| Racom Systems, Inc. | |||
| (www.racom.com) | |||
| Ticker: | RCOM | 6080 Greenwood Plaza Boulevard | |
| Exchange: | NASDAQ-Small Cap Market | Greenwood Village, CO 80111 | |
| Industry: | High-Tech (SIC Code 3674) | (303) 771-2077 | |
| Type of Shares: | Common Shares | Filing Date: | 12/20/96 | |
| U.S. Shares: | 1,500,000 | Offer Date: | 3/12/97 | |
| Non-U.S. Shares: | 0 | Filing Range: | $4.25 - $5.25 | |
| Primary Shares: | 1,500,000 | Offer Price: | $4.75 | |
| Secondary Shares: | 0 | Gross Spread: | $0.43 | |
| Offering Amount: | $7,125,000 | Selling: | $0.23 | |
| Expenses: | $250,000 | Reallowance: | $0.10 | |
| Shares Out After: | 13,032,532 |
| Manager | Tier | Phone |
| Spencer Edwards & Company | Lead Manager | (800) 288-8448 |
| Issuer's Law Firm: | Agron, Gary A. |
| Bank's Law Firm: | Michael J. Tauger |
| Auditor: | Arthur Andersen |
| Registrar/Transfer Agent: | American Securities Transfer, Inc |
Dollar amounts in U.S. millions except for per share data | |||||
| Full Year Audited Income | Latest Unaudited Income | Prior Unaudited Income | Balance Sheet | ||
| 12/31/96 | 12/31/96 | ||||
| Revenue: | $2.43 | Assets: | $3.89 | ||
| Net Income: | -$1.30 | Curr Assets: | |||
| EPS: | -$0.11 | Liabilities: | $3.65 | ||
| Prior EPS: | -$0.27 | Curr Liabilities: | |||
| Cash Flow/Oper: | -$0.74 | Equity: | $0.23 | ||
| Cash Flow/Fin: | Cash: | ||||
| Cash Flow/Inv: | |||||
| Business Description |
| The company is developing and marketing the "Smart Card or Smart Card System", used primarily in electronic commerce.. Generally the size of a credit card, Smart Cards are used in a number of consumer applications including 1) access to restricted areas, 2) public transportation fare collection, 3) point of sale purchases, and 4) miscellaneous small monetary transactions. Smart Card technology is also used in industrial applications such as attaching a "tag" containing the Smart Card technology to a manufactured product in order to track the product from the assembly line through quality control, warehousing, inventory control, distribution and warranty. The company's Smart cards are "contactless" and therefore do not require the use of a magnetic stripe or insertion in a terminal as is required by contacted cards. Instead, the company's Smart Card System involves direct wireless radio frequency communication between a ferroelectric random access memory chip on the Smart Card and a terminal. |
| Competition |
| The market for Smart Card products is new, intensely competitive, quickly evolving and subject to rapid technological change. Competitors may develop superior products or products of similar quality for sale at lower prices. Moreover, there can be no assurance that the company's Smart Card will not be rendered obsolete by changing technology or new industry standards. The company expects competition to persist and increase in the future. The company's current and potential competitors are primarily subsidiaries of multinational companies with established Contacted Card and contactless Smart Card businesses who have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical and marketing resources than the company. This intense level of competition could materially adversely affect the company's future business, operating results and financial condition. Competitive factors in the industry |
| Business Plan |
| The company's business strategy is to: (I) Continue to Develop New Smart Card Systems, (ii) Expand the Company's Smart Card Systems Applications, (iii) Grow Revenues through Strategic Alliances, Joint Ventures and Selective Licensing, (iv) Emphasize Marketing of the Company's Smart Card Products in North America and (v) Continue to Outsource Manufacturing to Control Fixed Costs. |
| Use of Proceeds |
| The proceeds from the proposed offering will be used for repayment of debt, sales and marketing expenses, research and development expenses, and working capital. |
| Additional Underwriter Compensation |
| Additional compensation of $213,750. |
| Warrant to purchase 150,000 shares/units at $100.00 per share/unit. |
| Exercise price of $7.36 for 4 year(s), 1 year(s) from 3/12/97. |
| # of Units: | 1,500,000 | |||
| Unit Ticker: | - | Unit Price: | $4.75 | |
| Warrant Ticker: | RCOMW | Warrant Price: | ||
| Warrant Exercise Date: | 03/12/1997 | Warrant Exercise Price: | $5.94 | |
| Warrant Expiration Date: | 03/12/1999 | |||
| Warrant Detachable: | Yes | Warrant Detach Date: | 03/12/1997 | |
| Warrant Callable: | Yes | Warrant Call Date: |
| Unit Composition: 1 Common Share + 1 Warrant |
| Warrant Entitlement: 1 Common Share |
| Warrants are callable at $1.00 if the common stock trades at $7.13 for 20 of 20 consecutive trading days. |