SCHNECK WELTMAN HASHMALL & MISCHEL LLP
1285 Avenue of the Americas
New York, New York 10019
Tel 212-956-1500
Fax 212-956-3252
March 13, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20001
Attn: Sarah L. Cunningham, Esq.
Re: Response USA, Inc.
Registration Statement on Form S-3
File No. 333-19527
----------------------------------
Dear Sir or Madam:
We file herewith Amendment No. 1 to the Registration
Statement on Form S-3 of Response USA, Inc. (the "Company"),
relating to the exercise of currently outstanding warrants (the
"Registration Statement"). The following numbered responses
correspond to the Staff's letter of comment dated February 7,
1997.
1. With the exception of section (d) (for which the
disclosure on the cover page has been revised accordingly), the
Company does not believe that the information which follows in
response to comment 1 should be included in the subject
registration statement. Such information is based largely upon
management's assessment of the available information rather than
the information itself. While the Company believes this provided
a sufficient basis for the Company's actions, such information is
not of the type which should be included in a registration
statement. Furthermore, the Company does not believe that such
information would be beneficial to an investment decision. There
is currently no irregular trading in the Company's common stock
and the conversions of the preferred stock have been suspended.
a and b. Based upon the monthly reports the Company
receives from The Nasdaq Stock Market, the "short" position for
the Company's common stock as of June 15 and July 15, 1996 was
1,000 and 10,210 shares, respectively. The sale of the preferred
stock was completed as of June 30, 1996, and a registration
statement with respect to the sale of the underlying common stock
was filed on July 12, 1996. The short position as of August 15,
1996 (accumulated during the previous 30 days), increased
dramatically to 155,592 shares. During this same period, the
price of the common stock declined from $7.375 to $4.656. After
calling some of the Company's market-makers, the Company could
find no basis for the increase in the short position or the
decline in the price. Lacking any other explanation, and based
upon a practice sometimes used by investors in convertible
securities, the Company believes that the investors were shorting
the common stock in anticipation of the effectiveness of the
registration statement. In fact, in the weeks that followed the
effectiveness of the registration statement, the Company received
requests for conversions into approximately 190,000 shares of
common stock. Based upon the precipitous decline in the stock
price as a result of the short sale of approximately 155,000
shares, the Company believed that significant conversions would
further erode the price, thereby damaging the market for all of
the Company's stockholders. The Company suspended conversions of
the preferred stock in order to protect the interests of all of
its securityholders.
The Company did not believe that it had a sufficient
basis to advise the Commission or NASD of the source of the
trading activity. Furthermore, the Company was concerned about
the impact on the overall market for its securities. The Company
sold the preferred stock with the belief that the investors in
the offering would hold their preferred stock as an investment
rather than selling at the first opportunity. The unusual
trading activity was not necessarily illegal or improper under
the rules and regulation of either the Commission or the NASD.
c. The purpose of conducting a warrant solicitation
at this time was specifically to fund the repurchase of the
preferred stock. The Company does not have "pressing liquidity
needs." Although the Company has significant losses, a
substantial portion of these are non-cash charges. More
importantly, as disclosed in the registration statement, the
Company has a borrowing facility in place with Mellon Bank which
provides up to $15,000,000 in credit. Currently, the Company has
an outstanding balance on such loan of less than $10,000,000.
2. The Company did not use soliciting materials in
connection with the sale of the preferred stock. All of the
investors are sophisticated and "accredited" and most are
substantial investment funds which have made similar investments
in the past. The investors were provided with the Company's 1934
Act reports. In addition, the placement agent and
representatives of the investors conducted independent due
diligence, including visits to the Company's facilities.
Negotiations concerning the terms of the investment and the
purchase agreements (and related documents) were conducted
between the Company, the placement agent and independent counsel
for the individual investors.
There is no material responsive to Rule 418(a) of
Regulation C.
3a. The Cover Page has been revised to include the
requested disclosure.
3b. At the current time, other than the proposed
warrant solicitation and repurchase of the preferred stock, the
Company is not undertaking any other financing or restructuring
activities. Appropriate disclosure has been included at the end
of the Recent Developments section.
3c. As disclosed in "Use of Proceeds," the only
contingent application for the proceeds is for working capital.
The disclosure has been revised to clarify the foregoing.
3d. There are no beneficial holders of more than 5% of
the Class A or Class B Warrants. We do not believe that the
requested disclosure is required or that in this case it is
material to an investor.
3e. None of the Company's officers or directors serve
pursuant to agreements with affiliates or any third party.
4. We hereby confirm that (i) Mr. Rubin is no longer
a director of Kay Kotts Associates or Arazan International 1991
Ltd., and (ii) Mr. Lieberbaum is no longer a director of Eastco
Industrial Safety, Conquest Industries or Jmar Industries.
5. We hereby acknowledge the information concerning
forward looking statements.
6. The "Incorporation by Reference" section has been
revised accordingly.
7. The Risk Factor has been revised accordingly.
8. The Risk Factor has been revised accordingly.
9. The Risk Factor has been revised accordingly.
10. The Risk Factor has been revised accordingly.
11. The comment concerning the age of the financial
statements is acknowledged.
12. An updated consent is provided with the Amendment.
13. All Exhibits have been filed herewith or
appropriately cross-referenced.
The amended Form 10-QSB's and Form 10-KSB have been
filed under separate cover.
Should you require any additional information, please
contact the undersigned at (212) 956-1500.
Very truly yours,
/s/THOMAS A. ROSE
Thomas A. Rose
Enclosures
cc: Richard M. Brooks, Esq.
Mr. Alan Cohen
As filed with the Securities and Exchange Commission on March 24, 1997
Registration No. 333-19527
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
AMENDMENT NO. 1 TO
------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________
RESPONSE USA, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 22-3088639
(State or Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
11-H Princess Road
Lawrenceville, New Jersey 08648
(609) 896-4500
(Address, Including Zip Code, and Telephone Number, Including
Area Code. of Registrant's Principal Executive Offices)
Richard M. Brooks, President
Response USA, Inc.
11-H Princess Road
Lawrenceville, New Jersey 08648
(609) 896-4500
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
___________
Copies to:
Felice F. Mischel, Esq.
Thomas A. Rose, Esq.
Schneck Weltman Hashmall & Mischel LLP
1285 Avenue of the Americas
New York, New York 10019
(212) 956-1500
Approximate date of proposed sale to the public: From time to time after
the effective date of this registration statement, as determined by market
conditions.
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 of 1933, please check the
following box and list the Securities Act of 1933 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 of 1933, check the following box and list the
Securities Act of 1933 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. [ ]
CALCULATION OF REGISTRATION FEE
Proposed
Title of Proposed Maximum
Each Class Maximum Aggregate Amount of
of Securities Amount Offering Offering Regis-
To Be To Be Price Per Price Per tration
Registered Registered Security Security Fee
- ---------------- ------------ ----------- ----------- -----------
Common Stock, par 1,233,381 $ 5.125 $6,321,078 $ 1,915.48
value $.008 per
share ("Common
Stock"), to be
issued upon exer-
cise of outstanding
Class A Redeemable
Common Stock
Purchase Warrants
Common Stock to be 1,481,950 $ 5.125 $7,594,994 $2,301.51
issued upon exercise
of outstanding Class B
Redeemable Common
Stock Purchase Warrants
Total Registration Fee $4,216.99
The registration fee is calculated pursuant to Rule 457(c) of the
Securities Act of 1933 by taking the closing high bid price of the
Registrant's common stock, par value $.008 per share, on January 8, 1997,
as reported on The Nasdaq SmallCap Market.
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 Registra-
tion 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 Securities and Exchange Commission,
acting pursuant to said Section 8(a) may determine.
RESPONSE USA, INC.
1,233,381 Shares of Common Stock Issuable upon Exercise
of Class A Redeemable Common Stock Purchase Warrants and
1,481,950 Shares of Common Stock Issuable upon Exercise
of Class B Redeemable Common Stock Purchase Warrants
This Prospectus relates to the sale of 2,715,331 shares of common stock,
$.008 par value per share (the "Common Stock"), of Response USA, Inc. (the
"Company"). Of such shares of Common Stock (i) 1,233,381 shares are issuable
upon the exercise of 3,700,142 currently outstanding class A Common Stock
purchase warrants ("Class A Warrants"), and (ii) 1,481,950 shares of Common
Stock are issuable upon the exercise of 4,445,848 currently outstanding class
B Common Stock purchase warrants (the "Class B Warrants," and collectively
with the Class A Warrants, the "Warrants"). Each three Class A Warrants are
exercisable to purchase one share of Common Stock for an aggregate exercise
price of $2.50, through June 30, 1997. Each three Class B Warrants are
exercisable to purchase one share of Common Stock for an aggregate exercise
price of $3.25, through June 30, 1997. Commencing on July 1, 1997, through
the October 19, 1998 expiration date of the Warrants, each share of Common
Stock will be issuable upon the exercise of ten Warrants (together with the
payment of the exercise price of $4.50 for the Class A Warrants and $5.50 for
the Class B Warrants). The Warrants were issued in connection with the
Company's initial public offering. The exercise prices of the Warrants were
previously reduced in order to encourage holders to exercise them.
There can be no assurance that all or any part of the Warrants will be
exercised. All expenses incurred in connection with this offering are being
borne by the Company (which expenses are estimated to be approximately
$30,000). The Company will also pay a fee of 5% of the exercise price of
each Warrant exercised, provided (i) the market price of the Common Stock on
the date the Warrant was exercised was greater than the Warrant exercise
price on that date, (ii) the exercise price of the Warrant was solicited by a
member of the NASD, (iii) the Warrant was not held in a discretionary account,
(iv) the disclosure of compensation arrangements was made both at the time of
this Offering and at the time of exercise of the Warrant, (v) the solicitation
of the exercise of the Warrant was not a violation of Rule 10b-6 under the
Securities Exchange Act of 1934, and (vi) the solicitation agent is designated
in writing as the soliciting NASD member.
The Common Stock, Class A Warrants and Class B Warrants are traded on The
Nasdaq SmallCap Market ("Nasdaq"), under the symbol RUOK, RUOKW and RUOKZ,
respectively. On March 21, 1997, as reported by Nasdaq, the closing bid price
for the Common Stock, Class A Warrants and Class B Warrants was $2.75, $1.125
and $.3125 , respectively.
_________________________________
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF
RISK AND SHOULD NOT BE PURCHASED BY INVESTORS WHO CANNOT AFFORD THE LOSS OF
THEIR ENTIRE INVESTMENT.
SEE "RISK FACTORS." (PAGE 5)
_________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE 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 March 24, 1997
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission, Washing-
ton, D.C. (the "Commission") a Registration Statement on Form S-3 under the
Securities Act of 1933 (the "Act") with respect to the securities offered by
this Prospectus. For further information with respect to the securities offered
hereby, reference is made to the Registration Statement and to the exhibits
listed in the Registration Statement.
The Company is subject to the information requirements of the Securities
Exchange Act of 1934 and in accordance therewith files reports, proxy state-
ments and other information with the Commission. Reports, Proxy Statements and
other information can be inspected and copies made at the public reference
facilities of the Commission, Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, as well as the following Regional Offices:
7 World Trade Center, New York, New York, 10007, and Room 1204 Everett McKinley
Dirksen Building, 219 South Dearborn Street, Chicago, Illinois, 60604. Copies
can also be obtained at prescribed rates from the Commission's Public Reference
Section, Judiciary Plaza, 450 Fifth Avenue, N.W., Washington, D.C. 20549. The
Commission also maintains a Web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrant's
that file electronically.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-KSB for its fiscal year ended June 30,
1996, and the Quarterly Report on Form 10-QSB for the quarter ended September
30, 1996 and the description of the Company's Common Stock contained in its
Registration Statement on Form S-3 filed with the Commission on April 11,
1996, as amended, and the Company's Report on Form 8-K, dated as of September
30, 1996, all of which have been previously filed with the Commission,
are incorporated in this Prospectus by reference. All documents filed by the
Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 after the date hereof and prior to the termination of the
offering made hereby are also incorporated by reference herein and made a part
hereof from the date of filing of such documents. Any statement contained in
a document incorporated by reference herein is modified or superseded for all
purposes to the extent that the statement contained in this Prospectus
or in any other subsequently filed document which is incorporated by reference
modifies or replaces such statement. The Company will provide without charge
to each person, including any beneficial owner, to whom a copy of this Prospec-
tus is delivered, upon the written or oral request of such person, a copy of
all documents incorporated herein by reference (not including the exhibits to
such documents, unless such exhibits are specifically incorporated by reference
in such documents).
PROSPECTUS SUMMARY
The following is a summary of certain information contained in this Prospectus
and is qualified in its entirety by the more detailed information, Consolidated
Financial Statements and Notes thereto appearing elsewhere in this Prospectus.
The Company
Response USA, Inc. (the "Company"), through its wholly-owned subsidiaries,
Response Ability Systems, Inc. ("Systems") and Emergency Response Systems,
Inc. ("ERS"), markets a personal emergency response system, ("PERS") which
enables users, such as elderly or disabled persons, to transmit a distress
signal using a portable transmitter which is part of the PERS. When activated
by the pressing of a button, the transmitter sends a radio signal to a receiv-
ing base installed in the user's home. The receiving base relays the signal
over telephone lines to a monitoring station which provides continuous
monitoring services. The monitoring station personnel verify the nature of
the emergency and contact the appropriate emergency authorities in the user's
area. The Company, through its wholly-owned subsidiary United Security
Systems, Inc. ("USS"), is also engaged in the sale, installation, continuous
monitoring and maintenance of electronic security systems.
Systems commenced operations in 1985 and, by 1987, had sold over 4,000 fran-
chises in 42 states for the distribution of PERS. Systems marketed the
franchises to individuals who purchased such franchises as a part-time
business or second source of income. The Company believes such franchisees
were poorly capitalized. Systems incurred substantial losses in its franchise
operations as costs to establish, maintain, promote and service the franchise
network exceeded the revenues from the sale of the franchises. Such losses
resulted in Systems filing a petition for reorganization under Chapter 11
of the Federal Bankruptcy Act in October 1987. While in reorganization,
Systems discontinued its franchise sales operations, and the Company has no
intention of resuming new franchise sales, although a number of its original
franchisees are still actively utilizing the Company's monitoring and
purchasing its PERS. Since the confirmation of Systems' Plan of Reorganiza-
tion in January 1990, Systems has devoted substantial efforts to broaden-
ing and diversifying its marketing programs to sell PERS units through
national pharmacy chains including Revco D.S., Inc and K-Mart pharmacies,
rather than direct marketing.
The Company sells its PERS products directly to the consumer and through
franchisees in the United States and a distributor in Canada under the
"Instant Response" and "Response Ability" trade names. The Company also sells
and leases PERS through its institutional division to hospitals and home
health care agencies. In addition, the Company provides monitoring
services through a third-party monitoring station located in Euclid, Ohio,
to tens of thousands of users of the Company's PERS. The Company also sells
PERS and related accessories, which are manufactured by a contractor located
in Florida, to independent home alarm and other vendors under private label
programs.
The Company's electronic security business utilizes electronic devices
installed in customers' businesses and residences to provide detection
of events, such as intrusion or fire, surveillance and control of access
to property. The detection devices are monitored by the same third-party
monitoring station which monitors the Company's PERS units. In some
instances, commercial customers may monitor these devices at their own premises
or the devices may be connected to local fire or police departments. The
products and services marketed in the electronic security services industry
range from residential systems that provide basic entry and fire protection
to more sophisticated commercial systems. USS commenced operation in
March 1994, upon the acquisition of substantially all of the assets of
two companies engaged in the electronic security business.
The Company, then known as Larsen Software Corporation and originally
incorporated in Utah in June 1984 for the purpose of acquiring computer
software, consummated an intra-state offering in 1985 in which it issued
184,642 shares of common stock and received proceeds of $25,850 which
were utilized principally to pay accounting and administrative costs.
The Company, which changed its state of incorporation to Nevada in September
1989, did not engage in any significant business operations until August
1990 when it acquired all of the outstanding common stock of Systems.
In connection with its acquisition of Systems, the Company changed its name
to Lifecall America, Inc. Systems was incorporated in Delaware in 1985 to do
business as a franchisor of direct sellers of PERS, and engaged principally
in such business until October 1987, when it filed a petition for reorgani-
zation under Chapter 11 of the Federal Bankruptcy Act. Systems' plan of
reorganization (the "Plan of Reorganization") was confirmed by the U.S.
Bankruptcy Court in January 1990, and became effective in February 1990.
In March 1992, the Company changed its name to Response USA, Inc. and its
state of incorporation from Nevada to Delaware. ERS was incorporated
in Delaware in 1994. References to the Company include Systems, ERS and
USS.
The Company's executive offices are located at 11-H Princess Road,
Lawrenceville, New Jersey 08648, and its telephone number at that address is
(609) 896-4500.
Recent Developments
The Company completed a financing agreement with Mellon Growth Finance, a
division of Mellon Bank, N.A. ("Mellon") on June 30, 1996, providing the
Company with a revolving term loan of up to $15,000,000. As of December 31,
1996, the Company has drawn upon approximately $8,950,000 of such available
credit. The loan bears interest at 1.75% above Mellon's prime interest
rate and matures on June 30, 2000.
Concurrently with the closing of the Mellon financing, the Company completed
the private placement of 7,500 shares of 1996 Series A Redeemable Convertible
Preferred Stock (the "Series A Preferred Stock"), for an aggregate of
$7,500,000. Each share of Series A Preferred Stock is convertible into shares
of Common Stock, at the sole option of the holder, based upon the following
formula:
The Premium + 1,000
-------------------
Conversion Price
Where (a) the Premium equals 10% multiplied by the number of days from the
date the purchaser deposited funds for the purchase of the Series A Preferred
Stock through and including the date of conversion divided by 365, and (b) the
Conversion Price is equal to the lesser of (i) 80% of the average closing bid
price of the Common Stock as reported by Nasdaq for the five trading days
preceding the date of conversion, or (ii) $5.00 per share. The Company may
redeem all or any portion of the Premium for cash in lieu of converting such
Premium into shares of Common Stock upon the foregoing conversion terms. Each
holder may, in their sole discretion, elect to convert up to 50% of the shares
of Series A Preferred Stock held beginning August 16, 1996 and may convert
the balance beginning September 10, 1996. After June 1, 1999, the Company
may require conversion of the Series A Preferred Stock upon the foregoing
conversion terms.
In September 1996, as a result of then current market conditions for
the Common Stock, the Company suspended conversion of the Series A Preferred
Stock. The Company believes that it is not in the best interests of the
Company to allow conversions which could result in a precipitous drop in the
market value of the Common Stock. The Company and certain holders of the
Series A Preferred Stock have been actively negotiating an alternative to the
prescribed conversion. The Company intends to use a substantial portion of
the proceeds from the exercise of Warrants, if any, to repurchase some
or all of the outstanding Series A Preferred Stock. There can be no assurance
that any holders of the Series A Preferred Stock will accept an offer for
repurchase of their shares. Furthermore, the Company may again permit the
conversion of Series A Preferred Stock into shares of Common Stock at any
time. As of December 31, 1996, 6,890 shares of Series A Preferred Stock remain
outstanding. Based on the current market price for the Common Stock and
the original conversion terms of the Series A Preferred Stock, such shares
would convert into an aggregate of 1,857,401 shares of Common Stock.
See "Risk Factors - Conversion of Series A Preferred Stock."
On January 2, 1997, Lake Management LDC and KA Investments LDC, each holders
of the Preferred Stock, filed a Complaint in the Court of Chancery of the State
of Delaware against the Company challenging among other things, the Company's
decision to suspend conversion and seeking, among other things, specific
performance under a Certificate of Designation to convert their Preferred
Stock to Common Stock of the Company. The case is captioned Lake Management LDC
and KA Investments LDC v. Response USA, Inc., Civil Action No. 15449. On
February 10, 1997, the Company responded to the Complaint by filing an Answer,
Defenses and Counterclaim. A Reply to the Counterclaim was filed on March 3,
1997.
On February 18, 1997, Halifax Fund, L.P., holder of the Preferred Stock,
filed a Complaint, a Motion for a Preliminary Injunction and a Motion for
Expedited Proceedings in the Court of Chancery of the State of Delaware
against the Company also challenging, among other things, the Company's
decision to suspend conversion and seeking, among other things, specific
performance under a Certificate of Designation to convert its Preferred
Stock to Common Stock No. 15553. On March 5, 1997, the Court held a conference
and denied plaintiff's request for a hearing on plaintiff's motion for a
preliminary injunction. On March 11, 1997, plaintiff filed a second Motion
for a Preliminary Injunction. The Court held a telephonic conference on
March 12, 1997 and denied plaintiff's request for a hearing on its second
preliminary injunction motion. Plaintiff has indicated that it intends to
file a motion for summary judgement, and the Court has scheduled a hearing
on that motion for May 13, 1997.
The Company continues to believe that suspension of the conversion is
warranted for various reasons, including without limitation, the unusual
trading activity in the Company's Common Stock following the issuance of the
Preferred Stock, coupled with the substantial conversions of the Preferred
Stock at conversion prices linked to the market price of the Common Stock.
The Company intends to take whatever action is required to protect the
interests of the Company, its Stockholders generally and its Preferred
Stockholders, which may include renegotiation of the terms and conditions
of the Preferred Stock, and intends to vigorously defend its decision to
suspend conversion of the Preferred Stock.
The Offering
Securities Offered 2,715,331 shares of Common Stock, of which
1,233,381 shares are issuable upon the exercise
of 3,700,142 Class A Warrants, and 1,481,950
shares are issuable upon the exercise of
4,445,848 Class B Warrants.
Use of Proceeds Assuming all of the Class A Warrants and Class B
Warrants are exercised, of which there can be no
assurance, the Company will receive an aggregate
of $3,083,452 and $4,816,337, respectively,
less expenses of approximately $30,000 and any
Warrant solicitation fee which may be paid.
The net proceeds from the sale of Common Stock
offered hereby will be used for the possible
repurchase of shares of Series A Preferred Stock
and for working capital purposes.
Risk Factors The securities offered hereby involve a high
degree of risk. See "RISK FACTORS."
Nasdaq Trading
Symbols Common Stock - RUOK
Class A Warrants - RUOKW
Class B Warrants - RUOKZ
RISK FACTORS
THIS OFFERING INVOLVES SUBSTANTIAL INVESTMENT RISK AND COMMON STOCK SHOULD
BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVEST-
MENT. IN EVALUATING AN INVESTMENT IN THE COMPANY AND ITS BUSINESS PRIOR TO
PURCHASE, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK
FACTORS AS WELL AS OTHER INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS:
Unprofitable Operations; Significant Obligations. The Company incurred losses
of $3,030,830, $4,411,898 and $3,158,260 for the years ended June 30, 1995
and June 30, 1996, and the three months ended September 30, 1996, respectively.
The Company is required to pay the long-term indebtedness of Systems in
connection with Systems Plan of Reorganization, through the year 2000. The
Company has funded its operations through various private placements of its
securities, including the sale of the Series A Preferred Stock, and through
debt financing, including the Mellon financing. In this regard, the Company
expects to incur significant interest expense as a result of the Mellon
financing. In the past, the Company has used external sources of funding to
finance its operations (including its debt service requirements) and expects
to continue to use external sources of funding for such purpose until the
Company's operations become profitable. However, there can be no assurance
that such funds will continue to be available if needed. The inability
to provide for its working capital needs would seriously inhibit the Company's
development and adversely affect its results of operations and prospects.
Possible Conversion of Series A Preferred Stock In September 1996, as a
result of then current market conditions for the Common Stock, the Company
suspended conversion of the Series A Preferred Stock. The Company and certain
holders of the Series A Preferred Stock have been actively negotiating an
alternative to the prescribed conversion. The Company intends to offer to
repurchase some or all of the outstanding Series A Preferred Stock. There
can be no assurance that any holders of the Series A Preferred Stock will
accept an offer for repurchase of their shares. If the Series A Preferred
Stockholders do not accept such an offer, they may seek to compel the
Company to allow conversion to Common Stock and/or seek monetary damages
resulting from their inability to convert their shares. Furthermore, the
Company may again permit the conversion of Series A Preferred Stock into
shares of Common Stock at any time. Based on the current market price
for the Common Stock and the original conversion terms of the Series A
Preferred Stock, such shares would convert into an aggregate of 1,857,401
shares of Common Stock.
Consequences of Default under Plan of Reorganization. The Company's wholly-
owned subsidiary, Systems, filed a petition for reorganization under Chapter 11
of the Federal Bankruptcy Act in October 1987. Systems' Plan of Reorganization
was confirmed by the U.S. Bankruptcy Court in January 1990, and became
effective in February 1990. The Plan of Reorganization provides for, among
other things, long-term payments totalling approximately $2.8 million to
secured and unsecured pre-petition creditors and for unpaid state and federal
taxes. As of June 30, 1996, deferred payment obligations to such pre-
reorganization creditors totalled $374,058, which are payable in
varying installments (assuming the adherence to the repayment schedule),
through the year 2000, as long as there are no defaults (failure to make
timely payments) under the Plan of Reorganization. In the event that the
Company should default in payment of these deferred obligations, Systems'
pre-reorganization creditors could seek appropriate relief in the bankruptcy
court, the result of which could range from dismissal or conversion of
Systems' bankruptcy to a Chapter 7 proceeding requiring liquidation of
Systems, or modification of Systems' Plan of Reorganization, which could
have a material adverse effect upon the Company. Any such modified plan
could require the Company to pay more to prepetition creditors than the
amounts required under the existing Plan of Reorganization. To date,
payments under the Plan of Reorganization have been made in a timely fashion.
Dependence on Key Personnel. The Company believes that it is dependent
to a significant degree on the services of Richard M. Brooks, its President,
Chief Executive and Financial Officer and Ronald A. Feldman, its Chief
Operating Officer. The Company has purchased key person insurance on the
lives of Messrs. Brooks and Feldman in the amounts of $3,000,000 (payable
to Mellon Bank) and $1,000,000 (payable to the Company) respectively. There can
be no assurance that such insurance would be sufficient to compensate the
Company in the event of the death of Mr. Brooks or Mr. Feldman. In addition,
the Company has entered into five-year employment agreements with Messrs.
Brooks and Feldman, effective on October 23, 1992, as amended to expire on
June 30, 2000, but there can be no assurance that Mr. Brooks will remain with
the Company during such term or thereafter. In the event that Mr. Brooks or
Mr. Feldman or other key personnel should die, become incapacitated, resign,
otherwise not remain with the Company or for any other reason be unable to
perform their duties, there can be no assurance that the business and
operations of the Company would not be adversely affected.
Competition and Markets. The personal emergency response and electronic
security services industries are highly competitive. There are numerous
companies of comparable size to, or larger than, the Company and many smaller
companies that sell PERS and electronic security service equipment and
offer monitoring services. Many of the Company's competitors have
significantly greater financial resources and a larger sales organization
than the Company. In addition, while the Company generally competes with
sellers of PERS and security services, there are numerous large national and
multinational companies, with far greater resources than the Company, that
compete in the information services industry and the electronic security
services industry. The Company competes for the acquisition of new accounts
on the basis of reputation in the industry. The Company also competes in con-
nection with the acquisition of blocks of existing accounts based on the
financial package it offers the acquirees. There is no assurance that such
larger companies will not attempt to enter the PERS market in the future, or,
if they do, that the Company will be able to compete successfully.
State and Federal Regulation. As a seller of personal emergency response
units and electronic security systems, the Company is subject to laws and
regulations administered by various states, the Federal Communications
Commission, the Food and Drug Administration and the Federal Trade Commission.
Some states require licenses or permits to sell PERS and electronic monitoring
systems and to provide security services. In addition, federal and state
regulations, including without limitation, consumer protection laws, govern
the promotion and advertising activities of the Company and other sellers of
the Company's products and services. The Company's relationship with its
franchisees also is subject to regulation under federal and state franchise
laws. Compliance with such laws and regulations is costly, and changes in laws
and regulations could increase the cost of compliance and materially affect
the Company in other respects not presently foreseeable. In the past,
Systems has been the subject of enforcement actions brought under state and
federal law to enforce certain of these laws and regulations concerning
the sales of franchises. The Company believes that it is in compliance with
all material State and Federal regulations. There can be no assurance that the
Company will not be subjected to enforcement actions in the future.
Products Liability and Errors and Omissions. The Company is subject to
claims by customers that a PERS unit was defective, that the Company has
failed to provide monitoring services as required, or that some action or
inaction by the Company or failure of its products or services has caused
or contributed to injury to the customer. While the Company has liability
insurance which it deems adequate ($1,000,000 per occurrence and
$5,000,000 in the aggregate), there can be no assurance that the Company
will be able to maintain such insurance or will not be subjected to
claims in excess of its insurance coverage.
Prior Sale of Unregistered Securities. In February 1996, the Company
consented to the issuance of an Order Instituting Proceedings pursuant
to the Securities Act of 1933 (the "Securities Act") and the Securities
Exchange Act of 1934 and Findings and Order of the Securities and Exchange
Commission (the "Finding"), without admitting or denying any allegations or
facts contained therein. In July 1993, the Company sold 60,000 shares of
Common Stock pursuant to what it claimed to be an exemption from registration
under Regulation S of the Securities Act. The Finding stated that such sales
were made under circumstances in which the Company knew or should have known
that such exemption was not available. Consequently, the Finding stated,
the sales were made in violation of the registration provisions of the
Securities Act. The Company consented to permanently cease and desist
from committing or causing any violation, and any future violation, of
Section 5 of the Securities Act.
Limitation of Directors' Liability. The Company's Certificate of
Incorporation limits the liability of the Company's directors for breach
of their fiduciary duty of care to the Company. The effect of this provision
is to eliminate the directors' liability for monetary damages resulting
from negligent or grossly negligent conduct in most situations. A director
remains responsible for damages to the Company resulting from a breach of his
duty of loyalty to the Company, a failure to act in good faith, intentional
misconduct, a knowing violation of law, receipt of an improper personal
benefit, or approval of an illegal dividend or stock purchase. Liabilities
under the federal securities laws also are not affected by this provision,
as the SEC views such provisions as unenforceable.
Authorization and Discretionary Issuance of Preferred Stock. The Company's
Certificate of Incorporation authorizes the issuance of "blank check" preferred
stock with such designations, rights and preferences as may be determined from
time to time by the Board of Directors. Accordingly, the Board of Directors
is empowered, without stockholder approval, to issue preferred stock with
dividend, liquidation, conversion, voting or other rights which would adverse-
ly affect the voting power or other rights of the holders of the Company's
Common Stock. In the event of issuance, the preferred stock could be utilized,
under certain circumstances, as a method of discouraging, delaying or
preventing a change in control of the Company, which could have the effect
of discouraging bids for the Company and thereby prevent stockholders from
receiving the maximum value for their shares. There can be no assurance that
preferred stock of the Company will not be issued at some time in the future.
Shares Eligible for Future Sale; Market Overhang from Outstanding Warrants
and Options. As of December 31, 1996, the Company had outstanding 4,130,908
shares of Common Stock, substantially all of which shares are freely
transferable without restriction or further registration under the Securities
Act. For the "restricted securities," under Rule 144, if certain conditions
are met, persons who satisfy a two year "holding period" may sell within
any three-month period a number of such shares which does not exceed the
greater of one percent of the total number shares outstanding or the average
weekly trading volume of such shares during the four calendar weeks prior
to such sale. After a three-year holding period is satisfied, persons who
are not "affiliates" of the issuer of the securities are permitted to sell such
shares without regard to these volume restrictions.
Warrants and options to purchase the following number of shares of Common
Stock are outstanding: (i) 1,233,381 shares issuable upon exercise of Class A
Warrants at a price of $2.50 per share, (ii) 1,481,950 shares issuable upon
exercise of Class B Warrants at a price of $3.50 per share, (iii) 49,700
shares issuable upon exercise of Class C Warrants, (iv) 2,868,400 shares
issuable upon exercise of options issued to officers, directors and employees
of the Company, (v) 12,500 shares issuable upon conversion of convertible
debentures, (vi) 175,000 shares issuable upon exercise of the warrants at
$4.50 per share, (vii) 1,032,135 shares issuable at a price of $3.25 per
share in connection with the Mellon financing, (viii) 1,857,401 shares issuable
upon conversion of the Series A Preferred Stock (based on the current price of
the Common Stock and assuming the Company redeems the shares otherwise
issuable with respect to the Premium), assuming the Series A Preferred
Stock is not repurchased by the Company.
No prediction can be made as to the effect, if any, that sales of shares of
Common Stock or the availability of such shares for sale will have on the
market prices of the Company's securities prevailing from time to time. The
possibility that substantial amounts of currently restricted shares or
newly issued shares of Common Stock into the public market may adversely
affect prevailing market prices for the Common Stock and could impair the
Company's ability to raise capital in the future through the sale of equity
securities.
Nasdaq Maintenance Requirements; Possible Delisting of Securities from
Nasdaq System. The Board of Governors of the National Association of
Securities Dealers, Inc. has established certain standards for the continued
listing of a security on Nasdaq. The maintenance standards require, among
other things, that an issuer have total assets of at least $2,000,000
and capital and surplus of at least $1,000,000; that the minimum bid price for
the listed securities be $1 per share; and that the minimum market value of
the "public float" be at least $1,000,000. A deficiency in either the
market value of the public float or the bid price maintenance standard will
be deemed to exist if the issuer fails the individual stated requirement
for ten consecutive trading days. If an issuer falls below the bid price
maintenance standard, it may remain on Nasdaq if the market value of the
public float is at least $1,000,000 and the issuer has $2,000,000 in equity.
The Company's current Common Stock price is above $1 per share, however,
there can be no assurance that the Company will continue to satisfy
the requirements for maintaining a Nasdaq listing. If the Company's securities
were excluded from Nasdaq, it would adversely affect the prices of such
securities and the ability of holders to sell them.
Penny Stock Regulation. In the event that the Company is unable to satisfy
Nasdaq's maintenance requirements, trading would be conducted in the "pink
sheets" or the NASD's Electronic Bulletin Board. In the absence of the Common
Stock being quoted on Nasdaq, or the Company having $2,000,000 in net
tangible assets, trading in the Common Stock would be covered by Rules 15g-1
through 15g-6 promulgated under the Securities Exchange Act of 1934 for
non-Nasdaq and non-exchange listed securities. Under such rules, broker/dealers
who recommend such securities to persons other than established customers
and accredited investors must make a special written suitability determination
for the purchaser and receive the purchaser's written agreement to a
transaction prior to sale. Securities also are exempt from these rules if the
market price is at least $5.00 per share.
The SEC adopted regulations that generally define a penny stock to be any
equity security that has a market price of less than $5.00 per share, subject
to certain exceptions (such exceptions including an equity security listed on
Nasdaq and an equity security issued by an issuer that has (i) net
tangible assets of at least $2,000,000, if such issuer has been in
continuous operation for three years, (ii) net tangible assets of at least
$5,000,000, if such issuer has been in continuous operation for less than
three years, or (iii) average revenue of at least $6,000,000 for the preced-
ing three years). Unless an exception is available, the regulations require
the delivery, prior to any transaction involving a penny stock, of a disclosure
schedule explaining the penny stock market and the risks associated
therewith.
If the Company's Common Stock were subject to the regulations on penny
stocks, the market liquidity for the Company's Common Stock could be
severely affected by limiting the ability of broker/dealers to sell the
Company's Common Stock and ability of purchasers in this offering to sell
their securities in the secondary market. There is no assurance that trading
in the Company's securities will not be subject to these or other regulations
that would adversely affect the market for such securities.
Lack of Dividends. The Company has never paid and does not plan to pay in
the foreseeable future any dividends on its Common Stock, although it is not
restricted from doing so.
USE OF PROCEEDS
Assuming all of the Class A Warrants and Class B Warrants are exercised,
of which there can be no assurance, the Company will receive an aggregate of
$3,083,452 and $4,816,337, respectively, less expenses of approximately
$30,000 and any Warrant solicitation fee which may be paid. The net proceeds
from the sale of Common Stock offered hereby will be used for the possible
repurchase of shares of Series A Preferred Stock and for working capital
purposes. Any proceeds not used for the repurchase of Series A Preferred Stock
will be used for working capital purposes.
PLAN OF DISTRIBUTION
The shares offered hereby may be offered and sold from time to time by
Warrantholders, or by pledgees, donees, transferees or other successors in
interest. Such offers and sales may be made from time to time on Nasdaq or
otherwise, at prices and on terms then prevailing or at prices related to the
then-current market price, or in negotiated transactions. The methods by which
the shares may be sold may include, but not be limited to, the following: a
block trade in which the broker or dealer so engaged will attempt to sell the
shares as agent but may position and resell a portion of the block as principal
to facilitate the transaction; purchases by a broker or dealer as principal and
resale by such broker or dealer for its account; an exchange distribution
in accordance with the rules of such exchange; ordinary brokerage
transactions and transactions in which the broker solicits purchasers;
privately negotiated transactions; short sales; and a combination of any such
methods of sale. In effecting sales, brokers or dealers engaged by the
Warrantholders may receive commissions or discounts from the Warrantholders or
from the purchasers in amounts to be negotiated immediately prior to the sale.
The Warrantholders may also sell such shares in accordance with Rule 144
under the Securities Act.
The Company is bearing all of the costs relating to the registration of the
shares. Any commissions, discounts or other fees payable to the broker,
dealer, underwriter, agent or market maker in connection with the sale of any
of the shares will be borne by the Warrantholders.
LEGAL MATTERS
The validity of the shares of Common Stock and Warrants under applicable
state law will be passed upon for the Company by Schneck Weltman Hashmall &
Mischel LLP, 1285 Avenue of the Americas, New York, New York 10019.
EXPERTS
The financial statements and schedules incorporated by reference in this
Prospectus and elsewhere in the Registration Statement have been audited by
Fishbein & Company, P.C., Independent Certified Public Accountants, to the
extent indicated in their reports with respect thereto, and are included herein
in reliance upon the authority of said firms as experts in accounting
and auditing in giving said reports.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company and to the Selling Stockholders pursuant to the provisions of
the Company's Certificate of Incorporation, the Company has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act and is, there-
fore, 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
officer, director 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 of whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The amount of expenses (other than underwriting discounts and
commissions) in connection with the issuance and distribution of the shares
registered hereby are set forth in the following table. All the amounts are
estimates, except the registration fee and the NASD filing fee.
Registration Fee $ 4,200
Legal fees and expenses 8,000
Accounting fees and expenses 6,000
Miscellaneous 11,800
Total $30,000
Item 15. Indemnification of Directors and Officers.
Article V of the Company's Bylaws provides the following:
5.1 Right to Indemnification. The Corporation shall indemnify any person who
was or is a party or threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (collectively, a "proceeding"),
by reason of the fact whether civil, criminal, administrative or
investigative (collectively, a "proceeding"), by reason of the fact such
person is or was a director or officer of the Corporation or a
constituent corporation absorbed in a consolidation or merger (here-
inafter, a "constituent corporation"), or is or was serving at the
request of the Corporation or a constituent corporation as a director,
officer, partner, employee or agent of another corporation, part-
nership, joint venture or other enterprise or entity, or is or was
a director or officer of the Corporation serving at its request as
an administrator, trustee or other fiduciary of one or more of the
employee benefit plans, if any, of the Corporation or another entity
which may be in effect from time to time (any such person, an
"Authorized Representative"), against all expenses, liability and loss
actually and reasonably incurred or suffered by such Authorized
Representative in connection with such proceeding, whether or not the
indemnified liability arises or arose from any proceeding by or in the
right of the Corporation, to the extent that such Authorized
Representative is not otherwise indemnified and to the extent that
such indemnification is not prohibited by law as it presently
exists or may hereafter be amended.
5.2 Advance of Expenses. The Corporation shall pay all reasonable expenses
incurred by an Authorized Representative in defending a Proceeding in
advance of the final disposition of such Proceeding, upon receipt by
the Corporation of a written undertaking by or on behalf of such
Authorized Representative to repay all amounts advanced (without
interest unless a court of competent jurisdiction determined the pay-
ment of interest is required by law) if it shall ultimately be
determined that he is not entitled to be indemnified by the
Corporation.
5.3 Procedure for Determining Permissibility. To determine whether any
indemnification under this Article V is permissible, the Board by a
majority vote of a quorum consisting of directors not parties to such
proceeding may, and on request of any Authorized Representative seeking
indemnification shall be required to, determine in each case whether
the applicable standards in any applicable statute have been
required to, determine in each case whether the applicable standards in
any applicable statute have been met, or such determination shall be made
(a) the stockholders of the Corporation or (b) by independent
legal counsel in a written opinion if such quorum is not obtainable,
or, even if obtainable, a majority vote of a quorum of disinterested
directors so directs; provided that, if there has been a change in
control of the Corporation between the time of the action or failure to
act giving rise to the claim for indemnification and the time such claim
is made, at the option of the Authorized Representative seeking
indemnification, the permissibility of indemnification shall be
determined by independent legal counsel. If a claim for indemnification
under this Article is not paid in full within ninety (90) days after a
written claim therefor has been received by the Corporation, the
claimant may file suit to recover the unpaid amount of such claim,
and the Corporation shall have the burden of proving that the claimant
was not entitled to the requested indemnification under applicable law.
The reasonable expenses of any Authorized Representative in prosecuting a
successful claim for indemnification, and the fees and expenses of any
independent legal counsel engaged to determine permissibility of
indemnification, shall be borne by the Corporation. For purposes of this
paragraph, "independent legal counsel" means legal counsel other
than that regularly or customarily engaged by or on behalf of the
Corporation.
5.4 Proceedings Initiated by Authorized Representatives. Notwithstanding any
other provision of this Article V, the Corporation shall be requested
to indemnify an Authorized Representative in connection with a
proceeding initiated by such Authorized Representative only if the
proceeding was authorized by the Board.
5.5 Indemnification Not Exclusive; Inuring of Benefit. The indemnification
provided by this Article V shall not be deemed exclusive of any other
right to which one seeking indemnification may have or hereafter acquired
under any statute, provision of the Certificate of Incorporating,
these Bylaws, agreement, vote of stockholders or disinterested
directors of otherwise, and shall inure to the benefit of the heirs,
executors and administrators of any person.
5.6 Insurance and Other Indemnification. The Board shall have the power
to (i) authorize the Corporation to purchase and maintain, at the
Corporation's expenses, insurance on behalf of the Corporation and on
behalf of others to the extent that power to do so has not been
prohibited by applicable law, and (ii) give other indemnification to
the extent not prohibited by applicable law.
5.7 Modification or Repeal. Any modification or repeal of any provision of
this Article V shall not adversely affect any right or protection of
an Authorized Representation existing hereunder with respect to any act
or omission occurring prior to such modification or repeal.
Article Nine of the Company's Certificate of Incorporation provides the
following:
A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for any
breach of fiduciary duty by a director except for (i) any breach of the
director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve inten-
tional misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit. Any repeal
or modification of this paragraph shall not adversely affect any
right or protection of a director of the Corporation existing here-
under with respect to any act or omission of occurring prior to such
repeal or modification.
If the Delaware General Corporation Law is hereafter amended to
authorize the further elimination or limitation of the liability of
a director, then the liability of a director of the Corporation shall
be eliminated or limited to the fullest extend permitted by the
amended Delaware General Corporation Law. Any repeal or modification
of this paragraph shall not adversely affect any right or protection
of a director of the corporation existing hereunder with respect to any
act or omission occurring prior to such repeal or modification.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits.
2(a) - Agreement and Plan of Reorganization dated
August 9, 1990, by and among the Company (Corsica
Capital Corp.), Management of Corsica Capital
Corp. and Lifecall Systems, Inc.(1)
2(b) - Plan and Agreement of Reorganization dated May
13, 1991, by and among the Company, Lifecall
Systems, Inc., Monitor Emergency Alert Lifecall
Systems, Inc., and its sole stockholder(1)
2(c) - Plan and Agreement of Merger dated March 18,
1992 by and between Response USA, Inc. (Delaware)
and Lifecall America, Inc.(1)
2(d) - Delaware Certificate of Ownership and Merger
Merging Response USA, Inc., a Nevada Corporation
with and into its wholly-owned subsidiary Response
USA, Inc., a Delaware corporation(1)
2(e) - Nevada Articles of Merger of Response USA,
Inc. (Formerly Lifecall America, Inc.), a Nevada
corporation, into Response USA, Inc., a Delaware
corporation(1)
3(a) - Certificate of Incorporation of the Company(1)
3(b) - Bylaws of the Company(1)
3(c) - Certificate of Designation of 1996 Series A Preferred Stock
4(a) - Form of Common Stock Certificate(1)
4(b) - Form of Class A Warrant Certificate(1)
4(c) - Form of Class B Warrant Certificate(1)
4(d) - Form of Class C Warrant Certificate(1)
4(e) - Form of Warrant Agreement(1)
5 - Opinion of Schneck Weltman Hashmall & Mischel
LLP as to legality of securities being registered
10(a) - Lifecall Systems, Inc. Third Amended Plan of
Reorganization with Order affirming Third Amended
Plan of Reorganization dated January 9, 1990(1)
10(c) - Agreement dated October 31, 1991, by and
between Bucks County Bank & Trust Company and
Lifecall Systems, Inc.(1)
10(d) - Distributorship Agreement, dated October 6, 1987
and as amended December 31, 1990,l by and
between Lifecall systems, Inc. and Teck World
Industries, Inc.(1)
10(i) - Emergency Backup Service Agreement dated June 13, 1991,
by and between Lifecall Emergency
Response Center, Inc., and the Emergency Response
People, Inc.(1)
10(j) - First Amended and Restated License and Royalty
Agreement dated as of July 1, 1991, by and between
Lifecall Systems, Inc. and the Emergency Response
People, Inc.(1)
10(l) - Master Agreement dated September 6, 1991, by
and between Visiting Nurse Associations of America
and Lifecall Systems, Inc. and attached Member
Agency Form Agreement(1)
10(m) - Agreement dated March 17, 1992 by and between
Synchronal Marketing, Inc. and Lifecall Systems
Inc.(1)
10(s) - Employment Agreement dated August 28, 1992, by
and between the Company and Richard R. Brooks, and
Addendum thereto dated October 1, 1992(1)
10(t) - Employment Agreement dated August 28, 1992, by
and between the Company and Ronald A. Feldman, and
Addendum thereto dated October 1, 1992(1)
10(u) - Consulting Agreement dated January 2, 1992 by
and among the Company, Lifecall Systems, Inc. and
Scott Affrime(1)
10(v) - Consulting Agreement dated May 22, 1986 by and
between LC Products, Inc. and Nevin Jenkins, as
amended(1)
10(w) - Incentive Stock Option Plan of the Company
adopted by the Company's Board on March 18, 1992
and approved by the Company's stockholders on
March 30, 1992(1)
10(x) - Restricted Stock Option Plan of the Company
adopted August 20, 1990, as amended August 30,
1991, January 2, 1992 and March 18, 1992(1)
11 - Calculation of Earnings (Loss) Per Share
22 - Subsidiaries of the Company
24(a) - Consent of Fishbein & Company, P.C.
24(b) - Consent of Schneck Weltman Hashmall & Mischel
(included in Exhibit 5)
1. Filed with the Registrant's registration
statement on Form S-1 (File No. 33-47589), and
incorporated by reference herein.
Item 17. Undertakings.
A. Certificates
The undersigned small business issuer hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration
Statement: (i) to include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect
in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information set
forth in the Registration Statement; (iii) to include any
additional or changed material information on the plan of
distribution; provided, however, that paragraph (i) and (ii) do
not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, to treat each post-effective amend-
ment as a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona-fide offering thereof..
(3) To file a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
Offering.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officer and controlling persons of the small
business issuer pursuant to the foregoing provisions, or otherwise, the small
business issuer 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 indem-
nification against such liabilities (other than the payment by the small
business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer 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
small business issuer 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Lawrenceville and State of New Jersey on the 13th
of March, 1997.
RESPONSE USA, INC
By:/s/RICHARD M. BROOKS
--------------------
Richard M. Brooks,
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement on Form S-3 has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/RICHARD M. BROOKS Director, President, Chief March 24, 1997
- -------------------- Executive Officer (Principal
Richard M. Brooks Executive, Financial
Accounting Officer)
/s/RONALD A. FELDMAN Director, Vice President and March 24, 1997
- -------------------- and Chief Operating Officer
Ronald A. Feldman
March 24, 1997
- -------------------- Director
Sheldon Lieberbaum
Director March 24, 1997
- -------------------
Jeffrey S. Budin
/s/STUART LEVIN Director March 24, 1997
- ---------------
Stuart Levin
/s/ Robert M. Rubin Director March 24, 1997
- -------------------
Robert M. Rubin
Director March 24, 1997
- --------------
Todd E. Herman
EXHIBIT 5.1
SCHNECK WELTMAN HASHMALL & MISCHEL LLP
1285 Avenue of the Americas
New York, New York 10019
Tel 212-956-1500
Fax 212-956-3252
March 21, 1997
Response USA, Inc.
11-H Princess Road
Lawrenceville, New Jersey 08648
Re: Response USA, Inc.
Public Offering of Common Stock
-------------------------------
Gentlemen:
We have acted as counsel for Response USA, Inc., a
Delaware corporation (the "Company"), in connection with the
preparation and filing of Amendment No. 1 to the Registration
Statement on Form S-3 (the "Registration Statement"), and the
Prospectus to be included therein (the "Prospectus"), pursuant to
which 1,233,381 shares of the Company's common stock, $.008 par
value per share ("Common Stock"), may be sold upon the exercise
of 3,700,142 class A redeemable Common Stock purchase warrants
(the "Class A Warrants"), and 1,481,950 shares of Common Stock may
be sold upon the exercise of 4,445,848 class B redeemable Common
Stock purchase warrants (the "Class B Warrants").
We are familiar with the proceedings by which the
Common Stock has been authorized and by which it has been or will
be issued and have reviewed and are familiar with the Certificate
of Incorporation and the By-laws of the Company, and such other
corporate records and documents as we have deemed necessary to
express the opinion herein stated. We have assumed the
genuineness of all signatures and the authenticity of all
documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified
or photostatic copies, and the authenticity of the originals of
such latter documents.
Based upon the foregoing, and having regard to legal
considerations we deem relevant, we are of the opinion that the
Class A and B Warrants have been, and the Common Stock issuable
upon exercise of the Class A and B Warrants, when issued, will
be, duly and validly authorized and issued by the Company, and
the Common Stock is fully paid and non-assessable.
We hereby consent to the use of this opinion as Exhibit
5(a) to the Registration Statement and to the inclusion of our
name under the section of the Prospectus entitled "Legal
Matters."
Very truly yours,
/s/SCHNECK WELTMAN HASHMALL & MISCHEL LLP
We hereby consent to the use in this Registration Statement on Form S-3
Amendment #1 of Response USA, Inc. of our report dated August 22, 1996
on the consolidated financial statements of Response USA, Inc. contained
in such Registration Statement, and to the reference to us, as appearing
under the headings of "Experts" in the Prospectus, which is a part of such
Registration Statement.
Fishbein & Company, P.C.
Elkins Park, PA
March 17, 1997
