Part 12 Prospectus (unformatted tables)
PLAN OF DISTRIBUTION
Subject to the terms and conditions contained in an agreement dated March 17, 1998 (the "Underwriting Agreement") between CIBC Wood Gundy, Midland Walwyn Capital Inc. and Yorkton Securities Inc. (collectively, the "Underwriters") and Tri-Vision, Tri-Vision has agreed to issue and sell and the Underwriters have agreed to purchase, on April 2, 1998 or on such later date as may be agreed upon, but in any event not later than May 1, 1998, an aggregate of 4,800,000 Units for an aggregate consideration of $12,000,000 being $2.50 per Unit, payable against delivery of the certificates therefor. The Company has agreed to pay the Underwriters a fee of $0.1625 per Unit for the services provided by the Underwriters in distributing such Units to the public. The obligations of the Underwriters under the Underwriting Agreement are several and each Underwriter may terminate its obligations at its discretion on the basis of its assessment of the state of the financial markets and also upon the occurrence of certain stated events. The Underwriters, however, shall take-up and pay for all of the Units if any are purchased under the Underwriting Agreement. If one Underwriter fails to purchase its allotment of Units, the remaining Underwriters may, but are not obligated to, purchase the Units not purchased by the Underwriter which fails to purchase. The Underwriting Agreement provides that Tri-Vision shall not be obligated to sell and the Underwriters shall not be obligated to purchase less than all the Units offered hereby.
The Underwriters have been granted an over-allotment option (the "Over-Allotment Option") exercisable until 30 days from the date of closing of the Public Offering to purchase from Tri-Vision up to an aggregate of 720,000 additional Units at the public offering price set forth on the cover page of this prospectus. Tri-Vision will pay the Underwriters a fee of $0.1625 per Unit with respect to Units issued under the Over-Allotment Option. The Underwriters may exercise such option only to cover over-allotments made in connection with the sale of the Units offered hereby and for market stabilization. This prospectus qualifies the distribution of the Over-Allotment Option and the Units issuable upon the exercise of the Over-Allotment Option.
As additional compensation for its services hereunder, the Company has agreed to grant to the Underwriters a non-assignable compensation option (the "Compensation Option") entitling the Underwriters to purchase a number of Common Shares equal to 10% of the number of Units issued pursuant to the Public Offering (including Units issued upon the exercise of the Over-Allotment Option) for a period of two years from the closing date of the Public Offering, exercisable at $2.50 per Common Share. The grant of one-half of the Compensation Option is qualified by this prospectus.
The Company has agreed that it will not, directly or indirectly, without the prior written consent of CIBC Wood Gundy, on behalf of the Underwriters, such consent not to be unreasonably withheld, issue, offer, sell, grant any option to purchase or otherwise dispose of (or announce any issue, offer, sale, grant of any option to purchase or other disposition of) any Common Shares or any securities convertible into, or exchangeable or exercisable for, Common Shares for a period of 180 days from the closing date of the Public Offering nor shall the Company publicly announce during such period the intention to do so thereafter, except for (i) the issuance of the Units offered hereby; (ii) the issuance of Common Shares upon the exercise of any Warrants; (iii) the issuance of Common Shares upon the exercise of any currently outstanding options; and (iv) the issuance of incentive stock options in accordance with applicable stock exchange requirements.
Pursuant to policy statements of the Ontario Securities Commission and the Commission des valeurs mobiliŠres du Qu‚bec, the Underwriters may not, throughout the period of distribution, bid for or purchase Common Shares. The foregoing restriction is subject to certain exceptions, on the condition that the bid or purchase not be engaged in for the purpose of creating actual or apparent active trading in, or raising the price of, the Common Shares. Such exceptions include a bid or purchase made for and on behalf of a customer where the order was not solicited during the period of distribution. Subject to applicable law, in connection with this offering, the Underwriters may over-allot or effect transactions which stabilize or maintain the market price of the Common Shares at levels other than those which might otherwise prevail on the open market. Such transactions, if commenced, may be discontinued at any time.
The Common Shares and Warrants comprising the Units offered hereby have not been and will not be registered under the United States Securities Act of 1933, as amended (the "1933 Act"), and, subject to certain exceptions, may not be offered, sold or delivered within the United States. The Common Shares issuable upon the exercise of the Warrants also have not been and will not be registered under the 1933 Act. Accordingly, subject to certain exceptions, the Common Shares and Warrants comprising the Units will not be offered or sold within the United States, the Warrants may not be exercised within the United States or by or for the account or benefit of any U.S. person (as defined in Regulation S under the 1933 Act), and no certificate evidencing any Common Shares issuable on the exercise of a Warrant will be delivered to any address in the United States or to or for the account or benefit of any U.S. person.
The Underwriting Agreement permits the Underwriters, acting through their U.S. broker-dealer affiliates, to reoffer and resell Units comprised of Common Shares and Warrants purchased by them pursuant to the Underwriting Agreement to a limited number of "accredited investors" (as such term is defined in Rule 501(a) under the 1933 Act) and to "qualified institutional buyers" (as such term is defined in Regulation S under the 1933 Act), in transactions exempt from registration under the 1933 Act. The Underwriting Agreement provides further that the Underwriters will not take any actions that would make the safe harbour provided by Regulation S under the 1933 Act unavailable in connection with the offering and sale of the Units. Such Regulation provides an exemption from registration under the 1933 Act in connection with the initial offer and sale of the Units outside the United States.
In addition, until 40 days after the commencement of the offering of the Units pursuant to this prospectus, an offer or sale of the Common Shares or Warrants comprising the Units within the United States by any dealer (whether or not participating in the offering) may violate the registration requirements of the 1933 Act unless such offer or sale is made pursuant to Rule 144A under the 1933 Act.
Subscriptions for the Units will be received subject to rejection or allotment, in whole or in part, and the right is reserved to close the subscription books at any time without notice. It is expected that certificates representing the Common Shares and Warrants comprising the Units will be available for delivery at closing of the Public Offering which is expected to take place on or about April 2, 1998, or on such other date as Tri-Vision and the Underwriters may agree, but in any event not later than May 1, 1998.
USE OF PROCEEDS
The net proceeds from the Public Offering are expected to be approximately $10,695,000 after deduction of the Underwriters' fee of $780,000 and the estimated expenses of the Public Offering of $525,000, but without giving effect to any exercise of the Over-Allotment Option.
The net proceeds from the Public Offering will be used as to $8,950,000 for the exploitation of the V-Chip Technology (consisting of $1,900,000 payable to VCCE in connection with the acquisition of the worldwide rights; $50,000 for tooling and moulds; $500,000 for advertising and marketing; and $6,500,000 for manufacturing costs) and the balance for general working capital. Any proceeds realized on the exercise of the Warrants and/or the Over-Allotment Option will be added to general working capital.
CONSOLIDATED CAPITALIZATION
The following table and notes set forth the consolidated capitalization of Tri-Vision, as at December 31, 1997, as at February 28, 1998, and as at February 28, 1998 adjusted to give effect to the Public Offering, but without giving effect to any exercise of the Over-Allotment Option. The table should be read in conjunction with the consolidated financial statements of the Company and related notes thereto appearing elsewhere in this prospectus.
Authorized As at Dec. 31, 1997 (unaudited) As at Feb. 28, 1998 (unaudited) As at Feb. 28, 1998 after giving effect tothe Public Offering (2)(unaudited)
DebtBank indebtedness(1) $1,092,986 $1,057,825 $1,057,825
Shareholders' EquityShare capital:Common shares(3)Special sharesRetained earnings(4) unlimitedunlimited $12,155,721 (40,907,396 shares) nil $576,000 $12,169,721(40,932,396 shares)nil$576,000 $24,169,721 (45,732,396 shares)nil $576,000
TOTAL CAPITALIZATION $13,824,707 $13,803,546 $25,803,546
Notes:
1. See Note 8 to the consolidated financial statements of the Company.
2. Without giving effect to the exercise of any options or warrants. See "Options and Other Commitments". The table set forth above does not reflect the issuance of 1,825,000 Common Shares subsequent to February 28, 1998. See "Prior Sales".
3. Options to purchase an aggregate of 3,625,100 Common Shares and 3,600,100 Common Shares were outstanding as of December 31, 1997 and February 28, 1998, respectively.
4. These amounts are as at December 31, 1997.
DILUTION
The effective price for each Common Share comprising a part of a Unit exceeds by $2.00 the consolidated net tangible book value of each Common Share as at December 31, 1997 after giving effect to the Public Offering (but before any exercise of the Over-Allotment Option). The dilution per share, based on the consolidated balance sheet of Tri-Vision as at December 31, 1997, is as follows:
Effective offering price $2.49
Consolidated net tangible book value
before the offering(1) $0.30
Increase in consolidated net tangible
book value attributable to this offering(2) $0.19
Consolidated net tangible book
value after giving effect to this offering $0.49
Dilution to investors $2.00
Percentage of dilution in relation to the
effective offering price 80%
Notes:
(1) Consolidated net tangible book value represents total shareholders' equity of $12,732,000 as at December 31, 1997.
(2) After deducting the estimated expenses of the Public Offering and the fees payable to the Underwriters. See "Plan of Distribution".
DIVIDEND POLICY
The board of directors of Tri-Vision currently does not anticipate paying any dividends but intends to retain earnings to finance the growth and development of the business of the Company. The directors of Tri-Vision will review this policy from time to time in the context of the Company's earnings, financial condition and other relevant factors.
LEGAL PROCEEDINGS
There are no legal proceedings by or against the Company or affecting the business of the Company.
RISK FACTORS
In addition to the other information contained in this prospectus, prospective investors should consider each, and the cumulative effect of all, of the risk factors set out below.
Dependence on the V-Chip Technology
The Company's future prospects are substantially dependant on the successful exploitation of the V-Chip Technology. See "Corporate Strategy". The success of the V-Chip Technology is subject to a number of risks, including intellectual property protection, competition, market acceptance and government support. The Company's rights will be subject to early termination by VCCE under certain circumstances, including non-payment of amounts owing to VCCE, the bankruptcy or insolvency of TVE, or the failure to achieve certain minimum sales quotas or make payment in lieu thereof by specified dates. The loss of such rights would have a material adverse effect on the operations and financial performance of the Company.
Uncertainty of Market Acceptance
The commercial success of the Company's V-Chip Technology products will depend upon their acceptance by consumers. See "The V-Chip Technology - Development of the V-Chip Technology". Market acceptance will depend upon several factors, including the establishment of the utility to consumers of these products and the introduction of competitive products serving the same market. The Company may be required to engage in extensive advertising, educational programs or other means to market its V-Chip Technology products. Failure of the Company's products to achieve market acceptance would have a material adverse effect on the Company.
New Products and Technological Change
The market for the Company's products is characterized by rapidly changing technology, evolving industry standards and frequent new product introductions which may be comparable to or superior to the Company's products. The Company's success will depend upon market acceptance of its existing products and its ability to enhance its existing products and to introduce new products and features to meet changing customer requirements. There can be no assurance that the Company will be successful in identifying, manufacturing and marketing new products or enhancing its existing products on a timely and cost-effective basis or that such new products will achieve market acceptance. In addition, there can be no assurance that products or technologies developed by others will not render the Company's products or technologies non-competitive or obsolete.
|
