<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 11, 1996.
REGISTRATION NO. 33-89194
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
MVSI, INC.
(Exact name of Registrant as specified in charter)
<TABLE>
<S> <C> <C>
DELAWARE 1711 54-1707718
(State or other jurisdiction (Primary standard (IRS employer
of industrial identification
incorporation or classification code number) number)
organization)
</TABLE>
8133 LEESBURG PIKE, SUITE 750
VIENNA, VIRGINIA 22182
(703) 356-5353
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
8133 LEESBURG PIKE, SUITE 750
VIENNA, VIRGINIA 22182
(703) 356-5353
(Address of principal place of business or intended principal place of business)
EDWARD RATKOVICH, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
MVSI, INC.
8133 LEESBURG PIKE, SUITE 750
VIENNA, VIRGINIA 22182
(703) 356-5353
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
------------------------
COPIES TO:
THOMAS T. PROUSALIS, JR., ESQ.
1919 Pennsylvania Avenue, N.W.
Suite 800
Washington, D.C. 20006
(202) 296-9400
(202) 296-9403 Fax
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON
A DELAYED OR CONTINUING BASIS, PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, AS AMENDED, CHECK THE FOLLOWING BOX: /X/
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C)
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, CHECK THE FOLLOWING BOX: /X/
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SECURITY OFFERING PRICE FEE
<S> <C> <C> <C> <C>
Class A Warrants................ 5,140,000 -- -- --
Common Stock, $.01 Par Value,
Underlying Class A Warrants.... 5,140,000 $ 4.00 $20,560,000 $ 7,089
Underwriters' Purchase Option... 180,000 $11.55 $ 2,079,000 $ 717
Common Stock $.01, Par Value, in
Underwriters' Purchase
Option......................... 360,000 -- -- --
Class A Warrants in
Underwriters' Purchase
Option......................... 360,000 -- -- --
Common Stock, $.01 Par Value,
Underlying Class A Warrants in
Underwriters' Purchase
Option......................... 360,000 $ 6.60 $ 2,376,000 $ 819
Common Stock, $.01 Par Value,
Underlying Class B Warrants.... 1,000,000 $ 4.20 $ 4,200,000 $ 1,448
Total Registration and Fee.... $29,215,000 $10,074
</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.
ii
<PAGE>
MVSI, INC.
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B)
SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS OF FORM S-3
<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM CAPTION IN PROSPECTUS
- ------------------------------------------------------------- --------------------------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and Outside
Front Cover Pages of Prospectus.................. Facing Page; Cross-Reference Sheet; Prospectus Cover
Page
2. Inside Front and Outside Back Cover Pages of
Prospectus....................................... Prospectus Cover Page; Prospectus Back Cover Page
3. Summary Information and Risk Factors.............. Prospectus Summary; Risk Factors
4. Use of Proceeds................................... Use of Proceeds
5. Determination of Offering Price................... Risk Factors; Plan of Distribution
6. Dilution.......................................... Dilution and Other Comparative Data
7. Selling Security-holders.......................... Description of Securities; Selling Security-holders
8. Plan of Distribution.............................. Prospectus Cover Page; Plan of Distribution
9. Description of Securities to be Registered........ Description of Securities
10. Interest of Named Experts and Counsel............. Legal Matters; Experts
11. Material Changes.................................. Prospectus Summary
12. Incorporation of Certain Information by
Reference........................................ Incorporation of Certain Information by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities... Risk Factors; Description of Securities
14. Other Expenses of Issuance and Distribution....... Part II, Form S-3 Registration Statement
15. Indemnification of Directors and Officers......... Part II, Form S-3 Registration Statement
16. Exhibits.......................................... Part II, Form S-3 Registration Statement
17. Undertakings...................................... Part II, Form S-3 Registration Statement
</TABLE>
iii
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 11, 1996
PROSPECTUS
$29,215,000
MVSI, INC.
5,140,000 CLASS A WARRANTS
5,140,000 SHARES, UNDERLYING CLASS A WARRANTS
AND
180,000 UNITS, UNDERWRITERS' PURCHASE OPTION
360,000 SHARES, UNDERLYING UNDERWRITERS' PURCHASE OPTION
360,000 CLASS A WARRANTS, UNDERLYING UNDERWRITERS' PURCHASE OPTION
360,000 SHARES, UNDERLYING CLASS A WARRANTS
The Prospectus relates to the continuing resale by MVSI, Inc. ("Company"), a
Delaware corporation, and certain of its security-holders, of 5,140,000 Class A
Warrants issued in connection with the Company's initial public offering
("Offering") of securities, which was declared effective by the Securities and
Commission ("Commission") on August 14, 1995. This Prospectus also relates to
the continuing resale of 180,000 Units, including 360,000 shares of Common
Stock, $.01 par value, and 360,000 Class A Warrants, by the underwriters, and
their assigns, which comprise the Underwriters' Purchase Option issued to the
underwriters in connection with the Offering. Should all of the warrants be
exercised, the Company will receive the proceeds therefrom, aggregating up to
$29,215,000. The Company can make no assurances that any of its securities
related to this offering can be sold or exercised under any circumstances. See
"Risk Factors" and "Description of Securities."
The Class A Warrants shall be exercisable commencing on the date of this
Prospectus. Each Class A Warrant entitles the holder to purchase one share of
Common Stock at $4.00 per share until August 14, 2000. The Class A Warrants are
redeemable by the Company for $.05 per Warrant, at any time after August 14,
1997, upon 30 days prior written notice, if the average closing price or bid
price of the Common Stock, as quoted by Nasdaq, equals or exceeds $8.00 per
share, for any 20 consecutive trading days within a period of 30 days ending
within 10 days of the notice of redemption. Upon 30 days prior written notice to
all holders of the Class A Warrants, the Company shall have the right to reduce
the exercise price and/or extend the term of the Class A Warrants in compliance
with the requirements of Rule 13e-4 to the extent applicable. See "Description
of Securities."
In connection with the Company's Offering, the Company agreed under certain
circumstances to pay to its underwriters a solicitation fee of four percent of
the exercise price of the Warrants. However, in September 1996, the underwriters
waived their rights to receive a fee in connection with the exercise of the
Company's Warrants. The Company does not intend to conduct any soliciting
activities in connection with its securities. See "Plan of Distribution."
The Company's shares of Common Stock and Class A Warrants have been quoted
on the Nasdaq SmallCap Market System under the symbols "MVSI" and "MVSIW,"
respectively, since August 14, 1995. On October , 1996, the last quoted bid
price of the Common Stock and Class A Warrants were $ and $ ,
respectively. Although the Company's securities are currently traded on Nasdaq,
there can be no assurance that the Company will be able to meet certain minimum
listing criteria in order to maintain such listing. See "Price Range of Common
Stock."
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK
AND IMMEDIATE SUBSTANTIAL DILUTION OF THE BOOK VALUE OF THE COMMON STOCK AND
SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR
ENTIRE INVESTMENT. SEE "RISK FACTORS" AND "DILUTION."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
MVSI, INC.
The date of this Prospectus is October , 1996.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
Available Information...................................................................................... 2
Incorporation of Certain Information by Reference.......................................................... 3
Prospectus Summary......................................................................................... 4
Selected Financial Data.................................................................................... 9
Risk Factors............................................................................................... 10
Price Range of Common Stock................................................................................ 22
Dividend Policy............................................................................................ 22
Use of Proceeds............................................................................................ 23
Dilution................................................................................................... 25
Description of Securities.................................................................................. 26
Selling Security-holders................................................................................... 30
Plan of Distribution....................................................................................... 32
Legal Proceedings.......................................................................................... 33
Legal Matters.............................................................................................. 33
Experts.................................................................................................... 33
</TABLE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission
("Commission") a Registration Statement on Form S-3 under the Securities Act,
with respect to the securities offered hereby. This Prospectus, which
constitutes part of the Registration Statement, omits certain of the information
contained in the Registration Statement and the exhibits and schedules thereto
on file with the Commission pursuant to the Securities Act and the rules and the
regulations of the Commission thereunder. Statements contained in this
Prospectus as to the contents of any contract or other document referred to are
not necessarily complete and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, and each such statement is qualified in all respects by such
reference. The Company is subject to the informational requirements of the
Exchange Act, and, in accordance therewith, files reports, proxy statements, and
other information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the following Regional Offices of the
Commission: Seven World Trade Center, Suite 1300, New York, New York 10048; and
500 West Madison Avenue, Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained from the public reference section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates, or from the
Commission's Internet web site at http:\\www.sec.gov. In addition, such
materials also may be inspected and copied at the offices of The Nasdaq Stock
Market, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
2
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents of the Company filed with the Securities and
Exchange Commission ("Commission"), File No. 0-26614, are incorporated herein by
reference.
(1) The Company's Form SB-2 Registration Statement, and related Prospectus,
File No. 33-89194, dated August 14, 1995;
(2) The Company's Form 8-A Registration Statement, File No. 0-26614, dated
August 14, 1995;
(3) The Company's Annual Report on Form 10-KSB for the fiscal year ended
September 30, 1995;
(4) The Company's Form 8-K, dated October 11, 1995;
(5) The Company's Form 8-K, dated June 13, 1996;
(6) The Company's Form 8-K, dated October 11, 1996;
(7) The Company's Current Reports on Form 10-QSB for the periods ending
December 31, 1995, March 31, 1996 and June 30, 1996.
In addition, all reports and other documents subsequently filed by the
Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), prior to the termination of
the offering made hereby, shall be deemed to be incorporated by reference into
this Prospectus. Any statement incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statements so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. These documents are available upon request from
the Company at its principal executive offices located at 8133 Leesburg Pike,
Suite 750, Vienna, Virginia 22182, Attn: Investor Relations, telephone (703)
356-5353, facsimile (703) 356-5354. In order to ensure timely delivery of any
document, any request should allow approximately ten days for delivery via first
class mail, postage prepaid.
3
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND THE FINANCIAL STATEMENTS AND
RELATED NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS OR INCORPORATED BY
REFERENCE HEREIN. SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN RISKS
ASSOCIATED WITH AN INVESTMENT IN THE SECURITIES. UNLESS THE CONTEXT OTHERWISE
REQUIRES, THE TERMS "MVSI" OR THE "COMPANY" REFER TO MVSI, INC., A DELAWARE
CORPORATION, AND ITS SUBSIDIARIES. ALL REFERENCES TO YEARS, UNLESS OTHERWISE
NOTED, REFER TO THE COMPANY'S FISCAL YEAR, WHICH ENDS ON SEPTEMBER 30 OF EACH
YEAR. THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE MAY CONTAIN STATEMENTS
DEEMED TO BE FORWARD LOOKING WHICH ARE INHERENTLY UNCERTAIN. ACTUAL RESULTS MAY
DIFFER FROM THOSE DISCUSSED IN SUCH FORWARD LOOKING STATEMENTS FOR THE REASONS,
AMONG OTHERS, SET FORTH UNDER THE HEADING "RISK FACTORS." THIS PROSPECTUS ALSO
CONTAINS PRO FORMA FINANCIAL INFORMATION THAT GIVES EFFECT TO CERTAIN EVENTS.
SUCH INFORMATION IS NOT NECESSARILY INDICATIVE OF THE RESULTS THAT THE COMPANY
WOULD HAVE ATTAINED HAD THE EVENTS OCCURRED AT THE BEGINNING OF THE PERIOD
PRESENTED, AS ASSUMED, OR OF THE FUTURE RESULTS OF THE COMPANY.
THE COMPANY
MVSI, Inc. ("Company"), through a wholly-owned Montreal, Canada based
subsidiary, MVS Modular Vision Systems, Inc. ("MVS"), which was acquired on
November 1, 1994, designs, develops, manufactures and markets state-of-the-art,
proprietary vision-based robotic and sensor products and systems for
productivity improvement and quality control applications in the manufacturing
workplace. The business of the Company's subsidiary has remained the same
business both prior to and subsequent to its acquisition by the Company. The
primary component of MVS's products and systems is its three-dimensional vision
technology, which is in the early stages of development with no brand name
recognition. This technology utilizes specialized cameras, lasers, optics and
custom-designed high-speed processing hardware and software. Many companies,
some with greater resources than the Company, have been unsuccessful in their
attempts to develop and market similar technology. MVS currently markets and
sells one principal scanner product and system: the MVS LaserVision FP Lead
Scanner, and also markets and sells two principal sensor products and systems:
the MVS LaserVision Welding Sensor and a MVS Portable LaserVision Welding
Inspection System. MVS's products and systems are marketed worldwide, but
principally to major corporate customers in North America, Europe and the
Pacific Rim. The Company intends to use the net proceeds of this offering to
significantly expand MVS's operations and the development and marketing of its
products and systems.
RECENT DEVELOPMENTS
ACQUISITION OF JMR DISTRIBUTORS, INC.
In October 1995, the Company acquired JMR Distributors, Inc. ("JMR"), as a
wholly-owned subsidiary, a Washington, D.C. area based contract manufacturer and
distributor of proprietary and generic memory module products for computers,
plotters, laser printers, process controllers and other computer related
industry devices using memory modules. JMR's products are marketed nationally to
major computer distributors and corporate customers. The Company acquired all of
the outstanding stock of JMR, whereby the Company exchanged 100,000 restricted
shares of its common stock for all of the outstanding shares of common stock of
JMR. The newly issued shares of common stock in the acquisition are restricted
and may not be sold for a 24 month period ending October 1997. In addition, the
Company loaned JMR $200,000 to fund compensation due to an officer of JMR. The
Company believes that the acquisition of JMR will enable the Company to expand
into the computer memory market and take advantage of the projected demand by
computer users for increased memory capabilities to cope with new hardware and
software developments. The acquisition of JMR is the first step in the Company's
efforts to participate in this market. The Company believes that its substantial
experience with laser vision-based quality control of the memory microchip
manufacturing process may prove to be beneficial in its future manufacture and
distribution of high quality memory modules.
ACQUISITION OF SOCRATES, INC.
In September 1996, the Company acquired Socrates, Inc. ("Socrates"), as a
wholly-owned subsidiary, a Washington, D.C. area based integrator and marketer
of proprietary and generic computer system products
4
<PAGE>
and services for advanced computer systems integration, telecommunications
integration, internet connectivity, and wide and local area networking.
Socrates' computer product systems and services are marketed nationally to major
computer distributors, corporate and government customers. The Company exchanged
350,000 shares of its common stock for all of the shares of common stock held by
Socrates' stockholder. The newly issued shares of common stock in the
acquisition are restricted and may not be sold for a 24 month period ending
September 1998. The Company believes that the acquisition of Socrates may
enhance its capability to provide software and hardware support to its
wholly-owned subsidiary, MVS Modular Vision Systems, Inc. whose product line
includes computer oriented proprietary laser vision-based robotic and sensor
products and systems; and potentially to e-Net, Inc. ("e-Net"), a development
stage Washington, D.C. area based telecommunications company that produces
proprietary telecommunications products and software to execute secure private
voice communications across the Internet and intranets. The Company recently
entered into a letter of intent to acquire e-Net as a wholly-owned subsidiary.
See below.
PROPOSED ACQUISITION OF E-NET, INC.
In August 1996, e-Net, Inc. ("e-Net"), a Delaware corporation, entered into
a letter of intent with the Company, whereby e-Net will become a wholly-owned
subsidiary of the Company. Among the principal terms and conditions of the
proposed acquisition, the Company will exchange, on a proposed tax-free basis,
4,000,000 restricted shares of its common stock, for all of e-Net's 8,000,000
shares of common stock. In addition, e-Net's 2,000,000 Class A Warrants and
2,000,000 Class B Warrants may be exercisable into a total of 2,000,000 shares
of the Company's Common Stock. The newly issued MVSI securities in the
acquisition may not be sold for a 24 month period ending September 1998. The
chairman and chief executive officer of the Company is a director and a
principal stockholder and warrantholder of e-Net; another director of MVSI is
also a director and a stockholder of e-Net. MVSI intends to provide at least
$5.3 million to e-Net over a 24-month period ending in September 1998 in order
to finance its business operations. The acquisition of e-Net, including all of
its terms and conditions, will be subject to a fairness opinion and approval by
at least a majority of MVSI's stockholders at its annual meeting scheduled for
Fall 1996. MVSI can make no assurances that it will be able to reach a
definitive agreement with e-Net and that such agreement will be approved by the
stockholders of MVSI.
e-Net develops, markets and supports open client, server and integrated
applications software that enables local, national and international telephone
communications, information exchange and commerce over the Internet and private
Internet Protocol ("IP") networks. e-Net's software products are designed to
deliver high levels of performance, ease of use and security. These software
products allow individuals and organizations to execute secure, private voice
communications across the Internet and intranets, through the use of
authentication technology, for local national and international telephone
communications, information exchange and commerce. In addition, through the use
of e-Net's software, organizations can extend their internal information systems
and enterprise applications to geographically dispersed facilities, remote
offices and mobile employees.
In March 1996, e-Net acquired all rights, title and interest in the first
U.S. patent, U.S. Patent No. 5,526,353, for a system and method for
communicating high fidelity and clear transmission of audio or voice over the
Internet and intranets, enabling worldwide high fidelity and clear transmission
of ordinary telephone communications over the Internet. e-Net acquired all
rights, title and interest in the patent from the inventors, Messrs. Arthur
Henley and Scott Grau, who are original stockholders of the Company, in
consideration of a five percent overriding royalty interest against gross
profits involving the use of the patent. e-Net has agreed to allocate $1,000,000
of capital to develop and exploit the market opportunities for the patent by
December 31, 1996, or the patent will be subject to repurchase by the inventors
of the patent. e-Net believes that its patent is the first patent awarded of its
kind, specifically involving the transmission of audio or voice over the
Internet and intranets. e-Net also believes that its patent may provide certain
strategic and technological advantages in the new and burgeoning area of audio
or voice over the Internet. e-Net can make no assurances, however, as to the
extent of the advantages or protection, if any, that may be granted to the
Company as a result of its patent or as to the future success of e-Net in
bringing products related to this technology to market. e-Net's first product
utilizing its patent is Telecom-2000-TM-, a hardware and software suite designed
for voice over the Internet and intranets, which is in the final testing stage
and projected to be available to market on or about January 1, 1997.
5
<PAGE>
In March 1996, e-Net entered into an agreement with Sprint Communications
Company, L.P. ("Sprint"), a leading telecommunications company, under which
e-Net will deliver certain software development services known as Sprint
Internet Protocol Dial Services support. Sprint, to date, has been e-Net's's
largest customer. Under the agreement, e-Net will use highly technical software
development services to provide security and field support to Sprint customers
who use Sprint as a means of accessing the Internet. e-Net's agreement provides
that e-Net will generate all of the revenues associated with the number of
authorized Sprint Internet Protocol Dial Service user identity codes. e-Net
shall also perform password administration, customer service administration and
emergency help desk administration under the terms of the agreement. The
agreement has a duration of one year, with automatic one year renewals, subject
to mutual consent. e-Net intends to seek additional strategic alliances with
other telecommunications companies, including the Regional Bell Operating
Companies (RBOC's), for the use of its technologies, products and services.
e-Net can make no assurances that it will be able to enter into any agreements
with such concerns for its technologies, products and services.
Also, in June 1996, e-Net entered into a letter of intent with the Product
Management Group of the Advanced Data Services Division of Sprint to enter into
an agreement to provide certain of e-Net's technologies, products and services
to Sprint to enable Sprint's frame relay customers, approximately 1,500
nationwide, to generate network data reports on an automated basis for their
virtual private networks. e-Net can make no assurances that it will be able to
enter into an agreement with Sprint for its technologies, products and services.
The Company was incorporated in the State of Delaware on April 12, 1994. The
principal executive offices of the Company are located at 8133 Leesburg Pike,
Suite 750, Vienna, Virginia 22182, telephone (703) 356-5353, facsimile (703)
356-5354. Unless the context otherwise indicates, the terms "Company" and "MVSI"
as used in this Prospectus refer to MVSI, Inc.
6
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Securities Offered by the Company........................... 5,140,000 Class A Warrants
Shares of Common Stock Underlying Class A Warrants.......... 5,140,000 Shares
Securities Offered by Underwriters(1)....................... 360,000 Shares
360,000 Class A Warrants
Shares of Common Stock Outstanding Prior to Offering........ 10,740,000 Shares
Shares of Common Stock Outstanding After Offering,
Assuming Exercise of the Warrants(2)...................... 17,600,000 Shares
Use of Net Proceeds of Sale of Securities Offered by Administrative expenses,
Company..................................................... operating costs and working
capital, including software
support and development,
capital equipment, marketing
and sales, mergers and
acquisitions and the repayment
of debt. See "Use of
Proceeds."
How to Exercise Warrants.................................... Any holder of warrants
desiring to exercise should
either (a) complete the
exercise form on the back of
warrant and forward it along
with the proper exercise price
to the Warrant Agent, or (b)
request a broker to effect the
transaction. See "Plan of
Distribution."
Warrant Agent............................................... American Stock Transfer &
Trust Company
40 Wall Street
New York, NY 10005
Risk Factors................................................ An investment in the
securities offered hereby
involves a high degree of risk
and immediate substantial
dilution of the book value of
the common stock and should be
considered only by persons who
can afford the loss of their
entire investment. See "Risk
Factors" and "Dilution."
Nasdaq SmallCap Market Symbols.............................. MVSI
MVSIW
</TABLE>
- ------------------------
(1) These securities are related to the Underwriters' Purchase Option which was
issued by the Company to the underwriters in connection with its initial
public offering of securities on August 14, 1995.
(2) Does not include 4,000,000 shares of common stock to be issued to the
stockholders of e-Net, Inc., a Delaware corporation, in connection with the
Company's proposed acquisition of e-Net. The acquisition of e-Net will be
subject to the approval by at least a majority of the Company's stockholders
at its annual meeting scheduled for Fall 1996. The Company can make no
assurances that its stockholders will approve the Company's acquisition of
e-Net. See "The Company."
7
<PAGE>
SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE
30, 1996 FISCAL YEAR ENDED SEPTEMBER 30,
---------------------- --------------------------------------------
PRO PRO FORMA
FORMA(1) ACTUAL 1995(1) 1995 1994 1993
----------- --------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenue.............................................. $19,373,046 $ 9,859 $13,836,330 $ 2,338 $ 2,375 $ 943
Income (loss) from operations........................ 1,129,030 845 (2,171,924) (1,977) 131 (610)
Income (loss) before income taxes.................... 1,444,360 1,161 (5,676,086) (5,481) 34 (637)
Net earnings (loss).................................. 1,668,625 1,385 (5,676,086) (5,481) 34 (642)
Earnings (loss) per common and common equivalent
shares
outstanding(1)...................................... $ 0.15 $ .13 $ (1.06) $ (1.10) $ .01 $ (.11)
Weighted average number of common and common
equivalent shares outstanding(2).................... 15,339 5,001 3,600 3,600
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1996 AS ADJUSTED(3)
------------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital.................................................................. $ 11,092 $ 40,157
Total assets..................................................................... 14,730 43,795
Long-term debt................................................................... -- --
Stockholders' equity............................................................. 13,062 42,127
</TABLE>
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(1) PRO FORMA data reflects the effect of the September 1996 acquisition of
Socrates, Inc. as if it had occurred as of the beginning of each period.
(2) The June 30, 1996 financial data includes the dilutive effect of
approximately 5,140,000 warrants and earnings per share reflects a net
income adjustment permitted by generally accepted accounting principles.
(3) Adjusted to reflect the exercise of the warrants offered hereby, after
deducting payment by the Company of expenses of this offering estimated at
$150,000. See "Use of Proceeds."
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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 FOLLOWING RISK FACTORS:
NEW COMPANY AND RECENT ACQUISITIONS
MVSI, Inc. ("Company") was incorporated in the State of Delaware on April
12, 1994. The Company, through its recently acquired wholly-owned subsidiaries,
designs, develops, manufactures and markets state-of-the-art, proprietary
vision-based robotic and sensor products and systems for productivity
improvement and quality control applications in the manufacturing workplace, and
also designs, develops and markets proprietary computer product systems for
large-scale applications and integration. The technology of the Company is in
the early stages of development with no brand name recognition and many
companies, some with greater resources than the Company, have been unsuccessful
in their attempts to develop and market similar technology. The Company can make
no assurances that the new business combinations and relatively new management
will prove successful. The Company intends to use the net proceeds of this
offering to significantly expand its operations and the development and
marketing of its proprietary products and systems. See "Use of Proceeds."
NO ASSURANCE OF FUTURE PROFITABILITY OR PAYMENT OF DIVIDENDS
The Company can make no assurances that the future operations of the Company
will result in additional significant revenues or will be profitable. Should the
operations of the Company be profitable, it is likely that the Company would
retain much or all of its earnings in order to finance future growth and
expansion. Therefore, the Company does not presently intend to pay dividends,
and it is not likely that any dividends will be paid in the foreseeable future.
See "Dividend Policy."
IMMEDIATE AND SUBSTANTIAL DILUTION
An investor in this offering will experience immediate and substantial
dilution upon the exercise 6,500,000 Warrants. As of June 30, 1996, the Company
had a net tangible book value of $11,511,442 or $1.11 per share derived from the
Company's balance sheet as of June 30, 1996. After giving effect to the exercise
of Warrants offered hereby, pro forma net tangible book value would have been
$40,576,442, or $2.31 per share. The result will be an immediate increase in net
tangible book value per share of $1.20 (108%) to existing shareholders and an
immediate dilution to new investors of $1.69 (42%) per share. As a result,
public investors will bear most of the risk of loss since their shares are being
purchased at a cost substantially above the price that existing shareholders
acquired their shares. See "Dilution."
LITIGATION INVOLVEMENT OF A FORMER UNDERWRITER MAY HAVE ADVERSE CONSEQUENCES
RECENT NASD ACTIONS INVOLVING A FORMER UNDERWRITER
The Company has been advised by Stratton Oakmont, Inc., a former underwriter
("Underwriter") of the Company's initial public offering of securities on August
14, 1995, that the NASD (District 10) filed a complaint (No. C10950081) on
October 5, 1995 ("Complaint") against Stratton Oakmont, Steven Sanders, the head
trader of Stratton Oakmont, Daniel M. Porush, the president of Stratton Oakmont,
and Paul F. Byrne, formerly Stratton Oakmont's director of compliance
(collectively, the "Respondents"), alleging various violations of the NASD Rules
of Fair Practice. The complaint consisted of three causes. The first cause
alleged that Stratton Oakmont and Sanders effected principal retail sales of
securities at prices that were fraudulently excessive. The second cause alleged
that Stratton Oakmont and Sanders charged excessive markups. The third cause
alleged that Stratton Oakmont and Messrs. Porush and Byrne failed to establish,
maintain and enforce reasonable supervisory procedures designed to assure
compliance with the NASD's rules and policies.
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On April 15, 1996 the NASD in its decision found all of the Respondents
except Paul Byrne in violation of all three causes and imposed the following
sanctions:
-Mr. Sanders was censured, fined $25,000 and was suspended from association
with any member of the NASD in any capacity for a period of one year.
-The Underwriter was censured, fined $500,000 and was required to disgorge
its excess profits to its customers, totaling $1,876,205, plus prejudgment
interest. In addition, the Underwriter was suspended for a period of one
year from effecting any principal retail transactions.
-Mr. Porush was censured, fined $250,000 and barred from association with
any member of the NASD in any capacity.
The Underwriter and Messrs. Porush and Sanders have appealed the NASD's
decision thereby staying imposition of the sanctions.
If the sanctions imposed on Stratton Oakmont are not reversed on appeal, the
Stratton Oakmont's ability to act as a market maker of the Company's securities
will be restricted. The Company cannot ensure that other broker dealers will
make a market in the Company's securities. In the event that other broker
dealers fail to make a market in the Company's securities, the possibility
exists that the market for and the liquidity of the Company's securities may be
adversely affected to such an extent that public security holders may not have
anyone to purchase their securities when offered for sale at any price. In such
event, the market for and liquidity of the Company's securities may not exist.
It should be noted that although the Underwriter may not be the sole market
maker in the Company's securities, it may likely be the dominant market maker in
the Company's securities.
In April 1996, the NASD settled an action whereby it fined Stratton Oakmont
$325,000 for fraud and other violations (which were neither admitted or denied)
in connection with its underwriting of an initial public offering. Mr. Sanders
was fined $50,000 and was suspended for a period of 45 days from associating
with an NASD member and agreed not to engage in any trading-related activities
for any NASD member for a period of 50 days. The settlement also required that
Stratton Oakmont file certain new supervisory procedures with the NASD. Stratton
Oakmont filed with the NASD on April 11, 1996 procedures relating to the conduct
of associated persons during and preceding an initial public offering, which
were aimed at preventing violations of Section 5 of the Securities Act of 1933
and Rule 10b-6 promulgated under Section 10(b) of the Securities Exchange Act of
1934 and aimed at preventing SEC Rule 10b-10 violations and the type of
arbitrary pricing which occurred in connection with the trading of securities
underwritten by Stratton Oakmont on January 16, 1991. These procedures have been
in effect since April 11, 1996.
The Company has been advised by Stratton Oakmont that the NASD (District 10)
filed a complaint (No. C10960080) on June 6, 1996 ("June 1996 Complaint")
against Stratton Oakmont, Daniel Porush, Steven Sanders, Irving Stitsky, a
former registered representative of Stratton Oakmont, and Jordan Shamah, a vice
president and a director of Stratton Oakmont (collectively, the "Respondents"),
alleging various violations of the Exchange Act and the NASD Rules of Fair
Practice. The June 1996 Complaint consists of seven causes of action. The first
cause alleges that Stratton Oakmont, through Porush and Sanders, engaged in the
use of fraudulent and manipulative devices in the failure to make bona fide
distributions in five public offerings of securities underwritten by Stratton
Oakmont between June 1993 and April 1994. The second cause alleges that Stratton
Oakmont, through Porush, Sanders, Stitsky and Shamah, engaged in the use of
fraudulent and manipulative devices in the failure to make a bona fide
distribution of the common stock of a company whose initial public offering was
underwritten by Stratton Oakmont. The third cause alleges that Stratton Oakmont,
through Porush and Sanders for a period of three days, manipulated the common
stock of such company. The fourth cause alleges that Stratton Oakmont, through
Sanders, charged fraudulently excessive markups in connection with the warrants
of such company. The fifth cause alleges that Stratton Oakmont, through Porush,
violated the NASD's Free-Riding and Withholding Interpretation inasmuch as he
allegedly allocated securities in certain public offerings to persons
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restricted from purchasing such securities. The sixth cause alleges that Porush
and Stitsky failed to adequately supervise Stratton Oakmont's activity relating
to the various alleged violations. The seventh cause alleges that Stratton
Oakmont and Porush failed to establish and maintain reasonable supervisory
procedures to prevent Stratton Oakmont's violative conduct. The Respondents
intend to file answers to the June 1996 Complaint denying all material
allegations and alleged violations.
In addition, the Company has been advised by Stratton Oakmont that the NASD
(District 10) filed a complaint (No. C10960068) on June 6, 1996 ("Complaint")
against Stratton Oakmont and Patrick Gerard Hayes, the compliance director of
Stratton Oakmont (collectively, the "Respondents"), alleging violations of the
NASD Rules of Fair Practice. The Complaint consists of two causes of action. The
first cause alleges that Stratton Oakmont failed to report information regarding
at least 59 customer complaints Stratton Oakmont received during the relevant
time periods as required by the NASD Rules of Fair Practice. The second cause
alleges that Stratton Oakmont, through its compliance director, failed to
establish, maintain and enforce written procedures designed to ensure that
Stratton Oakmont complied with the NASD Rules of Fair Practice. The Respondents
have filed answers to the Complaint and are contesting the proceeding.
On or about July 13, 1996, the District Business Conduct Committee for
District No. 10 ("District Committee") of the NASD issued a complaint against
Stratton Oakmont alleging that Stratton Oakmont violated Article III, Section 1
and Article IV, Section 5 of the NASD Rules of Fair Practice by entering into
settlement agreements with former customers which condition customers' ability
to cooperate with NASD investigations. The charges in the complaint were upheld
by the District Committee on this same date as well as the National Business
Conduct Committee of the NASD, and a fine of $20,000 was assessed and Stratton
Oakmont was ordered to get the NASD's agreement on language used in certain
customer settlement agreements. The firm also is required, if asked by the NASD,
to identify customers that should be released from settlement agreements that
impose conditions on a customer's ability to provide information to the NASD.
The sanctions follow an appeal of findings that the firm used certain agreements
when settling customer complaints that precluded, restricted, or conditioned
customers' ability to cooperate with the NASD in connection with its
investigation of customer complaints. The firm also failed to release a customer
from the restrictive provisions of such a settlement. This action had been
appealed to the SEC and the sanctions aren't in effect pending consideration of
the appeal. Stratton Oakmont contests the charges and has perfected an appeal to
the Securities and Exchange Commission.
PERMANENT INJUNCTION GRANTED -- STRATTON OAKMONT ENJOINED TO COMPLY WITH
RECOMMENDATIONS OF AN INDEPENDENT CONSULTANT AND AN INDEPENDENT AUDITOR
APPOINTED PURSUANT TO AN ADMINISTRATION ORDER
The Company has been advised by Stratton Oakmont that the Commission
instituted an action on December 14, 1994 in the United States District Court
for the District of Columbia against Stratton Oakmont. The complaint alleged
that Stratton Oakmont was not complying with the Administrative Order entered by
the Commission on March 17, 1994 ("Administrative Order") by failing to adopt
the recommendations of an independent consultant. The Administrative Order was
previously consented to by Stratton Oakmont, without admitting or denying the
findings contained therein, as settlement of an action commenced against
Stratton Oakmont by the Commission in March 1992, which found willful violations
of the anti-fraud provisions of the securities laws such that Stratton Oakmont:
-engaged in fraudulent sales practices;
-engaged in and/or permitted unauthorized trading in customer accounts;
-knowingly and recklessly manipulated the market price of a company's
securities by dominating and controlling the market for those securities;
-made improper and unsupported price predictions with regard to recommended
over-the-counter securities; and
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<PAGE>
-made material misrepresentations and omissions regarding certain securities
and its experience in the securities industry.
Pursuant to the Administrative Order, Stratton Oakmont was censured and an
independent consultant ("Stratton Consultant") was chosen by the Commission to
advise and consult with Stratton Oakmont and to review and recommend new
supervisory and compliance procedures. The complaint sought:
-to enjoin Stratton Oakmont from violating the Administrative Order;
-an order commanding Stratton Oakmont to comply with the Administrative
Order; and
-to have a Special Compliance Monitor appointed to ensure compliance with
the Administrative Order. Stratton Oakmont claimed that the Stratton
Consultant exceeded his authority under the Administrative Order and had
violated the terms of the Administrative Order.
On February 28, 1995, the court granted the Commission's motion for a
permanent injunction ("Permanent Injunction") and ordered Stratton Oakmont to
comply with the Administrative Order, which required the appointment of an
independent consultant and a separate independent auditor and required that all
recommendations be complied with, including the taping of all telephone
conversations between Stratton Oakmont's brokers and their customers. In
granting the Commission's motion for a Permanent Injunction, the court
determined that Stratton Oakmont's conduct unequivocally demonstrated that there
is a substantial likelihood that it will continue to evade its responsibilities
under the Administrative Order. On April 20, 1995, Stratton Oakmont filed an
appeal to the United States Court of Appeals for the District of Columbia, and
on April 24, 1995 filed a motion to stay the Permanent Injunction pending the
outcome of the appeal. The motion to stay was denied. Subsequently, Stratton
Oakmont voluntarily dismissed its appeal. The failure by Stratton Oakmont to
comply with the Administrative Order or Permanent Injunction may adversely
effect Stratton Oakmont's activities in that the court may enter a further order
restricting the ability of Stratton Oakmont to act as a market maker of the
Company's securities. The effect of such action may prevent the holders of the
Company's securities from selling such securities since Stratton Oakmont may be
restricted from acting as a market maker of the Company's securities and, in
such event, will not be able to execute a sale of such securities. Also, if
other broker dealers fail to make a market in the Company's securities, the
public security holders may not have anyone to purchase their securities when
offered for sale at any price and the security holders may suffer the loss of
their entire investment.
RECENT STATE ADMINISTRATIVE PROCEEDINGS INVOLVING STRATTON OAKMONT --
POSSIBLE LOSS OF LIQUIDITY
As a result of the Permanent Injunction, the states of Pennsylvania, Indiana
and Illinois have commenced administrative proceedings seeking, among other
things, to revoke Stratton Oakmont's license to do business in such states. In
Indiana, the Commissioner suspended Stratton Oakmont's license for a three year
period. Stratton Oakmont has appealed the decision and has requested a stay
pending appeal. The requested stay would maintain the status quo pending appeal.
In Illinois, Stratton Oakmont intends to file an answer to the administrative
complaint denying the basis for revocation. The District of Columbia suspended
Stratton Oakmont's license pending the outcome of an investigation. The states
of North Carolina and Arkansas also have suspended Stratton Oakmont's license
pending a resolution of the proceedings in those states. The states of
Minnesota, Vermont, and Nevada have served upon Stratton Oakmont notices of
intent to revoke Stratton Oakmont's license in such states. The state of Rhode
Island has served on Stratton Oakmont a Notice of Intent to suspend its license
in that state. The state of Connecticut has served on Stratton Oakmont a notice
of intent to suspend or revoke registration in that state with a notice of right
to hearing. In the state of Mississippi, Stratton Oakmont has agreed to a
suspension of its license pending resolution of certain claims and review of its
procedures and practices by the state authorities. In addition, Stratton Oakmont
withdrew its registration in the state of New Hampshire (with the right of
reapplication) and in the state of Maryland. There may be further administrative
action against the firm in Maryland. The firm
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withdrew its registration in Massachusetts with a right to reapply for
registration after two years, withdrew its registration in Delaware with a right
to reapply in three years and agreed to a temporary cessation of business in
Utah pending an on-site inspection and further administrative proceedings.
Stratton Oakmont's license in the state of New Jersey was revoked by an
administrative law judge, which revocation was affirmed by the New Jersey Bureau
of Securities, and an appeal has been filed with the appellate division of the
New Jersey Superior Court. The states of Georgia, Alabama and South Carolina
have lifted their suspensions and have granted Stratton Oakmont conditional
licenses. Such conditional licenses were granted pursuant to an order, which
Stratton Oakmont has proposed to various states, which provides provisions for:
(i) the suspension of revocation, (ii) compliance with recommendations of the
Consultant, (iii) an expedited claims mediation arbitration process, (iv)
resolution of claims seeking compensatory damages, (v) restrictions on use of
operating revenue, (vi) the limitation on selling group members in offerings
underwritten by Stratton Oakmont and the prohibition of participating as a
selling group member in offerings underwritten by certain other NASD member
firms, (vii) the periodic review of Stratton Oakmont's agents, (viii) the
retention of an accounting firm, and (ix) supervision and training, restrictions
on trading, discretionary accounts and other matters. The state of Oregon, as a
result of the Permanent Injunction, has filed a notice of intent to revoke
Stratton Oakmont's license subject to the holding of a hearing to determine
definitively Stratton Oakmont's license status, and Stratton Oakmont, in this
proceeding as well as other proceedings, expects to be able to demonstrate that
the Permanent Injunction is not of a nature as to be a lawful basis to revoke
Stratton Oakmont's license permanently. Finally, Stratton Oakmont has received
an order limiting license in the state of Nebraska. Such proceedings, if
ultimately successful, may adversely affect the market for and liquidity of the
Company's securities if additional broker-dealers do not make a market in the
Company's securities. Moreover, should investors purchase any of the securities
in this offering from Stratton Oakmont prior to a revocation of Stratton
Oakmont's license in their state, such investors will not be able to resell such
securities in such state through Stratton Oakmont but will be required to retain
a new broker-dealer firm for such purpose. The Company cannot ensure that other
broker-dealers will make a market in the Company's securities. In the event that
other broker-dealers fail to make a market in the Company's securities, the
possibility exists that the market for and the liquidity of the Company's
securities may be adversely affected to such an extent that public security
holders may not have anyone to purchase their securities when offered for sale
at any price. In such event, the market for, and liquidity and prices of the
Company's securities may not exist.
FOR ADDITIONAL INFORMATION REGARDING STRATTON OAKMONT, INC., INVESTORS MAY
CALL THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. AT (800) 289-9999.
POSSIBLE NEED FOR ADDITIONAL FINANCING
The Company intends to fund its operations and other capital needs for the
next 12 months substantially from the proceeds of this offering, but there can
be no assurance that such funds will be sufficient for these purposes. The
Company may require substantial amounts of the proceeds of this offering for its
future expansion, operating costs and working capital. The Company has made no
arrangements to obtain future additional financing, if required, and there can
be no assurance that such financing will be available, or that it will be
available on acceptable terms. See "Use of Proceeds."
DEPENDENCE ON MAJOR AND INTERNATIONAL CUSTOMERS
For the nine months ended June 30, 1996, the Company did not have any
individual customers which accounted for more than ten percent of its total
revenues. For the year ended September 30, 1995, revenue from three customers
amounted to approximately 19%, 11%, and 10%, respectively, of total revenue. For
the year ended September 30, 1994, revenue from three customers amounted to
approximately 21%, 11% and 11%, respectively, of total revenue.
The dependence on major and international customers subjects the Company to
significant financial risks in the operation of its business should a major or
international customer terminate, for any reason, its business relationship with
the Company. In such event, the financial condition of the
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Company may be adversely affected and the Company may be required to obtain
additional financing, of which there is no assurance. Also, dependence on
international customers significantly increases the Company's costs, E.G.,
travel, communication and delivery of products, which are reflected in the
Company's financial performance. See "Selected Financial Data."
DEPENDENCE ON MANAGEMENT
The Company's success is principally dependent on its current management
personnel for the operation of its business. In particular, General Ratkovich
has played a substantial role in the development and management of the Company,
although there is no assurance that additional managerial assistance will not be
required. The analysis of new business opportunities will be undertaken by or
under the supervision of General Ratkovich and the management of the Company.
The Company entered into an employment agreement with General Ratkovich in
February 1995 which terminates in January 2000. The agreement contains
non-compete provisions but is limited in geographical scope, I.E., the Northern
Virginia area. The Company has not purchased key-man life insurance on General
Ratkovich. If the employment by the Company of General Ratkovich terminates, or
he is unable to perform his duties, the Company may be substantially affected.
See "Use of Proceeds."
DEPENDENCE ON HIGHLY QUALIFIED TECHNICAL PERSONNEL
The Company believes that its future success will depend in large part upon
its continued ability to recruit and retain highly qualified technical
personnel. Competition for highly qualified technical personnel is significant,
particularly in the geographic area in which the Company's operations are
located. No assurances can be made that the Company's relationship with its
employees will remain good.
UNCERTAINTY OF PROPOSED MERGERS AND ACQUISITIONS CAMPAIGN
Following the closing of this offering, the Company intends to continue to
engage in a mergers and acquisitions campaign in order to merge with or acquire
companies engaged in a similar or complementary business. The Company has not
entered into any negotiations to merge with or acquire any such target
companies, but the Company has identified several such companies engaged in a
complementary business. The Company can make no assurances that it will be able
to merge with or acquire any companies. Although the Company intends to utilize
approximately $2,500,000 of the net proceeds of this offering in its mergers and
acquisitions activities during the 12 months following the date of this
prospectus, no assurances can be made that such funds will enable the Company to
expand its base or realize profitable consolidated operations. In addition, the
Company's stockholders may not have the opportunity to review the financial
statements of any of the companies that may be acquired or have the opportunity
to vote on any proposed acquisitions since Delaware law does not require such
review and approval. Should such funds not be utilized in its mergers and
acquisitions activities, the Company intends to utilize the funds in equal
amounts in working capital, capital equipment and marketing and sales. See "Use
of Proceeds."
SIGNIFICANT BUSINESS OPERATIONS IN CANADA
The Company acquired MVS Modular Vision Systems, Inc. ("MVS"), a Canadian
corporation, on November 1, 1994, as a wholly-owned subsidiary. As a result, a
significant part of the Company's business operations and assets are located in
Montreal, Canada. Also, a significant part of the net proceeds of this offering
will be used for the business operations of MVS. The Company intends to invest
approximately 20%, or approximately $5,800,000, assuming the exercise of all of
the Warrants, of which there is no assurance, of the net proceeds in its
wholly-owned subsidiary in Canada. Since a significant part of the Company's
current business operations and assets are located in Canada and a significant
part of the net proceeds of this offering will be used for the business
operations of the Company's wholly-owned subsidiary in Canada, investors in this
offering must be cognizant that their investment in the Company in part may be
governed by Canadian law. Also, legal service of process on issues related to
the Company may be governed by Canadian law. See "Use of Proceeds."
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BROAD DISCRETION IN APPLICATION OF PROCEEDS
The management of the Company has broad discretion to adjust the application
and allocation of the net proceeds of this offering, including funds received
upon exercise of the Warrants, of which there is no assurance, in order to
address changed circumstances and opportunities. As a result of the foregoing,
the success of the Company will be substantially dependent upon the discretion
and judgment of the management of the Company with respect to the application
and allocation of the net proceeds hereof. Pending use of such proceeds, the net
proceeds of this offering will be invested by the Company in temporary,
short-term interest-bearing obligations. See "Use of Proceeds."
UNCERTAIN PROTECTION OF PATENT, TRADEMARK, COPYRIGHT AND PROPRIETARY RIGHTS
On April 11, 1995, the Company was issued a patent (U.S. Patent No.
5,406,372) through its MVS subsidiary for its lead inspection system for
inspecting parameters of leads on quad flat-pack (QFP) computer chip packages.
The Company's lead inspection system comprises a lead scanner assembly including
a sensor head arrangement, a carriage means for moving the sensor head, a
support table and a tray means for holding at least one QFP package. The lead
inspection system permits the thorough inspection of such lead qualities as
clearances, bent lead conditions, overall lead geometry and coplanarity of the
leads of a flat-pack device without removing it from a standard tray. Such an
approach provides that there is no possibility of further lead damage by the
inspection system since there is no device manipulation. The Company believes
that this patented invention simplifies the handling of complete trays instead
of individual devices. The Company can make no assurances that its patented
invention will prove to be financially beneficial.
ALLEGED PATENT INFRINGEMENT
Neither MVSI, Inc. nor any of its wholly-owned subsidiaries is a party to
any significant legal proceedings.
However, in a letter dated March 16, 1995, Robotic Vision Systems, Inc.
("RVSI"), a competitor of the Company in the lead scanning equipment market,
made a charge of patent infringement and threatened litigation against the
Company based on a patent that it allegedly owns. On February 27, 1992, RVSI
sent the Company a similar notice of its claim that the Company's scanning
equipment infringed RVSI's patent rights. The Company believes that its lead
scanning products and systems do not infringe RVSI's patent rights and that
RVSI's asserted patent is invalid. The Company so informed RVSI in 1992 and
again on March 30, 1995. The Company has been informed that RVSI has made
similar claims to the Company's present and prospective customers in the past
and believes that the Company has lost United States customers as a result of
those claims. The Company believes that RVSI's claims are without merit and is
considering its legal options with respect to RVSI's conduct in this matter.
SUBSTANTIAL COMPETITION
Businesses in the United States and abroad that are engaged in the design,
development, manufacture and marketing of machine vision-based products and
systems are few in number but highly competitive. Businesses in the United
States and abroad that are engaged in the design, development and marketing of
proprietary computer hardware and software products and systems for large-scale
applications and integration are also large in number and highly competitive.
Almost all of the companies with which the Company intends to compete are
substantially larger and have substantially greater resources than the Company.
It is also likely that other competitors will emerge in the future. The Company
will compete with companies that have greater market recognition, greater
resources and broader capabilities than the Company. As a consequence, there is
no assurance that the Company will be able to successfully compete in the
marketplace.
LIMITATION ON DIRECTOR LIABILITY
As permitted by the Delaware General Corporation Law, the Company's
Certificate of Incorporation limits the liability of directors to the Company or
its stockholders for monetary damages for breach of a director's fiduciary duty
except for liability in four specific instances. These are for (i) any
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breach of the director's duty of loyalty to the Company or its stockholders,
(ii) acts or omissions not in good faith or which involve intentional misconduct
or knowing violation of law, (iii) unlawful payments of dividends or unlawful
stock purchases or redemptions as provided in Section 174 of the Delaware
General Corporation Law, or (iv) any transaction from which the director derived
an improper personal benefit. As a result of the Company's charter provision and
Delaware law, stockholders may have more limited rights to recover against
directors for breach of fiduciary duty than as existing prior to the enactment
of the law.
ARBITRARY OFFERING PRICE
The price to the public of the securities offered hereby has been
arbitrarily determined by negotiations between the Company and Stratton Oakmont,
Inc., a former underwriter of the Company's initial public offering of
securities on August 14, 1995, and bears no relationship to the Company's
earnings, book value or any other recognized criteria of value. The exercise
price of $4.00 per share is substantially in excess of the net tangible book
value of $1.11 per share, derived from the Company's balance sheet as of June
30, 1996, and in excess of the price received by the Company for shares sold in
prior transactions. See "Selected Financial Data."
REQUIREMENTS OF CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION IN
CONNECTION WITH THE EXERCISE OF THE WARRANTS
The Company will be able to issue the securities offered hereby, shares of
its Common Stock upon the exercise of the Warrants and the underwriters' Unit
Purchase Option only if (i) there is a current prospectus relating to the
securities offered hereby under an effective registration statement filed with
the Securities and Exchange Commission, and (ii) such Common Stock is then
qualified for sale or exempt therefrom under applicable state securities laws of
the jurisdictions in which the various holders of Warrants reside. Although the
Company intends to maintain a current registration statement, there can be no
assurance, however, that the Company will be successful in maintaining a current
registration statement. After a registration statement becomes effective, it may
require updating by the filing of a post-effective amendment. A post-effective
amendment is required (i) anytime after nine months subsequent to the Effective
Date when any information contained in the prospectus is over sixteen months
old; (ii) when facts or events have occurred which represent a fundamental
change in the information contained in the registration statement; or (iii) when
any material change occurs in the information relating to the plan or
distribution of the securities registered by such registration statement. The
Company anticipates that this Registration Statement will remain effective for
not more than nine months following the date of this Prospectus or until July
, 1997, assuming a post-effective amendment is not filed by the Company, which
may be required. The Company intends to qualify the sale of the securities in a
limited number of states, although certain exemptions under certain state
securities ("Blue Sky") laws may permit the Warrants to be transferred to
purchasers in states other than those in which the Warrants were initially
qualified. The Company will be prevented, however, from issuing Common Stock
upon exercise of the Warrants in those states where exemptions are unavailable
and the Company has failed to qualify the Common Stock issuable upon exercise of
the Warrants. The Company may decide not to seek, or may not be able to obtain
qualification of the issuance of such Common Stock in all of the states in which
the ultimate purchasers of the Warrants reside. In such a case, the Warrants of
those purchasers will expire and have no value if such Warrants cannot be
exercised or sold. Accordingly, the market for the Warrants may be limited
because of the Company's obligation to fulfill both of the foregoing
requirements. See "Description of Securities" and "Plan of Distribution."
The Warrants can only be exercised when there is a current effective
registration statement covering the shares of common stock underlying the
Warrants. The Company intends to maintain a current effective registration
statement covering the shares of common stock underlying the Warrants so long as
Warrants are outstanding. If the Company does not or is unable to maintain a
current effective registration statement the Warrant holders will be unable to
exercise the Warrants and the
16
<PAGE>
Warrants may become valueless. Moreover, if the shares of common stock
underlying the Warrants are not registered or qualified for sale in the state in
which a Warrant holder resides, such holder might not be permitted to exercise
the Warrants.
Several states have recently commenced actions against and/or suspended the
license of Stratton Oakmont seeking, among other things, to revoke Stratton
Oakmont's license to do business in such states. See "RISK FACTORS -- STATE
ADMINISTRATIVE PROCEEDINGS INVOLVING STRATTON OAKMONT -- POSSIBLE LOSS OF
LIQUIDITY." As a result, although the Company intends to maintain a current
effective registration statement covering the shares of Common Stock underlying
the Warrants so long as the Warrants are outstanding, the state actions against
Stratton Oakmont may require the security-holders in such states to seek other
broker dealer firms to sell such securities on their behalf.
ADDITIONAL AUTHORIZED SHARES AVAILABLE FOR ISSUANCE MAY ADVERSELY AFFECT THE
MARKET
The Company is authorized to issue 50,000,000 shares of its Common Stock,
$.01 par value. If all of the Warrants offered hereby are exercised, there will
be a total of 17,600,000 shares of Common Stock issued and outstanding. After
reserving a total of 6,860,000 shares of Common Stock for issuance upon the
exercise of all the Warrants, if all of the Warrants are exercised, the Company
will have at least 32,400,000 shares of authorized but unissued capital stock
available for issuance without further shareholder approval. As a result, any
issuance of additional shares of Common Stock may cause current shareholders of
the Company to suffer significant dilution which may adversely affect the
market. Pursuant to the terms of the Underwriting Agreement, entered into in
connection with the Company's initial public offering of securities on August
14, 1995, the Company's officers, directors and principal stockholders and the
Company have agreed not to sell, transfer, assign or issue any shares of Common
Stock for a period of 24 months following the date of the offering without the
consent of Stratton Oakmont, Inc. The sale of a significant number of these
shares in the public market may adversely affect prevailing market prices of the
Company's securities following this offering. See "Dilution" "Description of
Securities" and "Plan of Distribution."
WARRANTS SUBJECT TO REDEMPTION
The Class A Warrants shall be exercisable commencing on the date of this
Prospectus ("Effective Date"). Each Class A Warrant entitles the holder to
purchase one share of Common Stock at $4.00 per share until August 14, 2000. The
Class A Warrants are redeemable by the Company for $.05 per Warrant, upon thirty
(30) days' prior written notice, if the average closing price or bid price of
the Common Stock, as reported by the principal exchange on which the Common
Stock is quoted, Nasdaq or the National Quotation Bureau, Incorporated, as the
case may be, equals or exceeds $8.00 per share, for any twenty (20) consecutive
trading days within a period of thirty (30) days ending within ten (10) days of
the notice of redemption. Upon thirty (30) days' prior written notice to all
holders of the Class A Warrants, the Company shall have the right to reduce the
exercise price and/or extend the term of the Class A Warrants. Redemption of the
Warrants will force holders thereof to either (i) exercise such Warrants and pay
the exercise price at a time when it may be less than advantageous economically
to do so, or (ii) accept the redemption price, which may be substantially less
than the market value thereof at the time of redemption. The resale of the
securities is subject to Prospectus delivery and other requirements of the
Securities Act of 1933, as amended. Sales of such securities or the potential of
such sales at any time may have an adverse effect on the market prices of the
securities offered hereby. See "Description of Securities" and "Plan of
Distribution."
The Company intends to qualify the sale of the securities in a limited
number of states, although certain exemptions under certain state securities
("Blue Sky") laws may permit the Warrants to be transferred to purchasers in
states other than those in which the Warrants were initially qualified. The
Company will be prevented, however, from issuing Common Stock upon exercise of
the Warrants in those states where exemptions are unavailable and the Company
has failed to qualify the Common Stock issuable upon exercise of the Warrants.
The Company may decide not to seek, or may not be able to obtain qualification
of the issuance of such Common Stock in all of the States in which the ultimate
17
<PAGE>
purchasers of the Warrants reside. In such case, the Warrants of those
purchasers will expire and have no value if such Warrants cannot be exercised or
sold. Accordingly, the market for the Warrants may be limited because of the
Company's obligation to fulfill the foregoing requirements.
UNDERWRITERS' INFLUENCE ON THE MARKET MAY HAVE ADVERSE CONSEQUENCES
A significant number of securities may be sold to customers of Stratton
Oakmont, Inc., a former underwriter of the Company's initial public offering of
securities and a market maker of the Company's securities. Such customers
subsequently may engage in transactions for the sale or purchase of such
securities through or with Stratton Oakmont. Although they have no legal
obligation to do so, Stratton Oakmont from time to time in the future will make
a market in and otherwise effect transactions in the Company's securities. To
the extent Stratton Oakmont acts as market maker in the securities, it may be a
dominating influence in that market. The price and liquidity of such securities
may be affected by the degree, if any, of Stratton Oakmont's participation in
the market, inasmuch as a significant amount of such securities may be sold to
customers of Stratton Oakmont. Such customers, as customers of Stratton Oakmont,
subsequently may engage in transactions for the sale or purchase of such
securities through or with Stratton Oakmont, although no agreements or
understandings, written or oral, exist for such transactions, and such
transactions may further enhance Stratton Oakmont's dominating influence on the
market. Such market making activities, if commenced, may be discontinued at any
time or from time to time by Stratton Oakmont without obligation or prior
notice. If a dominating influence at such time, Stratton Oakmont's
discontinuance may adversely affect the price and liquidity of the securities.
Further, unless granted an exemption by the Securities and Exchange
Commission to its Rule 10b-6, Stratton Oakmont may be prohibited from engaging
in any market making activities with regard to the Company's securities for the
period from two or nine business days prior to any solicitation of the exercise
of Warrants until the later of the termination of such solicitation activity or
the termination, by waiver or otherwise, of any right that Stratton Oakmont may
have to receive a fee for the exercise of Warrants following the solicitation.
As a result, the Underwriters may be unable to continue to provide a market for
the Company's securities during certain periods while the Warrants are
exercisable, which may adversely affect the price and liquidity of the
securities. See "Risk Factors --LITIGATION INVOLVEMENT OF A FORMER UNDERWRITER
MAY HAVE ADVERSE CONSEQUENCES.
CONTRACTUAL OBLIGATIONS TO STRATTON OAKMONT MAY REDUCE PROCEEDS AVAILABLE TO
THE COMPANY
The Company has also agreed to pay fees to Stratton Oakmont, aggregating up
to five percent of the consideration involved in the transaction, if Stratton
Oakmont arranges equity financing, debt financing and assistance with mergers
and acquisitions, for the Company other than this offering until August 14,
2000, or if Stratton Oakmont obtains or is influential in increasing any lines
of credit the Company may have, provided such financing or increase is accepted
by the Company. Such fees will reduce the amount of proceeds available to the
Company from such financing or line of credit. The Company has not paid any fees
Stratton Oakmont, or any other underwriter or broker, in connection with its
acquisitions.
EXERCISE OF WARRANTS MAY HAVE DILUTIVE EFFECT ON MARKET
The Warrants will provide, during their term, an opportunity for the holder
to profit from a rise in the market price, of which there is no assurance, with
resulting dilution in the ownership interest in the Company held by the then
present stockholders. Holders of the Warrants most likely would exercise the
Warrants and purchase the underlying Common Stock at a time when the Company may
be able to obtain capital by a new offering of securities on terms more
favorable than those provided by such Warrants, in which event the terms on
which the Company may be able to obtain additional capital would be affected
adversely. See "Description of Securities" and "Plan of Distribution."
"PENNY STOCK" REGULATIONS MAY IMPOSE CERTAIN RESTRICTIONS ON MARKETABILITY OF
SECURITIES
The Securities and Exchange Commission ("Commission") has adopted
regulations which generally define "penny stock" to be any equity security that
has a market price (as defined) less than
18
<PAGE>
$5.00 per share or an exercise price of less than $5.00 per share, subject to
certain exceptions. Since the Company's securities are authorized for quotation
on Nasdaq, such securities are initially exempt from the definition of "penny
stock." If the securities offered hereby are removed from listing by Nasdaq at
any time, the Company's securities may become subject to rules that impose
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual income exceeding
$200,000, or $300,000 together with their spouse). For transactions covered by
these rules, the broker-dealer must make a special suitability determination for
the purchase of such securities and have received the purchaser's written
consent to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the rules require the
delivery, prior to the transaction, of a risk disclosure document mandated by
the Commission relating to the penny stock market. The broker-dealer also must
disclose the commissions payable to both the broker-dealer and the registered
representative, current quotations for the securities and, if the broker-dealer
is the sole market-maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market. Finally, monthly statements
must be sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks. Consequently, the
"penny stock" rules may restrict the ability of broker-dealers to sell the
Company's securities and may affect the ability of purchasers in this offering
to sell the Company's securities in the secondary market.
SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY AFFECT THE MARKET
Among the Company's currently outstanding shares of Common Stock, 6,600,000
shares are "restricted securities" and, in the future, may be sold upon
compliance with Rule 144, adopted under the Securities Act of 1933, as amended.
Rule 144 provides, in essence, that a person holding "restricted securities" for
a period of two years may sell only an amount every three months equal to the
greater of (a) one percent of the Company's issued and outstanding shares, or
(b) the average weekly volume of sales during the four calendar weeks preceding
the sale. The amount of "restricted securities" which a person who is not an
affiliate of the Company may sell is not so limited, since nonaffiliates may
sell without volume limitation their shares held for three years if there is
adequate current public information available concerning the Company. Assuming
the exercise of all of the Warrants, the Company will have 17,600,000 shares of
Common Stock issued and outstanding. Therefore, during each three month period,
beginning November 1, 1996, a holder of restricted securities who has held them
for at least the two year period may sell under Rule 144 a number of shares up
to 176,000 shares. Non-affiliated persons who hold for the three-year period
described above may sell unlimited shares once their holding period is met.
Pursuant to the terms of the Underwriting Agreement, the officers, directors and
principal stockholders of the Company and the Company have agreed not to sell,
transfer, assign or issue any securities of the Company for a period of 24
months following the date of the initial public offering securities, August 14,
1995, without the consent of Stratton Oakmont, Inc. The sale of a significant
number of these shares in the public market may adversely affect prevailing
market prices of the Company's securities following this offering. See
"Dilution," "Description of Securities" and "Plan of Distribution."
Prospective investors should be aware that the possibility of sales may, in
the future, have a depressive effect on the price of the Company's Common Stock
in any market which may develop and, therefore, the ability of any investor to
market his shares may be dependent directly upon the number of shares that are
offered and sold. Affiliates of the Company may sell their shares during a
favorable movement in the market price of the Company's Common Stock which may
have a depressive effect on its price per share. See "Description of
Securities."
19
<PAGE>
PRICE RANGE OF COMMON STOCK
The Common Stock has traded on the Nasdaq Small Cap Market System since
August 14, 1995, under the symbol "MVSI." On October , 1996, the last bid
price of the Common Stock was $ per share. On October 10, 1996, there were
approximately 1,500 shareholders of record of the Company's Common Stock. The
following table sets forth the range of high and low trading prices for the
Common Stock, as reported on Nasdaq, for the period from August 14, 1995, the
date of the Company's initial public offering of securities, through October ,
1996.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
FISCAL YEAR 1995
Fourth fiscal quarter........................................................................ $ 7.75 $ 3.50(1)
FISCAL YEAR 1996
First fiscal quarter......................................................................... $ 8.38 $ 3.88
Second fiscal quarter........................................................................ $ 7.38 $ 4.00
Third fiscal quarter......................................................................... $ 9.75 $ 6.88
Fourth fiscal quarter........................................................................ $ 15.63 $ 8.00
FISCAL YEAR 1997
First fiscal quarter, through October , 1996............................................... $ $
</TABLE>
- ------------------------
(1) Represents the initial public offering price per share on August 14, 1995.
DIVIDEND POLICY
Holders of the Company's Common Stock are entitled to dividends when, as and
if declared by the Board of Directors out of funds legally available therefor.
The Company does not anticipate the declaration or payment of any dividends in
the foreseeable future. The Company intends to retain earnings, if any, to
finance the development and expansion of its business. Future dividend policy
will be subject to the discretion of the Board of Directors and will be
contingent upon future earnings, if any, the Company's financial condition,
capital requirements, general business conditions and other factors. Therefore,
there can be no assurance that any dividends of any kind will ever be paid by
the Company.
20
<PAGE>
USE OF PROCEEDS
After deducting expenses of the offering estimated to be $150,000, the
Company will receive net proceeds from the offering of approximately
$29,065,000. Assuming all of the Warrants are exercised, the proceeds will be
utilized in order of priority by the Company as listed below for approximately
12 months substantially as follows:
<TABLE>
<CAPTION>
APPROXIMATE
AMOUNT OF NET
ADMINISTRATIVE EXPENSES PROCEEDS %
--------------- ---------
<S> <C> <C>
Management Compensation(1)........................................ $ 4,850,000 16.69
Employee Salaries and Overhead(2)................................. 4,850,000 16.69
OPERATING COSTS AND WORKING CAPITAL
Software Support and Development(3)............................... 4,850,000 16.69
Capital Equipment(4).............................................. 2,500,000 8.60
Marketing and Sales(5)............................................ 4,850,000 16.69
Mergers and Acquisitions(6)....................................... 2,500,000 8.60
Working Capital(7)................................................ 4,665,000 16.04
--------------- ---------
TOTAL......................................................... $29,065,000 100.00
--------------- ---------
--------------- ---------
</TABLE>
- ------------------------
(1) The officers and employees of the Company also receive remuneration as part
of an overall group insurance plan providing health, life and disability
insurance benefits for employees of the Company. The amount allocable to
each individual officer and employee cannot be specifically or precisely
ascertained, but, in any event, does not exceed $25,000 per annum as to each
individual.
(2) Includes annual general and administrative employee salaries, exclusive of
management salaries, associated benefits, related office rent and
miscellaneous office expenses.
(3) Includes annual salaries for software and engineering support personnel.
(4) The Company intends to purchase and/or lease certain additional capital
equipment including, but not limited to, engineering and manufacturing
facilities and equipment, computer hardware and software products and
systems, telephone and facsimile products and systems, security systems and
office equipment and furniture.
(5) The amount allocated by the Company for marketing and sales includes
industry promotion shows, marketing materials, advertising, business travel
and a significant expansion of its marketing and sales staff.
(6) Following the closing of this offering, the Company intends to continue to
engage in a mergers and acquisitions campaign in order to merge with or
acquire complementary companies in the $10 to $25 million revenue range, and
possibly larger. The Company has not entered into any negotiations to merge
with or acquire any such target companies, not otherwise disclosed herein,
but the Company has identified several such companies engaged in a
complementary or similar technology business. Such businesses include but
are not limited to businesses engaged in the sale and development of
products and services involving machine vision and others aimed at quality
and process improvement, and related computer hardware and software
companies. The Company can make no assurances that it will be able to merge
with or acquire any companies. Although the Company intends to utilize
approximately $2,500,000 in its mergers and acquisitions activities during
the 12 months following the date of this Prospectus, no assurances can be
made that such funds will enable the Company to expand its base or realize
profitable consolidated operations. The ability of the Company to engage in
a mergers and acquisitions campaign in view of the Company's resources is
uncertain. Should such funds not be utilized in its mergers and acquisitions
activities, the Company intends to utilize the funds in equal amounts in
capital equipment and marketing and sales.
(7) Working capital will be utilized by the Company to enhance and, otherwise,
stabilize cash flow during the initial 12 months of operations following the
closing of this offering, such that any
21
<PAGE>
shortfalls between cash generated by operating revenues and costs will be
covered by working capital. Although the Company prefers to retain its
working capital in reserve, the Company may be required to expend part or
all of these proceeds as financial demands dictate.
Although it is uncertain that the Company's shares of Common Stock will
maintain a level at which the Warrants would be exercised, in the event
subscribers in this offering elect to exercise all of the Warrants herein, the
Company will realize gross proceeds of approximately $29,215,000. Management
anticipates that the proceeds from the exercise of the Warrants would be
contributed to working capital of the Company. Nonetheless, the Company may at
the time of exercise allocate a portion of the proceeds to any other corporate
purposes. Accordingly, investors who exercise their Warrants will entrust their
funds to management, whose specific intentions regarding the use of such funds
are not presently and specifically known.
The Company is unable to predict the precise period for which this offering
will provide financing, although management believes that the Company should
have sufficient working capital to meet its cash requirements for the 12 months
period following the date of this offering. Accordingly, the Company may need to
seek additional funds through loans or other financing arrangements during this
period of time. No such arrangements exist or are currently contemplated and
there can be no assurance that they may be obtained in the future should the
need arise.
Pending utilization, management intends to make temporary investment of the
proceeds in bank certificates of deposit, interest-bearing savings accounts,
prime commercial paper or federal government securities.
22
<PAGE>
DILUTION
As of June 30, 1996, the Company had a net tangible book value of
$11,511,442 or $1.11 per share, derived from the Company's balance sheet as of
June 30, 1996. Net tangible book value per share means the tangible assets of
the Company, less all liabilities, divided by the number of shares of Common
Stock outstanding. After giving effect to the exercise of the Warrants offered
hereby at an assumed exercise price of $4.00 per share, pro forma net tangible
book value would have been $40,576,442 or $2.31 per share. The result will be an
immediate increase in net tangible book value per share of $1.20 (108%) to
existing shareholders and an immediate dilution to new investors of $1.69 (42%)
per share. "Dilution" is determined by subtracting net tangible book value per
share after the offering from the offering price to investors. The following
table illustrates this dilution:
<TABLE>
<S> <C> <C>
Exercise price of the Common Stock offered hereby.................... $ 4.00
Net tangible book value per share, before the offering............. $ 1.11
Increase per share attributable to the sale of the securities
offered hereby.................................................... $ 1.20
---------
Pro forma net tangible book value per share, assuming exercise of all
Warrants............................................................ $ 2.31
---------
Dilution per share to new public investors........................... $ 1.69
---------
---------
</TABLE>
The following table summarizes the investments of all existing stockholders
and new public investors after giving effect to the exercise of the Warrants
offered hereby:
<TABLE>
<CAPTION>
PERCENTAGE AGGREGATE PERCENT OF AVERAGE
SHARES OF TOTAL CONSIDERATION TOTAL PRICE PER
PURCHASED SHARES PAID INVESTED SHARE
------------- ----------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Present Stockholders(1)....................... 10,740,000 61.02% $ 20,251,002 40.94% $ 1.89
-----
-----
Public Stockholders........................... 6,860,000 38.98% $ 29,215,000 59.06% $ 4.26
------------- ----------- -------------- ----------- -----
-----
Total..................................... 17,600,000 100.00% $ 49,466,002 100.00% $ 2.81
------------- ----------- -------------- ----------- -----
------------- ----------- -------------- ----------- -----
</TABLE>
- ------------------------
(1) Does not include 4,000,000 shares of Common Stock to be issued to the
stockholders of e-Net, Inc., a Delaware corporation, in connection with the
Company's proposed acquisition of e-Net. The acquisition of e-Net will be
subject to the approval by at least a majority of the Company's stockholders
at its annual meeting scheduled for Fall 1996. The Company can make no
assurances that its stockholders will approve the Company's acquisition of
e-Net. See "Summary" and "Risk Factors."
23
<PAGE>
DESCRIPTION OF SECURITIES
COMMON STOCK
The authorized capital stock of the Company consists of 50,000,000 shares of
Common Stock, $.01 par value. The Company currently has 10,740,000 issued and
outstanding shares of Common Stock and approximately 1,500 shareholders of
record. Holders of the Common Stock do not have preemptive rights to purchase
additional shares of Common Stock or other subscription rights. The Common Stock
carries no conversion rights and is not subject to redemption or to any sinking
fund provisions. All shares of Common Stock are entitled to share equally in
dividends from sources legally available therefor when, as and if declared by
the Board of Directors and, upon liquidation or dissolution of the Company,
whether voluntary or involuntary, to share equally in the assets of the Company
available for distribution to stockholders. All outstanding shares of Common
Stock are validly authorized and issued, fully paid and nonassessable, and all
shares to be sold and issued as contemplated hereby, will be validly authorized
and issued, fully paid and nonassessable. The Board of Directors is authorized
to issue additional shares of Common Stock, not to exceed the amount authorized
by the Company's Certificate of Incorporation, and to issue options and warrants
for the purchase of such shares, on such terms and conditions and for such
consideration as the Board may deem appropriate without further stockholder
action. The above description concerning the Common Stock of the Company does
not purport to be complete. Reference is made to the Company's Certificate of
Incorporation and By-laws which are available for inspection upon proper notice
at the Company's offices, as well as to the applicable statutes of the State of
Delaware for a more complete description concerning the rights and liabilities
of stockholders.
Each holder of Common Stock is entitled to one vote per share on all matters
on which such stockholders are entitled to vote. Since the shares of Common
Stock do not have cumulative voting rights, the holders of more than 50 percent
of the shares voting for the election of directors can elect all the directors
if they choose to do so and, in such event, the holders of the remaining shares
will not be able to elect any person to the Board of Directors.
CLASS A AND CLASS B WARRANTS
The Company currently has 5,500,000 Class A Warrants outstanding, which were
issued in connection with the Company's initial public offering of securities on
August 14, 1995. The Class A Warrants shall be exercisable commencing on the
date of this Prospectus ("Effective Date") and until August 14, 2000. Each Class
A Warrant entitles the holder to purchase one share of Common Stock at $4.00 per
share until August 14, 2000. The Class A Warrants are redeemable by the Company
for $.05 per Warrant, at any time after August 14, 1997, upon thirty (30) days'
prior written notice, if the average closing price or bid price of the Common
Stock, as reported by the principal exchange on which the Common Stock is
traded, Nasdaq or the National Quotation Bureau, Incorporated, as the case may
be, equals or exceeds $8.00 per share, for any twenty (20) consecutive trading
days within a period of thirty (30) days ending within ten (10) days of the
notice of redemption. Upon thirty (30) days' written notice to all holders of
the Class A Warrants, the Company shall have the right to reduce the exercise
price and/or extend the term of the Class A Warrants. Should the Class A
Warrants be exercised, of which there is no assurance, the Company will receive
the proceeds therefrom, aggregating up to $22,936,000.
The Company also has 1,000,000 Class B Warrants outstanding. The Class B
Warrants are identical to the Class A Warrants, except that the exercise price
is $4.20. The Class B Warrants are not being offered for sale as part of this
offering. Should the Class B Warrants by exercised, of which there is no
assurance, the Company will receive the proceeds therefrom, aggregating up to
$4,200,000.
The Warrants can only be exercised when there is a current effective
registration statement covering the shares of Common Stock underlying the
Warrants. If the Company does not or is unable to maintain a current effective
registration statement the Warrant holders will be unable to exercise
24
<PAGE>
the Warrants and the Warrants may become valueless. Moreover, if the shares of
common stock underlying the Warrants are not registered or qualified for sale in
the state in which a Warrant holder resides, such holder might not be permitted
to exercise the Warrants.
Warrant certificates may be exchanged for new certificates of different
denominations, and may be exercised or transferred by presenting them at the
offices of the Transfer Agent. Holders of the Warrants may sell the Warrants if
a market exists rather than exercise them. However, there can be no assurance
that a market will develop or continue as to such Warrants. If the Company is
unable to qualify its common stock underlying such Warrants for sale in certain
states, holders of the Company's Warrants in those states will have no choice
but to either sell such Warrants or allow them to expire.
Each Warrant may be exercised by surrendering the Warrant certificate, with
the form of election to purchase on the reverse side of the Warrant certificate
properly completed and executed, together with payment of the exercise price to
the Warrant Agent. The Warrants may be exercised in whole or from time to time
in part. If less than all of the Warrants evidenced by a Warrant certificate are
exercised, a new Warrant certificate will be issued for the remaining number of
Warrants. Upon the exercise of the Warrants, the shares of Common Stock when
issued will be fully paid and nonassessable.
Holders of the Warrants are protected against dilution of the equity
interest represented by the underlying shares of common stock upon the
occurrence of certain events, including, but not limited to, issuance of stock
dividends. If the Company merges, reorganizes or is acquired in such a way as to
terminate the Warrants, the Warrants may be exercised immediately prior to such
action. In the event of liquidation, dissolution or winding up of the Company,
holders of the Warrants are not entitled to participate in the Company's assets.
For the life of the Warrants, the holders thereof are given the opportunity,
at nominal cost, to profit from a rise in the market price of the common stock
of the Company. The exercise of the Warrants will result in the dilution of the
then book value of the Common Stock of the Company held by the public investors
and would result in a dilution of their percentage ownership of the Company. The
terms upon which the Company may obtain additional capital may be adversely
affected through the period that the Warrants remain exercisable. The holders of
these Warrants may be expected to exercise them at a time when the Company
would, in all likelihood, be able to obtain equity capital on terms more
favorable than those provided for by the Warrants.
Because the Warrants being offered hereby may be transferred, it is possible
that the Warrants may be acquired by persons residing in states where the
Company has not registered, or is not exempt from registration such that the
shares of common stock underlying the Warrants may not be sold or transferred
upon exercise of the Warrants. Warrantholders residing in those states would
have no choice but to attempt to sell their Warrants or to let them expire
unexercised. Also, it is possible that the Company may be unable, for unforeseen
reasons, to cause a registration statement covering the shares underlying the
Warrants to be in effect when the Warrants are exercisable. In that event, the
Warrants may expire unless extended by the Company as permitted by the Warrant
because a registration statement must be in effect, including audited financial
statements for companies acquired, in order for warrantholders to exercise their
Warrants.
The Company will be able to issue the securities offered hereby, including
shares of its Common Stock upon the exercise of the Warrants and the
Underwriters' Purchase Option only if (i) there is a current prospectus relating
to the securities offered hereby under an effective registration statement filed
with the Securities and Exchange Commission, and (ii) such Common Stock is then
qualified for sale or exempt therefrom under applicable state securities laws of
the jurisdictions in which the various holders of Warrants reside. Although the
Company intends to maintain a current registration statement, there can be no
assurance, however, that the Company will be successful in maintaining a current
registration statement. After a registration statement becomes effective, it may
require updating by the filing of a post-effective amendment. A post-effective
amendment is required (i) anytime after nine months subsequent to the Effective
Date when any information contained in the
25
<PAGE>
prospectus is over sixteen months old; (ii) when facts or events have occurred
which represent a fundamental change in the information contained in the
registration statement; or (iii) when any material change occurs in the
information relating to the plan or distribution of the securities registered by
such registration statement. The Company anticipates that this Registration
Statement will remain effective for not more than nine months following the date
of this Prospectus or until July , 1997, assuming a post-effective amendment
is not filed by the Company, which may be required. The Company intends to
qualify the sale of the securities in a limited number of states, although
certain exemptions under certain state securities ("Blue Sky") laws may permit
the Warrants to be transferred to purchasers in states other than those in which
the Warrants were initially qualified. The Company will be prevented, however,
from issuing Common Stock upon exercise of the Warrants in those states where
exemptions are unavailable and the Company has failed to qualify the Common
Stock issuable upon exercise of the Warrants. The Company may decide not to
seek, or may not be able to obtain qualification of the issuance of such Common
Stock in all of the states in which the ultimate purchasers of the Warrants
reside. In such case, the Warrants of those purchasers will expire and have no
value if such Warrants cannot be exercised or sold. Accordingly, the market for
the Warrants may be limited because of the Company's obligation to fulfill both
of the foregoing requirements.
RESTRICTED SHARES ELIGIBLE FOR FUTURE SALE
Upon exercise of the Warrants in this offering, the Company will have
17,600,000 shares of Common Stock issued and outstanding. Among these shares,
6,600,000 shares ("Restricted Shares") of common stock were issued and sold by
the Company in a private transaction in reliance upon certain private placement
exemptions as promulgated by the Securities and Exchange Commission, Washington,
D.C. 20549.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned his or her Restricted
Shares for at least two years, including persons who may be deemed "affiliates"
of the Company, as that term is defined under the Act, would be entitled to sell
in broker's transactions within any three month period a number of shares that
does not exceed the greater of one percent of the then outstanding shares of the
Company's common stock, or the average weekly trading volume in the
over-the-counter market in the Company's common stock during the four calendar
weeks preceding such sale. Therefore, during each three month period, beginning
November 1, 1996, a holder of restricted securities who has held them for at
least the two year period may sell under Rule 144 a number of shares at least
equal to 176,000 shares. A person who is not deemed to have been an affiliate of
the Company at any time during the 90 days preceding a sale, and who has
beneficially owned his or her Restricted Shares for at least three years, would
be entitled to sell such shares under Rule 144 without regard to the volume
limitations described above, provided that certain public information concerning
the Company as required by the Rule is available.
Sales of substantial amounts of the Common Stock of the Company in the
public market may adversely affect prevailing market prices and may impair the
Company's ability to raise capital at the time through the sale of its equity
securities.
Pursuant to the terms of the Underwriting Agreement entered into on the
closing of the Company's initial public offering of securities, the Company's
officers, directors and principal stockholders have agreed not to sell,
transfer, assign or issue any restricted shares of Common Stock until August 14,
1997 without the prior consent of Stratton Oakmont, Inc., an underwriter in the
Company's initial public offering of securities. The sale of a significant
number of these shares in the public market may adversely affect prevailing
market prices of the Company's securities following this offering.
No predictions can be made as to the effect, if any, that sales of shares
under Rule 144 or otherwise or the availability of shares for sale will have on
the market, if any, prevailing from time to time. Sales of significant amounts
of the Company's shares of Common Stock pursuant to Rule 144 or otherwise may
adversely affect the market price of the securities offered hereby.
26
<PAGE>
INDEMNIFICATION
The Company intends to indemnify its officers and directors to the full
extent permitted by Delaware law. Under Delaware law, a corporation may
indemnify its agents for expenses and amounts paid in third party actions and,
upon court approval in derivative actions, if the agents acted in good faith and
with reasonable care. A majority vote of the Board of Directors, approval of the
shareholders or court approval is required to effectuate indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to officers, directors or persons
controlling the Company, the Company has been advised that, in the opinion of
the Securities and Exchange Commission, Washington, D.C. 20549, such
indemnification is against public policy as expressed in such Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by an officer, director or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
officer, director or controlling person in connection with the securities being
registered, the Company 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 such Act and will be governed by the final adjudication
of such issue.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the securities of the Company is
American Stock Transfer & Trust Company located at 40 Wall Street, New York, New
York 10005.
REPORTS TO SECURITY-HOLDERS
The Company intends to furnish to holders of its securities annual reports
containing audited financial statements. The Company may issue other unaudited
interim reports to its security-holders as it deems appropriate.
27
<PAGE>
PLAN OF DISTRIBUTION
The Prospectus relates to the continuing resale by MVSI, Inc. ("Company"), a
Delaware corporation, and certain of its security-holders, of 5,140,000 Class A
Warrants issued in connection with the Company's initial public offering
("Offering") of securities, which was declared effective by the Securities and
Commission ("Commission") on August 14, 1995. This Prospectus also relates to
the continuing resale of 180,000 Units, including 360,000 shares of Common
Stock, $.01 par value, and 360,000 Class A Warrants, by the underwriters, and
their assigns, which comprise the Underwriters' Purchase Option issued to the
underwriters in connection with the Offering. Should all of the Warrants be
exercised, the Company will receive the proceeds therefrom, aggregating up to
$29,215,000. The Company can make no assurances that any of its securities can
be sold or exercised under any circumstances. See "Risk Factors" and
"Description of Securities."
The Class A Warrants shall be exercisable commencing on the date of this
Prospectus. Each Class A Warrant entitles the holder to purchase one share of
Common Stock at $4.00 per share until August 14, 2000. The Class A Warrants are
redeemable by the Company for $.05 per Warrant, at any time after August 14,
1997, upon 30 days prior written notice, if the average closing price or bid
price of the Common Stock, as quoted by Nasdaq, equals or exceeds $8.00 per
share, for any 20 consecutive trading days within a period of 30 days ending
within 10 days of the notice of redemption. Upon 30 days prior written notice to
all holders of the Class A Warrants, the Company shall have the right to reduce
the exercise price and/or extend the term of the Class A Warrants in compliance
with the requirements of Rule 13e-4 to the extent applicable. See "Description
of Securities."
In connection with the Company's initial public offering of securities on
August 14, 1995, the Company agreed under certain circumstances to pay to
Stratton Oakmont, Inc., an underwriter in the offering, a fee of four percent of
the exercise price of the Warrants upon the exercise of such Warrants. However,
in September 1996, Stratton Oakmont waived its rights to receive a fee in
connection with the solicitation for the exercise of the Company's Warrants,
should it participate in such solicitation. The Company does not intend to
engage in any solicitation activities in connection with its securities.
Stratton Oakmont, Inc. currently makes a market in the Company's securities
and may solicit the exercise of the Warrants. Unless granted an exemption by the
Securities and Exchange Commission from its Rule 10b-6, Stratton Oakmont will be
prohibited from engaging in any market making activities with regard to the
Company's securities for the period from nine business days (or such other
applicable period as Rule 10b-6 may provide) prior to any solicitation of the
exercise of Warrants until the termination of such solicitation activity.
Accordingly, Stratton Oakmont may be unable to continue to provide a market for
the Company's securities during certain periods while the Warrants are
exercisable. See "Risk Factors."
The Company, and certain of its security-holders, may from time to time
offer the securities through underwriters, dealers or agents who may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Company, and/or the purchasers of the securities for whom they may act
as agent. The security-holders and any such underwriters who participate in the
distribution of the securities may be deemed to be underwriters, and any profits
on the sale of the securities by them and any discounts, commissions or
concessions received by any such underwriters, dealers or agents might be deemed
to be underwriting discounts and commissions under the Securities Act. To the
extent the selling security-holders may be deemed to be underwriters, the
Selling Security-holders may be subject to certain statutory liabilities of the
Securities Act, including, but not limited to, Sections 11, 12 and 17 of the
Securities Act and Rule 10b-5 under the Exchange Act.
The securities offered hereby may be sold from time to time in one or more
transactions at fixed prices, at prevailing market prices at the time of sale,
at varying prices determined at the time of sale or at negotiated prices. The
securities may be sold by one or more of the following methods, without
limitation: (a) a block trade in which the broker or dealer so engaged will
attempt to sell the securities as agent but may position and resell a portion of
the block as principal to facilitate the transaction; (b) purchases by a broker
or dealer as principal and resale by such broker or dealer for its account
28
<PAGE>
pursuant to this Prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; (d) an exchange
distribution in accordance with the rules of such exchange; and (e) face-to-face
transactions between sellers and purchasers without a broker-dealer. At any time
a particular offer of the securities is made, a Prospectus supplement, if
required, will be distributed which will set forth the aggregate amount of
securities being offered and the terms of the offering, including the name or
names of any underwriters, dealers or agents, any discounts, commissions and
other items constituting compensation from the Company and the Selling
Security-holders and any discounts, commissions or concessions allowed or
reallowed or paid to dealers. Such Prospectus supplement and, if necessary, a
post-effective amendment to the registration statement, of which this Prospectus
is a part, will be filed with the Commission to reflect the disclosure of
additional information with respect to the distribution of the securities. In
addition, the securities covered by this Prospectus may be sold in private
transactions or under Rule 144 rather than pursuant to this Prospectus.
The Company, and certain of its security-holders, and any other persons
participating in such distribution will be subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder, including, without
limitation, Rules 10b-6, 10b-7 and 10b-21(T), which may limit the timing or
purchases and sales of any of the securities by the Company and the Selling
Security-holders and any other such person. Furthermore, under Rule 10b-6 under
the Exchange Act, any person engaged in the distribution of the securities may
not simultaneously engage in market making activities with respect to the
particular securities being distributed for a period of nine business days prior
to the commencement of such distribution. All of the foregoing may affect the
marketability of the securities and the ability of any person or entity to
engage in market-making activities with respect to the securities.
The Company has agreed to pay the expenses of this offering, estimated at
$150,000, incidental to the registration, offering and sale of the securities to
the public.
DETERMINATION OF PUBLIC OFFERING PRICE
The exercise price of the Class A Warrants has been determined by
negotiations between the Company and Stratton Oakmont, Inc., an underwriter of
the Company's initial public offering of securities on August 14, 1995. Among
the factors considered in the negotiations were an analysis of the areas of
activity in which the Company is engaged, the present state of the Company's
business, the Company's financial condition, the Company's prospects, an
assessment of management, the general condition of the securities market and the
demand for similar securities of comparable companies. The exercise price of the
Class A Warrants does not necessarily bear any relationship to assets, earnings,
book value or other criteria of value applicable to the Company.
LEGAL PROCEEDINGS
Neither MVSI, Inc. nor any of its wholly-owned subsidiaries is a party to
any significant legal proceedings.
However, in a letter dated March 16, 1995, Robotic Vision Systems, Inc.
("RVSI"), a competitor of the Company in the lead scanning equipment market, has
made a charge of patent infringement and threatened litigation against the
Company based on a patent that it allegedly owns. On February 27, 1992, RVSI
sent the Company a similar notice of its claim that the Company's scanning
equipment infringed RVSI's patent rights. The Company believes that its lead
scanning products and systems do not infringe RVSI's patent rights and that
RVSI's asserted patent is invalid. The Company so informed RVSI in 1992 and
again on March 30, 1995. The Company has been informed that RVSI has made
similar claims to the Company's present and prospective customers in the past
and believes that the Company has lost United States customers as a result of
those claims. The Company believes that RVSI's claims are without merit and is
considering its legal options with respect to RVSI's conduct in this matter.
29
<PAGE>
LEGAL MATTERS
The validity of the securities being offered hereby will be passed upon for
the Company by Thomas T. Prousalis, Jr., Esq., 1919 Pennsylvania Avenue, N.W.,
Suite 800, Washington, D.C. 20006. Mr. Prousalis is the beneficial owner of
400,000 shares of Common Stock of the Company. However, upon the acquisition of
e-Net, Inc., a Delaware corporation, by the Company, of which there is no
assurance, Mr. Prousalis will own a total of 850,000 shares of the Common Stock
of the Company by virtue of his equity ownership in e-Net, Inc.
EXPERTS
The financial statements of MVSI, Inc. and Subsidiaries as of September 30,
1995 and each of the years in the two year period ended September 30, 1995,
included in the Annual Report on Form 10-K for the year ended September 30, 1995
which are incorporated by reference in the Registration Statement and this
Prospectus have been included herein in reliance on the report dated November
20, 1995, of Grant Thornton LLP, Independent Certified Public Accountants, and
upon the authority of such firm as experts in accounting and auditing.
30
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE HEREBY. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY PERSON IN ANY JURISDICTION IN
WHICH SUCH AN OFFER WOULD BE UNLAWFUL. ANY MATERIAL MODIFICATION OF THE OFFERING
WILL BE ACCOMPLISHED BY MEANS OF AN AMENDMENT TO THE REGISTRATION STATEMENT. IN
ADDITION, THE RIGHT IS RESERVED BY THE COMPANY TO CANCEL ANY CONFIRMATION OF
SALE PRIOR TO THE RELEASE OF FUNDS, IF, IN THE OPINION OF THE COMPANY,
COMPLETION OF SUCH SALE WOULD VIOLATE FEDERAL OR STATE SECURITIES LAWS OR A RULE
OR POLICY OF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC., WASHINGTON,
D.C. 20006.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information.......................... 2
Incorporation of Certain Information by
Reference..................................... 3
Prospectus Summary............................. 4
Selected Financial Data........................ 8
Risk Factors................................... 9
Price Range of Common Stock.................... 21
Dividend Policy................................ 21
Use of Proceeds................................ 22
Dilution....................................... 24
Description of Securities...................... 25
Plan of Distribution........................... 29
Legal Proceedings.............................. 30
Legal Matters.................................. 31
Experts........................................ 31
</TABLE>
------------------------
UNTIL , 1996 (25 DAYS AFTER THE EFFECTIVE DATE OF THIS
PROSPECTUS), ALL BROKER-DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
5,140,000 CLASS A WARRANTS
5,140,000 SHARES, UNDERLYING
CLASS A WARRANTS
AND
180,000 UNITS, UNDERWRITERS'
PURCHASE OPTION
360,000 SHARES,
UNDERLYING UNDERWRITERS'
PURCHASE OPTION
360,000 CLASS A WARRANTS, UNDERLYING
UNDERWRITERS' PURCHASE OPTION
360,000 SHARES, UNDERLYING
CLASS A WARRANTS
MVSI, INC.
---------------------
PROSPECTUS
---------------------
, 1996
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
PART TWO
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an itemization of expenses, payable by the Company from the
net proceeds of this offering, incurred by the Company in connection with the
issuance and distribution of the securities of the Company being offered hereby.
The Company has agreed to pay all of the expenses related to the registration of
the securities by the Selling Security-holders and their assigns, which are
included herein. All expenses are estimated except the Commission Registration
and Filing Fees. See "Use of Proceeds."
<TABLE>
<S> <C>
Commission Registration and Filing Fee(1)........................ $ 10,074
Financial Printing............................................... 25,000
Transfer Agent Fees.............................................. 10,000
Accounting Fees and Expenses..................................... 15,000
Legal Fees and Expenses.......................................... 75,000
Blue Sky Fees and Expenses....................................... 10,000
Miscellaneous.................................................... 4,926
---------
TOTAL........................................................ $ 150,000
---------
---------
</TABLE>
- ------------------------
(1) Paid upon initial filing of this Registration Statement and related
Prospectus.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by Delaware law, the Company's Certificate of Incorporation
includes a provision which provides that a director of the Company shall not be
personally liable to the Company or its stockholders for monetary damages for a
breach of fiduciary duty as a director, except (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of the law, (iii) under Section 174 of the General Corporation Law of
the State of Delaware, which prohibits the unlawful payment of dividends or the
unlawful repurchase or redemption of stock, or (iv) for any transaction from
which the director derives an improper personal benefit. This provision is
intended to afford directors protection against, and to limit their potential
liability for monetary damages resulting from, suits alleging a breach of the
duty of care by a director. As a consequence of this provision, stockholders of
the Company will be unable to recover monetary damages against directors for
action taken by them that may constitute negligence or gross negligence in
performance of their duties unless such conduct falls within one of the
foregoing exceptions. The provision, however, does not alter the applicable
standards governing a director's fiduciary duty and does not eliminate or limit
the right of the Company or any stockholder to obtain an injunction or any other
type of nonmonetary relief in the event of a breach of fiduciary duty.
Management of the Company believes this provision will assist the Company in
securing and retaining qualified persons to serve as directors. The Company is
unaware of any pending or threatened litigation against the Company or its
directors that would result in any liability for which such director would seek
indemnification or similar protection.
Such indemnification provisions are intended to increase the protection
provided directors and, thus, increase the Company's ability to attract and
retain qualified persons to serve as directors. Because directors liability
insurance is only available at considerable cost and with low dollar limits of
coverage and broad policy exclusions, the Company does not currently maintain a
substantial amount of liability insurance for the benefit of its directors
although the Company may attempt to acquire additional insurance in the future.
The Company believes that the substantial increase in the number of lawsuits
being threatened or filed against corporations and their directors and the
general unavailability of directors liability insurance to provide protection
against the increased risk of personal liability resulting from such lawsuits
have combined to result in a growing reluctance on the part of
II-1
<PAGE>
capable persons to serve as members of boards of directors of public companies.
The Company also believes that the increased risk of personal liability without
adequate insurance or other indemnity protection for its directors may result in
overcautious and less effective direction and management of the Company.
Although no directors have resigned or have threatened to resign as a result of
the Company's failure to provide insurance or other indemnity protection from
liability, it is uncertain whether the Company's directors would continue to
serve in such capacities if improved protection from liability were not
provided.
The provisions affecting personal liability do not abrogate a director's
fiduciary duty to the Company and its shareholders, but eliminate personal
liability for monetary damages for breach of that duty. The provisions do not,
however, eliminate or limit the liability of a director for failing to act in
good faith, for engaging in intentional misconduct or knowingly violating a law,
for authorizing the illegal payment of a dividend or repurchase of stock, for
obtaining an improper personal benefit, for breaching a director's duty of
loyalty (which is generally described as the duty not to engage in any
transaction which involves a conflict between the interest of the Company and
those of the director) or for violations of the federal securities laws. The
provisions also limit or indemnify against liability resulting from grossly
negligent decisions including grossly negligent business decisions relating to
attempts to change control of the Company.
The provisions regarding indemnification provide, in essence, that the
Company will indemnify its directors against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with any action, suit or proceeding arising out of the
director's status as a director of the Company, including actions brought by or
on behalf of the Company (shareholder derivative actions). The provisions do not
require a showing of good faith. Moreover, they do not provide indemnification
for liability arising out of willful misconduct, fraud, or dishonesty, for
"short-swing" profits violations under the federal securities laws, or for the
receipt of illegal remuneration. The provisions also do not provide
indemnification for any liability to the extent such liability is covered by
insurance. One purpose of the provisions is to supplement the coverage provided
by such insurance. However, as mentioned above, the Company does not currently
provide such insurance to its directors, and there is no guarantee that the
Company will provide such insurance to its directors in the near future although
the Company may attempt to obtain such insurance.
The provisions diminish the potential rights of action which might otherwise
be available to shareholders by limiting the liability of officers and directors
to the maximum extent allowable under Delaware law and by affording
indemnification against most damages and settlement amounts paid by a director
of the Company in connection with any shareholders derivative action. However,
the provisions do not have the effect of limiting the right of a shareholder to
enjoin a director from taking actions in breach of his fiduciary duty, or to
cause the Company to rescind actions already taken, although as a practical
matter courts may be unwilling to grant such equitable remedies in circumstances
in which such actions have already been taken. Also, because the Company does
not presently have a substantial amount of directors liability insurance and
because there is no assurance that the Company will procure such insurance or
that if such insurance is procured it will provide coverage to the extent
directors would be indemnified under the provisions, the Company may be forced
to bear a portion or all of the cost of the director's claims for
indemnification under such provisions. If the Company is forced to bear the
costs for indemnification, the value of the Company stock may be adversely
affected. In the opinion of the Securities and Exchange Commission,
indemnification for liabilities arising under the Securities Act of 1933 is
contrary to public policy and, therefore, is unenforceable.
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
This following is a list of Exhibits filed herewith by MVSI, Inc. as part of
the Registration Statement and related Prospectus:
<TABLE>
<C> <S>
1.0 Form of Underwriting Agreement.
1.1 Selected Dealers Agreement.
1.2 Form of Agreement Among Underwriters.
3.0 Certificate of Incorporation, filed April 12, 1994.
3.1 By-laws, as amended.
4.0 Specimen Copy of Common Stock Certificate.
4.1 Form of Class A Warrant Certificate.
4.2 Form of Class B Warrant Certificate.
4.3 Form of Underwriter's Purchase Option.
4.4 Form of Warrant Agreement.
5.0 Opinion of Thomas T. Prousalis, Jr., Esq. for Registrant.
10.0 Stock Purchase Agreement and Plan of Reorganization, dated November 1, 1994.
10.1 Employment Agreement, Edward Ratkovich, Maj. Gen., USAF (ret.)
10.2 Employment Agreement, Louis K. Lukanovich.
10.3 Employment Agreement, Bojko D. Vodanovic.
10.4 Texas Instruments Incorporated Agreement, dated April 1, 1994.
10.5 Possehl Hong Kong Precision Machining Ltd. Agreement, dated April 28, 1994
10.6 NJC Technical Letter, dated July 21, 1994.
10.7 NRC License Agreement, dated September 12, 1986.
10.8 MRCO License Agreement, dated February 25, 1994.
10.9 United States Patent, Number 5,406,372, dated April 11, 1995.
10.10 Consent and Waiver, dated June 30, 1995.
24.0 Consent of Thomas T. Prousalis, Jr., Esq. is contained on page II-6 of the
Registration Statement.
24.1 Consent of Grant Thornton LLP is contained on page II-7 of the Registration
Statement.
25.0 Power of Attorney appointing Edward Ratkovich, Maj. Gen., USAF (ret.) is
contained on page II-5 of the Registration Statement.
</TABLE>
ITEM 17. UNDERTAKINGS
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 provisions described in Item 14, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned Registrant hereby undertakes.
(1) To file, during any period in which any offers or sales are being
made, a post-effective amendment to the 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)
II-3
<PAGE>
which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii)
To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any other material change to such information in the
registration statement.
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to
Section 13 or 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 Act each
such post-effective amendment may be deemed to be a new registration
statement relating to the securities being offered therein and the
offering of such securities as the time may be deemed to be initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities which are being registered which remain unsold
at the termination of the offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
II-4
<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 City of Washington, District of Columbia, on October 11,
1996.
MVSI, INC.
By:____________EDWARD RATKOVICH____________
Chairman of the Board
Purusant 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:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ----------------------------------------------- --------------------
<C> <S> <C>
EDWARD RATKOVICH Chairman of the Board, President and Chief October 11, 1996
Edward Ratkovich Executive Officer
BOJKO D. VODANOVIC* Vice President, Secretary, Director October 11, 1996
Bojko D. Vodanovic
BARRY J. HATFIELD Vice President, Assistant Secretary, Director October 11, 1996
Barry J. Hatfield
MARK J. MCKNIGHT, C.P.A. Vice President, Assistant Secretary, Chief October 11, 1996
Mark J. McKnight, C.P.A. Financial Officer and Controller
EDWARD P. ROBERTS* Assistant Secretary, Director October 11, 1996
Edward P. Roberts
CLIVE G. WHITTENBURY, PH.D.* Director October 11, 1996
Clive G. Whittenbury, Ph.D.
</TABLE>
<TABLE>
<S> <C>
By: EDWARD RATKOVICH*
Edward Ratkovich
Attorney-in-Fact
</TABLE>
II-5
<PAGE>
CONSENT OF COUNSEL
The consent of Thomas T. Prousalis, Jr., Esq., 1919 Pennsylvania Avenue,
N.W., Suite 800, Washington, D.C. 20006, to the use of his name in this Form S -
3 Registration Statement, and related Prospectus, as amended, of MVSI, Inc. is
contained in his opinion filed as Exhibit 5.0 hereto.
II-6
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated November 20, 1995 (except for Note L, as to
which the date is December 4, 1995) accompanying the consolidated financial
statements of MVSI, Inc., and subsidiaries included in the Annual Report on Form
10-K for the year ended September 30, 1995 which are incorporated by reference
in this Registration Statement. We consent to the incorporation by reference in
the Registration Statement of the aforementioned reports and to use of our name
as it appears under the caption "Experts."
GRANT THORNTON LLP
Vienna, Virginia
October 11, 1996
II-7
