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As filed with the Securities and Exchange Commission on February 22, 2000
Registration No.
--------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
INFORMATION ARCHITECTS CORPORATION
(Exact name of Registrant as specified in its charter)
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NORTH CAROLINA 7372 87-0399301
- ------------------------------ ---------------------------- ---------------------
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation organization) Classification Code Number) Identification Number)
</TABLE>
4064 Colony Road
Charlotte, North Carolina 28211
(704) 365-2324
(Address, including zip code and telephone number,
including area code, of Registrant's
principal executive offices)
----------------------
J. Dain Dulaney
INFORMATION ARCHITECTS CORPORATION
4064 Colony Road
Charlotte, North Carolina 28211
(704) 365-2324
(Name, address, including zip code and telephone number,
including area code, of agent for service)
----------------------
COPY TO:
Jeffrey S. Hay
McGUIRE, WOODS, BATTLE & BOOTHE LLP
100 North Tryon Street
Suite 2900
Charlotte, North Carolina 28202
----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
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If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) 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 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. [ ]
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
Title of Each Class of
Securities to be Proposed Maximum Amount of
Registered Aggregate Offering Price Registration Fee
- ---------------------- ------------------------ ----------------
Common Stock of $37,500,000 (1) $9,900
Information Architects
Corporation (par value
$.001 per share)
- --------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 3
SUBJECT TO COMPLETION, DATED FEBRUARY 22, 2000
INFORMATION ARCHITECTS CORPORATION
______ SHARES
COMMON STOCK
($.001 PAR VALUE)
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ABOUT OUR COMPANY:
o We deliver information management solutions that empower organizations to
securely distribute content and functionality across the internet.
o Our headquarters are located at:
4064 Colony Road
Charlotte, North Carolina 28211
Telephone: (704) 365-2324
THE OFFERING:
o We intend to use any net proceeds from the offering for general corporate
purposes, including a marketing campaign, further development of our
proprietary software and expansion of our sales force.
o Closing: March ___, 2000
TRADING SYMBOL:
Our common stock is listed on the Nasdaq National Market under the symbol
"IARC."
THE COMMON STOCK:
We are selling up to ______ shares of our common stock and have retained
Stonegate Securities as the placement agent to offer and sell the shares for us
in a best efforts offering. The placement agent is not required to sell any
specific number or dollar amount of shares but will use its best efforts to sell
the shares offered.
THE SELLING SHAREHOLDER:
The selling shareholder named in this prospectus is selling 150,000 shares of
our common stock and has also retained Stonegate Securities as the placement
agent to offer the shares and to use its best efforts to sell the shares. We
will not receive any proceeds from the sale of the shares sold by the selling
shareholder. We will pay all expenses incurred in connection with this offering,
but the selling shareholder will pay Stonegate Securities' fee.
- --------------------------------------------------------------------------------
PUBLIC OFFERING PLACEMENT AGENT'S
PRICE FEE (1) PROCEEDS (2)
--------------- ----------------- ------------
Per Share $ $ $
Total $ $ $
- --------------------------------------------------------------------------------
(1) We have agreed to indemnify the placement agent against certain
liabilities, including liabilities under the Securities Act of 1933.
(2) Before deducting estimated expenses of $____________ payable by us.
---------------------------------------------------
BEFORE MAKING ANY INVESTMENT IN OUR SECURITIES, YOU SHOULD READ AND CAREFULLY
CONSIDER RISKS DESCRIBED IN THE RISK FACTORS BEGINNING ON PAGE 2.
---------------------------------------------------
- --------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
-------------------
PLACEMENT AGENT
STONEGATE SECURITIES, INC.
-------------------
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
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PROSPECTUS SUMMARY
This Summary highlights information contained elsewhere in this
prospectus. It is not complete and may not contain all of the information that
you should consider before investing in our common stock. You should read the
entire prospectus carefully, including the "Risk Factors" section.
THE COMPANY
We deliver information management solutions that empower organizations
to securely distribute digital content and functionality across the internet.
The Metaphoria software technology is an XML-based product suite that offers
customized delivery of any digital information across the internet. The
Metaphoria software technology enables aggregation of digital information
content from any source computer system, including mainframes, client server
systems, internet servers, intranets and extranets. Syndication is the means by
which an organization customizes and distributes digital information helping
companies improve data exchange and collaboration among its business partners,
suppliers, and customers. Metaphoria's real-time aggregation and syndication
technology enables users, from any internet site or internet enabled device, to
access digital content and e-commerce software from any source computer system.
We believe that this real-time digital access is a competitive advantage for our
customers because it should enhance the overall user experience and promote
loyalty to the website. The implementation and maintenance of these information
management solutions require that we provide associated internet related
services using highly trained technical personnel that are familiar with leading
edge internet architecture and technology.
THE OFFERING
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Common stock offered by us.....................................
Common stock offered by the selling shareholder................ 150,000
Common stock outstanding immediately prior
to the offering................................................ 28,271,505 (1)
Common stock estimated to be outstanding after
the offering...................................................
Use of proceeds................................................ We will not receive any proceeds from the
sale of the selling shareholder's shares. We expect
gross proceeds of $35,000,000 if all of the
shares of common stock are sold pursuant to
the offer. We will use all proceeds for general
corporate purposes.
</TABLE>
(1) This information is based on the number of shares outstanding at
February 18, 2000.
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RISK FACTORS
In evaluating our business, prospective investors should carefully
consider the following risks in addition to the other information in this
prospectus or in the documents referred to in this prospectus. Any of the
following risks could have a material adverse impact on our business, operating
results and financial condition and result in a complete loss of your
investment.
The statements made in this prospectus, including the information
incorporated by reference, that are not historical facts, contain
"forward-looking information" within the meaning of the Private Securities
Litigation Reform Act of 1995, and Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, both as amended, which can
be identified by the use of forward-looking terminology such as "may", "will",
"should", "anticipates", "expects", "projects", "estimates", "believes" or
"continue", the negative thereof, other variations or comparable terminology.
Important factors, including certain risks and uncertainties with respect to
such forward-looking statements that could cause actual results to differ
materially from those reflected in such forward looking statements include, but
are not limited to, the risk factors discussed below.
OUR LIMITED OPERATING HISTORY IN THE CONTENT AGGREGATION AND SYNDICATION
BUSINESS MAY IMPEDE YOUR ABILITY TO EVALUATE OUR BUSINESS AND ITS FUTURE
PROSPECTS.
Our operating history in the content aggregation and syndication
business is limited so it will be difficult for you to evaluate us in making an
investment decision. As of September 30, 1999 we have only received
approximately $90,000 of revenue from the content aggregation and syndication
business. We have not had a profitable quarter as a result of our new business
direction and do not expect to have a profit for the year 2000. Since July 1,
1999, we have funded our operations primarily from the sale of common stock and
securities convertible into common stock and have not generated net income from
operations. Our content aggregation and syndication business is still in the
early stages of development. Before buying our common stock, you should consider
the risks and difficulties frequently encountered by companies in new and
rapidly evolving markets, particularly those companies whose businesses depend
on the internet. These risks and difficulties, as they apply to us in
particular, include:
- potential fluctuations in operating results and uncertain
growth rates;
- limited market acceptance of our products;
- concentration of our revenues in a single product suite;
- our need to manage rapidly expanding operations; and
- our need to attract and train qualified personnel.
THE MARKET FOR E-BUSINESS IS NEW AND EMERGING AND IF IT DOES NOT GROW AS RAPIDLY
AS WE ANTICIPATE OR FAILS TO EMERGE AT ALL, OUR PLANNED GROWTH AND FINANCIAL
OBJECTIVES WILL NOT BE MET.
Our success is dependent on the emergence of the market for e-business;
and if that market does not grow as rapidly as we anticipate, we may fail to
achieve profitability. We are planning to dedicate all of our sales, marketing
and product development efforts toward e-business. If these markets do not
develop as rapidly as we expect, our planned growth and financial objectives
will not be met. A number of factors could prevent or hinder the emergence of
these markets, including the following:
- the unwillingness of customers to change their traditional
method of conducting commerce;
- the failure of the internet network infrastructure to keep
pace with substantial growth;
- adverse publicity and consumer concern about the security of
electronic commerce transactions; and
- any new legislation or regulation, the application of laws and
regulations from jurisdictions whose laws do not currently
apply to our business, or the application of existing laws and
regulations to the internet and on-line businesses.
OUR QUARTERLY OPERATING RESULTS ARE VOLATILE AND DIFFICULT TO PREDICT, AND IF WE
FAIL TO MEET THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS AND INVESTORS, THE
MARKET PRICE OF OUR COMMON STOCK MAY DECREASE SIGNIFICANTLY.
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Our quarterly operating results have fluctuated significantly in the
past, and we expect them to continue to fluctuate in the future, which may
result in a decrease in the price of our common stock. Because our business is
evolving rapidly and we have a limited operating history in the new business, we
have little experience in forecasting our revenues. Since our operating results
are volatile and difficult to predict, we believe that period-to-period
comparisons of our operating results are not a reliable indication of our future
performance. It is possible that in some future periods our results of
operations may not meet or exceed the expectations of public market analysts and
investors and the price of our common stock may decline.
VOLATILITY IN OUR STOCK PRICE MAY ADVERSELY EFFECT OUR BUSINESS
Fluctuations in the market price of our common stock may adversely
affect our access to capital and financing and our ability to attract and retain
qualified personnel. Historically, our common stock price and trading volume
have fluctuated widely, with a 52-week range as of February 18, 2000 of $19.63
to $.68. We expect fluctuations to continue in the future for a number of
reasons, including the following:
- our success or failure in meeting market expectations of our
quarterly or annual revenues, net income or earnings per
share;
- announcements by us or our competitors regarding new services
and products or technological innovations;
- stock prices for many technology companies fluctuate widely
for reasons, including perceived potential value, that may be
unrelated to operating results; and
- announcements of unusual events, such as acquisitions.
OUR REVENUES DEPEND ON A SINGLE PRODUCT LINE, WHICH IS IN AN EARLY STAGE OF
COMMERCIALIZATION.
A decline in demand for or in the selling price of our Metaphoria
products would have a direct negative effect on our primary source of revenues
and could cause our stock price to fall. We expect all of our revenues in 2000
to be derived from software licenses and service fees from our suite of products
related to the Metaphoria technology. Our suite of products related to the
Metaphoria technology is at an early stage of commercialization and the level of
market acceptance they will attain is difficult to forecast. Our technology
involves a new approach to the conduct of online business and, as a result,
intensive marketing and sales efforts are necessary to educate prospective
customers regarding the uses and benefits of our products. Market acceptance
could be seriously impeded in the following circumstances:
- information services departments of potential customers choose
instead to create their own technology internally or use third-party
professional developers to create and maintain their sites;
- competitors develop products, technologies or capabilities that
render our Metaphoria products and related services obsolete or
noncompetitive or that shorten the life cycles of these products and
services; or
- our Metaphoria products do not meet customer performance needs or
fail to remain free of significant software defects or technical
failures.
VARIATIONS IN OUR SALES CYCLE COULD IMPACT THE TIMING OF OUR REVENUE, CAUSING
OUR QUARTERLY OPERATING RESULTS TO FLUCTUATE.
A lengthy sales cycle may have an impact on the timing of our revenue,
which could cause our quarterly operating results to fluctuate. The period
between our initial contact with a potential customer and the purchase of our
software and services is often long and subject to delays associated with the
budgeting, approval, and competitive evaluation processes, which frequently
accompany significant capital expenditures such as the purchase of our software.
We believe that a customer's decision to purchase our software and services is
discretionary, involves a significant commitment of resources, and is influenced
by customer budgetary cycles. To successfully sell our software and services, we
generally must educate our potential customers regarding their use and benefits,
which can require significant time and resources.
OUR CUSTOMER BASE IS RELATIVELY SMALL AT THIS TIME AND THE LOSS OF A MAJOR
CUSTOMER COULD CAUSE OUR REVENUE TO DECLINE.
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We may continue to derive a significant portion of our revenue from a
relatively small number of customers in the future. If a major customer decided
not to continue to use our services or renew its license to use our products,
our revenue could decline and our operating results and financial condition
could be harmed.
FAILURE TO RESPOND TO RAPID TECHNOLOGICAL CHANGE COULD ADVERSELY AFFECT OUR
ABILITY TO GENERATE REVENUE.
If we are unable to improve existing services and products, offer new
services, enhance our Metaphoria technology and develop, acquire and market new
products and services, we may not be able to generate profits from operations.
New approaches to gather, exchange, integrate, personalize and syndicate
information over the internet based on new technologies and industry standards
could render our Metaphoria products obsolete and unmarketable. If we are unable
to adequately respond to these changes, our revenues and market share could
rapidly decline. In connection with the introduction of new products and
enhancements, we could experience development delays and related cost overruns,
which are not unusual in the software industry. Any delays in developing and
releasing new products or enhancements to our Metaphoria products could result
in:
- cancellation of orders and license agreements and customer
dissatisfaction;
- negative publicity;
- loss of revenues; and
- slower market acceptance.
IF WE ARE UNABLE TO COMPETE SUCCESSFULLY WITH COMPANIES DEVELOPING THEIR OWN
INTERNAL E-BUSINESS INFRASTRUCTURE SYSTEMS AND OTHER PROVIDERS OF E-BUSINESS
INFRASTRUCTURE SOLUTIONS, WE WILL NOT ACHIEVE OUR FINANCIAL OBJECTIVES.
Increased competition may result in price reductions, reduced gross
margins and loss of market share, any of which could negatively impact our
ability to sell our products at the price levels required to support our
continuing operations. There is competition on two distinct levels:
- from in-house development efforts by potential customers, and
- from third party competitors.
We expect the intensity of our competition to increase in the future. Many of
our competitors have longer operating histories, significantly greater
financial, technical, marketing and other resources, significantly greater name
recognition, and well-established relationships with current and potential
customers of ours. In addition, it is possible that new competitors or alliances
among competitors may emerge and rapidly acquire significant market share.
IF WE ARE UNABLE TO INCREASE MARKET AWARENESS AND SALES OF OUR METAPHORIA
TECHNOLOGY, WE MAY FAIL TO ACHIEVE PROFITABILITY.
We need to substantially expand our direct and indirect sales and
distribution efforts in order to increase market awareness and sales of our
Metaphoria technology and the related services we offer. We have recently
expanded our direct sales force and plan to hire additional sales personnel.
Sales of the Metaphoria technology and related services require a sophisticated
sales effort targeted at multiple departments within an organization.
Competition for qualified sales and marketing personnel is intense, and we might
not be able to hire and retain adequate numbers of such personnel to maintain
our growth. New hires will require training and take time to achieve full
productivity. We also plan to expand our relationships with system integrators,
enterprise software vendors and other third-party resellers to further develop
our indirect sales channel.
OUR BUSINESS PROSPECTS MAY BE ADVERSELY AFFECTED IF WE ARE NOT ABLE TO ATTRACT
AND RETAIN QUALIFIED PROFESSIONALS.
If we are not successful in attracting, assimilating, and retaining
qualified sales and technological personnel in the future or aligning with
partners that have these skills, then we may not remain competitive. There is
significant competition for professionals with the advanced technical skills
necessary to perform the necessary product
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development and services. Our ability to recruit and retain such personnel will
be a critical part of our success.
OUR DEBENTURE FINANCING MAY CAUSE US TO TAKE OTHER SIGNIFICANT CORPORATE
ACTIONS.
We have issued 19.99% of our outstanding common stock (3,876,567 shares
based on 19,393,809 shares outstanding on July 30, 1999) to an investor upon
conversion of its outstanding debentures. Since there is outstanding principal
and interest remaining to be converted under the debenture, we will be required
to issue more than 19.99% of our common stock. In order to issue more than
19.99% of our outstanding shares of common stock, we will be required to seek
shareholder approval. If we are unable to obtain shareholder approval for
issuance of the shares of our common stock, in addition to the 19.99% shares of
our common stock already issued to the investor, we may be required to remove
ourselves from the NASDAQ stock market and to issue the number of shares
required upon conversion of the outstanding principal and interest of the
debenture.
WE MAY NEED TO RAISE ADDITIONAL CAPITAL THAT MAY NOT BE AVAILABLE ON TERMS
FAVORABLE TO US, IF AT ALL.
We expect that if the placement agent sells all of the common stock
offered under this offering, the net proceeds will be sufficient to meet our
need for capital for at least the next twelve months. After that, we may need to
raise additional capital, and we cannot be certain that we will be able to
obtain additional financing on favorable terms, if at all. If we cannot raise
additional capital on acceptable terms, we may not be able to develop or enhance
our products and services, take advantage of future opportunities or respond to
competitive pressures or unanticipated requirements.
WE FACE POTENTIAL LIABILITY AS A RESULT OF PENDING SHAREHOLDER SUITS.
Between May 14, 1999 and July 13, 1999, we and current and former
officers and directors were named as defendants in four purported class action
lawsuits. The suits are filed in the United States District Court for the
Western District of North Carolina. The legal costs incurred by us in defending
ourselves and our officers and directors against this litigation, whether or not
we prevail, could materially impact the operating results in the quarters in
which those expenses are incurred. Further, in the event that the plaintiffs
prevail, we also could be required to pay damages that would materially impact
the operating results in the quarter and year in which the damages are incurred
and could materially impact our financial condition. This litigation may be
protracted and may result in a diversion of our management's attention and other
resources. The suits purport to be brought on behalf of a class of persons that
purchased our common stock between November 14, 1997 and April 1, 1999 and
allege violations of the federal securities laws. The suits have been
consolidated and a lead plaintiffs' group and lead plaintiffs' counsel have been
appointed by the court. On September 17, 1999, a consolidated and amended class
action complaint was filed. The suits allege that the defendants made material
omissions and misrepresentations in public filings, press releases and other
public statements during the purported class period. The suits seek class action
status and an unspecified amount of damages, including compensatory damages,
interest, attorney's and expert's fees and reasonable costs and expenses.
IF WE ARE UNABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, OUR
BUSINESS COULD SUFFER.
Our success is dependent upon our ability to use our proprietary
technology to create revenue-producing opportunities. If we are not able to
adequately protect our proprietary technology, we will be required to seek
revenue from sources other than our current proprietary technology. We currently
protect our proprietary rights through a combination of patent, copyright,
trademark and trade secret law, confidentiality agreements and contractual
provisions. Provisions of our client agreements, including provisions protecting
against unauthorized use, copying, transfer and disclosure, may be unenforceable
under the laws of some jurisdictions. We are also required to negotiate limits
on these provisions from time to time. We may not be able to adequately deter
misappropriation of proprietary information or to detect unauthorized use and
take appropriate steps to enforce our intellectual property rights.
IF OUR INTELLECTUAL PROPERTY RIGHTS ARE CHALLENGED, WE MAY FACE POTENTIAL
LIABILITY.
In recent years, litigation involving patents and other intellectual
property rights has increased. Patents exist which cover content aggregation and
syndication software and services. We believe that we are either not using these
patented solutions, software and services or have utilized them prior to the
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patent filing date. Regardless, we may be a party to litigation in the future to
protect our intellectual property or for allegedly infringing other intellectual
property rights. Such litigation may force us to do one or more of the
following:
- cease selling or using products or services that incorporate
the challenged intellectual property;
- obtain from the holder of the infringed intellectual property
a license to sell or use the relevant technology, which
license may not be available on reasonable pricing or business
terms; or
- redesign our affected products or services at additional cost
to us.
MR. GRUDER EXERCISES SIGNIFICANT CONTROL OVER US.
Mr. Gruder, our Chief Executive Officer and Chairman of the Board, is
presently the beneficial owner of approximately 25% of our outstanding common
stock. Although Mr. Gruder's percentage ownership of our outstanding common
stock may be reduced as a result of this offering, any additional financing or
the conversion or exercise of any outstanding convertible securities, Mr. Gruder
will continue to be in a position to influence the election of directors and
generally to direct our affairs, including significant corporate actions such as
acquisitions, the sale or purchase of assets and the issuance and sale of our
securities.
WE DO NOT PLAN TO PAY CASH DIVIDENDS ON OUR STOCK.
Since our inception, we have not paid, and do not intend to pay, any
cash dividends on our common stock in the foreseeable future. As a result, an
investor in the common stock would only receive a return on the investment if
the market price of the common stock increases.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any reports, statements or other information that we file at the Securities
and Exchange Commission's public reference room at 450 Fifth Street N.W.,
Washington, D.C. 20549 or at its regional public reference rooms in New York,
New York and Chicago, Illinois. Please call the Securities and Exchange
Commission at 1-800-SEC-0330 for further information on the operations and
locations of the public reference rooms. Our Securities and Exchange Commission
filings are also available to the public from commercial document retrieval
services and at the internet World Wide Web site maintained by the Securities
and Exchange Commission at "http://www.sec.gov."
This prospectus is a part of a registration statement we filed with the
Securities and Exchange Commission. As allowed by the rules of the Securities
and Exchange Commission, this prospectus does not contain all of the information
that can be found in the registration statement or in the exhibits to the
registration statement. You should read the registration statement and its
exhibits for a complete understanding of all of the information included in the
registration statement.
The Securities and Exchange Commission allows us to "incorporate by
reference" information into this prospectus, which means that we can disclose
important information to you by referring you to another document filed
separately with the Securities and Exchange Commission. The information
incorporated by reference becomes part of this prospectus, and information that
we file later with the Securities and Exchange Commission will automatically
update and supercede this information. We incorporate by reference the documents
listed below that we have previously filed with the Securities and Exchange
Commission:
1. Annual Report on Form 10-K for the fiscal year ended December 31, 1998;
2. Quarterly Report on Form 10-Q for the quarterly period ended March 31,
1999;
3. Current Report on Form 8-K filed with the Securities and Exchange
Commission on March 12, 1999;
4. Current Report on Form 8-K filed with the Securities and Exchange
Commission on April 8, 1999;
5. Quarterly report on Form 10-Q for the quarterly period ended June 30,
1999;
6. Amendment No. 7 to our General Form for Registration of Securities on
Form 10 filed with the Securities and Exchange Commission on July 1,
1999;
7. Current Report on Form 8-K filed with the Securities and Exchange
Commission on September 30, 1999;
8. Quarterly Report on Form 10-Q for the quarterly period ended September
30, 1999; and
9. Current Report on Form 8-K filed with the Securities and Exchange
Commission on November 30, 1999.
We also incorporate by reference in this prospectus additional
documents that we may file with the Securities and Exchange Commission under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after
the date of this prospectus. These include periodic reports, such as annual
reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form
8-K.
You may obtain the documents incorporated by reference as described
above. You may also request a copy of these filings, at no cost, from us by
writing or telephoning us at:
Information Architects Corporation
4064 Colony Road
Charlotte, North Carolina 28211
(704) 365-2324
We have authorized no one to give any information or to make any
representations that are not contained in this prospectus. You should rely only
on the information incorporated by reference or provided in this prospectus. You
must not rely on any unauthorized information.
This prospectus does not offer to sell or buy any shares in any
jurisdiction where it is unlawful. You should not assume that the information in
this prospectus is accurate as of any date other than the date on the front of
this document.
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RECENT FINANCING
In July 1999 we sold $5 million in principal amount of 6% convertible
debentures and issued to the debenture holder and the placement agent warrants
to purchase up to a total of 475,965 shares of our common stock. The placement
agent and the debenture holder have exercised the warrants, pursuant to cashless
exercise provisions, and we have issued to them 372,173 shares of our common
stock. In November 1999 we sold 4,033,921 shares of our common stock to various
investors and issued warrants to the placement agent to purchase up to 448,111
shares of our common stock.
On February 9, 2000 we filed Amendment No. 1 to our registration
statement on Form S-3 (File No. 333-94979) relating to 4,482,032 shares of our
common stock issued to various investors in the November 1999 private placement
and issuable in connection with the warrants granted to the placement agent in
November 1999. On February 10, 2000 we filed Amendment No. 2 to our registration
statement on Form S-3 (File No. 333-94437) relating to 423,160 shares of our
common stock issued or issuable in connection with the warrants issued to the
debenture holder and the placement agent in July 1999.
THE COMPANY
We deliver information management solutions that empower organizations
to securely distribute digital content and functionality across the internet.
The Metaphoria software technology is an XML-based product suite that offers
customized delivery of any digital information across the internet. The
Metaphoria software technology enables aggregation of digital information
content from any source computer system, including mainframes, client server
systems, internet servers, intranets and extranets. Syndication is the means by
which an organization customizes and distributes digital information helping
companies improve data exchange and collaboration among its business partners,
suppliers, and customers. Metaphoria's real-time aggregation and syndication
technology enables users, from any internet site or internet enabled device, to
access digital content and e-commerce software from any source computer system.
This real-time digital access enhances the overall user experience and promotes
loyalty to the website, leading to increased e-commerce generated revenues. The
implementation and maintenance of these information management solutions require
that we provide associated internet related services using highly trained
technical personnel that are familiar with leading edge internet architecture
and technology. Our executive offices are located at 4064 Colony Road,
Charlotte, North Carolina 28211. Our telephone number at that address is (704)
365-2324.
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the ________ shares
of common stock offered under this prospectus by the placement agent, and sold
using their best efforts acting as agents for us, to be approximately $32.8
million at an assumed public offering price of $____ per share and after
deducting the estimated underwriting discount and offering expenses payable by
us.
We plan to use the proceeds for general corporate purposes, including a
marketing campaign, increased development of our proprietary software and
expansion of our direct sales force. We have no current specific plan for
allocation of the proceeds. Prior to their expenditure, we will invest the net
proceeds of this offering in short-term, interest-bearing securities.
We will not receive any of the net proceeds from the sale of shares by
the selling shareholder.
SELLING SHAREHOLDER
Of the shares of our common stock offered by this prospectus, 150,000
shares will be sold by the selling shareholder, Ron Bloom. We issued 150,000
shares of our common stock to Mr. Bloom upon the exercise of warrants granted by
us to purchase that number of shares of common stock, at a price of $2.00 per
share, in connection with consulting services provided to us. Those consulting
services were provided pursuant to an agreement, dated November 8, 1999, between
us and Mr. Bloom. Except as a shareholder and consultant, the selling
shareholder is not an affiliate
8
<PAGE> 12
of us and has not had any position, office or other material relationship with
us within the past three years.
The following table is based on 28,271,505 shares of common stock
outstanding as of February 18, 2000.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Number of Number of Percent of
Shares Number of Shares Shares Outstanding
Beneficially Beneficially Underlying Shares Owned Common Stock
Owned Before Owned Before Warrants After the Owned After
Name of Selling Shareholder Offering-Direct Offering-Indirect Offered Offering Offering
- --------------------------- --------------- ----------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Ron Bloom(1) 320,000 0 150,000 170,000 *
- ------------------------------------------------------------------------------------------------------------
</TABLE>
* Represents less than one percent (1%) of our outstanding shares of common
stock.
PLAN OF DISTRIBUTION
Subject to the terms and conditions included in a placement agency
agreement among us, the selling shareholder and the placement agent, Stonegate
Securities, Inc., the placement agent has agreed to use its best efforts in
acting as agent for the selling shareholder to place up to 150,000 shares of our
common stock and as agent for us to place up to ________ shares of our common
stock with third-party purchasers. The placement agent will not underwrite the
transaction by purchasing the shares as principal and then reselling them,
although:
- in their role as agents, they may purchase some of the shares
for their own account; and
- they may distribute the shares through block trades in which
they attempt to sell the shares as an agent, but they may
position and resell a portion of the block as principal to
facilitate the transaction.
The placement agent proposes to offer the shares to the public at the
public offering price set forth on the cover page of this prospectus and will
receive a fee of 6% on each share placed and a number of warrants equal to 10%
of the total shares placed, to purchase our common stock at an exercise price
equal to the public offering price per share.
We have agreed to indemnify the placement agent against, or to
contribute to payments that the placement agent may be required to make with
respect to, liabilities, including liabilities under the Securities Act of 1933,
as amended.
The placement agent may purchase and sell the shares in the open
market. These transactions may include stabilizing transactions and purchases to
cover syndicate short positions created in connection with the offering.
Stabilizing transactions consist of bids and purchases made to prevent or slow a
decline in the market price of shares. Syndicate short positions arise when the
placement agent sells more shares than we are required to sell to the public in
the offering. The placement agent may repurchase the shares in stabilizing or
covering transactions. These activities may stabilize, maintain or otherwise
affect the market price of our shares, which may be higher as a result of these
activities than it might otherwise be in the open market. These activities, if
commenced, may be discontinued at any time without notice.
We and the placement agent make no representation or prediction as to
the direction or magnitude of any effect that the transactions described above
may have on the price of our common stock. In addition, we and the placement
agent make no representation that the placement agent will engage in those types
of transactions or that those transactions, once commenced, will not be
discontinued without notice.
The placement agent and its affiliates have provided, and may continue
to provide, investment banking services to us. We and Stonegate Securities, Inc.
entered into a Placement Agency Agreement, dated November 18, 1999, related to
the November private placement as disclosed in a Form 8-K filed by us on
November 30, 1999 with
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<PAGE> 13
the Securities and Exchange Commission. We and Stonegate Securities, Inc. also
entered into an agreement, dated October 26, 1999, pursuant to which Stonegate
Securities, Inc. provides us with investment banking services.
We estimate that our share of the total expenses of the offering,
excluding the placement agents' fee and commissions, will be approximately
$25,000.00.
The placement agent may be considered an "underwriter" within the
meaning of Section 2(11) of the Securities Act. In such event, any commissions
received by the placement agent may be deemed to be underwriting discounts and
commissions under the Securities Act. The placement agent will deliver a copy of
this prospectus to any U.S. person who purchases any of the shares through them.
LEGAL MATTERS
The validity of the common stock offered pursuant to this prospectus
will be passed upon for us by McGuire, Woods, Battle & Boothe LLP, Charlotte,
North Carolina.
EXPERTS
The financial statements appearing in our Annual Report (Form 10-K) for
the year ended December 31, 1998, have been audited by Holtz Rubenstein & Co.,
LLP, independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
10
<PAGE> 14
----------------
TABLE OF CONTENTS
-----------------
Page
----
Prospectus Summary....................................................... 1
Risk Factors............................................................. 1
Where You Can Find More Information ..................................... 7
Recent Financing......................................................... 8
The Company.............................................................. 8
Use of Proceeds.......................................................... 8
Selling Shareholder...................................................... 8
Plan of Distribution..................................................... 9
Legal Matters............................................................ 10
Experts.................................................................. 10
11
<PAGE> 15
____________ SHARES
INFORMATION ARCHITECTS CORPORATION
COMMON STOCK
--------------
PROSPECTUS
--------------
February _____ , 2000
12
<PAGE> 16
INFORMATION ARCHITECTS CORPORATION
REGISTRATION STATEMENT ON FORM S-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item
Number
- ------
Item 14 Other Expenses of Issuance and Distribution.
The following table sets forth costs and expenses of the sale and
distribution of the securities being registered. All amounts except Securities
and Exchange Commission fees are estimates.
Registration Statement--Securities and Exchange Commission $ 9,900.00
Accounting fees........................................... $ 3,000.00
Legal fees ............................................... $10,000.00
Miscellaneous............................................. $ 2,100.00
Total..................................................... $25,000.00
Item 15 Indemnification of Directors and Officers.
Reference is made to the North Carolina Business Corporation Act, G.S.
55-8-52 and 55-8-56, which provides that unless limited by our articles of
incorporation, a North Carolina corporation must indemnify a director or officer
who has been wholly successful, on the merits or otherwise, in the defense of
any actual or threatened proceeding to which he was, or was threatened to be
made, a party because he is or was a director or officer of the corporation.
This statutory right of indemnification covers all reasonable expenses incurred
by the officer or director in connection with the proceeding, including counsel
fees.
A North Carolina corporation can eliminate an individual's statutory
right to indemnification. However, our Bylaws provide that directors and
officers shall have the right to be indemnified "to the fullest permitted by
law" and further provide that expenses incurred by an officer or director shall
be paid in advance of the final disposition of any investigation, action, suit
or proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount unless it shall ultimately be determined that he is
entitled to be indemnified by us.
In addition, a North Carolina corporation may, but is not required to,
indemnify a director or officer against liability who has been named or
threatened to be named a party to a proceeding because he is or was acting in
that capacity if the officer or director (i) conducted himself in good faith,
(ii) had the reasonable belief that his conduct was in the corporation's best
interests if he was acting in his official capacity, or if not acting in an
official capacity, a reasonable belief that his conduct was not opposed to the
corporation's best interests, and (iii) in the case of a criminal proceeding,
had no reasonable cause to believe his conduct was unlawful. A North Carolina
corporation may also purchase and maintain insurance on behalf of an officer or
director against liability incurred by him in that capacity, whether or not the
corporation would have the power to indemnify him under the statutory provisions
of North Carolina.
Item 16 Exhibits.
Exhibit
Number
------
1.1* Form of Placement Agent Agreement between us and Stonegate
Securities, Inc., as placement agents.
II-1
<PAGE> 17
5.1* Opinion of McGuire, Woods, Battle & Boothe LLP.
23.1* Consent of Holtz Rubenstein & Co., LLP, independent auditors.
23.2* Consent of McGuire, Woods, Battle & Boothe LLP (included in
Exhibit 5.1).
24.1 Power of Attorney (included in signature page).
- ----------------------------------------------
* To be filed by amendment or to be incorporated by reference in a subsequently
filed Form 8-K.
Item 17 Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(a) to include any prospectus required by Section 10(a)(3) of
the Securities Act;
(b) to reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or the most recent
post-effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b), if in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
(c) to include any material information with respect to the
plan of distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement;
provided, however, that the undertakings set forth in paragraphs (a) and (b)
above shall not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by us pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act") that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
us pursuant to the foregoing provisions, or otherwise, We have been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by us of expenses incurred or paid by a
director, officer or controlling person of us 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, we will, unless in
the opinion of our 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 of 1933 and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
our annual report pursuant to Section 13(a) or Section 15(d) of the Exchange
II-2
<PAGE> 18
Act (and, when applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
We hereby undertake that (1) for purposes of determining any liability
under the Securities Act of 1933, 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 us pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to
be part of this registration statement as of the time it was declared effective;
and (2) for the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act, as amended;
and, where interim financial information required to be presented by Article 3
of Regulation S-X is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
II-3
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, we certify
that we have reasonable grounds to believe that we meet all of the requirements
for filing on Form S-3 and have duly caused this registration statement to be
signed on our behalf by the undersigned, thereunto duly authorized in the city
of Charlotte, state of North Carolina, on February 22, 2000.
INFORMATION ARCHITECTS CORPORATION
By: /s/ ROBERT F. GRUDER
------------------------------------
Robert F. Gruder
Chief Executive Officer and Chairman
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
hereby appoints Robert F. Gruder as such person's true and lawful attorney, with
full power for him to sign, for such person and in such person's name and
capacity indicated below, any and all amendments to this registration statement,
hereby ratifying and confirming such person's signature as it may be signed by
said attorney to any and all amendments.
SIGNATURE TITLE DATE
- -------------------------- -------------------------- ------------
/s/ Robert F. Gruder Chief Executive Officer February 22, 2000
- ------------------------ and Chairman of the Board
(Robert F. Gruder) (Principal Executive Officer)
/s/ J. Wayne Thomas Chief Financial Officer February 22, 2000
- ------------------------ (Principal Financial and
(J. Wayne Thomas) Accounting Officer)
/s/ Thomas J. Dudchik Senior Vice President and February 22, 2000
- ------------------------ Director
(Thomas J. Dudchik)
/s/ Richard J. Blumberg Director February 22, 2000
- ------------------------
(Richard J. Blumberg)
II-4
