-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LElbZJmqJlv7sDwOKlNkt85eQD1uxl9QoOuCUeOK0lBIBEPrIKt/tQTkkSUNDDtu ctDQeJYD4MqEpedRaWuZbQ== 0000897101-97-000684.txt : 19970623 0000897101-97-000684.hdr.sgml : 19970623 ACCESSION NUMBER: 0000897101-97-000684 CONFORMED SUBMISSION TYPE: 424B3 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19970620 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INSIGNIA SYSTEMS INC/MN CENTRAL INDEX KEY: 0000875355 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PROFESSIONAL & COMMERCIAL EQUIPMENT & SUPPLIES [5040] IRS NUMBER: 411656308 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-26955 FILM NUMBER: 97627402 BUSINESS ADDRESS: STREET 1: 10801 RED CIRCLE DRIVE CITY: MINNETONKA STATE: MN ZIP: 55343 BUSINESS PHONE: 6129308200 MAIL ADDRESS: STREET 2: 10801 RED CIRCLE DRIVE CITY: MINNETONKA STATE: MN ZIP: 55343 424B3 1 PROSPECTUS INSIGNIA SYSTEMS, INC. 2,064,031 SHARES OF COMMON STOCK This Prospectus relates to the sale of up to 2,064,031 shares (the "Shares") of Common Stock of Insignia Systems, Inc. (the "Company") which may be offered from time to time by the shareholders named herein (the "Selling Shareholders"). Of the Shares being offered, 1,376,020 Shares are now owned by the Selling Shareholders and 688,011 Shares may be obtained by them by exercise of stock purchase warrants (the "Warrants") held by the Selling Shareholders which have an exercise price of $2.125 per Share and expire on January 17, 2000. The Company will receive proceeds upon the exercise of the Warrants, but will not receive any of the proceeds from the sale of the Shares by the Selling Shareholders. See "Use of Proceeds." The Company will bear all expenses of the offering hereunder other than underwriting discounts and commissions incurred in connection with the sale of the Shares by the Selling Shareholders. The Company's Common Stock is traded on the NASDAQ SmallCap Market under the symbol "ISIG". The closing bid price of the Company's Common Stock on June 18, 1997 was $3.57 per share, as reported by NASDAQ. THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE " RISK FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS. The Selling Shareholders have advised the Company that they intend to sell the Shares from time to time in transactions on the Nasdaq SmallCap Market at prices prevailing at the time of the sale or otherwise as set forth below. The Selling Shareholders have also advised the Company that, as of the date hereof, they have made no arrangement with any brokerage firm for the sale of the Shares. The Selling Shareholders may be deemed to be "underwriters" within the meaning of the Act, in which case any commissions received by a broker or dealer may be deemed to be underwriting commissions or discounts under the Act. See "Plan of Distribution." THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED 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.
================================================================================================ Price to Public Underwriting Discounts Proceeds to Proceeds to Selling and Commissions Issuer Shareholders - ------------------------------------------------------------------------------------------------ Per Share $3.57(1) (2) None $3.57(1) - ------------------------------------------------------------------------------------------------ Total $7,368,591(1) (2) None $7,368,591(1) - ------------------------------------------------------------------------------------------------
(1) Estimated based on a per share price of $3.57 as of June 18, 1997 and assuming the sale of all Shares by the Selling Shareholders, with no adjustment for commissions, discounts, brokerage and other fees that may be paid by the Selling Shareholders, or expenses of the offering to be paid by the Company. (2) Commissions, discounts and brokerage fees will be payable to the Selling Shareholders in such amounts as the Selling Shareholders may agree to from time to time. THE DATE OF THIS PROSPECTUS IS JUNE 18, 1997 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy and information statements and other information can be inspected and copied at the public facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C., and the Commission's regional offices located at 7 World Trade Center, 14th Floor, New York, New York 10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained at prescribed rates from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. Electronic filings made through the Electronic Data Gathering Analysis and Retrieval System are also publicly available through the Securities and Exchange Commission's Web Site (http://www.sec.gov). The Company has filed with the Commission a registration statement under the Securities Act of 1933 with respect to the shares offered hereby. This Prospectus does not contain all information set forth in such registration statement. For further information with respect to the Company and the shares offered hereby, reference is made to such registration statement, including the exhibits and financial schedules filed as part thereof. Such information may be inspected at the Chicago regional office of the Commission at Northwestern Atrium Center, 500 West Madison, Suite 1400, Chicago, Illinois 60661 and at the public reference facilities at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies thereof may be obtained from the Commission at prescribed prices. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents, which have been filed by the Company with the Commission, are incorporated by reference in this Prospectus: (i) the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996; (ii) the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997; (iii) the Company's Proxy Statement dated April 4, 1997 for the 1997 Annual Meeting of Shareholders on May 8, 1997; and (iv) the description of the Company's Common Stock contained in the Company's Form S-18 Registration Statement, Registration No. 33-40765-C. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15 of the 1934 Act after the date of this Prospectus and prior to the termination of the offering of securities contemplated hereby shall also be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated by reference herein shall be deemed to be modified or superseded hereby to the extent that a statement contained herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person to whom a copy of this Prospectus has been delivered, upon the written or oral request of such person, a copy of any or all of the documents which are incorporated by reference into this Prospectus, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference in such documents.) Requests for such copies should be directed to G.L. Hoffman, Insignia Systems, Inc., 10801 Red Circle Drive, Minnetonka, Minnesota 55343, telephone number (612) 930-8200. PROSPECTUS SUMMARY THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS AND IN DOCUMENTS INCORPORATED HEREIN BY REFERENCE. THE COMPANY Insignia Systems, Inc. (the "Company") markets software, hardware and services for production of point-of-purchase signs by retailers. The Company's SIGNright production systems are used primarily by independent retailers and small retail chains to quickly and easily produce high quality point-of-sale signs for their stores. The Company's Stylus software is used by retail stores to produce signs and posters by importing information from a computer database and then electronically transmitting it to store-level printers. The Company has recently developed and introduced a new service, called the Insignia POPS program, in which the Company enters into agreements with manufacturers of brand name consumer products under which the Company is paid to collect, organize and format product messages and art provided by the manufacturer and to transmit that information to the retailer, who combines it with the retailer's logo, designs, color and pricing information and produces point-of-purchase signs. The Company was incorporated in 1990 under the laws of the State of Minnesota. Its principal executive offices are located at 10801 Red Circle Drive, Minnetonka, Minnesota 55343 and its telephone number is (612) 930-8200. THE OFFERING The 2,064,031 Shares being offered by the Selling Shareholders consist of 1,376,020 Shares now owned by the Selling Shareholders and an additional 688,011 Shares which may be purchased in whole or in part by the Selling Shareholders pursuant to Warrants which have an exercise price of $2.125 per Share and expire on January 17, 2000. The 1,376,020 Shares and the Warrants were issued by the Company on January 17, 1997 in a private placement of 1,376,020 units, each consisting of one Share and a Warrant to purchase one-half of one Share, for a purchase price of $2.125 per unit. The closing bid price of the Company's common stock on the NASDAQ SmallCap Market on January 17, the date the units were issued was $3.063 per share. The reason that resales of the Shares are being registered is to permit the Shares to be resold by the Selling Stockholders in the public market. Common Stock offered by Selling Shareholders.................... 2,064,031 Common Stock outstanding after offering (1)..................... 7,548,092 NASDAQ Symbol................................................... ISIG (1) Assumes the exercise of the Warrants. Excludes 651,600 shares of common stock issuable upon exercise of outstanding warrants and outstanding stock options granted pursuant to the Company 1990 Stock Plan. USE OF PROCEEDS If all of the Warrants are exercised, the gross proceeds to the Company will be $1,462,000, though there is no assurance that any of the Warrants will be exercised. After payment of the Company's expenses relating to this offering, which are estimated to be approximately $12,000, any remaining net proceeds will be added to the Company's working capital and used for general corporate purposes. The Company will not receive any proceeds from sales of the Shares by the Selling Shareholders. See "USE OF PROCEEDS." RISK FACTORS This offering involves substantial investment risk and the Shares should be purchased only by persons who can afford the loss of their entire investment. See "RISK FACTORS." RISK FACTORS AN INVESTMENT IN THE SECURITIES OFFERED HEREBY IS HIGHLY SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK. INVESTORS COULD LOSE THEIR ENTIRE INVESTMENT. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS, ALONG WITH THE OTHER INFORMATION SET FORTH OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, IN EVALUATING THE COMPANY, ITS BUSINESS AND PROSPECTS BEFORE PURCHASING THE SECURITIES OFFERED HEREBY. THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS OF OPERATIONS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH IN THE FOLLOWING RISK FACTORS AND ELSEWHERE IN THIS PROSPECTUS. OPERATING LOSSES The Company was incorporated in January 1990 and has an accumulated deficit of ($5,975,137) as of December 31, 1996. For 1992, 1993, 1994, 1995 and 1996 the Company experienced profit or (net losses) of $517,000, $366,000, $(909,000), $(1,451,000) and ($999,000), respectively. The Company anticipates that it will continue to experience losses through the second quarter of 1997, but there is no assurance that the Company will achieve profitability at that or any other point in time. COSTS AND RISKS OF NEW PRODUCT INTRODUCTION The Company has only recently introduced the Insignia POPS Program. In order to achieve and maintain profitability, this service needs to achieve national program status through use at approximately 4,000 retail locations. If Insignia POPS is successful, it will not reach profitability until approximately the third quarter of 1997. There is no assurance that the Company will be successful in introducing Insignia POPS or that it will achieve marketplace acceptance or profitability. RELIANCE ON LICENSED PROPRIETARY RIGHTS All patents on or other proprietary rights to the SIGNright System, and the associated bar-codes on the sign cards, are held by a third-party developer (the "Developer"), which is independent of the Company. The Company has a non-exclusive license to market and sell (but not manufacture) the SIGNright System. A patent covering certain aspects of the SIGNright System has been obtained in the Developer's name by the Company and a patent application covering certain aspects of the SIGNright product has been applied for in the Developer's name by the Company. There is no assurance that any such patents would offer the Company a meaningful competitive advantage, since competitors might employ non-infringing technology, and such patents may be subject to challenge by third parties. Any disruption in the Company's relationship with the Developer or termination of the Company's license with the Developer could have a serious adverse effect on the Company. SINGLE SOURCE SUPPLIER OF SIGNRIGHT MACHINES The Company does not have, and has no plans to develop, any in-house manufacturing capability. The Company obtains the SIGNright machine from a Japanese supplier (the "Supplier") which was designated by the Developer. Any significant disruption in the Company's relationship with the Supplier, or failure by the Supplier to make timely deliveries of quality product, could have a serious adverse effect on the Company. SIGN CARD REVENUE The Company derives a significant portion of its revenue from the sale of the bar coded sign cards required by the SIGNright machines. If competitors are able to reproduce the barcode and successfully market sign cards bearing it, there could be a serious adverse effect on the Company's revenue. SIGN CARD SUPPLIERS The thermal paper used by the Company in its sign cards is purchased exclusively from one supplier. While the Company believes that an alternative supplier would be available if necessary, any disruption in the relationship with or deliveries by the current supplier could have a serious adverse effect on the Company. COMPETITION The Company's SIGNright product faces competition from numerous sources, including from handmade signs, from large computer systems using customized software, and from personal computers with sign-making software and laser printers. For the Stylus product the Company's two major competitors are dESIGN, Inc. (a privately-held company based in Seattle, WA) and Electronic Label Technology, Inc. (a privately-held company based in Oklahoma City, OK). The Insignia POPS Program will be competing for the marketing expenditures of branded product manufacturers, who use various forms of point of purchase marketing methods, such as displays, coupons, in-store samples, etc. There is no assurance that the Insignia POPS Program will compete successfully with these traditional marketing methods. DEPENDENCE ON KEY EMPLOYEES The Company is highly dependent upon the services of its present officers, and the loss of any of them could have a material adverse effect on the Company. None of the Company's officers are bound by employment or noncompetition agreements with the Company. The success of the Company will also depend on its ability to attract and retain capable sales and marketing personnel. MARKET OVERHANG FROM WARRANTS AND OPTIONS In addition to the Warrants for the purchase of 688,011 Shares, the Company has outstanding options and warrants for the purchase of an additional 651,600 shares of common stock. The exercise of a significant portion of the Warrants and existing stock options and resale of the common stock thereby obtained could depress the trading price of the Company's common stock. ABSENCE OF DIVIDENDS The Company has never paid, and does not plan to pay, any dividends on its Common Stock in the foreseeable future. USE OF PROCEEDS If all of the Warrants are exercised, the gross proceeds to the Company will be $1,462,000, though there is no assurance that any of the Warrants will be exercised. After payment of the Company's expenses relating to this offering, which are estimated to be approximately $12,000, any remaining net proceeds will be added to the Company's working capital and used for general corporate purposes. The Company will not receive any proceeds from sales of the Shares by the Selling Shareholders. SELLING SHAREHOLDERS The following table sets forth certain information with respect to the beneficial ownership of the Company's Common Stock by the Selling Shareholders as of April 1, 1997, and as adjusted to reflect the sale of Shares obtained by the Selling Shareholders through the exercise of the Warrants.
Name Number of Shares Maximum Number of Shares to be Beneficially ---- Beneficially Owned Shares to be Sold(1)(2) Owned After the Offering(1)(2) Prior to Offering ----------------- ------------------------ ------------------ Number Percent ------- ------- Dain Bosworth, Inc. as Custodian FBO: 1,036,800 37,500 999,300 14.5% George L. Hoffman IRA....................... The Provident Bank as Custodian for The 750,000 750,000 -0- * Perkins Opportunity Fund.................... Pyramid Partners, LP........................ 297,500 187,500 110,000 1.6% Paul A. Moquist............................. 187,458 3,540 183,918 2.7% Bruce E. Hendry............................. 150,000 150,000 -0- * Larry Arnold................................ 100,000 75,000 25,000 * Richard C. Perkins.......................... 55,000 30,000 25,000 * Robert G. Allison........................... 52,500 37,500 15,000 * Scott J. Simcox............................. 50,407 6,000 44,407 * Daniel S. & Patrice M. Perkins JTWROS....... 50,000 37,500 12,500 * Ellis Limited Partnership................... 50,000 30,000 20,000 * Piper Jaffray as Custodian FBO Michael L. 47,500 37,500 10,000 * Bochert IRA................................. David R. Weir............................... 42,000 30,000 12,000 * Richard W. Perkins Trustee UA 37,500 37,500 -0- * FBO Richard W. Perkins (#1)................. Piper Jaffray as Custodian FBO Mark T 37,500 37,500 -0- * Donahoe IRA................................. Piper Jaffray as Custodian FBO Anne M. 37,500 37,500 -0- * Donahoe IRA................................. Scott Drill................................. 37,500 37,500 -0- * Piper Jaffray as Custodian FBO John 37,205 15,000 22,205 * Whisnant IRA................................ Dave M. Westrum............................. 31,000 22,500 8,500 * Perkins Capital Management, Inc., Profit 30,000 30,000 -0- * Sharing Plan & Trust UA..................... Harold Roitenberg Trustee FBO Harold 30,000 30,000 -0- * Roitenberg Trust U/A........................ Gerald M. Johnson........................... 24,865 3,750 21,115 * John F. Rooney.............................. 22,500 22,500 -0- * Strickland Family Limited Partnership....... 22,500 22,500 -0- * James F. Lyons.............................. 22,500 22,500 -0- * Dorothy J. Hoel............................. 22,500 22,500 -0- * Gary C. Gustavson........................... 22,500 7,500 15,000 * Vincent M. Palyan........................... 22,287 20,028 2,259 * Lee S. Chapman.............................. 21,180 21,180 -0- * Michael T. Mulligan......................... 18,000 18,000 -0- * C. McKenzie Lewis III....................... 17,625 17,625 -0- * American Enterprise FBO John Leighton Rock.. 15,880 10,589 5,291 * Perkins & Partners, Inc..................... 15,000 15,000 -0- * Pamela L. Brown, Trustee UA 15,000 15,000 -0- * FBO Pamela L. Brown........................ Perkins Foundation......................... 15,000 15,000 -0- * Richard W. Perkins Trustee UA 15,000 15,000 -0- * FBO Richard W. Perkins (#2)................ James E. & Barbara J. Bonneville JTWROS.... 15,000 15,000 -0- * Piper Jaffray as Custodian FBO Richard C. 15,000 15,000 -0- * Perkins SEP/IRA............................ Dain Bosworth, Inc. as Custodian FBO: 15,000 15,000 -0- * Thomas D. Spaeth, Jr. IRA.................. Kenneth Searl.............................. 14,893 14,118 775 * Dr. Lee S. Chapman Profit Sharing Plan & 14,115 14,115 -0- * Trust...................................... Carl J. Olsen.............................. 10,801 7,059 3,742 * Brian Siedlecki............................ 10,500 10,500 -0- * Piper Jaffray as Custodian FBO Timothy K. 8,500 7,500 1,000 * Linblad IRA................................ David M. Hyduke............................ 7,500 7,500 -0- * Elizabeth J. Hyduke........................ 7,500 7,500 -0- * Stephen P. Hyduke.......................... 7,500 7,500 -0- * Bradley A. Erickson........................ 7,500 7,500 -0- * Piper Jaffray as Custodian FBO Catherine 7,059 7,059 -0- * A. Studt IRA............................... Judith G. Vars............................. 6,750 3,750 3,000 * Piper Jaffray as Custodian FBO Mark 6,038 6,038 -0- * Pruszinske................................. Julie R. & Kennard B. McAdam JTWROS........ 4,638 3,600 1,038 * Kevin M. Fischer........................... 4,016 3,540 476 * Douglas D. Neitzel......................... 3,540 3,540 -0- * TOTALS..................................... 3,605,557 2,064,031 1,541,526 (1) Includes Shares to be acquired by the Selling Shareholders upon exercise of the Warrants. (2) Assumes the sale of all Shares offered hereunder. * Less than 1%.
PLAN OF DISTRIBUTION The Company has been advised that the Selling Shareholders may sell Shares from time to time in one or more transactions (which may include block transactions) on the NASDAQ SmallCap System at market prices prevailing at the time of the sale or at prices otherwise negotiated. The Shares may, without limitation, be sold by one or more of the following: (i) a block trade in which the broker or dealer so engaged will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; (ii) purchases by a broker or dealer as principal and resale by such broker or dealer for its account pursuant to this Prospectus; and (iii) ordinary brokerage transactions and transactions in which the broker solicits purchasers. The Company has been advised that, as of the date hereof, the Selling Shareholders have made no arrangement with any broker for the sale of the Shares. Underwriters, brokers or dealers may participate in such transactions as agents and may, in such capacity, receive brokerage commissions from the Selling Shareholders or purchasers of such securities. Such underwriters, brokers or dealers may also purchase Shares and resell such Shares for their own account in the manner described above. The Selling Shareholders and such underwriters, brokers or dealers may be considered "underwriters" as that term is defined by the Securities Act of 1933, although the Selling Shareholders disclaim such status. Any commissions, discounts or profits received by such underwriters, brokers or dealers in connection with the foregoing transactions may be deemed to be underwriting discounts and commissions under the Securities Act of 1933. LEGAL MATTERS The validity of the issuance of the Common Stock offered hereby will be passed upon for the Company by Lindquist & Vennum P.L.L.P., Minneapolis, Minnesota. EXPERTS The financial statements of Insignia Systems, Inc. incorporated by reference in Insignia Systems, Inc.'s Annual Report (form 10-K) for the year ended December 31, 1996, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report incorporated herein by reference in reliance upon such report given upon the authority of said firm as experts in accounting and auditing. INDEMNIFICATION The Company's Articles of Incorporation eliminate or limit certain liabilities of its directors and the Company's Bylaws provide for indemnification of directors, officers and employees of the Company in certain instances. Insofar as exculpation of, or indemnification for, liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Securities and Exchange Commission such exculpation or indemnification is against public policy as expressed in the Act and is therefore unenforceable. -----END PRIVACY-ENHANCED MESSAGE-----