As filed with the Securities and Exchange Commission on January ___, 1998
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ALCOHOL SENSORS INTERNATIONAL, LTD.
(Exact name of registrant as specified in its charter)
New York 11-3104480
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
11 Oval Drive, Islandia, New York 11722 - (516) 342-1515
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Steven A. Martello, President
Alcohol Sensors International, Ltd.
11 Oval Drive
Islandia, New York 11722
(516) 342-1515
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
Keith S. Braun, Esq.
Kaufman & Braun, LLP
400 Garden City Plaza, Suite 202
Garden City, New York 11530
(516) 873-2000
Approximate date of commencement of proposed sale to the public: As soon as
practicable 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. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
maximum maximum Amount of
Title of each class of Amount to offering price aggregate Registration
securities to be registered be registered per unit (1) offering price(1) Fee
<S> <C> <C> <C> <C>
Common Stock, par value
$.001 (2)(3). . . . . . . . 5,150,000 $1.00 $5,150,000 $1,519.25
<FN>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933, as amended, based upon the
closing price of the common stock on January 21, 1998.
(2) Includes (a) a maximum of 5,000,000 shares of common stock issuable upon
conversion of the Series B 8% Convertible Preferred Stock of the Registrant
(the "Series B Preferred Stock") and (b) 150,000 shares of common stock
issuable upon exercise of outstanding warrants (the "Warrants").
(3) Pursuant to Rule 416, there are also being registered such indeterminable
additional shares of Common Stock as may become issuable pursuant to
anti-dilution provisions contained in the Series B Preferred Stock and
Warrants.
</FN>
</TABLE>
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
-------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED JANUARY 22, 1998
PRELIMINARY PROSPECTUS
ALCOHOL SENSORS INTERNATIONAL, LTD.
5,150,000 Shares of Common Stock
This prospectus relates to the sale of up to 5,150,000 shares (the
"Shares") (including shares underlying outstanding warrants) of the common
stock, par value $.001 per share (the "Common Stock"), of Alcohol Sensors
International, Ltd. ("ASI" or the "Company") by certain securityholders of the
Company (the "Selling Shareholders"). The Shares offered hereby by one of the
Selling Shareholders consist of up to a maximum of 5,000,000 shares of Common
Stock issuable upon conversion of the Series B 8% Convertible Preferred Stock,
par value $.001 per share (the "Series B Preferred Stock"), of the Company. For
purposes of determining the number of Shares to be offered by such Selling
Shareholder for this Prospectus, the number of shares of Common Stock calculated
to be issuable upon conversion of the Series B Preferred Stock is based on an
extremely low conversion price as required by the Stock Purchase Agreement with
such Selling Shareholder, Milbright Estates, Ltd. ("Milbright"), and the terms
of the designation, relative rights, preferences and limitations of the Series B
Preferred Stock. Such conversion price is used merely for the purposes of
setting forth a number for this Prospectus and is less than the average of the
closing bid prices over the ten consecutive trading days preceding January 21,
1998, which was $1.23125. The number of shares of Common Stock issuable upon
conversion of the Series B Preferred Stock is subject to adjustment depending on
the date of the conversion thereof and could be materially less or more than
such estimated amount depending on factors which cannot be predicted by the
Company including, among other things, the future market price of the Common
Stock. See "Risk Factors - Potential Volatility of Stock Price" and "Selling
Shareholders." The remaining Shares offered hereby by the holder of the Series B
Preferred Stock and the other Selling Shareholders consist of an aggregate of
150,000 shares of Common Stock issuable upon exercise of warrants (the
"Warrants") which were issued to the Selling Shareholders in connection with the
issuance and sale of the Series B Preferred Stock.
The Shares may be offered by the Selling Shareholders from time to time in
transactions (which may include block transactions) on the Nasdaq SmallCap
Market, in negotiated transactions, through a combination of such methods of
sale, or otherwise, at fixed prices that may be changed, at market prices
prevailing at the time of sale, or at negotiated prices. The Selling
Shareholders may effect such transactions by selling the Shares to or through
broker-dealers, who may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholders and/or the purchasers
of the Shares for whom such broker-dealers may act as agents or to whom they may
sell as principals, or both (which compensation as to a particular broker-dealer
might be in excess of customary commissions). The Company will not receive any
of the proceeds from the sale of the Shares by the Selling Shareholders, other
than the exercise price of the Warrants, if and when exercised. The Company has
agreed to bear all expenses of registration of the Shares, but all selling and
other expenses incurred by a Selling Shareholder will be borne by that Selling
Shareholder. See "Selling Shareholders" and "Plan of Distribution."
The Selling Shareholders and any broker-dealers, agents or underwriters
that participate with the Selling Shareholders in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities Act of
1933, as amended (the "Securities Act"), and any commissions paid or any
discounts or concessions allowed to any such persons, and any profits received
on the resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. See "Selling Shareholders"
and "Plan of Distribution."
The Common Stock is traded on The Nasdaq SmallCap Market ("Nasdaq") under
the symbol "ASIL." On January 21, 1998, the last sales price for the Common
Stock, as reported by Nasdaq, was $1.00 per share. See "Risk Factors -- Possible
Nasdaq Delisting."
See"Risk Factors," commencing on page 6, for information
that should be considered by prospective investors.
<PAGE>
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 January ___, 1998
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the information reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "SEC"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450
Fifth Street, NW, Washington, D.C. 20549, and at the SEC's regional offices
located at Seven World Trade Center, Suite 1300, New York, New York 10048, and
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60601-2511. Copies of such material may be obtained by mail from the Public
Reference Section of the SEC at Judiciary Plaza, 450 Fifth Street, NW,
Washington, D.C. 20549, at prescribed rates. The SEC also maintains a Worldwide
Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC at the
address "http://www.sec.gov." Such reports, proxy statements and other
information can also be inspected at the offices of Nasdaq Operations, 1735 K
Street, NW, Washington, D.C. 20006.
The Company has filed with the SEC a registration statement on Form S-3
(herein, together with all amendments and exhibits thereto, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus 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 SEC. For further information
regarding the Company and the Shares offered hereby, reference is hereby made to
the Registration Statement. Statements contained in this Prospectus as to the
contents of any contract, agreement or other document are not necessarily
complete and, where the contract, agreement or other document referred to has
been filed as an exhibit to the Registration Statement, each such statement is
qualified in all respects by reference to the applicable document filed with the
SEC. The Registration Statement, including the exhibits and schedules thereto,
may be inspected at the public reference facilities maintained by the Commission
at 450 Fifth Street, NW, Washington, D.C. 20549 and copies of all or any part
thereof may be obtained from such office upon payment of the prescribed fees.
The Company will provide without charge to each person to whom a Prospectus
is delivered, on the written or oral request of any such person, a copy of any
or all of the documents incorporated by reference herein (other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
into such documents). Requests for such copies should be directed to Corporate
Secretary, Alcohol Sensors International, Ltd., 11 Oval Drive, Islandia, New
York 11722; telephone number (516) 342-1515.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act (File No. 0-26998) are incorporated in this Prospectus by
reference thereto:
1. Amendment No. 1 on Form 10-KSB to the Company's Annual Report on Form
10-KSB, for the fiscal year ended December 31, 1996;
2. The Company's Quarterly Reports on Form 10-QSB, for the quarters ended
March 31 and June 30, 1997;
3. The Company's Current Report on Form 8-K (Date of Report: September 26,
1997);
4. Amendment No. 1 on Form 10-QSB/A to the Company's Quarterly Report on
Form 10-QSB, for the quarter ended September 30, 1997; and
5. The description of the Common Stock contained in Amendment No. 1 to the
Company's Registration Statement on Form 8-A, declared effective on November 9,
1995, including any amendment(s) or report(s) filed for the purpose of updating
such description.
<PAGE>
In addition, all documents subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination
of the offering of the Shares, shall be deemed to be incorporated by reference
in this Prospectus and made a part hereof as of the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein or in any Prospectus Supplement
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.
TRADEMARKS
This Prospectus contains trademarks of the Company and its subsidiaries and
may contain trademarks of others. Sens-O-Lock is a registered trademark of the
Company and the Alcohol Sensors International, Ltd. logo and WeatherEye are
trademarks of the Company. All other trademarks referenced herein are the
property of their respective owners.
FORWARD-LOOKING STATEMENTS
Statements contained in this Prospectus, and in the documents incorporated
by reference into this Prospectus, that are not based upon historical fact are
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. Forward-looking statements included in
this Prospectus and in documents incorporated by reference involve known and
unknown risks, uncertainties and other factors which could cause the Company's
actual results, performance (financial or operating) or achievements expressed
or implied by such forward looking statements not to occur or be realized. Such
forward looking statements generally are based upon the Company's best estimates
of future results, performance or achievement, based upon current conditions and
the most recent results of operations. Forward-looking statements may be
identified by the use of forward-looking terminology such as "may," "will,"
"expect," "believe," "estimate," "anticipate," "continue," or similar terms,
variations of those terms or the negative of those terms. Potential risks and
uncertainties include, among other things, such factors as the results of the
Company's research and development efforts related to technology for the current
and future generations of the Company's Sens-O-Lock and other products, the
quality of the components, manufacturing, design and quality control of the
current and future generations of the Company's Sens-O-Lock and other products,
the enactment and enforcement of laws relating to the use of products such as
the Sens-O-Lock in connection with sentencing and penalties for alcohol-related
crimes and violations, the level of insurance industry adoption of discounts, if
any, for the use of products such as the Sens-O-Lock, the amount of sales of the
Company's products, the competitive environment within the industries in which
the Company competes, the level and costs incurred in connection with the
Company's product development and marketing efforts, market acceptance of the
Company's products, certain technological considerations, availability of parts
and components, competition, dependence on key personnel and the other factors
and information disclosed and discussed under "Risk Factors," in other sections
of this Prospectus and in documents incorporated by reference in this
Prospectus. Investors should carefully consider such risks, uncertainties and
other information, disclosures and discussions which contain cautionary
statements identifying important factors that could cause actual results to
differ materially from those provided in the forward-looking statements.
<PAGE>
THE COMPANY
The Company markets and sells electronic automotive after-market safety
products, including a patent-pending line of ignition interlock devices under
the Sens-O-Lock brand name. The Company's Sens-O-Lock equipment is designed to
detect, evaluate and assist in the prevention of an alcohol impaired driver
operating a vehicle. The Company also markets and sells, under the WeatherEye
brand name, a line of modular products designed to automatically engage and
adjust the headlights and taillights of automobiles depending upon weather and
sunlight conditions.
After the Company's initial sale of approximately 700 Sens-O-Lock units,
the Company became aware in late Spring 1996 of inconsistencies in certain
integral components manufactured for the Company and other manufacturing, design
and quality control problems. As a result, in the second quarter of 1996, the
Company discontinued manufacturing of the Sens-O-Lock product, recalled the
Sens-O-Lock units which had been sold, ceased marketing efforts and wrote down
its inventory by approximately $556,000. Since that time, the Company has
devoted substantial resources to research and development of new technology for
and the design of the next ("second") generation Sens-O-Lock product line,
developing new relationships with other component suppliers and manufacturers,
improving the Company's component and manufacturing quality control procedures,
enhancing the Sens-O-Lock operating software to meet the requirements for
foreign markets and developing marketing strategies for the Sens-O-Lock product
line.
The Company has conducted various tests upon the prototypes of its second
generation Sens-O-Lock product, utilizing the results of the Company's research
and development efforts. These pre-production prototypes have been placed in
U.S. and European automobiles. The Company completed final parts procurement and
an initial production of approximately 500 second generation Sens-O-Lock units
during September and October 1997 and, thereupon, commenced offering such units
for sale. The second generation Sens-O-Lock product will be required to undergo
certification testing prior to actual United States market introduction for the
legislative market, pursuant to National Highway Transportation Safety
Administration ("NHTSA") guidelines and the Company is presently pursuing such
NHTSA certification. In addition, the Company believes that, for the U.S.
voluntary and commercial markets, no such testing is required, although the
Company may elect to publicize any NHTSA certification of the second generation
Sens-O-Lock product in connection with the promotion of the product for both
domestic and foreign voluntary and commercial markets. However, there can be no
assurance given that the second generation Sens-O-Lock product will be awarded
NHTSA certification or that such certification, if awarded, will result in any
revenues to the Company or the commercial success of the second generation
Sens-O-Lock product.
The Company continues to evaluate other sensing technologies currently in
use within the industry. The Company intends to continue to utilize its research
and development efforts to provide the Company with alternative technical
options for different specified target markets, as well as to improve and
enhance the Company's products.
The Company's business strategy is expected to concentrate on penetrating
three markets: (a) the voluntary market, which includes parents of teenage
drivers; (b) individuals subject to legislative or judicial supervision (e.g.,
persons convicted of alcohol-related or other crimes or violations); and (c) the
commercial market comprising truck, bus and taxi fleets. The Company intends to
seek insurance discounts to help drive the market for Sens-O-Lock product and to
assist in the lobbying for stricter federal and state laws requiring drivers
convicted of alcohol-related or other crimes or violations to install an
ignition interlock device. The Company is evaluating strategies, marketing plans
and programs which the Company expects will enable it to work jointly with
insurance companies to enhance their respective markets. However, there can be
no assurance that the Company and such or other insurance companies will agree
upon a strategy, plan or program or that any such strategy, plan or program, if
adopted, or the Company's independent lobbying efforts, will result in revenues
to the Company or the commercial success of its products.
Principal Offices
The Company's principal executive offices are located at 11 Oval Drive,
Islandia, New York 11722; telephone number: (516) 342-1515. The Company
maintains a website at "asil.com."
<PAGE>
RISK FACTORS
The securities offered hereby are speculative and involve a high degree of
risk. Only those persons able to lose their entire investment should purchase
these securities. Prospective investors, prior to making an investment decision,
should carefully read this Prospectus and consider, along with other matters
referred to herein, the risk factors set forth below. This section contains
forward-looking statements that involve risks and uncertainties. Actual results
could differ materially from those anticipated in forward-looking statements as
a result of certain factors, including those set forth in the following risk
factors and elsewhere in this Prospectus. See "Forward-Looking Statements."
No Assurance of Profitability; Losses to Date; Substantial Doubt as to the
Ability of the Company to Continue as a Going Concern
The Company has been unprofitable since inception in February 1992 and
expects to incur operating losses in the course of building its business at
least until such time as the Company can generate sufficient sales of its
products. The Company's operating losses may increase as the Company's marketing
and production efforts with respect to the second generation Sens-O-Lock product
line increase, and such losses may fluctuate from quarter to quarter.
In addition, since inception, the Company has recorded only limited net
sales. For its fiscal years ended December 31, 1995 and 1996, and for the nine
months ended September 30, 1997, the Company recorded net sales of approximately
$41,000, $69,000, and $65,000 and net losses of $3,625,000, $6,121,000, and
$2,078,000, respectively. There is no assurance that the second generation
Sens-O-Lock will result in any material net sales to the Company or, if material
net sales do result from such release (or the release of any other product(s) by
the Company), that the Company will become profitable at any time in the future.
The report of the independent auditors with respect to the Company's financial
statements incorporated by reference in this Prospectus calls attention to the
existence of substantial doubt as to the ability of the Company to continue as a
going concern.
Possible Delisting of Securities from Nasdaq System; Risks Relating to
Low-Priced Stocks
The Common Stock is currently listed on Nasdaq. In order to continue to be
listed on Nasdaq, however, the Company must maintain, at a minimum, (a)
$2,000,000 in net tangible assets, $35,000,000 in market capitalization or have
net income of $500,000 in the latest completed fiscal year (or in two of the
last three fiscal years), (b) 500,000 shares in the public float (i.e. shares
held by persons other than officers, directors and 10% beneficial shareholders),
(c) a $1,000,000 market value of the public float, (d) 300 shareholders, (e) two
market makers and (f) a minimum bid price of $1.00 per share. The failure to
meet these maintenance criteria in the future may result in the delisting of the
Common Stock from Nasdaq, and trading, if any, in the Company's securities would
thereafter be conducted in the non-Nasdaq over-the-counter market. As a result
of such delisting, an investor could find it more difficult to dispose, or to
obtain accurate quotations as to the market value, of the Company's securities.
In addition, if the Common Stock were to become delisted from trading on
Nasdaq and the trading price of the Common Stock were to fall below $5.00 per
share, trading in the Common Stock would also be subject to the requirements of
certain rules promulgated under the Exchange Act, which require additional
disclosure by broker-dealers in connection with any trades involving a stock
defined as a "penny stock" (generally, any non-Nasdaq equity security that has a
market price of less than $5.00 per share, subject to certain exceptions). Such
rules require the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the risks associated
therewith, and impose various sales practice requirements on broker-dealers who
sell penny stocks to persons other than established customers and accredited
investors (generally defined as institutions or an investor with a net worth in
excess of $1,000,000 or annual income exceeding $200,000, $300,000 together with
spouse). For these types of transactions, the broker-dealer must make a special
suitability determination for the purchaser and have received the purchaser's
written consent to the transaction prior to sale. The additional burdens imposed
upon broker-dealers by such requirements may discourage broker-dealers from
effecting transactions in the Common Stock, which could severely limit the
market price and liquidity of the Common Stock and the ability of purchasers in
this offering to sell the Common Stock in the secondary market.
<PAGE>
At September 30, 1997, the Series B Preferred Stock was treated as debt for
financial reporting purposes and the Company's net tangible assets were a
negative $22,076. If the Company's shareholders approve the elimination of the
restriction on the number of shares of Common Stock issuable upon conversion of
the Series B Preferred Stock, the Company expects that the Series B Preferred
Stock would then be classified as shareholders' equity for financial reporting
purposes. The Company's shareholders are to be asked to approve the elimination
of the restriction on the number of shares of Common Stock issuable upon
conversion of the Series B Preferred Stock at a Special Meeting of Shareholders
of the Company scheduled for February 5, 1998.
By letter dated January 6, 1998 (the "Nasdaq Letter"), Nasdaq notified the
Company that, while the Company may achieve technical compliance with the
current continued listing criteria with the classification of the Series B
Preferred Stock as shareholders' equity upon the elimination of the restriction
on the number of shares of Common Stock issuable upon conversion of the Series B
Preferred Stock, Nasdaq believed that such inclusion, by itself, would be
insufficient to sustain compliance with Nasdaq's continued listing requirements
over the long term. The Nasdaq Letter went on to note that, based upon the
Company's historical net losses during 1997, Nasdaq believed that the Company
could not sustain compliance in the long term and, accordingly, the Company's
securities would be delisted from Nasdaq.
The Company believes that the Company may be able to sustain compliance
with Nasdaq's continued listing criteria and has notified Nasdaq of its
intention to appeal Nasdaq's determination to delist the Company's securities.
Such appeal is expected to be based on the Company's technical compliance with
all applicable listing requirements (assuming shareholder approval of the
elimination of the restriction on the number of shares of Common Stock issuable
upon conversion of the Series B Stock), the Company's plan to reduce or
eliminate the Company's historical net losses, as well as possibly a plan to
obtain additional or alternative funding in a form that would be treated as
shareholders' equity. Pending the determination of such appeal, the Company's
securities will continue to be listed on Nasdaq. However, no assurance can be
given that the Company's shareholders will approve the elimination of the
restriction on the number of shares of Common Stock issuable upon conversion of
the Series B Stock, that the Company will be able to provide to Nasdaq adequate
plans with respect to reducing or eliminating the net losses or obtaining such
additional or alternative funding in the form of shareholders' equity, that
Nasdaq would approve the Company's appeal, thereby continuing to list the
Company's securities, that such plans will be successfully implemented or that
the Company would be able to sustain compliance with Nasdaq's continued listing
criteria in the future.
Nasdaq Inquiry
By letter dated September 26, 1997 (the "Nasdaq Letter"), Nasdaq notified
the Company that Nasdaq staff was concerned about various aspects of the
Company's financial and operating status. The Nasdaq Letter went on to note
Nasdaq's desire to "obtain a more thorough understanding of the [C]ompany's
business strategy, market opportunities and operations" and, in furtherance
thereof, requested specified information and documents.
Under the rules of Nasdaq, which the Company is required to comply with
pursuant to the Company's listing agreement with Nasdaq, Nasdaq may request any
additional information or documentation deemed necessary to make a determination
regarding a security's initial or continued inclusion. In addition, the Nasdaq
rules grant Nasdaq "broad discretionary authority over the initial and continued
inclusion of securities in Nasdaq in order to maintain the quality and public
confidence in its market. Under such broad discretion . . . [Nasdaq] may deny
initial inclusion or apply additional or more stringent criteria for the initial
or continued inclusion of particular securities or suspend or terminate the
inclusion of particular securities based on any event, condition, or
circumstance which exists or occurs that makes initial or continued inclusion of
the securities in Nasdaq inadvisable or unwarranted in the opinion of [Nasdaq],
even though the securities meet all enumerated criteria for initial or continued
inclusion in Nasdaq."
The Company's management believes that the Company is in full compliance
with all enumerated criteria for continued inclusion in Nasdaq if the Company's
shareholders approve the elimination of the restriction on the number of shares
of Common Stock issuable upon conversion of the Series B Preferred Stock. In
fact, since the date of the Nasdaq Letter, the Company has introduced the second
generation Sens-O-Lock at the Birmingham, England Motor Show, commenced
marketing of the second generation Sens-O-Lock devices to customers and has
obtained financing which, management believes, will be sufficient for the
Company's needs to commence marketing and full production of the second
generation Sens-O-Lock product line. Such events have been communicated to
<PAGE>
Nasdaq in connection with the Company's formal response to the Nasdaq Inquiry.
However, there can be no assurance that the Company's response to the Nasdaq
Inquiry will allay Nasdaq's concerns regarding the status of the Company and/or
the Company's ability to successfully launch the second generation Sens-O-Lock,
that the Company will have sufficient funds for its long-term operations, that
the Company will successfully market the second generation Sens-O-Lock product,
that Nasdaq will not deny the continued inclusion thereon of the Company's
securities, that Nasdaq will not apply additional or more stringent criteria for
the continued inclusion thereon of the Company's securities or that the Company
would be capable of complying with any additional or more stringent criteria for
the continued inclusion on Nasdaq of the Company's securities, if imposed. Any
delisting of the Company's securities from Nasdaq could cause a precipitous
decline in the market value of the Company's securities and adversely affect the
liquidity of the Company's securities. See "Risk Factors -- Possible Nasdaq
Delisting."
Possible Redemption of Series B Preferred Stock; Effect on Company Financial
Statement
On September 26, 1997, the Company sold and issued to Milbright (a) a total
of 300 shares of Series B Preferred Stock and (b) a warrant (the "Milbright
Warrant") to purchase 50,000 shares of Common Stock, for total gross proceeds of
$3,000,000. In connection with the sale and issuance of the Series B Preferred
Stock and Milbright Warrant, the Company issued warrants (the "Third Party
Warrants" and, collectively with the Milbright Warrants, the "September 1997
Warrants") to purchase an aggregate 100,000 shares of Common Stock to third
parties and paid certain of such third parties an aggregate of $300,000.
The Series B Preferred Stock is convertible, at the option of the holder,
into shares of Common Stock at any time following the earlier of (a) the
effectiveness of a registration statement for the Common Stock into which the
Series B Preferred Stock is convertible (the "Registration Statement") or (b)
120 days from the date of original issuance of the Series B Preferred Stock (the
"Original Issuance Date"). This Prospectus constitutes a part of the
Registration Statement. Notwithstanding the foregoing, the Series B Preferred
Stock is convertible, (a) with respect to 100 shares, at any time on or after
November 24, 1997, (b) with respect to an additional 100 shares, at any time on
or after December 24, 1997 and (c) with respect to any other shares, at any time
on or after January 23, 1998. Each share of Series B Preferred Stock shall be
convertible into that number of shares of Common Stock as is determined by
dividing (a) the sum of (i) $10,000 plus (ii) the amount of all accrued but
unpaid or accumulated dividends on the share of Series B Preferred Stock being
so converted by (b) the Conversion Price (as defined below) in effect at the
time of conversion. The "Conversion Price" of the Series B Preferred Stock will
be equal to the lower of (a) $4.03125, the average of closing bid prices of a
share of Common Stock as quoted on The Nasdaq Stock Market for the ten
consecutive trading days immediately preceding the Original Issuance Date or (b)
82.5% of the average closing bid price of a share of Common Stock as quoted on
The Nasdaq Stock Market for the ten consecutive trading days immediately
preceding the date of the conversion notice delivered to the Company. If not
sooner converted, all outstanding shares of Series B Preferred Stock shall be
subject to automatic conversion two years after the Original Issuance Date.
Unless the approval of the Company's shareholders has previously been
obtained, the Company may not issue any Common Stock upon conversion of the
Series B Preferred Stock to the extent that (a) the issuance of such Common
Stock, when taken together with all prior issuances of Common Stock upon
conversion of Series B Preferred Stock, would result in the issuance by the
Company of a number of shares of Common Stock equal to or greater than 20% of
the number of shares of Common Stock outstanding on the date of initial issuance
of the Series B Preferred Stock (a "20% Issuance"), and such 20% Issuance
requires the prior approval of the shareholders of the Company pursuant to any
applicable rule, regulation, stated policy, practice or interpretation of The
Nasdaq Stock Market or (b) the Board of Directors of the Company determines in
good faith that the issuance of such Common Stock upon conversion (whether or
not constituting a 20% Issuance) otherwise requires the prior approval of the
shareholders of the Company pursuant to any applicable rule, regulation, stated
policy, practice or interpretation of any stock exchange or stock market on
which the Common Stock then listed or admitted to trading (the "Stockholder
Approval Requirement"). Following the first conversion of Series B Preferred
Stock to which a 20% Issuance is applicable, the Company is required to (a) give
notice to all holders of the Series B Preferred Stock that the Company is unable
to issue any further Common Stock upon conversion of Series B Preferred Stock,
and that the Series B Preferred Stock cannot be converted without compliance
with the Stockholder Approval Requirement, and (b) take one of the following
actions, at its election, within twenty days following the date of such notice:
<PAGE>
(i) the Company shall notify all such holders of the Series B Preferred Stock
that the Company intends to seek shareholder approval pursuant to the
Stockholder Approval Requirement, in which event the Company shall thereafter
take all action necessary to call a meeting of its shareholders as promptly as
reasonably practicable to vote on such matter; (ii) the Company shall obtain
from the stock exchange or stock market on which the Common Stock is then listed
a waiver of the Stockholder Approval Requirement and shall commence any mailing
to stockholders notifying them of such waiver that is required by the rules of
such stock exchange or stock market; or (iii) the Company shall notify all such
holders of the Series B Preferred Stock that it is redeeming Series B Preferred
Stock pursuant to the redemption provisions of the Series B Preferred Stock. In
the event that the Company elects to seek stockholder approval, and such
stockholder approval is not obtained within 75 days following the date of the
Company's notice to the holders of the Series B Preferred Stock that it intends
to seek such stockholder approval, the Company shall promptly following the end
of such 75 day period notify all holders of the Series B Preferred Stock that
the Company is redeeming the then outstanding Series B Preferred Stock. If the
Stockholder Approval Requirement is complied with or if a waiver of or exception
to the Stockholder Approval Requirement is obtained, the conversion rights of
the holders of the Series B Preferred Stock shall be reinstated.
If the Company is required to redeem Series B Preferred Stock pursuant to
the provisions thereof, the Company shall (a) issue the Maximum Number of Shares
of Common Stock (as defined below) to the holder of Series B Preferred Stock who
have requested conversion and (b) redeem, out of funds legally available
therefor, all of the Series B Preferred Stock that remain after such conversion
at a price per share of Series B Preferred Stock equal to $12,200 (subject to
adjustment) plus an amount equal to all dividends, if any, accrued but unpaid on
such shares as of the earlier of the date fixed for redemption or the maturity
date. For purposes of the Series B Preferred Stock, the "Maximum Number of
Shares of Common Stock" shall mean the greatest number of shares of Common Stock
that may be issued upon conversion of shares of Series B Preferred Stock without
causing a 20% Issuance.
On the Original Issuance Date, the Company had 8,757,268 shares of Common
Stock outstanding and Nasdaq requires approval of a 20% Issuance. Accordingly,
the Maximum Number of Shares of Common Stock is 1,751,203. On September 30,
1997, the Conversion Price was $4.10625, which would have resulted in an
aggregate 886,344 shares of Common Stock being issued if the Series B Preferred
Stock was fully converted as of such date. However, on January 21, 1998, the
Conversion Price was $1.0157812, which would have resulted in an aggregate
2,953,392 shares of Common Stock being issued, if the Series B Preferred Stock
was fully converted as of such date.
The Company intends to seek shareholder approval of the elimination of the
20% Issuance restriction at a Special Meeting of the Shareholders of the Company
scheduled for February 5, 1998, regardless of whether the Maximum Number of
Shares of Common Stock has been issued or whether a Stockholder Approval
Requirement is necessary as of the date of such Special Meeting. The Company's
directors and executive officers have indicated their intent to vote for
approval of the issuance of all shares of Common Stock to be issued upon the
conversion of the Series B Preferred Stock in full, including any issuance of
shares of Common Stock exceeding the Maximum Number of Shares of Common Stock.
There can be no assurance that the shareholders of the Company will approve
the elimination of the restriction on the number of shares of Common Stock
issuable upon conversion of the Series B Stock, the market price of the Common
Stock for the ten consecutive trading day periods prior to the giving of each
notice of conversion of the Series B Preferred Stock would not result in the
number of shares of Common Stock issuable upon conversion of the Series B
Preferred Stock subject to such conversion notices to exceed the Maximum Number
of Shares of Common Stock, if the shareholders of the Company do not approve the
elimination of the Maximum Number of Shares of Common Stock restriction or, in
such latter event and at such time, the Company will have sufficient available
funds to redeem the Series B Preferred Stock.
Competition
The Company competes in a highly competitive industry characterized by
rapidly changing technology. Other companies offer equipment and services which
are claimed to be similar in functionality to the Company's products and target
some of the same customers and markets as the Company. Some of the Company's
competitors are substantially larger than the Company and may have significantly
greater financial resources and marketing capabilities than the Company, along
<PAGE>
with better name recognition. It is also possible that new competitors may
emerge and acquire significant market share. Competitors with superior resources
and capabilities may be able to utilize such advantages to market their products
and services better, faster and/or cheaper than the Company. Increased
competition is likely to result in price reductions, reduced gross margins and
loss of market share, any of which could have a material adverse effect on the
Company's business, results of operations and financial condition. In addition,
no assurance can be given that the Company will be able to compete successfully
against its present or future competitors.
Management of Growth; Dependence on Key Personnel
The Company's ability to achieve its planned growth is dependent upon a
number of factors, including its ability to hire, train and assimilate
management and other employees, the adequacy of the Company's financial
resources and the Company's ability to adapt its purchasing, marketing,
management information and other systems to accommodate its expanded operations.
There can be no assurance that the Company will be able to effectively manage
such growth. The Company's failure to do so could have a material adverse effect
upon its business, operating results and financial condition. Competition for
qualified sales, technical and other qualified personnel is intense, and there
can be no assurance that the Company will be able to attract, assimilate or
retain additional highly qualified employees in the future. If the Company is
unable to hire and retain such personnel, particularly those in key positions,
its business, operating results and financial condition could be materially
adversely affected. The Company's future success also depends in significant
part upon the continued service of its current key technical, sales and senior
management personnel. The loss of the services of one or more of these key
employees could have a material adverse effect on its business, operating
results and financial condition. Additions of new and departures of existing
personnel, particularly in key positions, can be disruptive, which could have a
material adverse effect upon the Company's business, operating results and
financial condition.
International Sales; Currency Fluctuations
International sales may be a significant source of revenue for the Company.
The Company's international sales are expected to be denominated in either U.S.
or local currency and the Company does not intend to engage in any hedging
activities. There can be no assurance that fluctuations in currency exchange
rates in the future will not have a material adverse impact on the Company's
business, operating results and financial condition. Additional risks inherent
in the Company's international business activities include unexpected changes in
regulatory requirements, tariffs and other trade barriers, costs of localizing
products for foreign countries, lack of acceptance of localized products in
foreign countries, longer accounts receivable payment cycles, difficulties in
collecting payment, difficulties in managing international operations,
potentially adverse tax consequences including limitations on the repatriation
of earnings, reduced protection for intellectual property, the burdens of
complying with a wide variety of foreign laws, and the effects of high local
wage scales and other expenses. There can be no assurance that such factors will
not have a material adverse effect on the Company's future international sales
and, consequently, the Company's business, operating results and financial
condition.
Dependence on Proprietary Technology; Risk of Third Party Claims for
Infringement
The Company believes that its success depends significantly upon its
proprietary technology. The Company currently relies on a combination of patent,
copyright and trademark laws, trade secrets, confidentiality procedures and
contractual provisions and other written materials under trade secret, patent
and copyright laws to protect its proprietary technology; however, these
generally afford only limited protection. The Company has [registered and
applied for] registration for certain trademarks, and will continue to evaluate
the registration of additional trademarks as appropriate. Additionally, the
Company copyrights its software and related user documentation, but the
copyright laws afford only limited practical protection against duplication of
the media embodying the programs and the related user manuals. Despite the
Company's efforts to protect its proprietary rights, unauthorized parties may
attempt to copy aspects of the Company's products or services or to obtain and
use information that the Company regards as proprietary. In addition, the laws
of some foreign countries do not protect proprietary rights to as great an
extent as do the laws of the United States. Monitoring and identifying
unauthorized use of broadly disseminated products is difficult. The Company is
expected to rely upon software engineering and marketing skills to protect its
<PAGE>
market position, in addition to the copyright and trademark or trade secret
protection discussed above. The Company believes that factors such as the
technological and creative skills of its personnel, new product developments,
frequent product enhancements, name recognition and reliable product maintenance
are as important to establishing and maintaining a technology leadership
position as the various legal protections of its technology.
Distribution; Dependence on Retailers, Distributors and Sales Representatives
The Company intends to market its products to distributors for resale to
retailers and directly to retailers, original equipment manufacturers ("OEMs")
and end-users. The Company's retailing customers will include 12-volt automotive
after market supply stores (e.g., retailers that market and install cellular
telephones, alarms and security systems in motor vehicles. The Company's
distributors and retailers are not contractually required to make future
purchases of the Company's products and, therefore, could discontinue carrying
the Company's products in favor of a competitor's product or for any other
reason. In addition, retailers and distributors compete in a volatile industry
that is subject to rapid change, consolidation, financial difficulty and
increasing competition from new distribution channels. Retailers and
distributors are increasingly in a better position to negotiate favorable terms
of sale, including price discounts and product return policies. Retailers may
give higher priority to products other than the Company's, thus reducing their
efforts to sell the Company's products. There can be no assurance that the
Company will be able to obtain or sustain any amount of retail sales.
Product Returns and Rebates; Collection of Accounts Receivable
The Company may accept product returns or provide other credits in the
event that a retailer or distributor holds excess inventory of the Company's
products, even when the Company is not legally required to do to. Certain of the
Company's sales may be made on credit terms which may vary substantially and the
Company may not hold collateral to secure payment. Therefore, a default in
payment on a significant scale could materially adversely affect the Company's
business, results of operations and financial condition. Given the recent
release of the second generation Sens-O-Lock, it is difficult for the Company to
ascertain current demand for the product line. While the Company believes that
it will establish appropriate allowances, there can be no assurance that
uncollectible receivables will not exceed such allowances. Defective products
also may result in higher customer support costs and product returns. Any
significant increase in product returns or uncollected accounts receivable
beyond reserves could have a material adverse effect on the Company's business,
results of operations and financial conditions.
Uncertainties as to Viability of Sens-O-Lock Product
The Company's original Sens-O-Lock product was the subject of a total
product recall in 1996, after the Company discovered certain manufacturing,
design and quality control problems. After significant design and manufacturing
changes, the second generation Sens-O-Lock product was released in September
1997. While the Company believes it has redesigned the product in such a manner
and has improved its component procurement and manufacturing quality control
processes so as to overcome the problems which contributed to the 1996 recall,
there can be no assurance given that new manufacturing or design problems will
not arise in the second or future generations of the Sens-O-Lock product. In
addition, even in the event that the Sens-O-Lock product performs entirely
within the design parameters, no assurance can be given that the Company will
achieve significant market share or profitability.
Reliance on Marketing Efforts of Others
The Company intends to seek automotive insurance discounts for persons
installing the Company's Sens-O-Lock in their motor vehicle. While the Company
has been successful in persuading one United Kingdom company to offer an
insurance policy without a surcharge to Sens-O-Lock users who have been
previously found guilty of alcohol related motor vehicles offenses, violations
or crimes, and has held discussions with other European and United States
insurance companies, including a significant shareholder of the Company, with
respect to similar policy offers, there can be no assurance given that any other
insurance company will offer such types of insurance to purchasers of the
Sens-O-Lock product. In addition, even if insurance companies were to offer
similar insurance policies, the marketing efforts expended by these insurance
companies would, most likely, be solely controlled by them and not the Company.
<PAGE>
The lack of insurance companies offering insurance policies with discounts or no
surcharge to persons who would otherwise be required to pay higher premiums due
to prior alcohol-related motor vehicle offenses, violations or crimes, or, if
offered, their failure to promote or successfully sell such policies, could have
a material adverse effect on the Company's business, operating results and
financial condition. To date, the joint marketing efforts by the Company and
United Kingdom insurance company have not resulted in material sales and no
assurance can be given that such joint marketing efforts will result in material
sales in the future.
Potential for Future Product Liability Claims
Liability claims may be asserted in the future against the Company based
upon defects in, faulty installation of, or service mishandling involving, the
Company's Sens-O-Lock or other products. While the Company maintains insurance
coverage of $8,000,000 per occurrence and $9,000,000 in the aggregate to cover
such contingencies, no assurance can be given that any damages assessed against
the Company will not exceed the available insurance coverage or that such
coverage will be made available to the Company in the future on terms acceptable
to the Company. In addition, the potential negative publicity arising from such
claims may have a material adverse effect on the Company even if the Company
ultimately prevails in any such litigation.
Possible Adverse Decision in Litigation
The Company and certain of its current and former directors, officers and
employees have been named as defendants in two currently outstanding litigation
and arbitration matters. While the Company believes that it will ultimately
prevail in such matters, settle such matters on satisfactory terms or that the
damages awarded in such matters would not be material, no assurance can be given
with respect to the outcome of such matters or, if an adverse determination is
made in any of such actions (or in the aggregate), that the Company's business,
operations or financial condition will not be materially impacted.
Potential Obsolescence of Products
The markets for the Company's products are characterized by rapidly
changing technology. There can be no assurance of market acceptance of the
Company's products or that the Company will respond effectively to technological
changes or product introductions by competitors. Delays in new product
introductions or product enhancements, or the introduction of unsuccessful
products, could have a material adverse effect on the Company's business,
results of operations and financial condition.
Limitations on Enforcement of Civil Liability and Judgments Against Foreign
Persons
Milbright, one of the Selling Shareholders, is a foreign entity with an
address in Israel and, to the best knowledge of the Company, substantially all
of Milbright's assets are located outside of the United States. Therefore, it
may not be possible to effect service of process on Milbright within the U.S. or
to enforce judgments of U.S. courts against Milbright, including judgments
predicated upon the civil liability provisions of the U.S. federal securities
laws.
Volatility of Stock Prices
The market for the Common Stock is highly volatile. The trading price of
the Common Stock could be subject to wide fluctuations in response to quarterly
variations in operating and financial results, announcements of technological
innovations or new products by the Company or its competitors, changes in prices
of the Company's or its competitors' products and services, changes in revenue
and revenue growth rates for the Company as a whole or for individual geographic
areas, business units, products or product categories, as well as other events
or factors. Statements or changes in opinions, ratings, or earnings estimates
made by brokerage firms or industry analysts relating to the market in which the
Company does business or relating to the Company could result in an immediate
and adverse effect on the market price of the Common Stock. Statements by
financial or industry analysts may be expected to contribute to volatility in
the market price of the Common Stock. In addition, the stock market has from
<PAGE>
time to time experienced extreme price and volume fluctuations which have
particularly affected the market price for the securities of many technology
companies and which often have been unrelated to the operating performance of
these companies. These broad market fluctuations may adversely affect the market
price of the Common Stock. See "Risk Factors -- Possible Nasdaq Delisting" and
- -- "Nasdaq Inquiry."
Anti-takeover Effect of Certain Charter Provisions and State Law
Certain provisions of the Company's Certificate of Incorporation and
Bylaws, and of New York law, could discourage potential acquisition proposals
and could delay or prevent a change in control of the Company. Such provisions
could diminish the opportunities for a shareholder to participate in tender
offers, including tender offers at a price above the then current market value
of the Common Stock. Such provisions may also inhibit fluctuations in the market
price of the Common Stock that could result from takeover attempts. In addition,
the Board of Directors, without further shareholder approval, may issue Serial
Preferred Stock that could have the effect of delaying or preventing a change in
control of the Company. The issuance of Serial Preferred Stock could also
adversely affect the voting power of the holders of Common Stock, including the
loss of voting control to others.
Directors' Liability Limited
The Company's Certificate of Incorporation provides that its directors (but
not its officers) will not be held liable to the Company or its shareholders for
monetary damages upon breach of a director's fiduciary duty, except to the
extent otherwise required by law.
No Dividends
The Company has never paid any cash dividends on the Common Stock and the
Company does not anticipate paying any dividends in the foreseeable future. In
addition, the terms of the Company's Series A Cumulative Non-Redeemable
Convertible Preferred Stock, par value of $.001 per share (the "Series A
Preferred Stock"), contain provisions restricting the ability of the Company to
declare dividends on the Common Stock. See "Dividend Policy."
Possible Issuance of Substantial Amounts of Additional Shares Without
Shareholder Approval
As of the date of this Prospectus, the Company has an aggregate of
8,757,268 shares of Common Stock, 833,333 shares of Series A Preferred Stock and
300 shares of Class B Preferred Stock outstanding. The Series A Preferred Stock
is currently convertible into 637,852 shares of Common Stock (subject to
adjustment) and the Series B Preferred Stock is convertible into 2,953,392
shares of Common Stock, based upon conversion prices in effect on January 21,
1998. In addition, as of the date of this Prospectus, the Company has 2,166,067
shares of Serial Preferred Stock authorized but unissued and not reserved for
specific purposes and an additional aggregate 2,062,870 shares of Common Stock
(including 150,000 shares offered hereby) issuable upon exercise of stock
options or warrants previously granted by the Company and outstanding on the
date of this Prospectus. Although there are no other material present plans,
agreements, commitments or undertakings with respect to the issuance of
additional shares of Common Stock or securities convertible into any such shares
by the Company, other than in connection with the exercise of outstanding stock
options and warrants, any shares issued would further dilute the percentage
ownership of the Company held by the shareholders of the Company.
While the Company has no present plans to issue any additional shares of
Serial Preferred Stock, other than as paid-in-kind dividends on outstanding
Series A Preferred Stock and Series B Preferred Stock, the Board of Directors
has the authority, without shareholder approval, to create and issue one or more
series of such Serial Preferred Stock and to determine the voting, dividend and
other rights of holders of such Serial Preferred Stock. The issuance of any of
such series of Serial Preferred Stock could have an adverse effect on the
holders of Common Stock.
<PAGE>
Division of Enforcement Inquiry
In November 1996, the Company received a letter of inquiry (the "SEC
Letter") from the Division of Enforcement of the Securities and Exchange
Commission. The SEC Letter sought the voluntary cooperation of the Company in
providing specified information and documents. In December 1996, the Company
responded to the SEC Letter by providing the requested information and
documents. The Company has not received any further correspondence from the
Division of Enforcement and does not know if the Company or any current member
of the Company's management was or presently is a target of an investigation by
the Commission. There can be no assurance given that the Commission's inquiry
has been terminated or that the Company or any of the Company's current
directors or officers presently is a target of any investigation by the Division
of Enforcement or, if such investigation is continuing, whether the results of
such investigation will be favorable to the Company and its current directors
and officers. Any results of such investigation that are unfavorable to the
Company or its directors and officers may have a material adverse effect on the
Company's business, results of operations and financial condition.
USE OF PROCEEDS
The proceeds from the sale of the Shares will belong to the Selling
Securityholders. The Company will not receive any of the proceeds from the sale
of the Shares, other than receipt of the exercise price upon the exercise of the
Warrants, if any. The Company intends to utilize the net proceeds from the
exercise of the Warrants, if any, for working capital and general corporate
purposes.
PRICE RANGE OF COMMON STOCK
The Common Stock has traded on the Nasdaq SmallCap Market under the symbol
"ASIL" since August 9, 1996. Prior to such date and from November 9, 1995, the
Company's "Units" traded on the Nasdaq SmallCap Market under the symbol "ASILU."
Each Unit consisted of two shares of Common Stock, one Class A Warrant, and
one-half of a Class B Warrant. The following table sets forth the range of high
and low bid prices for the Units and shares of Common Stock for the periods
indicated, as derived from reports furnished by Nasdaq. The information reflects
inter-dealer prices, without retail mark-ups, mark-downs or commissions and may
not necessarily represent actual transactions.
<TABLE>
<CAPTION>
Units- High Bid High Bid
Fiscal 1996
<S> <C> <C>
First Quarter . . . . . . . . . . . . . . . 18-1/4 12
Second Quarter. . . . . . . . . . . . . . . 20 11-3/4
Third Quarter (through August 8, 1996). . . 15-3/4 8
Common Stock-
Fiscal 1996
Third Quarter (from August 9, 1996) . . . . 4-7/8 2-13/16
Fourth Quarter. . . . . . . . . . . . . . . 4-5/16 2-5/8
Fiscal 1997
First Quarter . . . . . . . . . . . . . . . 7-1/4 3-3/8
Second Quarter. . . . . . . . . . . . . . . 5-3/8 2-5/16
Third Quarter . . . . . . . . . . . . . . . 2-5/16 5-3/8
Fourth Quarter. . . . . . . . . . . . . . . 4-7/16 1
Fiscal 1998
First Quarter (through January 21, 1998). . 1-1/2 1
</TABLE>
<PAGE>
On January 21, 1998, the closing price for the Common Stock, as reported on
Nasdaq, was $1.00. On December 23, 1997, there were 333 holders of Common Stock
of record. The Company estimates, based upon surveys conducted by its transfer
agent in connection with the Company's 1997 Special Meeting of Shareholders,
that there are approximately 3,000 beneficial shareholders.
DIVIDEND POLICY
The Company has never paid cash dividends on its capital stock and does not
anticipate paying cash dividends in the foreseeable future. The Company
currently intends to retain any future earnings for reinvestment in its
business. Any future determination to pay cash dividends will be at the
discretion of the Board of Directors and will be dependent upon the Company's
financial condition, results of operations, capital requirements and other
relevant factors.
In addition, under the terms of the Series A Preferred Stock, so long as
any shares of Series A Preferred Stock shall be outstanding, the Company shall
not declare, pay or set apart for payment on any Company security junior in rank
to the Series A Preferred Stock, including the Common Stock and Series B
Preferred Stock (the "Junior Stock"), any dividends whatsoever, whether in cash,
property or otherwise (other than dividends payable in shares of the class or
series upon which such dividends are declared or paid, or payable in shares of
Common Stock with respect to any Junior Stock other than Common Stock, together
with cash in lieu of fractional shares), nor shall the Company make any
distribution on any Junior Stock, no shall any Junior Stock be purchased,
redeemed or otherwise acquired by the Company or any of its subsidiaries, nor
shall any monies be paid or made available for a sinking fund for the purchase
or redemption of any Junior Stock, in each case unless (i) all dividends to
which the holders of shares of Series A Preferred Stock shall have been entitled
for all previous periods shall have been paid in full and (ii) all such
dividends for the immediately preceding two dividend periods shall have been
paid exclusively in cash.
SELLING SHAREHOLDERS
An aggregate of 5,150,000 Shares, including 150,000 Shares issuable upon
exercise of the September 1997 Warrants, may be offered for sale and sold
pursuant to this Prospectus by the Selling Shareholders. The Shares are to be
offered by and for the respective accounts of the Selling Shareholders. The
Company has agreed to register all of the Shares under the Securities Act and to
pay all of the expenses in connection with such registration and sale of the
Securities (other than underwriting discounts and selling commissions and the
fees and expenses of counsel and other advisors to the Selling Shareholders).
Except as noted below, none of the Selling Shareholders has had any material
relationship with the Company or any of its affiliates within the past three
years. The Company will not receive any proceeds from the sale of the Securities
by the Selling Shareholders, except in connection with the exercise of the
Warrants, if any. See "Plan of Distribution" and "Use of Proceeds."
The following table sets forth certain information with respect to the
Selling Securityholders.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership of
Ownership Prior Common Stock After
Selling Shareholder(1) to Sale Amount Offered(2) Sale of the Securities(2)
- ---------------------------------------------------------------------------------------------------------
Number Percent
<S> <C> <C> <C> <C>
Corporate Capital Management
L.L.C. . . . . . . . . . 20,000(3) 20,000(3) -0- -0-
Global Consulting Group . . . 20,000(3) 20,000(3) -0- -0-
Milbright Estates, Ltd. . . . 5,050,000(4) 5,050,000(4) -0- -0-
Douglas M. Polinsky . . . . . 20,000(3) 20,000(3) -0- -0-
Settondown Capital
International, Ltd. . . 40,000(3) 40,000(3) -0- -0-
<PAGE>
<FN>
(1) Information with respect to beneficial ownership is based upon information
obtained from the Selling Shareholders.
(2) Because a Selling Shareholder may offer by this Prospectus all or some part
of the Common Stock which such Selling Shareholder owns, no estimate can be
given as of the date hereof as to the number of Shares actually to be
offered for sale by a Selling Shareholder or as to the amount of Common
Stock that will be held by a Selling Shareholder upon the termination of
such offering. See "Plan of Distribution."
(3) Represents Shares issuable upon exercise of Third Party Warrants held by
the Selling Shareholder.
(4) Represents up to a maximum of 5,000,000 Shares issuable upon conversion of
the Series B Preferred Stock and 50,000 Shares issuable upon exercise of
the Milbright Warrants held by Milbright. For purposes of determining the
number of Shares to be offered by Milbright for this Prospectus, the number
of shares of Common Stock calculated to be issuable upon conversion of the
Series B Preferred Stock is based on an extremely low conversion price as
required by the Stock Purchase Agreement between the Company and Milbright
and the terms of the designation, relative rights, preferences and
limitations of the Series B Preferred Stock. Such conversion price is used
merely for the purposes of setting forth a number for this Prospectus and
is less than the average closing bid price over ten consecutive trading
days preceding January 8, 1998, which was $1.2625. The number of shares of
Common Stock issuable upon conversion of the Series B Preferred Stock is
subject to adjustment depending on the date of the conversion thereof and
could be materially less or more than such estimated amount depending on
factors which cannot be predicted by the Company including, among other
things, the future market price of the Common Stock. John Gainsford is a
director of Milbright who has voting and investment power with respect to
the Series B Preferred Stock held by Milbright.
</FN>
</TABLE>
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold from time to time by the Selling
Shareholders for their respective own accounts. The Company will receive none of
the proceeds from this offering, except to the extent that the Warrants to
purchase 150,000 Shares are exercised.
Sales of the Shares may be effected by or for the account of the Selling
Shareholders from time to time in transactions (which may include block
transactions) on Nasdaq, in negotiated transactions, through a combination of
such methods of sale, or otherwise, at fixed prices that may be changed, at
market prices prevailing at the time of sale or at negotiated prices. The
Selling Shareholders may effect such transactions by selling the Shares directly
to purchasers, through broker-dealers acting as agents for the Selling
Shareholders, or to broker-dealers who may purchase Shares as principals and
thereafter sell the Shares from time to time in transactions (which may include
block transactions) on Nasdaq, in negotiated transactions, through a combination
of such methods of sale, or otherwise. In effecting sales, broker-dealers
engaged by a Selling Shareholder may arrange for other broker-dealers to
participate. Such broker-dealers, if any, may receive compensation in the form
of discounts, concessions or commissions from the Selling Shareholders and/or
the purchasers of the Shares for whom such broker-dealers may act as agents or
to whom they may sell as principals, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions).
The Selling Shareholders and any broker-dealers, agents or underwriters
that participate with the Selling Shareholders in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities Act. Any
commissions paid or any discounts or concessions allowed to any such persons,
and any profits received on the resale of the Shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act.
The Company has agreed to bear all expenses of registration of the Shares
(other than fees and expenses, if any, of counsel or other advisors to the
Selling Securityholders). Any commissions, discounts, concessions or other fees,
<PAGE>
if any, payable to broker-dealers in connection with any sale of the Shares will
be borne by the Selling Shareholder selling such Shares.
Any Shares covered by the Prospectus that qualify for sale pursuant to Rule
144 under the Securities Act may be sold under Rule 144 rather than pursuant to
this Prospectus.
EXPERTS
The financial statements of the Company as of December 31, 1996, and for
each of the two years then ended, incorporated by reference in this Prospectus
and the Registration Statement have been audited by Richard A. Eisner & Company,
LLP, independent auditors, as set forth in their report thereon incorporated by
reference herein and in the Registration Statement, which calls attention to
substantial doubt as to the ability of the Company to continue as a going
concern, and are included herein in reliance upon such report given upon the
authority of said firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the Common Stock offered hereby, subject to shareholder
approval of the elimination of the 20% Issuance Restriction, if required, will
be passed upon for the Company by Kaufman & Braun, LLP, Garden City, New York.
<PAGE>
No person has been authorized in connection with the offering made hereby to
give any information or to make any representation not contained in this
prospectus and, if given or made, such information or representation must not be
relied upon as having been authorized by the Company, any Selling Securityholder
or any other person. This Prospectus does not constitute an offer to sell or a
solicitation of any offer to buy any of the securities offered hereby to any
person or by anyone in any jurisdiction in which it is unlawful to make such
offer or solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, except as otherwise contemplated by the rules and regulations
of the Securities and Exchange Commission, create any implication that the
information contained herein is correct as of any date subsequent to the date
hereof.
TABLE OF CONTENTS
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Incorporation of Certain Information by Reference. . . . . . . . . . . . . . .3
Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Forward-looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . .4
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Price Range of Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . .14
Dividend Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
<PAGE>
5,150,000 SHARES
ALCOHOL SENSORS
INTERNATIONAL, LTD.
PROSPECTUS
January __, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses of the distribution, all of which are to be borne by
the Registrant, are as follows:
<TABLE>
<S> <C>
SEC Registration Fee . . . . . . . . . . . . . . $ 1,519.25 *
Blue Sky Fees and Expenses . . . . . . . . . . . 5,000.00 *
Accounting Fees and Expenses . . . . . . . . . . 5,000.00 *
Legal Fees and Expenses. . . . . . . . . . . . . 15,000.00 *
Printing and Engraving . . . . . . . . . . . . . 5,000.00 *
Miscellaneous. . . . . . . . . . . . . . . . . . 3,480.75 *
-----------
Total . . . . . . . . . . . . . . . . . . . $35,000.00 *
- ----------
*Estimated
</TABLE>
Normal commission expenses and brokerage fees are payable by the Selling
Shareholders.
Item 15. Indemnification of Directors and Officers.
Sections 722 and 723 of the New York Business Corporation Law grant to the
Registrant the power to indemnify the officers and directors of the Registrant
as follows:
Section 722. Authorization for Indemnification of Directors and Officers.
"(a) A corporation may indemnify any person made, or threatened to be
made, a party to an action or proceeding other than one by or in the right
of the corporation to procure a judgment in its favor, whether civil or
criminal, including an action by or in the right of any other corporation
of any type of kind, domestic or foreign, or any partnership, joint
venture, trust, employee benefit plan or other enterprise, which any
director or officer of the corporation served in any capacity at the
request of the corporation, by reason of the fact that he, his testator or
intestate, was a director or officer of the corporation, or served such
other corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise in any capacity, against judgments, fines, amounts paid
in settlement and reasonable expenses, including attorney's fees actually
and necessarily incurred as a result of such action or proceeding, or any
appeal therein, if such director or officer acted, in good faith, for a
purpose which he reasonably believed to be in, or, in the case of service
for any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise, not opposed to, the best
interests of the corporation and, in criminal actions or proceedings, in
addition, had no reasonable cause to believe that his conduct was unlawful.
(b) The termination of any such civil or criminal action or proceeding
by judgment, settlement, conviction or upon a plea of nolo contendere, or
its equivalent, shall not in itself create a presumption that any such
director or officer did not act, in good faith, for a purpose which he
reasonably believed to be in, or, in the case of service for any other
corporation or any partnership, joint venture, trust, employee benefit plan
or other enterprise, not opposed to, the best interests of the corporation
or that he had reasonable cause to believe that his conduct was unlawful.
(c) A corporation may indemnify any person made, or threatened to be
made, a party to an action by or in the right of the corporation to procure
a judgment in its favor by reason of the fact that he, his testator or
intestate, is or was a director or officer of the corporation, or is or was
serving at the request of the corporation as a director or officer of any
other corporation of any type or kind, domestic or foreign, or any
<PAGE>
partnership, joint venture, trust, employee benefit plan or other
enterprise, against amounts paid in settlement and reasonable expenses,
including attorneys' fees, actually and necessarily incurred by him in
connection with the defense or settlement of such action, or in connection
with an appeal therein if such director or officer acted, in good faith,
for a purpose which he reasonably believed to be in, or, in the case of
service for any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise, not opposed to, the best
interest of the corporation, except that no indemnification under this
paragraph shall be made in respect of (1) a threatened action, or a pending
action which is settled or otherwise disposed of, or (2) any claim, issue
or matter as to which such person shall have been adjudged to be liable to
the corporation, unless and only to the extent that the court on which the
action was brought, or, if no action was brought, any court of competent
jurisdiction, determines upon application that, in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such portion of the settlement amount and expenses as the
court deems proper.
(d) For the purpose of this section, a corporation shall be deemed to
have requested a person to serve an employee benefit plan where the
performance by such person of his duties to the corporation also imposes
duties on, or otherwise involves services by, such person to the plan or
participants or beneficiaries of the plan; excise taxes assessed on a
person with respect to an employee benefit plan pursuant to applicable law
shall be considered fines; and action taken or omitted by a person with
respect to an employee benefit plan in the performance of such person's
duties for a purpose reasonably believed by such person to be in the
interest of the participants and beneficiaries of the plan shall be deemed
to be for a purpose which is not opposed to the best interests of the
corporation."
Section 723. Payment of Indemnification Other Than by Court Award.
"(a) A person who has been successful, on the merits or otherwise, in
the defense of a civil or criminal action or proceeding of the character
described in section 722 shall be entitled to indemnification as authorized
in such section.
(b) Except as provided in paragraph (a), any indemnification under
section 722 or otherwise permitted by section 721, unless ordered by a
court under section 724 (Indemnification of directors and officers by a
court), shall be made by the corporation, only if authorized in the
specific case:
(1) By the board acting by a quorum consisting of directors who
are not parties to such action or proceeding upon a finding that the
director or officer has met the standard of conduct set forth in
section 722 or established pursuant to section 721, as the case may
be, or,
(2) If a quorum under subparagraph (1) is not obtainable or, even
if obtainable, a quorum of disinterested directors so directs:
(A) By the board upon the opinion in writing of independent
legal counsel that indemnification is proper in the circumstances
because the applicable standard of conduct set forth in such
sections has been met by such director or officer, or
(B) By the shareholders upon a finding that the director or
officer has met the applicable standard of conduct set forth in
such sections.
(c) Expenses incurred in defending a civil or criminal action or
proceeding may be paid by the corporation in advance of the final
disposition of such action or proceeding upon receipt of an undertaking by
or on behalf of such director or officer to repay such amounts as, and to
the extent, required by paragraph (a) of section 725.
The Registrant's Certificate of Incorporation, as amended, provides as
follows:
<PAGE>
"6. The corporation will indemnify any officer or director, made, or
threatened to be made, a party to an action or proceeding other than one by
or in the right of the corporation to procure a judgment in its favor,
whether civil or criminal, including an action by or in the right of any
other corporation of any type or kind, domestic or foreign, of any
partnership, joint venture, trust, employee benefit plan or other
enterprise, which any director or officer of the corporation served in any
capacity at the request of the corporation, by reason of the fact that he,
his testator or intestate, was a director or officer of the corporation, or
served such other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise in any capacity, against judgments, fines,
amounts paid in settlement and reasonable expenses, including attorneys'
fees actually and necessarily incurred as a result of such action or
proceeding, or any appeal therein, if such director or officer acted, in
good faith, for a purpose which he reasonably believed to be in, or, in the
case of service for any other corporation or any partnership, joint
venture, trust, employee benefit plan or other enterprise, not opposed to,
the best interest of the corporation and, in criminal actions or
proceedings, in addition, had no reasonable cause to believe that his
conduct was unlawful."
Item 16. Exhibits.
Number Description
4.1 Specimen Common Stock Certificate. (Incorporated by reference to
Exhibit 4(a) to Amendment No. 2 to the Company's Registration
Statement on Form SB-2 (Registration Number 33-96752), filed with the
Commission on October 30, 1995.)
5.1 Opinion and consent of Kaufman & Braun, LLP.
23.1 Consent of Richard A. Eisner & Company, LLP.
23.2 Consent of Kaufman & Braun, LLP (included in legal opinion filed as
Exhibit 5.1).
24 Powers of Attorney (set forth on the signature page of this
Registration Statement on Form S-3).
Item 17. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to any of the provisions
described under Item 15 above, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission (the "Commission")
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will governed by the final
adjudication of such issue.
The Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(a) include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; notwithstanding the forgoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
<PAGE>
the aggregate, the changes in the volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
Registration Statement; and
(c) Include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, the undertakings set forth in clauses (1)(a) and (1)(b)
above shall not apply if the information required to be included in a
post-effective amendment by such clauses is contained in periodic reports
filed with or furnished to the Commission by the Registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), that are incorporated by reference in the Registration
Statement.
(2) For determining any liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering; and
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the termination of the offering.
The Registrant hereby further undertakes that it will:
(1) For determining any liability under the Securities Act, treat 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 pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act as part of this Registration Statement as
of the time the Commission declared it effective; and
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the Registration
Statement, and that offering of such securities at that time as the initial
bona fide offering of those securities.
The Registrant hereby further undertakes that, for purposes of determining
liability under the Securities Act, each of the Registrant's annual report
pursuant to section 13(a) or section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The Registrant hereby further undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the Village of Islandia, State of New York, on January 26, 1998.
ALCOHOL SENSORS INTERNATIONAL, LTD.
By: /s/Steven A. Martello
Steven A. Martello, President
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed on January 26, 1998 by the following
persons in the capacities indicated. Each person whose signature appears below
constitutes and appoints Steven A. Martello and Joseph M. Lively, or either of
them, with full power of substitution, his/her true and lawful attorneys-in-fact
and agents to do any and all acts and things in his/her name and on his/her
behalf in his/her capacities indicated below which they or either of them may
deem necessary or advisable to enable Alcohol Sensors International, Ltd. to
comply with the Securities Act of 1933, as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission, in connection with
this Registration Statement including specifically, but not limited to, power
and authority to sign for him/her in his/her name in the capacities stated
below, any and all amendments (including post-effective amendments) thereto,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
such connection, as fully to all intents and purposes as we might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or his substitute or substitutes, may lawfully do or cause to be done by
virtue thereof.
/s/ Steven A. Martello President and Chief Executive Officer and
Steven A. Martello Director (Principal Executive and Financial
Officer)
/s/ Joseph M. Lively Chief Operating Officer, Vice President,
Joseph M. Lively General Counsel, Secretary and Director
/s/ Michael Sylvester Vice President of Sales and Director
Michael Sylvester
Director of Engineering, Manufacturing and
Michael Ghazarian Production and Director
/s/ Daniel H. Pisani Director
Daniel H. Pisani
/s/ J. Ernest Hansen Director
J. Ernest Hansen
<PAGE>
EXHIBIT INDEX
Number Description
4.1 Specimen Common Stock Certificate. (Incorporated by reference to
Exhibit 4(a) to Amendment No. 2 to the Company's Registration
Statement on Form SB-2 (Registration Number 33-96752), filed with the
Commission on October 30, 1995.)
5.1 Opinion and consent of Kaufman & Braun, LLP.
23.1 Consent of Richard A. Eisner & Company, LLP.
23.2 Consent of Kaufman & Braun, LLP (included in legal opinion filed as
Exhibit 5.1).
24 Powers of Attorney (set forth on the signature page of this
Registration Statement on Form S-3).
EXHIBIT 5.1
January 26, 1998
Alcohol Sensors International, Ltd.
11 Oval Drive
Islandia, New York 11722
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel for Alcohol Sensors International, Ltd., a New
York corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended, of 5,150,000 shares of the common stock, par
value $.001 per share (the "Common Stock"), of the Company, to be offered and
sold by certain shareholders of the Company (the "Selling Shareholders"). In
this regard we have participated in the preparation of a Registration Statement
on Form S-3 relating to such 5,150,000 shares of Common Stock. (Such
Registration Statement, as amended, is herein referred to as the "Registration
Statement.")
We are of the opinion that the shares of Common Stock to be offered and
sold by the Selling Shareholders upon the issuance thereof in accordance with
the terms of the Class B Preferred Stock and warrants convertible or exercisable
for such shares of Common Stock, subject to the approval by the shareholders of
the Company of the elimination of the restriction on the number of shares of
Common Stock issuable upon conversion of the Class B Preferred Stock, will be
duly authorized and legally issued and are fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Registration Statement and in the Prospectus included therein.
Very truly yours,
/s/ Kaufman & Braun, LLP
Kaufman & Braun, LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report,
dated March 18, 1997, except with respect to Note L which is dated as of April
3, 1997, appearing in Amendment No. 1 to Alcohol Sensors International, Ltd.'s
Annual Report on Form 10-KSB/A for the year ended December 31, 1996. Our report
calls attention to the existence of substantial doubt as to the ability of the
Company to continue as a going concern. We also consent to the reference to our
firm under the heading "Experts" in such Prospectus.
/s/Richard A. Eisner & Company, LLP
Richard A. Eisner & Company, LLP
New York, New York
January 22, 1998
