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SECURITY ASSOCIATES INTERNATIONAL, INC.
______________________
Supplement No. 1 Dated November 13, 1997
To Prospectus Dated October 20, 1997
On October 20, 1997, the Company commenced its offering of an aggregate of
2,000,000 shares of common stock, $.001 par value per share ("Common Stock")
and warrants to purchase up to 2,000,000 shares of Common Stock (the
"Warrants"). As of November 13, 1997, no shares of Common Stock and no
Warrants have been issued. This Supplement No. 1 expands upon, amends,
modifies and supersedes certain information contained in the Prospectus and
must be read in conjunction with the Prospectus. Unless otherwise defined,
capitalized terms used herein shall have the same meanings as in the
Prospectus.
1. The description of the Warrants on page 44 of the Prospectus is hereby
revised in its entirety as follows:
"The Company may issue an aggregate of 2,000,000 Warrants. Each
Warrant entitles the holder to purchase one share of Common Stock from the
Company at an exercise price of $6.00 per share payable in cash upon exercise
of the Warrant. The currently exercisable portion of the Warrants is
redeemable at the option of the Company after no less than two years from the
date of issuance at a redemption price of $.10 per share, provided the market
price of the Common Stock equals or exceeds 150% of the exercise price for a
period of 15 out of 20 consecutive trading days ending within 30 days of the
date on which the notice of redemption is given. The exercise price will be
adjusted in the event of share splits, share consolidations and certain rights
offerings and share dividends involving Common Stock. Except as otherwise
contractually restricted under the Dealer Program, the Warrants may be
exercised at any time after issuance until six years after issuance. Warrants
not exercised by that time will expire. The Warrants do not confer upon the
holder any voting rights, preemptive rights or any other rights as a Company
shareholder."
All other references in the Prospectus to the Warrants are hereby amended to
clarify that the exercise of the Warrants will require a cash outlay of $6.00
per share.
2. A new section entitled "Use of the Proceeds" from the exercise of the
Warrants is hereby included in the Prospectus as follows:
"The Company expects that any proceeds to the Company from the sale of
shares of Common Stock upon the exercise of the Warrants offered hereby at an
exercise price of $6.00 per share (payable in cash upon exercise of the
Warrants) will be used for general corporate purposes, including working
capital. Pending such use, the net proceeds from the exercise of the Warrants
will be deposited in the Company's bank accounts or invested in short-term,
investment grade, interest-bearing securities. The foregoing notwithstanding,
there can be no assurance that any of the Warrants will be issued or if issued
exercised. "
"The Company will not receive any proceeds from the issuance of any
shares of Common Stock or Warrants issued to Dealers in the Dealer Program
(except those issued upon exercise of the Warrants as described below) or from
the sale of Common Stock by the Selling Stockholders. See "Principal and
Selling Stockholders."
3. Additional sections under the "Risk Factors" section are hereby included in
the Prospectus as follows:
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(i) "Likelihood of Immediate and Substantial Dilution upon Exercise of
the Warrants. Although the Warrants issued to Dealers in the Dealer Program
cannot be exercised for a period of one year after issuance, and even then only
that portion of the Warrants that have vested may be exercised, the exercise
price of the Warrants (i.e., $6.00 per share) is substantially higher than the
present net tangible book value per share of the Common Stock. Depending upon
the net tangible book value per share of Common Stock at the time of the
exercise of the Warrants, Warrantholders who exercise their Warrants may incur
substantial dilution. Because the number of Warrants that will be issued in
this offering, the number of Warrants that will be exercised and the dates they
will be exercised, and the net tangible book value per share of Common Stock on
the date of any exercise are impossible to determine, the exact amount of
dilution, if any, that will be experienced by any exercising Warrantholder
cannot be predicted at this time. To the extent outstanding options to
purchase the Company's Common Stock are exercised, there will be further
dilution."
(ii) "Current Prospectus and State Registration Required to Exercise
Warrants. Holders of Warrants will only be able to exercise the Warrants if
(i) a current prospectus under the Securities Act of 1933, as amended (the
"Securities Act") relating to the securities underlying the Warrants is then in
effect and (ii) such securities are qualified for sale or exempt from
qualification under the applicable securities laws of the states in which the
various holders of Warrants reside. Although the Company will use its best
efforts to maintain the effectiveness of a current prospectus covering the
securities underlying the Warrants, there can be no assurance that the Company
will be able to do so. There also can be no assurance that exemptions from the
registration or qualification requirements of those states in which the
Company's securities are not currently registered or qualified will be
available at the time a Warrant holder wishes to exercise his or her Warrant.
The value of the Warrants may be greatly reduced if a current prospectus,
covering the securities issuable upon the exercise of the Warrants, is not kept
effective or if such securities are not qualified, or exempt from
qualification, in the states in which the holders of Warrants reside.
4. An additional paragraph is hereby added to the section entitled "Certain
Transactions" in its entirety as follows:
"The Company has agreed that for a one year period following the
commencement of the offering, it will not issue options or warrants to
officers, directors, 5% shareholders, employees or affiliates with an exercise
price of less than 85% of the fair market value of the Common Stock of the date
of grant. Options or warrants issued on a pro rata basis to all shareholders
are excluded from this restriction."
5. An additional sentence is hereby added to the Cover Page before the sentence
"See 'Risk Factors' beginning......... investors" which is hereby revised in
its entirety as follows:
"THESE ARE SPECULATIVE SECURITIES.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR INFORMATION
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS."
