As filed with the Securities and Exchange Commission on March 9, 2001
Registration No. 333-_______
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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DIMENSIONAL VISIONS INCORPORATED
(Name of small business issuer in its charter)
Delaware 2759 23-2517953
(State of other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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2301 W. Dunlap Avenue, Suite 207 2301 W. Dunlap Avenue, Suite 207
Phoenix, Arizona 85021 Phoenix, Arizona 85021
(602) 997-1990 (602) 997-1990
(Address and telephone number of (Address and telephone number of
principal executive office) principal place of business)
Prentice Hall Corporation System, Inc.
1013 Centre Road
Wilmington, DE 19805
(302) 998-0595
(Name, address and telephone number of agent for service)
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COPIES TO:
Lynne Bolduc, Esq.
Sean Palumbo Meulemans, LLP
18301 Von Karman Avenue, Suite 850
Irvine, CA 92618
(949) 453-0300
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Approximate Date of Proposed Sale to the Public.
As soon as practicable after this Registration Statement becomes effective.
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, check the following box. [X]
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Number of Shares Offering Price Aggregate Registration
Securities to be Registered to be Registered Per Share(1) Offering Price Fee
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Common Stock, $0.001 par value 25,222,207(2) $0.255 $6,431,662.79 $1,607.92
Common Stock, $0.001 par value,
underlying debt securities 1,500,000(3) $0.255 $ 382,500.00 $ 95.63
Common Stock, $0.001 par value,
underlying warrants 6,959,000(4) $0.255 $1,774,545.00 $ 443.64
- --------------------------------------------------------------------------------------------------------
Total 33,681,207 $8,588,707.79 $2,147.19
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(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c) and based upon the average of the
bid and asked prices for the common stock on March 6, 2001, as reported by
the OTC Bulletin Board.
(2) Represents 25,000,000 shares to be sold from time to time by Swartz Private
Equity, LLC; and 222,207 shares to be sold from time to time by other
Selling Shareholders.
(3) Represents common stock issuable upon conversion of Dimensional Visions'
debt securities.
(4) Represents 1,309,000 shares underlying warrants to be sold from time to
time by Swartz Private Equity, LLC; 4,900,000 shares underlying warrants to
be sold from time to time by the employee's of the Company if the Company
is profitable at June 30, 2000 or upon the discretion of the Board of
Directors; and 750,000 shares underlying warrants to be sold from time to
time by Dale Riker and Russ Ritchie pursuant to an investment agreement.
Pursuant to Rule 416 promulgated under the Securities Act of 1933, this
Registration Statement also covers any additional common shares which may
become issuable by reason of the antidilution provisions of the Warrants.
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 Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED MARCH 6, 2001
PROSPECTUS
DIMENSIONAL VISIONS INCORPORATED
33,681,207 SHARES OF
COMMON STOCK
($0.001 PAR VALUE)
THE OFFERING:
This Offering relates to the possible sale, from time to time, by certain
stockholders of Dimensional Visions Incorporated of up to 33,681,207 shares of
common stock of Dimensional Visions.
MARKET FOR THE SHARES:
The common stock of Dimensional Visions is traded in the over-the-counter
electronic bulletin board system, also called the Bulletin Board, under the
symbol "DVUI." The closing bid and asked prices for the common stock on March 6,
2001, as reported by the Bulletin Board were $0.24 and $0.27 per share,
respectively.
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THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY
IF YOU CAN AFFORD A COMPLETE LOSS. SEE "RISK FACTORS" BEGINNING ON PAGE 4.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IF TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
THE DATE OF THIS PROSPECTUS IS MARCH 6, 2001
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS. YOU SHOULD ALSO READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE
RISK FACTORS AND FINANCIAL STATEMENTS.
DIMENSIONAL VISIONS INCORPORATED
OFFICES:
Dimensional Visions' office and principal place of business is located at 2301
West Dunlap Avenue, Suite 207, Phoenix, Arizona 85021, and its telephone number
is (602) 997-1990.
OUR BUSINESS:
Dimensional Visions creates and delivers LIVING IMAGE(TM) Solutions for
products, packaging and marketing communications.
LIVING IMAGE(TM) Solutions are multi-dimensional (commonly known as "3-D")
and/or animated visual effects. These effects are created by viewing multiple
images through a series of lenses incorporated into a plastic sheet called
lenticular. Viewed in one direction, the lenses allow an individual to see
stereo, i.e. multiple, views of an image simultaneously. Stereo views are
interpreted by the brain as being in three dimensions. Alternatively, viewed in
the other direction, the lenses restrict the view to a particular image that
changes as the piece is moved creating an animation effect (i.e., it appears
that the picture is moving).
Images are printed directly on the lenticular and then incorporated into or onto
other products. For example, the images can be applied on products such as mouse
pads, children's backpacks, business cards and notebooks. They may also be used
on product packaging such as cereal boxes to differentiate the item from other
similar products by adding a three-dimensional or animated component to attract
the buyer's attention.
OUR OBJECTIVE:
Our objective is to become a dominant marketer, developer and producer of the
LIVING IMAGE(TM) in the United States and internationally.
COMPETITION:
Currently Dimensional Visions has two major competitors who produce similar
products. However, we have applied for a patent to protect our particular
process.
OUR STRATEGY:
Our LIVING IMAGE(TM) Solutions offer multi-dimensional and/or animated images
for the promotion marketing industry, advertising and graphic design industry,
and original equipment manufacturers throughout the United States. Interested
original equipment manufacturers include manufacturers making products that our
images can be affixed to or included in their packaging to alter the traditional
flat design.
OUR FINANCIAL POSITION:
The Company has sustained recurring losses through December 31, 2000 of
$22,427,533. As of June 30, 2000, total assets exceeded total liabilities by
$365,921. As of December 31, 2000, total liabilities exceeded total assets by
$41,718. Three customers accounted for 82% and four customers accounted for 79%
of the Living ImageTM revenue for the fiscal year ended June 30, 2000, and the
six months ended December 31, 2000, respectively. Our independent auditors,
Kopple & Gottlieb, LLP, expressed substantial doubt regarding the company's
ability to continue as a going concern in the year ended June 30, 2000,
financial statements.
SECURITIES TO BE ISSUED TO SWARTZ PRIVATE EQUITY, LLC
This prospectus has been prepared to register the sale from time to time of
25,000,000 shares of common stock and 6,190,000 shares underlying warrants held
by Swartz Private Equity, LLC. These shares may be issued to Swartz in the
future pursuant to our investment agreement with Swartz that provides us with
put options valued at up to $20,000,000.
SELLING
Stockholders: This prospectus has also been prepared to register shares of
common stock and shares underlying warrants to various individuals. A list of
the shares being registered in this prospectus and the people and entities that
own them appears in the "Selling Stockholders" section of this prospectus.
THE OFFERING
Common stock outstanding on March 6, 2001 10,339,873
If converted fully diluted common stock 17,594,034
outstanding
Common stock offered by selling stockholders 33,681,207
Risk Factors An investment in our
shares is very risky, and you
should be able to bear a
complete loss of your
investment. See "Risk Factors"
for a detailed discussion of
the risks and uncertainties
concerning Dimensional
Visions' common stock.
OTC Bulletin Board Symbol DVUI.ob
2
SUMMARY FINANCIAL INFORMATION
The following table presents selected historical financial data for Dimensional
Visions derived from our Financial Statements. The following data should be read
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements of Dimensional Visions and the notes to
the Financial Statements included elsewhere in this prospectus.
SIX MONTHS ENDED FISCAL YEAR ENDED
DECEMBER 31, JUNE 30,
------------------------- -------------------------
2000 1999 2000 1999
----------- ----------- --------- ---------
(UNAUDITED) (UNAUDITED) (AUDITED) (AUDITED)
----------- ----------- --------- ---------
Statement of Operations Data:
Revenue $ 162,996 $ 300,418 $ 1,008,862 $ 741,901
Net loss $(598,780) $(459,051) $(1,021,145) $(1,465,812)
Net loss per share per share of common stock* $ (0.07) $ (0.09) $ (0.18) $ (0.39)
DECEMBER 31, 2000 JUNE 30, 2000
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(UNAUDITED) (AUDITED)
Balance Sheet Data:
Working capital surplus (deficiency) $(206,620) $205,284
Total assets $ 373,429 $885,033
Total liabilities $ 415,147 $519,112
Stockholder's equity (deficiency) $ (41,718) $365,921
* The calculation of earnings per share considers the accumulative dividends
in arrears on preferred stock as paid.
3
RISK FACTORS
THE SHARES OFFERED IN THIS PROSPECTUS ARE VERY SPECULATIVE AND INVOLVE A HIGH
DEGREE OF RISK. THESE SHARES SHOULD BE PURCHASED ONLY BY PEOPLE WHO CAN AFFORD
THE LOSS OF THEIR ENTIRE INVESTMENT. BEFORE PURCHASING THESE SHARES, YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND THE OTHER INFORMATION
CONCERNING DIMENSIONAL VISIONS AND ITS BUSINESS CONTAINED IN THIS PROSPECTUS.
DIMENSIONAL VISIONS HAS INCURRED LOSSES SINCE INCEPTION AND MAY CONTINUE TO
INCUR LOSSES IN THE FUTURE.
Dimensional Visions has operated at a loss for all of the periods for which
financial statements are included in this prospectus. We must be able to garner
market share from our competitors and/or establish new markets for our products.
As lenticular products are more expensive alternatives to traditional flat
images, we must establish market acceptance of the products while simultaneously
generating sales into this market. The likelihood of our success depends on our
ability to develop and produce multi-dimensional and/or animated print products
in various formats and at competitive prices. Difficulties and delays in
developing new formats using various lenticulars and new technologies for their
application may affect our ability to successfully produce marketable products.
Failure to overcome any of the above difficulties may have a materially adverse
effect upon our business and could force us to reduce or close operations. No
assurance can be given that Dimensional Visions can or will ever operate
profitably. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business of Dimensional Visions--Market and
Penetration" and "--Competition."
THE INDEPENDENT AUDITORS HAVE ISSUED A GOING CONCERN OPINION FOR THE FISCAL
YEARS ENDED JUNE 30, 2000 AND 1999.
The company's independent auditors have included an explanatory paragraph
regarding the company's ability to continue as a going concern for each of the
fiscal years ended June 30, 2000 and 1999. Among the factors cited by the
accountants that raised substantial doubt as to the company's ability to
continue as a going concern are the company's continued recurring losses from
operations and limited sales of its products.
DIMENSIONAL VISIONS IS DEPENDENT ON A LIMITED PRODUCT LINE AND HAS DECLINING
RESOURCES ALLOCATED TO THE DEVELOPMENT OF NEW PRODUCTS.
The company's product line is composed solely of lenticular-based products. If
the company's share of the market for these products fails to develop to a level
sufficient to make the company profitable, there are no other products available
for sale. In this case, the company would be forced to reduce or close
operations. Additionally, the resources allocated to the development of new
products have been declining, further reducing the availability of new products
to market.
DIMENSIONAL VISIONS RELIES ON A FEW CUSTOMERS FOR THEIR SALES. WITHOUT REPEAT
ORDERS FROM OUR CUSTOMERS, DIMENSIONAL VISIONS WOULD HAVE TO REDUCE OR CLOSE
OPERATIONS.
For the fiscal year ended June 30, 2000, and the six months ended December 31,
2000, three customers accounted for 82% and four customers accounted for 79% of
the LIVING IMAGE(TM) revenue respectively. In addition, two customers accounted
for 98% and 100% of the InfoPak, Inc. revenue for the fiscal year ended June 30,
2000, and the six months ended December 31, 2000. If Dimensional Visions were to
lose their repeat customers, then the company would have to significantly
curtail or close operations.
WE CANNOT GUARANTEE THAT OUR PRODUCTS WILL SELL SUCCESSFULLY THUS GENERATING
SUFFICIENT REVENUE TO CONTINUE OPERATIONS.
There can be no assurance that our marketing and sales strategies will be
effective and that consumers will buy our products. Our failure to penetrate our
targeted markets would have a material adverse effect upon our operations.
Market acceptance of our products will depend in part upon our ability to
demonstrate the advantages of three-dimensional and/or animated products over
similar or competing products described under the next risk factor of
competition. In addition, our sales strategy contemplates sales to markets that
are unfamiliar with multi-dimensional printed images and may not be accepting of
these new products. Currently, we don't have any distribution agreements for any
of our products in place. See "Business of Dimensional Visions--Market and
Penetration" and "--Competition."
4
THERE IS COMPETITION FOR OUR PRODUCTS, AND THERE CAN BE NO ASSURANCE THAT
CUSTOMERS WILL CHOOSE OUR PRODUCTS OVER THOSE OF OUR COMPETITORS. CUSTOMERS MAY
CHOOSE LESS EXPENSIVE, CONVENTIONAL PRINTS OVER OUR PRODUCTS.
We compete with other established businesses that market similar products. Many
of these companies have greater capital, marketing and other resources than we
do. Also, other means of viewing three-dimensional and/or animated images exist.
These other methods may be less expensive or easier to incorporate into other
products. Further, traditional printed images are less expensive than our
products and may be favored in many, if not most, illustration and promotion
contexts. See "Business of Dimensional Visions--Competition."
DIMENSIONAL VISIONS DEPENDS ON KEY PERSONNEL FOR CRITICAL MANAGEMENT DECISIONS
AND THESE KEY PERSONNEL MAY LEAVE DIMENSIONAL VISIONS IN THE FUTURE.
Our success depends, to a significant extent, upon a number of key employees,
including our C.E.O./President, John McPhilimy, and our Senior Vice President,
Bruce D. Sandig. The loss of services of one or more of these employees could
have a material adverse effect on our business. We believe that our future
success will also depend in part upon our ability to attract, retain, and
motivate qualified personnel. Competition for such personnel is intense. There
can be no assurance that we can attract and retain such personnel. We have "key
person" life insurance on both Mr. McPhilimy and Mr. Sandig. See "Management."
DIMENSIONAL VISIONS MAY REQUIRE ADDITIONAL FINANCING FOR ITS BUSINESS THAT COULD
DILUTE THE OWNERSHIP OF EXISTING STOCKHOLDERS AND FORCE DIMENSIONAL VISIONS TO
CURTAIL OR CLOSE OPERATIONS.
Our future cash requirements will depend significantly on generating sufficient
cash flow from operations to cover our cost of goods sold and operating costs or
"burn rate" of approximately $70,000 per month. To continue operations, the
Company must obtain sufficient funds from the Swartz equity line agreement
and/or the line of credit from the investor group. Any equity financings could
result in dilution to our stockholders. Also, if the price of our common stock
declines or the trading volume in our common stock is low, we will only be able
to utilize the current line of credit per the investor group agreement. Once the
credit line is used, we would only have the Swartz equity agreement for
additional financing. However, the future market price and volume of trading our
common stocks limits the rate at which we can obtain money under the Swartz
equity line agreement.
UP TO 33,681,207 SHARES OF COMMON STOCK OF DIMENSIONAL VISIONS WILL BECOME
ELIGIBLE FOR PUBLIC SALE THAT COULD HAVE A DEPRESSIVE EFFECT ON THE STOCK.
When our registration statement, of which this prospectus is a part, is declared
effective by the SEC, 222,207 shares of our common stock will be eligible for
immediate resale on the public market and 2,559,000 shares of our common stock
underlying warrants and convertible debt, upon their exercise or conversion,
will be eligible for immediate resale on the public market for our common stock.
Also 25,000,000 shares will be available for sale upon the issuance of stock to
Swartz based on limitations of our trading volume and stock price. The remaining
4,900,000 shares underlying warrants will be available upon ongoing
profitability of the Company beginning on June 30, 2001 or upon the discretion
of the Board of Directors and 250,000 shares underlying warrants upon the
Company borrowing from their line of credit with an investor group.
Additionally, If a significant number of shares are offered for sale
simultaneously, it would have a depressive effect on the trading price of our
common stock on the public market. If and when we exercise our put rights and
sell shares of our common stock to Swartz, if and to the extent that Swartz
sells the common stock, our common stock price my decrease due to the additional
shares in the market.
5
DIMENSIONAL VISIONS' COMMON STOCK IS CURRENTLY CLASSIFIED AS A "PENNY STOCK"
WHICH COULD CAUSE INVESTORS TO EXPERIENCE DELAYS AND OTHER DIFFICULTIES IN
TRADING IN THE STOCK MARKET.
Dimensional Visions' common stock is quoted and traded on the Over-the-Counter
Bulletin Board ("Bulletin Board"). As a result, an investor could find it more
difficult to dispose of, or to obtain accurate quotations as to the market value
of, the stock. In addition, trading in the common stock is covered by what is
known as the "Penny Stock Rules." The Penny Stock Rules require brokers to
provide additional disclosure in connection with any trades involving a stock
defined as a "penny stock," including the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and the
risks associated therewith. The regulations governing penny stocks could limit
the ability of brokers to sell the shares offered in this prospectus and thus
the ability of the purchasers of this Offering to sell these shares in the
secondary market. Dimensional Visions' stock will be covered by the Penny Stock
Rules until it has a market price of $5.00 per share or more, subject to certain
shares exceptions.
THE OFFERING PRICE OF THESE SHARES MAY NOT HAVE ANY RELATIONSHIP TO OUR NET OR
WORTH FUTURE TRADING VALUE.
The shares being registered in this prospectus were offered at the market price
prevailing at the time of the offer. The market price of these shares may have a
limited relationship, or no relationship, to our assets, book value, results of
operations, or other established criteria of value. The offering price also may
not be indicative of the prices that will prevail in the subsequent trading
market for our securities.
NO DIVIDENDS HAVE BEEN PAID ON COMMON STOCK AND MAY NEVER BE PAID. REQUIRED
DIVIDENDS IN ARREARS ON ON PREFERRED STOCK MUST BE PAID BEFORE ANY DIVIDENDS ARE
PAID ON COMMON STOCK.
Dimensional Visions has never paid dividends on its common stock and does not
anticipate paying cash dividends in the foreseeable future. Dimensional Visions
is in dividends required to be paid on its Series A Preferred Stock and Series B
Preferred Stock. The unpaid cumulative dividends total arrears approximately
$74,225 and must be paid before dividends on common stock can be declared or
paid. See "Dividend Policy" and Note 10 of Notes to Consolidated Financial
Statements.
ALTHOUGH DIMENSIONAL VISIONS HAS PATENTS, THIRD PARTIES MAY DEVELOP SIMILAR OR
COMPETITIVE TECHNOLOGY. DIMENSIONAL VISIONS CAN GIVE NO ASSURANCE THAT ITS OWN
TECHNOLOGY DOES NOT INFRINGE ON EXISTING PATENTS.
Dimensional Visions enters into confidentiality agreements with all persons and
entities who or which may have access to our technology. However, no assurance
can be given that such agreements, the patents, or any additional patents that
may be issued to Dimensional Visions will prevent third parties from developing
similar or competitive technology. There can be no assurance that the patents
will provide us with any significant competitive advantages, or that challenges
will not be instituted against the validity or enforceability of its patents, or
if instituted that any such challenges will not be successful. The cost of
litigation to uphold the validity and prevent infringement can be substantial.
In addition, no assurance can be given that we will have sufficient resources to
either institute or defend any action, suit or other proceeding by or against
our company with respect to any claimed infringement of patent or other
proprietary rights. In the event that we should lose, in the near future, the
protection afforded by the patents and any future patents, such event could have
a material adverse effect on our operations. Furthermore, there can be no
assurance that our own technology will not infringe patent or other rights owned
by others or licenses to which may not be available to us.
DIMENSIONAL VISIONS RELIES ON THIRD PARTY PRINTERS THAT COULD RESULT IN A DELAY
OF OUR PRODUCT TO OUR CUSTOMERS AND SUBSTANTIALLY DECREASE OUR SALES IF OUR
PRINTERS BECAME UNABLE TO FULFILL OUR ORDERS.
Dimensional Visions relies on two large lithographic printers and one
photographic printer for most of its printing needs. If we were unable to use
these printers, it could delay the sales orders to our customers. We would have
to find another printer which may require additional time to schedule
production. Even though the majority of our print jobs are completed at our
printer in Minneapolis, MN, we can now rely on another printer in Los Angeles,
CA.
6
USE OF PROCEEDS
The primary use of proceeds raised through the issuance of stock registered in
this prospectus will be for working capital, sales and marketing expenses and
other general corporate purposes. Of the 25,222,207 shares of common stock being
registered, 222,207 are already issued and outstanding. The remaining 25,000,000
are to establish a credit line sufficient to meet these current expenses and
allow for the growth of the company. If an advantageous acquisition opportunity
presents itself and the stock price is sufficiently high to make an acquisition
reasonable, additional proceeds may also be used to make such an acquisition.
THE SWARTZ INVESTMENT AGREEMENT
OVERVIEW
On December 13, 2000, we entered into an investment agreement with Swartz
Private Equity, LLC. The investment agreement entitles us to issue and sell up
to $20 million of our common stock to Swartz, subject to a formula based on
stock price and trading volume, from time to time over a three year period
beginning on the date that this registration statement is declared effective. We
refer to each election by us to sell stock to Swartz as a put right.
PUT RIGHTS
In order to invoke a put right, we must have an effective registration statement
on file with the SEC registering the resale of the common shares which may be
issued as a consequence of the invocation of that put right and we must be
trading on at least the Over-The-Counter Bulletin Board. Additionally, we must
give at least ten but not more than twenty business days' advance notice to
Swartz of the date on which we intend to exercise a particular put right and we
must indicate the number of shares of common stock we intend to sell to Swartz.
At our option, we may also designate a maximum dollar amount of common stock not
to exceed $2 million which we will sell to Swartz during the put and/or a
minimum purchase price per common share, if applicable, at which Swartz may
purchase shares during that put. The designated minimum purchase price per
common share, if we chose to specify one, shall be no greater than the lesser of
(i) 80% of the closing bid price of our common stock on the business day prior
to the date of the advance put notice or (ii) the closing bid price of our
common stock on the business day prior to the date of the advance put notice,
minus $.125. The number of common shares sold to Swartz in a given put may not
exceed the lesser of:
- 15% of the aggregate daily reported trading volume, excluding any
block trades of 20,000 or more shares of common stock, during a period
which begins on the business day immediately following the day we
invoked the put right and ends on and includes the day which is twenty
business days after the date we invoked the put right, excluding,
however, certain days where the common shares trade below a minimum
price specified by us.
- 15% of the sum aggregate daily reported trading volumes, excluding
block trades of 20,000 or more shares of common stock, for the twenty
business days immediately preceding the put date.
- The intended put amount, specified in our put notice,
- The number of our shares, which when multiplied by the put share
price, equals $2 million,
- An amount of put shares, which when added to the number of put shares
acquired by the investor during the 61 days preceding the put date
would exceed 9.99% of the number of common shares outstanding on a
fully diluted basis.
For each common share, Swartz will pay us the lesser of:
- the market price for the applicable pricing period, minus $.075 or
- 91% of the market price for the applicable pricing period.
Market price is defined as the lowest closing bid price for common stock during
the pricing period. The pricing period is the period beginning on the business
day immediately following the put date and ending on and including the date
which is twenty business days after such put date.
7
We are registering 25,000,000 shares to be sold to Swartz in puts. Therefore, in
order for the Company to receive $20,000,000, the average sale price of these
shares would need to be $.80. Unless our share price increases drastically, we
will need to register additional shares in order to access the $20,000,000
maximum.
Our closing price on the Over-The-Counter Bulletin Board as of March 6, 2001 was
$.27. The maximum allowable number of shares per put under the Investment
Agreement is 1,500,000 shares. Assuming our trading price remained at its
current level, even if we put the maximum allowable shares per put to Swartz
under the investment agreement, each put would yield only $292,500 in proceeds
to us. The restrictions discussed, such as the restriction limiting the put
amount to a percentage of our aggregate trading volume, may operate to prevent
us from putting the maximum allowable number of shares. The 30,000,000 shares
that Swartz may sell under this prospectus would represent 74.37% of the Company
if they were all issued assuming that we don't issue any other shares in the
future.
WARRANTS
We have delivered to Swartz warrants to purchase 1,309,000 shares of our common
stock at anytime for seven years. The warrants will have semi-annual reset
provisions. Each warrant will be immediately exercisable and have a term
beginning on the date of issuance and ending seven years thereafter. All shares
underlying these warrants are being registered in this prospectus.
LIMITATIONS AND CONDITIONS PRECEDENT TO OUR PUT RIGHTS
Our ability to put shares of our common stock, and Swartz's obligation to
purchase the shares, is subject to the satisfaction of certain conditions. These
conditions include: - We have satisfied all obligations under the agreements
entered into between us and Swartz in connection with the Swartz investment
agreement;
- Our common stock is listed and traded on Nasdaq, the O.T.C. Bulletin
Board, or an exchange;
- Our representations and warranties in the Swartz investment agreement
are accurate as of the date of each put;
- We have reserved for issuance a sufficient number of shares of our
common stock to satisfy our obligations to issue shares under any put
and upon exercise of warrants;
- The registration statement for the shares we will be issuing to Swartz
must remain effective as of the put date and no stop order with
respect to the registration statement is in effect;
- If the number of shares to be put to Swartz, together with any
previously put to Swartz, would equal 20% of all shares of our common
stock that would be outstanding upon completion of the put, we must
obtain shareholder approval of such excess issuance as required by
Nasdaq rules.
Swartz is not required to acquire and pay for any common shares with respect to
any particular put for which during the period beginning on the date of the
advance put notice and ending on the last day of the pricing period:
- We have announced or implemented a subdivision or combination of our
common stock;
- We have paid a common stock dividend;
- We have made a distribution of all or any portion of our assets
between the put notice date and the date the particular put closes; or
- We have consummated a major transaction between the advance put notice
date and the date the particular put closed.
SHORT SALES
Swartz and its affiliates are prohibited from engaging in short sales of our
common stock, except that after they have received a put notice, they may sell a
number of the shares in long sales or short sales, up to the number of shares
specified in the put notice.
8
CANCELLATION OF PUTS
We must cancel a particular put if between the date of the advance put notice
and the last day of the pricing period:
- We discover an undisclosed material fact that would require the
registration statement to be amended or supplemented in order to
remain current and effective;
- The registration statement registering resales of the common shares
becomes ineffective; or - Shares are delisted from the then primary
exchange.
NON-USAGE FEE
On the last business day of each one year period following the effectiveness of
the registration period, if we have not put $1,000,000 of our stock to Swartz,
we will be required to pay Swartz a non-usage fee equal to the difference of
$50,000 and 10% of the aggregate put amounts to Swartz during the first one year
period and $100,000 and 10% of the aggregate put amounts to Swartz during the
remaining year periods thereafter.
TERMINATION OF INVESTMENT AGREEMENT
We may terminate our right to initiate further puts or terminate the investment
agreement by providing Swartz with notice of such intention to terminate;
however, any such termination will not affect any other rights or obligations we
have concerning the investment agreement or any related agreement.
RIGHT OF FIRST REFUSAL
During the term of the investment agreement and for 60 days after its
termination, we are prohibited from issuing or selling any capital stock or
securities convertible into our capital stock for cash in private capital
raising transactions, without obtaining the prior written approval of Swartz. In
addition, Swartz has the option to for 10 days after receiving notice to
purchase such securities on the same terms and conditions.
SWARTZ'S RIGHT OF INDEMNIFICATION
We are obligated to indemnify Swartz, including their affiliates, stockholders,
officers, directors, employees and agents, from all liability and losses
resulting from any misrepresentations or breaches we made in connection with the
investment agreement, our registration rights agreement, other related
agreements, or the registration statement.
9
MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Dimensional Visions' common stock has been quoted on the Bulletin Board under
the symbol "DVUI.ob" since January 12, 1998. Prior to January 12, 1998,
Dimensional Visions' common stock traded under the symbol "DVGL." The following
table sets forth the quarterly high and low bid prices of Dimensional Visions'
common stock for the periods indicated, after adjusting such prices for
Dimensional Visions' 1-for-25 reverse common stock split which was effective
January 15, 1998. Bid quotations represent interdealer prices without adjustment
for retail markup, markdown and/or commissions and may not necessarily represent
actual transactions.
HIGH LOW
---- ---
FISCAL 1999
First Quarter..................................... 1 11/32 27/64
Second Quarter.................................... 21/32 1/4
Third Quarter..................................... 7/16 3/16
Fourth Quarter.................................... 27/32 3/16
FISCAL 2000
First Quarter..................................... 2 3/16 3/8
Second Quarter.................................... 1 23/32 27/32
Third Quarter..................................... 2 3/32 13/16
Fourth Quarter.................................... 2 9/32 3/8
FISCAL 2001
First Quarter..................................... 17/32 17/64
Second Quarter.................................... 7/16 1/8
Third Quarter (through March 6, 2001)............. 5/16 1/8
HOLDERS
As of March 5, 2001, the number of stockholders of record was 469, not including
beneficial owners whose shares are held by banks, brokers and other nominees.
Dimensional Visions estimates that it has approximately 3,500 stockholders in
total.
DIVIDEND POLICY
Dimensional Visions has paid no dividends on its common stock since its
inception and does not anticipate or contemplate paying cash dividends in the
foreseeable future.
Pursuant to the terms of Dimensional Visions' Series A Convertible Preferred
Stock, a 5% annual dividend is due and owing. Pursuant to the terms of
Dimensional Visions' Series B Convertible Preferred Stock, an 8% annual dividend
is due and owing. As of June 30, 2000, Dimensional Visions has not declared
dividends on Series A or B preferred stock. The unpaid cumulative dividends
totaled approximately $74,225. See Note 10 of Notes to Consolidated Financial
Statements.
10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion regarding the financial statements of Dimensional
Visions should be read in conjunction with the financial statements of
Dimensional Visions included herewith.
OVERVIEW
Dimensional Visions is engaged in the business of manufacturing
multi-dimensional marketing promotional products.
SELECTED CONSOLIDATED FINANCIAL DATA
You should read the selected consolidated financial data set forth below along
with "Management's Discussion and Analysis" and our consolidated financial
statements and the related notes. We have derived the consolidated financial
data for 1996, 1997, 1998, 1999 and 2000 from our audited consolidated financial
statements. We believe the unaudited financial data shown in the table below
include all adjustments consisting only of normal recurring adjustments, that we
consider necessary for a fair presentation of such information. Operating
results for the six months ended December 31, 2000, are not necessarily
indicative of the results that may be expected for all of 2001. Potentially
dilutive common shares have been excluded from the shares used to compute
earnings per share in each loss year because their inclusion would be
antidilutive.
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 2000 JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1997 JUNE 30, 1996
------------- ------------- ------------- ------------- -------------
Operation revenue $ 1,008,862 $ 741,901 $ 609,392 $ 551,517 $ 1,083,897
Net Loss $(1,021,145) $(1,465,812) $(421,659) $(2,162,134) $(2,035,647)
Net Loss per share of common stock* $ (.18) $ (.39) $ (.14) $ (1.14) $ (3.34)
Balance Sheet Data:
Working Capital (deficit) $ 205,284 $ (603,946) $(235,920) $ (107,952) $ 9,528
Total Assets $ 885,033 $ 397,185 $ 920,841 $ 529,520 $ 1,408,919
Total Liabilities $ 519,112 $ 1,118,740 $ 713,539 $ 613,947 $ 673,058
Stockholders' equity (deficiency) $ 365,921 $ (721,555) $ 207,302 $ (84,427) $ 735,861
SIX MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, 2000 DECEMBER 31, 1999
(UNAUDITED) (UNAUDITED)
----------- -----------
Operation revenue $ 162,996 $ 300,418
Net Loss $(598,780) $ (459,051)
Net Loss per share of common stock* $ (.07) $ (.09)
Balance Sheet Data:
Working Capital (deficit) $(206,620) $ 176,478
Total Assets $ 373,429 $ 1,021,112
Total Liabilities $ 415,147 $ 1,027,988
Stockholders' Deficiency $ (41,718) $ (6,876)
* The calculation of earnings per share considers the accumulative dividends
in arrears on preferred stock as paid.
11
PLAN TO ADDRESS GOING CONCERN OPINION
The company's independent certified public accountants' report on the company's
consolidated financial statements for the year ended June 30, 2000 contains an
explanatory paragraph regarding the company's ability to continue as a going
concern. Among the factors cited by the accountants that raised substantial
doubt as to the company's ability to continue as a going concern are the
company's continued recurring losses from operations and limited sales of its
products. The accountants state that the company's ability to continue as a
going concern is subject to the attainment of profitable operations or obtaining
necessary funding from outside sources. The company has developed a plan to
achieve profitability and allay doubts as to its ability to continue as a going
concern. This plan includes: (1) increased marketing of its existing products to
increase sales; and (2) utilize long term financing through securities
offerings.
INCREASED MARKETING. As indicated in the Use of Proceeds, the company will use a
portion of the proceeds to expand its sales force and fund product marketing.
The company believes these efforts will result in increased sales of its
products.
LONG TERM FINANCING THROUGH SECURITIES OFFERINGS. The company has established an
equity line agreement with Swartz Private Equity of up to $20,000,000 with
common shares and shares underlying warrants registered under this prospectus.
This investment agreement is subject to a formula based on our stock price and
trading volume. See "The Swartz Investment Agreement". Management believes that
proceeds from any offerings using this line, together with our anticipated cash
flow from sales of the company's products, will be sufficient to support
currently anticipated working capital requirements.
FISCAL YEAR ENDED JUNE 30, 2000, AS COMPARED TO FISCAL YEAR ENDED JUNE 30, 1999
RESULTS OF OPERATIONS
The net loss for the fiscal year ended June 30, 2000, was $1,021,145 compared
with a net loss of $1,465,812 for the fiscal year ended June 30, 1999. The gross
margin increased from $179,190, representing 24% of fiscal year 1999 operating
revenue, to $346,841, representing 34% of fiscal year 2000 operating revenue.
Approximately $175,000 of the increase in general and administrative expenses
was the result of the amortization of one time consulting contracts paid through
the issuance of the Company's common stock. Other general and administrative
expense categories that increased significantly were salary, lease expense and
stock/proxy related expenses. Marketing expenses decreased from $301,630 in
fiscal year 1999, to $110,270 in fiscal year 2000. Marketing salary and
commissions decreased by approximately $110,000 and travel and entertainment by
$13,000. Management believes that marketing expenses will increase in the fiscal
year 2001, as a result of hiring of new sales staff and the beginning of a
nationwide marketing campaign. Of the $173,878 of interest expense for the
fiscal year 2000, approximately $49,572 was paid with the Company's common stock
on June 19, 2000. An additional $116,215 was simultaneously converted with their
associated interest.
Revenue for the fiscal year ended June 30, 2000, was $1,008,862 compared to
revenue of $741,901 for the fiscal year ended June 30, 1999. Approximately
$980,000 or 97% of total revenue for the fiscal year ended June 30, 2000, was
from print products compared to $614,000 or 83% of total revenue for the fiscal
year ended June 30, 1999. Sales of products and licensing fees for InfoPak,
Inc., which include the palm-top computers and associated database software, are
continuing to diminish. Management plans to continue to focus its efforts on
growing the revenue generated from the 3D/animated print products.
12
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2000, the Company had a working capital of $205,284 compared with
a working capital deficiency of $603,946 as of June 30, 1999. The increase in
working capital is largely attributable to the increase in cash of approximately
$258,000, an increase in account receivable of $270,000, and the conversion of
short-term debt and accrued interest into shares of the Company's common stock.
During the period ended June 30, 2000,the Company raised a total of $1,050,000
before expenses of approximately $94,500 through the sale of its Series D and
Series E Preferred Stock.
The Company extended an offer to its debenture holders and certain creditors to
convert their debt to equity in the Company. The offer, which expired on October
15, 1999, permitted the conversion of debt into shares of the Company's common
stock at prices ranging from $.25 to $.375 per share. Interest on the debentures
accrued at 12% per annum through January 31, 2000. Additionally, certain
accounts payable were offered the opportunity to convert their receivables into
shares of Dimensional Visions' common stock at $.375 per share. On June 19,
2000, following the effective date of the registration statement, the entire
outstanding balance of $720,000 of debentures and $60,748 of accounts payable
were converted into shares of the Company's common stock. A total of 2,601,021
shares were issued to convert the accounts payable and the debentures including
accrued interest.
Dimensional Visions plans to become profitable through increased sales of its
LIVING IMAGE(TM) products while maintaining current or higher gross margins.
The Company has a strong relationship with its printer which includes
preferential treatment, the ability to quickly produce products requested by
customers, and the resources to significantly expand production without a
commensurate increase in expenses. Our current customers are reordering products
on a regular basis which reduces our cost of sales. For the fiscal year ended
June 30, 1999, eight customers ordered additional products compared to ten
customers for the fiscal year ended June 30, 2000. These customers are also
increasing their order quantities indicating a growing acceptance of our
3D/animated products in the market place. The Company's three largest customers
ordered $64,940, $31,844 and $175,574 worth of products in the fiscal year 1999
compared to $119,571, $159,748 and $538,653 for the fiscal year ended June 30,
2000.
The Company's independent auditors report contained an explanatory paragraph
regarding the ability of the Company to continue as a going concern.
SIX MONTHS ENDED DECEMBER 31, 2000, AS COMPARED TO SIX MONTHS ENDED DECEMBER 31,
1999
RESULTS OF OPERATIONS
The net loss for the six months ended December 31, 2000 was $598,780, compared
to a net loss of $459,051 for the six months ended December 31, 1999. The
Company's marketing expenses for the six months ended December 31, 2000
increased by approximately $95,000. This increase is due to the addition of two
salesmen along with their travel expenses. The Company's engineering expenses
for the six months ended December 31, 2000 increased by approximately $57,000
over the same period last year. This increase was attributed to the increase in
the Company's design staff. The Company also increased their general and
administrative expenses for the six months ended December 31, 2000 by $44,000
over the six months ended December 31, 1999. The Company attributes this
increase to an arbitration settlement of disputed invoices for commissions and
the increase in the administrative staff.
Revenue for the six months ended December 31, 2000 was $162, 996 compared to
revenue of $300,418 for the six months ended December 31, 1999. Revenue for the
six months ended December 31, 1999 was boosted by $103,000 through the sale of
Pokemon products that are no longer being ordered. Generally, the sales volume
for the six months ended December 31, 2000 without Pokemon was down
approximately $34,000.
As a result of the decline in revenue, the Company has reduced its fixed
overhead costs by reducing the number of personnel employed by the Company. As
of December 31, 2000, the Company's work force has been reduced by six employees
which will result in a savings of approximately $100,000 through June 30, 2001.
13
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended December 31, 2000, the Company collected
approximately $310,000 of accounts receivable. Substantially all the cash
received and cash on hand was used to support operations. The Company will
utilize the secured line of credit to sustain operations until its sales will
support the Company's operations and growth. The Company is continually focusing
on expanding its customer base through its marketing and sales campaign.
As of December 31, 2000 the Company's financial position is precarious. The
Company needs funding in order to maintain current operations and to support
growth and sales. The Company has secured a $500,000 line of credit on January
12, 2000 that was obtained by an investor group of existing shareholders of the
Company secured by the Company's assets. Additionally, the Company finalized an
equity line with Swartz Private Equity, LLC to provide funding through the sale
of the Company's common stock. The Company has the right at its sole discretion
to put common stock to Swartz, subject to certain limitations and conditions
based upon trading volume of the Company's common stock. However, due to the
current limited trading volume of the Company's common stock, the Company would
not be able to raise significant funding from this arrangement. The put to the
investment firm is based upon trading volume and cannot exceed 10% of the volume
per trade day.
FLUCTUATIONS IN OPERATING RESULTS; SEASONALITY
Annual and quarterly fluctuations in Dimensional Visions' results of operations
may be caused by the timing and composition of orders from Dimensional Visions'
customers and distribution channels. Dimensional Visions' future results also
may be affected by a number of factors, including its ability to offer products
at competitive prices and to anticipate customer demands. Dimensional Visions'
results may also be affected by economic conditions in the geographical areas in
which Dimensional Visions operates. All of the foregoing may result in
substantial unanticipated quarterly earnings shortfalls or losses. Due to all of
the foregoing, Dimensional Visions believes that period-to-period comparisons of
its results of operations are not necessarily meaningful and should not be
relied upon as indicative of future performance.
AVAILABLE INFORMATION
Dimensional Visions is presently subject to the reporting requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"). Dimensional Visions has
filed with the Securities and Exchange Commission (the "Commission") a
Registration Statement on Form SB-2 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Act") with respect to the securities offered hereby. This
prospectus, which constitutes a part of the Registration Statement, omits
certain information contained in the Registration Statement on file with the
Commission pursuant to the Act and the rules and regulations of the Commission
thereunder. The Registration Statement, including the exhibits thereto, may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. Copies
of such material may be obtained by mail at prescribed rates from the Public
Reference Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. 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. Such material may also be accessed
electronically by means of the Commission's home page on the Internet at
http://www.sec.gov. Dimensional Visions' securities are currently listed on the
over-the-counter bulletin board and trading under the symbol "DVUI."
14
BUSINESS OF DIMENSIONAL VISIONS
GENERAL
Dimensional Visions creates and delivers LIVING IMAGE(TM) Solutions for
products, packaging and marketing communications.
LIVING IMAGE(TM) Solutions are multi-dimensional (commonly known as "3-D")
and/or animated visual effects. These effects may be produced in varying sizes
to specified customer applications for companies who want to differentiate their
products from the competition. The visual effects are created by viewing
multiple images through a series of lenses incorporated into a plastic sheet
called lenticular. These lenses work as a viewer which self adjusts to whatever
distance the viewer is from the image. Viewed in one direction, the lenses allow
the individual to see multiple views of an image simultaneously. These multiple
views are seen as being in three dimensions. Alternatively, viewed in the other
direction, the lenses restrict the view to a particular image that changes as
the piece is moved, thus creating an animation effect (i.e., the picture appears
to be moving).
Our objective is to become a dominant marketer, developer and producer of the
LIVING IMAGE(TM) in the United States and internationally.
Our LIVING IMAGE(TM) Solutions offer multi-dimensional and/or animated images
for the promotion marketing industry, advertising and graphic design industry
and original equipment manufacturers throughout the United States.
InfoPak, Inc. is our one active subsidiary company. InfoPak manufactures and
markets a hardware/software PACKAGED product line called the
"InfoPakSystem(TM)." This system was designed to handle substantial offline
information and databases that may require frequent updating.
We have decided to focus all of our resources on our LIVING IMAGE(TM) product
line. During Fiscal Year 1999, we retained Chapman Associates, an investment
banking firm, to assist us in the sale of our InfoPak, Inc. subsidiary. To date,
we have not found a buyer. We will continue to support the operations of InfoPak
until it is sold or our Board of Directors decides to discontinue its
operations.
Dimensional Visions office and principal place of business is located at 2301
West Dunlap Avenue, Suite 207, Phoenix, Arizona 85021, and its telephone number
is (602) 997-1990.
OUR HISTORY
FISCAL YEARS 1988-1994
In 1988 Dimensional Visions Group, Ltd. (Bulletin Board: DVGL) was incorporated
in the state of Delaware. Dimensional Visions was headquartered in Philadelphia,
Pennsylvania. At that time, Dimensional Visions created its three-dimensional
effects by building model sets and photographing these sets using a robotic
controlled camera. These photographed images were then prepared for lithographic
printing. The process utilized during this timeframe was very expensive and
extremely difficult to consistently reproduce quality images. Throughout this
period Dimensional Visions tried unsuccessfully to perfect the robotic camera
process.
FISCAL YEARS 1995-1997
In 1995 Dimensional Visions acquired InfoPak, Inc. of Phoenix, Arizona
("InfoPak") which is currently our wholly owned subsidiary. InfoPak manufactures
and markets a hardware/software package called the "InfoPakSystem(TM)". This
system takes existing databases and prepares them for use on a palm-top computer
manufactured by InfoPak. It is particularly useful to individuals who need
access to information while away from a computer terminal. Therefore, it is
marketed to mobile business professionals in the automobile appraisal and
real-estate businesses. Automobile appraisal guides are available on the
palm-top unit for access at automobile auctions or at car dealership lots.
Multiple listing data is similarly available for real estate agents for field
access to the home listings.
15
From 1995 to 1997, Dimensional Visions utilized the software development
resources of InfoPak to develop the patent-pending software and systematic
digital process for its LIVING IMAGE(TM) Solutions.
FISCAL YEARS 1998-2000
In January 1998 we established our current headquarters in Phoenix, Arizona.
Under the leadership of a new executive management team, Dimensional Visions was
completely restructured including changing our corporate name to Dimensional
Visions Incorporated and changing our stock trading symbol from DVGL to DVUI. At
the end of 1997, the company needed to complete private placements of debt and
equity to continue operations. As a prerequisite, our investment banking firm,
Capital West Investment Group, required the company to replace the upper level
management and effect a 1 for 25 reverse stock split.
During this timeframe we sold all of the original robotic photographic equipment
to concentrate on the new LIVING IMAGE(TM) (utilizing very high-end Intel based
graphic design computers). Our management team believes that the new process is
much more cost effective, reproducible, and has a shorter production cycle than
the photographic process formerly used by the company. We also believe that it
better meets the demands of today's market which requires quick turn around of
products from inception to delivery.
STRATEGY
MARKET & PENETRATION
Multi-dimensional and/or animated images are being utilized today by Dimensional
Visions' clients. The images are used because they combine depth and movement to
attract the consumer's attention and potentially increase their sales.
LIVING IMAGE(TM) solutions have and will be (a) integrated onto products (for
example: affixed to yearbooks, children's portfolio cover's, etc), (b)
integrated onto product packaging (for example: affixed to cereal boxes, CD
packages, etc), and (c) integrated onto marketing communications for products
and services (for example: affixed to annual reports, etc). We define the market
for our LIVING IMAGE(TM) as the following major markets in the United States:
* Specially selected Original Equipment Manufacturers
* Specially selected Promotional Marketing Firms
* Specially selected Advertising & Graphics Design Firms (less newspaper,
radio and TV)
Dimensional Visions believes that the market for LIVING IMAGE(TM) is in its
infancy particularly with the advent of new high-end Intel based graphic design
computers and improved lenticular plastic extrusion capabilities. With these
advances, coupled with the best-integrated software methodology and marketing
strategy, we believe Dimensional Visions can be a market leader.
Dimensional Visions estimates that the market universe for its LIVING IMAGE(TM)
is as follows:
* ORIGINAL EQUIPMENT MANUFACTURERS: Our revenues for the fiscal year ended
June 30, 2000, from the original manufacturers were approximately 91% of
our total revenue.
* PROMOTION MARKETING INDUSTRY: According to PROMO MAGAZINE article titled
The 1998 Annual Report, the estimated 1997 revenue for the promotion
marketing industry was $79.5 billion. This article can be found archived on
their website at WWW.PROMOMAGAZINE.COM. Dimensional Visions believes that
the Premium/Incentives, Point of Purchase, Specialty Printing, and Agencies
Net Revenues categories, which account for over $43.7 billion, are
potential users of the LIVING IMAGE(TM) Solutions. Our revenues for the
fiscal year ended June 30, 2000 from this market were approximately 9%.
16
* ADVERTISING INDUSTRY: According to ADVERTISING AGE article on May 18, 1998,
the 1997 advertising revenue in the U.S. totaled over $187.6 billion. The
article, titled 1997 U.S. ADVERTISING VOLUME (COEN/MCCANN-ERICKSON), can be
found on their website at WWW.ADAGE.COM. We believe that newspapers,
magazines, direct mail, business papers, and miscellaneous other
advertising methods are potential users of the LIVING IMAGE(TM) Solutions.
These categories make up over $116.4 billion or 62% of total advertising
revenues.
PRODUCTION
Dimensional Visions controls or supervises all phases of the production of its
LIVING IMAGE(TM) products from the image development and computerized
enhancement phases through the color separation and printing phases. Images are
provided to us by our clients in many formats including digitally in graphic
file formats and photographically in pictures or transparencies. Photographic
images are scanned into the computer to be modified and enhanced. Through a
proprietary process, several images are composited together to generate a final
image that will appear as a three-dimensional and/or animation image when viewed
through a lenticular material. "Lenticular" is a plastic optical material that
allows the three-dimensional and/or animation image to be viewed without the use
of any viewing apparatus such as glasses or hoods. The digital files are
forwarded to Travel Tags, our primary printer, or other commercial printer,
where, through the lithographic process, the images are printed on a polymer
based lenticular material which focuses the multi-dimensional or animation
images. Printing is done under the supervision of Dimensional Visions. The
lenticular material is supplied by producers in the petrochemical and plastic
fabricating industries directly to our printer. Dimensional Visions has no
long-term contracts with its printers.
COMPETITION
Other processes currently are available which allow a viewer to perceive an
image in three-dimensions, including those which employ stereoscopic glasses and
viewing hoods and other processes, and holograms and other three-dimensional
image systems which do not require the use of viewing apparatus. Dimensional
Visions is aware of at least two companies, Optigraphics, Inc. and National
Graphics, Inc., which compete with our products. Our products may be more
expensive than conventional, high quality, two-dimensional prints and for this
reason, high quality, conventional processes and methods may be favored for
many, if not most, illustration and promotion contexts. Color lenticular images
are less expensive than other forms of three-dimensional prints.
PATENTS, TRADEMARKS AND PROPRIETARY PROTECTION
The company filed a patent application on February 15, 1999 for its Living
Image(TM) software and print system. The company believes that the patent will
issue within two years.
Dimensional Visions has received trademark registration of DV3D(R) and has
submitted a trademark application for Animotion(TM) and LIVING IMAGE(TM) which
we believe will issue within the next 24 months as well.
EMPLOYEES
As of the date of this prospectus, we had six employees, including three in
management, one of whom is involved in product development and manufacturing,
one in marketing and sales, and one in finance. Dimensional Visions is not a
party to any collective bargaining agreements. Dimensional Visions considers its
relations with employees to be good.
PROPERTIES
We lease approximately 3,100 square feet of office space at 2301 W. Dunlap
Avenue, Suite 207 in Phoenix, Arizona. This location serves as our principal
executive offices and our current design and production facilities. The total
lease payments for fiscal year 2001 will be $48,050. The lease also requires us
to pay all taxes and insurance and expires on December 31, 2003.
17
LITIGATION
To the best knowledge of our management, there are no material litigation
matters pending or threatened against us.
MANAGEMENT
Directors and Executive Officers
The directors and officers of Dimensional Visions as of the date of
this prospectus are as follows:
NAME AGE POSITION
---- --- --------
John D. McPhilimy 57 Director, Chairman of the Board of Directors
and Chief Executive Officer
Roy D. Pringle 33 Vice President, Chief Financial Officer and Director
Bruce D. Sandig 41 Senior Vice President Engineering and Director
Susan A. Perlow 50 Director
Lisa R. McPhilimy 26 Vice President, Controller
Ronald L. Chilston 45 Vice President of Business Development
- ----------
Mr. John McPhilimy was appointed as a Director, President, and Chief Executive
Officer of Dimensional Visions in November 1997. In January 1998, he was
appointed Chairman of the Board. From January 1995 until November 1997, Mr.
McPhilimy served as President of Selah Information Systems, Inc., Mesa, Arizona,
a company involved in information systems. From March 1992 to December 1995, Mr.
McPhilimy served as President of Travel Teller, Inc. Mr. McPhilimy has over 30
years of executive and marketing experience in high-technology industries such
as aerospace, air transportation, and electronic telecommunication networks with
Bell Helicopter Textron, Aerospatiale, Executive Jet Aviation, Travel Teller
Inc., Marketing Works, and Selah Information Systems. Over the last 15 years he
has been responsible for implementing marketing strategies of NetJets and Travel
Teller, which created the new industries of "nationwide fractional ownership of
business jets" and "electronic ticket delivery networks," respectively.
Mr. Roy D. Pringle was appointed as Vice President, Chief Financial Officer, and
Chief Information Officer of Dimensional Visions in November 1997, and provides
overall integrated enterprise-wide financial management systems for Dimensional
Visions. Mr. Pringle has worked for InfoPak, Inc. since June 1992. Mr. Pringle
holds a master's degree from the American Graduate School of International
Management. Prior to joining InfoPak, he was President and founder of a small
software company, Signature Software.
Mr. Bruce D. Sandig was appointed as a Director of Dimensional Visions in
January 1998 and as Senior-Vice President of Creative Design and Production
Engineering of Dimensional Visions in November 1997 and provides overall
development and integration of the DV3D(R)and Animotion(TM) Multi-Dimensional
Images systems. Mr. Sandig was a co-founder of InfoPak in 1992. Mr. Sandig has
over 15 years experience in electro-mechanical and software engineering/design
with such companies as Universal Propulsion Company, Kroy, Inc., Dial
Manufacturing, and Softie, Inc., where he also created several proprietary
software games for Nintendo.
Ms. Susan A. Perlow has served as Director of Dimensional Visions since January
1998. Since January 1998 she has served as Managing Principal Consultant for
Oracle, Inc. She served as Director of Business Processing from March 1995 to
December 1997 for AmKor Electronics.
Mrs. Lisa R. McPhilimy, daughter-in-law of John McPhilimy, CEO, is Vice
President & Controller and provides overall integrated financial management and
reporting for the company. She is a Certified Public Accountant and a graduate
of Ohio University. She has over 5 years experience in financial management and
is responsible for the Securities & Exchange Commission reporting required as a
publicly held company.
18
Mr. Ronald L. Chilston is Vice President of Business Development and provides
overall integrated sales of our LivingImage(TM) Marketing Communication
Solutions for the company. He has over 25 years of sales and operations
experience in the photographic printing industry. He is in charge of our
national direct sales for the LivingImage(TM) Marketing Communication Solutions,
as well as, coordinating the national sales effort of both Anderson Litho and
Photobition-Phoenix & their collective 50+ sales people.
There is currently one committee on the Board of Directors. The Audit Committee
is comprised of Ms. Perlow and Mr. Pringle.
Directors serve until the next annual meeting or until their successors are
qualified and elected. Officers serve at the discretion of the Board of
Directors.
EXECUTIVE COMPENSATION
The following table sets forth the total compensation earned by or paid to
Dimensional Visions' Chief Executive Officer for the fiscal year ended June 30,
2000. No officer of Dimensional Visions earned more than $100,000 in the fiscal
year ended June 30, 2000.
LONG TERM COMPENSATION
------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------- --------------------------- -----------
OTHER ANNUAL RESTRICTED SECURITIES ALL OTHER
COMPEN- STOCK UNDERLYING LTIP COMPEN-
YEAR SALARY($) BONUS($) SATION($) AWARDS($) OPTIONS/SARS(#) PAYOUTS($) SATION($)
---- --------- -------- --------- --------- --------------- ---------- ---------
John D. McPhilimy 1999 $89,250 $ 0 $0 $0 -- $0 $0
2000 $90,000 $7,500 $0 $0 -- $0 $0
OPTIONS/SAR GRANTS IN THE FISCAL YEAR 2000
INDIVIDUAL GRANTS
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SARS GRANTED
OPTION/SARS TO EMPLOYEES IN EXERCISE OR BASE EXPIRATION
NAME YEAR GRANTED(#) FISCAL YEAR PRICE ($/SHARE) DATE
---- ---- ---------- ----------- --------------- ----
John D. McPhilimy 2000 550,000 41.9 .25 1/27/05
AGGREGATED OPTIONS/SAR EXERCISES IN THE FISCAL YEAR 2000 AND FY-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF
UNDERLYING EXERCISED UNEXERCISED
SHARES OPTIONS/SARS AT FY-END(#) IN-THE-MONEY
ACQUIRED ON VALUE EXERCISABLE/ OPTIONS/SARS
NAME YEAR EXERCISE(#) REALIZED UNEXERCISABLE AT FY-END ($)
---- ---- ----------- -------- ------------- -------------
John D. McPhilimy 2000 -- 0 1,000,000(E)/0(U) $147,500
19
EMPLOYMENT AND RELATED AGREEMENTS
None.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Certificate of Incorporation and Bylaws of Dimensional Visions provide that
Dimensional Visions will indemnify and advance expenses, to the fullest extent
permitted by the Delaware General Corporation Law, to each person who is or was
a director, officer or agent of Dimensional Visions, or who serves or served any
other enterprise or organization at the request of Dimensional Visions (an
"Indemnitee"). Under Delaware law, to the extent that an Indemnitee is
successful on the merits of a suit or proceeding brought against him or her by
reason of the fact that he or she was a director, officer or agent of
Dimensional Visions, or serves or served any other enterprise or organization at
the request of Dimensional Visions, Dimensional Visions will indemnify him or
her against expenses (including attorneys' fees) actually and reasonably
incurred in connection with such action. If unsuccessful in defense of a
third-party civil suit or a criminal suit, or if such a suit is settled, an
Indemnitee may be indemnified under Delaware law against both (i) expenses,
including attorneys' fees, and (ii) judgments, fines and amounts paid in
settlement if he or she acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of Dimensional Visions,
and, with respect to any criminal action, had no reasonable cause to believe his
other conduct was unlawful. If unsuccessful in defense of a suit brought by or
in the right of Dimensional Visions, where the suit is settled, an Indemnitee
may be indemnified under Delaware law only against expenses (including
attorneys' fees) actually and reasonably incurred in the defense or settlement
of the suit if he or she acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of
Dimensional Visions except that if the Indemnitee is adjudged to be liable for
negligence or misconduct in the performance of his or her duty to Dimensional
Visions, he or she cannot be made whole even for expenses unless a court
determines that he or she is fully and reasonably entitled to indemnification
for such expenses. Also under Delaware law, expenses incurred by an officer or
director in defending a civil or criminal action, suit or proceeding may be paid
by Dimensional Visions in advance of the final disposition of the suit, action
or proceeding upon receipt of an undertaking by or on behalf of the officer or
director to repay such amount if it is ultimately determined that he or she is
not entitled to be indemnified by Dimensional Visions. Dimensional Visions may
also advance expenses incurred by other employees and agents of Dimensional
Visions upon such terms and conditions, if any, that the Board of Directors of
Dimensional Visions deems appropriate. Insofar as indemnification for
liabilities arising under the Act may be permitted to directors, officers or
persons controlling Dimensional Visions pursuant to the foregoing provisions, in
the opinion of the Commission, such indemnification is against public policy as
expressed in the Act and is therefore unenforceable.
CERTAIN TRANSACTIONS
The Company entered into loan agreement with John McPhilimy on July 12, 2000.
The principle amount of the loan is $5,000 due June 30, 2001 with 6% interest.
The Company entered into a loan agreement with Bruce Sandig on July 12, 2000.
The principle amount of the loan is $7,000 due June 30, 2001 with 6% interest.
STOCK OPTION PLANS
1996 EQUITY INCENTIVE PLAN
In June 1996, Dimensional Visions adopted the 1996 Equity Incentive Plan (the
"1996 Plan") covering 10,000,000 shares of Dimensional Visions' common stock
pursuant to which employees, consultants and other persons or entities who were
in a position to make a significant contribution to the success of Dimensional
Visions were eligible to receive awards in the form of incentive or
non-incentive options, stock appreciation rights, restricted stock or deferred
20
stock. The 1996 Plan will terminate ten years after June 12, 1996, the effective
date of the 1996 Plan. The 1996 Plan is administered by the Board of Directors.
In its discretion, the Board of Directors may elect to administer the 1996 Plan.
Restricted stock entitles the recipients to receive shares of Dimensional
Visions' common stock subject to such restriction and condition as the
Compensation Committee may determine for no consideration or such considerations
as determined by the Compensation Committee. Deferred stock entitles the
recipients to receive shares of Dimensional Visions' common stock in the future.
As of the date of this prospectus, 5,002,978 shares have been issued pursuant to
this plan. The company has decided that it will not issue any additional shares
under the 1996 Plan, but will instead issue options under its 1999 Stock Option
Plan.
1999 STOCK OPTION PLAN
On November 15, 1999, the Board of Directors of Dimensional Visions adopted the
1999 Stock Option Plan (the "1999 Plan"). This plan was approved by a majority
of our stockholders at our January 28, 2000, stockholders' meeting. The purpose
of the 1999 Plan is to advance the interests of the company by encouraging and
enabling acquisition of a financial interest in the company by its officers and
other key individuals. The 1999 Plan is intended to aid the company in
attracting and retaining key employees, to stimulate the efforts of such
individuals and to strengthen their desire to remain with the company. A maximum
of 1,500,000 shares of the company's common stock are available to be issued
under the 1999 Plan. The option exercise price will be 100% of the fair market
value of the company's common stock on the date the option is granted and will
be exercisable for a period not to exceed 10 years from the date of grant. No
options have been issued to date.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the shares of
Dimensional Visions' outstanding common stock beneficially owned as of the date
of this prospectus by (i) each of Dimensional Visions' directors and executive
officers, (ii) all directors and executive officers as a group, and (iii) each
other person who is known by Dimensional Visions to own beneficially more than
5% of Dimensional Visions' common stock.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNERS(1) BENEFICIAL OWNERSHIP(2) OWNERSHIP(2)
- ----------------------- ----------------------- ------------
John D. McPhilimy 2,385,000(3) 18.8%
127 W. Fellars Dr
Phoenix, AZ 85023
Bruce D. Sandig 1,700,000(4) 14.1%
5801 N 14th St
Phoenix, AZ 85014
Roy D. Pringle 1,506,047(5) 12.7%
4915 W. Marco Polo Rd
Glendale, AZ 85308
Susan A. Perlow 75,000(6) 0.7%
26210 S. Lime Drive
Queen Creek, AZ 85242
Lisa R. McPhilimy 550,000(7) 5.1%
2906 E. Leland St
Mesa, AZ 85213
Ronald Chilston 400,000(8) 3.7%
3612 N 21st St Dr
Phoenix, AZ 85015
All executive officers and directors
as a group (6 persons) 6,616,047 39.1%
- ----------
(1) Each person named in the table has sole voting and investment power with
respect to all common stock beneficially owned by him or her, subject to
applicable community property law, except as otherwise indicated. Except as
otherwise indicated, each of such persons may be reached through
Dimensional Visions at 2301 W. Dunlap Avenue, Suite 207, Phoenix, Arizona
85021.
21
(2) The percentages shown are calculated based upon the 10,339,873 shares of
common stock outstanding as of the date of this prospectus. The numbers and
percentages shown include the shares of common stock actually owned as of
the date of this prospectus and the shares of common stock that the
identified person or group had the right to acquire within 60 days of such
date. In calculating the percentage of ownership, all shares of common
stock that the identified person or group had the right to acquire within
60 days of the date of this prospectus upon the exercise of options and
warrants, or the conversion of preferred stock, are deemed to be
outstanding for the purpose of computing the percentage of the shares of
common stock owned by such person or group, but are not deemed to be
outstanding for the purpose of computing the percentage of the shares of
common stock owned by any other person.
(3) Mr. McPhilimy has warrants to purchase 385,000 shares of Dimensional
Visions' common stock at an exercise price of $.20 until October 28, 2003.
He also has warrants to purchase 2,000,000 shares of common stock at an
exercise price of $.125 until January 1, 2008, which are zero percent
vested. On July 1, 2001, 25% of the warrants will fully vest provided
Dimensional Visions has a positive net income for the fiscal year ending
June 30, 2001 or upon the discretion of the Board of Directors. The
remaining warrants will vest at a rate of 18.75% of the total warrants for
each consecutive quarter that the company is profitable.
(4) Mr. Sandig ownes 10,000 shares of Dimensional Visions' common stock. Also
included in the amount are common stock purchase warrants to purchase
230,000 shares of Dimensional Visions' common stock at an exercise price of
$.20 until October 28, 2003 and warrants to purchase 460,000 shares of
common stock at an exercise price of $.25 until January 27, 2005. He also
has warrants to purchase 1,000,000 shares of common stock at an exercise
price of $.125 until January 1, 2008, which are zero percent vested. On
July 1, 2001, 25% of the warrants will fully vest provided Dimensional
Visions has a positive net income for the fiscal year ending June 30, 2001
or upon the discretion of the Board of Directors. The remaining warrants
will vest at a rate of 18.75% of the total warrants for each consecutive
quarter that the company is profitable.
(5) Mr. Pringle owns 6,047 shares of Dimensional Visions' common stock. Also
included in the amount are common stock purchase warrants to purchase
210,000 shares of Dimensional Visions' common stock at an exercise price of
$.20 until October 28, 2003 and warrants to purchase 290,000 shares of
common stock at an exercise price of $.25 until January 27, 2005. He also
has warrants to purchase 1,000,000 shares of common stock at an exercise
price of $.125 until January 1, 2008, which are zero percent vested. On
July 1, 2001, 25% of the warrants will fully vest provided Dimensional
Visions has a positive net income for the fiscal year ending June 30, 2001
or upon the discretion of the Board of Directors. The remaining warrants
will vest at a rate of 18.75% of the total warrants for each consecutive
quarter that the company is profitable.
(6) Ms. Perlow has warrants to purchase 40,000 shares of Dimensional Visions'
common stock at an exercise price of $.50 until October 28, 2003 and
warrants to purchase 35,000 shares of common stock at an exercise price of
$.25 until January 27, 2005.
(7) Ms. McPhilimy has warrants to purchase 18,334 shares of Dimensional
Visions' common stock at an exercise price of $.20 until October 28, 2003
and warrants to purchase 31,666 shares of common stock at an exercise price
of $.25 until January 27, 2005. She also has warrants to purchase 500,000
shares of common stock at an exercise price of $.125 until January 1, 2008,
which are zero percent vested. On July 1, 2001, 25% of the warrants will
fully vest provided Dimensional Visions has a positive net income for the
fiscal year ending June 30, 2001 or upon the discretion of the Board of
Directors. The remaining warrants will vest at a rate of 18.75% of the
total warrants for each consecutive quarter that the company is profitable.
(8) Mr. Chilston has warrants to purchase 400,000 shares of common stock at an
exercise price of $.125 until January 1, 2008, which are zero percent
vested. On July 1, 2001, 25% of the warrants will fully vest provided
Dimensional Visions has a positive net income for the fiscal year ending
June 30, 2001 or upon the discretion of the Board of Directors. The
remaining warrants will vest at a rate of 18.75% of the total warrants for
each consecutive quarter that the company is profitable.
22
SELLING STOCKHOLDERS
The following table sets forth the number of shares of common stock which may be
offered for sale from time to time by the selling stockholders. The shares
offered for sale constitute all of the shares of common stock known to
Dimensional Visions to be beneficially owned by the selling stockholders. Other
than as indicated, to the best of management's knowledge, none of the selling
stockholders has or have any material relationship with Dimensional Visions.
SHARES OF PERCENTAGE
COMMON STOCK OWNED IF MORE
NAME OF SELLING STOCKHOLDER OFFERED (1) THAN 1%
- --------------------------- ----------- -------
Donald John Casey Family Trust 2,812 --
Kent Casey 3,545 --
Mark Casey 3,125 --
Robert Casey 833 --
Edward Conn 500 --
Keith Denner 1,250 --
Evjen Profit Sharing Plan 15,000 --
Fideltiy Insurance Co. Ltd/B9-2206A 2,500 --
Roy A. Kite 30,000 --
Janice Casey Larsen 312 --
Larry Peery 3,750 --
Dennis & Diane Schlegel 3,250 --
Michael Shapiro 3,125 --
Eugene Snowden 75,000 --
Southwest Ventures 1,250 --
VMR Profit Sharing 9,375 --
Charles Wafer 12,500 --
Mark Ward 2,500 --
Watson Revocable Trust Dated 1/20/99 1,330 --
Pamela Wilson 250 --
Dale Riker (3) 1,150,000 6.3
Russ Ritchie (4) 1,150,000 2.4
Swartz Private Equity, LLC (5) 26,309,000 11.2
John D. McPhilimy (2) (6) 2,000,000 18.8
Bruce D. Sandig (2) (7) 1,000,000 14.1
Roy D. Pringle (2) (8) 1,000,000 12.7
Lisa R. McPhilimy (2)(9) 400,000 5.1
Ron Chilston (2)(10) 400,000 3.7
Michael J. McPhilimy (2)(11) 100,000 5.1
----------
Total 33,681,207
==========
- ----------
(1) All of these shares are currently restricted under Rule 144 of the Act.
(2) Indicates common shares issuable upon exercise of warrants that become
vested if the company is profitable for the fiscal year ended June 30,
2001 or upon the discretion of the Board of Directors.
(3) Includes 25,000 shares in common stock, 175,000 shares held upon exercise
of warrants, 200,000 shares held upon exercise of warrants to be issued
pursuant to an investment agreement and 750,000 shares held upon conversion
of debt pursuant to an investment agreement.
(4) Includes 25,000 shares in common stock, 175,000 shares held upon exercise
of warrants, 200,000 shares held upon exercise of warrants to be issued
pursuant to an investment agreement and 750,000 shares held upon conversion
of debt pursuant to an investment agreement.
(5) This number includes 1,309,000 shares of common stock issuable upon
exercise of warrants which are currently outstanding. This number also
includes (solely for purposes of this prospectus) up to an aggregate of
25,000,000 shares of our common stock that we may sell to Swartz under the
Swartz investment agreement. These shares would not be deemed beneficially
owned within the meaning of Sections 13(d) and 13(g) of the Exchange Act
before their acquisition by Swartz. Eric S. Swartz holds investment and
voting control of the shares held by Swartz.
(6) John D. McPhilimy is the President and Chief Executive Officer of the
company.
(7) Bruce D. Sandig is a Senior Vice President of the company.
(8) Roy D. Pringle is a Vice President and Chief Financial Officer of the
company.
(9) Lisa R. McPhilimy is a Vice President and Controller of the company.
(10) Ron Chilston is the Vice President of Business Development of the company.
(11) Michael J. McPhilimy is an employee of the company.
23
PLAN OF DISTRIBUTION
This prospectus involves an offering that relates to:
- The possible sale from time to time of 25,000,000 shares and 1,309,000
shares underlying warrants by Swartz Private Equity, LLC pursuant to
an investment agreement,
- The possible sale from time to time of 50,000 shares, 350,000 shares
underlying warrants, 400,000 shares underlying warrants to be issued
pursuant to an investment agreement and 1,500,000 shares held upon
conversion of debt pursuant to a line of credit investment agreement
with an investor group consisting on Dale Riker and Russ Ritchie.
- The possible sale from time to time of 4,900,000 shares underlying
warrants to be issued to the employees of the Company if we are
profitable at June 30, 2001 or upon the discretion of the Board of
Directors.
- The possible sale from time to time by other selling shareholders of
Dimensional Visions, Inc. of up to 172,207 shares of common stock of
Dimensional Visions.
SWARTZ PRIVATE EQUITY, LLC
This prospectus is registering the possible sale from time to time of 25,000,000
shares and 1,309,000 shares underlying warrants by Swartz. Pursuant to our
investment agreement with Swartz Private Equity, LLC, we can place puts to them
of our common stock of up to $20,000,000. The dollar amount of each sale is
limited by our common stock's trading volume and a minimum period of time since
the last sale. Each sale will be to Swartz. In turn, Swartz may sell our stock
in the open market, place our stock through negotiated transactions with other
investors, or hold our stock in their own portfolio.
SELLING SHAREHOLDERS
The shares will be offered and sold by the selling stockholders for their own
accounts. Dimensional Visions will not receive any of the proceeds from the sale
of the shares pursuant to this prospectus other than from the exercise of
warrants or the conversion of debt. Dimensional Visions will pay all of the
expenses of the registration of the shares, but shall not pay any commissions,
discounts, and fees of underwriters, dealers, or agents.
The selling shareholders and their successors, which term includes their
transferees, pledgees or donees or their successors may sell the common stock
directly to one or more purchasers (including pledgees) or through brokers,
dealers or underwriters who may act solely as agents or may acquire common stock
as principals, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, at negotiated prices or at fixed
prices, which may be changed. The selling shareholders may effect the
distribution of the common stock in one or more of the following methods:
- ordinary brokers transactions, which may include long or short sales;
- transactions involving cross or block trades or otherwise on the
Nasdaq National Market;
- purchases by brokers, dealers or underwriters as principal and resale
by such purchasers for their own accounts under this prospectus;
- "at the market" to or through market makers or into an existing market
for the common stock;
- in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected
through agents;
- through transactions in options, swaps or other derivatives (whether
exchange listed or otherwise); or
- any combination of the above, or by any other legally available means.
24
In addition, the selling shareholders or successors in interest may enter into
hedging transactions with broker-dealers who may engage in short sales of common
stock in the course of hedging the positions they assume with the selling
shareholders. The selling shareholders or successors in interest may also enter
into option or other transactions with broker-dealers that require delivery by
such broker-dealers of the common stock, which common stock may be resold
thereafter under this prospectus.
Brokers, dealers, underwriters or agents participating in the distribution of
the common stock may receive compensation in the form of discounts, concessions
or commission from the selling shareholders and/or the purchasers of common
stock for whom such broker-dealers may act as agent or to whom they may sell as
principal, or both (which compensation as to a particular broker-dealer may be
in excess of customary commissions).
Swartz is, and each remaining selling shareholder and any broker-dealers acting
in connection with the sale of the common stock by this prospectus may be deemed
to be, an underwriter within the meaning of Section 2(11) of the Securities Act,
and any commissions received by them and any profit realized by them on the
resale of common stock as principals may be underwriting compensation under the
Securities Act. Neither the selling shareholders nor we can presently estimate
the amount of such compensation. We do not know of any existing arrangements
between the selling shareholders and any other shareholder, broker, dealer,
underwriter or agent relating to the sale or distribution of the common stock.
The selling shareholders and any other persons participating in a distribution
of securities will be subject to applicable provisions of the Securities
Exchange Act and the rules and regulations thereunder, including, without
limitation, Regulation M, which may restrict certain activities of, and limit
the timing of purchases and sales of securities by, the selling shareholders and
other persons participating in a distribution of securities. Furthermore, under
Regulation M, persons engaged in a distribution of securities are prohibited
from simultaneously engaging in market making and certain other activities with
respect to such securities for a specified period of time prior to the
commencement of such distributions subject to specified exceptions or
exemptions. Swartz has, before any sales, agreed not to effect any offers or
sales of the common stock in any manner other than as specified in this
prospectus and not to purchase or induce others to purchase common stock in
violation of Regulation M under the Exchange Act. All of the foregoing may
affect the marketability of the securities offered by this prospectus.
Any securities covered by this prospectus that qualify for sale under Rule 144
under the Securities Act may be sold under that Rule rather than under this
prospectus.
We cannot assure you that the selling shareholders will sell any or all of the
shares of common stock offered by the selling shareholders.
In order to comply with the securities laws of certain states, if applicable,
the selling shareholders will sell the common stock in jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
states, the selling shareholders may not sell the common stock unless the shares
of common stock have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification requirement is
available and is complied with.
25
DESCRIPTION OF SECURITIES
The authorized capital stock of Dimensional Visions currently consists of
100,000,000 shares of common stock, $.001 par value, and 10,000,000 shares of
preferred stock, $.001 par value.
Dimensional Visions' transfer agent is American Stock Transfer & Trust
Corporation, 59 Maiden Lane, New York, New York 10007.
The following summary of certain terms of Dimensional Visions' securities does
not purport to be complete and is subject to, and qualified in its entirety by,
the provisions of Dimensional Visions' Articles of Incorporation and Bylaws.
COMMON STOCK
As of the date of this prospectus, there are 10,339,873 shares of common stock
outstanding.
Holders of common stock are each entitled to cast one vote for each share held
of record on all matters presented to stockholders. Cumulative voting is not
allowed; hence, the holders of a majority of the outstanding common stock can
elect all directors.
Holders of common stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available therefore and,
in the event of liquidation, to share pro rata in any distribution of
Dimensional Visions' assets after payment of liabilities. The Board of Directors
is not obligated to declare a dividend and it is not anticipated that dividends
will be paid until Dimensional Visions is profitable.
Holders of common stock do not have preemptive rights to subscribe to additional
shares if issued by Dimensional Visions. There are no conversion, redemption,
sinking fund or similar provisions regarding the common stock. All of the
outstanding shares of common stock are fully paid and non-assessable and all of
the shares of common stock offered hereby will be, upon issuance, fully paid and
non-assessable.
PREFERRED STOCK
SERIES A PREFERRED STOCK
The company's Series A Convertible 5% Preferred Stock, 100,000 shares
authorized, is convertible into common stock at the rate of 1.6 shares of common
stock for each share of the Series A Preferred. Dividends from date of issue are
payable from retained earnings, and have been accumulated on June 30 each year,
but have not been declared or paid. The Series A Preferred were issued for the
purpose of raising operating funds. As of the date of this prospectus, there are
15,500 shares of Series A Convertible 5% Preferred Stock outstanding.
SERIES B PREFERRED STOCK
The company's Series B Convertible 8% Preferred Stock, 200,000 shares
authorized, is convertible into common stock at the rate of four shares of
common stock for each share of the Series B Preferred. Dividends from date of
issue are payable from retained earnings, and have been accumulated on June 30
each year, but have not been declared or paid. The Series B Preferred were
issued for the purpose of raising operating fund. Shares of Series B Preferred
were issued to holders of warrants to purchase such preferred stock. The funding
for the exercise of these warrants was the exchange of 1,907,000 of principal
amount of secured and unsecured notes. As of the date of this prospectus, there
are 3,500 shares of Series B Convertible 8% Preferred Stock outstanding.
SERIES C PREFERRED STOCK
The company's Series C Convertible Preferred Stock is convertible at a rate of
0.4 shares of common stock per share of Series C Preferred and was issued to
certain holders of the company's 10% Secured Notes in lieu of accrued interest.
Shares of Series C Preferred were also issued in exchange for $262,750 of
interest due under secured and unsecured notes. As of the date of this
prospectus, there are 13,404 shares of Series C Convertible Preferred Stock
outstanding.
26
SERIES D PREFERRED STOCK
The company's Series D Convertible Preferred Stock is convertible at a rate of
two shares of common stock per share of Series D Preferred and was issued for
the purpose of raising operating funds. As of the date of this prospectus, there
are 180,000 shares of Series D Convertible Preferred Stock outstanding.
SERIES E PREFERRED STOCK
The company's Series E Convertible Preferred Stock is convertible at a rate of
one share of common stock per share of Series E Preferred and was issued for the
purpose of raising operating funds. As of the date of this prospectus, there are
275,000 shares of Series E Convertible Preferred Stock outstanding.
SERIES P PREFERRED STOCK
The company's Series P Convertible Preferred Stock is convertible at a rate of
0.4 shares of common stock per share of Series P Preferred. The Series P
Preferred was issued on September 2, 1995, to InfoPak stockholders in exchange
for (1) all of the outstanding capital stock of InfoPak, (2) as signing bonuses
for certain employees and a consultant of InfoPak, and (3) to satisfy InfoPak's
outstanding debt obligations to certain stockholders. As of the date of this
prospectus, there are 86,640 shares of Series P Convertible Preferred Stock
outstanding.
WARRANTS AND OPTIONS
As of March 6, 2001, there are 10,690,343 warrants issued and outstanding
expiring at various times until January 1, 2008. The exercise prices vary from
$.10 to $12.50 per share with a weighted average exercise price of $.25 per
share. Officers and directors of the company own 6,600,000 of the 10,690,343
issued and outstanding warrants with a weighted average exercise price of $.15
per share. Of these 6,600,000 warrants, 4,900,000 are part of incentive warrants
for the officers. On July 1, 2001, 25% of these warrants will fully vest
provided Dimensional Visions has a positive net income for the fiscal year
ending June 30, 2001. The remaining warrants will vest at a rate of 18.75% of
the total warrants for each consecutive quarter that the company is profitable.
The warrants would also vest if the Company were to have a change in control
before June 30, 2001 or upon the discretion of the Board of Directors. Other
individuals or entities own the other 4,090,343 warrants which have a weighted
average exercise price of $.42 per share.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
Dimensional Visions by Senn Palumbo Meulemans, LLP, Irvine, California.
EXPERTS
The Financial Statements of Dimensional Visions for the fiscal years ended June
30, 2000 and June 30, 1999, included herein and elsewhere in the registration
statement, have been included herein and in the registration statement in
reliance on the reports of Kopple & Gottlieb, LLP and Gitomer & Berenholz, P.C.,
appearing elsewhere herein, and upon the authority of said firms as experts in
accounting and auditing.
27
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
YEARS ENDED JUNE 30, 2000 AND 1999
AND
SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
----
Independent Auditors' Report F-2
Consolidated Financial Statements
Balance Sheets F-4
Statements of Operations F-5
Statements of Stockholders' Equity (Deficiency) F-6
Statements of Cash Flows F-10
Notes to Consolidated Financial Statements F-14
F-1
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Dimensional Visions Incorporated and Subsidiary
Phoenix, Arizona
We have audited the accompanying consolidated balance sheet of Dimensional
Visions Incorporated and Subsidiary (the "Company") as of June 30, 2000, and the
related consolidated statements of operations, stockholders' equity
(deficiency), and cash flows for the period ended June 30, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Dimensional Visions Incorporated
and Subsidiary as of June 30, 2000 and the results of their operations and their
cash flows for the period ended June 30, 2000 in conformity with generally
accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has financed its
operations primarily through the sale of its securities. As described in Note 1
to the consolidated financial statements, the Company has suffered recurring
losses from operations and has limited sales of its products, which raises
substantial doubt about the Company's ability to continue as a going concern.
The future of the Company as an operating business will depend on its ability
ability to (1) successfully market its products, (2) obtain sufficient capital
contributions and/or financing as may be required to sustain its current
operations and fulfill its sales and marketing activities, (3) achieve a level
of sales adequate to support the Company's cost structure, and (4) ultimately
achieve a level of profitability. Management's plan concerning these matters are
also described in Note 1. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Kopple & Gottlieb, LLP
KOPPLE & GOTTLIEB, LLP
Jenkintown, Pennsylvania
September 1, 2000
F-2
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Dimensional Visions Incorporated and Subsidiary
Phoenix, Arizona
We have audited the accompanying consolidated balance sheet of Dimensional
Visions Incorporated and Subsidiary (the "Company") as of June 30, 1999 (not
presented herein), and the related consolidated statement of operations,
stockholders' equity (deficiency), and cash flows for the year ended June 30,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Dimensional Visions Incorporated
and Subsidiary as of June 30, 2000 and the results of their operations and their
cash flows for the year ended June 30, 1999 in conformity with generally
accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has financed its
operations primarily through the sale of its securities. As described in Note 1
to the consolidated financial statements, the Company has suffered recurring
losses from operations and has limited sales of its products, which raises
substantial doubt about the Company's ability to continue as a going concern.
The future of the Company as an operating business will depend on its ability to
(1) successfully market its products, (2) obtain sufficient capital
contributions and/or financing as may be required to sustain its current
operations and fulfill its sales and marketing activities, (3) achieve a level
of sales adequate to support the Company's cost structure, and (4) ultimately
achieve a level of profitability. Management's plan concerning these matters are
also described in Note 1. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ GITOMER & BERENHOLZ, P.C.
Huntingdon Valley, Pennsylvania
October 7, 1999
F-3
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, June 30,
2000 2000
------------ ------------
(Unaudited)
ASSETS
Current assets
Cash $ 14,129 $ 276,333
Notes receivable, net of allowance for bad debts of $443,699 -- --
Notes receivable, officers 12,341 --
Accounts receivable, trade, net of allowance for bad debts of $11,833 116,100 350,493
Prepaid expenses 6,593 9,227
------------ ------------
Total current assets 149,163 636,053
------------ ------------
Equipment
Equipment 479,972 479,372
Furniture and fixtures 49,329 46,944
------------ ------------
529,301 526,316
Less accumulated depreciation 334,624 308,963
------------ ------------
194,677 217,353
------------ ------------
Other assets
Patent rights and other assets 29,589 31,627
------------ ------------
Total assets $ 373,429 $ 885,033
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities
Current portion of obligations under capital leases $ 55,559 $ 50,962
Accounts payable, accrued expenses and other liabilities 300,224 379,807
------------ ------------
Total current liabilities 355,783 430,769
------------ ------------
Obligations under capital leases, net of current portion 59,364 88,343
------------ ------------
Total liabilities 415,147 519,112
------------ ------------
Commitments and contingencies -- --
Stockholders' equity
Preferred stock - $.001 par value, authorized 10,000,000 shares;
issued and outstanding 574,044 at December 31, 2000, and
1,146,044 shares at June 30, 2000 574 1,146
Additional paid-in capital 953,843 1,474,295
------------ ------------
954,417 1,475,441
Common stock - $.001 par value, authorized 100,000,000 shares;
issued and outstanding 10,259,873 at December 31, 2000 and
8,934,916 shares at June 30, 2000 10,260 8,935
Additional paid-in capital 21,506,592 20,885,581
Deficit (22,427,533) (21,828,753)
------------ ------------
Total stockholders' equity (deficiency) before deferred
consulting contracts 43,736 (541,204)
Deferred consulting contracts (85,454) (175,283)
------------ ------------
Total stockholders' equity (deficiency) (41,718) 365,921)
------------ ------------
Total liabilities and stockholders' equity (deficiency) $ 373,429 $ 885,033
============ ============
See notes to consolidated financial statements.
F-4
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months Ended December 31, Year Ended June 30,
----------------------------- ---------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
Operating revenue $ 162,996 $ 300,418 $ 1,008,862 $ 741,901
Cost of sales 106,475 193,261 662,021 562,711
----------- ----------- ----------- -----------
Gross profit 56,521 107,157 346,841 179,190
Operating expenses
Engineering and development costs 134,562 77,152 169,895 146,480
Marketing expenses 120,116 25,367 129,520 301,630
General and administrative expenses 392,754 348,577 852,140 605,347
----------- ----------- ----------- -----------
Total operating expenses 647,432 451,096 1,151,555 1,053,457
----------- ----------- ----------- -----------
Loss before other income (expenses) (590,911) (343,939) (804,714) (874,267)
----------- ----------- ----------- -----------
Other income (expenses)
Interest expense (10,627) (120,196) (173,878) (207,727)
Interest income 2,758 5,084 14,779 18,188
Bad debt expense on notes receivable -- -- (57,332) (402,006)
----------- ----------- ----------- -----------
(7,869) (115,112) (216,431) (591,545)
----------- ----------- ----------- -----------
Net loss (598,780) (459,051) (1,021,145) (1,465,812)
Dividends in arrears on preferred stock (74,225) (88,050) (74,225) (88,050)
----------- ----------- ----------- -----------
Net loss available to common shareholders $ (673,005) $ (547,101) $(1,095,370) $(1,553,862)
=========== =========== =========== ===========
Loss per share
Basic and diluted loss per common share $ (.07) $ (.09) $ (.18) $ (.39)
=========== =========== =========== ===========
Shares used in computing net loss per share 9,620,342 5,759,686 6,052,835 3,973,118
=========== =========== =========== ===========
See notes to consolidated financial statements.
F-5
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
Preferred Stock Common Stock
$(.001 Par Value) Additional $(.001 Par Value) Additional
---------------- Paid-in ------------------ Paid-in
Shares Amount Capital Shares Amount Capital Deficit Total
------- ----- --------- --------- ------ ----------- ------------ -----------
Balance, July 1, 1998 133,321 $ 133 $ 683,278 3,612,101 $3,612 $18,862,075 $(19,341,796) $ 207,302
Conversion of 1,500 shares
Series B convertible preferred
stock valued at $15,000 into
6,000 shares of the Company's
common stock (1,500) (1) (14,999) 6,000 6 14,994 -- --
Conversion of 1,011 shares
Series C convertible preferred
stock valued at $10,110 into
47,390 shares of the Company's
common stock (1,011) (1) (10,109) 403 -- 10,110 -- --
Issuance of 1,519,688 shares
of the Company's common stock
to consultants for services
valued at $320,593 -- -- -- 1,519,688 1,520 319,073 -- 320,593
Issuance of 485,000 warrants
to purchase 485,000 shares of
the Company's common stock at
$.50 per share for a three and
a half year period commencing
January 16, 1998 in connection
with the issuance of convertible
debentures due July 31, 2001
Black Scholes option pricing
model was used to value the
warrants -- -- -- -- -- 310,850 -- 310,850
Issuance of 85,000 warrants to
purchase 85,000 shares of the
Company's common stock at $.25
per share and issuance of
150,000 warrants to purchase
150,000 shares of the Company's
common stock at $.10 per share
for a three year period
commencing January 25, 1999 in
connection with the issuance of
convertible debentures due July
1999 through October 1999. The
Black Scholes option pricing
model was used to value the
warrants -- -- -- -- -- 39,300 -- 39,300
Net loss -- -- -- -- -- -- (1,465,812) (1,465,812)
Balance, June 30, 1999 130,810 $ 131 $ 658,170 5,138,192 $5,138 $19,556,402 $(20,807,608) $ (587,767)
F-6
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)
Preferred Stock Common Stock
$(.001 Par Value) Additional $(.001 Par Value) Additional
---------------- Paid-in ------------------ Paid-in
Shares Amount Capital Shares Amount Capital Deficit Total
------- ----- --------- --------- ------ ----------- ------------ ----------
Balance, July 1, 1999 130,810 $ 131 $ 658,170 5,138,192 $5,138 $19,556,402 $(20,807,608) $(587,767)
Conversion of 4,266 shares
Series C convertible preferred
stock valued at $42,660 into
1,703 shares of the Company's
common stock (4,266) (4) (42,656) 1,703 2 42,658 -- --
Exercise of 135,000 warrants to
purchase 135,000 shares of the
Company's common stock at $.20
per share -- -- -- 135,000 135 26,865 -- 27,000
Exercise of 355,000 warrants to
purchase 355,000 shares of the
Company's common stock at $.10
per share -- -- -- 355,000 355 35,145 -- 35,500
Exercise of 30,000 warrants to
purchase 30,000 shares of the
Company's common stock at $.50
per share -- -- -- 30,000 30 14,970 -- 15,000
Exercise of 32,000 warrants to
purchase 32,000 shares of the
Company's common stock at $.25
per share -- -- -- 32,000 32 7,968 -- 8,000
Issuance of 166,730 shares of
the Company's common stock to
settle accounts payable valued
at $62,398 -- -- -- 166,730 167 62,231 -- 62,398
Issuance of 544,000 shares of
the Company's common stock to
consultants for services valued
at $341,250 -- -- -- 544,000 544 340,706 -- 341,250
Issuance of 375,000 shares of the
Company's Series D Preferred Stock 375,000 375 337,125 -- -- -- -- 337,500
Issuance of 675,000 shares of the
Company's Series E Preferred Stock 675,000 675 617,325 -- -- -- -- 618,000
Conversion of 7,500 shares
Series A convertible preferred
stock valued at $75,000 into
12,000 shares of the Company's
common stock (7,500) (8) (74,992) 12,000 12 74,988 -- --
F-7
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)
Preferred Stock Common Stock
$(.001 Par Value) Additional $(.001 Par Value) Additional
------------------ Paid-in ------------------ Paid-in
Shares Amount Capital Shares Amount Capital Deficit Total
------- ------ --------- --------- ------ ----------- ------------ ---------
Conversion of 23,000 shares
Series D convertible preferred
stock valued at $20,700 into
46,000 shares of the Company's
common stock (23,000) (23) (20,677) 46,000 46 20,654 -- --
Issuance of 40,000 shares of
Company's common stock as
payment of a $20,000 commission
owed from the sale of Series D
Preferred Stock in lieu of a
cash payment -- -- -- 40,000 40 19,960 -- 20,000
Conversion of debt of $570,000
and related interest of $97,387
at $.375 pursuant to SB-2
registration statement -- -- -- 1,779,691 1779 665,608 -- 667,387
Conversion of debt of $150,000
and related interest of $13,650
at $.25 pursuant to SB-2
registration statement -- -- -- 654,600 655 162,995 -- 163,650
Professional fees incurred in
connection with SB-2
registration statement (15,698) (15,698)
Adjustment for long term debt
discount of which debt was
converted into equity with the
SB-2 registration -- -- -- -- -- (116,622) -- (116,622)
Adjustment for deferred offering
costs associated with the SB-2
registration -- -- -- -- -- (13,249) -- (13,249)
Issuance of 323,293 warrants to
purchase the Company's common
stock at $.10 per share
commencing January 2001 in
connection with the issuance of
convertible debentures -- -- -- -- -- -- -- --
Issuance of 395,000 warrants to
purchase the Company's common
stock at $.25 per share
commencing October 2000 in
connection with private placement
of the Company's securities -- -- -- -- -- -- -- --
Issuance of 1,397,500 warrants
to purchase the Company's common
stock at $.25 per share
commencing December 2000 through
February 2005 for employee
incentives and consultants -- -- -- -- -- -- -- --
See notes to financial statements.
F-8
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)
Preferred Stock Common Stock
$(.001 Par Value) Additional $(.001 Par Value) Additional
------------------- Paid-in -------------------- Paid-in
Shares Amount Capital Shares Amount Capital Deficit Total
--------- ------- ----------- ---------- ------- ----------- ------------ -----------
Issuance of 917,500 warrants
to purchase the Company's
common stock at $.50 per
share commencing October
2000 through January 2003 in
connection with private
placement of the Company's
securities -- -- -- -- -- -- -- --
Net loss -- -- -- -- -- -- (1,021,145) (1,021,145)
--------- ------- ----------- ---------- ------- ----------- ------------ -----------
Balance, June 30, 2000 1,146,044 $ 1,146 $ 1,474,295 8,934,916 $ 8,935 $20,885,581 $(21,828,753) $ 541,204
Exercise of 85,000 warrants
to purchase 85,000 shares of
the Company's common stock
at $.10 per share -- -- -- 85,000 85 8,415 -- 8,500
Exercise of 73,750 warrants
to purchase 73,750 shares of
the Company's common stock
at $.50 per share along with
additional common stock per
the inducement to exercise -- -- -- 186,125 186 30,470 -- 36,875
Exercise of 250,000 warrants
to purchase 250,000 shares
of the Company's common stock
at $.25 per share along with
additional common stock per
the inducement to exercise -- -- -- 250,000 250 61,848 -- 55,937
Conversion of 172,000 shares
Series D convertible
preferred stock valued at
$154,800 into 344,000 shares
of the Company's common stock (172,000) (172) (154,629) 344,000 344 154,456 -- --
Conversion of 400,000 shares
Series E convertible
preferred stock valued at
$366,222 into 400,000 shares
of the Company's common stock (400,000) (400) (365,823) 400,000 400 365,822 -- --
Issuance of 172,207 shares
of the Company's common stock
as a warrant exercise
inducement -- -- -- 172,207 172
Net loss -- -- -- -- -- -- (598,780) (598,780)
--------- ------- ----------- ---------- ------- ----------- ------------ -----------
Balance, December 31, 2000
(unaudited) 574,044 $ 574 $ 953,843 10,259,873 10,260 $21,506,592 $(22,427,533) $ 43,736
========= ======= =========== ========== ======= =========== ============ ===========
F-9
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months
Ended December 31, Year Ended June 30,
-------------------------- --------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
Operating activities
Net loss $ (598,780) $ (459,051) $(1,021,145) $(1,465,812)
Adjustments to reconcile net loss to net
cash used in operating activities
Allowance for bad debts on notes receivable -- -- 41,663 402,006
Consulting service paid through issuance of
warrants and common stock -- 22,500 22,500 65,593
Depreciation and amortization of property and equipment 25,661 17,819 42,299 46,172
Amortization of debt discount 73,041 121,396 112,132
Amortization of other assets and deferred costs 91,867 71,316 262,858 36,811
Interest expense paid through issuance of common stock -- -- 50,400 --
Changes in assets and liabilities which provided (used) cash
Accounts receivable, trade 222,052 (108,911) (272,425) 66,552
Inventory (4,772) 4,822 62,464
Prepaid expenses 2,633 8,193 10,748 7,782
Accounts payable, accrued expenses and other liabilities (79,583) (91,616) (31,332) 94,196
----------- ----------- ----------- -----------
Net cash used in operating activities (336,150) (461,937) (768,216) (572,104)
----------- ----------- ----------- -----------
Investing activities
Payment of obligations under capital lease (24,382) (9,779) (49,702) (16,477)
Purchase of equipment (2,985) -- (1,071) (57,279)
Proceeds from payments on notes receivable -- -- -- 18,169
----------- ----------- ----------- -----------
Net cash used in investing activities
(27,367) (9,779) (50,773) (55,587)
----------- ----------- ----------- -----------
F-10
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Six Months
Ended December 31, Year Ended June 30,
-------------------------- --------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
Financing activities
Proceeds from Exercise of warrants 107,875 -- 85,500 --
Sale of Common stock -- -- -- --
Preferred stock net of offering costs of $74,500 -- -- 975,000 --
Preferred stock net of offering costs of $94,500 -- 955,500 -- --
Warrant right -- -- -- --
Short-term borrowings -- -- -- 235,000
Long-term debt -- -- -- 485,000
Reduction in deferred consulting fee contract originally
paid in common stock -- 30,000 30,000 100,000
Professional fees incurred in connection with SB-2
registration statement -- -- (15,697) --
Stock issuance costs (6,563) -- -- --
Issuance of common stock in connection with the exercise
of warrants -- 40,000 -- --
Proceeds from sale of equipment and supplies -- -- -- --
Borrowings from factor -- -- -- 195,560
Payment of debt obligations -- -- -- (350,060)
Disbursement of debt issuance costs -- -- -- (33,700)
--------- ---------- ----------- ---------
Net cash provided by financing activities 101,313 1,025,500 1,075,303 631,800
--------- ---------- ----------- ---------
Net increase (decrease) in cash and cash equivalents (262,204) 553,783 256,314 4,109
Cash, beginning of period 276,333 20,019 20,019 15,910
--------- ---------- ----------- ---------
Cash, end of period $ 14,129 $ 573,802 $ 276,333 $ 20,019
========= ========== =========== =========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 6,584 $ 7,152 $ 24,677 $ 34,957
========= ========== =========== =========
Issuance of common stock in connection with consulting
services $ -- $ 210,000 $ 341,250 $ 320,593
========= ========== =========== =========
F-11
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED JUNE 30, 2000 AND 1999
AND
SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999 (UNAUDITED)
Supplemental disclosure of non-cash investing and financing activities for the
six months ended December 31, 2000:
The Company issued 344,000 of the Company's common stock as a result of the
conversion of 172,000 shares of Series D Convertible Preferred Stock valued
at $154,800.
The Company issued 400,000 shares of the Company's common stock as a result
of the conversion of 400,000 shares of Series E Convertible Preferred Stock
valued at $366,222.
Supplemental disclosure of non-cash investing and financing activities for the
fiscal year 2000:
The Company recorded capital lease obligations of $86,422 relating to the
acquisition of equipment.
The Company issued 12,000 shares of the Company's common stock in
connection with the conversion of Series A Convertible Preferred Stock
valued at $75,000.
The Company issued 40,000 shares of its common stock in lieu of cash to
settle $20,000 in commissions payable from the Series D Preferred Stock
offering.
The Company issued 1,703 shares of the Company's common stock in connection
with the conversion of Series C Convertible Preferred Stock valued at
$42,660.
The Company issued 46,000 shares of the Company's common stock in
connection with the conversion of Series D Convertible Preferred Stock
valued at $20,700.
The Company issued 544,000 of the Company's common stock to consultants for
services valued at $341,250.
The Company issued 166,730 of the Company's common stock to settle accounts
payable valued at $62,398.
The Company issued 2,434,291 shares of the Company's common stock in
connection with the conversion of $720,000 in debt and related accrued
interest of $111,037.
F-12
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED JUNE 30, 1999 AND 1998
AND
SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999 (UNAUDITED)
Supplemental disclosure of non-cash investing and financing activities for
fiscal year 1999:
The Company issued 6,403 shares of the Company's common stock in connection
with the conversion of convertible preferred stock valued at $25,110 as
follows:
Converted to
Value Common Stock
---------- ----------
Series B Convertible Preferred Stock $ 15,000 6,000
Series C Convertible Preferred Stock 10,110 403
---------- ----------
$ 25,110 6,403
========== ==========
The Company issued 1,519,688 shares of the Company's common stock to
consultants for services valued at $320,593.
The Company recorded additional paid-in capital of $350,150 with the
issuance of warrants to purchase 920,000 shares of the Company's common
stock in connection with the short and long-term debenture financing.
F-13
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2000 AND 1999
(Information pertaining to the six months ended
December 31, 2000 and 1999 is unaudited)
Note 1: Summary of Significant Accounting Policies
Description of Business, Financing and Basis of Financial Statement
Presentation
Dimensional Visions Incorporated (the "Company" or "DVI") was
incorporated in Delaware on May 12, 1988. The Company produces and
markets lithographically printed stereoscopic and animation print
products. The stockholders of the Company approved a name change
effective January 15, 1998 from Dimensional Visions Group, Ltd. to
Dimensional Visions Incorporated.
The Company, through a wholly-owned subsidiary of InfoPak, Inc. has
developed a data delivery system that provides end users with specific
industry printed materials by way of a portable hand-held reader. Data
is acquired electronically from the data provided by mainframe systems
and distributed through a computer network to all subscribers.
The Company has financed its operations primarily through the sale of
its securities. The Company has had limited sales of its products
during the six months ended December 31, 2000 and the years ended June
30, 2000 and 1999. Even though the sales during the past two years
have significantly increased over the prior years, the volume of
business is not nearly sufficient to support the Company's cost
structure.
LIQUIDITY AND CAPITAL RESOURCES
The Company has incurred losses since inception of $22,427,533 and had
working capital deficiency of $206,620 as of December 31, 2000 and had
a working capital of $206,544 as of June 30, 2000. The future of the
Company as an operating business will depend on its ability to (1)
successfully market and sell its products, (2) obtain sufficient
capital contributions and/or financing as may be required to sustain
its current operations and to fulfill its sales and marketing
activities, (3) achieve a level of sales adequate to support the
Company's cost structure, and (4) ultimately achieve a level of
profitability. Management's plan to address these issues includes (a)
redirecting its marketing efforts of the Company's products and
substantially increasing sales results, (b) continued exercise of
tight cost controls to conserve cash, (c) raising additional long term
financing, and (d) selling of its subsidiary.
F-14
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2000 AND 1999
(Information pertaining to the six months ended
December 31, 2000 and 1999 is unaudited)
Note 1: Summary of Significant Accounting Policies (Continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
The consolidated financial statements have been prepared on a going
concern basis which contemplates the realization and settlement of
liabilities and commitments in the normal course of business. The
available funds at June 30, 2000, plus the limited revenue is not
sufficient to satisfy the present cost structure. Management
recognizes that the Company must generate additional resources to
enable it to continue operations. Management plans include the
continued expansion of the sale of its products and the sale of
additional securities.
Further, there can be no assurances, assuming the Company successfully
raises additional funds that the Company will achieve profitability or
positive cash flow from the sale of its products. In the event the
Company is not able to secure sufficient funds on a timely basis
necessary to maintain its current operations, it may cease all or part
of its existing operations and/or seek protection under the bankruptcy
laws.
CONSOLIDATION POLICY
The consolidated financial statements include the accounts of DVI and
its wholly-owned subsidiary, InfoPak, Inc. All significant
intercompany balances and transactions have been eliminated in
consolidation.
EQUIPMENT, DEPRECIATION AND AMORTIZATION
Equipment is stated at cost. Depreciation, which includes amortization
of assets under capital lease is provided by the use of the
straight-line method over the estimated useful lives of the assets as
follows:
Equipment 5 - 7 years
Furniture and fixtures 5 years
PATENT RIGHTS
Costs incurred to acquire patent rights and the related technology are
amortized over the shorter of the estimated useful life or the
remaining term of the patent rights. In the event that the costs of
patent rights and/or acquired technology are abandoned, the write-off
will be charged to expenses in the period the determination is made to
abandon them.
F-15
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2000 AND 1999
(Information pertaining to the six months ended
December 31, 2000 and 1999 is unaudited)
Note 1: Summary of Significant Accounting Policies (Continued)
ENGINEERING AND DEVELOPMENT COSTS
The Company charges to engineering and development costs items related
to bringing improvement to its product. Such costs include salaries
and expenses of employees and consultants, the conceptual formulation,
design, and testing of the products and creation of prototypes.
INCOME TAXES
The Company accounts for income taxes under the liability method.
Deferred tax assets and liabilities are determined based on
differences between the financial reporting and tax bases of assets
and are measured using the enacted tax rates and laws that will be in
effect when the differences are expected to reverse.
LOSS PER SHARE
The Company adopted Statement of Financial Accounting Standards
Statement No. 128, "Earnings Per Share" (FAS 128), which is effective
for fiscal years ending after December 15, 1997. FAS 128 replaced the
calculation of primary and fully diluted earnings per share with basic
and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effects of options,
warrants and convertible securities. Dilutive earnings per share is
very similar to the previously reported fully diluted earnings per
share.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
dates of the financial statements and the reported amounts of revenue
and expenses during the reporting periods. Actual results could differ
from those estimates.
F-16
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2000 AND 1999
(Information pertaining to the six months ended
December 31, 2000 and 1999 is unaudited)
Note 1: Summary of Significant Accounting Policies (Continued)
CONCENTRATION OF CREDIT RISK
The Company is subject to credit risk through trade receivables. The
Company relies on a limited number of customers for its sales. The
Company is in the process of building a customer base for its products
and, therefore, the degree of risk is substantially higher until the
base grows.
The Company also relies on several key vendors to supply plastics and
printing services. Although there are a limited number of vendors
capable of fulfilling the Company's needs, the Company believes that
other vendors could provide for the Company's needs on comparable
terms. Abrupt changes could, however, cause a delay in processing and
a possible inability to meet sales commitments on schedule, or a
possible loss of sales, which would affect operating results
adversely.
STOCK-BASED COMPENSATION
The Company accounts for stock-based awards to employees in accordance
with Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" ("APB Opinion No. 25") and has adopted the
disclosure-only alternative of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("FAS
123").
INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The financial statements and all information in these notes as of and
for the six months ended December 31, 2000 and 1999 are unaudited, but
in the opinion of management, have been prepared on the same basis as
the audited consolidated financial statements, and include all
adjustments necessary for the fair presentation of the results of the
interim period. All adjustments reflected in the consolidated
financial statements are of a normal recurring nature. The data
disclosed in the notes to the consolidated financial statements for
this period is also unaudited.
F-17
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2000 AND 1999
(Information pertaining to the six months ended
December 31, 2000 and 1999 is unaudited)
Note 1: Summary of Significant Accounting Policies (Continued)
Note 2: Cash
The Company considers all highly liquid investments, with an original
maturity of three months or less when purchased, to be cash
equivalents.
The Company maintains its cash in banks located in Arizona. The total
cash balances are insured by the FDIC up to $100,000 per financial
institution. As of December 31, 2000 and June 30, 2000, there were no
uninsured balances.
Note 3: Notes Receivable
Notes receivable consists of the following:
Interest
Rate Amount Maturity
---- -------- --------
Sale of Product Line (1) 11% $360,506 September 2001
Sale of InfoReaders (2) 10% 83,163 August 2001
--------
443,669
Less allowance for bad debts 443,669
--------
$ --
========
(1) The Company has been unable to collect the required monthly
payments. During the year ended June 30, 1999, the Company received
three installments and a fee of $10,000 which was included as interest
income. Management has determined that they are currently unable to
collect the amounts due on the note. Accordingly, management has
established a 100% allowance against this note. The Company has
determined that it does not make economic sense to take back this
product line and operate this aspect of the business. The Company will
continue to pursue the collection of this note. As of December 31,
2000 no additional funds have been collected.
F-18
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2000 AND 1999
(Information pertaining to the six months ended
December 31, 2000 and 1999 is unaudited)
Note 3: Notes Receivable (Continued)
(2) On March 1, 1998, the Company sold InfoReaders (hardware) to a
customer for $100,000 and agreed to accept a note for $90,000 with
payments commencing on September 1, 1998. The monthly installment is
$2,904, including interest at 10% per annum for thirty-six months. The
Company has not been able to collect the required monthly payments due
on this note. The customer has filed for an arbitration hearing on the
basis that the Company failed to provide data to support their
customer base and is requesting payment of $1,000,000 for the lost
business. The Company made provisions to acquire the data for the
customer. However, the customer was unwilling to pay for the
acquisition cost of the data and bring their account current.
Accordingly, without the updated data and failure to pay the
outstanding balance due the Company, there is no reason to support the
system. No date has been set for the arbitration hearings. The Company
has filed a counter-claim for full payment of the note. The Company
has taken a $41,500 allowance against the balance due on the note as
of June 30, 1999. The note is personally guaranteed by the
sole-shareholder of the customer and the Company expects to collect
approximately $50,000 as a result of this personal guarantee.
Note 4: Deferred Costs
Deferred costs as of December 31, 2000 consist of two consulting
contracts totaling $85,454. These costs are accounted for in the
equity section as a contra equity account.
On April 5, 1999, the Company entered into a contract with a
consultant. The fee for services for 36 months is $287,668 $(7,991 per
month), or upon signing of the contract, the Company will issue
$255,000 of the Company's common stock. The market value of the common
stock on April 5, 1999 was $.1875 per share and 1,360,000 shares of
registered common stock was issued (registered under Form S-8). In
addition, the warrant price on previously issued 500,000 warrants will
be reduced to $.10 per share.
In accordance with the terms of the agreement either party may
terminate or change the terms of this agreement with 30 days written
notice. On May 28, 1999 the term of this agreement was modified and
the term was reduced to 22 months. Under the provisions of the
contract, the consultant is required to either return the shares or
the cash equivalency of the reduction.
F-19
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2000 AND 1999
(Information pertaining to the six months ended
December 31, 2000 and 1999 is unaudited)
Note 4: Deferred Costs (Continued)
Accordingly on May 28, 1999, the Company received a $100,000 payment
from the consultant.
On August 10, 1999, the Company entered into a contract with a
consultant. The fee for services for 36 months is $169,216 $(4,700 per
month), or upon signing of the contract, the Company will issue
$150,000 of the Company's common stock. The market value of the common
stock on August 10, 1999 was $.50 per share and 300,000 shares of
registered common stock was issued (registered under Form S-8). In
accordance with the terms of the agreement either party may terminate
or change the terms of this agreement with 30 days written notice. In
accordance with the terms of the agreement either party may terminate
or change the terms of this agreement with 30 days written notice.
Note 5: Patent Rights and Other Assets
December 31, June 30,
2000 2000
-------- --------
Patent rights $ 58,426 $ 58,426
Deposits 4,100 4,100
Trademark 225 225
-------- --------
62,751 62,751
Less accumulated
amortization 33,162 31,125
-------- --------
Total $ 29,589 $ 35,701
======== ========
Note 6: Accounts Payable, Accrued Expenses and Other Liabilities
December 31, June 30,
2000 2000
-------- --------
Accounts payable $281,280 $353,927
Accrued expenses
Salaries 13,448 18,523
Payroll taxes payable 5,496 7,357
-------- --------
Total $300,224 $379,807
======== ========
F-20
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2000 AND 1999
(Information pertaining to the six months ended
December 31, 2000 and 1999 is unaudited)
Note 7: Short-Term Borrowings
During January through April 1999, the Company received short-term
borrowings of $235,000. The loans were 12% convertible debentures,
with due dates ranging from July 25, 1999 through October 29, 1999.
The terms of the debenture provide for a three month extension if the
debenture is not paid on the original due date. During the extension
period, interest is calculated at the stated rate plus 3% through the
extended due date (15%).
On June 19, 2000 the debentures were converted into 826,667 shares of
the Company's common stock. The related accrued interest on the short
term borrowings were also converted unto 80,885 shares of the
Company's common stock calculated at a 12% interest rate.
Note 8: Long-Term Debt
During July through September 1998, the Company through a private
placement was able to borrow $485,000 through the issuance of Series A
12% convertible secured debentures. The debentures are due July 31,
2001. Interest is accrued and payable on July 31 of each year and the
first interest payment is due July 31, 1999. In the event the Company
fails to pay the debenture holders any accrued interest or principal
the default rate is 16% from the due date through the date paid.
On June 19, 2000 all the Series A Convertible secured debentures were
converted into 1,293,327 shares of the Company's common stock and the
related accrued interest was converted into 233,412 shares of the
Company's common stock.
Note 9: Leases
The company leases certain equipment under a master lease agreement,
which are classified as capital leases. The equipment leases have a
five year term with an option to acquire the equipment for $1 at the
end of the lease term. Leased capital assets included in equipment was
as follows:
December 31, June 30,
2000 2000
-------- --------
Equipment $225,334 $225,334
Less accumulated
amortization 65,658 47,092
-------- --------
$159,676 $178,242
======== ========
F-21
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2000 AND 1999
(Information pertaining to the six months ended
December 31, 2000 and 1999 is unaudited)
Note 9: Leases (Continued)
Future minimum payments, by year and in the aggregate, under
noncancellable capital leases and operating leases with terms of one
year or more consist of the following:
December 30, June 30,
2000 2000
Years Ending -------- -------- June 30, 2000
June 30, Capital Leases Operating Leases
-------- --------------------- ----------------
2001 $ 36,232 $ 72,463 $ 37,000
2002 72,417 72,417 --
2003 30,527 30,527 --
-------- -------- --------
139,176 175,407 $ 37,000
========
Amounts representing
interest 24,253 36,102
-------- --------
Present value of net
minimum payments 114,923 139,305
Current portion 55,559 50,962
-------- --------
Long-term portion $ 59,364 $ 88,343
======== ========
The Company's rental expense for operating leases was approximately
$74,948 in 2000 and $69,100 in 1999 and for the six months ended
December 31, 2000 and 1999 rental expense was $35,598 and $34,247,
respectively.
Note 10: Commitments and Contingencies
There are no other legal proceedings which the Company believes will
have a material adverse effect on its financial position.
The Company has not declared dividends on Series A or B Convertible
Preferred Stock. The cumulative dividends in arrears through December
31, 2000 and June 30, 2000 was approximately $74,225.
F-22
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2000 AND 1999
(Information pertaining to the six months ended
December 31, 2000 and 1999 is unaudited)
Note 11: Common Stock
As of December 31, 2000, there are outstanding 6,677,410 of non-public
warrants to purchase the Company's common stock at prices ranging from
$0.10 to $12.50 with a weighted average price of $0.47 per share.
As of December 31, 2000, there were 574,044 shares of various classes
of Convertible Preferred Stock outstanding which can be converted to
713,818 shares of common stock (see Note 12).
During the six months ended December 31, 2000, the Company issued
344,000 shares of its common stock as a result of the conversion of
172,000 shares of Series D Convertible Preferred Stock.
During the six months ended December 31, 2000, the Company issued
400,000 shares of its common stock as a result of the conversion of
400,000 shares of Series E Preferred Convertible Preferred Stock.
During the six months ended December 31, 2000, the Company issued
580,957 shares of the Company's common stock in connection with the
exercise of warrants.
The total number of shares of the Company's common stock that would
have been issuable upon conversion of the outstanding warrants,
options and preferred stock equaled 7,391,228 shares as of December
31, 2000, and would be in addition to the 10,259,873 shares of common
stock outstanding as of December 31, 2000.
As of June 30, 2000, there were outstanding 6,808,910 of non-public
warrants and options to purchase the Company's common stock at prices
ranging from $.10 to $12.50 with a weighted average price of $.55 per
share.
As of June 30, 2000, there were 1,146,044 shares of various classes of
Convertible Preferred stock outstanding which can be converted to
1,457,818 shares of common stock (see Note 12).
During June 2000, there were $485,000 of secured debentures and
related interest that were converted into 1,526,739 shares of the
Company's common stock and $235,000 of short-term borrowings and
related interest that were converted into 907,552 shares of the
company's common stock.
F-23
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2000 AND 1999
(Information pertaining to the six months ended
December 31, 2000 and 1999 is unaudited)
Note 11: Common Stock (Continued)
The Company issued during August 1999, September 1999, and February
2000, 1,707 shares of its common stock as a result of the conversion
of 4,266 shares of series C Convertible Preferred Stock.
During February 2000, the Company issued 12,000 shares of its common
stock as a result of the conversion of 7,500 shares of Series A
Convertible Preferred Stock.
The Company issued 40,000 shares of its common stock in lieu of cash
to settle $20,000 in commissions from the Series D Preferred Stock
offering.
During the year ended June 30, 2000, the Company issued 544,000 shares
of its common stock to consultants for services valued at $341,250.
During August 1999, the Company issued 166,730 shares of its common
stock in lieu of cash to settle $62,398 of accounts payable.
The Company issued 552,000 shares of its stock during the fiscal year
2000 in connection with the exercise of warrants.
The Company issued during the year ended June 30, 1999, 1,519,688
shares of the Company's common stock to consultants for services
(including $133,788 as deferred) valued at $320,593 (average price per
share $.21).
F-24
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2000 AND 1999
(Information pertaining to the six months ended
December 31, 2000 and 1999 is unaudited)
Note 12: Preferred Stock
The Company has authorized 10,000,000 shares of $.001 par value per
share Preferred Stock, of which the following were issued and
outstanding:
Outstanding
-----------------------
December 31, June 30,
Allocated 2000 2000
---------- -------- ----------
Series A Preferred 100,000 15,500 15,500
Series B Preferred 200,000 3,500 3,500
Series C Preferred 1,000,000 13,404 13,404
Series D Preferred 375,000 180,000 352,000
Series E Preferred 1,000,000 275,000 675,000
Series P Preferred 600,000 86,640 86,640
---------- -------- ----------
Total Preferred Stock 3,325,000 574,044 1,146,044
========== ======== ==========
The Company's Series A Convertible 5% Preferred Stock ("Series A
Preferred"), 100,000 shares authorized, is convertible into common
stock at the rate of 1.6 shares of common stock for each share of the
Series A Preferred. Dividends from date of issue are payable from
retained earnings, and have been accumulated on June 30 each year, but
have not been declared or paid (see Note 10).
The Company's Series B Convertible 8% Preferred Stock ("Series B
Preferred") is convertible at the rate of 4 shares of common stock for
each share of Series B Preferred. Dividends from date of issue are
payable on June 30 from retained earnings at the rate of 8% per annum
and have not been declared or paid (see Note 10).
The Company's Series C Convertible Preferred Stock ("Series C
Preferred") is convertible at a rate of 0.4 shares of common stock per
share of Series C Preferred.
The Company's Series D Convertible Preferred Stock ("Series D
Preferred") is convertible at a rate of 2 shares of common stock per
share of Series D Preferred.
The Company's Series E Convertible Preferred Stock ("Series E
Preferred") is convertible at a rate of 1 share of common stock per
share of Series E Preferred.
The Company's Series P Convertible Preferred Stock ("Series P
Preferred") is convertible at a rate of 0.4 shares of common stock for
each share of Series P Preferred.
F-25
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2000 AND 1999
(Information pertaining to the six months ended
December 31, 2000 and 1999 is unaudited)
Note 12: Preferred Stock (Continued)
The Company's Series A Preferred and Series B Preferred, Series D
Preferred and seiries E Preferred were issued for the purpose of
raising operating funds. The Series C Preferred was issued to certain
holders of the Company's 10% Secured Notes in lieu of accrued interest
and also will be held for future investment purposes.
The Series P Preferred was issued on September 12, 1995, to InfoPak
shareholders in exchange for (1) all of the outstanding capital stock
of InfoPak, (2) as signing bonuses for certain employees and a
consultant of InfoPak, and (3) to satisfy InfoPak's outstanding debt
obligations to certain shareholders.
Shares of Series B Preferred were issued to holders of warrants to
purchase such preferred stock. The funding for the exercise of these
warrants was the exchange of $1,907,000 of principal amount of secured
and unsecured notes.
Shares of Series C Preferred were also issued in exchange for $262,750
of interest due under the secured and unsecured notes.
The Company raised $375,000 net of offering costs of $37,500 through
this issuance of 375,000 shares of its Series D Preferred. These
shares were issued for the purpose of raising operating funds.
The Company raised $675,000 net of offering costs of $57,000 through
this issuance of 675,000 shares of its Series E Preferred. These
shares were issued for the purpose of raising operating funds.
Note 13: Stock Option Plan and Equity Incentive Plan
The Company has adopted a stock option plan (the "Plan") covering
1,500,000 shares post-split (increased from 20,000 post-split by the
Board of Directors on January 13, 1998) of the Company's common stock
$.001 par value, pursuant to which officers, directors, key employees
and consultants of the Company are eligible to receive incentive, as
well as non-qualified stock options and Stock Appreciation Rights
("SAR's"). The Plan, which has been extended for 10 years by the Board
of Directors on January 13, 1998, and expires September 2008, will be
administered by the Board of Directors or a committee chosen
therefrom. This plan must be formally approved by the stockholders of
the Company. Incentive stock options granted under the Plan are
exercisable for a period of up to 10 years from the date of grant at
an exercise price, which is not less than the fair market value of the
F-26
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2000 AND 1999
(Information pertaining to the six months ended
December 31, 2000 and 1999 is unaudited)
Note 13: Stock Option Plan and Equity Incentive Plan (Continued)
common stock on the date of the grant, except that the terms of an
incentive stock option granted under the Plan to a stockholder owning
more than 10% of the outstanding common stock may not exceed five
years and the exercise price of an incentive stock option granted to
such a stockholder may not be less than 110% of the fair market value
of common stock on the date of the grant. Non-qualified stock options
may be granted on terms determined by the Board of Directors or a
committee designated by the Board of Directors. SAR's which give the
holder the privilege of surrendering such rights for the appreciation
in the Company's common stock between the time of grant and the
surrender, may be granted on any terms determined by the Board of
Directors or committee designated by the Board of Directors. No SAR's
have been granted.
A summary of transactions under this Plan is as follows:
Weighted
Average
Exercise
Price
Shares Per Share
---------- ----------
Options outstanding
July 1, 1997 -- $ --
Grants 1,300,000 $ .93
Cancelled -- --
---------- -------
Options outstanding
June 30, 1998 1,300,000 .93
Grants -- --
Cancelled (1,300,000) (.93)
---------- -------
Options outstanding
June 30, 1999 -- $ --
========== =======
Options exercisable
at end of year -- $ --
========== =======
F-27
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2000 AND 1999
(Information pertaining to the six months ended
December 31, 2000 and 1999 is unaudited)
Note 13: Stock Option Plan and Equity Incentive Plan (Continued)
The Company on June 13, 1996 adopted the 1996 Equity Incentive Plan
(the "Plan") covering 10,000,000 shares of the Company's common stock
$.001 par value, pursuant to which officers, directors, key employees
and consultants of the Company are eligible to receive incentive, as
well as non-qualified stock options, SAR's, and Restricted Stock and
Deferred Stock. The Plan, which expires in June 2006, will be
administered by the Compensation Committee of the Board of Directors.
Incentive stock options granted under the Plan are exercisable for a
period of up to 10 years from the date of grant at an exercise price,
which is not less than the fair market value of the common stock on
the date of the grant, except that the terms of an incentive stock
option granted under the Plan to a stockholder owning more than 10% of
the outstanding common stock may not exceed five years and the
exercise price of an incentive stock option granted to such a
stockholder may not be less than 110% of the fair market value of
common stock on the date of the grant. Non-qualified stock options may
be granted on terms determined by the Compensation Committee of the
Board of Directors. SAR's which give the holder the privilege of
surrendering such rights for the appreciation in the Company's common
stock between the time of grant and the surrender, may be granted on
any terms determined by the Compensation Committee of the Board of
Directors.
Restricted stock awards entitle the recipient to acquire shares for no
cash consideration or for consideration determined by the Compensation
Committee. The award may be subject to restrictions, conditions and
forfeiture as the Committee may determine. Deferred stock award
entitles recipient to receive shares in the future. Since inception of
this plan in 1996 through December 31, 2000, 5,102,978 shares of
common stock has been issued. For the year ended June 30, 1999,
1,519,688 shares of common stock had been issued at prices ranging
from $.1875 to $.6562 per share. For the year ended June 30, 2000,
544,000 shares of common stock have been issued at prices ranging from
$.37 to $.625 per share. In addition, as of December 31, 2000, no
options or SAR's have been granted.
F-28
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2000 AND 1999
(Information pertaining to the six months ended
December 31, 2000 and 1999 is unaudited)
Note 13: Stock Option Plan and Equity Incentive Plan (Continued)
If the Company had elected to recognize compensation expense based on
the fair value of stock plans as prescribed by FAS No. 123, the
Company's net loss and net loss per share would have been increased to
the pro forma amounts indicated below:
Year Ended June 30,
Six Months ended --------------------------
December 31, 2000 2000 1999
----------------- ----------- -----------
Net Loss available to common shareholders $(673,005) $(1,095,370) $(1,553,862)
Net Loss - pro forma $(673,005) $(1,095,370) $(1,553,862)
Net Loss per share - as reported $ (.07) $ (.18) $ (.39)
Net Loss per share - pro forma $ (.07) $ (.18) $ (.39)
The weighted-average fair value at the date of grant for options
granted in 2000 was $.25. The fair value of each option grant is
estimated on the date of grant using the Black-Scholes Option Pricing
Model. The following weighted average assumptions were used: no
dividends; expected volatility factor of 140%; risk-free interest of
5%; and an expected life of five years. The compensation expense and
pro forma net loss may not be indicative of amounts to be included in
future periods.
F-29
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2000 AND 1999
(Information pertaining to the six months ended
December 31, 2000 and 1999 is unaudited)
Note 14: Income Taxes
The tax effects of significant items comprising the Company's net
deferred taxes as of June 30, 2000 were as follows:
Deferred tax assets:
Goodwill $ 284,000
Net operating loss carryforwards 6,769,000
-----------
7,053,000
-----------
Deferred tax liabilities
Allowance for bad debts 191,000
Equipment 26,000
Patent rights 3,000
-----------
220,000
-----------
Net deferred tax asset 6,833,000
Valuation allowance (6,833,000)
-----------
Net deferred tax asset reported $ --
===========
The change in valuation allowance for the year ended June 30, 1999 was
increased by approximately $571,000.
There was no provision for current income taxes for the years ended
June 30, 2000 and 1999. Additionally there was no provision for
current income taxes for the six months ended December 31, 2000 and
1999.
The federal net operating loss carryforwards of approximately
$19,070,000 expires in various years through 2020. In addition the
Company has state carryforwards of approximately $3,175,000.
The Company has had numerous transactions in its common stock. Such
transactions may have resulted in a change in the Company's ownership,
as defined in the Internal Revenue Code Section 382. Such change may
result in an annual limitation on the amount of the Company's taxable
income which may be offset with its net operating loss carryforwards.
The Company has not evaluated the impact of Section 382, if any, on
its ability to utilize its net operating loss carryforwards in future
years.
F-30
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2000 AND 1999
(Information pertaining to the six months ended
December 31, 2000 and 1999 is unaudited)
Note 16: Segment of Business Reporting
The operations of the Company are divided into the following business
segments for financial reporting purposes.
* Lithographically printed stereoscopic prints commonly referred to
as three-dimensional prints and litho-graphically printed
animation.
* Hardware and software information and audio playback systems and
method products and programs.
There are no intersegment or foreign sales. For the period ended
December 31, 2000 four customers accounted for approximately 79% of
the lithographic sales and one customer accounted for 100% of the
hardware and software information and playback systems. For the year
ended June 30, 2000 three customers accounted for approximately 82% of
the lithographic sales and two customers accounted for approximately
98% of the hardware and software information and playback systems. For
the year ended June 30, 1999 three customers accounted for
approximately 47% of the lithographic sales and two customers
accounted for approximately 94% of the hardware and software
information and playback systems.
The Company had retained an investment banking firm to assist in the
sale of its subsidiary, InfoPak, Inc., which is responsible for the
hardware and software information and audio playback systems. To date,
a buyer has not been found. The Company will continue to support the
operations of InfoPak until it is sold or the Board of Directors
decides to discontinue its operations. In the event that InfoPak, Inc.
is sold, management does not expect a loss on the sale.
Financial information by business segments is as follows:
Year Ended June 30, 1999
------------------------------------------
Hardware
Lithographic and Software Consolidated
------------ ------------ ------------
Net customer sales $ 613,989 $ 127,912 $ 741,901
Interest income -- 18,188 18,188
Interest expense 207,726 -- 207,726
Operating loss (852,174) (22,093) (874,267)
Segment assets 469,526 61,447 530,973
Depreciation and amortization 33,955 12,217 46,172
--------- --------- ---------
$ -- $ 402,006 $ 402,006
========= ========= =========
F-31
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2000 AND 1999
(Information pertaining to the six months ended
December 31, 2000 and 1999 is unaudited)
Note 16: Segment of Business Reporting (Continued)
Year Ended June 30, 2000
------------------------------------------
Hardware
Lithographic and Software Consolidated
------------ ------------ ------------
Net customer sales $ 983,731 $ 25,131 $1,008,862
Interest income 14,182 -- 14,182
Interest expense 173,878 -- 173,878
Operating loss (705,603) (139,132) (844,735)
Segment assets 1,051,323 60,893 1,112,216
Depreciation and amortization 42,097 202 42,299
Six Months Ended December 31, 2000
------------------------------------------
Hardware
Lithographic and Software Consolidated
------------ ------------ ------------
Net customer sales $ 161,049 $ 1,947 $ 162,996
Interest income 2,758 -- 2,758
Interest expense 6,853 -- 6,853
Operating loss (582,000) (15,108) (597,108)
Segment assets 368,847 4,582 373,429
Depreciation and amortization 126,739 207,885 334,624
F-32
====================================== ======================================
You should rely only on the
information contained in this document
or that we have referred to you. We
have not authorized anyone to provide Dimensional Visions Incorporated
you with information that is
different. The delivery of this
prospectus and any sale made by this
prospectus doesn't imply that there
haven't been changes in the affairs of
Dimensional Visions since the date of
this prospectus. This prospectus does
not constitute an offer or
solicitation by anyone in any
jurisdiction in which such offer or
solicitation is not authorized or in
which the person making such offer or
solicitation is not qualified to do so
or to anyone to whom it is unlawful to
make such offer or solicitation.
----------
TABLE OF CONTENTS
Page 33,681,207
---- Shares of Common Stock
Prospectus Summary 1
Risk Factors 4
Use of Proceeds 7
The Swartz Investment Agreement 7
Market for Common Stock and --------------
Related Stockholder Matters 10
Dividend Policy 10 PROSPECTUS
Management's Discussion and
Analysis of Financial Condition --------------
and Results of Operations 11
Business of Dimensional Visions 15
Management 18
Employment and Related Agreements 20
Certain Transactions 20
Principal Stockholders 21
Selling Stockholders 23
Plan of Distribution 24
Description of Securities 26
Legal Matters 27
Experts 28
Financial Statements F-1
----------
DEALER PROSPECTUS DELIVERY
OBLIGATION. Until May 3, 2001 (90 days
after the date of this prospectus),
all dealers effecting transactions in
the registered securities, whether or
not participating in the distribution,
may be required to deliver a
prospectus. This delivery requirement
is in addition to the obligation of March 6, 2001
dealers to deliver a prospectus when
acting as underwriters with respect to
their unsold allotments or
subscriptions.
====================================== ======================================
DIMENSIONAL VISIONS INCORPORATED
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The company is required by its Bylaws and Certificate of Incorporation to
indemnify, to the fullest extent permitted by law, each person that the company
is permitted to indemnify. The company's Charter requires it to indemnify such
parties to the fullest extent permitted by Sections 102(b)(7) and 145 of the
Delaware General Corporation Law.
Section 145 of the Delaware General Corporation Law permits the company to
indemnify its directors, officers, employees, or agents against expenses,
including attorneys fees, judgments, fines and amounts paid in settlements
actually and reasonably incurred in relation to any action, suit, or proceeding
brought by third parties because they are or were directors, officers,
employees, or agents of the corporation. In order to be eligible for such
indemnification, however, the directors, officers, employees, or agents of the
company must have acted in good faith and in a manner they reasonably believed
to be in, or not opposed to, the best interests of the company. In addition,
with respect to any criminal action or proceeding, the officer, director,
employee, or agent must have had no reason to believe that the conduct in
question was unlawful.
In derivative actions, the company may only indemnify its officers, directors,
employees, and agents against expenses actually and reasonably incurred in
connection with the defense or settlement of a suit, and only if they acted in
good faith and in a manner they reasonably believed to be in, or not opposed to,
the best interests of the corporation. Indemnification is not permitted in the
event that the director, officer, employee, or agent is actually adjudged liable
to the Corporation unless, and only to the extent that, the court in which the
action was brought so determines.
The company's Certificate of Incorporation permits the company to indemnify its
directors except in the event of: (1) a breach of the duty of loyalty to the
company or its stockholders; (2) an act or omission that involves intentional
misconduct or a knowing violation of the law and an act or omission not in good
faith; (3) liability arising under Section 174 of the Delaware General
Corporation Law, relating to unlawful stock purchases, redemptions, or payment
of dividends; or (4) a transaction in which the potential indemnity received an
improper personal benefit.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers, or persons controlling the company pursuant to
the foregoing provisions, the company has been informed that in the opinion of
the Commission, such indemnification is against public policy as expressed in
the Act and is therefore unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC Registration Fee $ 2,147
Accounting Fees and Expenses $ 3,500
Legal Fees and Expenses $ 10,000
Printing Expenses $ 2,500
Miscellaneous $ 1,853
---------
Total $ 20,000
=========
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On April 29, 1999, the company completed a private placement (the "1999 Debt
Private Placement") of $235,000 of its short-term debt securities. The loans
were 12% convertible debentures with due dates ranging from July 25, 1999,
through October 29, 1999. The company also issued to the debenture holders three
year warrants which expire January 25, 2002, to purchase the company's common
stock at $.25 per share for 85,000 warrants and $.10 per share for 150,000
warrants. The 1999 Debt Private Placement was exempt from the registration
provisions of the Securities Act of 1933, as amended (the "Act") by virtue of
Section 4(2) of the Act, as transactions by an issuer not involving any public
offering. The securities issued pursuant to the 1999 Debt Private Placement were
II-1
restricted securities as defined in Rule 144 of the Act. The offering generated
net proceeds of approximately $211,500. The Company relied on Rule 506 of
Regulation D of the Act in making this private placement. There was no
underwriter involved in this private placement. The nine investors in the 1999
Debt Private Placement were accredited investors as that term is defined in Rule
501 of Regulation D adopted under the Act.
On September 1, 1999, the company completed a private placement (the "Series D
Private Placement") of 375,000 units of its securities (the "Units"), each unit
consisting of one share of Series D Convertible Preferred Stock which is
convertible into two shares of common stock of the company and one warrant,
exercisable at $0.25 and expiring 120 days after the date of effectiveness of a
registration statement of the company, at $1.00 per Unit, minimum investment
$50,000. The Series D Private Placement was exempt from the registration
provisions of the Securities Act of 1933, as amended (the "Act") by virtue of
Section 4(2) of the Act, as transactions by an issuer not involving any public
offering. The securities issued pursuant to the Series D Private Placement were
restricted securities as defined in Rule 144 of the Act. The offering generated
net proceeds of approximately $357,500. The Company relied on Rule 506 of
Regulation D of the Act in making this private placement. There was no
underwriter involved in this private placement. The twenty-one investors in the
Series D Private Placement were accredited investors as that term is defined in
Rule 501 of Regulation D adopted under the Act.
On December 30, 1999, the company completed a private placement (the "Series E
Private Placement") of 675,000 units of its securities (the "Units"), each unit
consisting of one share of Series E Convertible Preferred Stock which is
convertible into one share of common stock of the company and one warrant,
exercisable at $0.50 and expiring 120 days after the date of effectiveness of a
registration statement of the company, at $1.00 per Unit, minimum investment
$50,000. The Series E Private Placement was exempt from the registration
provisions of the Securities Act of 1933, as amended (the "Act") by virtue of
Section 4(2) of the Act, as transactions by an issuer not involving any public
offering. The securities issued pursuant to the Series E Private Placement were
restricted securities as defined in Rule 144 of the Act. The offering generated
net proceeds of approximately $618,000. The Company relied on Rule 506 of
Regulation D of the Act in making this private placement. There was no
underwriter involved in this private placement. The thirteen investors in the
Series E Private Placement were accredited investors as that term is defined in
Rule 501 of Regulation D adopted under the Act.
On December 13, 2000, the company entered into an agreement with Swartz Private
Equity. Included in the agreement is the possible sale from time to time of
25,000,000 shares and 1,309,000 shares underlying warrants by Swartz Private
Equity, LLC. This transaction was exempt from the registration provisions of the
Securities Act of 1933, as amended (the "Act") by virtue of Section 4 (2) of the
Act, as transactions by an issuer not involving any public offering.
On January 12, 2001, the company entered into a line of credit investment
agreement with an investor group consisting of Dale Riker and Russ Ritchie. The
agreement includes the possible sale from time to time of 50,000 shares, 350,000
shares underlying warrants, 400,000 shares underlying warrants to be issued
pursuant to an investment agreement and 1,500,000 shares held upon conversion of
debt pursuant to a line of credit investment agreement with an investor group
consisting on Dale Riker and Russ Ritchie. This transaction was exempt from the
registration provisions of the Securities Act of 1933, as amended (the "Act") by
virtue of Section 4 (2) of the Act, as transactions by an issuer not involving
any public offering. The two investors were accredited investors as that term is
defined in Rule 501 of Regulation D Adopted under the Act.
On January 12, 2001, the company formulated an approved incentive plan. The
incentives include the possible sale from time to time of 4,900,000 shares
underlying warrants to be issued to the employees of the Company if we are
profitable at June 30, 2001 or upon the discretion of the Board of Directors.
This transaction was exempt from the registration provisions of the Securities
Act of 1933, as amended (the "Act") by virtue of Section 4 (2) of the Act, as
transactions by an issuer not involving any public offering.
II-2
ITEM 27. EXHIBITS
EXHIBIT
(a) Exhibits
3.1(a) Certificate of Incorporation, dated May 12, 1988
3.2(a) Bylaws
4.1(a) Certificate of Designation of Series A Convertible Preferred
Stock, dated December 12, 1992
4.2(a) Certificate of Designation of Series B Convertible Preferred
Stock, dated December 22, 1993
4.3(a) Certificate of Designation of Series P Convertible Preferred
Stock, dated September 11, 1995
4.4(a) Certificae of Designation of Series S Convertible Preferred
Stock, dated August 28, 1995
4.5(a) Certificate of Designation of Series C Convertible Preferred
Stock, dated November 2, 1995
4.6(a) Certificate of Designation of Series D and Series E
Convertible Preferred Stock, dated August 25, 1999
4.7(a) Form of Warrant Agreement to debt holders, dated January 15,
1998
4.8(a) Form of Warrant Agreement to debt holders, dated April 8, 1998
4.9(a) Form of Warrant Agreement to participants in Private Placement
dated April 8, 1998
4.10 Pledge Agreement dated January 11, 2001
4.11 Investment Agreement dated December 13, 2000, with Swartz
Private Equity, LLC
5.0 Opinion of Senn Palumbo Meulemans, LLP
10.1(a) 1996 Equity Incentive Plan
10.2(a) 1999 Stock Option Plan
10.3(a) Agreement dated September 25, 1997 by and between InfoPak,
Inc., DataNet Enterprises, LLC, and David and Staci Noles
10.4 Lease Agreement, dated October 27, 1997
21.1 Subsidiaries of the Registrant
24.1 Consent of Senn Palumbo Meulemans, LLP (included in their
opinion set forth in Exhibit 5 hereto)
24.2 Consent of Gitomer & Berenholz, P.C.
24.3 Consent of Kopple & Gottlieb, LLP
25.1 Power of Attorney (see signature page)
- ----------
(a) Incorporated by reference to the Registrant's Registration Statement on
Form SB-2 filed with the SEC on June 19, 2000, Registration Number
333-30368.
ITEM 28. UNDERTAKINGS
The undersigned registrant hereby undertakes to:
(1) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of Dimensional Visions
pursuant to the foregoing provisions, or otherwise, Dimensional Visions has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, Dimensional Visions will, unless in the opinion of its counsel the
matter has been settled by controlling precedent submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
(2) File, during any period in which it offers or sells securities, a post
effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the Act;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in
the registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
For determining liability under the Act, treat each post-effective amendment as
a new registration statement of the securities offered, and the offering of the
securities at that time to be the initial bona fide offering.
II-4
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of Phoenix,
State of Arizona on March 6, 2001.
DIMENSIONAL VISIONS INCORPORATED
By: /s/ Roy D. Pringle By: /s/ John D. McPhilimy
------------------------------ -------------------------------
Roy D. Pringle, Chief Financial John D. McPhilimy, President, Chief
Executive Officer Officer, Director
POWER OF ATTORNEY
Each person whose signature appears appoints John D. McPhilimy as his agent and
attorney-in-fact, with full power of substitution to execute for him and in his
name, in any and all capacities, all amendments (including post-effective
amendments) to this Registration Statement to which this power of attorney is
attached. In accordance with the requirements of the Securities Act of 1933, the
following persons in the capacities and on the dates stated signed this
Registration Statement.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ John D. McPhilimy President, Chief Executive March 6, 2001
- ------------------------- Officer, Director
John D. McPhilimy
/s/ Roy D. Pringle Vice President, Chief Financial March 6, 2001
- ------------------------- Officer, Director, Secretary
Roy D. Pringle
/s/ Bruce D. Sandig Senior Vice President, Director March 6, 2001
- -------------------------
Bruce D. Sandig
/s/ Susan A. Perlow Director March 6, 2001
- -------------------------
Susan A. Perlow
II-5
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
4.10 Pledge Agreement dated January 11, 2001
4.11 Investment Agreement dated December 13, 2000, with Swartz
Private Equity, LLC 5.0 Opinion of Senn Palumbo Meulemans, LLP
10.4 Lease Agreement, dated October 27, 1997
21.1 Subsidiaries of the Registrant
24.1 Consent of Senn Palumbo Meulemans, LLP (included in their
opinion set forth in Exhibit 5 hereto)
24.2 Consent of Gitomer & Berenholz, P.C.
24.3 Consent of Kopple & Gottlieb, LLP
25.1 Power of Attorney (see signature page)