AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 30, 1998
REGISTRATION NO. 333-As filed with the Securities and Exchange Commission on August 7, 2002
Registration No. 333-75294
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------
INFINITE GROUP, INC.
(Exact Namename of Registrant as Specifiedspecified in Its Charter)
Delaware 52-1490422
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Identification
Organization) Number)
Clifford G. Brockmyre
Infinite Group, Inc.its charter)
Delaware 3674 52-1490422
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
--------------
2364 Post Road
Warwick, RI 02886
(401) 738-5777
(Address, Including Zip Code,including zip code, and Telephone Number,
Including Area Code,telephone number,
including area code, of Registrant's Executive Offices)
-----------------------------executive offices)
--------------
Clifford G. Brockmyre Infinite Group, Inc.II, CEO
2364 Post Road
Warwick, RI 02886
(401) 738-5777
(Name, Address, Including Zip Code,address, including zip code, and Telephone Number, Including Area Code,telephone number, including area code,
of Agentagent for Service)
Please send copies of all correspondenceservice)
--------------
Copies to:
Kenneth S. Rose, Esq.
Morse, Zelnick, Rose & Lander, LLP
450 Park Avenue
New York, New York 10022-2605
Telephone No.10022
(212) 838-5030
Fax No. (212) 838-9190--------------
Approximate date of commencement of proposed sale to the public: As soon
as practicable after thethis Registration Statement becomes effective.
--------------------
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following boxbox. |_|.
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, as amended (the "Securities Act") other than securities offered only in
connection with dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
|X|.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, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------==================================================================================================================================
Proposed Proposed Maximum
Title of Each Maximum Maximum Amount of Class of Securities Amount to be Offering PriceMaximum Aggregate Offering Registration
ToAmount of
to be Registered Registered Per ShareOffering Price Fee(1)Price(1) Registration Fee
- ------------------------------------------------------------------------------------------------------------------------ ---------------- ----------------- -------------------------- -------------------
Common Stock (2) (2) (2) $100.00
$.001stock, par value ====================================================================================$.0001 per
share (2) 592,518 $2.81 $1,664,976 $416.24
- ------------------------------------ ---------------- ----------------- -------------------------- -------------------
Shares of common stock, par value
$.0001 per share underlying
Common Stock Purchase Warrants (2) 73,400 $4.00(3)(4) $293,600 $73.40
- ------------------------------------ ---------------- ----------------- -------------------------- -------------------
Common stock, par value $.0001 per
share (5) 75,000 $1.35(6) $101,250 $9.32
- ------------------------------------ ---------------- ----------------- -------------------------- -------------------
Shares of common stock, par value
$.0001 per share underlying
Common Stock Purchase Warrants (5) 575,000 $3.02(3)(4) $1,736,500 $159.76
- ------------------------------------ ---------------- ----------------- -------------------------- -------------------
Shares of common stock, par value
$.0001 per share underlying
Convertible Notes (5) 937,500 $2.00(4)(7) $1,875,000 $172.50
- ------------------------------------ ---------------- ----------------- -------------------------- -------------------
Total Registration Fee $831.22(8)
- ------------------------------------ ---------------- ----------------- -------------------------- -------------------
- -------------------
(1) Estimated solely for purposes of calculatingdetermining the registration fee pursuant
to Rule 457.457 under the Securities Act.
(2) Includes an indeterminate numberThese shares were included in the initial filing of sharesthis registration
statement. The registration fee with respect to these securities is
calculated based upon the price of the Common Stock in connection
with market making transactions in such securities by H.J. Meyers & Co.on December 13, 2002
($2.81), Inc.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessaryapplicable.
(3) Pursuant 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)Rule 457(g) of the Securities Act of 1933, the proposed
maximum offering price is based upon the higher of the price at which the
warrants may be exercised and the price of shares of common stock as
amended, or until thisdetermined in accordance with Rule 457(c).
(4) Pursuant to Rule 416 under the Securities Act, there are also being
registered hereby such additional indeterminate number of shares as may
become issuable pursuant to the antidilution provisions of the warrants
and notes.
(5) These shares have been added to the Registration Statement shall become effectiveby amendment.
(6) Pursuant to Rule 457(c), the maximum offering price for the common stock
is based upon the average of the high and low sales prices of the Common
Stock on such datethe Nasdaq on August 5, 2002 of $1.35.
(7) Pursuant to Rule 457(g) of the Securities Act of 1933, the proposed
maximum offering price is based upon the higher of the price at which the
notes may be converted and the price of shares of common stock as
the Commission, acting pursuant to said
Sectiondetermined in accordance with Rule 457(c).
(8) $489.64 was previously paid. $341.58 is paid herewith.
================================================================================
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 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
================================================================================
The information in this prospectus is not complete and may determine.
==============================================================================
be changed.
These securities may not be sold until the registration statement of which this
prospectus is a part filed with the Securities and Exchange Commission is
declared effective. This prospectus is not an offer to sell these securities and
it is not soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
PROSPECTUS
SUBJECT TO COMPLETION
DATED JUNE 30, 1998
PROSPECTUSAugust 7, 2002
2,253,418 Shares
Common Stock
INFINITE GROUP, INC.
SharesThe selling stockholders identified in this prospectus are offering to
sell up to 2,253,418 shares of Common Stock, $.001 Par Value
----------------
This Prospectusour common stock. Of this amount, 648,400 shares
are covered by warrants held by selling stockholders that have not yet been
exercised and up to 937,500 shares are issuable upon conversion of an
outstanding note.
Except for the proceeds from the exercise of the warrants, we will be used by H.J. Meyers & Co., Inc. in connection with
offers and sales iN market-making transactions in the Common Stock, par value
$.001, of Infinite Group, Inc. (the "Company"). H.J. Meyers & Co., Inc. may act
as a principal or agent in such transactions. The Common Stock may be offered in
negotiated transactions or otherwise. Sales will be made at prices related to
prevailing market prices at the time of sale.
Nonenot
receive any of the proceeds from the sale of Common Stock hereunder will be
receivedthese shares. The shares are being
registered for resale by the Company.
---------------------------------
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.selling stockholders.
Our common stock is quoted on the Nasdaq SmallCap Market under the symbol
"IMCI." The last reported sale price of our common stock on the Nasdaq SmallCap
Market on August 6, 2002 was $1.299 per share.
Investing in our common stock involves a high degree of risk. See "Risk
Factors" atbeginning on page 5.
---------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
No dealer, salesman or other person has been authorized to give any information
or to make any representations other than those contained in this prospectus in
connection with the offering made hereby, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or by any other person.3.
Neither the delivery of this prospectus
nor any sale made hereunder shall, under any circumstances, create any
implication that information herein is correct as of any time subsequent to the
date hereof. This prospectus does not constitute an offer to sell or a
solicitation of an offer to buy the shares to any person or by anyone in any
jurisdiction in which such offer or solicitation may not lawfully be made.
The date of this Prospectus is , 1998.
AVAILABLE INFORMATION
The Company is subject to the informational and reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission by the Company may be
inspected and copied at the public reference facilities maintained by the
Commission at its principal offices at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511, and 7 World Trade Center, Suite 1300, New York, New York 10048. Such
reports, proxy statements and other information may also be obtained from the
web site that the Commission maintains at http://www.sec.gov. Copiesnor any state securities
commission has approved or disapproved of these materials can also be obtained at prescribed rates from the Public Reference
Section of the Commission at its principal offices in Washington, D.C., set
forth above.
The Company has filed a Registration Statement on Form S-3 (including all
amendments and supplements thereto, the "Registration Statement") with the
Commission under the Securities Act with respectsecurities or determined if this
prospectus is accurate or complete. Any representation to the Shares offered hereby.
This Prospectus, which formscontrary is a
part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement and the
exhibits filed therewith, certain parts of which have been omitted in accordance
with the rules and regulations of the Commission. Statements contained herein
concerning the provisions of such documents are not necessarily complete and, in
each instance, reference is made to the Registration Statement or to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference. Copies of the Registration Statement and the exhibits thereto
can be obtained upon payment of a fee prescribed by the Commission or may be
inspected free of charge at the public reference facilities and regional offices
referred to above.
REPORTS TO SECURITY HOLDERScriminal offense.
The Company intends to furnish to its stockholders annual reports
containing audited financial statements. In addition, the Company is required to
file periodic reports on Forms 8-K, 10-QSB and 10-KSB with the Commission and
make such reports available to its stockholders.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in this Prospectus by reference:
(1) Annual Report on Form 10-KSB, as amended (the "Form 10-KSB") for the
fiscal year ended December 31, 1997 filed pursuant to the Exchange
Act;
(2) Quarterly Report on Form 10-QSB, as amended for the quarter ended
March 31, 1998 filed pursuant to the Exchange Act; and
(3) Proxy Statement dated November 13, 1997, filed pursuant to Section
14 of the Exchange Act.
2
Each document filed subsequent to the date of this Prospectus pursuantprospectus is _________________, 2002
TABLE OF CONTENTS
Page
----
Risk Factors...................................................................4
Where You Can Find More Information...........................................10
Reports to Section 13(a), 13(c), 14Security Holders...................................................11
Incorporation of Certain Documents by Reference...............................11
Special Note Regarding Forward-Looking Statements.............................12
The Company...................................................................13
Recent Developments...........................................................17
Use of Proceeds...............................................................19
Selling Stockholders..........................................................20
Plan of Distribution..........................................................21
Legal Matters.................................................................22
Experts.......................................................................22
----------------------------
You should rely only on the information contained or 15(d) of the Exchange Act prior to the termination
of this offering shall be deemed to be incorporated in this Prospectus by
reference and to be a part hereof from the date of the filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any document incorporated by
reference in this Prospectus (otherprospectus. We have not authorized anyone to provide you with
any other information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than exhibits unless such exhibitsthe date on
the front cover.
SUMMARY OF BUSINESS
We have two business segments, our Laser Group and our Photonics Group.
Our Laser Group provides comprehensive laser-based materials and processing
services (cutting, welding, drilling and assembly) to aerospace, power
generation and medical device customers. Our Laser Group provides comprehensive
laser-based materials and processing services (cutting, welding, drilling and
assembly) to aerospace, power generation and medical device customers. Our
Photonics Group develops and markets diode lasers for source and pump lasers and
semiconductor optical amplifiers. Diode lasers amplifiers are specifically incorporated by referencevery small
semiconductor products used as the laser "light" source in such documents). Requests should be
directed to Infinite Group, Inc. 2364 Post Road, RI 02886 (401) 738-5777
Attention: Daniel Landi, Secretary.
FORWARD-LOOKING STATEMENTS
Certain statements made in or incorporated by reference to this
Registration Statement on Form S-3 are "forward-looking statements" (within the
meaninga variety of the Private Securities Litigation Reform Act of 1995) regarding the
plansdefense,
telecommunications, material processing and objectives of management for future operations. Such statements
involve known and unknown risks, uncertainties and other factors that may cause
actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. The forward-looking statements made
in or incorporated by reference to this Form are based on current expectations
that involve numerous risks and uncertainties. The Company's plans and
objectives are based, in part, on assumptions involving the growth and expansion
of business. Assumptions relating to the foregoing involve judgments with
respect to, among other things, future economic, competitive and market
conditions and futuremedical device applications. A more
detailed explanation our business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of the
Company. Although the Company believes that its assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, there can be no assurance that the forward-looking
statements made in or incorporated by reference to this Form will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements made in or incorporated by reference to this Form,
particularly in view of the Company's early stage of operations, the inclusion
of such information should not be regarded as a representation by the Company or
any other person that the objectives and plans of the Company will be achieved.found beginning on page 13.
3
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information appearing elsewhere in this ProspectusWe maintain web sites at www.infinite-group.com, www.laserfare. com and
the documents
incorporated herein by reference. Investors should carefully consider the
information set forth under "Risk Factors" prior to making an investment in the
shares offered hereby.
THE COMPANY
The Company was organized pursuant to the laws of the State of Delaware on
October 14, 1986. On January 7, 1998, the Company changed its name to Infinite
Group, Inc. from Infinite Machines Corp. Its executive offices are located 2364
Post Road, Warwick, Rhode Island 02886; telephone number and its telephone
number is (401) 738-5777.
THE OFFERING
Common Stock outstanding.................. 13,377,516 shares.
NASDAQ Symbol ............................ IMCI
Use of Proceeds(1) .......................www.infinitephotonics.com. None of the proceeds frominformation contained in any of our web
sites constitute part of this prospectus.
We own various intellectual property rights to our name and the salenames of
Common Stock offered hereby will
be received byour subsidiaries, as well as the Company.
Risk Factors ............................. An investment in the Securities
offered herebyInfinite Group logo. This prospectus also
contains trademarks and tradenames belonging to other persons.
RISK FACTORS
A purchase of our common stock is speculative and involves a high degree
of risk. This Prospectus contains
forward-looking information which
involves risk and uncertainties.
The Company's actual results could
differ materially from those
anticipated by such forward-looking
information as a result of various
factors, including those discussed
under "Risk Factors" in this
Prospectus. See "Risk Factors."
- ----------
(1) This Prospectus is being utilized by H.J. Meyers & Co., Inc. in connection
with offers and sales in market-making transactions in the Company's Common
Stock. Accordingly, the Company will not receive any proceeds from the
transactions contemplated hereby.
4
RISK FACTORS
An investment in the securities offered hereby is highly speculative and
subject to a high degree of risk and only those who can bear the risk of the
entire loss of their investment should participate. Prospective investorsYou should carefully consider the risks described below together with
all of the other information included or incorporated by reference in this
prospectus before making an investment decision. If any of the following factors,risks
actually occur, our business, financial condition or operating results could be
harmed. In such case, the trading price of our common stock could decline and
you could lose all or part of your investment.
We have experienced losses in analyzing this offering.
Accumulated Deficit; Working Capital Deficit; Independent Auditor's Report
Comments Regarding Company's Abilitythe current and prior years and we anticipate that
we may continue to Continue as a Going Concern; Need For
Additional Financing
At Decembergenerate operating losses during 2002.
Our operations to date have not been profitable. As of March 31, 1997, the Company2002 we had an
accumulated deficit of $17,296,766.approximately $23.9 million. We expect to continue
operating at a loss during the second quarter of 2002. The Company also experienced approximately $417,000 and $4.3
millionmajority of the
operating losses respectively, during 2001 were primarily attributable to discontinued
injection molding operations at our former Osley & Whitney, Inc. subsidiary and
start up costs at our Infinite Photonics, Inc. subsidiary (which are accounted
for in accordance with SOP 98-5). Other factors that could adversely affect our
operating results in the three months endedfuture include:
o the cost of manufacturing scale-up and production at our Photonics
Group;
o introduction of new products and product enhancements by us or our
competitors;
o changes in applied photonics technologies; and
o changes in general economic conditions.
We cannot assure you that our revenues will increase sufficiently to offset our
operating costs or that, even if they do, that our operations will ever be
profitable.
We are highly leveraged, which increases our operating deficit and makes it
difficult for us to grow.
At March 31, 19982002 we had current liabilities, including trade payables, of $4.5
million, and long-term liabilities of $3.4 million and a working capital deficit
of approximately $823,000, (approximately $30,000 after eliminating the year ended December 31, 1997. No assurance can be givenassets
and liabilities of our discontinued operations). We continue to experience
working capital shortages that the Company will notimpair our business operations and growth
strategy. If we continue to incur operating losses. There can be no
assurance that the Company will ever have significant revenues or achieve
profitable operations. The Company requires additionallosses and experience working
capital limitations, our business, operations and financial condition will be
materially adversely affected.
We have been dependent on our chief executive officer to fund itsworking capital
needs and provide equipment.
Our chief executive officer lent us $974,000 and $150,000 during 2000 and 2001,
respectively. He converted $974,000 and $100,000 during 2000 and 2001,
respectively, into shares of our common stock. In addition Mr. Brockmyre has
purchased and leased to us equipment necessary for our operations. There is no
assurance that the Companyhe will be successfulwilling or able to fund future working capital needs.
4
We may require additional financing in its
capital raising efforts, the failure offuture, which may not be available on
acceptable terms.
We may require the Companyadditional funds to scale
back its operations. The Company currentexpand our production capability, continue to
develop new applications for our diode technology and for working capital and
general corporate purposes. At this time, we cannot assure you that cash flow
from product sales will reach the level required to sustain our operations and
growth plans in management's
belief,the near term. Further, we cannot assure you that adequate
additional financing will be adequateavailable or, if available, will be offered on
acceptable terms. In addition, any additional equity financing may be dilutive
to fundstockholders, and debt financings, if available, may involve restrictive
covenants that further limit our ability to make decisions that we believe will
be in our best interests. In the event we cannot obtain additional financing on
terms acceptable to us when required, our operations will be materially
adversely affected and we may have to cease or substantially reduce operations.
Some of our products and services are at current levelsan early stage of development and may
not achieve market acceptance.
Our primary focus is to develop new commercial applications for six months
following the date of this Prospectus.
Possibility of Delays or Inability to Sellour diode laser
and Deliver Initial Product and
Proposed Products
The Company has been engaged in product development since its formation in
October 1986. Potential investors should be awarelaser-driven technologies. Many of the problems, delays,
expensesbenefits of our diode laser and difficulties encountered in product development, manylaser
technologies are not widely known. Therefore, we anticipate that we will need to
educate our target markets to generate demand for our products and services and,
as a result of whichmarket feedback, we may be beyond the Company's control. These include, but are not limitedrequired to unanticipated problems relatingfurther refine these
services. In order to productpersuade potential customers to purchase our services, we
will need to overcome industry resistance to, and suspicion of, new
technologies. In addition, developing new applications for these technologies
and other new technologies may require significant further research,
development, testing regulatory
compliance, manufacturing delays and costs, the competitive and regulatory
environment in which the Company plansmarketing prior to operate, marketing problems and
additional costs and expensescommercialization. We cannot assure
you that may exceed current estimates. There can be no
assurance that the Company's products or services will prove to be commercially
viable orcommercial applications of these technologies can be successfully
developed, marketed or thatproduced.
Some of our current products and services have not been commercially successful.
Our laser materials processing services have not generated a significant amount
of revenue, even though they have been available for some time. In addition,
since the Company will ever achieve
significant revenues.
Liquidity Problems; Additional Financing Requirements
The Company currently lacks the liquid assets to discharge its operating
expenses. In the past the Company has met its capitalnumber of jet engine, aerospace and operating requirements
through public and private salesmedical device manufacturers is
relatively small, most of equity and through borrowingsour revenue from these businesses is generated from a
shareholderlimited number of customers. We cannot assure you that these customers will
continue to purchase these products and unaffiliated lenders. The Company's continued operations will
depend upon revenues, if any, from operations and the availability of equityservices or debt financing. The Company has no commitments for additional financing.
Further, there can be no assurance that the Companywe will be able to
generate
levels of revenuesexpand the market for these products and cash flows sufficient to fund operationsservices. Therefore, any material
delay, retooling, cancellation or thatreduction in orders from the Company will be able to obtain additional financing on satisfactory terms, if at
all. If such be the case the Company would be forced to curtail or even suspend
its remaining operations.
Vulnerability of Service Businesses
The Company's sole revenues are generated by thecustomers who
purchase these products and services offered by the
Company's divisions, namely, laser contract material processing services and
laser consulting services. Most of these services are being rendered under
short-term contracts which can be terminated or not renewed
5
by the party or parties receiving the services. In addition, the business of
providing services is always subject to interruptions by external factors, such
as customer's eliminating products, unavailability of materials or customer's
developing internal capacity to perform specialized laser services, which can
further impair revenues. For all of these reasons there can be no assurance that
the Company's revenues from its service businesses will improve or even that its
existing revenues will be maintained.
Uncertainty of Laser Business
The Company's current laser business is subject to a number of risks
including the need for additional financing to fund acquisitions and expansion,
technical obsolescence of its processes and equipment, increased competition and
dependence upon, and need for, qualified personnel. There is no assurance that
the Company's current laser business will operate profitable in future periods.
Dependence Upon, and Need for, Key Personnel; Possible Adverse Effect if Key
Personnel Are Not Retained
The Company's success will depend, in large part, on its continued ability
to attract and retain highly qualified engineering, marketing and business
personnel. Competition for qualified personnel may be intense and the Company
will be required to compete for such personnel with companies having
substantially greater financial and other resources. The Company's inability to
attract and retain such personnel could have a material adverse effect upon its
business. Further,affect on our
business, operations and financial condition.
We have limited marketing and sales capabilities and must make sales in
fragmented markets.
Our future success depends, to a great extent, on our ability to successfully
market our products and services. We currently have limited sales and marketing
capabilities and experience at our Photonics Group (generally limited to
technical trade conferences, technical publications, and direct customer
inquiry) and we will need to hire qualified sales and marketing personnel,
develop additional sales and marketing programs and establish sales distribution
channels in order to achieve and sustain commercial sales of our products. In
addition, our ability to successfully market our products and services is
further complicated by the Company is dependent on certain management personnel forfact that our principal markets, laser photonics,
telecommunications, aerospace and medical components, are highly fragmented.
Consequently, we will need to identify and successfully target particular market
segments in which we believe we will have the operationmost success. These efforts will
5
require a substantial amount of effort and development of its business, particularly Clifford G.
Brockmyre, the President, Chief Executive Officerresources. We cannot assure you that
any marketing and a principal beneficial
shareholder of the Company. The Company does not maintain key man insurancesales efforts undertaken by us will be successful or will
result in any significant product sales.
We depend on the lifeaerospace, laser photonic, telecommunications and medical
device industries, which continually produce technologically advanced products.
A majority of Mr. Brockmyre, or any of its other officers or employees. The loss
or a reductionour sales in our Laser Group are to companies in the time devoted by Mr. Brockmyreaerospace,
laser photonic, telecommunications and medical device industries, which are
subject to rapid technological change and product obsolescence. If our customers
are unable to create products that keep pace with the Company's businesschanging technological
environment and market demand, their products could become obsolete and the
demand for our services could decline significantly. If we are unable to offer
cost-effective, quick-response manufacturing services to customers, demand for
our services will also decline. This would have a material adverse effectaffect on the Company's business.
Intense Competitionour
business, operations and Rapid Technological Change
The Companyfinancial condition.
We depend on government research and development contracts to support our
Photonics Group.
Substantially all of our Photonics Group revenue has been derived from
governmental research programs. Any reduction in spending on these programs
would have a material adverse affect on our business, operations and financial
condition.
Our industry is engaged in rapidly evolvingintensely competitive, which may adversely affect our operations
and highlyfinancial results.
All our markets are intensely competitive fields.
Competition is intense and expectednumerous companies offer
conventional and laser driven products and services that compete with our
products and services. We anticipate that competition for our products and
services will continue to increase. Most of the companies in
competition with the Companyour competitors have substantially
greater capital resources, research and development staffs, manufacturing
capabilities, sales and marketing resources, facilities and experience in the furnishing of
services.experience. These
companies, or others, could undertake extensive research and development in
laser technology and related fields whichthat could result in technological changeschanges.
Many of these companies also are primary customers for various components, and
therefore have significant control over certain markets that we have targeted.
In addition, we may not yet adopted by the Company. There can be no assuranceable to offer prices as low as some of our
competitors because those competitors may have lower cost structures. Our
inability to provide comparable or better products and services at a lower cost
than our competitors could adversely effect demand for our products and
services. We cannot assure you that the Company'sour competitors will not succeed in
developing technologies in these fields which will enable them to offer laser
services more advanced and less costly than any offered by the Companythose we offer or which could render
the Company'sour technologies obsolete.
LackOur products and services are subject to industry standards, which increases
their cost and could delay or bar their commercial acceptance.
Since some of Patent Protection; Patent Infringement
The Company holds no patentsour products and services in development are used in the
telecommunications industry, they must comply with the Bellcore Testing
standards for its technology or products. The Company
employs various methods, including confidentiality agreementstraditional equipment. These standards govern the design,
manufacture and marketing of these items. If we fail to comply with employees to
protect its proprietary know-how. Such methods may not afford complete
protection, however, and there can be no assurance that these
agreementsstandards, we will not be breached,able to sell our products. We may encounter
significant delays or incur additional costs in our efforts to comply with these
industry standards.
We depend on our relationship with third parties to develop and commercialize
new products.
Our strategy for research and development and for the commercialization of our
products contemplates a continuing relationship with various publicly and
privately funded consortia and our existing relationships will continue with
strategic partners, original equipment manufacturers (OEMs), potential licensees
and
6
others. We depend on these associations and relationships not only to underwrite
our research and development efforts, but also for product testing and to create
markets for our products and services. The majority of our product research has
been funded by customers or potential customers. We cannot assure you that our
existing relationships will continue or the Companyextent to which the parties to such
arrangements will continue to allocate time of resources to these strategic
alliances. Similarly, we cannot assure you that we will be able to enter into
new arrangements in the future. In addition, we cannot assure you that any
agreement will progress to a production phase or, if production commences, that
we will receive significant revenues as a result of these relationships. The
majority of our relationships for product development or contract research is
for one to two years in duration, and is generally cancelable based on attaining
or not attaining the customers' milestones.
We have only limited manufacturing capabilities and our inability to
continuously manufacture products on a cost-effective basis would harm our
business.
We have adequate remedieslimited production facilities and limited experience in manufacturing
our product offerings. To the extent any of our existing or future products must
be produced in commercially reasonable quantities, we will have to either
develop that expertise quickly or outsource that function. Developing
manufacturing capability is an expensive and time-consuming endeavor and we do
not have the resources that are required for any breacha full-scale manufacturing
capability. Therefore, in all likelihood we will have to engage a third party to
manufacture our products for us. In that event, we will depend on the
manufacturer to produce high-quality products based on our specifications, on
time and within budget. If we are unable to manufacture products in sufficient
quantities and in a timely manner to meet customer demand ourselves or that the Company'sby
others, our business, financial condition and results of operations will be
materially adversely affected.
We depend on our intellectual property rights to provide us with a competitive
advantage.
Our ability to compete successfully depends, in part, on our ability to protect
our products and technologies under United States and foreign patent laws, to
preserve trade secrets will not otherwise become knownand other proprietary information and technologies, and
to or
independently developed by competitors. If patent applications are filed byoperate without infringing the Company, there can be no assurance that any patents will be granted, or that if
granted such patents would provide the Company with meaningful
6
protection from competition. In addition, there can be no assurance that the
application of the Company's technologies will not infringe upon the patentproprietary rights of others. We cannot assure
you that patent applications relating to our products or potential products will
result in patents being issued, that any issued patents will afford adequate
protection or not be challenged, invalidated, infringed or circumvented, or that
any rights granted will give us a competitive advantage. Furthermore, we cannot
assure you that others have not independently developed, or will not
independently develop, similar products and/or technologies, duplicate any of
our product or technologies, or, if patents are issued to, or licensed by, us,
design around those patents. We cannot assure you that patents owned or licensed
and issued in one jurisdiction will also be issued in any other jurisdiction. In
addition, we cannot assure you that we can adequately protect our proprietary
technology and processes that we maintain as trade secrets. If we are unable to
develop and adequately protect our proprietary technology and other assets, our
business, financial condition and results of operations will be materially
adversely affected.
We depend on the continued services of our key personnel.
Our future success depends, in part, on the continuing efforts of our senior
executive officers, Clifford G. Brockmyre II, Thomas Mueller, Bruce J. Garreau,
and Jeff Bullington who conceived our strategic plan and who are responsible for
executing that plan. The Companyloss of any of these key employees may adversely affect
our business. At this time we do not have any term "key man" insurance on any of
these executives other than a $1.7 million policy on Clifford G. Brockmyre II.
If we lose the services of any of these senior executives, our business,
operations and financial condition could be materially adversely affected.
7
We may have difficulties in managing our growth.
Our future growth depends, in part, on our ability to implement and expand our
financial control systems and to expand, train and manage our employee base and
provide support to an expanded customer base. If we cannot manage growth
effectively, it could have material adverse effect on our results of operations,
business and financial condition. Acquisitions and expansion involve substantial
infrastructure and working capital costs. We cannot assure you that we will be
able to integrate our acquisitions and expansions efficiently. Similarly, we
cannot assure you that we will continue to expand or that any expansion will
enhance our profitability. If we do not achieve sufficient revenue growth to
offset increased expenses associated with our expansion, our results will be
adversely affected.
We must attract, hire and retain qualified personnel.
As we continue to develop new products and as our business grows, significant
demands will be placed on our managerial, technical, financial and other
resources. One of the keys to our future success will be our ability to attract,
hire and retain highly qualified scientific, engineering, marketing, sales and
administrative personnel. Competition for qualified personnel in these areas is
intense and we will be competing for their services with companies that have
substantially greater resources than we do. We cannot assure you that we will be
able to identify, attract and retain employees with skills and experience
necessary and relevant to the future operations of our business. Our inability
to retain or attract qualified personnel in these areas could have a material
adverse effect on our business and results of operations.
We face potential product liability claims.
The sale of our telecommunications, aerospace and medical products and services
will involve the inherent risk of product liability claims by others. We
maintain product liability insurance coverage. However, we cannot assure that
the amount and scope of our existing coverage is adequate to protect us in the
event that a product liability claim is successfully asserted. Moreover, we
cannot assure you that we will continue to maintain the coverage we currently
have. Product liability insurance is expensive, subject to various coverage
exclusions and may not always be obtainable on terms acceptable to us.
Our stock price is volatile and could be further affected by events not within
our control.
The trading price of our common stock has not conducted any patent searchesbeen volatile and will continue to be
subject to:
o volatility in the trading markets generally;
o significant fluctuations in our quarterly operating results;
o announcements regarding our business or obtainedthe business of our
competitors;
o changes in prices of our or our competitors' products and services;
o changes in product mix; and
o changes in revenue and revenue growth rates for us as a whole or for
geographic areas, and other events or factors.
Statements or changes in opinions, ratings or earnings estimates made by
brokerage firms or industry analysts relating to the markets in which we operate
or expect to operate could also have an opinionadverse effect on the market price of
patent counsel regarding its technologies.our common stock. In addition, the stock market as a whole has from time to time
experienced extreme price and volume fluctuations which have particularly
affected the market price for the securities of many small cap companies and
which often have been unrelated to the operating performance of these companies.
8
The Companyprice of our common stock may be forced to expend substantial resources if it is required to defend against any
such infringement claims.
Control of the Company
The officers, directors and principal shareholders of the Company control
an aggregate of approximately 60% of the Company's outstanding Shares, and thus
are effectively able to elect all of the Company's directors and to control the
affairs of the Company.
Loss Carryforward
At December 31, 1997, the Company had approximately $13.6 million in
available net operating losses for federal tax reporting purposes which may be
carried forward to offset future years taxable income subject to certain
limitations. Due to a greater than 50% change in stock ownership during 1993 the
utilization of net operating loss carryforward generated to the date of such
change is limited. Moreover, other shareholder changes includingadversely affected by the possible issuance
by the Company of additional shares in one or more financings may
further limit the utilizationas a result of the operating loss carryforward.
Issuanceexercise of Preferred Stock Barriersoutstanding warrants and options.
As of June 30, 2002, we had granted options covering 1,157,251 shares of our
common stock under our stock option plans. In addition, we had issued warrants
covering 1,358,375 shares of common stock and have notes outstanding convertible
into up to Takeover.937,500 shares of common stock. The Boardshares of Directors may issue one or more seriescommon stock issuable
in satisfaction of Preferred Stock
without any action on the partthese obligations represents approximately 52% of the stockholders of the Company, the existence
and/or terms of which may adversely affect the rights of holders of Common
Stock. Further, the issuance of Preferred Stock may be used as an
"anti-takeover" device without further action on the part of the stockholders.
Issuance of Preferred Stock, which may be accomplished through a public offering
or a private placement to parties favorable to current management, may dilute
the voting power of holders of Common Stock (such as by issuing Preferred Stock
with super voting rights) and may render more difficult the removal of current
management, even if such removal may be in the stockholders' best interest.
Absence of Dividends.
The Company does not expect to pay cash or stock dividends on its Common
Stock in the foreseeable future. To the extent the Company has earnings in the
future, it intends to retain such earnings in the business operations of the
Company.
Limitation on Director Liability.
As permitted by the Delaware General Corporation Law ("DGCL"), the
Company's Certificate of Incorporation limits the liability of directors to the
Company or its shareholders for monetary damages for breach of a director's
fiduciary duty, except for liability in four specific instances. These are for
(i) any breach of the director's duty of loyalty to the Company or its
shareholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or knowing violations of law, (iii) unlawful payments of
dividends or unlawful stock purchases or redemption's as provided in Section 174
of the Delaware General Corporation Law, or (iv) any transaction from which the
director derived an improper personal benefit.our
outstanding shares at June 30, 2002. As a result of the 7
Company'sactual or potential sale
of these shares into the market, our common stock price may decrease.
Concentration of ownership
As of June 30, 2002, our chief executive officer, Clifford G. Brockmyre II, is
our largest stockholder, owning approximately 21% of the issued and outstanding
shares of our common stock. Mr. Brockmyre, as a result, effectively controls all
our affairs, including the election of directors and any proposals regarding a
sale of the Company or its assets or a merger.
Some provisions in our charter provisiondocuments and the DGCL, shareholdersbylaws may have anti-takeover
effects.
Our certificate of incorporation and bylaws contain provisions that may make it
more limited
rightsdifficult for a third party to recover againstacquire us, with the result that it may
deter potential suitors. For example, our board of directors is authorized,
without action of the stockholders, to issue authorized but unissued common
stock and preferred stock. The existence of undesignated preferred stock and
authorized but unissued common stock enables us to discourage or to make it more
difficult to obtain control of us by means of a merger, tender offer, proxy
contest or otherwise.
Absence of dividends to shareholders.
We have never declared a dividend on our common stock. We do not anticipate
paying dividends on the common stock in the foreseeable future. We anticipate
that earnings, if any, will be reinvested in the expansion of our business and
debt reduction.
We have agreed to limitations on the potential liability of our directors.
Our certificate of incorporation provides that, in general, directors will not
be personally liable for monetary damages to the company or our stockholders for
a breach of fiduciary duty. Delaware Anti-Takeover Statute; IssuanceAlthough this limitation of Preferred Stock; Barriers to
Takeover.
The Company is a Delaware corporation and is subject to the prohibitions
imposed by Section 203 of the DGCL, which is generally viewed as an
anti-takeover statute. In general, this statute prohibits the Company from
entering into certain business combinations without the approval of its Board of
Directors and, as such, could prohibit or delay mergers or other attempted
takeovers or changes in control with respect to the Company. Such provisions may
discourage attempts to acquire the Company. In addition, the Company's
authorized capital consists of thirty-one million shares of capital stock of
which thirty million shares are designated as Common Stock and one million
shares are designated as Preferred Stock. No class other than the Common Stock
is currently designated and there is no current plan to designate or issue any
such securities. The Board of Directors, without any action by the Company's
shareholders, is authorized to designate and issue shares in such classes or
series (including classes or series of Preferred Stock) as it deems appropriate
and to establish the rights, preferences and privileges of such shares,
including dividends, liquidation and voting rights. The rights of holders of
Preferred Stock and other classes of Common Stock that may be issued, may be
superior to the rights granted to the holders of the existing classes of Common
Stock. Further, the ability of the Board of Directors to designate and issue
such undesignated shares could impede or deter an unsolicited tender offer or
takeover proposal regarding the Company and the issuance of additional shares
having preferential rights could adverselyliability does not
affect the voting power and other
rightsavailability of holdersequitable remedies such as injunctive relief or
rescission, the presence of Common Stock. Issuance of Preferred Stock, which may be
accomplished through a public offering or a private placement to parties
favorable to current management, may dilute the voting power of holders of
Common Stock (such as by issuing Preferred Stock with super voting rights) and
may render more difficult the removal of current management, even if such
removal may bethese provisions in the stockholders' best interests. Any such issuancecertificate of Preferred Stockincorporation
could prevent the holdersus from recovering monetary damages.
We must maintain compliance with certain criteria in order to maintain listing
of Common Stock from realizing a
premium on their shares.
Authorized or Outstanding Options and Warrants
As of the date of this Prospectus there outstanding options to purchase
559,526our shares of Common Stock pursuant to the Company's stock option plans at
exercise prices ranging from $1.38 to $3.00 and outstanding Common Stock
purchase warrants to purchase 228,820 shares of Common Stock at exercise prices
of $1.00 to $8.70, and a weighted average exercise price of $6.57. To the extent
that the outstanding stock options and warrants are exercised, dilution to the
interest of the Company's shareholders will occur. Moreover, the terms upon
which the Company will be able to obtain additional equity capital may be
adversely affected since the holders of the outstanding options and warrants can
be expected to exercise them at a time when the Company would, in all
likelihood, be able to obtain any needed capital on terms more favorable to the
Company than those provided in the outstanding options and warrants.
Possible Delisting of Common Stock from Nasdaq System
The Company's Common Stock is currently listed on the Nasdaq Small Cap
Market. The continued listing criteria formarket.
Our common stock is traded on the Nasdaq Small Cap Market include,
among other things, $2 million inSmallCap Market. In order to maintain
this listing, we are required to meet certain requirements relating to our stock
price and net tangible assets of $2.0 million (stockholders' equity, less
unamortized goodwill). If we fail to meet these requirements, our stock could be
delisted. If our stock is delisted, it will trade on the OTC Bulletin Board or
in the "pink sheets" maintained by the National Quotation Bureau Incorporated.
As a public floatconsequence of 500,000
shares with asuch delisting, an investor could find it more difficult to
dispose of or to obtain accurate quotations as to the market value equalof our
securities. Among other consequences, delisting from Nasdaq may cause a decline
in our stock price
9
and difficulty in obtaining future financing. In order to $1 million, two market makersregain compliance with
these requirements, and a minimum
bid priceto stem future losses we discontinued the Plastics
Group. Additionally, we raised additional capital through private placements,
and through the conversion of $1 per shareaccrued salaries to officers to shares of Common Stock. While the Company currently meets
eachcommon
stock, and conversion of the continued listing requirementsnotes payable to our president to shares of the Nasdaq Small Cap Market
system,
8
there is no assurance thatcommon
stock.
The liquidity of our stock could be severely reduced if it will continue to meet such requirements.
Accordingly, no assurance can be given that the Company's securities will
continue to be listed on the Nasdaq Small Cap Market.
"Penny Stock" Regulations May Impose Certain Restrictions on Marketability of
Securities.becomes classified as
"penny stock".
The Securities and Exchange Commission has adopted regulations which generally
define a "penny stock" to be any non-Nasdaq equity security that has a market
price (as therein defined) of less than $5.00 per share or with an exercise
price of less than $5.00 per share. If our securities were subject to certain exceptions. If the
Securities offered
hereby are removed from listingexisting rules on NASDAQ atpenny stocks, the market liquidity for our securities could be
severely adversely affected. For any time followingtransaction involving a penny stock, unless
exempt, the Effective
Date, the Securities may become subject to rules that imposerequire substantial additional disclosure obligations and
sales practice requirementsobligations on broker-dealers who sell such Securitieswhere the sale is to persons other
than established customers and accredited investors (generally, those persons
with assets in excess of $1,000,000 or annual income exceeding $200,000, or
$300,000 together with their spouse). For transactions covered by these rules,
the broker-dealer must make a special suitability determination for the purchase
of the Securitiescommon stock and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any transaction involving a
penny stock, unless exempt, the rules require the delivery, prior to the
transaction, of a risk disclosure document mandated by the Commission relating
to the penny stock market. The broker-dealer also must disclose the commissions
payable to both the broker-dealer and the registered representative, current
quotations for the securities and, if the broker-dealer is the sole market-maker,market
maker, the broker-dealer must disclose this fact and the broker-dealer's
presumed control over the market. Finally, monthly statements must be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks. Consequently, the "penny
stock" rules may restrict the ability of broker-dealers to sell the common stock
and accordingly the market for our common stock.
WHERE YOU CAN FIND MORE INFORMATION
We are required to comply with the informational and reporting
requirements of the Securities Exchange Act of 1934, as amended. As required by
that statute, we have filed various reports, proxy statements and other
information with the Securities and Exchange Commission. You may affectinspect these
reports, proxy statements and other information at the abilitypublic reference
facilities of purchasersthe Securities and Exchange Commission at its principal offices at
Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at its regional offices located at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. You can get copies of these reports, proxy statements and
other information from these offices by paying the required fees. Please call
the Securities and Exchange Commission at (800) SEC-0330 for further information
regarding the operation of its public reference room. These reports, proxy
statements and other information can also be accessed over the Internet at the
web site maintained by the Securities and Exchange Commission at
http://www.sec.gov.
We have filed a registration statement on Form S-3 with the Securities and
Exchange Commission under the Securities Act regarding the shares of our common
stock covered by this prospectus. This prospectus, which forms a part of that
registration statement, does not contain all of the information included in that
registration statement and its accompanying exhibits. Statements contained in
this offeringprospectus regarding the contents of any document are not necessarily
complete and are qualified in their entirety by that reference. You should refer
to sellthe actual document as filed with the Securities inand Exchange Commission.
10
Reports to Security Holders
We furnish our stockholders with annual reports containing audited
financial statements. In addition, we are required to file reports on Forms 8-K,
10-QSB and 10-KSB with the secondary market.
Risks AssociatedSecurities and Exchange Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by us with Forward-Looking Statements Includedthe Securities and Exchange
Commission are incorporated in this Prospectus.
This Prospectus contains certain forward-looking statements regarding the
plans and objectives of management for future operations. The forward-looking
statements included herein are based on current expectations that involve
numerous risks and uncertainties. The Company's plans and objectives are based,
in part, on assumptions involving the continued expansion of business.
Assumptions relating to the foregoing involve judgments with respect to, among
other things, future economic, competitive and market conditions and future
business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. Although the
Company believes that its assumptions underlying the forward-looking statements
are reasonable, any of the assumptions could prove inaccurate and, therefore,
there can be no assurance that the forward-looking statements included in this
Prospectus will prove to be accurate. In light of the significant uncertainties
inherent in the forward-looking statements included herein, particularly in view
of the Company's early stage operations, the inclusion of such information
should not be regarded as a representationprospectus by the Company or any other person
that the objectives and plans of the Company will be achieved.
9
THE COMPANY
The following is a brief summary of the Company's business. Reference is made to
the information contained in (a) Item 1 of the Company'sreference:
(1) Annual Report on Form 10-KSB for the fiscal year ended December 31,
1996,2001.
(2) Quarterly Report on Form 10-QSB for the quarter ended March 31,
2002.
(3) Current Reports on form 8-K dated February 14, 2002, March 15, 2002
and March 29, 2002.
(4) The description of our Common Stock as amended, andcontained in our Registration
Statement on Form 8-A.
Each document filed after the financial
statements and notes contained therein, and (b)date of this prospectus under Section 13(a),
13(c), 14 or 15(d) of the Company's Quarterly Reports
and other reportsSecurities Exchange Act but before this offering
terminates is incorporated hereinin this prospectus by reference for a more thorough
presentationand is to be treated
as part of this prospectus as of the Company's business and financial condition.date it is filed. Any statement contained
in a document incorporated or deemed to be incorporated in this prospectus by
reference is modified or superseded to the extent that a statement contained in
this prospectus or in any other subsequently filed document that is incorporated
in this prospectus by reference modifies or supersedes that statement.
We will provide, without charge, each person to whom a copy of this
prospectus is delivered, a copy of any document incorporated by reference in
this prospectus (other than exhibits, unless those exhibits are specifically
incorporated by reference in those documents) if it is requested. Requests
should be directed to Infinite Group, Inc., (the "Company") does business2364 Post Road, Warwick, Rhode
Island 02886, Attention: Clifford G. Brockmyre II, President and Chief Executive
Officer.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY US. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE OF SHARES OF OUR COMMON STOCK
COVERED BY THIS PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN OUR AFFAIRS SINCE THE DATE OF THIS
PROSPECTUS OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH IT RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY CIRCUMSTANCES IN
WHICH THE OFFER OR SOLICITATION IS UNLAWFUL.
11
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference in this
prospectus contain forward-looking statements that involve substantial risks and
uncertainties. You can identify these statements by forward-looking words such
as "anticipate," "believe," "could," "estimate," "expect," "intend," "may,"
"should," "will" and "would" or similar words. You should read statements that
contain these words carefully because they discuss our future expectations,
contain projections of our future results of operations or of our financial
position or state other "forward-looking" information. We believe that it is
important to communicate our future expectations to our stockholders. However,
there may be events in the fieldsfuture that we are not able to accurately predict or
control. The factors listed above in the section captioned "Risk Factors," as
well as any cautionary language in this prospectus, provide examples of risks,
uncertainties and events that may cause our actual results to differ materially
from the expectations we describe in our forward-looking statements. Before you
invest in our common stock, you should be aware that the occurrence of the
events described in these risk factors and elsewhere in this prospectus could
have a material adverse effect on our business, results of operations, financial
position and the price of our common stock.
12
THE COMPANY
BUSINESS
We operate through two business segments, our Laser Group and our Photonics
Group.
Revenues from our Laser Group for the quarter ended March 31, 2002 were
$1,529,046 (69.3% of total quarterly continuing revenues) compared to $1,961,200
for the quarter ended March 31, 2001. Revenues related to the Photonics Group in
the quarter ended March 31, 2002 were $678,077 (30.7% of total quarterly
continuing revenues) compared to $108,013. Each business segment is essential to
our overall growth. The Laser Group has been in business for over twenty years,
while the Photonics Group started just over one year ago. Research and
development performed in the Laser Group led to the original patent on the diode
technology that became the core business of the Photonics Group. We expect the
Laser Group to grow at the rate of the general economy, and for the Photonics
Group to grow from approximately $1.2 million in annual revenues in 2001 to in
excess of approximately $5.7 million of revenues from the DARPA contract in
2002. We anticipate developing diode lasers for defense, telecommunications,
materials processing, laser material processing, advanced manufacturing methods,printers, and laser-application
technology.medical applications and anticipate
that the Photonics Group will continue to grow much more rapidly than the Laser
Fare is the main operating subsidiary, which is wholly ownedGroup. In general, we expect most commercial and was acquired in July 1994governmental customers to pay
for stock. Additionally, Infinite has two
operating divisions of Laser Fare, the Advance Technology Group ("ATG"), engaged
in contract research and development in order to design diodes specific to
their application in terms of wattage output needed and ExpressTool Corp.other characteristics.
During 2001 and the first quarter of 2002, we also had a Plastics Group, which
consisted of two subsidiaries, Express Pattern, Inc. (EP) and Osley & Whitney,
Inc. (O&W). Our Plastics Group provided rapid prototyping services and
proprietary mold building services. In November 2001 and December 2001, our
board of directors determined to dispose of O&W and EP. Our plan consisted of
shutting down the operations of O&W and selling the assets of EP. The sale of EP
was consummated on March 14, 2002. The O&W equipment was sold in March 2202. The
O&W land and building were sold at auction on July 16, 2002 for $650,000. A
closing of this sale is scheduled for August 8, 2002. This closing will complete
the liquidation of the O&W assets, resulting in a net obligation to the secured
lender, including accrued interest and closing expenses, of approximately
$200,000. The obligation of O&W to the secured lender was guaranteed by
Infinite. Accordingly, we will assume that remaining outstanding balance. The
secured lender has tentatively agreed with us to convert the balance into a term
loan amortizing monthly based upon a seven year amortization schedule, with a
balloon payment due eighteen months from issuance. It is anticipated that this
note will be executed and delivered following the closing of the sale of the
land and building.
The Laser Group
Our Laser Group provides comprehensive laser-based materials and processing
services (cutting, welding, drilling and assembly) to aerospace, power
generation and medical device customers. As to the Laser Group, the majority of
revenues are derived from one-time purchase orders, usually from repeat
customers such as General Electric, United Technologies, Barnes Aerospace, Dey
Laboratories, etc. Work begins when materials arrive from the customer (our
inventories are minimal and the customer is responsible for the quality of the
materials), ("ExpressTool"and we cut, weld, drill and assemble the parts according to
engineering drawings and specifications provided by the customer or determined
by our engineers with customer approval. Upon completion of the parts, they are
inspected by quality control personnel, compared to the engineering
specifications, packaged and delivered to the customer. The customer is billed
for the number of parts delivered.
The Laser Group uses 26 laser workstations to process parts ranging in size from
very large (jet engine or gas turbine parts) to very small medical products,
such as stents (stents are medical implants used to open
13
veins for better blood flow). Substantially all of our laser workstations employ
multi-axis lasers, commonly used for industrial component fabrication. One of
our laser workstations uses a new system developed with and licensed from Sandia
National Laboratories (Sandia). This workstation uses a process called Laser
Engineered Net Shaping (LENS(R)), createdwhich was developed cooperatively at Sandia by
Sandia and a consortium that included our Laser Group, Ford, Motorola, Lockheed
Martin and others. The LENS(R) workstation is used to exploit high productivity production toolingmake parts or resurface
parts directly in metal by introducing powdered metals through a feeder system,
melting the airborne powdered metals as they pass through a small tube with a
laser beam, and rapid manufacturing.depositing the metal on to a surface. This process is computer
controlled and the systems deposit metals based on information provided from
three-dimensional engineering files, such as AutoCad(R). LENS(R) workstations
are useful for the overhaul and repair of expensive aerospace parts that would
otherwise be discarded, and for depositing rare metals, such as titanium, in
complex structures used in medical devices. Lockheed Martin, Barnes Aerospace,
United States Government military overhaul depots and Triton Systems are our
primary customers to date for these services.
To meet aerospace customer needs, our Laser Fare subsidiary is certified for
overhaul and repair of jet engine and aerospace parts by the FAA. We maintain
the overhaul and repair license in order to perform laser material processing
services on jet engine parts (cutting, welding, drilling) and to use the LENS
process to repair or deposit titanium or other metals to aerospace components.
To become FAA certified for overhaul and repair of jet engine and aerospace
parts, Laser Fare contacted the FAA and submitted a quality manual and the
required procedures for the parts involved. After the FAA staff reviewed the
documentation, FAA inspectors visited the facility and performed an inspection.
Thereafter, they require an inspection if procedures are changed. Our last
change was in 2000, for which we passed inspection. We are subject to audit by
the FAA at any time, either on a scheduled or periodic basis, or at our request
if we change procedures. Loss of the license could impair our ability to conduct
overhaul and repair of jet engine and aerospace parts.
Additionally, we are registered with the FDA as a Contract Manufacturer of
medical devices to produce products such as asthma testing devices for Dey
Laboratories (in which some of the components are cut using laser workstations).
Although we are subject to quality control audits by the FDA at any time, either
on a scheduled basis or if the FDA believes it has a quality issue, we have
never been audited by their inspectors. However, our medical customers are
responsible for the inspection, sale and distribution of their products and
devices and we do not believe we have liability to end-users. The Companyprocess for
registration as a contract manufacturer involves completion of an application
Form FDA 2891A, which Laser Fare completed in 1995, and renewal forms every two
years thereafter. Loss of the registration could impair our ability to perform
contract manufacturing of medical devices or components.
Our Laser Group also provides laser-related contract research and development.
We are both a prime contractor and subcontractor on several projects sponsored
by the Defense Advanced Research Projects Agency (DARPA). We are a subcontractor
on all four of DARPA's Mesoscopic Integrated Conformal Electronics (or MICE)
programs. Mesoscopic refers to "handheld", and MICE programs are aimed at
providing a series of sophisticated handheld devices for military, industrial
and consumer use based on very small electronic components, many of which may be
manufactured using lasers. Other research and development projects include
research for the United States Naval Underwater Warfare Center, the Electric
Boat division of General Dynamics, and the United States Air Force Research
Laboratory (AFRL).
The Laser Group employs 68 full-time technical and engineering personnel in
Smithfield and Narragansett, RI in 16,800 square feet of facilities that we own
and 8,326 square feet of facilities that we lease.
14
The Photonics Group
Our Photonics Group develops and markets diode lasers for source and pump
lasers and semiconductor optical amplifiers. Diode lasers and amplifiers are
small semiconductor products (as small as one millimeter). The structure of a
diode laser is much the same as a basic laser, with two specially designed slabs
of semiconductor material on top of each other, with another material in between
them forming the "active layer." An electrical current is sent through the
device in order to excite electrons, which can then fall back to the non-excited
ground state and give out photons ("particles" of light). Depending on the power
generated (as measured in watts) and other characteristics, the laser energy
generated can be used as the light source for a wide variety of products ranging
from being the light source for fiber optic cable to the energy source to cut
metals in materials processing equipment. Just as light bulbs can be designed
with different shapes, characteristics and wattage for different applications,
we can design diodes to provide different characteristics and wattages to meet
specific customer needs.
An amplifier couples two or more of these diode lasers in such a fashion
that the output of the second or third diode in terms of wattage is much greater
than one diode laser alone.
Photonics is the science of generating and harnessing light to do useful
work. Lasers and fiber optics are the best-known expressions of photonics
technology. We believe photonics technology will be as important to the 21st
century as electronics was to the 20th century.
The basic unit of light is the photon, while in electronics it is the
electron. Because photons are massless and travel faster than electrons,
photonic devices can be smaller and significantly faster than electronic
devices. For example, replacing electronics (copper wire) with photonics (fiber
optic cable) boosts the capacity of telecommunications transmission lines by a
factor of 10,000.
Photonic components are the "enabling technology" in many familiar
consumer products including CD-ROM players, digital cameras, displays on laptop
computers and calculators, fiber optic cable for telephones, cable television
and networked computer systems. In industry, photonic "eyes" enable robots to
"see." Photonics is also found in semiconductor manufacturing as well as
analytical and process-monitoring applications. In medicine, photonics is at the
largest shareholdercore of Spectra Science,diagnostic instrumentation, laser microsurgery, and filmless real-time
imaging.
In April 2001, we organized Infinite Photonics, Inc. to develop and market
laser diodes based on our proprietary, patented and patent pending grating
coupled surface emitting lasers (GCSEL) diode technology platform developed by
our Laser Group's research and development unit over the last four years. In
addition to our staff researchers, we also engaged researchers at the Photonics
Research Center at the University of Connecticut, the Ioffe Institute in St.
Petersburg, Russia and the Center for Research and Education in Optics and
Lasers at the University of Central Florida in Orlando to develop applications
of our GCSEL's. To date we have obtained one patent (expiring in 2018), have ten
patents pending and an additional ten patents are under development for GCSEL
and related technologies. We own the intellectual property, which was formed
in August 1996.addition to
patents and patent applications, includes the trade secrets and processing
techniques used to manufacture these diodes.
Our diode lasers are produced from two to four inch semiconductor wafer
material, usually indium phosphide (InP), gallium arsenide (GaAs), or gallium
nitride (GaN). The semiconductor wafer material chosen determines the wavelength
of the laser beam, such as 980 nanometers for GaAs, 1550 nanometers for InP, and
1480 nanometers for GaN. A nanometer is one billionth of a meter. The
semiconductor diode wafers we currently use in the manufacture of GCSEL's are
processed at Industrial
15
Microphotonics Company (a TRW subsidiary). We are currently qualifying a second
wafer-manufacturing source, as required by most larger telecommunications
equipment manufacturers.
A three-inch semiconductor wafer has the potential to produce
substantially more than 2,000 individual diode lasers as small as a millimeter
by one and one-half millimeters. Each diode can emit laser energy (lase) with
continuous power of greater than one watt. Each individual diode has two
sections, active and passive. The passive area of each diode on the wafer is
etched with one of a variety of grating patterns. It is through this grating on
the surface of the diode that the laser beam emits, hence the name, Grating
Coupled Surface Emitting Laser. At the opposite end of the diode from the
grating, a contact is placed on the diode to provide electrical power, and a
thermo-electric cooler or heat sink may be used to cool the diode during
operation. When electrical power is applied to the contact, lasing begins in the
semiconductor material, and laser energy is emitted through the grating. The
device is packaged to protect the diode, along with a very small focusing lens,
and that lens is used to focus the laser beam into the end of the fiber optic
cable.
Our competitors produce diode lasers that can either emit from the edge of
the wafer material, such as processes known as Fabry-Perot or Distributed
Feedback diode lasers, or through the surface, such as through a surface
emitting technology different from ours, known as Vertically Coupled Surface
Emitting Lasers. Each technology has different characteristics in terms of cost,
power output and laser beam quality. We believe that our GCSEL diodes produce
the best overall combination of cost, power and beam quality of emitted light
for high power (0.5 to 8 watts) applications used in defense,
telecommunications, materials processing, laser printers and medical device
equipment. Because the beam comes out of the grating in a cylindrical shape (low
beam spreading), our diodes require lower cost focusing optics. Emitting the
beam from the wide surface of the wafer (as opposed to the narrow edge of the
wafer) allows our diodes to be tested on the wafer, which provides lower test,
burn-in and packaging costs. Finally, the very narrow line width of the beam
allows for tunability over a greater number of available channels. The qualities
of our diode lasers in comparison to competitive diodes include:
o Power of up to eight watts compared to currently commercially
available power of under one watt;
o Beam spreading of less than one degree as compared to 12 to 30
degrees for edge emitted laser energy (which reduces the cost and
complexity of the optics needed to focus to the fiber); and
o Relatively narrow line width of emitted laser energy (which allows
for more than 50 communication channels on a single fiber optic
cable).
We have many of the same disadvantages of most emerging technology
start-ups, which includes among others: market acceptance of a new technology;
customer commitment to engineer or re-engineer their products to incorporate our
technology; the need to expand rapidly and attract talented personnel; and the
need to raise capital to fund that expansion.
On January 23, 2002, Infinite Photonics, Inc. signed and commenced a $12.0
million research and development contract with DARPA, which is scheduled to
conclude by the end of 2003. Payments under this contract will be received as
services are rendered and billed for. As of June 30, 2002, approximately $1.9
million has been billed under this contract in the current year. Of the
remaining contract balance we believe that an additional $3.8 million will be
billed during 2002 with the balance billed during 2003. If we fail to meet
technical milestones and defense contract audit requirements, DARPA may
terminate the contract which could result in less than $12 million of revenue to
us under this contract. The purpose of the contract is to provide DARPA with
pump and source laser diodes and grating coupled semiconductor optical
amplifiers with powers much higher than the current industry standard of about
0.3 watts (more than one watt with a goal as high as ten watts), high repetition
rates (up to 20,000 laser pulses per
16
second), and high beam quality (minimum beam spreading of the laser). We will
own the intellectual property developed under the contract.
In March 2002, we signed a one-year lease with the Central Florida
Research Park in Orlando, Florida for a 6,750 square foot laboratory and
manufacturing facility. This facility replaces laboratory and office space we
were leasing on a short-term basis from the University of Central Florida.
Depending on market acceptance of our products once we achieve full production,
we may require more space in the foreseeable future.
Our Photonics Group employs 12 full-time personnel. We expect to grow our
Photonics Group staff to approximately 30 to 40 full-time employees by the end
of 2002. We currently have subcontractors producing raw material (semiconductor
wafers), electrical drivers, power supplies and devices to control the heat
produced by our diodes (thermal management). The proprietary grating patterns
etched into the semiconductor wafers for different applications are accomplished
at our current facilities in Orlando, FL and in St. Petersburg, Russia at the
Ioffe Institute.
We expect to acquire a minimum of approximately $1.2 million in capital
equipment over the next year through equipment operating leases that will be
negotiated under terms available at the time of acquisition. Additionally, we
currently have semiconductor steppers and other relatively high cost equipment
available to us on a per hour basis from the University of Central Florida, as
well as from other commercial facilities. We estimate that this equipment will
support up to $10.0 million in annual revenue capacity. Our Florida facility is
certified for exemption by the Governor's Office from sales and use taxes under
Florida's Semiconductor, Defense and Space Technology Facilities Program.
Dey Laboratories, Inc. accounted for 12% and 7% of our revenues during the
year ended December 31, 2000 and 2001, respectively. DARPA accounted for 12 % of
our revenues for 2001 and we expect DARPA to account for over 40% of our
consolidated revenues for the year ending December 31, 2002.
We intend to continue to use a combination of direct sales to customers,
contract research and development for new and existing customer applications and
early stage prototype assistance to foster our Photonics Group's growth.
We were incorporated under the laws of the state of Delaware on October
14, 1986. On January 7, 1998, we changed our name from Infinite Machines Corp.
to Infinite Group, Inc. Our principal executive offices are located at 2364 Post
Road, Warwick, RI 02886 and our facsimile number is (401) 738-6180. Our
subsidiaries are located in Rhode Island and Florida. We maintain sites on the
World Wide Web at www.infinite-group.com, www.laserfare.com, and
www.infinitephotonics.com. Information contained on any of our websites do not
constitute a part of this Report on Form 10-KSB.
RECENT DEVELOPMENTS
ChangeOsley & Whitney Liquidation
During 2002, we continued to liquidate the assets of our Osley & Whitney
(O&W) subsidiary following the discontinuance of its operation in Officers.
Effective January 1, 1998, Clifford G. BrockmyreNovember 2001.
The O&W equipment was appointedsold at auction in March 2002 for approximately $415,000.
The O&W land and building were sold at auction in July 2002 for $650,000. A
closing of this sale is scheduled for August 8, 2002. This closing will complete
the liquidation of the O&W assets, resulting in a net obligation to the positionsecured
17
lender, including accrued interest and closing expenses, of Chief Executive Officerapproximately
$200,000. The obligation of O&W to the secured lender was guaranteed by us.
Accordingly, we will assume that remaining outstanding balance. The secured
lender has tentatively agreed with us to convert the balance into a term loan
amortizing monthly based upon a seven year amortization schedule, with a balloon
payment due eighteen months from issuance. It is anticipated that this note will
be executed and delivered following the closing of the Company.
Recent Financing Transactions
Insale of the land and
building.
Termination of Equity Line of Credit
On July 23,2002 we terminated the equity line of credit agreement which we
entered into with Cockfield Holdings Limited (Cockfield) on November 30, 2000.
As a result, we were released, and we released Cockfield, from any further
obligation thereunder.
As consideration for establishing the equity line of credit, we granted
Cockfield warrants to purchase up to 200,000 shares of our common stock. As
consideration for the services rendered by Jesup & Lamont as placement agent in
connection with the equity line of credit, we granted Jesup & Lamont warrants to
purchase up to 100,000 shares of our common stock. These warrants, covering
300,000 shares of our common stock, are exercisable at any time prior to
November 20, 2003, for $3.135 per share and survived the termination of the
agreement. The resale of the shares underlying these warrants are covered by
this prospectus.
Laurus Financings
On June 1998, the Company consummated a financing transaction whereby its
Chief Executive Officer and President, Clifford G. Brockmyre, loaned21, 2002, we issued an additional $500,000 convertible note to
the
Company an aggregate of $1 million.Laurus Master Fund, Ltd. The note evidencingis convertible at an initial conversion price
of $2.00 (subject to downward adjustment upon a default by the loan is for a term
of fifteen yearscompany under the
note and related agreements. The note bears interest at 15% per annum (subject
to downward adjustment based upon a conversion formula), payable monthly and may
be repaid by us at any time without penalty. $100,000 of the ratenet proceeds of
9.0%this financing were used to fund operations at our Photonics subsidiary and the
balance was applied for the first twelve
months and adjusts annually thereafter togeneral corporate purposes. In connection with this
financing, we issued Laurus a rate equal to the one-year T-Bill
rate plus 3.5%. Mr. Brockmyre also loaned the Company $250,000 earlier this
year. In consideration for the loans, the Company granted to Mr. Brockmyre
warrantsfive-year warrant to purchase 2,680,00025,000 shares of Company Common Stock exercisableour
common stock at $1.12$2.40 per share.
In connection with the eventclosing of this financing round, we agreed to
certain amendments to the $1 million note issued to Laurus in February 2002 and
the related agreements. As a result, the note was modified to provide for its
convertibility into shares of our common stock at the option of the holder at a
conversion price of $2.00 per share. Further, the exercise price of the warrant
to purchase 50,000 shares of our common stock was reduced to $2.40 per share. In
consideration of these amendments, Laurus agreed to defer certain registration
obligations that we had with respect to the shares issuable upon conversion of
the note and warrant issued in February 2002.
We have agreed with Laurus to register for resale both the shares issuable
upon exercise of the February and June warrants and the shares issuable upon
conversion of the February and June notes (with respect to the notes, based upon
a calculation of 125% of the shares issuable at the initial conversion price).
The shares issuable upon conversion of the June and February notes and the
exercise of the June and February warrants are prepaid withinincluded in this prospectus.
Investor Relations Agreement
On June 18, 2002, we entered into an agreement with Investor Relations
Services, Inc. to provide us with investor and public relations services over a
two-year period. Under the first year,agreement, Investor Relations Services is required to
expend up to one-half$500,000 in furtherance of such warrants are cancelable.our investor and public relations
programs. In exchange for these services, we issued Investor Relations Services
500,000 unregistered
18
shares of our common stock in a private placement transaction. These shares were
valued at $750,000 ($1.50 per share) and this expense will be amortized as a
general and administrative expense over the 24 month period of the agreement.
Sale of Express Pattern Assets
On March 14, 2002, we sold the net assets of our Express Pattern
subsidiary for $725,000, consisting of $575,000 in cash (of which $300,000 was
paid to the O&W secured lender) and a five-year 8% subordinated $150,000 note,
due upon maturity with quarterly interest payments. The purchasers included a
former employee of Express Pattern and Thomas J. Mueller, our chief operating
officer, who is a passive investor in the purchasing entity. The sale was
negotiated at "arm's length" by disinterested management with the former
employee and his financier.
Board of Directors Resignation
J. Terence Feeley, retired as a director and officer of the Company on
July 1, 2002. He will continue to be affiliated with us as a consultant pursuant
to a consulting agreement.
USE OF PROCEEDS
This Prospectus is being utilized by H.J. Meyers & Co. Inc. in connection
with offers and sales in marketing making transactions in the Common StockAll of the Company. Accordingly,shares of our common stock offered by this prospectus are being
registered for the Companyaccount of the selling stockholders. We will not receive any
proceeds of the transactions contemplated hereby.
PLAN OF DISTRIBUTION
This Prospectusproceeds from the sale of these shares. However, we will be used by H.J. Meyers & Co. Inc. in connection with
offers and sales in market-making transactions inreceive the
Common Stockproceeds from the exercise of the Company. H.J. Meyers & Co. Inc. may act as a principal or agent in such
transactions. The Common Stock and Warrants maywarrants covering the 648,400 shares of common
stock covered by this prospectus to the extent those warrants are exercised.
These proceeds would be offered in negotiated
transactions or otherwise. Sales will be made at prices relatedapproximately $1,958,600 if all the warrants are
exercised. We expect to prevailing
market prices atuse any proceeds from the time of sale. H.J. Meyers & Co. Inc. has no obligation to
make a market in the Common Stock
10
and may discontinue its market-making activities at any time without notice, in
its sole discretion. Northeast Hampton Holdings, LLC, an affiliate of H.J.
Meyers & Co. Inc. is a principal shareholderexercise of the Company.
CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION
Limitationwarrants for
general corporate purposes.
19
SELLING STOCKHOLDERS
The following table sets forth the name and the number of Director Liability; Indemnification
The Company's Certificateshares of Incorporation provides that a directorour
common stock beneficially owned by each selling stockholder as of June 30, 2002
and as adjusted to reflect the sale of the Company willshares offered by this prospectus, by
each selling stockholder. Except as otherwise indicated, the persons listed
below have sole voting and investment power with respect to all shares of common
stock owned by them including those shares not be personally liable to the Company or its stockholders for
monetary damages for breachyet issued. In addition, unless
otherwise indicated, none of the fiduciary dutyselling stockholders has had a material
relationship with us or any of care as a director,
including breaches which constitute gross negligence. By its terms andour affiliates within the past three years. All
information with respect to beneficial ownership has been furnished to us by the
respective selling stockholder.
Shares Beneficially Owned
Prior to Offering(1) Shares Beneficially
----------------------------- Owned After the Offering
Shares ------------------------
Name of Beneficial Owner Number Percent Offered Number Percent
- --------------------------------------- -------- ------- --------- -------- --------
Roger P. Moore (2) 13,750 * 13,750 -- --
Gulati Family, LP (Ramesh Gulati) (2) 13,750 * 13,750 -- --
Douglas J. Rademacher (2) 13,750 * 13,750 -- --
David R. Johnson Living Trust (2)
(David R. Johnson) 27,250 * 13,750 13,500 *
Delivery From Heaven Foundation
(Michael Casey) (3) 54,500 * 27,500 27,000 *
David P. Pilotte 75,000 1.2% 75,000 -- --
Christopher DiNapoli (3) 41,000 * 27,500 13,500 *
John J. Perkins (4) 82,500 1.3% 82,500 -- --
Dana A. Marshall (5) 55,000 * 55,000 -- --
Daniel Cohen 100,000 1.6% 100,000 -- --
Larry Dosser 16,268 * 16,268 -- --
Allan Ligi 117,500 1.8% 117,500 -- --
Idea Capital, Inc. (Sean McEllin) (6) 15,400 * 15,400 -- --
Rhino Capital (Michael Johnson) (7) 34,000 * 34,000 -- --
Christopher Murney (8) 16,500 * 16,500 -- --
John F. Corridan III 3,750 * 3,750 -- --
William M. Johnson 35,000 * 35,000
Richard G. Heidt 50,000 * 50,000
IHC, Inc. (Brian Bussanich) 30,000 * 30,000 -- --
Laurus Master Fund, LTD (9)
(David Grin - Partner) 1,012,500 13.9% 1,012,500 -- --
Rosecrest Venture Management (10)
(Chris DiNapoli & Dave Johnson) 200,000 3.1% 200,000 -- --
Cockfield Holdings, LLC (11)
(David Sims, Lamberto Banchetti) 200,000 3.1% 200,000 -- --
Jesup & Lamont Securities
Corporation(12) (David Rozinov-
Managing Director) 100,000 1.6% 100,000 -- --
20
- ----------
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the Delaware General Corporation Law, however, this provision
does not eliminate or limit the liability of a directorrules of the
Company (i)Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that
person, shares of common stock underlying options and warrants held by
that person that are currently exercisable or exercisable within 60 days
of June 30, 2002 are deemed outstanding. These shares, however, are not
deemed outstanding for breachthe purpose of computing the percentage ownership
of any other person.
(2) Includes 1,250 shares subject to currently exercisable warrants
(exercisable at $4.00 per share through June 15, 2004).
(3) Includes 2,500 shares subject to currently exercisable warrants
(exercisable at $4.00 per share through June 15, 2004).
(4) Includes 7,500 shares subject to currently exercisable warrants
(exercisable at $3.00 per share through June 15, 2004).
(5) Includes 5,000 shares subject to currently exercisable warrants
(exercisable at $4.00 per share through June 15, 2004).
(6) Includes 15,400 shares subject to currently exercisable warrants
(exercisable at $4.00 per share through June 15, 2004).
(7) Includes 34,000 shares subject to currently exercisable warrants
(exercisable at $3.00 per share through November 6, 2004.
(8) Includes 1,500 shares subject to currently exercisable warrants
(exercisable at $3.00 per share through November 30, 2004.
(9) Includes 50,000 shares subject to currently exercisable warrants
(exercisable at $2.40 per share through February 5, 2007), 25,000 shares
subject to currently exerciseable warrants (exerciseable at $2.40 per
share through June 21, 2007), and up to 937,500 shares issuable upon
conversion of outstanding notes. The address of the director's dutyholder is c/o Onshore
Corporate Services Ltd., PO Box 1234 G.T., Queensgate House, South Church
Street, Grand Cayman, Cayman Islands.
(10) Includes 200,000 shares subject to currently exercisable warrants
(exercisable at $3.00 per share through April 15, 2005) in full payment of
loyaltyoutstanding consulting fees which were included in accounts payable.
(11) Includes 200,000 shares subject to currently exercisable warrants
(exercisable at 3.135 per share) though November 29, 2003.
(12) Includes 100,000 shares subject to currently exercisable warrants
(exercisable at 3.135 per share) though November 29, 2003.
PLAN OF DISTRIBUTION
The selling stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock covered by this prospectus on any stock exchange, market or
trading facility on which the Companyshares are traded or itsin private transactions.
These sales may be at fixed or negotiated prices. The selling stockholders (ii) for actsmay
use any one or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174more of the Delaware General Corporation Law (relating to unlawful payments or dividends or
unlawful stock repurchases or redemptions), (iv) for any improper benefit or (v)
for breaches of a director's responsibilities under the Federal securities laws.
The Company' Certificate of Incorporation also provides that each director
or officer of the Corporation serving as a director or officer shall be
indemnifiedfollowing methods when selling shares:
o ordinary brokerage transactions and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law, against all expense liability and
loss (including attorney's fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith.
Section 203 of Delaware General Corporation Law
The Company is governed by the provisions of Section 203 of the General
Corporation Law of Delaware, an anti-takeover law enacted in 1988. In general,
the law prohibits a Delaware public corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transactiontransactions in which the
person became an interest stockholder,
unless it is approvedbroker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a prescribed manner. As a result of Section 203,
potential acquirorsportion of the Company may be discouraged from attemptingblock
as principal to effect
acquisition transactionsfacilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the Company thereby possibly depriving holdersrules of the
Company's Securities of certain opportunitiesapplicable exchange;
o privately negotiated transactions;
21
o short sales;
o broker-dealers may agree with the selling stockholders to sell or otherwise disposea
specified number of such securitiesshares at above-market pricesa stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to such transactions.
Insofar as indemnification for liabilities arisingapplicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The selling stockholders may also engage in short sales against the box,
puts and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection with these trades. The
selling stockholders may pledge their shares to their brokers under the margin
provisions of customer agreements. If a selling stockholder defaults on a margin
loan, the broker may, from time to time, offer and sell the pledged shares.
Broker-dealers engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The selling stockholders and any broker-dealers or agents that are
involved in selling the shares may be permitteddeemed to directors, officers and controlling personsbe "underwriters" within the
meaning of the small
business issuer pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and is, therefore, unenforceable.any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
We will pay all of the expenses relating to the registration of the shares
covered by this prospectus except for selling and brokerage commissions. These
expenses are estimated at $35,000.00.
LEGAL MATTERS
The validity of the securitiescommon stock offered hereby will be passed upon for the
Company by
Morse, Zelnick, Rose & Lander, LLP. Members of Morse, Zelnick, Rose & Lander,
LLP 450 Park Avenue, New York, New
York 10022.
11
own options to purchase 65,000 shares of our common stock.
EXPERTS
The financial statements of the CompanyInfinite Group, Inc. as of December 31, 2001
and 2000, and for the yearyears then ended, December 31,
1997are incorporated by reference in this
Prospectus by reference toprospectus and in the Form 10-KSB have been
so incorporatedregistration statement in reliance onupon the report of
Freed Maxick Sachs & Murphy, PCBattaglia CPAs, P.C., independent certified public accountants,
given onincorporated by reference herein, upon the authority of such firmssaid firm as experts in
accounting and auditing.
TRANSFER AGENT
The Transfer Agent and Registrar for the Shares is American Stock Transfer
Company, 40 Wall Street, 46th Floor, New York, New York 10005.
1222
No dealer, salesperson or any other person has been authorized to give any
information or to make any representation not contained in this Prospectus with
respect to the offering made hereby. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any of the securities offered
hereby to any person or by anyone in any jurisdiction in which such offer or
solicitation may not lawfully be made. Neither the delivery of this Prospectus
nor any sale made hereunder shall, under any circumstances, create any
implication that there has been no change in the information set forth herein or
in the business of the Company since the date hereof.
----------------------
TABLE OF CONTENTS
Page
Available Information ..................................................... 2
Reports to Security Holders ............................................... 2
Incorporation of Certain Documents
by Reference ............................................................ 2
Forward-Looking Statements ................................................ 3
Prospectus Summary ........................................................ 4
Risk Factors .............................................................. 5
The Company ............................................................... 10
Recent Developments ....................................................... 10
Use of Proceeds ........................................................... 10
Plan of Distribution ...................................................... 10
Certain Provisions of the Certificate
of Incorporation and By-Laws ............................................ 11
Legal Matters ............................................................. 11
Experts ................................................................... 12
Transfer Agent ............................................................ 12
Shares of Common StockPROSPECTUS
INFINITE GROUP, INC.
2,253,418 Shares
Common Stock
Dated: ______________________, PROSPECTUS
______________________
, 1998
132002
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
ExpensesThe fees and expenses we incurred in connection with the issuanceoffering are
payable by us and, distribution of the
securities being registered hereunder other than underwriting commissions and
expenses,registration fees, are estimated below. The Selling Stockholders will not pay any of
these expenses.as follows:
SEC Registration Feeregistration fee........................................... $ 100
Printing expenses $ 300*831
Accounting fees and expenses $ 1,000*expenses................................... 15,000
Legal fees and expensesexpenses........................................ 45,000
Printing costs................................................. 1,000
Miscellaneous expenses......................................... 669
--------
Total.................................................... $ 3,000*
Miscellaneous expenses $ 600*
Total $ 5,000*
=========
* estimated62,500
========
Item 15. Indemnification of Officers and Directors
Our Certificate of Incorporation provides that the indemnification
provisions of Sections 102(b)(7) and Officers
Sections 145 of the Delaware General Corporation Law
grantsshall be utilized to the Companyfullest extent possible. Further, the powerCertificate of
Incorporation contains provisions to indemnifyeliminate the officers andliability of our directors to
Infinite or its stockholders to the fullest extent permitted by Section
102(b)(7) of the Company, under certain
circumstancesDelaware General Corporation Law, as amended from time to time.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and subject to certain conditionsofficers as well as other employees and
limitations as stated
therein,individuals against all expenses (including attorneys' fees), judgments, fines and
liabilitiesamounts paid in settlement actually and reasonably incurred by such person in
connection with any threatened, pending or imposed upon them
ascompleted actions, suits or
proceedings in which such person is made a resultparty by reason of suits brought against them as such officers and directors if they
act in good faith and inperson being
or having been a manner they reasonably believe to be indirector, officer, employee or not
opposed to the best interestsagent of the Company and, with respectcorporation. The
Delaware General Corporation Law provides that Section 145 is not exclusive of
other rights to which those seeking indemnification may be entitled under any
criminal
actionbylaw, agreement, vote of stockholders or proceeding, have no reasonable causedisinterested directors or otherwise.
Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to believe their conduct was
unlawful.
The Company'sprovide in its certificate of incorporation provides as follows:
"NINTH: Athat a director of
the Corporationcorporation shall not be personally liable to the Corporationcorporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporationcorporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under Section 174for
unlawful payments of the Delaware General Corporation
Law,dividends or unlawful stock repurchases, redemptions or
other distributions, or (iv) for any transaction from which the director derived
an improper personal benefit. TENTH: (a) RightOur Certificate of Incorporation provides for such
limitation of liability.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, is permitted for our directors, officers or controlling
persons, pursuant to Indemnification. Eachthe above mentioned statutes or otherwise, we understand
that the Securities and Exchange Commission is of the opinion that such
indemnification may contravene federal public policy, as expressed in said Act,
and therefore, may be unenforceable. Accordingly, in the event that a claim for
such indemnification is asserted by any of our directors, officers or
controlling persons, and the Commission is still of the same opinion, we (except
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insofar as such claim seeks reimbursement from us of expenses paid or incurred
by a director, officer of controlling person who was or is made a
party or is threatened to be made a party to or is involved in successful defense of any
action, suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"),proceeding) will, unless the matter has theretofore been
adjudicated by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer,
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmlessprecedent deemed by the Corporation to the fullest extent
authorized by the General Corporation Law, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the extent that such
amendment permits the
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Corporation to provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid orour counsel to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue ascontrolling, submit to a
person who has ceased to be a director,
officer, employee or agent and shall inure tocourt of appropriate jurisdiction the benefit of his or her heirs,
executors and administrators; provided, however, that, except as provided in
paragraph (b) hereof, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation. The right to indemnification conferred in
this Section shall be a contract right and shall include the right to be paid by
the Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that, if the General
Corporation Law requires, the payment of such expenses incurred by a director or
officer (in his or her capacity as a director or officer and not in any other
capacity in which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding, shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Section or otherwise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the Corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of
this Section is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law for the Corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard or conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss,question whether or not indemnification by
it is against public policy as expressed in the II-2
Corporation would haveAct and will be governed by the
powerfinal adjudication of such issue.
At present, there is no pending litigation or proceeding involving any of
our directors, officers or employees as to indemnify such person against such expense,
liabilitywhich indemnification is sought, nor
are we aware of any threatened litigation or loss under the General Corporation Law."proceeding that may result in
claims for indemnification.
Item 16. Exhibits
The following exhibits are filed with this Registration Statement:
Exhibit No. Description
- ----------- ------------------------- --------------------------------------------------------------
5.1 Opinion and consent of Morse, Zelnick, Rose & Lander, LLPLLP*
10-A Agreement between the Registrant and DARPA dated January 2002*
10-B Securities Purchase Agreement, Convertible Note and Warrant
Agreement between the Registrant and Laurus Master Fund, LTD.
dated June 21, 2002*
10-C Amendment No. 1 to Securities Purchase Agreement between the
Registrant and Laurus Master Fund, LTD. dated February 4, 2002
and Allonge to Promissory Note and Warrant*
10-D Termination Agreement between the Registrant and Cockfield
Holdings Limited dated July 23, 10-D 2002*
10-E Warrant Agreement between the Registrant and Rosecrest Venture
Capital dated April 15, 2002*
10-F Amended and Restated Securities Purchase Agreement between the
Registrant and The Estate of Ralph P. Lazzara dated as of
November 14, 2001*
10-G Asset Purchase Agreement among the Registrant, Express
Pattern, Inc., a Delaware corporation, Express Pattern, Inc.,
an Illinois corporation, Thomas Mueller and David Flynn, dated
March 13, 2002*
10-H Waiver letter from First International Capital to legality
of the
securities being registered.*Registrant dated March 13, 2002*
23.1 Consent of Freed Mexick SachsMaxick & Murphy,Battaglia CPAs, PC*
23.2 Consent of Morse, Zelnick, Rose & Lander, LLP (included in
Exhibit 5.1)
24.1*
24 Power of Attorney (included in signature page)Attorney**
- ----------------------------------
* Filed herewith.
** Previously filed.
Item 17. Undertakings
A. The undersigned Registrantregistrant hereby undertakes to:undertakes:
(1) File,to file, during any period in which it offers or sells securities,sales are being made,
a post-effective amendment to this registration statement:
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(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 to:
(i) Include(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.
Notwithstanding the foregoing, any additionalincrease or changeddecrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) to include any material information onwith respect to the plan
of distribution.distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, that are incorporated by reference in this
Registration Statement.
(2) Forthat, for the purpose of determining any liability under the
Securities Act treatof 1933, each such post-effective amendment asshall be
deemed to be a new registration statement ofrelating to the securities
offered therein, and the offering of thesuch securities at that time
shall be deemed to be the initial bona fide offering.offering thereof; and
(3) File a post-effective amendment to remove from registration by means of a post-effective amendment
any of the securities thatbeing registered which remain unsold at the
endtermination of this offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
offering.
B.registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in this 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) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuerRegistrant pursuant to the foregoing provisions, or otherwise,
the small business issuerRegistrant 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 of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the small business issuerRegistrant of expenses incurred or paid by a director, officer or
controlling person of the small business issuerRegistrant in the successful defense of any action,
suit ofor proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the small business issuerRegistrant 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 of 1933 and will be governed by the final adjudication of such
issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrantregistrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Warwick, State of Rhode Island and Providence
Plantations on the 30ththis 6th day of June, 1998.August, 2002.
INFINITE GROUP INC.
By: /s/ Clifford G. Brockmyre --------------------------------------II
-------------------------------
Clifford G. Brockmyre II,
President, and Chief Executive Officer
and Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN AND WOMEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Clifford G. Brockmyre Kenneth S. Rose, or either
one of them,II as his true and
lawful attorney-in-fact and agent, with full power of substitution, and resubstitution, for him and
in his name, place and stead, in any and all capacities, to sign any andor all
pre-amendments or post-effective amendments to this Registration Statement, and to
file the same, with all exhibits thereto, which amendments may make such changes
in this Registration Statement as such agent deems appropriate, and to file any
new registration statement (and any post-effective amendment thereto) which
registers additional securities of the same class and for the same offering as
this Registration Statement in accordance with Rule 462(b) under the Securities
Act (each, a "462(b) Registration Statement"), and the Registrant and each such
person hereby appoints each such Agent as attorney-in-fact to execute in the
name and on behalf of the Registrant and each such person, individually and in
each capacity stated below, any such amendments to this registration statement
and any such 462(b) Registration Statements, and other documents in connection
therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either of them, or
their or his substitutes, may lawfully do or cause to be done by virtue hereof.Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in the
capacities indicated on June 30, 1998.
SignaturesAugust 6, 2002.
Signature Title
- ---------- ---------------------------------------- ----------------------------------------
/s/ Clifford G. Brockmyre II* President, Chief Executive Officer and
- ------------------------- And Director----------------------------------- Chairman of the Board (Principal
Clifford G. Brockmyre II Executive Officer)
/s/ Daniel LandiBruce J. Garreau* Chief Financial Officer
(principal
- ------------------------- financial----------------------------------- (Principal Financial and accounting officer)
Daniel LandiAccounting
Bruce J. Garreau Officer)
/s/ Paul WatsonBrian Q. Corridan* Director
- -------------------------
Paul Watson-----------------------------------
Brian Q. Corridan
/s/ Robert SherwoodMichael S. Smith* Director
- -------------------------
Robert Sherwood
- ------------------------- Director-----------------------------------
Michael S. Smith
*By: /s/ Clifford G. Brockmyre II
-----------------------------
Clifford G. Brockmyre II
Attorney-in-fact
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