As Filed With the Securities and Exchange Commission on December 27, 1996
Registration Statement No. 333-10175
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
AMENDMENT NO. 1 TO
FORM S-3
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 38-3286394
(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 principal executive offices)
Mark A. Babin
President and Chief Executive Officer
Intelligent Decision Systems, Inc.
2026 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:
Gregory R. Hall, Esq.
Snell & Wilmer L.L.P.
One Arizona Center
Phoenix, Arizona 85004-0001
(602) 382-6000
Approximate date of commencement of proposed sale to the public:
From time to time after this 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, please check the following box. _X_
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. ___
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. ___
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. ___
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===========================================================================================================
Title of Each Class Proposed Maximum Proposed Maximum Amount of
of Securities Amount to be Offering Aggregate Offering Registration
Being Registered(1) Registered(2) Price Per Unit Price Fee
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value 3,690,500 Shares $1.875(3) $6,919,688 $2,386(3)
Common Stock, $.001 par value 1,850,000 Shares $1.14(4) $2,110,156 $ 640(4)
===========================================================================================================
(Facing Page Continued on Following Page)
</TABLE>
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(1) This registration statement covers the resale by selling securityholders of
(i) 950,000 shares of Common Stock previously acquired by selling
securityholders, (ii) 1,850,000 shares of Common Stock that may be acquired
by selling securityholders upon the exercise of Common Stock Purchase
Warrants (the "Warrants"), and (iii) the resale by selling securityholders
of 2,740,500 shares of Common Stock that may be acquired by such selling
securityholders upon the exercise of options.
(2) In the event of a stock split, stock dividend, or similar transaction
involving Common Stock of the Company, in order to prevent dilution, the
number of shares of Common Stock of the Company registered shall be
automatically increased to cover the additional shares of Common Stock in
accordance with Rule 416(a) under the Securities Act of 1933.
(3) The registration fee has been calculated based on the average of the high
"asked" and low "bid" prices of the Common Stock on August 13, 1996, as
reported in the over-the-counter market on the "OTC Electronic Bulletin
Board" pursuant to Rule 457(c). This fee was paid in connection with the
filing of the registration statement with the Commission on August 14,
1996.
(4) This new registration fee has been calculated based on the average of high
"asked" and low "bid" prices of the Common Stock on December 23, 1996, as
reported in the over-the-counter market on the "OTC Electronic Bulletin
Board" pursuant to Rule 457(c). The new fee is being paid with the filing
of Amendment No. 1 to this registration statement on Form S-3.
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.
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.
<PAGE>
SUBJECT TO COMPLETION; DATED DECEMBER ____, 1996
PROSPECTUS
FOR UP TO 5,540,500 SHARES
OF COMMON STOCK
INTELLIGENT DECISION SYSTEMS, INC.
To Be Offered by Several Holders of the Common
Stock of Intelligent Decision Systems, Inc.
This Prospectus relates to the resale by certain selling securityholders
(the "Selling Securityholders") of up to an aggregate of 4,590,500 shares of
Common Stock, $.001 par value per share ("Common Stock"), of Intelligent
Decision Systems, Inc., a Delaware corporation (the "Company"), that may be
acquired upon the exercise of Common Stock Purchase Warrants (the "Warrants") or
options to purchase Common Stock ("Options") that are currently outstanding, as
more fully described below. This Prospectus also relates to the resale by four
of the Selling Securityholders of an aggregate of 950,000 shares of Common Stock
previously acquired by such Selling Securityholders.
The shares of Common Stock registered for resale hereby have been
registered pursuant to the Company's obligations contained in written agreements
with certain of the Selling Securityholders. The Selling Securityholders may
elect to sell all, a portion or none of the Common Stock offered by them
hereunder.
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 December
23, 1996, the low "bid" and high "asked" prices for the Common Stock were
$1.09375 and $1.1875, respectively. There is no established market for the
Warrants or the Options.
The Selling Securityholders may sell the Common Stock from time to time in
underwritten public offerings, in transactions pursuant to Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), in privately
negotiated transactions, in ordinary brokers' transactions through the
facilities of Nasdaq or otherwise, at market prices prevailing at the time of
such sale, at prices relating to such prevailing market prices, or at negotiated
prices. The Company will not receive any of the proceeds from the sale of Common
Stock by the Selling Securityholders. The net proceeds to the Selling
Securityholders will be the proceeds received by such Selling Securityholders
upon such sales, less brokerage commissions. All expenses incurred in connection
with the registration of the Common Stock, other than any underwriting or
brokerage discounts, commissions and selling expenses with respect to the Common
Stock being sold by the Selling Securityholders, will be borne by the Company.
See "Plan of Distribution" and "Selling Securityholders."
INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS.
EACH SELLING SECURITYHOLDER AND ANY BROKER EXECUTING SELLING ORDERS ON
BEHALF OF THE SELLING SECURITYHOLDERS MAY BE DEEMED TO BE AN "UNDERWRITER"
WITHIN THE MEANING OF THE SECURITIES ACT. COMMISSIONS RECEIVED BY ANY SUCH
BROKER MAY BE DEEMED TO BE UNDERWRITING COMMISSIONS UNDER THE SECURITIES ACT.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is December ____, 1996
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AVAILABLE INFORMATION
The Company 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 may 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. The Commission maintains a web site (http://www.sec.gov)
that contains reports, proxy, and information statements and other information
regarding registrants, such as the Company, that file electronically with the
Commission.
The Company has filed a Registration Statement on Form S-3 under the
Securities Act covering the Common Stock included in this Prospectus. As
permitted by the rules and regulations of the Commission, this Prospectus omits
certain of the information contained in the Registration Statement and reference
is hereby made to the Registration Statement and related exhibits for further
information with respect to the Company and the securities offered hereby. Any
statements contained herein concerning the provisions of any documents filed as
an exhibit to the Registration Statement are not necessarily complete, and, in
each instance reference is made to the copy of such document so filed.
Each such statement is qualified in its entirety by such reference.
No person is authorized to give any information or make any representation
other than those contained or incorporated by reference in this Prospectus, and
if given or made, such information or representation must not be relied upon as
having been authorized. This Prospectus does not constitute an offer to sell or
a solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. 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 since the date
hereof.
INFORMATION INCORPORATED BY REFERENCE
The following documents have been previously filed by the Company with the
Commission and are hereby incorporated by reference in this Prospectus: (i) 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; (ii) the Annual Report of the Company on Form 10-KSB for the
fiscal year ended June 30, 1996; (iii) the Quarterly Report of the Company on
Form 10-QSB for the fiscal quarter ended September 30, 1996; (iv) Current Report
on Form 8-K, filed with the commission on November 6, 1996; (v) Current Report
on Form 8-K, filed with the commission on December 20, 1996; and (vi) the
description of the Company's Common Stock contained in the Company's Form 8-A
filed under the Exchange Act. All other documents and reports filed by the
Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the securities described herein shall be deemed to be incorporated
by reference into this Prospectus and to be made a part hereof from the
respective dates such documents and reports 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.
The Company will cause to be furnished, 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 49546 or by telephone at (616)
285-5830.
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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus, including all documents incorporated by reference,
includes "forward-looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. All statements other than
statements of historical facts included in this prospectus (and in documents
incorporated by reference), including without limitation, statements under "The
Company," "Risk Factors," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business" regarding the Company's
financial position, business strategy and plans and objectives of management of
the Company for future operations, are forward-looking statements. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to have been correct. Important factors that could cause actual results to
differ materially from the Company's expectations are disclosed under "Risk
Factors" and elsewhere in this Prospectus, including without limitation in
conjunction with the forward-looking statements included in this Prospectus. All
subsequent written and oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by this section.
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RISK FACTORS
Investment in the Common Stock offered hereby involves certain risks. In
addition to the other information included elsewhere in this Prospectus,
prospective investors should give careful consideration to the following factors
before purchasing any shares of the Common Stock offered hereby. This Prospectus
contains forward-looking statements which include risks and uncertainties. The
Company's actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set
forth in the following risk factors and elsewhere in this Prospectus. See
"Disclosure Regarding Forward-Looking Statements."
Net Operating Losses; Expectation of Future Losses
The Company has generated cumulative operating losses in the past and there
can be no assurance that the Company will become profitable in the future. 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.
The Company is currently spending approximately $350,000 per month on the
development of its products and its administrative structure and currently
generates monthly cash flow of approximately $100,000 from leasing services and
the sales and rental of its products. The prospective cash flows from sales of
the interactive, multimedia computerized management business system ("the Vision
System") through the Company's marketing agreement with National Purchasing
Corporation, a California corporation doing business as HPSI (the "HPSI
Agreement"), and cash flows from the Company's subsidiary's leasing activities
are the Company's material sources of operational cash flow. The Company
addresses its capital needs through financing negotiated by Neptune Technology
Leasing Corp. (formerly named The Neptune Group, Inc.) ("Neptune"), a Michigan
corporation and wholly owned subsidiary of the Company, and its own financial
reserves, which are equivalent to approximately nine months of operating costs
and expenses from September 30, 1996 (excluding non-cash items such as
depreciation and amortization and assuming no increase in current sales levels).
Management believes that sales will increase over the current levels during the
remainder of the fiscal year ending June 30, 1997, and that the increase in
revenues, as supplemented by the Company's cash reserves, will be sufficient to
provide adequate working capital for twelve months of operations from September
30, 1996.
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
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, in April 1996 the Company completed a restructuring involving
the merger of Resource Finance Group, Ltd., a Colorado corporation and the
Company's parent corporation ("RFG"), with and into the Company and the merger
of Digital Sciences, Inc., a Nevada corporation ("Old DSI"), with and into
Digital Sciences, Inc., a wholly-owned subsidiary of the Company ("New DSI")
(collectively, the "Mergers"), 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.
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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 the majority of 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
would 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, the Vision System. 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 the Vision System or other systems to users other than
HPSI's clients, the Company will be required 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. 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 commercializing 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 has entered into certain agreements with IBM Corporation
(collectively, the "IBM Agreement") pursuant to which IBM installs and services
the Vision System. 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.
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. 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 future 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
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technologies noncompetitive or obsolete or that the Company will not experience
significant delays in introducing new products 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 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 its 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 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 has 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 compete. Many of these
companies have far greater capital, technical, personnel, 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.
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 can be no assurance
that such protection will be granted or that it 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
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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 infringement, and no such claims are
currently pending against the Company.
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 the Company'
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
New DSI's existing software is based, and upon which the Company's software is
based. The Company maintains "key-man" life insurance on the life of Mr. Hyte
but does not maintain "key-man" life insurance on the lives of Messrs. Babin or
Horowitz. 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.
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 in operating results, announcements of technological
innovations, the introduction of new products or changes in product pricing
policies by the Company or its 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 to fluctuate
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 the 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
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attention and resources, which could have a material and adverse effect on the
Company's business, financial condition and results of operation.
Potential Dilution
Certain events, including the issuance of additional shares of Common Stock
upon the exercise or conversion of outstanding options and warrants of the
Company, could result in substantial dilution of the Common Stock. Such options,
warrants and other rights are exercisable at per share prices ranging from $.50
to $20.00 per share and most are exercisable through the year 2000. The issuance
of 3,245,000 and 8,513,384 additional shares of Common Stock underlying such
warrants and options, respectively, and the potential "overhang" of such shares
on the market could adversely affect the prevailing market price of the
Company's Common Stock and would substantially dilute the ownership percentage
of holders of Common Stock.
SEC Investigation of Regulation S Offerings
The Company is being investigated by the staff of the Commission.
Management of the Company believes that this investigation primarily concerns
certain offerings in 1994 and earlier of the common stock of the Company's
predecessor, RFG, to overseas investors made by RFG in reliance upon Regulation
S under the Securities Act, but may relate to other operational matters as well.
Although the management of the Company believes that the Company has not engaged
in any wrongdoing, there can be no assurances as to the outcome of any such
investigation.
8
<PAGE>
THE COMPANY
The Company is a holding corporation formed under the laws of Delaware. The
Company's primary operations, the development and marketing of its Vision System
and the leasing of this system, are conducted through its wholly owned
subsidiaries, Digital Sciences, Inc., a Delaware corporation formerly known as
DSI Acquisition Corp. ("DSI"), and Neptune Technology Leasing Corp.
respectively. Both the Company and DSI were formed in June 1995 in connection
with the merger (the "Merger") of Resource finance Group, Ltd. ("RFG") and
Digital Sciences, Inc., a Nevada corporation ("Old DSI"). Under the terms of the
Merger, which was effective on April 1, 1996, (i) Old DSI merged with and into
DSI, and (ii) RFG merged with and into the Company. Also on April 1, 1996, the
Company issued 7,314,636 shares of Common Stock in exchange for all of the
outstanding capital stock of Old DSI. These shares were registered on a Form S-4
Registration Statement that was declared effective by the Commission in
February, 1996.
RFG was incorporated in August 1991 under the laws of the State of
Colorado. From inception until April 15, 1993, RFG attempted to engage in the
business of financing equipment for operators of South American mines, which
efforts ceased April, 1993.
On June 30, 1993, RFG acquired all of the assets of Digital Video
Graphics, Inc., a Michigan corporation then doing business as ONYX Systems, Ltd.
("ONYX"), owned by Joseph J. Walsh and James M. Keller, Jr. The assets involved
included equipment, inventory, customer relationships and other business
intangibles. The acquired company possessed relationships with established
customers and vendors in the commodity computer hardware business. The purchase
was financed by promissory notes totaling $26,500 issued to the previous owners
and the assumption of the acquired company's liabilities which were $315,153.
The acquisition was effected, to, among other things, leverage ONYX's
relationships with other computer and hardware suppliers and similar networks.
In 1993, RFG entered into a supply agreement with Crutchfield Corporation,
a large electronics catalogue company, which called for sales of RFG's Onyx
personal computer under the Crutchfield name. Approximately $3 million of these
sales were made during fiscal 1994, accounting for 43% of RFG's revenues during
fiscal 1994. Early in fiscal 1995, RFG permitted the agreement to lapse by its
terms, due to increasing losses.
During fiscal 1994, RFG attempted to sell its multimedia line of computers
through the establishment of a telemarketing and customer service operation. RFG
discontinued these efforts in December, 1994. Subsequently, RFG briefly entered
the wholesale computer component business, incurred losses, and ceased its
efforts later in fiscal 1994. In fiscal 1994, RFG opened a retail computer store
named "Floppy Joe's" in Grand Rapids, Michigan, and closed the operation in
January, 1995 after experiencing losses.
In May, 1994, RFG entered into an agreement with Old DSI to acquire Old
DSI's intellectual property ("Screenware") for 1 million shares of RFG's common
stock. Under this agreement, RFG retained voting rights over those shares for a
two year period. RFG then licensed Screenware to Old DSI for 99 years, but
retained the right to 30% of all revenues from projects performed using
Screenware that were arranged by RFG, and 5% of all revenues derived from any
other use of Screenware.
Additional infusions of equity occurred during fiscal 1994 via a series of
private placements. Gross proceeds from these offerings were in excess of $2
million in equity capital, which had been substantially utilized as of December
31, 1994.
In August, 1994, RFG entered into an agreement (the "Consortium Agreement")
with Old DSI and National Purchasing Corporation ("NPC") that provided for the
development and distribution of computerized business systems designed
specifically for the long term health care industry. Nursing homes form the
greater part of this market segment.
In April, 1995, RFG agreed to provide Old DSI with software programming,
accounting and other administrative services in return for funding of these
services.
9
<PAGE>
In August, 1995, RFG and Old DSI entered into a Joint Operating Agreement
pursuant to which RFG and Old DSI would cooperate in sharing the costs of
certain operational matters. Under the Joint Operating Agreement, RFG provided
Old DSI with accounting, financial reporting, payroll and administrative
services and programmers on a subcontracted basis and Old DSI provided RFG with
funds adequate to cover the costs of maintaining RFG's corporate, legal,
financial, accounting and administrative capabilities. The Joint Operating
Agreement was terminated as of April 1, 1996, effective the date of the merger
(the "Merger") of Old DSI with RFG's successor corporation, IDSI.
On June 28, 1996, IDSI purchased substantially all the assets of The
Neptune Group, Inc. ("TNG") and those of its subsidiaries. The assets purchased
consisted of primarily cash, accounts receivable and notes receivable, the total
value of which is approximately $1.73 million. IDSI issued 750,000 restricted
shares of common stock to TNG for those assets and assumed certain liabilities,
which totaled approximately $0.25 million. IDSI agreed to file a registration
statement covering the stock issued to TNG by September 30, 1996, and TNG agreed
not to sell those shares for a period of one year after the closing date of the
transaction.
On June 28, 1996, IDSI privately placed 1,631 shares of its Series A
Convertible Preferred Stock at a per share price of $1,000 for net proceeds of
$1,500,520. The preferred shares are convertible into common shares of IDSI
after the following dates: one-third on or after August 17, 1996, an additional
one-third on or after September 11, 1996 and the final one-third on or after
October 6, 1996. These shares are convertible at 78% of the average market price
of IDSI common stock for the five days immediately prior to conversion. All of
the preferred shares have been converted into Common Stock.
CERTAIN RECENT DEVELOPMENTS
The Company has reached an agreement to retain the services of James N.
Lane, R. Wayne Fritzsche and Anthony Kamin. They will advise the Company on
strategic planning, licensing, technical issues, identify strategic
alliances/partners and assist in the development of business opportunities. The
Company has also agreed to appoint two of the above individuals (or their
designee) to two seats on the board of directors of the Company, subject to
certain conditions and limitations. The Company increased the size of its Board
of Directors from five members to seven and added R. Wayne Fritzsche to fill one
of the vacancies.
USE OF PROCEEDS
Other than the exercise price of such of the Warrants and Options 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 $13,526. The Selling Securityholders are not obligated
to exercise their Warrants or Options, as the case may be, and there can be no
assurance that they will choose to exercise all or any of such Warrants or
Options. The gross proceeds to the Company in the event that all of the Warrants
and Options are exercised would be $8,170,250 (800,000 shares issued upon
exercise of the Warrants bearing an exercise price of $2.25 per share, 750,000
shares issued upon exercise of the Warrants bearing an exercise price of $4.00
per share, 300,000 shares issued upon exercise of the Warrants bearing an
exercise price of $2.50 per share, 240,500 shares issued upon exercise of
Options bearing an exercise price of $.50 per share, and 2,500,000 shares issued
upon exercise of Options bearing an exercise price of $1.00 per share).
The Company intends to apply the net proceeds it receives from the exercise
of the Warrants and the Options, to the extent any are exercised, to augment its
working capital for general corporate purposes.
10
<PAGE>
SELLING SECURITYHOLDERS
The following table sets forth certain information as of December 23, 1996
with respect to the Selling Securityholders. The shares to be sold by the
Selling Securityholders represent shares of Common Stock currently owned by the
Selling Securityholders or which may be acquired by them upon exercise of the
Warrants or Options.
Beneficial ownership after this offering will depend on the number of shares of
Common Stock actually sold by the Selling Securityholders.
<TABLE>
<CAPTION>
Shares of Common Stock Shares of Shares of Common Stock
Name of Beneficially Owned Prior Common Stock Beneficially Owned After
Securityholder to the Offering Offered Hereby the Offering(1)
Number % of Class Number Number Percent
<S> <C> <C> <C> <C> <C>
AMC Consumer Services LLC 1,039,000(2) 6.9% 950,000 89,000 0.62%
Mark A. Babin(3) 571,250 3.9% 500,000 71,250(4) 0.50%
David A. Horowitz(5) 893,167 5.9% 862,500 30,667 0.22%
Robert B. Hyte(6) 1,067,800 7.1% 878,000 189,800 1.33%
James M. Keller(7) 583,000 4.0% 500,000 83,000 0.60%
The Neptune Group, Inc. 750,000 5.3% 750,000 0 0.00%
VISYS Capital Group, Inc. 750,000(8) 5.0% 0 0 0.00%
Ash Brook Holdings, Inc. 49,000 0.3% 25,000 24,000 0.20%
Darin Reubel 66,000 0.5% 25,000 41,000 0.30%
Neptune Technology
Leasing Corp.(9) 300,000 2.0% 300,000 0 0.00%
</TABLE>
(1) Assumes that the Selling Securityholders dispose of all of the shares of
Common Stock covered by this Prospectus and do not acquire any additional
shares of Common Stock.
(2) Includes 800,000 shares of the Company's Common Stock underlying the
Warrants.
(3) Mark A. Babin, has served as President, Chief Executive Officer, Chief
Financial Officer, and Director of RFG and, following the Mergers, the
Company, since January 15, 1995, and served as a consultant to RFG's Chief
Financial Officer from June 1994 to January 15, 1995. Prior to 1994, Mr.
Babin was President of Babin & Company, P.C., a consulting firm assisting
development stage companies in various industries. The total for Mr. Babin
includes 500,000 shares of the Company's Common Stock underlying the
Options.
(4) Includes 50,000 shares of the Company's Common Stock underlying an Option.
(5) David A. Horowitz has served as President, Chief Executive Officer,
Treasurer, and a Director of DSI since January 1993. The total for Mr.
Horowitz includes 862,500 shares of the Company's Common Stock underlying
the Options.
(6) Robert B. Hyte has served as Executive Vice-President, Secretary, Chief
Science Officer, and a Director of DSI since January 1993. Mr. Hyte is the
author of Screenware, a 4th generation computer programming language used
to simplify the development of computer programs written for the Pick
operating system. The total for Mr. Hyte includes 878,000 shares of the
Company's Common Stock underlying the Options.
(7) James M. Keller, Jr., has served as Secretary, Treasurer, and Director of
RFG and, following the Mergers, the Company, since April 15, 1993. Mr.
Keller has an undergraduate degree from the University of Michigan and a
law degree from Wayne State University. He is a partner in the law firm of
DeGroot, Keller & Vincent, Grand
11
<PAGE>
Rapids, Michigan, with which he became associated in 1986. The total for
Mr. Keller includes 500,000 shares of the Company's Common Stock underlying
the Options.
(8) Includes 750,000 shares of the Company's Common Stock underlying a warrant.
(9) Includes 300,000 shares of the Company's Common Stock underlying a warrant.
12
<PAGE>
DESCRIPTION OF SECURITIES
The Company has authorized 30,000,000 shares of common stock ("Common
Stock") and 1,000,000 of preferred stock ("Preferred Stock"). As of the date of
this Prospectus, 14,223,065 shares of Common Stock were issued and outstanding.
The Company's Board of Directors has the authority, without further action
by the shareholders, to issue additional shares of Preferred Stock in one or
more series and to fix the rights, preferences, privileges and restrictions
granted to or imposed upon any series of unissued shares of Preferred Stock and
to fix the number of shares constituting any series and the designation of such
series, without any further vote or action by the shareholders. The issuance of
Preferred Stock may have the effect of delaying, deferring or preventing a
change in control of the Company without further action by the shareholders, may
discourage bids for the Company's Common Stock at a premium over the market
price of the Common Stock, and may adversely affect the market price of and
other rights of the holders of Common Stock.
The following summary of certain provisions of the Common Stock and
Preferred Stock does not purport to be complete and is subject to, and is
qualified in its entirety by, the Certificate of Incorporation of the Company
and the Bylaws of the Company which are included as exhibits to the Form S-4
Registration Statement filed by the Company, and by the provisions of applicable
law.
Common Stock
Holders of Common Stock are entitled to one vote per share on all matters
on which shareholders are entitled to vote. Subject to the rights of holders of
any class or series of shares, including holders of Preferred Stock, having a
preference over the Common Stock as to dividends or upon liquidation, holders of
Common Stock are entitled to such dividends as may be declared by the Company's
Board of Directors out of funds lawfully available therefor, and are entitled
upon liquidation to receive pro rata the assets available for distribution to
shareholders. Holders of the Common Stock have no preemptive, subscription or
conversion rights. The Common Stock is not subject to assessment and has no
redemption provisions.
Options
The Company has outstanding options to purchase a total of 8,513,384 shares
of the Company's Common Stock at exercise prices which range from $.50 to $20.00
per share. The options have expiration dates which range from 1996 to 2002.
Warrants
The Company has outstanding warrants to purchase a total of 3,245,000
shares of the Company's Common Stock at exercise prices which range from $.50 to
$4.00 per share. The warrants have expiration dates which range from 1998 to
2001.
Transfer Agent and Registrar
The Transfer Agent and Registrar for the Common Stock is American
Securities Transfer, Incorporated. Their address is America Securities Transfer,
Inc., P.O. Box 1596, Denver, CO 80201.
13
<PAGE>
PLAN OF DISTRIBUTION
The Common Stock offered hereby is being sold by the Selling
Securityholders acting as principal for their own accounts. The Company will
receive none of the proceeds from such offering, with the exception of the
exercise price of such Warrants and Options as may be exercised.
The distribution of the shares of Common Stock by the Selling
Securityholders is not subject to any underwriting agreement. The Company
expects that the Selling Securityholders will sell the 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. The Selling Securityholders 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 Securityholders and/or
the purchasers of the Common Stock for whom they may act as agent (which
compensation may be in excess of customary commissions). The Selling
Securityholders and any broker-dealers that participate with such Selling
Securityholders in the distribution of the Common Stock may be deemed to be
underwriters and any commission received by such broker-dealers and any profit
on resale of the Common Stock 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
Securityholder will be borne by such Selling Securityholder.
The Selling Securityholders are not restricted as to the price or prices at
which they may sell the Common Stock. Sales of shares of the Common Stock at
less than market prices may depress the market price of the Company's Common
Stock. Moreover, the Selling Securityholders are not restricted as to the number
of shares which may 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 Securityholders 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 the Selling
Securityholders.
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 Intelligent Decision Systems, Inc. are
incorporated by reference in this Prospectus from the Company's Form 10-KSB for
the fiscal year ended June 30, 1996 which have been audited by Wilber &
Townshend, P.C., independent certified public accountants, as indicated in their
report with respect thereto, and included herein in reliance upon the authority
of said firm as experts in auditing and accounting in giving said report.
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 Snell &
Wilmer L.L.P., special counsel to the Company.
14
<PAGE>
========================================= =============================
No dealer, sales representative or other
person has been authorized to give any
information or to make any representation
not contained in this Prospectus and,
if given or made, such information or 5,540,500 Shares of
representations must not be relied upon Common Stock
as having been authorized by the Company,
the Selling Securityholders, or any
other person. This Prospectus does not
constitute an offer of any securities INTELLIGENT DECISION
other than those to which it relates or SYSTEMS, INC.
an offer to sell, or a solicitation of
an offer to buy, to any person in any
jurisdiction where such an offer to buy,
to any person in any jurisdiction where
such an offer or solicitation would be
unlawful. Neither the delivery of this
Prospectus nor any sale made hereunder and
thereunder shall, under any circumstances,
create any implication that the information
contained herein is correct as of any time
subsequent to the date hereof.
_________________
PROSPECTUS
_________________
____________
TABLE OF CONTENTS
Page
Available Information................2
Information Incorporated
by Reference.......................2
Risk Factors.........................4
The Company..........................9
Use of Proceeds......................10
Selling Securityholders..............11
Description of Securities............13
Plan of Distribution ...............14
Experts..............................14
Legal Matters........................14
______________ _____, 1996
========================================= =============================
15
<PAGE>
PART II
INFORMATION NOT REQUIRED IN 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............................. $ 3,026*
Printing expenses............................... 250*
Accounting fees and expenses.................... 1,000*
Legal fees and expenses......................... 8,000*
Fees and expenses for qualification
under state securities laws.................... 1,000*
Miscellaneous................................... 250*
---------
Total...................................... 13,526*
*Estimated
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 securityholders for
monetary damages except (i) for any breach of the director's duty of loyalty to
the Company or its securityholders, (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 willful 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:
4.1 Form of Common Stock certificate (previously filed as exhibit 4.01 to
the Company's registration statement on Form S-4, Registration No.
33-93058, and incorporated herein by reference)
5.1 Opinion of Snell & Wilmer L.L.P.
10. Consulting Agreement filed as an Exhibit to the Company's Current
Report on Form 8-K for an event occurring on October 29, 1996 and
incorporated herein by reference.
23.1 Consent of Snell & Wilmer L.L.P. (included in Exhibit 5.1)
23.2 Consent of Wilber & Townshend
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. Notwith-
standing 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
II-2
<PAGE>
and price represent no more than a 20% change in the maximum
aggregate offering price set 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 or Form S-8, 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. 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 Amendment No. 1 to
the registration statement to be signed on its behalf by the undersigned,
hereunto duly authorized in the City of Grand Rapids, State of Michigan, on
December 27, 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 Amendment
No. 1 to the 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, December 27, 1996
Mark A. Babin Officer,Chief Financial and
Accounting Officer and Director
/s/ Raymond F. Blue Director December 26, 1996
Raymond F. Blue
/s/ David A. Horowitz Chairman of the Board December 24, 1996
David A. Horowitz and Director
/s/ Robert B. Hyte Director December 27, 1996
Robert B. Hyte
/s/ James M. Keller, Jr. Director, Secretary, Treasurer December 26, 1996
James M. Keller, Jr.
II-4
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit
4.1 Form of Common Stock Certificate of IDS filed as an exhibit
to the Company's Registration Statement on Form S-4,
Registration No. 33-93058, and incorporated herein by
reference.
5.1 Opinion of Snell & Wilmer L.L.P. as to legality of securities
being registered.
10. Consulting Agreement filed as an Exhibit to the Company's Current
Report on Form 8-K for an event occurring on October 29, 1996 and
incorporated herein by reference.
23.1 Consent of Snell & Wilmer L.L.P. (included in exhibit 5.1)
23.2 Consent of Wilber & Townshend
II-5
Snell & Wilmer L.L.P
One Arizona Center
Phoenix, Arizona 85004
(602) 382-6000
December 27, 1996
Intelligent Decision Systems, Inc.
2025 East Beltline Avenue, SE, Suite 400
Grand Rapids, MI 49546
Re: Amendment No. 1 to Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Intelligent Decision Systems, Inc., a Delaware
corporation (the "Company"), in connection with its Amendment No. 1 to the
Registration Statement on Form S-3 (the "Registration Statement") filed under
the Securities act of 1933, as amended, relating to the registration for resale
from time to time of up to 5,540,500 shares of its Common Stock, $.001 par value
(the "Shares"), that may be acquired by certain existing securitiyholders
pursuant to the exercise of currently outstanding warrants ("Warrants") and
options ("Options").
In that connection, we have examined the Registration Statement and such
documents, corporate records, and other instruments as we have deemed necessary
or appropriate for purposes of this opinion, including the Certificate of
Incorporation and the Bylaws of the Company.
In rendering the opinion set forth herein, we have assumed the Registration
Statement being declared effective by the Securities and Exchange Commission
(the "Commission") and the offering and sale of the Shares in the manner set
forth in the Registration Statement.
Based upon the foregoing, we advise you that, in our opinion, when the
following events have occurred:
(a) The Registration Statement has become effective under the Securities
Act of 1933, as amended.
(b) The due authorization, registration, and delivery of the certificate or
certificates evidencing the Shares; and
(c) The Shares have been issued and sold in the manner specified in the
Registration Statement and the exhibits thereto, in accordance with corporate
and governmental authorities and not in violation of any applicable law,
agreement, or instrument; then
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Intelligent Decision Systems, Inc.
December 27, 1996
Page 2
(1) The Shares issuable upon the exercise of the Warrants and Options and
the receipt by the Company of the consideration for such Shares in accordance
with the terms thereof will be legally issued, fully paid, and non-assessable.
The foregoing opinion is limited to the federal law of the United States of
America and the General Corporation Law of the State of Delaware as in effect on
the date hereof. We express no opinion as to the application of the various
state securities laws to the offer, sale, issuance, or delivery of the Shares.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the use of our name under the caption "legal
Matters" in the Registration Statement and in the Prospectus included therein.
Very truly yours,
/s/ Snell & Wilmer L.L.P.
WILBER &
TOWNSHEND
A Professional Corporation 465 Baldwin St.
Certified Public Accountants Jenison, MI 49428
PH: 616-457-4880
FX: 616-457-1114
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our names as experts as found in the "Experts" section
on page 14 in the Amendment No. 1 to the Form S-3 registration statement of
Intelligent Decision Systems, Inc. which reads:
Certain financial statements of Intelligent Decision Systems, Inc. are
incorporated by reference in this Prospectus from the Company's Form 10-KSB for
the fiscal year ended June 30, 1996 which have been audited by Wilber &
Townshend, P.C., independent certified public accountants, as indicated in their
report with respect thereto, and included herein in reliance upon the authority
of said firm as experts in auditing and accounting in giving said report.
/s/ Wilber & Townshend
December 23, 1996
