As filed with the Securities and Exchange Commission on December 30, 1999
Registration No. 333------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
CAVION TECHNOLOGIES, INC.
(Name of Small Business Issuer in its Charter)
Colorado 514191 84-1472763
(State or other (Primary North American (I.R.S. Employer
jurisdiction Industry Classification Identification No.)
of incorporation) System Number)
7475 Dakin Street, Suite 607
Denver, Colorado 80221
(303) 657-8212
(Address and Telephone Number of Principal Executive Offices
and Principal Place of Business)
DAVID J. SELINA
President and Chief Executive Officer
Cavion Technologies, Inc.
7475 Dakin Street, Suite 607
Denver, Colorado 80221
(303) 657-8212
(Name, Address, including Zip Code, and Telephone Number,
including Area Code, of Agent for Service)
----------------
Copies to:
S. LEE TERRY, JR., ESQ.
CYNTHIA R. CAIN, ESQ.
Gorsuch Kirgis LLP
Tower I, Suite 1000
1515 Arapahoe Street
Denver, Colorado 80202
(303)376-5000
----------------
Approximate date of commencement of proposed sale to the public: as
soon as practicable after this registration statement becomes effective.
----------------
THE REGISTRANT WILL AMEND 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 THAT SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum Amount
Title of Each Class Amount to Offering Aggregate of
of Securities to be be Price Per Offering Registration
Registered RegisteredShare(1)(2) Price(1)(2) Fee
--------------------- ----------- ------------
<S> <C> <C> <C> <C>
Class A common stock,
$.0001 par value
per share 831,891 $6.50 $5,407,291.50 $1,503.23
Common stock issuable
upon exercise of
warrants to purchase
Class A common stock(3) 30,000 $6.50 $195,000.00 $54.21
Common stock issuable
upon conversion of
Class B common stock
to Class A common
stock (4) 28,648 $6.50 $186,212.00 $51.77
Total -- -- $5,788,503.50 $1,609.21
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee.
(2) The price is based on the last sale price reported on the National
Association of Securities Dealers Automated Quotation System on
December 27, 1999.
(3) Each warrant is exercisable for one share of common stock.
(4) Each Class B common share is convertible into one share of common
stock.
Subject to completion, dated December 27 1999
PROSPECTUS
831,891 Shares
[Logo - cavion.com secure connectivity
from a single-minded
company]
Common Stock
- -------------------------------------------------------------------------
This prospectus relates to 831.891 shares of common stock of Cavion
Technologies, Inc. that may be sold from time to time by the selling
shareholders named in this prospectus.
We will not receive any proceeds from the sales by the selling
shareholders.
Our common stock is traded on the Nasdaq SmallCap Market under the symbol
CAVN. On December 23, 1999, the last reported sale price of the common
stock was $6.1875 per share.
INVESTING IN SHARES OF OUR STOCK INVOLVES RISKS.
RISK FACTORS BEGIN ON PAGE 6.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED
IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------
------------------,1999
The information in this prospectus is not complete and may change. 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 is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
[INSIDE COVER OF PROSPECTUS]
[Blank]
PROSPECTUS SUMMARY
cavion.com
cavion.com offers products and services for business to business
communications, secure Internet financial products, such as online banking
and bill paying services, and secure Internet access and services for our
customers. We are also building and managing a secure private
communications network exclusively for the credit union industry, which we
call CUIiNET(R). Our network acts as communications platform for the
delivery of services and information to and from credit unions and related
businesses.
Our principal executive offices are located at 7475 Dakin Street,
Suite 607, Denver, Colorado 80221. Our telephone number is 303-657-8212.
The offering
------------
Common stock offered by selling
shareholders 831,891 shares
Use of proceeds We will not receive any proceeds
from the sale of the common stock
Nasdaq symbol CAVN
Summary financial information
-----------------------------
The following tables contain our summary financial data. In addition
to this summary financial data, you should refer to the more complete
financial information included elsewhere in this prospectus. Earnings per
share in the summary financial information excludes the effect of our
October 29, 1999 sale of 1,200,000 shares of common stock in our initial
public offering.
<TABLE>
<CAPTION>
cavion.com Pro Forma
Period from Combined
LanXtra August 18,1998 Year Ended
Year Ended (Inception) to Pro Forma December 31,
December 31, December 31, Adjustments 1998
1998 1998 (unaudited) (unaudited)
------------ -------------- ----------- ------------
<S> <C> <C> <C> <C>
STATEMENT OF
- ------------
OPERATIONS DATA:
- ---------------
Revenue $ 215,022 $ -- $ -- $ 215,022
Cost of Revenue 222,419 -- -- 222,419
Operating Expenses 1,117,892 6,877 914,146 2,038,915
----------- -------- --------- -----------
Operating Loss (1,125,289) (6,877) (914,146) (2,046,312)
Interest expense,
and other 845,213 29,067 (584,480) 289,800
----------- -------- --------- -----------
Loss from
continuing
operations $(1,970,502) $(35,944) $(329,666) $(2,336,112)
=========== ======== ========= ===========
Basic and diluted
net loss from
continuing
operations per
share $(.77)
=====
Weighted average
common shares
outstanding -
basic and
diluted 3,029,218
===========
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
cavion.com Combined
Nine Nine
LanXtra Months Months
One Month Ended Ended
Ended September 30, Pro Forma September 30,
January 31, 1999 Adjustments 1999
1999 (unaudited) (unaudited) (unaudited)
------------ ------------------------- ------------
<S> <C> <C> <C> <C>
STATEMENT OF
- ------------
OPERATIONS DATA:
- ---------------
Revenue $ 37,850 $ 384,809 $ -- $ 422,659
Cost of Revenue 31,898 283,467 -- 315,365
Operating Expenses 213,311 2,803,816 79,421 3,096,548
--------- ---------- -------- ----------
Operating Loss (207,359) (2,702,474) (79,421) (2,989,254)
Interest expense,
and other 64,069 391,966 (52,932) 403,103
--------- ---------- -------- ----------
Net Loss $(271,428) $(3,094,440) $(26,489) $(3,392,357)
======== ========== ======= ==========
Basic and diluted
net loss per
share $(1.20)
=======
Weighted average
common shares
outstanding -
basic and
diluted 2,830,600
==========
</TABLE>
The following table is a summary of our balance sheet data. The pro forma
column reflects our receipt of the net proceeds of the 1,200,000 shares of
common stock we sold in our initial public offering and the 90,500 shares
sold in the partial exercise of the over-allotment at $6.50 per share,
after deducting underwriting discounts and commissions and expenses of our
initial public offering.
The pro forma as adjusted column reflects the repayment upon completion of
our initial public offering of our line of credit, notes payable to former
LanXtra shareholders, back pay to former employees, promissory notes
payable and equipment purchases.
<TABLE>
<CAPTION>
Pro Forma
cavion.com Pro Forma As Adjusted
September Pro Forma September September
30, 1999 Adjustments 30, 1999 30, 1999
(unaudited) (unaudited)(unaudited) (unaudited)
----------- ---------------------- -----------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
- -------------------
Current Assets $ 838,170 $6,792,000 $ 7,630,170 $ 6,202,170
Total Assets $5,505,332 $6,792,000 $12,297,332 $10,869,332
========== ========== =========== ===========
Current Liabilities $2,921,002 $ -- $ 2,921,002 $ 1,493,002
Long-term
Borrowings 502,678 -- 502,678 502,678
Putable Stock 196,577 -- 196,577 196,577
Stockholders'
Equity 1,885,075 6,792,000 8,677,075 8,677,075
---------- ---------- ----------- -----------
Total Liabilities
and Stockholders'
Equity $5,505,332 $6,792,000 $12,297,332 $10,869,332
========== ========== =========== ===========
</TABLE>
Risk Factors
------------
Because we have a short operating history, you will have limited
historical information about us on which to base your investment decision
- -------------------------------------------------------------------------
Our business plan was developed in January 1998 and we began
acquiring credit union customers, other than our original pilot customers,
in April 1998. Accordingly, we have a limited operating history upon
which you may evaluate us. We face the risks and uncertainties faced by
early-stage companies. Our short operating history makes it difficult to
predict our future financial results.
Because we have not yet been profitable, we may not have sufficient
resources to execute our business plan
- -------------------------------------------------------------------
As of the date of this prospectus, we have not been a profitable
business. We may never achieve profitable operations. Even if we do
become profitable, we may not be able to continue to be profitable.
Combined with LanXtra, we reported a total loss of $2,006,446 for the year
ended December 31, 1998, comprised of a $35,944 net loss for cavion.com
and a net loss of $1,970,502 for LanXtra. We reported additional combined
losses of $3,365,868 for the nine months ended September 30, 1999. We
expect to continue to report losses through most of the year 2000. Today,
we receive our revenue from the license and sale of products and services
to our credit union customers. Our revenue has grown since the start of
our business but it may not continue to grow or even continue at its
current level. Because some of our expenses are fixed, including
equipment and real estate leases, if our revenue does not increase, we may
not be able to compensate by reducing our expenses as much or as quickly
as we need to do. It is possible that our operating losses will continue
at present levels or even increase in the future. Our business, our
financial condition and the results of our operations will be materially
and adversely affected if we can't quickly adjust our operating expense
levels to at least match our revenue levels.
If we are unable to attract more credit union customers, we may not be
able to execute our business plan
- ------------------------------------------------------------------
As of the date of this prospectus, substantially all our revenue has
been derived from network access and connectivity fees and installation
service fees from our credit union customers. We expect that reliance to
continue for at least the next 16 months, after which we expect our
affinity program to generate increasing revenue. Our revenue depends on
information-technology spending by credit unions and we can't be sure that
this type of spending will increase as we expect or even continue at
today's levels. We do expect the credit union industry to grow over the
next several years, partially because credit unions have recently been
allowed to expand their membership beyond a single employee group. We
think that, as the credit union industry grows, its demand for information
technology products will also grow. Still, the demand for our products
and services is unpredictable. Our network currently hosts 80 credit
unions, three credit union leagues, two of which provide check clearing
services to credit unions, one corporate credit union, which provides
liquidity services to credit unions, and two credit union vendors, one of
which is a provider of website design, development and hosting services to
credit unions and one that provides electronic archiving services to
credit unions. Our future growth depends on our ability to provide more
services and different kinds of services to our existing and new
customers. We cannot be certain that we will be able to do that. There
are approximately 12,600 credit unions in the United States with combined
assets of more than $375 billion and approximately 73 million members.
Our success in the near term will depend on our ability to capture a
significant percentage of the credit union services market and to expand
the services we provide to our existing credit union customers. We cannot
assure you we will be able to do so.
Because we have not established a backup system, there may be temporary
interruptions in our service
- -----------------------------------------------------------------------
Our business depends on the efficient and uninterrupted operation of
our computer and communications hardware systems. Any system
interruptions that cause our services to be unavailable to our credit
union customers would greatly reduce the attractiveness of our services
and would materially damage our business, financial condition, and
operating results. Substantially all of our computer and communications
hardware is located at a single leased facility in metro Denver, Colorado,
which has finite backup protection. Our systems and operations are
vulnerable to damage or interruption from fire, flood, power loss,
telecommunications failure, break-ins, earthquake and similar events. We
presently do not have redundant, or backup, systems in separate geographic
locations for our network, nor do we have a formal disaster recovery plan.
We do store copies of critical data from our internal systems and
customers' systems, including the source code of our proprietary software,
at a second location. We carry business interruption insurance which will
compensate us for up to twelve months of actual losses of business income
due to physical loss of or damage to property at our principal facility in
metro Denver. This insurance is limited and may not compensate us for all
of our losses. The design of our network architecture includes some
redundancy and disaster recovery capabilities, but these capabilities will
not be available until we have installed and connected at least one other
network server farm with capacity similar to our Denver facility. We
can't predict today when that second installation will be completed.
Because of the importance to us of David Selina's experience and contacts
in the credit union industry, and Jeff Marshall's technical expertise, our
success may be dependent on our ability to retain these individuals
- ---------------------------------------------------------------------
We believe that the credit union and related management experience of
David J. Selina, our president, chief executive officer and chief
operating officer, is important to our success. We also believe that the
software development ability of Jeff Marshall, vice president of Software
Development, is important to our success. While we recently lost the
services of our former chief executive officer, Craig Lassen, who resigned
in March of 1999 to pursue other interests, we believe that the current
management team is highly qualified to carry out our business expansion
plans. We recently entered into an agreement with Mr. Lassen under which
he will provide up to 360 hours of consulting services relating to our
business generally, including telecommunications matters. As of the date
of this prospectus, we have not utilized a significant amount of the hours
available to us. We have employment contracts with David Selina, Jeff
Marshall and another key executive, Marshall Aster, our chief financial
officer. We have purchased $1,000,000 of key man insurance on each of
David Selina and Jeff Marshall. We have relied on our direct sales force
for sales of our products and services.
Our success may be dependent on our ability to attract and retain
personnel qualified in Internet and network services
- -----------------------------------------------------------------
We will need to hire more people in sales, customer service and other
areas in 1999 and beyond if we grow as we expect to. Competition for
qualified people in the Internet services and software industry,
particularly in the network services field, is intense. We compete with
bigger and better financed software and Internet services companies for
these employees. Our future success may depend on whether we can
attract, retain and motivate highly qualified personnel. We can't assure
you that we will be able to do so.
Because our business involves the transmission of confidential financial
information over the Internet, we could be liable if our electronic
security measures should fail
- ------------------------------------------------------------------------
We represent to our credit union customers that our Internet-based
network and transactional banking software are secured and protected by
multiple security measures, seven days a week, 24 hours a day, with
electronic monitoring and activity tracking, and industry-standard
software encryption. We believe that these features are an important
factor in convincing credit unions to buy our products and services, and
encouraging their members to use our Internet network systems for their
personal and sometimes sensitive financial transactions. Although we
believe our systems will prevent unauthorized access to credit union and
personal information, it is impossible to eliminate all risk of
unauthorized access. Despite all the measures we have taken, our products
may be vulnerable to physic
LAW\56199\323314.01
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of
this Registration Statement.
/s/ Arthur Andersen LLP
Denver, Colorado,
December 23, 1999.
LAW\56199\335219.01
GORSUCH KIRGIS LLP
Attorneys at Law
Tower I Suite 1000 1515 Arapahoe Street Denver, Colorado 80202
Telephone (303) 376-5000 Facsimile (303) 376-5001
December 23, 1999
Cavion Technologies, Inc.
7475 Dakin Street, Suite 607
Denver, Colorado 80239
Re: Cavion Technologies, Inc.
Registration Statement on Form SB-2
Gentlemen:
We are acting as counsel to Cavion Technologies, Inc., a
Colorado corporation (the "Company"), in connection with the
preparation of a Registration Statement on Form SB-2 filed with
the Securities and Exchange Commission (the "Registration
Statement"), relating to a proposed offering by the Selling
Shareholders named therein to the public of a maximum of 831,891
shares of the Company's Class A Common Stock, $.0001 par value
(the "Common Stock"), which consists of 773,243 outstanding
shares of Common Stock, 30,000 shares of Common Stock issuable
upon exercise of warrants to purchase Common Stock (the
"Warrants"), and 28,648 shares of Common Stock issuable upon
conversion of the Class B Common Stock (the "Class B Shares").
In this connection, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of such
corporate records, certificates and written and oral statements
of officers, legal counsel and accountants of the Company and of
public officials, and other documents that we have considered
necessary and appropriate for this opinion, and, based thereon,
we advise you that, in our opinion:
1. The Company is a corporation duly organized and validly
existing under the laws of the State of Colorado;
2. The Common Stock is validly issued, fully paid and
nonassessable;
3. The shares of Common Stock, when issued upon exercise
of the Warrants in accordance with the terms thereof, will be
validly issued, fully paid and nonassessable; and
4. The shares of Common Stock, when issued upon conversion
of the Class B Shares in accordance with the terms thereof, will
be validly issued, fully paid and nonassessable.
We hereby consent to the use of our name beneath the caption
"Legal Matters" in the Prospectus forming a part of the
Registration Statement and to the filing of this opinion as
Exhibit 5 thereto.
Very truly yours,
GORSUCH KIRGIS LLP
/s/Gorsuch Kirgis LLP
