BENEFITS OF OFFERING TO OSICOM The offering will provide significant
benefits to Osicom, which iscurrently the sole stockholder of the Company, including the creation of apublic market for the Company's Common Stock and the payment of the Company'sindebtedness to Osicom in the approximate amount of $3.8 million. As a result,Osicom will generally have greater liquidity with respect to its investment inthe Company's Common Stock and its holding of the Common Stock will havepotentially greater value. In addition, upon consummation of the offering,Osicom may be relieved of its obligation as guarantor of the Company's line ofcredit. Osicom will beneficially own 3,323,327
shares of the Company's CommonStock after completion of this offering. Based upon the exercise price of $5.00per share, such shares owned by Osicom will have an aggregate market value ofapproximately $16.6 million. See 'Use of
Proceeds,' 'Principal Stockholders' and'Certain Relationships and Related Party Transactions.'
REQUIREMENTS FOR LISTING SECURITIES ON THE NASDAQ NATIONAL
MARKET; APPLICATIONOF THE PENNY STOCK RULES The Company has
applied with the Nasdaq National Market to have the CommonStock and rights (the 'Listed Securities') approved for listing (upon completionof this offering with respect to the Common Stock and from the date of thisProspectus through the expiration date with respect to the rights). If theCompany is unable to maintain the standards for continued listing, the ListedSecurities could be subject to
delisting from the Nasdaq National Market.Trading, if any, in the Listed Securities would thereafter be conducted on theNasdaq Small Cap Market.
THE OFFERING WHY WE ARE SELLING SHARES THROUGH A RIGHTS
OFFERING We have agreed with Osicom to make a rights offering to holders of Osicomcommon stock and Osicom Securities. This rights offering represents theCompany's initial public offering of its securities, although it is differentthan a traditional public offering in that securities are directed first toholders of Osicom
common stock and Osicom Securities, and then to the generalpublic. We believe that this rights offering will provide several advantagesover a traditional initial public offering. This type of offering gives us theopportunity to offer our Common Stock to investors who, as holders of Osicomcommon stock and Osicom Securities already have some knowledge of our business.Our securities will alsobe distributed to a broader, more stable stockholderbase and underwritingdiscounts and commissions will be less than if we pursueda traditional initial
public offering. In addition, Osicom supports this type ofrights offering because it affords the holders of Osicom common stock and OsicomSecurities the opportunity to purchase shares before the shares are offered tothe general
public. We determined the exercise price through negotiations with the
Underwriter.In making this determination, we considered such factors as our future prospectsand historical financial data, our industry in general and our position in theindustry; market valuations of the securities of companies engaged in activitiessimilar to ours; the quality of our management team; and the advice of ourUnderwriter. We are also obtaining two independent appraisals to further supportthe determination of the final exercise and offering price.
YOU CAN EXERCISE OR SELL YOUR RIGHTS Until , 1998, you may purchase
one share of our Common Stock foreach right you receive, or you may sell your rights in the market. However, youmay not exercise rights for fewer than 75 shares of Common Stock in a singleaccount, unless you have previously exercised rights for at least 75 shares inthe same account and you provide a letter to American Stock Transfer and TrustCompany ('AST') stating that you have already exercised at least 75 rights. Ifyou hold Osicom common stock and Osicom Securities in multiple accounts, youmust meet the minimum purchase requirement for each account. You may, however,consolidate your rights into one account. If you receive fewer than 75 rights,you should consider purchasing enough additional rights to be eligible toexercise your rights or selling your rights in the market. We anticipate that apublic market will develop in the rights although no assurance can be given (i)that such market will develop or (ii) as to the quality of such market for therights should one develop. You should consult
with your regular investmentadvisor and carefully consider your alternatives. |
