| Dayton General Systems, Inc. | |||
| Proposed Ticker: | DGSI | 2492 Technical Drive | |
| Exchange: | NASDAQ-Small Cap Market | Miamisburg, OH 45342 | |
| Industry: | High-Tech (SIC Code 7372) | (937) 847-7800 | |
| # of Employees: | 14 | ||
| Type of Shares: | Common Shares | Filing Date: | 8/14/97 | |
| U.S. Shares Filed: | 1,800,000 | Filing Price: | $5.00 | |
| Non-U.S. Shares Filed: | 0 | Offering Amount: | $9,000,000 | |
| Primary Shares: | 1,800,000 | Expenses: | $271,175 | |
| Secondary Shares: | 0 | Shares Out After: | 3,045,286 |
| Manager | Tier | Phone |
| J.V. Delaney & Associates | Lead Manager |
| Issuer's Law Firm: | Taft, Stettinius & Hollister |
| Bank's Law Firm: | Dinsmore & Shohl |
| Auditor: | Grant Thornton |
Dollar amounts in U.S. millions except for per share data | |||||
| 6 Month Ending Financials | |||||
| Full Year Audited Income | Latest Unaudited Income | Prior Unaudited Income | Balance Sheet | ||
| 12/31/96 | 6/30/97 | 6/30/96 | 6/30/97 | ||
| Revenue: | $0.81 | $0.39 | $0.42 | Assets: | $0.46 |
| Net Income: | $0.01 | -$0.15 | $0.04 | Curr Assets: | $0.37 |
| EPS: | $0.01 | -$0.11 | $0.03 | Liabilities: | $0.35 |
| Prior EPS: | $0.01 | -$0.11 | -$0.05 | Curr Liabilities: | $0.35 |
| Cash Flow/Oper: | $0.06 | $0.12 | $0.03 | Equity: | $0.11 |
| Cash Flow/Fin: | -$0.03 | -$0.02 | -$0.03 | Cash: | $0.01 |
| Cash Flow/Inv: | -$0.06 | -$0.02 | Working Cap: | $0.02 | |
| Business Description |
| The company designs, builds, installs and services state-of-the-art computerized building automation systems. These systems monitor and control heating, air conditioning, ventilation, lighting, fire detection, security, indoor air quality, etc. The company markets a combination of these products and services to the facilities management industry. The company's systems are currently installed in high-rise buildings, manufacturing facilities, wastewater treatment plants and educational institutions, including the General Motors Building in New York City and the entire University of Pennsylvania. Although DGS plans to continue servicing its installed base of building automation systems, it has recently changed its focus to becoming a software technology solution provider to an emerging segment of the control and automation industry marketplace. Company management has identified a major technological revolution from closed control systems, where customers were "locked in" to one vendor's control devices, to open control systems, where customers decide which mix of vendors' devices they will use in their control or automation systems. |
| Competition |
| To the best of the Company's knowledge, VisualControl is the only commercialized software product designed for control network technology product development that (i) functions as a network/Windows NT graphical user interface, (ii) generates user-defined control strategies or modifications and (iii) functions as a control network management tool. Additionally, THE COMPANY believes that VisualControl is the only product of its type to work with LNS architecture. THE COMPANY is aware of one possible competitor in the graphical programming area and three companies that develop network management tools that might become competitors of the Company. THE COMPANY was one of a few companies that worked closely with Echelon for over two years as part of the "beta team" developing new 32 bit LNS technology. This relationship facilitated the Company's development of the VisualControl software package so that it was available when LNS was introduced in April 1997. To the Company's knowledge, no other software company took advantage of this opportunity to create packages specifically for LNS prior to its release. Companies such as THE COMPANY that sell software application tools which incorporate LonWorks technology must pay royalty fees to Echelon on a per node basis. Royalty payments to Echelon can be a significant cost to companies promoting software and hardware for LNS. Recently, Echelon raised its per node royalty fees. Due, in part, to the Company's beta team role noted above, this increase will not apply to THE COMPANY for at least the next three years. Potential competitors to THE COMPANY, however, will be subject to the new royalty structure which will raise their costs. The Company believes that this will create a barrier to those companies wishing to compete with THE COMPANY. |
| Business Plan |
| The key elements of the company's business strategy are: (I) Expand the company's software production and customer support capacity and increase research and development; (ii) Establish the company's software distribution channels; (iii) Establish the VisualControl brand name as a leader in software add-ons for the LonWorks based control design platform; (iv) Leverage the company's intelligent control design knowledge-based creative capabilities and technical expertise into application and new product development; (v) Pursue complementary strategic business and technology acquisitions; and (vi) Create additional worldwide interest in the company and its products through the innovative use of the company global web site. |
| Use of Proceeds |
| The proceeds from the proposed offering will be used to establish sales, marketing and distribution infrastructure for its software products, for research and development, to purchase additional computer hardware and software, for potential acquisitions and for working capital. |
| Name of Shareholder | % Owned Before | % Owned After |
| Thomas C. Haas | 60.40% | 26.00% |
| Vernon F. Brannon | 6.20% | 2.60% |
| Daniel B. Lackey | 6.20% | 2.60% |
| James E. Cogan | 5.40% | 2.10% |
| Officer Name | Title | Age |
| Thomas C. Haas | Chairman of the Board, President and Chief Executive Officer | 53 |
| Vernon F. Brannon | Chief Engineer | 57 |
| Jay G. Pollack, Ph.D. | Executive Vice President of Research and Development | 49 |
| William C. Kaesche III | Executive Vice President of Sales and Marketing | 55 |
| Mahmoud Saleh | Senior Software Engineer | 28 |
| Daniel B. Lackey | Senior Software Manager | 40 |
| Frank Capuano | Systems Engineer | 27 |
| Additional Underwriter Compensation |
| Warrant to purchase 90,000 shares/units at $45.00 per share/unit. |
| # of Units: | 900,000 | |||
| Unit Ticker: | DGSU | Unit Price: | $10.00 | |
| Warrant Ticker: | DGSIW | Warrant Price: | ||
| Warrant Exercise Date: | Warrant Exercise Price: | $6.50 | ||
| Warrant Expiration Date: | ||||
| Warrant Detachable: | Yes | Warrant Detach Date: | ||
| Warrant Callable: | No |
| Unit Composition: 2 Common Shares + 1 Warrant |
| Warrant Entitlement: 1 Common Share |