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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 23, 1999
REGISTRATION NO. 333--81581
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
HOMECOM COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
DELAWARE 58-2153309
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
</TABLE>
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BUILDING 14, SUITE 100
3535 PIEDMONT ROAD
ATLANTA, GEORGIA 30305
(404) 237-4646
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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HARVEY SAX
CHIEF EXECUTIVE OFFICER
HOMECOM COMMUNICATIONS, INC.
BUILDING 14, SUITE 100
ATLANTA, GEORGIA 30305
(404) 237-4646
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------------
COPIES TO:
RAYMOND L. MOSS
SIMS MOSS KLINE & DAVIS LLP
400 NORTHPARK TOWN CENTER, SUITE 310
1000 ABERNATHY ROAD, N.E.
ATLANTA, GEORGIA 30328
(770) 481-7200
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement until September
23, 2001, or until such earlier time that 60,000 of the shares registered
hereunder have been sold.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
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<CAPTION>
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED (1) PER SHARE OFFERING PRICE (2) FEE(3)
<S> <C> <C> <C> <C>
Common Stock, par value $0.0001 per share 92,671 shares $6.0625 $561,818 $156.18
</TABLE>
(1) The shares of common stock set forth in the Calculation of Registration Fee
Table, and which may be offered pursuant to this Registration Statement,
include, pursuant to Rule 416 of the Securities Act of 1933, as amended,
such additional number of shares of the Registrant's common stock as may
become issuable as a result of any stock split, stock dividend or similar
event.
(2) Estimated solely for the purpose of computing the amount of the registration
fee, based on the average of the high and low prices for the Company's
common stock as reported on the Nasdaq SmallCap Market-TM- on June 24, 1999,
in accordance with Rule 457 under the Securities Act of 1933.
(3) Previously paid.
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 SECTION 8(A), MAY
DETERMINE.
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<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION, DATED SEPTEMBER 23, 1999
HOMECOM COMMUNICATIONS, INC.
92,671 SHARES OF COMMON STOCK
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THE SHARES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE RISK FACTORS DESCRIBED BEGINNING ON PAGE 4 IN
DETERMINING WHETHER TO PURCHASE SHARES OF HOMECOM.
These shares of common stock are being offered by six selling shareholders
identified in the section entitled "Selling Shareholders" on page 15 of this
prospectus. We issued the shares to the selling shareholders in connection with
the acquisition of Ganymede Corporation on April 23, 1999. The selling
shareholders may sell these shares from time to time:
- on the over-the-counter market;
- in transactions directly with market makers; or
- in privately negotiated transactions.
We will not receive any portion of the proceeds from the sale of these
shares.
HomeCom's common stock is quoted on the Nasdaq SmallCap Market-TM- under the
symbol HCOM.
The selling shareholders will determine the price of the shares independent
of HomeCom. On September 20, 1999, the last sale price of the common stock on
the Nasdaq SmallCap Market-TM- was $4.00 per share.
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<CAPTION>
UNDERWRITING
PRICE TO PUBLIC DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSION SELLING SHAREHOLDERS
<S> <C> <C> <C>
PER SHARE.................. SEE TEXT ABOVE SEE TEXT ABOVE SEE TEXT ABOVE
TOTAL......................
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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.
The date of this prospectus is September 23, 1999
<PAGE>
TABLE OF CONTENTS
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PAGE
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SUMMARY................................................................................................... 4
RISK FACTORS.............................................................................................. 4
USE OF PROCEEDS........................................................................................... 14
ISSUANCE OF SHARES TO SELLING SHAREHOLDERS................................................................ 14
PLAN OF DISTRIBUTION...................................................................................... 14
SELLING SHAREHOLDERS...................................................................................... 15
LEGAL MATTERS............................................................................................. 15
EXPERTS................................................................................................... 16
WHERE YOU CAN FIND MORE INFORMATION....................................................................... 16
INFORMATION INCORPORATED BY REFERENCE..................................................................... 16
</TABLE>
2
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We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You should
not rely on any unauthorized information. This prospectus does not offer to sell
or buy any shares in any jurisdiction in which it is unlawful. The information
in this prospectus is current as of the date on the cover.
3
<PAGE>
SUMMARY
HomeCom develops and markets specialized software applications, products and
services that enable consumers and financial institutions to use the internet
and intranets/extranets to obtain and communicate important business
information, conduct commercial transactions and improve business productivity.
HomeCom's principal mission is to enable financial institutions to establish an
electronic channel to consumers and business by providing secure, innovative,
internet-based solutions to the banking, insurance and brokerage industries. As
a technology provider to this electronic channel, HomeCom intends to continually
enrich the content, host and maintain its own as well as third party software
applications, and to provide strategic consulting to financial institutions on
e-commerce and marketing. HomeCom derives revenue from software licensing,
application development, and hosting and transactions fees. Through September,
1999, HomeCom provided internet/intranet solutions in three areas: (i) the
design, development and integration of customized software application,
including world wide web site development and related network outsourcing; (ii)
the development, sale and integration of HomeCom's existing software
applications into the client's operations; and (iii) security consulting and
integration services. In September, 1999, we announced that we expect to divest
our security consulting and integration services operations for proceeds of
approximately $1.35 million in common stock in the non-public acquiror and
$200,000 cash, and to enter into a joint marketing program with the acquiror.
As used in this prospectus, HomeCom refers to HomeCom Communications, Inc.,
a Delaware corporation, and its wholly owned subsidiaries. HomeCom was
incorporated on December 2, 1994, under the laws of Delaware. Our principal
executive offices are located at Building 14, Suite 100, 3535 Piedmont Road,
Atlanta, Georgia 30305, and our telephone number is (404) 237-4646.
RISK FACTORS
WE WILL REQUIRE ADDITIONAL CAPITAL TO FINANCE OUR OPERATING LOSSES AND CAPITAL
REQUIREMENTS
We have incurred substantial operating losses, and we will require
substantial sums of cash in our operations for at least the next 12 months. We
may also need to spend significant amounts of cash to:
- fund continued growth, and offset operating losses;
- take advantage of unanticipated opportunities, such as major strategic
alliances or other special marketing opportunities, acquisitions of
complementary businesses or assets, or the development of new products; or
- react to unanticipated developments or competitive pressures.
On September 7, 1999, we announced a restructuring of our business
consistent with our core internet banking, insurance offerings, and professional
services operations. This restructuring is expected to result in a reduction of
expenses of approximately $3.5 million over the next twelve months, and a
reduction in our personnel by about 60 employees, to about 95 employees (after
taking into effect the anticipated divestiture of our security consulting and
integration division). There is no such assurance that such actions will be
sufficient. As of September 7, 1999, the Company only has sufficient working
capital to last for the next 2-3 months. If the Company exhausts its current
sources of capital and is not able to obtain additional capital, the Company
will be required to undertake additional steps to continue its operations. Such
steps may include further reduction of the Company's operating costs and other
expenditures, including additional reductions of personnel and suspension of
salary increases and capital expenditures. If such measures are not sufficient,
the Company may elect to implement other cost reduction actions as the Company
may determine are necessary and in the Company's best interests, including the
possible sale of some or all of the Company's business lines. Any such actions
undertaken may limit the Company's opportunities to realize continued increases
in sales and the Company may not be able to reduce its costs in amounts
sufficient to achieve break-even or profitable operations. If the Company
exhausts its sources of capital, and subsequent cost reduction measures are not
sufficient to allow the Company to achieve
4
<PAGE>
positive cash flows, the Company will be forced to seek protection from its
creditors. The aforementioned factors raise substantial doubt about the
Company's ability to continue as a going concern. The financial statements
incorporated by reference in this registration statement have been prepared
assuming the Company is a going concern and do not include any adjustments that
might result should the Company be unable to continue as a going concern.
In September, 1999, we entered into a letter of intent with J.P. Turner &
Company, L.L.C. to consummate an underwritten public offering of $10 million of
the securities of the Company. There is no assurance that such public offering
will be successful, or that HomeCom will not exhaust its current capital
resources before the consummation of the offering.
WE HAVE A LIMITED OPERATING HISTORY
We have a limited operating history. Our growth plans are subject to the
risks, expenses, and uncertainties frequently encountered by young companies
that operate exclusively in the new and evolving markets for internet products
and services. If we fail to achieve our growth plans, our prospects, and the
market for our shares, will be adversely affected. Successfully achieving our
growth plans depends upon:
- Our ability to attract, retain, and motivate qualified people;
- Our ability to upgrade and commercialize products and services;
- Our ability to effectively integrate the technology and operations of
businesses or technologies we have acquired; and
- Our development or acquisition of services or products equal or superior
to those of our competitors.
WE EXPECT TO INCUR CONTINUED LOSSES
As of June 30, 1999, we had an accumulated deficit of approximately $11.3
million. We expect to continue to experience significant losses on a quarterly
and annual basis for at least the next 12 months. This will be primarily due to
increased sales and marketing, product development, customer service and
support, and operating costs incurred in support of our product and service
offerings. If we cannot generate sufficient revenues to offset our operating
expenses, our business and operating results will continue to be materially
adversely affected.
OUR MARGINS MAY CONTINUE TO DECLINE DUE TO PRICE EROSION
The market for internet and intranet products and services is highly
competitive and is characterized by significant pressures to reduce prices,
incorporate new capabilities, and accelerate completion schedules. This increase
in competition has resulted in significant price competition, which in turn has
resulted in significant reductions in the average selling price of many of our
products and services, including our web site development and hosting services.
We have not been able to offset the effects of price reductions through an
increase in the number of our customers, higher revenue from enhanced services,
or cost reductions, and we expect that our margins may continue to decline. This
decline, if it continues, will negatively affect our results, and may negatively
affect the market for our shares. Our gross margins for each of the past two
years have been approximately 20%, which represents a significant decline from
the gross margins we achieved in 1996 of approximately 63%.
There are no substantial barriers to entry in our market, and we expect that
competition will continue to intensify. In addition, we compete with many other
companies that have longer operating histories, longer customer relationships,
and substantially greater financial, management, technical development sales,
marketing, and other resources. Many nationally known companies and regional
local companies across the country are involved in intranet and intranet
applications, including the development and support of web sites and internet
applications, and the number of these companies is increasing.
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WE DEPEND UPON CONTINUED GROWTH IN USE OF THE INTERNET
Our future success is dependent upon continued growth in the use of the
internet and the web. The internet may not prove to be a viable commercial
marketplace for many reasons, including:
- lack of acceptable security technologies,
- potentially inadequate development of the necessary infrastructure, or
- timely development and commercialization of performance improvements.
If the internet continues to experience significant growth in the number of
users and level of services, the internet infrastructure may not be able to
support the demands placed upon it, and the performance and reliability of the
web may be adversely affected.
OUR STOCK PRICE MAY BE VOLATILE
The trading price of our shares has been, and may continue to be, subject to
wide fluctuations. During 1999, the closing sale prices of our shares on the
Nasdaq SmallCap Market-TM- has ranged from $3.50 to $9.6875. The stock price may
fluctuate in response to a number of events and factors such as:
- quarterly variations in operating results,
- announcements of technological innovations or new products and media
products by us or our competitors,
- changes in financial estimates and recommendations by securities analysts,
- the operating and stock price performance of other companies that
investors view as comparable, and
- news reports related to trends in our markets.
In addition, the stock market in general and the market prices for
internet-related companies in particular have experienced extreme volatility and
often have been unrelated to the operating performance of those companies. These
broad market and industry fluctuations may adversely affect the price of the
stock regardless of our operating performance.
WE MAY NOT PROPERLY MANAGE OUR GROWTH
Our growth has placed a significant strain on our managerial, operational
and financial resources. To manage our growth, we must continue to implement and
improve our operational and financial systems and to expand, train, and manage
our employee base. Our systems, procedures, or controls may not be adequate to
support our operations. Our management may not be able to achieve the rapid
execution necessary to support our market opportunity. Any failure to
effectively manage growth could have a material adverse effect on our business,
operating results, or financial condition.
WE MAY NOT PROPERLY HANDLE THE RISKS ASSOCIATED WITH ACQUISITIONS
As part of our business strategy, we have completed several acquisitions and
expect to enter into additional business combinations to further our goal to
become a leading provider of internet software solutions for the financial
services industry. Acquisition transactions are accompanied by many risks, and
we may not be successful in addressing one ort more of these risks. These risks
include:
- the difficulty of assimilating the operations and personnel of the
acquired companies;
- the difficulties of managing geographically separate business units;
- the difficulty of incorporating acquired technology or content and rights
into our product and services;
- unanticipated expenses relating to technology integration;
- the maintenance of uniform standards, controls, procedures, and policies;
and
6
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- the impairment of relationships with employees and customers as a result
of any integration or management changes.
Since February 1999, we have completed two acquisitions which have added
approximately 35 employees to HomeCom.
WE DEPEND ON KEY PERSONNEL
We depend upon the continued services of our senior management for our
continued success. The loss of any member of senior management, such as Harvey
Sax, Daniel A. Delity, David B. Frank, or James Wm. Ellsworth, could have a
serious negative impact upon our business and operating results. This is
particularly true in the case of senior management of the companies that HomeCom
has recently acquired, including FIMI and Ganymede, where senior management of
these companies has been retained following the acquisition of these companies.
We can provide no assurances that we will be able to retain our senior
management or other key personnel. Although we have entered into employment
agreements with each of these executive officers that contain non-competition
and nondisclosure provisions, our ability to benefit from them is uncertain
because these provisions are typically limited in geographic scope and time, and
may not effectively prohibit competition due to the global nature of the
internet.
OUR AVERAGE SALES CYCLE MAY LENGTHEN
Our development and implementation of interactive web sites and intranet
software applications involves a lengthy sales cycle, which can be as long as
six to nine months. Extensive web sites, development or licensing of our
products may also involve substantial commitment of capital by potential
customers as well as the attendant delays frequently associated with approving
larger capital expenditures and reviewing new technologies that affect key
operations. If our average sales cycle continues to lengthen, we will face
increased costs, potentially lower profit margins and a potential inability to
achieve our target and sales goals.
WE MAY INCUR LOSSES FROM DEFECTS IN OUR PRODUCTS AND SERVICES
Web site services and other services based on software and computing systems
frequently encounter development and completion delays. Software may contain
undetected errors or failures when introduced, especially in the case of web
sites when the volume of traffic on the site increases. Errors found in the
software, underlying web site, or other project may result in delays in
completion, commercial release or acceptance of the software, web site or other
project. In addition, we may incur unanticipated additional costs in order to
cure any defect or be obligated to refund money paid to us or pay for damages
caused by any delay or defect. Applications or products developed by us may
contain undetected errors or failures when first introduced. If software errors
are discovered after introduction, we could experience delays and lost revenues
during the period required to correct these errors. Despite our best efforts to
the contrary, errors may be found in new applications, products, or releases
after the commencement of installation or shipment. These problems can result in
losses, or in delays in receiving revenues.
WE MAY INCUR LOSSES FROM SECURITY RISKS
Our software and equipment is vulnerable to computer viruses or similar
disruptive problems caused by customers or other internet users. Computer
viruses or problems caused by third parties, such as hackers, could lead to
interruptions, delays, or termination of service to our customers. Third parties
could also potentially jeopardize security of confidential information stored in
our computer systems or our customers' computer systems by their inappropriate
use of the internet, which could cause losses to us and to our customers.
Inappropriate use of the internet includes attempting to gain unauthorized
access to information or systems. Although we intend to continue to implement
security measures to prevent this, hackers have circumvented security measures
in the past, and may be able to circumvent our security measures or the security
measures of third parties in the future. Further, until more comprehensive
technologies are developed, the security and privacy concerns of existing and
potential customers may
7
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inhibit the growth of the internet service industry in general and our customer
base and revenue in particular. We do not have errors and omissions, product
liability, or other insurance to protect against risks caused by computer
viruses or other misuse of software or equipment by third parties.
WE MAY NOT BE SUCCESSFUL IN PROTECTING OUR PROPRIETARY RIGHTS OR AVOIDING CLAIMS
THAT WE INFRINGED THE PROPRIETARY RIGHTS OF OTHERS
Our success depends in part upon our software and related documentation. We
principally rely on copyright, trade secret, confidentiality procedures, and
contract laws to protect our proprietary technology. The steps we have taken may
not be adequate to prevent misappropriation of our technology, and our
competitors may independently develop technologies that are substantially
equivalent or superior to our technologies. We have a registered service mark
for our logo and have applied for federal registration of the names HomeCom,
Post On the Fly-TM-, and Personal Internet Banker-TM-. In addition, the laws of
some foreign countries do not protect our proprietary rights to as great an
extent as the laws of the United States. Although we do not believe that the
software or trademarks we use or any of the other elements of our business
infringe on the proprietary rights of any third parties, third parties may
assert claims of infringement against us in the future and may succeed in
securing injunctive relief or money damages. We could incur substantial costs
and diversion of management resources in the defense of any claims relating to
proprietary rights, which could materially adversely affect our business,
financial condition, and results of operations.
THERE ARE A SUBSTANTIAL NUMBER OF SHARES ELIGIBLE FOR FUTURE SALE
The market for the shares may be adversely affected as a result of sales of
a large number of shares in the market, or a perception that large sales may
occur. This could also limit HomeCom's ability to raise capital through
offerings of shares, or to effect acquisitions utilizing shares as part or all
of the purchase price.
HomeCom has 6,669,453 shares outstanding as of July 23, 1999. Of that
amount, 3,799,646 shares, or approximately 57%, will be freely tradable without
restriction or further registration under the Securities Act, except for any
shares purchased by affiliates of HomeCom, as that term is defined in Rule 144
under the Securities Act. Included in that number are the 92,671 shares
registered under this prospectus. Also included in that number are 626,087
shares issued in connection with a recently completed acquisition, and HomeCom
has filed a registration statement covering those shares. The holders of those
shares have agreed not to sell one-half, or 313,043, of such shares until June
24, 1999 and to limit sales on a cumulative basis to no more than one-sixth of
these 313,043 shares during each month for the following six months. These
restrictions do not apply in the event that the shares have traded above $10.00
per share of each of the five trading days prior to any single sale, so long as
the sale is made at a price per share of at least $10.00.
The remaining 2,869,807 shares, or approximately 43% of the outstanding
shares, may be sold in the public market only if registered or sold under an
exemption from registration such as Rule 144.
In addition, there are also the following shares that may become available
for resale in the public markets:
- There are outstanding warrants to acquire an aggregate of 468,125 shares
at a weighted average exercise price of $8.52 per share. The shares
issuable upon exercise of the warrants have been registered under the
Securities Act, and will be available for resale upon issuance following
exercise of the warrants. Warrants to acquire an additional 300,000 shares
at an exercise price of $3.74 per share were issued in conjunction with
the acquisition of First Institutional Marketing, Inc. ("FIMI") and
certain of its affiliates. The shares issuable upon exercise of these
warrants have not been registered under the Securities Act and are not
currently available for resale upon issuance following exercise of the
warrants.
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- There are outstanding options to purchase 892,069 shares under our
employee stock option plan at a weighted average exercise price of $4.91
per share, and 25,000 shares under our non-employee directors option plan.
As of July 31, 1999, 9,457 shares have been issued under our employee
stock purchase plan at a weighted average price of $2.64 per share. We
have filed a registration statement on Form S-8 under the Securities Act
to register the potential sale of 300,000 shares reserved for issuance
under our stock option plan and the 150,000 shares reserved for issuance
under our stock purchase plan. Except for shares held by our affiliates,
shares purchased under our stock option and purchase plans generally will
be available for resale in the public market.
- On March 25, 1999, we completed a private placement for cash of $2,500,000
principal amount of our series B convertible preferred stock and related
warrants to purchase shares of common stock. The series B preferred stock
has an initial stated value of $20,000 per share, which increases at the
rate of 5% per year. The series B preferred stock is convertible, until
March 24, 2002, at the option of the holder, into a number of shares of
common stock determined by dividing the stated value by a conversion price
equal to the market conversion price (the conversion price will not exceed
$5.23). The market conversion price is defined to mean the average of the
closing bid prices of the common stock during any four consecutive trading
days as determined by the holder during the twenty-five consecutive
trading day period ending the trading day prior to the date that a notice
of conversion is sent to HomeCom by the holder, subject to adjustments.
The series B preferred stock is redeemable at HomeCom's option at a price
of 120% of its principal amount. The warrants are exercisable for a total
of 250,000 shares of common stock until March 24, 2004, at an exercise
price of $5.70 per share, subject to adjustment.
If all the shares of series B preferred stock were converted, and all the
related warrants exercised, as of August 13, 1999, HomeCom would be
required to issue approximately 769,751 shares of common stock, or
approximately 11.5% of the number of shares of common stock outstanding as
of August 13, 1999. The total number of shares of common stock issuable
upon such conversion and exercise will vary, based upon the closing bid
prices of HomeCom's common stock. Pursuant to certain registration rights
granted to the investors in the private placement, we were obligated to
file a registration statement covering the shares issuable upon conversion
of the series B preferred stock, and we were obligated to pay penalties if
the registration statement was not filed and declared effective within
specified time periods. We are not presently in compliance with such
provisions, and we have elected to pay such penalties by issuing investors
additional shares of common stock. As of September 3, 1999, such penalties
amount to an aggregate of 18,163 shares of common stock. We have filed a
registration statement on Form S-1 covering 1,298,163 shares issuable upon
conversion of the series B preferred stock, exercise of the warrants and
payment of the penalties described above.
- On July 28, 1999, we completed a private placement for cash of $3,500,000
principal amount of our series C convertible preferred stock and related
warrants to purchase 59,574 shares of common stock. The series C preferred
stock has an initial stated value of $20,000 per share, which increases at
the rate of 6% per year. Each series C preferred share is convertible,
beginning 120 days following the date of issuance, at the option of the
holder, into the number of shares of common stock determined by dividing
the stated value by the lower of (a) $5.875, and (b) 82.5% of the average
of the closing bid prices for the five trading days prior to the date of
conversion. Any series C preferred stock outstanding on July 22, 2002 will
automatically be converted into common stock at the conversion price then
in effect.
Pursuant to certain registration rights granted to the investors in the
private placement, we are obligated to file a registration statement under
the Securities Act with respect to a minimum of 1,244,444 shares of common
stock issuable upon conversion of the series C preferred stock and
exercise of the related warrants. We are obligated to pay penalties if the
registration statement is not filed and declared effective within
specified time periods.
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After the 90(th) day following the issuance of the series C preferred
stock, and through July 22, 2001, we have the right, under specified
circumstances, to prohibit holders of the series C preferred stock from
exercising any conversion rights for up to 90 days. If we exercise that
right, we are required to compensate the holders of the series C preferred
stock in cash or in shares of common stock. The right of the holders of
the series C preferred stock to convert their shares is also subject to
the following restrictions; (i) during the period beginning on the
issuance date through the following 120 days, each holder may not convert
more than 25% of the series C preferred stock purchased by such holder;
(ii) during the period beginning on the issuance date through the
following 150 days, each holder may not convert more than 50% of the
series C preferred stock purchased by such holder; and (iii) during the
period beginning on the issuance date through the following 180 days, each
holder may not convert more than 75% of the series C preferred stock
purchased by such holder.
At any time after the issuance date, HomeCom has the right, in its sole
discretion, to redeem from time to time, any or all of the series C
preferred stock; provided that specified conditions are met, including
that we have cash, credit or standby underwriting facilities available to
fund the redemption. The redemption price is (i) 105% of the original
purchase price for the first 30 days following the issuance date; (ii)
110% of the original purchase price from the next 90 days thereafter and
(iii) 120% of the original purchase price after 120 days from the issuance
date.
The warrants expire on July 27, 2004 and have an exercise price of $7.34
per share, subject to adjustment.
We centered into, and consummated, the private placement of the series C
preferred stock and the warrants based on a determination by our board of
directors that HomeCom's level of cash and cash equivalents were
inadequate to permit HomeCom to continue in existence for a sustained
period. While the board of directors considered the disadvantages of the
potential issuance of a significant number of shares of common stock upon
conversion of the series C preferred stock including (i) the potential
dilution of the voting power per share of common stock, (ii) the potential
dilution of the common stock book value, and (iii) the potential negative
impact on earnings per share of common stock, after negotiations with
investment banking firms and potential investors, and based upon the
pressures of the need for additional cash resources, the board of
directors determined that it was in the best interests of HomeCom and its
shareholders for HomeCom to proceed with the private placement based on
the board's belief that such transactions offered the most favorable terms
then available to HomeCom given the existing market conditions and
HomeCom's need for additional cash resources.
If all the shares of series C preferred stock were converted, and all the
related warrants exercised, as of August 13, 1999, HomeCom would be
required to issue approximately 947,899 shares of common stock, or
approximately 14.2% of the number of shares of common stock outstanding as
of August 13, 1999. The total number of shares of common stock issuable
upon such conversion and exercise will vary based upon the closing bid
prices of HomeCom's common stock.
PREFERRED STOCK, IF ISSUED, WILL HAVE RIGHTS SENIOR TO THE SHARES
We have the right to issue up to 10,000,000 shares of preferred stock and to
fix the rights, preferences, privileges and restrictions, which include voting
rights, of the preferred stock without shareholder approval. The rights of
holders of common stock may be adversely affected by the rights of holders of
any preferred stock that may be issued in the future. In addition, the issuance
of additional shares of preferred stock could make it more difficult for a third
party to acquire control of HomeCom, even if the change of control would be
beneficial to shareholders.
10
<PAGE>
WE HAVE ANTI-TAKEOVER PROVISIONS IN PLACE
Our restated certificate of incorporation provides that our board is divided
into three classes of directors with each class serving a staggered three year
term. The division of the board of directors into three classes may discourage a
third party from making a tender offer or commencing a proxy contest to obtain
control of HomeCom, and may serve to maintain the incumbency of the present
board of directors.
THERE ARE LIMITATIONS ON THE LIABILITY OF OUR DIRECTORS AND OFFICERS
Our restated certificate of incorporation provides that our directors shall
have no personal liability for some breaches of their fiduciary duties. In
addition, our restated bylaws provide for mandatory indemnification of directors
and officers to the fullest extent permitted by Delaware law. These limitations
on personal liability do not apply to liabilities under the federal securities
laws. However these provisions may reduce the likelihood of derivative
litigation against directors and officers and may discourage stockholders from
bringing a lawsuit against directors and officers for a breach of their
fiduciary duties.
THERE ARE UNCERTAINTIES ASSOCIATED WITH GOVERNMENT REGULATION AND OTHER LEGAL
ISSUES
There are currently few laws or regulations directly applicable to access to
or commerce on the internet. Due to the increased popularity and the use of the
internet, it is possible that laws and regulations may be adopted, covering
issues such as:
- user privacy,
- defamation,
- pricing,
- taxation,
- content regulation,
- quality of products and services, and
- intellectual property ownership and infringement.
Legislation of this type could expose us to substantial liability. It could
also dampen the growth in use of the web, decrease the acceptance of the web as
a communications and commercial medium, or require us to incur significant
expense in complying with any new regulations. Other nations, including Germany,
have taken actions to restrict the free flow of material considered to be
objectionable on the web. The European Union has recently adopted privacy and
copyright directives that may impose additional burdens and costs on our
international operations. In addition, several telecommunication carriers,
including America's Carriers Telecommunications Association, are seeking to have
telecommunications over the web regulated by the Federal Communication
Commission in the same manner as other telecommunication services. Because the
growing popularity and use of the web has burdened the existing
telecommunications infrastructure, many areas with high web use have begun to
experience interruptions in phone service. Local telephone carriers, including
Pacific Bell, have petitioned the Federal Communications Commission to regulate
service providers and impose access fees. Increased regulation, or the
imposition of access fees, could substantially increase the cost of
communicating on the web and potentially decrease the demand for our products. A
number of proposals have been made at the federal, state, and local level that
would impose additional taxes on the sale of goods and services through the
internet. These proposals, if adopted, could substantially impair the growth of
electronic commerce and could adversely affect our opportunity to derive
financial benefit from the sale of goods and services through the internet.
11
<PAGE>
THERE ARE POTENTIAL COMMERCE-RELATED LIABILITIES
We are offering and intend to continue to offer insurance and securities
products through the internet. These activities will expose us to a number of
additional risks and uncertainties, including:
- potential liabilities for wrongful or illegal activities that may be
conducted in connection with the sale of securities and insurance
products;
- consumer fraud and false or deceptive advertising or sales practices;
- breach of contract claims related to the sales of insurance and securities
products;
- claims that materials included in our sites infringe on third-party
patents, copyrights, trademarks or other intellectual property rights or
are libelous, defamatory, or breach third-party confidentiality or privacy
rights;
- claims relating to any failure to appropriately collect or remit sales or
other taxes arising from commerce transactions;
- claims that may be brought by customers as a result of losses resulting
from any down time or other performance failures in our services; and
- state laws limiting the sale of insurance and securities products.
Although we maintain liability insurance, insurance may not cover these
claims or may not be adequate. Even if the claims do not result in material
liability, investigating and defending claims of this type is expensive.
FAILURE TO OBTAIN YEAR 2000 COMPLIANCE MAY HAVE ADVERSE EFFECTS ON US
Many existing computer programs were originally designed to use only two
digits to identify a year in date fields. As a result, date-sensitive software
applications may recognize a date using 00 as the year 1900 rather than the year
2000. If not corrected, these applications could fail or produce erroneous
results when working with dates in the year 2000 and beyond. If not properly
addressed, the year 2000 issue could have a material effect on our financial
position and future operating results. We primarily rely on industry standard
operating systems and applications for our internal systems rather than
proprietary software, and based on review of significant internal programs and
systems, we have determined that they are substantially year 2000 compliant. In
addition, we are seeking confirmation from our primary telecommunications
service providers that they are developing and implementing plans to become year
2000 compliant. Information we have received so far has indicated that they are
in the process of implementing remediation procedures to ensure that their
computer systems, services, or products are year 2000 compliant by December 31,
1999. However, we have not undertaken an in-depth evaluation of these providers
in relation to the year 2000 issue. In addition, we cannot predict whether or
not all of these vendors' programs will be successful. To the extent that these
vendors fail to resolve any year 2000 issues on a timely basis or in a manner
that is compatible with our systems, that failure could have a material adverse
effect on our financial position and future operating results. We are using
internal resources to identify and correct our systems for year 2000 compliance,
and we expect any incremental costs associated with addressing this issue to be
minimal. We do not believe that the costs of addressing year 2000 issues will be
material to our future operating results or financial position.
MANAGEMENT AND SIGNIFICANT STOCKHOLDERS CAN EXERCISE INFLUENCE OVER HOMECOM
Based upon stock ownership as of August 12, 1999, our executive officers,
directors, and 5% stockholders and their affiliates own an aggregate of 38% of
our outstanding shares. As a result, these persons acting together will have the
ability to control all matters submitted to our shareholders for approval and to
control the management and affairs of HomeCom. Accordingly, this concentration
of
12
<PAGE>
ownership may have the effect of delaying or preventing a change in control of
HomeCom, impede a merger, consolidation, or takeover or other business
combination, or discourage a potential acquiror from attempting to obtain
control. This concentration of control could also have a negative effect on the
market price of your shares.
NEW INVESTORS WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION
Shares purchased in this offering may incur immediate and substantial
dilution. To the extent that currently outstanding options and warrants are
exercised or converted, there will be further dilution in your shares. Please
refer to the information above under "There Are a Substantial Number of Shares
Eligible For Future Sale."
WE MAY NOT MAINTAIN NASDAQ LISTING REQUIREMENTS
If we are unable to maintain the standards for continued listing, our shares
could be subject to delisting from the Nasdaq SmallCap Market-TM-. If our shares
were delisted, trading, if any, in our shares would be conducted in the
over-the-counter market on the OTC Bulletin Board established for securities
that do not meet the Nasdaq SmallCap Market-TM- listing requirements or in what
are commonly referred to as the pink sheets. As a result, investors may find it
more difficult to dispose of or to obtain accurate price quotations on the
shares. Under the currently effective criteria for continued listing of
securities on the Nasdaq SmallCap Market-TM-, a company must maintain $2,000,000
in net tangible assets, a minimum bid price of $1.00, and a public float of at
least $1,000,000.
THE SHARES MAY BECOME SUBJECT TO RISKS OF LOW PRICED STOCKS
In the absence of the shares being quoted in Nasdaq, or listed on an
exchange, trading in the shares would be covered by Rule 15g-9 promulgated under
the Securities Exchange Act of 1934, if our shares are a penny stock. The
applicability of this rule, if it occurs, could materially adversely affect the
ability of broker-dealers to sell our shares and the ability of purchasers in
this offering to sell their shares in the secondary market.
Under that rule, broker-dealers who recommend penny stocks to persons other
than established customers and accredited investors, who are generally investors
with net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 together with a spouse, must make a special written suitability
determination for the purchaser and receive the purchaser's written agreement to
a transaction before the sale.
The SEC has adopted regulations that generally defined a penny stock to be
any equity security that has a market price of less than $5.00 per share.
However, exemptions to this rule include:
- an equity security listed on the Nasdaq Stock Market-TM-, and
- an equity security issued by an issuer that has:
- net tangible assets of at least $2,000,000, if the issuer has been in
continuous operation for three years,
- net tangible assets of at least $5,000,000, if the issuer has been in
continuous operation for less than three years, or
- average revenue of at least $6,000,000 for the preceding three years.
Unless an exception is available, the regulations require the delivery,
before any transaction involving a penny stock, of a disclosure schedule
explaining the penny stock market and the associated risks.
13
<PAGE>
USE OF PROCEEDS
The proceeds from the sale of the shares covered by this prospectus are
entirely for the benefit of the selling shareholders. We will not receive any
proceeds from the sale of the shares from the selling shareholders.
ISSUANCE OF SHARES TO SELLING SHAREHOLDERS
Under the terms of a stock purchase agreement by and among HomeCom and the
selling shareholders, HomeCom acquired all the outstanding stock of Ganymede
Corporation on April 23, 1999, in exchange for 185,342 shares and $100,000 in
cash.
PLAN OF DISTRIBUTION
Shares covered by this prospectus may be offered and sold from time to time
by the selling shareholders. The selling shareholders will act independently of
HomeCom in making decisions with respect to the timing, manner and size of each
sale. The selling shareholders may sell the shares:
- on The Nasdaq SmallCap Market-TM-;
- at prices and at terms then prevailing or at prices related to the then
current market price; or
- in private sales at negotiated prices directly or through brokers.
The selling shareholders and any underwriter, dealer or agent who
participates in the distribution of the shares may be deemed to be underwriters
under the Securities Act, and any discount, commission or concession received by
these persons might be deemed to be an underwriting discount or commission under
the Securities Act. We have agreed to indemnify the selling shareholders against
some liabilities arising under the Securities Act.
Any broker-dealer participating in transactions as agent may receive
commissions from the selling shareholders, and, if acting as agent for the
purchaser of the shares, from the purchaser. Usual and customary brokerage fees
will be paid by the selling shareholders. Broker-dealers may agree with the
selling shareholders to sell a specified number of shares at a stipulated price
per share, and, to the extent the broker-dealer is unable to do so acting as
agent for the selling shareholders, to purchase as principal any unsold shares
at the price required to fulfill the broker-dealer commitment to the selling
shareholders. Broker-dealers who acquire shares as principal may then resell the
shares from time to time in transactions in the over-the-counter market, in
negotiated transactions or by a combination of these methods of sale, at market
prices prevailing at the time of sale or at negotiated prices, and in connection
with resales may pay to or receive from the purchasers of the shares commissions
as described above.
We have advised the selling shareholders that the anti-manipulation rules
under the Exchange Act may apply to sales of shares in the market and to the
activities of the selling shareholders and their affiliates. The selling
shareholders have advised HomeCom that during the time as the selling
shareholders may be engaged in the attempt to sell shares registered under this
prospectus, they will:
- not engage in any stabilization activity in connection with any of the
shares;
- not bid for or purchase any of the shares or any rights to acquire the
shares, or attempt to induce any person to purchase any of the shares or
rights to acquire the shares other than as permitted under the Securities
Exchange Act;
- not effect any sale or distribution of the shares until after the
prospectus shall have been appropriately amended or supplemented, if
required, to describe the terms of the sale or distribution; and
14
<PAGE>
- effect all sales of shares in broker's transactions through broker-dealers
acting as agents, in transactions directly with market makers, or in
privately negotiated transactions where no broker or other third party,
other than the purchaser, is involved.
The selling shareholders may indemnify any broker-dealer that participates
in transactions involving the sale of the shares against some liabilities,
including liabilities arising under the Securities Act. Any commissions paid or
any discounts or concessions allowed to any broker-dealers, and any profits
received on the resale of shares, may be deemed to be underwriting discounts and
commissions under the Securities Act if the broker-dealers purchase shares as
principal.
In order to comply with the securities laws of some states, if applicable,
the shares will be sold in some jurisdictions only through registered or
licensed brokers or dealers. In some states, the shares may not be sold unless
the shares have been registered or qualified for sale in the applicable state or
an exemption from the registration or qualification requirement is available and
is complied with.
HomeCom has agreed to use its best reasonable efforts to maintain the
effectiveness of this registration statement until the earlier of the sale of at
least 60,000 shares by the selling shareholders or two years from the date of
this prospectus. No sales may be made under this prospectus after that date
unless we amend or supplement this prospectus to indicate that we have agreed to
extend the period of effectiveness. There can be no assurance that the selling
shareholders will sell all or any of the shares offered under this prospectus.
SELLING SHAREHOLDERS
All of the shares registered for sale under this prospectus are owned by the
selling shareholders, as the shares offered by the selling shareholders were
acquired in connection with the acquisition of Ganymede by HomeCom. Such shares
amount to approximately 3% of our outstanding capitalization as of the date of
this prospectus.
The selling shareholders are Richard L. Chu, Joseph G. Rickard, John R.
Winans, Mario D'Agostino, Karen Moore, and John Kokinas. All were employees of
Ganymede, and HomeCom has entered into employment agreements with Richard L.
Chu, Joseph G. Rickard, and John R. Winans.
The following table presents information known to us with respect to
beneficial ownership of our shares as of July 23, 1999, by each selling
shareholder. The following table assumes that there are 6,669,453 shares
outstanding and that the selling shareholders sell all of the shares. We are
unable to determine the exact number of shares that actually will be sold.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED BEFORE THE OFFERING OWNED AFTER THE
OFFERING
---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C>
SHARES OFFERED BY
SELLING SHAREHOLDERS SHARES PERCENT THIS PROSPECTUS SHARES PERCENT
- -------------------------------------------- ----------- --------------- ----------------------- ----------- ---------------
Richard L. Chu.............................. 51,684 0.8 25,842 25,842 0.4
Joseph G. Rickard........................... 23,846 0.4 11,923 11,923 0.2
John R. Winans.............................. 26,951 0.4 13,475 13,475 0.2
Mario D'Agostino............................ 78,746 1.2 39,373 39,373 0.6
Karen Moore................................. 1,029 0.0 515 514 0.0
John Kokinas................................ 3,086 0.0 1,543 1,543 0.0
</TABLE>
LEGAL MATTERS
The validity of the shares offered under this prospectus will be passed upon
by Sims Moss Kline & Davis LLP, Atlanta, Georgia, counsel to HomeCom. That law
firm has received warrants to purchase shares of common stock of the Company as
part of its compensation for legal services. The amount of
15
<PAGE>
compensation that the firm has received (or expects to receive for services
rendered but not yet billed) in the form of warrants is approximately $53,000.
EXPERTS
The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-K/A for the year ended December 31, 1998, have been so
incorporated in reliance on the report (which contains an explanatory paragraph
relating to the Company's ability to continue as a going concern as described in
Note 12 to the financial statements) of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement on Form S-3 that we
filed with the Securities and Exchange Commission. Some information in the
registration statement has been omitted from this prospectus as permitted by the
rules of the SEC. We file the annual, quarterly and special reports, proxy
statements and other information with the SEC. You can inspect and copy the
registration statement as well as reports, proxy statements and other
information we have filed with the SEC at the public reference room maintained
by the SEC at 450 Fifth Street, NW, Washington, D.C. 20549, and at the following
Regional Offices of the SEC: Seven World Trade Center, New York, New York 10048,
and Northwest Atrium Center, 500 West Madison Street, Chicago, Illinois 60661.
You can obtain copies from the public reference room of the SEC at 450 Fifth
Street, NW, Washington, D.C. 20549 upon payment of copying fees. You can call
the SEC at 1-800-732-0330 for further information about the public reference
room. We are also required to file electronic versions of these documents with
the SEC, which may be accessed through the SEC's World Wide Web site at
http://www.sec.gov. Our latest annual report and quarterly reports can also be
accessed through our Internet World Wide Web site at http://www.homecom.com. Our
common stock is quoted on The Nasdaq SmallCap Market-TM-. Reports, proxy and
information statements and other information concerning HomeCom may be inspected
at The Nasdaq Stock Market at 1735 K Street, NW, Washington, D.C. 20006.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to incorporate by reference some of our publicly-filed
documents into this prospectus, which means that information included in these
documents is considered part of this prospectus. Information that we file with
the SEC subsequent to the date of this prospectus will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings made with the SEC under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 until the selling shareholders
have sold all the shares.
The following documents filed with the SEC are incorporated by reference in
this prospectus:
1. Our annual report on Form 10-K for the year ended December 31, 1998 and
the amendment thereto on Form 10-K/A filed September 17, 1999 (File No.
0-26822).
2. Our quarterly reports on Form 10-Q for the three months ended March 31,
1999 and the three and six months ended June 30, 1999, (File No.
0-29204).
3. Our definitive proxy statement dated February 11, 1999, filed in
connection with our February 26, 1999, special meeting of shareholders.
4. Our current reports on Form 8-K, filed with the SEC on May 10, 1999,
April 13, 1999, April 1, 1999, June 11, 1999, June 25, 1999 and July 9,
1999 (File No. 0-26822).
We will furnish without charge to you, on written or oral request, a copy of
any or all of the documents incorporated by reference, other than exhibits to
the documents. You should direct any requests for documents to Corporate
Communications and Investor Relations, HomeCom Communications, Inc., Building
14, Suite 100, 3535 Piedmont Road, Atlanta, Georgia 30305, telephone (404)
237-4646.
16
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Registrant will bear no expenses in connection with any sale or other
distribution by the selling shareholders of the shares being registered other
than the expenses of preparation and distribution of this Registration Statement
and the prospectus included in this Registration Statement. Such expenses are
set forth in the following table. All of the amounts shown are estimates except
the Securities and Exchange Commission ("SEC") registration fee and the NASD
listing fee.
<TABLE>
<S> <C>
SEC registration fee............................................ $ 156.18
Legal fees and expenses......................................... 15,000.00
Accounting fees and expenses.................................... 10,000.00
NASD listing fee................................................ 1,853.42
Miscellaneous expenses.......................................... 1,000.00
---------
Total........................................................... $28,009.60
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporation Law (the "DGCL") permits a corporation to
eliminate or limit the personal liability of a director to the corporation or
its stockholders for monetary damages for breach of duty of care or other duty
as a director, provided that no provision shall eliminate or limit the liability
of a director: (A) for an appropriation, in violation of his duties, of any
business opportunity of the corporation; (B) for acts or omissions which involve
intentional misconduct or a knowing violation of law; (C) for unlawful corporate
distributions; or (D) for any transaction from which the director received an
improper personal benefit. This provision pertains only to breaches of duty by
directors in their capacity as directors (and not in any other corporate
capacity, such as officers) and limits liability only for breaches of fiduciary
duties under Delaware corporate law (and not for violation of other laws, such
as the federal securities laws). The Company's Restated Certificate of
Incorporation (the "Restated Certificate") exonerates the Company's directors
from monetary liability to the extent permitted by this statutory provision.
The Company's Restated Certificate of Incorporation and Restated Bylaws (the
"Restated Bylaws") also provide that the Company shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (including any action by or in the right of the Company), by
reason of the fact that such person is or was a director or officer of the
Company, or is or was serving at the request of the Company as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including reasonable attorneys' fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding, if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the Company (and with respect to any criminal
action or proceeding, if such person had no reasonable cause to believe such
person's conduct was unlawful), to the maximum extent permitted by, and in the
manner provided by, the DGCL.
Notwithstanding any provisions of the Company's Restated Certificate of
Incorporation and Restated Bylaws to the contrary, the DGCL provides that the
Company shall not indemnify a director or officer for any liability incurred in
a proceeding in which the director is adjudged liable to the Company or is
subjected to injunctive relief in favor of the Company: (1) for any
appropriation, in violation of his duties, of any business opportunity of the
Company; (2) for acts or omissions which involve intentional misconduct or a
knowing violation of law; (3) for unlawful corporate distributions; or (4) for
any transaction from which the director or officer received an improper personal
benefit.
II-1
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBITS
- -------------
<C> <S>
5.1 Opinion of Sims Moss Kline & Davis LLP
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.2 Consent of Sims Moss Kline & Davis LLP (included in Exhibit 5.1)
24.1 Power of Attorney (previously filed)
</TABLE>
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 to include any material
information with respect to the plan of distribution not previously disclosed in
the Registration Statement or any material change to such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each 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
this offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the 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.
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 SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
HomeCom Communications, Inc. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Atlanta, State of Georgia, on
September 21, 1999.
HOMECOM COMMUNICATIONS, INC.
BY: /S/ HARVEY W. SAX
-----------------------------------------
Harvey W. Sax
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
/s/ HARVEY W. SAX President, Chief Executive
- ------------------------------ Officer and Director
By Norman H. Smith, (Principal Executive September 21, 1999
Attorney-in-fact Officer)
/s/ KRISHAN PURI Executive Vice President
- ------------------------------ and Director
By Norman H. Smith, September 21, 1999
Attorney-in-fact
/s/ GIA BOKUCHAVA, PH.D. Chief Technical Officer and
- ------------------------------ Director
By Norman H. Smith, September 21, 1999
Attorney-in-fact
/s/ ROGER NEBEL Vice President and Director
- ------------------------------
By Norman H. Smith, September 21, 1999
Attorney-in-fact
/s/ NORMAN H. SMITH Chief Financial Officer
- ------------------------------ September 21, 1999
Norman H. Smith
II-3
<PAGE>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
/s/ CLAUDE THOMAS Director
- ------------------------------
By Norman H. Smith, September 21, 1999
Attorney-in-fact
/s/ WILLIAM WALKER Director
- ------------------------------
By Norman H. Smith, September 21, 1999
Attorney-in-fact
/s/ DANIEL A. DELITY Director
- ------------------------------
By Norman H. Smith, September 21, 1999
Attorney-in-fact
/s/ JAMES WM. ELLSWORTH Director
- ------------------------------
By Norman H. Smith, September 21, 1999
Attorney-in-fact
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- --------------------- ----------------------------------------------------------------------------------------------
<C> <S>
5.1 Opinion of Sims Moss Kline & Davis LLP
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.2 Consent of Sims Moss Kline & Davis LLP (included in Exhibit 5.1)
24.1 Power of Attorney (previously filed)
</TABLE>
II-5
<PAGE>
EXHIBIT 5.1
OPINION OF COUNSEL
September 23, 1999
HomeCom Communications, Inc.
Fourteen Piedmont Center, Suite 100
3535 Piedmont Road
Atlanta, Georgia 30305
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have examined Amendment No. 1 to the Registration Statement on Form S-3
to be filed by you with the Securities and Exchange Commission on or about
September 23, 1999 (the "Registration Statement") in connection with the
registration under the Securities Act of 1933 of shares of your common stock
(the "Shares"), to be sold by certain shareholders listed in the Registration
Statement (the "Selling Shareholders"). As your legal counsel in connection with
this transaction, we have examined the proceedings taken and are familiar with
the proceedings proposed to be taken by you in connection with the sale of the
Shares.
As counsel to you, we have examined such corporate records, documents,
instruments, certificates of public officials and of the Company and such
questions of law as we have deemed necessary for the purpose of rendering the
opinions set forth herein.
It is our opinion that the Shares, when sold by the selling shareholders in
the manner described in the Registration Statement, will be legally and validly
issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever it appears in the
Registration Statement and in any amendment to it.
<TABLE>
<S> <C>
Sincerely,
SIMS MOSS KLINE & DAVIS LLP
/s/ SIMS MOSS KLINE & DAVIS LLP
</TABLE>
II-6
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the Incorporation by reference in this Registration
Statement on Form S-3 of our report, which contains an explanatory paragraph
relating to the Company's ability to continue as a going concern, dated March
29, 1999, except as to Note 12, which is as of September 7, 1999, relating to
the financial statements, which appears in Home Com Communications, Inc.'s
Annual Report on Form 10-K/A for the year ended December 31, 1998. We also
consent to the reference under the heading "Experts" in such Registration
Statement.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Atlanta, Georgia
September 16, 1999
II-7
