As filed with the Securities and Exchange Commission on July ___,
1996
Registration No.
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------------
RGB COMPUTER & VIDEO, INC.
(Exact name of registrant as specified in its charter)
Florida 65-0142837
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
18245 S.E. Federal Highway
Tequesta, Florida 33469
(561) 743-5625
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Robert L. Gilbert, III, President and Chief Executive Officer,
RGB COMPUTER & VIDEO, INC.,
18245 S.E. Federal Highway, Tequesta, Florida 33469 (561) 743-5625
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Mark H. Mirkin, Esq., MIRKIN & WOOLF, P.A.,
1700 Palm Beach Lakes Boulevard #580, West Palm Beach, Florida
33401 (561) 687-4460
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes
effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following box:
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than securities offered
only in connection with dividend or interest reinvestment plans,
check the following box:
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box.
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Title of each class Amount to be Proposed maximum Proposed maximum Amount of
ofsecurities to be registered offering price per aggregate offering registration fee
registered (shares) share <F1> price<F1>
<S> <C> <C> <C> <C>
Common Stock
(no par value) 320,000 $10.00 $3,200,000 $1104
<F1>
Estimated solely for the purpose of calculating the registration fee pursuant
to Rule 457(o) under the Securities Act of 1933 based upon the average of the
high and low prices of the Company's Common Stock as reported by the NASDAQ
SmallCap Market on July ___, 1996.
</TABLE>
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date
until the Reg-istrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JULY ___, 1996
PROSPECTUS
_________ Shares
RGB COMPUTER & VIDEO, INC.
Common Stock
This Prospectus relates to 320,000 shares of common stock, no par
value ("Common Stock"), of RGB Computer & Video, Inc., a Florida
corporation (the "Company"), which may be offered for sale from
time to time by certain shareholders of the Company (the "Selling
Shareholders"), or by their pledgees, donees, transferees or oth-
er successors in interest, to or through underwriters or directly
to other purchasers or through agents in one or more transactions
at varying prices determined at the time of sale or at negotiated
prices (the "Offering"). See "PLAN OF DISTRIBUTION".
The Company will not receive any of the proceeds from the sale of
the shares of Common Stock (the "Shares") by the Selling Share-
holders. The expenses of registration under the Securities Act
of 1933, as amended (the "Securities Act"), of the Shares which
may be offered hereby will be paid by the Company.
The Common Stock is traded on the Nasdaq SmallCap Market under
the symbol "EDIT". On July ___ , 1996, the closing price of the
Common Stock was $ ________ .
See "INVESTMENT CONSIDERATIONS" for information that should be
considered by prospective purchasers of the securities offered
hereby.
_____________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is July ___ , 1996.
No dealer, salesman or other person has been authorized to give
any information or to make any representation not contained in or
incorporated by reference in this Prospectus and, if given or
made, such information or representation must not be relied upon
as having been authorized by the Company, the Selling Sharehol-
ders or any other person. 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 in such jurisdiction.
Neither the delivery of this Prospectus nor any sale made hereun-
der shall, under any circumstances, create any implication that
the information herein is correct as of any time subsequent to
the date hereof or that there has been no change in the affairs
of the Company since such date.
________________
TABLE OF CONTENTS
________________
Page
AVAILABLE INFORMATION....................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............. 3
INVESTMENT CONSIDERATIONS................................... 4
THE COMPANY................................................. 7
USE OF PROCEEDS............................................. 13
PRICE RANGE OF COMMON STOCK................................. 14
DIVIDEND POLICY............................................. 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS....................... 15
MANAGEMENT.................................................. 16
SELLING SHAREHOLDERS........................................ 18
DESCRIPTION OF CAPITAL STOCK................................ 19
FLORIDA LAW AND CERTAIN CHARTER PROVISIONS.................. 21
PLAN OF DISTRIBUTION........................................ 21
LEGAL MATTERS............................................... 22
EXPERTS..................................................... 22
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Secur-ities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy state
ments and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and
other information concerning the Company filed with the Commis
sion may be inspected and copied at the public reference
facilities maintained by the Commission at its office at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as
at the Regional Offices of the Commission at 500 West Madison
Street #1400, Chicago, Illinois 60661-2511 and Seven World Trade
Center #1300, New York, New York 10048. Copies of such material
can be obtained from the Public Reference Section of the Commis
sion at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Shares of the Company's Common Stock are
traded on the Nasdaq SmallCap Market. Such reports, proxy state
ments and other information can also be inspected and copied at
the offices of the Nasdaq SmallCap Market, 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the Commission a Registration State
ment on Form S-3 (herein, together with all amendments and ex
hibits thereto, the "Registration Statement"), under the
Securities Act with respect to the securities offered pursuant to
this Prospectus. This Prospec-tus does not contain all of the
information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information,
reference is made to the Registration Statement and the exhibits
filed as a part thereof. Statements contained herein concerning
any document filed as an exhibit are not necessarily complete
and, in each in-stance, reference is made to the copy of such
document filed as an exhibit to the Registration Statement. Each
such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission pursuant to the
Exchange Act (File No. 1-11968) are hereby incorporated by
reference in-to this Prospectus: (a) the Company's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1995, (b)
the Company's Current Report on Form 8-K filed on January 19,
1996, (c) the Company's Current Report on Form 8-K filed on
February 26, 1996, and (d) the Compa-ny's Quarterly Report on
Form 10-QSB filed on May 15, 1996.
All other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the Of
fering pursuant to this Prospectus shall be deemed to be incor
porated by reference and to be part of this Prospectus from the
date of filing of such documents. Any statement contained in a
document incorporated or deemed to be in-corporated by reference
herein shall be deemed to be modified or sup-erseded for purposes
of the Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes
such statement. Any 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 provide without charge to each person to whom a
copy of this Prospectus is delivered, upon oral or written
request of any such person, a copy of any or all of the documents
incorporated herein by reference, other than the exhibits to such
documents (unless such exhibits are specifically incorporated by
reference into the information that this Prospectus incor
porates). Requests should be directed to the Investor Relations
Department, RGB Computer & Video, Inc., 18245 S.E. Federal High
way, Tequesta, Florida 33469, telephone number 561-743-5625.
INVESTMENT CONSIDERATIONS
Each prospective purchaser should carefully consider the follow
ing factors inherent in and affecting the business of the Company
and this Offering before making a decision to purchase the Common
Stock offered hereby.
History of Operating Losses; Future Operating Results. The Com
pany has never reported a co other than the exhibits to such
documents (unless such exhibits are specifically incorporated by
reference into the information that this Prospectus incor
porates). Requests should be directed to the Investor Relations
Department, RGB Computer & Video, Inc., 18245 S.E. Federal High
way, Tequesta, Florida 33469, telephone number 561-743-5625.
INVESTMENT CONSIDERATIONS
Each prospective purchaser should carefully consider the follow
ing factors inherent in and affecting the business of the Company
and this Offering before making a decision to purchase the Common
Stock offered hereby.
History of Operating Losses; Future Operating Results. The Com
pany has never reported a consolidated net profit for a fiscal
year end. The Company's operating expenses can be expected to
increase significantly in connection with the implementation of
its marketing and advertising program, as well as the financing
of inventory and receivables. There can be no assurance that the
Company will operate profitably in the future.
Rapid Transformation and Integration of Acquisition. The Compa-
ny's operations and business have been substantially transformed
as a result of the acquisition by merger in February 1996 of Saf
T Lok Corporation (now known as STL Lock, Inc.) ("STL"). The Com
pany has made a major commitment to the gun lock business,
representing a complete departure from its former focus. In or-
der to integrate its new business into the Company's operations,
the Company will be required to expend significant management and
financial resources. There can be no assurance that the Company
will be able to integrate successfully its new business into the
Company's operations or that STL can be operated profitably.
Dependence on Key Personnel. The success of the Company is
largely dependent on the personal efforts and abilities of Frank
W. Brooks, Chairman of the Board, and Robert L. Gilbert, III,
President and Chief Executive Officer, and certain other key mem-
bers of senior management. The loss of Mr. Brooks' or Mr. Gil-
bert's services or those of other key personnel could have a mat-
erial adverse effect on the Company.
Shares Eligible for Future Sale. Future sales of Common Stock by
existing shareholders pursuant to Rule 144 under the Securities
Act, or following the exercise of outstanding vested options or
warrants and the exercise of related registration rights, could
adversely affect the market price of the Company's Common Stock
and impair the Company's ability to raise capital through the
sale of its equity securities. As of July 15, 1996, the Company
had 5,522,057 shares of Common Stock outstanding. Of these
shares, approximately 2,000,000 shares are freely transferable
without restriction.
Possible Volatility of Market Price of Common Stock. The market
price for the Common Stock may be significantly affected by such
factors as the Company's operating results and various factors
affecting the economy in general. Moreover, in recent years, the
stock market has experienced a high level of price and volume
volatility and market prices for the stock of many companies, par
ticularly of small and emerging growth companies that trade in
the over-the-counter market, have experienced wide price fluctua
tions not necessarily related to the operating performance of
such companies.
Strategic Alliance. On May 3, 1996, the Company issued a press
release announcing that it had commenced preliminary discussions
concerning forming a strategic alliance with gun manufacturers.
There can be no assurance that the Company will enter into a bus-
iness arrangement with a gun manufacturer or, if so, that such
arrangement can be consummated successfully.
New Product. The Company's success depends on its ability to
market a new product to gun owners and buyers and, thereafter, to
enhance its initial product and to introduce new products. There
can be no assurance that the Company will be successful in iden-
tifying new markets, in developing and marketing new products or
in enhancing its initial product. The Company's prospects could
be adversely affected if the Company were to incur delays in dev-
eloping new products or enhancing its initial product or if such
new products or enhancements do not gain market acceptance. In
addition, there can be no assurance that products or technologies
developed by others will not render the Company's products or
technologies non-competitive or obsolete.
Sales Channel Risks. The Company currently sells its products
directly to retailers but may begin selling through regional, na-
tional and wholesale distributors. If such selling begins, the
Company might become dependent upon the continuing viability and
financial stability of such distributors. Additionally, the Com-
pany is seeking to sell products to original equipment manufac
turers ("OEMs"). OEMs typically have significantly different re-
quirements and more stringent purchasing procedures and quality
standards than wholesale distributors and other resellers. There
can be no assurance that the Company will be able to develop pro-
ducts for or deliver products into the OEM market or that it can
establish and maintain an effective distribution and customer
support system for OEMs. The Company's prospects could be ad-
versely affected if it is unsuccessful in developing, manufactur-
ing and marketing products for sale to OEMs. In addition, OEMs
may require special distribution arrangements and product pric
ing, which could have a material adverse effect on the Company's
operating results. Finally there can be no assurance that the
Company will be able to generate and sustain sales to retailers,
which could have a material adverse effect on the Company's oper-
ating results.
Proprietary Rights. Although STL has not historically been the
subject of claims of infringement by third parties, it may re-
ceive in the future communications from third parties asserting
intellectual property rights relating to the Company's products
and technologies. The Company could be forced to incur substan
tial costs in defending legal action taken against it or rede-
signing its products. Should the Company be found to infringe
the proprietary rights of others, the Company could be required
to pay claims to the infringed party which could have a material
adverse effect on the Company's operating results.
Warranty Claims; Product Returns. The Company to date has not
encountered material warranty claims or liabilities. The Company
seeks to introduce enhanced and new products, which could result
in product returns and warranty claims as a result of the risks
inherent in the introduction of such products. The Company has
not reserved any sums for product returns or warranty claims.
There can be no assurance that product returns and warranty
claims will not have a material adverse effect on the Company's
future operating results.
Dependence on Suppliers. The major components of the Company's
products are locks and grips. Currently each major component is
obtained from single sources. The Company has no guaranteed sup-
ply arrangements with any of its suppliers and there can be no
assurance that these suppliers will continue to meet the Compa-
ny's requirements. An extended interruption in the supply of any
of these components or a reduction in their quality or reliabili-
ty would have a material adverse effect on the Company's operat
ing results. While the Company believes that with respect to its
single source components it could obtain similar components from
other sources, there can be no assurance that shortages of com
ponents will not occur in the future which could increase the
cost or delay the shipment of the Company's products and have a
material adverse effect on the Company's operating results. Sig-
nificant increases in the prices of these components could also
have a material adverse effect on the Company's operating results
because the Company may not be able to adjust product pricing to
reflect the increases in component costs.
International Sales. The Company seeks to sell products outside
the United States and anticipates that international sales will
account for a significant portion of sales in the foreseeable fu-
ture. Expanding operations outside the U.S. and entering addi
tional international markets will require significant management
attention and financial resources. Risks inherent in interna
tional sales include unexpected changes in regulatory require
ments, tariffs or other barriers, difficulties in staffing and
managing foreign sales operations and potentially adverse tax con
sequences. In addition, fluctuations in exchange rates may
render the Company's products less competitive relative to other
products or expose the Company to foreign exchange currency los-
ses. One or more of these factors may have a material adverse
effect on the Company's future international sales and conse-
quently on the Company's operating results.
Anti-takeover Effects of Florida Law and Charter. Provisions of
Florida law and the Company's Amended and Restated Articles of
Incorporation may discourage third parties from making, or make
it more difficult for other persons to make, a tender offer for
or acquisitions of substantial amounts of the Company's Common
Stock or from launching other takeover attempts that a sharehol-
der might consider in such shareholder's best interest.
THE COMPANY
The Company is engaged in two lines of business: (i) subsidiary
RGB Video, Inc. ("RGBVI") assembles, markets and sells personal
computer-based video editing systems ("Desktop Video") under the
trademark AmiLink(r), and (ii) subsidiary STL designs, develops,
manufactures and distributes a patented and proprietary safety
lock for guns (the "Safety Lock").
RGBVI has developed versions of its Desktop Video products that
are compatible with Commodore Amiga computer systems and with IBM
and IBM-compatible computers utilizing the Microsoft Windows op-
erating system. On May 2, 1994, Commodore Electronics Ltd.,
maker of the Commodore Amiga computer, claimed insolvency and
stopped producing the Amiga computer. This single event had a
devastating effect on the marketability of RGBVI's Amiga-based
products. RGBVI's PC-based products face formidable competition
and sales of these products have been insignificant. As a res-
ult, RGBVI does not have a strong presence in this market and at
present sales have been nominal.
In order to produce professional quality videotapes, a video pro-
ducer must acquire raw footage, choose video sequences to be used
in the final product, and edit these select sequences. The pro-
duction of a videotape requires several pieces of equipment in
cluding cameras to record raw footage and video devices ("Video
Devices") consisting of videotape players, laserdisc players and
videotape recorders. Videotape and laserdisc players are used to
play back raw footage and other pre-recorded images, and video
tape recorders are used to record the final product. Traditional
hardware-based editing systems use additional devices ("Peripheral
Components") to generate special effects, captions, graphics
and sound, which are integrated with videotaped sequences to create
a finished videotape. In Desktop Video systems, computer ex-
pansion cards and software (collectively "Expansion Cards") can
normally replace hardware-based Peripheral Components.
RGBVI markets proprietary software programs which, when used in
conjunction with a specialized computer circuit board ("Machine
Control"), allow the video producer to edit and integrate raw
footage from Video Devices and special effects generated by
Expansion Cards using a personal computer.
On February 13, 1996 the Company acquired STL through merger with
a newly-formed special purpose subsidiary. STL designs, devel-
ops, manufactures and distributes a patented and proprietary
safety lock for guns (see "The Safety Lock Business").
Organization, Initial Public Offering and Merger
The Company was incorporated in Florida in July 1989 under the
name of RGB Sales & Marketing, Inc. In September 1989, Robert L.
Gilbert, III and his wife Cynthia T. Gilbert purchased certain of
the assets and assumed certain of the liabilities of RGB Video
Creations, Inc. These assets were contributed to the Company as
its initial capitalization. In October 1989 RGBVI commenced op-
erations of its Desktop Video business. At that time, the Compa-
ny succeeded to the business of its predecessor which had oper-
ated a retail store that sold the Amiga computer, had produced a
series of tutorial programs used with software written for the
Amiga platform and developed the initial version of Ami-Link
software. RGBVI did not continue the other lines of the prede-
cessor's business described above.
The Company completed an initial public offering of its common
stock on June 23, 1993. In total, the Company sold 1,340,000
shares of its common stock at an offering price to the public of
$7.00 per share. Of the shares sold, 1,160,000 were sold pursu
ant to the initial offering and an additional 180,000 shares were
sold under the same terms and conditions by the exercise in full
of the underwriter's option granted solely for the purpose of
covering over-allotments. The gross proceeds to the Company from
the offering, before deducting expenses of the offering and after
underwriting discounts and commissions, were $8,160,600. The net
proceeds to the Company from the offering, after deducting expen-
ses of the offering and after underwriting discounts and commis
sions, were $7,349,867.
Pursuant to an Agreement and Plan of Merger (the "Plan") dated
January 10, 1996 among the Company, STL and Sphere Enterprises,
Inc. ("Sphere"), Sphere, a wholly-owned subsidiary of the Company,
merged with and into STL with the STL shareholders receiving
shares of the Company's Common Stock in a tax-free reverse trian-
gular merger. Under the Plan, each STL common share was convert-
ed into the right to receive 15.54 common shares of the Company.
On February 13, 1996, the effective date of the merger, former
STL shareholders owned approximately 40 percent of the Company's
outstanding common shares. In addition, the Plan provided for
Frank W. Brooks, the chief executive officer and majority share-
holder of STL, to become Chairman of the Board of Directors of
the Company.
Following the merger, on February 22, 1996 the Company relocated
its principal executive offices to 18245 S.E. Federal Hwy.,
Tequesta, Florida 33469, telephone number 561-743-5625.
The Safety Lock Business
STL was organized to design, develop, manufacture and market a
patented and proprietary combination lock for firearms. The ini
tial product, the Saf T LokTM, is designed to prevent unauthor
ized use of firearms, including unintentional discharge by chil
dren and assailants. The Saf T LokTM is easily installed, re
moved and operated by consumers.
As a development stage entity, STL has been engaged in product
and market research and development since its incorporation in
1989. STL dedicated six years to confirming the initial Saf T
LokTM concept and then developing and refining a prototype pro-
duct that it could use to demonstrate the appearance and function
ality of the new product to investors, consumers and retail-ers.
Product development has incorporated handgun dealer and customer
comments and suggestions concerning product design, appearance,
operation and use. Intensive assessment of component composi-
tion, manufacturing costs and projected retail pricing has con
firmed the economic feasibility of the concept. STL has devel
oped packaging formats, inclusive of necessary instructions and
cautionary information. STL will continue research and develop
ment on a basis the Company believes is prudent and consistent
with its financial and other resources.
The Initial Product
The Saf T LokTM is a mechanical combination lock that attaches to
a gun. When unlocked, it does not hamper or interfere with the
use of the gun. When the Saf T LokTM is engaged it locks the
"safety" in the "no fire" position, blocking the normal operation
of the gun and preventing the gun from being fired. (Guns with-
out safeties are locked using the basic Saf T LokTM to block op-
eration of other internal gun components.) There are no keys,
batteries or other gadgets to lose or fail. The lock's body is
positioned under and concealed by the gun grip. The lock's com
bination mechanism is located at the top of the grip, where it is
easily accessible.
Planned production of approximately 25 variations of mounting
plates and grips will allow the Saf T LokTM to fit approximately
2,000,000 or 80% of the handguns produced yearly in the U.S. and
350,000 or 30% of handguns imported yearly into the U.S. These
variations will also fit a significant portion of the over 70 mil
lion handguns estimated to be in existence in the U.S. retrofit
market.
Installation of the Saf T LokTM requires no modification to a
gun. It is mounted on a plate placed under the gun's grip. The
lock is installed simply by removal of the grip, insertion of the
mounting plate and replacement of the manufacturer's grip with
custom rubber grips. The process typically requires removal and
replacement of two screws; mounting the lock takes about three
minutes. When locked, the Saf T LokTM engages an interlock on
the mounting plate and cannot be removed without special tools or
damage to the gun, even if the grips are removed.
To lock the gun, the operator need only move the safety slide
backwards with one finger while moving the reset slide forward
with another finger. The need for this simultaneous action elim
inates the possibility of accidental locking.
To unlock the gun, the operator depresses three individually pro-
grammed buttons in any order with the thumb of the hand holding
the gun, without the need to look at the gun or the lock. The
lock can be released in under five seconds while holding the gun
in firing position. The combination can be entered short of one
keystroke, permitting accelerated unlocking, for example, when a
police officer is concerned that his gun may be taken from him
and yet wants it readily usable. The incidence of police offi
cers being shot with their own weapons could be significantly de
creased as a result of installation and utilization of the Saf T
LokTM.
Although each lock will come with a pre-set combination, the com-
bination is changeable; the Company markets combination changing
kits separate from the lock and mounting hardware.
Technical Specifications
The Saf T LokTM is designed to ensure reliable operation and long
lock life under firing conditions. Gaps in the casing are de
signed to prevent sand and dirt infiltration. The lock mechan-
ism's nickel-plated zinc alloy composition makes it impervious to
rust. The design and layout of the mechanical parts shunt forces
from firing recoil and mishandling to the lock casing, diminish
ing the potential for small parts breakage.
STL owns seven U.S. patents as assignee of Frank Brooks, the in
ventor and Chairman of the Board of the Company. Two U.S. pat-
ents are pending, as are 33 foreign patent applications. Patent
coverage is fundamental and separate for revolvers, long-arms and
semi-automatic pistols. Patent counsel has opined that the orig-
inal patent extends coverage to any external gun lock using an ex
ternal safety. Other patents extend coverage to externally
mounted locks which act on a gun's internal firing mechanism to
block operation. Other patent claims cover incorporation of a
lock into a gun's grip assembly and the use of an adapter plate
to mount a lock. These claims cover application of the Saf T
LokTM to both pistols and revolvers.
The Market
Many reported injuries and deaths from the accidental discharge
of firearms involve guns purchased for protection and stored
loaded at home. Half of all U.S. households have at least one
gun. Two-thirds of teen suicides involve shootings. Further-
more, police officers and military personnel as well as individu-
al gun owners are at risk of being shot by their own weapons in
the hands of assailants.
The Saf T LokTM market includes both new and previously manufac
tured guns (the "retrofit market"). One time sales could exceed
$4 billion if all these guns are equipped with the Saf T LokTM.
These figures exclude longarms and foreign sales, both potential
ly significant markets. STL's initial market is the gun owner/
buyer who bought or is planning to buy a gun for home defense/
self-protection, i.e. about 70 percent of all owners/purchasers.
Americans own over 220 million guns. Approximately 3.5 million
guns were sold in the U.S. in 1994, the last year for which
statistics are available.
Manufacturing
STL's manufacturing process is designed to produce low-cost reli
able products. Die manufacturers cast the lock components. A
grip manufacturer injection-molds gun grips to house the lock
components. An assembly shop assembles the grips and locks.
After quality assurance testing, packaging and handling, the Saf
T LokTM is ready for distribution.
The lock housing is cast with channels to hold the individual com
ponents. Assembly requires the lock parts to be inserted in the
housing in a particular order. If incorrectly assembled, the
lock will not lock. Assembly is estimated to take five minutes
and testing about 30 seconds. By using contract labor, STL bene-
fits from the efficiency of volume production without the need to
maintain a large staff or incur the costs and inefficiencies as-
sociated with a large facility.
Parts are die cast in zinc alloy, then nickel plated for addition
al strength and lubricity. STL believes that an ample sup-ply of
the raw materials used in the manufacture of the Saf T LokTM is
available from numerous sources at reasonable prices.
STL utilizes a centralized distribution system for the Saf T
LokTM to assure quality.
STL is committed to a high level of customer service, both to its
retailers and consumer purchasers. STL operates a toll-free as
sistance line to receive comments from its customers. These com
ments and other issues are used in determining prospective im
provements to existing products and development of new product
concepts.
Marketing
STL initially is marketing the Saf T LokTM to the 8000 retailers
that are each grossing over $800,000 annually from among the
12,000 U.S. firearms dealers and 25,000 U.S. sporting goods and
other stores that sell guns. The Saf T LokTM is sold wholesale
to dealers at a price amenable to the standard mark-up for gun ac
cessories. Locks are packaged separately from grips, mounting
plates and safety slides. Dealer orders are solicited through
mailings and store visits.
STL may implement direct mail and television marketing activi-
ties. The marketing effort will encompass advertising, public
relations and product promotions, each of which management be-
lieves is important to the long-term success of sales of the Saf
T LokTM. While the costs of these activities are substantial,
such costs are expected to decline as a percentage of sales as
the product gains acceptance and distribution channels are estab-
lished. STL anticipates using a number of means for advertising
and promotion, including newspapers, magazines, radio, television
and in-store displays.
STL will also encourage legislators to sponsor legislation manda-
ting gun safety measures. Several states have such legislation
in place already. Florida, STL's home state, requires gun owners
to store firearms in a locked mode out of the reach of children.
Competition
The Saf T LokTM competes with other products which attempt to
achieve similar objectives, such as lock boxes, trigger locks, ca
ble locks and ring locks. Lock boxes are clumsy and therefore of
little practical use to gun owners, the police or armed forces.
If they open via a push-button mode they are difficult to operate
in the dark. If they open via a key, the key must be hidden for
security, thereby complicating access to the gun. Trigger locks
are difficult to operate in the dark and require separate key
storage for reliable security. Cable locks are slow to operate
and difficult to use in the dark. Ring locks (a magnetic lock)
are very expensive (approximately $1000), require modification of
a gun, require the owner to wear a special ring and give no posi
tive indication of unlocking.
While STL will aggressively protect the Saf T LokTM from in-
fringement, it is possible for others to copy the patented fea
tures of the Saf T LokTM or the function it serves. If the Saf T
LokTM is successful, STL expects that competitors will attempt to
develop comparable products, possibly reducing STL's sales or
profit margins or both. STL's business strategy emphasizes in
creasing consumer awareness of the Saf T LokTM, as well as enhan-
cing brand name recognition. Competitors such as Master Lock
Inc., maker of a trigger lock, are larger, better capitalized
companies with existing distribution channels.
The Saf T LokTM will also be competing at the retail store level
for shelf space, advertising space and promotional displays.
Governmental Regulation
STL knows of no governmental regulation of gun safety devices.
STL believes that the demand for the Saf T LokTM will increase as
media attention continues to focus on firearm-related accidents.
This media attention has kept firearm safety at the forefront of
public awareness. To the extent firearm safety legislation res-
ults from such publicity, demand for the Saf T LokTM will in all
likelihood increase.
Employees
Including its executive officers, the Company has 13 full-time
employees. None of the Company's employees is covered by a collective
bargaining agreement. Management believes that the Company's
relationship with its employees is good.
Legal Proceedings
On April 3, 1996 the Company settled a lawsuit filed in October
1995 against the Company and two of its directors and largest individual
shareholders, Robert and Cynthia Gilbert, by Barington
Capital, L.P. ( Barington ) by and through its general partner,
LNA Capital Corp. Barington was the Company's underwriter in its
initial public offering and is the propellant of this Registration
Statement and Prospectus; Barington exercised its demand
registration rights under a Warrant it holds to acquire 120,000
shares of the Company's common stock (see "Relationship Between
the Company and the Selling Shareholders"). Although not clear
from the manner in which the original Complaint was pled, Barington
apparently claimed mismanagement by the Gilberts as directors
of the Company, for which Barington requested money damages. In
the same lawsuit Barington claimed injunctive relief on the basis
that the harm allegedly done to the Company was not compensable
by money damages. Settlement of the suit included relinquishment
on Barington's part of its right to appoint a director to the Company's
Board of Directors and issuance to it of 20,000 shares of
common stock.
USE OF PROCEEDS
The proceeds from the sale of the Shares will be received by the
Selling Shareholders. The Company will not receive any of the
proceeds. However, in order for Barington to sell newly-regis-
tered shares, it must first exercise its warrant (see "Relationship
Between the Company and the Selling Shareholders"); full
exercise could result in receipt by the Company of $1,344,000.
PRICE RANGE OF COMMON STOCK
The Common Stock of the Company has traded on the NASDAQ SmallCap
Market under the symbol EDIT since the Company's initial public
offering in June 1993. Prior to that time, there was no public
market for the Common Stock. The following table sets forth the
high and low closing sale prices per share for the Company's Com-
mon Stock for the periods indicated, as reported by the NASDAQ
SmallCap Market:
Quarter Ended High Low
June 30, 1993.....................$ 9.50 ..........$8.75
September 30, 1993................ 8.25 .......... 7.00
December 31, 1993................. 7.00 .......... 6.50
March 31, 1994.................... 4.00 .......... 2.62
June 30, 1994..................... 3.00 .......... 1.75
September 30, 1994................ 1.68 .......... .875
December 31, 1994................. .75 .......... .625
March 31, 1995.................... 1.00 .......... .50
June 30, 1995..................... .625.......... .50
September 30, 1995................ .72 .......... .47
December 31, 1995................. .75 .......... .125
March 31, 1996.................... 8.50 .......... 3.625
June 30, 1996..................... 20.00 .......... 4.75
On May 2, 1996 the Cabot Heritage newsletter made a "buy" recom-
mendation and included a favorable paragraph as to the operations
and prospects of the Company. As a result, the trading volume in
the Company's shares soared to 2,305,800 from 98,400 overnight,
raising prices from $7.00 on May 2, 1996 to $19.00 on May 6,
1996.
On July ___, 1996 the last reported sales price of the Common
Stock was $_____ per share. As of July 15, 1996 there were ap-
proximately 140 record holders of the Common Stock. This number
does not include beneficial owners of the Common Stock whose
shares are held in the names of various dealers, clearing agen-
cies, banks, brokers and other fiduciaries.
DIVIDEND POLICY
The Company currently anticipates that it will retain all of its
earnings for use in the development of its business and does not
anticipate paying any cash dividends on the Common Stock in the
foreseeable future.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
All sales and operating expenses for the first quarter of 1996
reflect activity in STL and RGB Video, Inc. (the "Subsidiaries").
There were no sales or expenses for the Company except for legal
and accounting fees and bank charges.
Sales for the first quarter of 1996 decreased $17,145 to $80,648
from $97,793 in the prior year's comparable period. Gross mar
gins increased to 16 percent in the quarter compared to zero per-
cent in the quarter ended March 31, 1995. The Company reported a
net loss of $530,468 or $0.11 per share, up from a net loss of
$308,922 or $0.09 per share in the similar period last year. The
per share loss in the quarter was based on a weighted average
number of shares of 4,614,444 as compared to 3,268,032 for the
comparable period in 1995.
This decrease resulted primarily from the insolvency claim of
Commodore Electronics Ltd., owner of the Commodore Amiga computer,
on May 2, 1994 and its request that the Supreme Court of the Com
monwealth of the Bahamas supervise its "winding up". Commodore's
insolvency claim had a dramatically negative impact on the
marketability and sales of the Amiga-based products of RGB Video,
Inc. Additionally, the Company did not realize significant sales
in non-Amiga-based products during the quarter.
Initial production and sales of STL's initial product, the Saf T
Lok(TM), did not start until the end of the quarter. Attendance at
domestic and foreign trade shows as well as increased marketing
and collateral material were introduced to generate interest in
the product and to establish dealer networks. In addition, press
releases addressed the interest of the public in protecting ag-
ainst accidental shootings. The Company's initial product was
enthusiastically received at the National Rifle Association show
in Dallas in April, where several strategic contacts were made
with major gun manufacturers. On May 2, 1996 the Cabot Heritage
newsletter made a recommendation to "buy a little" and discussed
the Saf T Lok(TM) product. As a result, the stock price increased
from $7.00 per share on May 2, 1996 to a high of $19.00 per share
on May 6, 1996, with a volume increase from 98,400 on May 2, 1996
to a high of 2,305,800 on May 3, 1996.
Total operating expenses, including non-recurring costs, in
creased to $555,986 for the quarter from $340,673 in the similar
period last year. The selling expense component increased to
$190,506 from $165,086 resulting from new product development and
increase in sales and marketing efforts. Additional expenses
were incurred for the national advertising campaign. The general
and administrative expenses for the first quarter of 1996 in
creased to $341,157 from $133,061 from the prior year's compar-
able period primarily as a result of legal fees associated with
the merger of the Company and STL and litigation settlement as
well as relocation fees to a new office, new investor relations
consultants and the absorption of STL personnel.
The net of non-operating income and expense for the first quarter
of 1996 totaled $12,442 compared to the net of non-operating in-
come and expense for the first quarter of 1995 of $36,435. As a
result, the net loss for the quarter was $530,468 compared to a
net loss of $308,922 for the prior year's comparable period.
MANAGEMENT
Directors and Executive Officers. The names, ages (as of July
15, 1996) and positions held by each executive officer and direc-
tor of the Company are listed below:
<TABLE>
<CAPTION>
Name Age Positions
<S> <C> <C>
Frank W. Brooks 61 Chairman of the Board<F1>
Robert L. Gilbert III 44 President and Chief Executive Officer,
Director(1)
Cynthia T. Gilbert 41 Vice President, Secretary, Treasurer
Jeffrey W. Brooks 35 Director<F2>
Eugene V. Horanoff 64 Director<F2>
William M. Schmidt 53 Director
<F1>
Member: Compensation Committee
<F2>
Member: Audit Committee
</TABLE>
Frank W. Brooks, the inventor of the Saf T LokTM, STL's initial
product, serves as the Company's Chairman. He formed STL in 1989
and has actively participated in all organizational and financial
aspects of that company. Mr. Brooks is a long-time gun owner and
father of four children, the protection of whom provided the imp-
etus for the invention of the Saf T LokTM. Mr. Brooks owns and
operates Palm Beach Business Services, Inc. d/b/a Ding-A-Ling
Answering Service in West Palm Beach, Florida, a leading tele-
phone answering service in the Fort Lauderdale to Orlando market,
with 70 employees.
Robert L. Gilbert, III, the Company's President, Chief Executive
Officer and a director since 1989, founded the Company in July
1989 and is the creator of the AmiLink concept, the initial pro-
duct of RGB Video, Inc., a subsidiary of the Company. From incep
tion through June 1, 1993, Mr. Gilbert was the President and
Chief Executive Officer of the Company; on June 2, 1993, the Company
appointed Mr. Gilbert Chairman of the Company. Mr. Gilbert
was President of RGB Video Creations, Inc., the Company's prede-
cessor, from its inception in December 1987 until he formed the
Company.
Cynthia T. Gilbert is the wife of Mr. Gilbert. She is the Company's
Vice President of Finance, Treasurer and Secretary, and a
director since 1989, and has handled all financial transactions
for the Company since its inception. From December 1987 through
September 1989, she had similar duties with the Company's prede-
cessor.
William M. Schmidt serves as Vice President and a director of the
Company. He joined STL in September 1995 from Ilco Unican Inc.'s
Simplex Safelock Division in Greensboro, North Carolina where he
was Vice President and General Manager, accountable for two com
mercial lock divisions with sales of $35 million.
Jeffrey W. Brooks, the son of Frank Brooks, serves as a director
of the Company. He joined STL in 1989 at its inception as Mana-
ger of Research & Development. Mr. Brooks has also served as
General Manager of Palm Beach Business Services, Inc. since 1985
and was promoted to President in 1994.
Eugene V. Horanoff serves as a director and Chief Engineer of the
Company. He joined STL in 1989 at the commencement of prototype
development. He was instrumental in designing and engineering
the Saf T LokTM. He spent 28 years with the Naval Surface War
fare Center in Silver Spring, Maryland, retiring in 1982 as a
Senior Aerospace Design Engineer.
Employment Agreements. The Company and Frank Brooks entered into
an Employment Agreement on February 13, 1996 pursuant to which
Mr. Brooks' position as Chief Officer of STL was confirmed
through February 2001 at an annual base salary of $100,000. Ad
ditionally, the Agreement and Plan of Merger dated January 10,
1996 between the Company and STL provided that Mr. Brooks would
serve as a director of the Company through 2001.
The Company and Robert Gilbert entered into an Employment Agree
ment on April 22, 1993 pursuant to which Mr. Gilbert's position
as President of the Company was confirmed. That Agreement has
since been modified, such that Mr. Gilbert has assumed the presi-
dency of STL and earns an annual base salary of $100,000 through
February 2001.
The Company and Cynthia T. Gilbert entered into an Employment Ag-
reement on April 22, 1993 pursuant to which Mrs. Gilbert's posi
tion as Vice President/Secretary/Treasurer of the Company was
confirmed. That Agreement has since been modified, such that
Mrs. Gilbert has assumed the roles of Treasurer and Chief Finan
cial Officer of STL and earns an annual base salary of $85,000
through February 2001.
STL and Mr. Schmidt entered into an Employment Agreement in Nov-
ember 1995, since amended, as Vice President of STL at an annual
salary of $75,000.
Messrs. Schmidt, J. Brooks and Horanoff were named as directors
in the Agreement and Plan of Merger through 1999, so long as
Frank Brooks so desires and he remains Chairman of the Board.
Stock Options. Mr. Brooks has an option to acquire 1,000,000
shares of the Company's common stock at an exercise price of $200
per share. The option is exercisable through December 31, 1999,
vesting in equal thirds on each of January 1, 1997, 1998 and
1999. Vesting is contingent upon attainment of specified earn
ings targets. Mr. Brooks has the right to have the Company reg-
ister the shares underlying the option.
Mr. Gilbert has an identical option to acquire 600,000 shares.
SELLING SHAREHOLDERS
The table below sets forth information as of July 15, 1996 with
respect to the Selling Shareholders, including their names, hold
ings of shares of the Company's Common Stock prior to the Offer
ing of Shares, the number of Shares being offered for their ac
counts and the number and percentage of shares of the Company's
Common Stock to be owned by each Selling Shareholder immediately
following the sale of the Shares, assuming all of the offered
Shares are sold.
<TABLE>
<CAPTION>
Shares of Common Stock Shares of Common Shares of Common Stock Percentage of Common
Beneficially Owned Stock Being to be Beneficially Owned Stock Beneficially Owned
Names before the offering Offered After the Offering After the Offering
<S> <C> <C> <C> <C>
Frank W. Brooks 760,994 200,000 560,994 10.16%
Barington Capital
Group, L.P. _______<F1> 120,000<F2> _______
<F1>
Does not include 120,000 shares available for purchase pursuant to a Warrant
<F2>
Shares underlying the Warrant
</TABLE>
Relationship Between the Company and the Selling Shareholders
Frank W. Brooks is Chairman of the Board of Directors of the Com
pany and its largest individual shareholder. He is also Chairman
of the Board of STL, the Company's primary subsidiary.
Barington Capital Group, L.P., an NASD-member firm, underwrote
the Company's initial public offering in June 1993. In connec
tion with that effort, Barington was issued a Warrant to purchase
120,000 shares of common stock at an exercise price of $11.20 per
share. The Warrant included demand registration rights, which
Barington has elected to exercise, resulting in the registration
of Shares herein addressed.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of
10,000,000 shares of common stock, no par value. As of July 15,
1996 there were 5,522,057 shares of Common Stock outstanding.
Holders of Common Stock are entitled to one vote for each share
held on all matters submitted to a vote of shareholders and do
not have cumulative voting. (Frank Brooks holds an irrevocable
proxy to vote the shares of the Company's Common Stock held by
Robert and Cynthia Gilbert in director elections through February
2000.) Accordingly, holders of a majority of the shares of Com
mon Stock entitled to vote in any election of directors may elect
all of the directors standing for election. Holders of Common
Stock are entitled ratably to receive such dividends, if any, as
may be declared by the Board of Directors out of funds legally
available therefor. Upon liquidation, dissolution or winding up
of the Company, the assets legally available for distribution to
shareholders are distributable ratably among the holders of the
Common Stock subject to the payment of other claims of creditors.
Holders of Common Stock have no preemptive, subscription or red-
emption rights.
Transfer Agent and Registrar. The Transfer Agent and Registrar
for the Company's Common Stock is Florida Atlantic Stock Trans
fer, Inc., Tamarac, Florida.
Limited Liability and Indemnification. Under the Florida Busi
ness Corporation Act (the "FBCA"), a director is not personally
liable for monetary damages to the corporation or any other per-
son for any statement, vote, decision or failure to act, regard
ing corporate management or policy, by a director unless (i) the
director breached or failed to perform his duties as a director;
and (ii) the director's breach of, or failure to perform, those
duties constitutes: (1) a violation of the criminal law, unless
the director had reasonable cause to believe his conduct was law-
ful or had no reasonable cause to believe his conduct was unlaw
ful; (2) a transaction from which the director derived an impro-
per personal benefit, either directly or indirectly, (3) a cir
cumstance under which an unlawful distribution is made; (4) in a
proceeding by or in the right of the corporation to procure a
judgment in its favor or by or in the right of a shareholder,
conscious disregard for the best interest of the corporation or
willful misconduct; or (5) in a proceeding by or in the right of
someone other than the corporation or a shareholder, recklessness
or an act or omission which was committed in bad faith or with
malicious purpose or in a manner exhibiting wanton and willful
disregard of human rights, safety or property. A corporation may
purchase and maintain insurance on behalf of any director or of-
ficer against any liability asserted against him and incurred by
him in his capacity or arising out of his status as such, whether
or not the corporation would have the power to indemnify him ag-
ainst such liability under the FBCA. The Company may elect to
purchase such insurance on behalf of its directors and officers.
The Amended and Restated Articles of Incorporation of the Company
provide that the Company shall indemnify all directors and offi-
cers of the Company, as well as any employees or agents of the
Company to whom the Company has agreed to grant indemnification.
Section 607.0850(1) of the FBCA provides that a Florida corpora-
tion, such as the Company, shall have the power to indemnify any
person who is or was or is a party to any proceeding (other than
an action by, or in the right of, the corporation), by reason of
the fact that he is or was a director, officer, employee or agent
of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enter-
prise against liability incurred in connection with such proceed
ing, including any appeal thereof, if he acted in good faith and
in a manner he reasonably believed to be in, or not opposed to,
the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful, to the fullest extent permitted by ap-
plicable law, as amended from time to time. This indemnification
includes the right to advancement of expenses when allowed pursu-
ant to applicable law.
In addition, the Amended and Restated Articles of Incorporation
provide that a director of the Company shall not be personally
liable to the Company or its shareholders for monetary damages
for breach of the director's fiduciary duty. However, the Amend-
ed and Restated Articles of Incorporation do not eliminate or
limit the liability of a director for any of the following rea-
sons: (i) breach of the director's duty of loyalty to the Company
or its shareholders; (ii) acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of
law; (iii) a violation under Section 607.0834 of the FBCA (which
imposes liability upon directors for unlawful dividends and other
distribution); (iv) a transaction from which the director derived
an improper personal benefit; or (v) an act or omission occurring
before the effective date of the Articles.
Insofar as indemnification for liabilities arising under the Sec-
urities Act may be permitted to directors, officers and control-l
ing persons of the Company pursuant to the foregoing provisions,
or otherwise, the Company has been advised that in the opinion of
the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
FLORIDA LAW AND CERTAIN CHARTER PROVISIONS
The Company is subject to several anti-takeover provisions under
Florida law that apply to a public corporation organized under
Florida law unless such corporation has elected to opt-out of
such provisions in its Articles of Incorporation or, depending on
the provision in question, its Bylaws. The Company has not elec-
ted to opt-out of such provisions. The Common Stock of the Com
pany is subject to the "affiliated transaction" and "control-
share acquisition" provisions of the FBCA, Sections 607.0901 and
607.0902, respectively. These provisions provide that, subject
to certain exceptions, an "affiliated transaction" must be ap
proved by the holders of two-thirds of the voting shares other
than those beneficially owned by an "interested shareholder" and
that "control shares" acquired in specified control-share acqui-
sitions have voting rights only to the extent conferred by reso-
lution approved by shareholders, excluding holders of shares def-
ined as "interested shares".
The provisions of the FBCA described above may have certain anti-
takeover effects. Such provisions, individually or in combina
tion, may discourage third parties from or make it more difficult
for third parties to make a tender offer or acquisition of sub
stantial amounts of the Company's Common Stock or from launching
other takeover attempts that a shareholder might consider in such
shareholder's best interest, including those attempts that might
result in the payment of a premium over the market price for the
Common Stock held by such shareholder.
PLAN OF DISTRIBUTION
Any distribution of the Shares by the Selling Shareholders or by
their pledgees, donees, transferees or other successors in inter
est may be effected from time to time in one or more of the fol
lowing transactions: (a) to underwriters who will acquire the
Shares for their own account and resell them in one or more
transactions, including negotiated transactions, at a fixed pub-
lic offering price or at varying prices determined at the time of
sale (any public offering price and any discount or concessions
allowed or reallowed or paid to dealers may be changed from time
to time); (b) through brokers, acting as principal or agent, in
transactions (which may involve block transactions) on the Nasdaq
SmallCap Market or on one or more exchanges on which the Shares
are then listed, in special offerings, exchange distributions pur
suant to the rules of the applicable exchanges or in the over-the-
counter market, or otherwise, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices,
at negotiated prices or at fixed prices; (c) directly or through
brokers or agents in private sales at negotiated prices; or (d)
by any other legally available means.
The Selling Shareholders and such underwriters, brokers, dealers
or agents, upon effecting a sale of the Shares, may be considered
"underwriters" as that term is defined by the Securities Act.
Underwriters participating in any offering made pursuant to this
Prospectus (as amended or supplemented from time to time) may re-
ceive underwriting discounts and commissions. Discounts or con
cessions may be allowed or reallowed or paid to dealers, and bro-
kers or agents participating in such transaction may receive bro-
kerage or agent's commissions or fees.
At the time a particular offering of the Shares is made, to the
extent required, a Prospectus supplement will be distributed
which will set forth the amount of the Shares being offered and
the terms of the Offering, including the purchase price or public
offering price, the name or names of any underwriters, dealers or
agents, the purchase price paid by any underwriter for the Shares
purchased from the Selling Shareholders, any discounts, commis
sions and other items constituting compensation from the Selling
Shareholders and any discounts, commissions or concessions al
lowed or reallowed or paid to dealers.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions, if re-
quired, only through registered or licensed brokers or dealers.
In addition, in certain states the Shares may not be sold unless
the Shares have been registered or qualified for sale in such
state or an exemption from registration or qualification is av-
ailable and complied with.
The Company has agreed that it will bear all costs, expenses and
fees in connection with the registration of the Shares.
LEGAL MATTERS
The validity of the Shares offered hereby are being passed upon
for the Company by Mirkin & Woolf, P.A., West Palm Beach, Flori-
da.
EXPERTS
The consolidated financial statements and schedule of RGB
Computer & Video, Inc. and its subsidiary appearing in the
RGB Computer & Video, Inc. Annual Report (Form 10-KSB) for
the year ended December 31, 1995 have been audited by
Michaelson & Co., P.A., independent auditors, as set forth
in its report thereon included therein and incorporated
herein by reference. Such consolidated financial statements
and schedule are incorporated herein by ref-erence in
reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following is a list of the estimated expenses to be incurred by the
Registrant in connection with the issuance and distribution of the Shares
being registered hereby.
S.E.C. Registration Fee ........... $ 1,104
Accounting Fees and Expenses ...... 2,000 *
Legal Fees and Expenses ........... 20,000 *
Miscellaneous ..................... 1,896 *
TOTAL ........................ $25,000 *
_______________
* Estimated, subject to change.
The Selling Shareholders will not bear any portion of the expen-
ses of registration of the Shares.
Item 15. Indemnification of Directors and Officers
Section 607.0850(1) of the Florida Business Corporation Act, as
amended (the "Florida Act"), provides that, in general, a Florida
corporation may indemnify any person who was or is a party to any
proceeding (other than an action by, or in the right of, the cor-
poration), by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serv
ing at the request of the corporation as a director, officer, em-
ployee or agent of another corporation, partnership, joint ven
ture, trust or other enterprise, against liability incurred in
connection with such proceeding, including any appeal thereof, if
he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the corporation
and, with respect to any criminal action or proceeding, he had no
reasonable cause to believe his conduct was unlawful.
In the case of proceedings by or in the right of the corporation,
Section 607.0850(2) of the Florida Act provides that, in general,
a corporation may indemnify any person who was or is a party to
any such proceeding by reason of the fact that he is or was a
director, officer, employee or agent of the corporation against
expenses and amounts paid in settlement actually and reasonably
incurred in connection with the defense or settlement of such
proceeding, including any appeal thereof, provided that such per-
son acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the corporation,
except that no indemnification shall be made in respect of any
claims as to which such person is adjudged liable unless a court
of competent jurisdiction determines upon application that such
person is fairly and reasonably entitled to indemnity.
Section 607.0850 further provides that to the extent a director,
officer, employee or agent of a corporation is successful on the
merits or in the defense of any proceeding referred to in subsec-
tions (1) or (2) of Section 607.0850 or in the defense of any
claim, issue or matter therein, he shall be indemnified against
expenses actually and reasonably incurred by him in connection
therewith; that the corporation amy advance such expenses; that
indemnification provided for by Section 607.0850 shall not be
deemed exclusive of any other rights to which the indemnified
party may be entitled; and that the corporation may purchase and
maintain insurance on behalf of such person against any liability
asserted against him or incurred by him in any such capacity or
arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liabilities
under such Section 607.0850.
Section 607.0850 of the Florida Act further provides that, in
general, indemnification or advancement of expenses shall not be
made to or on behalf of any director, officer, employee or agent
if a judgment or other final adjudication establishes that such
person's actions, or omissions to act, were material to the cause
of action so adjudicated and constitute: (i) a violation of the
criminal law, unless such a person had reasonable cause to be-
lieve his conduct was lawful or had no reasonable cause to be-
lieve his conduct was unlawful; (ii) a transaction from which
such person derived an improper personal benefit; (iii) in the
case of a director, a circumstance under which the director has
voted for or assented to a distribution made in violation of the
Florida Act or the corporation's articles of incorporation; or
(iv) willful misconduct or a conscious disregard for the best in-
terests of the corporation in a proceeding by or in the right of
the corporation to procure a judgment in favor or in a proceeding
by or in the right of a shareholder.
The Company's Amended and Restated Articles of Incorporation and
Bylaws provide that the Company shall indemnify its directors and
officers to the fullest extent permitted by Florida law.
Item 16. Exhibits.
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
<S> <C> <C>
1 Amended and Restated Articles of Incorporation<F1>
2 Bylaws
3 Specimen Common Stock certificate*
4 Warrant dated June 30, 1993 issued to Barington Capital Group, L.P.*
5 Opinion of Mirkin & Woolf, P.A.<F1>
6 Consent of Mirkin & Woolf, P.A. (included in Exhibit 5)
7 Consent of Michaelson & Co., P.A.<F1>
8 Power of Attorney (included on the signature page of this
Registration Statement)
9 Financial Data Schedule<F1>
<F1>
Filed herewith
</TABLE>
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:
(a) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended (the "Act");
(b) 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, in-
dividually or in the aggregate, represent a fundamental change in
the information set forth in the Registration Statement;
(c) To include any material information with respect to
the plan of distribution not previously disclosed in the Reg-
istration Statement or any material change to such information in
the Registration Statement;
provided, however, that paragraphs (A)(1)(a) and (A)(1)(b) do not
apply if the Registration Statement is on Form S-3, Form S-8 or
Form F-3, and the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Securities and Exchange
Commission (the "Commission") by the Registrant pursuant to Sec
tion 13 or Section 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act)", that are incorporated by refer-
ence in the Registration Statement.
(2) That, for the purpose of determining any liability un-der
the Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities of-fered
therein, and the offerings of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of post-effective
amendment any of the securities being registered which remain un-
sold at the termination of the offering.
B. The undersigned Registrant hereby undertakes that for pur
poses of determining any liability under the Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or Sec
tion 15(d) of the Exchange Act (and, where applicable, each fil-
ing of an employee benefit plan's annual report pursuant to Sec
tion 15(d) of the Exchange Act) that is incorporated by reference
in the Registration Statement shall be deemed to be a new regis-
tration 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 Act may be permitted to directors, officers and controlling
per-sons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion
of the 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 payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Regis-
trant in the successful defense of any action, suit or proceed
ing) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Regis-
trant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of ap
propriate 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.
D. The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act,
the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pur
suant to Rule 424(b)(1) or (4) or 497(h) under the Act shall be
deemed to be part of this Registration Statement as of the time
it was declared effective.
(2) For the purpose of determining any liability under the
Act, each post-effective amendment that contains a form of pros-
pectus shall be deemed to be a new registration statement relat
ing 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-3 and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly author-
ized, in the city of Tequesta, State of Florida, on July ___,
1996.
RGB COMPUTER & VIDEO, INC.
By:________________________________
Robert L. Gilbert, III, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the fol
lowing persons in the capacities and on the dates indicated.
Signature Title Date
_________________________ Chairman of the July ___, 1996
Frank W. Brooks Board
_________________________ President, Chief
Robert L. Gilbert, III Executive Officer
(Principal Executive
Officer) and Director July ___, 1996
_________________________ Vice President,
Cynthia T. Gilbert Chief Financial Officer
_________________________ Chairman of the
Frank W. Brooks Board July ___, 1996
Director July ___,1996
_________________________ Director July ___,1996
Jeffrey W. Brooks
_________________________ Director July ___, 1996
Eugene V. Horanoff
_________________________ Director July ___, 1996
William M. Schmidt
==============================================================================
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signa
ture appears above in so signing also makes, constitutes and
appoints Robert L. Gilbert, III as his true and lawful at
torney-in-fact with full power of substitution and
resubstitution for him and in his name, place and stead, in
any and all capacities to execute and cause to be filed with
the Securities and Exchange Commission any and all amend
ments (including pre-effective and post-effective
amendments) to this Registration Statement, with exhibits
thereto and other documents in connection therewith,
granting un-to said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as he
might or could do in person, and hereby rati-fies and
confirms all that said attorney-in-fact and agent or his sub
stitute or substitutes may lawfully do or cause to be done
by virtue hereof.
====================================================================
<TABLE>
EXHIBIT INDEX
<CAPTION>
NUMBER DESCRIPTION NUMBERED PAGE
<S> <C> <C>
1 Amended and Restated Articles of Incorporation<F1>
2 Bylaws
3 Specimen Common Stock certificate*
4 Warrant dated June 30, 1993 issued to Barington Capital Group, L.P.*
5 Opinion of Mirkin & Woolf, P.A.<F1>
6 Consent of Mirkin & Woolf, P.A. (included in Exhibit 5)
7 Consent of Michaelson & Co., P.A.<F1>
8 Power of Attorney (included on the signature page of this
Registration Statement)
9 Financial Data Schedule<F1>
<F1>
Filed herewith
</TABLE>
=============================================================================
EXHIBIT 9. FINANCIAL DATA SCHEDULE
<CIK 0000902056>
[ARTICLE] 5
<TABLE>
<S> <C> <C>
[PERIOD-TYPE] 3-MOS 3-MOS
[FISCAL-YEAR-END] DEC-31-1996 DEC-31-1995
[PERIOD-END] MAR-31-1996 DEC-31-1995
[CASH] 30,149 119,638
[SECURITIES] 1,735,864 2,379,941
[RECEIVABLES] 330,694 249,993
[ALLOWANCES] 0 0
[INVENTORY] 397,779 282,471
[CURRENT-ASSETS] 2,202,865 3,579,247
[PP&E] 1,323,518 826,986
[DEPRECIATION] 455,547 418,159
[TOTAL-ASSETS] 3,362,457 3,440,870
[CURRENT-LIABILITIES] 289,382 168,325
[BONDS] 0 0
[PREFERRED-MANDATORY] 0 0
[PREFERRED] 0 0
[COMMON] 8,089,270 8,089,270
[OTHER-SE] 5,016,195 4,816,725
[TOTAL-LIABILITY-AND-EQUITY] 3,362,457 3,440,870
[SALES] 80,648 97,793
[TOTAL-REVENUES] 80,648 97,793
[CGS] 67,572 102,477
[TOTAL-COSTS] 555,986 340,673
[OTHER-EXPENSES] 0 0
[LOSS-PROVISION] 0 0
[INTEREST-EXPENSE] 0 0
[INCOME-PRETAX] (530,468) (308,922)
[INCOME-TAX] 0 0
[INCOME-CONTINUING] 12,442 36,435
[DISCONTINUED] 0 0
[EXTRAORDINARY] 0 0
[CHANGES] 0 0
[NET-INCOME] (530,468) (308,922)
[EPS-PRIMARY] 0 0
[EPS-DILUTED] (.11) (.09)
</TABLE>
