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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 8, 2000
REGISTRATION NO. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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ON2.COM INC.
(Exact name of Registrant as specified in its charter)
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<S> <C>
DELAWARE 84-1280679
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification Number)
organization)
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375 GREENWICH STREET, NEW YORK, NEW YORK 10013, (212) 941-2400
(Address, including zip code and telephone number, including area code, of
registrant's principal executive offices)
DOUGLAS A. MCINTYRE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ON2.COM INC.
375 Greenwich Street, New York, New York 10013
(212) 941-2400
(Name, address, including zip code and telephone number, including area code, of
agent for service)
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COPY TO:
WILLIAM A. NEWMAN, ESQ.
McGuireWoods LLP, 9 West 57th Street, Suite 1620, New York, New York 10019
(212) 548-2100
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS
REGISTRATION STATEMENT.
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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, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) PER SHARE(1) OFFERING PRICE(1)(2) REGISTRATION FEE
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Common Stock par value $0.01 per share
Preferred Stock par value $0.01 per share
Total $7,897,000 100% $7,897,000 $2,085
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(1) An indeterminate number of or aggregate principal amount of the securities
is being registered as may at various times be issued at indeterminate
prices, with an aggregate public offering price not to exceed $7,897,000.
The proposed maximum offering price per unit will be determined from time to
time in connection with the issuance of the securities registered. Any
securities registered hereunder may be sold separately or as units with
other securities registered hereunder.
(2) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933.
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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.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
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SUBJECT TO COMPLETION, DATED DECEMBER 8, 2000
$7,897,000
ON2.COM INC.
Common Stock
Preferred Stock
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We may offer from time to time up to $7,897,000 aggregate principal amount
of common stock and preferred stock with this prospectus, in amounts, at prices
and on terms to be determined by market conditions at the time of the offering.
An accompanying prospectus supplement will specify the terms of the securities.
We may sell securities directly to purchasers, through underwriters, dealers
or agents or through any combination of these methods. A supplement to this
prospectus will name any underwriters, dealers or agents involved in the sale of
our securities and describe their compensation.
This prospectus may not be used to offer and sell securities unless
accompanied by a prospectus supplement. The prospectus supplement may update or
change information contained in this prospectus.
INVESTING IN THE COMMON STOCK OR PREFERRED STOCK INVOLVES A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 1.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is December , 2000.
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TABLE OF CONTENTS
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PAGE
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ABOUT THIS PROSPECTUS....................................... i
RISK FACTORS................................................ 1
SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING
STATEMENTS................................................ 6
WHERE YOU CAN FIND MORE INFORMATION......................... 6
THE COMPANY................................................. 7
RECENT DEVELOPMENTS......................................... 7
USE OF PROCEEDS............................................. 7
DESCRIPTION OF CAPITAL STOCK................................ 8
PLAN OF DISTRIBUTION........................................ 10
LEGAL MATTERS............................................... 11
EXPERTS..................................................... 11
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3 that we
filed with the Securities and Exchange Commission utilizing a "shelf"
registration process. Under this shelf process, we may sell the securities
covered by this prospectus from time to time in one or more offerings up to an
aggregate initial public offering price of $7,897,000. Each time securities are
offered under this prospectus, we will provide a prospectus supplement that will
contain specific information about the terms of that offering. The prospectus
supplement may also add, update or change information contained in this
prospectus. You should read both this prospectus and any prospectus supplement
together with additional information described below under the heading "Where
You Can Find More Information."
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RISK FACTORS
In evaluating our business, prospective investors should carefully consider
the following risks in addition to the other information in this prospectus or
in the documents referred to in this prospectus. Any of the following risks
could have a material adverse impact on our business, operating results and
financial condition and result in a complete loss of your investment.
WE HAVE A HISTORY OF LOSSES AND NEGATIVE CASH FLOW AND ANTICIPATE CONTINUED
LOSSES.
Since our inception, we have incurred significant losses and negative cash
flow from operations, and as of September 30, 2000, we had an accumulated
deficit of approximately $53.7 million. We have not achieved profitability, and
we expect to continue to incur operating losses for the foreseeable future as we
fund operating and capital expenditures in implementing our business plan. Our
business model assumes that consumers will be attracted to and use
broadband-specific video compression technology to access content available on
customer Web sites that will, in turn, allow us to provide our technology
solutions to customers. Our business model is not yet proven, and we cannot
assure you that we will ever achieve or sustain profitability or that our
operating losses will not increase in the future. Our business strategy may be
unsuccessful and we may not be able to adequately address all or any of these
risks. Even if we are able to achieve profitability, we may be unable to sustain
or increase our profitability. In either case, our business, financial
conditions and results of operations will be materially and adversely affected.
WE MAY NEED ADDITIONAL CASH TO OPERATE OUR BUSINESS.
We anticipate that we will require additional funding within the next
12 months to adequately finance the growth of our current operations and the
fulfillment of our strategic objectives. We may require additional financing
within this time frame to fund acquisitions, develop new technologies or acquire
strategic assets. However, there can be no assurance that we will be able to
procure additional funding on terms acceptable to us, or at all. In that event,
we could reduce the development of our products and services, scale back current
operations until funds become available to us on favorable terms and could
potentially result in a modification to the auditor's report on our
December 31, 2000 financial statements. We cannot assure you that we will be
able to generate sufficient cash flow from our operations or be able to raise
sufficient capital, or at all, to enable us to operate our business.
SINCE WE RECENTLY CHANGED OUR STRATEGIC OPERATING MODEL, WE ARE ESSENTIALLY A
NEW COMPANY AND ACCORDINGLY ARE SUBJECT TO THE RISKS ASSOCIATED WITH A NEW
COMPANY.
Even though our business was founded in 1992, we have only recently
implemented our new business plan. As a result, our company is essentially a new
venture. Therefore, we do not have a significant operating history upon which
you can evaluate us and our prospects, and you should not rely upon our past
performance to predict our future performance. In transitioning to our new
business model, we are substantially changing our business operations, sales and
implementation practices, customer service and support operations and management
focus. We also face new risks and challenges, including a lack of meaningful
historical financial data upon which to plan future budgets, competition from a
new range of sources, the need to develop strategic relationships and other
risks described below. We cannot guarantee that we will be able to transition
successfully to our new business model.
Our ability to generate profits, if any, will depend on our ability:
- to attract customers to use our technology infrastructure and support
services;
- to generate revenues from software licensing and sales, broadband
streaming services and consulting to developers of broadband content;
and
- to control costs.
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WE ANTICIPATE CONTINUED SIGNIFICANT OPERATING LOSSES FOR THE FORESEEABLE FUTURE
AND WE CANNOT ASSURE YOU THAT PROFITABILITY WILL EVER BE ATTAINED.
In light of the rapidly evolving nature of our business and its limited
operating history, we have little experience forecasting our revenues and
believe that period-to-period comparisons of financial results are not
necessarily meaningful. Therefore, you should not rely on period-to-period
comparisons of our historical financial results as an indication of our future
financial results. Moreover, our financial results may vary from period to
period due to the uncertainties of our business.
OUR STOCK PRICE IS VOLATILE.
The market for our common stock has experienced extreme price and volume
fluctuations and may continue to be volatile in response to various factors,
including:
- quarterly variations in our operating results;
- competitive announcements;
- the operating and stock price performance of other companies that
investors may deem comparable to us;
- news relating to trends in our markets; and
- changes in financial estimates by securities analysts or failure to
meet analyst estimates.
In addition, the stock market generally has experienced significant price
and volume fluctuations, and the market prices of companies in our industry have
been highly volatile. Due to the volatility of the stock market generally, the
price of our common stock could fluctuate for reasons beyond our control.
THE SALE OF SHARES ELIGIBLE FOR FUTURE SALE IN THE OPEN MARKET COULD DEPRESS OUR
STOCK PRICE.
Sales of significant amounts of common stock in the public market in the
future, the perception that sales will occur or the registration of shares could
materially and adversely affect the market price of our common stock or our
future ability to raise capital through an offering of our equity securities. As
of November 30, 2000, there were outstanding approximately 12,208,699 shares of
our common stock that are freely tradable. As of November 30, 2000, we issued
approximately 18,750,823 shares of common stock, warrants to purchase up to
7,033,135 shares of our common stock upon exercise and 3,002,931 shares of
preferred stock that are convertible under certain circumstances into our common
stock, in private transactions since June of 1999. We have granted the holders
of those securities registration rights. Therefore, these shares of common
stock, warrants and preferred stock can be sold in accordance with Rule 144 of
the Securities Act or the holders thereof can exercise their registration rights
related thereto. In addition, as of November 30, 2000, there were outstanding
options to purchase approximately 6,859,000 shares of common stock that become
eligible for sale in the public market from time to time depending on vesting.
There are also 5,459,000 shares of common stock which are issuable under our
common stock purchase agreement with Crossover Ventures, Inc., dated
December 1, 2000, and which may be granted in the future to Crossover Ventures.
We may also issue additional shares in acquisitions and may grant additional
stock options to our employees, officers, directors and consultants under our
stock option plans.
The issuance or even the potential issuance of shares under the common stock
purchase agreement, in connection with any other additional financing, and upon
exercise of warrants, options or rights will have a dilutive impact on other
stockholders and could have a negative effect on the market price of our common
stock. In addition, the shares issuable to Crossover Ventures under the common
stock purchase agreement will be issued at a discount to the daily volume
weighted average prices of
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our common stock prior to the issuance to Crossover Ventures. This will further
dilute the interests of other stockholders.
As we sell shares of common stock to Crossover Ventures under the common
stock purchase agreement, and then Crossover Ventures sells the common stock to
third parties, our common stock price may decrease due to the additional shares
in the market. If we decide to draw down under the common stock purchase
agreement as the price of our common stock decreases, we will be required to
issue more shares of our common stock for any given dollar amount invested by
Crossover Ventures, subject to the minimum selling price we specify. The more
shares that are issued under the common stock purchase agreement, the more our
shares will be diluted and the more our stock price may decrease. This may
encourage short sales, which could place further downward pressure on the price
of our common stock.
WE DEPEND ON THE GROWTH OF BROADBAND INTERNET USAGE.
Our technology works primarily over "broadband" Internet connections. The
main services we are building require high-bandwidth access to the Internet and
delivery of data volumes that are higher than most service providers are
presently delivering. While we are striving to overcome the technical and
business hurdles inherent in establishing a network of this nature, there can be
no assurance we will be successful in obtaining the bandwidth required to
provide our services, or obtain it at economical cost.
Broadband web usage may be inhibited for a number of reasons, such as:
- inadequate network infrastructure;
- security concerns;
- inconsistent quality of service; and
- availability of cost-effective, high-speed service.
Our business would be adversely affected if broadband web usage does not
continue to grow.
OUR SUCCESS DEPENDS ON OUR ABILITY TO CONTINUE TO ATTRACT, RETAIN AND MOTIVATE
HIGHLY SKILLED EMPLOYEES.
Our ability to execute our growth plan and be successful depends on our
continuing ability to attract, retain and motivate highly skilled employees. As
we continue to grow, we will need to hire additional personnel in all
operational areas. Competition for personnel throughout the Internet industry is
intense. We may be unable to retain our key employees or attract, assimilate or
retain other highly qualified employees in the future. We have from time to time
in the past experienced, and we expect to continue to experience in the future,
difficulty in hiring and retaining highly skilled employees with appropriate
qualifications. If we do not succeed in attracting new personnel or retaining
and motivating our current personnel, our business will be adversely affected.
MUCH OF OUR TECHNOLOGY RELIES ON OWNED OR LICENSED INTELLECTUAL PROPERTY AND WE
CANNOT BE SURE THAT SUCH RIGHTS ARE PROTECTED FROM THE USE OF OTHERS,
INCLUDING POTENTIAL COMPETITORS.
We regard much of our technology as proprietary and try to protect it by
relying on trademarks, copyrights, patents, trade secret laws and
confidentiality agreements. In connection with our license agreements with third
parties, we seek to control access to and distribution of our technology,
documentation and other proprietary information. Even with all of these
precautions, it could be possible for someone else to either copy or otherwise
obtain and use our proprietary information without our authorization or to
develop similar technology independently. Effective trademark, copyright and
trade secret protection may not be available in every country in which our
services are
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made available through the Internet, and policing unauthorized use of our
proprietary information is difficult and expensive. We cannot be sure that the
steps we have taken will prevent misappropriation of our proprietary
information. Any misappropriation could have a material adverse effect on our
business. In the future, we may need to go to court to either enforce our
intellectual property rights, to protect our trade secrets or to determine the
validity and scope of the proprietary rights of others. That litigation might
result in substantial costs and diversion of resources and management attention.
We currently license from third parties technologies incorporated into some
of our products and services. As we continue to introduce new services that
incorporate new technologies, we may be required to license additional
technology from others. We cannot be sure that these third-party technology
licenses will continue to be available on commercially reasonable terms, if at
all.
OUR INDUSTRY IS HIGHLY COMPETITIVE.
The Internet industry is highly competitive and affected by rapid change. We
believe that the principal competitive factors in our business include
technological innovation, pricing, customer service, network quality, service
offerings and the flexibility to adapt to changing market conditions. In
establishing our broadband strategy, we face a number of strong, firmly
entrenched competitors who are currently providing similar services to
low-bandwidth users and high-bandwidth users. These and other companies have
announced plans to provide broadband video-based services and technology. In
addition to competition from other Internet content and technology companies,
well-established media distribution companies, particularly in the cable
television and satellite markets, have established, and continue to seek to
establish, interactive, on-demand digital services through the development of
sophisticated digital set-top technology and related back-end server systems.
Many of our existing competitors have, and some future competitors may have,
significantly greater financial and technical resources than we have.
WE MUST KEEP PACE WITH TECHNOLOGICAL CHANGE TO REMAIN COMPETITIVE.
Our future success depends, in large part, on our ability to use leading
technologies effectively, to develop our technological expertise, to enhance our
existing services and to develop new services that meet changing customer needs
on a timely and cost-effective basis. We are unable to predict which
technological development will challenge our competitive position or the amount
of expenditures that will be required to respond to a rapidly changing
technological environment. Our failure to respond in a timely and effective
manner to new and evolving technologies could have a negative impact on our
operating results and financial condition.
INTERNET CAPACITY CONSTRAINTS MAY IMPAIR THE ABILITY OF CONSUMERS TO ACCESS OUR
WEB SITE OR OUR CUSTOMER'S WEB SITES, WHICH COULD HINDER OUR ABILITY TO
GENERATE REVENUE.
Our success will depend, in large part, upon a robust communications
industry and infrastructure for providing Internet access and carrying Internet
traffic. The Internet may ultimately not prove to be a viable commercial medium
because of:
- inadequate development of the necessary infrastructure such as a
reliable network backbone;
- failure to timely develop complementary products such as high speed
modems that will enable broadband access for individuals;
- delays in the development or adoption of new standards and protocols
required to handle increased levels of Internet activity; or
- increased government regulation.
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If the Internet continues to experience significant growth in the number of
users and the level of use, then the Internet infrastructure may not be able to
continue to support the demands placed on it.
WE FACE UNCERTAINTIES REGARDING GOVERNMENTAL REGULATION AND LEGAL UNCERTAINTIES.
Laws and regulations specifically pertaining to the Internet are new and
developing. These laws or regulations govern matters such as online content,
intellectual property, user privacy, e-commerce, information security and
taxation. In addition, the applicability of existing laws to the Internet is
uncertain and evolving. As a result of this uncertainty, it is difficult to
predict the impact, if any, that future regulation or changes in regulation may
have on our operations.
Moreover, we may be liable to third parties for any content that we encode,
distribute or make available on our website if that content violates a third
party's intellectual property rights or violates any applicable laws, such as
obscenity laws or defamation laws. Although we try to mitigate this risk by
seeking indemnification from our customers and suppliers, we may still be
subject to liability if indemnification is not obtained, is contested or does
not provide us with enough resources to cover any potential liability.
EFFECTS OF ANTI-TAKEOVER PROVISIONS COULD INHIBIT POTENTIAL INVESTORS.
Some of the provisions of our certificate of incorporation, our bylaws and
Delaware law could, together or separately:
- discourage potential acquisition proposals;
- delay or prevent a change in control; and
- limit the price that investors might be willing to pay in the future
for shares of our common stock.
In particular, our board of directors is authorized to issue up to
20,000,000 shares of preferred stock (less any outstanding shares of preferred
stock) with rights and privileges that might be senior to our common stock,
without the consent of the holders of the common stock.
WE HAVE NEVER PAID DIVIDENDS.
We currently intend to retain earnings, if any, to support our growth
strategy. We do not anticipate paying dividends on our stock in the foreseeable
future.
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SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS
Some statements in (a) this prospectus under the caption "Risk Factors,"
(b) any applicable prospectus supplement and (c) the documents incorporated by
reference into this prospectus may constitute "forward-looking statements"
within the meaning of federal securities laws. Forward-looking statements are
based on our management's beliefs, assumptions, and expectations of our future
economic performance, taking into account the information currently available to
them. These statements are not statements of historical fact. Forward-looking
statements involve risks and uncertainties that may cause our actual results,
performance or financial condition to be materially different from the
expectations of future results, performance or financial condition we express or
imply in any forward-looking statements. Some of the important factors that
could cause our actual results, performance or financial condition to differ
materially from our expectations are discussed in "Risk Factors" and in our
filings with the SEC.
When used in our documents or presentations, the words "anticipate,"
"estimate," "expect," "objective," "projection," "forecast," "goal" or similar
words are intended to identify forward-looking statements. We qualify any such
forward-looking statements entirely by these cautionary factors.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information that we file at the SEC's public reference room at 450 Fifth Street
N.W., Washington, D.C. 20549 or at its regional public reference rooms in New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the operations and locations of the public reference
rooms. Our SEC filings are also available to the public from commercial document
retrieval services and at the SEC's website at "http://www.sec.gov."
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference becomes part of this prospectus, and information that
we file later with the SEC will automatically update and supercede this
information. We incorporate by reference the documents listed below that we have
previously filed with the SEC:
1. Annual Report on Form 10-KSB for the fiscal year ended December 31,
1999;
2. Current Report on Form 8-K filed with the SEC on March 2, 2000;
3. Quarterly Report on Form 10-QSB for the quarterly period ended
March 31, 2000;
4. Current Report on Form 8-K filed with the SEC on April 20, 2000;
5. Quarterly Report on Form 10-QSB for the quarterly period ended June 30,
2000;
6. Quarterly Report on Form 10-QSB for the quarterly period ended
September 30, 2000; and
7. Current Report on Form 8-K filed with the SEC on November 20, 2000.
We also incorporate by reference in this prospectus any future filings that
we may make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after the date of this prospectus. These include
periodic reports, such as annual reports on Form 10-K, quarterly reports on
Form 10-Q and current reports on Form 8-K.
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You may obtain the documents incorporated by reference as described above.
You may also request a copy of these filings, at no cost, from us by writing or
telephoning us at:
On2.com Inc.
375 Greenwich Street
New York, NY 10013
(212) 941-2400
Attention: Investor Relations
You should rely only on the information provided in this prospectus or any
prospectus supplement or incorporated by reference. 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.
Information is accurate only as of the date of the documents containing the
information, unless the information specifically indicates that another date
applies.
This prospectus is a part of a registration statement we filed with the SEC.
As allowed by the rules of the SEC, this prospectus does not contain all of the
information that can be found in the registration statement or in the exhibits
to the registration statement. You should read the registration statement and
its exhibits for a complete understanding of all of the information included in
the registration statement.
This prospectus does not offer to sell or buy any shares in any jurisdiction
where it is unlawful. You should not assume that the information in this
prospectus or any supplement is accurate as of any date other than the date on
the front of these documents.
THE COMPANY
We are a leading broadband application service provider specializing in the
delivery of television quality video over the Internet. We have developed next
generation proprietary video compression and Internet streaming technology, True
Motion-Registered Trademark- VP3, that enables full-motion, full-screen
television-quality video over the Internet. We provide a full suite of products
and services that includes high-level video encoding, hosting, and streaming, as
well as interface design, customized technical support and consulting services.
We provide our full-service broadband solutions to new and traditional media
companies, Internet enterprises and Web sites. Our executive offices are located
at 375 Greenwich Street, New York, New York 10013. Our telephone number at that
address is (212) 941-2400. As used in this prospectus, the words "we," "us,"
"our" and "On2" refer to On2.com Inc., a Delaware corporation, and its wholly
owned subsidiaries.
RECENT DEVELOPMENTS
On November 17, 2000, our stockholders voted at a special meeting to
increase the authorized number of shares of common stock from 50,000,000 to
100,000,000 in order to give us the needed flexibility in our corporate planning
and in responding to developments in our business, including possible financing
and acquisition transactions, stock splits or other general corporate purposes.
USE OF PROCEEDS
Unless otherwise indicated in the applicable prospectus supplement, we
anticipate that any net proceeds from the sale of the securities that we may
offer under this prospectus and any accompanying prospectus supplement will be
used for general corporate purposes. General corporate purposes may include
acquisitions, investments, repayment of debt, capital expenditures, repurchase
of our capital stock and any other purposes that we may specify in any
prospectus supplement. We may invest the net proceeds temporarily until we use
them for their stated purpose.
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DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock is 120,000,000 shares. Those shares consisted
of 100,000,000 shares of common stock, $0.01 par value per share, and 20,000,000
of preferred stock, $0.01 par value per share. As of November 30, 2000,
27,684,171 shares of common stock were outstanding and 3,002,931 shares of
preferred stock were outstanding. No holder of shares of common stock or
preferred stock has any preemptive rights.
COMMON STOCK
LISTING. Our outstanding shares of common stock are listed on the American
Stock Exchange under the symbol "ONT". Any additional common stock we issue will
also be listed on the American Stock Exchange.
DIVIDENDS. We have never paid dividends and do not anticipate paying
dividends on our common stock in the foreseeable future. Common stockholders may
receive dividends if declared by our board of directors. Dividends may be paid
in cash, stock or other form. In certain cases, common stockholders may not
receive dividends until we have satisfied our obligations to any preferred
stockholders.
FULLY PAID. All outstanding shares of common stock are fully paid and
non-assessable. Any additional common stock we issue, upon receipt of the
purchase price, will also be fully paid and non-assessable.
VOTING RIGHTS. Each share of common stock is entitled to one vote in the
election of directors and other matters. Common stockholders are not entitled to
cumulative voting rights.
OTHER RIGHTS. We will notify common stockholders of any stockholders'
meetings according to applicable law. If we liquidate, dissolve or wind up our
business, either voluntarily or not, common stockholders will share equally in
the assets remaining after we pay our creditors and preferred stockholders.
TRANSFER AGENT AND REGISTRAR. Corporate Stock Transfer is our transfer
agent and registrar. You may contact Corporate Stock Transfer located at 3200
Cherry Creek Drive South, Suite 430, Denver, Colorado 80209.
PREFERRED STOCK
The following description of the terms of the preferred stock sets forth
general terms and provisions of our authorized preferred stock. If we offer
preferred stock, the specific designations and rights will be described in the
prospectus supplement and a description will be filed with the SEC.
Our board of directors can, without approval of stockholders, issue one or
more series of preferred stock. The board can also determine the number of
shares of each series and the rights, preferences and limitations of each series
including the dividend rights, voting rights, conversion rights, redemption
rights and any liquidation preferences of any wholly unissued series of
preferred stock, the number of shares constituting each series and the terms and
conditions of issue. In some cases, the issuance of preferred stock could delay
a change in our control and make it harder to remove present management. Under
certain circumstances, preferred stock could also restrict dividend payments to
holders of our common stock.
GENERAL. The applicable prospectus supplement will describe the following
terms of each series of preferred stock:
- the designation of the series and the number of shares offered;
- the amount of the liquidation preference per share;
8
<PAGE>
- the initial public offering price of the shares to be sold;
- the dividend rate applicable to the series, the dates on which dividends
will be payable and the dates from which dividends will begin to
accumulate, if any;
- any redemption or sinking fund provisions;
- any conversion or exchange rates;
- any antidilution provisions;
- any additional voting and other rights, preferences, privileges and
restrictions;
- any listing of the series on a exchange;
- the relative ranking of the series as to dividend rights and rights upon
liquidation, dissolution or winding up; and
- any other terms of the series.
Upon receipt of the purchase price, the shares of preferred stock that we
issue will be fully paid and nonassessable. The liquidation price or preference
of any series of preferred stock is not indicative of the price at which such
shares will actually trade after the date of issuance.
VOTING. The voting rights of each series of preferred stock will be
determined by our board of directors and will be set forth in the applicable
prospectus supplement.
RANK. Each series of preferred stock will, with respect to dividend and
liquidation rights, rank senior to common stock. Each series of preferred stock
may vary as to rank and priority with other series of preferred stock.
DIVIDENDS. Holders of each series of preferred stock will be entitled to
receive, if declared by our board, dividends in cash or stock, payable on such
dates and at such rates as are described in the applicable prospectus
supplement.
LIQUIDATION. Unless otherwise specified in the applicable prospectus
supplement, if we liquidate, dissolve, or wind up, then the holders of a series
of preferred stock will be entitled to receive, subject to the rights of
creditors, but before any such payment to the holders of common stock or any
other junior stock, an amount equal to the liquidation preference per share set
forth in the applicable prospectus supplement. In addition to such liquidation
preference, holders of such series of preferred stock will also be entitled to
receive accrued and unpaid dividends on their shares of preferred stock, if such
dividends are cumulative.
If the amounts available for distribution upon liquidation, dissolution or
winding up are not sufficient to satisfy the full liquidation rights of all
outstanding series of preferred stock and all stock ranking on parity with such
preferred stock, then the holder of each such series of stock will share ratably
in such distribution, which, in the case of preferred stock, may include a
cumulative dividend.
CONVERSION OR EXCHANGE. The terms, if any, on which preferred stock of any
series may be converted or exchanged for another class or series of securities
will be set forth in the applicable prospectus supplement.
REDEMPTION. The applicable prospectus supplement will set forth the terms,
if any, on which we may redeem any series of preferred stock. We will cancel all
redeemed or repurchased shares of series of preferred stock and restore such
shares to the status of authorized but unissued shares of preferred stock.
9
<PAGE>
OTHER RIGHTS. The applicable prospectus supplement will set forth such
other preferences, voting powers or relative participating, optional or other
special rights of a series of preferred stock. The holders of preferred stock
will not have any preemptive rights to subscribe for any of our securities.
TITLE. We, the transfer agent and registrar for a series of preferred stock
and any agent of ours or such transfer agent and registrar may treat the
registered owner of such series of preferred stock as the absolute owner of the
preferred stock for all purposes.
TRANSFER AGENT AND REGISTRAR. The applicable prospectus supplement will
name the transfer agent and registrar for each series of preferred stock.
PLAN OF DISTRIBUTION
We may sell the securities being offered pursuant to this prospectus
directly to purchasers, to or through underwriters, through dealers or agents,
or through a combination of these methods. The prospectus supplement with
respect to the securities being offered will set forth the method of
distributing the offered securities, including the names of the underwriters,
dealers or agents, if any, the purchase price, the net proceeds to us, any
underwriting discounts and other items constituting underwriters' compensation,
and any public offering price and any discounts or concessions allowed or
reallowed or paid to dealers and any securities exchanges on which the
securities are listed.
The distribution of the offered securities will be effected from time to
time in one or more transactions at a fixed price or prices which may be
changed, at prices related to prevailing market prices or at negotiated prices.
If we use underwriters, we will execute an underwriting agreement with the
underwriters and will specify the name of each underwriter and the terms of the
transaction (including any underwriting discounts and other terms constituting
compensation of the underwriters and any dealers) in a prospectus supplement. If
an underwriting syndicate is used, the managing underwriter or underwriters will
be specified on the cover of the prospectus supplement. If underwriters are used
in the sale, the offered securities will be acquired by the underwriters for
their own accounts and may be resold from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. Any public offering
price and any discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time. Unless otherwise set forth in the prospectus
supplement, the obligations of the underwriters to purchase the offered
securities will be subject to conditions precedent and the underwriters will be
obligated to purchase all of the offered securities if any are purchased.
If we use dealers, we will sell the securities to the dealers as principals.
The dealers then may resell the securities to the public at varying prices which
they determine at the time of resale. The names of the dealers and the terms of
the transaction will be specified in a prospectus supplement.
The securities may be sold directly by us or through agents we designate. If
agents are used by us in an offering, the names of the agents and the terms of
the agency will be specified in a prospectus supplement. Unless otherwise
indicated in a prospectus supplement, the agents will act on a best-efforts
basis for the period of their appointment.
Dealers and agents named in a prospectus supplement may be deemed to be
underwriters (within the meaning of the Securities Act) of the securities
described therein. In addition, we may sell securities directly to institutional
investors or others who may be deemed to be underwriters within the meaning of
the Securities Act with respect to any resales thereof.
The common stock is listed on the American Stock Exchange. Any common stock
sold pursuant to a prospectus supplement will be eligible for quotation and
trading on the American Stock Exchange, subject to official notice of issuance.
Any underwriters to whom common stock is sold by the Company
10
<PAGE>
for public offering and sale may make a market in the common stock, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice.
LEGAL MATTERS
The validity of the securities offered pursuant to this prospectus will be
passed upon for us by McGuireWoods LLP, New York, New York. William A. Newman, a
director of On2.com Inc., is a partner of McGuireWoods LLP.
EXPERTS
The audited financial statements incorporated by reference in this
registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing.
11
<PAGE>
$7,897,000
ON2.COM INC.
COMMON STOCK
PREFERRED STOCK
------------------
PROSPECTUS
---------------------
DECEMBER , 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
<TABLE>
<CAPTION>
ITEM
NUMBER
---------------------
<S> <C>
ITEM 14 OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
</TABLE>
The following table sets forth costs and expenses of the sale and
distribution of the securities being registered. All amounts except SEC fees are
estimates.
<TABLE>
<S> <C>
SEC registration fee........................................ $ 2,085
Legal fees and expenses..................................... 20,000
Accounting fees and expenses................................ 3,000
Financial printers fees and expenses........................ 2,500
Miscellaneous expenses...................................... 1,000
-------
Total....................................................... $28,585
=======
</TABLE>
ITEM 15 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") allows for
the indemnification of officers, directors, and other corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act. Article XII of the Registrant's amended and restated certificate
of incorporation and Article IX of the Registrant's bylaws authorize
indemnification of the Registrant's directors, officers, employees and other
agents to the extent and under the circumstances permitted by the DGCL. The
Registrant maintains liability insurance for the benefit of its directors and
certain of its officers.
The above discussion of the DGCL and of the Registrant's amended and
restated certificate of incorporation, bylaws and indemnification agreements is
not intended to be exhaustive and is qualified in its entirety by such statutes,
amended and restated certificate of incorporation, bylaws and indemnification
agreements.
ITEM 16 EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
---------------------
<C> <S>
5.1......... Opinion of McGuireWoods LLP.
23.1........ Consent of Arthur Andersen LLP, independent public
accountants.
23.2........ Consent of McGuireWoods LLP (included in Exhibit 5.1).
24.1........ Power of Attorney (included in signature page).
</TABLE>
ITEM 17 UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
II-1
<PAGE>
(b) to reflect in the prospectus any facts or events arising after the
effective date of this registration statement (or the most recent
post-effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b), if in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(c) to include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
PROVIDED, HOWEVER, that the undertakings set forth in paragraphs (a) and
(b) above shall not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by the Registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") that are incorporated
by reference in this registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of our counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, when applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective. For the purpose of
determining any liability under the Securities Act, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new
registration
II-2
<PAGE>
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the city
of New York, state of New York, on December 8, 2000. Each person whose signature
appears below hereby appoints Douglas A. McIntyre as such person's true and
lawful attorney, with full power for him to sign, for such person and in such
person's name and capacity indicated below, any and all amendments to this
registration statement, hereby ratifying and confirming such person's signature
as it may be signed by said attorney to any and all amendments.
ON2.COM INC.
By: /s/ Douglas A. McIntyre___________
Douglas A. McIntyre
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
SIGNATURE TITLE DATE
------------------------------------ ------------------------------------ ----------------
/s/ Douglas A. McIntyre President, Chief Executive Officer
----------------------------------- and Director
(Douglas A. McIntyre) December 8, 2000
<C> <S> <C>
/s/ Daniel B. Miller Founder, Chief Technology Officer
----------------------------------- and Director
(Daniel B. Miller) December 8, 2000
/s/ Mark J. Meagher Chief Financial Officer
-----------------------------------
(Mark J. Meagher) December 8, 2000
/s/ Douglas Song Senior Vice President Finance and
----------------------------------- Corporate Development
(Douglas Song) December 8, 2000
/s/ Stephen D. Klein Director
-----------------------------------
(Stephen D. Klein) December 8, 2000
/s/ William A. Newman Director
-----------------------------------
(William A. Newman) December 8, 2000
/s/ Jack L. Rivkin Director
-----------------------------------
(Jack L. Rivkin) December 8, 2000
/s/ Strauss Zelnick Director
-----------------------------------
(Strauss Zelnick) December 8, 2000
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
5.1 Opinion of McGuireWoods LLP.
23.1 Consent of Arthur Andersen LLP, independent public
accountants.
23.2 Consent of McGuireWoods LLP (included in Exhibit 5.1).
24.1 Power of Attorney (included in signature page).
</TABLE>
