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SECURITIES AND EXCHANGE COMMISSION
Washington. D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ADAPTIVE SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
OREGON 93-0981962
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1400 N.W. COMPTON DRIVE, SUITE 340, BEAVERTON, OR 97006
(503) 690-1236
(Address, including zip code, and telephone number,
including area code of registrant's principal executive offices)
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DANIEL J. MEUB, PRESIDENT & CHIEF EXECUTIVE OFFICER
ADAPTIVE SOLUTIONS, INC.
1400 N.W. COMPTON DRIVE, SUITE 340, BEAVERTON, OR 97006
(503) 690-1236
(Name, address, including zip code, and telephone number,
including area code of agent for service)
COPY TO:
BYRON W. MILSTEAD, ESQ.
ATER, WYNNE, HEWITT, DODSON & SKERRITT, LLP
222 S.W. COLUMBIA, SUITE 1800, PORTLAND, OR 97201-6618
Approximate date of commencement of proposed sale to public: AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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. / /
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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. / /
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
To Be To Be Price Per Offering Registration
Registered Registered Share (1) Price (1) Fee
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Common Stock, 274,443 $.71875 $197,255.91 $59.77
No par value shares
(1) The offering price is estimated solely for the purpose
of calculating the registration fee in accordance with
Rule 457(c) using the average of the high and low price
reported by the Nasdaq Small-Cap Market for the Common Stock
on December 1, 1997, which was approximately $.71875 per
share.
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 the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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PROSPECTUS
ADAPTIVE SOLUTIONS, INC.
274,443 SHARES OF COMMON STOCK
(NO PAR VALUE)
--------------------
This Prospectus relates to the offer and sale of 274,443 shares (the
"Shares") of common stock, no par value (the "Common Stock"), of Adaptive
Solutions, Inc. (the "Company"), an Oregon corporation. The Shares may be
offered by Eastman Kodak Company, a shareholder of the Company (the "Selling
Shareholder"), from time to time in transactions on the Nasdaq Small-Cap
Market and the Boston Stock Exchange (the "BSE"), in privately negotiated
transactions or otherwise at fixed prices which may be changed, at market
prices prevailing at the time of sale, at prices related to such market
prices or at negotiated prices. The Shares offered hereby were issued to the
Selling Shareholder pursuant to the terms of the Asset Purchase Agreement,
dated as of October 30, 1997, between the Selling Shareholder and the
Company, under which the Company acquired certain OCR business assets and ICR
technology from the Selling Shareholder. The Shares were issued in a
transaction (the "Offering") exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"). See "Selling
Shareholders." The Shares represent approximately 4% of the Company's
outstanding Common Stock.
The Company will receive no part of the proceeds of sales made hereunder.
The shares of Common Stock offered hereby may be sold by one or more of the
following: (a) a block trade in which the broker or dealer so engaged will
attempt to sell the shares of Common Stock as agent, but may position and
resell a portion of the block as principal to facilitate the transaction; (b)
purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this Prospectus; (c) an exchange
distribution in accordance with the rules of such exchange; and (d) ordinary
brokerage transactions and transactions in which the broker solicits
purchasers. In effecting sales, brokers or dealers engaged by the Selling
Shareholder may arrange for other brokers or dealers to participate. All
expenses of registration incurred in connection with this offering are being
borne by the Company, but all selling and other expenses incurred by the
Selling Shareholder will be borne by such Selling Shareholder. The Selling
Shareholder and any broker executing selling orders on behalf of the Selling
Shareholder may be deemed to be an "underwriter" within the meaning of the
Securities Act, in which event commissions received by such broker may be
deemed to be underwriting commissions under the Securities Act. The Company
has agreed to indemnify the Selling Shareholder against certain liabilities,
including certain liabilities under the Securities Act.
The Common Stock is registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is
traded on the Nasdaq Small-Cap Market and the BSE under the symbols "ADSO"
and "ADO", respectively. On December 10, 1997, the last registered sale of
the Common Stock on the Nasdaq Small-Cap Market was $.5625.
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK AND SHOULD
BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE
INVESTMENT. SEE "RISK FACTORS" COMMENCING ON PAGE 6 FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS DECEMBER 11, 1997.
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TABLE OF CONTENTS
_________________
PAGE
Available Information. . . . . . . . . . . . . . . . 4
Incorporation of Certain Documents by Reference. . . 4
The Company. . . . . . . . . . . . . . . . . . . . . 6
Risk Factors . . . . . . . . . . . . . . . . . . . . 6
Use of Proceeds. . . . . . . . . . . . . . . . . . . 11
Selling Shareholders . . . . . . . . . . . . . . . . 11
Plan of Distribution . . . . . . . . . . . . . . . . 12
Experts. . . . . . . . . . . . . . . . . . . . . . . 12
Legal Matters. . . . . . . . . . . . . . . . . . . . 12
Indemnification of Directors and Officers. . . . . . II-1
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERING DESCRIBED HEREIN, 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 TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH
PERSON TO MAKE SUCH OFFER, SOLICITATION OR SALE. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
AN IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy statements and other information can be inspected and
copied at the public reference facilities maintained by Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices at 500 West Madison Street, Chicago, Illinois
60606 and 7 World Trade Center, New York, New York 10048. Copies of such
material can also be obtained at prescribed rates from the Public Reference
Section of the Commission at its principal office at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549. Such materials may be obtained
electronically by visiting the Commission's Web site on the Internet at
http://www.sec.gov. The Company's Common Stock is listed on the Nasdaq
Small-Cap Market and the BSE. Reports, proxy statements and other information
concerning the Company can be inspected at 1735 K Street, N.W., Washington,
D.C. 20006-1506.
This Prospectus does not contain all of the information set forth in the
Registration Statement of which this Prospectus is a part and which the
Company has filed with the Commission. For further information with respect
to the Company and the securities offered hereby, reference is made to the
Registration Statement, including the exhibits filed as a part thereof,
copies of which can be inspected at, or obtained at prescribed rates from,
the Public Reference Section of the Commission at the address set forth
above. Additional updating information with respect to the Company may be
provided in the future by means of appendices or supplements to this
Prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company with the
Commission under the Exchange Act and are incorporated by reference herein:
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a. The Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996;
b. The Company's Current Report on Form 8-K filed with the
Commission on November 14, 1997;
c. All other reports filed by the Company pursuant to
Section 13(a) or 15(d) of the Exchange Act since the
end of the Company's fiscal year ended December 31,
1996; and
d. The description of the Company's Common Stock contained
in the Company's Registration Statement on Form 8-A
dated September 27, 1993, and the Company's
Registration Statement on Form 8-A/A dated October 13,
1993, including any amendment or report filed for the
purpose of updating such description.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Prospectus and to be part hereof from the date of filing such documents.
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 that also is or is deemed
to be incorporated by reference herein, modifies or supersedes such
statement. Any 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 to whom a copy
of this Prospectus is delivered, upon written or oral request of such person,
a copy of any and all of the information that has been or may be incorporated
by reference herein (other than exhibits to such documents unless such
exhibits are specifically incorporated by reference into such documents).
Such requests should be directed to Chief Financial Officer, Adaptive
Solutions, Inc., 1400 N.W. Compton Drive, Suite 340, Beaverton, Oregon 97006,
telephone number (503) 690-1236.
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THE COMPANY
Adaptive Solutions, Inc. (the "Company") was incorporated in Oregon in
1988 and designs and markets high performance computer assisted data entry
and image recognition solutions targeted at a range of applications. In
October, 1997, the Company purchased Eastman Kodak Company's optical
character recognition ("OCR") business, including certain inventory of
finished goods and work-in-process, certain ancillary equipment used in the
business, certain service contracts, its intelligent character recognition
("ICR") technology, and its OCR technology, patents and rights.
The Company's principal executive offices are located at 1400 N.W.
Compton Drive, Suite 340, Beaverton, Oregon 97006, and its telephone number
is (503) 690-1236.
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, EACH PROSPECTIVE
INVESTOR SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS IN EVALUATING THE
COMPANY AND ITS BUSINESS BEFORE PURCHASING THE SECURITIES OFFERED HEREBY. NO
INVESTOR SHOULD PURCHASE SUCH SECURITIES UNLESS SUCH INVESTOR CAN AFFORD A
COMPLETE LOSS OF HIS OR HER INVESTMENT. THIS PROSPECTUS CONTAINS CERTAIN
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE
SECURITIES AND EXCHANGE ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE
SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED, THAT INVOLVE RISKS AND
UNCERTAINTIES. ACTUAL RESULTS ARE UNCERTAIN AND MAY BE AFFECTED BY THE
FOLLOWING FACTORS, AMONG OTHERS, WHICH MAY CAUSE THE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS.
HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT; FUTURE CAPITAL NEEDS
The Company was incorporated in 1988 and first shipped products in 1993.
The Company has been engaged in the development of its products and has
incurred significant operating losses through September 30, 1997. As of
September 30, 1997, the Company had an accumulated deficit of approximately
$27,867,000. For the nine months ended September 30, 1997 the Company
incurred operating losses of approximately $808,000. The Company expects to
report losses at least through 1997, and possibly beyond. In order to become
profitable the Company must continue to develop applications requiring high
performance computer assisted data entry ("CADE"), increase sales of its
products in the transportation and medical industries, and to governmental
entities, obtain market acceptance of its products, manage operating expenses
and expand its sales and distribution capabilities. There can be no
assurance that the Company will meet any of these objectives or ever achieve
profitability.
The Company's cash and cash equivalents at September 30, 1997, were
$2,326,000, a decrease of $1,286,000 from the cash and cash equivalents
balance of $3,612,000 at December 31, 1996. The Company's working capital at
September 30, 1997, was $2,851,000, an increase of $23,000 from the working
capital balance of $2,828,000 at December 31, 1996. The Company expects that
it will need additional funding in 1998, although it is unable to predict the
precise amount or date that such funding will be required. The Company has
not yet identified specific sources of funding, nor has it received
commitments for funding. Accordingly, there can be no assurance that any
such funding can be obtained on terms acceptable to the Company, if at all.
If adequate funds are not available as required, the Company's ability to
fulfill product orders, as well as the Company's financial position and
results of operations, will be adversely affected. In particular, the
Company could be required to significantly reduce or suspend its operations,
seek a merger partner or sell additional securities on terms that are highly
dilutive to existing stockholders. The Company's future capital needs will
depend upon numerous factors, including the success of the Company's revised
product strategy, the progress of the Company's research and development
activities, the extent and timing of the acceptance of the Company's
products, the cost of the Company's sales, marketing and manufacturing
activities and the amount of revenues generated from operations, none of
which can be predicted with certainty, and, therefore, there can be no
assurance that the Company will not require additional funding earlier than
anticipated.
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POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS
The Company expects that revenues will fluctuate substantially from
quarter to quarter and will be difficult to forecast. The absence of
significant backlog will also limit the Company's ability to plan production
and inventory levels. In addition, due to the complexity of computer
assisted data entry, the Company has a long sales cycle for its products.
The timing of new orders for these products may lead to substantial
fluctuations of operating results. Operating results may also be affected by
other factors including but not limited to, cancellation or rescheduling of
orders, seasonal fluctuations in business activity, and product announcements
by competitors and suppliers. In addition, the Company intends to make
significant expenditures on development and expanding its sales and marketing
activities. Once these expenditures are planned, it can be difficult to
reduce them quickly if funds are limited. The Company's ability to reduce
operating expenses, especially over the short term, is therefore limited.
Accordingly, any significant shortfall in revenues in any quarter, regardless
of the cause of such shortfall would have an adverse impact on the Company's
operating results and on the Company's ability to achieve profitability.
COMPETITION
The computer assisted data entry market is intensely competitive, and the
Company expects this competition to continue to increase. The Company faces
direct and indirect competition from a broad range of competitors. The
Company's principal competition comes from customer developed solutions,
direct competition from companies offering CADE solutions, and indirect
competition from companies offering competing technologies capable of
recognizing computer and hand written characters. Most of the Company's
competitors are more established, benefit from greater name recognition than
the Company. In addition, many of these companies have large established
sales forces and have been selling their products to the same customers
targeted by the Company for a substantial period of time. There can be no
assurance the Company can compete effectively in its selected markets. It is
also possible that the Company will face competition from new competitors
including VARs, system integrators, and other forms processing companies not
currently actively competing in the CADE market.
NEW PRODUCTS AND RAPID TECHNOLOGICAL CHANGE
The market for the Company's products is characterized by rapid
technological change and evolving industry standards and is highly
competitive with respect to timely product innovation. The introduction of
new products embodying new technology and the emergence of new industry
standards can rapidly render existing products obsolete and unmarketable.
The Company's success will be substantially dependent upon its ability to
anticipate changes in technology and industry standards and successfully
develop and introduce new and enhanced products on a timely basis. If the
Company is unable, for technological or other reasons, to develop products in
a timely manner in response to changes in the industry, or if products or
product enhancements developed by the Company do not achieve market
acceptance, the Company's results of operations will be materially adversely
affected. There can be no assurance that the Company will be successful in
developing and marketing products and product enhancements, that the Company
will not experience difficulties that could delay the successful development
and marketing of these products, or that its products and product
enhancements will be accepted in the marketplace. Moreover, from time to
time, the Company or its competitors may introduce new products or
technologies that have the potential to replace the Company's existing
products. There can be no assurance that these new products may delay or
eliminate the purchase of the Companies existing products, which could have a
material adverse affect on the Company's results of operations.
PRODUCT QUALITY AND RELIABILITY
The Company's customers establish demanding specifications for quality
and reliability that must be met by the Company's products. The Company has
in the past experienced some field failures on early product shipments.
Although the Company has taken steps to address these concerns, there can be
no assurance that quality and reliability problems will not recur in the
future. If such problems did recur, the Company could experience delays in
shipments, increased costs, delays in or cancellation of orders and product
returns, any of which could have a material adverse effect on the Company's
results of operations. In addition, sales of the Company's products for
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certain applications may require modifications to the Company's development
and manufacturing processes to meet strict specifications required for these
applications. Meeting such specifications could be time consuming and could
result in delays in product shipments, increased or increased manufacturing
costs which could have a material adverse effect on the Company's results of
operations.
NEED TO DEVELOP MARKETING EXPERIENCE
The Company has very limited marketing experience in its chosen markets,
and expanding the Company's marketing capabilities will require significant
expenditures for items including additions to personnel. The Company intends
to increase both its product offerings and target markets through marketing,
sales and distribution and development of relationships with other companies.
The Company intends to increase the number of its strategic partners. The
Company plans to continue to devote significant resources to its sales and
marketing efforts in order to build such corporate infrastructure.
Therefore, any failure to achieve growth in revenues in excess of increased
expenses would have a material adverse effect on the Company's operating
results and financial condition. There can be no assurance that the Company
will be able to successfully expand its sales and service force or that such
expansion will increase revenues in excess of expenses.
DEPENDENCE UPON KEY PERSONNEL
The Company's future success will depend in significant part upon the
continued service of key technical and senior management personnel, and the
Company's continuing ability to attract and retain highly qualified
technical, managerial, and sales and marketing personnel. The Company does
not have employment contract with, or "key person" life insurance policies
on, any of its employees. Given the Company's state of development, the
Company is also highly dependent on its ability to attract and retain highly
skilled engineers required to develop and refine the Company's technology and
introduce future products. The high technology industry is characterized by a
high level of employee mobility and aggressive recruiting of skilled
personnel. There can be no assurance that the Company will be able to
attract and retain qualified personnel. Failure to attract, assimilate and
retain key personnel could have a material adverse effect on the Company's
results of operations.
MANAGEMENT OF CHANGING BUSINESS
Prior to June 1996, the Company's business focused on the development and
sales of its CNAPS chip and related products to VARs, OEMs, end-users, and
government and defense industry customers. During the end of 1996 and
beginning of 1997 the Company made substantial changes to its strategy. Key
elements of its new strategy include: 1) a focus on applications requiring
CADE solutions, 2) development of high performance programmable image
processing engine products, 3) a gradual transition from the Company's
proprietary CNAPS processor to parallel processors being brought to market by
Motorola, Inc. and Intel Corporation, and 4) development of strategic
relationships with other software and hardware companies with expertise in
the image recognition area. To effectively manage the transition of its
strategy, the Company must respond to competitive developments, attract and
retain qualified personnel, use its available capital to develop and market
its technologies and products, and manage its growth in the face of a rapidly
changing business environment. There can be no assurance that the Company
can successfully manage these changes. The inability to successfully manage
this transition could have a material adverse effect on the Company's results
of operations and financial condition.
INTELLECTUAL PROPERTY
The Company relies on a combination of patents, trade secrets, and other
intellectual property law, nondisclosure agreements and other protective
measures to preserve its rights pertaining to its products. Such protection,
however, may not preclude competitors from developing products similar to the
Company's. In addition, the laws of certain foreign countries do not protect
intellectual property rights to the same extent as do the laws of the United
States. Although the Company continues to implement protective measures and
intends to protect its proprietary rights vigorously, there can be no
assurance that these efforts will be successful.
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There can also be no assurance that third parties will not assert
intellectual property infringement claims against the Company. Although no
written claims or litigation related to any such matter are currently pending
against the Company, the Company has not conducted any patent searches or
obtained an opinion of counsel with respect to its proprietary rights.
Accordingly, there can be no assurance that no claims will be initiated, that
the Company would prevail in any such litigation seeking damages or
injunction against the sale of the Company's products or, if necessary, that
the Company would be able to obtain any necessary licenses on reasonable
terms, or at all. Any such litigation could be protracted and costly and
could have a material adverse effect on the Company's results of operations
regardless of the outcome of the litigation.
SUBSTANTIAL SHARES OF COMMON STOCK RESERVED
The Company has reserved 2,312,500 shares of Common Stock for issuance
upon exercise of outstanding warrants. The Company has reserved and
additional 1,391,599 shares of Common Stock for issuance to key employees,
officers, directors, and consultants pursuant to the Company's Stock
Incentive Plan and the Company's Employee Stock Purchase Plan. The existence
of the warrants and any other options may prove to be a hindrance to future
equity financing by the Company. Further, the holders of such warrants and
options may exercise them at a time when the Company would otherwise be able
to obtain additional equity capital on terms more favorable to the Company.
POSSIBLE VOLATILITY OF STOCK PRICE
The trading price of the Common Stock has been and could continue to be
subject to significant fluctuations in response to variations in quarterly
operating results, changes in analysts' earnings estimates, announcements of
technological innovations by the Company or its competitors, general
conditions in the computer industry and other factors. In addition, the
stock market is subject to price and volume fluctuations that affect the
market price for companies in general, and high technology companies in
particular, and that are often unrelated to operating performance.
POSSIBLE ILLIQUIDITY OF STOCK PRICE
The Common Stock is quoted on the Nasdaq Small-Cap Market ("Nasdaq").
Nasdaq does not offer last sale reporting and may be a significantly less
liquid market than the National Market System. Moreover, if the Company
should continue to experience losses from operations, it may be unable to
maintain standards for continued quotation on Nasdaq, and the Common Stock
could be subject to removal from the Nasdaq system. Trading, if any, in the
Common Stock would thereafter be conducted in the over-the-counter market on
an electronic bulletin board established for securities that do not meet the
Nasdaq listing requirements or in what are commonly referred to as the "pink
sheets". As a result, an investor would find it more difficult to dispose of,
or to obtain accurate quotations as to the price of, the Company's
securities. In addition, if the Company's securities were removed from the
Nasdaq system, they would be subject to so-called "penny stock" rules that
impose additional sales practice requirements on broker-dealers who sell such
securities. Consequently, removal from the Nasdaq system, if it were to
occur, could affect the ability or willingness of broker-dealers to sell the
Company's securities and the ability of purchasers of the Company's
securities to sell their securities in the secondary market.
NO ANTICIPATED DIVIDENDS
The Company has not previously paid any dividends on its Common Stock and
for the foreseeable future intends to continue its policy of retaining any
earnings to finance the development and expansion of its business.
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LIMITATIONS ON UTILIZATION OF NET OPERATING LOSS CARRYFORWARDS
As of September 30, 1997, the Company had net operating loss
carryforwards of approximately $27.9 million. Due to changes in the
Company's ownership structure, including in connection with the Offering, the
use of these carryforwards may be further limited. There can be assurance
that the net operating loss carryforwards will ever be fully utilized.
EFFECT ON ANTITAKEOVER PROVISIONS
The Company's Board of Directors has the authority to issue up to
5,000,000 shares of Preferred Stack and to determine the price, rights,
preferences and privileges of those shares without any further vote or action
by the shareholders. The rights of the holders of the Common Stock will be
subject to, and may be adversely affected by the rights of the holders of any
Preferred Stock that may be issued in the future. Because the terms of the
Preferred Stock can be fixed by the Board of Directors without shareholder
action, the Preferred Stock could be issued quickly with terms calculated to
defeat a proposed takeover of the Company or to make the removal of
management more difficult. The Company is subject to the Oregon Business
Combination Act. The provisions of this statute could impede any merger,
consolidation, takeover or other business combination involving the Company
or discourage a potential acquirer from making a tender offer or otherwise
attempting to gain control of the Company.
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USE OF PROCEEDS
The proceeds from the sale of the Selling Shareholder's Common Stock will
belong to the Selling Shareholder. The Company will not receive any proceeds
from such sales of the Common Stock.
SELLING SHAREHOLDERS
The following table sets forth the names of the Selling Shareholder, the
number of shares beneficially owned by the Selling Shareholder prior to the
offering, and the number of shares and percentage of the class to be owned by
the Selling Shareholder upon completion of the Offering.
Shares Shares Owned
Beneficially After Offering
Owned Prior Shares -----------------
Selling Shareholder to Offering Offered Number Percent
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Eastman Kodak Company 604,992(1) 274,487 330,549 4.5
(1) Includes 330,549 shares of Common Stock in which Eastman
Kodak Company has an indirect beneficial ownership interest
through its 99% limited partnership interest in Aperature
Associates, L.P.
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PLAN OF DISTRIBUTION
The Selling Shareholder has informed the Company that the Shares may be
sold from time to time by the Selling Shareholder or may be retained. The
Selling Shareholder may from time to time elect to sell Shares over Nasdaq,
the BSE or in other market transactions, or in negotiated transactions, at
prices and on terms related to the then-current market price or otherwise.
In addition, the Shares may be sold by one or more of the following: (a) a
block trade in which the broker or dealer so engaged will attempt to sell the
Shares as agent, but may position and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a broker or dealer
as principal and resale by such broker or dealer for its account pursuant to
this Prospectus; (c) an exchange distribution in accordance with the rules of
such exchange; and (d) ordinary brokerage transactions and transactions in
which the broker solicits purchasers. In effecting sales, brokers or dealers
engaged by the Selling Shareholder may arrange for other brokers or dealers
to participate. All brokers' commissions, concessions or discounts will be
paid by the Selling Shareholder.
The Selling Shareholder and any broker executing selling orders on behalf
of the Selling Shareholder may be deemed to be an "underwriter" within the
meaning of the Securities Act, in which event commissions received by such
broker may be deemed to be underwriting commissions under the Securities Act.
The Company has agreed to indemnify the Selling Shareholder against
certain liabilities, including certain liabilities under the Securities Act.
EXPERTS
The financial statements and schedule of the Company as of December 31,
1996 and 1995, and for each of the years in the three year period ended
December 31, 1996, all contained in the Company's Annual Report on Form 10-K
for the year ended December 31, 1996, have been incorporated by reference
herein in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, and upon the authority of said firm as experts
in accounting and auditing.
LEGAL MATTERS
Counsel for the Company, Ater Wynne Hewitt Dodson & Skerritt, LLP, 222
S.W. Columbia, Suite 1800, Portland, Oregon 97201, has rendered an opinion to
the effect that the Shares offered hereby are duly and validly issued, fully
paid and nonassessable.
-12-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
SEC Registration Fee . . . . . . . . . $ 60
Nasdaq Listing Fee . . . . . . . . . . 2,744
Boston Stock Exchange Listing Fee. . . 1,372
Accountant's Fees and Expenses . . . . 5,000
Legal Fees and Expense . . . . . . . . 5,000
Blue Sky Fees and Expenses . . . . . . 15,000
Miscellaneous. . . . . . . . . . . . . --
-------
Total. . . . . . . . . . . . . . . . . 29,176
* Represents expenses related to the distribution by the
Selling Shareholder pursuant to the Prospectus prepared
in accordance with the requirements of Form S-3. These
expenses will be borne by the Company on behalf of the
Selling Shareholder. All amounts are estimates except
for the SEC Registration Fee and the Nasdaq and Boston
Stock Exchange listing fees.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Articles of Incorporation provide for indemnification of
the officers and directors of the Company to the fullest extent not
prohibited by law. The Oregon Business Corporation Act, ("OBCA") permits a
corporation to limit, under certain circumstances, a director's liability for
monetary damages in actions brought by the corporation or its stockholders.
As an Oregon corporation the Company is subject to the OBCA and the
exculpation from liability and indemnification provisions contained therein.
Pursuant to Section 60.047(2)(d) of the OBCA, Article III of the Company's
Fifth Restated Articles of Incorporation (the "Articles") eliminates the
liability of the Company's directors to the Company or its stockholders for
monetary damages, except for any liability related to breach of the duty of
loyalty, actions not in good faith and certain other liabilities.
Section 60.387 ET. SEQ., of the OBCA allows corporations to indemnify
their directors and officers against liability where the director or officer
has acted in good faith and with a reasonable belief that actions taken were
in the best interests of the corporation or at least not adverse to the
corporation's best interests and, if in a criminal proceeding, the individual
had no reasonable cause to believe the conduct in question was unlawful.
Under the OBCA, corporations may not indemnify against liability in
connection with a claim by or in the right of the corporation but may
indemnify against the reasonable expenses associated with such claims.
Corporations may not indemnify against breaches of the duty of loyalty. The
OBCA mandates indemnification against all reasonable expenses incurred in the
successful defense of any claim made or threatened whether or not such claims
was by or in the right of the corporation. Finally, a court may order
indemnification if it determines that the director or officer is fairly and
reasonably entitled to indemnification in view of all the relevant
circumstances whether or not the director or officer met the good faith and
reasonable belief standards of conduct set out in the statute.
The OBCA also provides that the statutory indemnification provisions are
not deemed exclusive of any other rights to which directors or officers may
be entitled under a corporation's articles of incorporation or bylaws, any
agreement, general or specific action of the board of directors, vote of
stockholders or otherwise.
The Company's Articles also provide for the elimination of liability of
directors for monetary damages to the full extent permitted by the Oregon
Business Corporations Act.
The Company has entered into indemnification agreements with its
directors and certain of its officers.
II-1
<PAGE>
ITEM 16. EXHIBITS.
Exhibits
Number
------
2.1 Asset Purchase Agreement dated as of October 30,, 1997,
between Eastman Kodak Company and Adaptive Solutions, Inc.*
5.1 Opinion of Ater Wynne Hewitt Dodson & Skerritt, LLP
23.1 Consent of KPMG Peat Marwick LLP, independent auditors
23.2 Consent of Ater Wynne Hewitt Dodson & Skerritt, LLP (included in
Exhibit 5.1)
24.1 Power of Attorney (included on page II-3)
-------------
* Incorporated by reference to Exhibit 23.2 to the
Company's Current Report on Form 8-K dated November 11,
1997.
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
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 this
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act
that is incorporated by reference in this registration statement
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities 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 foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification is 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 of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement on Form S-3 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Beaverton, State of Oregon, on December 4, 1997.
ADAPTIVE SOLUTIONS, INC.
By: /s/ Daniel J. Meub
-----------------------------------------
Daniel J. Meub
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Daniel J. Meub and Dan Hammerstrom
jointly and severally, his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendment to
this Registration Statement on Form S-3 and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------------ -------------------------- ----------------
<S> <C> <C>
/s/ C. Scott Gibson Chairman of the Board December 4, 1997
- ------------------------------
(C. Scott Gibson)
/s/ Daniel J. Meub President, Chief Executive December 4, 1997
- ------------------------------ and Director
(Daniel J. Meub)
/s/ Dan Hammerstrom, Ph.D. Director December 4, 1997
- ------------------------------
(Dan Hammerstrom, Ph. D.)
/s/ Frederick M. Haney, Ph.D. Director December 4, 1997
- ------------------------------
(Frederick M. Haney, Ph.D.)
/s/ T. Peter Thomas Director December 4, 1997
- ------------------------------
(T. Peter Thomas)
/s/ Jean-Claude Peterschmitt Director December 4, 1997
- ------------------------------
(Jean-Claude Peterschmitt)
/s/ David Wood Director December 4, 1997
- ------------------------------
(David Wood)
</TABLE>
II-3
<PAGE>
INDEX TO EXHIBITS
Number
------
2.1 Asset Purchase Agreement dated as of October 30,, 1997,
between Eastman Kodak Company and Adaptive Solutions, Inc.*
5.1 Opinion of Ater Wynne Hewitt Dodson & Skerritt, LLP
23.1 Consent of KPMG Peat Marwick LLP, independent auditors
23.2 Consent of Ater Wynne Hewitt Dodson & Skerritt, LLP (included in
Exhibit 5.1)
24.1 Power of Attorney (included on page II-3)
____________________
* Incorporated by reference to Exhibit 23.2 to the
Company's Current Report on Form 8-K dated November 11,
1997.
II-4
<PAGE>
Exhibit 5.1
ATER WYNNE HEWITT DODSON & SKERRITT, LLP
222 SW Columbia, Suite 1800
Portland, Oregon 97201
Telephone: (503) 226-1191
FAX: (503) 226-0079
December 11, 1997
Board of Directors
Adaptive Solutions, Inc.
1400 N.W. Compton Drive, Suite 340
Beaverton, OR 97006
Gentlemen:
In connection with the registration of 274,443 shares (the "Shares") of
common stock, no par value (the "Common Stock"), of Adaptive Solutions, Inc.,
an Oregon corporation (the "Company"), under the Registration Statement on
Form S-3 to be filed with the Securities and Exchange Commission on December
3, 1997 (the "Registration Statement"), and the proposed offer and sale of
the Common Stock pursuant to the Registration Statement, we have examined
such corporate records, certificates of public officials and officers of the
Company and other documents as we have considered necessary or proper for the
purpose of this opinion. The Shares were issued by the Company to Eastman
Kodak Company (the "Selling Shareholder") in a private placement in
connection with a purchase of certain assets by the Company from the Selling
Shareholder.
Based on the foregoing and having regard to legal issues which we deem
relevant, it is our opinion that the Shares are validly issued, fully paid
and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
above-mentioned Registration Statement and to the reference to this firm
under the caption "Legal Matters" in the prospectus constituting a part of
the Registration Statement. This consent shall not be construed to cause
this firm to be in the category of persons whose consent is required to be
filed pursuant to Section 7 of the Securities Act of 1933, as amended, or the
rules thereunder.
Very truly yours,
/s/ Ater Wynne Hewitt Dodson & Skerritt, LLP
ATER WYNNE HEWITT DODSON & SKERRITT, LLP
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITOR'S CONSENT
The Board of Directors
Adaptive Solutions, Inc.
We consent to the use of our report, dated February 7, 1997, incorporated
herein by reference and to the reference to our firm under the heading
"Experts" in Prospectus.
/s/ KPMG Peat Marwick LLP
Portland, Oregon
December 9, 1997
