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Filed pursuant to Rule 424(b)(3)
Registration No. 333-38332
CAIS Internet, Inc.
3,970,517 Shares of Common Stock
Some of our stockholders from time to time are using this prospectus to sell
common stock. These selling stockholders collectively may sell the following
common stock:
* 3,230,527 shares of common stock;
* 625,000 shares of common stock issuable upon conversion of our Series C
Cumulative Mandatory Redeemable Convertible Preferred Stock; and
* 114,990 shares of common stock issuable upon the exercise of warrants.
We will not receive any of the proceeds from any sale of these shares, but we
have agreed to bear the expenses of registration of the shares by this
prospectus.
Nasdaq National Market symbol:
CAIS
The last sale price of our common stock on the Nasdaq National Market on June
28, 2000 was $13.31 per share.
______________________
The shares registered by this prospectus involve a high level of investment
risk. You should invest only if you can afford a complete loss. See "Risk
Factors" beginning on page 2 of this prospectus for a summary of some of the
risks related to this investment.
Neither the Securities and Exchange Commission nor any State Securities
Commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
______________________
June 29, 2000
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TABLE OF CONTENTS
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About CAIS Internet, Inc................................................ 1
Risk Factors............................................................ 2
Use of Proceeds......................................................... 12
Selling Stockholders.................................................... 12
Plan of Distribution.................................................... 24
Incorporation of Certain Documents by Reference......................... 25
Legality Opinion and Interest of Counsel................................ 26
Experts................................................................. 26
Where You May Find More Information..................................... 26
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About CAIS Internet, Inc.
We are a nationwide provider of broadband Internet access solutions. We
offer cost-effective, broadband Internet access and content solutions to hotels
and multi-family properties utilizing our tier-one, nationwide Internet network
and several proprietary technologies. Our proprietary technologies for the hotel
and multi-family markets include the patented OverVoice technology, IPORT server
software and the CAIS broadband portal. We use our Internet kiosk product, known
as IPORT PTS, to deliver broadband Internet access and content to public venues,
such as airports, retail centers, hotel lobbies and cruise ships. To maximize
use of our network, we also offer always-on, broadband Internet access to
commercial and residential customers through our digital subscriber line
service, "HyperDSL," in major metropolitan areas throughout the U.S. Our goal
is to become a leader in the provision of broadband Internet access, content,
software and systems.
We provide broadband Internet access solutions in markets where broadband
Internet access has previously been uneconomical. We deploy highly cost-
effective proprietary and non-proprietary technology that allows us to provide
broadband Internet access economically in such markets. We use this technology
to simultaneously transmit voice and data over a single traditional copper
telephone line at speeds of up to 175 times those of 56.6k dial-up modems. We
use this technology to convert existing copper telephone wiring into a secure,
broadband Internet network and provide Internet connections to all rooms within
a property without costly end-user equipment or modems. A CAIS Internet customer
is able to have both always-on, broadband Internet access and complete use of
the telephone at the same time over one traditional telephone line. OverVoice
technology is inexpensive to produce and install relative to competing
technologies, so we are able to provide always-on, broadband Internet access in
a property in a highly cost-effective manner.
Our IPORT server software is a broadband provisioning system which provides
hotels and multi-family properties with Internet access connections together
with "plug and play" automatic provisioning, automatic billing, credit card
authorization and quality of service features including the ability to support
Virtual Private Networks and offer secured network access for users. Our
Business Anywhere centers provide a variety of automated business services as
well as facilitate broadband Internet access. Our IPORT PTS Internet kiosks
enable us to offer broadband public Internet access to the common areas of
hotels, multi-family properties and other public venues, including airports,
retail centers and cruise ships. Our current customers for IPORT PTS kiosks
include US West, GTE, TCG, Pacific Bell, Royal Caribbean Cruise Lines, Park and
View and Mail Boxes Etc.
We are located at 1255 22nd Street, N.W., Fourth Floor, Washington, D.C.
20037. Our telephone number is (202) 715-1300, and our Internet address is
www.CAIS.com. None of the information contained in our Web site is, or shall be
deemed to constitute, a part of this prospectus.
FORWARD LOOKING STATEMENTS
This prospectus includes "forward-looking statements," as such term is defined
in the Private Securities Litigation Reform Act of 1995. These statements can be
identified by the use of forward-looking terminology such as "believes,"
"expects," "may," "will," "should," or "anticipates" or the negative thereof or
other variations thereon or comparable terminology, or by discussions of
strategy that involve risks and uncertainties. The safe harbor provisions of the
Securities Exchange Act of 1934, as amended, and the Securities Act of 1933, as
amended, apply to forward-looking statements made by us. These forward-looking
statements involve risks and uncertainties, including those identified within
"Risk Factors" beginning on page 2 and elsewhere in, or incorporated by
reference into, this prospectus. The actual results that we achieve may differ
materially from any forward-looking
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statements, due to such risks and uncertainties. These forward-looking
statements are based on current expectations, and we assume no obligation to
update this information. Readers are urged to carefully review and consider the
various disclosures made by us in this prospectus, any subsequent prospectus
supplement and in our other reports filed with the Securities and Exchange
Commission that attempt to advise interested parties of the risks and factors
that may affect our business.
RISK FACTORS
This offering involves a high degree of risk. You should carefully consider the
risks and uncertainties described below and the other information in this
prospectus before deciding whether to invest in shares of our common stock. If
any of the following risks actually occur, our business, financial condition and
results of operations could be materially adversely affected. This could cause
the trading price of our common stock to decline, and you may lose part or all
of your investment.
Our performance may be difficult to evaluate since we have had a limited
operating history during which we have incurred significant net losses and
experienced negative cash flows.
Our limited historical operating data may make it more difficult for you to
evaluate our performance. Since our beginning, we have incurred losses from
continuing operations: approximately $12.3 million for the year ended December
31, 1998, approximately $52.4 million for the year ended December 31, 1999 and
approximately $25 million for the quarter ended March 31, 2000. We have
continued to generate negative cash flow from operations: approximately $3.2
million for the year ended December 31, 1998, approximately $15.3 million for
the year ended December 31, 1999 and approximately $23.4 million for the quarter
ended March 31, 2000.
We believe that we will incur further losses in the future, in part due to
expenses incurred in connection with the continued roll-out of our network, the
installation and deployment of our high-speed Internet access system in hotel
and multi-family properties, marketing and sales organizations and the
introduction of new services. We also expect that operations in new target
markets will experience losses until we establish an adequate customer base.
However, we cannot assure you that after incurring these additional losses and
expenses:
there will be an increase in revenues;
we will gain profits in future operating periods; or
we will have sufficient cash available to meet continuing losses and/or
necessary capital expenditures.
Our continued growth and expansion will place substantial burdens on our
resources and personnel. We may experience difficulties meeting a high demand
for services in the future.
Our business strategy depends in large part on our ability to rapidly
deploy OverVoice and our other technology platforms. This growth will increase
our operating complexity as well as the level of responsibility for both
existing and new management personnel. As a result, in order to manage our
growth, we must, among other things:
continue to implement and improve our operational, financial and
management information systems, including our billing, accounts
receivable and payables tracking, fixed assets and other financial
management systems;
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hire and train additional qualified personnel; and
continue to expand and upgrade our network infrastructure.
We also expect that demands on our network infrastructure and technical
support resources will increase rapidly as our customer base continues to grow.
We cannot assure you that our infrastructure, technical support or other
resources will be sufficient to facilitate this growth. As we strive to increase
network utilization, there will be additional demands on our customer support,
sales and marketing resources. Competition for qualified employees is intense
and salaries are escalating very quickly. In addition, the process of locating
such personnel with the combination of skills and attributes required to carry
out our strategy is often lengthy.
We intend to rapidly enhance and develop our network and continue a broad-based
roll-out of OverVoice and our other technology platforms in order to attain our
business goals. To do this, we will need additional capital, which we may not
be able to obtain.
We will need to seek additional financing to carry out our growth and
operating plans. We may not be able to raise cash on terms acceptable to us or
at all. Financings may be on terms that are dilutive or potentially dilutive to
our stockholders. If financing is insufficient or unavailable, we will have to
modify our growth and operating plans, which may negatively affect our ability
to expand our network and facilities and offer additional services, and may
adversely affect our growth and our ability to repay our outstanding
indebtedness.
Registration of the shares described in this prospectus, and/or future sales of
our common stock, could cause the market price of our common stock to drop and
prevent us from making future stock offerings, even if our business is doing
well.
The shares of common stock covered by this prospectus will be freely
tradable without restriction or further registration under the Securities Act,
unless the shares are purchased by an affiliate of ours, in which case sales
will be limited by Rule 144 under the Securities Act. Holders of restricted
shares generally will be able to sell these shares in the public market without
registration either under Rule 144 or any other applicable exemption under the
Securities Act.
The registration of a number of shares of common stock for resale in the
public market, or the appearance that such shares are available for resale,
could adversely affect the market price of our common stock, and could impair
our ability to raise funds in future stock offerings. Similarly, the sale of a
significant number of additional shares of common stock in the public market, or
the issuance of additional shares of convertible preferred stock, or appearance
that such shares are available for sale or issue, also could adversely affect
the market price of our common stock, and could impair our ability to raise
funds in future stock offerings. In the event that all or a substantial portion
of the shares of common stock covered by this prospectus or otherwise
immediately available for sale are sold on any one day, such sales may have an
adverse effect on the market price of our common stock.
We have filed two registration statements under the Securities Act covering
6,549,495 shares of our common stock subject to outstanding options or reserved
for issuance under our stock plan. These registration statements became
effective upon filing. Accordingly, shares registered under these registration
statements are, subject to vesting provisions and Rule 144 volume limitations
applicable to our affiliates, available for sale in the open market.
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A third party could be prevented from acquiring your shares of stock at a
premium to the market price because of our anti-takeover provisions.
There are provisions in our certificate of incorporation and by-laws that
make it more difficult for a third party to acquire, or attempt to acquire,
control of CAIS Internet, even if a change in control would result in the
purchase of your shares at a premium to the market price.
These provisions include:
a classified Board of Directors with staggered, three-year terms;
the authority to issue "blank check" preferred stock;
eliminating the ability of stockholders to act by written consent;
eliminating the ability of stockholders to call a special meeting of the
stockholders;
an advance notice procedure for stockholder proposals to be brought
before meetings of our stockholders; and
requiring a super-majority stockholder vote to effect certain
amendments.
In addition, the Delaware General Corporation Law may also discourage
takeover attempts that have not been approved by our Board of Directors.
We are required to pay ongoing royalties to Inline to use the OverVoice
technology, and any failure to do so, or otherwise meet our obligations to
Inline, could cause us to lose our exclusive right to use the OverVoice
technology.
We are required to pay Inline Connection Corporation royalties ranging
between 3.0% and 5.5% of net sales of the OverVoice technology. In the rare
cases where we do not provide the Internet access or own the OverVoice equipment
installed, this percentage may be as high as 70.0%. If we sublicense the patents
and pending patent applications relating to the OverVoice technology to a third
party, we are required to pay Inline a percentage of the income received from
the sublicense. Additionally, we have minimum annual royalty payments under the
agreement. If we fail to pay the minimum payments, or otherwise breach our
agreement with Inline, we will lose our exclusive right to use the OverVoice
technology in hotels and multi-family properties which would eliminate our
ability to offer many of our key services.
Technological change and evolving industry standards may render our services
noncompetitive, unnecessary or obsolete.
Our future success will depend, in part, on our ability to: (1) offer
services that address the increasingly sophisticated and varied needs of our
current and prospective customers, and (2) respond to technological advances and
emerging industry standards and practices on a timely and cost-effective basis.
Internet access operations are characterized by:
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rapidly changing and unproven technology;
evolving industry standards;
changing customer needs; and
numerous competitive services and product offerings.
We cannot assure you that:
future advances in technology will be beneficial to, or compatible with,
our business;
we will be able to incorporate such advances on a cost-effective or
timely basis; or
our services will be necessary and cost-effective as a result of such
advances.
Although we intend to support emerging standards, we cannot assure you that
industry standards will be established, or that, if established, we will be able
to conform to the new standards in a timely fashion or maintain a competitive
position in the market. In addition, future products, services or technologies
developed by others may render our services noncompetitive, unnecessary or
obsolete.
The market in which we operate is highly competitive, and we may not be able to
capture increased market share, especially against established industry
competitors with greater marketplace presence and financial resources.
We operate in a highly competitive environment for each of our lines of
business and we believe that competition is increasing. We may not be able to
compete effectively, especially against established industry competitors with
greater marketplace presence and financial resources than ours. The competitive
environments for our different lines of business are as follows:
OverVoice. The major groups of competitors in the business of providing
broadband Internet access to hotels and multi-family properties include:
local exchange carriers;
other digital subscriber line providers;
cable TV companies and other providers using cable modems; and
installation firms that upgrade existing wiring.
Many of these competitors have extensive marketplace presence and greater
technological and financial resources than we do.
The OverVoice technology also competes with technologies using other
transmission media, such as coaxial cable, wireless facilities and fiber optic
cable. If telecommunications service providers, hotels, multi-family properties
or single family residences install any of these alternative transmission media,
demand for OverVoice may decline.
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HyperDSL. Our principal competitors include other major providers such as
UUNET Technologies, Inc., PSINet Inc., BBN (a GTE subsidiary), and other
providers of always-on broadband Internet access including digital subscriber
line services, T-1 and wireless access. To a lesser extent, we also compete for
always-on and dial-up access and web services business with smaller, regional
Internet service providers and cable companies that operate in the same
geographic markets that we serve. Because the Internet services market has no
substantial barriers to entry, we expect that competition will continue to
intensify. Eventually, we expect some form of a market consolidation to occur,
with those Internet service providers that furnish the most value-added
solutions ultimately surviving.
CAIS Software Solutions, Inc. Our principal competitors include other
providers of self-automated subscriber management systems and kiosk software
that could challenge the private label sale of our IPORT server and kiosk
software solutions. We compete for business with cable, digital subscriber line
and wireless providers in the deployment of access solutions to multiple users.
Our IPORT software automates and creates subscriber management systems for
customer service billing, pay-per-use ordering, work order management, and
portal sales and marketing functions. Some potential customers for our server
and kiosk products may have existing contracts with our competitors, or may sell
their server and kiosk software as part of a competitor's bundled solution in
the hotel and apartment community marketplace.
As a result of increased competition and vertical and horizontal
integration in the industry, we could encounter significant pricing pressure
which could cause us to significantly reduce the average selling price of some
of our products and services. We might not be able to offset the effects of any
such price reductions with an increase in the number of our customers, higher
revenue from enhanced services, cost reductions or otherwise. Market
consolidation could result in increased price and other competition in these
industries. Increased price or other competition could result in erosion of our
market share and could have a material adverse effect on our financial
condition. We cannot assure you that we will have the financial resources,
technical expertise or marketing and support capabilities to continue to compete
successfully.
If we do not meet our obligations to deliver broadband Internet access solutions
to our customers according to schedule, our reputation will be harmed and our
revenues may be affected.
Our ability to meet the installation schedule in our agreements is critical
to our success and to our ability to generate revenues. We depend on outside
suppliers and vendors to install our technology in buildings, as well as on
telecommunications service providers, to provide services to our customers. If
we fail to install our technology or provide service on a timely basis as
required by our customer agreements, whether or not such failure is outside of
our control, our ability to market our Internet access and content solutions
and, accordingly, our revenues would be harmed.
We incur significant up-front costs to install our technology, which we may not
be able to recover; our agreements do not contain any minimum use requirements,
and some of our contracts are not exclusive.
We have incurred, and will continue to incur, significant up-front costs
installing OverVoice and our other technology platforms in hotels and multi-
family properties. There is no guarantee that we will be able to recover such
costs.
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Because our trial and long-term agreements for both hotels and multi-family
properties generally do not contain any minimum use requirements, there is no
minimum payout that we can expect to receive. Furthermore, some of our
agreements do not require hotel owners and operators to offer our services
exclusively. As a result owners and operators could offer services that compete
with ours.
Our competitive advantage depends on certain domestic and foreign patents and
patent applications relating to the OverVoice technology that we license from
and jointly own with Inline Connection Corporation, as well as our patented
IPORT and Business Anywhere Center technology. If we fail to adequately protect
these rights or face a claim of intellectual property infringement by a third
party, we could lose our intellectual property rights or be liable for
significant damages.
Our success relies substantially on our ability to protect our patented
technology, both domestically and abroad. We face two major risks in connection
with our intellectual property rights:
(1) Others may infringe on our intellectual property rights, resulting in:
lack of competitiveness in the market;
expense of time and resources to protect our patents; and
dilution of the brand value of our service.
(2) Although we do not believe this to be the case, we may infringe others'
patents, resulting in:
significant expense in defending our technology, even in the case of a
frivolous suit;
requirement to pay significant damages; and
costly and potentially impracticable redesign of our technology.
Our success is dependent in part on recognition of our name and trademarks, such
as "CAIS," "OverVoice", IPORT and "Business Anywhere" and pending
trademarks, such as "DeskJack. "If we are unable to protect our proprietary
rights, it could seriously affect our ability to market our products and
services. In addition, legal challenges to our proprietary rights could lead to
a substantial diversion of our limited resources.
We intend to protect and defend our name, servicemarks and trademarks in
the United States and internationally. We achieved federal registration for
several of our trademarks, including the mark CAIS, and filed for federal
trademark protection for a number of other marks which we use or intend to use,
for example "DeskJack." However, we cannot assure you that:
our efforts to protect our proprietary rights in the United States or
abroad will be successful;
our use of our trademarks and servicemarks will be free from legal
challenges; or
we will have sufficient funds to withstand such challenges or claims,
regardless of their merit.
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Because we depend upon our suppliers and have sole and limited sources of supply
for certain products and services, we are vulnerable to service interruptions
and increased costs of services.
We depend substantially on telecommunications services providers and we are
unable to control the prices for these services. For example, in order to
provide Internet access and other on-line services to our customers, we lease
long distance fiber optic telecommunications lines from national
telecommunications services providers.
Certain of our suppliers, including regional Bell operating companies and
competitive local exchange carriers, are currently subject to various price
constraints, including tariff controls, which may change in the future. In
addition, pending regulatory proposals may affect the prices they charge us.
These regulatory changes could result in increased prices for products and
services. This could reduce the profit margin for our services or require us to
increase the prices which we charge our customers, which could reduce the demand
for our services.
We do not manufacture our proprietary OverVoice equipment, such as wall
jacks and the OverVoice DeskJack; rather, we depend on third parties to
manufacture and supply it. Any interruption in these manufacturers' operations
or defects in the products or services they supply us could adversely affect our
ability to meet our customers' requirements, which could cause them to use our
competitors' services.
We rely on other companies to supply our network infrastructure, some of which
may compete directly with us or enter into arrangements with our competitors.
We rely on other companies to supply our network infrastructure (including
telecommunications services and networking equipment) which, in the quantities
and quality we require, is available only from sole or limited sources. We are,
therefore, vulnerable to the possibility that our suppliers may:
compete directly with us;
enter into exclusive arrangements with our competitors; or
stop selling their products or components to us at commercially
reasonable prices, or at all.
The Internet relies on the exchange of traffic over a network of networks
that is owned and operated by many parties. We currently exchange traffic with
other Internet service providers with whom we maintain relationships. These
exchange agreements are not regulated and may be changed. If they become
regulated, modified or are altogether terminated, we may have to find alternate,
more expensive means to exchange traffic, or we may not be able to do so, which
could limit our ability to offer services in a particular market or increase the
cost of our services, which could reduce the demand for these services.
A system failure could cause interruptions in the services we provide to our
customers.
Our operations depend upon our ability to protect our network against
damage from acts of nature, power failures, telecommunications failures and
similar events. Because we lease our lines from long-distance telecommunications
companies, Internet providers, the regional Bell operating companies and
competitive local exchange carriers, we depend upon those companies for physical
repair and maintenance of those lines. Despite the precautions we and our
telecommunications providers take, the
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occurrence of a natural disaster, fire, electrical outage or other unanticipated
problems at one of our facilities may cause interruptions in the services we
provide. Such interruptions in operations could limit our ability to meet our
customers' requirements and reduce the demand for our services.
Viruses, break-ins and other security breaches could cause interruptions, delays
or a cessation of the services we provide to our customers.
Despite the implementation of network security measures, the core of our
Internet network infrastructure is vulnerable to computer viruses, break-ins and
similar disruptive problems. We may experience future interruptions in service
as a result of the accidental or intentional actions of Internet users, current
and former employees or others. Unauthorized use could also potentially
jeopardize the security of confidential information stored in our computer
systems and the computer systems of our customers. Although we intend to
continue to implement security measures to prevent this, these measures have
occasionally been circumvented in the past, and the possibility exists that the
measures we implement will be circumvented in the future. In addition,
eliminating such viruses and remedying such security problems may cause
interruptions, delays or cessation of service to our customers. If our security
measures fail, we may lose subscribers or be sued, resulting in additional
expenses and reduced profitability. We do not carry any insurance against these
risks because it is unavailable at a reasonable cost.
Competition for qualified, high-level telecommunications personnel is intense.
The loss of our senior management personnel and other employees who possess
longstanding industry relationships and technical knowledge of our operations,
or failure to hire similar additional personnel, could harm our business because
we would lose experienced personnel and new skilled personnel are in short
supply and command high salaries.
While we do not maintain any "key person" insurance, we have entered into
employment agreements with key employees. Our future success also depends on our
ability to attract, train, retain and motivate highly skilled personnel. We
cannot assure you that we will be able to continue to attract and retain such
talent. The loss of the services of one or more of our key individuals, or the
failure to attract and retain additional key personnel, could limit our ability
to market our services, manage our growth and develop and achieve our business
objectives.
If the FCC decides to regulate internet service providers, the application of
the telecommunication laws to the Internet could significantly increase our
costs of doing business.
As an Internet service provider, we are not currently subject to direct
regulation by the FCC. Nevertheless, Internet-related regulatory policies are
continuing to develop and vigorous public debates regarding the costs and
benefits of regulating the Internet have emerged in federal, state and local
legislative, executive and regulatory agency forums. It is possible that we
could be exposed to regulation as a telecommunications service provider in the
future. For example, the FCC has stated its intention to consider whether to
regulate voice and fax telephony services provided over the Internet as
"telecommunications" even though Internet access itself would not be
regulated; and the FCC recently initiated a Notice of Inquiry to examine this
issue. The FCC is also considering whether such Internet-based telephone service
should be subject to universal service support obligations, or pay carrier
access charges on the same basis as traditional telecommunications companies.
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Local telephone companies assess access charges to long distance companies
for the use of the local telephone network to originate and terminate long
distance calls, generally on a per-minute basis. Access charges have been a
matter of continuing dispute, with long distance companies complaining that the
rates are substantially in excess of cost, and local telephone companies arguing
that access rates are justified to subsidize lower local rates for end users and
other purposes. Both local and long distance companies, however, contend that
Internet-based telephony should be subject to these charges. We have no current
plans to install gateway equipment and offer telephony, and so we do not believe
we would be directly affected by these developments However, we cannot predict
whether these debates will cause the FCC to reconsider its current policy of not
regulating Internet service providers.
A decision by Congress or the FCC to regulate Internet telephony or
Internet access services may limit the growth of the Internet, increase our cost
of doing business or increase our legal exposure, any of which could cause our
revenues to decrease.
A governmental body could impose sales and other taxes on the provision of our
services, which could increase our costs of doing business.
A number of federal, state and local government officials have asserted the
right or indicated a willingness to impose taxes on Internet-related services
and commerce, including sales, use and access taxes. We cannot accurately
predict whether the imposition of any such taxes would materially increase our
costs of doing business or limit the services we provide.
We may be liable for information sent through our network. Therefore, we might
have to pay significant damages for content and communications that we have no
knowledge of or control over.
As an Internet service provider, we may be liable for content and
communications provided by third parties and carried over, or hosted on, our
facilities. Because the law of Internet service provider liability is uncertain
and in a constant state of change, our actual exposure for third-party content
cannot be predicted.
One area of potential liability is copyright and trademark infringement. We
may be found liable for third-party communications that infringe a trademark or
copyright, and we are obligated to comply with the requirements of the Digital
Millennium Copyright Act concerning responses to claims of copyright
infringement.
We also may be liable for obscene, indecent or otherwise offensive
communications carried over our facilities. Although the Communications Decency
Act, enacted in 1996, was found by the courts to be unconstitutional as applied
to indecent speech, in 1998 the Congress passed another statute intended to
prohibit indecent communications over the Internet. That more recent statute was
declared to be unconstitutional, but a federal court of appeals is hearing a
pending challenge to that decision. Depending upon the outcome of that
proceeding, we may be exposed to potential liability for indecent material
carried over our facilities.
We also are required to comply with state and federal privacy requirements,
including the Electronic Communications Privacy Act ("ECPA") and the
Children's Online Privacy Protection Act ("COPPA"). The ECPA imposes
limitations on the interception, disclosure and use of communications
transmitted over and stored on our facilities. COPPA, and the Federal Trade
Commission rules
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implementing that statute, requires us to safeguard personal information that we
know to be transmitted to our website by children under 13.
We also are subject to federal and state laws that regulate the advertising
and sale of certain products and services over the Internet. In addition to
existing statutes of this kind, such as state statutes that prohibit
advertisement of gambling, a number of bills are pending in the Congress and
state legislatures that would prohibit or regulate particular marketing
practices (such as the transmission of unsolicited commercial email) or the
advertisement or sale of certain goods and services. We cannot predict the
impact of these potential laws upon our business.
While no one has ever filed a claim against us concerning content carried
over our service, someone may file a claim of that type in the future and may be
successful in imposing liability on us. If that happens, we may have to spend
significant amounts of money to defend ourselves against these claims and, if we
are not successful in our defense, the amount of damages that we will have to
pay may be significant. Any costs that we incur as a result of defending these
claims or the amount of liability that we may suffer if our defense is not
successful could materially adversely affect our profitability.
If, as the law in this area develops, we may decide to take steps to reduce
our exposure to for information carried on, stored on or disseminated through
our network. This may require us to spend significant amounts of money for new
equipment and may also require us to discontinue offering certain of our
products or services or modify existing arrangements to mitigate potential
liability.
Because our executive officers and directors, as a group, control CAIS Internet,
you may be prevented from receiving an acquisition premium if another party
seeks to acquire us unless management supports the transaction
Our executive officers and directors, as a group, beneficially own or
control approximately 61% of the shares of our common stock on an outstanding
basis. Consequently, as a practical matter, our executive officers and
directors, as a group, are able to control all matters requiring approval by our
stockholders, including the election of our Board of Directors, management
policy and all fundamental corporate actions, including mergers, substantial
acquisitions and dispositions of assets.
In order to respond to the competitive pressures of the broadband access
services industry and support our intended growth, we intend to continue to
focus on acquiring, or making significant investments in, additional companies,
products and technologies that complement our business. Our acquisition
strategy could result in unanticipated expenses and disruptions in our business.
Since our initial public offering in May 1999, we have completed four such
acquisitions. Our ability to compete effectively and support our intended growth
may be adversely affected if we are not able to identify suitable acquisition
candidates or investments or acquire companies or make investments on acceptable
terms or at acceptable times. In addition, acquiring companies, products,
services or technologies involves many potential difficulties and risks,
including:
difficulty in assimilating them into our operations;
disruption of our ongoing business and distraction of our management and
employees;
11
<PAGE>
negative effects on reported results of operations due to acquisition-
related charges and amortization of acquired technology and other
intangibles; and
potential dilutive issuances of equity or equity-linked securities.
These potential difficulties and risks could adversely affect our ability
to realize the intended benefits of an acquisition, which could harm our
financial results and condition.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the common stock.
See below for a list of those persons and entities whose shares are being
registered for resale. We are registering the resale of these shares to satisfy
various obligations to the selling stockholders.
SELLING STOCKHOLDERS
The following table sets forth information regarding the number of shares
of common stock being registered by the selling stockholders, and the percentage
these represent of all outstanding shares of the Company's common stock.
<TABLE>
<CAPTION>
Common Stock Common Percentage of
------------ ------ -------------
Beneficially Owned stock being Common Stock
Selling Stockholders ------------------ ----------- ------------
-------------------- Prior to Offering registered Owned following
------------------ ------------- ---------------
completion of the
offering (1)
------------
<S> <C> <C> <C>
ING U.S. Capital Corporation 390,000 390,000 *
U.S. Telesource, Inc. 1,750,000 625,000 1.41%
John Kornreich 77,001 77,001 *
Harvey Sandler 77,001 77,001 *
MJM Associates L.P. 77,001 77,001 *
Bear Stearns, custodian for Michael Finnell's 15,400 15,400 *
IRA
Chris Moore 15,400 15,400 *
Donald McGuire 15,400 15,400 *
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Common Stock Common Percentage of
------------ ------ -------------
Beneficially Owned stock being Common Stock
Selling Stockholders ------------------ ----------- ------------
-------------------- Prior to Offering registered Owned following
------------------ ------------- ---------------
completion of the
-----------------
offering (1)
------------
<S> <C> <C> <C>
Torunn Garin 38,500 38,500 *
Carol Goldstein 9,240 9,240 *
James Larmett 15,400 15,400 *
Fred Assenheimer 15,400 15,400 *
David Kenney 15,400 15,400 *
Adrian MacKay 7,700 7,700 *
Drew von Glahn 7,700 7,700 *
Brad Wightmann 7,700 7,700 *
Theodore Muftic 6,160 6,160 *
William W. Martin 5,237 5,237 *
Naushad Madon 23,100 23,100 *
Larry Greenes 6,160 6,160 *
Lorraine Massaro 4,004 4,004 *
Randee Day 49,000 49,000 *
Kim Kao 121,704 121,704 *
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Common Stock Common Percentage of
------------ ------ -------------
Beneficially Owned stock being Common Stock
Selling Stockholders ------------------ ----------- ------------
-------------------- Prior to Offering registered Owned following
------------------ ---------- ---------------
completion of the
-----------------
offering (1)
------------
<S> <C> <C> <C>
Comercia Bank 3,557 3,557 *
Joon Kim 5,316 5,316 *
PNC Bank 2,076 2,076 *
APA Excelsior IV, LP 525,637 525,637 1.18%
Coutts (Cayman) Ltd, c/f APA Excelsior IV 92,765 92,765 *
Patricof Private Investments 10,055 10,055 *
PA Fund 117,032 117,032 *
Adrienne E. Nicholas 1,748 1,748 *
Anna Chan 850 850 *
Arthur D. Friedman and Barbara B. Friedman 13,523 13,523 *
JTWROS
Audrey G. Senturia & Neil R. Senturia, Trustees 4,368 4,368
of the Audrey G. Senturia
Revocable living Trust 16-Mar-92
Allan D. Simon IRA 88,656 88,656 *
Barbara Bry, Trustee Bry Family Trust under 61,272 61,272 *
Declaration of Trust 4/7/86
Benjamin Wang 3,190 3,190 *
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Common Stock Common Percentage of
------------ ------ -------------
Beneficially Owned stock being Common Stock
Selling Stockholders ------------------ ----------- ------------
-------------------- Prior to Offering registered Owned following
------------------ ---------- ---------------
completion of the
-----------------
offering (1)
------------
<S> <C> <C> <C>
Bixby Family dated 9/5/96, James A. 8,484 8,484 *
Bixby Trustee
Bruce E. Dahrling, II, M.D. 11,611 11,611 *
Cathryn Campell 5,085 5,085 *
Chan Suk Park and Sung Mi Kim, Trustees, or 7,469 7,469 *
their Successors in Trust, under the Chan Suk
Park Living Trust, 8/30/94
Cheryl Ladd 186 186 *
Colin J. Case 16,877 16,877 *
Cornell Associates, Inc. 6,536 6,536 *
Daniel J. Epstein, Trustee of the Epstein Family 8,987 8,987 *
Trust, dated 4/13/93
David Pattison 5,133 5,133 *
Dawnienne Van Horne 266 266 *
Donna Caley Leach 4,656 4,656 *
Donald Hollis 266 266 *
Douglas Bry 12,732 12,732 *
Edwin J. Van Horne, III 1,441 1,441 *
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Common Stock Common Percentage of
------------ ------ -------------
Beneficially Owned stock being Common Stock
Selling Stockholders ------------------ ----------- ------------
-------------------- Prior to Offering registered Owned following
------------------ ---------- ---------------
completion of the
-----------------
offering (1)
------------
<S> <C> <C> <C>
Esther Eckerling Goodman 16,877 16,877 *
Eugene Levy 3,580 3,580 *
Felecia Fleishman 4,368 4,368 *
Hansup Kwon & Heemok as Joint Tenants 3,045 3,045 *
w/Right of Survivorship
Harmonic Money Purchase Pension Plan 3,045 3,045 *
Ila Lynn 8,438 8,438 *
Inter@ctive, Inc. 2,666 2,666 *
International Medical and Technology 79,739 79,739 *
Jeremy Cohen 5,898 5,898 *
Jesse F. Wolff 1,283 1,283 *
Jesse Wolff & Bonni Wolff as Joint Tenants 829 829 *
w/Right of Survivorship
Jim Nicholas 97,632 97,632 *
Jim Yonan 3,376 3,376 *
John Chang, M.D. 4,368 4,368 *
John W. Packel & Sandra N. Packel, Joint
Tenants with Right of Survivorship 12,665 12,665 *
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Common Stock Common Percentage of
------------ ------ -------------
Beneficially Owned stock being Common Stock
Selling Stockholders ------------------ ----------- ------------
-------------------- Prior to Offering registered Owned following
------------------ ---------- ---------------
completion of the
-----------------
offering (1)
------------
<S> <C> <C> <C>
Keith A. and Elizabeth A. Olson 33,753 33,753 *
Keith Olson 17,560 17,560 *
Kenneth E Olson Trust 3/16/89 16,952 16,952 *
Kenneth E. Olson, Trustee FBO & Kenneth E. 3,820 3,820 *
Olson
Kevin Ki-Dong Lee 25,314 25,314 *
Kevin Miller 18,057 18,057 *
Lawrence B. Robinson 52,666 52,666 *
Leonard J. Adams 11,872 11,872 *
Lori Roeder 727 727 *
Louis L. Kirvay & Lenore E. Kirvay, as Joint 3,045 3,045
tenants with Right of *
Survivorship
Luzemer Kantonalbank 33,753 33,753 *
Mark D. Olson & Linda Nordenstam-Olson, 5,159 5,159
Husband & Wife wife as *
community property
Mathew Ryan Goodman Trust 1,687 1,687 *
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Common Stock Common Percentage of
------------ ------ -------------
Beneficially Owned stock being Common Stock
Selling Stockholders ------------------ ----------- ------------
-------------------- Prior to Offering registered Owned following
------------------ ------------- ---------------
completion of the
-----------------
offering (1)
------------
<S> <C> <C> <C>
N.J.& Beulah S. Nicholas 5,243 5,243 *
Neil R. Senturia 266,901 266,901 *
Neil Senturia, Trustee Audrey G. Senturia 26,855 26,855 *
Family Trust
The Neil R. Senturia 1998 Irrevocable Trust, 207,589 207,589 *
Ward Bukofsky, Trustee
Nicole Kubin & Micheal Kubin as Joint Tenants 29,683 29,683 *
with Right of Survivorship
Nicole Kubin 5,050 5,050 *
Patricia Miller 1,063 1,063 *
Peggy Lee Ridley 4,253 4,253 *
Peter Van Horne 28,929 28,929 *
Robert Burgleman 1,435 1,435 *
Robert E. Leach 4,656 4,656 *
Ron Wheeler 297 297 *
Sally Bowen 1,240 1,240 *
Stephan R. Bickel Individual Ownership 5,333 5,333 *
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Common Stock Common Percentage of
------------ ------ -------------
Beneficially Owned stock being Common Stock
Selling Stockholders ------------------ ----------- ------------
-------------------- Prior to Offering registered Owned following
------------------ ------------- ---------------
completion of the
-----------------
offering (1)
------------
<S> <C> <C> <C>
Stephen R. Bickel, IRA 5,139 5,139 *
Steven D. Heinemann 6,722 6,722 *
Barry Sternlicht 52,871 52,871 *
Jonathan Eilian 46,702 46,702 *
Merrick Kleeman 11,102 11,102 *
Jeffrey Dishner 5,287 5,287 *
Madison Grose 5,287 5,287 *
Jay Sugarman 5,287 5,287 *
Spencer Haber 5,287 5,287 *
Jerome Silvey 5,287 5,287 *
Ellis Rinaldi 1,586 1,586 *
David DiDomenico 2,644 2,644 *
Jeffrey Rosenthal 1,057 1,057 *
Gerardo Rosenkranz 5,086 5,086 *
Gary R. Silverman 11,018 11,018 *
Chele Chiavacci 5,934 5,934 *
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Common Stock Common Percentage of
------------ ------ -------------
Beneficially Owned stock being Common Stock
Selling Stockholders ------------------ ----------- ------------
-------------------- Prior to Offering registered Owned following
------------------ ------------- ---------------
completion of the
-----------------
offering (1)
------------
<S> <C> <C> <C>
M. Jane Chiavacci 2,364 2,364 *
Michael H. Skelton 1,695 1,695 *
The Corrente Corp. 4,368 4,368 *
The Dennis Family Trust 2,954 2,954 *
The Townsend Agency 1,690 1,690 *
UMB Bank N.A.,Trustee of the LMFT & M
Master Trust f/b/o James J. McMullen 3,045 3,045 *
Vincent and Anne H. Ricchiuti, Trustees of
LaJolla Radiology Medical Group Profit
Sharing Plan 15,769 15,769 *
Wayne Saker 13,852 13,852 *
William B. Packer, Jr & Margaret Roe, joint
tenants w/ Right of Survivorship 3,208 3,208 *
Escrow in name of QuickATM LLC 4,019 4,019 *
Clifford Orloff 26,631 26,631 *
Barman Capital LLC 2,411 2,411 *
Howard Zack 6,666 6,666 *
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Common Stock Common Percentage of
------------ ------ -------------
Beneficially Owned stock being Common Stock
Selling Stockholders ------------------ ----------- ------------
-------------------- Prior to Offering registered Owned following
------------------ ------------- ---------------
completion of the
-----------------
offering (1)
------------
<S> <C> <C> <C>
Samuel Salkin 434 434 *
Marion Atherton 32 32 *
</TABLE>
___________
* Less than 1%
(1) Indicates the percentage of all outstanding shares of CAIS common stock
represented by the total number of shares of CAIS common stock beneficially
owned by each shareholder.
21
<PAGE>
390,000 shares which are being registered under this prospectus are related
to warrants issued to ING (U.S.) Capital Corporation ("ING"), an investment
banking firm, in connection with a credit agreement entered into by CAIS and
certain of its affiliates in September 1998. Under the credit agreement, CAIS
borrowed $7,000,000 to repay existing debt with First Union, fund the
development of the OverVoice program and for general corporate purposes. The
loan was repaid in full from net proceeds from the initial public offering of
our common stock. In connection with the loan, the CAIS issued ING warrants to
acquire 3 percent of the fully diluted outstanding shares of common stock of the
Company, or 390,000 shares.
In September 1999, CAIS issued 125,000 shares of Series C Cumulative
Mandatory Redeemable Convertible Preferred Stock and warrants to acquire 500,000
shares of CAIS common stock at $12.00 per share to U.S. Telesource, Inc., a
wholly-owned subsidiary of Qwest Communications Corporation. 625,000 shares
which are being registered under this prospectus underlie 62,500 shares of the
Series C Cumulative Mandatory Redeemable Convertible Preferred Stock. The Series
C Cumulative Mandatory Redeemable Convertible Preferred Stock must be redeemed
by CAIS beginning on the second anniversary date of its issuance. The warrants
expire on October 28, 2002. The total gross proceeds of this sale were
$15,000,000.
368,761 shares which are being registered under this prospectus were issued
to CAIS-Sandler, L.P. upon the conversion of shares of Series A convertible
preferred stock following the completion of our initial public offering. 84,121
shares which are being registered under this prospectus are related to warrants
issued to CAIS-Sandler, L.P. in connection with the Series A Preferred Stock and
Warrant Purchase Agreement entered into among CAIS, Chancery Lane, L.P., CAIS-
Sandler Partners, L.P. on February 19, 1999. The warrants may be exercised, in
whole or in part, at any time. The warrants expire to the extent unexercised on
the earlier of (i) February 19, 2009 or (ii) five years from the closing of the
Company's initial public offering. Lorraine Massaro, a partner in CAIS-Sandler,
L.P., is also a partner at Morrison & Foerster LLP, our legal counsel.
49,000 shares which are being registered under this prospectus were issued
to Randee Day on February 19, 1999, as part of the Series A transaction.
2,270,185 shares which are being registered under this prospectus were
issued to former stockholders of Atcom, Inc. in connection with our acquisition
of Atcom, Inc. in September 1999. 35,531 shares being registered are issuable
upon the exercise of warrants held by former stockholders of Atcom, Inc. that
were converted into warrants to purchase CAIS common stock upon consummation of
our acquisition of Atcom, Inc.
121,704 shares which are being registered under this prospectus were issued
to Kim Kao, the former President and Chief Executive Officer and a former stock
holder of Business Anywhere, USA, Inc. ("BAC") in connection with our
acquisition of BAC in September 1999. Kim Kao is now an officer of BAC, a CAIS'
subsidiary.
40,193 shares which are being registered under this prospectus were issued
to Clifford Orloff, Howard Zack, Marion Atherton, Sam Selkin and Jeff Barman,
collectively, each a former stockholder of Quick ATM LLC, in connection with the
acquisition by CAIS Software Solutions, Inc., of the contracts, intellectual
property and other assets of Quick ATM, LLC. CAIS Software Solutions, Inc. is a
wholly owned subsidiary of CAIS Internet, Inc.
22
<PAGE>
You can find more detail regarding the above transactions in CAIS' Form 10-
K for the year ended December 31, 1999 and Form 10-Q for the quarter ended March
31, 2000, both of which are incorporated by reference into this prospectus.
The stockholders and holders listed in any supplement to this prospectus,
and any transferors, pledgees, donees or successors to these persons, may from
time to time offer and sell, pursuant to this prospectus, any and all of these
shares. Any supplement to this prospectus may contain certain information about
the selling stockholders and the aggregate principal amount of the shares
beneficially owned by each selling stockholder that they are offering. Such
information will be obtained from the selling stockholders.
Except as disclosed in this prospectus, none of the selling stockholders
currently has any position, office or other material relationship with the
Company or its affiliates. Because the stockholders may offer all or some
portion of their shares, no estimate can currently be given as to the number of
shares that will be held by any stockholder upon termination of such sales. In
addition, stockholders may have disposed of, or may dispose of, all or a portion
of their shares in transactions exempt from the requirements of the Securities
Act.
23
<PAGE>
PLAN OF DISTRIBUTION
Under the registration rights agreements and other agreements between CAIS
and the selling stockholders, CAIS agreed to register these shares under the
Securities Act of 1933, for resale to the public.
The sale of all or a portion of these shares of common stock by the selling
stockholders may be effected from time to time at prevailing market prices at
the time of such sales, at prices related to such prevailing prices, at fixed
prices that may be changed or at negotiated prices. The selling stockholders may
effect such transactions by selling directly to purchasers in negotiated
transactions, to dealers acting as principals or through one or more brokers, or
any combination of these methods of sale. In addition, shares may be transferred
in connection with the settlement of call options, short sales or similar
transactions that may be effected by the selling stockholders. Dealers or
brokers may receive compensation in the form of discounts, concessions or
commissions from the selling stockholders. The selling stockholders and any
brokers or dealers that participate in the distribution may under certain
circumstances be "underwriters" within the meaning of the Securities Act, and
any commissions received by such brokers or dealers and any profits realized on
the resale of shares by them may be underwriting discounts and commissions under
the Securities Act. CAIS and the selling stockholders may agree to indemnify
such brokers or dealers against certain liabilities, including liabilities under
the Securities Act.
To the extent required under the Securities Act or the rules of the
Securities and Exchange Commission, a supplemental prospectus will be filed
disclosing:
the name of any such brokers or dealers,
the number of shares involved,
the price at which such shares are to be sold,
the commissions paid or discounts or concessions allowed to such
brokers or dealers, where applicable,
that such brokers or dealers did not conduct any investigation to
verify the information set out in this prospectus and
other facts material to the transaction.
We can give no assurance that any of the selling stockholders will sell any
or all of these shares of common stock.
CAIS has agreed, among other things, to bear all expenses other than
underwriting discounts and selling commissions, but, in certain cases, including
reasonable fees and disbursements of one firm or counsel designated to act as
counsel for the selling stockholders, in connection with the registration and
sale of these shares. CAIS will not receive any of the proceeds from the
offering of these shares.
24
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by CAIS under the Exchange Act with
the Commission and are incorporated into this prospectus by reference:
a. CAIS' Current Report on Form 8-K/A filed with the Commission on
November 12, 1999;
b. CAIS' Annual Report on Form 10-K for the year ended December 31, 1999;
c. CAIS' Schedule 14A definitive proxy statement for CAIS' annual meeting
of stockholders filed with the Commission on May 18, 2000;
d. CAIS' amendment to Annual Report on Form 10-K for the year ended
December 31, 1999, filed with the Commission on April 28, 2000;
e. CAIS' Quarterly Report on Form 10-Q for the quarter ended March 31,
2000;
f. CAIS' Current Report on Form 8-K filed with the Commission on March
7, 2000;
g. CAIS' Schedule 14A definitive Proxy Statement for CAIS' special
meeting of stockholders filed with the Commission on March 23, 2000;
h. CAIS' Current Report on Form 8-K filed with the Commission on May 31,
2000; and
i. The description of the CAIS' common stock contained in Form 8-A filed
with the Commission on May 17, 1999.
Each document filed by CAIS pursuant to sections 13(a), 13(c), 14 and 15(d) of
the Exchange Act subsequent to the date of this prospectus and prior to the
termination of the offering made by this prospectus shall be deemed to be
incorporated by reference into this prospectus.
Copies of all documents which are incorporated into this prospectus by reference
(not including the exhibits to such documents, unless such exhibits are
specifically incorporated by reference in such documents) will be provided
without charge to each person, including any beneficial owner, to whom this
prospectus is delivered upon written or oral request. Please direct requests to
CAIS' corporate headquarters at 1255 22nd Street, N.W., Fourth Floor,
Washington, D.C., 20037 or by telephone at (202) 715-1300.
25
<PAGE>
LEGALITY OPINION AND INTEREST OF COUNSEL
The validity of the issuance of the shares of common stock offered pursuant to
this prospectus will be passed upon for CAIS by Morrison & Foerster LLP,
Washington, D.C. Morris DeFeo, Jr., an of counsel with Morrison & Foerster LLP,
our counsel, also serves as an Executive Vice President of CAIS. In connection
with his employment by CAIS, Mr. DeFeo received options to purchase 200,000
shares of our common stock at an exercise price of $13 1/16 per share,
exercisable in four equal installments beginning on May 1, 2001.
EXPERTS
The consolidated financial statements and schedules of CAIS Internet, Inc.
incorporated by reference in this registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said reports.
The financial statements of ATCOM, Inc. (now CAIS Software Solutions, Inc.)
incorporated by reference in this registration statement from the CAIS Internet,
Inc. Current Report on Form 8-K/A dated November 12, 1999, have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
WHERE YOU MAY FIND MORE INFORMATION
CAIS is subject to the informational requirements of the Securities Exchange Act
of 1934, and accordingly CAIS files reports, proxy statements and other
information with the Securities and Exchange Commission. Such reports, proxy
statements and other information filed can be inspected and copied at the
Commission's Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.,
20549, and at the following regional offices of the Commission: Seven World
Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. The Commission maintains a
web site (http://www.sec.gov) containing reports, proxy and information
statements and other information of registrants, including us, that file
electronically with the Commission. In addition, our common stock is listed on
the Nasdaq National Market and similar information concerning CAIS can be
inspected and copied at the offices of the National Association of Securities
Dealers, Inc., 9513 Key West Avenue, Rockville, Maryland 20850.
We have filed with the Commission a registration statement on Form S-3 (of which
this prospectus is a part) under the Securities Act of 1933, with respect to the
shares offered by this prospectus. This prospectus does not contain all of the
information set forth in the registration statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
Statements contained in this prospectus as to the contents of any contract or
other documents are not necessarily complete, and in each instance reference is
made to the copy
26
<PAGE>
of such contract or other document filed as an exhibit to the registration
statement, each such statement being qualified in all respects by such reference
and the exhibits and schedules thereto. For further information regarding us and
the shares offered by this prospectus, reference is hereby made to the
registration statement and such exhibits and schedules which may be obtained
from the Commission at its principal office in Washington, D.C. upon payment of
the fees prescribed by the Commission.
No person has been authorized to give any information or to make any
representations not contained or incorporated by reference in this prospectus in
connection with the offer described in this prospectus and, if given or made,
such information and representations must not be relied upon as having been
authorized by us. Neither the delivery of this prospectus nor any sale made
under this prospectus shall under any circumstances create any implication that
there has been no change in our affairs since the date of this prospectus or
since the date of any documents incorporated into this prospectus by reference.
This prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any securities other than the securities to which it relates, or an
offer or solicitation in any state to any person to whom it is unlawful to make
such offer in such state.
27
