AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 19, 1995
REGISTRATION NO. 33-58543
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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DATAMETRICS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 95-3545701
(STATE OR OTHER JURISDICTION (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
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21135 ERWIN STREET
WOODLAND HILLS, CALIFORNIA 91367
(818) 598-6200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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SIDNEY E. WING
PRESIDENT AND CHIEF EXECUTIVE OFFICER
DATAMETRICS CORPORATION
21135 ERWIN STREET
WOODLAND HILLS, CALIFORNIA 91367
(818) 598-6200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE OF AGENT FOR SERVICE)
COPIES TO:
THOMAS A. EDWARDS, ESQ.
LATHAM & WATKINS
701 "B" STREET, SUITE 2100
SAN DIEGO, CALIFORNIA 92101
(619) 236-1234
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Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
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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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PROSPECTUS
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DATAMETRICS CORPORATION
170,000 SHARES OF COMMON STOCK, $.01 PAR VALUE PER SHARE
This Prospectus relates to 170,000 shares of Common Stock, $.01 par value per
share (the "Common Stock"), of Datametrics Corporation (the "Company") which
may be offered from time to time by Cruttenden Roth Incorporated, formerly
Cruttenden & Co., Inc. (the "Selling Stockholder"). Such shares of Common Stock
are hereinafter referred to as the "Securities." The Selling Stockholder holds
a Warrant (the "Warrant") to purchase the Securities pursuant to a Warrant
Agreement dated as of March 17, 1994 (the "Warrant Agreement") between the
Company and the Selling Stockholder. Information regarding the Selling
Stockholder and the circumstances under which the Selling Stockholder may
acquire the Securities is set forth in "Selling Stockholder and Plan of
Distribution" herein.
The Selling Stockholder may exercise the Warrant from March 17, 1995 and from
time to time thereafter in whole or in part until it expires on March 23, 1999,
and purchase the underlying Securities for $3.15 per share, which represented
120% of the public offering price for the Company's Common Stock in its public
offering completed in March 1994. The Company and the Selling Stockholder have
entered into an agreement pursuant to which on the later of March 17, 1995 and
the effective date of the Registration Statement (the "Registration Statement")
of which this Prospectus is a part (such date being the "Warrant Exercise
Date"), the Selling Stockholder will exercise the Warrant and pay the Company
the aggregate exercise price of $535,500 in cash. See "Selling Stockholder and
Plan of Distribution." Thereafter, the Securities may be offered and sold from
time to time by the Selling Stockholder, or by pledgees, transferees or other
successors of the Selling Stockholder, in each case in open market
transactions, in private or negotiated transactions or in a combination of such
methods of sale, at fixed prices, at prices then prevailing on the American
Stock Exchange (the "AMEX") at the time of sale, at prices related to such
prevailing market prices, or at negotiated prices. To the extent required, the
amounts of the Securities to be sold, purchase prices, public offering prices,
the names of any agents, dealers or underwriters, and any applicable
commissions or discounts with respect to a particular offer will be set forth
in an accompanying Prospectus Supplement or, if appropriate, a post-effective
amendment to the Registration Statement. The Selling Stockholder reserves the
sole right to accept and, together with any agent of the Selling Stockholder,
to reject in whole or in part any proposed purchase of the Securities. The
Selling Stockholder will pay any sales commissions or other seller's
compensation applicable to such transactions. The Selling Stockholder and
agents who execute orders on its behalf may be deemed to be underwriters as
that term is defined in Section 2(11) of the Securities Act of 1933, as amended
(the "Securities Act") and a portion of any proceeds of sales and discounts,
commissions or other seller's compensation may be deemed to be underwriting
compensation for purposes of the Securities Act. See "Selling Stockholder and
Plan of Distribution."
The Company will not receive any of the proceeds from the sale of the
Securities by the Selling Stockholder. Prior to such sale of Securities,
however, the Company will have received $535,500 aggregate exercise price
($3.15 per share) under the Warrant referred to above. All such proceeds
received by the Company will be used for working capital and other general
corporate purposes.
The Company has agreed to pay all costs of the registration of the
Securities. Such costs, fees and disbursements are estimated to be
approximately $21,000.
SEE "RISK FACTORS" FOR CERTAIN CONSIDERATIONS RELEVANT TO AN INVESTMENT IN
THE SECURITIES.
The Common Stock to be registered hereunder is listed for trading on the
American Stock Exchange (Symbol: DC).
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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.
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THE DATE OF THIS PROSPECTUS IS MAY 19, 1995
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission by the Company can
be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located at Suite 1400, Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661 and at 7 World Trade
Center, New York, New York 10048. Copies of such material can be obtained from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Additional information with
respect to this offering may be provided in the future by means of supplements
or "stickers" to the Prospectus.
The Company has filed a Registration Statement on Form S-3 (the "Registration
Statement") with the Commission under the Securities Act of 1933, as amended,
covering the shares of Common Stock covered by this Prospectus. This Prospectus
omits certain information and exhibits included in that Registration Statement,
copies of which may be obtained upon payment of a fee prescribed by the
Commission or may be examined free of charge at the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Company's Common Stock is traded on the AMEX (Symbol: DC), and reports
and information concerning the Company can be inspected at the offices of the
AMEX, 86 Trinity Place, New York, New York 10006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended October
30, 1994 (the "Form 10-K"), the Company's Quarterly Report on Form 10-Q for the
quarter ended January 29, 1995, the Company's Quarterly Report on Form 10-Q/A
for the quarter ended January 29, 1995 and the Company's Quarterly Report on
Form 10-Q for the quarter ended April 30, 1995, which were previously filed
with the Commission, are hereby incorporated by reference.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
filing of a post-effective amendment which indicates that all Securities
offered hereby have been sold or which deregisters all Securities then
remaining unsold shall be deemed to be incorporated by reference in this
Prospectus and to be a part of it from the respective dates 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.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents or into this Prospectus) will be
provided without charge to each person, including any beneficial owner, to whom
this Prospectus is delivered, upon a written or oral request to Datametrics
Corporation, Attention: John J. Van Buren, Chief Financial Officer, 21135 Erwin
Street, Woodland Hills, California 91367, telephone number (818) 598-6200.
2
THE COMPANY
Datametrics Corporation (the "Company") designs, develops, manufactures and
sells high-speed color printers, high-resolution non-impact printer/plotters
and ruggedized computers, printers and workstations. For the year ended October
30, 1994, approximately 85% of the Company's revenues were derived from U.S.
Department of Defense ("DoD") business and included contracts with U. S.
government contractors and with the DoD itself. In the DoD business arena, the
Company is dependent on being selected to supply computers, computer
workstations, printers, printer/plotters or keyboards by a government
contractor who has obtained a DoD contract which requires those computer
products, or by the DoD itself. See "Risk Factors."
The Company was organized under California law in October 1962 and was re-
incorporated in Delaware on April 15, 1987.
Since 1991, the Company has initiated efforts to reduce its dependency on DoD
spending. These non-DoD efforts have included, among others, the development
and sale of a high-speed color printer/plotter for use in the oil exploration
industry and an interface device (protocol converter) which enables encrypted
telephones to interface with commercial facsimile machines. The Company's high-
speed color printer technology is now being applied to the commercial
marketplace. To date, however, sales of the Company's high-speed color printers
for commercial applications have been negligible. See "Risk Factors."
In August 1993, the Company acquired Rugged Digital Systems, Inc. ("Rugged
Digital") of Santa Clara, California. Rugged Digital is a value-added
ruggedizer of Digital Equipment Corporation, Sun Microsystems Inc., Hewlett-
Packard Company, Silicon Graphics, Inc. and Cray Research computer devices and
peripherals. For fiscal 1994 revenue from these types of products represented
45% of the Company's total revenue.
3
RISK FACTORS
In addition to the other information in this Prospectus, the following risks
should be considered carefully in evaluating the Company and its business
before purchasing the Common Stock offered hereby.
LOSS IN FIRST SIX MONTHS; EXPECTED LOSS IN FISCAL YEAR 1995; IMPACT ON
LIQUIDITY
The Company reported a net loss of $4,050,000 for the six-months ended April
30, 1995, attributable to the Company's significant investment in its
commercial color printer technology and to declining defense-related sales
during such period. As a result of the Company's expected continued significant
investment in its high-speed color digital printer program, the Company expects
to incur a substantial loss for fiscal year 1995 which it is unable to quantify
at this time. In addition, the Company is currently seeking additional funding
to provide the liquidity necessary to maintain this expected significant level
of research and development and to make anticipated production deliveries in
calendar 1995. The status of such additional funding is uncertain, and there
can be no assurance that the Company will obtain such additional funding.
UNCERTAINTY OF COMMERCIAL IMPLEMENTATION OF COLOR PRINTER TECHNOLOGY
The Company's future success depends in large part on the timely and
successful development and marketing in commercial markets of products based
upon the Company's proprietary high-speed color digital printer technology.
Mass commercial implementation of the Company's technology remains uncertain
and is subject to a number of factors including, without limitation, timely
completion of the Company's product offerings, the timing of development of
competing color printing technologies, the availability of adequate
manufacturing capacity and distribution channels and the availability of
adequate working capital to finance development, manufacture and marketing of
the products. Although the Company has sold high-speed color digital printers
to Halliburton Oil Logging Services for use in the oil exploration industry,
the Company has not yet begun to ship CYMAX (TM) ("CYMax") series high-speed
color digital printers into mass commercial markets and is currently
negotiating with third party manufacturers to provide for full-scale
production. There can be no assurance, however, that any such agreements will
be signed or, if so, when. If the Company is unable to complete any of these
efforts in a timely manner, such failure could have a material adverse effect
on the timely introduction and sales of the CYMax series high-speed color
digital printer into the short-run production printer markets.
DEPENDENCE ON THIRD PARTY DISTRIBUTION CHANNELS TO ACCESS CERTAIN MASS
COMMERCIAL PRINTER MARKETS
Because the Company believes that time-to-market is an important factor in
addressing available commercial markets, such as the short-run production
printer market, its primary distribution strategy is to align itself with
original equipment manufacturers ("OEMs") possessing brand name recognition and
established distribution channels. Accordingly, the Company has been seeking
OEM agreements to provide such distribution capabilities. In March 1995, the
Company signed a multi-year agreement with A.B.Dick for the worldwide
distribution of the Company's CYMax series of high-speed color digital
printers. The Company has received an initial purchase order from A.B.Dick in
excess of $2 million subject to the Company's ability to meet certain product
specifications and other customary contractual requirements. Other than the
initial purchase order, A.B.Dick is not obligated to make any further purchases
under the distribution agreement, and there can be no assurance that it will do
so.
The Company is also seeking other OEM distribution alliances. There can be no
assurance that the Company will be successful in securing other such alliances
and, if so, what capabilities or resources any other such alliance will
actually provide to the Company. Additionally, the Company is presently seeking
to establish third party distribution capabilities through national and/or
regional distribution networks for markets not specifically covered by OEM
candidates. Such distribution channels have not yet been
4
established. There can be no assurance that the Company will be successful in
establishing such distribution channels. Accordingly, there can be no assurance
that the Company will be able to successfully develop and market its CTI color
printer technology in certain mass commercial markets by these strategies.
COMPETITION
The Company competes in each market it serves with numerous other companies,
many of which have far greater name recognition and financial, technical,
marketing and customer service resources than the Company. The principal
competitive factors in the commercial markets in which the Company participates
are image quality, performance and price. Competition in commercial color
printing markets is intense. The commercial color printing market is addressed
by numerous companies with various technologies, each with certain advantages
and disadvantages in terms of image quality, print speed and price. The Company
believes that its CTI technology currently has a print speed advantage over
competitive products and, therefore, is well-suited to high-volume color
printing/plotting. The commercial color printing market is characterized,
however, by rapid technological advances and downward price pressure as
competing technologies mature. The Company's principal competitors in the
commercial markets include Canon, Xerox, Minolta, Ricoh, Xeikon and Indigo.
Most of the Company's competitors have substantially greater financial and
technical resources than the Company. In addition, competitors in the
commercial color printer market are rapidly improving the quality and price of
their current printers. If one or more of the Company's competitors were to
introduce a printer with a significantly enhanced combination of image quality,
speed and price characteristics before the Company introduced its printer, such
introduction could have a material adverse effect on the Company's ability to
market a printer into such markets. If such a competitor's product introduction
occurred after the Company had a printer on the market, such product
introduction could also have a material adverse effect on the success of the
Company's printer in such markets.
In the domestic and international defense markets, the Company's principal
competitors are North Atlantic Industries, Inc., Aydin and Genesco, Inc. In
addition, many airborne electronic data processing and communications prime
contractors have the capability of manufacturing military and airborne
products, and several such companies do presently manufacture products
performing functions similar to the Company's products. In almost all cases,
these companies have substantially greater financial and technological
resources than the Company. In certain applications, the Company's printers are
higher in price than those of its competitors, and many of its competitors have
more experience in the markets for lower-cost military printers than the
Company. Management believes, however, that the Company's printers usually
perform at higher speed and with greater reliability in extreme environments.
There can be no assurance that the Company will be able to compete effectively
in either the commercial or the domestic or international defense market for
its products.
DEPENDENCE ON DEPARTMENT OF DEFENSE CONTRACTS; DECLINING DEFENSE SALES
The Company is currently highly dependent upon being selected to supply
printers, printer/plotters, ruggedized computers or workstations by government
contractors who have obtained DoD contracts which require those products, or by
the DoD itself. Accordingly, the Company is currently dependent upon continued
DoD spending on programs which include its products. For the fiscal years ended
October 25, 1992, October 31, 1993 and October 30, 1994, direct and indirect
DoD business represented approximately 72%, 69% and 85%, respectively, of the
Company's sales. Substantially all of the Company's other sales during such
periods were derived from business with other U.S. government agencies and
foreign military-related sales.
Since fiscal 1989, the Company has experienced generally declining defense-
related sales, principally as a result of an uncertain defense budget situation
that resulted in contract awards delays and reduced military program funding.
Management expects that these downward trends will continue for the foreseeable
future. The market for the Company's high-end military printers has been
particularly weak during this time period and is expected to continue to be
weak for the foreseeable future. This environment has resulted in substantial
decreases in the Company's backlog of funded orders. The Company's funded
backlog related to DoD
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business at the end of fiscal years 1990, 1991, 1992, 1993 and 1994 was
approximately $15,511,000, $10,434,000, $4,394,000, $6,629,000, and $5,075,000,
respectively. The Company's funded backlog related to DoD business at April 30,
1995 was $6,687,000.
Companies engaged primarily in supplying equipment and services, directly or
indirectly, to the United States government are subject to special risks
including dependence on government appropriations, termination without cause,
contract renegotiation and competition for the available DoD business. In
addition, many of the Company's contracts provide for the right to audit the
Company's cost records and are subject to regulations providing for contract
price reductions if defective cost or pricing information was provided by the
Company.
DEPENDENCE ON MAJOR CUSTOMERS
The Company's business is also substantially dependent on a relatively small
number of customers and defense programs. In fiscal 1994, the Company's five
largest customers in sales, Lockheed Corporation (21.6%), Raytheon Company
(13.5%), Rockwell International (10.7%), Martin Marietta Corporation (10.2%)
and the DoD (6.8%), accounted for an aggregate of 62.8% of total Company sales.
The loss of any one of these customers could have a material adverse effect on
the Company's result of operations and financial condition.
The Company's distribution of its CYMax product line is currently
substantially dependent on future sales by A.B.Dick under its worldwide
distribution agreement with the Company. A.B.Dick has given the Company an
initial purchase order for CYMax products, but there can be no assurance that
A.B.Dick will achieve or sustain a substantial level of sales of the Company's
CYMax series of high-speed color digital printers.
FLUCTUATIONS IN QUARTERLY RESULTS
The Company's results of operations are subject to considerable fluctuations
from quarter to quarter due to changes in demand for the Company's products and
other factors, and there can be no assurance that the Company will be
profitable in any particular quarter. Demand for the Company's products in each
of the markets it serves can vary significantly from quarter to quarter due to
revisions in budgets or schedules for customer projects requiring the Company's
products, changes in demand for the customers' products which incorporate or
utilize the Company's products and other factors beyond the Company's control.
In addition, demand for products based upon the Company's CTI technology is
highly uncertain given the emerging nature of the Company's technology, other
competing color printer products and technologies and the commercial color
printer market itself.
TECHNOLOGICAL OBSOLESCENCE
The markets served by the Company, particularly the commercial color printer
market, are characterized by rapid technological advances, downward price
pressure in the marketplace as technologies mature, changes in customer
requirements and frequent new product introductions and enhancements. The
Company's business requires substantial ongoing research and development
efforts and expenditures, and its future success will depend on its ability to
enhance its current products, reduce product costs and develop and introduce
new products that keep pace with technological developments in response to
evolving customer requirements. The Company's failure to anticipate or respond
adequately to technological development or introduction could result in a loss
of anticipated future revenues and impair the Company's competitiveness.
RISKS OF FOREIGN SALES
The Company believes that foreign sales may represent a significant portion
of the Company's future sales. 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
6
or governments, 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 many payments have been supported by letters of
credit. To the extent, however, that future foreign sales are transacted in a
foreign currency or not supported by a letter of credit, the Company would be
subject to the risk of losses due to foreign currency fluctuations and
difficulties associated with accounts receivable collection.
SOLE OR LIMITED SOURCES OF SUPPLY
The Company relies to a substantial extent on sole suppliers to manufacture
several key components for use in the CYMax series of high-speed color digital
printers, including controllers, print heads and color printer ribbons. The
Company's reliance on sole suppliers for key components involves several risks,
including a potential inability to obtain an alternate supply of required
components and supplies, and reduced control over pricing and the timing of
delivery of the CYMax series high-speed color digital printers. Because the
manufacture of certain of these components, including controllers, print heads
and color printer ribbons, is specialized and requires long lead times, there
can be no assurance that delays in the ability to timely complete production
orders will not be caused by vendors. Any inability to obtain adequate
deliveries, or any other circumstance that would require the Company to seek
alternative sources of supply or to manufacture such components internally,
could delay shipment of the Company's products, increase its cost of goods sold
and have a material adverse effect on the Company's business, financial
condition and results of operations. The Company is currently engaged in
negotiations with other manufacturers for alternate sources of supply of print
heads and color printer ribbons. There can be no assurance, however, that any
agreements with such alternate supply sources will be signed or, if so, when.
In the military business area, the Company is generally not dependent upon
any one supplier for any raw material or component which it purchases, and
there are available alternative sources for such raw materials and components.
The Company is currently dependent, however, on certain OEM suppliers for
components used in its rugged computer devices and peripherals. The Company has
year-to-year renewable supply agreements with suppliers which have been renewed
in prior years. In the event any of these contracts are not renewed, however,
the Company's business would be materially and adversely impacted because the
Company would have to purchase similar components upon substantially less
favorable terms and conditions.
DEPENDENCE ON KEY PERSONNEL
Management believes that the Company's success depends in part upon its
ability to attract and retain highly skilled management, technical, sales and
marketing personnel. Competition for such personnel is intense, and there can
be no assurance that the Company will be successful in attracting and retaining
such personnel. None of the Company's employees has an employment contract with
the Company. The Company does not maintain key-man life insurance on any of its
personnel (other than a key-man life insurance policy on the Company's Chairman
of the Board, Gerald S. White).
LIMITED PROTECTION OF INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
The Company regards portions of the hardware designs and operating software
incorporated into its products as proprietary and attempts to protect them with
a combination of patent, copyright, trademark and trade secret laws, employee
and third-party nondisclosure agreements and similar means. Despite these
precautions, it may be possible for unauthorized third parties to copy certain
portions of the Company's products or to "reverse engineer" or otherwise obtain
and use to the Company's detriment information that the Company regards as
proprietary. Moreover, the laws of some foreign countries do not afford the
same protection to the Company's proprietary rights as do U.S. laws. There can
be no assurance, therefore, that any of these protections will be adequate or
that the Company's competitors will not independently develop technologies that
are substantially equivalent or superior to the Company's technologies.
VOLATILITY OF STOCK PRICE
The trading price of the Company's Common Stock has from time to time
fluctuated widely and in the future may be subject to similar fluctuations in
response to quarter-to-quarter variations in the Company's
7
operating results, announcements of technological innovations or new products
by the Company or its competitors, announcements of marketing and distribution
arrangements by the Company, general conditions in the industries in which the
Company competes and other events or factors. In addition, in recent years
broad stock market indices, in general, and the securities of technology
companies, in particular, have experienced substantial price fluctuations. Such
broad market fluctuations also may adversely affect the future trading price of
the Common Stock. In addition, sales of substantial amounts of Common Stock in
the public market following this offering could adversely affect the future
trading price of the Common Stock. See "Description of Capital Stock--Market
Information."
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Common Stock in the public market following
this offering could adversely affect the future trading price of the Common
Stock. In addition to the 170,000 shares of Common Stock registered for resale
hereby, all of the shares of Common Stock currently outstanding are available
for immediate sale in the public market as of May 17, 1995. In addition, the
Company has filed a Registration Statement on Form S-2 for a proposed
underwritten public offering of up to 2,300,000 shares of Common Stock. If and
when such proposed public offering is consummated, such shares would be
available for immediate sale in the public market.
POSSIBLE DILUTIVE EFFECT OF OUTSTANDING OPTIONS AND ADDITIONAL WARRANTS
As of May 17, 1995, there were 1,419,290 shares of Common Stock reserved for
issuance upon exercise of outstanding stock options granted and available for
grant under the Company's stock option plans. Of such reserved shares, there
were 1,200,990 shares of Common Stock reserved for issuance upon the exercise
of stock options outstanding under the Company's stock option plans at exercise
prices ranging from $.75 to $5.75 per share, of which options to purchase
660,819 shares are currently exercisable. An additional 218,300 shares of
Common Stock are reserved for issuance upon the exercise of options available
for future grant under such plans. In addition, 200,000 shares of Common Stock
are reserved for issuance upon exercise of certain warrants which are expected
to be issued to the representatives of the several underwriters in connection
with the Company's proposed public offering of up to 2,300,000 shares of Common
Stock, and 170,000 shares of Common Stock are reserved for issuance upon
exercise of warrants which the Company has issued. See "Selling Stockholder and
Plan of Distribution." To the extent the trading price of Common Stock at the
time of exercise of any such options or warrants exceeds the exercise price,
such exercise will have a dilutive effect on the Company's stockholders.
POSSIBLE DILUTIVE EFFECT OF TERMS OF SERIES B PREFERRED STOCK
The original holders of the Company's Series B Preferred Stock are entitled
to receive warrants to purchase Common Stock at an exercise price of $.50 per
share if the Series B Preferred Stock remains outstanding on August 10, 1995.
See "Description of Capital Stock." The Series B Preferred Stock is redeemable
for cash at any time in whole or in part, at the Company's option, at a
redemption price equal to 100% of the liquidation preference per share, plus
all accrued and unpaid dividends thereon, if any, to the date of redemption.
Because of this redemption right, the Company does not anticipate that it will
ever have to issue any warrants. In the event that the warrants are issued and
exercised, however, such exercise will have a dilutive effect on the Company's
stockholders.
CERTAIN CHARTER AND BY-LAW PROVISIONS, AND ANTI-TAKEOVER EFFECT OF DELAWARE LAW
The Company's Board of Directors has the authority to issue up to 5,000,000
shares of Preferred Stock and to determine the price, rights, preferences and
privileges, including voting rights, of such shares without any further vote on
action by the Company's stockholders. The rights of the holders of Common Stock
will be subject to, and could be adversely affected by, the rights of the
holders of any Preferred Stock that may be issued in the future. The issuance
of shares of Preferred Stock under certain circumstances could have the effect
of delaying, deferring or preventing a change of control of the Company. The
Company has no present plan or arrangement to issue any additional shares of
Preferred Stock. Certain provisions of Delaware law could delay or inhibit a
merger, tender offer or proxy contest involving the Company. See "Description
of Capital Stock."
8
SELLING STOCKHOLDER AND PLAN OF DISTRIBUTION
All of the Securities offered hereby will be sold for the account of the
Selling Stockholder. Except as set forth below, the Selling Stockholder's plan
of distribution is set forth on the cover page of this Prospectus. Additional
information regarding the Selling Stockholder is as set forth below.
The Selling Stockholder acted as representative of the several underwriters
in connection with the Company's public offering of common stock in 1994. In
such offering, the Company sold an aggregate of 2.3 million shares of common
stock for aggregate net proceeds of approximately $5.1 million. In connection
with the offering the Company sold the Selling Stockholder the Warrant for a
purchase price of $170.00 ($.001 per share of common stock purchasable under
the Warrant). The Warrant exercise price is $3.15 per share which is equal to
120% of the initial public offering price. The Warrant is exercisable from
March 17, 1995 until it expires on March 23, 1999. The Company granted to
Selling Stockholder the right to require the Company on one occasion to
register the 170,000 shares of Common Stock issuable upon exercise of the
Warrant. The Registration Statement of which this Prospectus is a part has been
prepared and filed by the Company pursuant to that obligation.
In February 1995, the Company and the Selling Stockholder entered into an
agreement pursuant to which the Selling Stockholder agreed to exercise the
Warrant on the later of March 17, 1995 or the effective date of the
Registration Statement (such date being the "Warrant Exercise Date"). On the
Warrant Exercise Date, the Selling Stockholder will exercise the Warrant and
pay the Company the aggregate exercise price of $535,500 in cash. In addition,
pursuant to the February 1995 agreement, the Company agreed to issue to the
Selling Stockholder new warrants (the "Additional Warrants") to purchase
170,000 shares of Common Stock on the Warrant Exercise Date. On May 11, 1995,
the Company and the Selling Stockholder amended the February 1995 agreement to
provide that no Additional Warrants would be issued to the Selling Stockholder
pursuant to such agreement.
On May 19, 1995, the Company filed a Registration Statement on Form S-2 in
connection with a proposed public offering of up to 2.3 million shares of
Common Stock. The Company anticipates that the Selling Stockholder will act as
co-representative of the several underwriters of this proposed public offering.
In connection with the consummation of the proposed public offering, the co-
representatives will receive certain compensation, including an aggregate of
200,000 warrants to purchase Common Stock at an exercise price equal to 120% of
the public offering price, exerciseable during a four-year period commencing on
the first anniversary of the effective date of the Registration Statement on
Form S-2.
Except as set forth above, the Selling Stockholder has had no position,
office or other material relationship with the Company (or had any such
position, office or material relationship within the past three years), and
will not own greater than one percent of the Common Stock of the Company after
this offering, assuming all the Securities offered hereby are sold.
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 15,000,000 shares of Common Stock, $.01
par value, of which 9,417,582 are issued and outstanding, and 5,000,000 shares
of Preferred Stock, $.01 par value, of which 615,000 have been designated as
Series B Preferred Stock, 545,950 of which are issued and outstanding as of May
17, 1995.
PREFERRED STOCK
The Board of Directors is authorized, without further action by the
stockholders, to issue from time to time shares of Preferred Stock in one or
more classes or series and to fix the designations, voting rights, liquidation
preferences, dividend rights, conversion rights, rights and terms of redemption
(including sinking fund provisions) and certain other rights and preferences of
the Preferred Stock. The issuance of shares of Preferred Stock under certain
circumstances could adversely affect the voting power of the holders of Common
Stock and may have the effect of delaying, deferring or preventing a change in
control of the
9
Company. In connection with the acquisition of Rugged Digital, the Company
issued 613,110 shares of Series B Preferred Stock to holders of Rugged Digital
subordinated debt of which 545,950 are presently issued and outstanding. Series
B Preferred Stock ranks senior to the Common Stock and subordinate to all
indebtedness of the Company. In the event of any voluntary or involuntary
liquidation, dissolution, or winding up of the Company, the holders of the
Series B Preferred Stock will be entitled to receive an aggregate liquidation
preference of $955,413 ($1.75 per share) over the Common Stock. The Series B
Preferred Stock is redeemable for cash at any time in whole or in part, at the
Company's option, at a redemption price equal to 100% of the liquidation
preference per share ($1.75 per share).
Pursuant to the agreements under which the Series B Preferred Stock was
issued, the original holders of the Series B Preferred Stock have a contractual
right to receive warrants to purchase Common Stock in the event that the Series
B Preferred Stock remains outstanding on August 10, 1995. Each original holder
of Series B Preferred Stock who owns shares of Series B Preferred Stock on such
date (the "Series B Warrant Issuance Date") shall receive a warrant to purchase
that number of shares of Common Stock (rounded to the nearest whole share)
equal to the product (1) a fraction, the numerator of which is 200,000 and the
denominator of which is 613,110, the aggregate number of shares of Series B
Preferred Stock issued in connection with the merger with Rugged Digital, and
(2) the number of shares of Series B Preferred Stock held by such holder on the
Series B Warrant Issuance Date. In addition, as long as any shares of Series B
Preferred Stock are outstanding, every three months following the Series B
Warrant Issuance Date (each, a "Subsequent Issuance Date"), the Company shall
issue and deliver to each of the original holders who owns shares of Series B
Preferred Stock a warrant to purchase the number of shares of Common Stock
(rounded to the nearest whole share) equal to the product of (1) a fraction,
the numerator of which is 25,000 and the denominator of which is 613,110, and
(2) the number of shares of Series B Preferred Stock held by such holder on the
Subsequent Issuance Date. Each such warrant provides that the exercise price
for each share of Common Stock covered thereby is $.50, and that it is
exercisable for a period from issuance through 30 days after the date on which
no shares of Series B Preferred Stock remain outstanding. The warrant rights
apply only to shares of Series B Preferred Stock that are outstanding as of the
Warrant Issuance Date or a Subsequent Issuance Date, as the case may be, and no
such rights accrue with respect to shares of Series B Preferred Stock which are
redeemed or which otherwise cease to be outstanding prior to any such date. The
rights arising under the Warrants are personal to each original holder of
Series B Preferred Stock and may not be sold, assigned or otherwise
transferred, by operation of law or otherwise, to any other person or entity.
Because the Company has the right to redeem the Series B Preferred Stock at any
time at the liquidation preference, the Company does not anticipate that it
will ever issue any such warrants. There can be no assurance however, that the
Company will have sufficient financial resources to effect the redemption.
As of the date of this Prospectus, the Company has no plan or arrangement for
the issuance of any additional shares of Preferred Stock.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share on all
matters voted on by stockholders, and, except as otherwise required by law or
provided in any resolution adopted by the Board of Directors with respect to
any other series or class of the Common Stock or series of the Preferred Stock,
holders of such shares will exclusively possess all voting power. The Restated
Certificate of Incorporation of the Company does not provide for cumulative
voting for the election of directors. Subject to any preferential rights of any
other outstanding shares of the Preferred Stock designated by the Board of
Directors from time to time, when and as dividends or other distributions are
declared, whether payable in cash, in property or in securities of the Company,
the holders of shares of Common Stock will be entitled to share equally, share
for share, in such dividends or other distributions. The Common Stock has no
preemptive rights and no redemption, sinking fund or conversion provisions. All
shares of Common Stock are fully paid and nonassessable. As of May 17, 1995,
there were 894 holders of the Company's Common Stock.
CERTAIN CHARTER PROVISIONS
The Company's Restated Certificate of Incorporation eliminates, to the
fullest extent permitted by law, the liability of its directors to the Company
and its stockholders for monetary damages for breach of the
10
directors' fiduciary duty. This provision is intended to afford the Company's
directors the benefit of the Delaware General Corporation Law, which provides
that directors of Delaware corporations may be relieved of monetary liability
for breach of their fiduciary duty of care, except under certain circumstances
involving breach of a director's duty of loyalty, acts or omissions not in good
faith or involving intentional misconduct or a knowing violation of law or any
transaction from which the director derived an improper personal benefit.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
The Company is subject to Section 203 of the Delaware General Corporation Law
("Section 203"), which restricts certain transactions and business combinations
between a corporation and an "Interested Stockholder" owning 15% or more of the
corporation's outstanding voting stock for a period of three years from the
date the stockholder becomes an Interested Stockholder. Subject to certain
exceptions, unless the transaction is approved by the Board of Directors and
the holders of at least 66-2/3% of the outstanding voting stock of the
corporation (excluding shares held by the Interested Stockholder), Section 203
prohibits significant business transactions such as a merger with, disposition
of assets to, or receipt of disproportionate financial benefits by, the
Interested Stockholder, or any other transaction that would increase the
Interested Stockholder's proportionate ownership of any class or series of the
corporation's stock. The statutory ban does not apply if, upon consummation of
the transaction in which any person becomes an Interested Stockholder, the
Interested Stockholder owns at least 85% of the outstanding voting stock of the
corporation (excluding shares held by persons who are both directors and
officers or by certain stock plans).
REGISTRAR AND TRANSFER AGENT
The Transfer Agent and Registrar for the Common Stock is Chemical Trust
Company of California. Its telephone number is (213) 621-8000.
Dividends may be paid on the Common Stock out of any funds legally available
for that purpose when declared by the Board of Directors. The Company has not,
however, paid cash dividends on its Common Stock since inception and management
does not anticipate that the Company will do so in the foreseeable future. In
addition, the Company's bank line of credit currently prohibits the payment of
dividends on the Common Stock without written permission from the bank. The
Company currently intends to retain any earnings to provide funds for working
capital and general corporate purposes.
MARKET INFORMATION
The following table sets forth the high and low sales prices for the Common
Stock on AMEX (Symbol: DC) for the fiscal periods indicated as reported by
AMEX.
HIGH LOW
-------- -------
Fiscal Year Ended October 31, 1993
1st Quarter............................................ $2 1/2 $1 1/16
2nd Quarter............................................ 2 5/8 1 1/2
3rd Quarter............................................ 1 13/16 1 1/4
4th Quarter............................................ 3 5/8 1 3/16
Fiscal Year Ended October 30, 1994
1st Quarter............................................ $4 1/8 $2 9/16
2nd Quarter............................................ 3 1/4 2 3/8
3rd Quarter............................................ 3 3/16 2 9/16
4th Quarter............................................ 5 1/4 3 7/16
Fiscal Year Ending October 29, 1995
1st Quarter............................................ $6 3/8 $3 3/4
2nd Quarter............................................ 9 1/4 5 1/8
3rd Quarter (through May 18, 1995)..................... 9 1/4 8
11
The Company cannot predict the market price for Common Stock upon
commencement or completion of this offering. Exercise of the Warrant and sales
of the Securities could cause the Common Stock to trade at levels lower than
would otherwise be anticipated. On May 18, 1995, the closing price for the
Common Stock as reported on the AMEX was $8.25 per share. As of May 17, 1995,
the Company had 894 holders of record of Common Stock.
LEGAL OPINION
The validity of the Common Stock offered hereby will be passed upon for the
Company by Latham & Watkins, San Diego, California.
EXPERTS
The financial statements of Datametrics Corporation incorporated by reference
in the Datametrics Corporation Annual Report (Form 10-K) for the year ended
October 30, 1994 have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein
by reference. Such financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
12
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an itemized statement of expenses incurred in connection
with this Registration Statement. All such expenses will be paid by the
Company.
Securities and Exchange Commission registration fee.............. $ 432
Accounting fees.................................................. 5,000
Company legal fees and expenses.................................. 14,000
Blue Sky fees and expenses....................................... 1,000
Miscellaneous expenses........................................... 568
-------
TOTAL........................................................ $21,000
=======
All of the above items except the registration fee are estimates.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As authorized by the Delaware General Corporation Law, the Company's Restated
Certificate of Incorporation and the Company's Restated By-Laws provide that no
director of the Company will be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director
except for liability (i) for any breach of the director's duty of loyalty to
the Company or its stockholders, (ii)for acts or omissions not in good faith
which involve intentional misconduct or a knowing violation of law, (iii) in
respect of certain unlawful dividend payments or stock redemptions or
repurchases and (iv) for any transaction from which the director derives an
improper personal benefit. The effect of this provision is to eliminate the
rights of the Company and its stockholders (through stockholders' derivative
suits on behalf of the Company) to recover monetary damages against a director
for breach of the fiduciary duty of care as a director (including breaches
resulting from negligent or grossly negligent behavior) except in the
situations described in clauses (i) though (iv) above. This provision does not
limit or eliminate the rights of the Company or any stockholders to seek non-
monetary relief such as an injunction or rescission in the event of a breach of
a director's duty of care.
ITEM 16. EXHIBITS.
The Exhibit Index is attached hereto on page E-1.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made of the
securities registered hereby, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this 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 this
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
II-1
Provided however, that the undertakings set forth in paragraphs (1)(i) and
(1)(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this
Registration Statement.
(2) That, for the purposes of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the Securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
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 Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-2
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
WOODLAND HILLS, STATE OF CALIFORNIA, ON MAY 18, 1995.
DATAMETRICS CORPORATION
By /s/ Sidney E. Wing
_____________________________________
Sidney E. Wing
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
--------- ----- ----
/*/ Garland S. White Chairman of the Board May 18, 1995
____________________________________
Garland S. White
/*/ Sidney E. Wing President and Chief May 18, 1995
____________________________________ Executive Officer (Principal
Sidney E. Wing Executive Officer)
/*/ John J. Van Buren Senior Vice President, Chief May 18, 1995
____________________________________ Financial Officer and
John J. Van Buren Treasurer (Principal
Financial and Accounting
Officer)
/*/ Dann V. Angeloff Director May 18, 1995
____________________________________
Dann V. Angeloff
/*/ Richard A. Foster Director May 18, 1995
____________________________________
Richard A. Foster
/*/ Burton L. Kaplan Director May 18, 1995
____________________________________
Burton L. Kaplan
II-3
SIGNATURE TITLE DATE
--------- ----- ----
Director
____________________________________
Richard W. Muchmore
/*/ Kenneth K. Zeiger Director May 18, 1995
____________________________________
Kenneth K. Zeiger
/*/ John J. Van Buren May 18, 1995
____________________________________
*John J. Van Buren
Attorney-in-fact
II-4
INDEX
The following exhibits are filed as part of this Amendment No. 1 to Form S-3
Registration Statement or are incorporated herein by reference. Where an
exhibit is incorporated by reference, the number which precedes the description
of the exhibit indicates the document to which the cross-reference is made.
EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
------- ----------------------
1.0 Omitted (Inapplicable).
4.1 Warrant to purchase 170,000 shares of Common Stock of Datametrics
Corporation issued to Cruttenden & Company on March 24, 1994
(incorporated by reference to Exhibit 4.1 to Registrant's Form S-2
Registration Statement (File No. 33-73344) filed on December 23, 1993)
as amended by letter agreement dated February 17, 1995.
4.2(2) Letter Agreement dated February 17, 1995 between Datametrics
Corporation and Cruttenden Roth.
4.3(1) Amendment to Letter Agreement dated May 11, 1995 between Datametrics
Corporation and Cruttenden Roth.
5.0(2) Opinion and Consent of Latham & Watkins.
8.0 Omitted (Inapplicable).
12.0 Omitted (Inapplicable).
15.0 Omitted (Inapplicable).
23.1 Consent of Latham & Watkins (included in Exhibit 5.0 hereto).
23.2(1) Consent of Ernst & Young LLP.
25.0(2) Powers of Attorney (included on the signature page hereto).
26.0 Omitted (Inapplicable).
27.0 Omitted (Inapplicable).
28.0 Omitted (Inapplicable).
29.0 Omitted (Inapplicable).
- --------
(1) Filed herewith.
(2) Previously filed.