<PAGE>
As filed with the Securities and Exchange Commission on November 1, 1999.
Registration No. 333-86033
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
SECURITIES ACT OF 1933
FIRSTLINK COMMUNICATIONS, INC.
------------------------------
(Exact name of Registrant as specified on its Charter)
Oregon 7385 93-1197477
- ------------ ---------- ----------------
State or other juris- Primary Standard I.R.S. Employer
diction of incorpor- Industrial Classification Identification
ation or organization Code Number Number
190 SW Harrison Street
Portland, Oregon 97201
(503) 306-4444
-----------------------------------------
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
A. Roger Pease
FirstLink Communications, Inc.
190 SW Harrison Street
Portland Oregon 97201
(503) 306-4444
-----------------------------------------
(Name, address, including zip code, and telephone number
of agent for service of process)
Copies to:
David H. Drennen, Esq.
Neuman & Drennen, LLC
5445 DTC Parkway, PH-4
Englewood, Colorado 80111
(303) 221-4700
Fax: (303) 488-3454
Approximate date of commencement of proposed sale to public:
As soon as practicable after the effective date of the
Registration Statement.
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 this Form is a post-effective amendment filed pursuant to Rule 462(d) 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. [ ]
<PAGE>
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Title of Each Class Amount Offering Aggregate Amount of
of Securities to be to be Price per Offering Registra-
Registered Registered Share Price tion fee
- ------------------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Common Stock (1) 502,917 $4.11(2) $2,066,989 (3)
Common Stock (4) 10,000 $4.11(2) $ 41,100 (3)
Common Stock Purchase
Warrants (5) 213,889 $1.13(6) $ 241,695 $67.00
TOTAL: $2,349,784 $67.00
</TABLE>
- -----------------
(1) Common stock issuable by the Registrant upon conversion of Registrant's
issued and outstanding warrants and options. Pursuant to Rule 416, there
are also being registered such additional shares and warrants as may
become issuable pursuant to anti-dilution provisions upon the exercise of
the Warrants.
(2) Calculation based on the average of the high and low prices of the
Registrant's common stock on Nasdaq on October 28, 1999. This
calculation is made in accordance with Rule 457(c).
(3) Previously paid
(4) Issued to employees of the Company in 1999.
(5) Common Stock Purchase Warrants issued by the Company in 1998.
(6) Calculation based on the average of the high and low prices of the
Registrant's common stock purchase warrants on Nasdaq on October 28,
1999. This calculation is made in accordance with Rule 457(c).
Pursuant to Rule 416, there are also being registered such additional shares
and warrants as may become issuable pursuant to anti-dilution provisions of
the options and warrants.
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>
<PAGE>
FIRSTLINK COMMUNICATIONS, INC.
1. Forepart of the Registration Forepart of Registration
Statement and outside front cover of Statement and outside front
prospectus cover page of prospectus
2. Inside front and outside back cover Inside front and outside back
pages of prospectus back cover pages of prospectus
3. Summary Information, Risk Factors Summary of Offering; Risk
and Ratio of Earnings to Fixed Charges Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Not applicable
6. Dilution Not applicable
7. Selling Security Holders Selling Shareholders
8. Plan of Distribution Plan of Distribution
9. Description of Securities to be Description of Securities
Registered
10. Interest of Named Experts and Counsel Legal Matters
11. Material Changes Not applicable
12. Incorporation by Reference Where You can Find More
Information
13. Disclosure of SEC's Position on Indemnification of Officers
Indemnification for Securities and Directors
Act Liabilities
<PAGE>
<PAGE>
FIRSTLINK COMMUNICATIONS, INC.
This is a public offering of 213,889 warrants to purchase shares of our
common stock, and 512,917 shares of our common stock. We will not receive any
of the proceeds from the offer and sale of the shares. However, all of the
shares to be sold are issuable upon the exercise of issued and outstanding
warrants or options by selling shareholders. If these warrants or options are
exercised in full, we will receive proceeds of $1,314,930.
The Nasdaq Small Cap Market lists our shares and the warrants offered
through this prospectus under the symbols "FLCI" and "FLCIW", respectively.
Investing in the shares involves risks. You should not purchase the
warrants or the shares unless you can afford to lose your entire investment.
See "Risk Factors" beginning on page 3 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. It is illegal for anyone to tell you
otherwise.
The information in this prospectus is not complete. It might change.
The selling shareholders are not allowed to sell the shares offered by this
prospectus until the registration statement that we have filed with the SEC
becomes effective. This prospectus is not an offer to sell the securities-and
does not solicit offers to buy-in any state where the offer or sale is not
permitted.
This prospectus is dated October ____, 1999.
<PAGE>
<PAGE>
PROSPECTUS SUMMARY
General Information About Us and Our Business
FirstLink Communications, Inc., an Oregon corporation, was founded in
1996. Our executive offices are at 190 SW Harrison, Portland, Oregon 97201,
telephone (503) 306-4444. We use the calendar year for our fiscal year.
We provide cable television and local and long distance telephone
services to residents in multi-family dwelling units (MDUs), primarily
apartment and condominium complexes. We offer a variety of services to
tenants including:
* Cable television
* Local telephone
* Long distance telephone
* Enhanced telephone calling features
* High speed internet access
* Telephone calling cards
We offer these services under our service mark to tenants of MDUs with
which we have exclusive contracts. We have long-term contracts with 14
residential developments in the Portland, Oregon area, all of which are on
line. We plan to increase the number of apartment and condominiums in
Portland we provide our services to, and to expand to other cities as well.
We lease telephone transmission facilities from third parties. We also
acquire bulk cable television signal from Tele-Communication, Inc. However,
since November 1998, it has become difficult for us to obtain contracts from
TCI for bulk cable service to new properties, which has prevented us from
expanding to new properties. We believe that our merger with USOL Holdings,
Inc., which is referred to below, will enable us to provide such services on
our own through Satellite Master Antenna Television System ("SMATV") headends
which receive programming signal from satellites and retransmits it throughout
the property.
On July 21, 1999, we signed a definitive agreement with USOL Holdings,
Inc., pursuant to which USOL will merge into us.
The Offering
All of the shares offered hereby will be received by the selling
shareholders when they exercise warrants and options they previously purchased
from us. Persons who may sell shares, referred to as selling shareholders,
must deliver a copy of this prospectus to persons who buy them. The shares
will probably be sold at the prevailing market prices, through broker-dealers,
although they are not required to do so. The selling shareholders will retain
all of the proceeds of their sales, except for commissions they may pay
broker-dealers. We will not receive any money when they sell. However, we
will receive the proceeds from the exercise of the warrants or options. We
are paying the costs of registering the warrants and shares.
Our common stock is listed on the Nasdaq Small Cap Market, under the
symbol "FLCI." Certain of our warrants, including the warrants offered hereby
and warrants into which some of the shares offered hereby are exercisable, are
also listed on the Nasdaq Small Cap Market, under the symbol "FLCIW." The
market prices of the common stock and the warrants have fluctuated
significantly since they were first traded. The last price that the shares
were sold for on October 28, 1999, was $4.09; and the last price that the
warrants were sold for on October 28, 1999, was $1.13.
<PAGE>
<PAGE>
RISK FACTORS
Our Initial Business Plan Was Unsuccessful -- Our New Plan Depends on Our
Ability to Consummate Our Merger with Usol and to Operate Our New Business
Successfully
Our business plan required us to enter contracts with TCI or other cable
providers to provide cable TV service to MDUs. In November 1998, TCI informed
us that, as a result of its purchase by AT&T, it may no longer enter into such
agreements with us. We subsequently negotiated the merger agreement with
USOL, which will allow us to provide cable services to MDUs via fixed SMATV
systems, thereby bypassing local cable systems. The merger might not be
completed for various reasons, including that our stockholders do not approve
it. If the merger is not completed, we will have to consider other
alternatives which might involve the acquisition or merger with companies that
operate in industries other than the telecommunications industry. You would
have to rely on our management to formulate a new business plan or locate and
negotiate an agreement with another company.
We May Not Be Able to Integrate Our Recently Acquired Businesses in a Manner
That Is Beneficial to Us, or That Results in Additional Profits
We believe that our ultimate success and profitability depends on our
ability to expand and strengthen our market position via acquisition. We will
actively seek acquisition opportunities that complement our existing business.
We cannot assure you that the integration of our operations with those of USOL
will be completed in a manner that is efficient, effective and timely enough
to achieve the anticipated benefits of the acquisitions, or that the
acquisitions will result in additional operating cash flow. If we identify
additional appropriate acquisition candidates, we cannot assure you that we
will be able to successfully negotiate, finance or integrate the acquired
businesses. Integrating the companies will require the timely, efficient and
effective combination of management, sales and marketing development teams
that prior to the acquisitions operated in different geographic locations,
under varying management philosophies. Integration of the companies also will
require the combination of differing operating approaches. Additionally, the
time-consuming task of integrating the companies may distract our attention
from our day-to-day business operations.
We Are in an Extremely Competitive Industry That Is Dominated by Several
Companies Which Have Significantly Greater Financial, Technical, and Marketing
Resources than We Have
The telecommunications industry is highly competitive and characterized
by constant innovation and domination by large, often monopolistic entities.
Many of such companies have names that are more recognizable by consumers than
ours, which may provide such competitors with significant competitive
advantages. Entities with financial resources greater than ours may be able
to offer greater incentives to property owners, and the amount of the payments
demanded by property owners may increase, impairing our ability to operate on
a profitable basis. Some of our competitors include private cable and phone
companies, local exchange carriers, competitive local exchange carriers,
franchise cable companies, franchise cable company joint ventures and of local
exchange carrier affiliates. The regulatory environment in which we operate
continues to undergo fundamental changes that may also lead to increased
competition. The trend in the telecommunications industry has been the
convergence of traditional telephone and data services with broadcast video
services. As part of this trend, service providers are attempting to converge
network components: cable television distribution equipment is being
considered for telephone services and vice versa, and wireless distribution
equipment is being considered for both broadcast video and telephone services.
In broader terms, the telephone, cable, wireless and computer industries are
evolving to provide fully integrated multimedia services to end-users. The
opportunities offered by such convergence will present risks for us due to
enhanced competition from competitors in various industries with much greater
financial, technical, marketing and other resources. Should rates decrease,
we may be forced to lower our prices or offer additional services or features
to remain competitive. Wireless cable and telephone services may also allow
competitors to bypass property owners altogether and market their services
directly to residents of MDUs. To remain competitive with other providers, we
may be required to adopt new technologies, which are likely to entail
significant capital expenditures.
Our Failure to Manage Growth Properly could have a Material Adverse Effect
upon Our Business, Financial Condition and Results of Operations
The expansion of our operations will depend to some extent on matters
outside of our control including our ability to enter into right of entry
agreements with property owners on favorable terms, make attractive
acquisitions, and obtain required governmental permits in a timely manner, at
reasonable costs and on satisfactory terms and conditions. We may incur
substantial additional indebtedness to continue to upgrade our existing
systems and to acquire right of entry agreements from other entities that will
enable us to grow and offer our customers enhanced products and services.
Construction of new systems requires us to obtain qualified subcontractors and
may subject us to the risk of cost overruns and delays. Delays also can be
caused by weather, design changes, or material or equipment shortages, as well
as the need to obtain governmental approvals. Failure to complete
construction of new systems on a timely basis could impair our ability to
compete effectively in a particular area. In addition, we rely on our
reputation for providing superior customer service to attract customers. The
failure to continue to provide this level of service may impair our growth
strategy and may result in the loss of customers.
Our Management Information Systems May Not Be Able To Track Information About
Our Customers
Our management information systems ("MIS") and billing system are
adequate for our present level of business. However, the merger with USOL
will require us to handle a substantially larger number of customers. USOL
uses a MIS and billing system that can accurately and quickly process large
amounts of data. Each month, USOL processes over 500,000 individual phone
calls and thousands of other individual account transactions. Each of these
must be properly billed to the appropriate customer. On occasion, USOL's MIS
and billing system has not properly tracked some types of billable calls, in
part due to technology limitations and in part due to the fact that its
current MIS and billing system is limited in the number of calls that it can
accurately process at one time. Errors and delays in processing customer
calls may undermine customer confidence and may result in customers switching
their telephone service to another company. While to date these difficulties
and limitations have not been material, management estimates that
approximately $1,600,000 will be required over the next 18 months to upgrade
our MIS and billing system to accurately handle the substantial additional
transactions that will be generated if we meet our business goals. The actual
cost of implementing such an upgrade may materially exceed management's
estimates. USOL engaged a national management information system consulting
firm to assist it in its efforts to enhance its MIS and billing system.
Nonetheless, there can be no assurance that we will not encounter material
unforeseen difficulties and delays in upgrading our MIS and billing system.
Any such difficulties or delays could have a material adverse effect on our
business, financial condition and results of operations. We do not believe
that the cost of implementing year 2000 compliant software and systems will
have a material effect on our financial condition and results of operations;
however, there can be no assurance that we will not be impacted by year 2000
issues faced by major distributors, suppliers and financial service
organizations with which we interact.
We Depend upon Contracts with MDU Owners -- We may not be Able to Acquire or
Finance Additional Contracts; Additionally, Changing Regulations may
Invalidate the Exclusivity of Those Contracts
Our strategy relies in large part on our continuing ability to enter into
long-term right of entry contracts on satisfactory terms with owners of
demographically favorable MDUs. In addition, we depend upon third-party
lenders to finance the build-out of properties covered by right of entry
contracts. We may not be able to implement our growth plan as currently
contemplated if the demographics or occupancy rates of the MDUs served by us
change, if in the future we are unable to procure suitable right of entry
contracts or finance the build-out of properties covered by right of entry
contracts, or if the cost of acquiring right of entry contracts increases
substantially as a result of increased competition or otherwise. Our ability
to implement our growth plan could also be materially adversely affected if
lenders are unwilling to accept right of entry contracts as collateral for
debt financing.
Our Business is Subject to Extensive and Changing Laws and Regulations --
Changes in Current or Future Regulations Could have a Material Adverse Effect
on the Company
Extensive and changing laws and rules regulate the telecommunications
business, including those of the Federal Communications Commission ("FCC") and
state and local regulatory bodies such as public utility commissions. Many of
our operations are subject to licensing requirements of federal, state and
local law. The United States Congress, the FCC, and state and local
regulatory bodies in the past have adopted, and may in the future adopt, new
laws, regulations and policies regarding a wide variety of matters, including
rule-making by the FCC with respect to exclusive contractual rights to provide
CATV service to a Property that could affect our operations. Changes in
current or future regulations adopted by the United States Congress, the FCC,
or state or local regulatory bodies or legislative initiatives could have a
material adverse effect on the Company.
Some states have adopted "mandatory access laws," which could prevent
alternative video providers, such as private cable operators, and property
owners from enforcing exclusivity provisions such as those included in many of
our right of entry contracts. None of the states in which we currently
operate or plan to operate in the foreseeable future have mandatory access
laws. We cannot assure that mandatory access laws will not be adopted in
states where we do business, or that we will not expand our operations into
states that have mandatory access laws. In addition, the Federal
Communications Commission is reviewing the rights of various video programming
service providers to access private property, including MDUs, and is
considering various restrictions on the duration of contracts that grant
exclusive access rights.
Rapid and Significant Technological Changes may Cause Our Systems to Become
Obsolete
The cable and telecommunications industries are subject to rapid and
significant technological changes and service innovations. The effect of
these changes and innovations, including those relating to emerging hardwire
and wireless transmission and switching technologies, cannot be predicted.
However, if new methods for delivering the services we provide more cost
effectively are devised, unless we are able to adopt such methods and modify
our current systems, we may have difficulty competing profitably with
companies that utilize such methods.
Our Success Will Depend on Our Ability to Attract And Retain Key Personnel; If
We are Unable to Attract and Retain Key Personnel, We will be Unable to
Succeed in Our Business Plan
Our success will continue to be highly dependent upon the continued
services of certain key individuals. Members of the management of USOL will
replace Mr. Pease as President and CEO. The loss of the services of such
individuals could adversely affect our business, financial condition and
results of operations. We will also require the services of additional
executive personnel in the future. We have salary continuation agreements
with Messrs. Pease and Sperber and with Ramona Kelly. We will also enter into
employment agreements with new management personnel in connection with the
Merger. We cannot assure that we will be successful in attracting and
retaining the personnel it requires to develop and operate its facilities or
to expand its operations.
Oregon Law and Our By-Laws Protect Our Directors from Certain Types of
Lawsuits
Oregon law provides that our directors will not be liable to us or our
stockholders for monetary damages for all but certain types of conduct as
directors. Our Bylaws require us to indemnify our directors and officers
against all damages incurred in connection with our business to the fullest
extent provided or allowed by law. The exculpation provisions may have the
effect of preventing stockholders from recovering damages against our
directors caused by their negligence, poor judgment or other circumstances.
The indemnification provisions may require us to use our assets to defend our
directors and officers against claims, including claims arising out of their
negligence, poor judgment, or other circumstances. We have also entered into
indemnity agreements with each of our directors and officers.
We Expect to Continue to Incur Net Losses
If we never become profitable, the value of our shares may fall. We have
incurred net losses every year since we started business in 1996. Through
June 30, 1999, we had recognized cumulative losses of over $3.5 million. As
we expand our operations, we expect to incur negative cash flow. Our ability
to cover the operating costs of each new system, including the networks
utilized by USOL, will depend on our obtaining a sufficient number of
subscribers at each property. Additionally, losses will continue until we are
able to obtain a sufficient number of subscribers to cover our administrative
and over-head expenses. Virtually all of our revenues for fiscal year ended
December 31, 1998 and the six months ended June 30, 1999, were derived in the
Portland, Oregon geographic areas. USOL's revenues are primarily derived from
properties in Dallas, San Antonio, and Austin, Texas. A sustained economic
downturn or significant increases in competition in those regions could effect
revenues.
Failure to Raise Necessary Capital Could Restrict the Development of Our
Networks, the Introduction of New Services, and the Acquisition of New
Properties
Setting up and running SMATV and telephony systems requires significant
capital. Upon completion of the Merger, we will expand and upgrade networks
to provide new and expanded services to additional MDUs. Technological change
may make even more upgrades necessary if we are to compete in our market. Our
financial resources, even with the capital injected into USOL, may not be
enough for our capital needs. We may not be able to obtain financing. Not
being able to acquire and update additional properties could harm our
operations and competitive position.
We Will Incur Substantial Indebtedness in Our Merger with USOL
USOL has obtained a commitment for a $35 million senior debt credit
facility which we will assume. That facility contains covenants which, among
other things, will restrict our ability to dispose of assets or merge, incur
debt, pay distributions, or take certain other corporate actions. If we are
not able to generate a sufficient amount of cash flow from our operations to
operate our systems and to pay the interest on our obligations, our creditors
could foreclose on our properties or otherwise deprive stockholders of their
equity interests.
We Will have Broad Discretion to Allocate Any Proceeds We Receive from the
Exercise of Warrants; We cannot Guarantee that the Monies Received will
Improve Our Operations
Any monies we may receive from the exercise of the warrants have been
allocated generally to provide working capital for operations. As such, we
will use funds as they are received for such purposes and in such proportions
as we deem advisable. While we will apply the proceeds in a manner consistent
with our fiduciary duty and in a manner consistent with our best interests, we
cannot assure you that the monies received will result in any present or
future improvement in our results of operations.
The Market Price of Our Securities Could Be Adversely Affected By Sales of
Restricted Securities
Actual sales or the prospect of future sales of shares of our common
stock under SEC Rule 144 may have a depressive effect upon the price of, and
market for, our common stock. As of June 30, 1999, 3,615,617 shares of our
common stock were issued and outstanding. 1,4000,000 of those shares have
been registered and are publicly tradable. The remaining shares have been
subject to various lock-up provisions that have restricted their resale. All
of the shares have been released from the lock-ups.
We cannot predict what effect, if any, that sales of shares of common
stock, or the availability of these shares for sale, will have on the market
prices prevailing from time to time. Nevertheless, the possibility that
substantial amounts of common stock may be sold in the public market may
adversely effect prevailing prices for our common stock and could impair our
ability to raise capital in the future through the sale of equity securities.
We May Authorize the Issuance of Our Preferred Stock Without Shareholder
Approval
Our articles of incorporation, as amended, authorize the issuance of up
to 1,000,000 shares of preferred stock. We can fix and determine the relative
rights and preferences of preferred shares and may issue these shares, without
further stockholder approval. As a result, we could authorize the issuance of
a series of preferred stock which would:
1. grant to holders preferred rights to our assets upon liquidation;
2. grant to holders the right to receive dividend coupons before
dividends would be declared to common stockholders; and
3. grant to holders the right to the redemption of those shares,
together with a premium, prior to the redemption of common stock.
Common stockholders have no redemption rights.
In addition, we could issue large blocks of voting stocks to fend against
unwanted tender offers or hostile takeovers without further shareholder
approval. We have agreed to issue shares of preferred stock in the USOL
merger.
The Exercise of Outstanding Options and Warrants And/or Our Ability to Issue
Additional Securities Without Shareholder Approval Could Have Substantial
Dilutive and Other Adverse Effects on Existing Stockholders and Investors in
this Offering
We have the authority to issue additional shares of common stock and to
issue options and warrants to purchase shares of our common stock without
shareholder approval. We could issue large blocks of voting stock to fend off
unwanted tender offers or hostile takeovers without further shareholder
approval. At June 30, 1999, we had outstanding options exercisable to
purchase up to 556,668 shares of common stock at a weighted average exercise
price of $1.45 per share, and outstanding options and warrants exercisable to
purchase up to 1,412,917 shares of common stock at a weighted average exercise
price of $4.69 per share. Holders of the options or warrants can be expected
to exercise them at a time when we would, in all likelihood, be able to obtain
any needed capital on terms which are more favorable to us than the exercise
terms provided by such options or warrants. Exercise of these warrants and
options could have a further dilutive effect on existing stockholders and you
as an investor in this Offering.
Our common stock and warrants have been thinly traded on the Nasdaq Small
Cap Market under the symbols FLCI and FLCIW, respectively. While there
currently exists a limited and sporadic public trading market for our
securities, the prices are subject to high degrees of volatility and we cannot
assure you that the market will improve in the future. Factors discussed in
this prospectus may have a significant impact on the market prices of our
common stock and warrants.
The over-the-counter markets for securities such as the shares offered
hereby historically have experienced extreme price and volume fluctuations
during certain periods. These broad market fluctuations and other factors,
such as new product developments and trends in our industry and investment
markets generally, as well as economic conditions and quarterly variations in
our results of operations, may adversely affect the market price of our common
stock. Although our common stock is currently included in Nasdaq Small Cap
Market, there can be no assurance that they will remain eligible to be
included in Nasdaq. In the event that our common stock were no longer
eligible to be included in Nasdaq, trading in our common stock could be
subject to rules adopted by the SEC regulating broker-dealer practices in
connection with transactions in "penny stocks" which could materially,
adversely affect the liquidity of our securities. The regulations define a
penny stock as any equity security not listed on a regional or national
exchange or Nasdaq that has a market price of less than $5.00 per share,
subject to certain exceptions. The material, adverse effects of such
designation could include, among other things, impaired liquidity with respect
to our securities and burdensome transactional requirements associated with
transactions in our securities, including, but not limited to, waiting
periods, account and activity reviews, disclosure of additional personal
financial information and substantial written documentation. These
requirements could lead to a refusal of certain broker-dealers to trade or
make a market in our securities.
<PAGE>
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference
is considered to be part of this prospectus, and later information that we
file with the SEC will automatically update and supercede 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
Act of 1934. This prospectus is part of a registration statement we filed
with the SEC.
(a) Annual Report on Form 10-KSB for the fiscal year ended December 31,
1998.
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999
and June 30, 1999.
(c) Current Report on Form 8-K for event occurring on July 21, 1999.
You may request a copy of these filings at no charge by a written or oral
request to Roger Pease, FirstLink Communications, Inc., 190 SW Harrison
Street, Portland, Oregon 97201 (503) 306-4444. In addition, you can obtain
this filing electronically at the SEC's worldwide web site at
http://www.sec.gov/edgarhp/htm.
You should rely only on the information provided in this prospectus or
any supplement to this prospectus. We have not authorized anyone else to
provide you with different information. We are not making an offer of these
securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus or any supplement to this
prospectus is accurate as of any date other than the date on the front of
those documents.
FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995 that are prospective.
These statements are subject to risks, uncertainties, and other factors which
could cause actual results to differ materially from the information contained
in the forward-looking statements. We cannot control many of those risks and
uncertainties which include competitive pressures, changing economic
conditions and other factors.
<PAGE>
<PAGE>
CAPITAL STOCK INFORMATION
The following table sets forth our capitalization as of June 30, 1999.
This section should be read in conjunction with the financial statements and
notes to the financial statements that are incorporated by reference into this
prospectus.
<TABLE>
<CAPTION>
June 30, 1999
-------------
(Unaudited)
<S> <C>
Long term debt, net of current portion $ 142,778
-------------
Stockholders' equity:
Preferred stock, no par value, 1,000,000
shares authorized; no shares outstanding $ -
Common stock, no par value, 20,000,000
shares authorized; 3,615,617 shares issued
and outstanding 8,515,209
Retained deficit (3,564,255)
-------------
Total stockholders' equity 4,950,954
-------------
Total capitalization $ 5,093,732
=============
</TABLE>
- ----------------
(1) Does not include (i) 556,668 shares of Common Stock which have been
granted under our stock option plans, having exercise prices ranging from
$1.13 to $2.31 per share, and of which 299,446 are subject to future
vesting; and (ii) 1,412,917 shares of Common Stock reserved for issuance
upon exercise of outstanding options and warrants having a weighted
average exercise price of $4.69 per share.
<PAGE>
<PAGE>
USE OF PROCEEDS
We will not receive any of the proceeds from the offer and sale of the
warrants or the shares; however, the shares being offered are issuable upon
the exercise of warrants. If all of those warrants were exercised, we would
receive proceeds of $1,314,930. You will not pay any of the expenses that are
expected to be incurred in connection with the registration of the shares, but
you will pay all commissions, discounts and other compensation to any
securities broker-dealers through whom you sell any of the shares.
We will utilize the net proceeds, if any, realized from the exercise of
the warrants for working capital and for general corporate purposes, at our
discretion. Actual expenditures may vary substantially depending upon
economic conditions and opportunities we are unable to identify at this time.
THE MARKET FOR OUR SECURITIES
Our common stock and certain common stock purchase warrants trade on the
Nasdaq Small Cap Market under the symbols "FLCI" and "FLCIW", respectively.
The following table sets forth the high and low closing prices for each
quarter since we completed our initial public offering on July 27, 1998.
There was no public market for our stock or warrants prior to that date. The
quotations represent inter-dealer quotations without retail markups, markdowns
or commissions, and may not represent actual transactions.
<TABLE>
<CAPTION>
Common Stock Warrants
--------------- ---------------
Quarter Ended High Low High Low
------ ------ ------ ------
<S> <C> <C> <C> <C>
September 30, 1998 $ 4.50 $ 1.50 $ 0.56 $ .13
December 31, 1998 $ 2.31 $ 1.13 $ 0.25 $ .06
March 31, 1999 $ 2.94 $ 1.19 $ 0.41 $ .06
June 30, 1999 $ 7.50 $ 1.69 $ 1.88 $ .19
September 30, 1999 $ 6.63 $ 4.00 $ 1.47 $ .81
December 31, 1999 (through
October 28, 1999) $ 4.63 $ 3.75 $ 1.19 $ .88
</TABLE>
There were approximately 550 holders of record of the our common stock as
of June 30, 1999.
We have not declared any dividends on our common or preferred stock, nor
do we anticipate paying cash dividends on shares of common stock in the
foreseeable future.
<PAGE>
<PAGE>
SELLING SHAREHOLDERS
The selling shareholders have indicated that the warrants and shares they
are offering through this prospectus may be sold from time to time by them or
by their pledgees, donees, transferees or other successors in interest.
Under the registration statement of which this prospectus is a part we
have registered an additional number of shares of our common stock that we may
be required to issue to the selling shareholders as a result of any stock
split, stock dividend, or similar transaction involving our common stock, in
order to prevent dilution, in accordance with Rule 416 under the Securities
Act of 1933. In the following table, we have calculated percentage ownership
by assuming that all shares of common stock which the selling shareholder has
the right to acquire within 60 days from the date of this prospectus upon the
exercise of options, warrants, or convertible securities are outstanding for
the purpose of calculating the percentage of common stock owned by such
selling shareholder.
Except as noted in the tables below, within the past three years none of
the selling shareholders have held any position or office with us; or entered
into a material relationship with us.
There is no assurance that the selling shareholders will sell the
warrants or shares offered by this prospectus.
Common Stock
The following table sets forth:
* The name of each of the selling shareholders;
* The number of shares of our common stock owned by each of them as of
June 30, 1999;
* The number of shares offered by this prospectus that may be sold
from time to time by each of them;
* The number of shares of our common stock that will be beneficially
owned by each of them if all of the shares offered by them are sold;
* The percentage of the our total shares outstanding that will be
owned by each of them at the completion of this offering, if the
shareholder sells all of the warrants and shares included in this
prospectus.
<TABLE>
<CAPTION>
Percentage
Number Number of Common
Shares Number of Shares Stock that
Beneficially of Beneficially will be
Name of Owned Shares Owned Beneficially
Selling Prior to Offered After Owned after
Shareholder Offering Hereby Offering Offering
- ----------- ----------- -------- --------- ----------
<S> <C> <C> <C> <C>
Jack A. Alexander
Trust (1) 22,647 13,332 9,315 *
United Investment
Bankers (1) 22,649 13,334 9,315 *
Frederick A. Arnstein,
Jr. Trust 38,667 6,666 32,001 *
Dudley L. Bailey 51,112 6,666 44,446 1.2%
Vicki D.E. Barone 14,299 14,299 0 *
Steven M. Bathgate (2) 360,660 81,332 279,328 7.7%
Kenneth S. Bernstein 74,223 13,332 60,891 1.7%
Birdie Capital
Corporation 11,111 3,703 7,408 *
Lawrence S. Black 22,222 7,407 14,815 *
Joseph M. Blackwell (3) 27,370 8,703 18,667 *
Blackwell Donaldson
& Co. (3) 27,370 8,703 18,667
Al Blum & Co Inc. 20,000 6,666 13,334 *
Boutcher & Boutcher 39,000 39,000 0 *
Caribou Bridge Fund, LLC 162,165 14,444 147,721 4.1%
Gregory Cole 1,250 1,250 0 *
Richard F. Cooper, Jr. 20,000 6,666 13,334 *
James A. Cross 20,000 6,666 13,334 *
Susan M. Cross 20,000 6,666 13,334 *
David H. Drennen 13,999 13,999 0 *
Fred W. Duboc 25,556 3,333 22,223 *
DW Squared 28,889 4,444 24,445 *
Frederick H. Fischer 25,333 6,666 18,667 *
James W. Fleming 20,000 6,666 13,334 *
Frank Capital LLC 6,666 6,666 0 *
Candy Geislinger 1,250 1,250 0 *
Generation Capital
Associates 333,333 33,333 0 1.8%
Joshua Harless 1,250 1,250 0 *
Randy Heberle 1,250 1,250 0 *
Mark Holifer 2,082 2,082 0 *
Stanley A. Kaplan 20,000 6,666 13,334 *
Victor Kashner 107,877 4,444 103,433 2.9%
Kiawah Capital Partners 67,211 8,888 58,323 1.6%
Kendra Krebsbach 1,250 1,250 0 *
J. Scott Liolios 5,000 1,666 3,334 *
John P. Manry 29,322 4,444 24,878 *
Shawn McChesney 6,756 2,222 4,534 *
Thomas E. McChesney (4) 141,920 28,578 113,342 3.1%
Eugene C. McColley (5) 330,460 71,332 259,128 7.2%
James Edgar McDonald
Trust (6) 172,611 7,777 158,168 4.3%
Virginia Stevens
McDonald Trust(6) 172,611 6,666 158,168 4.3%
Robert M. Neider 28,901 4,444 24,457 *
Andrew F. Nicoletta 26,600 6,666 19,934 *
Edmund O'Donnell 38,667 6,666 32,001 *
Pro Futures Bridge
Capital Fund, LP 53,333 53,333 0 *
Randy Sasaki & Rori
Sasaki 5,000 1,666 3,334 *
Gregg T. Shimanski
and Barbara Shimanski 10,000 3,333 6,667 *
Alex Skorodov 1,250 1,250 0 *
Rhonda Stensrud 1,250 1,250 0 *
WEB Service Co. 75,000 12,500 62,500 *
Bruce Weaver 1,250 1,250 0 *
</TABLE>
- ---------------
* Less than 1%
(1) Mr. Alexander is an affiliate of United Investment Bankers.
(2) Includes shares owned by the Bathgate Family Trust, Kiawah Capital
Partners, and Caribou Bridge Fund, LLC. Mr. Bathgate disclaims
beneficial ownership of the shares owned by Caribou Bridge Fund. Mr.
Bathgate's firm, Bathgate McColley Capital Group, LLC., has acted as
placement agent in a number of private transactions for us. He has also
guaranteed certain of our leases.
(3) Mr. Blackwell is an affiliate of Blackwell Donaldson.
(4) Includes shares owned by Elizabeth McChesney, Thomas E. McChesney's wife.
Mr. McChesney is deemed to be the beneficial owner of his wife's shares.
Mr. McChesney is one of our directors.
(5) Includes shares owned by Kiawah Capital Partners and Caribou Bridge Fund,
LLC. Mr. McColley disclaims beneficial ownership of the shares owned by
Caribou Bridge Fund. Mr. McColley's firm, Bathgate McColley Capital
Group, LLC, has acted as placement agent in a number of private
transactions for us. He has also guaranteed certain of our equipment
leases.
(6) Mr. and Mrs. McDonald are husband and wife. Each is deemed to be the
beneficial owner of the other's shares.
Warrants
The following table sets forth:
* The name of each of the selling shareholders who may sell warrants;
* The number of warrants owned by each of them as of June 30, 1999;
* The number of warrants offered by this prospectus that may be sold
from time to time by each of them;
At the completion of the offering, except as noted below, the selling
shareholders will not own any warrants.
<TABLE>
<CAPTION>
Number of
Warrants Number of
Beneficially Warrants
Owned Prior Offered
Name of Selling Shareholder to Offering Hereby
- --------------------------- ----------- ----------
<S> <C> <C>
Steven M. Bathgate (1) 26,667 20,000
Kenneth S. Bernstein 13,333 13,333
Birdie Capital Corporation 7,407 7,407
Lawrence S. Black 14,815 14,815
Caribou Bridge Fund, LLC 6,667 6,667
Fred W. Duboc 6,667 6,667
DW Squared 8,889 8,889
Generation Capital Associates 66,667 66,667
J. Scott Liolios 3,333 3,333
Eugene C. McColley (1) 6,667 6,667
James Edgar McDonald Trust (2) 20,000 6,667
Virginia Stevens McDonald Trust (2) 20,000 20,000
Randy Sasaki & Rori Sasaki 3,333 3,333
Gregg T. Shimanski and Barbara
Shimanski 6,667 6,667
Sterling Capital Corp. (3) 11,111 11,111
WEB Service Co. (4) 50,000 25,000
</TABLE>
- ---------------
* Less than 1%
(1) Includes warrants owned by Caribou Bridge Fund, LLC. Messrs. Bathgate
and McColley disclaim beneficial ownership of such warrants.
(2) Mr. and Mrs. McDonald are husband and wife. Each is deemed to be the
beneficial owner of the other's warrants.
(3) Shares underlying warrants previously sold by Sterling Capital.
(4) WEB owns 25,000 publicly traded warrants that are not part of this
registration statement.
<PAGE>
<PAGE>
PLAN OF DISTRIBUTION
The selling shareholders may sell the shares through the Nasdaq Small Cap
Market or other over-the-counter markets or otherwise at prices and at terms
then prevailing or at prices related to the then current market price or in
negotiated transactions. These shares may be sold by one or more of the
following:
* A block trade in which the broker or dealer so engaged will attempt
to sell shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction.
* Purchases by a broker or dealer as principal and resale by a broker
or dealer for its account in accordance with this prospectus.
* Ordinary brokerage transactions and transactions in which the broker
solicits purchasers.
* In privately negotiated transactions not involving a broker or
dealer.
In effecting sales, brokers or dealers engaged to sell the shares may
arrange for other brokers or dealers to participate. Brokers or dealers
engaged to sell the shares will receive compensation in the form of
commissions or discounts in amounts to be negotiated immediately prior to each
sale. Those brokers or dealers and any other participating brokers or dealers
may be deemed to be "underwriters" within the meaning of the Securities Act of
1933 in connection with these sales. We anticipate that the brokers or
dealers, if any, participating in the sales of the shares will receive the
usual and customary selling commissions.
To comply with the securities laws of some states, if applicable, the
shares will be sold in those states only through brokers or dealers. In
addition, in some states, the shares may not be sold in those states unless
they have been registered or qualified for sale in those states or an
exemption from registration or qualification is available and is complied
with.
<PAGE>
<PAGE>
LIMITATION ON DIRECTORS' LIABILITY; INDEMNIFICATION
Our articles of incorporation limit the liability of a directors for
monetary damages for his conduct as a director, except for:
* Any breach of his duty of loyalty to FirstLink or its shareholders,
* Acts or omissions not in good faith or that involved intentional
misconduct or a knowing violation of law,
* Dividends or other distributions of corporate assets from which the
director derives an improper personal benefit.
* Liability under federal securities law
The effect of this provisions is to eliminate our right and the right of
our shareholders (through shareholder's derivative suits on our behalf) to
recover monetary damages against a director for breach of his fiduciary duty
of care as a director, except for the acts described above. This provisions
does not limit or eliminate our right or the right of a shareholder to seek
non-monetary relief, such as an injunction or rescission, in the event of a
breach of a director's duty of care. Our by-laws provide that if Oregon law
is amended, in the case of alleged occurrences of actions or omissions
preceding any such amendment, the amended indemnification provisions shall
apply only to the extent that the amendment permits us to provide broader
indemnification rights than the law permitted prior to such amendment.
Our articles of incorporation and by-laws also provide that we shall
indemnify, to the full extent permitted by Oregon law, any of our directors,
officers, employees or agents who are made, or threatened to be made, a party
to a proceeding by reason of the fact that he or she is or was one of our
directors, officers, employees or agents. The indemnification is against
judgments, penalties, fines, settlements and reasonable expenses incurred by
the person in connection with the proceeding if certain standards are met.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors, officers and controlling persons in
accordance with these provisions, or otherwise, we have been advised that, in
the opinion of the SEC, indemnification for liabilities arising under the
Securities Act of 1933 is against public policy as expressed in the Securities
Act and is, therefore, unenforceable.
<PAGE>
<PAGE>
DESCRIPTION OF SECURITIES
We are authorized to issue up to 20,000,000 shares of common stock and
1,000,000 shares of preferred stock. The shares of common stock covered by
this prospectus, when they are received upon exercise of warrants or options,
will be fully paid and nonassessable.
Common Stock
Each holder of our common stock is entitled to one vote for each share
held of record. Voting rights in the election of directors are not cumulative,
and, therefore, the holders of more than 50% of our common stock could, if
they chose to do so, elect all of the directors.
The shares of common stock are not entitled to preemptive rights and are
not subject to redemption or assessment. Subject to the preferences which may
be granted to holders of preferred stock, each share of common stock is
entitled to share ratably in distributions to shareholders and to receive
ratably such dividends as we may declare. Upon our liquidation, dissolution
or winding up, subject to prior liquidation or other preference rights of
holders of preferred stock, if any, the holders of common stock are entitled
to receive pro rata those assets which are legally available for distribution
to shareholders. The issued and outstanding shares of common stock are
validly issued, fully paid and nonassessable.
Preferred Shares
Our articles of incorporation authorize issuance of a maximum of
1,000,000 preferred shares. No shares preferred stock have been issued. The
articles of incorporation give the board of directors the authority to divide
the class of preferred shares into series and to fix and determine the
relative rights and preferences of the shares of any such series so
established to the full extent permitted by the laws of the State of Oregon
and those articles of incorporation in respect of, among other things, the
number of preferred shares to constitute such series, and the distinctive
designations thereof, the rate and preference of dividends, if any, the time
of payment of dividends, whether dividends are cumulative and the date from
which any dividend shall accrue; whether preferred shares may be redeemed and,
if so, the redemption price and the terms and conditions of redemption; the
liquidation preferences payable on preferred shares in the event of
involuntary or voluntary liquidation; sinking fund or other provisions, if
any, for redemption or purchase of preferred shares; the terms and conditions
by which preferred shares may be converted, if the preferred shares of any
series are issued with the privilege of conversion; and voting rights, if any.
No series has been designated by the board of directors. However, preferred
stock will be issued in the merger with USOL. See "Our Business - The USOL
Merger."
In the event of a proposed merger, tender offer, proxy contest or other
attempt to gain control of us, which we have not approved, we could authorize
the issuance of one or more series of preferred stock with voting rights or
other rights and preferences which would impede the success of the proposed
merger, tender offer, proxy contest or other attempt to gain control of us.
Such issuance would be subject to any limitations imposed by applicable law,
our Articles of Incorporation, the terms and conditions of any outstanding
class or series of preferred shares and the applicable rules of any securities
exchanges upon which our securities are at any time listed or of other markets
on which our securities are at any time listed. The issuance of preferred
stock may have an adverse effect on the rights (including voting rights) of
holders of common stock.
Warrants
The following summarizes the terms of our outstanding warrants:
<TABLE>
<CAPTION>
NUMBER SHARES EXERCISE EXPIRATION
WARRANT ISSUED UNDERLYING PRICE DATE
- ------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Public Warrants 1,400,000 700,000 $5.50 July 27, 2001
1998 Private
Warrants 213,889 106,938 $5.50 July 27, 2001
1997 Private
Warrants 290,001 193,320 $2.25 April 30, 2000
1997-1 Placement
Agent Warrants 130,500 86,997 $1.125 April 30, 2002
1997-2 Placement
Agent Warrants 84,000 55,997 $.75 November 30, 2002
1997-3 Placement
Agent Warrants 21,000 13,999 $3.00 November 30, 2002
Consultant Warrants 10,000 6,666 $1.125 December 1, 2000
Underwriters' Share
Warrants 140,000 140,000 $7.70 July 27, 2003
Underwriters' Warrant
Warrants 140,000 70,000 $5.50 July 27, 2001
</TABLE>
The Public Warrants, the 1998 Warrants, and the Underwriters' Warrant
Warrants have identical terms. Two of those warrants entitle the holder to
purchase one share of Common Stock at a price of $5.50 during the period
ending on July 27, 2001. They are redeemable upon forty-five days prior
written notice at a redemption price of $.05 per Warrant if (a) the closing
high bid price of the Common Stock has exceeded $8.25 for at least 20 of the
30 trading days immediately preceding the date of mailing of the notice of
redemption, and (b) we have a current registration statement in effect for the
underlying shares.
The 1997 Warrants entitle the holder to purchase one share of Common
Stock at a price of $2.25 during the period ending on May 5, 2000. They are
redeemable upon forty-five days prior written notice at a redemption price of
$.01 per Warrant if (a) the closing high bid price of the Common Stock has
exceeded $3.375 for at least 20 of the 30 trading days immediately preceding
the date of mailing of the notice of redemption, and (b) we have a current
registration statement in effect for the underlying shares.
The Placement Agent Warrants (1997-1 through 1999-3), the Consultant
Warrants, and the Underwriters' Share Warrants contain the same basic terms,
except for the exercise price and the expiration dates.
The exercise price, number and kind of common shares to be received upon
exercise of our outstanding warrants are subject to adjustment on the
occurrence of certain events, such as stock splits, stock dividends or
recapitalization. In the event of our liquidation, dissolution or winding up,
the holders of the warrants will not be entitled to participate in the
distribution of our assets. Additionally, holders of the warrants have no
voting, preemptive, liquidation or other rights of shareholders, and no
dividends will be declared on the warrants or the shares underlying the
warrants.
The exercise prices of the warrants were determined at the time the
warrants were issued and bear no relationship to the market price of our
common stock, prevailing market conditions, our operating results in recent
periods, our book value, or other recognized criteria of value.
State Legislation
We are subject to the Oregon Control Share Act (the "Control Share Act").
As it pertains to us, the Control Share Act generally provides that a person
(the "Acquirer") who acquires our voting stock in a transaction which results
in the Acquirer holding more than each of 20%, 33 1/3% or 50% of the our total
voting power (a "Control Share Acquisition") cannot vote the shares it
acquires in the Control Share Acquisition ("Control Shares") unless voting
rights are accorded to the Control Shares by (i) a majority of each voting
group entitled to vote and (ii) the holders of a majority of the outstanding
voting shares, excluding the Control Shares held by the Acquirer and shares
held by the corporation's officers and inside directors. The term "Acquirer"
is broadly defined to include persons acting as a group.
The Acquirer may, but is not required to, submit to the corporation an
"Acquiring Person Statement" setting forth certain information about the
Acquirer and its plans with respect to the corporation. The Acquiring Person
Statement may also request that the corporation call a special meeting of
stockholders to determine whether the voting rights will be restored to the
Control Shares. If the Acquirer does not request a special meeting of
stockholders, the issue of voting rights of Control Shares will be considered
at the next annual or special meeting of stockholders. If the Acquirer's
Control Shares are accorded voting rights and represent a majority or more of
all voting power, Stockholders who do not vote in favor of the restoration of
such voting rights will have the right to receive the appraised "fair value"
of their shares, which may not be less than the highest price paid per share
by the Acquirer for the Control Shares.
This provision will not apply to the USOL acquisition, since no new
shares will be issued until our shareholders have approved the transaction.
Transfer and Warrant Agent
American Securities Transfer & Trust, Incorporated, 1825 Lawrence Street,
Denver, Colorado 80202 is our transfer agent and registrar for our common
stock and the warrant agent for the Public Warrants.
Registration Rights
When we sold certain convertible promissory notes , shares of common
stock, and warrants, we agreed with the purchasers of those securities to
register the shares and warrants they purchased under the Securities Act of
1933, unless they could be sold under SEC Rule 144. We are is registering the
shares of common stock underlying those warrants in the registration statement
of which this prospectus is a part. The shares they purchased can be sold
under Rule 144.
Shares Eligible for Future Sale
Future sales of substantial amounts of our common stock in the public
market could adversely affect prevailing market prices.
We have 3,615,617 shares of common stock outstanding. Of these shares,
1,400,000 shares are freely tradable without restriction under the Securities
Act. The remaining 2,215,617 shares and all of the shares of common stock
issuable upon exercise of outstanding options and warrants are "restricted
securities" as defined in Rule 144 and may be sold under Rule 144.
In general, under Rule 144 as currently in effect, any person (or persons
whose shares are aggregated) who has beneficially owned restricted securities
for at least one year is entitled to sell, within any three-month period, a
number of shares that does not exceed the greater of 1% of the then
outstanding shares of the issuer's common stock or the average weekly trading
volume during the four calendar weeks preceding such sale, provided that
certain public information about the issuer as required by Rule 144 is then
available and the seller complies with certain other requirements. In
general, shares issued in compliance with Rule 701 promulgated under the 1933
Act may be sold by non-affiliates subject to the manner of sale requirements
of Rule 144, but without compliance with the other requirements of Rule 144.
Affiliates may sell such shares in compliance with Rule 144, other than the
holding period requirement. A person who is not an affiliate, has not been an
affiliate within three months prior to sale, and has beneficially owned the
restricted securities for at least two years is entitled to sell such shares
under Rule 144 without regard to any of the limitations described above.
LEGAL MATTERS
Our legal counsel, Neuman & Drennen, LLC, 5445 DTC Parkway, PH-4,
Englewood, Colorado will issue an opinion regarding the legality of the
shares. David H. Drennen, a member of the firm, owns warrants to purchase
13,999 shares of our common stock. Those shares are included in this
prospectus.
EXPERTS
The financial statements and related financial statement schedule of
FirstLink Communications, Inc. as of December 31, 1998 and 1997, and for each
of the years in the two-year period ended December 31, 1998, have been
incorporated by reference herein in reliance upon the reports of KPMG LLP,
independent certified public accountants, and upon the authority of said firm
as experts in accounting and auditing.
<PAGE>
<PAGE>
You should rely only on the information
incorporated by reference or provided
in this prospectus. We have not FIRSTLINK COMMUNICATIONS, INC.
authorized anyone to provide you with
different information. We are not
making an offer of these securities in 502,917
any state where the offer would not be Shares of Common Stock
permitted. You should not assume that
the information contained in this 213,889
prospectus is accurate as of any date Common Stock
other than the date on the front of this Purchase Warrants
document or the date of documents
incorporated by reference.
TABLE OF CONTENTS
Page
Prospectus Summary 2
Risk Factors 4
Where You Can Find More
Information 8
Forward-Looking Statements 8
Capital Stock Information 9 -------------------------------
Use of Proceeds 10
The Market for Our Securities 10 Prospectus
Selling Shareholders 11
Plan of Distribution 15 -------------------------------
Limitation on Directors'
Liability; Indemnification 16
Description of Securities 17
Legal Matters 20
Experts 20 October ___, 1999
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14.Other Expenses of Issuance and Distribution.
The estimated expenses of the offering, all of which are to be borne by
us, are as follows:
<TABLE>
<CAPTION>
<S> <C>
SEC Filing Fee $ 1,641
Printing Expenses* 600
Accounting Fees and Expenses* 2,000
Legal Fees and Expenses* 6,000
Blue Sky Fees and Expenses* 1,000
Registrar and Transfer Agent Fee* 1,000
Miscellaneous* 759
---------
Total* $ 13,000
</TABLE>
- ---------------
* Estimated
Item 15. Indemnification of Director and Officers.
The only statute, charter provision, by-law, contract, or other
arrangement under which any controlling person, director or officers of the
Registrant is insured or indemnified in any manner against any liability which
he may incur in his capacity as such, is as follows:
Our articles of incorporation permit and its By-laws require us to
indemnify officers and directors to the fullest extent permitted by the Oregon
Business Corporation Law (OBCA). We have also entered into agreements to
indemnify our directors and executive officers to provide the maximum
indemnification permitted by Oregon law. These agreements, among other
provisions, provide indemnification for certain expenses (including attorney
fees), judgments, fines and settlement amounts incurred in any action or
proceeding, including any action by or in our right.
Article VI of the our by-laws permits us to indemnify our directors,
officers, employees and agent to the maximum extent permitted by the OBCA.
Section 317 of the OBCA provides that a corporation has the power to indemnify
and hold harmless a director, officer, employer, or agent of the corporation
who is or is made a party or is threatened to be made a party to any
threatened action, suit or proceeding, whether civil, criminal, administrative
or investigative, against all expense, liability and loss actually and
reasonably incurred by such person in connection with such a proceeding if he
or she acted in good faith and in a manner he or she reasonably believed to be
in the best interest of the corporation, and, with respect to any criminal
proceeding, had no reasonable cause to believe that the conduct was unlawful.
If it is determined that the conduct of such person meets these standards,
such person may be indemnified for expenses incurred and amounts paid in such
proceeding if actually and reasonably in connection therewith.
If such a proceeding is brought by or on behalf of the corporation (i.e.,
a derivative suit), such person may be indemnified against expenses actually
and reasonably incurred if such person acted in good faith and in a manner
reasonably believed to be in the best interest of the corporation and its
shareholders. There can be no indemnification with respect to any matter as
to which such person is adjudged to be liable to the corporation unless and
only to the extent that the court in which such action or suit was brought
shall determine upon application that, despite such adjudication but in view
of all of the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the court shall deem proper.
Where any such person is successful in any such proceeding, such person
is entitled to be indemnified against expenses actually and reasonably
incurred by him or her. In all other cases (unless order by a court),
indemnification is made by the corporation upon determination by it that
indemnification of such person is proper in the circumstances because such
person has met the applicable standard or conduct.
A corporation may advance expenses incurred in defending any such
proceeding upon receipt of an undertaking to repay any amount so advanced if
it is ultimately determined that the person is not eligible for
indemnification.
The indemnification rights provided in Section 317 of the OBCA are not
exclusive of additional rights to indemnification for breach of duty to the
corporation and its shareholders to the extent additional rights are
authorized in the corporation's articles of incorporation and are not
exclusive of any other rights to indemnification under any by-law, agreement,
vote of shareholders or disinterested directors or otherwise, with as to
action in his or her office and as to action in another capacity which holding
such office.
Item 16. Exhibits.
a. The following Exhibits are filed as part of this Registration
Statement pursuant to Item 601 of Regulation S-B:
<TABLE>
<CAPTION>
<S> <C>
Exhibit No. Title
- ---------- -----
2.1 Agreement and Plan of Merger and Reorganization (1)
4.2.1 Form of Warrant Agreement (with Form of Warrant Certificate) (2)
5.1 Opinion of Neuman Drennen & Stone, LLC
23.1 Consent of Neuman Drennen & Stone, LLC (included in Exhibit 5.1)
23.2 Consent of KPMG LLP
24 Power of Attorney (included on page II-4)
</TABLE>
- ------------------
(1) Incorporated by reference from the Registrant's Current Report on Form
8-K for event occurring on July 21, 1999.
(2) Incorporated by reference from the Registrants Amendment No.4 to
Registration Statement on Form SB-2, File No. 333-49291
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
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 that 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 Act
and will be governed by the final adjudication of such issue.
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 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.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing the Form SB-2 Registration Statement to be
signed on its behalf by the undersigned thereunto duly authorized, in the City
of Portland, State of Oregon on the 1st day of November 1999.
FIRSTLINK COMMUNICATIONS, INC.,
an Oregon Corporation
By: /s/ A. Roger Pease
------------------------------
A. Roger Pease, President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints A. Roger Pease and Jeffrey S. Sperber, and each
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and re-substitution, for him and in his name, place, and stead,
in any and all capacities, to sign any and all amendments (including post-
effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1933, this
Registration Statement on Form SB-2 has been signed by the following persons
in the capacities with FirstLink Communications, Inc. and on the dates
indicated.
Signature Title Date
- --------- ----- ----
/s/ A. Roger Pease President, Chief Executive 11/1/99
- ----------------------------- Officer and Director
A. Roger Pease
/s/ Jeffrey S. Sperber Chief Financial Officer 11/1/99
- ----------------------------- and Secretary
Jeffrey S. Sperber
/s/ Thomas E. McChesney Director 11/1/99
- ------------------------------
Thomas E. McChesney
/s/ Robert F. Olsen Director 11/1/99
- ------------------------------
Robert F. Olsen
/s/ James F. Twaddell Director 11/1/99
- ------------------------------
James F. Twaddell
<PAGE>
NEUMAN & DRENNEN, LLC
ATTORNEYS AT LAW
5445 DTC PARKWAY, PENTHOUSE 4
ENGLEWOOD, COLORADO 80111
(303) 221-4700 (tel) (303) 488-3454 (fax)
November 1, 1999
FirstLink Communications, Inc.
190 SW Harrison
Portland, Oregon 97201
Ladies and Gentlemen:
We have acted as legal counsel for FirstLink Communications, Inc. (the
"Company") in connection with the Company's Registration Statement on Form
S-3 (the "Registration Statement") filed by the Company with the Securities
and Exchange Commission under the Securities Act of 1933, as amended, and
the prospectus included as a part of the Registration Statement (the
"prospectus"), relating to 1,413,251 shares of Common Stock, no par value
per share (the "Common Stock"). The Common Stock may be offered and sold
by certain selling shareholders of the Company in the manner set forth in
the Registration Statement and prospectus. The Common Stock is to be
issued to the Selling Shareholders upon their exercise of certain warrants
and options of the Company.
In connection therewith, we have examined: (a) the Registration
Statement and the prospectus included therein, as amended; (b) the Articles
of Incorporation and Bylaws of the Company; and (c) the relevant corporate
proceedings of the Company. In addition to such examination we have
reviewed such other proceedings, documents, and records and have
ascertained or verified such additional facts as we deem necessary or
appropriate for purposes of this opinion.
Based upon the foregoing, we are of the opinion that:
1. The Company has been legally incorporated and is validly existing
under the laws of the State of Oregon.
2. The Shares, and shares of Common Stock into which the Warrants
are exercisable, upon issuance and payment therefor, as
contemplated by the Registration Statement and prospectus, will
be validly issued, fully paid, and nonassessable.
3. We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to our firm under
the caption "Legal Matters" in the prospectus. In giving this
consent, we do not admit that we come within the category of
persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations
of the Securities and Exchange Commission thereunder.
Very truly yours,
NEUMAN & DRENNEN, LLC
/s/ David H. Drennen
<PAGE>
KPMG, LLP
Certified Public Accountants
1211 S.W. 5TH AVENUE, SUITE 2000
PORTLAND, OREGON 97204
(503) 221-6500 (tel) (503) 796-7650 (fax)
Independent Auditors' Consent
The Board of Directors
FirstLink Communications, Inc.
We consent to the use of our report, dated January 29, 1999, except for note 1
which is at March 11, 1999, relating to the balance sheet of FirstLink
Communications, Inc. as of December 31, 1998, and the related statements of
operations, stockholders' equity and cash flows for each of the years in the
two-year period ended December 31, 1998 which report is included in the
Registration Statement on Form S-3, dated August 20, 1999, of FirstLink
Communications, Inc., and to the reference to the reference to our firm under
the heading "Experts" in the Registration Statement.
/s/ KPMG LLP
Portland, Oregon
November 1, 1999
