As filed with the Securities and Exchange Commission on June 12, 2003
Registration No. 333 - 61200
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
POST-EFFECTIVE
AMENDMENT NO. 4
TO
FORM S-2
ON
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
ESSEX CORPORATION
(Exact name of registrant as specified in its charter)
COMMONWEALTH OF VIRGINIA 54-0846569
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
9150 Guilford Road
Columbia, Maryland 21046
(301) 939-7000
(Address, including zip code, and telephone number, including area
code, of Registrant's principal executive offices)
Leonard E. Moodispaw WITH COPY TO:
President and Chief Executive D. Scott Freed, Esquire
Officer
Essex Corporation Whiteford, Taylor & Preston L.L.P.
9150 Guilford Road Seven Saint Paul Street
Columbia, Maryland 21046 Baltimore, Maryland 21202
(301) 939-7000 (410) 347-8700
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Approximate date of commencement of proposed sale to public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
PROSPECTUS SUBJECT TO COMPLETION: June 12, 2003
ESSEX CORPORATION
785,000 Shares of Common Stock
We have prepared this prospectus to allow some of our stockholders and
optionholders to sell up to 785,000 shares of our common stock. These
stockholders may sell their shares at prices which are based on the
market price of the stock, on United States exchanges or in negotiated
transactions. Essex will not receive any of the proceeds from the sale
of the shares in the offering but may receive a small amount of
proceeds upon the exercise of options by an optionholder.
Our Common Stock trades on the American Stock Exchange under the symbol
"EYW." On June 9, 2003, the last reported sale price of our common
stock was $4.50 per share.
-------------------------
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 7.
-------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE COMMON STOCK, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is , 2003.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY CHANGE. WE MAY NOT
SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SEC IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
ESSEX HAS NOT AUTHORIZED ANYONE, INCLUDING ANY SALESPERSON OR BROKER, TO GIVE
ORAL OR WRITTEN INFORMATION ABOUT THIS OFFERING, ESSEX OR THE SHARES COVERED BY
THIS PROSPECTUS THAT IS DIFFERENT FROM THE INFORMATION INCLUDED OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN
THIS PROSPECTUS, OR ANY SUPPLEMENT TO THIS PROSPECTUS, IS ACCURATE AT ANY DATE
OTHER THAN THE DATE INDICATED ON THE COVER PAGE OF THIS PROSPECTUS OR ANY
SUPPLEMENT TO IT.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and other reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference rooms at 450 Fifth Street,
N.W., Washington, D.C., and in New York, New York and Chicago, Illinois. Please
call the SEC at 1-800-732-0330 for further information on the public reference
rooms.
For purposes of this prospectus, the SEC allows us to "incorporate by
reference" certain information we have filed with the SEC, which means that we
are disclosing important information to you by referring you to other
information we have filed with the SEC. The information we incorporate by
reference is considered part of this prospectus. We specifically are
incorporating by reference the following documents:
o Our Annual Report on Form 10-KSB for the fiscal year ended December
29, 2002.
o Our Current Reports on Form 8-K filed on March 7, 2003, April 17,
2003, June 4, 2003 and the Form 8-K/A filed on June [10], 2003.
o Our Quarterly Report on Form 10-QSB for the fiscal quarter ended March
30, 2003.
o All documents filed by us pursuant to Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 after the date of this
prospectus and before the termination of the offering.
o The description of our Common Stock in our Form 8-A filed on June 3,
2003, as it may be amended from time to time.
We are delivering with this prospectus a copy of the Form 10-KSB and
the Form 10-QSB referred to above. To obtain a copy of other filings at no cost,
you may write or telephone us at the following address:
Corporate Secretary
ESSEX CORPORATION
9150 Guilford Road
Columbia, Maryland 21046
(301) 939-7000
Neither we nor the selling stockholders have authorized anyone else to
provide you with different information. Neither we nor the selling stockholders
are making an offer of these securities in any state where the state does not
permit an offer.
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FORWARD-LOOKING STATEMENTS
Some of the statements contained, or incorporated by reference, in this
prospectus discuss future expectations, contain projections of results of
operations or financial condition or state other "forward-looking" information.
Those statements are subject to known and unknown risks, uncertainties and other
factors that could cause the actual results to differ materially from those
contemplated by the statements. The "forward-looking" information is based on
various factors and was derived using numerous assumptions. In some cases, you
can identify these so-called "forward-looking statements" by words like "may,"
"will," "should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," or "continue" or the negative of those words and other
comparable words. You should be aware that those statements only reflect our
predictions. Actual events or results may differ substantially. Important
factors that could cause our actual results to be materially different from the
forward-looking statements are disclosed under the heading "Risk Factors" and
throughout this prospectus.
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ESSEX CORPORATION
Based in Columbia, Maryland, Essex develops and commercializes
optoelectronic devices for industry and government. In the area of services,
Essex provides optoelectronic and signal processing expertise to government
customers under highly classified advanced and next generation research and
development contracts, supports the intelligence community mission critical
voice and video systems infrastructure, and provides highly classified systems
engineering to government customers. In the area of products, Essex builds
optical communications and networking system elements and components. Our
products and services incorporate advances achieved through more than two
decades of pioneering work in developing high-throughput optoelectronics
processors and receivers for image, signal and data processing, and advanced
communications applications for U.S. intelligence organizations. See "Our
Products and Services" below for more information about our technology, services
and products under development.
SUMMARY FINANCIAL INFORMATION
The following table contains summary information derived from the
financial statements included in our Annual Report on Form 10-KSB for the fiscal
year ended December 29, 2002 and Quarterly Report on Form 10-QSB for the fiscal
quarter ended March 30, 2003, incorporated by reference herein, and should be
read in conjunction with those financial statements and the related notes
thereto.
FISCAL YEAR ENDED
DECEMBER 29, 2002 DECEMBER 30, 2001
---------------------- ----------------------
Revenues $4,506 419 $2,641,776
Operating loss $2,150,159 3,577,136
Net loss ($2,173,617) (3,569,199)
FISCAL QUARTER ENDED
MARCH 30, 2003 (1) MARCH 31, 2002
------------------- --------------------
Revenues $3,001,334 $763,276
Operating Loss $ 4,423 823,889
Net Loss ($ 20,081) (830,031)
AS OF MARCH 30, 2003
Working capital $ 882,687
Total Assets $ 7,586,712
Goodwill $ 3,014,000 (2)
Stockholders' Equity $ 4,358,438
Accumulated Deficit ($ 14,418,443)
1. Includes one month of operations of Sensys Development Laboratories,
Inc. (SDL), which we acquired as of March 1, 2003. See "RECENT
DEVELOPMENTS" below.
2. Reflects goodwill resulting from our acquisition of SDL.
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THE OFFERING
Shares of common stock offered by us None
Shares of common stock that may be 785,000
sold by the selling stockholders
Use of Proceeds We will not receive any proceeds
from the resale of the shares
offered hereby, all of which
proceeds will be paid to the
Selling Stockholders. We may
receive a small amount of
proceeds if and when an
optionholder exercises the
option that it holds and we will
use those proceeds for general
corporate purposes.
Risk Factors The purchase of our common stock
involves a high degree of risk.
You should carefully review and
consider the disclosure under
"Risk Factors" beginning on
page 7.
American Stock Exchange Trading Symbol EYW
RECENT DEVELOPMENTS
Effective March 1, 2003 Essex acquired Sensys Development Laboratories,
Inc. (SDL), a Maryland-based provider of systems and software engineering
services to the intelligence community. SDL's skill and experience are highly
complementary to Essex's core competencies in image and signal processing
technology. The acquisition adds over 25 employees, an estimated $4 million to
Essex 2003 revenues and a solid base of contracts with excellent growth
potential. SDL's revenues were approximately $3.1 million and $1.1 million for
the fiscal year ended September 30, 2002 and the fiscal quarter ended December
31, 2002, respectively. Historical financial statements of SDL and pro forma
information presenting the effect of the acquisition as if it had been completed
on December 30, 2001 are contained in our Current Report on Form 8-K filed with
the SEC on April 17, 2003. The Form 8-K is incorporated in this prospectus by
reference.
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RISK FACTORS
You should carefully consider the following risk factors before
deciding to invest in our Common Stock. You should also consider the other
information in this prospectus and the additional information in our other
reports on file with the SEC and in the other documents incorporated by
reference in this prospectus. See "Where You Can Find More Information" on page
3.
RISKS RELATED TO OUR FINANCIAL RESULTS
WE HAVE A HISTORY OF NET LOSSES AND WE MAY NOT ACHIEVE OR SUSTAIN PROFITABILITY.
We incurred a net loss for each of our fiscal years ended December 29,
2002 and December 30, 2001 and for our fiscal quarter ended March 30, 2003. The
Company also incurred net losses in fiscal 2000 and 1998. In 1999, we reported a
small net income. As of March 30, 2003, we had an accumulated deficit of $14.4
million. Our revenues have increased from $2.6 million in fiscal 2001 to $4.5
million in fiscal 2002, primarily as a result of higher revenues on new and
expanding U.S. Government programs. In the first fiscal quarter of 2003 our
revenues were approximately $3.0 million compared to revenues of $763,000 in the
same quarter in 2003, primarily as a result of expansion of government programs
and the inclusion of one month of results for SDL, which we acquired effective
March 1, 2003. Since September 2000, we have primarily funded our operations
from the sale of equity securities. We also expect to incur significant but
reduced product development and related expenses, and as a result we will need
to increase revenues to achieve profitability.
IF OUR ACTUAL CAPITAL REQUIREMENTS VARY SIGNIFICANTLY FROM OUR EXPECTATIONS, WE
MAY REQUIRE ADDITIONAL FINANCING SOONER THAN ANTICIPATED.
Between September 2000 and December 2002, we have received
approximately $6.6 million from Private Investors to pursue commercial
applications of our optical and wireless communications technologies and
resulting products. Receipt of additional funds will be critical to our ability
to continue to develop our commercial technologies and products because we
currently experience and expect to continue to experience negative or breakeven
cash flows. Our actual capital requirements depend upon several factors that are
difficult to predict, including the timing of market acceptance of our
commercial products under development, our ability to establish and expand our
customer base for our commercial products and services, the level of
expenditures for sales and marketing and general and administrative functions,
the level of revenues from our U.S. Government contracts, the cost of offering
additional services and other factors. If our capital requirements vary
materially from those currently planned, we may require additional financing
sooner than anticipated. The capital raising environment for small-cap companies
like Essex that are developing communications technology products has been and
remains in a depressed state. Even if additional funding becomes available it
may be based on an unacceptably low valuation for the Company and/or its
technology assets. As a result, we cannot assure you that additional funding
will be available or could be obtained in sufficient amounts or on terms
acceptable to us, if at all, or on terms that would not include substantial
dilution to our stockholders. Without timely financing, we would have to curtail
or eliminate development and further reduce expenditures.
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RISKS RELATED TO OUR BUSINESS
WE CURRENTLY RELY ON SALES TO U.S. GOVERNMENT ENTITIES, AND THE LOSS OF SUCH
CONTRACTS WOULD HAVE A MATERIAL ADVERSE IMPACT ON OUR OPERATING RESULTS.
During fiscal 2002 and 2001, contracts with the U.S.
Government, primarily the military services and other departments and agencies
of the Department of Defense (DoD), accounted for approximately 97%, or $4.4
million of our revenues, and 84%, or $2.2 million of our revenues, respectively.
In the fiscal quarter ended March 30, 2003, revenues on U.S. Government programs
were $2.9 million, or 96.3% of our revenues.
The loss or significant reduction in government funding of a large
program in which we participate could also materially adversely affect our
future revenues, earnings and cash flows and thus our ability to meet our
financial obligations. U.S. Government contracts are conditioned upon the
continuing approval by Congress of the amount of necessary spending. Congress
usually appropriates funds for a given program each fiscal year even though
contract periods of performance may exceed one year. Consequently, at the
beginning of a major program, the contract is usually partially funded, and
additional monies are normally committed to the contract only if appropriations
are made by Congress for future fiscal years.
GOVERNMENT CONTRACTS CONTAIN UNFAVORABLE TERMINATION PROVISIONS AND ARE SUBJECT
TO AUDIT AND MODIFICATION.
Companies engaged in supplying defense-related services and equipment
to U.S. Government agencies are subject to certain business risks peculiar to
the defense industry. These risks include the ability of the U.S. Government to
unilaterally:
o suspend us from receiving new contracts pending resolution of alleged
violations of procurement laws or regulations;
o terminate existing contracts;
o reduce the value of existing contracts;
o audit our contract-related costs and fees, including allocated
indirect costs; and
o control and potentially prohibit the export of our products.
Any of our U.S. Government contracts can be terminated by the U.S.
Government either for its convenience or if we default by failing to perform
under the contract. Termination for convenience provisions provide only for our
recovery of costs incurred or committed, settlement expenses and profit on the
work completed prior to termination. Termination for default provisions provide
for the contractor to be liable for excess costs incurred by the U.S. Government
in procuring undelivered items from another source.
OUR FIXED PRICE CONTRACTS MAY COMMIT US TO UNFAVORABLE TERMS.
We provide some of our products and services through fixed price
contracts. Fixed price contracts provided 45% and 28% of our sales for fiscal
2001 and 2002, respectively. In a fixed price contract, the price is not subject
to adjustment based on cost incurred to perform the required work under the
contract. Therefore, we fully absorb cost overruns on fixed price contracts and
this
8
reduces our profit margin on the contract. Those cost overruns may result in a
loss. A further risk associated with fixed price contracts is the difficulty of
estimating sales and costs that are related to performance in accordance with
contract specifications and the possibility of obsolescence in connection with
long-term procurements. Failure to anticipate technical problems, estimate costs
accurately or control costs during performance of a fixed price contract may
reduce our profit or cause a loss on the contract.
SINCE WE ARE CURRENTLY DEVELOPING OUR OPTICAL AND WIRELESS TELECOMMUNICATIONS
PRODUCTS IT IS DIFFICULT TO EVALUATE OUR FUTURE BUSINESS AND PROSPECTS.
We have traditionally derived our revenues from providing engineering,
communications and signal processing services to the U.S. Government. While we
continue to provide these services, over the past year we have continued to
emphasize our work on developing new optoelectronics telecommunications
products, including HYPERFINE WDM fiber optic communications technology and
Optical Processor Enhanced Receiver Architecture (OPERA(TM)) technology. Because
our development efforts on these products are ongoing and we have not begun
significant commercial sales of these products, our revenue and profit potential
is unproven and our limited history in the commercial telecommunications field
makes it difficult to evaluate our business and prospects. We have difficulty
accurately forecasting our commercial revenue, and we have limited historical
financial data upon which to base operating production budgets. You should
consider our business and prospects in light of the heightened risks and
unexpected expenses and problems we may face as a company developing new
commercial products for a rapidly changing industry.
IF WE DO NOT SUCCESSFULLY IMPLEMENT OUR PLAN TO EXPAND INTO COMMERCIAL MARKETS
OUR STOCK PRICE AND VALUATION MAY DECLINE.
In addition to continuing to pursue our business with the U.S.
Government, we are focusing our technical capabilities and expertise on related
commercial markets, including HYPERFINE WDM, OPERA(TM) and ImSyn(TM). These
products are still under various stages of development. As such, these products
are subject to certain risks and may require us to:
o develop marketing, sales and customer support capabilities;
o obtain customer and/or regulatory certification;
o respond to rapid technological advances; and
o obtain customer acceptance of these products and product performance.
Our efforts to enter commercial markets will require significant
resources, including additional working capital and capital expenditures, as
well as the use of management's time. Our efforts to sell our commercial
telecommunications products, particularly our optical networking and broadband
wireless communications products, also may depend to a significant degree on the
efforts of independent distributors or communication service providers. We can
give no assurance that these distributors or service providers will be able to
market our products or their services successfully or that we will be able to
realize a return on our investments in them. If we are not successful in
addressing these risks or in developing these commercial business opportunities
investors that purchased our stock based on the potential commercial market may
sell their shares and this could cause our stock price and valuation to decline.
9
OUR STRATEGY INVOLVES PURSUING STRATEGIC ACQUISITIONS AND INVESTMENTS THAT MAY
NOT BE SUCCESSFUL.
Our business strategy includes acquiring or making strategic
investments in other companies with a view to expanding our portfolio of
products and services, acquiring new technologies, and accelerating the
development of new or improved products. To do so, we may issue equity that
would dilute our current shareholders' percentage ownership or incur or assume
indebtedness. In addition, we may incur significant amortization expenses
related to intangible assets. We also may incur significant write-offs of
goodwill associated with companies, businesses or technologies that we acquire.
Acquisitions and strategic investments involve numerous risks, including:
o difficulties in integrating the operations, technologies, and products
of the acquired companies;
o diversion of management's attention from our core business;
o potential difficulties in completing projects of the acquired company;
o the potential loss of key employees of the acquired company; and
o dependence on unfamiliar or relatively small supply partners.
In addition, acquisitions and strategic investments may involve risks
of entering markets in which we have no or limited direct prior experience,
where competitors in such markets have stronger market positions and of
obtaining insufficient revenues to offset increased expenses associated with
acquisitions.
OUR SUCCESS LARGELY DEPENDS ON OUR ABILITY TO RETAIN KEY PERSONNEL.
Our success has always depended in large part on our ability to attract
and retain highly-skilled technical, managerial, sales and marketing personnel,
particularly those skilled and experienced in optoelectronics and optical
communications equipment. The loss of key personnel may prevent us from
completing current development and restrict new development.
IF WE ARE UNABLE TO DEVELOP AND SUCCESSFULLY INTRODUCE NEW AND ENHANCED PRODUCTS
THAT MEET THE NEEDS OF OUR CUSTOMERS IN A TIMELY MANNER, OUR REVENUES AND
RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED.
Our future success depends on our ability to anticipate our customers'
needs and develop products that address those needs. Technological change in the
optical networking industry is occurring at a rapid pace. As a result, we expect
there to be frequent new product introductions, changes in customer requirements
and evolving industry standards. We may not be able to develop new products or
enhancements to our existing products in a timely manner, or at all. This would
cause potential customers to seek other solutions, which would reduce our
revenues and adversely affect our results of operations and financial condition.
We are currently developing many potential optical networking products
through our research and development efforts. Although we have several products
in development, we may not bring all of these potential products into commercial
production due to:
o changes in customer demand;
10
o technological developments that make our products less competitive;
o evolving industry standards; or
o allocation of our limited resources to other products or technologies.
If we incur significant expenses developing products that we do not
produce commercially, or if we select the wrong products or technologies to
bring into commercial production, our revenues and results of operations could
be adversely affected and we may not recover significant research and
development expenses.
ONE ASPECT OF OUR SUCCESS IS DEPENDENT ON OUR OPTOELECTRONICS TELECOMMUNICATIONS
PRODUCTS BEING DEVELOPED. FAILURE OF OUR PRODUCTS TO OPERATE AS EXPECTED COULD
DELAY OR PREVENT THEIR DEPLOYMENT AND SALE AND COULD SERIOUSLY IMPAIR OUR
COMMERCIAL BUSINESS AND PROSPECTS.
Our future growth and success depends in part on the commercial success
of our optical and wireless telecommunications products being developed. We have
begun limited commercial sales of our products and have produced devices only to
specifications required in order to conduct laboratory tests and field trials.
Some of our devices have been deployed in field trials, others have been tested
in our laboratories and still others are in earlier stages of development. If
our products fail to operate as expected, this could delay or prevent their
deployment and sale and could seriously impair our business and prospects.
THE MARKET WE INTEND TO SERVE IS HIGHLY COMPETITIVE AND WE MAY NOT BE ABLE TO
ACHIEVE OR MAINTAIN PROFITABILITY.
Competition in the network communications equipment market is intense.
This market has historically been dominated by such large companies as Alcatel,
Ciena, Cisco Systems, JDS Uniphase, Lucent Technologies, NEC and Nortel
Networks. Some of these companies, as well as emerging companies, are currently
developing products that may compete in the specialty areas that Essex's
technology is designed to address. We may face competition from other large
communications companies who may enter our proposed markets. Many of these
possible competitors have longer operating histories, greater name recognition,
larger customer bases and greater financial, technical and sales and marketing
resources than we do and may be able to undertake more extensive marketing
efforts and adopt more aggressive pricing policies than we can. Due to the
rapidly evolving markets in which we compete, additional competitors with
significant market presence and financial resources may enter our markets,
further intensifying competition.
IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY EFFECTIVELY, WE MAY BE
UNABLE TO PREVENT THIRD PARTIES FROM USING OUR TECHNOLOGIES, WHICH WOULD IMPAIR
OUR COMPETITIVE ADVANTAGE.
We rely on a combination of patent, copyright, trademark and trade
secret laws and restrictions on disclosure to protect our intellectual property
rights. We also enter into confidentiality or license agreements with our key
employees and consultants and control access to and distribution of our
software, documentation and other proprietary information. The Company believes
that its patents and patent applications provide it with a competitive
advantage. Accordingly, in the event the Company's products and technologies
under development gain market acceptance, patent protection would be important
to the Company's business. However, obtaining patent and other intellectual
property protection may not adequately protect our rights or permit us
11
to gain or keep any competitive advantage. For instance, unauthorized parties
may attempt to copy, reverse engineer or otherwise obtain and use our patented
products or technology without our permission, thus eroding or eliminating the
competitive advantage we hope to gain though the exclusive rights provided by
patent protection. Moreover, our existing patents and patents we have applied
for (if granted) may not protect us against competitors that independently
develop proprietary technologies that are substantially equivalent or superior
to our technologies, or design around our patents. In addition, the competitive
advantage provided by patenting our technology may erode if we do not upgrade,
enhance and improve our technology on an ongoing basis to meet competitive
challenges.
Monitoring unauthorized use of our technology is difficult, and we
cannot be certain that the steps we have taken will prevent unauthorized use of
our technology, particularly in foreign countries where the laws may not protect
our proprietary rights as fully as in the United States. A complete description
of Essex's patents and patent applications is contained in our Annual Report on
Form 10-KSB for fiscal 2002. The Form 10-KSB is incorporated in this prospectus
by reference and we are delivering a copy of the report together with this
prospectus.
THERE IS A RISK THAT OUR PATENT APPLICATIONS WILL NOT BE GRANTED.
Although we have filed several applications for U.S. patents relating
to our HYPERFINE WDM and OPERA(TM) technologies, there is a risk that some or
all of our pending applications will not issue as patents. Although we believe
our patent applications are valid, the failure of our pending applications to
issue as patents would affect the competitive advantage we hope to gain by
obtaining patent protection and thus likely would have a material adverse effect
upon our business and results of operations.
WE MAY BECOME INVOLVED IN INTELLECTUAL PROPERTY DISPUTES, WHICH COULD SUBJECT US
TO SIGNIFICANT LIABILITY, DIVERT THE TIME AND ATTENTION OF OUR MANAGEMENT AND
PREVENT US FROM SELLING OUR PRODUCTS.
We or our customers may be a party to litigation in the future to
protect our intellectual property or to respond to allegations that we infringe
on others' intellectual property. Any parties asserting that our products
infringe upon their proprietary rights would force us to defend ourselves and
possibly our customers against the alleged infringement. If we are unsuccessful
in any intellectual property litigation, we could be subject to significant
liability for damages and loss of our proprietary rights. Intellectual property
litigation, regardless of its success, would likely be time consuming and
expensive to resolve and would divert management's time and attention. In
addition, we could be forced to do one or more of the following:
o stop selling, incorporating or using our products that include the
challenged intellectual property;
o obtain from the owner of the infringed intellectual property right a
license to sell or use the relevant technology, which license may not
be available on reasonable terms, or at all; or
o redesign those products that use the technology.
If we are forced to take any of these actions, our business could be
seriously harmed.
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IF NECESSARY LICENSES OF THIRD-PARTY TECHNOLOGY ARE NOT AVAILABLE TO US OR ARE
VERY EXPENSIVE, OUR BUSINESS WOULD BE SERIOUSLY HARMED.
From time to time we may be required to license technology from third
parties to sell or develop our products and product enhancements. These
third-party licenses may not be available to us on commercially reasonable
terms, if at all. Our inability to maintain or obtain any third-party license
required to sell or develop our products and product enhancements could require
us to obtain substitute technology of lower quality or performance standards or
at greater cost. If we were required to use technology with lower performance
standards or quality, customers may stop buying our products and this would
cause our revenues to decline. Similarly, if our costs rise significantly,
customers may choose less expensive alternative products, which would cause our
revenues to decline.
RISKS RELATED TO THE OPTICAL NETWORKING INDUSTRY
THE OPTICAL NETWORKING INDUSTRY IS DEVELOPING, UNPREDICTABLE AND CHARACTERIZED
BY RAPID TECHNOLOGICAL CHANGES AND EVOLVING STANDARDS. IF THIS INDUSTRY DOES NOT
DEVELOP AND EXPAND AS WE ANTICIPATE, DEMAND FOR OUR PRODUCTS MAY FAIL TO GROW OR
MAY DECLINE, WHICH WOULD ADVERSELY AFFECT OUR REVENUES.
The optical networking industry is developing and characterized by
rapid technological change, frequent new product introductions, changes in
customer requirements and continuously evolving industry standards. As a result,
it is difficult to predict its potential size and future growth rate. In
addition, evolving customer requirements and industry standards are uncertain.
Our success in generating revenues in this evolving market will depend on our
ability to:
o establish, maintain and enhance our relationships with optical
networking customers;
o convince our customers of the benefits of next-generation optical
networks; and
o predict accurately, and develop our products to meet, evolving
customer requirements and industry standards.
If we fail to address changing market conditions, sales of our products
may fail to grow or may decline, which would adversely affect our revenues.
THE OPTICAL NETWORKING EQUIPMENT INDUSTRY IS EXPERIENCING DECLINING AVERAGE
SELLING PRICES, WHICH COULD ADVERSELY AFFECT OUR REVENUES AND GROSS MARGINS.
The optical networking equipment industry is experiencing declining
average selling prices as a result of increasing competition and greater unit
volumes as communications service providers continue to deploy fiber optic
networks. We anticipate that average selling prices will continue to decrease in
the future in response to product introductions by competitors, price pressures
from significant customers and greater manufacturing efficiencies. These average
selling price declines may contribute to a decline in our gross margins, which
could adversely affect our results of operations.
13
IF THE INTERNET AND COMMERCIAL DATA NETWORKS DO NOT CONTINUE TO EXPAND AND
NEXT-GENERATION OPTICAL NETWORKS ARE NOT DEPLOYED AS RAPIDLY AS WE ANTICIPATE,
SALES OF OUR PRODUCTS UNDER DEVELOPMENT MAY DECLINE, AND OUR REVENUES MAY BE
ADVERSELY AFFECTED.
Our future commercial success depends on the continued growth of the
Internet and commercial data networks for commerce and communications, the
continuing increase in the amount of data transmitted over communications
networks and the increasing adoption of, and improvements to, optical networks
to meet the increased demand for bandwidth. If data networks, including the
Internet, do not continue to expand as a widespread communications medium and
commercial marketplace, the need for significantly increased bandwidth across
networks and the market for optical networking products may not continue to
develop. Future demand for the products we are developing is uncertain and will
depend to a great degree on the continued growth and upgrading of optical
networks.
BECAUSE OPTICAL PRODUCTS ARE COMPLEX AND ARE DEPLOYED IN COMPLEX ENVIRONMENTS,
THE PRODUCTS WE ARE DEVELOPING MAY HAVE DEFECTS THAT WE DISCOVER ONLY AFTER FULL
DEPLOYMENT, WHICH COULD SERIOUSLY HARM OUR BUSINESS.
Optical products are complex and are designed to be deployed in large
quantities across complex networks. Because of the nature of the products, they
can only be fully tested when completely deployed in large networks with high
amounts of traffic. Customers may discover errors or defects in the hardware or
the software, or products we develop may not operate as expected, after they
have been fully deployed. If we are unable to fix defects or other problems that
may be identified in full deployment, we would likely experience:
o loss of, or delay in, revenue and loss of market share;
o loss of existing customers;
o difficulties in attracting new customers or achieving market
acceptance;
o diversion of development resources;
o increased service and warranty costs;
o legal actions by our customers; and
o increased insurance costs.
The occurrence of any of these problems could seriously harm our
business, financial condition and results of operations. Defects, integration
issues or other performance problems could result in financial or other damages
to our customers or could negatively affect market acceptance for the products
we develop. Our customers could also seek damages for losses from us, which, if
they were successful, would seriously harm our business, financial condition and
results of operations. A product liability claim brought against us, even if
unsuccessful, would likely be time consuming and costly and would put a strain
on our management and resources.
14
RISKS RELATED TO THIS OFFERING
A LIMITED NUMBER OF STOCKHOLDERS ARE ABLE TO EXERT SIGNIFICANT INFLUENCE OVER
MATTERS REQUIRING STOCKHOLDER APPROVAL.
Since September 2000, the Company has engaged in several private
placements with a few private investors or their affiliates. We refer to these
entities and their affiliates as the "Private Investors". As of the date of this
prospectus, these Private Investors hold collectively approximately 3.6 million
shares of common stock, including 660,000 shares of Common Stock covered by this
Prospectus. The Private Investors also hold warrants exercisable under certain
circumstances for up to two million shares of our common stock. Accordingly, the
Private Investors could seek to exercise significant control and influence of
certain actions requiring the approval of the holders of shares of our common
stock. This concentration of ownership may also delay or prevent a change in
control of Essex or reduce the price other investors might be willing to pay for
our common stock. In addition, the interests of the Private Investors may
conflict with the interests of other holders of our common stock.
THERE IS CURRENTLY ONLY A LIMITED PUBLIC MARKET FOR OUR COMMON STOCK AND OUR
COMMON STOCK IS SUBJECT TO SIGNIFICANT PRICE fluctuations.
Our common stock has recently been included for listing on the American
Stock Exchange (AMEX). Prior to the AMEX listing, our common stock was traded on
the OTC Bulletin Board. Historically, there has been only a limited public
market for our common stock and we do not expect that an active and robust
trading market to develop until the number of shares in the hands of the public
is substantially increased. In addition, in the event our operating results fall
below the expectations of public market analysts and investors, the market price
of our common stock would likely be materially adversely affected.
The trading price of our common stock is likely to be volatile and
sporadic. The stock market in general, and the market for technology companies
in particular, has experienced extreme volatility. This volatility has often
been unrelated to the operating performance of particular companies. Volatility
in the market price of our common stock may prevent investors from being able to
sell their common stock at or above the price such investors paid for their
shares or at any price at all.
SALES BY THE SELLING STOCKHOLDERS OR OTHERS OF A SIGNIFICANT NUMBER OF SHARES OF
COMMON STOCK COULD HAVE A MATERIAL ADVERSE EFFECT ON PREVAILING MARKET PRICES.
We cannot predict what effect, if any, that future sales of shares, or
the availability of shares for future sale, will have on the market price of our
common stock prevailing from time to time. Nevertheless, sales of substantial
amounts of common stock by the selling stockholders, or the perception that such
sales may occur, could have a material adverse effect on prevailing market
prices.
At March 31, 2003, we have outstanding approximately 8.9 million shares
of our common stock, approximately 4,348,000 of which were sold or issued by us
in private transactions in reliance upon exemptions from registration under the
Securities Act. (See "Other Business Information - Recent Developments" in our
2002 Form 10-KSB for further information.) These privately placed shares may be
sold only pursuant to an effective registration statement filed by
15
Essex or an applicable exemption, including the exemption contained in Rule 144
promulgated under the Securities Act. In general, under Rule 144 as currently in
effect, a shareholder, including an affiliate of Essex, may sell shares of
common stock after at least one year has elapsed since such shares were acquired
from us or an affiliate of ours. The number of shares of common stock which may
be sold within any three- month period is limited to the greater of one percent
of the then outstanding number of shares of common stock or the average weekly
trading volume in the common stock during the four calendar weeks preceding the
date on which notice of such sale was filed under Rule 144. Certain other
requirements of Rule 144 concerning availability of public information, manner
of sale and notice of sale must also be satisfied. In addition, a shareholder
who is not our affiliate (and who has not been our affiliate for 90 days prior
to the sale) and who has beneficially owned shares acquired from us or our
affiliate for over two years may resell the shares without compliance with the
foregoing requirements under Rule 144.
In addition to the shares covered by this prospectus, the Private
Investors have been granted rights to have up to 2,000,000 shares of common
stock issuable upon exercise of warrants registerable under the Securities Act
upon demand and another approximately 600,000 shares of common stock through
"piggy-back" registration rights. We have also filed a registration statement to
register an additional 1.17 million shares held by the Private Investors and 1.l
million shares held by other parties. Sales of substantial amounts of common
stock under Rule 144 or pursuant to the holder's registration rights, or the
perception that such sales may occur, could have a material adverse effect on
prevailing market prices.
WE ARE AT RISK OF SECURITIES CLASS ACTION LITIGATION DUE TO OUR EXPECTED STOCK
PRICE VOLATILITY.
In the past, securities class action litigation has often been brought
against companies after periods of volatility in the market price of their
securities. Securities litigation could result in substantial costs and divert
management's attention and resources from our business. Due to the potential
volatility of our stock price, we may be the target of securities litigation in
the future.
OUR PRODUCTS AND SERVICES
Capitalizing on our expertise and success in developing and building
optoelectronic systems for national security applications, we has developed five
core areas of technological expertise and intellectual property:
1) Optoelectronic processors and processing (including the Advanced
Optical Processor (AOP) program and Optical Processor Enhanced
Receiver Architecture (OPERA(TM)) technology);
2) HYPERFINE WAVELENGTH DIVISION MULTIPLEXING (WDM) technology for
telecommunications;
3) Communications services (including the capabilities of the newly
formed Communications Services Division);
4) Signal processing (including the capabilities of recently acquired
Sensys Development Laboratories, Inc.); and
16
5) Virtual Lens Imaging (VLI) technology (including the
ImSyn(TM)processor and technology, for above and below ground
imaging).
Our services and products for sale and under development include:
o The Advanced Optical Processor (AOP) being developed by Essex under
contract for the United States Missile Defense Agency (MDA) is a third
generation device which leverages spread spectrum signal analysis,
wideband ELINT (electronic intelligence) and cryptologic exploitation.
The AOP is used for ballistic missile defense environments. In these
environments, not only must the missile target be identified using
Range-Doppler Imaging (RDI), but other items that are sent into the
threat environment to make it harder to identify and "kill" the
missile target must also be identified. Other items launched along
with the missile include chaff, debris, closely spaced objects,
jammers, spoofers and missile decoys. The AOP is a high performance
radar signal processor that provides the true correlation-based image
formation for ballistic missile defense in a cost-effective, low size,
low weight and low power package. Separately, OPERA(TM), an optically
enhanced digital signal processing technology, has demonstrated in
laboratory modeling a dramatic increase in the quality of service and
carrying capacity for CDMA wireless telecommunications systems.
Further development and testing of OPERA(TM)has been temporarily
delayed until funding is identified and obtained to finance such
activity.
o An all-optical, all-passive technique, HYPERFINE WDM fiber optic
communications technology, which has shown to significantly increase
the number of channels and their combined bandwidth used for DWDM. The
core HYPERFINE WDM technology provides:
- All passive optical components;
- Simple and small packaging, using standard manufacturing
processes;
- Excellent channel isolation;
- High density--50 MHz to 100 GHz spacing;
- Superior response and flat filter shapes with excellent channel
isolation;
- Passband shapes that can be tailored for each application;
- Low insertion loss;
- Low temperature sensitivity; and
- Fixed or tunable designs.
o In late 2002 Essex received a telecommunication services contract with
a potential total multiyear contract value of $30 million and formed
the Communications Services Division (CSD) to provide
telecommunication systems support in the area of modernization,
project management, integration and engineering analysis. The CSD will
focus on supporting the intelligence community's mission-critical
voice and video systems and associated infrastructure.
o Essex has acquired SDL, a Maryland-based provider of systems and
software engineering services to the intelligence community. SDL's
skill and experience are
17
highly complementary to Essex's core competencies in image and signal
processing technology.
o The Virtual Lens Imaging technology (VLI) is a patented
high-resolution imaging system that leverages Essex's experience in
synthetic aperture imagery and optoelectronic system development. The
Company's VLI technology is based on the key features of its
optoelectronic processor and its ability to calculate images from
non-uniform data in real time. Separately, our high-speed
optoelectronic processor, Image Synthesis (ImSynTM), enables
extraordinarily fast processing of data for complex visual image
systems including radar imaging, magnetic resonance imaging (MRI),
microscopy and ultrawideband signal processing. We are currently
seeking additional funding to further the development and testing of
second generation ImSyn(TM) processors in 2003.
Essex currently does not have sufficient resources to bring all of its
telecommunications and optoelectronics processing devices to market.
Accordingly, Essex will likely have to partner with or enter into licensing
arrangements with major industry participants in order to successfully introduce
in large volume its technology and products. In addition, several optical
telecommunications and fiber optic companies, both established and emerging, are
currently developing products that may compete in the specialty areas that
Essex's technology is designed to address. Most of these companies are larger
and more established than Essex and have existing customer bases and
significantly greater access to capital resources than Essex. See "RISK
FACTORS."
USE OF PROCEEDS
We will not receive any proceeds from the sale of the Common Stock by
the selling stockholders. We will receive aggregate proceeds of $148,350 if and
when all optionholders fully exercise the options that they hold and we will use
those proceeds for general corporate purposes.
18
SELLING STOCKHOLDERS
This prospectus relates to the offering by the stockholders and
optionholders named in the prospectus for resale of up to 785,000 shares of
common stock. Throughout this prospectus, we may refer to these stockholders and
optionholders and their pledgees, donees, transferees or other successors in
interest who receive shares in non-sale transactions, as the "selling
stockholders." If they sell all of these shares in this offering, the selling
stockholders will beneficially own the shares of our Common Stock as shown
below.
The following table sets forth the following information with respect
to each selling stockholder as of March 31, 2003: (i) name and nature of any
position or other relationship with us within the past three years; (ii) the
number and percentage of total outstanding shares of our Common Stock each
selling stockholder beneficially owns before this offering; (iii) the number of
shares of Common Stock the selling stockholder is offering; and (iv) the number
and percentage of total outstanding shares of our Common Stock that the selling
stockholder will own after the selling stockholder sells all of the shares in
this offering.
The table below has been revised to reflect the following events that
occurred prior to March 31, 2003: (i) the automatic conversion of 500,000 shares
of Preferred Stock formerly held by certain selling stockholders into a total of
2,000,000 shares of Common Stock; (ii) the expiration of a voting agreement by
and among GEF Optical Investment Company, Inc. and Networking Ventures LLC and
certain affiliated parties; (iii) the dissolution of Networking Ventures LLC and
the removal of Networking Ventures LLC as a selling stockholder; and (iv) the
inclusion of the John G. Hannon as successor to Networking Ventures as a selling
stockholder herein.
Percentage of
Percentage of Outstanding
Amount and Outstanding Amount and Shares of
Nature of Shares of Nature of Common Stock
Beneficial Common Stock Shares of Beneficial Beneficially
Name and Address Ownership Beneficially Common Ownership Owned After
of Beneficial Owner Before the Owned Before Stock After the the Offering
Offering the Offering Offered Offering
--------------------- ----------------- ----------------- ----------- --------------- ---------------
GEF Optical Investment
Company, LLC ("GEF")(1) 1,531,532 17.2 330,000 1,210,532 13.5
John G. Hannon (2) 1,538,973 17.3 330,000 1,208,973 13.6
Nottingham Investment
Company (3) 125,000 1.7 125,000 0 0.0
---------------------------------
(1) Includes 118,200 shares held by Global Environmental Capital, LLC.
("GECC") and 166,666 shares held by Global Environment Strategic
Technology Partners, LLC ("GESTP"). H. Jeffrey Leonard, the Chairman of
the Board of Essex, is a director of the managing member of GEF. Marie
S. Minton, a director of Essex, is also a director of the managing
member of GEF. The Company has been advised that each of GEF, GECC,
GESTP, Mr. Leonard and Ms. Minton may be deemed the beneficial owner of
all the shares of common stock beneficially owned by GEF, GECC and
GESTP.
(2) Includes 1,346,666 shares of common stock directly held by the Hannon
Family LLC over which Mr. Hannon has sole voting and investment power.
Also consists of 192,307 shares of Common Stock issuable upon
conversion of $500,000 convertible promissory note held by the Hannon
Family LLC. John G. Hannon is a director of Essex.
(3) Total shares beneficially owned prior to the Offering. As of March 31,
2003, Nottingham Investment Company beneficially owned 115,000 shares
consisting of options exercisable for 115,000 shares of Common Stock.
Nottingham Investment Company is a Maryland corporation
19
..
PLAN OF DISTRIBUTION
The Common Stock being offered by the selling stockholders may be sold
in transactions on the OTC Bulletin Board, on another market on which the Common
Stock may be trading, or in privately-negotiated transactions. The sale price to
the public may be the market price prevailing at the time of sale, a price
related to the prevailing market price or any other price the selling
stockholders may determine. The Common Stock may also be sold under SEC Rule 144
and not under this prospectus. The selling stockholders have the discretion not
to accept any purchase offer or make any sale of Common Stock if they deem the
purchase price to be unsatisfactory at any particular time, or for any reason.
The selling stockholders may also sell the Common Stock directly to
broker-dealers acting as principals and/or to broker-dealers acting as agents
for themselves or their customers. Brokers acting as agents for the selling
stockholders will receive usual and customary commissions for brokerage
transactions, and broker-dealers acting as principals will do so for their own
account at negotiated prices and at their own risk. It is possible that the
selling stockholders will sell shares of Common Stock to broker-dealers or other
purchasers at a price per share which may be below the then market price. In
addition, the selling stockholders may enter into hedging transactions with
broker-dealers who may engage in short sales of Common Stock in the course of
hedging the positions they assume with a selling stockholder. The selling
stockholders also may sell shares short and deliver the shares to close out
their positions, and may loan or pledge their shares to a broker-dealer who may
have the right to sell the loaned or pledged shares on default or otherwise. The
selling stockholders and any brokers, dealers or agents, upon effecting the sale
of any of the Common Stock offered hereby, may be deemed "underwriters" as that
term is defined under the Securities Act or the Exchange Act, or the rules and
regulations thereunder.
The selling stockholders and any other persons participating in the
sale or distribution of the Common Stock will be subject to applicable
provisions of the Exchange Act and its rules and regulations, which may limit
the timing of purchases and sales of any of the Common Stock by the selling
stockholders or other distribution participants. Furthermore, under Regulation
M, persons engaged in a distribution of securities are prohibited from
simultaneously engaging in market making and other activities with respect to
such securities for a specified period of time before the commencement of
distributions subject to specified exceptions or exemptions. This may affect the
marketability of the Common Stock.
We have agreed to indemnify the selling stockholders against some
important liabilities, including liabilities under the Securities Act, or to
contribute to any payments these selling stockholders may be required to make in
respect of these liabilities. We are paying the costs of this registration for
the selling stockholders.
20
LEGAL MATTERS
The legal issuance and fully paid and non-assessable status of our
Common Stock offered by this prospectus was passed upon for us by our legal
counsel, Whiteford, Taylor & Preston L.L.P., Baltimore, Maryland. Counsel's
opinion is included as exhibit 5.1 to the registration statement of which this
prospectus is a part.
EXPERTS
The financial statements incorporated in this prospectus by reference
to our Annual Report on Form 10-KSB for the year ended December 29, 2002 have
been so incorporated in reliance on the report of Stegman & Company, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
The historical financial statements of SDL as of September 30, 2002 and
for each of the two years in the period ended September 30, 2002 incorporated in
this prospectus by reference to our Current Report on Form 8-K filed on April
17, 2003, as amended by the Form 8-K/A filed on June [10], 2003, have been so
incorporated in reliance on the report of Stegman & Company, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
21
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TABLE OF CONTENTS
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PAGE
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Where You Can Find More
Information......................................................... 3
Forward Looking Statements............................................. 4
Essex Corporation...................................................... 5
Summary Financial Information.......................................... 5
The Offering........................................................... 6
Recent Developments.................................................... 6
Risk Factors........................................................... 7
Our Products and Services.............................................. 16
Use of Proceeds........................................................ 18
Selling Stockholders................................................... 19
Plan of Distribution................................................... 20
Legal Matters.......................................................... 21
Experts................................................................ 21
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ESSEX CORPORATION
Common Stock
------------------------
PROSPECTUS
------------------------
, 2003
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II-1
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses in connection with
the issuance and distribution of the securities being registered. Except for the
SEC registration fee, all amounts are estimates.
SEC registration fee...................................... $ 854
Accounting fees and expenses.............................. 4,000
Legal fees and expenses................................... 12,500
Blue Sky fees and expenses (including counsel fees)....... 2,500
Printing expenses......................................... 500
Transfer agent's and registrar's fees and expenses........ 500
Miscellaneous expenses.................................... 200
--------------
Total................................................... $ 21,054
==============
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Virginia Stock Corporation Act ("Act") permits indemnification of
directors and officers of a corporation under certain conditions and subject to
certain limitations. Articles (h) and (i) of Essex's Articles of Incorporation
contain provisions for the indemnification of directors and officers of Essex
within the limitations permitted by the Act. In addition, Essex has entered into
indemnity agreements with all of its directors and officers which provide the
maximum indemnification allowed by the Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
EXHIBIT
NUMBER DESCRIPTION
4.1 Specimen Stock Certificate*
5.1 Opinion of Whiteford, Taylor & Preston L.L.P.*
23.1 Consent of Independent Accountants
23.2 Consent of Independent Accountants
23.3 Consent of Whiteford, Taylor & Preston L.L.P. (included in Exhibit
5.1)*
24 Power of Attorney*
99.1 Securities Purchase Agreement dated March 15, 2001*
II-1
99.2 Amendment No. 2 to Registration Rights Agreement dated March 15,
2001*
99.3 Securities Purchase Agreement dated December 4, 2000*
99.4 Amendment No. 1 to Registration Rights Agreement dated December 4,
2000*
99.5 Amendment to Securities Purchase Agreement, dated as of March 1,
2002, between Essex Corporation and the Hannon Family LLC*
99.6 Amendment to Securities Purchase Agreement, dated as of March 1,
2002, between Essex Corporation and Global Environment Strategic
Technology Partners, L.P.*
99.7 Convertible Promissory Note Purchase Agreement by and between Essex
Corporation and the Hannon Family LLC dated December 17, 2002*
99.8 Convertible Promissory Note dated December 17, 2002 issued by Essex
Corporation to the Hannon Family LLC*
-----------------------
* Previously filed
(b) Financial Statement Schedules.
None.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment to the
registration statement) which, individually or when viewed
together, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement.
II-2
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to the
information in the registration statement. Provided, however,
that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section
15(d) of the Securities and Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each of these post-effective amendments shall be
deemed to be a new registration statement relating to the securities
being offered, and the offering of those securities at that time shall
be deemed to be their initial bona fide offering.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities being offered, and the offering of those securities
at that time shall be deemed to be their initial bona fide offering.
(c) Insofar as directors, officers and controlling persons of the
Registrant are permitted to seek indemnification for liabilities arising under
the Securities Act, under the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission,
this indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a director, officer or
controlling person asserts a claim for indemnification against these types of
liabilities in connection with the securities being registered, other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether indemnification by it under these
circumstances is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of the issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the County of Howard, State of Maryland, on June 12, 2003.
ESSEX CORPORATION
By: /S/ LEONARD E. MOODISPAW
----------------------------------------
Leonard E. Moodispaw
President and Chief Executive Officer
II-4
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
SIGNATURE TITLE DATE
/S/ H. JEFFREY LEONARD* Chairman of the Board June 12, 2003
----------------------------
H. Jeffrey Leonard
/S/ LEONARD E. MOODISPAW President, Chief Executive June 12, 2003
--------------------------- Officer, and Director
Leonard E. Moodispaw (principal executive officer)
/S/ JOSEPH R. KURRY, JR. Chief Financial Officer June 12, 2003
--------------------------- (principal financial
Joseph R. Kurry, Jr. and accounting officer)
Director June , 2003
---------------------------
John G. Hannon
/S/ ROBERT W. HICKS* Director June 12, 2003
---------------------------
Robert W. Hicks
/S/ RAY M. KEELER* Director June 12, 2003
---------------------------
Ray M. Keeler
Director June , 2003
---------------------------
Frank E. Manning
/S/ MARIE S. MINTON* Director June 12, 2003
---------------------------
Marie S. Minton
Director June , 2003
---------------------------
Arthur L. Money
/S/ TERRY M. TURPIN* Director June 12, 2003
---------------------------
Terry M. Turpin
* pursuant to a power of attorney dated May 17, 2001 previously filed with Form
S-3 (No. 333-61200)
II-5