<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 3, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PRINCETON VIDEO IMAGE, INC.
(Exact Name of Registrant as Specified in its Charter)
NEW JERSEY 22-3062052
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
15 Princess Road
Lawrenceville, NJ 08648
(609) 912-9400
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Office)
BROWN F WILLIAMS
PRINCETON VIDEO IMAGE, INC. Copies to:
15 PRINCESS ROAD RICHARD J. PINTO, ESQ.
LAWRENCEVILLE, NJ 08648 SMITH, STRATTON, WISE, HEHER & BRENNAN
(609) 912-9400 600 COLLEGE ROAD EAST
(Name, Address, Including Zip Code, and PRINCETON, NJ 08540
Telephone Number, Including Area Code, (609) 924-6000
of Agent for Service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON
AS POSSIBLE 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, 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, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Offering Price (1) Aggregate Offering Registration Fee
Registered Price
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<S> <C> <C> <C> <C>
Common Stock 1,592,727 $5.157 $8,213,693.14 $2,283.41
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</TABLE>
(1) Estimated solely for purposes of calculating the registration fee, based
upon the average of the high and low prices for the common stock as
reported on the Nasdaq National Stock Market on November 1, 1999, in
accordance with Rule 457 under the Securities Act of 1933, as amended.
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 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
PROSPECTUS
1,592,727 SHARES
PRINCETON VIDEO IMAGE, INC.
COMMON STOCK
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This Prospectus relates to the offering of 1,592,727 shares of common
stock, no par value per share, of Princeton Video Image, Inc. being registered
hereby which are held by some of our current shareholders. The selling
shareholders, or their transferees, may sell these shares of common stock from
time to time on or after the date of this Prospectus. The selling shareholders
have acquired the shares of common stock being offered by this Prospectus in
private placement transactions. Our common stock is traded on the Nasdaq
National Market under the symbol "PVII."
The selling shareholders may offer these shares of common stock in one or
more transactions on the Nasdaq National Market at prices then prevailing, in
negotiated transactions or otherwise. The selling shareholders and brokers
through whom the sale of the shares of common stock are made may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act of
1933, as amended. In addition, any profits realized by the selling shareholders
or such brokers on the sale of shares of common stock may be deemed to be
underwriting commissions under the Securities Act. The price at which any of the
shares of common stock may be sold and the commissions paid in connection with
any sale may vary from transaction to transaction. We will pay certain expenses
of this offering. We will not receive any proceeds from sales of the shares of
common stock covered by this Prospectus. See "Plan of Distribution."
Our common stock is quoted on the Nasdaq National Market under the symbol
"PVII." On November 1, 1999, the average of the high and low price for the
common stock was $5.157.
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INVESTING IN OUR COMMON STOCK INVOLVES SOME RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 3.
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.
The date of this Prospectus is November , 1999
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THE COMPANY
Princeton Video Image, Inc. developed and is marketing a real-time video
insertion system that, through patented pattern recognition technology, places
computer-generated electronic images into television broadcasts of sporting and
other events. These electronic images range from simple corporate names or logos
to sophisticated 3-D animated productions. Our Live Video Insertion System (the
"L-VISTM System" or "L-VIS System") has been used to insert images, including
advertising images and visual aids, into live and pre-recorded television
broadcasts, including baseball games, soccer matches, football games, tennis
matches, motor sports events, telethons and entertainment broadcasting. We are
developing software to enable the L-VISTM System to be used in the broadcast of
other sporting events.
We were incorporated in New Jersey in July 1990. Our executive offices are
located at 15 Princess Road, Lawrenceville, New Jersey 08648, and our telephone
number is 609-912-9400.
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RISK FACTORS
Investment in our common stock involves substantial risks, including those
described below. You should purchase our common stock only if you can afford to
lose your entire investment. You should carefully consider all of the
information included in this Prospectus to evaluate us and our business. You
should make this evaluation before deciding whether to purchase our common
stock. You should understand that additional risks which we cannot predict at
this time may have negative impact on us in the future. You should also
understand that the risks discussed below might affect us more than or in a
different manner than we now predict.
Some of the information in this Prospectus may contain forward-looking
statements. These statements can be identified by the use of forward-looking
words such as "may," "will," "expect," "anticipate," "estimate," "continue" or
other similar words. These statements discuss future expectations and
projections of results of operations or of financial conditions. When
considering these forward-looking statements, you should keep in mind the risk
factors described below and other cautionary statements made in this Prospectus.
These statements identify some of the factors that may cause actual results to
differ from any projections contained in forward-looking statements. Important
factors that may cause actual results to differ from projections include, for
example:
- adverse economic conditions;
- intense competition, including entry of new competitors and
products;
- adverse federal, state, local and foreign government regulation;
- inadequate capital to operate our business;
- unexpected costs and operating deficits;
- lower revenues than forecast;
- inability to successfully market the L-VISTM System to television
viewers, advertisers, broadcasters and sporting events rights
holders;
- inability of third party sales forces to sell L-VIS TM System
advertising;
- contractual restrictions on use of video insertion technology;
- risks associated with doing business in international markets;
- seasonal fluctuations based upon the game schedules of each sport;
- manufacturing inexperience;
- challenges to our patent and proprietary technology;
- technological obsolescence of the L-VIS TM System;
- inability to upgrade and develop software for use of the L-VIS TM
System with new sports and other new uses;
- dependence on a sole source of supply for some hardware components;
- the possible fluctuation and volatility of our operating results and
financial condition;
- adverse publicity and news coverage;
- loss of key employees, and
- other specific risks shown in this Prospectus.
We do not promise to update forward-looking information or any other information
to reflect actual results or changes in assumptions or other factors that could
affect those statements.
WE MAY NOT GENERATE ENOUGH MONEY TO SUPPORT OUR BUSINESS OPERATIONS.
Our operations relate to the development, introduction and marketing of
the L-VIS TM System. We have built 37 L-VIS TM System units, of which
approximately 25 units are in use or available for use by customers, potential
customers or foreign marketing partners. We are now trying to convince
advertisers, broadcasters and broadcast rights holders of the value of the L-VIS
TM System. We are also trying to enter into contracts to generate enough revenue
to meet our operating expenses. If we do not generate enough revenue, we will
have to either raise additional money or substantially reduce the scale of our
operations. We may not be able
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to raise additional money. We also may not succeed in reaching our business
objectives. Our failure to do so would have a material adverse effect on our
business, financial condition and the results of our operations.
WE HAVE A HISTORY OF OPERATING LOSSES AND EXPECT TO INCUR ADDITIONAL LOSSES.
We have not made a profit in any period of operations since we began our
business. We expect to lose money at least through calendar year 1999 due to the
costs required to manufacture, market and enhance the L-VIS TM System. We
incurred net losses of $5,774,711 for the fiscal year ended June 30, 1997,
$9,128,374 for the fiscal year ended June 30, 1998, and $9,698,048 for the
fiscal year ended June 30, 1999. We have earned only $1,222,213 during fiscal
year ended June 30, 1999 through receipts from advertising use of the L-VIS
System, contractual arrangements made with customers and license and royalty
fees from the use of the L-VIS System.
We may never earn a profit. Further, we may not be able to continue our
operations. Our limited operating history makes the prediction of future
operating results difficult or impossible. You should consider our prospects in
light of the risks, expenses and difficulties frequently encountered by early
stage companies, particularly companies in new or rapidly evolving markets.
WE MAY NOT BE ABLE TO SUCCESSFULLY MARKET THE L-VIS SYSTEM WHICH WILL ADVERSELY
AFFECT OUR ABILITY TO RAISE REVENUES.
We expect to derive almost all of our revenues from the operation of the
L-VIS System. We intend to spend additional money to hire more sales and
marketing personnel and on making the product more market friendly. Any benefits
from the expansion may take one year or longer. We will lose more money if sales
do not increase by an amount at least equal to the increase in expenses. Our
expansion will depend on, among other things, our ability to identify markets,
to manage growth, and to hire and retain skilled personnel. Our failure to
successfully market the L-VIS System would have a material adverse effect on our
business, financial condition and the results of our operations. Our ability to
market successfully the L-VIS System will depend upon its acceptance by at least
four groups: television viewers, advertisers, broadcasters and broadcast rights
holders. To date, only a few broadcasters, broadcast rights holders and
advertisers have agreed to use the L-VIS System. No data exists about television
viewers' reactions to the L-VIS System. However, some press coverage of our
technology has raised concerns about its desirability and potential misuse. For
instance, one article described inserted advertising images as subliminal
advertising. The technology has also been described as allowing unethical
tampering with a television picture. Others have complained that television
viewers will see too many advertisements. We may not be able to combat
successfully any negative publicity about inserted advertising. We may not be
able to maintain or increase our commercial arrangements. The failure of any one
or more of the four groups to accept the L-VIS System may prevent us from
successfully marketing the L-VIS System. That result could cause the holders of
our common stock to lose their entire investment.
WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETARY RIGHTS AND THERE CAN BE NO
ASSURANCE THAT THESE RIGHTS ARE SUFFICIENT TO PROTECT OUR TECHNOLOGY.
We must maintain the proprietary nature of our technology to compete
effectively. We have been assigned six issued United States patents and four
allowed European patents. We have licensed several other patented technologies
from third parties and we have filed applications for a number of patents in the
United States and abroad. However, the degree of protection offered by these
patents is not certain and the pending patents may not be issued. Any patents
issued to us or our licensors in a foreign country may provide less protection
than provided in the United States. Competitors may obtain patents that
interfere with our ability to make L-VIS System units and to market the L-VIS
System. Competitors may intentionally infringe our patents. Competitors or
strategic partners may copy or independently develop technologies that are the
same or similar to our technologies.
Our patents may be challenged in court proceedings. There has been no
court test of our patents or patent applications. We are aware of other
companies that have patents or patent applications relating to video insertion
technology. Other companies may claim that we infringe their patents or rights.
These companies
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may infringe our patents. In June 1999, we sued Scidel USA, Ltd. for patent
infringement. Scidel has responded by denying our claims and alleging that our
patents are invalid. In September 1999, we filed a request with the United
States Patent and Trademark Office to correct the ownership of US Patent
5,917,553. In October 1999, we received a complaint filed by Sportvision and Fox
Sports Productions, Inc., which has licensed the patent to Sportvision. Based
upon our preliminary assessment of the claim, we believe that we are the owner
of the basic subject matter of the disputed patent and that the claim lacks
merit. We plan to vigorously defend our ownership of the patent.
Patent litigation involves complex legal and factual issues. The outcome
of such actions are highly uncertain. In addition, patent litigation involves
considerable costs. We cannot assure you that we do not or will not infringe the
patent or intellectual property rights of another company. If we lose a patent
infringement action, we may be required to pay a significant amount of money or
to stop selling our products. We may also need to license disputed technology
from another company, if possible. If our patents are successfully challenged,
our business, financial condition and the results of our operations will be
adversely affected.
We also rely on unpatented trade secrets, improvements and proprietary
technology. Others may copy or independently develop similar technology or gain
access to our technology. We require our employees and some third parties to
enter into confidentiality agreements. We also use copyright, trademark and
trade secret protection. These steps may not protect our trade secrets, know-how
or other proprietary information.
WE MAY NOT BE ABLE TO RETAIN OUR KEY PERSONNEL OR HIRE ADDITIONAL PERSONNEL.
We depend on a number of key technical and management employees,
including:
- Brown F Williams, our Co-Founder and Chairman of the Board;
- Dennis P. Wilkinson, our President and Chief Executive Officer;
- Samuel A. McCleery, our Vice President, Business Development;
- Lawrence L. Epstein, our Vice President of Finance, Chief
Financial Officer and Treasurer; and
- Paul Slagle, our Vice President of Sales and Marketing
If one or more of these individuals leaves us, our ability to conduct
operations may be materially and negatively affected. Our success depends on our
ability to attract and retain qualified financial, technical, marketing and
other management personnel. We face competition for this personnel. We have
employment agreements with Messrs. Williams, Wilkinson, McCleery, Epstein and
Slagle. We have obtained key man life insurance on the life of Mr. Williams for
$2 million and on the life of Mr. McCleery for $1 million. Although our
employees sign confidentiality and non-competition agreements, our key personnel
might leave us and work for a competitor. We also rely on consultants to assist
us in research and development strategy. Our consultants are employed by third
parties and may have commitments to others that may limit their availability.
OUR DEPENDENCE ON THIRD PARTY SALES FORCES MAY ADVERSELY AFFECT ADVERTISING
REVENUES.
Under many of our contracts, the broadcast rights holders market and sell
the L-VIS System advertising. We typically receive a percentage of the
advertising revenues earned by the broadcast rights holders. The broadcast
rights holders may not be successful in selling L-VIS System advertising. If the
broadcast rights holders are unable to enter into arrangements with a
substantial number of advertisers, their failure will have a material adverse
effect on our business, financial condition and the results of our operations.
USE OF THE L-VIS SYSTEM MAY BE RESTRICTED BY AGREEMENTS WHICH WILL AFFECT OUR
ABILITY TO EARN REVENUES.
Agreements among advertisers, sponsors, syndicators, promoters,
broadcasters and cable operators may include provisions that restrict the use of
video insertion technology in television broadcasts. These restrictions may have
a material adverse effect on our business, financial condition and the results
of our operations. Businesses might not enter into amendments of these
agreements to help us. We believe that one manufacturer of scrolling billboards
used in stadiums has included these restrictions in its contracts.
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OUR INTERNATIONAL MARKETING PLANS MAY BE ADVERSELY AFFECTED BY INTERNATIONAL
BUSINESS CONDITIONS, INCLUDING FOREIGN MARKETS AND REGULATORY REQUIREMENTS.
We plan to continue to market the L-VIS System outside the United States
through agreements with others. We may not succeed in creating a material
business internationally. We have granted some parties exclusive rights to
territories or specific sporting events which means that we must rely on their
success in these areas. Their failure could have a material adverse effect on
our business, financial condition and the results of our operations.
Furthermore, there are some risks inherent in doing business in
international markets, such as:
- unexpected changes in regulatory requirements;
- tariffs and other trade barriers;
- difficulties in staffing and managing foreign operations;
- political instability;
- fluctuations in currency exchange rates; - reduced protection for
intellectual property rights;
- seasonal reductions in business activity during the summer months;
and
- adverse tax consequences.
Any of these or other risks inherent in doing business in international
markets could have a material adverse impact upon the success of our
international operations and thus could have a material adverse effect on our
business, financial condition and the results of our operations.
THE SEASONALITY OF SPORTS MAY CAUSE FLUCTUATIONS IN OUR REVENUES.
If we are unsuccessful in expanding the market for use of the L-VIS System
beyond a limited number of sports, our revenues will fluctuate seasonally based
upon the game schedules associated with each of these sports.
TECHNICAL UNCERTAINTIES RELATING TO THE OPERATION OF THE L-VIS SYSTEM COULD
LIMIT ITS USE.
The L-VIS System can only be used for some sports under limited
circumstances. We must have the cooperation of the broadcaster to obtain
acceptable results. The L-VIS System has been operated mainly by our personnel
and operators trained by us. We will have to develop additional software and
hardware and train personnel to achieve wider use. Future operational
difficulties of the L-VIS System could increase the cost of, or delay
implementation of, our business plan which, in turn, could materially adversely
affect our success.
OUR FAILURE TO KEEP PACE WITH TECHNOLOGICAL CHANGES AND CUSTOMER PREFERENCES
WOULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS.
We operate in a rapidly developing commercial and technological
environment. Our success will depend in part upon our ability to develop product
enhancements that keep pace with continuing changes in technology and customer
preferences. Our failure to develop product enhancements on a timely basis would
have a material adverse effect on our business, financial condition and the
results of our operations. The video, electronics, data processing, broadcast
television and cable television industries are changing rapidly due to, among
other things, technological improvements, consolidations of companies and
changes in consumer preferences and customs. In particular, the live video image
insertion market is new and undeveloped. We anticipate that as the market
develops, it will be affected by technological change and product improvements.
Changes in industry broadcast standards may adversely affect our competitive
position.
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WE HAVE LIMITED EXPERIENCE IN MANUFACTURING THE L-VIS SYSTEM IN COMMERCIAL
QUANTITIES.
We have limited experience in manufacturing L-VIS System units in large
quantities for commercial purposes. Our current modest manufacturing facilities
are designed to meet the current demand for use of the L-VIS System. We will
have to redesign our manufacturing facilities if we are able to develop a
substantially larger market for use of the L-VIS System. Any manufacturing
difficulties and any cost increases may materially adversely affect our profit
margin, if any, on the sale, lease or use of future L-VIS System units.
Manufacturing difficulties and cost increases may also affect our ability to
develop and deliver L-VIS System units on a timely basis. We believe that the
eventual manufacturing cost of L-VIS System units will be based upon the cost of
the components of the L-VIS System units purchased from the manufacturers of
these components and the cost of the digital signal processing circuits used to
perform identification, recognition and insertion functions which we produce. As
we increase our product development activities, we may find it desirable to
enter into contracts to have outside parties manufacture the L-VIS System units.
Any increased reliance on outside parties will require that we devote additional
resources to monitoring operations, controlling costs and maintaining effective
quality, inventory and service controls.
OUR DEPENDENCE ON A SOLE SUPPLIER OF SOME HARDWARE COMPONENTS MAY DELAY
MANUFACTURING OR REQUIRE REDESIGN OF THE L-VIS SYSTEM.
We depend upon a single supplier, Lucent Technologies, for some hardware
components. Although these hardware components are stock items, Lucent may
decide to stop selling them. We do not have an agreement with Lucent. If we
cannot get hardware components on a timely basis or if we have to pay
substantially more for them, we will have to find other sources for similar
components. This would require a redesign of some of our systems and our
business, financial condition and the results of our operations may be
materially adversely affected.
WE FACE INTENSE COMPETITION FROM COMPANIES INVOLVED WITH VIDEO INSERTION
TECHNOLOGY AND FROM COMPANIES INVOLVED WITH TRADITIONAL ADVERTISING.
Competition may have a material adverse effect on our business, financial
condition and the results of our operations. The market for electronic video
insertion technology is new and evolving. We are aware of three competitors with
video technologies used for advertising: Symah Vision-SA, Orad Hi Tech Systems,
Ltd. and Scidel Technologies, Ltd. Orad is partly owned by ISL, a Swiss
sports-marketing firm. We recently expanded the services we offer to include,
for a fee, the electronic insertion of visual aids in live sporting events, such
as a virtual first-down marker in live television broadcasts of football games.
We are aware that another U.S. company, Sportvision, Inc., is also in the
business of inserting visual aids in live sporting events. If the market for
electronic video insertion technology grows, we also expect substantial
competition from established broadcast businesses. These broadcast businesses
have greater resources and more highly skilled individuals than we do. Many
potential competitors could gain significant market share due to their greater
name recognition and more extensive customer bases. These competitors may be
able to:
- produce a product superior to ours;
- undertake more extensive promotional activities than ours;
- offer more attractive terms to customers than we do; and
- adopt more aggressive pricing policies than we have.
The L-VIS System competes with advertisers' use of traditional 30-second
advertising spots. These 30-second advertising spots are the standard in the
television advertising industry. The L-VIS System also competes with
advertisers' use of conventional billboard products, including advertising
placed on playing surfaces, such as outfield walls, football fields and ice
hockey rinks and scrolling billboards. Scrolling billboards are physically
located at the site of an event and can display a series of different
advertisements during an event. Scrolling billboards can achieve an effect
similar to the L-VIS System for the television viewing audience in some
circumstances.
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We expect to generate revenue primarily by causing existing advertisers
and sponsors to use the L-VIS System and by attracting new advertisers and
sponsors to the advertising and sponsorship market. However, existing
advertisers may be reluctant to use a new technology. Advertisers may not
believe that their sales will increase as a result of the use of our technology.
The competition is likely to be more intense where we are competing for
television advertising and sponsorship dollars that are currently spent on
traditional media, such as 30-second spots or scrolling billboards. We need the
cooperation of the sponsorship advertising sales departments of team owners,
other rights holders and broadcasters. We rely on these entities for the sale of
our products to advertisers, but they may have incentives to sell alternative
advertising or sponsorship inventory rather than our services. This will have a
material adverse effect on our business, financial condition and the results of
our operations.
DOMESTIC AND FOREIGN REGULATIONS MAY RESTRICT THE USE OF THE L-VIS SYSTEM.
We believe that no federal or state regulations directly restrict the use
of the L-VIS System. There are existing regulations imposed on broadcasters,
which may require disclosure that the L-VIS System is being used in a particular
broadcast. There may be regulations or restrictions in the future which
adversely affect the use of the L-VIS System. These regulations or restrictions
could have a material adverse effect on our business, financial condition and
the results of our operations.
Regulatory agencies in foreign jurisdictions may have adopted, or may
adopt in the future, regulations or restrictions affecting the use of the L-VIS
System. The adoption of these regulations or restrictions may reduce or
eliminate the market for our products in any country where these regulations or
restrictions are adopted. This would have a material adverse effect on our
business, financial condition and the results of our operations.
WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL FINANCING THAT WE MAY NEED TO SUPPORT
OUR FUTURE OPERATIONS.
In the future we may need to raise money for our operations if we do not
generate enough revenues. We may not be able to obtain additional financing on
acceptable terms, or at all. If we cannot raise money, our business, financial
condition and the results of our operations will be adversely affected.
We intend to use the net proceeds from our 1999 private placement, which
resulted in net proceeds of approximately $8,260,000, our other existing cash,
our cash flow from operations and our borrowings to support operations. Our need
for money may be affected by market changes or changes in our business. In
addition, our required payments for some electronic imaging rights total
$2,000,000 for the two fiscal years ending June 30, 2000. We may need to raise
money earlier than expected to expand, develop or enhance products, respond to
competition or acquire businesses. Our need for money will also depend on:
- the size of our research and development programs;
- the cost of our manufacturing and marketing activities;
- our ability to market products successfully;
- the length of time required to collect accounts receivable; and
- the need to address competing technological and market developments.
If we raise money by selling stock or convertible debt securities,
shareholders could experience substantial dilution. In addition, the securities
could have greater rights, preferences and privileges than you have as a holder
of our common stock. If we cannot generate sufficient revenues or raise money,
we will be required to reduce growth to a level that can be supported by
internally generated cash flow.
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THIRD PARTY AGREEMENTS MAY PROHIBIT USE OF THE L-VIS SYSTEM.
The broadcast of a sporting event is governed by agreements among the
applicable teams, leagues, broadcasters and the sports federation, if any.
Impediments to use of the L-VIS System during the broadcast of the sporting
events covered by any of these agreements could have a material adverse effect
on our business, financial condition and the results of our operations. In many
instances, these agreements provide that different persons control the
copyrights to the broadcasts in differing circumstances, for instance, regular
season play versus playoffs. Agreements often govern permitted forms of
advertising and modifications to the broadcast. Use of live video insertion
technology is not specifically discussed in some existing agreements. Under
these circumstances it is not clear whose permission must be obtained to use the
L-VIS System. If the L-VIS System is used without the permission of the
appropriate parties, the use of the L-VIS System can be challenged. The defense
and prosecution of copyright suits is both costly and time-consuming. Current
broadcast copyright holders might not agree to amend current agreements on terms
acceptable to us.
WE MAY BE REMOVED FROM THE NASDAQ NATIONAL MARKET IF WE FAIL TO MEET CERTAIN
MAINTENANCE CRITERIA AND THE MARKET FOR OUR COMMON STOCK COULD BE ADVERSELY
AFFECTED IF WE BECOME GOVERNED BY REGULATIONS GOVERNING LOW PRICE STOCKS.
Our common stock is quoted on the Nasdaq National Market. The continued
listing of our common stock is conditioned upon our meeting certain asset, stock
price and other criteria. If we fail any listing criteria, our common stock may
be delisted. The effects of delisting include limited news coverage and the
limited release of the market prices of our common stock. Delisting may diminish
investors' interest in our common stock, restrict the trading market and reduce
the price for our common stock. Delisting may also restrict us from issuing
additional securities or securing additional financing.
Companies with low price stocks are governed by additional federal and
state regulatory requirements and could lose an effective trading market for
their stock. For instance, if our common stock is delisted from the Nasdaq
National Market and the trading price of our common stock is less than $5.00 per
share, our common stock could be governed by Rule 15g-9 under the Securities
Exchange Act of 1934. This rule requires that broker-dealers satisfy special
sales practice requirements before any transaction, including suitability
determinations and receiving any purchaser's written consent. The additional
burdens imposed upon broker-dealers may discourage broker-dealers from effecting
transactions in our common stock. This would reduce the liquidity of our common
stock. If these rules become applicable to our common stock, they could have a
material adverse effect on the trading market for our common stock. In addition,
our common stock could be deemed "penny stock" under the Securities Enforcement
and Penny Stock Reform Act of 1990. If this occurs, additional disclosure will
be required if you wish to make a trade in our common stock. The disclosure
includes the delivery of a disclosure schedule explaining the nature and risks
of the penny stock market. These requirements could severely limit the liquidity
of our common stock and the ability of purchasers to sell their shares of our
common stock in the secondary market.
FUTURE SALES OF OUR COMMON STOCK IN THE PUBLIC MARKET COULD ADVERSELY AFFECT OUR
STOCK PRICE AND OUR ABILITY TO RAISE FUNDS IN NEW STOCK OFFERINGS.
The market price of our common stock could drop as a result of sales of a
large number of shares of our common stock in the marketplace, or the perception
that the sales could occur. These factors could also make it more difficult for
us to raise money through future offerings of securities.
In addition to the 1,592,727 shares being offered pursuant to this
Prospectus, 8,213,805 shares of our common stock were outstanding on September
10, 1999. Of these shares, 4,600,000 were sold through our initial public
offering and are freely transferable under the Securities Act of 1933. An
additional 412,500 shares of our common stock are issuable upon exercise of some
warrants and will be freely transferable pursuant to a registration statement on
Form S-3, filed by us with the SEC. 777,130 shares are also issuable upon
exercise of other outstanding warrants and will be "restricted securities" as
defined under Rule 144 under the Securities Act.
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<PAGE> 11
Finally, the 2,160,000 shares of our common stock which may be issued under our
1993 Amended Stock Option Plan have been registered by us by filing a
registration statement on Form S-8 with the Securities and Exchange Commission.
"Restricted securities" may be sold only under Rule 144 or under an
effective registration statement under the Securities Act or an exemption from
the registration requirement. As of September 30, 1999, almost all shares of our
outstanding common stock were eligible for resale under Rule 144, including Rule
144(k).
We granted some demand and piggyback registration rights to the holders of
3,583,652 shares of our common stock and to the holders of warrants exercisable
for an aggregate of 1,392,130 shares of our common stock, including the 400,000
shares underlying the warrants held by the representatives of the several
underwriters of our initial public offering and the 200,000 shares underlying
the warrants issued to the placement agent in our 1999 private placement. These
registration rights require us to register under the Securities Act those shares
of our common stock and the shares of our common stock issuable upon exercise of
the warrants. If the holders, by exercising their registration rights, cause a
large number of shares to be registered and sold in the public market, the sales
could have a material adverse effect on the market price for our common stock.
THE PRICE OF OUR COMMON STOCK MAY BE HIGHLY VOLATILE.
The market prices of equity securities of technology companies have
experienced substantial price volatility in recent years for reasons both
related and unrelated to the individual performance of specific companies.
Accordingly, the market price of our common stock may be highly volatile.
Factors such as announcements by us or our competitors concerning the following
matters may have a significant impact on the market price of our common stock
and could cause it to fluctuate substantially:
- products;
- patents and technology;
- governmental regulatory actions;
- events affecting technology companies generally; and
- general market conditions.
In addition, there are a relatively small number of shares of our common
stock trading publicly. Accordingly, shareholders may experience difficulty
selling or otherwise disposing of shares of our common stock at favorable
prices, or at all.
OUR OFFICERS, DIRECTORS AND EXISTING 5% SHAREHOLDERS HAVE SIGNIFICANT INFLUENCE
OVER OUR AFFAIRS AND MAY DELAY OR PREVENT A CHANGE IN CONTROL OF US.
As of September 1, 1999, our executive officers and directors, together
with entities affiliated with these individuals, and other holders of five
percent or more of our outstanding capital stock beneficially owned over 30% of
our common stock, assuming the exercise of all vested stock options and
warrants. Effectively, these shareholders will be able to elect a majority of
our directors, will have the voting power to approve all matters requiring
shareholder approval and will continue to have significant influence over our
affairs. This concentration of ownership could have the effect of delaying or
preventing a change in control of our company. As of September 1, 1999, Allen &
Company Incorporated was the beneficial owner of 12.0% of our common stock.
Enrique F. Senior, one of our directors, is an Executive Vice President and
Managing Director of Allen & Company Incorporated and as such may be deemed to
be the beneficial owner of 12.2% of our common stock, which includes the shares
of our common stock beneficially owned by Allen & Company Incorporated. These
factors could lead to conflicts of interest between us, on the one hand, and
Allen & Company Incorporated and/or Mr. Senior, on the other hand. In the event
any conflict of interest arises between us and Allen & Company Incorporated or
Mr. Senior in the future, we intend that the issue will be resolved by a
majority of directors who do not have a personal interest in the issue.
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<PAGE> 12
We issued a total of 262,000 shares of our common stock, or 3.2% of the
shares of our common stock outstanding on September 1, 1999, to Brown F Williams
and Samuel A. McCleery as a result of the exercise of warrants in July 1997. The
total number of shares issued to these individuals was in exchange for
promissory notes. In December 1997 we lent money to Mr. Williams and Mr.
McCleery to allow them to pay the tax liabilities they each incurred as a result
of the exercise of their warrants in July 1997. They executed additional
promissory notes in December 1997 for these loans. All of these promissory notes
were outstanding as of September 1, 1999. Mr. Williams and Mr. McCleery have
significant influence over our affairs. Among other effects, this influence
could result in a delay of payment by Mr. Williams and Mr. McCleery to us.
OUR ABILITY TO UTILIZE OUR INCOME TAX LOSS CARRYFORWARDS TO OFFSET POSSIBLE
FUTURE CORPORATE INCOME WILL BE SEVERELY LIMITED BY THE INTERNAL REVENUE CODE.
As a result of our initial public offering of our common stock in December
1997, we underwent an additional "ownership change" within the meaning of
Section 382 of the Internal Revenue Code of 1986. Under Section 382 of the
Internal Revenue Code, upon undergoing the ownership change, our right to use
existing net operating loss carryforwards is limited during each future year to
a percentage of the fair market value of our outstanding capital stock
immediately before the ownership change. If other ownership changes have
occurred before this ownership change, we may be further limited in using the
losses. As of June 30,1999, we had net operating loss carryforwards for federal
income tax purposes of approximately $30,311,000. These net operating loss
carryforwards expire in the years 2006 through 2019. The timing and manner in
which we may use the net operating loss carryforwards to offset possible future
corporate income will be severely limited by Section 382 of the Internal Revenue
Code.
OUR ISSUANCE OF PREFERRED STOCK AND THE NEW JERSEY SHAREHOLDER PROTECTION ACT
COULD ADVERSELY AFFECT THE VALUE OF OUR COMMON STOCK.
Our board of directors may issue up to 1,000,000 shares of our preferred
stock in one or more series and may determine the price, rights, preferences and
privileges of those shares without any further vote or action by our
shareholders. We may issue up to 167,000 shares of our Series A Preferred Stock
and 93,300 shares of our Series B Preferred Stock. As of June 30, 1999, 67,600
shares of our Series A Preferred Stock were outstanding and 86,041 shares of our
Series B Preferred Stock were outstanding. As a holder of our common stock, you
may be negatively affected by the rights of the holders of our preferred stock.
The issuance of additional shares of our preferred stock would provide
flexibility for possible acquisitions and other corporate purposes. However, our
preferred stock can also be used to delay, defer or prevent a change in control
and, thus, entrench our existing management. We are governed by the
anti-takeover provisions of the New Jersey Shareholder Protection Act. This act
restricts certain business combinations with interested shareholders for five
years following the date the person becomes an interested shareholder, unless
the board of directors approves the business combination. These provisions could
adversely affect the value of our common stock since they delay and deter
unsolicited takeover attempts.
IF THE COMPUTER SYSTEMS WE RELY UPON ARE NOT YEAR 2000 COMPLIANT, OUR
BUSINESS COULD BE NEGATIVELY IMPACTED.
Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. Beginning in the year
2000, these date code fields need to recognize four digit entries to identify
correctly dates in the 21st century. If not corrected, many computer
applications could fail or create erroneous results at the year 2000. To the
extent that all internal and external systems and services relating to our
operations, including, but not limited to, all computer hardware and software
systems, both those produced by us and those produced by others for our use, the
systems of our suppliers, significant third party vendors and broadcasters, and
our own internal information systems, databases and programs are not year 2000
compliant, our planned operations could be significantly disrupted. This could
have a material adverse effect on our business, financial condition and planned
results of operations. Further, to the extent that, while becoming year 2000
compliant, there are failures by governmental agencies causing delays in
approval of new products or sales of approved products, failures in global
banking systems and capital markets, failures by public and private
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<PAGE> 13
utility companies supplying services to us, or failures in identifying critical
systems within our company, these failures could have a material adverse effect
on our business, financial condition and planned results of operations.
USE OF PROCEEDS
All of the net proceeds from the sale of the common stock covered by this
Prospectus will go to the selling shareholders who offer and sell the shares. We
will receive no proceeds from the sale of shares of the common stock offered by
the selling shareholders pursuant to this Prospectus.
SELLING SHAREHOLDERS
The following table sets forth the name of each person who is a selling
shareholder, the number of shares of our common stock beneficially owned for
each selling shareholder's account as of October 20, 1999, the number of shares
being sold by each selling shareholder, the number of shares of our common stock
each selling shareholder will beneficially own after the completion of this
offering, and the percentage of outstanding shares of our common stock owned by
each selling shareholder after the completion of this offering. The table
assumes that each selling shareholder will sell all shares they are offering
under this Prospectus, and that each selling shareholder will not acquire
additional shares of our common stock prior to completion of this offering. The
shares are being registered to permit secondary trading of the shares, and each
selling shareholder may offer such shares for resale from time to time. See
"Plan of Distribution."
<TABLE>
<CAPTION>
Percentage of
Number of Number of Outstanding
Shares Maximum Number Shares Common Stock
Beneficially of Shares Beneficially Beneficially
Number of Selling Owned Before Being Owned After Owned After
Shareholder Offering(1)(2) Offered(3) Offering(1)(2) Offering(1)(2)
- ----------- -------------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
Anvil Investment
Associates, L.P. 150,000 150,000 0 *
Cascade Investment,
L.L.C. 455,000 200,000 255,000 3%
Chilton QP Investment
Partners, L.P. 24,000 24,000 0 *
Chilton Opportunity
International, L.P 12,520 12,520 0 *
Chilton International,
L.P. 106,220 106,220 0 *
Chilton Investment
Partners, L.P 57,260 57,260 0 *
Bost & Co. 64,500 64,500 0 *
Kobrick Fund, L.P 111,000 111,000 0 *
</TABLE>
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<PAGE> 14
Selling Shareholder Information (continued)
<TABLE>
<CAPTION>
Percentage of
Number of Number of Outstanding
Shares Maximum Number Shares Common Stock
Beneficially of Shares Beneficially Beneficially
Number of Selling Owned Before Being Owned After Owned After
Shareholder Offering(1)(2) Offered(3) Offering(1)(2) Offering(1)(2)
- ----------- -------------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
Kobrick Investment
Fund, L.P. 70,000 70,000 0 *
Kobrick Offshore
Fund, Ltd. 19,000 19,000 0 *
MGN Opportunity
Group LLC 90,000 90,000 0 *
Oscar Investment
Fund L.P. 90,909 90,909 0 *
Westfield Technology
Fund L.P. 139,000 39,000 100,000 1%
Westfield Technology
Fund II L.P. 18,500 11,000 7,500 *
Warburg, Pincus Post-
Venture Capital
Fund, Inc. 90,909 90,909 0 *
Warburg Pincus Trust,
Post-Venture Capital
Portfolio 90,909 90,909 0 *
Whiting & Co. 365,000 365,000 0 *
</TABLE>
* Less than one percent
(1) Applicable percentage of ownership is based on 9,823,318 shares of our
common stock outstanding as of October 20, 1999. Outstanding shares of our
Series A and Series B Preferred Stock are not reflected above because such
preferred stock has no voting rights and is not convertible.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of our common stock
subject to stock options and warrants currently exercisable or exercisable
within 60 days from the record date are deemed outstanding for computing
the percentage ownership of the person holding such options and the
percentage ownership of any group of which the holder is a member, but are
not deemed outstanding for computing the percentage ownership of any other
person. Except as indicated by footnote, and subject to community property
laws where applicable, the persons named in the table have sole voting and
investment power with respect to all shares of our common stock shown as
beneficially owned by them.
(3) See "Plan of Distribution."
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<PAGE> 15
PLAN OF DISTRIBUTION
The selling shareholders or pledgees may sell or distribute some or all of
the shares of common stock from time to time through underwriters or dealers or
brokers or other agents or directly to one or more purchasers, including
pledgees, in transactions (which may involve crosses and block transactions) on
the Nasdaq National Market, privately negotiated transactions (including sales
pursuant to pledges) or in the over-the-counter market, or in a combination of
such transactions or by any other legally available means. Such transactions may
be effected by the selling shareholders 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. Brokers, dealers, agents or
underwriters participating in such transactions as agent may receive
compensation in the form of discounts, concessions or commissions from the
selling shareholders (and, if they act as agent for the purchaser of such
shares, from the purchaser). Such discounts, concessions or commissions as to a
particular broker, dealer, agent or underwriter might be in excess of those
customary in the type of transaction involved. This Prospectus also may be used,
with our consent, by donees of the selling shareholders, or by other persons
acquiring the shares of common stock and who wish to offer and sell such shares
under circumstances requiring or making desirable its use. To the extent
required, we will file, during any period in which offers or sales are being
made, one or more supplements to this Prospectus to set forth the names of
donees of selling shareholders and any other material information with respect
to the plan of distribution not previously disclosed. The selling shareholders
may also effect the transfer of shares of our common stock under Rule 144 of the
Securities and Exchange Act or other applicable exemptions from the registration
requirement of the Securities Act.
The selling shareholders and any such underwriters, brokers, dealers or
agents that participate in such distribution may be deemed to be "underwriters"
within the meaning of the Securities Act, and any discounts, commissions or
concessions received by any such underwriters, brokers, dealers or agents might
be deemed to be underwriting discounts and commissions under the Securities Act.
Neither we nor the selling shareholders can presently estimate the amount of
such compensation. We know of no existing arrangements between the selling
shareholders and any underwriter, broker, dealer or other agent relating to the
sale or distribution of the shares of common stock.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of any of the shares of common stock may not
simultaneously engage in market activities with respect to the common stock for
a period of up to five business days prior to the commencement of such
distribution. In addition and without limiting the foregoing, the selling
shareholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including without limitation Rule 10b-5
and Regulation M, which provisions may limit the timing of purchases and sales
of any of the shares by the selling shareholders. All of the foregoing may
affect the marketability of the common stock.
We will pay substantially all of the expenses incident to the offering of
the shares of common stock by the selling shareholders to the public other than
commissions and discounts of underwriters, brokers, dealers or agents. The
selling shareholder may indemnify any broker, dealer, agent or underwriter that
participates in transactions involving sales of the shares of common stock
against certain liabilities, including liabilities arising under the Securities
Act. We have agreed to indemnify the selling shareholders and any such
underwriters and controlling persons of such underwriters against certain
liabilities, including certain liabilities under the Securities Act.
If shares of common stock are sold in an underwritten offering, the shares
may be acquired by the underwriters for their own account and may be further
resold from time to time in one or more transactions, including negotiated
transactions, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices, at negotiated prices, or at fixed prices. The
names of the underwriters with respect to any such offering and the terms of the
transactions, including any underwriting discounts, concessions or commissions
and other items constituting compensation of the underwriters and
broker-dealers, if any, will be set forth in a supplement to this Prospectus
relating to such offering. Any public offering price and any discounts,
concessions or commissions allowed or reallowed or paid to broker-dealers may be
changed from time
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<PAGE> 16
to time. Unless otherwise set forth in a supplement to this Prospectus, the
obligations of the underwriters to purchase the shares of common stock will be
subject to certain conditions precedent and the underwriters will be obligated
to purchase all of the shares specified in such supplement if any such shares
are purchased.
In order to comply with certain states' securities laws, if applicable,
the shares will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In addition, in certain states the common stock may
not be sold unless the common stock has been registered or qualified for sale in
such state or an exemption from registration or qualification is available and
is complied with.
ABOUT THIS PROSPECTUS
You should rely only on the information provided in this Prospectus,
including the information incorporated by reference. We have not authorized
anyone to provide you with different information. You should not assume that the
information in this Prospectus is accurate at any date other than the date
indicated on the cover page of this Prospectus. We are not offering the
securities in any state where the offer is not permitted.
WHERE YOU CAN FIND MORE INFORMATION
This Prospectus, which constitutes a part of a registration statement on
Form S-3 (the "Registration Statement") filed by us with the Securities and
Exchange Commission under the Securities Act, omits some of the information
shown in the Registration Statement. Reference is made to the Registration
Statement and to the exhibits to the Registration Statement for further
information with respect to our company and the securities offered by this
Prospectus. Copies of the Registration Statement and the exhibits to the
Registration Statement are on file at the offices of the SEC and may be obtained
upon payment of the prescribed fee or may be examined without charge at the
public reference facilities of the SEC described below.
We are governed by the informational requirements of the Securities
Exchange Act, which require us to file reports, proxy statements and other
information with the SEC. Reports, proxy statements and other information which
we file can be read and copied at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the following regional offices of
the SEC: 7 World Trade Center, New York, New York 10048 and 500 West Madison
Street, 14th Floor, Chicago, Illinois 60661. The public may obtain information
on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy
and information statements, and other information regarding issues at
http://www.sec.gov. Our common stock is listed and traded on the Nasdaq National
Market. Reports, proxy statements and other information which we file may also
be inspected at the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20002.
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<PAGE> 17
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed with the SEC are incorporated in this
Prospectus by reference:
(a) Our Annual Report on Form 10-KSB for the fiscal year ended June 30,
1999 which we filed under Section 13(a) or 15(d) of the Securities Exchange Act;
(b) Our Proxy Statement and Notice of Meeting relative to the Annual
Meeting of Shareholders to be held on December 3, 1999, as filed with the SEC;
(c) All other reports filed under Section 13 or 15(d) of the Securities
Exchange Act since June 30, 1999; and
(d) The description of our common stock, no par value, which is contained
in our latest registration statement filed under the Securities Exchange Act,
including any amendments or reports filed for the purpose of updating the
description.
All documents which we file under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act after the date of this Prospectus and before
termination of the offering shall be deemed to be incorporated by reference in
this Prospectus and to be a part of this Prospectus from the date of the filing
of this Prospectus. Any statement contained in this Prospectus or in a document
incorporated by reference or deemed to be incorporated by reference in this
Prospectus shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that the statement is modified or superseded by any
other subsequently filed document which is incorporated or is deemed to be
incorporated by reference in this Prospectus. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not
presented in this Prospectus or delivered with this Prospectus. We undertake to
provide without charge to each person, including any beneficial owner, to whom
this Prospectus is delivered, on the written or oral request of the person, a
copy of any or all of the documents referred to above which have been or may be
incorporated into this Prospectus and deemed to be a part of this Prospectus,
other than exhibits to the documents unless the exhibits are specifically
incorporated by reference in the documents. These documents are available upon
request from Elizabeth Dumont, Controller, Princeton Video Image, Inc., 15
Princess Road, Lawrenceville, New Jersey 08648, (609) 912-9400.
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<PAGE> 18
INDEMNIFICATION
We have agreed to indemnify the underwriters of our initial public
offering and the placement agent in our October 20, 1999 private placement,
including Allen & Company Incorporated, which may be deemed to be an affiliate
or control person of our company, and each person who controls any of these
underwriters, including Enrique F. Senior, a member of our board of directors
who is an Executive Vice President and Managing Director of Allen & Company
Incorporated, against some liabilities in connection with the Registration
Statement, including liabilities under the Securities Act.
Our Bylaws provide that our directors shall not be personally liable to us
or our shareholders for monetary damages for breach of fiduciary duty as a
director. However, our Bylaws do not eliminate or limit the liability of a
director:
- for any breach of the director's duty of loyalty to us or our
shareholders;
- for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law;
- under Section 14A:6-12 of the New Jersey Business Corporation
Act; or
- for any transaction from which the director derived an improper
personal benefit.
Furthermore, our Bylaws provide that we shall indemnify our directors and
officers to the full extent permitted by Section 14A:3-5 of the New Jersey
Business Corporation Act or any successor statute thereto.
Section 14A:3-5 of the New Jersey Business Corporation Act gives a
corporation the power to indemnify a corporate agent, including a director
and/or officer, against expenses and liabilities incurred in connection with
certain proceedings involving the corporate agent by reason of his or her being
or having been a corporate agent, provided that with regard to a proceeding
other than one by or in the right of the corporation, the corporate agent must
have acted in good faith and in a manner reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal proceeding, have had no reasonable cause to believe his or her conduct
was unlawful. In any of these proceedings, the termination of the proceeding by
judgment, order, settlement, conviction or upon plea of nolo contendere or its
equivalent does not of itself create a presumption that any corporate agent
failed to meet the above applicable standards of conduct. The indemnification
provided by the New Jersey Business Corporation Act does not exclude any rights
to which a corporate agent may be entitled under a certificate of incorporation,
by-law, agreement, vote of shareholders or otherwise. No indemnification, other
than that required when a corporate agent is successful on the merits or
otherwise in any of the above proceedings, shall be allowed if the
indemnification would be inconsistent with a provision of the certificate of
incorporation, a by-law, a resolution of the board of directors or of the
shareholders, an agreement or other proper corporate action in effect at the
time of the accrual of the alleged cause of action which prohibits, limits or
otherwise conditions the exercise of indemnification powers by the corporation
or the rights of indemnification to which a corporate agent may be entitled.
We currently carry liability insurance for the benefit of our directors
and officers which provides coverage for losses of directors and officers for
liabilities arising out of claims against the persons acting as directors or
officers of our company, or any subsidiary of our company, due to any breach of
duty, neglect, error, misstatement, misleading statement, omission or act done
by these directors and officers, except as prohibited by law. Our current policy
includes coverage for any claim made against the directors and officers based
upon (a) the purchase, sale or offer of any of our securities, and (b) any claim
brought by one of our security holders. The coverage includes claims which
allege a violation of the Securities Act and the Securities Exchange Act.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of our
company under these provisions, or otherwise, we have been advised that, in the
opinion of the SEC, the indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable.
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<PAGE> 19
LEGAL MATTERS
The validity of our common stock offered by this Prospectus and legal
matters will be passed upon for us by Smith, Stratton, Wise, Heher & Brennan,
Princeton, New Jersey. A member of Smith, Stratton, Wise, Heher & Brennan serves
as the Secretary of our company, for which services he is not compensated.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on form 10-KSB for the year ended June 30, 1999 have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
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<PAGE> 20
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the Registrant's costs and expenses
expected to be incurred in connection with the registration of the securities
being offered hereby. The amounts listed below are estimates:
<TABLE>
<S> <C>
Legal fees and expenses....... $ 7,500
Accounting fees and expenses.. $ 7,500
Miscellaneous expenses........ $ 1,500
Nasdaq listing fee............ $17,500
Registration fee.............. $ 2,283
Total......................... $36,283
</TABLE>
All expenses of registration incurred in connection herewith are being
borne by the Registrant, but all selling and other expenses incurred herein by
the selling shareholders will be borne by the selling shareholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant has agreed to indemnify the underwriters of its initial
public offering and the placement agent in our October 20, 1999 private
placement (including Allen & Company Incorporated, which may be deemed to be an
affiliate or control person of the Registrant) and each person who controls any
such underwriter (including Enrique F. Senior, a director of the Company who is
an Executive Vice President and Managing Director of Allen & Company
Incorporated) against some liabilities in connection with the Registration
Statement, including liabilities under the Securities Act of 1933.
The Bylaws of the Registrant provide that a director of the Registrant
shall not be personally liable to the Registrant or its shareholders for
monetary damages for breach of fiduciary duty as a director. However, such
Bylaws do not eliminate or limit the liability of a director: (i) for any breach
of the director's duty of loyalty to the Registrant or its shareholders; (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of the law; (iii) under Section 14A:6-12 of the New
Jersey Business Corporation Act; or (iv) for any transaction from which the
director derived an improper personal benefit. Furthermore, the Bylaws provide
that the Registrant shall indemnify its directors and officers to the full
extent permitted by Section 14A:3-5 of the New Jersey Business Corporation Act
or any successor statute thereto.
Section 14A:3-5 of the New Jersey Business Corporation Act gives a
corporation the power, without a specific authorization in its certificate of
incorporation or by-laws, to indemnify a corporate agent, including a director
and/or officer, against expenses and liabilities incurred in connection with
certain proceedings involving such corporate agent by reason of his or her being
or having been a corporate agent, provided that with regard to a proceeding
other than one by or in the right of the corporation, the corporate agent must
have acted in good faith and in a manner reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal proceeding, have had no reasonable cause to believe his or her conduct
was unlawful. In any such proceeding, the termination of a proceeding by
judgment, order, settlement, conviction or upon plea of nolo contendere or its
equivalent does not of itself create a presumption that any corporate agent
failed to meet the above applicable standards of conduct. The indemnification
provided by the New Jersey Business Corporation Act does not exclude any rights
to which a corporate agent may be entitled under a certificate of incorporation,
by-law, agreement, vote of shareholders or otherwise. No indemnification, other
than that required when a corporate agent is successful on the merits or
otherwise in any of the above
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<PAGE> 21
proceedings shall be allowed if such indemnification would be inconsistent with
a provision of the certificate of incorporation, a by-law, a resolution of the
board of directors or of the shareholders, an agreement or other proper
corporate action in effect at the time of the accrual of the alleged cause of
action which prohibits, limits or otherwise conditions the exercise of
indemnification powers by the corporation or the rights of indemnification to
which a corporate agent may be entitled.
The Registrant currently carries liability insurance for the benefit of
its directors and officers which provides coverage for losses of directors and
officers for liabilities arising out of claims against such persons acting as
directors or officers of the Registrant (or any subsidiary thereof) due to any
breach of duty, neglect, error, misstatement, misleading statement, omission or
act done by such directors and officers, except as prohibited by law. The
Registrant's current policy includes coverage for any claim made against the
directors and officers based upon (i) the purchase, sale, or offer of any
security of the Registrant, and (ii) any claim brought by a security holder of
the Registrant. Such coverage includes claims which allege a violation of the
Securities Act, and the Securities Exchange Act of 1934.
ITEM 16. EXHIBITS
Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- -------- -------------------------
<S> <C>
4.1 Restated Certificate of Incorporation (Incorporated by reference to
Exhibit 3.1 to the Registrant's Registration Statement on Form SB-2
(Registration No. 333-37725) which became effective on December 16,
1997).
4.2 Restated Bylaws, as amended (Incorporated by reference to Exhibit
3.2 to the Registrant's Quarterly Report on Form 10-QSB for the
quarter ended December 31, 1998 as filed with the Securities and
Exchange Commission).
4.3 Specimen Stock Certificate (Incorporated by reference to Exhibit 4.1
to the Registrant's Registration Statement on Form SB-2
(Registration No. 333-37725) which became effective on December 16,
1997).
5.1 Opinion of Smith, Stratton, Wise, Heher & Brennan
23.1 Consent of PricewaterhouseCoopers LLP, independent public
accountants
23.2 Consent of Smith, Stratton, Wise, Heher & Brennan (contained in
Exhibit 5.1)
24.1 Power of Attorney (included on the signature page)
</TABLE>
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<PAGE> 22
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement. Notwithstanding the foregoing,
any increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in the volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective registration
statement;
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For the purpose of determining liability under the Securities Act,
treat each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be the
initial bona fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (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) is asserted by such
director, officer or controlling person in connection with the securities being
registered, 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 such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that it will:
(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1), or (4), or 497(h)
under the Securities Act as part of this Registration Statement as of the time
the Securities and Exchange Commission declared it effective.
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the Registration Statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
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<PAGE> 23
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and authorized this Registration
Statement on Form S-3 to be signed on its behalf by the undersigned, in the
Township of Lawrence, State of New Jersey, on October 29, 1999.
PRINCETON VIDEO IMAGE, INC.
By: /s/ Brown F Williams
-----------------------------------
Brown F Williams
Chairman of the Board
Date: October 29, 1999
<PAGE> 24
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Brown F Williams, Dennis P. Wilkinson and
Lawrence L. Epstein, and each or any one of them, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or any of them, or
their or his or her substitutes or substitute, may lawfully do or cause to be
done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Brown F Williams Chairman of the Board October 25, 1999
- ---------------------------------------- (principal executive officer)
Brown F Williams
/s/ Dennis P. Wilkinson President, Chief Executive October 25, 1999
- ---------------------------------------- Officer and Director
Dennis P. Wilkinson
Chief Financial Officer and October 25, 1999
/s/ Lawrence Epstein Treasurer (principal financial
- ---------------------------------------- officer and principal
Lawrence Epstein accounting officer)
/s/ John B. Torkelsen Director October 22, 1999
- ----------------------------------------
John B. Torkelsen
/s/ Lawrence Lucchino Director October 25, 1999
- ----------------------------------------
Lawrence Lucchino
/s/ Jerome J. Pomerance Director October 25, 1999
- ----------------------------------------
Jerome J. Pomerance
/s/Enrique F. Senior Director October 26, 1999
- ----------------------------------------
Enrique F. Senior
- ---------------------------------------- Director October __, 1999
Eduardo Sitt
</TABLE>
<PAGE> 25
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- -------- -------------------------
<S> <C>
4.1 Restated Certificate of Incorporation (Incorporated by reference to
Exhibit 3.1 to the Registrant's Registration Statement on Form SB-2
(Registration No. 333-37725) which became effective on December 16,
1997).
4.2 Restated Bylaws, as amended (Incorporated by reference to Exhibit
3.2 to the Registrant's Quarterly Report on Form 10-QSB for the
quarter ended December 31, 1998 as filed with the Securities and
Exchange Commission).
4.3 Specimen Stock Certificate (Incorporated by reference to Exhibit 4.1
to the Registrant's Registration Statement on Form SB-2
(Registration No. 333-37725) which became effective on December 16,
1997).
5.1 Opinion of Smith, Stratton, Wise, Heher & Brennan
23.1 Consent of PricewaterhouseCoopers LLP, independent public
accountants
23.2 Consent of Smith, Stratton, Wise, Heher & Brennan (contained in
Exhibit 5.1)
24.1 Power of Attorney (included on the signature page)
</TABLE>
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<PAGE> 1
Exhibit 5.1
[SMITH, STRATTON, WISE, HEHER & BRENNAN LETTERHEAD]
November 1, 1999
Princeton Video Image, Inc.
15 Princess Drive
Lawrenceville, New Jersey 08648
Gentlemen:
We have acted as counsel to Princeton Video Image, Inc., a New Jersey
corporation (the "Company"), in connection with the filing by the Company of a
registration statement on Form S-3 (the "Registration Statement"), under the
Securities Act of 1933, as amended (the "Act"). The Registration Statement
relates to the registration of 1,592,727 shares of the Company's common stock,
no par value (the "Shares"), which are to be offered by the shareholders listed
in the Registration.
In connection with the Registration Statement, we have examined such
corporate records and documents, other documents, and such questions of law as
we have deemed necessary or appropriate for purposes of this opinion. On the
basis of such examination, it is our opinion that the Shares are validly issued,
fully paid and non-assessable.
We consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the Prospectus contained therein and elsewhere in the
Registration Statement and Prospectus.
Sincerely,
/s/ SMITH, STRATTON,
WISE, HEHER & BRENNAN
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated September 24, 1999 relating to the
financial statements, which appear in Princeton Video Image, Inc.'s Annual
Report on Form 10-KSB for the year ended June 30, 1999. We also consent to the
reference to us under the heading "Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
Florham Park, New Jersey
November 3, 1999
