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As filed with the Securities and Exchange Commission on August 27, 1999.
Registration No. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
SECURITIES ACT OF 1933
FIRSTLINK COMMUNICATIONS, INC.
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(Exact name of Registrant as specified on its Charter)
Oregon 7385 93-1197477
- ---------------- -------------------------- ---------------
(State or other (Primary Standard Industrial (I.R.S.
jurisdiction of Classification Code Number Employer
incorporation or Identification
organization) 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 & Stone, 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 the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: [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 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. [ ]
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<PAGE>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Each Class Amount to Maximum Maximum
of Securities to be be Offering Aggregate Amount of
Registered Registered Price Offering Price Registration
Per Share Fee
- ---------------------------------------------------------------------------
Common Stock(1) 1,409,917 $4.19(2) $5,904,027 $1,641
- ---------------------------------------------------------------------------
TOTAL: $5,904,027 $1,641
(1) Common stock issuable by the Registrant upon conversion of
Registrant's issued and outstanding warrants and options, or upon exercise
of warrants that may be issued. 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 August 19, 1999. This calculation
is made in accordance with Rule 457(c).
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
Statement and outside front and outside front cover page of
cover of Prospectus Prospectus
2. Inside front and outside back Inside front and outside back cover
cover pages of Prospectus pages of Prospectus
3. Summary Information, Risk Factors Summary of Offering; Risk Factors
and Ratio of Earnings to Fixed
Charges
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 Legal Matters
Counsel
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 and
Indemnification for Securities Directors
Act Liabilities
<PAGE>
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED AUGUST ___, 1999
FIRSTLINK COMMUNICATIONS, INC.
This is a public offering of 1,409,917 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 $6,630,930.
The Nasdaq Small Cap Market lists our shares and certain of our
warrants under the symbols "FLCI" and "FLCIW", respectively.
Investing in the shares involves risks. You should not purchase 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 August ____, 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 integrated telecommunications and entertainment services to
multi-family 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 apartment
and condominium complexes 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 TCI, a subsidiary of AT&T.
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 the USOL
Merger, 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
shares.
Our common stock is listed on the Nasdaq Small Cap Market, under the
symbol "FLCI." Certain of our warrants, including warrants into which some
of the shares offered hereby are exercisable, are also listed on the Nasdaq
Small Cap Market, under the symbol "FLCI." The market prices of the common
stock and the warrants have fluctuated significantly since they were first
traded. The last prices that the shares and warrants were sold for on
August 19, 1999, were $4.31 and $.84, respectively.
<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 would no longer
enter into such agreements with us. We subsequently negotiated the Merger
Agreement with USOL, which will allow us to provide cable and telephone
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 and the businesses which it will acquire prior to our merger
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 those of the Company may be able to offer greater incentives
to property owners, and the amount of the payments demanded by property
owners may increase, impairing the Company's ability to operate on a
profitable basis. Some of our competitors include private cable and phone
companies, local exchange carriers ("LECs"), competitive local exchange
carriers ("CLECs"), franchise cable companies, franchise cable company
joint ventures and LEC 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 the Company 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 ("ROEs") 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 will incur substantial additional indebtedness to continue
to upgrade our existing systems and to acquire ROEs 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 ROEs 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 ROEs. 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 ROEs or finance the build-out of properties
covered by ROEs, or if the cost of acquiring ROEs 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 ROEs 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
("PUC"). 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, including Mr. Pease, our President and
Chief Executive Officer, and Mr. Sperber, our Chief Financial Officer. It
is possible that members of the management of USOL will replace some of
those individuals. If suitable replacements are not found, 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 financed its operations primarily through loans from equity
owners and other lenders, equipment lease financing, and borrowings under a
credit facility with Silicon Valley Bank. It has obtained a commitment for
a $35 million senior debt credit facility. 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 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. See "Description of Securities."
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 566,668 shares of common stock at a weighted
average exercise price of $1.30 per share, and outstanding options and
warrants exercisable to purchase up to 1,409,917 shares of common stock at
a weighted average exercise price of $4.70 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. See "Description of Securities."
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. See "Description of Securities."
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 Commission 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.
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WHERE YOU CAN FIND MORE INFORMATION
The Commission 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 Commission will automatically update and
supercede this information. We incorporate by reference the documents
listed below and any future filings made with the Commission 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 Commission.
(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 Commission's worldwide website 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.
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CAPITAL STOCK INFORMATION
The following table sets forth the capitalization of the Company 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
<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) 566,668 shares of Common Stock which have been
granted under the Company's Stock Option Plans, having exercise prices
ranging from $1.13 to $2.31 per share, and of which 286,000 are
subject to future vesting; and (ii) 1,409,917 shares of Common Stock
reserved for issuance upon exercise of outstanding options and
warrants having a weighted average exercise price of $4.70 per share.
See "Description of Securities-Warrants."
<PAGE>
<PAGE>
USE OF PROCEEDS
We will not receive any of the proceeds from the offer and sale of 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 $6,630,930. You will not pay any of the expenses which 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
(through August 19) $6.50 $4.06 $1.43 $.84
</TABLE>
There were approximately 550 holders of record of the Company's common
stock as of June 30, 1999.
No dividends have been declared or paid by the Company, nor does the
Company anticipate paying cash dividends on the shares of common stock in
the foreseeable future.
<PAGE>
<PAGE>
SELLING SHAREHOLDERS
The selling shareholders have indicated that the warrants and shares
offered by 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.
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.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
----------------------
Percentage
of
Number of Common
Shares Number Number of Stock That
Beneficially of Shares Will be
Owned Prior Shares Beneficially Beneficially
Name Of Selling to Offering Offered Owned Owned
Shareholder Hereby After Offering After
Offering
- -------------------------- ------------ -------- --------------- ----------
- --
<S> <C> <C> <C> <C>
Jack A. Alexander Trust 22,647 13,332 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 (1) 162,290 57,999 104,291 5.6%
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 27,370 8,703 18,667 *
Al Blum & Co Inc. 20,000 6,666 13,334 *
Boucher & Boucher 36,000 36,000 0 *
Caribou Bridge Fund, LLC 114,445 14,445 100,001 2.8%
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 *
Generation Capital Associates 100,000 33,333 66,667 1.8%
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%
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 (2) 141,920 28,578 113,342 3.1%
Eugene C. McColley (3) 130,845 47,999 82,846 2.3%
James Edgar McDonald Trust (4) 172,611 7,777 158,168 4.3%
Virginia Stevens McDonald
Trust(4) 172,611 6,666 158,168 4.3%
Robert M. Neider 20,000 4,444 15,556 *
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 *
Sterling Capital LLC 16,667 5,555 11,112 *
WEB Service Co. 37,500 12,500 25,000 *
</TABLE>
<PAGE>
<PAGE>
* Less than 1%
(1) 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.
(2) Elizabeth McChesney and Thomas E. McChesney are husband and wife. Each is
deemed to be the beneficial owner of the other's shares. Mr. McChesney is
one of our directors.
(3) Includes shares owned by the 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.
(4) Mr. and Mrs. McDonald are husband and wife. Each is deemed to be the
beneficial owner of the other's shares.
<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 the 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. 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
The Company is 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 the Common Stock
and the warrant agent for the Public Warrants.
Registration Rights
When we sold certain Convertible Promissory Notes (the "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. The Company is registering those securities in the registration statement
of which this Prospectus is a part.
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 & Stone, 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 authorized anyone to provide
you with different information. We
are not making an offer of these
securities in any state where the offer -----------------------------------
would not be permitted. You should not FIRST LINK COMMUNICATIONS, INC.
assume that the information contained
in this Prospectus is accurate as of
any date other than the date on the front 1,409,917
of this document or the date of documents Shares of Common Stock
incorporated by reference.
TABLE OF CONTENTS
Page
Prospectus Summary 2
Risk Factors 3
Where You Can Find More
Information 10
Forward-Looking Statements 10
Capital Stock Information 11
Use of Proceeds 12
The Market for Our Securities 12
Selling Shareholders 13
Plan of Distribution 16
Limitation on Directors'
Liability; Indemnification 17 --------------------------------
Description of Securities 18 PROSPECTUS
Legal Matters 22 --------------------------------
Experts 22
, 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:
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
__________________________
* 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:
The Company's Articles of Incorporation permit and its By-laws require the
Company to indemnify officers and directors to the fullest extent permitted by
the Oregon Business Corporation Law (OBCA). The Company has also entered into
agreements to indemnify its 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 the right of the Company.
Article VI of the Company's By-laws permits the Company to indemnify its
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:
Exhibit No. Title
---------- -----
2.1 Agreement and Plan of Merger and Reorganization (1)
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)
________________________________
(1) Incorporated by reference from the Registrant's Current Report on Form 8-K
for event occurring on July 21, 1999.
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 26th day of August, 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 August 26, 1999
- ----------------------- Officer and Director
A. Roger Pease
/s/ Jeffrey S. Sperber Chief Financial Officer August 26, 1999
- ----------------------- and Director
Jeffrey S. Sperber
/s/ Thomas E. McChesney Director August 26, 1999
- ------------------------
Thomas E. McChesney
/s/ Robert F. Olsen Director August 26, 1999
- ------------------------
Robert F. Olsen
/s/ James F. Twaddell Director August 26, 1999
- ------------------------
James F. Twaddell
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<PAGE>
EXHIBITS
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FIRSTLINK COMMUNICATIONS, INC.
<PAGE>
<PAGE>
INDEX OF EXHIBITS
EXHIBIT NO. TITLE
- ----------- -----
5.1 Opinion of Neuman Drennen & Stone, LLC
23.2 Consent of KPMG LLP
<PAGE>
<PAGE>
EXHIBIT 5.1
NEUMAN, DRENNEN & STONE, LLC
Temple-Bowron House
1507 Pine Street
Boulder, Colorado 80302
Telephone: (303)449-2100
Facsimile: (303) 449-1045
August 20, 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,
/s/ David H. Drennen
NEUMAN DRENNEN & STONE, LLC
<PAGE>
<PAGE>
EXHIBIT 23.2
KPMG PEAT MARWICK, LLP
1211 S.W. 5th Avenue, Suite 3000
Portland, Oregon 97204
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 Peat Marwick, LLP
Portland, Oregon
August 20, 1999
