LA-MAN CORPORATION
210,000 SHARES OF COMMON STOCK
This Prospectus relates to the offer and sale by a certain Selling
Securityholder (the "Selling Securityholder") of up to 210,000 shares of Common
Stock underlying Common Stock Purchase Warrants (the "Common Stock") of La Man
Corporation (the "Company"). The Shares may be offered by the Selling
Securityholder in transactions on the Nasdaq SmallCap Market (the "SmallCap
Market"), in privately negotiated transactions, or by a combination of such
methods of sale, at fixed prices that 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 Company will not receive any of the proceeds
of the sale of such shares of Common Stock in this Offering. The Company will
receive proceeds of up to $365,400 from the exercise of the 210,000 Common Stock
purchase warrants by the Selling Securityholder.
SEE "RISK FACTORS" ON PAGE 4 FOR CERTAIN CONSIDERATIONS RELEVANT TO AN
INVESTMENT IN THESE SECURITIES.
The shares of Common Stock of the issuer are reported on the Nasdaq SmallCap
Market under the symbol "LAMN."
The Selling Securityholder has agreed to pay all of the expenses in
connection with the registration and sale of the Common Stock being offered by
the Selling Securityholder.
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" ON PAGE 4.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Common Stock was offered by the Company pursuant to an exemption from
registration provided by the Securities Act of 1933, as amended.
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY, BY ANY PERSON
IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER,
SOLICITATION OR SALE MADE HEREUNDER, SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE OF THE PROSPECTUS.
The date of this Prospectus is May 14, 1998
AVAILABLE INFORMATION
The small business issuer is a reporting company under Section 13 of the
Securities and Exchange Act of 1934 (the "Exchange Act"). The reports and other
information filed by the small business issuer may be inspected and copied at
the public reference facilities of the Commission at 450 Fifth Street, N.W. in
Washington, D.C. 20549. Copies may be obtained at the prescribed rates from the
Public Reference Section of the SEC at its principal office in Washington, D.C.
The Commission maintains a website that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. The address of the website is http://www.sec.gov.
Statements contained in this Prospectus as to the contents of any contract or
other document referred to are not necessarily complete, and, in each instance,
reference is made to the copy of such contract or other document filed as an
exhibit to the registration statement, each such statement being qualified in
all respects by such reference.
The Company has filed with the Commission a registration statement on
Form S-3 (together with any and all amendments, the "Registration Statement")
under the Securities Act of 1933, as amended, with respect to the registration
of the Common Stock. This Prospectus does not contain all of the information set
forth in the Registration Statement and the exhibits thereto, certain portions
of which have been omitted as permitted by the rules and regulations of the
Commission. In addition, certain documents filed by the Company with the
Commission have been incorporated herein by reference. See "Incorporation of
Certain Documents by Reference." For further information regarding the Company
and the Common Stock reference is made to the Registration Statement, including
the exhibits and schedules thereto and the documents incorporated herein by
reference.
The securities of the issuer are reported on the Nasdaq SmallCap Market
under the symbol "LAMN."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference.
(a) Annual Report on Form 10-KSB for the fiscal year ended June 30, 1997;
(b) Proxy Statement on Schedule 14A as filed on October 3, 1997;
(c) Quarterly Report on Form 10-QSB for the quarter ended December 31, 1997;
(d) Quarterly Report on Form 10-QSB for the quarter ended September 30,
1997;
(e) Quarterly Report on Form 10-QSB for the quarter ended March 31, 1997;
(f) Quarterly Report on Form 10-QSB for the quarter ended March 31, 1998.
(g) Current Report on Form 8-K as filed on March 2, 1998.
(h) Current Report on Form 8-K as filed on March 12, 1998.
(i) The description of the Company's Common Stock as contained in the
Company's Registration Statement on Form S-3 dated November 14, 1995 and
amended on December 18, 1995.
All reports and other documents filed by the Company pursuant to Section
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Securities Act"), subsequent to the date of this Prospectus and prior to
the termination of the offering made by the Prospectus shall be deemed to be
incorporated by reference herein. 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 incorporated or 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 undertakes to provide without charge to each person to whom a
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the information incorporated by reference in this Prospectus,
other than exhibits to such information. Requests for such copies should be
directed to Marshall S. Harris, Broad and
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Cassel, 390 North Orange Avenue, Suite 1100, Orlando, FL 32801.
This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, which are subject to the
"safe harbor" created by those sections. The Company's actual results could
differ materially from those anticipated in these forward-looking statements as
a result of certain factors, including those set forth under "Risk Factors" and
elsewhere in this Prospectus.
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS, INCLUDING NOTES THERETO, APPEARING
ELSEWHERE IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE HEREIN. EACH
PROSPECTIVE INVESTOR IS URGED TO READ THIS PROSPECTUS IN ITS ENTIRETY. UNLESS
OTHERWISE INDICATED ALL PER SHARE DATA AND INFORMATION IN THIS PROSPECTUS
RELATING TO THE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING ASSUMES NO EXERCISE
OF THE OUTSTANDING WARRANTS AND OPTIONS TO PURCHASE AN AGGREGATE OF 2,847,455
SHARES OF COMMON STOCK AND NOTES CONVERTIBLE INTO AN AGGREGATE OF 902,186 SHARES
OF COMMON STOCK.
THE COMPANY
La-Man Corporation, a Nevada corporation, was originally incorporated in
Michigan on November 2, 1979 and remained substantially inactive until the
autumn of 1980. On February 4, 1983, La-Man Corporation, a Nevada corporation
("the Company"), was formed and, pursuant to a Certificate of Merger filed on
May 16, 1983, the Michigan corporation was merged into the Nevada corporation.
The Company's executive office is located at 5029 Edgewater Drive, Orlando,
Florida 32810. Its telephone number is (407) 521-7477. The Company operates in
two business segments: Signage and Filtration.
The Company's direct wholly-owned subsidiaries include Ad Art Electronic
Sign Corporation, a Florida corporation ("Ad Art"), Nevada SEMCO, Inc., a Nevada
corporation ("SEMCO"), Don Bell Industries, Inc., a Florida corporation ("Don
Bell"), Vision Trust Marketing, Inc., a Florida corporation ("Vision") and
Certified Maintenance Service, Inc., a Florida corporation ("Certified"). The
Company's indirect wholly-owned subsidiaries include J.M. Stewart Industries,
Inc., a Florida corporation ("Stewart Industries") and J.M. Stewart Corporation,
a Florida corporation ("Stewart Corporation"), each of which is directly owned
by SEMCO, ESC of Nevada, Inc., a Nevada corporation ("ESC Nevada"), which is
directly owned by Ad Art and Don Bell Industries of Nevada, Inc., a Nevada
corporation ("Don Bell Nevada") which is directly owned by Don Bell.
Since the commencement of its operations, the Company has been engaged in
the manufacture and sale of a line of products which, when installed in
compressed air lines, substantially reduce or totally eliminate water and
condensate problems and most foreign contaminants, such as moisture, oil, dust,
rust, and the like, in the air line. The Company assembles and ships all of its
products from its owned facility in Port Orange, Florida. However, in order to
minimize production costs, the actual components are manufactured by others
using tooling owned by the Company.
On February 18, 1998, the Company acquired Electronic Sign Corporation d/b/a
Ad Art, a California corporation ("ESC"), through the merger of ESC into Ad Art
Electronic Sign Corporation, a wholly owned Florida subsidiary of the Company
formed on February 9, 1998. Ad Art, as the successor by merger of ESC (which was
incorporated on April 26, 1995), produces electronic signs for installation
throughout the world and also manufactures high-quality wedge-based color lens
systems.
SEMCO was incorporated on August 12, 1993. SEMCO is the holding company for
Stewart Corporation which designs and markets outdoor signs for institutional
businesses such as churches, schools, funeral homes and governmental/military
installations and Stewart Industries, which produces graphic arts and screen
print products.
On November 14, 1994, the Company acquired Vision and operated the
corporation in Orlando, Florida as a wholly-owned subsidiary offering long
distance telephone services as an authorized agent of MCI Telecommunications,
Inc. ("MCI"). The original contract between Vision and MCI for commercial long-
distance
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customers was originally executed in 1994 and was restated and extended for a
new five year term in May 1996. This contract revision had been proposed by MCI
in September 1995 and discussed with Vision over a period of eight months. In
reliance on the new contract, Vision invested heavily in staff, facilities and
equipment in anticipation of significant commission revenue as a result of the
enhancements in the revised contract. In November 1996, the contracts between
Vision and MCI were abruptly terminated by MCI. A lawsuit was filed by Vision
on April 16, 1997 seeking the recovery of damages from MCI. Because the
cancellation of the contract by MCI resulted in Vision no longer being
contracted to market MCI long-distance services, its sole line of business, the
Company discontinued the operations of Vision in December 1996.
On September 7, 1995, the Company acquired Don Bell, located in Port Orange,
Florida and Don Bell Nevada, an inactive company. Don Bell, which is a
commercial sign manufacturer, was incorporated on January 1, 1982 as a successor
to a family-owned business. Don Bell specializes in the design, manufacture,
installation and service of custom designed electronic signs. All manufacturing
is done at its owned plant in Port Orange, Florida. Don Bell Nevada has remained
inactive since the acquisition.
Only July 1, 1997, the Company acquired Certified, which was incorporated on
September 27, 1991. Certified is a service company specializing in the servicing
of electronic signs and indoor and outdoor commercial lighting.
Unless the context otherwise requires, the term "Company" hereinafter refers
to La-Man Corporation, Ad Art, ESC Nevada, Certified, SEMCO and its subsidiaries
Stewart Corporation and Stewart Industries, Don Bell, Don Bell Nevada, and
Vision. The Company's Consolidated Financial Statements include the accounts of
all subsidiaries except Ad Art and ESC Nevada. See the footnotes to the
Company's Consolidated Financial Statements included in the documents filed by
the Company with the Commission which are incorporated herein by reference for
information relating to the Company's industry segments.
PRINCIPAL EXECUTIVE OFFICES
The principal executive offices of the Company are located at 5029 Edgewater
Drive, Orlando, FL 32810; its telephone number is (407)-521-7477
Certain considerations are relevant to an investment in these securities.
See "Risk Factors" for a description of the significant risks associated with
the purchase of these securities.
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR
ENTIRE INVESTMENT. EACH PROSPECTIVE INVESTOR SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS INHERENT IN AND AFFECTING THE BUSINESS OF THE COMPANY AND
THIS OFFERING BEFORE MAKING AN INVESTMENT DECISION.
MARKET OVERHANG; EFFECT OF ISSUANCE OF ADDITIONAL COMMON STOCK
The Company presently has outstanding the following Common Stock purchase
warrants: (a) 620,000 Redeemable Warrants, each of which entitles the registered
holder to purchase one share of Common Stock at an exercise price, subject to
adjustment, of $4.536 per share through December 31, 1998; (b) warrants to
purchase up to a total of 275,000 shares of Common Stock at an exercise price,
subject to adjustment, of $4.32 per share through March 2, 2003; (c) warrants
held by the Selling Securityholder to purchase up to 210,000 shares of Common
Stock that are the subject of this Prospectus; (d) warrants granted to the
Company's investment relations advisor to purchase up to 52,500 shares at the
exercise price of $1.47 through March 17, 2001 and to purchase up to 52,500
shares of Common Stock at the exercise price of $2.62 through August 28, 2001.
Substantially all of the foregoing warrants are presently exercisable and the
Redeemable Warrants (and the shares of Common Stock underlying such warrants)
are freely tradeable as of the date of this Prospectus.
The Company also has outstanding options ("Plan Options") for the purchase
of up to an aggregate of
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1,513,455 shares of Common Stock granted to various present and former employees
and non-employee directors. All of such Plan Options are presently exercisable,
at prices ranging between $.50 per share and $2.91 per share.
The Company also has outstanding the following convertible debt instruments
("Convertible Debt Instruments"): (a) Convertible Promissory Note dated
September 7, 1995 in the principal amount of $750,000, presently convertible
into up to 165,343 shares of Common Stock at the conversion price of $4.536 per
share (the "Convertible Note"); and (b) $3,500,000 of the Company's 8.75%
convertible Debentures due March 2, 2005, presently convertible into up to
736,842 shares of Common Stock at the conversion price of $4.75 per share
("Debentures").
The holders of the Convertible Debt Instruments and the warrants issued to
finance the ESC acquisition have demand and piggy-back registration rights with
respect to the shares of Common Stock underlying such instruments and warrants.
As additional consideration for services performed by Mathews, Holmquist &
Associates, Inc. (the "Underwriter"), which acted as underwriter of a January
1994 offering of the Company's securities (the "1994 Offering"), for its
services in connection with the 1994 Offering, the Company granted to the
Underwriter options to purchase 31,000 Units ("Unit Purchase Option"). The Unit
Purchase Option is exercisable at a price equal to 120 percent of the public
offering price of the Units. The Units to be issued upon exercise of the Unit
Purchase Option are identical to the Units offered in the 1994 Offering except
that the warrants issuable upon exercise of the Unit Purchase Option are
exercisable at $4.68 per share of Common Stock, and are not redeemable. The
Unit Purchase Option is exercisable at any time prior to January 6, 1999. The
exercise price of the Unit Purchase Option was arbitrarily determined by the
Company and the Underwriter and should not be deemed to reflect any estimate of
the intrinsic value of either the Unit Purchase Option, the Units, or the
underlying Common Stock and warrants. The Unit Purchase Option contains anti-
dilution and adjustment provisions in the event of any merger, acquisition,
recapitalization, split-up of shares, stock dividend, sales, or issuance by the
Company of stock or securities convertible into stock by the Company at a price
or conversion price less than the exercise price of the Unit Purchase Option or
less than the market price of the Common Stock at the time of such sale or
indebtedness or similar event, except for dilution which would result from the
effect of the Company's stock option plans, reasonably acceptable to the
Underwriter.
The Company has agreed to register, at its expense, under the Securities
Act, the Unit Purchase Option and/or the underlying securities included in the
Unit Purchase Option at the request of the holders of 50% of the Unit Purchase
Option. Such request may be made at any time during a period of four years
beginning January 5, 1995. The Company also granted the Underwriter "piggyback"
registration rights concerning the Unit Purchase Option and the underlying
securities which may be exercised at any time during a period of four years
beginning January 6, 1995.
In connection with the Company's acquisition of Stewart Eleemosynary
Marketing Company in January 1994, the Company granted to J. Melvin Stewart,
presently the Chairman of the Board of Directors of the Company and the
president and chief executive officer of certain operating subsidiaries of the
Company, certain one-time demand registration rights with respect to the 316,
923 shares of unregistered Common Stock issued to Mr. Stewart in connection with
such acquisition, which demand rights are exercisable until February 13, 1999.
Also, the terms of employment agreements between the Company and certain
director-employees provide for certain demand and piggyback registration rights
with respect to shares of Common Stock owned by the director-employees in the
event their employment is terminated other than for cause following a "Change of
Control" as defined in such employment agreements. See "Effect of Change of
Control" below.
There are presently 4,657,110 shares of Common Stock outstanding. At times
in the past, due to the relatively small size of the "public float" in the
Common Stock and the absence of active market makers in the Common Stock, public
trading in the Common Stock has been thin and sporadic. Accordingly, the
exercise of outstanding demand registration rights and/or the issuance of
additional shares of Common Stock upon the exercise of the Company's outstanding
warrants and options, the exercise of the Unit Purchase Option and the
underlying warrants, or the exercise of the conversion rights under the
Convertible Debt Instruments, could adversely affect trading prices of the
Common Stock and trading prices, if any, of the remaining unexercised warrants
and options. Also, such issuances of additional shares of Common Stock and
warrants could adversely affect the ability of the
5
Company to obtain financing for future growth and acquisitions.
EFFECT OF CHANGE IN CONTROL
The Convertible Note, provides, among other default events, that in the
event there shall occur a "Change in Control" with respect to the Company, the
holder of the Convertible Note may, by written notice to the Company, declare
all principal and accrued but unpaid interest evidenced by the Convertible Note
immediately due and payable, which obligations shall accrue interest at a rate
equal to 10% per annum from the date of acceleration until paid. "Change of
Control" is defined in the Convertible Note as occurring when, within a period
of 12 consecutive months other than as the result of proxies solicited by, or
votes cast by, management of the Company, (I) there is a change in 35% of the
persons who, as of September 7, 1995, constitute the Board of Directors other
than as the result of resignations or (ii) there is an increase of 25% or more
in the number of members of the Board of Directors.
Also, the employment agreements between the Company and three of its
director-employees, i.e., Messrs. J. Melvin Stewart, J. William Brandner and
Philip Howe Hoard, ("Management Employment Agreements"), provide for substantial
increases in the amount of severance payable by the Company to such persons, and
grant certain other rights to such persons, in the event their employment with
the Company or its subsidiaries is terminated other than for cause following a
Change of Control, which is defined as having occurred when: (a) any one person,
or any persons acting together which would constitute a "group" for purposes of
Section 13(d) of the Exchange Act, consummates a tender offer, a plan of open-
market purchases or an exchange offer for shares of Common Stock, or consummates
a proxy solicitation, which, in the judgment of a majority of the members of the
Board of Directors of the Company, is reasonably likely to permit such person or
Group to obtain control of a sufficient number of voting securities of the
Company to elect a majority of the members of the Board of Directors of the
Company; or (b) there occurs, within any period of 12 consecutive months other
than as the result of proxies solicited by, or votes cast by, management of the
Company, (i) a change in 35% of the persons who, as of August 31, 1995,
constitute the Board of Directors of the Company other than as the result of
resignations or (ii) an increase of 25% or more in the number of members of the
Board of Directors.
In addition, certain of the Company's debt instruments include as an event
of default the failure, for whatever reason, of J. William Brandner to continue
to serve as Chief Executive Officer of the Company.
As the result of the acceleration provisions in the above debt instruments,
and the contingent severance benefits and other rights provided to executive
officers of the Company under the Management Employment Agreements, the
occurrence of a Change of Control as defined in or contemplated by such
documents could have a material adverse effect on the financial condition and
operations of the Company, and the trading price of the Common Stock.
OPERATING HISTORY
The Company reported fully diluted earnings per share of $0.21 and $0.13 and
$.07 for the fiscal years ended June 30, 1997, 1996 and 1995. However, in its
prior 14-year operating history, the Company produced an operating profit only
four times and never in excess of $100,000.
The Company's management believes that the significant improvements in the
Company's performance, resulting from acquisitions, such as the Don Bell
acquisition, together with improvement in operating performance of the Company's
filtration division, and expected future benefits from the and Ad Art
acquisition will enable the Company to continue to operate profitably and to
produce improvements in operating results. However, there can be no assurances
that economic and other events beyond the control of the Company and its
management will not adversely affect the ability of the Company to improve on or
continue the growth and operating results reflected by the Company's performance
in the 1997 fiscal year.
DEPENDENCE ON MANAGEMENT
The Company is dependent upon the services of J. William Brandner, President
and Chief Executive Officer and a director, and Todd D. Thrasher, Vice
President, Treasurer and Chief Financial Officer, of the
6
Company. The Company is also dependent upon the services of J. Melvin Stewart,
Chairman of the Board of Director and President of Nevada SEMCO, Inc., Stewart
Corporation, and Stewart Industries, as well as Gary D. Bell, president of Don
Bell, and Terry J. Long, President of Ad Art, who are directors of the Company.
The officers of the Company have principal responsibility for the management of
the company and for recommendations to the Board of Directors, which exercises
final authority over business decisions. Consequently, the loss of the services
of such officers and directors could be detrimental to the Company. Mr.
Brandner has an employment agreement with the Company, Mr. Stewart has an
employment agreement with Stewart Corporation, Mr. Bell has an employment
agreement with Don Bell and Mr. Long has an employment agreement with Ad Art.
There can be no assurance that the Company will be successful in attracting
and retaining the personnel it requires to develop and market new and enhanced
products and to conduct its operations successfully. Any inability to attract
and retain such personnel could have a material adverse effect on the Company's
business, operating results and financial condition.
BUSINESS AND ECONOMIC FACTORS
The future of the Company, and of the Company's operations, will be subject
to a number of business and other factors beyond management's control, such as
economic slowdowns and increased competition. Unfavorable general economic
conditions could adversely affect the operating results of the Company. There
can be no assurance that the Company would be able to sustain its operations in
the event of an economic slowdown for an extended period of time or if general
economic conditions in the U.S. and in foreign countries were to deteriorate.
LIMITED CURRENT SOURCES OF ADDITIONAL CAPITAL
The Company's management believes that net cash flow from operations and the
availability of funds under the Company's present $1,300,000 revolving line of
credit and Ad Art's $5,000,000 line of credit will be sufficient to enable the
Company to satisfy its operating capital needs. However, the Company has no
additional financing commitments. In the event the Company needs additional
financing to pursue future acquisitions and other expansion of its business,
there can be no assurance that such additional financing on acceptable terms
will be available to the Company when and if needed.
COMPETITION
Each of the Company's current and proposed business segments is
characterized by intense competition. Many companies offer or are engaged in the
development of products or the provision of services which may be or are
competitive with the Company's present or proposed products or services. Some of
these entities have substantially greater financial, technical, manufacturing,
marketing, distribution, and/or other resources than the Company. There can be
no assurance that the Company will be able to compete successfully with such
companies.
ABSENCE OF DIVIDENDS
Although the Company has paid 5% dividends in Common Stock the last two
fiscal years, the Company has not paid and does not anticipate paying any cash
dividends on its Common Stock in the foreseeable future, but instead intends to
retain all working capital and earnings, if any, for use in the Company's
business operations and in the expansion of its business.
SHARES AVAILABLE FOR SALE
The 1,513,455 shares of Common Stock issuable upon exercise of the Plan
Options have been registered under the Securities Act on registration statements
filed by the Company with the Commission on Form S-8 (Registration No. 33-77924
and Registration No. 33-81348). Because certain grantees of the options to which
such registered shares relate are directors and/or executive officers of the
Company, the resale of any such shares following exercise of such options
(together with all other shares of Common Stock owned by directors and executive
officers of the Company) are subject to certain resale restrictions and
limitations set forth in Rule 144 promulgated by the Commission under the
Securities Act. Likewise, because the 316,923 shares of Common Stock issued to
J. Melvin Stewart in January 1994 in partial consideration of the Company's
acquisition of SEMCO and the shares of Common Stock issuable upon exercise of
conversion rights under the Convertible Debt Instruments
7
have not been registered under the Securities Act, resales of such shares are
also subject to the limitations and restrictions of, and are deemed "restricted
securities" under, Rule 144. In general, a person who holds "restricted
securities" (as that term is defined in Rule 144) may not publicly resell such
securities until such person has been the beneficial owner of such securities
for a period of one year (unless such securities are registered under the
Securities Act prior to the expiration of such one-year holding period) and
after such holding period may not sell within any three-month period a number of
restricted securities which exceeds the greater of one percent of the shares
outstanding or the average weekly trading volume during the four calendar weeks
preceding the notice of sale required to be filed by such person under Rule 144.
Sales of shares of Common Stock pursuant to Rule 144 could have an adverse
effect on the market for or trading price of the Company's securities.
FUTURE ISSUANCES OF STOCK BY THE COMPANY
The Company has 50,000,000 shares of Common Stock authorized, of which
4,657,110 shares are issued and outstanding. In addition, the Company has
reserved a total of 3,749,641 shares of Common Stock for issuance as follows:
(a) 1,270,000 shares for issuance upon exercise of outstanding warrants; (b)
1,513,455 shares for issuance upon exercise of outstanding Plan Options; (c)
124,000 shares for issuance upon exercise of the Unit Purchase Option and the
warrants underlying the Unit Purchase Option; and (d) 902,186 shares for
issuance upon exercise of conversion rights under the Convertible Debt
Instruments. The remaining 41,593,249 authorized but unissued and unreserved
shares of Common Stock may be issued without any action or approval by the
Company's stockholders. Although there are no present plans, agreements, or
undertakings with respect to the Company's issuance of any shares of such Common
Stock, or related convertible securities, except as disclosed in this Prospectus
Supplement, any such issuances could be used as a method of discouraging,
delaying, or preventing a change in control of the Company or could dilute the
public ownership of the Company, and there can be no assurance that the Company
will not issue any such additional shares of Common Stock. A shareholder's pro
rata ownership interest in the Company will be reduced to the extent of the
exercise of the outstanding warrants, the Employee Options, the exercise of the
Unit Purchase Option and the warrants underlying such option, or the exercise or
conversion rights under the Convertible Debt Instruments.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS.
The Company's results of operations have historically varied from quarter to
quarter and the Company expects that further variability may continue to occur
and may be significant. In the past, operating results have varied as a result
of a number of factors, including the size and timing of customer orders,
seasonality, the timing of the introduction and customer acceptance of new
products or product enhancements by the Company's competitors, the introduction
of new products by the Company, changes in pricing policies by the Company or
its competitors, marketing and promotional expenditures, the timing of
acquisitions and changes in general economic conditions.
MARKET PRICE FLUCTUATIONS.
The Company has recently experienced significant variability in the market
price of its Common Stock and the volume of its trading. In addition, the
securities markets from time to time experience significant price and volume
fluctuations that may be unrelated to the operating performance of particular
companies. Announcements of major contracts by competitors and economic and
other external factors, as well as period-to-period fluctuations in the
Company's financial results, may have a significant impact on the market price
of the Common Stock.
ACQUISITIONS
Since September 1995, the Company has acquired three complementary companies
and businesses. Integration of these companies into the Company's business is
currently ongoing, and no assurances may be made that the Company will be able
to successfully complete this process. Risks commonly encountered in such
transactions include the difficulty of assimilating the operations and personnel
of the combined companies, the potential disruption of the Company's ongoing
business, the inability to retain key personnel, the inability of management to
maximize the financial and strategic position of the company through the
integration of acquired businesses,
8
additional expenses associated with amortization of acquired intangible assets,
the maintenance of uniform standards, controls, procedures, and policies, the
impairment of relationships with employees and customers as a result of any
integration of new personnel, risks of entering markets in which the Company has
no or limited direct prior experience, and operating companies in different
geographical locations with different cultures. There can be no assurance that
the Company will be successful in overcoming these risks or any other problems
encountered in connection with such acquisitions, or that such transactions will
not materially adversely affect the Company's business, financial condition, or
results of operations.
SUBSTANTIAL LEVERAGE
As a result of the issuance of $2,500,000 aggregate principal amount of
Variable/Fixed Rate Credit Enhanced Notes ("Notes") in August 1997 and
$3,500,000 principal amount of Debentures in March 1998, the Company is highly
leveraged. As of December 31, 1997, after giving pro forma effect to the
application of the estimated net proceeds from the issuance of the Notes and
Debentures, and the $3,879,812 indebtedness of Ad Art, the Company's total
indebtedness and stockholders' equity would have been $11,090,812 and $9,744,110
respectively. The Company's ability to make scheduled payments of the principal
or, or interest on, its indebtedness will depend on its future performance,
which is subject to economic, financial, competitive and other factors beyond
its control.
SELLING SECURITYHOLDER AND PLAN OF DISTRIBUTION
All of the shares of Common Stock being offered hereby are being sold by the
Selling Securityholder, M.H. Meyerson & Co., Inc. An aggregate of up to 210,000
shares of Common Stock may be offered and sold pursuant to this Prospectus by
the Selling Securityholder. The Company has agreed to register such shares under
the Securities Act and M.H. Meyerson & Co., Inc. has agreed to pay all expenses
in connection therewith. Such shares have been included in the Registration
Statement of which this Prospectus forms a part.
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of February 15, 1998, assuming the exercise of all
options exercisable on, or within 60 days of, such date, and as adjusted to give
effect to the Offering by the Selling Securityholder. The Selling Securityholder
does not hold any position or office, and has not had any other material
relationship with the Company or any of its predecessors or affiliates within
the last three years other than performing services pursuant to an Investment
Banking Agreement.
Name Shares of Common Stock Percentage
- ---- ---------------------- ----------
M.H. Meyerson & Co., Inc. 210,000/(1)/ *
TOTAL 210,000 *
======= ===
(1) Represents Common Stock underlying Common Stock Purchase Warrants
exercisable as of the date of effectiveness of this Prospectus.
* Less than one percent (1%) of the outstanding Common Stock of the Company.
The 210,000 shares of Common Stock being offered by the Selling
Securityholder, pursuant to this Prospectus may be offered and sold from time to
time as market conditions permit on the Nasdaq SmallCap Market, or otherwise, at
prices and terms then prevailing or at prices related to the then current market
price, or in negotiated transactions. The Selling Securityholder's shares may be
sold by one or more of the following methods, without limitation: (a) a block
trade in which a broker or dealer so engaged will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker or dealer as principal and
resale by such broker or dealer for its account pursuant to this Prospectus; (c)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; and (d) face-to-face transactions between sellers and purchasers
without a broker/dealer. In effecting sales, brokers or dealers engaged by the
Selling Securityholder may arrange for other brokers or dealers to participate.
Such brokers or dealers may receive commissions or discounts from the Selling
Securityholder in amounts to be
9
negotiated. Such brokers and dealers and any other participating brokers and
dealers may be deemed to be "Underwriters" within the meaning of the Securities
Act in connection with such sales.
To comply with certain states' securities laws, if applicable, the shares of
Common Stock registered hereunder will be offered or sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in certain
states the shares many not be sold or offered unless they have been registered
or qualified for sale in such states or an exception for registration or
qualification is available and is complied with.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for the
Company by Broad and Cassel.
EXPERTS
The consolidated financial statements incorporated by reference in this
Prospectus and Registration Statement have been audited by BDO Seidman, LLP,
independent certified public accountants, to the extent and for the periods set
forth in their report incorporated herein by reference, and are incorporated in
reliance upon such report given upon the authority of said firm as experts in
accounting and auditing.
10
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY, BY ANY PERSON
IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER,
SOLICITATION OR SALE MADE HEREUNDER, SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE OF THE PROSPECTUS.
Table of Contents Page
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Available Information............................................... 2
Incorporation of Certain Documents
by Reference....................................................... 2
Summary Prospectus.................................................. 3
The Company......................................................... 3
Risk Factors........................................................ 4
Selling Securityholder and Plan
of Distribution.................................................... 9
Legal Matters....................................................... 10
Experts............................................................. 10
210,000
SHARES OF COMMON STOCK
(PAR VALUE $0.001 PER SHARE)
LA-MAN CORPORATION
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PROSPECTUS
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