<PAGE>
As filed with the Securities and Exchange Commission on April 15,
1999.
Registration No. 333-37725
=================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 3
ON
FORM S-3
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PRINCETON VIDEO IMAGE, INC.
(Exact Name of Registrant as Specified in its Charter)
New Jersey
(State or Other 22-3062052
Jurisdiction of (I.R.S. Employer
Incorporation or Identification No.)
Organization)
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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)
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Brown F Williams
Princeton Video Image, Inc.
15 Princess Road
Lawrenceville, NJ 08648
(609) 912-9400
(Name, Address, Including Zip Code, and
Telephone Number, Including Area Code,
of Agent for Service)
Copies to:
Richard J. Pinto, Esq.
Smith, Stratton, Wise, Heher & Brennan
600 College Road East
<PAGE>
Princeton, NJ 08540
(609) 924-6000
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, please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 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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EXPLANATORY NOTE
This Registration Statement covered the registration of
4,600,000 shares of common stock, no par value per share (the
"Common Stock"), offered by Princeton Video Image, Inc. ("the
Company") in its initial public offering of the Common Stock which
was completed in December 1997 in accord with the terms of the
Underwriting Agreement among the Company, Allen & Company
Incorporated ("Allen") and Barington Capital Group, L.P., as
representatives of the several underwriters (Allen and Barington
collectively, the "Representatives") and 37,500 shares of Common
Stock offered by certain selling shareholders. This Registration
Statement also covers (i) 262,500 shares of Common Stock (the
"Bridge Warrant Shares") issued or issuable upon exercise of
warrants (the "Bridge Warrants") issued by the Company in
October 1997, (ii) the Representatives' Warrants to purchase
400,000 shares of Common Stock issued by the Company to the
Representatives, (iii) 400,000 shares of Common Stock issuable upon
exercise of the Representatives' Warrants (the "Representatives'
Warrant Shares") and (iv) 2,000,000 shares of Common Stock and such
indeterminate number of additional shares of Common Stock
(collectively, the "Market Making Shares") as may be sold solely in
connection with the market making activities of Allen. The Bridge
Warrant Shares and the Representatives' Warrant Shares are offered
by certain holders of such securities (the "Selling Shareholders")
and not for the account of the Company. When initially effective,
this Registration Statement included a complete Prospectus relating
to the initial public offering and certain pages of the Prospectus
relating solely to the securities being offered by the Selling
Shareholders and the Market Making Shares, including alternate
front and back cover pages, an alternative "The Offering" section
of the "Prospectus Summary," and sections entitled "Selling
Shareholders" and "Plan of Distribution." This Post-Effective
Amendment No. 3 on Form S-3 is being filed to update the Prospectus
relating to the securities being offered by the Selling
Shareholders and the Market Making Shares.
<PAGE>
PROSPECTUS
2,662,500 Shares
PRINCETON VIDEO IMAGE, INC.
Common Stock
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This prospectus relates to the offering of 662,500 shares of
common stock, no par value per share, of Princeton Video Image,
Inc. by the selling shareholders identified on pages 17-18. 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. This prospectus also relates to 2,000,000 shares of
common stock and an indeterminate number of additional shares of
common stock as may be sold solely in connection with the market
making activities of Allen & Company Incorporated. The common stock
is traded on the Nasdaq National Market under the symbol "PVII."
The selling shareholders have not entered into any
underwriting arrangements. The selling shareholders may distribute
their shares from time to time in transactions on the Nasdaq
National Market, in negotiated transactions, through the writing of
options on their shares, or a combination of these methods of sale.
The selling shareholders may distribute their shares at fixed
prices that may be changed, at market prices prevailing at the time
of sale, at prices related to the prevailing market prices, or at
negotiated prices. We will not receive any proceeds from sales of
the shares of common stock covered by this prospectus. See "Plan of
Distribution."
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 ___________, 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-VIS(TM)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-VIS(TM)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.
<PAGE>
RISK FACTORS
Before you invest in our common stock, you should be aware
that there are 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 a
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-VIS(TM) System
to television viewers, advertisers, broadcasters and
sporting events rights holders;
- inability of third party sales forces to sell L-VIS
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 System;
- inability to upgrade and develop software for use of
the L-VIS System with new sports and other new uses;
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- 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.
We have a limited operating history and face the risks of a
relatively new company. Our operations relate to the development,
introduction and marketing of the L-VIS System. Twenty-four L-VIS
System units are available for operation. We are now trying to
convince advertisers, broadcasters and broadcast rights holders of
the value of the L-VIS 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 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 System. We incurred net losses of $5,730,661
for the fiscal year ended June 30, 1997, $9,084,324 for the fiscal
year ended June 30, 1998, and $4,051,764 for the six month period
ended December 31, 1998. We had an accumulated deficit of
approximately $32.7 million at December 31, 1998. We have earned
only a small amount of revenues from the broadcasts in which the
L-VIS System was utilized. We earned only $712,468 in advertising and
production revenues from the use of the L-VIS System and $1,647,016
in licensing fees through December 31, 1998.
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.
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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 a year or longer. We will lose more money if sales do not
increase in proportion 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 be successful, we must have
acceptance from the advertisers, broadcast rights holders and
broadcasters. 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 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 of Marketing
and Sales;
- Lawrence L. Epstein, our Vice President of Finance,
Chief Financial Officer and Treasurer; and
- Roy J. Rosser, our Co-Founder and Director of New
Business Development.
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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
only with Messrs. Williams, Wilkinson, McCleery and Epstein. 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.
OUR INTERNATIONAL MARKETING PLANS MAY BE ADVERSELY AFFECTED BY
INTERNATIONAL BUSINESS CONDITIONS, INCLUDING FOREIGN MARKETS AND
REGULATORY REQUIREMENTS.
We plan 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.
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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 risks 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
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<PAGE>
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.
WE HAVE LIMITED EXPERIENCE IN MANUFACTURING THE L-VIS SYSTEM IN
COMMERCIAL QUANTITIES.
We have limited experience in manufacturing L-VIS System units
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 BOTH OTHER 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 insertion
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technologies used for advertising: Symah Vision-SA, Orad Hi Tech
Systems, Ltd. and Scidel Technologies, Ltd. Orad's system is
marketed by Imagine Video Systems which is partly owned by Orad and
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, 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.
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.
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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.
By the third calendar quarter of 2000 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 December 1997
initial public offering, 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, we are required to make periodic payments during fiscal
years ending June 30, 1999 and 2000 totalling approximately
$2,000,000 as payment for some electronic imaging rights. 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,
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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.
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 four issued United
States patents and two 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 may
infringe our patents. If our patents or rights are brought before
a court, litigation would involve complex legal and factual issues.
The outcome would be highly uncertain. In addition, any patent
litigation would cost us considerable money. 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 another company 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.
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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
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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.
8,183,552 shares of our common stock were outstanding on
December 31, 1998. 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 415,000 shares of our common
stock are issuable upon exercise of some warrants registered
hereunder. 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. 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. Under Rule 144,
generally, 3,020,482 shares of our outstanding common stock were
eligible for resale as of December 1, 1998. Under Rule 144(k),
1,615,988 shares of our outstanding common stock were eligible for
resale as of December 1, 1998.
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 1,192,130
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. 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
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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, stockholders 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 OUR COMPANY.
As of December 31, 1998, 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. Allen & Company Incorporated is the
beneficial owner of 12.1% 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 12.3% 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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We issued a total of 262,000 shares of our common stock, or
3.2% of the shares of our common stock outstanding on December 31,
1998, 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
December 31, 1998. Mr. Williams and Mr. McCleery have significant
influence over our affairs. Among other effects, this control
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 December 31, 1998, we
had net operating loss carryforwards for federal income tax
purposes of approximately $26,200,000. These net operating loss
carryforwards expire in the years 2006 through 2013. 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. 67,600 shares of our Series A
Preferred Stock are outstanding and 86,041 shares of our Series B
Preferred Stock are 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
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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 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.
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USE OF PROCEEDS
We will receive no proceeds from the sale of shares of our
common stock by the selling shareholders but will receive proceeds
from the exercise of the warrants to purchase 400,000 shares of our
common stock held by the representatives of the several
underwriters of our initial public offering and the outstanding
warrants to purchase 15,000 shares of our common stock which we
issued in October 1997. Proceeds from the exercise of these
warrants are expected to be used for general corporate purposes.
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 by each selling shareholder's account as of
February 28, 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.
Percentage of
Outstanding
Number of Number of Common
Shares Maximum Shares Stock
Beneficially Number of Beneficially Beneficially
Name of Owned Shares Owned Owned
Selling Before Being After After
Shareholder Offering(1)(2) Offered(3) Offering(1)(2) Offering(1)(2)
- ----------- -------------- ---------- --------------- ---------------
Acorn Technology 15,000 15,000 0 *
Fund, L.P.(4)
Bader M. Al- 8,540 5,000 3,540 *
Humaidhi
Allen & Company 1,092,430 380,000 712,430 8.3%
Incorporated(5)
Al-Mal Kuwaiti 7,500 7,500 0 *
Company
Fahad Al-Rajaan 8,540 5,000 3,540 *
Taleb A. Ali 10,000 10,000 0 *
Peder A. Arneson 2,500 2,500 0 *
Aus. Per. No. 1, Inc. 32,250 7,500 24,750 *
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Percentage of
Outstanding
Number of Number of Common
Shares Maximum Shares Stock
Beneficially Number of Beneficially Beneficially
Name of Owned Shares Owned Owned
Selling Before Being After After
Shareholder Offering(1)(2) Offered(3) Offering(1)(2) Offering(1)(2)
- ----------- -------------- ---------- --------------- ---------------
Stephen D. Baksa 8,250 1,250 7,000 *
Barington 20,000 20,000 0 *
Capital Group, L.P.(6)
Leonard Barrack 21,500 21,500 0 *
C.A.L.M. 6,296 2,500 3,796 *
Venture Partners, L.P.
Nicholas E. Chimicles 2,500 2,500 0 *
Patrick Coughlin 8,500 2,500 6,000 *
Jonathan W. Cuneo 1,000 1,000 0 *
Falah Partners 4,586 2,500 2,086 *
Gary J. and Miriam I. 6,000 2,500 3,500 *
Greenberg(7)
Douglas J. Greenlaw (8) 102,792 10,000 92,792 1.1%
William S. Lerach 25,000 10,000 15,000 *
Dennis Mensch 10,092 2,500 7,592 *
Presencia en 614,308 130,000 484,308 5.6%
Medios, S.A. de
C.V.(9)
Richard Y. Roberts 5,000 5,000 0 *
Gerald J. Rodos 17,000 2,500 14,500 *
Paula P. Runnells 7,250 1,250 6,000 *
John T. Shea 5,582 2,500 3,082 *
The M and B Weiss 25,000 10,000 15,000 *
Family Limited Partnership
of 1996
______________
* Less than one percent
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(1) Based upon record ownership of the shares as of February 28, 1999.
(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 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.
Applicable percentage of ownership is based on 8,183,552 shares of our
common stock outstanding as of February 28, 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.
(3) See "Plan of Distribution."
(4) Mr. John B. Torkelsen, a member of our board of directors, is the Manager
and a member of Acorn Technology Partners, L.L.C., the general partner of
Acorn Technology Fund., L.P. Does not reflect beneficial ownership of
5,992 shares of our common stock held by Pamela R. Torkelsen, Mr.
Torkelsen's wife, 29,658 shares of our common stock and 48,200 shares of
our common stock underlying warrants held by Princeton Venture Research,
Inc., a company of which Mr. Torkelsen is the sole shareholder, and 25,277
shares of our common stock underlying options held by Mr. Torkelsen that
were exercisable within 60 days of February 28, 1999. Mr. Torkelsen
disclaims beneficial ownership of the shares of our common stock that are
owned by Mrs. Torkelsen.
(5) Mr. Enrique F. Senior, a member of our board of directors, is an Executive
Vice President and Managing Director of Allen & Company Incorporated, one
of our principal shareholders. Allen & Company Incorporated may serve as
a market maker for our common stock. See "Plan of Distribution." Includes
234,204 shares of our common stock and 478,226 shares of our common stock
underlying warrants owned of record by Allen & Company Incorporated. Also
includes 380,000 shares of our common stock underlying the warrants
received by Allen & Company Incorporated as partial consideration for
services rendered on our behalf with respect to our initial public
offering. Does not include 25,277 shares of our common stock underlying
options held by Mr. Senior that were exercisable within 60 days of
February 28, 1999. Does not include 6,436 shares of our common stock held
directly by some officers, directors or employees of Allen & Company
Incorporated.
(6) Barington Capital Group, L.P. acted, along with Allen & Company
Incorporated, as the representatives of the several underwriters for the
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initial public offering of our common stock in December 1997.
(7) Does not include (a) 100 shares of our common stock owned by Gary J.
Greenberg, as custodian for Theresa Greenberg, (b) 100 shares of our
common stock owned by Gary J. Greenberg, as custodian for Carson Kleiner,
or (c) 100 shares of our common stock owned by Gary J. Greenberg, as
custodian for Emma Greenberg.
(8) Mr. Greenlaw served as our President and Chief Executive Officer from
January 1997 until November 1998 and as a member of our board of directors
from October 1997 until November 1998. Includes 22,500 shares of our
common stock and 88,626 shares of our common stock underlying options held
by Mr. Greenlaw that were exercisable within 60 days of February 28, 1999.
(9) Mr. Eduardo Sitt, a member of our board of directors, is the President of
Presencia en Medios, S.A. de C.V., one of our principal shareholders.
Does not include 35,277 shares of our common stock underlying options held
by Mr. Sitt that were exercisable within 60 days of February 28, 1999.
PLAN OF DISTRIBUTION
The distribution of shares of our common stock held by the
selling shareholders may be effected from time to time in
transactions on the Nasdaq National Market, in negotiated
transactions, through the writing of options on the shares, or a
combination of these methods of sale, at fixed prices that may be
changed, at market prices prevailing at the time of the sale, at
prices related to the prevailing market prices or at negotiated
prices. The selling shareholders may effect these transactions by
the sale of shares to or through broker-dealers, and the
broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the selling shareholders and/or the
purchasers of the shares for whom the broker-dealers may act as
agent or to whom they may sell as principal, or both. Usual and
customary or specifically negotiated brokerage fees or commissions
may be paid by the selling shareholders who sell their shares. The
selling shareholders have not entered into any underwriting
arrangements. The selling shareholders may also effect the
transfer of shares of our common stock under Rule 144 of the
Securities Act or other applicable exemptions from the registration
requirement of the Securities Act.
2,000,000 shares of our common stock and an indeterminate
number of additional shares of our common stock as may be sold
solely in connection with the market making activities of Allen &
Company Incorporated are registered under this registration
statement. Enrique F. Senior, a member of our board of directors,
is a Managing Director and Executive Vice President of Allen &
Company Incorporated, which is one of our principal shareholders,
furnishes general financial advisory services to us from time to
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time and acted as a representative of the several underwriters in
our initial public offering. Allen & Company Incorporated and some
of its affiliates beneficially own an aggregate of 1,092,430 shares
of our common stock. For these reasons, Allen & Company
Incorporated may be deemed to have an ability to influence our
policies and thus may be deemed to be an "affiliate" of our company
under prevailing interpretations of what constitutes an affiliate
relationship. Any sales of shares of our common stock by the
selling shareholders under this registration statement will be made
in conformity with the applicable provisions of the rules of the
National Association of Securities Dealers, Inc. We will not
receive any proceeds from sales of shares by the selling
shareholders or the market making activities of Allen & Company
Incorporated.
The selling shareholders and intermediaries through whom the
shares are sold may be deemed "underwriters" within the meaning of
the Securities Act with respect to the securities offered and any
profits realized or commissions received may be deemed underwriting
compensation. We have agreed to indemnify the selling shareholders
against some liabilities, including liabilities under the
Securities Act.
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
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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.
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, 1998 which we filed
under Section 13(a) or 15(d) of the Securities
Exchange Act;
(b) Our Quarterly Reports on Form 10-QSB for
the quarters ended September 30 and December 31,
1998;
(c) Our Proxy Statement and Notice of Meeting
relative to the Annual Meeting of Shareholders held
on December 10, 1998, as filed with the SEC;
(d) All other reports filed under Section 13 or 15(d)
of the Securities Exchange Act since June 30, 1998;
(e) 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 the documents.
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
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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.
INDEMNIFICATION
We have agreed to indemnify the underwriters of our initial
public offering, 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
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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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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 the member is not compensated.
EXPERTS
The balance sheet as of June 30, 1998 and the statements of
operations, changes in shareholders' (deficit)/equity and cash
flows for each of the two years in the period ended June 30, 1998
and for the period July 23, 1990, the date of inception, to June
30, 1998, incorporated by reference in this prospectus, have been
incorporated by reference in this prospectus in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of that firm as experts in accounting and
auditing.
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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:
Legal fees and expenses. . . . . . . . . . . . . . . . . $ 7,500
Accounting fees and expenses . . . . . . . . . . . . . . $ 7,500
Miscellaneous expenses. . . . . . . . . . . . . . . . . $ 1,500
Total . . . . . . . . . . . . . . . . . . . . . . . . . $16,500
All expenses of registration incurred in connection herewith are
being borne by the Company, 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 Company has agreed to indemnify the underwriters of its
initial public offering (including Allen & Company Incorporated,
which may be deemed to be an affiliate or control person of the
Company) 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 Company provide that a director of the
Company shall not be personally liable to the Company 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 Company 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 Company 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
<PAGE>
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 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 Company 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
Company (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 Company'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 Company, and (ii) any claim
brought by a security holder of the Company. Such coverage includes
claims which allege a violation of the Securities Act, and the
Securities Exchange Act of 1934.
<PAGE>
ITEM 16. EXHIBITS
Exhibits
Exhibit
Number Description
- -----------------------------------------------------------------
3.1+ -- Restated Certificate of Incorporation
3.2 -- Restated Bylaws, as amended (Incorporated by
reference to Exhibit 3.2 to the Company's Quarterly
Report on Form 10-QSB for the quarter ended December
31, 1998 as filed with the Securities and Exchange
Commission on February 12, 1999)
4.1+ -- Specimen Stock Certificate
4.2+ -- Form of Warrant for purchase of 400,000 shares of
Common Stock issued to the Representatives
4.3+ -- Form of Warrant for the purchase of shares of Common
Stock issued in connection with the Company's bridge
financing in October 1997
4.4+ -- Form of Warrant for the purchase of shares of Common
Stock issued by the Company
4.5+ -- Warrant Certificate dated as of December 19, 1997 for
the purchase of 380,000 shares of Common Stock issued
to Allen & Company Incorporated
4.6+ -- Warrant Certificate dated as of December 19, 1997 for
the purchase of 20,000 shares of Common Stock issued
to Barington Capital Group, L.P.
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 to
the Registration Statement)
- ------------
+ Previously filed
<PAGE>
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 volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the
low or high end of the estimated maximum offering
range may be reflected in the form of prospectus
filed with the 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 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
<PAGE>
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.
<PAGE>
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 Post-Effective Amendment No. 3 on Form S-3 to
the Registration Statement on Form SB-2 to be signed on its behalf
by the undersigned, in the Township of Lawrence, State of New
Jersey, on April 15, 1999.
PRINCETON VIDEO IMAGE, INC.
By: /s/ BROWN F WILLIAMS
-----------------------
Brown F Williams,
Chairman of the Board
In accordance with the requirements of the Securities Act of
1933, this Post-Effective Amendment No.3 on Form S-3 to the
Registration Statement on Form SB-2 has been signed by the
following persons in the capacities and on the dates stated.
Signature Title Date
--------- ----- ----
/s/ BROWN F WILLIAMS Chairman of the Board April 15, 1999
- ----------------------- (principal executive
Brown F Williams officer)
/s/ DENNIS P. WILKINSON President, Chief April 15, 1999
- ----------------------- Executive Officer and
Dennis P. Wilkinson Director
/s/ LAWRENCE L. EPSTEIN Vice President, Finance, April 15, 1999
- ----------------------- Chief Financial Officer
Lawrence L. Epstein and Treasurer (principal
accounting and financial
officer)
*
- ----------------------- Director April 15, 1999
Lawrence Lucchino
*
- ----------------------- Director April 15, 1999
Jerome J. Pomerance
<PAGE>
*
- ----------------------- Director April 15, 1999
Enrique F. Senior
*
- ----------------------- Director April 15, 1999
Eduardo Sitt
*
- ----------------------- Director April 15, 1999
John B. Torkelsen
* By his signature set forth below, the undersigned, pursuant to
duly authorized powers of attorney filed with the Securities and
Exchange Commission, has signed this Post-Effective Amendment No. 3
on Form S-3 to the Registration Statement on Form SB-2 on behalf of
the persons indicated.
By: /s/ BROWN F WILLIAMS
------------------------
Brown F Williams
ATTORNEY-IN-FACT April 15, 1999
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------------------------------------------------------------------------
3.1+ -- Restated Certificate of Incorporation
3.2 -- Restated Bylaws, as amended (Incorporated by
reference to Exhibit 3.2 to the Company's
Quarterly Report on Form 10-QSB filed with the
Securities and Exchange Commission on February
12, 1999)
4.1+ -- Specimen Stock Certificate
4.2+ -- Form of Warrant for purchase of 400,000 shares of
Common Stock issued to the Representatives
4.3+ -- Form of Warrant for the purchase of shares of
Common Stock issued in connection with the
Company's bridge financing in October 1997
4.4+ -- Form of Warrant for the purchase of shares of
Common Stock issued by the Company
4.5+ -- Warrant Certificate dated as of December 19, 1997
for the purchase of 380,000 shares of Common
Stock issued to Allen & Company Incorporated
4.6+ -- Warrant Certificate dated as of December 19, 1997
for the purchase of 20,000 shares of Common Stock
issued to Barington Capital Group, L.P.
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
to the Registration Statement)
___________
+ Previously filed
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement on Form S-3 of our report, dated September 2, 1998,
on our audits of the financial statements of Princeton Video Image,
Inc. We also consent to the reference to our firm under the caption
"Experts".
PricewaterhouseCoopers LLP
Princeton, New Jersey
April 15, 1999
