As filed with the Securities and Exchange Commission on May 30, 1996
Registration No. 333-3437
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
AMENDMENT NO. 1 TO
FORM S-3/A
Registration Statement Under The Securities Act of 1933
INTELLIGENT DECISION SYSTEMS, INC.,
(Successor to Resource Finance Group, Ltd.)
(Exact name of registrant as specified in its charter)
Delaware 38-3286374
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2025 East Beltline Avenue SE
Suite 400
Grand Rapids, Michigan 49546
(616) 285-5830
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Mark A. Babin
President
Intelligent Decision Systems, Inc.
2025 East Beltline Avenue SE, Suite 400
Grand Rapids, Michigan 49546
(616) 285-5830
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Joseph P. Richardson, Esq.
Brown & Bain, P.A.
2901 North Central Avenue
Suite 2000
Phoenix, Arizona 85012
(602) 351-8000
Approximate date of commencement of proposed sale to public: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. ___
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. _x_
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. ___
If this Form is a post-effective amendment filed pursuant to Rule 462(b) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. ___
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. ___
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount Maximum Maximum Amount
Title of Each Class to be Offering Price Aggregate of
of Securities to Be Registered Registered Per Unit Offering Price Registration Fee
<S> <C> <C> <C> <C>
Common Stock, $.001 par value 1,964,154 shares $2.19 $4,301,497 (1) $1,484.00 (2)
Common Stock, $.001 par value 136,654 shares $3.75 $512,453 (3) $ 177.00 (4)
================ ===== ========== =========
</TABLE>
(1) The registration fee has been calculated based on the average of the
high "asked" and low "bid" prices of the Common Stock on May 6, 1996 as reported
in the over-the-counter market on the "OTC Electronic Bulletin Board" pursuant
to Rule 457(c).
(2) This registration fee was previously paid by the registrant with the
registration Statement on Form S-3 filed with the Commission of May 10, 1996.
(3) The registration fee("New Fee") has been calculated based on the
average of the high "asked" and low "bid" prices of the Common Stock on May 28,
1996 as reported in the over-the-counter market on the "OTC Electronic Bulletin
Board" pursuant to Rule 457(c).
(4) The New Fee is being paid with Amendment No. 1 to the Registration
Statement on Form S-3/A filed with the Commission on May 30, 1996.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
SUBJECT TO COMPLETION; DATED MAY 30, 1996
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
INTELLIGENT DECISION SYSTEMS, INC.
PROSPECTUS
FOR UP TO 1,964,154 SHARES
OF COMMON STOCK
This Prospectus relates to up to 1,964,154 shares (the "Shares") of Common
Stock, par value $.001 per share ("Common Stock") of Intelligent Decision
Systems, Inc., a Delaware corporation ( "IDS"), which may be offered from time
to time by certain stockholders of IDS named herein (the "Selling
Stockholders"). The Shares are issuable by IDS upon the exercise of certain
warrants or options to purchase shares of Common Stock as more fully described
below (the "Warrants"). IDS will not receive any proceeds from the sale of the
Shares, with the exception of the exercise price of such Warrants as may be
exercised. See "Selling Stockholders."
IDS has been advised by each Selling Stockholder that he or she expects to
offer his or her Shares through brokers and dealers to be selected by him or her
from time to time. The Shares may be offered for sale in the over-the-counter
market, in one or more private transactions, or a combination of such methods of
sale, at prices and on terms then prevailing, at prices related to such prices,
or at negotiated prices. Certain of the Selling Stockholders may distribute
their shares, from time to time, to their limited and/or general partners who
may sell Shares pursuant to this Prospectus. Each Selling Stockholder may pledge
all or a portion of the Shares owned by him or her as collateral in loan
transactions. Upon default by such a Selling Stockholder, the pledgee in such
loan transaction would have the same rights of sale as the Selling Stockholder
under this Prospectus. Each Selling Stockholder may also transfer Shares owned
by him by gift and upon any such transfer the donee would have the same rights
of sale as such Selling Stockholder under this Prospectus. In addition, any
securities covered by this Prospectus which qualify for sale pursuant to Rule
144 of the Securities Act of 1933, as amended (the "Securities Act"), may be
sold under Rule 144 rather than pursuant to this Prospectus. Finally, each
Selling Stockholder and any brokers and dealers through whom sales of the Shares
are made may be deemed to be "underwriters" within the meaning of the Securities
Act, and the commissions or discounts and other compensation paid to such
persons may be regarded as underwriters' compensation.
The Common Stock is traded under the symbol "IDSI" in the over-the-counter
market on the "OTC Electronic Bulletin Board" operated by the National
Association of Securities Dealers, Inc. (the "OTC Bulletin Board"). On May 28,
1996, the low "bid" and high "asked" prices for the Common Stock were $3-5/8 and
$3-7/8, respectively. There is no established market for the Warrants. See
"Price Range of Common Stock."
Investment in the shares offered hereby involve a high degree of risk. See
"Risk Factors" which begin on page 2 of this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR AS 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 date of this Prospectus is _______________, 1996.
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AVAILABLE INFORMATION
IDS is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (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 copies thereof may be obtained, at prescribed
rates, at the public reference facilities maintained by the Commission at the
Public Reference Section, Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's Regional Offices located at 7 World Trade Center,
13th Floor, New York, New York 10048, and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be
obtained at prescribed rates by writing to the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
IDS has filed a Registration Statement on Form S-3 under the Securities Act
covering the Common Stock included in this Prospectus. This Prospectus does not
contain all the information set forth in or annexed as exhibits to the
Registration Statement filed by IDS with the Commission and reference is made to
such Registration Statement and the exhibits thereto for the complete text
thereof. For further information with respect to IDS and the securities offered
hereby, reference is made to the Registration Statement, including the exhibits
filed as part thereof, copies of which may be obtained at prescribed rates upon
request to the Commission in Washington, D.C. Any statements contained herein
concerning the provisions of any documents are not necessarily complete, and, in
each instance, such statements are qualified in their entirety by reference to
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission.
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<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been previously filed by IDS with the
Commission, are incorporated by reference in this Prospectus:
1. The Company's Joint Proxy Statement-Prospectus included in the
Registration Statement on Form S-4, File No. 33-93058, as filed
pursuant to Rule 424(b) under the Securities Act;
2. Annual Report on Form 10-KSB for the fiscal year ended June 30,
1995;
3. Quarterly Report on Form 10-QSB for the fiscal quarter ended
September 30, 1995;
4. Quarterly Report on Form 10-QSB for the fiscal quarter ended
December 31, 1995;
5. Quarterly Report on Form 10-QSB for the fiscal quarter ended
March 31, 1996; and
6. Current Report on Form 8-K, dated April 15, 1996.
All documents filed by IDS pursuant to Sections 13(a), 13(c), 14 or 15(d)of
the Exchange Act on or after the date of this Prospectus and prior to the
termination of the offering of the Shares described herein shall be deemed to be
incorporated by reference into this Prospectus from the respective dates those
documents are filed.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of the Registration Statement and this Prospectus to the extent
that a statement contained herein or in any subsequently filed document which
also is or is 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 the
Registration Statement or this Prospectus.
IDS will provide, without charge, to each person who receives this
Prospectus, upon the written or telephonic request of any such person, a copy of
any or all of the documents which have been incorporated herein by reference,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference). Requests should be directed in writing to the
Secretary, Intelligent Decision Systems, Inc., 2025 East Beltline Avenue SE,
Suite 400, Grand Rapids, Michigan 49545 or by telephone at (616) 285-5830.
v
<PAGE>
THE COMPANY
Intelligent Decision Systems, Inc. ("IDS") is a Delaware corporation
incorporated on June 1, 1995 and is the successor by a merger on April 1, 1995
with Resource Financial Group, Ltd., a Colorado corporation ("RFG"). See
"Certain Recent Developments." IDS, together with its subsidiaries (the
"Company") develops and distributes computerized business systems designed
specifically for the long-term (non-acute) health care industry. The Company's
principal executive offices are located at 2025 East Beltline Avenue SE, Suite
400, Grand Rapids, Michigan 49546 and its telephone number is (616) 285-5830.
The Company maintains offices in Draper, Utah, Stamford, Connecticut and
Scottsdale, Arizona.
CERTAIN RECENT DEVELOPMENTS
IDS was originally formed as a wholly owned subsidiary of RFG. In accordance
with the terms set forth in IDS's Registration Statement on Form S-4 declared
effective by the SEC on February 9, 1996 ("Form S-4"), IDS entered into a series
of transactions whereby RFG merged with and into IDS and Digital Services, Inc.,
a Nevada corporation ("Old DSI") merged with and into a wholly owned subsidiary
of IDS ("New DSI") on April 1, 1996 (the "Mergers").
As a result of the Mergers, among other things, the Company has succeeded to
the rights and obligations of RFG and Old DSI under a ten-year agreement, dated
July 13, 1994 ("HPSI Agreement"), with National Purchasing Corporation, a
California corporation doing business as HPSI ("HPSI"). HPSI is a group
purchasing organization which presently serves approximately 3,000 licensed
nursing home clients, as well as 3,000 other clients who operate principally in
the health care, hospitality, restaurant and institution markets. Pursuant to
the HPSI Agreement, the Company and HPSI have agreed to combine their expertise
and resources with the Company developing an interactive, multimedia
computerized management business system ("Vision System") that will provide to
system users various components, including an order processing and confirmation
module, a vendor/supplier module, and training and installation modules and HPSI
marketing the system to its clients. The Vision System developed in accordance
with the HPSI Agreement will be owned by HPSI Online, Inc., a California
corporation and a wholly-owned subsidiary of HPSI. The business plan of the
Company will rely heavily on the success of its relationship with HPSI.
In addition, the Company has become a party to a Leasing Program Agreement,
dated as of June 7, 1995 (together with Master Lease Agreement and other related
documents, the "Leasing Agreement") with Neptune Technology Leasing Corp.
("Neptune") whereby Neptune will purchase the Vision System from the Company and
will lease those systems to DSI Leasing Corporation, a wholly owned subsidiary
of the Company, which in turn will sublease the Vision System to end users of
the system. Except as provided under the Leasing Agreement, Neptune will be the
Company's exclusive leasing source during the term of such agreement.
The Company is also a party to a Customer Agreement, a Vision Base System
Installation Agreement, a Servicing Agreement, and other related agreements,
each dated March 1, 1996 with IBM Corporation (collectively, the "IBM
Agreement"), whereby IBM will assist the Company by providing installation and
maintenance and warranty services for the Vision System to end users of the
system. IBM will provide the services on a nationwide basis at the end-users
facilities which are located throughout the United States.
1
<PAGE>
RISK FACTORS
The following factors, in addition to those discussed elsewhere in this
Prospectus, should be carefully considered in evaluating an investment in the
Shares offered hereby:
Limited Liquidity and Limited Financial Resources
The Company is currently spending approximately $200,000 per month on the
development of its products and its administrative structure and currently
generates cash flow of approximately $200,000 from the sales and rental of its
products, most significantly, those involving the Vision System. The prospective
cash flows from the Vision System through the HPSI Agreement are the Company's
only foreseeable material source of operational cash flow. The Company addresses
its capital needs through financing provided by and Neptune and its own
financial reserves, which are equivalent to approximately two months of
operating costs and expenses (excluding non-cash items such as depreciation and
amortization).
The Company has entered into a Loan Agreement with Neptune pursuant to which
the Company may borrow on a revolving basis an aggregate principal amount of
$450,000. Under this Agreement, the Company has granted a security interest in
all of its inventory and accounts receivable to Neptune. The loan matured on
April 27, 1996 and Neptune has been extending credit to the Company under the
same terms on a month-to-month basis. There can be no assurance that the Company
will be able to pay the amounts which are due under the Loan Agreement.
The Company has sold an aggregate of $1,490,000 million in the principal
amount of its 15% Unsecured Notes ("Unsecured Notes") in a private placement
pursuant to a Note Purchase Agreement, dated as of December 13, 1994, between
the Company (as the successor to Old DSI) and each purchaser of the Unsecured
Notes. The Unsecured Notes will mature on December 15, 1996. There can be no
assurance that the Company will be able to pay the amounts which are due under
the Unsecured Notes.
As the Company will be unable to pay the amounts due under the Unsecured
Notes through the operational cash flow of the Company, the Company will need to
attract additional equity capital in order to repay the Unsecured Notes. The
ability of the Company to timely pay the Unsecured Notes may depend on whether
warrant holders of the Series A and Series B warrants (together, the "Note
Warrants") that were issued as a Unit with the Unsecured Notes, exercise such
Note Warrants. See "Selling Stockholders." These Note Warrants expire on July
31, 1996. The exercise prices of the warrants are $2.00 (or $1.69) and $1.00
respectively. A total of $745,000 would be contributed to equity assuming full
exercise of the Series B Warrants and an additional $1,490,000 would be
contributed to equity assuming full exercise of the Series A Warrants. There can
be no assurances that the warrant holders will fully exercise their warrants. If
warrant holders exercise their Note Warrants, dilution of current shareholders
will result and the relative interests of the shareholders of the Company may be
adversely affected.
Alternatively, the Company could use other available means to obtain equity
financing. Capital may be sought through additional equity offerings, as well as
collaborative relationships, borrowings and other available sources. There can
be no assurance that such funding will be available on acceptable terms, if at
all. If additional funds are raised by issuing equity securities, significant
dilution to the Company's then existing stockholders may result. The
unavailability of such financing could prevent or delay the development and
marketing of the Company's products and the Company's business, results of
operation and financial condition could be materially and adversely affected.
2
<PAGE>
Period of Transition
The Company is experiencing a period of transition as it emerges from its
status as a development stage company. The transition has placed, and will
continue to place, a significant strain on the Company's resources. The Company
intends to declare itself out of the development stage as of July 1, 1996, a
date that corresponds to the beginning of its next fiscal year. The likelihood
of success of the Company must be considered in light of the expenses,
difficulties and delays frequently encountered in connection with the continuing
development of a new business. If the Company is unable to manage the transition
out of the development stage, the Company's business, competitive position,
results of operations and financial condition will be materially and adversely
affected.
In addition, the Company has recently undergone a restructuring as a result
of the merger of RFG with and into the Company and the merger of Old DSI with
New DSI, and the entire board of directors and the management has changed. See
"Certain Recent Developments." The Company's ability to manage growth
successfully will require the personnel of RFG and Old DSI to work together
effectively and will require the Company to improve its operational, management
and financial systems and controls. Prior to the consummation of the Mergers,
Old DSI and RFG had been operated as separate, independent corporations. While
Old DSI and RFG were engaged in related businesses and were parties to a joint
operating agreement pursuant to which certain administrative, financial and
other services were performed cooperatively, there can be no assurance that
management of the Company will be able to integrate or allocate properly the two
businesses on an economic basis or be able to oversee and implement successfully
the business strategy of the Company after the Mergers. If the Company is unable
to manage this transition effectively, the Company's business, competitive
position, results of operation and financial condition will be materially and
adversely affected.
Dependence on Collaborative Relationships
The Company is reliant on other companies for the marketing, sales and
installation of its main product, Vision System, and accordingly, there can be
no assurances that the Company will be able to oversee and implement
successfully the business strategy of the Company.
The Company has minimal direct sales or marketing capability. The Company
will rely on HPSI for sales of the Vision System. See "Certain Recent
Developments." The failure or inability of HPSI to perform its obligations under
the HPSI Agreement or to effectively sell or market the Vision System would have
a material adverse effect on the Company. If the Company determines to broaden
its business to provide Vision System or other systems to users other than
HPSI's clients, the Company will either have to develop the capabilities to
commercialize and market its technologies itself or will be dependent on others
to do so. Should the Company elect to commercialize and market its technologies
itself, the Company would need to develop additional resources, and there can be
no assurance that it will be successful in developing these capabilities. Also,
should the Company elect to obtain additional collaborative partners to assist
in commercialization and marketing its technologies and the resultant products,
there can be no assurance that the Company will be successful in reaching
satisfactory arrangements with such third parties.
The Company's ability to install and maintain the Vision System is limited.
The Company relies on IBM to install and service the Vision System pursuant to
the IBM Agreement. The failure or inability of IBM to satisfactorily perform its
obligations under the IBM Agreement or to adequately install and service the
Vision System would have a material adverse effect on the Company.
3
<PAGE>
History of Losses and Expectation of Future Losses
The Company has generated minimum net income from operations in the past and
there can be no assurance that the Company will become profitable in the future.
The Company has an aggregate accumulated deficit of $1,924,005 through June 30,
1995. The continuing development and commercialization of the Company's products
will require substantial expenditures. There can be no assurance that the
Company's products will ever gain commercial acceptance or that the Company will
ever generate significant revenues or achieve profitability.
Dependence on the Vision System; Uncertainty of Market Acceptance
The Vision System is currently the Company's primary product. The Company has
only sold the Vision System product in limited quantities and there can be no
assurance that the Company's continuing efforts will be successful or that the
Vision System and any other product developed by the Company will be effective,
capable of being manufactured at commercial quantities at acceptable costs, or
successfully marketed. The Company expects that the Vision System, when fully
commercialized, will account for substantially all the Company's earnings for
the foreseeable future. Because the Vision System currently represents the
Company's main product focus, if the Vision System is not successful, the
Company's business, financial condition and results of operation could be
materially and adversely affected.
Risk of Product Defects
Software products as complex as those offered by the Company may contain
defects or failures when introduced or when new versions are released. The
Company may discover software defects in the Vision System or its other products
and may experience delays or lost revenues to correct such defects in the
future. Although the Company has not yet experienced significant delays or lost
revenues for any defects, there can be no assurance that despite testing by the
Company, errors will not be found in new products released after the
commencement of commercial shipment, resulting in loss of market share or
failure to achieve market acceptance. Any such occurrence could have a material
adverse effect upon the Company's business, operating results or financial
condition.
Products in Development
The markets for the Company's existing and planned computer software and
hardware products are characterized by rapidly changing technology, evolving
industry standards, frequent new product introductions and enhancements. The
successful development and commercialization of new products involve many risks,
including the identification of new product opportunities, the successful
completion of the development process, and the retention and hiring of
appropriate research and development personnel. The introduction of products
embodying new technologies and the emergence of new industry standards could
render the Company's existing products and products currently under development
obsolete and unmarketable. The Company's future success will depend upon
successfully developing and distributing the Vision System in connection with
the HPSI Agreement, and thereafter upon its ability to enhance the Vision System
and to develop and introduce new products that keep pace with technological
developments, respond to evolving end-user requirements and achieve market
acceptance. Any failure by the Company to anticipate or respond adequately to
technological developments or end-user requirements, or any significant delays
in product development or introduction, could result in a loss of
competitiveness or revenues. There can be no assurance that products or
technologies developed by others will not render the Company's products or
technologies noncompetitive or obsolete or that the Company will not experience
significant delays in the future, which could have a material adverse effect on
the Company's results of operations. In addition, there can be no assurance the
Company will be successful in developing
4
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and marketing new products or product enhancements on a timely basis or that new
products or product enhancements developed by the Company will achieve market
acceptance.
In addition, the life cycle of the Company's products are difficult to
predict due to the effect of new product introductions or product enhancements
by the Company or to competitors, market acceptance of new or enhanced versions
of the Company's products and competition in the Company's marketplace. Declines
in the demand for the Vision System, whether as a result of competition,
technological change, price reductions or otherwise, could have a material
adverse effect on the Company's business, operating results and financial
condition.
Limited Production Capabilities
The Company currently integrates various components into the Vision System in
limited quantities in Draper, Utah. However, the Company does not have
experience in producing the Vision System in commercial quantities. The Company
may encounter difficulties in scaling up production of the Vision System to meet
customer demand, including problems involving production yields, quality control
and assurance, components supply and shortages of qualified personnel. There can
be no assurance that the Company will not encounter manufacturing difficulties,
which could have a material adverse effect on the Company's business and
financial condition and results of operation. Should the Company elect to obtain
additional collaborative partners to assist in producing Vision Systems in
commercial quantities, there can be no assurance that the Company will be
successful in reaching satisfactory arrangements with such parties.
Limited Trading Market for Common Stock
The Common Stock is traded in the over-the-counter market through the OTC
Bulletin Board under the symbol "IDSI." Prior to the Mergers, the trading market
for the Common Stock of the Company's predecessor, RFG, was extremely limited
and sporadic. There can be no assurance that an active trading market will
develop or be sustained.
Commercial/Consumer Acceptance of PICK Operating System
The Company's Screenware software, which is used for the Vision System, is
designed to be used on a unique operating system called PICK. PICK is a
multi-user, multi-tasking operating system which results in a less costly
investment in hardware. In addition, PICK's operating system is itself a data
base which results in a much faster system that is easier to use and more
user-friendly than most other operating systems and eliminates the need for
purchasing a third party database. It is estimated that nearly 80% of the
Fortune 1000 companies have PICK-based applications in their organizations. The
Company's products are based on the PICK operating system. Any factors that
adversely affect the availability or popularity of PICK in the market would have
a material adverse effect on the Company's operating system. The Company will
have no control over the factors that affect the availability or commercial
acceptance of the PICK operating system.
Competition
A large number of companies compete in the computer software business,
including the portion of the market targeted at developing and providing
business management systems in which the Company will competes. Many of these
companies have far greater capital, technical, personal, marketing and other
resources than the Company. Furthermore, there can be no assurance that these or
other firms will not develop new or enhanced products and software systems that
are more effective than any that have been or may be developed by the Company.
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Importance of Intellectual Property
The Company does not currently hold any patent or copyright protection for
its principal assets. Management of the Company may file for appropriate
intellectual property protection in the future but there are no assurances such
protection will be granted or that protection will be adequate to deter
misappropriation of the Company's technologies or that there will not be
independent third party development of similar technologies. The Company's
success and revenues will depend, in part, on its ability to obtain or license
patents, protect trade secrets and operate without infringing on the proprietary
rights of others.
The Company has not in the past adhered to a disciplined regimen relating to
the execution of confidential disclosure, proprietary rights and non-competition
agreements with its vendors, customers, employees and consultants. Accordingly,
there are significant risks that claims may be brought against the Company in
the future for infringing on the proprietary rights of others. The Company is
not aware of any actual material infringement, and no such claims are currently
pending against the Company.
Management has started taking steps to protect the Company's proprietary
information. However, the patent and proprietary protection of software is
highly competitive and involves complex legal and factual questions. There can
be no assurance that any patents issued to the Company will provide it with
competitive advantages or will not be challenged by others, or that the patents
or proprietary rights of others will not have an adverse effect on the ability
of the Company to do business. Furthermore, there can be no assurance that
others will not independently develop similar products or, if patents are issued
to the Company, that others will not design around such patents or proprietary
rights. In addition, the Company may be required to obtain licenses to patents
or other proprietary rights of other parties. No assurance can be given that any
licenses required under any such patents or proprietary rights would be made
available on terms acceptable to the Company, if at all. If the Company does not
obtain such licenses, it could encounter delays in product market introductions
while it attempts to design around such patents, or could find that the
development, manufacture or sale of products requiring such licenses could be
foreclosed. In addition, the Company could experience a loss of revenues as well
as incur substantial costs in defending itself and indemnifying its partners in
suits brought against it or one or more of them on such patents or proprietary
rights or in suits in which the Company's patents or proprietary rights may be
asserted by it against another party. Further, there can be no assurance that
any patent obtained or licensed by the Company will be held valid and
enforceable if challenged by another party.
Dividends
Neither the Company nor its predecessor has ever paid cash dividends on
shares of its Common Stock, and the Company does not intend to pay any dividends
in the foreseeable future. The Company intends to reinvest earnings, if any, in
the development of its business.
Dependence on Key Employees
The Company's success will depend, to a significant extent, on IDS's Chief
Executive and Financial Officer, and President, Mark A. Babin, New DSI's
President, Chief Executive Officer and Treasurer, David A. Horowitz and New
DSI's Executive Vice President, Chief Science Officer and Secretary, Robert B.
Hyte and on other members of its senior management. Mr. Hyte is the creator of
the Screenware Software which operates on the PICK operating system upon which
DSI's existing software is based, and upon which the Company's software is
based. The loss of the services of Mr. Babin, Mr. Horowitz or Mr. Hyte or any of
its other key employees, could have a material adverse effect on the Company.
The Company's future success will also depend largely upon its ability to
attract and retain other highly qualified personnel. There can be no assurance
that the Company will be successful in attracting and retaining such personnel.
6
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Possible Volatility of Stock Price
The market price of the Company's and its predecessor's common stock has been
volatile. Future announcements concerning the Company or its competitors,
quarterly variations and operating results, announcements of technological
innovations, the introduction of new products or changes in product pricing
policies by the Company or to competitors, litigation relating to proprietary
rights or other litigation, changes in earnings estimates by analysts or other
factors could cause the market price of the Common Stock fluctuates
substantially. In addition, the stock market has from time to time experienced
significant price and volume fluctuations that have particularly affected the
market price for the common stock of technology companies and that have often
been unrelated to the operating performance of particular companies. These broad
market fluctuations may also adversely affect the market price of the Company's
common stock. In certain circumstances, following periods of volatility in the
market price of a company's securities, securities class action litigation has
occurred against such issuing company. There can be no assurances that such
litigation will not occur in the future with respect to the Company. Such
litigation could result in substantial cost and divert management's attention
and resources, which could have a material and adverse effect on the Company's
business, financial condition and results of operation.
Potential Dilution
As a result of the Mergers, there are issued and outstanding warrants,
options and other rights to acquire up to 8,492,700 shares of Common Stock
(including shares subject to the Series A and Series B Warrants). Such options,
warrants and other rights are exercisable at per share prices ranging from $0.50
to $20.00, and most are exercisable through the year 2000. The exercise of all
or a material portion of such options, warrants or other rights would
substantially dilute the ownership percentage of Common Stock owned by holders
of Common Stock.
SEC Investigation of Regulation S Offerings
IDS is being investigated by the staff of the Securities and Exchange
Commission. Management of IDS believes that this investigation primarily
concerns certain stock offerings in 1994 and earlier of the Common Stock of
IDS's predecessor, RFG, to overseas investors made by IDS in reliance upon
Regulation S under the Securities Act, but may relate to other operational
matters as well. Although the management of IDS believes that IDS has not
engaged in any wrongdoing, there can be no assurances as to the outcome of any
such investigation.
USE OF PROCEEDS
Other than the exercise price of such of the Warrants as may be exercised,
the Company will not receive any of the proceeds from the sale of the Common
Stock offered hereby. The Company will pay the costs of this offering, which are
estimated to be $11,104. Holders of the Warrants are not obligated to exercise
their Warrants, and there can be no assurance that such holders will choose to
exercise all or any of such Warrants. The gross proceeds to the Company in the
event that all of the Warrants are exercised would be $2,561,000 (745,000 shares
at an exercise price of $2.00 per share or 881,654 shares at an exercise price
of $1.69 per share, 745,000 shares at an exercise price of $1.00 per share and
337,500 shares at an exercise price of $1.00 per share).
The Company intends to apply the net proceeds it receives from the exercise
of the Warrants, to the extent any are exercised, to discharge existing
indebtedness of the Company and to augment its working capital for general
corporate purposes.
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PRICE RANGE OF COMMON STOCK
The Company's Common Stock has traded in the over-the-counter market through
the "OTC Electronic Bulletin Board" (the "OTC Bulletin Board") maintained by the
National Association of Securities Dealers, Inc. under the symbol "IDSI."
Trading in the Common Stock commenced on April 1, 1996, upon the effectiveness
of the Mergers. Prior to April 1, 1996, the Common Stock of IDS's predecessor
traded through the OTC Bulletin Board under the symbol "RFGP" from April 29,
1993 through March 31, 1996. The following table sets forth the range of high
bid and low ask quotations per share for the Common Stock and the predecessor's
common stock for the periods indicated. The quotations are inter-dealer prices
in the over-the-counter market without retail mark-ups, mark-downs or
commissions, and may not represent actual transactions.
RFG COMMON STOCK
The prices of RFG Common Stock set forth below represent historical prices
which have been divided by 4 to reflect the exchange ratio used in the merger of
RFG into IDS whereby each four shares of RFG Common Stock became one share of
IDS Common Stock.
Period High Bid($) Low Ask($)
Apr. 29 - June 30, 1993 1-1/4 5/8
July 1 - Sept. 30, 1993 1-1/4 1-1/8
Oct. 1 - Dec. 31, 1993 1-3/8 1-1/4
Jan. 1 - Mar. 31, 1994 1-5/16 1
Apr. 1 - June 30, 1994 1-3/16 1-1/16
July 1 - Sept. 30, 1994 1-1/2 1-1/4
Oct. 1 - Dec. 31, 1994 1-1/8 1-1/2
Jan. 1 - Mar. 31, 1995 1-5/32 1-5/16
Apr. 1 - June 30, 1995 1-5/16 1
July 1 - Sept. 30, 1995 1/2 3/4
Oct. 1 - Dec. 31, 1995 3/16 1/4
Jan. 1 - March 31, 1996 1/8 1/4
IDS COMMON STOCK
Period High Bid($) Low Ask($)
April 1 - May 28, 1996 3-13/16 2-3/16
As of May 28, 1996, there were approximately 1,750 owners of record of the
Common Stock and the Company believes that there are approximately 2,300
beneficial owners of the Common Stock, many of whom the Company believes are
residents of countries other than the United States. The large number of
non-United States resident beneficial owners is a result of the sale of shares
of Common Stock of IDS' predecessor in private placements outside of the United
States pursuant to Regulation S promulgated by the Securities and Exchange
Commission prior to its merger with IDS.
8
<PAGE>
DIVIDEND POLICY
The Company has never paid a cash dividend on its Common Stock. The Company
expects that for the foreseeable future, any earnings will be retained for use
in the Company's business or for other corporate purposes, and it does not
expect to pay any cash dividends in the foreseeable future.
SELLING STOCKHOLDERS
Prior to the Mergers, Old DSI sold an aggregate of $1,490,000 million of
principal amount of its Unsecured Notes in a private placement pursuant to a
Note Purchase Agreement, dated as of December 13, 1994 (the "Note Purchase
Agreement") between Old DSI and each purchaser of the Unsecured Notes.
In connection with such sale, Old DSI issued to the purchasers of such notes
Series A and Series B Warrants. Each Series A Warrant was exercisable on or
after July 31, 1995 to purchase 10,000 shares of DSI Common Stock which is
subject to certain restrictions at a per share price of $2.00 until July 31,
1996 (the "Termination Date"), subject to certain conditions and subject to
adjustment in certain circumstances including a stock split of, or stock
dividend on, or a subdivision, combination, or recapitalization of the DSI
Common Stock. Each Series A Warrant also provided for a special conversion
adjustment provision (the "Special Conversion Right") in the event Old DSI
entered into a merger or similar transaction with RFG or any related party prior
to 18 months from original issuance date of such warrants. The Special
Conversion Right is a right of the holders of the Series A Warrants to acquire
an aggregate of approximately fifteen percent (assuming all Series A Warrants
are exercised) of the shares of the voting common stock of any entity surviving
a merger with Old DSI prior to July 31, 1996.
Each of the Series B Warrants was exercisable on or after July 31, 1995 to
purchase 10,000 shares of Common Stock at a per share price of $4.00 until the
Termination Date, subject to the same adjustment provisions as are applicable to
the Series A Warrants (except that the Series B Warrants do not include the
Special Conversion Right). The Series B Warrants provided that in the event the
Company fails to obtain a listing of its Common Stock on the small cap section
of the NASDAQ on or before a date which is within one year from the date of
original issuance or the Common Stock trade below $3.20 per share at any time
during such period, the exercise price of the Series B Warrants will be reduced
from $4.00 to $1.00 per share.
Upon the consummation of the Mergers, each outstanding Warrant for shares of
DSI Common Stock was converted into Warrants to acquire the same number of
shares of Common Stock of the Company on the same terms set forth in such
Warrants. Accordingly, an aggregate of approximately 745,000 shares of Common
Stock are purchasable at $2.00 per share (or 881,654 shares of Common Stock are
purchasable at $1.69 per share) by holders of the Series A Warrants and
approximately 745,000 shares of Common Stock are purchasable at $1.00 per share
by holders of Series B Warrants.
Old DSI granted "piggy back" registration rights to the holders of Series A
Warrants and Series B Warrants with respect to the shares of common stock
issuable upon the exercise thereof. As a result of the Mergers, such rights
obligate the Company to use reasonable efforts to include shares of Common Stock
in any registration statement filed by the Company in connection with the sale
of shares of equity securities by the Company.
On April 28, 1995, Epoch Resources Inc. received an option to purchase
337,500 shares of Old DSI Common Stock at $1.00 per share in exchange for its
existing rights to receive Old DSI Common Stock. On February 8, 1996, Epoch
Resources Inc., requested that its option for 138,760 shares of Common Stock (of
the 337,000 shares) be transferred to Daniel Pfeiffer.
9
<PAGE>
The foregoing Warrants constitute "restricted securities" within the meaning
of Rule 144 of the regulations promulgated under the Securities Act. As such,
they generally are not currently transferable. However, the Shares issuable upon
exercise of the Warrants, when issued upon exercise of the Warrants and sold
pursuant to this Prospectus, will be currently transferable.
The following table sets forth certain information as of May 30, 1996 with
respect to the Selling Stockholders. The shares to be sold by the Selling
Stockholders represent shares of Common Stock currently owned by the Selling
Stockholders or which may be acquired by them on exercise but will not receive
any of the proceeds from the sale of such shares. Beneficial ownership after
this offering will depend on the number of Shares actually sold by each Selling
Stockholder.
Number of Shares of Common
Stock Owned by Selling Shares of Common Stock
Selling Stockholder Shareholder (1) Offered Hereby
Shares % of Class Shares % of Class
Banque Paribas 218,343 2 218,343 2
A. David Barnes, M.D. 37,834 (2) .4 21,834 .2
Mitchell G. Bradford IRA 23,834 (3) .2 21,834 .2
Bernard L. Brodkorb 66,418 (4) .6 32,752 .3
Wing Chau 65,503 .6 65,503 .6
Dr. Yong Chung 65,503 .6 65,503 .6
Robert J. Colsen 21,834 .2 21,834 .2
Epoch Resources, Inc. 228,740 (5) 2 198,740 1
Ralph and Jean Forte 21,834 .2 21,834 .2
Herbert Friske 43,699 .4 43,669 .4
Thomas B. Fryer Sr. 87,337 .8 87,337 .8
House & Co. 218,343 2 218,343 2
Manuel Hernandez 21,834 .2 21,834 .2
Shorland G. Hunsaker 107,337 (6) 1 87,337 .8
Richard J. Jutzi 10,917 .1 10,917 .1
Richard Loomis 21,834 .2 21,834 .2
Stanley Peter Lopat, M.D. 65,503 .6 65,503 .6
Bruce T. MacMillan 83,669 (7) .8 43,669 .4
Massinvest S.A. 109,172 1 109,172 1
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<PAGE>
Jerry Matsumura/Pomona 21,834 .2 21,834 .2
Valley
Joel S. Morse 10,917 .1 10,917 .1
Daniel Pfeiffer 138,760 (8) 1 138,760 1
Mark Scheier M.D. 26,334 (9) .2 21,834 .2
Vicky L. Schiff 10,917 .1 10,917 .1
Robert Schneiderman 12,917 (10) .1 10,917 .1
Omer Schrock Pension P/S 21,834 .2 21,834 .2
Sherwood Schwartz 31,834 (11) .3 21,834 .2
Scroggie Holdings, Inc. 43,669 .4 43,669 .4
Richard L. Sears 48,469 (12) .5 43,669 .4
Loyal A. Seeds 45,669 (13) .4 43,669 .4
Charles Smith 43,669 .4 43,669 .4
Robinson Family Trust 22,834 (14) .2 21,834 .2
Robert K. Torgerson 10,917 .1 10,917 .1
Robert and Audrey 10,917 .1 10,917 .1
Torgerson Trust
Victor Investments L.L.C. 40,834 (15) .4 21,834 .2
Lakha Wahla 21,834 .2 21,834 .2
Herman O. Westover 35,834 (16) .3 21,834 .2
Yingling Family Trust 43,669 .4 43,669 .4
- ----------------------------------
(1) Unless otherwise indicated, includes the shares of IDS Common
Stock underlying the Warrants.
(2) Includes an option to purchase 16,000 shares of Common Stock of IDS at
$1.00/share; expires 2/1/00.
(3) Includes 2,000 shares of IDS Common Stock.
(4) Includes 33,668 shares of IDS Common Stock.
(5) Includes 30,000 shares of IDS Common Stock and an option to purchase
198,740 shares of Common Stock of IDS at $1.00/share; expires 4/28/00.
(6) Includes 20,000 shares of IDS Common Stock.
(7) Includes 40,000 shares of IDS Common Stock.
(8) Includes an option to purchase 1138,760 shares of Common Stock of IDS
at $1.00/share; expires 4/28/00.
(9) Includes 4,500 shares of IDS Common Stock.
(10) Includes 2,000 shares of IDS Common Stock.
(11) Includes 10,000 shares of IDS Common Stock.
(12) Includes 4,800 shares of IDS Common Stock.
(13) Includes 2,000 shares of IDS Common Stock.
(14) Includes 1,000 shares of IDS Common Stock.
(15) Includes 19,000 shares of IDS Common Stock.
(16) Includes 14,000 shares of IDS Common Stock.
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<PAGE>
The sale of the shares by the Selling Stockholders may be effected from time
to time in transactions (which may include block transactions by or for the
account of the Selling Stockholders) in the over-the-counter market or in
negotiated transactions, through the writing of options on such shares, a
combination of such methods of sale, or otherwise. Sales may be made at fixed
prices which may be changed, at market prices prevailing at the time of sale, or
at negotiated prices.
Selling Stockholders may effect such transactions by selling their shares
directly to purchasers, through broker-dealers acting as agents for the Selling
Stockholders, or to broker-dealers who may purchase shares as principals and
thereafter sell the shares from time to time in the over-the-counter market, in
negotiated transactions, or otherwise. Such broker-dealers, if any, may receive
compensation in the form of discounts, concessions, or commissions from the
Selling Stockholders and/or the purchasers for whom such broker-dealers may act
as agents or to whom they may sell as principals or both (which compensation as
to a particular broker-dealer may be in excess of customary commissions).
The Selling Stockholders and broker-dealers, if any, acting in connection
with such sale might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act and any commission received by them and any
profit on the resale of such shares might be deemed to be underwriting discounts
and commissions under the Securities Act.
PLAN OF DISTRIBUTION
The Shares offered hereby are being sold by the respective Selling
Stockholders acting as principal for its own account. The Company will receive
none of the proceeds from such offering, with the exception of the exercise
price of such Warrants as may be exercised.
The distribution of the Shares by the Selling Stockholders is not subject to
any underwriting agreement. The Company expects that each Selling Stockholder
will sell its shares covered by this Prospectus through customary brokerage
channels, either through broker-dealers acting as principals, who may then
resell the Shares in the over-the-counter market, or at private sales or
otherwise, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. Each Selling Stockholder
may effect such transactions by selling Shares through broker-dealers, and such
broker-dealers will receive compensation in the form of commissions from the
Selling Stockholders and/or the purchasers of the Shares for whom they may act
as agent (which compensation may be in excess of customary commissions). Each
Selling Stockholder and any broker-dealers that participate with such Selling
Stockholder in the distribution of the Shares may be deemed to be underwriters
and any commission received by such broker-dealers and any profit on resale of
Shares sold by them might be deemed to be underwriting discounts or commissions
under the Securities Act. All expenses of registration incurred in connection
with this offering are being borne by the Company, but all brokerage commissions
and other similar expenses incurred by any Selling Stockholder will be borne by
such Selling Stockholder.
At the time a particular offer of Shares is made, to the extent required, a
supplement to this Prospectus will be distributed which will identify and set
forth the aggregate amount of Common Stock being offered and the terms of the
offering.
The Selling Stockholders are not restricted as to the price or prices at
which he or she may sell Shares. Sales of Shares at less than market prices may
depress the market price of the Company's Common Stock. Moreover, Selling
Stockholders are not restricted as to the number of Shares which may
12
<PAGE>
be sold at any one time, and it is possible that a significant number of
Shares could be sold at the same time.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Common Stock may not simultaneously engage in
market making activities with respect to the Common Stock for a period of nine
business days prior to the commencement of such distribution. In addition and
without limiting the foregoing, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including without limitation rules 10b-6 and 10b-7, which provisions
may limit the timing of purchases and sales of the Shares by certain of the
Selling Stockholders.
In order to comply with certain states' securities laws, if applicable, the
Shares may be sold in such jurisdiction only through registered or licensed
brokers or dealers. In certain states the Shares may not be sold unless the
Shares have been registered or qualified for sale in such state, or unless an
exemption from registration or qualification is available and is obtained.
EXPERTS
Certain financial statements of the Company incorporated by reference in this
Prospectus from the Company's Form S-4 have been audited by Wilber & Townsend,
P.C., independent certified public accountants, as indicated in their reports
with respect thereto, and included herein in reliance upon the authority of said
firm as experts in auditing and accounting in giving said reports.
LEGAL MATTERS
The legality of the shares offered under the Registration Statement of which
this Prospectus is a part will be passed upon for the Company by Brown & Bain,
P.A., special counsel to the Company.
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No dealer, salesman or other person has been authorized to give any
information or make any representations, other than those contained in this
Prospectus, in connection with the offering hereby, and, if given or made, such
information and representations must not be relied upon as having been
authorized by the Company or the Selling Securityholders. This Prospectus does
not constitute an offer to sell, or a solicitation of an offer to buy, any
securities to any person in any State or other jurisdiction in which such offer
or solicitation is unlawful. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that
there has been no change in the affairs of the Company or the facts herein set
forth since the date hereof.
----------------------------------------
----------------------------------------
Shares of Common Stock
INTELLIGENT DECISION
SYSTEMS, INC.
-----------------
TABLE OF CONTENTS
Page
Available Information................iv
Incorporation of Certain Information PROSPECTUS
by Reference......................... v
The Company.......................... 1
Certain Recent Developments.......... 1
Risk Factors......................... 2
Use of Proceeds...................... 7 -----------------
Price Range of Common Stock ......... 8
Dividend Policy...................... 9
Selling Stockholders................. 9
Plan of Distribution.................12
Experts..............................13
Legal Matters........................13
__________, 1996
----------------------------------------
----------------------------------------
14
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The Company estimates that expenses in connection with the distribution
described in this Registration Statement will be as follows. All expenses
incurred with respect to the distribution will be paid by the Company.
SEC registration fee........................... $1,661
Printing expenses.............................. 250
Accounting fees and expenses................... 120
Legal fees and expenses........................ 8,000
Fees and expenses for qualification under state
securities laws ............................... 1,000
Miscellaneous.................................. 250
--------
Total....................................... $11,281
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware Law") empowers a Delaware corporation to indemnify any persons who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he reasonably believed to be in, or
not opposed to, the corporation's best interests, and for criminal proceedings,
had no reasonable cause to believe his conduct was illegal. A Delaware
corporation may indemnify officers and directors in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation in the performance of his duty. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or directly actually and reasonably incurred.
In accordance with the Delaware Law, the Certificate of Incorporation of the
Company contains a provision to limit the personal liability of the directors
for violations of their fiduciary duty. This provision eliminates each
director's liability to the Company or its respective stockholders for monetary
damages except (i) for any breach of the director's duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware Law providing for liability of directors for
unlawful payment of dividends or unlawful stock purchases or redemptions, or
(iv) for any transaction from which a director derived an improper personal
benefit. The effect of this provision is to eliminate the personal liability of
directors for monetary damages for actions involving a breach of their fiduciary
duty of care, including any such actions involving gross negligence.
II-1
<PAGE>
Section 6.4 of the By-Laws of the Company provides for indemnification of
directors, officers and employees as follows:
ARTICLE VIII
INDEMNIFICATION
Each Director and officer of the Corporation now or hereafter serving as such
shall be indemnified by the Corporation against any and all claims and
liabilities to which he or she has or may become subject by reason or serving or
having served as such Director or officer, or by reason of any action alleged to
have been taken, omitted, neglected as such Director or officer and the
Corporation shall reimburse each such person for all legal expenses reasonably
incurred in connection with any such claim or liability or wrong payments made
by him or her in satisfaction of such claim or claims, either by compromise or
in satisfaction of judgment. No such person shall be indemnified against, or be
reimbursed for any expense or payments incurred in connection with, any claim or
liability established to have arisen out of his own wilful misconduct or gross
negligence.
The right of indemnification hereinabove provided for shall not be exclusive
of any right to which any Director or officer of the Corporation may otherwise
be entitled by law.
ITEM 16. EXHIBITS
The following exhibits are filed herewith or incorporated by reference as a
part of this Registration Statement:
4.01 Form of Common Stock certificate (previously filed as an exhibit to the
Company's registration statement on Form S-4, Registration No.
33-93058, and incorporated herein by reference)
5.01 Opinion of Brown & Bain, P.A.
23.01 Consent of Brown & Bain, P.A. (included in Exhibit 5.01)
23.02 Consent of Wilber & Townshend
24.01 Power of Attorney (Filed in previous filing of Form S-3 on page II-4)
ITEM 17. UNDERTAKINGS
(a) The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of the securities registered hereby, a post-effective
amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this 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 this registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 42(b) if, in the aggregate, the
changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set
II-2
<PAGE>
forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that (i) and (ii) do not apply if the
registration statement is on Form S-3, and the information
required to be included in a post-effective amendment is
contained in periodic reports filed by the registrant pursuant to
section 13 or section 14(d) of the Exchange Act that are
incorporated by reference in the 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
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.
(b) The undersigned Company hereby undertakes:
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 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Exchange Act) 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.
(e) The undersigned Company hereby undertakes:
To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual
report to security holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the requirements of
Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where interim
financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or
given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial
information.
(h) Insofar as indemnification for liabilities arising under the Securities
Act 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 Commission such
indemnification is against public policy as expressed in the Securities
Act 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) is 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 and will be governed
by the final adjudication of such issue.
II-3
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing of Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, hereunto duly
authorized in the City of Grand Rapids, State of Michigan, on May 29, 1996.
INTELLIGENT DECISION SYSTEMS, INC.
By: /s/ Mark Babin
Mark A. Babin
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons of Intelligent Decision
Systems, Inc. in the capacities and on the date indicated.
Signature Title Date
/s/ Mark A. Babin President, Chief Executive Officer, May 30, 1996
Mark A. Babin Chief Financial Officer (Principal
Executive and Accounting Officer)
and Director
* Secretary, Treasurer and Director May 30, 1996
James M. Keller, Jr.
* Director May 30, 1996
Robert B. Hyte
*By /s/ Mark A. Babin
Mark A. Babin
Attorney-in-Fact
Mark A. Babin, by signing his name hereto, does hereby sign this document on
behalf of each of the persons indicated above, pursuant to powers of attorney
duly executed by such persons, which were filed with the Securities and Exchange
Commission on May 10, 1996, as part of this Registration Statement.
II-4
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit Sequentially
Numbered
Page
4.01* Form of Common Stock Certificate of IDS
5.01 Opinion of Brown & Bain, P.C. counsel to IDS as to
legality of securities being registered
23.01 Consent of Brown & Bain, P.A. (included in exhibit 5.01)
23.02 Consent of Wilber & Townshend
24.01** Power of Attorney
* Filed as an exhibit to the Company's Registration Statement of Form S 4,
Registration No. 33-93058 and incorporated herein by reference.
** Filed in previous filing of Form S-3 on page II-4.
II-5
BROWN & BAIN
A PROFESSIONAL ASSOCIATION
2901 NORTH CENTRAL AVENUE
PHOENIX, AZ 85012-2788
(602) 351-8000
May 29, 1996
Ladies and Gentlemen:
We have acted as counsel to Intelligent Decision Systems, Inc., a Delaware
corporation (the "Company"), in connection with its Registration Statement on
Form S-3 (the "Registration Statement") filed under the Securities Act of 1933
relating to the registration of 1,964,154 shares of its common stock, $.001 par
value (the "Shares"), on behalf of the Selling Stockholders identified therein.
Capitalized terms used without definition herein shall have the meanings
ascribed to such terms in the Registration Statement.
In that connection, wehave examined such documents, corporate records and
other instruments as we have deemed necessary or appropriate for purposes of
this opinion, including the Restated Certificate of Incorporation and Bylaws of
the Company.
Based upon the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized and validly existing under
the laws of the State of Delaware.
2. The Shares, when issued and sold in accordance with the terms of the
Warrants, will be validly issued, fully paid and nonassessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/BROWN & BAIN, P.A.
Intelligent Decision Systems, Inc.
2025 East Beltline Avenue SE, Suite 400
Grand Rapids, MI 49546
B&B:shj
EXHIBIT 5.01
WILBER & TOWNSHEND
A PROFESSIONAL CORPORATION
CERTIFIED PUBLIC ACCOUNTANTS
465 Baldwin St.
Jenison, MI 49428
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our names as experts as found in the "Experts"
section on page 13 in the Amendment No. 1 to the Form S-3 registration statement
of Intelligent Decision Systems, Inc.
Certain financial statements of Digital Sciences Incorporated and
Resource Finance Group Ltd. Incorporated by reference in this
Prospectus from the company's Form S-4 have been audited by Wilber &
Townshend P.C., independent certified public accountants, as indicated
in their reports with respect there to, and included herein in reliance
upon authority of said firm as experts in auditing and accounting in
giving said reports.
/S/Wilber & Townshend
May 29, 1996
EXHIBIT 23.01
