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As filed with the Securities and Exchange Commission on August 9, 1996
Registration No: 33-96848
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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JMAR INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE 3845 68-0131180
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION) CLASSIFICATION CODE NUMBER)
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3956 Sorrento Valley Blvd.
San Diego, California 92121
(619) 535-1706
(Address including zip code and telephone number, including area code of
Registrant's principal executive offices and principal place of business)
Dennis E. Valentine
Chief Financial Officer
3956 Sorrento Valley Blvd.
San Diego, CA 92121
(619) 535-1706
(Name, address, including zip code and
telephone number, including area code, of agent for service)
Copies to
Joseph G. Martinez, Esq.
Parker, Milliken, Clark, O'Hara & Samuelian
A Professional Corporation
333 S. Hope Street, Twenty Seventh Floor
Los Angeles, California 90071-1488
(213) 683-6500
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Approximate date of commencement of proposed sale to the public: As soon as
practicable 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
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: /X/
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PROSPECTUS
JMAR INDUSTRIES, INC.
2,521,458 Shares
of Common Stock
This Prospectus relates to the sale by certain persons (the "Selling
Stockholders") of 2,521,458 shares of common stock, $.01 par value per share
(the "Common Stock"), of JMAR Industries, Inc., a Delaware corporation (the
"Company"). See "Selling Stockholders". The Company is not offering any shares
hereunder and will not receive any of the proceeds from the sale of shares by
the Selling Stockholders. Certain of the shares offered hereby are issuable
under outstanding warrants and options held by the Selling Stockholders. The
Company will receive proceeds represented by the exercise price of such warrants
and options if exercised by the holders thereof. See "Prospectus Summary -- The
Offering." It is anticipated that the Selling Stockholders will offer such
shares from time to time in the over-the-counter market at the then prevailing
market prices and terms or in negotiated transactions and without the payment of
any underwriting discounts or commissions, except for usual and customary
selling commissions paid to brokers or dealers. The Selling Stockholders also
may sell such shares from time to time pursuant to Rule 144 under the Securities
Act of 1933, as amended (the "Act").
The Common Stock is traded on the National Association of Securities
Dealers Automated Quotation System National Market System ("NASDAQ - NMS") under
the symbol "JMAR". The closing price for the Common Stock as reported by NASDAQ
was $2.69 on August 8, 1996.
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK
AND SHOULD NOT BE PURCHASED BY ANYONE WHO CANNOT AFFORD THE LOSS OF HIS ENTIRE
INVESTMENT. SEE "RISK FACTORS" ON PAGES 6-10 OF THIS PROSPECTUS FOR A
DESCRIPTION OF SEVERAL RISK FACTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Company has agreed to bear all of the expenses (other than selling
commissions and fees and expenses of counsel or other advisors to certain of the
Selling Stockholders) in connection with the registration and sale of the Common
Stock being offered by the Selling Stockholders. See "Selling Stockholders" and
"Plan of Distribution." The Company has also agreed to indemnify certain of the
Selling Stockholders against certain liabilities, including liabilities under
the Securities Act of 1933. The total expenses to be paid by the Company for
this offering are estimated at $30,000.
The date of this Prospectus is _________________________, 1996
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance therewith
files regular reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at the following
regional offices: Los Angeles Regional Office, 5757 Wilshire Blvd., Suite 500
East, Los Angeles, California 90036-3648; Chicago Regional Office, Everett
McKinley Dirksen Building, 219 S. Dearborn Street, Room 1704, Chicago, Illinois
60604; New York Regional Office, 7 World Trade Center, New York, New York 10048.
Copies of such material may also be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
The Company's Common Stock, Class A Warrants and Units are quoted on
the NASDAQ System. Any such reports, proxy statements or other information filed
by the Company can also be inspected at the offices of the NASDAQ, 1735 K
Street, N.W., Washington, D.C. 20006-1500.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents (or specified portions thereof) filed with the
Commission by the Company are incorporated by reference herein as of their
respective dates and are made a part hereof:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995;
(b) The Company's Quarterly Report on Form 10-Q and Form 10-Q/A
for the quarter ended March 31, 1996;
(c) The description of Common Stock contained in "Description of
Securities" in the Company's Registration Statement on Form
8-A, dated April 3, 1990, as amended on a Form 8, dated April
9, 1990, filed pursuant to Section 12(b) of the Exchange Act;
(d) The Company's Form 8-K, filed December 27, 1994, pursuant to
Section 13(a) under the Securities Act of 1934 describing the
sale of Surgilase, Inc. and the Company's Form 8-K/A, filed
January 10, 1995 related thereto.
(e) The Company's Form 8-K, filed May 31, 1996, pursuant to
Section 13(a) under the Securities Act of 1934 describing the
acquisition of approximately 94 percent of the outstanding
common stock of California ASIC Technical Services, Inc. and
the Company's Form 8-K/A, filed August 6, 1996 related
thereto.
(f) The Company's Form 10-C filed on May 31, 1996.
All documents filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the offering of the securities
hereby shall be deemed to be incorporated herein by reference and shall be a
part hereof from the date of the filing of such documents.
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Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is incorporated 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.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon written
or oral request, a copy of any or all of the documents that have been
incorporated herein by reference, except for the exhibits to such documents
which are not specifically incorporated herein by reference. Requests should be
directed to Corporate Secretary, JMAR Industries, Inc., 3956 Sorrento Valley
Blvd., San Diego, California; (619) 535-1706.
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PROSPECTUS SUMMARY
The following is a summary of certain information contained in this
Prospectus and is qualified in its entirety by the more detailed information
included herein and incorporated herein by reference.
THE COMPANY
JMAR Industries, Inc. (the "Company" or "JMAR") designs, manufactures
and markets a broad line of specialty equipment for the microelectronics
industry. The Company targets semiconductor, disk drive and medical implant
manufacturers with its precision machinery that measures, positions, welds,
trims, cuts, and repairs microelectronic parts during critical phases of the
production process. JMAR also is developing advanced manufacturing systems,
including X-ray and ultra-violet (UV) sources for lithography imaging systems
that have the potential to produce significantly more powerful semiconductors
than can now be manufactured by conventional means.
On May 23, 1996, the Company acquired approximately 94 percent of the
outstanding common stock of California ASIC Technical Services and renamed it
California ASIC ("Cal ASIC"). Cal ASIC is engaged in the design, fabrication,
assembly and testing of application specific integrated circuits for the
electronics industry and will be operated as a division of the Company.
Up until the time of the acquisition of Cal ASIC, the Company
consisted of two divisions: Pacific Precision Laboratories ("PPL"), its
microelectronics manufacturing equipment division located in Chatsworth,
California (Los Angeles County) and JMAR Technology Co. ("JTC"), its R&D Center,
located in the Sorrento Valley area of San Diego (co-located with JMAR's
corporate office). With PPL's manufacturing and product engineering capabilities
the Company believes that JMAR is well positioned to efficiently transition
JTC's new high tech products to the commercial marketplace.
JMAR was founded in 1987 and went public in 1990. Its common shares and
warrants to purchase common shares trade on the NASDAQ National Market System
under the symbols: JMAR and JMARW, respectively. The Company maintains its
executive offices at 3956 Sorrento Valley Boulevard, San Diego, California 92121
and its telephone number is (619) 535-1706. Unless otherwise indicated, all
references to the Company include the Company and its subsidiaries.
RECENT DEVELOPMENTS
During May, 1996, the Company received an additional $1.2 million of
contract funding from the U.S. Army Research Laboratory, sponsored by the
Defense Advanced Research Projects Agency ("DARPA") to continue development of
the Company's Picosecond X-ray Lithography System ("PXS") for advanced
semiconductor manufacturing. The additional funding increases the total amount
of the Contract to approximately $5.4 million.
In addition, the U.S. Army Research Laboratory and DARPA jointly agreed
to deliver to the Company a government-owned X-ray Stepper, formerly located at
Bell Laboratories. The Stepper, developed over several years at an estimated
cost of in excess of $25 million, will be integrated with the PXS to provide
the foundation for a leading-edge X-ray lithography workstation. The Company
received the Stepper in July, 1996.
Cal ASIC recently signed a manufacturing and sales agreement with San
Jose, California-based IMP Incorporated ("IMP") to share CMOS gate array design
and manufacturing resources. Under the agreement, IMP will sell gate array base
wafers to Cal ASIC. Using its fast-turn direct write-on-wafer technology, Cal
ASIC will produce and sell completed gate arrays to IMP customers for their
prototype and initial production quantities. For high-volume production of
proven designs, Cal ASIC will transfer the customer's database to IMP to
manufacture using conventional techniques and will receive fees from IMP on the
sales of those products.
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THE OFFERING
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Securities Offered (1)................................................. 2,521,458 Shares of Common Stock, $.01
par value.
Common Stock outstanding prior to Offering (2)......................... 16,190,639 Shares
Common Stock outstanding after the Offering assuming issuance of all
2,144,953 shares underlying the warrants and options
described in footnote (1).............................................. 18,335,592 Shares
Risk Factors........................................................... The securities offered hereby involve
a high degree of risk. See "Risk
Factors" commencing on page 6.
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(1) Includes 376,505 shares which are currently outstanding and 2,144,953
shares which are not outstanding and which are issuable upon exercise of
outstanding warrants and options.
(2) Does not include (i) an aggregate of 540,768 shares of Common Stock
reserved for issuance upon exercise of options available for grant under
the Company's 1988 and 1991 Stock Option Plans, pursuant to which 536,310
options are outstanding; (ii) 3,423,950 shares of Common Stock reserved for
issuance upon exercise of various other stock options and warrants; (iii)
806,637 shares of Common Stock reserved for issuance upon exercise of
warrants available for grant pursuant to the Management Anti-Dilution
Incentive Plan, pursuant to which 455,230 warrants are outstanding; (iv) an
aggregate of 470,588 shares of Common Stock reserved for issuance upon
exercise of underwriters' warrants issued to the underwriters in a 1993
public offering and upon exercise of Class B Warrants contained in the
underwriters' units underlying the underwriters' warrants; (v) 2,705,882
shares of Common Stock reserved for issuance upon exercise of Class A
Warrants issued in the 1993 public offering; (vi) 426,667 shares of Common
Stock reserved for issuance upon conversion of convertible notes; and (vii)
450,000 shares of Common Stock reserved for issuance upon exercise of
warrants available for grant pursuant to an incentive plan established for
the benefit of key employees of Pacific Precision, pursuant to which
200,000 warrants are outstanding. See "Description of Securities."
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RISK FACTORS
THIS OFFERING INVOLVES SUBSTANTIAL INVESTMENT RISK AND SHARES SHOULD BE
PURCHASED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. IN
EVALUATING AN INVESTMENT IN THE COMPANY AND ITS BUSINESS, PROSPECTIVE INVESTORS
SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AS WELL AS OTHER
INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS.
1. SIGNIFICANT LOSSES. The Company had revenues, excluding discontinued
operations, of $2,126,342, $5,241,596, $9,148,925, $10,821,025, $12,210,490 and
$2,457,395 for the years ended December 31, 1991, 1992, 1993, 1994 and 1995 and
for the three months ended March 31, 1996, respectively, and incurred net losses
of $2,000,368, $4,923,602, $12,975,637 and $4,665,654 for the years ended
December 31, 1991, 1992, 1993 and 1994, respectively, a net profit of $76,265
for the year ended December 31, 1995, and a net loss of $356,113 for the three
months ended March 31, 1996. There can be no assurance that the Company will
achieve significant revenues or profitable operations in the future.
The Company completed a restructuring in 1994 in which it spun-off a
division, which has been classified as a "discontinued" operation, plus it sold
several other unprofitable product lines, which it has classified as
"terminated" operations, the results of which are included in the above results.
Excluding both "discontinued" and "terminated" operations the Company's revenues
for the fiscal years 1991 through 1995 were approximately $713,000, $2,328,000,
$3,621,000, $7,782,000 and $12,210,490, respectively.
2. SIGNIFICANT CASH REQUIREMENTS. The Company's cash requirements have
been and will continue to be significant. The Company's negative cash flow from
operations for the years ended December 31, 1992, 1993, 1994 and 1995 and the
three months ended March 31, 1996 was $4,238,014, $7,341,389, $3,065,334,
$1,625,119 and $102,074, respectively. In connection with the Company's
acquisition of Cal ASIC, the Company loaned Cal ASIC $500,000 (including
$100,000 previously loaned) at the closing of the transaction and agreed to
advance up to an additional $1,000,000 to Cal ASIC over an eighteen month
period to be used by Cal ASIC for equipment purchases and working capital
purposes. To the extent the Company requires additional financing, there can be
no assurance that such future financings will be available to the Company on
acceptable terms.
3. SHARES ELIGIBLE FOR SALE. As of the date of this Prospectus, the Company
had outstanding 16,190,639 shares of Common Stock of which (i) 13,419,573 shares
are freely transferable without restriction or further registration under the
Securities Act (including 376,505 covered by this Prospectus) and (ii) 2,771,066
shares are "restricted securities" within the meaning of Rule 144 under the
Securities Act. Under Rule 144, if certain conditions are met, persons who are
affiliates of the Company and persons who satisfy a two year "holding period"
may sell within any three month period a number of shares which does not exceed
the greater of one percent of the total number of shares outstanding or the
average weekly trading volume of such shares during the four calendar weeks
prior to such sale. After a three year holding period is satisfied, persons who
are not "affiliates" of the Company are permitted to sell such shares without
regard to these volume restrictions. "Affiliates" of the Company consist of all
officers and directors of the Company and all holders of ten percent (10%) or
more of the outstanding shares of Common Stock. Of the 13,419,573 shares which
are freely transferable, 434,017 are owned by affiliates and are subject to the
volume limitations of Rule 144.
The SEC has proposed an amendment to Rule 144 to reduce the aforementioned
two and three year holding periods to one and two years, respectively. If such
proposed rule amendment was finalized as of July 31, 1996, the number of shares
which are freely transferable and the number of shares which are "restricted
securities" would be 13,743,585 and 2,447,054, respectively.
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An additional 6,676,619 shares of Common Stock which are not issued and
outstanding but which are issuable upon the exercise of warrants and options and
the conversion of convertible notes are included in currently effective
registration statements (of which 2,144,953 are covered by this Prospectus) and
upon issuance will be freely transferable during the effectiveness of such
registration statements or are included in warrants issued pursuant to
Regulation S. Of the 6,676,619 shares of Common Stock issuable upon the exercise
of warrants and options and the conversion of convertible notes, 631,701 are not
currently exercisable.
4. RECENT ACQUISITION. On May 23, 1996, the Company acquired 94 percent of
California ASIC ("Cal ASIC"), a quick turn, but as yet unprofitable,
manufacturer of a special category of semiconductor chips. The Company expects
that the initial expense of integrating Cal ASIC into the Company and expanding
its sales volume to profitable levels will produce losses for the first several
quarters after the closing of the transaction. Furthermore, there are no
assurances that even with the additional investment that the Company plans to
make, Cal ASIC will ever achieve profitability. There are many possible factors
which could negatively impact the achievement of the expected future benefits
to the Company, including: failure of the quick-turn gate array market to
materialize as rapidly as forecast, emergence of new competitors, possible
patent infringement claims, inability to attract and retain the additional
qualified employees required to manufacture and sell the Cal ASIC products and
services, failure of Cal ASIC's manufacturing facilities to produce adequate
quantity of products within the required time frame at profitable cost levels,
deterioration of the relationship between Cal ASIC and its base wafer
suppliers, litigation from prior creditors or shareholders of Cal ASIC and the
ability of the Company to raise the funds necessary to adequately finance the
working capital needs and equipment purchase needs of Cal ASIC.
5. GOVERNMENT REGULATION. The Company's JTC subsidiary is subject to
regulation in connection with its government R&D contract work. In addition, JTC
is subject to audit by the U.S. Government (the "Government") of its costs
incurred under Government contracts and to safety audits by various Government
agencies.
6. POSSIBLE FLUCTUATIONS IN OPERATING RESULTS. The Company's operating
results are likely to vary from period to period as a result of the Company's
sales cycle and nonrecurring sales of a limited number of large laser and other
manufacturing systems.
7. LIMITED PRODUCT LINE; UNCERTAINTY OF MARKET ACCEPTANCE AND MARKET
PENETRATION. The markets for certain of the Company's products may be saturated.
There can be no assurance that the Company will achieve greater penetration in
such markets. Achieving market acceptance for the Company's new and proposed
products requires substantial marketing and sales efforts and the expenditure of
significant funds to create customer awareness of and demand for the Company's
products. There can be no assurance that recent or future additions to the
Company's product lines will achieve market acceptance or result in
significantly increased levels of revenues.
8. RESEARCH AND DEVELOPMENT COSTS. The development of sophisticated laser
and microelectronics manufacturing products is a lengthy and capital intensive
process and is subject to unforeseen risks, delays, problems and costs. There
can be no assurance that the Company will be able to successfully develop any
additional products or enhance existing products, or that unanticipated
technical or other problems will not occur which would result in delays in the
Company's development program. Failure to complete development of a product
could result in the complete loss of the funds committed by the Company to that
product, which could be substantial.
9. PRODUCT DEFECTS. Products as complex as the Company's may contain
certain defects which from time to time become apparent subsequent to commercial
use. Remedying such defects could require significant modifications at
substantial costs to the Company.
10. DEPENDENCE ON SUPPLIERS; NO ASSURANCE OF CONTINUOUS AND TIMELY
PRODUCTION. The Company is primarily dependent upon outside suppliers for
components used in the manufacture of its products. Failure to maintain
satisfactory agreements with suppliers could have a material adverse effect on
the Company. There can be no assurance that in the future its current or
alternative sources will be able to meet all of the Company's demands on a
timely basis. Unavailability of parts or components used in the manufacture of
its products could require the Company to re-engineer its products to
accommodate available substitutions, which could increase costs to the Company
or have a material adverse effect on manufacturing schedules, product
performance and market acceptances.
11. COMPETITION; POSSIBLE TECHNOLOGICAL OBSOLESCENCE. The markets for the
Company's products are highly competitive and are characterized by rapid
technological change and evolving industry standards. Development by others of
new or improved products, processes or technologies may make the Company's
products obsolete or less competitive. The ability of the Company to compete is
dependent on the Company's ability to continually enhance and improve its
products and to successfully
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develop and market new products. Many of the Company's competitors have greater
financial, managerial and technical resources than the Company. There can be no
assurance that the Company will successfully differentiate itself from its
competitors, that the market will consider the Company's products to be superior
to its competitors' products or that the Company will be able to adapt to
evolving markets and technologies, develop new products or achieve and maintain
technological advantages.
12. PATENTS AND PROPRIETARY RIGHTS. The Company relies, to a significant
extent, on patents, trade secrets and confidentiality agreements to protect its
proprietary technology. There can be no assurance as to the breadth or degree of
protection which existing or future patents, if any, may afford the Company, or
that patents will not be circumvented or invalidated, or that the Company's
products do not and will not infringe on patents or violate proprietary rights
of others. In the event a patent infringement claim is asserted against the
Company, or the Company is required to enforce its rights under an issued
patent, the cost of such actions may be very high, whether or not the Company is
successful. While the Company is unable to predict what such costs, if any, will
be if the Company is obligated to pursue patent litigation, its ability to fund
its operations and to pursue its business goals may be substantially impaired.
13. RELIANCE ON FOREIGN SALES. The Company derives a portion of its
revenues from foreign markets and expects to continue to be dependent upon such
markets. Revenues from foreign markets were $3,351,561 and $1,801,440 for the
years ended December 31, 1994 and 1995, respectively. As a result, the Company
is subject to various risks inherent in foreign trade, including economic or
political instability, shipping delays, fluctuations in foreign currency rates,
custom duties and import quotas and other trade restrictions, all of which could
have a significant impact on the Company's ability to deliver its products on a
timely and competitive basis.
14. GOVERNMENT BUDGET CONSTRAINTS. Certain of the Company's research and
development activities are partially dependent on Government sponsorship,
particularly by the U.S. Department of Defense ("DOD"). The DOD's overall budget
is undergoing intense scrutiny and is subject to significant reduction as a
result of current world events. This may result in fewer funds available for the
contracts the Company is seeking from the DOD and could adversely affect the
Company's ability to attain a profitable R&D contract business.
15. PRODUCT LIABILITY. The Company may be exposed to potential product
liability claims arising out of the use of the Company's products. Although the
Company currently maintains product liability insurance, there can be no
assurance that such insurance will be sufficient to cover potential claims or
that the present level of coverage will be available in the future at a
reasonable cost. A partially or completely uninsured successful claim against
the Company could have a material adverse affect on the Company.
16. RELIANCE UPON KEY EMPLOYEES. The success of the Company is
substantially dependent on the efforts of certain key personnel of the Company.
The loss of such key personnel could adversely affect the Company's business and
prospects. In such event, there can be no assurance that the Company would be
able to employ qualified persons on terms favorable to the Company. In seeking
qualified personnel, the Company will be required to compete with companies
having greater financial and other resources than the Company. Since the future
success of the Company is, in part, dependent upon its ability to retain or
attract qualified personnel, the Company's failure to do so could have a
materially adverse impact on the business of the Company.
17. OUTSTANDING RIGHTS TO ACQUIRE COMMON STOCK. As of July 31, 1996, there
were 8,075,663 shares of Common Stock subject to issuance upon exercise of
outstanding options and warrants and upon conversion of outstanding convertible
notes, including 2,144,953 shares of Common Stock offered hereby and 4,531,666
shares which are included in currently effective registration statements or are
included in warrants issued pursuant to Regulation S. To the extent that
outstanding options and warrants are exercised prior to their expiration dates
and other securities are converted, additional equity
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investment funds will be paid into the Company at the expense of dilution to the
interests of the Company's stockholders. Moreover, the terms upon which the
Company will be able to obtain additional equity capital may be adversely
affected since the holders of outstanding options and warrants and other
securities can be expected to exercise or convert them at a time when the
Company would, in all likelihood, be able to obtain any needed capital on terms
more favorable to the Company than those provided in such securities. See
"Description of Capital Stock" and "Shares Eligible for Future Sale."
18. NO DIVIDENDS. The Company has never paid cash dividends and intends,
for the foreseeable future, to retain its earnings, if any, to finance its
business. Future dividend policy will depend on the Company's earnings, capital
requirements, financial condition, debt covenants and other factors considered
relevant by the Company's Board of Directors.
19. UTILIZATION OF NET OPERATING LOSS CARRYFORWARD. Realization of future
tax benefits from utilization of the Company's net operating loss carryforwards
for income tax purposes is limited by changes in ownership in 1990, 1992 and
1993. In addition, the net operating losses of acquired companies are also
subject to separate change of ownership limitations.
20. AUTHORIZATION AND ISSUANCE OF PREFERRED STOCK. The Company's Board of
Directors is authorized to issue up to 5,000,000 shares of Preferred Stock. The
Board of Directors has the power to establish the dividend rates, liquidation
preferences, voting rights, redemption and conversion terms and privileges with
respect to any series of Preferred Stock. The issuance of any shares of
Preferred Stock having rights superior to those of the Common Stock may result
in a decrease in the value or market price of the Common Stock. Holders of
Preferred Stock may have the right to receive dividends, certain preferences in
liquidation and conversion rights. The issuance of Preferred Stock could, under
certain circumstances, have the effect of delaying, deferring or preventing a
change in control of the Company without further vote or action by the
stockholders and may adversely affect the voting and other rights of the holders
of Common Stock. See "Description of Capital Stock -- Preferred Stock."
21. NASDAQ-NMS MAINTENANCE REQUIREMENTS; POSSIBLE DELISTING OF SECURITIES
FROM NASDAQ-NMS SYSTEM. The Board of Governors of the National Association of
Securities Dealers, Inc. has established certain standards for the continued
listing of a security on the NASDAQ National Market System ("NASDAQ-NMS"). The
maintenance standards for continued listing of the Company's Common Stock on the
NASDAQ-NMS require, among other things, that (i) an issuer have net tangible
assets of at least $4 million if the issuer has sustained losses from continuing
operations and/or net losses in three of its four most recent fiscal years; (ii)
the market value of its publicly held shares is at least $1 million (in the
event that the minimum bid price per share of the Company's Common stock should
fall below $1.00 per share, the market value of the public float of the
Company's shares must exceed $3 million); (iii) at least 200,000 shares of
Common Stock are publicly held; and (iv) the issuer has at least 400
shareholders. As of March 31, 1996, the Company's net tangible assets were
approximately $4,600,000. There can be no assurance that the Company will
continue to satisfy the requirements for maintaining a NASDAQ-NMS listing in the
future. If the Company's securities were excluded from NASDAQ-NMS, it may
adversely affect the prices of such securities and the ability of holders to
sell them. If the Company's securities were excluded from NASDAQ-NMS, the
Company would seek to list its securities on the NASDAQ "Small Cap" system. In
such an event NASDAQ might require the Company to meet the initial inclusion
requirements of the NASDAQ "Small Cap" system, which require, among other
things, that an issuer have total assets of at least $4,000,000, capital and
surplus of at least $2,000,000 and a minimum bid price of $3 per share. There
can be no assurance that the Company will satisfy those initial inclusion
requirements for the NASDAQ "Small Cap" system in the future should its
securities be delisted from the NASDAQ-NMS.
22. PENNY STOCK REGULATION. In the event that the Company's securities are
neither listed on the NASDAQ-NMS nor on the NASDAQ Small Cap system, trading
would be conducted in the "pink sheets" or through the NASD's Electronic
Bulletin Board. In the absence of the Common Stock being quoted on
9
<PAGE> 11
NASDAQ, trading in the Common Stock would be covered by Rule 15c2-6 promulgated
under the Securities Exchange Act of 1934 for non-NASDAQ and non-exchange listed
securities. Under such rule, broker/dealers who recommend such securities to
persons other than established customers and accredited investors must make a
special written suitability determination for the purchaser and receive the
purchaser's written agreement to a transaction prior to sale. Securities also
are exempt from this rule if the market price is at least $5.00 per share.
The Securities and Exchange Commission recently adopted regulations that
generally define a penny stock to be any equity security that has a market price
of less than $5.00 per share, subject to certain exceptions. Such exceptions
include an equity security listed on NASDAQ and an equity security issued by an
issuer that has (i) net tangible assets of at least $2,000,000, if such issuer
has been in continuous operation for three years, (ii) net tangible assets of at
least $5,000,000, if such issuer has been in continuous operation for less than
three years, or (iii) average revenue of at least $6,000,000 for the preceding
three years. Unless an exception is available, the regulations require the
delivery, prior to any transaction involving a penny stock, of a disclosure
schedule explaining the penny stock market and the risks associated therewith.
At the current time, the Company's Common Stock is listed on the NASDAQ-NMS
system and its net tangible assets and average revenues are substantially above
the minimums set forth above. Therefore, the Company's stock is not subject to
the penny stock regulations.
If the Company's Common Stock were subject to the regulations on penny
stocks, the market liquidity for the Common Stock would be severely affected by
limiting the ability of broker/dealers to sell the Common Stock and the ability
of purchasers in this offering to sell their securities in the secondary market.
There is no assurance that trading in the Company's securities will not be
subject to these or other regulations in the future which would adversely affect
the market for such securities.
23. MARKET OVERHANG FROM THE WARRANTS; MARKET OVERHANG RESULTING FROM
CERTAIN ANTI-DILUTION PROVISIONS. The exercise of the Company's outstanding
warrants and options, or a substantial portion thereof, and sale of the shares
issued upon exercise could adversely affect the market price of the Common
Stock. In addition, the number of shares issuable upon exercise of the
Underwriters' Warrants issued in the Company's 1993 public offering as well as
the exercise price of the warrants underlying such Underwriters' Warrants, are
subject to adjustment under certain circumstances, including the future issuance
of shares by the Company at a price less than the current exercise prices of
such warrants and options. The issuance of additional shares as a result of such
anti-dilution provisions could also adversely affect the market price of the
Common Stock. See "Description of Securities -- Warrants."
10
<PAGE> 12
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock by
the Selling Stockholders.
DESCRIPTION OF SECURITIES
COMMON STOCK
The Company is authorized by its Certificate of Incorporation to issue an
aggregate of 40,000,000 shares of Common Stock, $.01 par value per share (the
"Common Stock"). All shares of Common Stock carry full voting rights to cast one
vote for each share on any matter coming before the stockholders for a vote. The
holders of Common Stock have no preemptive or subscription rights. There are no
liquidation preferences, conversion rights, redemption rights, sinking fund or
assessment provisions with respect to the Common Stock.
The Bylaws of the Company provide that the annual meeting of stockholders
may be held on such date as the Board of Directors may determine. The Company
provides annual reports to all stockholders, by mail, as soon as available.
Subject to the rights of holders of Preferred Stock which may be issued in
the future, the holders of Common Stock are entitled to dividends in such
amounts as may be declared by the Board of Directors from time to time from
funds legally available therefor and, in the event of liquidation, to share
ratably in any assets of the Company remaining after payment in full of all
creditors and provision for any liquidation preferences on any outstanding
Preferred Stock.
Holders of the Common Stock do not have cumulative voting rights, which
means that the holders of more than half of the total number of shares of Common
Stock and shares of Preferred Stock which have any voting rights can elect all
of the Company's Directors, if they choose to do so. In such event the holders
of the remaining shares would not be able to elect any Directors. The Board is
empowered to fill any vacancies on the Board created by the resignation of
Directors.
Except as otherwise required by the Delaware General Corporation Law, all
stockholder action is taken by vote of a majority of the shares of Common Stock
and voting Preferred Stock present at a meeting of stockholders at which a
quorum is present in person or by proxy, or by the written consent without a
meeting of holders of a majority of such outstanding shares.
PREFERRED STOCK
The Company has 5,000,000 authorized shares of Preferred Stock, $.01 par
value, of which no shares are outstanding. The Board of Directors has the
authority to issue the Preferred Stock in one or more series and to fix the
rights, preferences, privileges and restrictions thereof, including dividend
rights, dividend rates, conversion rights, voting rights, terms of redemption,
redemption prices, liquidation preferences and the number of shares constituting
any series or the designation of such series, without further vote or action by
the stockholders. The issuance of Preferred Stock could, under certain
circumstances, have the effect of delaying, deferring or preventing a change in
control of the Company without further action by the stockholders and may
adversely affect the voting and other rights of the holders of Common Stock. The
issuance of Preferred Stock with voting and conversion rights may adversely
affect the voting power of the holders of Common Stock, including the loss of
voting control to others.
11
<PAGE> 13
UNDERWRITERS' WARRANTS
Underwriters' Warrants were issued to the two underwriters of the Company's
1993 public offering (the "1993 Offering") entitling the holders to purchase an
aggregate of 235,294 underwriters' units ("Underwriters' Units") at an exercise
price of $6.80 per unit ("Underwriters' Warrants"). The Underwriters' Warrants
expire on February 15, 1998. The exercise price of the Underwriters' Warrants is
subject to adjustment under certain circumstances, including the future issuance
of shares of Common Stock (other than the shares offered in the 1993 Offering)
by the Company at a price less than $6.80.
UNDERWRITERS' UNITS
Each Underwriters' Units issued in the 1993 Offering consist of one share
of Common Stock and one "Class B" Warrant. The Underwriters' Units are evidenced
by separate certificates for the Common Stock and the Class B Warrants which
comprise the Underwriters' Units.
CLASS A AND CLASS B WARRANTS
As part of the Units sold to the public in the 1993 Offering, the Company
issued 2,705,882 "Class A" Warrants. Each Class A Warrant entitles its holder to
purchase one share of Common Stock at an exercise price of $4.68 per share. The
Class A Warrants expire on February 15, 1998.
Upon exercise of the Underwriters' Warrants issued in the 1993 Offering,
the Company will issue 235,294 shares of Common Stock and 235,294 Class B
Warrants. Each Class B Warrant entitles its holder to purchase one share of
Common Stock at an exercise price of $6.80 per share. The Class B Warrants
expire on February 15, 1998.
Both the Class A Warrants and the Class B Warrants may be redeemed by the
Company at any time at a redemption price of $.05 per Warrant upon 30 days prior
written notice, provided the closing high bid price of the Common Stock for 20
consecutive trading days, ending not more than 15 days prior to the date of the
notice of redemption, exceeds $6.38 per share. Warrantholders shall have
exercise rights until the close of the business day preceding the date fixed for
redemption.
The exercise price of both the Class A Warrants and the Class B Warrants is
subject to adjustment upon the occurrence of certain events, including the
issuance of dividends payable in Common Stock and subdivisions or combinations
of the Common Stock.
OTHER OUTSTANDING RIGHTS
In addition to the Underwriters' Warrants, Class A Warrants and Class B
Warrants, as of the date of this Prospectus there were currently outstanding
certain other warrants and options to purchase an additional 4,472,526 shares of
Common Stock at per share exercise prices varying from $.34 to $9.00. Of that
number, 2,144,953 are included in this Prospectus, and 928,529 have been
previously registered or are included in warrants issued pursuant to Regulation
S.
TRANSFER AGENT AND WARRANT AGENT
The Transfer Agent and Registrar for the Common Stock and the warrant agent
for the Class A Warrants and the Class B Warrants is American Securities
Transfer, Inc., 1825 Lawrence Street, Denver, Colorado 80202. Its telephone
number is (303) 234-5300.
12
<PAGE> 14
SHARES ELIGIBLE FOR FUTURE SALE
As of the date of this Prospectus, the Company had outstanding 16,190,639
shares of Common Stock of which approximately (i) 13,419,573 shares are freely
transferable without restriction or further registration under the Securities
Act (including 376,505 covered by this Prospectus) and (ii) 2,771,066 shares are
"restricted securities" within the meaning of Rule 144 under the Securities Act.
Under Rule 144, if certain conditions are met, persons who are affiliates of the
Company and persons who satisfy a two year "holding period" may sell within any
three month period a number of shares which does not exceed the greater of one
percent of the total number of shares outstanding or the average weekly trading
volume of such shares during the four calendar weeks prior to such sale. After a
three year holding period is satisfied, persons who are not "affiliates" of the
Company are permitted to sell such shares without regard to these volume
restrictions. "Affiliates" of the Company consist of all officers and directors
of the Company and all holders of ten percent (10%) or more of the outstanding
shares of Common Stock. Of the 13,419,573 shares which are freely transferable,
434,017 are owned by affiliates and are subject to the volume limitations of
Rule 144.
The SEC has proposed an amendment to Rule 144 to reduce the aforementioned
two and three year holding periods to one and two years, respectively. If such
proposed rule amendment was finalized as of July 31, 1996, the number of shares
which are freely transferable and the number of shares which are "restricted
securities" would be 13,743,585 and 2,447,054, respectively.
An additional 6,676,619 shares of Common Stock issuable upon the exercise
of warrants and options and the conversion of convertible notes are included in
currently effective registration statements (of which 2,144,953 are covered by
this Prospectus) and upon issuance will be freely transferable during the
effectiveness of such registration statements or are included in warrants issued
pursuant to Regulation S. Of the 6,676,619 shares of Common Stock, which are
issuable upon the exercise of warrants and options and the conversion of
convertible notes, warrants and options to purchase a total of 631,701 shares
are not currently exercisable.
13
<PAGE> 15
SELLING STOCKHOLDERS
The following table sets forth as of July 15, 1996 certain information
regarding the beneficial ownership of the Company's Common Stock by each of the
Selling Shareholders. The footnotes which follow this table contain additional
information regarding the nature of any position, office or other material
relationship which the Selling Shareholders have had within the past three years
with the Company and its affiliates. Except as otherwise noted, the persons
shown in the table have sole voting and investment power with respect to the
shares.
<TABLE>
<CAPTION>
Number of Percent of
Number of Shares Shares
Shares of Percent of Remaining Outstanding
Common Shares of Number of if All if All
Stock Common Shares Shares Shares
Name and Beneficially Stock Being Registered Registered
Address Owned Outstanding Registered Are Sold Are Sold
- ------------------------------- ------------ ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
John S. Martinez (1)
3956 Sorrento Valley Blvd.
San Diego, CA 92121 1,609,614 9.62% 538,256 1,071,358 6.40%
Baytree Associates Incorporated (2)
50 Broad Street
New York, NY 10004 411,500 2.48% 411,500 0 0.00%
Mogador Partnership (3)
1112 Maybrook Drive
Beverly Hills, CA 90210 300,000 1.82% 300,000 0 0.00%
Robert S. Hash (4)
9207 Eton Avenue
Chatsworth, CA 91311 299,802 1.85% 55,568 244,234 1.50%
M.H. Meyerson & Co., Inc. (5)
30 Montgomery Street
Jersey City, NJ 07303-0260 250,000 1.52% 375,000 0 0.00%
Laser Photonics, Inc. (6)
12351 Research Parkway
Orlando, FL 32826 179,487 1.10% 179,487 0 0.00%
Larry M. Levy (7)
19601 Tomlee Street
Torrance, CA 90503 107,744 * 97,744 10,000 *
Veeder South III (8)
4240 Lost Hills Road, #504
Agoura Hills, CA 91301 99,817 * 93,150 6,667 *
Dennis E. Valentine (9)
3956 Sorrento Valley Blvd.
San Diego, CA 92121 87,567 * 52,464 35,103 *
Richard M. Foster (10)
325 8th Street
Manhattan Beach, CA 90266 65,647 * 50,000 15,647 *
David S. Grosky (11)
P.O. Box 1634
Chicago, IL 60690-1684 50,000 * 50,000 0 0.00%
</TABLE>
- -----------
* Less than one percent.
- -----------------------
14
<PAGE> 16
<TABLE>
<CAPTION>
Number of Percent of
Number of Shares Shares
Shares of Percent of Remaining Outstanding
Common Shares of Number of if All if All
Stock Common Shares Shares Shares
Name and Beneficially Stock Being Registered Registered
Address Owned Outstanding Registered Are Sold Are Sold
- ------------------------------- ------------ ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Silverman Heller Associates (12)
1100 Glendon Avenue
Los Angeles, CA 90024 50,000 * 50,000 0 0.00%
Interactive Corporate Services (13)
920 W. San Marcos Blvd., Suite 4
San Marcos, CA 92069 45,000 * 40,000 5,000 *
Leonid Yoffe (14)
2473 Park Meadow Ct.
Simi Valley, CA 93065 42,346 * 28,964 13,382 *
James H. Morris (15)
1386 Diamond Head Drive
Encinitas, CA 92024 40,286 * 1,000 39,286 *
Kenneth G. Berquist (16)
7 Wabanaki Way
Andover, MA 01810 30,992 * 22,180 8,812 *
Wood Capital Associates (17)
P.O. Box 3641
Breckenridge, CO 80424 30,000 * 30,000 0 0.00%
William L. Duschatko (18)
33 Wiggin Road
Bedford, NH 03110 26,843 * 23,145 3,698 *
Vernon H. Blackman (19)
13591 Nogales Drive
Del Mar, CA 32014 19,166 * 4,000 15,166 *
John McGill (20)
18 Broadway
Niantic, CT 06357 13,375 * 6,000 7,375 *
Barry Ressler (21)
187 Newton Turnpike
Weston, CT 06883 13,336 * 6,670 6,666 *
Israel Trading Co. Ltd. (22)
50 Broad Street
New York, NY 10004 10,000 * 10,000 0 0.00%
Harry Rieger (23)
17127 Pomerado Way
San Diego, CA 92128 9,584 * 6,250 3,334 *
Emerald Partners (24)
20805 Cipres Way
Boca Raton, FL 33433 7,500 * 7,500 0 0.00%
</TABLE>
- -----------
* Less than one percent.
- -----------------------
15
<PAGE> 17
<TABLE>
<CAPTION>
Number of Percent of
Number of Shares Shares
Shares of Percent of Remaining Outstanding
Common Shares of Number of if All if All
Stock Common Shares Shares Shares
Name and Beneficially Stock Being Registered Registered
Address Owned Outstanding Registered Are Sold Are Sold
- ------------------------------- ------------ ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Jonathan Turk (25)
14 Linden Street
Woodmere, NY 11598 6,800 * 6,800 0 0.00%
Lynn M. Decker (26)
3330 30th Street #7
San Diego, CA 92104 5,000 * 5,000 0 0.00%
Richard B. Healey (27)
8501 Lubao Avenue
Canoga Park, CA 91306 5,000 * 5,000 0 0.00%
Daniel L. Kinzie (17)
15840 Teal Road
Crittenden, KY 41030 5,000 * 5,000 0 0.00%
Clarence Heinkel (28)
1037 Beau Brummel Drive
Dundee, IL 60118 3,480 * 3,480 0 0.00%
Winita Phongsamran (27)
13301 DeFoe Avenue
Sylmar, CA 91342 2,500 * 2,500 0 0.00%
Julia S. Wu (29)
19570 Shadow Glen Circle
Northridge, CA 91326 2,500 * 2,500 0 0.00%
Larry L. Burns (27)
4105 Navajo Drive
Johnson City, TN 37604 2,000 * 2,000 0 0.00%
Janet Kaval (27)
22111 Hart Street
Canoga Park, CA 91303 300 * 300 0 0.00%
</TABLE>
(1) Includes: (a) 372,965 shares owned of record by the John S. Martinez
Separate Property Trust, of which Dr. Martinez as trustee, has sole
voting and investment power; (b) 536,649 shares which are issuable upon
exercise of currently exercisable warrants and stock options at
exercise prices ranging from $.34 to $7.75 per share; and (c) 700,000
shares of Common Stock subject to a voting trust pursuant to which Dr.
Martinez is sole trustee and has sole voting power (but no investment
power) until the earlier of October 6, 2003 or until the transfer of
the shares according to the terms of the voting trust agreement (the
"Voting Trust Agreement") between Dr. Martinez and Cato Portfolio A.G.
("Cato"). Dr. Martinez also holds sole voting power pursuant to the
Voting Trust Agreement over 426,667 shares of Common Stock which are
issuable upon conversion of $1,600,000 of notes. Pursuant to the terms
thereof, since these notes are not convertible within 60 days of this
Registration Statement, Dr. Martinez is not considered to have
"beneficial ownership" of said 426,667 shares. Dr. Martinez is the
Chairman of the Board, President and Chief Executive Officer of the
Company. Of the shares being registered, 100,000 were purchased
pursuant to the Company's 1995 Employee Stock Purchase Plan ("Employee
Stock Purchase Plan") and the remainder are shares issuable upon the
exercise of warrants issued in connection with loans made to the
Company in 1994.
- -----------
* Less than one percent.
- -----------------------
16
<PAGE> 18
(2) All shares are issuable upon exercise of currently exercisable warrants
and options at exercise prices ranging from $.45 to $2.13 per share.
These warrants and options were issued in connection with the placement
of common stock of the Company in 1994 and in connection with financial
consulting and public relations services in 1995. Baytree Associates
Incorporated has also acted as a placement agent for several common
stock placements in 1995 and 1996.
(3) All shares being registered are issuable upon exercise of stock options
at per share exercise prices ranging from $1.50 to $3.00 per share.
These options were issued in 1994 in connection with financial
consulting and public relations services.
(4) Includes: (a) 244,234 shares received by Mr. Hash in connection with
the acquisition of PPL by the Company; (b) 45,980 shares which are
issuable upon exercise of currently exercisable warrants at prices
ranging from $.36 to $.44 per share and; (c) 9,588 shares which are
issuable upon exercise of currently exercisable warrants owned of
record by Mr. Hash's wife at prices ranging from $.42 to $.44 per
share. The warrants were issued in connection with loans made to the
Company in 1994. Mr. Hash is the President and a director of Pacific
Precision and was the President and Chief Operating Officer and a
director of the Company from February, 1994 until August, 1994.
(5) All shares being registered are issuable upon exercise of stock
options, 250,000 of which are currently exercisable within 60 days of
this Registration Statement, at a per share exercise price of $1.875.
The options were issued in 1995 in connection with a financial
consulting and investment banking agreement.
(6) All shares are issuable upon exercise of currently exercisable warrants
at $4.68 per share. The warrants were issued in 1993 as partial
consideration for a license agreement.
(7) Includes 72,744 shares which are issuable upon exercise of currently
exercisable warrants at per share exercise prices ranging from $.36 to
$.47 per share. Mr. Levy was the Senior Vice President Corporate
Development of the Company from December, 1991 until March 31, 1995 and
was the President and a director of Surgilase from May, 1992 until May,
1994. He was a consultant of the Company from April 1, 1995 through
March 31, 1996. Of the shares being registered, 25,000 were purchased
pursuant to the Company's 1995 Employee Stock Purchase Plan and the
remainder are shares issuable upon the exercise of warrants issued in
connection with loans made to the Company in 1994.
(8) Includes 68,150 shares issued to Dr. South in connection with the
acquisition of Rose Technology by the Company. Of these shares, 36,150
are currently vested and the balance vests at the rate of 8,000 every
three months, as long as Dr. South continues to be employed by the
Company. Also includes 6,667 shares which are issuable upon exercise of
currently exercisable options at an exercise price of $.75 per share.
The shares being registered also includes 25,000 shares purchased
pursuant to the Company's 1995 Employee Stock Purchase Plan.
(9) Includes 85,562 shares which are issuable upon exercise of currently
exercisable stock options and warrants at per share exercise prices
ranging from $.36 to $5.38. Mr. Valentine has been the Vice President
Finance of the Company since August, 1990 and Chief Financial Officer
since March, 1991. The shares being registered are issuable upon the
exercise of warrants issued in connection with loans made to the
Company in 1994.
(10) Includes 15,000 shares which are issuable upon exercise of currently
exercisable options at prices ranging from $3.00 to $4.81. Mr. Foster
has been the President of JTC since January, 1994 and an employee of
the Company since 1990. The shares being registered were issued
pursuant to the Company's 1995 Employee Stock Purchase Plan.
17
<PAGE> 19
(11) All shares being registered are issuable upon exercise of stock
options, 50,000 of which are not currently exercisable, at per share
exercise prices ranging from $1.25 to $1.75. The options were issued in
1995 in connection with financial consulting and public relations
services.
(12) All shares are issuable upon exercise of currently exercisable options
at an exercise price of $1.00 per share. The options were issued in
1995 in connection with a public relations agreement.
(13) Includes 40,000 shares which are issuable upon exercise of currently
exercisable warrants at an exercise price of $2.00 per share. The
warrants were issued in 1994 in connection with a public relations
agreement.
(14) Includes: (a) 13,382 shares received in connection with the acquisition
of PPL by the Company and (b) 28,964 shares which are issuable upon
exercise of currently exercisable warrants at prices ranging from $.36
to $.44 per share. Mr. Yoffe is an officer of PPL. The warrants were
issued in connection with loans made to the Company in 1994.
(15) Includes: (a) 20,420 shares which are issuable upon exercise of
currently exercisable options and warrants at exercise prices ranging
from $.50 to $3.32 and; (b) 200 shares owned of record by Mr. Morris'
wife. Mr. Morris is an employee of the Company. The shares being
registered were purchased pursuant to the Company's 1995 Employee Stock
Purchase Plan.
(16) Mr. Berquist was the President and a director of Benchmark from May,
1993 until August, 1994. The shares were issued in connection with the
conversion of debt owed by Benchmark to Mr. Berquist.
(17) These shares were issued in connection with the issuance of the
Company's common stock for preferred stock of Atlantic American Holding
Company.
(18) All shares are owned of record by E.L. Stearns Trust, as to which Mr.
Duschatko has sole voting and investment power. Mr. Duschatko received
the shares being registered hereunder in 1993 in connection with the
conversion of debt owed to him by Benchmark Industries, Inc., a
subsididary of the Company. Pursuant to the terms of the debt
conversion agreement between the Company and Mr. Duschatko, he is
limited in the amount of stock that can be sold by him in any 90 day
period. Mr. Duschatko was the President and a Director of Benchmark
until May, 1993 and a director of the Company until April, 1993.
(19) All shares are issuable upon exercise of currently exercisable stock
options and warrants at per share exercise prices ranging from $.43 to
$5.75 per share. Dr. Blackman has been a director of the Company since
July, 1991 and was a consultant to the Company from December, 1991
until July, 1994. The warrants being registered were issued in
connection with loans to the Company in 1994.
(20) Includes 6,000 shares issuable upon exercise of currently exercisable
warrants at an exercise price of $3.33 per share. The warrants were
issued in connection with the acquisition by the Company of PPL.
(21) All shares are issuable upon exercise of currently exercisable stock
options and warrants at per share exercise prices ranging from $.43 to
$2.13. Mr. Ressler has been a director of the Company since January,
1994. The warrants being registered were issued in connection with
loans to the Company in 1994.
(22) All shares are issuable upon exercise of currently exercisable warrants
at an exercise price of $3.00 per share. The warrants were issued in
connection with the placement of common stock in 1994.
18
<PAGE> 20
(23) Includes 3,334 shares issuable upon exercise of currently exercisable
options at an exercise price of $2.38 per share. Mr. Rieger is an
employee of the Company. The shares being registered were purchased
pursuant to the Company's 1995 Employee Stock Purchase Plan.
(24) All shares are issuable upon exercise of currently exercisable warrants
at an exercise price of $2.13 per share. The warrants were issued in
connection with the placement of common stock in 1994.
(25) All shares are issuable upon exercise of currently exercisable warrants
at an exercise price of $2.20 per share. The warrants were issued in
connection with the placement of common stock in 1994.
(26) Ms. Decker was an employee of the Company until November, 1995. The
shares being registered were purchased pursuant to the Company's 1995
Employee Stock Purchase Plan.
(27) These holders are employees of the Company. The shares being registered
were purchased pursuant to the Company's 1995 Employee Stock Purchase
Plan.
(28) These shares were issued in connection with the conversion of debt in
1994.
(29) Includes 1,250 shares owned of record by Julia S. Wu Custodian for
Connie P. Wu. Julia S. Wu is an employee of the Company. The shares
being registered were purchased pursuant to the Company's 1995 Employee
Stock Purchase Plan.
19
<PAGE> 21
PLAN OF DISTRIBUTION
Following the date of this Prospectus, the Selling Shareholders will be
able to sell shares covered hereunder from time to time in one or more
transactions in the over-the-counter market at prices and on terms prevailing on
the date of the sale or in negotiated transactions or otherwise. Subject to the
restrictions described in "Shares Eligible for Future Sale" above, the shares
covered hereby may be sold by the Selling Shareholders from and after the date
of this Prospectus, and the Company has not been advised when, or even whether,
the Selling Shareholders intend to sell such shares.
The Selling Shareholders may pay customary brokerage commissions on the
sale transactions. The Selling Shareholders and the brokers and dealers through
whom sales of the shares are made may be deemed "underwriters" within the
meaning of the Act and any and all payments to brokers/dealers associated with a
distribution may be considered to be underwriting compensation. Pursuant to
various agreements with a substantial number of Selling Shareholders, the
Company has agreed to indemnify such Selling Shareholders against certain
liabilities, including those arising under the Securities Act of 1933. If the
Selling Shareholders should, collectively, engage a broker or dealer to sell a
material portion of the Common Stock offered hereby, the Company may be required
to file a post-effective amendment to this Registration Statement to show a
change in the plan of distribution. The shares of Common Stock will be offered
on a delayed or continuous basis pursuant to Rule 415 under the Act.
EXPERTS
The consolidated financial statements and schedules of the Company and the
financial statements of California ASIC Technical Services, Inc. as of December
31, 1995 and 1994 and for the years then ended incorporated by reference in this
Prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, to the extent and for the
periods indicated in their reports with respect thereto, and are incorporated by
reference herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.
The financial statements of California ASIC Technical Services, Inc. as of
December 31, 1993 and for the year then ended incorporated by reference in this
Prospectus and elsewhere in the registration statement have been audited by
Corbin & Wertz, independent public accountants, to the extent and for the
period indicated in their report with respect thereto, and are incorporated by
reference herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said report.
LEGAL MATTERS
The legality of the Securities offered hereby is being passed upon for the
Company by Parker, Milliken, Clark, O'Hara & Samuelian, A Professional
Corporation, Los Angeles, California.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") in Washington, D.C., a Registration Statement on Form S-3 under
the Securities Act of 1933 with respect to the securities offered hereby.
This Prospectus, filed as a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, certain
portions of which have been omitted as permitted by the rules and regulations of
the Commission. For further information pertaining to the shares of Common Stock
offered hereby and to the Company, reference is made to the Registration
Statement, including the exhibits filed as a part thereof and the documents
containing the information which is incorporated by reference herein. Copies of
the Registration Statement and the exhibits thereto may be obtained from the
Commission upon payment of the fees prescribed therefor and may be examined at
the principal office of the Commission, at 450 Fifth Street, Washington, D.C.,
20549.
20
<PAGE> 22
No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and if given or made, such information or representations must not
be relied upon as having been authorized by the Company. This Prospectus does
not constitute an offer or solicitation to any person in any jurisdiction where
such offer or solicitation would be unlawful. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities
other than the registered securities to which it relates. Neither delivery of
this Prospectus nor any sales hereunder shall, under any circumstances, create
an implication that there has been no change in the facts herein set forth since
the date hereof.
TABLE OF CONTENTS
Page
Available Information .................................................... 2
Incorporation of Certain Documents by Reference .......................... 2
Prospectus Summary ....................................................... 4
Risk Factors ............................................................. 6
Use of Proceeds .......................................................... 11
Description of Securities ................................................ 11
Shares Eligible for Future Sale .......................................... 13
Selling Stockholders ..................................................... 14
Plan of Distribution ..................................................... 20
Experts .................................................................. 20
Legal Matters ............................................................ 20
Additional Information ................................................... 20
21
<PAGE> 23
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized statement of expenses of the Company in
connection with the issuance and sale of the securities being registered:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee .................. $ 1,557
Printing expenses .................................................... 1,000
Accounting fees and expenses ......................................... 8,500
Legal fees and expenses .............................................. 17,500
Miscellaneous expenses ............................................... 1,443
-------
Total ................................................... $30,000
========
</TABLE>
The amounts are estimated except for the registration fee. The Company
has agreed to pay the above expenses of the Selling Stockholders in connection
with the Offering.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article V of the Bylaws of the Company provides that directors, officers,
employees and agents of the Company or a subsidiary of the Company shall be
indemnified against liabilities incurred by them while acting in such
capacities, including liabilities arising under the Securities Act, except to
the extent prohibited by then applicable law. Article V also provides for the
advance of expenses incurred in defending any proceeding prior to the final
disposition thereof, except to the extent prohibited by then applicable law. The
right of indemnification provided shall not be exclusive of any right the party
may have by law, or under any agreement, insurance policy, vote of the Board of
Directors or Stockholders or otherwise. The Company shall have the power to
purchase and maintain insurance on behalf of any indemnifiable party against any
liability asserted against or incurred by the indemnifiable party in such
capacity.
Section 145 of the Delaware General Corporation Law generally provides
that indemnification will only be available where an officer or director can
establish that he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Company.
The Company maintains a director's and officer's liability insurance
policy which indemnifies directors and officers for certain losses arising from
a claim by reason of a wrongful act, as defined, under certain circumstances, in
his capacity as a director or officer of the Company or any of its subsidiaries.
See the last paragraph of Item 17, "Undertakings" which is incorporated
by reference in response to this Item 15.
II-1
<PAGE> 24
ITEM 16. EXHIBITS
EXHIBIT
NO. DESCRIPTION
4.1(1) Form of Common Stock Certificate.
5.1(2) Opinion of Parker, Milliken, Clark, O'Hara & Samuelian, A
Professional Corporation.
23.1(2) Consent of Parker, Milliken, Clark, O'Hara & Samuelian, A
Professional Corporation is included in Exhibit 5.1 hereto.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Corbin & Wertz.
24.1(2) Power of Attorney.
- --------------------------------------
(1) Incorporated by reference to the exhibit filed with the Company's
Registration Statement on Form S-1 (No. 33-47390) filed on April 22,
1992 and amended November 23, 1992, January 11, 1993, January 27, 1993,
February 9, 1993, February 11, 1993, February 12, 1993 and declared
effective on February 16, 1993.
(2) Filed previously.
II-2
<PAGE> 25
ITEM 17. UNDERTAKINGS
The undersigned Company hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act 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
(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.
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 Company 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 of liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions, 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 of
1933 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) if 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 of 1933 and will be
governed by the final adjudication of such issue.
II-3
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 San Diego, State of California, on the 9th day of
August, 1996.
JMAR INDUSTRIES, INC.
By: /s/ Dennis E. Valentine
-----------------------------------
Dennis E. Valentine,
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons on August 9, 1996, in
the capacities indicated.
Signature Title
/s/ JOHN S. MARTINEZ
- ----------------------------- Chairman of the Board,
John S. Martinez Chief Executive Officer and Director
/s/ DENNIS E. VALENTINE Chief Financial Officer and Principal
- ----------------------------- Accounting Officer
Dennis E. Valentine
/s/ BARRY RESSLER * Director
- -----------------------------
Barry Ressler
/s/ C. NEIL BEER * Director
- -----------------------------
C. Neil Beer
/s/ JAMES H. BANISTER, JR. * Director
- -----------------------------
James H. Banister, Jr.
/s/ VERNON H. BLACKMAN * Director
- -----------------------------
Vernon H. Blackman
* By: /s/ DENNIS E. VALENTINE
- -----------------------------
Dennis E. Valentine
(Attorney-in-Fact)
II-4
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3 of our report dated March
25, 1996 included in the JMAR Industries, Inc. Form 10-K for the year ended
December 31, 1995, and our report dated May 23, 1996 included in the JMAR
Industries, Inc. Form 8-K/A dated August 2, 1996, and to all references to our
firm included in this registration statement.
ARTHUR ANDERSEN LLP
San Diego, California
August 8, 1996
<PAGE> 1
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Board of Directors
California ASIC Technical Services, Inc.
We consent to the incorporation by reference in the Pre-Effective Amendment
No.3 to Form S-3 of JMAR Industries, Inc. filed August 9, 1996 of our report
dated February 25, 1994, except as to Note 11, which is as of March 5, 1994,
related to the 1993 financial statements of California ASIC Technical Services,
Inc. included in Amendment No. 1 to Form 8-K/A of JMAR Industries, Inc. dated
August 2, 1996 and the reference to our firm under the heading "Experts" in the
Prospectus.
CORBIN & WERTZ
Irvine, California
August 9, 1996
