filed on August 19, 1998; and
(5) Definitive Schedule 14A (Proxy Statement) filed on September
29, 1998.
This prospectus is part of a registration statement we filed with the
SEC. You may request a copy of the registration statement or any of the above
filings, at no cost, by writing or telephoning the Chief Executive Officer at
the following address:
Telident, Inc.
Ten Second Street N.E., Suite 212
Minneapolis, Minnesota 55413
(612) 623-0911
You should rely only on the information or representations provided in
this prospectus. We have not authorized anyone else to provide you with
different information. The selling shareholders will not make an offer of these
shares in any state where the offer is not permitted. You should not assume that
the information in this prospectus is accurate as of any date other than the
date on the front of this document.
2
<PAGE>
PROSPECTUS SUMMARY
BECAUSE THIS IS A SUMMARY, IT DOES NOT CONTAIN ALL THE INFORMATION THAT
MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY BEFORE
YOU DECIDE TO INVEST.
THE COMPANY
We design, manufacture and market hardware and software systems which
provide the exact location of a 911 telephone call to the emergency dispatcher
at the public safety answering point who receives the call. Our systems provide
information which can speed the response time to a 911 call, reduce the costs
associated with responses to incorrect locations and improve the safety of
individuals within private branch exchange telephone systems. We also
manufacture and market network hardware which provides switching, selective
routing and data interfacing capabilities to public and private telephone
networks and governmental agencies.
Our products utilize existing enhanced 911 technology which
automatically transmits the caller's telephone number and address to the nearest
emergency dispatcher. Currently over two-thirds of the telephone systems in the
United States have access to this enhanced service. However, this service
generally does not have the ability to pinpoint a caller's location within a
private branch exchange without equipment such as that which we offer. Our
patented systems create and manage a sophisticated database of information to
monitor 911 calls within private branch exchanges and transmit the precise
location, and generally the caller's name, to the nearest emergency dispatcher
through the existing enhanced service. Presently five states have adopted
legislation mandating the modification of private branch exchanges to make them
fully compatible with the existing 911 technology.
The primary markets for our systems and services include a wide variety
of private branch exchange telephone system owners such as:
* Medium to large corporations * Apartment and condominium buildings
* Colleges and universities * Nursing and retirement homes
* City, county and state governments * Hotels and motels
* Public schools * Hospitals and clinics
BUSINESS STRATEGIES
We have created a special board committee and hired an investment
banking firm to explore our strategic options, including selling the Company or
acquiring another company. We have also implemented strategies to grow our core
business. Such plans include extending our current products to include
additional features and converting our hardware and software to become
compatible with the Internet.
GENERAL
Our principal executive offices are located at Ten Second Street, N.E.,
Suite 212, Minneapolis, Minnesota 55413, and our telephone number is (612)
623-0911.
3
<PAGE>
RISK FACTORS
BEFORE YOU INVEST IN OUR COMMON STOCK, YOU SHOULD BE AWARE THAT THERE
ARE VARIOUS RISKS, INCLUDING THOSE DESCRIBED BELOW. YOU SHOULD CONSIDER
CAREFULLY THESE RISK FACTORS, AND THE OTHER INFORMATION INCLUDED IN THIS
PROSPECTUS BEFORE YOU DECIDE TO PURCHASE SHARES OF OUR COMMON.
SOME OF THE INFORMATION IN THIS DOCUMENT MAY CONTAIN FORWARD-LOOKING
STATEMENTS. YOU CAN IDENTIFY SUCH STATEMENTS BY NOTING THE USE OF
FORWARD-LOOKING TERMS SUCH AS "BELIEVES," "EXPECTS," "PLANS," "ESTIMATES" AND
OTHER SIMILAR WORDS. CERTAIN RISKS, UNCERTAINTIES OR ASSUMPTIONS THAT ARE
DIFFICULT TO PREDICT MAY AFFECT SUCH STATEMENTS. THE FOLLOWING RISK FACTORS AND
OTHER CAUTIONARY STATEMENTS COULD CAUSE OUR ACTUAL OPERATING RESULTS TO DIFFER
MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD-LOOKING STATEMENT. WE CAUTION YOU
TO KEEP IN MIND THE FOLLOWING RISK FACTORS AND OTHER CAUTIONARY STATEMENTS AND
TO REFRAIN FROM PLACING UNDUE RELIANCE ON ANY FORWARD-LOOKING STATEMENTS, WHICH
SPEAK ONLY AS OF THE DATE OF THIS DOCUMENT.
HISTORY OF OPERATING LOSSES. Except for the last two quarters, we have
historically incurred losses from operations because we have not sold enough
products to cover our expenses. We had an accumulated deficit of approximately
$13.6 million as of September 30, 1998. Net losses applicable to our common
stock for the years ended June 30, 1998 and 1997, were approximately $1.0
million and $3.8 million, respectively. We cannot assure you that we will be
able to operate profitably in the future.
NEED FOR ADDITIONAL CAPITAL. At September 30, 1998, we had access to
approximately $1.3 million in cash. We believe that the proceeds from our August
1998 private placement and the cash received from future operations will enable
us to meet our working capital requirements through December 31, 1999. After
that, we may need additional capital.
CHALLENGE TO GROWTH AND PROFITABILITY AND EFFECTS OF RECENT
RESTRUCTURING. We have focused on strengthening our market position, reducing
our costs and examining ways to grow and be profitable. Such efforts have
included reducing operating expenses, cutting our workforce and repositioning
our sales force. These steps may not lead to increased revenue, improved market
position or profitability. We also are exploring our strategic options,
including selling the Company or merging with another company. If these measures
and other reorganization efforts prove unsuccessful, we may be forced to cease
operations.
COLLECTION OF ACCOUNTS RECEIVABLE; EFFECTS OF NON-COLLECTION. As of
September 30, 1998, approximately 6% of our accounts receivable were past due at
least 180 days. If we do not collect substantially all of our accounts
receivable, our future earnings and our working capital will be adversely
affected.
DEPENDENCE ON NEW OR IMPROVED PRODUCTS; TECHNOLOGICAL CHANGES. We
participate in an industry in which significant changes and new and better
products are rapidly introduced. To keep up with the industry changes and
product development, we must make substantial investments in product and
technology developments. We may not have the funds required to make such
investments on a timely basis in the future. New products which we attempt to
develop may not be successful. Newly developed products must also successfully
enter a competitive market and meet necessary regulatory requirements.
DEPENDENCE ON KEY PERSONNEL. We believe that our development and
ability to operate profitably depends on the continued employment of our senior
management team. If the President and Chief Executive Officer or other members
of the management team do not continue to serve in their present positions, our
business and financial results could be materially adversely affected. We have
not entered into non-competition or employment agreements with our employees. We
do not maintain life insurance on any of our employees.
4
<PAGE>
COMPETITION. We face increasing competition from other companies which
market products similar to our station translation system product. We believe
that our products provide better features than those of our competitors and that
our competitors products are only compatible with equipment offered by a limited
number of telecommunication equipment manufacturers. We believe that our station
translation system product is compatible with over 90% of the equipment for
private branch exchange vendors in the United States.
Many of our potential competitors are larger and have greater resources
than we do. In addition, the technology used in the telecommunications industry
is subject to rapid change. We must be able to adapt to such changes by our
competitors or our products will become obsolete.
Our competitors continually take steps to attract customers and
increase their market share. The most heavily used techniques are advertising,
target marketing and price competition. These competitive practices, as well as
competition that may develop in the future, could diminish our ability to obtain
and keep customers.
PRODUCT ACCEPTANCE. Market acceptance of our products has been limited.
There can be no assurance that our products will gain market acceptance or
maintain their level of acceptance.
COOPERATION WITH TELEPHONE COMPANIES. The attractiveness of our
products to the public depends, in part, on the tariffs filed by local or
regional telephone companies. We depend, and our customers depend, upon the
cooperation of local telephone companies for the installation and operation of
our products. If the local tariff environment is not favorable to the Company's
products, or if telephone companies are uncooperative, our sales in that market
drop. We presently are experiencing a lack of cooperation with one telephone
company. Some telephone companies have expressed a preference to sell digital
equipment; however, our current products are analog compatible. We know that a
change to digital is inevitable and we are currently preparing for such a
change.
PRODUCT LIABILITY. We may be liable if any of our products cause
injury, illness or death. We carry product liability insurance, but this
insurance may not be adequate to cover successful product liability claims. We
are not aware of any pending material product liability claims against us.
However, a successful product liability suit could materially adversely affect
our business and financial results.
PROTECTION OF INTELLECTUAL PROPERTY. We rely upon trade secrets and
patents to protect the technology we develop. We also require our employees to
execute nondisclosure agreements to preserve our trade secrets. It is important
for our success to preserve our intellectual property. Our competitors may
develop or acquire substantially equivalent technologies or gain access to our
trade secrets. We may not be able to protect our rights in our trade secrets and
our attempts to do so may not provide us with a competitive advantage.
IMPACT OF SALE OF SECURITIES; SHARES ELIGIBLE FOR FUTURE SALE. As of
the date of this prospectus, there were 2,787,297 shares of common stock
outstanding. There were warrants and options outstanding to purchase
approximately 1,619,975 shares of common stock. In addition, there were 437,500
shares of preferred stock outstanding which are convertible into an
indeterminate number of shares of common stock. The market price of the common
stock could drop as a result of a large number of shares of common stock being
sold in the market following this registration, the exercise of warrants and
options, the conversion of convertible securities, or the perception that such
sales could occur. These factors also could make it more difficult for us to
raise funds through future equity offerings. In general, the shares sold
pursuant to this prospectus will be freely transferable without restrictions or
further registration under the Securities Act.
5
<PAGE>
LIMITATIONS ON BROKER-DEALER SALES OF COMMON STOCK; APPLICABILITY OF
"PENNY STOCK" RULES; NO ASSURANCE OF CONTINUED QUOTATION ON THE NASDAQ STOCK
MARKET. Our shares are quoted on the Nasdaq SmallCap Market. The Nasdaq SmallCap
Market requires that listed companies maintain certain requirements, including
total assets of at least $2.0 million, capital and surplus of at least $1.0
million, minimum bid price per share of at least $1.00 and total market value of
at least $1.0 million. As of September 30, 1998, our shareholders' equity was
$2,198,690. On November 6, 1998, the average of the high and low sale prices of
one share of our stock was $1.75 and our total market value was approximately
$4.9 million. If we are unable to maintain the requirements for continued
listing on the Nasdaq SmallCap Market, our shares will no longer be traded in
that market. There can be no assurance that our common stock will continue to be
listed on the Nasdaq SmallCap Market.
If our shares do not continue to be listed on the Nasdaq SmallCap
Market, trading, if any, would be conducted in the over-the-counter market in
the so-called "pink sheets" or the OTC Bulletin Board, which was established for
securities that do not meet the Nasdaq SmallCap Market listing requirements.
Consequently, selling our shares would be more difficult because smaller
quantities of shares could be bought and sold, transactions could be delayed,
and security analysts' and news media's coverage of Telident may be reduced.
These factors could result in lower prices and larger spreads in the bid and ask
prices for our shares.
If our shares are not listed on the Nasdaq SmallCap Market, they may
become subject to an Exchange Act rule which imposes additional sales practice
requirements on broker-dealers that sell low-priced securities to persons other
than established customers and institutional accredited investors. For
transactions covered by this rule, a broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
consent to the transaction prior to sale. Consequently, this rule may affect the
ability of holders to sell our shares in the secondary market.
The SEC's regulations define a "penny stock" to be any equity security
that has a market price less than $5.00 per share or with an exercise price of
less than $5.00 per share, subject to certain exceptions. The penny stock
restrictions will not apply if our shares continue to be listed on the Nasdaq
SmallCap Market and we provide certain price and volume information on a current
and continuing basis, or meet required minimum net tangible assets or average
revenue criteria. We cannot assure you that our shares will continue to qualify
for exemption from these restrictions. If our shares were subject to the penny
stock rules, the market liquidity for the shares would be adversely affected.
POSSIBLE DILUTIVE EFFECT OF OUTSTANDING OPTIONS, WARRANTS, CONVERTIBLE
DEBENTURES, AND PREFERRED STOCK. We have reserved approximately 2,130,000 shares
of our common stock for issuance upon the exercise of outstanding derivative
securities. If the common stock is trading at a higher price than the exercise
price of the derivative securities when they are exercised, such exercise will
have a dilutive effect on our shareholders and may cause the price of our common
stock to decrease.
CONVERSION OF PREFERRED STOCK. Our Articles of Incorporation authorize
the issuance of up to 2,500,000 shares of preferred stock. The board may
establish the preferences and rights of any preferred stock issued. The issuance
of preferred stock could have the effect of delaying or preventing someone from
taking control of us, even if a change in control were in the shareholders' best
interests. Issuance of preferred stock with rights superior to the common stock
could result in a reduction in the value of the common stock. As of the date of
this prospectus, there were 37,500 shares of Series I Convertible Preferred
Stock and 400,000 shares of Series III Convertible Preferred Stock issued and
outstanding. All preferred stock has the same voting rights as the common stock.
6
<PAGE>
CONTROL BY MANAGEMENT. Our current officers and directors beneficially
own approximately 57.9% of our common stock. Accordingly, such persons exert
substantial influence over our business and affairs. Such persons may also
control the outcome of shareholder approvals of business acquisitions, mergers
and combinations and other actions.
NO DIVIDENDS. We do not anticipate that we will pay any dividends on
our common stock. We plan to retain any earnings to develop and expand our
business.
MATTERS RELATING TO YEAR 2000. Many currently installed computer
systems and software products are coded to accept only two digit entries in the
date code field. These date code fields will need to accept four digit entries
to distinguish 21st century dates from 20th century dates. As a result, in just
over one year, computer systems and software used by many companies may need to
be upgraded to comply with such "Year 2000" requirements. We are presently
assessing our Year 2000 readiness for its operations, focusing on critical
operating and applications systems, particularly the Year 2000 compliance of:
(1) our hardware and software products and (2) our key software/hardware
vendors.
Although we believe that our products are Year 2000 compliant, we
believe that the purchasing patterns of customers and potential customers may be
affected as companies expend a significant portion of their limited information
technology resources to correct or patch their current software systems for Year
2000 compliance. These expenditures may result in reduced funds available to
purchase hardware and software products such as those which we offer. This could
result in a material adverse effect on our business, operating results and
financial condition.
We are currently performing a compliance survey of our critical
vendors, although we presently have little information concerning their Year
2000 compliance status. In the event that any such key suppliers do not achieve
Year 2000 compliance in a timely manner, or at all, our business or operations
could be adversely affected.
As a part of our Year 2000 assessment, we intend to demonstrate our
Year 2000 readiness by simulating the Year 2000 in an orchestrated manner for
our key infrastructure components, critical business processes and key
applications systems. We expect that minor Year 2000 compliance issues will be
identified as an outcome of the Year 2000 simulation test and intend to address
these compliance issues no later than the second quarter of calendar 1999. We
recognize the need for Year 2000 contingency plans in the event that remediation
is not fully successful or that the remediation efforts of our vendors,
suppliers and governmental/regulatory agencies are not timely completed. We
intend to address contingency planning during calendar 1999. We intend to
complete our Year 2000 remediation efforts primarily with in-house resources,
but will utilize consultants should the need arise. We have spent an estimated
$20,000 to date, and anticipate spending an additional $15,000 as part of our
Year 2000 assessment and remediation.
We recognize that issues related to Year 2000 constitute a material
known uncertainty. We also recognize the importance of ensuring that our
operations will not be adversely affected by Year 2000 issues. We believe that
the processes described above will be effective to manage the risks associated
with the problem. However, there can be no assurance that the processes can be
completed on the timetable described above or that remediation will be fully
effective. The failure to identify and remediate Year 2000 issues, or the
failure of customers, key vendors or other critical third parties who do
business with us to timely remediate their Year 2000 issues could cause system
failures or errors, business interruptions and, in a worst case scenario, the
inability to engage in normal business practices for an unknown length of time.
The effect on our operations, income and financial condition could be materially
adverse.
7
<PAGE>
SELLING SHAREHOLDERS
Under stock purchase agreements between us and the selling
shareholders, we agreed to register (i) shares of common stock held by the
selling shareholders, (ii) shares to be issued to the selling shareholders upon
the conversion of preferred stock, and (iii) shares to be issued to the selling
shareholders upon the exercise of warrants. We also agreed to use our best
efforts to keep the registration statement effective for three years, until the
selling shareholders no longer hold or have the right to acquire the shares, or
until all of the shares may be sold pursuant to SEC rules without volume
restrictions, whichever comes first. Our registration of the shares does not
necessarily mean that the selling shareholders will sell all or any of the
shares.
The following table presents certain information regarding the selling
shareholders. The shares listed below represent the shares that each selling
shareholder currently owns, or which each selling shareholder may own, upon the
conversion of preferred stock or the exercise of warrants.
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES SHARES OUTSTANDING
BENEFICIALLY BENEFICIALLY SHARES
OWNED SHARES OWNED UPON BENEFICIALLY
PRIOR TO OFFERED COMPLETION OF OWNED UPON
OFFERING HEREBY THE OFFERING COMPLETION OF
SELLING SHAREHOLDER (1) (2) (3) THE OFFERING(4)
- ----------------------------------------------- ------------ ------- ------------- ---------------
<S> <C> <C> <C> <C>
FAMCO III, Limited Liability Company(5) 2,253,967 2,253,967 0 0
Interchange Tower, Suite 850
600 S. Highway 169
Minneapolis, MN 55426
Special Situations Private Equity Fund, L.P.(6) 836,875 836,875 0 0
153 East 53rd Street
New York, NY 10022
</TABLE>
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(1) The securities "beneficially owned" by a person are determined in
accordance with the SEC's definition of "beneficial ownership" and,
accordingly, may include securities owned by or for, among others, the
spouse, children or certain other relatives of such person, as well as
other securities over which the person has or shares voting or
investment power or securities which the person has the right to
acquire within 60 days of the date of this prospectus.
(2) The actual number of shares issuable upon conversion of shares of
Series III Convertible Preferred Stock held by the selling shareholders
is subject to adjustment and could be materially more or less than such
estimated amount depending on factors that cannot be predicted at this
time, such as the future market price of the common stock. We have
assumed that each selling shareholder will be able to convert its
Series III Convertible Preferred Stock into 636,875 shares of common
stock.
(3) Assumes that all of the shares held by the selling shareholders and
being offered under this prospectus are sold, and that the selling
shareholders acquire no additional shares of common stock before the
completion of this offering.
(4) Percentage of beneficial ownership is based on 2,787,297 shares of
common stock outstanding as of the date of this prospectus. Shares
issuable pursuant to the conversion of Series III Convertible Preferred
Stock and the exercise of warrants are deemed outstanding for computing
the percentage of the person holding such securities but are not deemed
outstanding for computing the percentage of any other person. Certain
warrants reported herein contain antidilution rights which may be
triggered upon exercise.
(5) Includes 636,875 shares purchasable pursuant to the conversion of
Series III Convertible Preferred Stock, 564,907 shares purchasable
pursuant to the exercise of warrants and 1,052,185 shares of
8
<PAGE>
common stock. The number of shares purchasable pursuant to one of
FAMCO's warrants has been adjusted to reflect previously triggered
antidilution rights.
(6) Includes 636,875 shares purchasable pursuant to the conversion of
Series III Convertible Preferred Stock and 200,000 shares purchasable
pursuant to the exercise of warrants.
USE OF PROCEEDS
All of the net proceeds from the sale of the shares will go to the
shareholders who offer and sell their shares. Accordingly, we will not receive
any proceeds from the sale of the shares.
PLAN OF DISTRIBUTION
The selling shareholders may offer their shares at various times in one
or more of the following transactions:
* on the Nasdaq SmallCap Market
* in transactions other than on such market
* in privately negotiated transactions, or
* in a combination of any of the above transactions
The selling shareholders may sell their shares at market prices
prevailing at the time of sale, at prices related to such prices, or at
negotiated prices. We are indemnifying the selling shareholders against certain
liabilities, including liabilities under the Securities Act.
The selling shareholders may use broker-dealers to sell their shares.
If this happens, broker-dealers will either receive discounts or commissions
from the selling shareholders, or they will receive commissions from purchasers
of shares for whom they acted as agents.
The selling shareholders and any persons who participate in the sale of
the shares from time to time, may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act. Any commissions paid or
discounts or concessions allowed to any such persons and any profits received on
resale of the shares, may be deemed to be underwriting compensation under the
Securities Act.
In order to comply with the securities laws of certain states, if
applicable, the shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available.
LEGAL MATTERS
For the purposes of this offering, Briggs and Morgan, Professional
Association, is giving its opinion on the validity of the shares and certain
legal matters pertaining to the Company.
EXPERTS
The financial statements incorporated in this prospectus by reference
from the Company's Annual Report on Form 10-KSB for the year ended June 30, 1998
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
9
<PAGE>
================================================================================
YOU SHOULD RELY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT
TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN
THIS DOCUMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF
THIS DOCUMENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT SEEKING AN
OFFER TO BUY ANY SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
-----------------
TABLE OF CONTENTS
-----------------
Page
----
Where You Can Find More Information......................................... 2
Prospectus Summary.......................................................... 3
Risk Factors................................................................ 4
Selling Shareholders........................................................ 8
Use of Proceeds............................................................. 9
Plan of Distribution........................................................ 9
Legal Matters............................................................... 9
Experts..................................................................... 9
================================================================================
3,090,842 SHARES
TELIDENT, INC.
COMMON STOCK
------------
PROSPECTUS
------------
_____________, 1998
================================================================================
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses payable by the
Company in connection with the sale and distribution of the Shares being
registered. All amounts shown are estimates, except the registration fee.
SEC registration fee........................................ $ 900
Legal fees and expenses..................................... 7,500
Accounting fees and expenses................................ 5,000
Blue sky and related fees and expenses...................... 1,000
Miscellaneous (including listing fees, if applicable)....... 600
--------
Total.................................................. $ 15,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Minnesota Statutes Section 302A.521 provides that a Minnesota business
corporation shall indemnify any director, officer, employee or agent of a
corporation made or threatened to be made a party to a proceeding, by reason of
the former or present official capacity (as defined) of the person, against
judgments, penalties, fines, settlements and reasonable expenses incurred by the
person in connection with the proceeding if certain statutory standards are met.
"Proceeding" means a threatened, pending or completed civil, criminal,
administrative, arbitration or investigative proceeding, including one by or in
the right of a corporation. Section 302A.521 contains detailed terms regarding
such right of indemnification and reference is made thereto for a complete
statement of such indemnification rights.
Article VII of the Company's Restated Articles of Incorporation
eliminates certain personal liability of the directors of the Company for
monetary damages for certain breaches of the directors' fiduciary duties.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibit
Number Description
- ------ -----------
5.1 Opinion of Briggs and Morgan, Professional Association.
10.1 Stock Purchase Agreement dated April 13, 1998, between the
Company and FAMCO III Limited Liability Company and Special
Situations Private Equity Fund, L.P. (incorporated by reference
to the Registrant's Statement on Form 10-K filed with the
Securities and Exchange Commission on August 20, 1998, File No.
000-20887).
23.1 Consent of Briggs and Morgan, Professional Association (included
in Exhibit 5.1).
23.2 Independent Auditors' Consent.
24.1 Power of Attorney (included on signature page to the Registration
Statement).
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
and
II-1
<PAGE>
(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 the undertakings set forth in paragraphs (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(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.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the Registrant pursuant to the provisions summarized in Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel, the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
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 of Minneapolis and State of Minnesota, on November 23,
1998.
TELIDENT, INC.
By /s/ W. Edward McConaghay
--------------------------------------
W. Edward McConaghay
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints W. Edward McConaghay as his true and lawful
attorney-in-fact and agent, with full powers of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to this registration
statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the SEC, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons on the dates and in the
capacities indicated.
Signature Title Date
--------- ----- ----
/s/ W. Edward McConaghay President, Chief Executive November 23, 1998
- --------------------------- Officer and Director (Principal
W. Edward McConaghay Executive Officer)
/s/ W. Edward McConaghay Treasurer (Principal Financial November 23, 1998
- --------------------------- Officer and Principal Accounting
W. Edward McConaghay Officer)
/s/ Mark W. Sheffert Chairman of the Board and November 23, 1998
- --------------------------- Director
Mark W. Sheffert
/s/ Scott R. Anderson Director November 23, 1998
- ---------------------------
Scott R. Anderson
/s/ Willis K. Drake Director November 23, 1998
- ---------------------------
Willis K. Drake
<PAGE>
Signature Title Date
--------- ----- ----
/s/ David F. Durenberger Director November 23, 1998
- ---------------------------
David F.Durenberger
/s/ John D. Wunsch Director November 23, 1998
- ---------------------------
John D. Wunsch
/s/ Mack V. Traynor, III Director November 23, 1998
- ---------------------------
Mack V. Traynor, III
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
5.1 Opinion of Briggs and Morgan, Professional Association.
10.1 Stock Purchase Agreement dated April 13, 1998, between the
Company and FAMCO III Limited Liability Company and Special
Situations Private Equity Fund, L.P. (incorporated by reference
to the Registrant's Statement on Form 10-K filed with the
Securities and Exchange Commission on August 20, 1998, File No.
000-20887).
23.1 Consent of Briggs and Morgan, Professional Association (included
in Exhibit 5.1).
23.2 Independent Auditors' Consent.
24.1 Power of Attorney (included on signature page to the Registration
Statement).
EXHIBIT 5.1
November 23, 1998
Telident, Inc.
Ten Second Street N.E., Suite 212
Minneapolis, MN 55413
Gentlemen:
We are counsel to Telident, Inc., a Minnesota corporation, in
connection with its filing of a registration statement on Form S-3, under the
Securities Act, relating to the proposed sale by selling shareholders of
3,090,842 shares of common stock of the Company.
We have examined the registration statement and those documents,
corporate records, and other instruments we deemed relevant as a basis for the
opinion herein expressed.
Based on the foregoing, it is our opinion that when the registration
statement shall have been declared effective by order of the SEC, and the shares
have been sold as contemplated by the registration statement, the shares will be
legally and validly issued, fully-paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
registration statement and to the reference to our firm under the caption "Legal
Matters" in the prospectus included in such registration statement.
Very truly yours,
BRIGGS AND MORGAN,
Professional Association
By /s/ Brian D. Wenger
-------------------------------------
Brian D. Wenger
EXHIBIT 23.2
Independent Auditors' Consent
We consent to the incorporation by reference in this Registration Statement of
Telident, Inc. on Form S-3 of our report dated July 31, 1998, except as to Note
7 which is dated August 18, 1998, appearing in the Annual Report on Form 10-KSB
of Telident, Inc. for the year ended June 30, 1998 and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
/s/ Deloitte & Touche LLP
- -----------------------------
DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
November 20, 1998
