As filed with the Securities and Exchange Commission on January 19, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
RSI SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-1767211
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5555 West 78th Street
Suite F
Edina, Minnesota 55439
(612) 896-3020
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
Copies to:
Donald C. Lies Robert R. Ribeiro, Esq.
Chief Executive Officer Hinshaw & Culbertson
RSI Systems, Inc. 3300 Piper Jaffray Tower
5555 West 78th Street 222 South Ninth Street
Suite F Minneapolis, Minnesota 55402
Edina, Minnesota 55439 (612) 334-8025
(612) 896-3020
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------------------
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
========================================================================================================
Proposed Proposed
Title of Each Amount Maximum Maximum Amount of
Class of Securities to be Offering Price Aggregate Registration
to be Registered Registered Per Share* Offering Price* Fee
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock
($.01 par value) 1,389,000 $3.50 $4,861,500 $1,435
========================================================================================================
</TABLE>
* Estimated solely for purposes of computing the registration fee and
based upon the last sales prices for such Common Stock on January 14,
1999, as reported on the Nasdaq Small Cap Market system.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PROSPECTUS SUBJECT TO COMPLETION
JANUARY 19, 1999
RSI SYSTEMS, INC.
1,389,000 SHARES
OF
COMMON STOCK
($.01 PAR VALUE)
This Prospectus relates to the sale from time to time of 1,389,000
shares of RSI Systems, Inc., a Minnesota corporation, by the shareholders named
in the Section called "Selling Shareholders." The Company will not receive any
proceeds from the sale of the Shares. 834,000 of the Shares were purchased by
the Selling Shareholders from the Company at various dates and 555,000 of the
Shares are issuable in the future upon exercise of warrants or options.
Any or all of the Shares may be offered from time to time in
transactions on the over-the-counter market, in brokerage transactions at
prevailing market prices or in transactions at negotiated prices. See "Plan of
Distribution."
The Common Stock is traded in the over-the-counter market and is quoted
on the Nasdaq SmallCap Market System under the symbol "RSIS." On January 14,
1999, the last reported sale price of the Common Stock as reported on the Nasdaq
SmallCap Market System was $3.50 per share.
For information concerning certain risks related to this
offering, see "Risk Factors" beginning on page 3 of this prospectus.
The Securities and Exchange Commission and State Regulatory Authorities
have not approved or disapproved these securities, or determined if
this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
You should rely only on the information contained in this prospectus.
We have not authorized anyone to provide you with information different from
that contained in this prospectus. The selling security holders are offering to
sell, and seeking offers to buy, shares of RSI common stock only in
jurisdictions where offers and sales are permitted. The information contained in
this prospectus is accurate only as of the date of this prospectus, regardless
of the time of delivery of this prospectus or of any sale of the shares.
In this prospectus, the "company," the "Registrant," "RSI," "we," "us,"
and "our" refer to RSI Systems, Inc.
The date of this Prospectus is __________, 1999.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and current reports, proxy statements, and
other documents with the Securities and Exchange Commission (the "SEC"). You may
read and copy any document we file at the SEC's public reference room at
Judiciary Plaza Building, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549. You should call 1-800-SEC-0330 for more information on the public
reference room. The SEC maintains an internet site at http://wwe.sec.gov where
certain information regarding issuers (including RSI) may be found.
This prospectus is part of a registration statement that we filed with
the SEC (Registration No. 333-______). The registration statement contains more
information than this prospectus regarding RSI and its common stock, including
certain exhibits and schedules. You can get a copy of the registration statement
from the SEC at the address listed above or from its internet site.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate" into this prospectus information we
file with the SEC in other documents. This means that we can disclose important
information to you by referring to other documents that contain that
information. The information may include documents filed after the date of this
prospectus which update and supersede the information you read in this
prospectus. We incorporate by reference the documents listed below, except to
the extent information in those documents is different from the information
contained in this prospectus, and all future documents filed with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until
we terminate the offering of these shares.
* Annual Report on Form 10-KSB for the Year ended June 30, 1998
* Quarterly Report on Form 10-QSB for the Quarter ended September 30, 1998
* Registration Statement on Form 8-A describing the common stock.
You may request a copy of these documents, at no cost, by writing to:
RSI Systems, Inc.
5555 W. 78th Street
Suite F
Edina, MN 55439
Phone- (612) 896-3020
Fax - (612) 896-3030
FORWARD-LOOKING INFORMATION
Statements made in this prospectus or in the documents incorporated by
reference herein that are not statements of historical fact are forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). A number of risks and uncertainties,
including those discussed under the caption "Risk Factors" below and the
documents incorporated by reference herein could affect such forward-looking
statements and could cause actual results to differ materially from the
statements made.
RSI SYSTEMS, INC.
The Company designs, develops, manufactures and markets
telecommunications products for video conferencing. The Company was incorporated
under the laws of Minnesota on December 21, 1993. On July 25, 1995, the Company
conducted a public offering of its common stock.
In July, 1996, the Company brought in a new management team which
redesigned the Company's initial computer based video conferencing system into a
small television-based workgroup system. In addition, the management team
accelerated the Company's development of a second generation, high performance
mobile workgroup video conferencing system product -- the Video Flyer(TM).
The Video Flyer system went into full production for worldwide
distribution in July, 1997. The Video Flyer is a self-contained, high
performance video conferencing peripheral component engine. The system is
available in two models: The Video Flyer 384 and the Video Flyer Rocket. The
Video Flyer 384 can communicate simultaneously over three ISDN lines to provide
a high quality signal of up to 30 frames per second. The Rocket incorporates the
same chassis, software, external shell and electronic components as the 384
except that it connects to only a single ISDN line and provides business quality
video conferencing of up to 15 frames per second. Both systems are designed to
connect to any size TV, projection system, PC, MAC or laptop (properly
configured) and can support most of the popular industry cameras and recording,
playback and communication devices.
The Video Flyer is manufactured in Minnesota by Altron, Inc., an ISO
9002 facility that has been regionally recognized as a provider of high quality,
component-type assembly products. All product development for the Video Flyer is
performed in-house. A significant number of no-charge and for-fee new features
are in development. The Company's management believes these will keep the Video
Flyer current in the evolving technological marketplace and continue to enhance
its price performance and value.
RISK FACTORS
You should consider carefully the following risk factors, along with
the other information contained in or incorporated by reference in this
prospectus, in deciding whether to invest in our securities. These factors,
among others, may cause actual results, events or performance to differ
materially from those expressed in any forward-looking statements we made in
this prospectus.
<PAGE>
OPERATING LOSSES, ACCUMULATED DEFICIT. The Company was formed in December
1993 and has financed its operations to date through sales of its Common Stock.
As of June 30, 1998, the Company had an accumulated deficit of $(15,042,000).
There can be no assurance that the Company will generate sufficient sales from
the Video Flyer System or other products to achieve positive cash flow or
profitable operations.
QUOTATION BY NASDAQ. The Company's Common Stock is currently traded in
the national over-the-counter market and quoted on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") SmallCap Market System.
NASDAQ adopted more stringent minimum listing requirements which became
effective on February 23, 1998. These requirements include a minimum of $2
million in Net Tangible Assets or $35 million in market capitalization or
$500,000 in net income (in the latest fiscal year, or two of the last three
fiscal years). A minimum bid price of $1.00 per share for listed stock also is
required. There can be no assurance that the Company will continue to be able to
meet such requirements. If we fail to meet such requirements the Company's
common stock could be delisted from the NASDAQ SmallCap Market. If the Company's
Common Stock is delisted for failure to meet the NASDAQ listing requirements,
the Common Stock would be subject to the rules promulgated under the Securities
Exchange Act of 1934 relating to "penny stocks." These rules require brokers who
sell securities subject to such rules to persons other than established
customers and "institutional accredited investors" to complete certain
documentation, make suitability inquiries of investors and provide investors
with certain information concerning the risks of trading in the security. These
rules may restrict the ability of brokers to sell the Company's Common Stock and
may affect the ability of purchasers in this offering to sell such Company Stock
in the secondary market.
SUCCESS DEPENDENT ON MARKET ACCEPTANCE. The Company's success will
depend on its ability to capitalize on the market opportunity for portable
conference room and workgroup conferencing systems and to successfully market
its Video Flyer System. The Company believes that the market leaders of portable
conference room and workgroup conferencing equipment will be determined during
the next several years. To establish its market presence during this period, the
Company must convince a significant number of business, education and government
entities that the Video Flyer System and other products which may be developed
by the Company in the future offer superior features at a reasonable price as
compared to other group-type conferencing systems which have been or will become
available from the Company's competitors. There can be no assurance that the
Company will be able to obtain sufficient acceptance of its products by
individuals and organizations to achieve profitable operations.
INTENSE COMPETITION. The market for videoconferencing equipment is
intensely competitive. The Company's major competitors in the group conferencing
market in the United States include PictureTel, Vtel, Tandberg, Vcon, Polycom
and Sony. These and other companies provide group conferencing systems that
provide 128 and 384 KBPS quality video and audio signal videoconferencing. In
addition, we expect that new competitors will attempt to enter the market and
that existing or new competitors will develop systems in the future that
duplicate or improve on various features of the Company's system. Many of the
Company's competitors are well established, better known, and significantly
larger, with substantially greater technical, manufacturing, marketing, and
financial resources than the Company. The greater resources of many of our
competitors may permit them to respond more rapidly than the Company to changes
in technology. The Company's ability to compete in the market will depend upon a
number of factors including its success in generating market acceptance of the
Video Flyer System and the success of its marketing efforts. The Company
competes based upon the quality, reliability, flexibility and the ease of use of
its products. The Company also competes on value relative to the features its
product offers. However, if the Company is forced by competitive pressure to
significantly reduce prices the Company's revenues and profitability may be
adversely affected.
LIMITED HISTORY OF MARKETING, DISTRIBUTION, AND SALES. As of September 30,
1998, we have sold approximately $8.5 million of the Video Flyer systems and
related components. The Company's marketing strategy is to focus on larger
businesses, schools and governmental entities which the Company believes will
provide the most significant opportunities for sales of its system. The Company
markets its system worldwide direct and through distributors and dealers. The
Company also sells worldwide through OEM relationships with Philips North
America and VTEL Corporation. Although the Company's marketing personnel have
significant experience in marketing new products and services in the industry,
such
<PAGE>
personnel only have limited experience in marketing the Company's product. There
can be no assurance that the Company's marketing and distribution strategy will
be successful.
TECHNICAL OBSOLESCENCE. The telecommunications industry is undergoing
rapid and significant technical advances. While we believe that the Video Flyer
System has certain advantages over other, currently available group conferencing
systems, we expect future technology to be superior to the technology currently
used in our system. Although the Video Flyer System has been designed to
assimilate future technical advances, there can be no assurance that any such
future advances or the development of new or competitive products by others will
not render our system less competitive or obsolete.
AVAILABILITY AND ACCEPTANCE OF ISDN. We believe the growth of the group
conferencing market is dependent on the availability and acceptance of
Integrated Services Digital Network ("ISDN") telephone service. To provide ISDN
service to their customers, telephone companies must replace analog switches
with digital switches in their local offices. In 1994, approximately 75 percent
of all telephone circuits in the United States were capable of providing ISDN
service. Internationally, approximately 84 percent, 80 percent and 58 percent of
telephone circuits in Europe, Australia and Japan, respectively, are capable of
providing ISDN service. The monthly charge for ISDN service in the United States
ranges between $20 and $80 per month plus, in certain markets, per-minute
charges for usage above minimum levels. Although the Company believes ISDN
service will become more available and less expensive in the United States, the
Company's sales of its products would be materially adversely affected if ISDN
service is not available to, or not accepted by, businesses and individuals. The
Video Flyer also operates on existing Tl lines.
FUTURE CAPITAL NEEDS. The Company believes that it has sufficient
working capital to meet its needs for the foreseeable future. Nonetheless, the
Company's working capital requirements may vary substantially from those planned
depending on numerous factors, including a failure to generate significant
revenues in 1999, unexpected increases in expenses, and other unplanned events.
If the Company is unable to generate significant revenues from sales, or if
despite sufficient sales, the Company is unable to achieve its targeted margins,
it will require additional financing. In addition, the Company may need
additional working capital if it experiences higher than anticipated expenses.
The Company could also require additional capital to finance future growth or
for strategic acquisitions, although no such acquisitions are currently planned.
Required additional capital would be sought from a number of sources and could
include sales of additional shares of capital stock or other securities or loans
from banks or other sources. Any additional sales of capital stock could be
dilutive to investors in this offering. The Company's ability to obtain
additional funding will depend substantially on operating results in future
periods. The Company will be materially adversely affected and its ability to
continue in business could be jeopardized if it is not able to achieve positive
cash flow or profitability or if it is not able to obtain any necessary
financing on satisfactory terms.
DEPENDENCE ON KEY PERSONNEL. The Company is highly dependent on its key
management, technical and marketing personnel, particularly Donald C. Lies,
President and Chief Executive Officer of the Company. The Company's future
success will also depend in part upon its ability to attract and retain highly
qualified personnel and consultants. The Company competes for such personnel
with other companies, and there can be no assurance that the Company will be
successful in hiring or retaining qualified personnel or consultants. The loss
of key personnel or consultants or the inability to hire or retain qualified
personnel or consultants could have a material adverse effect on the Company.
The Company has entered into confidentiality, non-compete and employment
agreements with Mr. Lies.
<PAGE>
LIMITED PROPRIETARY PROTECTION. The Company currently relies on patent
and trademark protection for the Video Flyer System. The Company filed a utility
patent application for its peripheral videoconferencing system in the fall of
1994 and received a Notice of Allowance in August 1997. The Company also claims
the trademark Eris Video Flyer and has registered the trademark under federal
trademark statutes. The Company filed an application for its "intent to use" the
mark "Eris Video Flyer" as a trademark under federal trademark statutes and
intends to file its "statement of use" of that trademark once it is eligible to
do so under such statutes. The Company has also applied for patents for its
peripheral videoconferencing systems in foreign countries. The Company intends
to register its copyrights.
There can be no assurance that the Company's measures to protect its
intellectual property will be successful, that it will be granted any patents in
the future, or that any patents that may be granted will be of value to the
Company. In the absence of meaningful intellectual property protection, the
Company may be vulnerable to competitors who could lawfully attempt to copy the
Company's products. Moreover, there can be no assurance that other competitors
may not independently develop the same or similar technology. While the Company
believes that it has all rights necessary to market and sell its system without
infringement of intellectual property rights held by others, the Company has not
conducted a formal infringement search and there can be no assurance that such
conflicting rights do not exist. The Company could incur substantial legal costs
in seeking enforcement of its intellectual property rights against infringement
or the unauthorized use of its proprietary technology by others or in defending
itself against similar claims of others. There can be no assurance that the
Company will have sufficient funds to enforce or defend its intellectual
property rights.
NO CUMULATIVE VOTING; CONTROL. There is no cumulative voting for the
election of directors of the Company. Accordingly, the owners of a majority of
the Company's outstanding voting stock may elect all the directors, if they
choose to do so, and the owners of the remaining shares will not be able to
elect any directors. Officers and directors of the Company currently own
approximately 21 percent of the outstanding shares of Common Stock.
<PAGE>
ANTI-TAKEOVER PROVISIONS. The Board of Directors is authorized to issue
up to 5,000,000 undesignated shares and to fix the rights, preferences,
privileges and restrictions, including voting rights of those shares without any
further vote or action by the Company's shareholders. The rights of the holders
of the Common Stock will be subject to, and may be adversely affected by, the
rights of the holders of any undesignated shares that may be issued in the
future. Although there is no current intention to do so, the issuance of such
shares by the Company could deprive the Company's shareholders of opportunities
to sell their shares of the Common Stock at a premium. Additionally, the Company
could adopt in the future one or more additional anti-takeover measures, such as
a shareholder rights plan, without first seeking shareholder approval. Those
measures could also make a change in control of the Company more difficult. The
Company is also subject to provisions of the Minnesota Business Combination Act
and the Minnesota Control Share Acquisition Act that make certain business
combinations more difficult.
NO CASH DIVIDENDS. The Company has never paid or declared any cash
dividends on its Common Stock and does not intend to pay dividends on its Common
Stock in the foreseeable future.
LIMITATION OF DIRECTOR LIABILITY. The Company's Restated Articles of
Incorporation and Bylaws provide for indemnification of directors to the full
extent permitted by the Minnesota Business Corporation Act and to the extent
permitted by such law, eliminate or limit the personal liability of directors to
the Company and its shareholders of monetary damages for certain breaches of
fiduciary duty. Such indemnification may be available for liabilities arising in
connection with this Offering. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to directors, officers
or persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth certain information as to the maximum
number of Shares that may be sold by each of the Selling Shareholders pursuant
to this Prospectus.
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF COMMON STOCK
SHARES TO BE OWNED AFTER
NUMBER OF SHARES NUMBER OF SHARES OWNED AFTER THE COMPLETION
NAME OWNED PRIOR TO OFFERING OFFERED HEREBY OFFERING(5) OF OFFERING
- ---- ----------------------- ---------------- ----------- -----------
<S> <C> <C> <C> <C>
Byron G. Shaffer 364,000 155,000 (6) 209,000 3.1%
Richard F. Craven (1) 953,000 813,000 (7) 140,000 2.1%
Gregory D. Craven 55,000 36,000 (8) 19,000 *
Gretchen M. Craven 25,500 5,000 20,500 *
Todd R. Craven 15,000 5,000 10,000 *
Donald C. Lies (2) 663,325 335,000 (9) 328,325 4.7%
Marti Miller (3) 120,000 20,000 (10) 100,000 1.5%
James Hanzlik (4) 100,000 20,000 (11) 80,000 1.2%
--------- --------- -------
2,295,825 1,389,000 906,825
</TABLE>
- -----------------------
* Less than 1 percent.
(1) Mr. Craven is a director of the Company.
(2) Mr. Lies is President, Chairman and CEO of the Company.
(3) Mr. Miller is the Vice President - Engineering of the Company.
(4) Mr. Hanzlik is the Chief Financial Officer of the Company.
(5) Assumes all shares being registered in this offering will be sold.
However, to the Company's knowledge, the holders of such securities
have no commitment to anyone to sell all or part of the securities
being registered.
(6) Includes 32,500 shares issuable upon exercise of warrants.
(7) Includes 141,500 shares issuable upon exercise of warrants.
(8) Includes 31,000 shares issuable upon exercise of options.
(9) Includes 310,000 shares issuable upon exercise of options.
(10) Consists of shares issuable upon exercise of options.
(11) Consists of shares issuable upon exercise of options.
<PAGE>
PLAN OF DISTRIBUTION
The Shares will be offered and sold by the Selling Shareholders for
their own accounts. The Company will not receive any proceeds from the sale of
the Shares pursuant to this Prospectus. The Company will pay the expenses of
registration of the Shares, including legal and accounting fees.
The Selling Shareholders may offer and sell the Shares from time to
time in transactions on the over-the-counter market, in brokerage transactions
at prevailing market prices or in transactions at negotiated prices. Sales may
be made to or through brokers or dealers who may receive compensation in the
form of discounts, concessions or commissions from the Selling Shareholders or
the purchasers of Shares for whom such brokers or dealers may act as agent or to
whom they may sell as principal, or both. As of the date of this Prospectus, the
Company is not aware of any agreement, arrangement or understanding between any
broker or dealer and the Selling Shareholders.
The Selling Shareholders and any brokers or dealers acting in
connection with the sale of the Shares hereunder may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act, and
any commissions received by them and any profit realized by them on the resale
of Shares as principals may be deemed underwriting compensation under the
Securities Act.
EXPERTS
The consolidated financial statements contained in the Company's Annual
Report on Form 10-KSB incorporated by reference in this Prospectus have been
audited by KPMG Peat Marwick LLP, independent certified public accountants, as
indicated in their report with respect thereto, and incorporated herein by
reference in reliance upon the authority of such firm as experts in accounting
and auditing in giving said report.
LEGAL MATTERS
The validity of the Shares offered hereby has been passed upon for the
Company by Hinshaw & Culbertson, 222 South Ninth Street, Minneapolis, Minnesota
55402.
<PAGE>
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. RSI HAS NOT AUTHORIZED
ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. RSI IS NOT MAKING AN
OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU
SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THOSE
DOCUMENTS.
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TABLE OF CONTENTS
Page
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WHERE YOU CAN FIND MORE INFORMATION....................................... 2
INCORPORATION OF CERTAIN DOCUMENTS........................................ 2
RSI SYSTEMS, INC.......................................................... 3
RISK FACTORS.............................................................. 3
SELLING SHAREHOLDERS...................................................... 12
PLAN OF DISTRIBUTION...................................................... 13
EXPERTS ................................................................. 14
LEGAL MATTERS............................................................. 14
1,389,000 Shares
RSI SYSTEMS, INC.
Common Stock
--------------
PROSPECTUS
--------------
___________, 1999
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC Registration Fee $ 1,434
Accounting Fees and Expenses 2,000
Legal Fees and Expenses 5,000
Miscellaneous 1,000
-------
Total $ 9,434
All fees and expenses other than the SEC registration fee are
estimated. The expenses listed above will be paid by the Company.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Minnesota Statutes Section 302A.521 provides that a corporation shall
indemnify any person made or threatened to be made a party to a proceeding by
reason of the former or present official capacity of such person against
judgments, penalties, fines (including, without limitation, excise taxes
assessed against such person with respect to any employee benefit plan),
settlements and reasonable expenses, including attorneys' fees and
disbursements, incurred by such person in connection with the proceeding, if,
with respect to the acts or omissions of such person complained of in the
proceeding, such person (1) has not been indemnified therefor by another
organization or employee benefit plan; (2) acted in good faith; (3) received no
improper personal benefit and Section 302A.255 (with respect to director
conflicts of interest), if applicable, has been satisfied; (4) in the case of a
criminal proceeding, had no reasonable cause to believe the conduct was
unlawful; and (5) reasonably believed that the conduct was in the best interests
of the corporation in the case of acts or omissions in such person's official
capacity for the corporation or reasonably believed that the conduct was not
opposed to the best interests of the corporation in the case of acts or
omissions in such person's official capacity for other affiliated organizations.
The Restated Articles of Incorporation and Bylaws of RSI provides that RSI shall
indemnify officers and directors to the extent permitted by Section 302A.521 as
now enacted or hereafter amended.
RSI also maintains an insurance policy or policies to assist in funding
indemnification of directors and officers for certain liabilities.
ITEM 16. LIST OF EXHIBITS
5 Opinion of Hinshaw & Culbertson regarding legality.
23.1 Consent of independent auditors.
23.2 Consent of Hinshaw & Culbertson (included in Exhibit 5 to this
Registration Statement).
24 Power of Attorney.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof which,
individually or in the aggregate, represent a fundamental
change to such information in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
under the Securities Act if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change in the
information set forth in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the
registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising Under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Minneapolis, State of
Minnesota, on January 15, 1999.
RSI SYSTEMS, INC.
By /s/ Donald C. Lies
-----------------------------------------------
Donald C. Lies
Chief Executive Officer, President and Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
By /s/ Donald C. Lies
---------------------------------------------- Dated: January 15, 1999
Donald C. Lies
Chief Executive Officer, President and Director
(principal executive officer) (principal financial officer)
(principal accounting officer)
By *
---------------------------------------------
Richard F. Craven Dated: January 15, 1999
Director
By *
---------------------------------------------
David W. Stassen Dated: January 15, 1999
Director
By *
---------------------------------------------
Manfred D. Haiderer Dated: January 15, 1999
Director
* By /s/ Donald C. Lies
-------------------------------------------
Donald C. Lies Dated: January 15, 1999
As Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
5 Opinion of Hinshaw & Culbertson regarding legality .........
23.1 Consent of Independent Auditors ............................
24 Power of Attorney ..........................................
Exhibit 5
(Hinshaw & Culbertson Letterhead)
January 15, 1999
RSI Systems, Inc.
5555 W. 78th Street
Suite F
Edina, MN 55439
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to RSI Systems, Inc., a Minnesota corporation
(the "Company") in connection with a Registration Statement on Form S-3 (the
"Registration Statement") to be filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to the sale of
up to 1,389,000 shares of common stock of the Company, par value $.01 per share
("Common Stock"), of which all such shares will be sold from time to time by the
Selling Shareholders named in the Registration Statement, on the
over-the-counter market or otherwise, directly or through underwriters, brokers
or dealers.
We have examined such documents and have reviewed such questions of law
as we have considered necessary and appropriate for the purposes of our opinions
set forth below. In rendering our opinions set forth below, we have assumed the
authenticity of all documents submitted to us as originals, the genuineness of
all signatures and the conformity to authentic originals of all documents
submitted to us as copies. We have also assumed the legal capacity for all
purposes relevant hereto of all natural persons and, with respect to all parties
to agreements or instruments relevant hereto other than the Company, that such
parties had the requisite power and authority (corporate or otherwise) to
execute, deliver and perform such agreements or instruments, that such
agreements or instruments have been duly authorized by all requisite action
(corporation or otherwise), executed and delivered by such parties and that such
agreements or instruments are the valid, binding and enforceable obligations of
such parties. As to questions of fact material to our opinions, we have relied
upon certificates of officers of the Company and of public officials.
Based on the foregoing, we are of the opinion that the shares of Common
Stock to be sold by the Selling Shareholders pursuant to the Registration
Statement have been duly authorized by all requisite corporate action and are
validly issued, fully paid and nonassessable.
Our opinions expressed above are limited to the laws of the State of
Minnesota.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the heading "Legal
Matters" in the Prospectus constituting part of the Registration Statement.
Very truly yours,
/s/ Hinshaw & Culbertson
Hinshaw & Culbertson
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
RSI Systems, Inc.:
We consent to the use of our report incorporated herein by reference
and to the reference to our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
January 18, 1999
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Donald C. Lies, his or her true and
lawful attorney-in-fact and agent with full power of substitution, for him or
her and in his or her name, place and stead, in any and all capacities, to sign
the Registration Statement on Form S-3 of RSI Systems, Inc. (the "Company")
relating to an aggregate of 1,389,000 shares of Company Common Stock that may be
sold from time to time by certain shareholders of the Company, and any or all
amendments or post-effective amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and to file the same with such state
commissions and other agencies as necessary, granting unto each such
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that each such attorney-in-fact fund
agent, or his substitute, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, this Power of Attorney has been signed on this 15th
day of January, 1999, by the following persons.
/s/ Richard F. Craven
---------------------------------------
/s/ David W. Stassen
---------------------------------------
/s/ Manfred D. Haiderer
---------------------------------------
