<PAGE>
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
REGISTRATION STATEMENT ON FORM S-3
UNDER
THE SECURITIES ACT OF 1933
---------------------
RESPONSE USA, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 22-3088639
(State or jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
------------------------
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
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:
KENNETH R. KOCH, ESQ.
SQUADRON, ELLENOFF, PLESENT & SHEINFELD, LLP
551 FIFTH AVENUE
NEW YORK, NEW YORK 10176
(212) 661-6500 / (212) 697-6686 (FAX)
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: From time to time after the
effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
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. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE
SECURITIES TO BE REGISTERED REGISTERED(1)(2) PER SHARE OFFERING PRICE
<S> <C> <C> <C>
Common Stock, par value $.008 per share ("Common
Stock"), issued in connection with a financing (the
"Financing Shares")................................ 119,632 $ 4.625 $ 553,298
Common Stock issued in connection with acquisitions
(the "Acquisition Shares")......................... 929,648 $ 4.625 $4,299,622
TOTAL................................................ 1,049,280
<CAPTION>
TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE
<S> <C>
Common Stock, par value $.008 per share ("Common
Stock"), issued in connection with a financing (the
"Financing Shares")................................ $ 163.22
Common Stock issued in connection with acquisitions
(the "Acquisition Shares")......................... $1,268.39
TOTAL................................................ $1,431.61
</TABLE>
(1) Determined pursuant to Rule 457(C) under the Securities Act of 1933, as
amended, on the basis of fluctuating market prices, solely for the purpose
of calculating the registration fee.
(2) In addition, the Registrant hereby registers such additional shares as may
be issued pursuant to certain anti-dilution protection pursuant to Rule 416
of the Securities Act of 1933, as amended.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
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 OCTOBER 7, 1998
PROSPECTUS
RESPONSE USA, INC.
1,049,280 Shares of Common Stock
This Prospectus relates to the offering of 1,049,280 shares (the "Shares") of
Common Stock, par value $.008 per share (the "Common Stock"), of Response USA,
Inc., a Delaware corporation (the "Company"). The Shares may be offered from
time to time for the accounts of holders of Shares named herein or in
supplements to this Prospectus (the "Selling Stockholders"). See "Plan of
Distribution." The Shares being offered by the Selling Stockholders consist of:
(i) 119,632 shares issued to McGinn, Smith Capital Holdings Corp. ("MSCH") in
partial consideration for providing financing to the Company, (ii) up to 146,321
shares of Common Stock which may be issued in connection with the Company's
guarantee of a promissory note (the "Note") issued by a subsidiary of the
Company in connection with an acquisition (the "Liberty Acquisition"), (iii)
2,730 shares of Common Stock issued to certain employees of Stephen Schueren in
connection with the Liberty Acquisition and (iv) 780,597 shares issued in
connection with an acquisition (the "Health Watch Acquisition"). Pursuant to
Rule 416 of the Securities Act of 1933, as amended (the "Securities Act"), this
Prospectus also relates to the sale of such additional number of Shares as may
become issuable as a result of stock splits, stock dividends or similar
transactions and pursuant to Rule 416 under the Securities Act. Information
concerning the Selling Stockholders may change from time to time and will be set
forth in supplements to this Prospectus. The Company will not receive any
proceeds from the sale of shares of Common Stock by the Selling Stockholders.
All expenses incurred in connection with this offering are being borne by the
Company (which expenses are estimated to be approximately $10,000), other than
any commissions or discounts paid or allowed by the Selling Stockholders to
underwriters, dealers, brokers or agents.
All of the outstanding Shares were issued pursuant to an exemption from the
registration requirements of the Securities Act, provided by Section 4(2)
thereof or Regulation D thereunder and, to the Company's knowledge, were issued
to the Selling Stockholders meeting the definition of accredited investors under
the Securities Act.
The Selling Stockholders, acting as principals for their own account,
directly, through agents designated from time to time, or through brokers,
dealers or agents also to be designated, may sell all or a portion of the Shares
which may be offered by them from time to time on terms to be determined at the
time of sale. The aggregate proceeds to the Selling Stockholders from the sale
of Common Stock which may be offered hereby by the Selling Stockholders will be
the purchase price of such Common Stock less commissions, if any. For
information concerning indemnification arrangements between the Company and the
Selling Stockholders, see "Plan of Distribution."
The Selling Stockholders and any brokers, dealers or agents that participate
with the Selling Stockholders in the distribution of the Shares may be deemed to
be "underwriters" within the meaning of the Securities Act, in which case any
commissions received by such broker, dealers, agents or underwriters and any
profit on the resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
The Common Stock of the Company is traded on the Nasdaq SmallCap Market
under the symbol "RSPN". On October 2, 1998, the closing bid price of the Common
Stock as reported by the Nasdaq SmallCap Market was $4.50.
SEE "RISK FACTORS" BEGINNING ON PAGE 7 HEREOF FOR A DISCUSSION OF
CERTAIN MATTERS THAT SHOULD BE CONSIDERED BY POTENTIAL INVESTORS.
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.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information and representations must not
be relied upon as having been authorized by the Company. This Prospectus does
not constitute an offer to sell or a solicitation of any offer to buy the
securities described herein by anyone in any jurisdiction in which such offer or
solicitation is not authorized, or in which the person making the offer or
solicitation is not qualified to do so, or to any person to whom it is unlawful
to make such offer or solicitation. Under no circumstances shall the delivery of
2
<PAGE>
this Prospectus or any sale made pursuant to this Prospectus create any
implication that the information contained in this Prospectus is correct as of
any time subsequent to the date of this Prospectus.
The date of this Prospectus is October , 1998
3
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), 450 Fifth Street, N.W., Washington, D.C. 20549, a Registration
Statement on Form S-3 (Registration No. 333- ) (the "Registration
Statement") under the Securities Act with respect to the offering and sale from
time to time of the Shares. This Prospectus does not contain all the information
set forth in the Registration Statement and the exhibits thereto, as permitted
by the rules and regulations of the Commission. For further information,
reference is made to the Registration Statement and to the exhibits filed
therewith. Statements contained in this Prospectus as to the contents of any
contract or other document which has been filed or incorporated by reference as
an exhibit to the Registration Statement are qualified in their entirety by
reference to such exhibits for a complete statement of their terms and
conditions. Additionally, the Company is subject to the informational
requirements of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), and, in accordance therewith, files reports, proxy statements,
and other information statements with the Commission. Copies of such materials
may be inspected without charge at the offices of the Commission, and copies of
all or any part thereof may be obtained from the Commission's public reference
facilities at 450 Fifth Street, N.W., Washington, D.C. 20549 or at the regional
offices of the Commission located at 7 World Trade Center, New York, New York
10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, upon
payment of the fees prescribed by the Commission. In addition, the Commission
maintains a Web Site that contains reports, proxy and information statements and
other information regarding the Company (http://www.sec.gov). The Common Stock
is quoted on the Nasdaq SmallCap Market under the symbol "RSPN." Reports and
other information concerning the Company may be inspected at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated herein by reference and made a part of this Prospectus are the
following:
(1) the Company's Annual Report on Form 10-KSB for the fiscal year ended
June 30, 1998;
(2) the description of the Company's Common Stock contained in its
Registration Statement on Form 8-A (file no. 0-20770) filed with the
Commission on October 22, 1992;
(3) the Company's Proxy Statement on Schedule 14A filed with the
Commission on December 11, 1997;
(4) the financial statements of Triple A Security Systems, Inc. as of
and for the years ended December 31, 1996 and 1995 included in the Company's
Annual Report on Form 10-KSB as amended, for the fiscal year ended June 30,
1997; and
(5) the financial statements of The Jupiter Group, Inc. as of and for
the years ended December 31, 1996 and 1995 included in the Company's Annual
Report on Form 10-KSB, as amended, for the fiscal year ended June 30, 1997.
All documents subsequently filed by the Company with the Commission pursuant
to Section 13(a), 13(c), 14, or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering made hereby will be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the respective dates of filing of such documents.
Any statement contained in any document incorporated by reference shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is 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 this Prospectus. All
information appearing in this Prospectus is qualified
2
<PAGE>
in its entirety by the information and financial statements (including notes
thereto) appearing in the documents incorporated herein by reference, except to
the extent set forth in the immediately preceding statement.
The Company will provide without charge to each person who receives a
Prospectus, upon written or oral request of such person, a copy of the
information that is incorporated by reference herein (not including exhibits to
the information that is incorporated by reference herein). Requests for such
information should be directed to: Response USA, Inc., 11-H Princess Road,
Lawrenceville, New Jersey 08648; Attention: Richard M. Brooks. The Company's
telephone number is (609) 896-4500.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements included or incorporated by reference into this
Prospectus constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. All such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company,
or industry results, to be materially different from any future results,
performance, or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the following: History of
Significant Losses; Substantial Accumulated Deficit; Working Capital Deficit;
Negative Cash Flow; Uncertain Future Profitability; Significant Receivables;
Encumbered; Certain Non-Cash Charges; Risks Related to Growth Through
Acquisitions; Potential Need for Additional Financing; Potential Dilutive Impact
of Acquisitions; Attrition of Subscriber Accounts; Competition; Dependence on
the Monitoring Station; Dependence on Suppliers and Manufacturers; Product
Liability and Availability of Insurance; Possible Adverse Effect of "False
Alarms" Ordinances and Government Regulations; Geographic Concentration;
Government Regulation of and Limitations Brought on by Reimbursement Programs;
Dependence on Key Personnel and Management; Control by Directors and Executive
Officers; Possible Volatility of Stock Price; No Dividends, Shares Eligible for
Future Sale; Effect of Previously Issued Options; Registration Rights; Delaware
Anti-Takeover Statute; Limitation of Liability of Directors and Officers;
Possible Adverse Effects Associated with the Issuance of "Blank Check" Preferred
Stock; Year 2000 Compliance and other factors referenced in this Prospectus.
3
<PAGE>
THE COMPANY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE
DETAILED INFORMATION AND THE FINANCIAL STATEMENTS AND THE RELATED NOTES
APPEARING ELSEWHERE IN THIS PROSPECTUS OR INCORPORATED HEREIN BY REFERENCE.
UNLESS THE CONTEXT OTHERWISE REQUIRES, ALL REFERENCES HEREIN TO THE COMPANY
REFER TO RESPONSE USA, INC. AND THE FOLLOWING WHOLLY-OWNED SUBSIDIARIES: UNITED
SECURITY SYSTEMS, INC. ("USS"), EMERGENCY RESPONSE SYSTEMS, INC., RESPONSE
ABILITY SYSTEMS, INC., THE JUPITER GROUP, INC. D/B/A TRIPLE A PATROL ("TRIPLE A
PATROL"), ORGANIZATION FOR ENHANCED CAPABILITY, INC., AND RESPONSE ACQUISITION
CORP. ("RAC"); AND HEALTHLINK, LTD., AN ENTITY IN WHICH THE COMPANY HAS A 50%
EQUITY INTEREST. EACH PROSPECTIVE INVESTOR IS URGED TO READ THIS PROSPECTUS IN
ITS ENTIRETY. INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE
OF RISK. SEE "RISK FACTORS," STARTING ON PAGE 7 HEREOF.
The Company is a fully-integrated security systems provider engaged in the
monitoring, sale, installation and maintenance of residential and commercial
security systems and personal emergency response systems ("PERS"). The Company
is a regional provider of security alarm monitoring services for residential and
small business subscribers operating in the states of New York, New Jersey,
Pennsylvania, Delaware, Maryland and Connecticut. The Company provides security
patrol services in northeastern Pennsylvania as a supplement to its alarm
monitoring services. The Company is also a nationwide provider of PERS products
which enable individual users, such as elderly or disabled persons, to transmit
a distress signal using a portable transmitter. As of September 30, 1998 the
Company had an aggregate of approximately 64,000 alarm and PERS subscribers for
which it provides monitoring services. As a result of the Company's acquisitions
of subscriber account portfolios, the Company's monthly recurring revenue
("MRR") has grown by approximately $450,000, to approximately $1,250,000 for the
month ended June 30, 1998 from approximately $800,000 for the month ended June
30, 1997. According to a May 1998 report published by Security Distributing and
Marketing ("SDM"), an organization which publishes industry reports, as of
December 31, 1997, the Company is the 18th largest electronic security company
in the United States, based on gross revenues, and the 16th largest electronic
security company, based on recurring annual revenues.
The Company's electronic security systems business utilizes electronic
systems installed in businesses and residences to provide (i) detection of
events such as intrusion or fire, (ii) surveillance and (iii) control of access
to property. The detection devices are currently monitored either by a
third-party monitoring station located in Euclid, Ohio (the "Euclid Monitoring
Station") or the Company's Underwriters Laboratory and Factory Mutual approved
monitoring station located in Wilkes Barre, Pennsylvania (the "Triple A
Monitoring Station," and together with the Euclid Monitoring Station, the
"Monitoring Station"). The Monitoring Station personnel verify the nature of the
emergency and contact the appropriate emergency authorities in the user's area.
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. During the current fiscal year, the
Company anticipates transferring all of its subscriber accounts from the Euclid
Monitoring Station to the Triple A Monitoring Station.
The Company's PERS is an electronic device which is designed to monitor,
identify and electronically report emergencies requiring medical, fire or police
assistance, to help elderly, disabled and other individuals. When activated by
the pressing of a button, or automatically, in the case of certain environmental
temperature fluctuations, the transmitter sends a radio signal to a receiving
base installed in the user's home. The receiving base relays the signal over
telephone lines to the Monitoring Station which provides continuous monitoring
services. In addition, this signal establishes two-way voice communication
between the user and the Monitoring Station personnel directly through the PERS
unit, thereby avoiding any need for the user to access a telephone.
4
<PAGE>
The electronic security services industry is highly fragmented and the
Company's strategy is to grow primarily by acquisition, generate internal
growth, and grow by offering new products and services. According to an industry
report published in 1998, there are approximately 16,000 separate security
services companies nationally and, according to the May 1998 SDM report, the
electronic security services industry generates an aggregate of approximately
$14 billion in revenues annually. The Company believes that there is an
industry-wide trend towards consolidation due, in part, to the relatively high
fixed costs of maintaining a centralized monitoring station and the relatively
low incremental cost of servicing additional subscribers. The Company completed
the acquisition of an aggregate of 17 subscriber account portfolios (a total of
approximately 19,000 subscriber accounts) during the fiscal year ended June 30,
1998.
In February 1998, the Company acquired substantially all of the assets of
Triple A Security Systems, Inc. ("Triple A") including the Triple A Monitoring
Station. Triple A was engaged in the monitoring, sale and installation of
residential and commercial security systems, principally in northeastern
Pennsylvania. At the time of the acquisition by the Company, Triple A serviced
approximately 14,000 subscriber accounts which were monitored by the Triple A
Monitoring Station.
In November 1996, the Company entered into a two-year agreement granting it
the exclusive worldwide distribution rights within the health care industry to
WanderWatch-TM-, a monitoring system designed to assist in the care of patients
with Alzheimer's disease, autism, head injury, dementia or other diseases or
injuries which may involve memory loss. WanderWatch-TM- is similar to PERS,
except that the transmitter is designed to be continuously activated and
transmits a signal to the base unit. If the base unit does not receive the
requisite number of transmissions, it indicates that the patient may have
wandered outside the "safety range," and triggers an alarm in the home base
unit. If the alarm is not disabled, a signal is automatically transmitted to the
Monitoring Station, whose personnel will then place calls based upon a set
protocol established by the caregivers. The license agreement for
WanderWatch-TM- provides for automatic one-year renewals and the Company's
exclusive rights to the license are subject to forfeiture under certain
circumstances. WanderWatch-TM- is currently being test-marketed by the Company
and the Company does not anticipate commencing distribution of the product prior
to the fourth quarter of its current fiscal year.
The Company's revenues consist primarily of recurring payments under written
contracts for the monitoring and servicing of security systems and PERS
products. As of September 30, 1998 the Company monitored approximately 64,000
subscribers. For the fiscal year ended June 30, 1998, monitoring and service
revenues represented 74.8% of total revenues. MRR is a term commonly used in the
alarm industry and means monthly recurring revenue that the Company is entitled
to receive under contracts in effect at the end of the period. MRR is utilized
by the alarm industry to measure the size of a company, but not as a measure of
profitability of performance, and does not include any allowance for future
attrition or allowance for doubtful accounts. During the fiscal year ended June
30, 1998, the Company's MRR grew by approximately $450,000, to approximately
$1,250,000 from approximately $800,000 for the fiscal year ended June 30, 1997.
Total revenues have increased during such period from $12,722,903 to
$16,520,128, a 30% increase.
The Company is a Delaware corporation, organized in March 1992. The
Company's principal executive offices are located at 11-H Princess Road,
Lawrenceville, New Jersey 08648, and its telephone number is 609-896-4500.
5
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Securities Offered................ 1,049,280 shares of Common Stock.
Use of Proceeds................... The Company will not receive any of the proceeds from
the sale of Common Stock offered by the Selling
Stockholders hereby.
Risk Factors...................... The securities offered hereby involve a high degree of
risk. See "RISK FACTORS."
Offering Price.................... All or part of the shares of Common Stock offered hereby
may be sold from time to time in amounts and on terms to
be determined by the Selling Stockholders at the time of
sale.
Nasdaq Trading Symbol............. "RSPN."
</TABLE>
6
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE SHARES OF COMMON STOCK BEING OFFERED HEREBY IS HIGHLY
SPECULATIVE, INVOLVES A HIGH DEGREE OF RISK AND SHOULD BE MADE ONLY BY INVESTORS
WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. THE FOLLOWING RISK FACTORS
SHOULD BE CONSIDERED CAREFULLY IN ADDITION TO THE OTHER INFORMATION IN THIS
PROSPECTUS BEFORE PURCHASING THE SHARES OF COMMON STOCK OFFERED HEREBY. IT MUST
BE RECOGNIZED THAT OTHER UNFORSEEN RISKS MIGHT ARISE IN THE FUTURE AND AFFECT
THE COMPANY TO A GREATER EXTENT THAN COULD EVER BE ANTICIPATED.
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THIS PROSPECTUS
CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995, SUCH AS STATEMENTS OF THE COMPANY'S
PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS. ALL SUCH FORWARD-LOOKING
STATEMENTS INVOLVE RISKS AND UNCERTAINTIES, ACCORDINGLY, THE COMPANY'S ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN THE FORWARD-LOOKING
STATEMENTS. ALL CAUTIONARY STATEMENTS MADE IN THIS PROSPECTUS SHOULD BE READ AS
BEING APPLICABLE TO ALL RELATED FORWARD-LOOKING STATEMENTS WHEREVER THEY APPEAR
IN THIS PROSPECTUS. SEE "SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS."
HISTORY OF SIGNIFICANT LOSSES; SUBSTANTIAL ACCUMULATED DEFICIT; WORKING CAPITAL
DEFICIT; NEGATIVE CASH FLOW AND UNCERTAIN FUTURE PROFITABILITY
The Company has incurred net losses of $18,054,144 and $12,875,836
(inclusive of dividends and accretion on preferred stock of $6,876,521 and
$3,210,333) for the two fiscal years ended June 30, 1997, and 1998,
respectively, and an accumulated deficit of $44,317,785 at June 30, 1998 and
negative cash flow of $1,228,215 for the fiscal year ended June 30, 1997 and a
positive cash flow of $267,589 for the fiscal year ended June 30, 1998. It is
anticipated that such losses will continue for the foreseeable future. The
Company had a net working capital deficit of $1,508,402 as of June 30, 1998. In
addition, the Company's future plans are subject to known and unknown risks and
uncertainties that may cause the Company to continue to incur substantial losses
from operations. There can be no assurance that the Company's operations will
ever become profitable or that, if it is successful in doing so, it will be able
to maintain profitability.
SIGNIFICANT RECEIVABLES ENCUMBERED
On July 30, 1998, the Company completed a restructuring of its long-term
indebtedness with MSCH. In connection with such restructuring, USS sold certain
of its alarm monitoring contracts (the "Purchased Contracts") to its newly
created, wholly-owned subsidiary, RAC, for aggregate consideration of
approximately $26,000,000 pursuant to a Purchase Agreement dated as of July 30,
1998, as amended (the "Purchase Agreement"), between USS and RAC. The Purchased
Contracts generate approximately $700,000 in monthly recurring revenue. Also on
July 30, 1998, in a related transaction, RAC entered into a Receivable Financing
Agreement dated as of July 30, 1998, as amended (the "Financing Agreement"),
among RAC, USS and MSCH. Pursuant to the terms of the Financing Agreement, RAC
received initial financing from MSCH in the amount of $26,000,000 (the "Initial
Loan") and granted MSCH a first priority perfected security interest in the
receivables derived from the Purchased Contracts (the "Receivables"). The
Initial Loan has a term of five years and bears interest at a rate of 8% per
annum. The Receivables are paid directly into a lockbox administered by USS as
Collection Agent under the Financing Agreement for which USS will receive a
monthly fee equal to $5.00 per Purchased Contract from RAC. Under the terms of
the Financing Agreement, all funds derived from the Receivables will be paid to
the lockbox account and MSCH will be paid its monthly payment of principal and
interest under the Loan out of such lockbox account prior to any payments to USS
as Collection Agent or any other funds being distributed to the Company or its
subsidiaries. RAC may finance, from time to time, up to an additional
$24,000,000 pursuant to the Financing Agreement by pledging additional Purchased
Contracts which it may purchase from USS pursuant to the Purchase Agreement to
MSCH, which funds will be provided to MSCH by KeyBank National Association
("KeyBank"). On October 1, 1998, the Company pledged additional contracts
generating approximately $300,000 in receivables and received gross proceeds of
$11,292,000. As
7
<PAGE>
of the date hereof, $12,708,000 is available under the Financing Agreement. In
the event of a default under the Financing Agreement, MSCH would be entitled to
all amounts derived from all receivables pledged to the lender necessary to
satisfy all outstanding obligations to MSCH under the Financing Agreement. As of
August 31, 1998, $25,988,333 was outstanding under the Financing Agreement. As a
result of such borrowings, the Company's capital structure is highly leveraged.
The Company's indebtedness requires that a significant amount of its cash flow
from operations be applied to the payment of interest, and there can be no
assurance that the Company's operations will generate sufficient cash flow to
service this indebtedness.
In consideration for providing the funds for the Initial Loan, KeyBank
received a fee from MSCH in cash of $2,730,000 out of the fees which were
received by MSCH from RAC of approximately $3,900,000, $3,120,000 of which was
paid to MSCH in cash at the closing and $780,000 was paid in 119,632 shares of
Common Stock (the "Fee Shares") to be issued to MSCH. The Company has agreed to
file a registration statement to register the sale of the Fee Shares by MSCH
under the Securities Act. The Company has agreed that in the event the proceeds
to be derived by MSCH from the sale of the Fee Shares is less than $780,000, the
Company is obligated to, at its option, pay cash or issue additional shares
equal to the amount of the shortfall, if any.
CERTAIN NON-CASH CHARGES
The Company may incur certain non-cash charges of up to $437,500 for the
fiscal year ended June 30, 1999 as deferred compensation expense relating to
certain performance options granted to two former officers of USS, based upon
fluctuations of the market price of the Common Stock. In addition, in
conjunction with the Financing Agreement, the Company will report an
extraordinary loss in the amount of approximately $2,600,000 on the early
extinguishment of its previous line of credit in the fiscal year ended June 30,
1999.
RISKS RELATED TO GROWTH THROUGH ACQUISITIONS
Since fiscal year end 1994, substantially all of the Company's growth has
been through acquisitions. One of the Company's primary strategies is to
continue to increase its revenues and the markets it serves through the
acquisition of other companies in the electronic security services industry and
portfolios of alarm monitoring accounts. During the fiscal years ended June 30,
1997 and 1998, the Company consummated 14 acquisitions (an aggregate of 5,300
subscriber accounts) and 17 acquisitions (an aggregate of 19,000 subscriber
accounts), respectively. In the event that the Company targets larger
acquisitions, such acquisitions can be expected to involve significant
expenditures of capital and time, whether or not consummated. Such acquisitions
may involve certain unknown risks and uncertainties in addition to those
identified herein, which could have a material adverse effect on the Company's
financial condition and results of operations. In addition, the acquisition of
electronic security service companies may become more expensive in the future,
to the extent that demand and competition increases. There can be no assurance
that the Company will be able to identify acquisition candidates, successfully
consummate such acquisitions, acquire or profitably manage such acquisition
candidates or successfully integrate such businesses into its operations without
substantial costs, delays or other problems. In addition, the Company is unable
to predict the size or frequency of any future acquisitions, and there can be no
assurance that any businesses acquired will be profitable at the time of their
acquisition or will achieve sales and profitability that justify the investment
therein or that the Company will be able to realize expected operating and
economic efficiencies following such acquisitions. Acquisitions may involve a
number of special risks, including (i) adverse effects on the Company's reported
operating results, (ii) diversion of management's attention, (iii) increased
burdens on the Company's management resources and financial controls, (iv)
dependence on retention and hiring of key personnel, (v) risks associated with
unanticipated problems or legal liabilities and (vi) amortization of acquired
intangible assets, some or all of which could have a material adverse effect on
the Company's operations and financial performance.
8
<PAGE>
In February 1998, the Company entered into an agreement to acquire Triple A
Patrol, a company engaged in the patrol service business. The Company has
limited experience in the patrol service business and such industry may involve
risks and uncertainties which are unknown to the Company and which could have a
material adverse effect on the Company's financial condition and results of
operations. In addition, the patrol service business has a significantly lower
profit margin than the other services provided by the Company, which could also
have a material adverse effect on the Company's results of operations and
financial performance.
Since the Company's primary consideration in making an acquisition is the
amount of MRR associated with the seller's subscriber accounts, the price paid
by the Company is customarily directly tied to such MRR. Frequently, no audited
historical financial information is available from the Company's acquisitions.
Therefore, the actual MRR acquired may be less than the Company anticipated.
Thus, the Company must rely on management's knowledge of the industry, due
diligence procedures, and representations and warranties of the sellers. In the
event the Company's assessment of the MRR of an acquired company is higher than
actual MRR for an acquired company, the Company's financial condition and
results of operations could be materially adversely affected.
A difference between the accounting treatment of the purchase of subscriber
accounts and the accounting treatment of the generation of subscriber accounts
through direct sales by the Company's sales force has a significant impact on
the Company's results of operations. The costs of monitoring contracts (acquired
either through the Company's dealer program or through the acquisition of
subscriber account portfolios) are capitalized and amortized over estimated
lives ranging from five to ten years on a straight-line basis for alarm and PERS
accounts. Included in capitalized costs are acquisition transition costs that
reflect the Company's estimate of costs associated with incorporating the
acquired subscriber accounts into its operations. In contrast, all of the
Company's costs related to the marketing, sales and installation of new alarm
monitoring systems generated by its sales force are expensed in the period in
which such activities occur. The Company's marketing, sales and installation
expenses for new systems generally exceed installation revenues. Such accounting
treatment could adversely affect the Company's financial condition and results
of operations.
POTENTIAL NEED FOR ADDITIONAL FINANCING; POTENTIAL DILUTIVE IMPACT OF
ACQUISITIONS
Based on the Company's operating plan, the Company may require additional
financing. The Company believes that the cash on hand and available debt
financing under the Financing Agreement will be sufficient to satisfy its
current capital requirements for at least 12 months following the date hereof.
The Company had an additional $24,000,000 available pursuant to the Financing
Agreement as of September 30, 1998 and $12,708,000 as of the date hereof,
however, in the event that the Company were to make significant acquisitions for
cash consideration, in excess of such availability, or if the lender were
unwilling to loan such amounts to RAC, the Company may require additional
capital before such time. Sources of funds may include the issuance of Common
Stock or preferred stock sold in a public offering or in private placements,
debt securities or bank financing. Historically, the Company has utilized its
Common Stock to pay a portion of the consideration of its acquisitions. To the
extent the Company continues to use its Common Stock in connection with
acquisitions, the issuance of such shares could have a dilutive impact on the
Company's existing stockholders. Alternatively, to avoid such dilution, or if
the acquisition candidate is unwilling to accept Common Stock as all or a
portion of the consideration for such acquisition, the Company may be required
to utilize more of its cash resources, if available, or may be required to seek
additional funding. There can be no assurance that the Company would be able to
obtain capital on a timely basis, on favorable terms, or at all. If the Company
is unable to obtain such financing, or generate funds from operation sufficient
to meet it needs, the Company may be unable to implement its current plans for
expansion and development.
9
<PAGE>
ATTRITION OF SUBSCRIBER ACCOUNTS
The Company is heavily dependent on its recurring monitoring and service
revenues. Given the relatively fixed nature of monitoring and service expenses,
increases and decreases in monitoring and service revenues have a significant
impact on the Company's financial performance. Substantially all of the
Company's monitoring and service revenues are derived from recurring charges to
subscribers for the provision of various services. Although no single subscriber
represents more than one-half of one percent of the Company's recurring revenue
base, the Company is vulnerable to subscribers canceling their contracts. In
recent years, lost recurring revenues from such cancellations have exceeded the
new recurring revenues added by the Company's internal sales efforts.
At June 30, 1998, the cost of subscriber accounts and intangible assets, net
of previously accumulated amortization, was $31,280,805, which constituted 73.3%
of the book value of the Company's total assets. The Company's acquired
subscriber accounts are amortized on a straight-line basis over the estimated
life of the related revenues. The Company's assumed attrition rate for all of
its subscriber accounts, expressed as total accounts lost per year, net of new
accounts from new installations, conversions, subscribers who move into premises
previously occupied by Company subscribers and accounts for which the Company is
reimbursed by virtue of a guarantee by the seller of the account, is
approximately 5%. It is the Company's policy to review periodically actual
account attrition and, when necessary, adjust the remaining estimated lives of
the Company's acquired accounts to reflect assumed future attrition. There could
be a material adverse effect on the Company's results of operations and
financial condition if actual account attrition significantly exceeds assumed
attrition and the Company has to make further adjustments with respect to the
amortization of acquired subscriber accounts.
COMPETITION
The electronic security services industry is highly competitive and
fragmented. The Company competes with national and regional companies, as well
as smaller local companies, in all of its operations. Furthermore, new
competitors continue to enter the industry and the Company may encounter
additional competition from such future industry entrants. Subject to regulatory
compliance, certain companies engaged in the telephone and cable business are
competing in the electronic security services industry and other such companies
may, in the future, enter the industry. Certain of the Company's current
competitors have, and new competitors may have, substantially greater financial
resources than the Company. There can be no assurance that the Company will be
able to compete successfully in the electronic security services industry. The
Company's principal competitors with respect to its PERS are other national or
regional emergency response providers and burglar alarm companies that offer
medical emergency features in addition to their home protection systems. Many of
these companies have greater financial resources than the Company and may enjoy
a particular competitive advantage due to their access to a larger client base.
There can be no assurance that the Company will be able to compete successfully
in the PERS industry.
DEPENDENCE ON THE MONITORING STATION
The Company is dependent on the Euclid Monitoring Station, an independent
third-party monitoring station, and the Triple A Monitoring Station to monitor a
significant amount of its subscriber accounts. The Company's agreement with the
Euclid Monitoring Station expires in April 1999 and is terminable sooner under
certain circumstances. Although the Company believes that alternative monitoring
stations are available on commercially reasonable terms, any termination or
temporary interruption of services by the Euclid Monitoring Station or the
Triple A Monitoring Station for any reason including a catastrophic event such
as tornado, hurricane, earthquake, fire or other disaster which rendered the
Euclid Monitoring Station or the Triple A Monitoring Station temporarily or
permanently inoperable could adversely affect the Company's financial condition
and results of operations. The Company anticipates transferring all of
10
<PAGE>
its subscriber accounts from the Euclid Monitoring Station to the Triple A
Monitoring Station by the end of its current fiscal year.
DEPENDENCE ON SUPPLIERS AND MANUFACTURERS
The Company does not manufacture any of the equipment or components that it
designs and installs. Although the Company believes that a variety of
alternative sources of supply are available on commercially reasonable terms,
the Company has no guaranteed supply arrangements with its suppliers and
purchases components pursuant to purchase orders placed from time to time in the
ordinary course of business. There can be no assurance that shortages of
components will not occur in the future. Failure of sources of supply and the
inability of the Company to develop alternative sources of supply, if required
in the future, could have a material adverse effect on the Company's operations.
PRODUCT LIABILITY AND AVAILABILITY OF INSURANCE
The nature of the security services provided by the Company potentially
exposes it to greater risk of liability claims for employee acts or omissions or
system failure than may be inherent in many other service businesses. Although
(i) substantially all of the Company's customers have subscriber agreements
which contain provisions for limited liability and predetermined liquidated
damages and (ii) the Company carries insurance which provides coverage against
certain of such liabilities, there can be no assurance that such existing
arrangements will prevent the Company from being adversely affected as a result
of damages arising from the acts of its employees, defective equipment, the acts
or omissions of the Monitoring Station or because some jurisdictions prohibit or
restrict limitations on liabilities and liquidated damages. In addition, certain
of the Company's insurance policies and the laws of some states may limit or
prohibit insurance coverage for punitive damages and for certain other kinds of
damages arising from employee misconduct. In addition, in some states, the
contractual limitation on liability and indemnification provisions may be
ineffective in cases of gross negligence or intentional misconduct and in
certain other situations.
The sale and service of the Company's products entails the risk of product
liability claims. In addition, many of the companies with which the Company does
or may do business may require financial assurances of product reliability. The
Company has product liability insurance, but may be required to pay higher
premiums associated with new product development. Product liability insurance is
expensive and there can be no assurance that additional insurance will be
available on acceptable terms, if at all, or that it will provide adequate
coverage against potential liabilities. The inability to obtain additional
insurance at an acceptable cost or to otherwise protect against potential
product liability could prevent or inhibit commercialization of the Company's
products. A successful claim brought against the Company in excess of its
insurance coverage could have a material adverse effect on the Company.
POSSIBLE ADVERSE EFFECT OF "FALSE ALARMS" ORDINANCES AND GOVERNMENT REGULATIONS
The Company believes that approximately 97% of alarm activations that result
in the dispatch of police or fire department personnel are not emergencies, and
thus are "false alarms." Significant concern has arisen in certain
municipalities about this high incidence of false alarms. This concern could
cause a decrease in the likelihood or timeliness of police response to alarm
activations and thereby decrease the propensity of consumers to purchase or
maintain alarm monitoring services.
A number of local governmental authorities have considered or adopted
various measures aimed at reducing the number of false alarms. Such measures
include (i) subjecting alarm monitoring companies to fines or penalties for
transmitting false alarms, (ii) licensing individual alarm systems and the
revocation of such licenses following a specified number of false alarms, (iii)
imposing fines on alarm subscribers for false alarms, (iv) imposing limitations
on the number of times the police will respond to alarms at a particular
location after a specified number of false alarms and (v) requiring further
verification of an
11
<PAGE>
alarm signal before the police will respond. Enactment of such measures could
adversely affect the Company's future business and operations.
The Company's operations are also subject to a variety of federal, state,
county and municipal laws, regulations and licensing requirements. Many of the
states in which the Company operates, as well as certain local authorities,
require the Company to obtain licenses or permits to conduct a security alarm
services business. Certain governmental entities also require persons engaged in
the security alarm services business to be licensed and to meet certain
standards in the selection and training of employees and in the conduct of
business. The loss of such licenses, or the imposition of conditions on the
granting or retention of such licenses, could have a material adverse effect on
the Company.
The Company's advertising and sales practices are regulated by both the FTC
and state consumer protection laws. Such regulations include restrictions on the
manner in which the Company promotes the sale of its products and the obligation
of the Company to provide purchasers of its products with certain rights. While
the Company believes that it has complied with these regulations in all material
respects, there can be no assurance that none of these regulations were violated
in connection with the solicitation of the Company's existing subscriber
accounts, particularly with respect to accounts acquired from third parties, or
that no such violations will occur in the future.
GEOGRAPHIC CONCENTRATION
The Company's existing alarm subscriber base is geographically concentrated
in New York, New Jersey, Connecticut, Delaware, Maryland and Pennsylvania.
Accordingly, the performance of the Company may be adversely affected by
regional or local economic conditions. The Company may from time to time make
acquisitions in regions outside of its current operating area. The acquisition
of companies in other regions, or in metropolitan areas in which the Company
does not currently have subscribers, requires an investment by the Company. In
order for the Company to expand successfully into a new area, the Company must
acquire companies with a sufficient number and density of subscriber accounts in
such area to support the investment. There can be no assurance that the Company
will find such opportunities or that an expansion into new geographic areas will
generate operating profits.
GOVERNMENT REGULATION OF AND LIMITATIONS BROUGHT ON BY REIMBURSEMENT PROGRAMS
Many aspects of the medical industry in the United States are presently
subject to extensive federal and state governmental regulation, including
reimbursement rates and policies imposed by Medicare and other third-party
reimbursement programs. Laws and regulations affecting the Company's business
include federal and state "kickback laws," conflict of interest laws (such as
the federal "Stark" legislation), and licensing requirements. In addition, both
the Clinton Administration and the Congress have periodically asserted a need to
overhaul or reform the nation's healthcare system. Such legislative initiatives,
if enacted, could impose pressures on the pricing structures applicable to a
portion of the Company's PERS services. In particular, there is a possibility
that a significant portion of healthcare services will be rendered and
administered through managed care systems, which could have the effect of
forcing price concessions and reductions on the part of service providers such
as the Company. Depending on the nature and extent of any new laws and/or
regulations, or possible changes in the interpretation of existing laws and/or
regulations, any such changes may have a material adverse effect on the
Company's PERS revenues, operating margins and profitability.
The Company derives a portion of its revenues from Medicaid, and from other
third-party indemnity payors. In January 1992, the federal government
implemented, through the Medicare program, a resource-based relative value scale
("RBRVS") payment methodology. Implementation of RBRVS could reduce
reimbursement rates for certain of the Company's PERS products and services.
Policymakers have from time to time advocated that a RBRVS type of reimbursement
system be imposed on private-sector third-party payors. Implementation of such a
program would reduce reimbursements by private third-party
12
<PAGE>
payors, and would adversely affect the Company's PERS operating margins to the
extent that costs on these procedures could not be concomitantly reduced. There
can be no assurance that some or any of these reduced operating margins could be
recouped through cost reductions or otherwise.
DEPENDENCE ON KEY PERSONNEL AND MANAGEMENT
The Company's success depends to a significant degree upon the continuing
contributions of its senior management and other key employees, particularly its
three current executive officers, Richard M. Brooks, the Company's Chief
Executive Officer, President, Chief Financial Officer and Chairman of the Board,
Robert L. May, the Company's Executive Vice President and Ronald A. Feldman, the
Company's Chief Operating Officer, Vice President, Secretary and Treasurer, the
loss of any one of whom might have a material adverse effect on the Company's
financial condition and results of operations. Although the Company has
employment agreements with Messrs. Brooks, May and Feldman and certain other
employees, there can be no assurance that the Company will be able to retain the
services of such individuals. It is an event of default under the Financing
Agreement if Messrs. Brooks, May and Feldman are not employed in certain
management positions. The Company has key-man life insurance policies on the
lives of Messrs. Brooks and Feldman in the amount of $3,000,000 and $1,000,000,
respectively.
CONTROL BY DIRECTORS AND EXECUTIVE OFFICERS
The Company's directors and executive officers beneficially own
approximately 15.9% of the outstanding shares of Common Stock and, accordingly,
will have substantial influence over the outcome of any matter submitted to a
vote of stockholders, including the election of directors and the approval of
significant corporate transactions (such as acquisitions of the Company or its
assets). Such influence could delay or prevent a change of control of the
Company.
POSSIBLE VOLATILITY OF STOCK PRICE
The stock market has from time to time experienced extreme price and volume
fluctuations that have been unrelated to the operating performance of particular
companies. The market price of the Common Stock may be significantly affected by
quarterly variations in the Company's operating results, changes in financial
estimates by securities analysts or failure by the Company to meet such
estimates, litigation involving the Company, general trends in the security
alarm industry, actions by governmental agencies, national economic and stock
market conditions, industry reports and other factors, many of which are beyond
the control of the Company.
NO DIVIDENDS
The Company has never paid any cash or other dividends on its Common Stock.
Payment of dividends on the Common Stock is within the discretion of the Board
of Directors and will depend upon the Company's earnings, its capital
requirements and financial condition, and other relevant factors. For the
foreseeable future, the Board intends to retain future earnings, if any, to
finance its business operations and does not anticipate paying any cash
dividends with respect to the Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE; EFFECT OF PREVIOUSLY ISSUED OPTIONS AND
WARRANTS; REGISTRATION RIGHTS
As of September 25, 1998, the Company had outstanding 6,725,442 shares of
Common Stock, 5,581,027 of which are freely tradeable without restriction or
further registration under the Securities Act and 1,144,415 of which are
"restricted securities" (as that term is defined in Rule 144 under the
Securities Act) and in the future may only be sold pursuant to a registration
statement under the Securities Act, in compliance with the exemption provisions
of Rule 144 or pursuant to another exemption under the Securities Act. In
general, under Rule 144, as currently in effect, a person (including a person
who may be deemed an "affiliate" of the Company as that term is defined under
the Securities Act) who has
13
<PAGE>
beneficially owned such shares for at least one year would be entitled to sell
within any three-month period a number of shares beneficially owned for at least
one year that do not exceed the greater of (i) 1% of the then outstanding shares
of Common Stock or (ii) the average weekly trading volume of the Common Stock
during the four calendar weeks preceding such sale. Sales under Rule 144 are
further subject to certain restrictions relating to the manner of sale, notice
and the availability of current public information about the Company. After two
years have elapsed from the date of the issuance of restricted securities by the
Company or their acquisition from an affiliate, such shares may be sold without
limitation by persons who have not been affiliates of the Company for at least
three months. The sale, or availability for sale, of substantial amounts of
Common Stock in the public market pursuant to Rule 144 or otherwise could
materially adversely affect the market price of the Common Stock and could
impair the Company's ability to raise additional capital through the sale of its
equity securities or debt financing.
The Company has reserved from the authorized, but unissued, Common Stock,
3,268,441 shares of Common Stock issuable upon exercise of options, warrants and
convertible securities. The existence of such outstanding securities may prove
to be a hindrance to future financings, since the holders of such securities may
be expected to exercise them at a time when the Company would otherwise be able
to obtain additional equity capital on terms more favorable to the Company.
Certain of the holders of such securities have registration rights with respect
to such securities. No prediction can be made as to the effect, if any, that
sales of such securities, or the availability of such securities for sale, will
have on the market prices prevailing from time to time for the Common Stock.
However, even the possibility that a substantial number of the Company's
securities may, in the near future, be sold in the public market may adversely
affect prevailing market prices for the Common Stock and could impair the
Company's ability to raise capital through the sale of its equity securities.
DELAWARE ANTI-TAKEOVER STATUTE; LIMITATION OF LIABILITY OF DIRECTORS AND
OFFICERS
The Company is a Delaware corporation and is subject to the prohibitions
imposed by Section 203 of the Delaware General Corporate Law ("DGCL"), which is
generally viewed as an anti-takeover statute. In general, this statute will
prohibit the Company from entering into certain business combinations without
the approval of its Board of Directors and, as accordingly, could prohibit or
delay mergers or other attempted takeovers or changes in control with respect to
the Company. Such provisions may discourage attempts to acquire the Company.
The Company's Certificate of Incorporation includes provisions to eliminate,
to the full extent permitted by the DGCL as in effect from time to time, the
personal liability of directors of the Company for monetary damages arising from
a breach of their fiduciary duties as directors. The Certificate of
Incorporation also includes provisions to the effect that (subject to certain
exceptions) the Company shall, to the maximum extent permitted from time to time
under the law of the State of Delaware, indemnify, and upon request shall
advance expenses to, any director or officer to the extent that such
indemnification and advancement of expenses is permitted under such law, as it
may from time to time be in effect. In addition, the Company's Bylaws (the
"Bylaws") require the Company to indemnify, to the full extent permitted by law,
any director, officer, employee or agent of the Company for acts which such
person reasonably believes are not in violation of the Company's corporate
purposes as set forth in the Certificate of Incorporation. As a result of such
provisions in the Certificate of Incorporation and the Bylaws, stockholders may
be unable to recover damages against the directors and officers of the Company
for actions taken by them which constitute negligence, gross negligence or a
violation of their fiduciary duties, which may reduce the likelihood of
stockholders instituting derivative litigation against directors and officers
and may discourage or deter stockholders from suing directors, officers,
employees and agents of the Company for breaches of their duty of care, even
though such action, if successful, might otherwise benefit the Company and its
stockholders.
14
<PAGE>
POSSIBLE ADVERSE EFFECTS ASSOCIATED WITH THE ISSUANCE OF "BLANK CHECK" PREFERRED
STOCK
The Company's Certificate of Incorporation authorizes the Company's Board of
Directors to issue up to 250,000 shares (of which 239,430.42 remain available)
of "blank check" preferred stock, from time to time, in one or more series,
solely on the authorization of its Board of Directors. The Board of Directors
will thus be authorized, without further approval of the stockholders, to fix
the dividend rights and terms, conversion rights, voting rights, redemption
rights and terms, liquidation preferences, and any other rights, preferences,
privileges and restrictions applicable to each new series of preferred stock.
The issuance of such stock could, among other results, adversely affect the
voting power of the holders of Common Stock and, under certain circumstances,
make it more difficult for a third party to gain control of the Company,
discourage bids for the Common Stock at a premium, or otherwise adversely affect
the market price of the Common Stock.
YEAR 2000 COMPLIANCE
Year 2000 compliance relates to the ability of computer hardware and
software to respond to the problems posed by the fact that computer programs
have traditionally been written using two digits rather than four to define the
applicable year. As a consequence, unless modified, computer programs and
systems will not be able to differentiate between the year 2000 and 1900. The
failure to address the problem could result in system failures and the
generation of erroneous data. The accounts receivable and billing software
currently used by the Company has been tested internally and, based upon such
tests, the Company believes such software is year 2000 compliant. The Company
that designs the monitoring software for the Triple A Monitoring Station has
represented to the Company that such software is year 2000 compliant. The
Company plans to test such monitoring station software prior to its use by the
Company. The Company plans to install a new Windows-based general ledger and
accounts payable program, which the manufacturer has warranted as year 2000
compliant, by January 1, 1999. To date, the Company has not incurred any
material costs historically and does not expect to incur any material costs in
the future with respect to becoming Year 2000 compliant. However, the Company
cannot predict the effect of the year 2000 problem on entities with which the
Company transacts business (including its customers, financial institutions and
vendors), and there can be no assurance that the effects of the year 2000
problem on such entities will not have a material adverse effect on the
Company's business, financial condition or results of operations. The Company
plans to initiate communication with its financial institutions and major
suppliers concerning their readiness for the year 2000, during the fiscal year
ending June 30, 1999, in order to minimize the risk associated with the year
2000 hardware and software problems. If the Company's current financial
institutions or major suppliers are unable to attain year 2000 compliance in a
timely manner; then the Company will change to financial institutions that will
be year 2000 compliant, and seek out other suppliers for the same product or
purchase certain levels of product to enable the vendor to become year 2000
compliant over a specified period of time.
15
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from any sale of the Shares.
SELLING STOCKHOLDERS
The following table sets forth information concerning Shares beneficially
owned as of October 5, 1998. Other than their ownership of the Company's
securities, none of the Selling Stockholders has had any material relationship
with the Company within the past three years, other than as described in the
footnotes to the table. The table has been prepared based on information
furnished to the Company by American Stock Transfer Trust Company and/or by or
on behalf of the Selling Stockholders.
Any or all of the Shares listed below may be offered for sale by the Selling
Stockholders from time to time and, therefore, no estimate can be given as to
the number of Shares that will be held by the Selling Stockholders upon
termination of this offering. Except as otherwise indicated, the Selling
Stockholders listed in the table have sole voting and investment powers with
respect to the Shares indicated.
Of the securities offered hereby (i) 119,632 shares were issued to MSCH in
partial consideration for providing financing to the Company, (ii) up to 146,321
shares of Common Stock may be issued in connection with the Company's guarantee
of the Note issued by a subsidiary of the Company in connection with the Liberty
Acquisition, (iii) 2,730 shares of Common Stock were issued to certain employees
of Stephen Schueren in connection with the Liberty Acquisition and (iv) 780,597
shares of Common Stock were issued in connection with the Health Watch
Acquisition.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
-------------------------
<S> <C> <C> <C>
PRIOR TO
STOCKHOLDER OFFERED SALE AFTER SALE
- --------------------------------------------------------------------------- ----------- ------------ -----------
McGinn, Smith Capital Holdings Corp........................................ 119,632(1) 119,632 0
Stephen Schueren........................................................... 146,321(2) 282,223 135,902
Phil Umile................................................................. 758(3) 758 0
Tim Fagan.................................................................. 531(3) 537 0
Sally Malarkey............................................................. 531(3) 531 0
Eden Ratliff............................................................... 379(3) 379 0
Matthew Ratliff............................................................ 379(3) 379 0
Nick Fote.................................................................. 152(3) 152 0
Andrew Queen............................................................... 260,199(4) 260,199 0
Jeffrey Queen.............................................................. 260,199(4) 260,199 0
Jeffrey Queen and Andrew Queen............................................. 260,199(4) 260,199 0
Irrevocable Trust U/A January 2, 1998
</TABLE>
- ------------------------
(1) Shares issued in connection with the Financing Agreement.
(2) Includes up to 146,321 shares of Common Stock which may be issued in
connection with the Company's guarantee of the Note.
(3) Shares issued in connection with the Liberty Acquisition.
(4) Shares issued in connection with the Health Watch Acquisition.
16
<PAGE>
PLAN OF DISTRIBUTION
The Shares offered hereby may be offered and sold from time to time by the
Selling Stockholders, or by pledgees, donees, transferees or other successors in
interest. Such offers and sales may be made from time to time on the Nasdaq
SmallCap Market 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 Selling
Stockholders may receive commissions or discounts from the Selling Stockholders
or from the purchasers in amounts to be negotiated immediately prior to the
sale. The Selling Stockholders may also sell such shares in accordance with Rule
144 under the Securities Act.
In order to comply with certain state securities laws, if applicable, the
Shares will be sold in such jurisdictions only through registered or licensed
brokers or dealers. In certain states, the Shares may not be sold unless such
Shares have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Shares may not simultaneously engage in
market-making activities with respect to such Shares for a period of one or five
business days prior to the commencement of such distribution. In addition to,
and without limiting, the foregoing, each of the Selling Stockholders and any
other person participating in a distribution will be subject to the applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including, without limitation, Regulation M, which provisions may limit the
timing of purchases and sales of any of the Shares by the Selling Stockholders
or any such other person. All of the foregoing may affect the marketability of
the Shares.
The Company has agreed to use its best efforts to maintain the effectiveness
of the registration of the shares offered hereby until the earlier of the date
upon which all of the shares offered hereby have been sold or the date on which
the shares offered hereby, in the opinion of counsel, may be immediately sold by
the Selling Stockholders without registration.
The Selling Stockholders and any brokers participating in such sales may be
deemed to be underwriters within the meaning of the Securities Act. There can be
no assurances that the Selling Stockholders will sell any or all of the shares
offered hereby.
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 Selling Stockholders. The Company will not receive
any of the proceeds from this offering.
Any commissions paid or any discounts or concessions allowed to any broker,
dealer, underwriter, agent or market maker and, if any such broker, dealer,
underwriter, agent or market maker purchases any of the shares as principal, any
profits received on the resale of such shares, may be deemed to be underwriting
commissions or discounts under the Securities Act.
LEGAL MATTERS
The validity of the Shares under applicable state law has been passed upon
for the Company by Squadron, Ellenoff, Plesent & Sheinfeld, LLP, New York, New
York 10176.
17
<PAGE>
EXPERTS
The financial statements incorporated in this prospectus by reference from
the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
1998 have been audited by Deloitte & Touche LLP, independent auditors, as stated
in their report, which is incorporated by reference, and has been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
The financial statements of Triple A Security Systems, Inc. and The Jupiter
Group, Inc. incorporated by reference in this prospectus from the Company's
Annual Report on Form 10-KSB, as amended, for the fiscal year ended June 30,
1997, as of and for the years ended December 31, 1996 and 1995 have been audited
by Terry H. Jones, CPA, independent auditor, as stated in his report which is
incorporated by reference, and are incorporated in reliance upon the report of
such person given upon his authority as an expert in accounting and auditing.
18
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN 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 OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATES AS OF WHICH SUCH INFORMATION IS FURNISHED.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Available Information........................... 2
Incorporation of Certain Documents by
Reference..................................... 2
Special Note Regarding Forward Looking
Statements.................................... 3
The Company..................................... 4
The Offering.................................... 6
Risk Factors.................................... 7
Use of Proceeds................................. 16
Selling Stockholders............................ 16
Plan of Distribution............................ 17
Legal Matters................................... 17
Experts......................................... 18
</TABLE>
RESPONSE USA,
INC.
-------------
COMMON STOCK
---------------------
PROSPECTUS
---------------------
OCTOBER , 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemization of all expenses (subject to future
contingencies) incurred or expected to be incurred by the Company in connection
with the issuance and distribution of the securities being offered hereby (items
marked with an asterisk (*) represent estimated expenses):
<TABLE>
<S> <C>
SEC Registration Fee............................ $1,432.00
Legal Fees and Expenses......................... $5,000.00*
Accounting Fees and Expenses.................... $2,500.00*
Miscellaneous................................... $1,068.00*
---------
Total..................................... $10,000.00*
</TABLE>
- ------------------------
* Estimate
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Delaware General Corporation Law, Section 102(b)(7), enables a corporation
in its original certificate of incorporation, or an amendment thereto validly
approved by stockholders, to eliminate or limit personal liability of members of
its Board of Directors for violations of a director's fiduciary duty of care.
However, the elimination or limitation shall not apply where there has been a
breach of the duty of loyalty, failure to act in good faith, intentional
misconduct or a knowing violation of a law, the payment of a dividend or
approval of a stock repurchase which is deemed illegal or an improper personal
benefit is obtained. The Company's Certificate of Incorporation includes the
following language:
"No director of the Corporation shall be liable to the Corporation or
any of its stockholders for monetary damages for breach of fiduciary duty as
a director; provided that this provision does not eliminate the liability of
the director (i) for 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 intentional misconduct or a knowing violation of law,
(iii) under Section 174 of Title 8 of the Delaware Code, or (iv) for any
transaction from which the director derived an improper personal benefit."
Article Ninth of the Certificate of Incorporation of the Company permits
indemnification of directors of the Corporation. Such Article provides as
follows:
"A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for 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 intentional 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 hereunder with respect to any act or omission
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 extent 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."
II-1
<PAGE>
Additionally, 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 (hereinafter, 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, partnership, 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 payment 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.
II-2
<PAGE>
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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 16. EXHIBITS
(a) The following exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------------------
<S> <C>
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 Merger dated March 18, 1992 by and between Response USA, Inc. (Delaware) and Lifecall
America, Inc.(1)
2(c) 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(d) 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(3)
4(a) Form of Common Stock Certificate(1)
4(b) Form of Warrant Agreement(1)
4(c) Form of Class A Warrant Certificate(1)
4(d) Form of Class B Warrant Certificate(1)
4(e) Form of Class C Warrant Certificate(1)
4(f) Form of Preferred Warrant Certificate(4)
4(g) 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 1992(1)
4(h) Restricted Stock Option Plan of the Company adopted by the Company's Board on August 20, 1990, as amended
August 30, 1991, January 2, 1992 and March 18, 1992(1)
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------------------
<S> <C>
4(i) 1997 Stock Option Plan of the Company adopted by the Company's Board in September 1997(3)
5 Opinion of Squadron, Ellenoff, Plesent & Sheinfeld, LLP
23(a) Consent of Deloitte & Touche LLP
23(b) Consent of Terry H. Jones, CPA
23(c) Consent of Squadron, Ellenoff, Plesent & Sheinfeld, LLP (contained in the Opinion filed as Exhibit 5)
24 Power of Attorney (included on the signature pages hereto)
27 Financial Data Schedule(2)
</TABLE>
- ------------------------
(1) Incorporated by reference to the Company's Registration Statement on Form
S-1 (registration number 33-47589).
(2) Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1998.
(3) Incorporated by reference to the Company's Registration Statement on Form
SB-2, as amended (registration number 333-37595).
(4) Incorporated by reference to the Company's Annual Report on Form 10-KSB, as
amended, for the fiscal year ended June 30, 1997.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(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 the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set 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 paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the Registration Statement is on Form S-3, and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(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 at that time shall be deemed to be the
initial bona fide offering thereof.
II-4
<PAGE>
(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) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to section 13(a)
or section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of
Registrant pursuant to the foregoing provisions, or otherwise, Registrant 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, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a director, officer, or controlling person of Registrant in
the successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question 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-5
<PAGE>
SIGNATURES
In accordance with 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 this Registration Statement on Form S-3
("Registration Statement") and authorized this Registration Statement to be
signed on its behalf by the undersigned, in the City of Lawrenceville, State of
New Jersey, October 5, 1998.
<TABLE>
<S> <C> <C>
RESPONSE USA, INC.
By: /s/ RICHARD M. BROOKS
------------------------------------------
Richard M. Brooks
PRESIDENT, CHIEF EXECUTIVE OFFICER, CHIEF
FINANCIAL
OFFICER AND CHAIRMAN OF THE BOARD
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard M. Brooks and Ronald A. Feldman, or
either one of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place, and
stead, in any and all capacities, to sign (i) any and all pre- or post-effective
amendments to this Registration Statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, and (ii) any
registration statements, and any and all amendments thereto, relating to the
offering covered hereby filed pursuant to Rule 462(b) under the Securities Act,
with the Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either of them, or
their or his substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Chief Executive Officer,
President, Chief
Financial Officer and
/s/ RICHARD M. BROOKS Chairman of the Board
---------------------------- (Principal Executive October 5, 1998
Richard M. Brooks Officer) (Principal
Accounting and Financial
Officer)
Vice President, Chief
/s/ RONALD A. FELDMAN Operating Officer,
---------------------------- Secretary, Treasurer and October 5, 1998
Ronald A. Feldman Director
/s/ ROBERT L. MAY
---------------------------- Executive Vice President October 5, 1998
Robert L. May and Director
/s/ A. CLINTON ALLEN
---------------------------- Director October 5, 1998
A. Clinton Allen
---------------------------- Director October 5, 1998
Stuart R. Chalfin
</TABLE>
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
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 Merger dated March 18, 1992 by and between Response USA, Inc. (Delaware) and
Lifecall America, Inc.(1)
2(c) 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(d) 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(3)
4(a) Form of Common Stock Certificate(1)
4(b) Form of Warrant Agreement(1)
4(c) Form of Class A Warrant Certificate(1)
4(d) Form of Class B Warrant Certificate(1)
4(e) Form of Class C Warrant Certificate(1)
4(f) Form of Preferred Warrant Certificate(4)
4(g) 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 1992(1)
4(h) Restricted Stock Option Plan of the Company adopted by the Company's Board on August 20, 1990, as
amended August 30, 1991, January 2, 1992 and March 18, 1992(1)
4(i) 1997 Stock Option Plan of the Company adopted by the Company's Board in September 1997(3)
5 Opinion of Squadron, Ellenoff, Plesent & Sheinfeld, LLP
23(a) Consent of Deloitte & Touche LLP
23(b) Consent of Terry H. Jones, CPA
23(c) Consent of Squadron, Ellenoff, Plesent & Sheinfeld, LLP (contained in the Opinion filed as Exhibit 5)
24 Power of Attorney (included on the signature pages hereto)
27 Financial Data Schedule(2)
</TABLE>
- ------------------------
(1) Incorporated by reference to the Company's Registration Statement on Form
S-1 (registration number 33-47589).
(2) Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1998.
(3) Incorporated by reference to the Company's Registration Statement on Form
SB-2, as amended (registration number 333-37595).
(4) Incorporated by reference to the Company's Annual Report on Form 10-KSB, as
amended, for the fiscal year ended June 30, 1997.
<PAGE>
EXHIBIT 5
[SEP&S LETTERHEAD]
October 6, 1998
Response USA, Inc.
11-H Princess Road
Lawrenceville, New Jersey 08648
Re: Registration Statement on Form S-3 (Registration No. 333- )
Ladies and Gentlemen:
You have requested our opinion, as counsel for Response USA, Inc., a
Delaware corporation (the "Company"), in connection with the registration
statement on Form S-3 (No. 333- ) (the "Registration Statement"), filed with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act").
The Registration Statement relates to the registration by the Company of the
sale by certain Selling Stockholders of up to 1,049,280 shares of common stock,
par value $.008 per share (the "Shares"), of the Company.
We have examined such records and documents and made such examinations of
law as we have deemed relevant in connection with this opinion. Based upon such
examinations, it is our opinion that, when there has been compliance with the
Act and the applicable state securities laws, the Shares, when issued, delivered
and paid for in accordance with the terms thereof, will be validly issued, and
the Shares, when so issued, delivered and paid for will also be fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Registration Statement. In so doing, we do not admit that we are
in the category of persons whose consent is required under Section 7 of the Act
or the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
<TABLE>
<S> <C>
Very truly yours,
/s/ SQUADRON, ELLENOFF, PLESENT &
SHEINFELD, LLP
------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 23(A)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Response USA, Inc. on Form S-3 of our report dated September 16, 1998
appearing in the Annual Report on Form 10-KSB for the fiscal year ended June 30,
1998 and to the reference to us under the heading "Experts" in the Prospectus,
which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
/s/ Deloitte & Touche LLP
Philadelphia, Pennsylvania
October 5, 1998
<PAGE>
EXHIBIT 23(B)
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Registration Statement
on Form S-3 of our report dated March 27, 1997, appearing in the Annual Report
on Form 10-KSB for the year ended June 30, 1997, as amended, relating to the
financial statements of Triple A Security Systems, Inc. and our report dated
November 21, 1997, appearing in the Annual Report on Form 10-KSB for the year
ended June 30, 1997, as amended, relating to the financial statements of The
Jupiter Group, Inc.
We also consent to the reference to our firm under the caption "Experts" in
the Prospectus, which is part of this Registration Statement.
TERRY H. JONES, CPA
/s/ Terry H. Jones, CPA
West Hazelton, Pennsylvania
October 6, 1998
