Filed pursuant to Rule 424(b)(3).
Registration Statement File
Number 333-69047
PROSPECTUS
2,660,000 SHARES
V-ONE CORPORATION
COMMON STOCK
The 2,660,000 shares of common stock of V-ONE Corporation
offered through this prospectus will be sold by the shareholders
listed on pages 11 through 12 of this prospectus. The selling
shareholders own their shares directly. In some instances, the
shares offered pursuant to this prospectus may be sold by the
pledgees, donees or transferees of or other successors in
interest to the selling shareholders. None of the proceeds from
this offering will be received by V-ONE.
The sale of shares offered through this prospectus may be
effected by the selling shareholders from time to time in
transactions on the Nasdaq National Market, in privately
negotiated transactions or in a combination of such methods of
sale. The shares may be sold at fixed prices that may change, at
prices prevailing at the time of sale, at prices relating to
such prevailing prices or at negotiated prices.
V-ONE's common stock is currently listed on the Nasdaq
National Market under the trading symbol "VONE." V-ONE's
principal executive offices are located at 20250 Century
Boulevard, Suite 300, Germantown, Maryland 20874. V-ONE's
telephone number is (301) 515-5200.
POTENTIAL INVESTORS SHOULD CONSIDER CAREFULLY THE RISK
FACTORS BEGINNING ON PAGE 2 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY
STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
APRIL 16, 1999
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V-ONE
V-ONE develops, markets, and licenses a comprehensive suite of network
security products that enables organizations to conduct secured electronic
transactions and information exchange using private enterprise networks and
public networks, such as the Internet. V-ONE's suite of products address network
user authentication, perimeter security, access control, and data integrity
through the use of smart cards, firewalls, and encryption technology. V-ONE's
products interoperate seamlessly and can be combined to form a complete,
integrated network security solution or can be used as independent components in
customized security solutions. V-ONE's products have been designed with an open
and flexible architecture to enable applications to work better and to support
future network security standards. In addition, V-ONE's products enable
organizations to deploy and scale their solutions from small, single-site
networks to large, multi-site environments and can accommodate both wireline and
wireless media.
V-ONE was incorporated in Maryland in February 1993 and reincorporated
in Delaware in February 1996. Effective July 2, 1996, V-ONE changed its name
from "Virtual Open Network Environment Corporation" to "V-ONE Corporation."
RISK FACTORS
V-ONE operates in a rapidly changing environment that involves numerous
risks, some of which are beyond V-ONE's control. The following discussion
highlights some of the risks V-ONE faces. This prospectus contains
"forward-looking statements." Such statements involve known and unknown risks
and uncertainties that could cause V-ONE's actual performance or achievements to
differ from any future performance or achievements expressed or implied by such
statements. Readers should carefully consider the following risk factors before
purchasing common stock of V-ONE. Readers are also referred to the documents to
be filed by V-ONE with the SEC, specifically V-ONE's 1999 Annual Report on Form
10-K and subsequent fiscal years, which may identify important risk factors for
V-ONE.
V-ONE'S LIMITED OPERATING HISTORY, ACCUMULATED DEFICIT AND FINANCING ACTIVITIES
As of December 31, 1998, V-ONE had an accumulated deficit of
approximately $29,692,000. V-ONE currently expects to incur additional net
losses over the next several quarters. V-ONE will need to raise additional
capital through various financing activities in the short term to finance its
ongoing operations and is presently exploring sources of such financing.
Because of V-ONE's limited operating history, V-ONE may not achieve or
sustain profitability or significant revenues. To address these risks, V-ONE
must, among other things, continue its emphasis on research and development,
successfully execute and implement its marketing strategy, respond to
competitive developments and seek to attract and retain talented personnel.
V-ONE may be unable successfully to address these risks and the failure to do so
could have a material adverse effect on V-ONE's business, financial condition,
results of operations and cash flows.
V-ONE was founded in February 1993 and introduced its first product in
December 1994. Accordingly, V-ONE did not generate any significant revenues
until 1995 when it commenced sales of its SmartWall firewall product and
introduced its SmartGate client/server system. Revenues for 1995, 1996, 1997 and
1998 were approximately $1,104,000, $5,319,000, $5,973,000 and $6,260,000,
respectively.
Losses attributable to holders of common stock for 1995, 1996, 1997 and
1998 were approximately $1,122,000, $7,813,000, $10,828,000 and $9,407,000,
respectively.
V-ONE's growth in recent periods may not be an accurate indication of
future results of operations in light of V-ONE's short operating history, the
evolving nature of the network security market and the uncertainty of the demand
for Internet and intranet products in general and V-ONE's products in
particular.
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RISKS RELATING TO AVAILABILITY OF CAPITAL
It is anticipated that V-ONE will continue to expend significant amounts
to fund its operations and research and development. V-ONE's cash and cash
equivalents may not be sufficient to meet its requirements beyond August 31,
1999. In order to maintain V-ONE's operations and research and development at
present levels, V-ONE anticipates that it will need to secure additional
financing through the sale of equity securities by the third quarter of 1999. If
such additional financing is not available to V-ONE, it will attempt to reduce
its cash requirements through significant reductions in operating levels. V-ONE
may be unable to place equity securities on favorable terms or in an amount
required to meet its future cash requirements. In addition, V-ONE may not be
successful in reducing operating levels or, if operating levels are reduced,
V-ONE may not be able to maintain operations for any extended period of time.
RISKS RELATING TO SECURED LOAN
On February 24, 1999, V-ONE obtained a $3,000,000 term loan from
Transamerica Business Credit Corporation. The term loan is due on August 31,
1999. Thereafter, the term loan will convert into a revolving credit facility if
V-ONE is not in default under its credit agreement with Transamerica. The
maximum amount that can be borrowed by V-ONE under the revolving credit facility
is the lesser of $3,000,000 and 80% of eligible receivables. The revolving
credit facility expires on August 31, 2000.
In connection with this loan, V-ONE granted a security interest in all
of its assets, including its intellectual property, to Transamerica. If V-ONE is
unable to repay the loan or there is an event of default under the loan,
Transamerica could foreclose on its security interest.
Pursuant to the terms of the loan agreement relating to this term loan,
receipt by V-ONE of an opinion from its independent auditors which expresses
doubt with regard to the ability of V-ONE to continue as a going concern
constitutes an event of default under the loan agreement and allows Transamerica
to foreclose on its security interest. V-ONE has received such an opinion from
its independent auditors in connection with their audit of V-ONE's financial
statements as of and for the year ended December 31, 1998. As of the date of
such opinion, there was an event of default under the loan agreement; however,
Transamerica has subsequently waived this event of default. In consideration for
such waiver, V-ONE has agreed (a) to grant an affiliate of Transamerica warrants
to purchase 100,000 shares of common stock at an exercise price of $3.25 per
share and (b) accept an additional financial covenant that V-ONE's net worth
will be $5,000,000 as of June 30, 1999 and September 30, 1999. There can be no
assurance that V-ONE will be able to comply with the loan covenants.
RISKS ASSOCIATED WITH THE EMERGING NETWORK SECURITY MARKET
The market for V-ONE's products, particularly its client/server VPN or
virtual private network products, is in an early stage of development and the
market's acceptance of these products has been slower than expected. The rapid
development of Internet and intranet computing has increased the ability of
users to access proprietary information and resources and has recently increased
demand for network security products. Because the market for network security
products is only beginning to develop and potential customers are only beginning
to realize the benefits of VPN technology, it is difficult to assess the size of
the market, the product features desired by the market, the best price structure
for V-ONE's products, the best distribution strategy and the competitive
environment that will develop in this market.
The demand for V-ONE's products could decline as a result of
competition, technological change, the public's perception of the need for
security products, developments in the hardware and software environments in
which these products operate, general economic conditions or other factors
beyond V-ONE's control. Any such decline would adversely effect V-ONE.
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ANTICIPATED FLUCTUATIONS IN QUARTERLY RESULTS
At V-ONE's board of directors meeting on March 4, 1999, V-ONE revised
its revenue recognition policy. V-ONE had previously used a "sell-in" model with
distributors, where revenue is recognized when product is sold to the
distributor. V-ONE is now using a "sell-through" model, where revenue is
recognized when the distributor has delivered the licenses to end-user customers
and the end-user customers have registered the software with V-ONE. This
revision in policy will cause revenue to be recognized later in the distribution
cycle and may make V-ONE's quarterly financial results more variable. In
addition, future revenues may be less affected by V-ONE's direct sales efforts
unless V-ONE directly assists resellers in sales to end users.
V-ONE is applying the revised revenue recognition policy to its
financial statements for the year ended December 31, 1998. In addition, V-ONE
has restated its financial statements for the years ended December 31, 1997 and
1996 and for the quarters ended September 30, 1998, 1997 and 1996, June 30, 1998
and 1997 and March 31, 1998 and 1997 for consistency of presentation.
V-ONE'S DEPENDENCE ON KEY PERSONNEL
To a large extent, V-ONE's success depends upon the performance of its
senior management and its technical, sales and marketing personnel, many of whom
have only recently joined V-ONE. There is intense competition in the software
security industry to hire and retain qualified personnel. V-ONE is actively
searching for additional qualified personnel. V-ONE's success will depend upon
its ability to retain and hire additional key personnel. The loss of the
services of key personnel or the inability to attract additional qualified
personnel could materially and adversely effect V-ONE's results of operations
and product development efforts.
V-ONE has entered into employment agreements that provide for fixed
terms of employment with David D. Dawson, its Chairman of the Board, President
and Chief Executive Officer, Charles B. Griffis, its Senior Vice President and
Chief Financial Officer, and Robert F. Kelley, its Vice President of
Engineering. However, V-ONE has not historically provided such types of
employment agreements to its other employees. This may adversely impact V-ONE's
ability to attract and retain the necessary technical, management and other key
personnel.
RISK OF V-ONE'S INABILITY TO MANAGE GROWTH
To manage growth effectively, V-ONE needs to continue to improve its
operational, financial and management information systems and to hire, train,
motivate and manage its employees. Competition is intense for qualified
technical, marketing and management personnel. V-ONE may be unable to achieve or
manage any future growth. Its failure to do so could delay V-ONE's product
development cycles and marketing efforts.
V-ONE has experienced and may experience future growth in the number of
its employees and the scope of its operations, resulting in increased
responsibilities for management and added pressure on V-ONE's operating and
financial systems. As of January 1, 1999, V-ONE had 77 employees, as compared to
83, 77, and 34 employees on January 1, 1998, 1997, and 1996, respectively.
RISK OF V-ONE'S DEPENDENCE ON SMARTGATE AND SMARTWALL
V-ONE currently generates most of its revenues from its SmartWall and
SmartGate products. SmartWall and SmartGate have met with a favorable degree of
market acceptance since sales of SmartWall commenced in the first quarter of
1995 and since SmartGate was introduced in the fourth quarter of 1995. However,
SmartWall or SmartGate may not continue to be accepted in the future. In
addition, any or all of V-ONE's other current or future products could fail to
win market acceptance.
V-ONE's success partly depends on V-ONE's ability to design, develop and
introduce new products, services and enhancements on a timely basis to meet
changing customer needs, technological developments and evolving industry
standards.
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RISK OF INADEQUATE PROTECTION FOR V-ONE'S TECHNOLOGIES
V-ONE relies on trademark, copyright, patent and trade secret laws,
employee and third-party non-disclosure agreements and other methods to protect
the rights of V-ONE and the companies from which V-ONE licenses technology.
V-ONE currently holds patents on its Wallet Technology, its SmartGate
technology, its Smartcard Technology, and its On-Line Registration technology.
Others may independently develop similar technologies or duplicate any
technology developed by V-ONE.
Prosecution of patent applications and any other patent applications may
require the expenditure of substantial resources. For example, the issuance of a
patent may require 24 months or longer. During this period, V-ONE's technology
may become obsolete. Pending or future patent applications may not be granted,
future patents may be challenged, invalidated or circumvented and the rights
granted may not provide competitive advantages to V-ONE.
V-ONE currently intends to pursue patent protection outside of the
United States for the technology covered by the most recently filed patent
applications. This protection may not be granted. Even if it is granted, it may
not adequately protect the covered technology.
V-ONE's success also depends on its software technology and technology
licensed from others. V-ONE's trade secrets, license agreements and
non-disclosure agreements may not provide appropriate protection for V-ONE's
technology or the technology it licenses from others. Further, V-ONE relies on
license agreements that are not signed by the end user to license V-ONE's
products. These license agreements may be unenforceable under the laws of some
jurisdictions.
V-ONE may be subject to additional risk as V-ONE enters into
transactions in countries where intellectual property laws are not well
developed or are poorly enforced. Legal protections of V-ONE's rights may be
ineffective in foreign markets and technology developed by V-ONE may not be
protectable in foreign jurisdictions.
As the number of security products in the industry increases and the
functionality of these products overlap, software developers may become subject
to infringement claims. Third parties may in the future assert infringement
claims against V-ONE with respect to current or future products. V-ONE also may
desire or be required to obtain licenses from others. Failure to obtain those
licenses could adversely effect V-ONE's ability to market its software security
products. However, V-ONE may be unable to obtain these licenses on commercially
reasonable terms, if at all. In addition, the patents underlying such licenses
may not be valid or enforceable and the proprietary nature of the unpatented
technology underlying such licenses may not remain proprietary.
Any claims or litigation could be costly and could result in a diversion
of management's attention. Adverse determinations in such claims or litigation
could also adversely effect V-ONE.
RISK OF ERRORS OR FAILURES
The complex nature of V-ONE's software products can make the detection
of errors or failures difficult when products are introduced. If errors or
failures are subsequently discovered, this may result in delays and lost
revenues during the correction process. In addition, technology licensed by
V-ONE for use in its products may contain errors that adversely effect such
products. Despite testing by V-ONE and current and prospective customers, errors
may still be discovered in new products or releases after commencement of
commercial shipments. This might result in delay, adverse publicity, loss of
market acceptance and claims against V-ONE.
A malfunction or the inadequate design of V-ONE's products could result
in tort or warranty claims. V-ONE generally attempts to reduce the risk of such
losses to itself and to the companies from which V-ONE licenses technology
through warranty disclaimers and liability limitation clauses in its license
agreements. V-ONE may not have obtained adequate contractual protection in all
instances or where otherwise required under agreements V-ONE has entered into
with others. In addition, these measures may not be effective in limiting
V-ONE's liability to end users and to the companies from which V-ONE licenses
technology.
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V-ONE'S PRODUCT LIABILITY RISK
V-ONE currently has product liability insurance. However, V-ONE's
insurance coverage may not be adequate and any product liability claim against
V-ONE for damages resulting from security breaches could be substantial. In
addition, a well-publicized actual or perceived security breach could adversely
effect the market's perception of security products in general or V-ONE's
products in particular. This could result in a decline in demand for V-ONE's
products.
RISKS OF CHANGES IN TECHNOLOGY AND INDUSTRY STANDARDS AND NEW PRODUCT
INTRODUCTION
The network security industry is characterized by rapid changes,
including evolving industry standards, frequent new product introductions,
continuing advances in technology and changes in customer requirements and
preferences. Advances in techniques by individuals and entities seeking to gain
unauthorized access to networks could expose V-ONE's existing products to new
and unexpected attacks and require accelerated development of new products or
enhancements to existing products.
V-ONE may be unable to counter challenges to its current products.
V-ONE's future products may not keep pace with technological changes implemented
by competitors or persons seeking to breach network security. Its products may
not satisfy evolving consumer preferences and V-ONE may not be successful in
developing and marketing products for any future technology. Failure to develop
and introduce new products and improve current products in a timely fashion
could adversely effect V-ONE.
RISK OF DEFECTS AND DEVELOPMENT DELAYS
V-ONE may experience schedule overruns in software development triggered
by factors such as insufficient staffing or the unavailability of
development-related software, hardware or technologies. Further, when developing
new software products, V-ONE's development schedules may be altered as a result
of the discovery of software bugs, performance problems or changes to the
product specification in response to customer requirements, market developments
or V-ONE-initiated changes.
Changes in product specifications may delay completion of documentation,
packaging or testing. This may, in turn, affect the release schedule of the
product.
When developing complex software products, the technology market may
shift during the development cycle, requiring V-ONE either to enhance or change
a product's specifications to meet a customer's changing needs. All of these
factors may cause a product to enter the market behind schedule, which may
adversely effect market acceptance of the product or place it at a disadvantage
to a competitor's product that has already gained market share or market
acceptance during the delay.
RISKS RELATING TO EVOLVING DISTRIBUTION CHANNELS
V-ONE relies on its direct sales force and its channel distribution
strategy for the sale and marketing of its products. V-ONE's sales and marketing
organization may be unable to successfully compete against the more extensive
and well-funded sales and marketing operations of some of its current and future
competitors.
V-ONE's distribution strategy involves the development of relationships
with resellers and international distributors to enable V-ONE to achieve broad
market penetration. However, V-ONE may be unable to continue to attract
integrators and resellers that will be able to market V-ONE's products
effectively and that will be qualified to provide timely and cost-effective
customer support and service.
V-ONE ships products to distributors, integrators and resellers on
receipt of a purchase-order, and its distributors, integrators and resellers
generally carry competing product lines. Current distributors, integrators and
resellers may not continue to represent V-ONE's products. The inability to
recruit, or the loss of, important sales personnel, distributors, integrators or
resellers could adversely effect V-ONE.
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RISKS RELATING TO COLLECTION OF RECEIVABLES
Due to worldwide economic factors, V-ONE has from time to time
experienced and may continue to experience difficulty in collecting its
receivables on a timely basis. V-ONE continues to focus on the collection of its
receivables on a timely basis. However, if V-ONE is unable to collect its
receivables on a timely basis, it could have an adverse effect on V-ONE's
financial condition, results of operations and cash flows.
RISKS ASSOCIATED WITH LONG SALES CYCLE AND SEASONALITY
Sales of V-ONE's products generally involve a significant commitment of
capital by its customers. For sales by V-ONE's sales force directly to end
users, V-ONE often permits customers to evaluate products being considered for
license, generally for a period of up to 30 days. For these and other reasons,
the sales cycle associated with V-ONE's products is likely to be lengthy and
subject to a number of significant risks over which V-ONE has little or no
control. As a result, V-ONE believes that its quarterly results are likely to
vary significantly.
V-ONE may be required to ship products shortly after it receives orders.
Consequently, any order backlog at the beginning of any period may represent
only a small portion of that period's expected revenues. As a result, product
revenues in any period will be substantially dependent on orders booked and
registered in that period. V-ONE plans its production and inventory levels based
on internal forecasts of customer demand, which is highly unpredictable and can
fluctuate substantially. If revenues fall significantly below anticipated
levels, V-ONE's financial condition, results of operations and cash flows could
be adversely effected. In addition, V-ONE may experience significant seasonality
in its business, and V-ONE's financial condition and results of operations may
be effected by such trends in the future. Such trends may include higher
revenues in the third quarter of the year. V-ONE believes that revenues may tend
to be higher in the third quarter due to the fiscal year end of the U.S.
government.
RISK OF SALES TO GOVERNMENTS
No government agency or department has an obligation to purchase
products from V-ONE in the future. Accordingly, V-ONE believes that future
government contracts and orders for its network security products will in part
depend on the continued favorable reaction of government agencies and
departments to the development capabilities of V-ONE and the reliability and
perceived reliability of its products.
V-ONE may be unable to sell its products to government departments and
agencies and government contractors and any such sales may not result in
commercial acceptance of V-ONE's products. In addition, reductions or delays in
funds available for projects V-ONE is performing or to purchase its products
could adversely impact V-ONE's government contracts business.
Contracts involving the U.S. government are also subject to the risks of
disallowance of costs upon audit, changes in government procurement policies and
the necessity to participate in competitive bidding. U.S. government contracts
involving prime contractors or government-designated subcontractors are also
subject to the inability of such parties to perform under their contracts. V-ONE
is also exposed to the risk of increased or unexpected costs, causing losses or
reduced profits, under government and some third-party contracts. Any of the
foregoing events could adversely effect V-ONE.
In 1995, V-ONE derived a substantial portion of its revenue from the
sale of SmartWall to departments and agencies of the U.S. government and
government contractors. In 1996, V-ONE's revenues were attributable, in part, to
a contract with the National Security Agency. In 1997, approximately one-half of
V-ONE's total sales were attributable to contracts with various agencies and
departments of the United States government and of state and local governments.
This relationship increased to more than 60% through December 31, 1998.
RISK OF EFFECT OF GOVERNMENT REGULATION OF TECHNOLOGY EXPORTS
V-ONE currently sells its products abroad and intends to continue to
expand its relationships with international distributors. V-ONE's international
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sales and operations could be subject to risks such as the imposition of
governmental controls, export license requirements, restrictions on the export
of critical technology, trade restrictions and changes in tariffs. In
particular, V-ONE's information security products are subject to the export
restrictions administered by the U.S. Department of Commerce. These
restrictions, in the case of some products, permit the export of encryption
products only with a specific export license.
These export laws also prohibit the export of encryption products to a
number of countries, individuals and entities and may restrict exports of some
products to a narrow range of end-users. In some foreign countries, V-ONE's
distributors are required to secure licenses or formal permission before
encryption products can be imported.
V-ONE has obtained a license exception to export strong encryption from
the U. S. Department of Commerce on a worldwide basis (except to the seven
terrorist countries) as long as the end user agrees to use the KRAKit(TM)
session key recreation capability. Foreign competitors that face less stringent
controls on their products may be able to compete more effectively than V-ONE in
the global network security market.
RISKS ASSOCIATED WITH YEAR 2000 ISSUE
The Year 2000 issue concerns the potential exposures related to the
automated generation of business and financial misinformation resulting from the
application of computer programs that have been written using six digits (E.G.,
12/31/99), rather than eight (E.G., 12/31/1999), to define the applicable year
of business transactions.
V-ONE has completed the identification and assessment of most of its IT
systems, and those systems have been modified by the suppliers of those systems
to V-ONE to address Year 2000 problems. In addition to its internal systems,
V-ONE has assessed the level of Year 2000 problems associated with most of its
suppliers of software incorporated or bundled with its products, other
suppliers, customers and creditors. V-ONE has also identified and assessed most
of its non-IT systems, which include its telephone systems, heating and
air-conditioning, elevators, and other business equipment. Almost all of these
suppliers have indicated that their software and other products are Year 2000
compliant. In addition, most of V-ONE's non-IT systems appear to be Year 2000
compliant.
V-ONE's own software products are Year 2000 compliant.
V-ONE's costs to date for its Year 2000 compliance program, excluding
the salaries of its employees, has not been material. In fact, most of V-ONE's
IT systems have been modified by the suppliers of those systems and such
modifications were included as part of normal upgrades of those systems.
Although V-ONE has not completed its assessment, it does not currently believe
that the future costs associated with its remaining IT systems or its non-IT
systems will be material.
V-ONE cannot determine currently its most likely worst case Year 2000
scenario, as it has not identified and assessed all of its systems, particularly
its non-IT systems. As V-ONE completes its identification and assessment of
internal and third party systems, it expects to develop contingency plans for
various worst-case scenarios. V-ONE expects to complete such contingency
planning by September 1999. A failure to address Year 2000 issues successfully
could have a material adverse effect on V-ONE's business, financial condition,
results of operations and cash flows.
EFFECTS OF CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION, BYLAWS AND
DELAWARE LAW
Certain provisions of V-ONE's Amended Certificate of Incorporation and
of Delaware law could delay or make difficult a merger, tender offer or proxy
contest involving V-ONE. Among other things, these provisions include a
classified board, prohibitions on removing directors except for cause, and other
requirements.
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WHERE YOU CAN FIND MORE INFORMATION
A Registration Statement on Form S-3 (the "Registration Statement")
under the Securities Act of 1933 relating to the securities offered by this
prospectus has been filed by V-ONE with the SEC in Washington, D.C. This
prospectus does not contain all of the information set forth in the Registration
Statement and its exhibits and schedules. Some financial and other information
relating to V-ONE is contained in the documents indicated below under
"Incorporation of Certain Documents by Reference." This information is not
presented in this prospectus or delivered with it. For further information with
respect to V-ONE and the securities offered by this prospectus, reference is
made to such Registration Statement, exhibits and schedules.
Statements contained in this prospectus as to the contents of any
contract or other document referred to are not necessarily complete. In each
instance, reference is made to the copy of such contract or other document filed
as exhibits to the Registration Statement, each such statement being qualified
in all respects by such reference.
A copy of the Registration Statement may be inspected without charge or
may be obtained from the SEC upon the payment of certain fees prescribed by the
SEC at the public reference facilities maintained by the SEC in Washington, D.C.
at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
SEC's Regional Offices in New York at 7 World Trade Center, Suite 1300, New
York, New York 10048 and in Chicago at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661.
V-ONE is subject to the informational requirements of the Securities
Exchange Act of 1934. Accordingly, V-ONE files periodic reports, proxy
statements and other information with the SEC. Such reports, proxy statements
and other information concerning V-ONE may be inspected or copied at the public
reference facilities at the SEC located at 450 Fifth Street, N.W., Washington,
D.C. 20549. Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 1-800-SEC-0330. Copies of such documents can be
obtained at the Public Reference section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates or by reference to V-ONE on the
SEC's Worldwide Web page (http://www.sec.gov).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by V-ONE with the SEC,
are incorporated in this prospectus by reference:
(1) V-ONE's Annual Report on Form 10-K for the year ended December 31,
1998;
(2) V-ONE's Current Report on Form 8-K dated March 31, 1999;
(3) All other reports filed by V-ONE pursuant to Sections 13(a) or
15(d) of the Securities and Exchange Act of 1934 since March 31,
1999; and
(4) The description of V-ONE's common stock contained in V-ONE's
Registration Statement on Form 8-A filed on October 9, 1996,
pursuant to Section 12(g) of the Securities Exchange Act of 1934.
All reports and other documents subsequently filed by V-ONE pursuant to
Sections 12, 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934
prior to the filing of a post-effective amendment that indicates that all
securities offered by this prospectus have been sold or that deregisters all
securities then remaining unsold, are deemed to be incorporated by reference in
and to be a part of this prospectus from the date of filing of such reports and
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus is deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained in this prospectus or in the Registration Statement containing this
prospectus or in any other subsequently filed document that also is or is deemed
to be incorporated by reference in this prospectus modifies or supersedes such
statement. Any statement so modified or superseded is not deemed, except as so
modified or superseded, to constitute a part of this prospectus.
V-ONE will provide without charge to each person to whom this prospectus
is delivered, upon the written or oral request of such person, a copy of any or
all of the foregoing documents referred to above that have been or may be
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incorporated in this prospectus by reference. Exhibits to such documents will
not be provided (unless such exhibits are specifically incorporated by reference
into the information that this prospectus incorporates). Requests for such
documents should be directed to: V-ONE Corporation, 20250 Century Boulevard,
Germantown, Maryland 20874, attention: Charles B. Griffis, Senior Vice President
and Chief Financial Officer. Mr. Griffis' telephone number is (301) 515-5243.
SELLING STOCKHOLDERS
The following table sets forth the names of the shareholders selling
shares of common stock in this offering, the number of shares of common stock
beneficially owned by each selling stockholder as of March 8, 1999 (except as
noted below) and the number of shares of common stock that may be offered for
sale pursuant to this prospectus by each such selling stockholder. Except as set
forth below, none of the selling stockholders has held any position, office or
other material relationship with V-ONE or any of its affiliates within the past
three years other than as a result of the transaction that results in its
ownership of shares of common stock.
The shares may be offered from time to time by the selling stockholders
named below. However, the selling stockholders are under no obligation to sell
all or any portion of such shares, nor are the selling stockholders obligated to
sell any such shares immediately pursuant to the Registration Statement. Because
the selling stockholders may sell all or part of their shares, no estimate can
be given as to the number of shares of common stock that will be held by any
selling stockholder termination of any offering made by this prospectus.
The table below shows the shares of common stock beneficially owned by
Advantage Fund II Ltd. ("Advantage") as of March 8, 1999. These shares include
shares of common stock issuable on exercise of warrants to purchase 389,441
shares of common stock at an exercise price of $4.77 per share and warrants to
purchase 100,000 shares of common stock at an exercise price of $2.125 per share
(collectively, the "New Warrants"). The New Warrants expire on September 21,
2003.
With respect to the shares of common stock beneficially owned by
Advantage prior to the offering, the table below also includes shares issuable
on exercise of warrants issued on conversion of shares of Series A Convertible
Preferred Stock ("Series A Warrants"). However, no holder of Series A Warrants
or New Warrants is entitled to receive shares of common stock on exercise of
such warrants to the extent that the sum of (1) the shares of common stock owned
by such holder and its affiliates and (2) the shares of common stock issuable on
exercise of the Series A Warrants and the New Warrants would result in
beneficial ownership by such holder and its affiliates of more than 4.9% of the
outstanding shares of common stock. Beneficial ownership of Advantage for this
purpose is determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, excluding shares of common stock so owned through
ownership of unexercised Series A Warrants or New Warrants. Absent the 4.9%
limitation on beneficial ownership described above, under Section 13(d) of the
Securities Exchange Act of 1934 Advantage would hold 200,000 shares of common
stock and warrants to purchase 633,576 shares of common stock. Accordingly, the
number listed in the table below with respect to Advantage in the column labeled
"Shares of Common Stock Beneficially Owned Prior to Offering" does not include
26,152 shares of common stock as a result of the application of the ownership
limitation.
The table below does not include shares of common stock issuable on
conversion of shares of Series A Convertible Preferred Stock as, on November 20,
1998, V-ONE redeemed all of the 2,462 outstanding shares of Series A Convertible
Preferred Stock held by Advantage for $3,200,600 in the aggregate.
10
<PAGE>
<TABLE>
<CAPTION>
Common Stock Beneficially
Owned After Offering If
All Offered Shares Are Sold
---------------------------
Shares of Common
Stock Beneficially
Name of Selling Owned Prior to Common Stock Percent of
Stockholder Offering Offered Hereby Number Outstanding
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
Andrew and Bette Vaccaro 10,000 10,000 0 *
Elliott Broidy 50,000 50,000 0 *
Karl F. Fox 50,000 50,000 0 *
Amy N. Karp 50,000 50,000 0 *
Madison Investment Partners, 40,000 40,000 0 *
L.P.
Murray D. Shaewitz Trust 10,000 10,000 0 *
Lewis M. Schott Trust 459,820 200,000 259,820 1.6
Lewis M. Schott 512,070(1) 52,250 259,820(2) 1.6
William and Dorothy Marbaker 10,000 10,000 0 *
John H. White 10,000 10,000 0 *
Robert E. Cleary 50,000 50,000 0 *
CLFS Equities LLP 30,000 30,000 0 *
Warner Blumenthal 10,000 10,000 0 *
Garo A. Partoyan 20,000 20,000 0 *
Conrad A. Riemer 50,000 50,000 0 *
Len and Sandra Coleman 20,000 20,000 0 *
Richard L. Denton 10,000 10,000 0 *
Richard J. Wright 10,000 10,000 0 *
Thomas and Kathleen Moore 10,000 10,000 0 *
Kathryn P. Kaplan Trust 14,000 10,000 4,000 *
Bryan J. O'Connor 20,000 20,000 0 *
Byron and Joy Crowe 10,000 10,000 0 *
Stanley Shapiro Revocable Trust 122,083 50,000 72,083 *
Shapiro Family Trust 93,568 11,250 82,318 *
Stanley Shapiro 135,458(3) 6,875 78,583(4) *
Atlas Capital Partners, L.P. 50,000 50,000 0 *
Albert McCaffery, Jr. 20,000 20,000 0 *
Cranshire Capital, L.P. 400,000 400,000 0 *
John Galt Fund, L.P. 50,000 50,000 0 *
11
<PAGE>
Common Stock Beneficially
Owned After Offering If
All Offered Shares Are Sold
---------------------------
Shares of Common
Stock Beneficially
Name of Selling Owned Prior to Common Stock Percent of
Stockholder Offering Offered Hereby Number Outstanding
- --------------------------------------------------------------------------------------------------
Louis Lang 20,000 20,000 0 *
Joseph Lupo Profit Sharing Plan 495,000 400,000 95,000 *
Joseph and Rosa Lupo 10,000 10,000 0 *
John and Susan Rogue 10,000 10,000 0 *
Thomas and Vicke Horvath 100,000 100,000 0 *
Richard F. Fox 75,000 75,000 0 *
Atlas II, L.P. 50,000 50,000 0 *
William C. Clement Trust 50,000 50,000 0 *
Reg W. Cordry 10,000 10,000 0 *
Norman Fine 39,521 27,000 12,521 *
JAD Management 15,000 15,000 0 *
William Rivkin Trust 10,000 10,000 0 *
Jayant and Madhu Desai 20,000 20,000 0 *
John F. Whittemore 95,000 25,000 70,000 *
Bryan T. Vanas 61,500 17,500 44,000 *
Professional Trading Services 150,000 150,000 0 *
Est.
Lee and Linda DeVisser 180,481 22,625 157,856 1.0
Martin Lane Clark 125,000 125,000 0 *
Advantage Fund II Ltd. 807,424 200,000 633,576(5) 3.7
Burnett Moody 25,762 2,500 23,262 *
- --------------------------------------------------------------------------------------------------
</TABLE>
* Less than 1%.
(1) Includes 52,250 shares of common stock owned by Lewis M. Schott and
459,820 shares of common stock owned by the Lewis M. Schott Trust.
(2) Includes 259,820 shares of common stock owned by the Lewis M. Schott
Trust.
(3) Includes 13,375 shares of common stock owned by Stanley Shapiro and
122,083 shares of common stock owned by the Stanley Shapiro Revocable
Trust.
(4) Includes 6,500 shares of common stock owned by Stanley Shapiro and 72,083
shares of common stock owned by the Stanley Shapiro Revocable Trust.
(5) Includes 633,576 shares of common stock issuable on exercise of warrants
to purchase common stock.
12
<PAGE>
From time to time the selling stockholders may transfer, pledge, donate
or assign their shares to lenders, family members and others and each of such
persons upon acquiring the shares will be deemed to be a selling stockholder for
purposes of this prospectus. The number of shares beneficially owned by the
selling stockholders who so transfer, pledge, donate or assign shares will
decrease as and when they take such actions. The plan of distribution for shares
sold hereunder will otherwise remain unchanged, except that the transferees,
pledgees, donees or other successors will be selling stockholders hereunder. If
V-ONE is notified by a selling stockholder that a donee or pledgee intends to
sell more than 500 shares, a supplement to this prospectus will be filed.
USE OF PROCEEDS
There will be no proceeds to V-ONE from the sale of the shares by the
selling stockholders. Any proceeds from the sales of common stock received by
the selling stockholders will be retained by the selling stockholders.
V-ONE will pay substantially all of the expenses incident to the
registration, offering and sale of the shares to the public other than
commissions or discounts of underwriters, broker-dealers or agents and the
expenses of counsel to the selling stockholders. Such expenses are estimated to
be approximately $47,000. V-ONE has also agreed to indemnify some of the selling
stockholders against certain liabilities, including liabilities under the
Securities Act of 1933.
PLAN OF DISTRIBUTION
The shares are being offered on behalf of the selling stockholders, and
V-ONE will not receive any proceeds from this offering. See "Use of Proceeds."
The shares may be sold or distributed from time to time by the selling
stockholders, or by pledgees, donees or tranferees of, or other successors in
interest to, the selling stockholders, directly to one or more purchasers
(including pledgees) or through brokers, dealers or underwriters who may act
solely as agents or may acquire shares as principals, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices, or at fixed prices, which may be changed.
The distribution of the shares may be effected in one or more of the
following methods:
o ordinary brokers' transactions, which may include long or short
sales
o transactions involving cross or block trades or otherwise on the
Nasdaq National Market or on any other stock exchange or trading
facility on which the common stock may be trading
o purchases by brokers, dealers or underwriters as principal and
resale by such purchasers for their own accounts pursuant to this
prospectus
o "at the market" to or through market makers or into an existing
market for the common stock
o in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected
through agents
o through transactions in options, swaps or other derivatives
(whether exchange-listed or otherwise) or
o any combination of the foregoing, or by any other legally available
means.
In addition, the selling stockholders or their successors in interest may enter
into hedging transactions with broker-dealers who may engage in short sales of
shares of common stock in the course of hedging the positions they assume with
the selling stockholders. The selling stockholders or their successors in
interest may also enter into option or other transactions with broker-dealers
that require the delivery by such broker-dealers of the shares. Those shares may
be resold thereafter pursuant to this prospectus.
13
<PAGE>
In addition, the selling stockholders from time to time may sell short
the common stock of V-ONE. In such instances, this prospectus may be delivered
in connection with such short sales and the shares may be used to cover such
short sales. Any or all of the sales or other transactions involving the shares
described above may be made pursuant to this prospectus, whether effected by the
selling stockholders, any broker-dealer or others. In addition, any shares that
qualify for sale pursuant to Rule 144 under the Securities Act of 1933 may be
sold under Rule 144 rather than pursuant to this prospectus. The shares may also
be offered in one or more underwritten offerings, on a firm commitment or best
efforts basis.
Brokers, dealers, underwriters or agents participating in the
distribution of the shares as agents may receive compensation in the form of
commissions, discounts or concessions from the selling stockholders and/or
purchasers of the shares for whom such broker-dealers may act as agent, or to
whom they may sell as principal, or both. The compensation as to a particular
broker-dealer may be less than or in excess of customary commissions. The
selling stockholders and any broker-dealers who act in connection with the sale
of shares hereunder may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, and any commissions they receive and proceeds of any
sale of shares may be deemed to be underwriting discounts and commissions under
the Securities Act of 1933.
Neither V-ONE nor any selling stockholder can presently estimate the
amount of such compensation. V-ONE knows of no existing arrangements between any
selling stockholder and any other stockholder, broker, dealer, underwriter or
agent relating to the sale or distribution of the shares.
Under applicable rules and regulations under the Securities Exchange Act
of 1934, any person engaged in the distribution of the shares may not
simultaneously engage in market making activities with respect to V-ONE's common
stock for a period of one business day prior to the commencement of such
distribution and ending upon such person's completion of participation in the
distribution, subject to certain exceptions for passive market making
transactions. In addition and without limiting the foregoing, the selling
stockholders will be subject to applicable provisions of the Securities Exchange
Act of 1934 and the rules and regulations thereunder, including, without
limitation, Regulation M, which provisions may limit the timing of purchases and
sales of shares of common stock by the selling stockholders.
At the time a particular offer of shares is made, to the extent
required, a supplemental prospectus will be distributed that will set forth the
number of shares being offered and the terms of the offering including the name
or names of the selling stockholders and any underwriters, dealers or agents,
the purchase price paid by an underwriter for the shares purchased from the
selling stockholders and any discounts, concessions or commissions allowed or
reallowed or paid to dealers.
In order to comply with the securities laws of some states, if
applicable, the shares may be sold in such jurisdictions only through registered
or licensed brokers or dealers.
DESCRIPTION OF CAPITAL STOCK
GENERAL
V-ONE is authorized to issue up to 33,333,333 shares of common stock,
$0.001 par value, and 13,333,333 shares of preferred stock, $0.001 par value.
The following summary of certain provisions of V-ONE's common stock and
preferred stock does not purport to be complete. It is subject to, and qualified
in its entirety by, the provisions of V-ONE's Restated Certificate of
Incorporation and Restated Bylaws, and by the provisions of applicable law.
14
<PAGE>
COMMON STOCK
As of March 8, 1999, there were 16,761,299 shares of common stock
outstanding that were held of record by approximately 2,000 shareholders.
The holders of common stock are entitled to one vote for each share held
of record on all matters submitted to a vote of shareholders. Dividends, if any,
may be declared by the Board of Directors out of funds legally available for the
payment of dividends. Dividends may be paid in cash, in property or in shares of
capital stock. In the event of any voluntary or involuntary liquidation, sale,
or winding up of V-ONE, the holders of common stock are entitled to share
ratably in all assets remaining after payment of liabilities and liquidation
preferences of any outstanding shares of preferred stock. Holders of common
stock have no preemptive rights to subscribe for any of V-ONE's securities or
rights to convert their common stock into any other securities. There are no
redemption or sinking fund provisions applicable to the common stock.
PREFERRED STOCK
V-ONE's Board of Directors has the authority to issue up to 13,333,333
shares of preferred stock in one or more series and to fix the rights,
preferences, privileges and restrictions thereof, including dividend rights,
conversion rights, voting rights, terms of redemption, liquidation preferences
and the number of shares constituting any series or the designation of such
series, without any further vote or action by shareholders. The issuance of
preferred stock may have the effect of delaying or preventing a change in
control of V-ONE.
LEGAL MATTERS
Certain legal matters with respect to the issuance of the shares of
common stock offered by this prospectus have been passed upon for V-ONE by
Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W., Washington, D.C.
20036.
EXPERTS
The balance sheets as of December 31, 1997 and 1998, and the statements
of operations, shareholders' equity (deficit) and cash flows for each of the
three years in the period ended December 31, 1998, incorporated in this
prospectus, have been incorporated by reference herein in reliance on the report
(which report includes an explanatory paragraph regarding V-ONE's ability to
continue as a going concern and an explanatory paragraph regarding the
restatement of V-ONE's financial statements as of December 31, 1997 and for the
years ended December 31, 1996 and 1997 to reflect a revision of certain revenue
recognition policies) of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of that firm as experts in accounting and auditing.
15
<PAGE>
No dealer, salesperson or any other person is authorized to give any
information or to make any representations in connection with this prospectus
and, if given or made, such information or representations must not be relied
upon as having been authorized by V-ONE. This prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any security other than the
securities offered by this prospectus, or an offer to sell or a solicitation of
an offer to buy any securities by anyone in any jurisdiction in which such offer
or solicitation is not authorized or is unlawful. The delivery of this
prospectus shall not, under any circumstances, create any implication that the
information herein is correct as of any time subsequent to the date of the
prospectus.
---------------------
TABLE OF CONTENTS
PAGE
V-ONE........................................................................ 2
Risk Factors................................................................. 2
Where You Can Find More Information.......................................... 9
Incorporation of Certain Documents by Reference.............................. 9
Selling Stockholders......................................................... 10
Use of Proceeds.............................................................. 13
Plan of Distribution......................................................... 13
Description of Capital Stock................................................. 14
Legal Matters................................................................ 15
Experts...................................................................... 15
<PAGE>
2,660,000 Shares
V-ONE CORPORATION
-----------------
COMMON STOCK
----------------
PROSPECTUS
----------------
April 16, 1999
