As filed with the Securities and Exchange Commission on May 22,November 12, 1996
Registration No. 333-1314
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDERUnder
THE SECURITIES ACT OF 1933
NEMATRON CORPORATION
(Exact name of Registrant as specified in its charter)
Michigan 38-2483796
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5840 Interface Drive
Ann Arbor, Michigan 48103
(313) 994-0591
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
David P. Gienapp
Nematron Corporation
5840 Interface Drive
Ann Arbor, Michigan 48103
(313) 994-0591
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
copies to:
Aleksandra A. Miziolek, Esq.
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243
Approximate date of commencement of proposed sale to public: From
time to time after this Registration Statement is declared effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or investment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or reinvestment plans, please 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 and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the 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. [ ]
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Shares To Be Aggregate Price Aggregate Registration
To Be Registered Registered Per Unit Offering Price Fee
Common Stock 506,330 $6.9375 $3,512,664.30 $1,064.44
(1) Estimated solely for purposes of computing the registration
fee, based upon the average of the high and low prices
reported on the Nasdaq Stock Market's National Market on
November 8, 1996 in accordance with Rule 457.
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933, as amended, or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
SUBJECT TO COMPLETION, DATED MAY 22,NOVEMBER 12, 1996
NEMATRON CORPORATION
945,526506,330 SHARES
COMMON STOCK
The 945,526506,330 shares of Common Stock of Nematron Corporation (the
"Company") offered by this Prospectus are presently outstanding shares that
may be sold from time to time in the market or in other transactions by the
selling shareholders identified in the Prospectus (the "Selling
Shareholders"). See "Plan of Distribution" for methods by which the Common
Stock offered hereby may be sold and "Selling Shareholders and Certain
Transactions" for the names of the Selling Shareholders and a description of
the transactions in which the shares of Common Stock were received by such
holders. This offering is not underwritten. The Company's principal
executive offices are located at 5840 Interface Drive, Ann Arbor, Michigan
48103 and its telephone number at that address is (313) 994-0591.
The Common Stock is traded on The Nasdaq Stock Market SmallCapNational
Market (the "SmallCap"National Market"). The last reportedaverage of the high and low sales
priceprices of the Common Stock on May 17,November 8, 1996, on the SmallCapNational Market was
$10.00.$6.9375.
See "Risk Factors" on page 3 for certain information which should be
carefully considered before purchasing shares of Common Stock offered
hereby.
The shares of Common Stock offered hereby by the Selling
Shareholders will be sold at market prices prevailing from time to time or
otherwise at prices then obtainable. The Company will not receive any of
the proceeds from the sale of Common Stock offered hereby. See "Use of
Proceeds". The Company will pay estimated expenses (including those
incurred by the Selling Shareholders) relating to this offering of
approximately $42,895. A firm commitment underwritten offering of 1,000,000
shares of Common Stock by the Company is currently pending.$17,644.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1996
Information contained herein is subject to completion or amendment.
A registration statement relating to these securities has been filed with
the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be any sale
of these securities in any State in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such State.
No dealer, salesman or other person has been authorized to give any
information or to make any representation other than as contained in this
Prospectus in connection with the offering described herein and, if given or
made, such information or representation must not be relied upon as having
been authorized by the Company or eitherany of the Selling Shareholders. The
delivery of this Prospectus at any time does not imply that the information
herein is correct as of any time subsequent to the date hereof or that there
has been no change in the affairs of the Company. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to buy such
securities in any circumstances in which such offer or solicitation is
unlawful.
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and in
accordance therewith files reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports, proxy statements
and other information may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the following regional offices of the
Commission: New York Regional Office, 7 World Trade Center, 13th Floor, New
York, New York 10048; and Chicago Regional Office, Suite 1400, 500 West
Madison Street, Chicago, Illinois 60661-2511. The Commission also maintains
a Web site at http://www.sec.gov. that contains reports, proxy and
information statements and other information regarding issuers that file
electronically with the Commission. In addition, copies of such material
can be obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
This Prospectus is a part of a Registration Statement filed by the
Company with the Commission under the Securities Act of 1933, as amended
(the "Securities Act"). This Prospectus omits certain of the information
included in such Registration Statement. The Registration Statement may be
inspected by anyone at the office of the Commission without charge, and
copies of all or any part of it may be obtained upon payment of the
Commission's charge for copying. For further information about the Company
and its securities, reference is hereby made to such Registration Statement,
and to the exhibits and financial schedules filed as part thereof or
otherwise incorporated herein. Each summary herein of additional
information included in the Registration Statement or any exhibit thereto is
qualified in its entirety by reference to such information or exhibit.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents (and the amendments thereto) filed by the
Company with the Commission are hereby incorporated by reference and made a
part hereof:
(a) The description of the Company's Common Stock contained in
the Registration Statement on Form 10, No. 0-21142, filed
under the Exchange Act.
(b) Annual Report on Form 10-KSB, for the year ended September
30, 1995, as amended by Form 10-KSB/A filed February 2, 1996
and Form 10-KSB/A2 filed May 20, 1996.
(c) Current Report on Form 8-K, dated September 20, 1995.
(d) Quarterly Reports on Form 10-QSB, for the quarters ended
December 31, 1995, and March 31, 1996 and June 30, 1996.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the offering of the
securities covered by this Prospectus shall be deemed to be incorporated
herein by reference and to be a part hereof from the respective date of
filing of each such document. Any statement contained in a document
incorporated by reference or deemed to be incorporated by reference in this
Prospectus shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
To the extent the foregoing documents are incorporated by reference
herein, copies may be obtained without charge (other than for exhibits to
such documents) upon written request communicated to the Company's Secretary
at the Company's principal executive offices, located at 5840 Interface
Drive, Ann Arbor, Michigan 48103 (telephone number: (313) 994-0591).
RISK FACTORS
In addition to the other information in this Prospectus, the
following factors should be considered carefully in evaluating the Company
and its business before purchasing the shares of Common Stock offered by
this Prospectus.
Unprofitable History
The Company generated net income in fiscal year ended September 30,
1995 and the first sixnine months of fiscal 1996 after incurring net losses for each of the five fiscal
years ended September 30, 1990 through 1994, including net losses of
approximately $2,797,000 and $1,409,000 for the fiscal years ended September
30, 1994 and 1993, respectively. As a result of such losses,For the Company
has an accumulated deficit of $78,000 and total stockholders' equity of
$7,074,000 at March 31, 1996. Althoughnine months ended June 30, 1996,
the Company generated net income of $303,000$234,177, as compared to $134,564 over
the same period in 1995.
The Company's financial statements for the year ended September 30,
1995, $74,000 was attributable to
foreign currency gains. See "Risk Factors - Exposure to Foreign Currency
Exchange Risk".
The independent auditors' report for the fiscal year ended
September 30, 1994 contains an explanatory paragraph to the effect that the
related financial statements had been prepared assuming that the Company
would continue as a going concern but stated that there were matters that
raised substantial doubt about the Company's ability to continue as a gong
concern. The Company's financial statements for such year indicated that the Company's continuation as a going concern was
dependent upon the Company's ability to generate sufficient cash flow to
meet its obligations on a timely basis, to comply with the terms and
covenants of its short-term borrowing agreement, to renew its bank credit
agreement or obtain alternative financing and, ultimately, to attain
profitability. Although the Company has recently been profitable, is
currently in compliance with the covenants in its loan documents, and has
obtained a significant amount of additional debt and equity financing to
address its short term cash needs, there can be no assurance that the
Company will continue to be profitable, will continue to be in compliance
with the covenants in its loan documents or will be able to generate
sufficient cash flow in the future.
Fluctuations in Operating Results
The Company may in the future experience fluctuations in revenue and
operating results from period to period as a result of several factors
including, without limitation, the demand for the Company's existing
products; the mix of products sold; the ability to develop, introduce and
ship new products; market acceptance of or defects in the Company's
existing, new or enhanced products; new product introductions and
announcements by the Company, the Company's competitors or the Company's
customers; accounting charges due to obsolete products or inventory; changes
in Company strategy; increased competition and pricing pressures; and
changes in economic conditions generally. In addition, because the Company
receives a substantial amount of its net revenues from a limited number of
relatively significant purchase orders, the size, timing and recognition of
revenue from such orders may materially affect the Company's results of
operations in a given period. As a result of these factors, there can be no
assurance that the Company will be profitable in the future on a quarterly
or annual basis. It is possible that in some future quarter the Company's
operating results will be below the expectations of public market analysts
and investors. In such event, or in the event that adverse conditions
prevail or are perceived to prevail generally or with respect to the
Company's business, the price of the Common Stock would likely be materially
adversely affected.
Effect of Recent Acquisitions on Operations
On March 3, 1995, the Company consummated a merger with
Imagination Systems, Inc. and, on September 20, 1995, consummated
a merger with Universal Automation, Inc. The Company believes
that these mergers will result in more efficient new product development and
contribute to its efforts to achieve consistent profitability. There can be
no assurance that these mergers can assist the Company in achieving
consistently profitable operations.
New Products and Technological Change
The industrial operator workstation and industrial software markets
in which the Company competes are characterized by rapid and significant
technological change, and the introduction of new products and services
using new technologies. The Company's future success will depend on, among
other things, its ability to anticipate and adapt to its customers' changing
needs and to provide, on a continuing basis, the most effective solutions
permitted by the available technology. In addition, new and enhanced
products and solutions affecting the Company's markets are continually being
introduced by the Company's competitors which may have a material adverse
effect on the Company's ability to sell its products. There can be no
assurance that the Company will be able to bring sufficient funds and talent
to bear to meet the changes faced by firms competing in markets driven by
high technology. The Company's failure to successfully keep pace with
technological advances may have a material adverse effect on the Company's
business, financial condition and results of operations.
The success of the Company's business strategy depends on the
continued progression of the trend from PLCs to PC-based solutions in the
industrial automation industry. If the marketplace progression is slower
than expected by the Company or ceases to occur, the Company's business,
financial condition and results of operations could be materially and
adversely affected.
Dependence on Proprietary Technology; Pending Litigation
The Company has one patent and relies principally on copyright,
trade secret and other common law protection of its intellectual property.
There is no assurance that the Company will be able to protect its
proprietary technology or that others will not independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to the Company's proprietary technology. There is no assurance
that foreign intellectual property laws will protect the Company's
intellectual property rights with respect to its products sold abroad. In
addition, the computer industry is characterized by frequent litigation
regarding patent and other intellectual property rights. Litigation may be
necessary to enforce the Company's proprietary rights, to determine the
validity and scope of the proprietary rights of others or to defend against
the claims of patent infringement. If an infringement claim is asserted
against the Company, the Company may seek to obtain a license under the
other party's intellectual property rights. There is no assurance that a
license would be available on reasonable terms or at all.
The Company is currently involved in certain litigation with Xycom,
Inc. relating to itsthe merger of Universal Automation, Inc., with Nemasoft,
the Company's wholly-owned subsidiary, and the ownership of the FloPro
product.patent. While the Company believes that the litigation isXycom's claims are without merit
and that the ultimate disposition of this lawsuit will be
favorable,intends to defend its position vigorously, there can be no assurance
that itsuch litigation will not have a material adverse effect on the
Company's business or financial position. In addition, this litigation as
well as any other litigation with respect to patents or other intellectual
property matters could result in substantial costs and diversion of
management and other resources and could have a material adverse effect on
the Company's business, financial condition and results of operations.
New Products and Technological Change
The industrial operator workstation and industrial software markets
in which the Company competes are characterized by rapid and significant
technological advances, evolving industry standards, changes in customer
requirements and the introduction of new products and services using new
technologies. The Company's future success will depend on, among others,
its ability to anticipate and adapt to its customers' changing needs and to
provide, on a continuing basis, the most effective solutions permitted by
the available technology. In addition, new and enhanced products and
solutions affecting the Company's markets are continually being introduced
by the Company's competitors which may have a material adverse effect on the
Company's ability to sell its products. There can be no assurance that the
Company will be able to bring sufficient funds and talent to bear to meet
the changes faced by the firms competing in markets driven by high
technology. The Company's failure to successfully keep pace with
technological advances may have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, the
failure of the Company's software products to achieve and sustain market
acceptance, and the increased pace at which the Company may be required to
introduce new products in response to technological advances, evolving
industry standards, changing customer requirements and introductions and
enhancements of competitive products, could result in the write-off of
capitalized software costs, which could have a material adverse effect on
the Company's results of operations.
Software products as internally complex as those offered by the
Company frequently contain errors or defects, especially when first
introduced or when new versions or enhancements are released. Despite
extensive product testing by the Company and by current and potential
customers, there can be no assurance that defects or errors will not be
found in the Company's new software products or in new versions or
enhancements after commencement of commercial shipments. Such defects or
errors could result in damage to the Company's reputation, loss of revenue,
delay in market acceptance, diversion of resources and increased warranty
costs, any of which could have a material adverse effect on the Company's
business, financial condition and results of operations.
The success of the Company's business strategy depends primarily on
the continued progression of the trend away from PLCs to PC-based solutions
for discrete logic control applications in the industrial automation
industry. If the marketplace progression is slower than expected by the
Company or fails to occur as the Company expects, or if the Company's
estimate of the market size is smaller than anticipated, the Company's
business, financial condition and results of operations could be materially
and adversely affected.
Effect of Recent Acquisitions on Operations
On March 3, 1995, the Company consummated a merger with Imagination
Systems, Inc. and, on September 20, 1995, consummated a merger with
Universal Automation, Inc. The Company believes that these mergers will
result in more efficient new product development and contribute to its
efforts to achieve consistent profitability. There can be no assurance that
these mergers can assist the Company in achieving consistently profitable
operations.
Competition
The industrial operator workstation and industrial software markets
are highly competitive. The Company competes directly with many firms that
supply industrial automation equipment, systems and software that are
alternatives to those of the Company. Many of these competitors have
substantially greater resources than the Company. As a result, they may be
able to respond more quickly to new or emerging technologies and changes in
customer requirements, or to devote greater resources to the development,
promotion and sale of products than can the Company. There can be no
assurance that the Company will be able to compete successfully against
current and future competitors or that competitive pressures faced by the
Company will not materially adversely affect its business, results of
operations and financial condition.
Dependence on Third Party Suppliers
The Company is dependent on third parties for a continuing supply of
the components it uses for the manufacture of its hardware products. As
part of the Company's turnaround plan initiated in fiscal 1995, the Company
altered its purchasing practices and purchased raw materials and components
in smaller quantities and more on a "just in time" basis than in previous
years. Although substantially all of the components used in the Company's
products are available from multiple sources, the Company may experience
shortages in supply from its suppliers due to various factors, including
increases in market demand for certain components which occur from time to
time and the limited capacity of certain suppliers. While the Company
believes that it has arranged for an adequate supply of components to meet
its requirements, the Company has no long-term contract with any suppliers
of components and there is no assurance that the Company will continue to be
able to obtain all of the components it requires. The Company believes that
the partial or complete loss of one or more suppliers is not likely to have
a material long-term impact on its operations but, due to the Company's
purchasing practices and attempts to minimize the inventory it maintains,
such a loss could cause significant production delays which could have a
material adverse effect on the Company's business, financial condition and
results of operations in the short term.
Exposure to Foreign Currency Exchange Risk
The Company's international operations expose the Company to
constantly fluctuating currency rates. Currency fluctuations have in the
past adversely affected, and may in the future adversely affect, the
Company's reported revenue, expenses and stockholders' equity. A majority
of the Company's international sales are denominated in foreign currencies.
As a result, an increase in the value of the U.S. dollar relative to foreign
currencies may have the effect of reducing the Company's reported revenue
and profits from international sales denominated in such currencies. If the
Company were to increase its prices in certain markets in response to such
fluctuations, its products may be less competitive in those markets. As the
Company increases emphasis on foreign sales, it may increase the amount of
foreign sales denominated in currencies other than U.S. dollars. While the
Company intends to enter into forward exchange contracts to hedge exposures
related to foreign currency fluctuations, there can be no assurance that the
Company will not incur losses as a result of such fluctuations which could
have a material adverse effect on the Company's financial condition and
results of operations.
Dependence on Key Personnel
The Company's success dependsfuture performance will depend to a significant extent ondegree
upon the continuing contributions of its ability
to attract and retain key management, sales, marketing,
customer support and technicalproduct development personnel. Competition for such
personnel is intense and there can be no assurance that the Company will be
able to retain its key managerial, sales and technical
employeessuch personnel or that it will be able to attract, assimilate
or retain such highly qualified managerial, sales or technical personnel as may be required in the future.
If the Company is unable to retain its key managerial,management, sales and technical
personnel, or attract, assimilate and retain additional qualified personnel
as needed, or if a significant number of its sales, marketing, customer
service or product development personnel should no longer be active in the
Company's business, the Company's business, financial condition and results
of operations and financial condition could be materially and adversely affected.
Substantial Influence by Existing Shareholders
Upon completion of this offering, theThe Company's officers, directors, principal shareholders and their
affiliates will own approximately 31.6%28.7% of the outstanding Common Stock of the
Company. As a result, they will beare able to control substantially all matters
requiring approval by the shareholders of the Company, including the
election of directors.
Possible Adverse Effect on Market Price from Sales by Existing Shareholders
As of January 1,September 30, 1996, there are 2,869,6134,558,248 shares of Common Stock
outstanding, of which 1,537,7733,877,918 are tradeable without restriction. As a
result of this Prospectus, 945,526506,330 additional shares will be tradeable
without restriction, unless they are held by an "affiliate" of the Company
(as that term is defined in Rule 144 under the Securities Act). If the
holders of such shares, by utilizing this Prospectus, cause a large number
of shares to be sold in the public market, such sales might have an adverse
effect on the market price for the Common Stock.
Stock Price Volatility
The trading price of the Company's Common Stock has been, and in the
future could be, subject to wide fluctuations in response to public
announcements of technological innovations or new products by the Company or
its competitors, the Company reporting results of operations below the
expectations of public market analysts and investors, changes in earnings
estimates by securities analysts, general conditions in the software and
industrial workstation industries and other events or factors. In addition,
the stock market has from time to time experienced extreme price and volume
fluctuations that have particularly affected the market price of the stock
of many high technology companies and that have often been unrelated or
disproportionate to the operating results of these companies. These broad
market fluctuations may adversely affect the market price of the Company's
Common Stock. The trading prices of these companies' stocks are at or near their
historical highs and reflect price/earnings ratios substantially above
historical norms. In particular, the trading price of the Company's Common
Stock in the current quarter is at its all-time high and, management
believes, this reflects the increased price/earnings ratios of high
technology companies in general. There can be no assurance that the trading price of the Common
Stock will remain at or near its current level.
Restrictions on Ability to Pay Dividends
Substantially all of the assets of the Company are pledged as
collateral under the Company's credit facilities. The Company is prohibited
by these credit facilities and its mortgage agreement from declaring or
paying cash dividends. Accordingly, the Company's shareholders should not
anticipate dividend income from shares of the Company's Common Stock.
Anti-takeover Provisions
Certain provisions of the Company's Articles of Incorporation and
Bylaws may have the effect of preventing, discouraging or delaying any
change in control of the Company. These provisions include a classified
board of directors, a requirement that shareholders provide advance notice
of nominations to be made and business to be proposed at meetings of
shareholders, and a vote of the directors or a super-majority vote of the
shareholders to amend the Company's Bylaws.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of
the shares of Common Stock offered hereby.
PLAN OF DISTRIBUTION
The Selling Shareholders have advised the Company that they may from
time to time offer and sell the shares of Common Stock offered hereby on the
SmallCapNational Market or otherwise at market prices then prevailing or at prices
and upon terms then obtainable. Sales may be made in ordinary brokerage
transactions, in block transactions, in privately negotiated transactions or
otherwise. The Company will not receive any of the proceeds of the sales of
the Selling Shareholders. The Company will bear the costs of the offering,
including those incurred by the Selling Shareholders; except that the
Selling Shareholders will pay all applicable broker-dealer fees and charges,
as well as the fees and expenses of their counsel, if any.
SELLING SHAREHOLDERS AND CERTAIN TRANSACTIONS
General
The following table sets forth the name of each Selling Shareholder
for whose account shares of Common Stock are offered by this Prospectus, the
number of shares of Common Stock currently held for the account of such
Selling Shareholder the number of shares of Common Stock being sold for the
account of such Selling Shareholder in this Offering and the number of
shares of Common Stock that will be held for the account of such Selling
Shareholder following this Offering (assuming that the Selling Shareholder
utilizes this Registration Statement to sell all such shares).
Shares Held Shares to Shares to be
for Account be Sold Held for
Prior to in the Account After
Name Offering Offering the Offering
---- ---------- -------- -------------
Number Percent Number Percent
Michael L. Hershey 491,543(1) 16.1 327,029(2) 164,514(3) 5.4
Mertz & Moyer 471,172 15.5 314,115 157,057 5.1
Eric May 471,172(4) 15.5 314,115 157,057 5.1
Stockton & Sallie Smith 355,812(5) 11.3 237,208 118,604(6) 3.8
F. G. Logan, III 352,325(7) 11.1 182,289 106,114 3.3
H. B. duPont Smith 52,308 1.7 52,308 0 -
Shares Held Shares to Shares to be
for Account be Sold Held for
Prior to in the Account After
Name Offering Offering the Offering
---- ------------ --------- -------------
Number Percent Number Percent
------ ------- ------ -------
J. Eric May 471,172 10.3% 157,057 314,115 6.9%
Frank G. Logan, III(1) 313,361 6.8% 97,108 216,253 4.8%
Stockton N. Smith 277,821 6.1% 92,607 185,214 4.1%
Henry B. duPont Smith 78,462 1.7% 26,154 52,308 1.1%
Sallie N. Smith 77,991 1.7% 25,997 51,994 1.1%
Thomas C. Peacock 72,500 1.6% 26,000 46,500 1.0%
Lumber Industries, Inc. 70,912 1.6% 23,637 47,275 1.0%
E. Newbold Smith & Co. 25,558 0.6% 8,519 17,039 0.4%
Jeffrey Achesinski 20,866 0.5% 3,585 17,281 0.4%
Michael L. Hershey 18,270 0.4% 4,090 14,180 0.3%
Perter Dalke 17,040 0.4% 5,680 11,360 0.2%
Charles Keiger 15,334 0.3% 5,111 10,223 0.2%
Sally S. Logan 15,334 0.3% 5,111 10,223 0.2%
Dawn Snell White 15,016 0.3% 5,005 10,011 0.2%
Teddy Davis 11,901 0.3% 3,967 7,934 0.2%
David M. Bentz 11,076 0.2% 3,692 7,384 0.2%
Thomas M. Walsh 8,520 0.2% 2,840 5,680 0.1%
StockCross & Co. 7,101 0.2% 2,367 4,734 0.1%
Danny White 5,043 0.1% 1,681 3,362 0.1%
Alfred B. duPont 2,956 0.1% 985 1,971 0.0%
E. Bradford duPont, Jr. 2,956 0.1% 985 1,971 0.0%
M. Lynne duPont 2,956 0.1% 985 1,971 0.0%
- --------------------
(1) Includes 15,000 shares owned by E. M. Logan, J. D. Logan and M. C. Logan, members of Mr. Logan's
immediate family, and held by Mr. Logan, as custodian. Of such 15,000 shares, 5,964 shares in the aggregate
(1,988 shares on behalf of each of J. D. Logan, E. M. Logan and M. C. Logan) are offered hereby. Mr. Logan
has voting and investment power over such shares and expressly disclaims beneficial ownership thereof. Mr.
Logan is President and Chief Executive Officer and a Director of the Company.
(2) Includes 25,558 shares owned by E. N. Smith & Co., a corporation wholly owned by Mr. Smith.
(3) Mr. Hershey has been a director of the Company since March 1995 when the Company merged with Imagination
Systems, Inc.
47,275 1.5 47,275 0 -
E. N. Smith & Co. 17,039 * 17,039 0 -
E. Newbold Smith 17,039(8) * 17,039 0 -
P. A. Dalke 11,360 * 11,360 0 -
C. F. Keiger 10,223 * 10,223 0 -
S. S. Logan 10,223 * 10,223 0 -
D. S. White 10,011 * 10,011 0 -
Lack & Lindsay 8,520 * 8,520 0 -
Andrew Smith 8,520(9) * 8,520 0 -
D. M. Bentz 7,384 * 7,384 0 -
T. M. Walsh 5,680 * 5,680 0 -
StockCross & Co. 4,734 * 4,734 0 -
E. M. Logan 3,976 * 3,976 0 -
J. D. Logan 3,976 * 3,976 0 -
M. C. Logan 3,976 * 3,976 0 -
A. B. duPont 1,971 * 1,971 0 -
E. B. duPont, Jr. 1,971 * 1,971 0 -
M. L. duPont 1,971 * 1,971 0 -
Angela Runge 1,136 * 1,136 0 -
- --------------------------
* Less than 1%.
(1) The shares represented in the table include shares over which the
named individual has sole and shared voting and dispositive power
and which are claimed to be beneficial owned by one or more
individuals or entities named as reported in their Schedule 13D
Report dated March 5, 1995. The aggregate amount reported as being
beneficially owned by Mr. Hershey includes 471,172 shares of Common
Stock owned by J. Eric May, Trustee Under Declaration of Trust. The
amount reported also includes (i) 13,914 shares of Common Stock
owned outright and (ii) warrants to purchase 6,457 shares of Common
Stock.
(2) Includes 157,057 shares of Common Stock owned by J. Eric May,
Trustee Under Declaration of Trust. The amount reported also
includes (i) 1,000 shares of Common Stock and (ii) warrants to
purchase 6,457 shares of Common Stock owned by Mr. Hershey.
(3) Includes 314,115 shares of Common Stock offered hereby by J. Eric
May, Trustee Under Declaration of Trust.
(4) Includes shares held by Mertz & Moyer, over which shares Mr. May
shares dispositive and voting power.
(5) The shares represented in the table include (i) 237,208 shares of
Common Stock owned outright; and (ii) warrants to purchase 118,604
shares of Common Stock.
(6) Includes warrants to purchase 118,604 shares of Common Stock.
(7) The shares represented in the table include (i) 189,217 shares of
Common Stock owned outright; (ii) 20,000 shares of Common Stock
owned by Mr. Logan as custodian of certain trusts for his children;
(iii) currently exercisable options to purchase 50,000 shares of
Common Stock under the 1993 Stock Option Plan; (iv) warrants to
purchase 91,144 shares of Common Stock by Mr. Logan; and (v)
warrants to purchase 5,964 shares of Common Stock by Mr. Logan as
custodian of certain trusts for his children.
(8) Includes 17,039 shares owned by E.N. Smith & Co, a corporation
wholly owned by Mr. Smith.
(9) Includes 8,570 shares owned by Lack & Lindsay, a company wholly
owned by Mr. A. Smith.
Shares Held Shares to Shares to be
for Account be Sold Held for
Prior to in the Account After
Name Offering Offering the Offering
---- ----------- --------- -------------
Number Percent Number Percent
------ ------- ------ -------
Edwin Moore 1,803 0.0% 601 1,202 0.0%
Joe Bland 1,803 0.0% 601 1,202 0.0%
Michelle Nemes 1,803 0.0% 601 1,202 0.0%
Barbara Harrigan 1,146 0.0% 382 764 0.0%
Thomas Brown 1,146 0.0% 382 764 0.0%
Brian Domino 300 0.0% 100 200 0.0%
Kurt Crisman 300 0.0% 100 200 0.0%
Laurel Swanson 300 0.0% 100 200 0.0%
Lloyd Thatcher 300 0.0% 100 200 0.0%
Michael Arrington 300 0.0% 100 200 0.0%
Rhonda Wilson 300 0.0% 100 200 0.0%
--------- ----- ------- --------- -----
1,551,647 34.0% 506,330 1,045,317 22.9%
========= ==== ======= ========= =====
ISI Merger
Of the 945,526506,330 shares offered hereby by the Selling Shareholders,
825,526480,330 shares were acquired by the Selling Shareholders upon exercise of
warrants received as part of the consideration paid by the Company in
connection with the Company's merger with Imagination Systems, Inc. (the
"Merger""ISI Merger"). In connection with the ISI Merger, the Company agreed to
register the shares ownedreceived by the Selling Shareholders, upon exercise of
the warrants and the satisfaction of certain other conditions, with the
Securities and Exchange Commission and applicable state securities
commissions and to pay the expenses associated with such registration,
except for any fees and expenses of their counsel, if any.
At the time negotiations for the ISI Merger commenced, neither
Messrs. Logan or Hershey was affiliated with the Company. It is the
Company's policy to have transactions between the CompanyEmployment and its officers
and directors, including Messrs. Logan and Hershey, reviewed by the
independent members of its board of directors to determine if such
transactions, including loan transactions, are on terms no less favorable to
the Company than could be obtained from unaffiliated third parties.
Frank G. Logan, III
Of the 945,526Noncompetition Agreement
The 26,000 shares offered hereby by Thomas Peacock, one of the
Selling Shareholders, 182,289 are being registered on behalf of Frank Logan, III, the President
and Chief Executive Officer, and a director, of the Company.were acquired by Mr. Logan
acquired 62,289 sharesPeacock in connection with the Merger. The additional
120,000 shares were acquired pursuant to the terms of a non-competition
agreement between Mr. Loganan
Employment and Noncompetition Agreement among the Company, dated as of March 2, 1995.
Michael L. Hershey
Michael L. Hershey isNemasoft, Inc., a
directorwholly owned subsidiary of the Company, and acquiredMr. Peacock, entered into at the
12,914 shares offered hereby, on his behalf, intime of the merger of Universal Automation, Inc. with and into NemaSoft,
Inc. (the "UAI Merger"). In connection with the Merger.UAI Merger, the Company
agreed to register such shares with the Securities and Exchange Commission
and applicable state securities commissions and to pay the expenses
associated with such registration, except for any fees and expenses of his
counsel, if any.
LEGAL MATTERS
The validity under Michigan law of the authorization and issuance of
the shares offered hereby will be passed upon for the Company by Dykema
Gossett PLLC, Detroit, Michigan.
EXPERTS
The consolidated balance sheet as of September 30, 1995, the
consolidated statements of operations, shareholders' equity and cash flows
for the year ended September 30, 1995, all as included in the Company's
Annual Report on Form 10-KSB, as amended, for the year ended September 30,
1995, have been audited by KPMG Peat Marwick LLP, independent certified
public accountants, and incorporated herein upon authority of said firm as
experts in accounting and auditing.
The consolidated statements of operations, stockholders' equity and
cash flows for the year ended September 30, 1994, incorporated in this
prospectus by reference, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report (which expresses an
unqualified opinion and includes an explanatory paragraph relating to
substantial doubt about the Company's ability to continue as a going
concern), which is incorporated herein by reference upon their authority as
experts in accounting and auditing.
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following statement sets forth the estimated amounts of expenses
to be borne by the Company in connection with the distribution of the Common
Stock offered hereby:
Securities and Exchange Commission Registration Fee ....... $ 2,895
Blue Sky Fees and Expenses................................. *15,0001,644
Accounting Fees and Expenses .............................. * 5,000
Legal Fees and Expenses ................................... * 8,000*10,000
Miscellaneous Expenses .................................... * 2,0001,000
------
Total Expenses ............................................ $32,895$17,644
======
------------------------------
* Estimated.
The Company will pay certain expenses of the Selling Shareholders
incurred in connection with the distribution of the Common Stock offered
hereby, which are included above.
Item 15. Indemnification of Directors and Officers
Sections 561 through 571 of the Michigan Business Corporation Act
(the "MBCA") govern the indemnification of officers, directors and other
persons. In this regard, the MBCA provides for indemnification of directors
and officers acting in good faith and in a manner they reasonably believe to
be in, or not opposed to, the best interest of the Company or its
shareholders (and, with respect to a criminal proceeding, if they have no
reasonable cause to believe their conduct to be unlawful). Such
indemnification may be made against (a) expenses (including attorney's
fees), judgments, penalties, fines and amounts paid in settlement actually
and reasonably incurred in connection with any threatened, pending or
completed action, suit or proceeding (other than an action by, or in the
right of, the Company) arising by reason of the fact that they were serving
as a director, officer, employee or agent of the Company (or some other
entity at the Company's request), and (b) expenses (including attorney's
fees) and amounts paid in settlement actually and reasonably incurred in
connection with a threatened, pending or completed action or suit by, or in
the right of, the Company, unless the director or officer is found liable to
the Company and an appropriate court does not determine that he or she is
nevertheless fairly and reasonably entitled to indemnification. The MBCA
requires indemnification for expenses to the extent that a director or
officer is successful in defending against any such action, suit or
proceeding, and otherwise requires in general that the indemnification
provided for in (a) and (b) above be made only on a determination by a
majority vote of a quorum of the Board of Directors comprised of members who
were not parties to or threatened to be made parties to such action. In
certain circumstances, the MBCA further permits advances to cover such
expenses before a final determination that indemnification is permissible,
upon receipt of (i) a written affirmation by the director or officer of his
or her good faith belief that thehe or she has met the applicable standard of
conduct set forth in the MBCA, and (ii) a written undertaking by or on
behalf of the director or officer to repay such amounts unless it shall
ultimately be determined that he or she is entitled to indemnification and a
determination that the facts then known to those making the advance would
not preclude indemnification. The Company's Articles of Incorporation
provide the same indemnification rights as the MBCA.
Subject to the exceptions recited in the following sentence, the
Company's Articles of Incorporation provide that no director shall be
personally liable to the Company or its shareholders for damages for breach
of his or her duty as a director. Such exculpatory language does not,
however, eliminate or limit the liability of a director for (a) breach of
the duty of loyalty, (b) acts or omissions that are not in good faith or
involve intentional misconduct or a knowing violation of law, (c) certain
other violations of the Michigan Business Corporation Act, or (d)
responsibility in respect of any transaction from which the director has
derived an improper personal benefit.
The MBCA permits the Company to purchase insurance on behalf of its
directors and officers against liabilities arising out of their positions
with the Company, whether or not such liabilities would be within the
indemnification provisions of the MBCA. Under an insurance policy
maintained by the Company, the directors and officers of the Company are
insured, within the limits and subject to the limitations of the policy,
against certain expenses in connection with the defense of certain claims,
actions, suits or proceedings, and certain liabilities which might be
imposed as a result of such claims, actions, suits or proceedings, which may
be brought against them by reason of being or having served as directors and
officers of the Company or certain other entities.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to officers and directors pursuant to the
foregoing provisions, the Company has been informed that, in the opinion of
the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
Item 16. Exhibits
A list of exhibits included as part of this Registration Statement
is set forth in the Exhibit Index which immediately precedes such exhibits
and is incorporated herein by reference.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
1. That for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act 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.
2. Except to the extent that the information is contained in
periodic reports filed by the Company pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 and incorporated by reference into this
registration statement, to file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement
(i) to include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933 and (ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement.
3. (a) To file, during any period in which offers or sales are
being made, a post effective amendment to this registration statement to
include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material
change to such information in the registration statement, (b) that, for the
purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof, and (c) to remove from registration by means of a post-effective
amendment any of the securities which remain unsold at the termination of
the offering.
4. That insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Company has duly caused this Amendment No. 2 to this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Ann
Arbor, State of Michigan on the 22nd12th day of May,November, 1996.
NEMATRON CORPORATION
By: /s/ Frank G. Logan, -------------------------------III
---------------------------------
Frank G. Logan, III, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 2 to this Registration Statement has been signed below by the following persons in the
capacities indicated on May 22,November 12, 1996.
Signature Title
/S//s/ Frank G. Logan, III
- ---------------------------------------------------------
Frank G. Logan, III Chairman of the Board
President, Chief Executive Officer
and Director (Principal Executive
Officer)
/S//s/ David P. Gienapp
- ---------------------------------------------------------
David P. Gienapp Vice President-Finance and
AdministratorAdministration and Director
(Principal Financial and
Accounting Officer)
/s/ Hugo Braun
- ---------------------------------------------------------
Hugo Braun Director
/S//s/ Gregory J. Chandler
- ---------------------------------------------------------
Gregory J. Chandler Vice President - Design
Engineering and Director
/s/ Garnel F. Graber
- ---------------------------------------------------------
Garnel F. Graber Director
/S//s/ Harry A. Sundblad
- ---------------------------------------------------------
Harry A. Sundblad Director
/S//s/ Michael L. Hershey
- ---------------------------------------------------------
Michael L. Hershey Director
- ------------------------
Albert W. Lowery Senior Vice President -
International Operations
and Director
EXHIBIT INDEX
Exhibit No. Description of Exhibits
4.1 Employment and Noncompetition Agreement dated September 20,
1995 among Thomas Peacock, Nematron Corporation, a Michigan
Corporation, and NemaSoft, Inc., a Michigan corporation and
wholly owned subsidiary of Nematron Corporation.
4.2 Form of Stock Purchase Warrant ("Warrant") between Nematron
Corporation, a Michigan corporation and Warrant holders,
with schedule A identifying holders of substantially
identical warrants (including certain of the Selling
Shareholders).
5.1 Opinion of Dykema Gossett PLLC.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Dykema Gossett PLLC (included in Exhibit 5.1
hereto).