LIBERTY TECHNOLOGIES, INC.
407,972 Shares
of
Common Stock
-------------------------
This Prospectus relates to the offering of 407,972 outstanding shares (the
"Shares") of Common Stock, par value $.01 per share ("Common Stock"), of Liberty
Technologies, Inc. ("Liberty" or the "Company") which may be sold by certain
shareholders of the Company (the "Selling Shareholders").
The Company will not receive any proceeds from the sale of the Shares of
Common Stock offered hereby.
The Company's Common Stock is quoted on the Nasdaq National Market under
the trading symbol "LIBT." On October 17, 1997, the last reported sale price of
the Common Stock was $3.625 per share.
-------------------------
See "Risk Factors" beginning on page 6 for a discussion of certain factors
that should be considered by prospective investors of the Common Stock offered
hereby.
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
------------------------------
The date of this Prospectus is October 20, 1997
-1-
<PAGE>
AVAILABLE INFORMATION
The Company has filed a Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Act"), with the Securities and Exchange Commission (the "Commission") relating
to the Shares of Common Stock offered hereby. This Prospectus does not contain
all the information set forth in the Registration Statement, certain portions of
which have been omitted pursuant to the rules and regulations of the Commission.
Reference is hereby made to the Registration Statement and to the exhibits
relating thereto for further information with respect to the Company and the
securities offered hereby. Any statements contained herein concerning the
provisions of any document filed as an Exhibit to the Registration statement or
otherwise filed with the Commission are not necessarily complete, and in each
instance reference is made to the copy of such document so filed as an exhibit
to, or incorporated by reference into, the Registration Statement. Each
statement shall be qualified in its entirety by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith files reports, proxy and information statements and other information
with the Commission. Such reports, proxy and information statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the following Regional Offices of the Commission:
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and Seven World Trade Center, 13th Floor, New York, New
York 10048. Copies of such material may be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, registration statements and certain other filings
made electronically with the Commission through its "EDGAR" system are publicly
available through the Commission's site on the Internet's World Wide Web,
located at http://www.sec.gov. This Registration statement, including all
exhibits thereto, has been filed with the Commission through EDGAR. Reports,
proxy and information statements and other information concerning the Company
can also be inspected at the offices of the Nasdaq National Market, 1735 K
Street, N.W., Washington, D.C. 20006-1506.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in this Prospectus by reference:
(a) The Company's Annual Reports on Form 10-K for the years ended
December 31, 1996, 1995, and 1994 (including the Company's amended Annual
Report on Form 10-K/A for the years ended December 31, 1996 and 1994 and second
and third amendments on Form 10-K/A No. 2 and No. 3 for the year ended December
31, 1996);
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
June 30, 1997, March 31, 1997 (including the Company's amended Quarterly Report
on Form 10-Q/A and Form 10-Q/A No. 2 for the quarter ended June 30, 1997);
(c) The Company's Reports on Form 8-K dated October 6, 1997 and July 25,
1997;
(d) The Company's Schedule 14A dated October 8, 1997; and
(e) The descriptions of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed on February 19, 1993 and the Series A
Junior Participating Preferred Stock Purchase Rights contained in Amendment No.
1 to the Company's Form 8-A filed on October 7, 1997, including any amendments
or reports filed for the purpose of updating such descriptions.
-2-
<PAGE>
In addition, all documents and reports subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Prospectus and prior to the termination of the offering shall
be deemed to be incorporated by reference herein from their respective dates of
filing. Any statements contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is incorporated or 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.
The Company will furnish, without charge, to any person to whom a copy of
this Prospectus is delivered, upon such person's written or oral request, a copy
of any and all of the documents that have been incorporated by reference in the
Registration Statement and herein (not including exhibits to such documents,
unless such exhibits are specifically incorporated by reference into such
documents). The Company will also furnish, without charge, to any such person
upon such person's written or oral request, a copy of the Company's most recent
Annual Report to Shareholders. Any such request should be directed to the
Corporate Secretary, Liberty Technologies, Inc., 555 North Lane, Conshohocken,
Pennsylvania 19428, telephone number: (610) 834-0330.
-3-
<PAGE>
CAUTIONARY STATEMENT
When used in this Prospectus and in other public statements by the Company
and Company officers, the words "estimate," "project," "intend," "believe,"
"anticipate" and similar expressions are intended to identify forward-looking
statements regarding events and financial trends which may affect the Company's
future operating results and financial position. Such statements are subject to
risks and uncertainties that could cause the Company's actual results and
financial position to differ materially. Such factors are described in detail
below under "Risk Factors." Additional factors are described in the Company's
public reports filed with the Commission which are incorporated herein by
reference. Investors are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date made. The Company
undertakes no obligation to publicly release the result of any revision of these
forward-looking statements to reflect events or circumstances after the date
they are made or to reflect the occurrence of unanticipated events.
THE COMPANY
The Company, founded in 1984, develops, manufactures, markets and sells
diagnostic, condition monitoring and nondestructive evaluation systems and
provides related services to customers in the worldwide power and process
industrial markets, such as the chemical, petrochemical, pulp and paper and
nuclear utility industries. Liberty's products and services are designed to
reduce operating and maintenance costs and increase efficiency, reliability and
safety of plant operations. The Company has established certain strategic
technical and commercial alliances to advance its business objectives, including
to support product development and the sales and marketing of diagnostic systems
and services.
Historically, Liberty has had four key business segments that support its
mission: (i) performance and condition monitoring products and services,
including dynamic testing services, (ii) Liberty Technical Services, (iii)
RADView(TM) imaging systems, and (iv) international business development. The
businesses described in clauses (i), (iii) and (iv) shall sometimes be referred
to collectively herein as the "Products Business."
Performance and Condition Monitoring Products and Services. The Company's
performance and condition monitoring products are designed to provide customers
with the tools to prevent unplanned downtime, improve asset utilization and
increase plant safety and reliability. The Company's proprietary products gather
and interpret operating data of valves, engines, compressors, motors, and
certain motor-driven equipment. The products utilize sensors, instruments and
proprietary software that capture and log data for trending and analysis.
Dynamic testing services are provided using primarily the Company's condition
monitoring products and systems. These services involve the condition monitoring
of, and predictive and general maintenance and repair for, plant equipment,
including without limitation, valves, compressors, engines, motors and certain
motor-driven equipment. The service business provides a channel for the
Company's products into new markets.
Liberty Technical Services. Liberty Technical Services ("LTS") provides
comprehensive nondestructive and dynamic testing services for customers in the
power, chemical, paper, petroleum and construction industries. Dynamic testing
services are provided for many plant components, including valves, compressors,
turbines, engines, motors and motor-driven equipment. Nondestructive evaluation
services include special applications of visual inspection, ultrasonic,
radiographic, dye penetrant, eddy current, and magnetic particle technologies.
Special services include process safety management support, plant inspection,
computerized reporting, and training in nondestructive testing.
On July 25, 1997, the Company entered into an asset purchase agreement with
General Electric Company ("GE") to sell substantially all of the assets of the
nondestructive evaluation and testing services portion of the LTS business unit
(the "NDE Business") to a subsidiary of GE ("GE-IS") for an initial purchase
price to be paid at
-4-
<PAGE>
closing of at least $12,101,000, subject to downward adjustment based upon
certain post-closing adjustments plus the assumption of certain associated
liabilities not to exceed $1,390,000. Liberty will retain the Nuclear Service
group of LTS, as well as the existing Product Business. Consummation of the
transaction is subject to approval by the Company's shareholders and certain
other terms and conditions. If the transaction is approved and all conditions
set forth therein are satisfied, it is expected that the acquisition will be
consummated by October 31, 1997. The Company plans to use the proceeds from the
sale of the NDE Business to repay its outstanding bank debt, to invest in the
Products Business and for other general corporate purposes.
RADView(TM)Imaging Systems. RADView(TM)imaging systems involves the
production and sale of the Company's RADView(TM) Digital Radiography product
line and related equipment. The Company believes that RADView(TM)offers
improvements over conventional and industrial radiography, providing faster,
more accurate, lower cost and safer methods for acquiring and analyzing
radiographic information. During 1995, the Company released the first phase, the
Film Digitizer and Workstation, which converts conventional film to digital
format. The second phase, Filmless Radiography, which replaces conventional film
with reusable phosphor screens, was released in 1996. The Imaging Systems
Division focuses on marketing to customers in the power, process and aeronautics
industries. For the fiscal year ended December 31, 1996, the Company had
approximately $1.5 million in revenues from the sale of RADView products, which
represented a significant increase in RADView sales revenues from the previous
fiscal year, which were approximately $45,000.
International Business Development. The Company has actively sought joint
venture and strategic alliance opportunities abroad. In December 1995, the
Company formed a joint venture, Liberty Maintenance Predictive S.A.S. ("Liberty
M.P."), with French-owned Electricite de France ("EdF"), the largest utility in
the world. Through June 1997, the joint venture has contributed approximately
$3.5 million in revenues to the Company. Liberty M.P. provides predictive
maintenance products and related services critical to the safe, reliable
operation of electric power and industrial plants in the European Union. In
1996, the Company developed several business alliances for Europe, Scandinavia,
the United Kingdom, and the Far East. The Company intends to continue to
establish business alliances, joint ventures and partnerships in various
locations around the world where appropriate to meet its business objectives.
Strategic Alliances. The Company has entered into agreements with, and
continues to seek, strategic partners for its Products Business to support
product development and the sales and marketing of diagnostic systems and
services.
Products and Services Currently Offered. By combining advanced diagnostic
technologies with comprehensive software analysis, the Company's products and
services are designed to assist plant operators in various industries in
preventing unplanned downtime, improve asset utilization and increase plant
safety. The Company's proprietary products monitor machinery condition and
performance by gathering and interpreting operating data of valves, engines,
compressors, motors, and certain motor-driven equipment. In addition to product
sales, the Company provides sensors, accessories, hardware and software
upgrades, and offers field services and training to its customers. The Company
also performs specialized diagnostic and consulting services as part of
customers' periodic predictive maintenance programs.
-5-
<PAGE>
RISK FACTORS
Prospective investors should consider carefully the following factors, in
addition to other information contained in this Prospectus, in evaluating an
investment in the Common Stock offered hereby.
History of Recent Losses. The Company has experienced net losses for each
of the fiscal years ended December 31, 1996, 1995 and 1994 of $2.57 million,
$2.64 million and $0.1million, respectively, and for the six months ended June
30, 1997 of $20,000.
Liquidity and Capital Resources; Going Concern Qualification. During 1996
and 1997, the Company's primary source of financing has been borrowings under
its line of credit. During 1997, the Company continues to experience limitations
on its ability to borrow. Additionally, in 1997, the Company has failed to
comply with certain loan covenants that give the lenders the right to accelerate
the due date of the loan, and such failure to comply has not been cured. These
conditions, which occurred after the issuance of the initial opinion of the
Company's independent public accountants, have caused the Company's independent
public accountants to modify its report to the consolidated financial statements
of the Company and its subsidiaries for the year ended December 31, 1996 to
include a qualification that there is substantial doubt about the Company's
ability to continue as a going concern. The Company plans to use the proceeds
from the sale of the NDE Business to repay the Company's bank indebtedness. If
the sale of the NDE Business is not completed, or is substantially delayed, the
Company would need to pursue alternative financing, and management is unable to
estimate the amount and timing of funding required, if any, from such
alternative sources or if such funding could be obtained.
No Guaranteed Minimum Purchase Price for Sale of NDE Business. Because
there may be purchase price adjustments and indemnification claims, as described
below, there is no guaranteed minimum purchase price for the sale of the NDE
Business. The initial purchase price to be paid at closing (the "Purchase
Price") for the NDE Business is $12,101,000 in cash. In addition, $1,499,000
will be deposited in an escrow account to secure, in part, the Company's
indemnification obligations. If the closing had occurred as of August 31, 1997,
the Purchase Price would have been reduced by approximately $400,000 as a result
of the post-closing purchase price adjustments. The actual cash payment to the
Company and the payment into escrow depends on the amount of liabilities to be
assumed by GE-IS, which will not be determinable until the closing. Should the
actual amount of assumed liabilities be less than $1,390,000, the initial cash
purchase price will be increased by up to $139,000 and the amount placed in
escrow will be reduced by the same amount so that the sum of the cash payment
and the escrow deposit will be $13.6 million, subject to adjustment. The amounts
in the escrow account will be reduced to the extent of any indemnification
payments by the Company, and therefore the Company's receipt of the amount in
escrow is contingent. Further, the escrow funds are less than the maximum
liability for indemnification for which the Company could be obligated to pay to
GE-IS or GE should there be any requirement for the Company to indemnify GE or
GE-IS. The Purchase Price will also include assumed liabilities consisting of
accounts payable, accrued expenses and accrued taxes of the NDE Business, not to
exceed $1,390,000 in the aggregate. There is no minimum amount of liabilities
that GE-IS is required to assume. However, if the closing had occurred as of
August 31, 1997, the amount of liabilities assumed by GE-IS would have been $1.2
million. The actual amount of assumed liabilities may differ because they will
be calculated as of the closing date.
Company's Financial Position Upon Sale of the NDE Business. After the
completion of the sale of the NDE Business, the Company will continue to operate
the Products Business, which in the aggregate has been unprofitable in recent
years. For the fiscal years ended December 31, 1996 and 1995, respectively, the
NDE Business contributed operating income of approximately $2.0 million and $1.7
million, respectively. The Company reported on a consolidated basis operating
losses (before income taxes) for the fiscal years ended December 31, 1996 and
1995 of approximately $2.3 million and $3.7 million, respectively. For the six
months ended June 30, 1997, the NDE Business contributed operating income of
approximately $0.8 million, while the Company's consolidated operating income
(before income taxes) was approximately $0.2 million. Consequently, without the
NDE Business, the Company's operating losses would have been greater for 1996
and 1995, and the Company
-6-
<PAGE>
would have had an operating loss for the six month period ended June 30,
1997. If the Company is unable to operate profitably in its remaining
businesses, it is likely that the Company would consume any excess cash
generated from the sale of the NDE Business. In such event, the Company would be
required to seek additional external funding, and again management is unable to
estimate the amount and timing of funding required, if any, from such external
sources, or if such funding could be obtained.
Quarterly Fluctuations of Results of Operations. The Company has
experienced significant variability of operating results from quarter to
quarter, depending in part on the timing of major product and service orders.
This variability may continue in the future. The Company's revenues and
operating results may fluctuate as a result of other factors as well, including
seasonal patterns of capital spending by customers, the timing and receipt of
orders, competition, pricing, new product introductions by the Company or its
competitors, levels of market acceptance for new products, and general economic
and political factors. There can be no assurance that the Company will not
suffer net losses in future periods for any of the foregoing reasons.
Dependence on New Product Introductions and Market Acceptance. The
Company's growth and future financial performance depend in part upon its
ability to continue to develop and introduce new cost effective products, the
market acceptance of its new product introductions and its ability to enhance
existing products to meet technological advances and customer requirements.
There can be no assurance that any such products will be successfully developed
and introduced or that recently introduced products or future product
introductions will achieve market acceptance. Failure by the Company to
anticipate or respond adequately to changes in technology and customer
requirements, or delays in product development or introduction, could have a
material adverse effect on the Company's business.
Expansion of Presence in New Markets. The Company's growth and future
financial performance also depend in part on new markets for its technology and
products. The Company is actively seeking to expand its presence in the
international nuclear power and worldwide industrial process markets, where the
regulatory requirements for the testing of safety-related equipment generally
are significantly less stringent than in the U.S. nuclear power industry. The
Company believes that the cost effectiveness of its systems is important to
commercial acceptance in these markets, particularly the process industries.
There can be no assurance that the new products that the Company has developed
and recently introduced, or those that are currently under development and
expected to be introduced in the next several years, will gain widespread
commercial acceptance in these markets.
Patents and Proprietary Rights. The Company's current products and those
under development utilize the Company's proprietary and licensed technologies.
Although the Company relies on a combination of patent, copyright, trademark and
trade secret laws, employee and third-party nondisclosure agreements and other
methods to protect its products and technologies, there can be no assurance as
to the degree of protection that will be provided by these means. The inability
of the Company to maintain the proprietary nature of its significant products
and core technologies could have a material adverse effect on the Company's
results of operations.
Competition. The Company believes that competition in the power generation
and industrial equipment diagnostic testing markets is driven by product
performance, reliability, accuracy, ease of use and, particularly with respect
to process industries, cost effectiveness. Certain of the Company's existing and
potential competitors may have substantially greater financial, research and
development, sales and marketing, and production resources than the Company and,
as a result, may be better equipped to develop, test and market their products.
Accordingly, there is no assurance that the Company will be able to compete
effectively with these companies.
Dependence on and Ability to Attract and Retain Key Personnel. The
Company's success is dependent upon certain key management and technical
personnel. In addition, the Company's future success will depend in part on its
ability to continue to attract and retain qualified scientific, technical,
marketing and managerial personnel, who are in high demand. The loss of certain
of the Company's employees or an inability to attract and retain additional
qualified employees could adversely affect the Company's business.
-7-
<PAGE>
Risk of Product Liability. The Company's products include an inherent risk
of liability because they are used to diagnose critical equipment, the failure
of which could have adverse safety, environmental or economic consequences. The
Company is currently insured against such risks under its general liability
policies. The Company also is covered under the U.S. nuclear power industry's
nuclear liability insurance program against liability for personal injury and
off-site property damage arising from certain nuclear related incidents.
However, a successful product liability claim not covered under the nuclear
power liability insurance program and in excess of the Company's aggregate
insurance coverage could have a material adverse effect on the Company. There
can be no assurance that product liability insurance will continue to be
available to the Company in sufficient amounts or at acceptable costs.
Risk of Failure of Sources of Supply. The Company presently has multiple
sources of supply for most critical components used in its systems, although for
economic and quality control reasons the Company utilizes single sources of
supply for certain components. In situations where it relies on single sources
of supply, the Company believes that an adequate quantity of components is
available to meet its foreseeable needs, and, to date, the Company generally has
been able to obtain supplies of such components in a timely manner from these
sources. However, failure of sources of supply and the inability of the Company
to develop alternative sources of supply as required in the future could have a
material adverse effect on the Company's operations.
Possible Volatility of Stock Price. The market prices for common stocks of
technology companies, including the Company, have at times been highly volatile.
Future announcements concerning the Company or its competitors, including the
results of technological innovations or new commercial products, developments
concerning proprietary rights, as well as period-to-period variances in
financial results, could cause the market price of the Common Stock to
fluctuate. In addition, the stock market has in the past experienced significant
price and volume fluctuations that have affected the market price for many
growth companies, though unrelated to the operating performance of these
companies.
No Dividends on Common Stock. The Company expects that its future earnings,
if any, will be retained for the operation and expansion of the Company's
business, and that it will not pay cash dividends for the foreseeable future.
USE OF PROCEEDS
The Company will receive no proceeds from any sales of Shares of Common
Stock by the Selling Shareholders.
-8-
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth as of September 25, 1997 information with
respect to the beneficial ownership of the Company's Common Stock by the Selling
Shareholders. Unless otherwise indicated, the shareholders listed below
possesses sole voting and investment power with respect to the shares listed.
<TABLE>
<CAPTION>
Number of Shares
Number of Shares To Be Beneficially
Beneficially Owned Number of Shares Owned After the
Name Prior to Registration Being Offered Offering
- ---- --------------------- -------------- --------
<S> <C> <C> <C>
Larry D. Hornbeck 12,000 12,000 -0-
Don V. Ingram 40,000 40,000 -0-
Atalanta Selective Fund Number Six, 450,500 450,500 -0-
Limited Partnership
Stephen F. Smith 40,000 40,000 -0-
Stephen A. Wells 264,400 264,400 -0-
Walter Epstein, Esq. 15,972 15,972 -0-
Energy Consolidation, Inc. 225,000 225,000 -0-
</TABLE>
The Selling Shareholders acquired the Shares through a Stock Purchase
Agreement among the Selling Shareholders, Edison Venture Fund, L.P. ("Edison")
and the Company. Pursuant to this agreement, Edison assigned its registration
rights under a Stock and Warrant Purchase Agreement dated October 27, 1987
between the Company and Edison and a Stock Purchase Agreement dated February 23,
1989 between the Company and certain Investors listed therein, to the Selling
Stockholders. Mr. Richard J. Defieux, a member of the Board of Directors of the
Company, is a general partner of Edison Partners, L.P., the general partner of
Edison. Mr. Defieux, together with the other general partners of Edison, shares
voting and investment power with respect to the shares owned by Edison. Mr.
Defieux does not own any outstanding shares of Common Stock in his individual
capacity and disclaims beneficial ownership of the shares held by Edison except
as to his proportionate partnership interest therein.
Certain of the Selling Shareholders have also entered into a letter
agreement with the Company dated August 18, 1997 (the "Standstill Agreement").
Pursuant to the Standstill Agreement, the Company agreed not to take any action
or exercise any rights under the Company's shareholder rights plan as long as
the other parties to the Standstill Agreement are in compliance with its terms.
The parties to the Standstill Agreement, other than the Company, have agreed for
a period of ten years not to take certain actions, including the acquisition, in
the aggregate, of more than twenty-five percent of the voting stock of the
Company. L. Mark Newman, who is a party to the Standstill Agreement, is a
principal and affiliate of Atalanta Selective Fund Number Six, Limited
Partnership.
As noted above, the Company will receive no proceeds from any sales of the
Shares under this Prospectus by the Selling Shareholders.
-9-
<PAGE>
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Shareholders that they, or
their pledgees, donees, transferees or other successors in interest, may sell
all, a portion or none of the Shares offered by them hereby from time to time.
Any such sales may be in one or more transactions in the over-the-counter market
at prices prevailing at the times of such sales or in private sales of the
securities at prices related to the prevailing market prices or negotiated
prices. The sales may involve (a) a block transaction in which the broker or
dealer so engaged will attempt to sell the Shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction, (b) a
purchase by a broker or dealer as principal and a resale by such broker or
dealer for his account pursuant to this Prospectus, or (c) ordinary brokerage
transactions in which the broker will solicit purchasers. Broker-dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions (which compensation may be in excess of customary commissions). The
Selling Shareholders and any broker-dealers that participate in the distribution
of the Shares may be deemed to be underwriters and any commissions received by
them and any profit on the resale positioned by them may be deemed to be
underwriting discounts and commissions under the Act.
There is no assurance that the Selling Shareholders will sell any or all of
the Shares offered hereby. The Company will receive no proceeds from any sales
of the Shares offered hereby by the Selling Shareholders.
The Registration Statement of which this Prospectus is a part has been
filed with the Commission by the Company as a condition to, and in accordance
with the terms of the registration rights provisions of, that certain Stock
Purchase Agreement dated August 29, 1997 by and among the Company and certain
investors, including the Selling Shareholders. Such Agreement also imposes
certain restrictions on the transfer of the Shares by the Selling Shareholders
other than with respect to sales pursuant to a registered offering. In addition,
the Company has been advised by the Selling Shareholders that, if they do not
sell all of the Shares in this Offering under this Prospectus, they or their
pledgees, donees, transferees or other successors in interest may sell some or
all of the remaining Shares pursuant to Rule 144 under the Act.
The Company has agreed to pay the filing fees, costs and expenses
associated with such Registration Statement, including compliance with any state
blue sky requirements, commissions and discounts of underwriters, dealers or
agents, if any, and any stock transfer taxes. The Company has also agreed to
indemnify the Selling Shareholders and any underwriters for certain civil
liabilities in connection with such Registration Statement and the securities
offered thereby and hereby, including liabilities under the Act.
-10-
<PAGE>
LEGAL MATTERS
The validity of the Shares of Common Stock offered hereby is being passed
upon for the Company by Pepper, Hamilton & Scheetz LLP, Berwyn, Pennsylvania.
James D. Rosener, a partner of Pepper, Hamilton & Scheetz LLP, is a member of
the Board of Directors of the Company and holds options to purchase an aggregate
of 12,500 shares of Common Stock.
EXPERTS
The Consolidated Financial Statements and Consolidated Financial Statement
Schedule incorporated by reference into this Prospectus and in the Registration
Statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in giving said
reports. Reference is made to their report which includes an explanatory
paragraph regarding the Company's ability to continue as a going concern.
-11-
<PAGE>
===============================================================================
No dealer, salesman or other person has been authorized to give any information
or to make any representations other than those contained in this Prospectus in
connection with the offer made hereby, and, if given or made, such information
or representations must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, the securities offered hereby to any person in any state or
other jurisdiction in which such offer or solicitation is unlawful. The delivery
of this Prospectus at any time does not imply that information contained herein
is correct as of any time subsequent to its date.
-------------------
TABLE OF CONTENTS
Page
----
Available Information...................................2
Incorporation of Certain
Documents by Reference..............................2
The Company.............................................4
Risk Factors ...........................................6
Use of Proceeds ........................................8
Selling Shareholders................................... 9
Plan of Distribution.................................. 10
Legal Matters .........................................11
Experts ...............................................11
407,972 Shares
LIBERTY TECHNOLOGIES, INC.
COMMON STOCK
----------
PROSPECTUS
----------
OCTOBER 20, 1997
===============================================================================
<PAGE>
