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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 25, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PARAVANT COMPUTER SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
FLORIDA 59-2209179
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1615A WEST NASA BOULEVARD
MELBOURNE, FLORIDA 32901
(407) 727-3672
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
RICHARD P. McNEIGHT
PRESIDENT AND CHIEF OPERATING OFFICER
PARAVANT COMPUTER SYSTEMS, INC.
1615A WEST NASA BOULEVARD
MELBOURNE, FLORIDA 32901
(407) 727-3672
(Name, address, including zip code, and telephone number
including area code, of agent for service)
Copy to:
James Martin Kaplan, Esq.
Tenzer Greenblatt LLP
405 Lexington Avenue
New York, New York 10174
(212) 885-5000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier registration
statement for the same offering. [ ] ____
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) PRICE PER UNIT(2) PRICE(2) REGISTRATION FEE
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Common Stock, par value
$.015 per share 480,000 $1.25 $600,000 $177.00
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(1) The shares of Common Stock being registered hereunder are issuable upon
exercise by the Selling Stockholders of certain warrants ("Bridge
Warrants") held by them. Pursuant to Rule 416 of the Securities Act of
1933, as amended, this Registration Statement also relates to such
additional indeterminate number of shares of Common Stock as may become
issuable by reason of stock splits, dividends and similar adjustments in
accordance with the antidilution provisions of the Bridge Warrants.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, as amended (the
"Act"), based on the average of the high and low prices of the Common
Stock on September 23, 1998, which was $1.25.
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.
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PARAVANT COMPUTER SYSTEMS, INC.
CROSS REFERENCE SHEET
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ITEM
NUMBER ITEM HEADING IN PROSPECTUS
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1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus..................................... Table of Contents; Available Information; Documents
Incorporated by Reference
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges......................... Prospectus Summary; Risk Factors
4. Use of Proceeds................................... Use of Proceeds
5. Determination of Offering Price *
6. Dilution.......................................... *
7. Selling Security Holders.......................... Selling Securityholders and Plan of Distribution
8. Plan of Distribution.............................. Selling Securityholders and Plan of Distribution
9. Description of Securities to be Registered........ Documents Incorporated by Reference
10. Interests of Named Experts and Counsel............ Experts; Legal Matters
11. Material Changes.................................. Not applicable
12. Incorporation of Certain Information by
Reference......................................... Documents Incorporated by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities.... Disclosure of Commission Position on Indemnification for
Securities Act Liabilities
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* Not Applicable.
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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.
PRELIMINARY PROSPECTUS DATED SEPTEMBER 25, 1998
SUBJECT TO COMPLETION
PROSPECTUS
PARAVANT COMPUTER SYSTEMS, INC.
480,000 SHARES OF COMMON STOCK
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This Prospectus relates to the offer and sale of up to 480,000
shares (the "Shares") of common stock, par value $.015 per share ("Common
Stock"), of Paravant Computer Systems, Inc. (the "Company," "Paravant" or
"PCS"), which Shares will be offered for the account of certain securityholders
of the Company, none of whom are affiliates of the Company (the "Selling
Securityholders"). The Shares will be acquired by the Selling Securityholders
upon the exercise of warrants (the "Bridge Warrants") which were originally sold
to the Selling Securityholders in connection with the Company's August 1995
bridge financing (the "1995 Bridge Financing").
Each of the Bridge Warrants entitles the holder thereof to
purchase one share of Common Stock at an exercise price of $2.00 per share at
any time until June 3, 2001. After the expiration of such exercise period, the
Bridge Warrants will be void and of no value. The Bridge Warrants are subject to
earlier redemption as follows: if the average of the closing bid prices of the
Common Stock (if the Common Stock is then traded on a national securities
exchange or the Nasdaq National Market or the Nasdaq SmallCap Market) exceeds
$2.00 for any consecutive 20 trading days, then upon at least 30 days' prior
written notice, given within 60 days of the period, the Company will be able to
call all (but not less than all) of the Bridge Warrants for redemption at a
price of $.0167 per Bridge Warrant. In addition, the Bridge Warrants contain
provisions that protect the holders thereof against dilution by adjustment of
the exercise price and number of shares issuable upon exercise on the occurrence
of certain events.
It is anticipated that the Shares will be offered and sold by
the Selling Securityholders, or by pledgees, donees, transferees or other
successors-in-interest thereof, from time to time in transactions (which may
include block transactions) on the Nasdaq National Market ("Nasdaq"), in the
over-the-counter market or otherwise, in private sales or in negotiated
transactions, through the writing of options, or a combination of such methods
of sale, at fixed prices which may be changed, at market prices prevailing at
the time of sale, at prices related to such market prices, or at negotiated
prices. The Selling Securityholders or such other parties may effect such
transactions by selling Common Stock to or through broker-dealers or otherwise,
and such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Securityholders and/or the
purchasers of the Common Stock for whom such broker-dealers may act as agent or
to whom they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). See "Selling
Securityholders and Plan of Distribution."
The Company will not receive any proceeds from the sale of the
Shares offered by the Selling Securityholders hereby. The Company has agreed to
pay all of the expenses of registration incurred in connection herewith;
provided, however, that all selling and other expenses incurred by the Selling
Securityholders will be borne by the Selling Securityholders.
The Common Stock is traded on Nasdaq under the symbol "PVAT".
On September 23, 1998, the closing sale price of the Common Stock on Nasdaq was
$1.1875.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK
AND IMMEDIATE SUBSTANTIAL DILUTION AND SHOULD NOT BE PURCHASED BY INVESTORS WHO
CANNOT AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS"
(COMMENCING ON PAGE 7).
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is , 1998
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AVAILABLE INFORMATION
Pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), the Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (together with all amendments
and exhibits thereto, the "Registration Statement") of which this Prospectus is
a part. This Prospectus does not contain all the information set forth in the
Registration Statement, to which reference is hereby made for further
information. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily complete.
With respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is hereby made to the exhibit
for a more complete description of the matter involved, and each such statement
shall be deemed qualified in its entirety by such reference. The Registration
Statement may be inspected and copies may be obtained from the Public Reference
Section at the Commission's principal office, 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549, and at the New York Regional Office, 7 World
Trade Center, New York, New York 10048, upon payment of the fees prescribed by
the Commission.
The Company is subject to the requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith is
required to file reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed with the
Commission by the Company can be inspected at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
or at the Regional Offices of the Commission located at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661 and at 7 World Trade
Center, Suite 1300, New York, New York 10048. Copies of such materials can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, the
Commission also maintains a Web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information which have been filed
electronically with the Commission.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Commission are incorporated into
this Registration Statement by reference:
(a) The Company's Annual Report on Form 10-KSB for the fiscal year
ended September 30, 1997;
(b) The Company's Quarterly Report on Form 10-QSB for the period ended
December 31, 1997;
(c) The Company's Quarterly Report on Form 10-QSB for the period ended
March 31, 1998;
(d) The Company's Quarterly Report on Form 10-QSB for the period ended
June 30, 1998;
(e) The description of the Company's Common Stock, par value $.015 per
share, contained in the Company's Registration Statement on Form SB-2
(Registration No. 333-38279) filed with the Commission on October 20, 1997;
(f) The Company's Proxy Statement and Notice of Meeting relating to the
Special Meeting of Shareholders to be held on September 17, 1998, as filed with
the Commission on August 11, 1998; and
(g) All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since September 30, 1997.
All documents filed by the Company after the date of this Prospectus
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the sale of all of the securities offered hereunder or the deregistration of all
such securities then remaining unsold, shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner of any of the Common Stock, to whom a copy of this Prospectus
has been delivered, upon the written or oral request of such person, a copy of
any and all of the documents referred to above which have been or may be
incorporated by reference in this Prospectus. Requests for such copies of any
document should be directed to William R. Craven, Secretary, 1615A West Nasa
Boulevard, Melbourne, Florida 32901, telephone number (407) 727-3672.
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PROSPECTUS SUMMARY
Unless otherwise indicated, the information set forth in this
Prospectus gives effect to a three-for-one stock split of the Company's common
stock, par value $.045 per share ("Old Common Stock"), which was effected on
July 25, 1996 (the "Stock Split"). Pursuant to the Stock Split, each holder of
record of Common Stock on July 22, 1996 received two additional shares of Old
Common Stock for each share held on such date. In connection with the Stock
Split, the Company amended its Articles of Incorporation to decrease the par
value of its common stock from $.045 per share to $.015 per share, as a result
of which each share of Old Common Stock was converted into a share of common
stock, par value $.015 per share ("Common Stock"). In addition, in connection
with the Stock Split, the Company elected to effect a three-for-one split (the
"Public Warrant Split") of the Company's publicly traded redeemable warrants
(the "Public Warrants"), which Public Warrants originally represented the right
to purchase one share of Common Stock at an exercise price of $6.00 per share.
As a result of the Public Warrant Split, effective July 25, 1996, each holder of
a Public Warrant thereafter held, in lieu of one Public Warrant to purchase one
share of Common Stock at an exercise price of $6.00 per share, three Public
Warrants, each to purchase one share of Common Stock at an exercise price of
$2.00 per share. Likewise, in connection with the Stock Split, the Company
elected to adjust the terms of the Bridge Warrants (the "Bridge Warrant Split"),
each of which originally represented the right to purchase one share of Common
Stock at an exercise price of $6.00 per share. As a result of the Bridge Warrant
Split, effective July 25, 1996, each holder of a Bridge Warrant thereafter held,
in lieu of one Bridge Warrant to purchase one share of Common Stock at an
exercise price of $6.00 per share, three Bridge Warrants, each to purchase one
share of Common Stock at an exercise price of $2.00 per share. Unless otherwise
indicated, the information set forth in this Prospectus gives effect to the
Public Warrant Split and the Bridge Warrant Split.
THE COMPANY
Paravant Computer Systems, Inc. (the "Company", "Paravant" or "PCS") is
a manufacturer of ruggedized, portable computers and communications interfaces
utilized in outdoor and medical settings. Paravant also offers extensive
customization services to modify its standard products to the specific needs of
end users. The Company's laptop and hand-held systems are designed and built to
function in adverse environments under harsh weather, climate and operational
conditions. Because the Company's products are insulated from temperature
extremes, flying debris, shock, vibration, moisture and humidity, they are able
to achieve high-level performance and reliability in difficult circumstances.
The Company's products are sold to U.S. and foreign military establishments,
other government agencies and commercial enterprises. In addition, the Company
has entered the medical market by selling to manufacturers of certain types of
implantable medical devices a computer device known as a "programmer," which
enables the implanted device to be externally reprogrammed.
MILITARY AND OTHER COMMERCIAL MARKETS. The hand-held and laptop
computers that the Company manufactures perform tasks and functions of an
extensive nature. In military applications, PCS's computers operate weapon
systems, provide radar displays, process incoming information, communicate with
other systems, train personnel in system's utilization and diagnose and maintain
equipment. In Raytheon's Hawk Anti-Aircraft Missile System, for example, PCS's
computers display radar information indicating the location of potential
targets, control the firing of missiles and serve as communicators of
information and orders. In the government and commercial areas, the Company's
products are used to collect, store, download and process data obtained in the
field. They are specifically utilized in environmental studies, land mapping and
surveys, oil exploration and medical testing.
The Company believes that it has several competitive advantages over
other companies selling similar products. Specifically, the Company believes
that, because it emphasizes ruggedization of its products from the selection and
design of components to assembly and encasement in sealed containers through the
extensive testing at various phases, it has achieved high levels of capability,
performance and reliability for its products. PCS also offers its customers
engineering services that modify its standard products for specialized
applications or provide complete integration of a variety of different
interfaces required for a specific application. Moreover, PCS's ability to
incorporate state-of-the-art communications interfaces into its products allows
computers to talk to one another and provide end-users with solutions to
important technical problems. Finally, the Company specializes in miniaturizing
electronic equipment, and, consequently, is able to place more computing power
or communications capability into smaller and lighter configurations. See "Risk
Factors", generally and "Risk Factors -- Competition".
Unlike PCS, PCS's competition typically does not design for
ruggedization from start to finish but rather purchases off-the-shelf computers
or electronics available in the commercial market and encases them in
protective, air-breathing boxes. These companies also generally do not provide
customization services, and furnish only limited communication capabilities for
their products, if at all. Naturally, given the higher levels of performance,
capability and reliability of PCS's computers, its products tend to be
substantially more expensive than those similar items offered by its
competitors. However, the Company generally does not manufacture the components
for its products. See "Risk Factors -- Competition."
For the fiscal year ended September 30, 1997 and the nine months ended
June 30, 1998, approximately 95% and 97%, respectively, of PCS's total sales
were made, directly or indirectly, to the military market in the United States
and abroad. The remaining 5% and 3%, respectively, of its sales for such periods
were made to the government and commercial markets. Approximately 1% and 3%,
respectively, of its total sales for the same period were made by it directly to
foreign customers while additional sales of its products were made abroad by its
U.S. customers.
In the military market, the Company's customers include the Armed
Forces of the U.S. government, foreign governments and major aerospace companies
and prime military contractors, such as Raytheon Company, Lockheed Martin
Corporation and Texas Instruments. In regard to the government marketplace, PCS
has sold its products to the U.S. Environmental Protection Agency, the U.S.
Forestry Service, state Departments of Transportation and other
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government agencies. In the commercial market, the Company's computers have been
sold to public utilities, timber and logging companies, surveyors, civil
engineering firms and railroads.
While the general trend in defense spending is toward reductions of
overall expenditures, current trends in U.S. military procurement and budgeting
policies appear to be favorable to the Company. In its attempt to economize, the
U.S. military tends to avoid expenditures on new large weapon systems and
special-function computers wherever possible. In contrast, much of the Company's
product emphasis is on upgrading and retro-fitting existing weapon systems in
order to increase their overall capabilities. In its product offerings, PCS also
stresses enhanced support for electronic warfare systems, diagnostics and
maintenance of military equipment as well as battlefield communications and data
processing. All of these areas are important to the U.S. military establishment
in its procurement policies and strategic plans. Finally, PCS's miniaturization
and customization capabilities, which make military electronic systems lighter
and more compact, lend themselves to greater application to military needs in
this age of rapid deployment of forces and equipment. Despite these factors, it
is uncertain whether continued downward trends in military spending may have
material adverse effects on the Company's future business. See "Risk Factors."
THE MEDICAL MARKET. The Company has begun designing and developing
computer devices known as "programmers" to be sold to manufacturers of certain
types of implantable medical devices, including drug delivery devices,
electroneurostimulators, defibrillators and ventricular assist devices.
Increasingly, such implantable devices are capable of being reprogrammed
externally by a programmer via a telemetry link, thereby enabling the physician
to alter the drug delivery rate or dispensing of medication. The Company
believes that many manufacturers of implantable devices would prefer to
outsource the design and production of these programmers, since the skills and
resources required to develop such programmers do not necessarily align with the
core competencies of the manufacturer -- i.e., the implant. To date, the Company
has secured development contracts with four manufacturers of implantable medical
devices in the implantable categories of drug pumps, neurostimulators,
defibrillators and ventricular assist devices. Although the Company believes
that, based on the reputation and experience it has developed in the military
market, it will be able to further penetrate the medical market by targeting
medical device manufacturers who, like the Company's military customers, require
expert electrical and mechanical engineering capabilities, strict documentation
control, adherence to multiple specifications and configuration control
management, there can be no assurance of such or that any programmers will be
successfully developed by the Company or, if developed, will meet with broad
market acceptance.
The Company was incorporated under the laws of the State of Florida in
June 1982. In June 1996, the Company consummated an initial public offering (the
"IPO") of Common Stock and Public Warrants.
The Company's principal executive offices are located at 1615A West
Nasa Boulevard, Melbourne, Florida 32901 and its telephone number is (407)
727-3672.
RECENT DEVELOPMENTS
NAME CHANGE. Consistent with the long range plans of the Board of
Directors to further diversify the business activities of the Company in the
defense, communications and related electronics industry, the Board recommended
a change in the name of the Company from Paravant Computer Systems, Inc. to
Paravant Inc. in order to present a corporate identity which is not limited
solely to the Company's present core business. The proposal to change the name
of the Company was approved at a special meeting of the Company's shareholders
held on September 17, 1998 (the "Special Meeting of Shareholders"). The Company
will effect the name change by filing a name change amendment to the Company's
articles of incorporation. It is currently anticipated that such name change
amendment will be filed within thirty days after the date of the Special Meeting
of Shareholders.
PROPOSED ACQUISITION. On March 31, 1998, the Company announced that it
had entered into an agreement (the "Acquisition Agreement") to acquire
Engineering Development Laboratories, Incorporated ("EDL") and Signal Technology
Laboratories, Inc., EDL's majority-owned subsidiary ("STL" and, together with
EDL, "EDL-STL"). These privately-held affiliated companies are engaged in the
business of designing, developing and producing equipment to meet U.S. and
foreign government requirements. On September 17, 1998, at the Special Meeting
of Shareholders, the Acquisition Agreement was approved and adopted by the
Company's shareholders. Pursuant to such agreement, which is subject certain
conditions set forth therein, the Company will acquire all of the outstanding
capital stock of EDL and substantially all of the business and assets of STL, in
consideration for which stock and assets the Company will pay an aggregate
consideration consisting of (i) approximately $8.7 million in cash, (ii)
three-year, $4.8 million notes bearing interest at the rate of 8% and (iii)
3,950,000 shares of Common Stock (the "EDL-STL Acquisition"). In addition, in
connection with the EDL-STL Acquisition, a contingent cash earn-out will be
payable by the Company under specified circumstances over a period of up to five
years based on EDL-STL's future profits and, if paid, will be recorded as
additional compensation expense for the fiscal years ending September 30, 2000
to September 30, 2003. EDL, whose primary customers include the U.S. Air Force,
U.S. Navy and U.S. Marines and allied military forces, specializes in designing,
developing and producing avionics equipment used to modify the airborne
platforms employed by Special Operations forces. STL, whose customers include
several U.S. government agencies and government prime contractors, designs and
produces digital signal processing hardware, digital switch matrices for signal
routing purposes, and other products for signal enhancement and modification. It
is currently anticipated that the EDL-STL Acquisition, which is subject to
certain conditions set forth in the Acquisition Agreement, will be consummated
on or about October 1, 1998; provided, however, that the parties to the EDL-STL
Acquisition have agreed that, by mutual agreement, the closing date may be
extended to a date not later than October 30, 1998 or, if necessary to comply
with certain regulatory requirements, to a date not later than thirty-two days
thereafter. Under the Acquisition Agreement, if the shareholders of EDL-STL or
the Company do not perform their respective obligations to consummate the
EDL-STL Acquisition, the non-performing party or parties would be obligated to
pay the other party liquidated damages of $1,000,000 plus certain costs and
expenses.
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There can be no assurance that the EDL-STL Acquisition will be consummated or,
if consummated, that it will be consummated as currently scheduled on October 1,
1998.
The Company intends to finance the cash portion of the consideration to
be paid by the Company in connection with the EDL-STL Acquisition. The Company
has received a conditional commitment from National City Bank, Dayton, Ohio for
floating rate financing in an amount up to $14,000,000 (the "EDL-STL Acquisition
Financing") under a revolving line of credit with a maturity date of December
31, 2001, convertible thereafter to five year term debt. Pursuant to the
conditional commitment, the rate of interest would be determined at a rate equal
to the Bank's prime rate, the federal funds rate or the LIBOR rate plus a margin
which ranges from 1.5% to 2% based on the debt to tangible net worth ratio at
the beginning of the applicable LIBOR rate contract period. The Company may
elect among the rates based upon conditions on the dates upon which funds are
drawn. The EDL-STL Acquisition Financing would be secured by a first security
interest in accounts, contract rights, inventory, equipment and other security
reasonably requested by the lender. It is anticipated that the loan agreement
applicable to the EDL-STL Acquisition Financing will include various loan
covenants and restrictions of a customary nature. Such covenants and
restrictions, while the EDL-STL Acquisition Financing is outstanding, under
certain circumstances, may limit the ability of the Company to pay cash
dividends, undertake additional acquisitions, make certain changes in the
Company's management, or otherwise limit obligations undertaken by, or
operations of, the Company. The Company anticipates obtaining the line of credit
immediately preceding the closing of the EDL-STL Acquisition. The ability of the
Company to close the EDL-STL Acquisition is dependent upon the Company's
obtaining the EDL-STL Acquisition Financing or other financing in a comparable
amount from another source. Under the terms of the acquisition agreement
relating to the EDL-STL Acquisition, the availability of the EDL-STL Acquisition
Financing is not a condition to the Company's obligation to close the
transaction.
In the event the EDL-STL Acquisition is consummated, the Company's
operations will become subject to certain additional risk factors related
thereto, which risk factors are described herein under "Risk Factors --
Additional Risks Related to the Proposed EDL-STL Acquisition."
A copy of the Acquisition Agreement has been included as an exhibit to
this Registration Statement, and the foregoing summary of certain terms and
provisions of the Acquisition Agreement is qualified in its entirety by
reference to the full text of the Acquisition Agreement. In addition, a more
detailed description of the EDL-STL Acquisition (including, without limitation,
a description of the background of and reasons for the EDL-STL Acquisition as
well as a description of the business of each of EDL and STL) is set forth in
the Company's Proxy Statement relating to the Special Meeting of the
Shareholders, which was filed with the Commission on August 11, 1998. Copies of
such Proxy Statement may be obtained from the Commission in the manner described
under the heading "Available Information."
ISO-9001 CERTIFICATION. On March 27, 1998, the Company's manufacturing
and assembly facilities and procedures were certified as being in compliance
with the quality and assurance standards of ISO-9001, an international standard
promulgated by the International Organization for Standardization, a worldwide
federation of standards bodies from approximately 100 countries. These standards
have been adopted by the European Economic Community as their preferred quality
standards and, to some degree, by the U.S. Department of Defense and the U.S.
Food and Drug Administration (the "FDA"). The Company believes that such
certification will enable it to increase its marketing opportunities in the
domestic and international military markets for ruggedized computers as well as
in the medical market for the Company's "programmers," although there can be no
assurance of such.
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THE OFFERING
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Securities Offered................................... The Shares to be sold pursuant to this Prospectus by the
Selling Securityholders include up to 480,000 shares of
Common Stock issuable upon the exercise of Bridge Warrants
which were originally sold to the Selling Securityholders in
the 1995 Bridge Financing.
Common Stock Outstanding
Before the Offering................................ 8,343,928 shares (1)
After the Offering................................. 8,823,928 shares (2)
Use of Proceeds...................................... The Company will not receive any of the proceeds from the
sale by the Selling Securityholders of Shares to be issued to
the Selling Securityholders upon exercise of the Bridge
Warrants held by them. Management anticipates that the net
proceeds, if any, received by the Company upon the exercise
of any of the Bridge Warrants will be allocated to working
capital and general corporate purposes; the Company may
also use a portion of such proceeds to repay any indebtedness
which may be outstanding under the Company's secured line
of credit arrangement at the time such proceeds become
available to the Company.
Risk Factors......................................... The securities offered hereby are speculative and involve a
high degree of risk and should not be purchased by investors
who cannot afford the loss of their entire investment. See
"Risk Factors."
Nasdaq symbol........................................ Common Stock -- "PVAT."
</TABLE>
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(1) Based on the number of shares outstanding as of September 23, 1998. Does
not include (i) 1,269,050 shares of Common Stock reserved for issuance
upon exercise of stock options granted under the Company's Incentive
Stock Option Plan (the "Incentive Plan"); (ii) 1,652,357 shares of
Common Stock reserved for issuance upon exercise of options available
for future grant under the Incentive Plan; (iii) 43,500 shares of Common
Stock reserved for issuance upon exercise of options granted under the
Company's Nonemployee Directors' Stock Option Plan (the "Directors'
Plan"); (iv) 78,000 shares of Common Stock reserved for issuance upon
exercise of options available for future grant under the Directors'
Plan; (v) 22,143 shares of Common Stock reserved for issuance upon
exercise of options granted under a non-qualified stock option plan
previously maintained by the Company, which has been cancelled; (vi)
25,000 shares of Common Stock reserved for issuance upon exercise of
options granted pursuant to certain Special Non-Qualified Non-Plan Stock
Option Agreements (the "Option Agreements"); (vii) 288,000 shares of
Common Stock reserved for issuance upon exercise of certain warrants
(the "Underwriter's Warrants") issued to the underwriter engaged by the
Company in the IPO (the "Underwriter"); (viii) 47,982 shares of Common
Stock reserved for issuance upon exercise of Public Warrants underlying
the Underwriter's Warrants; (ix) 5,089,803 shares of Common Stock
reserved for issuance upon exercise of currently outstanding Public
Warrants; and (x) 480,000 shares of Common Stock issuable upon exercise
of the Bridge Warrants. Also excludes an aggregate of 3,950,000 shares
of Common Stock to be issued pursuant to the Acquisition Agreement in
the event the EDL-STL Acquisition is consummated.
(2) Assumes the exercise of all 480,000 Bridge Warrants. Does not include
any of the shares of Common Stock referred to in clauses (i) through
(ix) of Note 1 above or any of the shares of Common Stock to be issued
pursuant to the Acquisition Agreement in the event the EDL-STL
Acquisition is consummated.
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RISK FACTORS
An investment in the securities offered hereby is speculative in
nature, involves a high degree of risk and should only be made by investors who
can afford the loss of their entire investment. Prospective investors should
give careful attention to these risk factors, as well as to the other
information described elsewhere in this Prospectus, including the financial
statements and notes thereto, in evaluating the Company, its business and
management before making a decision to purchase the Common Stock. In addition to
the risks discussed below, businesses, including the Company's, are often
subject to risks not foreseen, anticipated or appreciated by its management.
This Prospectus contains certain "forward-looking statements" within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. All statements other than statements of historical information provided
herein are forward-looking statements and may contain information about
financial results, economic conditions, trends and known uncertainties. Actual
results could differ materially from those projected in the forward-looking
statements as a result of the risk factors set forth below and elsewhere in this
Prospectus, including but not limited to the budgetary and appropriations
policies of the Company's governmental customers, the competitive environment
for the Company's products and services, the timing of new orders and the degree
of market penetration of the Company's new products.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's analysis, judgment,
belief or expectation only as of the date hereof. The Company undertakes no
obligation to publicly revise these forward-looking statements to reflect events
or circumstances that arise after the date hereof. In addition to the disclosure
contained herein, readers should carefully review any disclosure of risks and
uncertainties contained in other documents the Company files or has filed from
time to time with the Securities and Exchange Commission pursuant to the
Exchange Act.
SUBSTANTIAL DEPENDENCE UPON MILITARY SALES
The majority of PCS's sales have historically been to the United
States military, foreign military or military suppliers. The Company's future
success, if any, is highly dependent on the continued purchase by the military
of its portable computers or equipment manufactured by others which contain its
devices. For the fiscal years ending September 30, 1997 and 1996 and for the
nine months ended June 30, 1998 and 1997, direct and indirect sales of the
Company's products to the U.S. Department of Defense and foreign governments
represented approximately 95%, 96%, 97% and 95%, respectively, of its sales.
Attempts to reduce military expenditures have commenced worldwide for a
multitude of reasons, including budget deficit reduction and a perceived easing
of global tensions.
For the past several years, the uncertain defense budget situation has
caused delays in contract awards and reduced funding for various military
programs. Management expects that these downward trends will continue through
1999. Notwithstanding the foregoing, most of PCS's product sales to the U.S.
military have either been unaffected by such reductions in military spending or
have benefitted from increases in such funding. Management believes that this
has occurred because its products are often used for upgrades or retrofits of
existing military devices, electronic warfare systems, portable diagnostic and
maintenance equipment, lighter systems for rapid deployment and digitization of
the battlefield. However, although to date the Company has generally not been
adversely affected by delays in contract awards or reductions in spending, there
can be no assurance that any future delays or reductions will not have a
material adverse effect on the Company's business.
Recent announcements from the U.S. Congress and Defense Department
indicate that overall defense spending may stabilize or increase modestly;
however, it is extremely difficult to predict the amount or pattern of such
spending. Management believes that in the foreseeable future military spending
on new weapon systems will continue to be restricted to research and development
of military hardware already under development and to limited production of such
systems. During this period, the Company anticipates that the U.S. military will
still emphasize the upgrading, repair and extended use of older systems.
One example of the U.S. military's deferring expenditures on new
weapon systems involves its handling of the F-16 and F-22 fighter planes.
Instead of replacing F-16's with the newer F-22's, the military has, in its
economizing efforts, sought to continue the F-16's in service for longer
periods. As a consequence, PCS's sales of its portable computers to Lockheed
Martin Corporation as part of that company's upgraded electronic maintenance
systems for F-16's actually increased in 1997 and 1998. Should the U.S. military
alter this policy and seek full-scale production of the F-22 planes, sales of
the Company's computers for such maintenance systems will, in all likelihood,
decrease.
In an effort to reduce expenses, the U.S. military has increased its
efforts to purchase commercial off-the-shelf computers for all applications,
including certain of the applications served by the Company's ruggedized
computers. Although management believes that the U.S. military will continue to
have a need for the Company's customized and ruggedized computer products, there
can be no assurance of such. Rather, the U.S. military may elect to purchase
off-the-shelf products exclusively or substantially reduce its purchases of
ruggedized computers. Any such elimination or substantial reduction of purchases
by the U.S. military of the Company's ruggedized
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computers would have a material adverse effect on the Company's primary market
and would therefore have a significant adverse effect on the Company's business
and prospects.
COMPLIANCE WITH REGULATORY OPERATIONAL STANDARDS
The Company's manufacturing and assembly facilities and procedures
have been certified as being in compliance with the quality and assurance
standards of ISO-9001, an international standard promulgated by the
International Organization for Standardization, a worldwide federation of
standards bodies from approximately 100 countries. These standards have been
adopted by the European Economic Community as their preferred quality standard
and, to some degree, by the U.S. Department of Defense and the FDA. The Company
has also obtained approval from the FDA to function as a contract manufacturer
for manufacturers of certain medical products. The Company believes that its
ISO-9001 certification will enable the Company to increase its marketing
opportunities in the domestic and international military markets for ruggedized
computers as well as in the medical market for the Company's "programmers,"
although there can be no assurance of such. Any failure by the Company to
maintain its compliance with such standards could prevent its expansion in such
markets and could have a material adverse effect on its direct and indirect
sales to the U.S. military as well as to certain foreign customers. Likewise,
any failure by the Company to maintain its FDA approval could materially and
adversely affect its sales in the medical market and its ability to expand into
such market.
GOVERNMENT REGULATION AND CONTRACTS
Commercial enterprises engaged primarily in supplying equipment and
services, directly or indirectly, to the United States government are subject to
special risks such as dependence on government appropriations, termination
without cause, contract renegotiation and competition for the available
Department of Defense ("DoD") business. PCS has no material DoD contracts,
however, that are subject to renegotiation in the foreseeable future and is not
aware of any proceeding to terminate material DoD contracts in which it may be
indirectly involved. In addition, many of the Company's contracts provide for
the right to audit its cost records and are subject to regulations providing for
price reductions if inaccurate cost information was submitted by PCS. See "Risk
Factor -- Competition."
DEPENDENCE ON MAJOR CUSTOMERS
The Company's business is substantially dependent on a relatively
small number of customers and DoD programs. In the fiscal years ended September
30, 1997 and 1996 and the nine months ended June 30, 1998, Raytheon Company's
Missile Systems Division (46%, 49% and 49%, respectively) and Lockheed Martin
Corporation (36%, 21% and 28%, respectively) accounted for an aggregate of 82%,
70% and 77%, respectively, of PCS's total sales. The loss of Raytheon or
Lockheed Martin as a customer could have a material adverse effect on PCS's
results of operations or financial condition. In recent years, there have been a
number of consolidations of various prime contractors serving the defense
industry. To date, the Company has not been adversely affected by any such
consolidations and the Company does not anticipate that consolidations of
contractors will negatively impact the Company, although there can be no
assurance of such.
As of June 30, 1998, the Company's backlog was $9,367,564, consisting
of firm fixed price purchase orders, 77% of which was represented by large
orders from two customers: Medtronic, Inc. (61%), Raytheon Company (16%). The
remaining 23% of such backlog represented orders from approximately 9 other
customers. The Company currently expects to manufacture and deliver $7,913,503
of the products in backlog within the next 12 months, and to complete the
remaining $1,454,061 of products in backlog over the next 24 months. Although
all of the purchase orders included in the Company's backlog are expected to
generate profits within the Company's historical levels, there can be no
assurance of such. In addition, although the Company believes that the
completion of the orders constituting its backlog, and any new orders which may
be accepted by the Company in the future, should not result in additional
liquidity pressures that cannot be addressed in a manner consistent with the
Company's past practices, there can be no assurance that such completion of the
Company's backlog will not have a material adverse effect on the Company's
liquidity or financial condition. Likewise, the loss or diminution of orders
from any large customer or group of customers could have a substantial adverse
effect on the Company's business and prospects.
TECHNOLOGICAL OBSOLESCENCE OR FAILURE AND UNCERTAIN MARKET ACCEPTABILITY
The markets served by the Company are characterized by rapid
technological advances, changes in customer requirements and frequent new
product introductions and enhancements. PCS's business requires substantial
ongoing research and development efforts and expenditures, and its future
success will depend in large measure on its ability to enhance its current
products and develop and introduce new products that keep pace with
technological developments in response to evolving customer requirements.
Nevertheless, while the Company is under pressure to introduce new products
which embody recent technology, the Company is under less pressure than computer
companies serving either commercial markets or commercial applications within
the military. The Company's military customers buy the Company's products for
use in rugged tactical applications and place a high premium on low risk in
terms of performance and complete configuration control (i.e., once a specific
product configuration is selected, military customers often do not want the
product to change in order to ensure absolute software compatibility as well
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as to ensure that spare parts and trained personnel will be able to consistently
and reliably support the products in the field for years). Typically, the
Company will trail the commercial market in terms of technology and the
Company's experience to date is that this is usually acceptable to the
risk-averse engineering community which the Company serves, since the customer
is afforded the opportunity to purchase "proven" technology. Many older
customers continue to buy the old product configurations and even new customers
sometimes adopt the older design products. However, most new customers start
buying the Company's most recently introduced products but will then want to buy
the identical product configuration over an extended period of time. Likewise,
in the medical market, the Company believes that, while it may be under pressure
to introduce new products which incorporate recent technology, the Company's
medical customers will seek to purchase "proven" technology and will not wish to
experience changes in the products selected. Accordingly, while the Company is
under continuing pressure to design new products, it is not under the same
degree of intense pressure as companies in the commercial market to offer the
latest technologies well ahead of its competitors. There can be no assurance,
however, that in the future the Company's failure to anticipate or respond
adequately to technological developments and changing customer requirements, the
occurrence of significant delays in new product development or introduction or
the technological failures of its products or the systems in which they are
incorporated would not result in a material loss of anticipated future revenues
and seriously impair PCS's competitiveness.
In addition, PCS may misgauge market needs and introduce products that
fail to gain the necessary market acceptance due to a variety of factors,
including pricing. Hence, it is also uncertain whether new products or
enhancements of existing products can be successfully marketed and sold by the
Company.
RISKS OF FOREIGN SALES
For the fiscal years ended September 30, 1997 and 1996 and the nine
months ended June 30, 1998 and 1997, the Company derived approximately 1%, 18%,
3% and 1% of its total sales, respectively, from foreign markets. Although
foreign sales do not currently represent a significant portion of the Company's
revenue, such sales may represent a greater portion of the Company's future
revenues, although there can be no assurance of such. In addition, foreign sales
of Paravant products by both Raytheon and Lockheed Martin represent an important
percentage of their past and present sales opportunities. Foreign sales are
subject to numerous risks, including political and economic instability in
foreign markets, restrictive trade policies of foreign governments, inconsistent
product regulation by foreign agencies or governments, currency valuation
variations, exchange control problems, the imposition of product tariffs and the
burdens of complying with a wide variety of international and U.S. export laws
and differing regulatory requirements. To date, the Company's foreign sales have
been transacted in U.S. dollars and payments have generally been supported by
letters of credit. To the extent, however, that any future foreign sales are
transacted in a foreign currency or not supported by letters of credit, PCS
would also be subject to possible losses due to foreign currency fluctuations
and difficulties associated with collection of accounts receivable abroad.
SEASONALITY, COST OVERRUNS AND LONG SALES CYCLE
Because so much of its sales are related to the U.S. military and
government procurement, the Company's business is greatly influenced by the
timing of such purchases. Many U.S. military and government purchasing decisions
tend to be effectuated in the last portion of the Federal government's fiscal
year. As a consequence, a gradual increase of the Company's sales develops
during its first three quarters, but most sales actually occur in its fourth
quarter ending September 30th each year to correspond with such government
purchase decisions. This unevenness in sales generation and development can
exert significant pressure on management's capabilities and the Company's
resources. Although at times PCS has experienced strains on, and shortages of,
working capital resulting from such seasonality, the impact of such seasonality
has been significantly reduced in the fiscal years ending September 30, 1997 and
1998 as a result of the Company's increased backlog and revenues. However, there
can be no assurance that the adverse impact on the Company's working capital and
other resources resulting from the seasonality associated with U.S. military and
government purchases will not recur in the future.
For the most part, the Company enters into the equivalent of fixed
price contracts with its customers for the sales of its computer products and
engineering services. In the event that PCS has not properly estimated the costs
in advance of such sales or undergoes unforeseen difficulties in developing or
producing the products or services, its costs may exceed the prices previously
agreed upon or may be so great as to narrow significantly its expected profit
margins. Although the Company has not historically experienced cost overruns,
such cost overruns may in the future have a material adverse impact on the
Company's business and its profitability.
On the military side of its business, the Company often experiences a
lengthy sales cycle that, from beginning to end, may run for as many as five
years in some cases. There are generally a number of crucial points in this
cycle, including the identification of a product need in a military program, the
retention of the prime contractor, retention of subcontractors for each element,
assembly of elements for prototype systems, testing of such systems, funding for
production runs of the systems and execution of the production contracts for the
prime contractor and the sub-contractors. Not only does this cycle take a long
time, but it is also susceptible to failure at each crucial point.
In addition, the Company will also experience a lengthy sales cycle
with respect to its medical-related computer products, primarily due to the
length of time required to obtain approval of such products from the FDA. In
developing programmers for implantable medical device manufacturers, the Company
must first design each
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particular programmer based on the unique specifications of the particular
manufacturer with respect to its implantable medical device. Once the programmer
has been tested and approved by the manufacturer, the manufacturer must
thereafter submit the complete implantable device, including the Company's
programmer, for FDA approval, which can take from three to eighteen months. Any
delays in obtaining FDA approval for any such devices, whether resulting from
the portion of the device relating to the Company's programmer or from the
portion of the device developed by the manufacturer of the implantable device,
could have a material adverse effect on the Company's business and operations.
Consequently, the Company can and does invest heavily in time, money
and manpower to obtain subcontracts for military production runs on its products
and will invest heavily in time, money and manpower to design and implement its
medical computer products. In the final analysis, such investments may yield no
business at all or may take so long to develop that PCS's resources are strained
or other more profitable opportunities are missed.
COMPETITION
The Company competes in the rugged portable computer business with a
wide variety of computer manufacturers and repackagers, many of which are
larger, better known and have more resources in finance, technology,
manufacturing and marketing. PCS competes on the basis of customization
capabilities, price, performance, delivery and quality. In many situations, the
Company will not be the lowest-priced bidder.
Because a large portion of PCS's business is military-related, the
procurement procedure for militarized computers -- i.e., Indefinite Delivery,
Indefinite Quantity ("IDIQ") contracts -- could have a material adverse impact
on the Company's efforts to sell its computers to the U.S. military. IDIQ
represents large bulk purchasing of commercial and militarized computers. With
only a small portion of computers purchased being militarized, these large
umbrella contracts offer the U.S. government the lowest prices, but usually each
reaches hundreds of millions of dollars. As a result, only large companies can
afford to bid on these contracts, and smaller companies, like PCS, can be easily
locked out of the process unless they have formed strategic alliances with a
larger successful company or unless other means to avoid the impact of IDIQ's
are found. For the last five years, the Company has been able to sell its
computers to the U.S. military notwithstanding the IDIQ requirements because
such computers fall into product categories not currently covered by IDIQ
requirements. However, there can be no assurance that such IDIQ requirements
will not in the future have a material adverse effect on the Company's ability
to sell its computers to the U.S. military.
In the military and government markets, the Company will often be
engaged, directly or indirectly, in the process of seeking competitive bid or
negotiated contracts with government departments and agencies. These government
contracts are subject to specific rules and regulations with which the Company
may have difficulty complying. In most cases, the Company tends to be the high
priced bidder for military bids since, among other reasons, the Company designs
its computers on an overall basis to assure their ruggedness and use in the
worst circumstances and, therefore, employs more expensive components than its
competitors and makes extensive modifications and refinements of its computers
to meet the specifications and special needs of its customers. As a result, the
Company is occasionally one of only a few companies whose products meet the
required specifications designated by such customers.
In the medical market, the Company believes that many medical device
manufacturers either design and produce their own medical support devices such
as reprogrammers or hire a design consultant to design such devices and contract
with a third party to manufacture the devices. Although the Company believes
that it will compete based on its ability to offer a full design and production
service to medical device manufacturers, there can be no assurance of such, or
that the Company will be able to compete successfully with other computer
manufacturers who provide similar design and production services to medical
device manufacturers.
DEPENDENCE UPON KEY PERSONNEL AND ATTRACTION OF QUALIFIED PERSONNEL
The Company is highly dependent on the services of Richard P.
McNeight, its President and Chief Operating Officer. The Company has entered
into an employment contract with him effective through December 31, 1999. The
Company has also obtained "key-man" term insurance in the amount of $1,500,000
on his life. The loss of Mr. McNeight's services to the Company could materially
and adversely affect its business and operations.
In recent years, as PCS's business has improved and Mr. McNeight has
assumed more day-to-day management responsibilities, Krishan K. Joshi, PCS's
Chairman and Chief Executive Officer, has spent considerably more of his time
managing the Company's acquisition opportunities. Management believes that Mr.
Joshi's diminished role with respect to the day-to-day operations of the Company
has not had, and will not have in the future, any adverse effects on the
Company's operations or financial condition.
Competition for qualified employees is intense, and the loss of any
such person or the inability to locate, attract, retain and motivate qualified
personnel required for the expansion of PCS's activities could materially and
adversely affect its business and operations. There can be no assurance that PCS
will be successful in this regard or, if successful, that the services of such
personnel can be secured on terms deemed favorable to it.
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RELIANCE ON SUB-CONTRACTORS AND SUPPLIERS
The Company subcontracts the fabrication of its computer boards to a
few third party manufacturers. It purchases the metal cases, hard disk drives,
brackets, window panels and the keyboards for its portable computers from sole
sources such as Distec, Xcel and HiTech. PCS also licenses its software from
sole sources, including MicroSoft, Phoenix Technology, Magnavox and JFK
Associates. Many of its other components are furnished by outside suppliers.
Except for its software suppliers, it does not have written agreements with any
of these subcontractors or suppliers. This reliance on a few subcontractors,
sole sources and other suppliers can result, and has in the past resulted, in
some delays in deliveries as well as quality control and production problems. In
an attempt to minimize such problems, the Company has developed and keeps an
inventory of parts that are generally more difficult to obtain. However, any
interruption, suspension or termination of component deliveries from the
Company's suppliers could have a material adverse effect on its business.
Although management believes that in nearly every case alternative sources of
supply can be located, inevitably a certain amount of time would be required to
find substitutes. During any such interruption in supplies, the Company may have
to curtail the production and sale of its computers for an indefinite period.
Accordingly, any such interruption, suspension or termination of component
deliveries could have a material adverse effect on the Company's business.
NO ASSURANCE AS TO PROTECTION OF INTELLECTUAL PROPERTY; DEPENDENCE ON
INTELLECTUAL PROPERTY
The Company has no patent or copyright protection on its products. Its
ability to compete effectively with other companies will depend, in part, on its
ability to maintain the proprietary nature of its technologies. PCS intends to
rely substantially on unpatented proprietary information and know-how, and
there can be no assurance that others will not develop such information and
know-how independently or otherwise obtain access to its technology. In
addition, although management believes that the Company's technology does not
infringe patents or other rights owned by others, there can be no assurance that
third parties will not assert infringement claims against the Company in the
future or be successful in asserting such claims, as a result of which the
Company could be put in a position where it would be unable to license such
technology at a reasonable cost.
POSSIBLE PRODUCT LIABILITY
The risk that the Company's products may malfunction and cause a loss
of or error in data, loss of man hours, damage to, or destruction of, equipment
or delays is significant. Consequently, PCS, as a manufacturer of such
computers, may be subject to claims if such malfunctions or breakdowns occur.
The Company is not aware of any past or present claims against it. While PCS
presently maintains product liability insurance of $1,000,000, it cannot be
certain that such coverage will be adequate to satisfy future claims, if any.
In connection with products developed by the Company for sale in the
medical market, the Company requires that its contracts with its medical device
customers include provisions requiring such customers to indemnify the Company
or provide insurance for any claims brought against the Company as a result of
any malfunctions in the programmable devices sold by such customers. There can
be no assurance that any such indemnification or insurance will satisfy future
claims, if any. In addition, there can be no assurance that the Company will be
able to secure such provisions in future contracts with medical device
manufacturers or any future medical industry customers.
POSSIBLE NEED FOR ADDITIONAL FINANCING
The Company anticipates that the Company's existing working capital
and anticipated cash flow from the Company's operations, together with the
proceeds from the exercise of any Bridge Warrants or other outstanding options
or warrants and the proceeds of the EDL-STL Acquisition Financing (or similar
financing) to fund the cash portion of the EDL-STL Acquisition and the future
operations of the acquired companies, will be sufficient to satisfy the
Company's cash requirements for at least twelve months. In the event the
Company's plans change (due to unanticipated expenses or difficulties or
otherwise), or if the Company's existing working capital and projected cash flow
otherwise prove insufficient to fund operations, the Company could be required
to seek additional financing sooner than currently anticipated. Except for the
Company's current bank loans and the EDL-STL Acquisition Financing, the Company
has no current arrangements with respect to, or sources of, additional
financing. Accordingly, there can be no assurance that additional financing will
be available to the Company when needed, on commercially reasonable terms, or at
all. The Company's inability to obtain such additional financing could have a
material adverse effect on the Company's long-term liquidity and on the proposed
business expansion plans of the Company.
ADDITIONAL RISKS RELATED TO THE PROPOSED EDL-STL ACQUISITION
As described elsewhere herein, the Company has entered into the
Acquisition Agreement, pursuant to which, subject to certain conditions set
forth in the Acquisition Agreement, the Company will purchase all of the
outstanding capital stock of EDL, a privately-held company which specializes in
designing, developing and producing avionics equipment used to modify the
airborne platforms employed by Special Operations forces, and substantially all
of the business and assets of STL, a privately-held company and majority-owned
subsidiary of EDL which designs and produces digital signal processing hardware,
digital switch matrices for signal routing purposes and other products for
signal enhancement and modification. It is currently anticipated that the
EDL-STL Acquisition will be
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consummated on or about October 1, 1998; however, there can be no assurance that
the EDL-STL Acquisition will be consummated or, if consummated, that it will be
consummated as currently scheduled on October 1, 1998. In the event the EDL-STL
Acquisition is consummated, the Company's future operations will become subject
to certain additional risk factors related thereto, including the following: (i)
the fact that, during recent periods, the revenue and earnings of EDL and STL
were materially higher than those of earlier periods and that, in evaluating the
results of operations for such recent periods in relation to those of prior
periods and reasonable expectations for periods following the consummation of
the EDL-STL Acquisition, management may not have adequately discounted its
evaluation of recent periods, with the result that the EDL-STL Acquisition could
be less favorable to the Company and its shareholders than anticipated by
management; (ii) following the consummation of the EDL-STL Acquisition, the
Company may not be able to obtain the required consent of third parties to
transfer a major portion of the customers and business of STL to the Company;
(iii) the continuing successful operation of the businesses of EDL and STL
following the consummation of the EDL-STL Acquisition will largely depend on the
Company's retaining key management personnel of EDL and STL; (iv) the Company
may experience difficulties in assimilating the acquired businesses into its
business, and the process of combining the acquired businesses may cause an
interruption of, or a loss of momentum in, the Company's business; (v) the
issuance by the Company of 3,950,000 shares of Common Stock to the shareholders
of EDL and STL in connection with the EDL-STL Acquisition will cause dilution in
the ownership interest of the Company's existing shareholders, and the ownership
of such shares of Common Stock by the shareholders of EDL and STL following the
consummation of the EDL-STL Acquisition will provide them with the ability to
exercise substantial influence in the election of directors and other matters
submitted for approval by the Company's shareholders; and (vi) the EDL-STL
Acquisition may have a dilutive effect on the future book value per share and
earnings per share of the Company in the event the results achieved by the
Company following the acquisition of EDL and STL are less favorable than the
results which could have been achieved by the Company on a stand-alone basis.
RISKS ASSOCIATED WITH POSSIBLE FUTURE ACQUISITIONS
In addition to its internal growth strategies, the Company intends to
evaluate, on an ongoing basis, potential acquisitions of, or investments in,
businesses or assets which the Company believes will complement or enhance its
existing business and operations. While the Company regularly evaluates possible
acquisition opportunities, as of the date of this Prospectus the Company has no
current agreements, commitments, understandings or arrangements with respect to
any potential acquisition other than the EDL-STL Acquisition. There can be no
assurance that the EDL-STL Acquisition or any future acquisitions by the Company
will be successful or improve the Company's operating results. In addition, the
Company's ability to complete acquisitions will depend on the availability of
both suitable target businesses and acceptable financing. Any future
acquisitions, including the EDL-STL Acquisition, may result in a potentially
dilutive issuance of additional equity securities, the incurrence of additional
debt or increased working capital requirements. Any such acquisition may also
result in earnings dilution, the amortization of goodwill and other intangible
assets or other charges to operations, any of which could have a material
adverse effect on the Company's business, financial condition or results of
operations. Such acquisitions could involve numerous risks, including, without
limitation, difficulties in the assimilation of the operations, products,
services and personnel of any acquired company and the diversion of management's
attention from other business concerns. Although the Company will endeavor to
evaluate the risks inherent in a particular acquisition, there can be no
assurance that the Company will properly ascertain or assess all significant
risk factors prior to consummating any acquisition.
YEAR 2000 COMPLIANCE
The Company has conducted a comprehensive review of its computer
systems to identify any systems that could be affected by the "Year 2000" issue.
The Year 2000 problem is the result of computer programs being written using two
digits rather than four to define the applicable year. Any programs that have
time-sensitive software may recognize a date using '00' as the year 1900 rather
than the year 2000. This could result in a major systems failure or
miscalculations. The Company has determined the Year 2000 problem will not pose
any operational problems for the Company's computer systems or result in any
material expense for the Company, as all programs currently being used have
already been modified or converted. However, the Company is still in the process
of assessing the potential effect on the Company should a significant vendor,
supplier or customer not be Year 2000 compliant in a timely manner.
MANAGEMENT'S BROAD DISCRETION IN USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale by the
Selling Securityholders of Shares to be issued to the Selling Securityholders
upon exercise of the Bridge Warrants held by them. Management anticipates that
the net proceeds, if any, received by the Company upon the exercise of any of
the Bridge Warrants will be allocated to working capital and general corporate
purposes; the Company may also use a portion of such proceeds to repay any
indebtedness which may be outstanding under the Company's secured line of credit
arrangement at the time such proceeds become available to the Company. Although
there can be no assurance as to the number of Bridge Warrants, if any, that will
be exercised, the Company's management will have broad discretion with respect
to the application of all or a substantial portion of the net proceeds from any
such exercises of the Bridge Warrants.
-12-
<PAGE>
<PAGE>
CONCENTRATION OF OWNERSHIP
As of the date of this Prospectus, Krishan K. Joshi, the Company's
Chairman, Richard P. McNeight, the Company's President, and William R. Craven,
the Company's Vice President of Marketing, beneficially own approximately 23.2%,
12.1% and 6.0%, respectively, of the outstanding shares of Common Stock of the
Company (assuming no exercise of options or warrants held by persons other than
Messrs. Joshi, McNeight and Craven). Although such stockholders do not hold, in
the aggregate, a majority of the voting securities of the Company, their
significant beneficial holdings enable them to exercise substantial influence
over the Company.
NO DIVIDENDS
The Company has not paid any dividends on its shares of Common Stock
and intends to follow a policy of retaining any earnings to finance the
development and growth of its business. Accordingly, it does not anticipate the
payment of cash dividends in the foreseeable future. However, the payment of
dividends, if any, rests within the discretion of the Board of Directors and
will depend upon, among other things, the Company's earnings, its capital
requirements and its overall financial condition.
QUALIFICATION AND MAINTENANCE REQUIREMENTS FOR NASDAQ LISTING; MARKET VOLATILITY
The stock market has, from time to time, experienced significant price
and volume fluctuations that may be unrelated to the operating performance of
any particular company. In addition, the market prices of the securities of many
publicly-traded companies in the computer and defense industries have in the
past been, and can in the future be expected to be, especially volatile. Various
factors and events, including future announcements of new product and service
offerings by the Company or its competitors, and economic and other external
factors, as well as fluctuations in the Company's financial results, could have
a significant impact on the market prices of the Company's securities.
The Common Stock and Public Warrants are quoted on the Nasdaq National
Market. The Commission has approved rules imposing criteria for listing of
securities on the Nasdaq National Market, including standards for maintenance of
such listing. In order to qualify for initial quotation of securities on the
Nasdaq National Market, a company, among other things, must have at least
$4,000,000 in net tangible assets, $3,000,000 in market value of the public
float and a minimum bid price of $5.00 per share. For continued listing, a
company must have, among other things, either (i) $4,000,000 in net tangible
assets, a public float of at least 750,000 shares with a market value of at
least $5,000,000 and a minimum bid price of $1.00 per share or, alternatively,
(ii) a market capitalization of $50,000,000 or total assets and total revenues
of $50,000,000 each, a public float of at least 1,100,000 shares with a market
value of at least $15,000,000 and a minimum bid price of $5.00. If the Company
is unable to satisfy the Nasdaq National Market's maintenance criteria in the
future, its securities may be delisted from the Nasdaq National Market. In such
event, the Company would seek to list its securities on the Nasdaq Small
Capitalization Market. However, if it was unsuccessful, trading, if any, in the
Company's securities would thereafter be conducted in the over-the-counter
market in the so-called "pink sheets" or the NASD's "Electronic Bulletin Board".
As a consequence of such delisting, an investor would likely find it more
difficult to dispose of, or to obtain quotations as to, the price of the
Company's securities.
PENNY STOCK REGULATION
In the event that the Company is unable to satisfy the maintenance
requirements for the Nasdaq National Market and its Common Stock falls below the
minimum bid price of $5.00 per share for the initial quotation, the Company
would seek to list its securities on the Nasdaq Small Capitalization Market. If
it was unsuccessful, trading would be conducted on the "pink sheets" or the
NASD's "Electronic Bulletin Board". In the absence of the Common Stock being
quoted on Nasdaq, or the Company's having $2,000,000 in stockholders' equity,
trading in the Common Stock would be covered by Rule 15g-9 promulgated under the
Exchange Act, for non-Nasdaq and non-exchange listed securities. Under such
rule, broker-dealers who recommend such securities to persons other than
established customers and accredited investors must make a special written
suitability determination for the purchaser and receive the purchaser's written
agreement to a transaction prior to sale. Securities are exempt from this rule
if the market price is at least $5.00 per share.
The Commission adopted regulations that generally define a penny stock
to be any equity security that has a market price of less than $5.00 per share,
subject to certain exceptions. Such exceptions include an equity security listed
on Nasdaq and an equity security issued by an issuer that has (i) net tangible
assets of at least $2,000,000, if such issuer has been in continuous operation
for three years, (ii) net tangible assets of at least $5,000,000, if such issuer
has been in continuous operation for less than three years or (iii) average
revenue of at least $6,000,000 for the preceding three years. Unless an
exception is available, the regulations require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule explaining the
penny stock market and the risks associated therewith.
If the Company's securities were to become subject to the regulations
applicable to penny stocks, the market liquidity for the securities would be
severely affected, limiting the ability of broker-dealers to sell the securities
and the ability of the purchasers in this offering to sell their securities in
the secondary market. There is no assurance
-13-
<PAGE>
<PAGE>
that trading in the Company's securities will not be subject to these or other
regulations that would adversely affect the market for such securities.
POSSIBLE ISSUANCES OF PREFERRED STOCK
Shares of Preferred Stock of the Company may be issued by the Board of
Directors, without stockholder approval, on such terms as the Board may
determine. The rights of the holders of Common Stock will be subject to, and may
be adversely affected by, the rights of the holders of any Preferred Stock that
may be issued in the future. Although the ability to issue Preferred Stock may
provide flexibility in connection with possible acquisitions and other corporate
purposes, such issuance may make it more difficult for a third party to acquire,
or may discourage a third party from acquiring, a majority of the voting stock
of the Company. This result could prevent an increase in the market price of
PCS's Common Stock or cause a decline in such price. PCS has no current plans to
issue any shares of its Preferred Stock.
OUTSTANDING OPTIONS, PUBLIC WARRANTS, UNDERWRITER'S WARRANTS AND BRIDGE WARRANTS
As of September 23, 1998, the Company had outstanding options to
purchase an aggregate of 1,359,693 shares of Common Stock at exercise prices
ranging from $0.243 to $6.00. The Company also had outstanding Public Warrants,
Underwriter's Warrants and Bridge Warrants to purchase an aggregate of
5,089,803, 288,000 and 480,000 shares of Common Stock at exercise prices of
$2.00, $2.00 and $2.00, respectively. Exercise of any of the foregoing options
or warrants will have a dilutive effect on the Company's shareholders.
Furthermore, the terms upon which the Company may be able to obtain additional
equity financing may be adversely effected, since the holders of the options and
warrants can be expected to exercise them, if at all, at a time when the Company
would, in all likelihood, be able to obtain any needed capital on terms more
favorable to the Company than those provided in the options and warrants.
VOLATILITY OF STOCK AND PUBLIC WARRANT PRICES
The Company's Common Stock and Public Warrants have experienced
substantial price fluctuations since the IPO in June 1996. In addition, the
stock market has experienced significant price and volume fluctuations that have
affected the market prices of equity securities of many companies and that often
have been unrelated to the operating performance of such companies. These broad
market fluctuations may adversely affect the market price of the Company's
Common Stock and Public Warrants. In the past, following periods of volatility
in the market price of a company's securities, securities class action
litigation has often been instituted against such a company. Such litigation
could result in substantial costs and a diversion of management's attention and
resources, which would have a material adverse effect on the Company's business,
operating results and financial condition.
POSSIBLE CONTINGENT LIABILITY
In connection with the 1995 Bridge Financing involving certain private
investors which preceded the IPO, the Company may be deemed to have incurred a
technical violation of Section 5 of the Securities Act. Accordingly, there may
be a contingent liability associated with such matter. However, management
believes that there was no such violation, and the possibility of such related
liability is remote.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of a substantial number of shares of Common Stock in the public
market following this offering could adversely affect the market price of such
shares. Upon the consummation of this offering, the Company will have 8,823,928
shares of Common Stock outstanding (assuming no exercise of outstanding options
or warrants other than the Bridge Warrants), of which 5,459,637 shares will be
freely tradeable without restriction or further registration under the
Securities Act. All of the remaining 3,364,291 shares of Common Stock
outstanding are "restricted securities," as that term is defined under Rule 144
promulgated under the Securities Act, and in the future may only be sold
pursuant to a registration statement under the Securities Act, in compliance
with the exemption provisions of Rule 144 (including, without limitation,
certain volume limitations and holding period requirements thereof) or pursuant
to another exemption under the Securities Act.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale by the
Selling Securityholders of Shares to be issued to the Selling Securityholders
upon exercise of Bridge Warrants held by them. Management anticipates that the
net proceeds, if any, received by the Company upon the exercise of any of the
Bridge Warrants will be allocated to working capital and general corporate
purposes; the Company may also use a portion of such proceeds to repay any
indebtedness which may be outstanding under the Company's secured line of credit
arrangement at the time such proceeds become available to the Company.
-14-
<PAGE>
<PAGE>
SELLING SECURITYHOLDERS AND PLAN OF DISTRIBUTION
The 480,000 Shares offered hereby will be offered and sold by the
Selling Securityholders and will be acquired by the Selling Securityholders upon
the exercise of Bridge Warrants currently held by them. The Bridge Warrants were
issued to the Selling Securityholders in connection with the 1995 Bridge
Financing, in which (i) the Company borrowed $400,000 from the Selling
Securityholders pursuant to bridge notes (the "Bridge Notes") with an annual
interest rate of 6% and (ii) sold to the Selling Securityholders the Bridge
Warrants to purchase an aggregate of 480,000 shares of Common Stock. As of the
date hereof, the Bridge Notes have been repaid in full.
Each of the Bridge Warrants entitles the holder thereof to purchase
one share of Common Stock at an exercise price of $2.00 per share at any time
until June 3, 2001. After the expiration of such exercise period, the Bridge
Warrants will be void and of no value. The Bridge Warrants are subject to
earlier redemption as follows: if the average of the closing bid prices of the
Common Stock (if the Common Stock is then traded on a national securities
exchange or the Nasdaq National Market or the Nasdaq SmallCap Market) exceeds
$2.00 for any consecutive 20 trading days, then upon at least 30 days' prior
written notice, given within 60 days of the period, the Company will be able to
call all (but not less than all) of the Bridge Warrants for redemption at a
price of $.0167 per Bridge Warrant. In addition, the Bridge Warrants contain
provisions that protect the holders thereof against dilution by adjustment of
the exercise price and number of shares issuable upon exercise on the occurrence
of certain events.
The number of shares of the Company's Common Stock owned beneficially
by each of the Selling Securityholders as of the date of this Prospectus, the
number of shares of the Company's Common Stock which may be offered by each of
the Selling Securityholders pursuant to this Prospectus and the amount and
percentage of shares to be owned by each of the Selling Securityholders assuming
the sale of all such shares are as follows:
<TABLE>
<CAPTION>
SHARES TO BE OWNED AFTER SALE
OF SHARES REGISTERED FOR RESALE
-------------------------------
SHARES
BENEFICIALLY SHARES BEING PERCENT OF
NAME OF SELLING SECURITYHOLDER OWNED REGISTERED FOR RESALE AMOUNT OUTSTANDING
- ------------------------------ ------ --------------------- ------ ------------
<S> <C> <C> <C> <C>
Mati Achidov 60,000 60,000 -- --
Israel Cohen 60,000 60,000 -- --
David Cymrot 90,000 90,000 -- --
Dental Art Training, Inc. 60,000 60,000 -- --
Kweit, Mantell & Co.
P.C. Profit Sharing Plan 60,000 60,000 -- --
Gary A. Pawl 30,000 30,000 -- --
Steven B. Rosner
Money Purchase Pension Plan 60,000 60,000 -- --
Ziegler, Ziegler & Altman 60,000 60,000 -- --
</TABLE>
The shares of Common Stock offered hereby may be sold or otherwise
disposed of from time to time by the Selling Securityholders, or by pledgees,
donees, transferees or other successors-in-interest thereof, should the Selling
Securityholders or any such other parties determine to make such sales. The
Company is unable to predict whether or when the Selling Securityholders or any
such other parties will determine to proceed with sales of Common Stock, as such
determination will be made by the Selling Securityholders or such other parties.
The sale or other disposition of Common Stock by the Selling Securityholders, or
by pledgees, donees, transferees or other successors-in-interest thereof, may be
effected from time to time in transactions (which may include block
transactions) on the Nasdaq National Market, the over-the-counter market or
otherwise, in private sales or in negotiated transactions, through the writing
of options on Common Stock, or a combination of such methods of sale, at fixed
prices which may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, or at negotiated prices. The
Selling Securityholders or such other parties may effect such transactions by
selling Common Stock to or through broker-dealers or otherwise, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Securityholders and/or the purchasers of Common
Stock for whom such broker-dealers may act as agent or to whom they sell as
principal, or
-15-
<PAGE>
<PAGE>
both (which compensation as to a particular broker-dealer might be in excess of
customary commissions). In addition, any shares of Common Stock covered by this
Prospectus which qualify for sale pursuant to Rule 144 promulgated under the
Securities Act may be sold under Rule 144 rather than pursuant to this
Prospectus.
In connection with distributions of the shares of Common Stock or
otherwise, the Selling Securityholders may enter into hedging transactions with
broker-dealers. In connection with such transactions, broker-dealers may engage
in short sales of the shares of Common Stock registered hereunder in the course
of hedging the positions they assume with Selling Securityholders. The Selling
Securityholders may also sell shares of Common Stock short and deliver the
shares to close out such short positions. The Selling Securityholders may also
enter into option or other transactions with broker-dealers which require the
delivery to the broker-dealer of the shares of Common Stock registered
hereunder, which the broker-dealer may resell pursuant to this Prospectus. The
Selling Securityholders may also pledge the shares of Common Stock registered
hereunder to a broker or dealer and upon a default, the broker or dealer may
effect sales of the pledged shares pursuant to this Prospectus.
The Selling Securityholders and any broker-dealers that act in
connection with the sale of Common Stock hereunder might be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act and any
commissions received by them and any profit on the resale of Common Stock as
principal might be deemed to be underwriting discounts and commissions under the
Securities Act.
The Company has advised the Selling Securityholders that during such
time as they may be engaged in a distribution of the shares of Common Stock
included herein they are required to comply with Regulation M promulgated under
the Exchange Act. With certain exceptions, Regulation M precludes any Selling
Securityholder, any affiliated purchasers and any broker-dealer or other person
who participates in such distribution from bidding for or purchasing, or
attempting to induce any person to bid for or purchase, any security which is
the subject of the distribution until the entire distribution is complete.
Regulation M also prohibits any bids or purchases made in order to stabilize the
price of a security in connection with the distribution of that security. All of
the foregoing may affect the marketability of the Common Stock.
The Company has agreed to pay all expenses of registration incurred in
connection herewith; provided, however, that all selling and other expenses
incurred by the Selling Securityholders will be borne by the Selling
Securityholders.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
The Board of Directors of the Company has authorized the Company to
provide a general indemnification to its officers, directors and employees
regarding any claims or liabilities incurred in the course of their employment.
In addition, the Florida Business Corporation Act (i.e., the corporation law of
the Company's state of incorporation) provides that each officer and director of
the Company shall be indemnified by the Company against certain costs, expenses
and liabilities which he or she may incur in his or her capacity as such.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
-16-
<PAGE>
<PAGE>
EXPERTS
The financial statements of the Company as of and for the years ended
September 30, 1997 and 1996 appearing in the Company's Annual Report on Form
10-KSB have been incorporated by reference herein in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
LEGAL MATTERS
The validity of the Shares has been passed upon by Tenzer Greenblatt
LLP, 405 Lexington Avenue, New York, New York 10174.
-17-
<PAGE>
<PAGE>
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
-----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information............................................2
Documents Incorporated By Reference..............................2
Prospectus Summary...............................................3
Risk Factors.....................................................7
Use of Proceeds.................................................14
Selling Securityholders and Plan of Distribution................15
Indemnification for Securities Act Liabilities..................16
Experts.........................................................17
Legal Matters...................................................17
</TABLE>
================================================================================
================================================================================
PARAVANT COMPUTER
SYSTEMS, INC.
480,000 SHARES OF COMMON STOCK
---------
PROSPECTUS
---------
, 1998
================================================================================
<PAGE>
<PAGE>
PART II
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses to be incurred in connection with the offering
are as follows:
<TABLE>
<S> <C>
SEC registration fee..............................................$ 177.00
Legal fees and expenses...........................................$20,000.00
Printing expenses.................................................$ 2,000.00
Registrar and transfer agent fees and expenses....................$ 1,000.00
Accounting fees and expenses......................................$ 4,500.00
Miscellaneous fees and expenses...................................$ 6,323.00
Total....................................................$34,000.00
==========
</TABLE>
Item 15. Indemnification of Directors and Officers
The Registrant's Board of Directors has authorized it to provide a
general indemnification to its officers, directors and employees regarding any
claims or liabilities incurred in the course of their employment.
The Florida Business Corporation Act ("FBCA") provides that each
officer and director of the Company shall be indemnified by the Registrant
against certain costs, expenses and liabilities which he or she may incur in his
or her capacity as such.
Section # 607.0850 of the FBCA "Indemnification of officers, directors,
employees and agents," provides:
(1) A corporation shall have power to indemnify any person who
was or is a party to any proceeding (other than an action by, or in the
right of, the corporation), by reason of the fact that he is or was a
director, officer, employee, or agent of the corporation or is or was
serving at the request of the corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise against liability incurred in connection
with such proceeding, including any appeal thereof, if he acted in good
faith and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the corporation and, with respect to any
criminal action or proceeding, had reasonable cause not to believe that
his conduct was unlawful. The termination of any proceeding by
judgment, order, settlement, or conviction or upon a plea of nolo
contendere or its equivalent shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of
the corporation or, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.
(2) A corporation shall have power to indemnify any person,
who was or is a party to any proceeding by or in the right of the
corporation to procure a judgment in its favor by reason of the fact
that he is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against
expenses and amounts paid in settlement not exceeding, in the judgment
of the board of directors, the estimated expense of litigating and the
proceeding to conclusion, actually and reasonably incurred in
connection with the defense or settlement of such proceeding, including
any appeal thereof. Such indemnification shall be authorized if such
person acted in good faith and in a manner he reasonably believed to be
in, or not opposed to, the best interests of the corporation, except
that no indemnification shall be made under this subsection in respect
of any claim, issue or matter as to which such person shall have been
adjudged to be liable unless, and only to the extent that, the court in
which such proceeding was brought, or any other court of competent
jurisdiction, shall determine upon application that,
<PAGE>
<PAGE>
despite the adjudication of liability but in view of all circumstances
of the case, such person is fairly and reasonably entitled to indemnify
for such expenses which such court shall deem proper.
(3) To the extent that a director, officer, employee, or agent
of a corporation has been successful on the merits or otherwise in
defense of any proceeding referred to in subsection (1) or subsection
(2), or in defense of any claim, issue, or matter therein, he shall be
indemnified against expenses actually and reasonably incurred by him in
connection therewith.
(4) Any indemnification under subsection (1) or subsection
(2), unless pursuant to a determination by a court, shall be made by
the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee,
or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsection (1) or
subsection (2). Such determination shall be made:
(a) By the board of directors by a majority vote of a
quorum consisting of directors who were not parties to such
proceeding;
(b) If such a quorum is not obtainable, or even if
obtainable, by majority vote of a committee duly designated by
the board of directors (in which directors who are parties may
participate) consisting solely of two or more directors not at
the time parties to the proceeding;
(c) By independent legal counsel;
1. Selected by the board of directors
prescribed in paragraph (a) or the
committee prescribed in paragraph (b);
or
2. If a quorum of the directors cannot be
obtainable for paragraph (a) and the
committee cannot be designated under
paragraph (b), selected by majority vote
of the full board of directors (in which
directors who are parties may
participate); or
(d) By the shareholders by a majority vote of a
quorum consisting of shareholders who were not parties to such
proceeding or, if no such quorum is obtainable, by a majority
vote of shareholders who were not parties to such proceeding.
(5) Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination of permissibility
is made by independent legal counsel, persons specified by paragraph (4)(c)
shall evaluate the reasonableness of expenses and may authorize indemnification.
(6) Expenses incurred by an officer or director in defending a civil or
criminal proceeding may be paid by the corporation in advance of the final
disposition of such proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if he is ultimately found not to
be entitled to indemnification by the corporation pursuant to this section.
Expenses incurred by other employees and agents may be paid in advance upon such
terms or conditions that the board of directors deems appropriate.
(7) The indemnification and advancement of expenses provided pursuant
to this section are not exclusive, and a corporation may make any other or
further indemnification or advancement or expenses of any of its directors,
officers, employees, or agents, under any bylaw, agreement, vote of shareholders
or disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
However, indemnification or advancement of expenses shall not be made to or on
behalf of any director, officer,
II-2
<PAGE>
<PAGE>
employee, or agent if a judgment or other final adjudication establishes that
his actions, or omissions to act, were material to the cause of action so
adjudicated and constitute:
(a) A violation of the criminal law, unless the
director, officer, employee, or agent had reasonable cause to
believe his conduct was lawful or had no reasonable cause to
believe his conduct was unlawful;
(b) A transaction from which the director, officer,
employee, or agent derived an improper personal benefit;
(c) In the case of a director, a circumstance under
which the liability provisions of 'SS'607.0834 are
applicable; or
(d) Willful misconduct or a conscious disregard for
the best interests of the corporation in a proceeding by or in
the right of the corporation to procure a judgment in its
favor or in a proceeding by or in the right of a shareholder.
(8) Indemnification and advancement of expenses as provided in this
section shall continue as, unless otherwise provided when authorized or
ratified, to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of such a person unless otherwise provided when authorized or ratified.
(9) Unless the corporation's articles of incorporation provide
otherwise, notwithstanding the failure of a corporation to provide
indemnification, and despite any contrary determination of the board or of the
shareholders in the specific case, a director, officer, employee, or agent of
the corporation who is or was a party to a proceeding may apply for
indemnification or advancement of expenses, or both, to the court conducting the
proceeding, to the circuit court, or to another court of competent jurisdiction.
On receipt of an application, the court, after giving any notice that it
considers necessary, may order indemnification and advancement of expenses,
including expenses incurred in seeking court-ordered indemnification or
advancement of expenses, if it determines that:
(a) The director, officer, employee, or agent is
entitled to mandatory indemnification or advancement under
subsection (3), in which case the court shall also order the
corporation to pay the director reasonable expenses incurred
in obtaining court-ordered indemnification or advancement of
expenses;
(b) The director, officer, employee, or agent is
entitled to indemnification or advancement of expenses, or
both, by virtue of the exercise by the corporation of its
power pursuant to subsection (7); or
(c) The director, officer, employee, or agent is
fairly and reasonably entitled to indemnification or
advancement of expenses, or both, in view of all the relevant
circumstances, regardless of whether such person met the
standard of conduct set forth in subsection (1), subsection
(2), or subsection (7).
(10) For purposes of this section, the term "corporation" includes, in
addition the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or a merger, so that
any person who is or was a director, officer, employee or agent of a constituent
corporation, or is or was serving at the request of a constituent corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, or other enterprise, is in the same position under this
section with respect to the resulting or surviving corporation as he would have
with respect to such constituent corporation if its separate existence had
continued.
II-3
<PAGE>
<PAGE>
(11) For purposes of this section:
(a) The term "other enterprises" includes employee
benefit plans;
(b) The term "expenses" includes counsel fees,
including those for appeal;
(c) The term "liability" includes obligations to pay
a judgment, settlement, penalty, fine, (including an excise
tax assessed with respect to any employee benefit plan), and
expenses actually and reasonably incurred with respect to a
proceeding;
(d) The term "proceeding" includes any threatened,
pending, or completed action, suit, or other type of
proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal;
(e) The term "agent" includes a volunteer;
(f) The term "serving at the request of the
corporation" includes any service as a director, officer,
employee, or agent of the corporation that imposes duties on
such persons, including duties relating to an employee benefit
plan and its participants or beneficiaries; and
(g) The term "not opposed to the best interest of the
corporation" describes the actions of a person who acts in
good faith and in a manner he reasonably believes to be in the
best interest of the participants and beneficiaries of an
employee benefit plan.
(12) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee, or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against any
such liability under the provisions of this section.
Item 16. Exhibits
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
2.1 Acquisition Agreement dated as of March 31, 1998 by and among
the Registrant, Engineering Development Laboratories
Incorporated, Signal Technology Laboratories, Inc., James E.
Clifford, Edward W. Stefanko, C. David Lamberston, C. Hyland
Schooley, Peter Oberback and Leo S. Torresari (incorporated by
reference to Exhibit 2.1 to the Registrant's Current Report on
Form 8-K dated March 31, 1998).
4.1 Specimen Common Stock Certificate of Registrant (incorporated
by reference to Exhibit 4.1 to Amendment No. 4 to the
Registrant's Registration Statement on Form SB-2 (Registration
No. 33- 91426), as filed with the Securities and Exchange
Commission on May 16, 1996 ("Amendment No. 4")).
4.2 Specimen Warrant of Registrant (incorporated by reference to
Exhibit 4.2 to Amendment No. 4).
</TABLE>
II-4
<PAGE>
<PAGE>
<TABLE>
<S> <C>
4.3 Warrant Agreement between Registrant, Duke & Co., Inc. and
Warrant Agent (incorporated by reference to Exhibit 4.1 to the
Registrant's Quarterly Report on Form 10-QSB for the quarterly
period ended June 30, 1996).
4.4 Form of Lock-Up Agreement (incorporated by reference to Exhibit
4.4 to Amendment No. 3 to the Registrant's Registration
Statement on Form SB-2 (Registration No. 33-91426), as filed
with the Securities and Exchange Commission on March 20, 1996
("Amendment No. 3")).
4.5 Underwriter's Warrant issued to Duke & Co., Inc. (incorporated
by reference to Exhibit 4.2 to the Registrant's Quarterly
Report on Form 10-QSB for the quarterly period ended June 30,
1996).
5.1 Opinion of Tenzer Greenblatt LLP, filed herewith.
10.1 Employment Agreement between the Registrant and Richard P.
McNeight (incorporated by reference to Exhibit 10.1 to the
Registrant's Registration Statement on Form SB-2 (Registration
No. 33-91426), as filed with the Securities and Exchange
Commission on April 21, 1995 ("Registration Statement on Form
SB-2")).
10.2 Employment Agreement between the Registrant and William R.
Craven (incorporated by reference to Exhibit 10.2 to the
Registration Statement on Form SB-2).
10.3 Incentive Stock Option Plan and form of Stock Option Agreement
(incorporated by reference to Exhibit 10.3 to the Registration
Statement on Form SB-2).
10.3A Amendment No. 1 to the Incentive Stock Option Plan
(incorporated by reference to Exhibit 10.3A to Amendment No.
3).
10.3B Incentive Stock Option Plan, as amended March 12, 1998
(incorporated by reference to Exhibit 10.3B to the Registrant's
Quarterly Report on Form 10-QSB for the quarterly period ended
March 31, 1998).
10.4 Original Office Lease and Amendment between the Registrant and
Atrium Professional Centre (incorporated by reference to
Exhibit 10.4 to the Registration Statement on Form SB-2).
10.5 Form of Registrant's Manufacturer's Representative Agreement
(incorporated by reference to Exhibit 10.5 to the Registration
Statement on Form SB-2).
10.6 Form of Registrant's Distributor's Agreement (incorporated by
reference to Exhibit 10.6 to the Registration Statement on Form
SB-2).
10.7 Amended Licensing Agreement between the Registrant and
MicroSoft Corporation (incorporated by reference to Exhibit
10.7 to the Registration Statement on Form SB-2).
10.8 Licensing Agreement between Registrant and Phoenix
Technologies, Ltd. (incorporated by reference to Exhibit 10.8
to the Registration Statement on Form SB-2).
10.9 Joint Development Agreement between Registrant and MES, Inc.
(incorporated by reference to Exhibit 10.9 to the Registration
Statement on Form SB-2).
10.10 Joint Marketing Agreement between Registrant and Texas
Instrument Corporation (incorporated by reference to Exhibit
10.10 to the Registration Statement on Form SB-2).
</TABLE>
II-5
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.11 Joint Marketing Agreement between Registrant and Raytheon
Company (incorporated by reference to Exhibit 10.11 to the
Registration Statement on Form SB-2).
10.12 Licensing Agreement between Registrant and Grid Systems
Corporation (incorporated by reference to Exhibit 10.12 to the
Registration Statement on Form SB-2).
10.13 Forms of (revised) Subscription Agreement and Subordinated
Convertible Promissory Note (incorporated by reference to
Exhibit 10.13 to Amendment No. 2 to the Registrant's
Registration Statement on Form SB-2 (Registration No.
33-91426), as filed with the Securities and Exchange Commission
on October 4, 1995)).
10.14 Nonemployee Directors' Stock Option Plan (incorporated by
reference to Exhibit 10.14 to Amendment No. 3).
10.14A Nonemployee Directors' Stock Option Plan, as amended March 12,
1998 (incorporated by reference to Exhibit 10.14A to the
Registrant's Quarterly Report on Form 10-QSB for the quarterly
period ended March 31, 1998).
10.15 Employment Agreement between the Registrant and Kevin J.
Bartczak (incorporated by reference to Exhibit 10.15 to
Amendment No. 3).
10.16 Letter agreements between the Registrant and National City Bank
(incorporated by reference to Exhibit 10.16 to Amendment No. 3).
10.17 Commercial demand note by Registrant in favor of National City
Bank (incorporated by reference to Exhibit 10.17 to Amendment
No. 3).
10.18 Security Agreement (accounts receivable) by Registrant in favor
of National City Bank (incorporated by reference to Exhibit
10.18 to Amendment No. 3).
10.19 Security Agreement (equipment) by Registrant in favor of
National City Bank (incorporated by reference to Exhibit 10.19
to Amendment No. 3).
10.20 Form of promissory note of Registrant issued in connection with
stockholder loans make in April 1996 (incorporated by reference
to Exhibit 10.20 to Amendment No. 4).
10.20A Form of Common Stock Purchase Agreement for purchase of shares
by selling security holders (incorporated by reference to
Exhibit 10.20A to Amendment No. 5 to Registrant's Registration
Statement on Form SB-2 (Registration No. 33-91426), as filed
with the Securities and Exhibit Commission on May 29, 1996
("Amendment No. 5")).
10.21 Option Agreements dated as of December 16, 1991 between UES
Florida, Inc. and each of Krishan K. Joshi, Richard P. McNeight
and William R. Craven (incorporated by reference to Exhibit
10.21 to Amendment No. 4).
10.22 Option Agreement dated as of November 23, 1994 with Richard P.
McNeight (incorporated by reference to Exhibit 10.22 to
Amendment No. 4).
10.23 Warrant Agent Agreement and Warrant relating to August 1995
bridge financing (incorporated by reference to Exhibit 10.1 to
the Registrant's Quarterly Report on Form 10-QSB for the
quarterly period ended June 30, 1996).
</TABLE>
II-6
<PAGE>
<PAGE>
<TABLE>
<S> <C>
10.24 Promissory Note dated February 19, 1993 by Richard P. McNeight
(incorporated by reference to Exhibit 10.24 to Amendment No. 5).
10.25 Underwriting Agreement between Registrant and Duke & Co., Inc.
(incorporated by reference to Exhibit 1 to the Registrant's
Quarterly Report on Form 10-QSB for the quarterly period ended
June 30, 1996).
10.26 Financial Advisory and Investment Banking Agreement
(incorporated by reference to Exhibit 10.2 to the Registrant's
Quarterly Report on Form 10-QSB for the quarterly period ended
June 30, 1996).
10.28 Lease Agreement dated September 1, 1996 between Registrant and
California Microwave, Inc. and related agreement dated November
15, 1996 with Symetrics Industries, Inc. (incorporated by
reference to Exhibit 10.28 to the Registrant's Annual Report on
Form 10-KSB for the year ended September 30, 1996).
10.29 Commercial Note of Registrant dated November 20, 1996 in favor
of National City Bank of Dayton (incorporated by reference to
Exhibit 10.29 to the Registrant's Annual Report on Form 10-KSB
for the year ended September 30, 1996).
10.30 Security Agreement (All Personal Property and Fixtures) dated
November 20, 1996 by Registrant in favor of National City Bank
of Dayton (incorporated by reference to Exhibit 10.30 to the
Registrant's Annual Report on Form 10-KSB for the year ended
September 30, 1996).
10.31 1997 Special Option Agreements dated November 20, 1997 between
the Registrant and James E. Clifford, Michael F. Maguire and
John P. Singleton (incorporated by reference to Exhibit 10.31
to the Registrant's Annual Report on Form 10-KSB for the year
ended September 30, 1997).
10.32 Agreement Granting Special Stock Option between the Registrant
and John P. Singleton dated as of June 18, 1998 (incorporated
by reference to Exhibit 10.32 to the Registrant's Quarterly
Report on Form 10-QSB for the quarterly period ended June 30,
1998).
10.33 Agreement Clarifying Prior Grant of Stock Options between the
Registrant and Michael F. Maguire dated as of June 18, 1998
(incorporated by reference to Exhibit 10.33 to the Registrant's
Quarterly Report on Form 10-QSB for the quarterly period ended
June 30, 1998).
10.34 Promissory Note to Registrant from Richard P. McNeight dated
June 3, 1998 (incorporated by reference to Exhibit 10.34 to the
Registrant's Quarterly Report on Form 10-QSB for the quarterly
period ended June 30, 1998).
10.35 Promissory Note to Registrant from UES, Inc. dated July 2,
1998, which note is personally guaranteed by Krishan J. Joshi
(incorporated by reference to Exhibit 10.35 to the Registrant's
Quarterly Report on Form 10-QSB for the quarterly period ended
June 30, 1998).
23.1 Consent of Tenzer Greenblatt LLP (included in its opinion filed
as Exhibit 5.1).
23.2 Consent of KPMG Peat Marwick LLP, filed herewith.
24.1 Power of Attorney (see page II-9 of this Registration
Statement).
</TABLE>
II-7
<PAGE>
<PAGE>
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (1)(i) and (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 Section 15(d) of the Exchange Act 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 shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
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.
II-8
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Melbourne, Florida, on this 25th day of
September, 1998.
PARAVANT COMPUTER SYSTEMS, INC.
By: /s/ Krishan K. Joshi
---------------------------------
Krishan K. Joshi
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints each of Richard P. McNeight, William R.
Craven and Kevin J. Bartczak, and each of them, as his true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for him and his name, place and stead, in any and all capacities, to sign any
and all amendments, including post-effective amendments, to this registration
statement, and to file the same, with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or his or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
<S> <C> <C>
/s/Krishan K. Joshi Chairman, Chief Executive September 25, 1998
- ---------------------------------- Officer and Director
KRISHAN K. JOSHI (Principal Executive Officer)
/s/Richard P. McNeight President and Director September 25, 1998
- ----------------------------------
RICHARD P. McNEIGHT
/s/William R. Craven Vice President, Director and September 25, 1998
- ---------------------------------- Secretary
WILLIAM R. CRAVEN
/s/Kevin J. Bartczak Vice President and Chief Financial September 25, 1998
- ---------------------------------- Officer and Treasurer (Principal
KEVIN J. BARTCZAK Financial Officer and Principal
Accounting Officer)
/s/Michael Maguire Director September 25, 1998
- -----------------------------------
MICHAEL MAGUIRE
/s/John P. Singleton Director September 25, 1998
- ------------------------------------
JOHN P. SINGLETON
</TABLE>
II-9
STATEMENT OF DIFFERENCES
------------------------
The section symbol shall be expressed as............................... 'SS'
<PAGE>
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF TENZER GREENBLATT LLP]
September 25, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Paravant Computer Systems, Inc.
Registration Statement on Form S-3
----------------------------------
Gentlemen:
We have acted as counsel to Paravant Computer Systems, Inc., a Florida
corporation (the "Company"), in connection with the preparation and filing of a
Registration Statement on Form S-3 (the "Registration Statement") relating to
the registration under the Securities Act of 1933, as amended (the "Act"), and
the rules and regulations thereunder, of the sale by certain securityholders of
the Company (the "Selling Securityholders") of up to 480,000 shares (the
"Shares") of common stock, par value $.015 per share, of the Company ("Common
Stock") which are issuable to the Selling Securityholders upon exercise of
warrants (the "Bridge Warrants") which were originally sold to the Selling
Securityholders in connection with the Company's August 1995 bridge financing.
We have examined the proceedings taken in connection with the
incorporation of the Company under the laws of the State of Florida, including
the articles of incorporation of the Company and any amendments thereto which
have been filed. We have also examined (i) the by-laws of the Company, and any
amendments thereto, (ii) the Registration Statement and (iii) the Bridge
Warrants. We have also examined such other documents, records, certificates of
public officials, certificates and/or statements of officers and representatives
of the Company and matters of law as we have considered relevant. In such
examination, we have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, the conformity to original
documents of documents submitted to us as certified or photostatic copies and
the authenticity of the originals of such latter documents. As to all questions
of fact material to this opinion that have not been independently established,
we have relied upon certificates and/or statements of officers and
representatives of the Company.
Based upon the foregoing, and subject to the qualifications stated
herein (and assuming that the securities referred to herein will be issued or
sold according to the Registration Statement at a time when such is effective
and that they will be in compliance with all applicable securities laws involved
in those states in which said securities may be sold), we are of the opinion
that the Shares have been duly authorized and, when issued and paid for upon
exercise of the Bridge Warrants in accordance with the terms thereof, will be
validly issued, fully-paid and non-assessable.
We are admitted to practice law only in the State of New York and we
are expert in, and express opinions only as to, the laws of the State of New
York and federal laws of the United States.
We consent to the use and filing of this opinion in connection with the
Registration Statement and to the use of our name in the Registration Statement
under the caption "Legal Matters".
Very truly yours,
TENZER GREENBLATT LLP
<PAGE>
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Paravant Computer Systems, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the Prospectus.
KPMG PEAT MARWICK LLP
Orlando, Florida
September 25, 1998
<PAGE>
