As filed with the Securities and Exchange Commission on July __, 1998June 3, 1999
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
INSIGNIA SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1656308
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10801 Red Circle Drive
Minnetonka,5025 Cheshire Lane
Plymouth, Minnesota 5534355446
(612) 930-8200392-6200
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive office)
------------------
Scott F. Drill
President, Chief Executive Officer
Insignia Systems, Inc.
10801 Red Circle Drive
Minnetonka,5025 Cheshire Lane
Plymouth, Minnesota 5534355446
(612) 930-8200392-6200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------
COPIES TO:
John Whisnant, Esq. Richard D. McNeil, Esq.
Chief Financial Officer Kristin L. Johnson, Esq.
Insignia Systems, Inc. Lindquist & Vennum P.L.L.P.
5025 Cheshire Lane 4200 IDS Center
Plymouth, Minnesota 55446 80 South Eighth Street
Telephone: (612) 392-6200 Minneapolis, Minnesota 55402
Telephone: (612) 371-3211
Approximate date of commencement of proposed sale to public: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: |X|[X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earliest effective registration
statement for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
==========================================================================================================
Proposed Proposed
Maximum Maximum
Amount to be Offering Aggregate Amount of
Title of Each Class of Registered Price Offering Price Registration
Securities to be Registered Per Unit Fee
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Common Stock, no par value................................... 2,470,000 (1) $2.5625(2) $6,329,375(2) $1,868value................. 75,000 $1.375(1) $103,125(1) $29
- ------------------------------------------------------------- --------------- ------------- ---------------- -------------------------------------------------------------------------------------------------------------------------
(1) Issuable upon exercise of outstanding warrants.
(2) Estimated solely for the purpose of determining the registration fee based
on the average of the closing bid and asked pricesprice of the Company's Common Stock on the Nasdaq SmallCap Market
on July 28, 1998June 1, 1999 pursuant to Rule 457(c).
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 THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES, AND IT IS NOT A SOLICITATION TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS
SUBJECT TO COMPLETION
JUNE 3, 1999
INSIGNIA SYSTEMS, INC.
2,470,00075,000 SHARES OF
COMMON STOCK
This Prospectus relates to the saleThese shares of up to 2,470,000 shares (the
"Shares") of Common Stock of Insignia Systems, Inc. (the "Company") which may be
offered from time to timeour common stock are being sold by the three selling
shareholders named herein (the "Selling
Shareholders"). Of the Shares being offered, 1,600,000 Shares are now owned by
the Selling Shareholders and 870,000 Shares may be obtained by them by exercise
of stock purchase warrants (the "Warrants") held by the Selling Shareholders
which have an exercise price of $1.625 per Share and expirelisted on June 24, 2001.
The Company will receive proceeds upon the exercise of the Warrants, butpage 5, or their transferees, pledgees, donees or other
successors in interest. We will not receive any part of the proceeds from the
sale of the Shares by the Selling
Shareholders. See "Use of Proceeds."
The Company will bear all expenses of the offering hereunder other than
underwriting discounts and commissions incurred in connection with the sale of
the Shares by the Selling Shareholders. The Company's Common Stocksale.
Our common stock is tradedlisted on the NASDAQNasdaq SmallCap Market under the
symbol "ISIG". The closing bidreported last sale price of the Company's Common Stockcommon stock on July 28, 1998June 1, 1999,
was $2.5625$1.375 per share, as reported by
NASDAQ.share.
THIS OFFERINGINVESTMENT INVOLVES A HIGH DEGREE OF RISK. SEE " RISK"RISK FACTORS" BEGINNING ON
PAGE 4 OF THIS PROSPECTUS.
The Selling Shareholders have advised the Company that they intend to
sell the Shares from time to time in transactions on the Nasdaq SmallCap Market
at prices prevailing at the time of the sale or otherwise as set forth below.
The Selling Shareholders have also advised the Company that, as of the date
hereof, they have made no arrangement with any brokerage firm for the sale of
the Shares. The Selling Shareholders may be deemed to be "underwriters" within
the meaning of the Act, in which case any commissions received by a broker or
dealer may be deemed to be underwriting commissions or discounts under the Act.
See "Plan of Distribution."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY3.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION ORNOR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSIONAPPROVED OR ANY STATEDISAPPROVED THESE SECURITIES, COMMISSIONOR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PRICE TO UNDERWRITING PROCEEDS TO PROCEEDS TO SELLING
PUBLIC DISCOUNTS AND ISSUER SHAREHOLDERS
COMMISSIONS
Per Share $2.5625(1) (2) None $2.5625(1)
- ------------------------------- ------------------- --------------------------- ----------------- --------------------------
Total $6,329,395(1) (2) None $6,329,375(1)
- ------------------------------- ------------------- --------------------------- ----------------- --------------------------
(1) Estimated based on a per share price of $2.5625 as of July 28, 1998 and
assuming the sale of all Shares by the Selling Shareholders, with no
adjustment for commissions, discounts, brokerage and other fees that
may be paid by the Selling Shareholders, or expenses of the offering to
be paid by the Company.
(2) Commissions, discounts and brokerage fees will be payable to the
Selling Shareholders in such amounts as the Selling Shareholders may
agree to from time to time.
THE DATEJUNE __, 1999
TABLE OF THISCONTENTS
PAGE
PROSPECTUS IS JULY __, 1998SUMMARY.............................................................2
RISK FACTORS...................................................................3
YEAR 2000 ISSUES...............................................................5
USE OF PROCEEDS................................................................5
SELLING SHAREHOLDERS...........................................................5
PLAN OF DISTRIBUTION...........................................................6
LEGAL MATTERS..................................................................6
EXPERTS ......................................................................6
INDEMNIFICATION................................................................6
WHERE YOU CAN FIND INFORMATION.................................................7
2
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy and information
statements and other information can be inspected and copied at the public
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C., and the Commission's regional offices located at 7 World Trade
Center, 14th Floor, New York, New York 10048, and Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. Electronic
filings made through the Electronic Data Gathering Analysis and Retrieval System
are also publicly available through the Securities and Exchange Commission's Web
Site (http://www.sec.gov).
The Company has filed with the Commission a registration statement
under the Securities Act of 1933 with respect to the shares offered hereby. This
Prospectus does not contain all information set forth in such registration
statement. For further information with respect to the Company and the shares
offered hereby, reference is made to such registration statement, including the
exhibits and financial schedules filed as part thereof. Such information may be
inspected at the Chicago regional office of the Commission at Northwestern
Atrium Center, 500 West Madison, Suite 1400, Chicago, Illinois 60661 and at the
public reference facilities at 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies thereof may be obtained from the Commission at prescribed prices.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated by reference in this Prospectus: (i) the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997; (ii) the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998;
(iii) the Company's Proxy Statement dated April 15, 1998 for the 1998 Annual
Meeting of Shareholders on May 21, 1998; and (iv) the description of the
Company's Common Stock contained in the Company's Form S-18 Registration
Statement, Registration No. 33-40765-C. All documents filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15 of the 1934 Act after the date of
this Prospectus and prior to the termination of the offering of securities
contemplated hereby shall also be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded hereby to the extent that a
statement contained herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus has been delivered, upon the written or oral request of such
person, a copy of any or all of the documents which are incorporated by
reference into this Prospectus, other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference in such documents.)
Requests for such copies should be directed to Scott F. Drill, Insignia Systems,
Inc., 10801 Red Circle Drive, Minnetonka, Minnesota 55343, telephone number
(612) 930-8200.
2
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PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS AND
IN DOCUMENTS INCORPORATED HEREIN BY REFERENCE.
THE COMPANYABOUT INSIGNIA SYSTEMS
Insignia Systems Inc. (the "Company") markets software, services and supplies for production
of point-of-purchase signs by retailers. The Company'sOur Stylus software is used by retail
stores to produce signs and posters by importing information from a computer
database and then electronically transmitting it to store-level printers. The Company hasWe
have recently developed and introduced a new service, called the Insignia
POPS(TM) program, in which the
Company enterswe enter into agreements with manufacturers of brand
name consumer products under which the Company is paidfood products. These food manufacturers pay us to collect,
organize and format productpromotional messages and artproduct clip-art provided by the
manufacturer and to transmit thatmanufacturer. Insignia Systems combines this information
to the retailer, who combines it with the retailer'sstore's logo,
designs, color and pricing information and produces point-of-purchase signs.signs,
before forwarding the signs to the store. We pay the retailer a fee from the
food manufacturer's payment to us. The CompanyPOPS(TM) program increases product sales
by the manufacturer and provides the retailer an additional revenue source.
Insignia Systems was incorporated in 1990 under the laws of the State
of Minnesota. ItsOur principal executive offices are located at 10801 Red Circle
Drive, Minnetonka,5025 Cheshire Lane,
Plymouth, Minnesota 5534355446 and itsour telephone number is (612) 930-8200.392-6200.
THE OFFERING
The 2,470,000 Shares being offered byselling shareholders are offering 75,000 shares of common stock. We
issued these shares to the Selling Shareholders consistselling shareholders under the terms of 1,600,000 Shares now owned bya settlement
agreement between Insignia Systems and Meta-4, Inc. on March 26, 1999. We are
registering the Selling Shareholders and an additional
870,000 Shares which may be purchased in whole or in part by the Selling
Shareholders pursuant to Warrants which have an exercise priceresale of $1.625 per
Share and expire on June 24, 2001. The 1,600,000 Shares and 800,000 Warrants
were issued by the Company on June 25, 1998 in a private placement of 1,600,000
units, each consisting of one Share and a Warrant to purchase one-half of one
Share, for a purchase price of $1.25 per unit. Warrants for an additional 70,000these shares were issued on June 25, 1998 for consultation services. The closing bid
price of the Company's common stock on the NASDAQ SmallCap Market on June 25,
1998, the date the units were issued was $1.6875 per share. The reason that
resales of the Shares are being registered is to permit the Sharesselling shareholders to
be resold
byresell the Selling Stockholdersshares in the public market.
Common Stockstock offered by Selling Shareholders......... 2,470,000the selling shareholders.................... 75,000
Common Stockstock outstanding after offering (1).......... 10,967,721
NASDAQ Symbol........................................as of June 1, 1999......................... 8,651,496
Nasdaq SmallCap Market Symbol....................................... ISIG
(1) Assumes the exercise of the Warrants. Excludes 1,293,004 shares of common
stock issuable upon exercise of outstanding warrants and outstanding stock
options granted pursuant to the Company 1990 Stock Plan.
USE OF PROCEEDS
If all of the Warrants are exercised, the gross proceeds to the Company
will be $1,413,750, though there is no assurance that any of the Warrants will
be exercised. After payment of the Company's expenses relating to this offering,
which are estimated to be approximately $12,500, any remaining net proceeds will
be added to the Company's working capital and used for general corporate
purposes. The CompanyInsignia Systems will not receive any proceeds from salesthe sale of the
Shares by
the Selling Shareholders.common stock. See "USE OF PROCEEDS."Use of Proceeds."
RISK FACTORS
This offering involves substantialcertain investment risk and the Shares
should be purchased only by persons who can afford the loss of their entire
investment.risks. See "RISK FACTORS."Risk Factors."
3
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RISK FACTORS
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY IS HIGHLY SPECULATIVE
AND INVOLVES A HIGH DEGREE OF RISK. INVESTORS COULD LOSE THEIR ENTIRE
INVESTMENT. PROSPECTIVE INVESTORSYOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS, ALONG WITHRISKS BEFORE MAKING AN
INVESTMENT DECISION. THE RISKS DESCRIBED BELOW ARE NOT THE ONLY ONES THAT WE
FACE. OUR BUSINESS, OPERATING RESULTS OR FINANCIAL CONDITION COULD BE MATERIALLY
ADVERSELY AFFECTED BY ANY OF THE FOLLOWING RISKS. THE TRADING PRICE OF OUR
COMMON STOCK COULD DECLINE DUE TO ANY OF THESE RISKS, AND YOU MAY LOSE ALL OR
PART OF YOUR INVESTMENT. YOU SHOULD ALSO REFER TO THE OTHER INFORMATION SET FORTHINCLUDED
OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, IN EVALUATING THE COMPANY, ITS BUSINESSINCLUDING OUR FINANCIAL
STATEMENTS AND PROSPECTS BEFORE
PURCHASING THE SECURITIES OFFERED HEREBY. THIS PROSPECTUS CONTAINS
FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S
ACTUAL RESULTS OF OPERATIONS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN
THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE
SET FORTH IN THE FOLLOWING RISK FACTORS AND ELSEWHERE IN THIS PROSPECTUS.RELATED NOTES.
WE HAVE INCURRED OPERATING LOSSES The CompanyIN EACH OF THE PAST FOUR YEARS.
Insignia Systems was incorporated in January 1990 and had an
accumulated deficit of ($10,838,867)13,029,958) as of March 31, 1998.1999. For 1995, 1996, 1997,
1998 and the first three months of 1998 the Company1999 we experienced net losses of
($1,451,402), ($999,226), ($3,379,512), ($3,415,579) and ($1,484,218)259,731),
respectively. The Company anticipatesWe anticipate that itwe will continue to experience losses through
the fourth quarter of 1998,
but there is1999, and we can give no assurance that the Companywe will achieve
profitability thereafter.
OUR LIQUIDITY IS DEPENDENT UPON OUR LINE OF CREDIT AND SHORT-TERM SECURED DEBT
As of March 31,ALL OF OUR ASSETS SECURE
OUR DEBT.
In September 1998, the Company's indebtedness to itswe amended our credit agreement with our asset based
lender was $703,392. Thisto provide for a voluntary temporary suspension of our line of credit. We
anticipate, however, reinstating the line of credit in June 1999. Any and all
future indebtedness iswill be secured by a security interest in substantially all
of the Company'sour assets and iswill be payable on demand. The credit line expireswas also amended to
expire on December 29, 1999.approximately July 1, 2000. The lender has no obligation to make
additional advances to the Company,us, and all advances made must be supported by a
borrowing base of the Company'sour accounts receivable and inventory. If the lender were to
demand repayment in full of the Company'sour indebtedness to it, the
Companywe would need to seek
replacement financing in order to avoid a substantial disruption of itsour business
and depletion of all itsour cash. There isWe can give no assurance that such replacement
financing would be available, or that the terms on which it might be available
would be reasonable from the Company's point of view.
COSTS AND RISKSto us.
OUR RESULTS WILL DEPEND ON THE SUCCESS OF NEW PRODUCT INTRODUCTION
The Company has recently introduced a new service, referred to as
Insignia POPS.OUR INSIGNIA POPS PROGRAM.
In order to achieve and maintain profitability, thisour Insignia POPS
service program, which we introduced in early 1998, needs to achieve national
program status through a combination of use at approximately 3,0003,500 retail
locations. There islocations with 5 signs per cycle. In order to obtain participating manufacturers
and retailers at the rate we have anticipated, this service program must achieve
increases in food product sales that are comparable to the results to date. In
achieving these results, Insignia POPS will be competing for the marketing
expenditures of branded product manufacturers who use various forms of
point-of-purchase marketing methods, such as displays, coupons and in-store
samples. We can give no assurance that the Company will be successful in
introducingour Insignia POPS or that itservice will achieve
marketplace acceptance or profitability.
POSSIBLE WRITEDOWN OF CERTAIN INVENTORY
In April 1998 the Company discontinued sale of the SIGNright machine.
The Company presently has approximately 400 SIGNright machines in inventoryprofitability or that it will compete successfully
with a recorded cost of approximately $200,000. Depending on how the Company
determines to liquidate this inventory, there is no assurance that the Company
will recover its cost.
4
these traditional marketing methods.
WE DEPEND SIGNIFICANTLY ON OUR SIGN CARD REVENUE
The Company derivesREVENUE.
We derive a significant portion of itsour revenue from the sale of the bar
coded sign cards required by the Impulse and SIGNright machines which werewe
formerly sold by the Company.sold. If competitors are able to reproduce
4
the barcode and successfully market sign cards bearing it thereor if a substantial
number of existing customers discontinue using the sign card, our revenue could
be a serious
adverse effect on the Company's revenue.materially adversely affected.
PRODUCTION OF OUR SIGN CARD SUPPLIERSCARDS DEPENDS EXCLUSIVELY ON A SINGLE SOURCE.
The thermal paper used by the Companywe use in itsour sign cards is purchased exclusively
from one supplier. While the Companywe believes that an alternative supplier would be
available if necessary, any disruption in the relationship with or deliveries by
the current supplier could have a serious adverse effect on the Company.
COMPETITION
The two main competitors of the Company's Stylus product are dESIGN,
Inc. (a privately-held company based in Seattle, WA) and Electronic Label
Technology, Inc. (a privately-held company based in Oklahoma City, OK). Insignia
POPS competes for the marketing expenditures of branded product manufacturers,
who use various forms of point of purchase marketing methods, such as displays,
coupons, in-store samples, etc. The POPS program also competes with other
companies, such as ACTMEDIA, INCORPORATED and Catalina Marketing, which provide
in-store marketing programs to retailers. There is no assurance that Insignia
POPS will compete successfully with these traditional and alternative marketing
methods.
DEPENDENCE ON KEY EMPLOYEES
The Company is highly dependent upon the services of its present
officers, and the loss of any of them could have a material adverse effect on
the Company. None of the Company's officers are bound by employment or
noncompetition agreements with the Company. The success of the Company will also
depend on its ability to attract and retain capable sales and marketing
personnel.
CONTINUEDour results.
WE MAY NOT BE ABLE TO MAINTAIN OUR ELIGIBILITY FOR THE NASDAQ SMALLCAP MARKET
In order for the Company's Common Stockour common stock to continue to be traded on the NASDAQNasdaq
SmallCap Market, the Companywe must maintain at least $2 million of "net tangible assets"
(defined as the book value of total assets, minus intangible assets, minus all
liabilities), have a bid price for the Common Stockour common stock of at least $1 per share,
have a public float of 500,000 shares, and meet certain other criteria. There isWe can
give no assurance that the Companywe will be able to maintain continued eligibility for
inclusion on the NASDAQNasdaq SmallCap Market, and loss of eligibility would impair
the marketability of our common stock.
THIS PROSPECTUS CONTAINS AND INCORPORATES BY REFERENCE CERTAIN
FORWARD-LOOKING STATEMENTS BASED ON CURRENT EXPECTATIONS WHICH INVOLVE RISKS AND
UNCERTAINTIES. ACTUAL RESULTS AND THE TIMING OF CERTAIN EVENTS MAY DIFFER
MATERIALLY FROM THOSE PROJECTED IN SUCH FORWARD-LOOKING STATEMENTS DUE TO A
NUMBER OF RISK FACTORS, INCLUDING THOSE SET FORTH BELOW. WE HAVE TRIED, WHEREVER
POSSIBLE, TO IDENTIFY THESE FORWARD-LOOKING STATEMENTS BY USING WORDS SUCH AS
"BELIEVE," "ANTICIPATE," "ESTIMATE," "EXPECT" AND SIMILAR EXPRESSIONS. WE
UNDERTAKE NO OBLIGATION TO RELEASE PUBLICLY THE RESULTS OF ANY REVISIONS TO ANY
SUCH FORWARD-LOOKING STATEMENTS THAT MAY BE MADE TO REFLECT EVENTS OR
CIRCUMSTANCES AFTER THE DATE OF THIS PROSPECTUS OR TO REFLECT THE OCCURRENCE OF
UNANTICIPATED EVENTS.
5
YEAR 2000 ISSUES
The Year 2000 issue is the Company's Common Stock.
MARKET OVERHANG FROM WARRANTS AND OPTIONS
In additionresult of computer programs being written
using two digits rather than four to define the Warrantsapplicable year. Our computer
equipment, software, devices and products with imbedded technology that are
time-sensitive may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a shut down in our
manufacturing operations, a temporary inability to process transactions, send
invoices or engage in similar normal business activities. A detailed description
of our Year 2000 State of Readiness, Costs to address the Year 2000 issue, Risks
of the Year 2000 issue and our Contingency Plans are contained in our Form 10-K
for the purchase of 870,000 Shares, the
Company has outstanding options and warrants for the purchase of an additional
1,293,004 shares of common stock. The exercise of a significant portion of the
Warrants and existing stock options and resale of the common stock thereby
obtained could depress the trading price of the Company's common stock.
5
LACK OF DIVIDENDS
The Company has never paid and does not plan to pay any dividends on
its Common Stock in the foreseeable future.fiscal year ended December 31, 1998.
USE OF PROCEEDS
If all of the Warrants are exercised, the gross proceeds to the Company
will be $1,413,750, though there is no assurance that any of the Warrants will
be exercised. After payment of the Company's expenses relating to this offering,
which are estimated to be approximately $12,500, any remaining net proceeds will
be added to the Company's working capital and used for general corporate
purposes. The CompanyWe will not receive any proceeds from salesthe sale of the Sharesshares offered in
this prospectus by the Selling Shareholders.selling shareholders.
SELLING SHAREHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common StockInsignia common stock by the Selling Shareholdersselling shareholders as of
July 29,1998, and as adjusted to reflect the sale of Shares obtained by
the Selling Shareholders through the exercise of the Warrants.June 1, 1999:
NAME NUMBER OF SHARES MAXIMUM NUMBER OF SHARES TO BE BENEFICIALLY
BENEFICIALLY OWNED SHARES TO BE SOLD (1)Common Stock Number of
Beneficially Shares of Owned After
Owned Prior to Common Stock Offering(1)(2)
OWNED AFTER THE OFFERING(1)(2)
PRIOR TO OFFERING
NUMBER PERCENTSelling Shareholder Offering Offered(1) Number Percent
------------------- -------- ---------- ------ -------
Ramsdell Irrevocable Trust U/A/D 12/28/92 208,000 168,000 40,000Meta-4, Inc. 50,000 50,000 0 *
Ramsdell Family Trust U/A/D 7/7/94(3) 463,000 270,000 193,000 2.2
Delaware Charter Guarantee and Trust co. FBO 581,900 480,000 101,900 1.2
W. Ramsdell-IRA
ERAMKO 140,000 90,000 50,000Bruce A. Rasmussen & Assoc., Ltd. 14,375 14,375 0 *
Salvatore Totino and Lorraine D. Totino, TIC(4) 64,000 54,000 10,000Catherine J. Donohoo 10,625 10,625 0 *
Elyse A. Ramsdell 70,000 60,000 10,000 *
Robert S. Ramsdell 40,000 30,000 10,000 *
Richard Berger(5) 248,875 60,000 188,875 2.2
G. Tyler Runnels 174,564 60,000 114,564 1.3
Nancy D. Singer and Edward S. Singer, JTWROS(6) 67,500 38,000 29,500 *
Milfam I 300,000 300,000 -0- *
Delaware Charter Guarantee and Trust Co. FBO 48,000 48,000 -0- *
Dana Benson IRA Rollover Acct. #W073006553
Dana Benson Recovery Fund Acct. #W073006538 12,000 12,000 -0- *
Mark L. Levin 30,000 30,000 -0- *TOTAL SHARES OFFERED 75,000
6
NAME NUMBER OF SHARES MAXIMUM NUMBER OF SHARES TO BE BENEFICIALLY
BENEFICIALLY OWNED SHARES TO BE SOLD (1)(2) OWNED AFTER THE OFFERING(1)(2)
PRIOR TO OFFERING
NUMBER PERCENT
Delaware Charter Gty & Tr Co. FBO 30,000 30,000 -0- *
Mark L. Levin IRA R/O
Invest, Inc. 60,000 60,000 -0- *
Craig C. Avery Prof. Sh. Tr. 70,000 60,000 10,000 *
Jack R. Swenson 66,000 60,000 6,000 *
Randall Wooster 45,000 45,000 -0- *
Delaware Charter Gty & Tr. Co. FBO 45,000 45,000 -0- *
Randall Wooster IRA
The Avalon Total Return Fund, L.P. 270,000 270,000 -0- *
Bear Stearns as Custodian FBO J. Steven Emerson 275,000 180,000 95,000 1.1
IRA R/O II Account #48360160
Stella Rochelle Totino(7) 20,000 20,000 -0- *
TOTALS . . . . . . . . . . . . . . . . . . . . . . . . . 3,328,839 2,470,000 858,839
(1) Includes Shares to be acquired by the Selling Shareholders upon exercise of
the Warrants.
(2) Assumes the sale of all Shares offered hereunder.
(3) Includes 30,000 shares issuable upon exercise of a consultants' warrant.
(4) Includes 10,000 shares beneficially by Lorraine Totino individually. Mr.
Totino disclaims beneficial ownership.
(5) Includes 44,875 shares beneficially owned by Marilyn Olin Berger. Mr.
Berger disclaims beneficial ownership to such shares.
(6) Includes 67,500 shares beneficially owned by Mr. Singer individually of
which 40,000 shares are issuable upon exercise of a consultants' warrant.
Mrs. Singer disclaims beneficial ownership of these shares.
(7) Includes 20,000 shares issuable upon exercise of a consultants' warrant.- ---------------------------
* Less than 1%.
PLAN OF DISTRIBUTION
The Company has been advised(1) Represents the maximum number of shares that the Selling Shareholders may sell
Shares from time to time in one or more transactions (which may include block
transactions) on the NASDAQ SmallCap System at market prices prevailing at the
time of the sale or at prices otherwise negotiated.
The Shares may, without limitation, be sold by one or more of the
following: (i) a block trade in which the broker or dealer so engaged will
attempt to sell the securities as agent but may position and resell a portion of
the block as principal to facilitate the transaction; (ii) purchases by a broker
or dealer as principal and resale by such broker or dealer for its accounteach
selling shareholder pursuant to this Prospectus; and (iii) ordinary brokerage transactions and
transactions in which the broker solicits purchasers.
The Company has been advisedprovided, however,
that as of the date hereof, the Selling
Shareholders have made no arrangement with any broker for the sale of the
Shares. Underwriters, brokers or dealers may participate in such transactions as
agents and may, in such capacity, receive brokerage commissions from the Selling
7
Shareholders or purchasers of such securities. Such underwriters, brokers or
dealers may also purchase Shares and resell such Shares for their own account in
the manner described above. The Selling Shareholders and such underwriters,
brokers or dealers may be considered "underwriters" as that term is defined bypursuant to Rule 416 under the Securities Act of 1933, although the Selling Shareholders disclaim such
status. Any commissions, discounts or profits received by such underwriters,
brokers or dealers in connection with the foregoing transactions may be deemed
to be underwriting discounts and commissions under the Securities Act of 1933.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Lindquist & Vennum P.L.L.P., Minneapolis,
Minnesota.
EXPERTS
The financial statements of the Company incorporated by reference inas amended,
the Registration Statement of which this Prospectus is a part shall
also cover any additional shares of common stock which become issuable
in connection with the shares registered for sale hereby by reason of
(i) any stock dividend, stock split, recapitalization or other
transaction effected without the receipt of consideration which results
in an increase in the Company's number of outstanding shares of common
stock. In the event Rule 416 is not available, the Company is obligated
to register such additional shares of common stock.
(2) Assumes the sale of all shares offered hereby to unaffiliated third
parties. The selling shareholders may sell all or part of their
respective shares.
6
PLAN OF DISTRIBUTION
The selling shareholders may offer their shares at various times in one
or more of the following transactions:
* on the Nasdaq SmallCap Market, where our common stock is listed;
* in the over-the-counter market;
* in transactions other than on such exchanges or in the over-the-counter
market;
* in connection with short sales of the shares;
* by pledge to secure debts and other obligations;
* in connection with the writing of non-traded and call options, in hedge
transactions and in settlement of other transactions in standardized or
over-the-counter options; or
* in a combination of any of the above transactions.
The selling shareholders may sell their shares at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at fixed prices.
The selling shareholders may use broker-dealers to sell their shares.
If this happens, broker-dealers will either receive discounts or commissions
from the selling shareholders, or they will receive commissions from purchasers
of shares for whom they acted as agents.
LEGAL MATTERS
Our outside general counsel, Lindquist & Vennum P.L.L.P. of
Minneapolis, Minnesota, will issue an opinion about the legality of the shares
for us and the selling shareholders.
EXPERTS
The financial statements and schedule of Insignia Systems, Inc.
incorporated by reference in this registration statement have been audited by
Ernst & Young LLP, independent public accountants,auditors, as indicatedset forth in their report, with respect thereto, and are
incorporated by reference herein in reliance upon theirsuch report andgiven upon the
authority of said firm as experts in accounting and auditing.
INDEMNIFICATION
The Company'sMinnesota law and our Articles of Incorporation eliminate or limit
certain liabilities of its directorsour directors. Minnesota law and the Company'sour Bylaws provide for
indemnification ofrequire us to
indemnify our directors, officers and employees of the Company in certain instances. Insofar as
exculpation of, or indemnification for, liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling
the CompanyInsignia Systems pursuant to the foregoing provisions, the
Company haswe have been informed
that in the opinion of the Securities and Exchange Commission such exculpation
or indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
7
WHERE YOU CAN FIND INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, DC, New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's website at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until the selling shareholders sell all the shares. This
prospectus is part of a registration statement we filed with the SEC
(Registration No. 333-________).
* Annual Report on Form 10-K for the fiscal year ended December 31, 1998;
* Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1999;
* Proxy Statement dated April 12, 1999 for the 1999 Annual Meeting of
shareholders on May 20, 1999;
* The description of our common stock contained in our Registration
Statement on Form S-18 (No. 33-40765-C).
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following address:
John Whisnant
Insignia Systems, Inc.
5025 Cheshire Lane
Plymouth, MN 55446
(612) 392-6200
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. The selling shareholders will
not make an offer of these shares in any state where the offer is not permitted.
You should not assume that the information in this prospectus or any supplement
is accurate as of any date other than the date on the front of those documents.
8
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14: OTHER EXPENSES OF ISSUANCE AND DISTRIBUTIONDISTRIBUTION*
SEC registration fee .................................................... $ 1,86829
Nasdaq listing fee.................................. 1,000
Accounting fees and expenses ............. 2,000expenses........................ 1,500
Legal fees and expenses ..................expenses............................. 5,000
Printing expenses................................... 0
Blue Sky fees and expenses.......................... 0
Transfer agent and registrar fees................... 500
Miscellaneous....................................... 471
---------
Total .............................................. $ 8,500
Miscellaneous ............................ 132
--------
Total .................................. 12,500
Except=========
- ------------------
*Except for the SEC registration fee and Nasdaq listing fee, all of the
foregoing expenses have been estimated.
ITEM 15: INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 302A.521 of the Minnesota Statutes requires among other
things, the indemnification of personsRegistrant to
indemnify a person made or threatened to be made a party to a proceeding by
reason of the former or present official capacity of the person with respect to
the Registrant, against judgments, penalties, fines, including reasonable
expenses, if such person (1) has not been indemnified by another organization or
employee benefit plan for the same judgments, penalties, fines, including,
without limitation, excise taxes assessed against the person with respect to an
employee benefit plan, settlements, and reasonable expenses, including
attorneys' fees and disbursements, incurred by the person in connection with the
proceeding with respect to the same acts or omissions; (2) acted in good faith;
(3) received no improper personal benefit, and statutory procedure has been
followed in the case of any conflict of interest by a director; (4) in the case
of a criminal proceeding, had no reasonable cause to believe the conduct was
unlawful; and (5) in the case of acts or omissions performedoccurring in theirthe person's
performance in the official capacity as anof director or, for a person not a
director, in the official capacity of officer, director,committee member or employee, or agent of the corporation against judgments,
penalties and fines (including attorneys' fees) if such person is not otherwise
indemnified, acted in good faith, received no improper benefit,
reasonably believed that suchthe conduct was in the best interests of the
corporation, and,Registrant, or, in the case of criminal proceedings, had no reason to believeperformance by a director, officer or employee of
the Registrant as a director, officer, partner, trustee, employee or agent of
another organization or employee benefit plan, reasonably believed that the
conduct was unlawful.not opposed to the best interests of the Registrant. In addition,
Section 302A.521, subd. 3, of the Minnesota Statutes
requires payment by the corporation,Registrant, upon written
request, of reasonable expenses in advance of final disposition in certain
instances if ainstances. A decision as to required indemnification is made by a disinterested
majority of the Board of Directors present at a meeting at which a disinterested
quorum is present, or by a designated committee of the Board, by special legal
counsel, by the Shareholdersshareholders or by a court. The Company'sRegistrant's Bylaws provide for
the indemnification of itsofficers, directors,
officers, employees, and agents in accordance with, and to the fullest
extent provided by Section 302A.521.
II-1
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act") may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the provisions
referenced in Item 15 of this Registration Statement or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
provisionsRegistrant of expenses incurred or paid by a director, officer or controlling
person of the Minnesota Business CorporationRegistrant 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 hereunder, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act as
amended from time to time.and will be governed by the final adjudication of such issue.
ITEM 16. EXHIBITS
Exhibit No. Description
- ----------- -----------
5.1 Opinion and Consent of Lindquist & Vennum P.L.L.P., counsel to
the Company
23.1 Consent of Ernst & Young, LLP, independent public accountants
23.2 Consent of Lindquist & Vennum P.L.L.P. (see Exhibit 5.1 above)
24 Powers of Attorney (included on signature page hereof)
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
II-1
undertakes, in accordance with Item
512 of Regulation S-K:
(a) (1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the Prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii)Registration Statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statementRegistration Statement or any material change to such
information in the registration statement.
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered herein,therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.offering;
(b) The undersigned Registrant hereby undertakes that,That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's Annual Reportannual report pursuant
to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c)thereof; and
II-2
(e) To deliver or cause to be delivered with the Prospectus, to each
person to whom the Prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the Prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 and Rule 14c-3
under the Securities Exchange Act of 1934; and, where interim financial
information required to be presented by Article 3 of Regulation S-X is not set
forth in the Prospectus, to deliver, or cause to be delivered to each person to
whom the Prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the Prospectus to provide such interim
financial information.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrantRegistrant pursuant to the foregoing provisions or otherwise, the registrantRegistrant
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 registrantRegistrant of expenses incurred
or paid by a director, officer or controlling person of the registrantRegistrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrantRegistrant 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-2(i) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of Prospectus
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe it meets all of
the requirements for filing a Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Minnetonka,Plymouth, State of Minnesota, on the 29th1st day of July, 1998.June,
1999.
INSIGNIA SYSTEMS, INC.
By /s/ Scott F. Drill
--------------------------------
Scott F. Drill, President and
Chief Executive Officer
POWER OF ATTORNEY
The undersigned officers and directors of Insignia Systems, Inc. hereby
constitute and appoint G.L. Hoffman our true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution for us and in our
stead, in any and all capacities, to sign any or all amendments to this
registration statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as
such person, hereby ratifying and confirming all that said attorney-in-fact and
agent or his substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on July 29, 1998June 1, 1999
in the capacities indicated.
Signature Title
--------- -----
/s/ G.L. Hoffman Chairman and Secretary
- ----------------------------
G.L. Hoffman
/s/ Scott F. Drill President, Chief Executive
Scott F. Drill- ---------------------------- Officer and Director (principal executive
Scott F. Drill officer)
/s/ John R. Whisnant Vice President, Finance (principal financial
- ---------------------------- and accounting officer)
John R. Whisnant
/s/ Gary L. Vars Executive Vice President and accounting officer)Director
- ----------------------------
Gary L. Vars
/s/ G.L. HoffmanDonald E. Schultz Director
and Secretary
G.L. Hoffman- ----------------------------
Donald E. Schultz
/s/ Erwin A. Kelen Director
- ----------------------------
Erwin A. Kelen
/s/ Gordon F. Stofer Director
- ----------------------------
Gordon F. Stofer
/s/ Frank D. TrustmanTrestman Director
- ----------------------------
Frank D. Trustman
/s/ Donald E. Schultz Director
Donald E. Schultz
II-3Trestman