<PAGE>
As Filed with the Securities and Exchange Commission on August 7, 1997
Registration No. 333-
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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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NUKO INFORMATION SYSTEMS, INC.
(Name of registrant as specified in its charter)
DELAWARE 16-0962874
(State or other jurisdiction of incorporation (I.R.S. Employer
or jurisdiction) Identification No.)
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2391 QUME DRIVE
SAN JOSE, CALIFORNIA 95131
(408) 526-0288
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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PRATAP KESAV KONDAMOORI, CHIEF EXECUTIVE OFFICER
NUKO INFORMATION SYSTEMS, INC.
2391 QUME DRIVE
SAN JOSE, CALIFORNIA 95131
(408) 526-0288
(Name, address, including zip code, and telephone number,
including area code, of agent for service of process)
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WITH COPY TO:
DEBRA K. WEINER
GROVER T. WICKERSHAM, P.C.
430 CAMBRIDGE AVENUE, SUITE 100
PALO ALTO, CALIFORNIA 94306
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO
TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If any securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF SECURITIES AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED BE REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
COMMON STOCK(1) 2,284,138 $2.75 $6,281,379.50 $1,904
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</TABLE>
(1) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933, as amended (the
"Securities Act") and equal to the closing sales price of the Common Stock
on The Nasdaq National Market on August 6, 1997.
(2) Also registered hereby is an indeterminate number of shares issuable
pursuant to the anti-dilution provisions of the warrants held by certain
selling stockholders, as such number may be adjusted as a result of stock
splits, stock dividends and antidilution provisions in accordance with Rule
416 under the Securities Act.
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 EXCHANGE ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
Subject to Completion Dated August 7, 1997
2,284,138 SHARES
NUKO INFORMATION SYSTEMS, INC.
COMMON STOCK
This Prospectus covers 2,284,138 shares (the "Shares") of the Common
Stock, par value $0.01 per share (the "Common Stock") of NUKO Information
Systems, Inc. (the "Company") for reoffer or resale from time to time by the
certain selling stockholders of the Company's securities (the "Selling
Stockholders"), or by their pledgees, donees, transferees or other successors
in interests (sometimes referred to as "Sellers"). See "Selling
Stockholders." Of the Shares, 1,263,730 Shares were issued or are issuable to
certain Selling Stockholders upon exercise of outstanding Warrants, and the
remaining 1,020,408 Shares were purchased from the Company in a private
transaction.
The Shares may be offered by the Sellers from time to time in brokerage
transactions (which may include block transactions), in the over-the-counter
market or negotiated transactions at prices and terms prevailing at the times
of such sales, at prices related to such market prices or at negotiated
prices. Such shares may be sold directly to purchasers, through
broker-dealers acting as agents for the Sellers or to broker-dealers who may
purchase the Sellers' Shares as principals and thereafter sell the Shares
from time to time in the over-the-counter market, in negotiated transactions
or otherwise, or by a combination of these methods. Broker-dealers who effect
these transactions may receive compensation in the form of discounts or
commissions from the Sellers or from the purchasers of the Shares for whom
the broker-dealers may act as an agent or to whom them may sell as a
principal, or both. See "Plan of Distribution."
The Selling Stockholders and broker-dealers, if any, acting in
connection with such sales, might be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933, as amended (the
"Act") and any commission received by them and any profit on the resale of
such securities might be deemed to be underwriting discounts and commissions
under the Act.
All expenses of this offering will be paid by the Company except for
commissions, fees and discounts of any underwriters, brokers, dealers or
agents retained by the Selling Stockholders. Estimated expenses payable by
the Company in connection with this offering are approximately $50,000. The
Company will not receive any part of the proceeds from the resale of the
Shares by the Selling Stockholders. The aggregate proceeds to the Selling
Stockholders from the Common Stock will be the purchase price of the Common
Stock sold less the aggregate agents' commissions and underwriters'
discounts, if any. The Company has agreed to indemnify the Selling
Stockholders and certain other persons against certain liabilities, including
liabilities under the Act.
On August 6, 1997, the Company filed a separate registration statement
covering the resale of a total of 157,532 shares of Common Stock by one
selling stockholder.
The Company's Common Stock is currently traded on The Nasdaq National
Market under the symbol "NUKO." On August 6, 1997, the closing sale price of
the Common Stock on Nasdaq was $2-3/4 per share.
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE, INVOLVE A HIGH DEGREE OF
RISK AND SHOULD NOT BE PURCHASED BY ANY INVESTORS WHO CANNOT AFFORD THE LOSS
OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS" ON PAGE 8 OF THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE>
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Reports, proxy statements and
other information filed by the Company may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at its regional offices located
at 7 World Trade Center, Suite 1300, New York, New York 10048, and at
Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, the Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information statements
and other information regarding registrants, such as the Company, that file
electronically with the Commission. Furthermore, the Common Stock is listed
on the Nasdaq National Market and similar information concerning the Company
can be inspected and copied at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Act with respect to the securities offered hereby. This
Prospectus, which constitutes part of the Registration Statement, does not
contain all the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. The Registration Statement, including exhibits thereto, may be
inspected without charge at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of all
or any part thereof may be obtained from the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's regional offices located at 7 World Trade
Center, Suite 1300, New York, New York 10048, and Northwest Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material may be obtained by mail at prescribed rates from the Public Reference
Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Statements contained in this Prospectus as to the contents of any contract or
other document referred to are not necessarily complete and in each instance
reference is made to the copy 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.
2
<PAGE>
INFORMATION INCORPORATED BY REFERENCE
The following documents heretofore filed by the Company with the
Commission are by this reference incorporated in and made a part of this
Prospectus:
(i) The Company's Annual Report on Form 10-K for the year ended
December 31, 1996, filed pursuant to Section 13 of the Exchange
Act;
(ii) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997, filed pursuant to Section 13 of the Exchange Act;
(iii) The Company's Current Reports on Form 8-K, dated March 5, 1997,
February 14, 1997 and July 25, 1997;
(iv) The Company's Definitive Proxy Statement for the May 28, 1997
Annual Meeting of Stockholders;
(v) All reports filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent
to the date of this Prospectus and prior to the termination of this
offering; and
(vi) The description of the Company's Common Stock contained in
Form 8-A, filed pursuant to Section 12(g) of the Exchange Act.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document that is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will cause to be furnished without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, upon
the written or oral request of such person, a copy of any documents described
above, other than certain exhibits to such documents. Request should be
addressed to: NUKO Information Systems, Inc., 2391 Qume Drive, San Jose,
California 95131, Attention: Secretary, telephone (408) 526-0288.
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, and, if given
or made, such information or representations must not be relied upon as
having been authorized. This Prospectus does not constitute an offer to sell,
or a solicitation of an offer to buy, any securities in any jurisdiction to
any person to whom it is unlawful to make such offer or solicitation. Neither
the delivery of this Prospectus nor any sale made hereunder shall under any
circumstances create an implication that there has been no change in the
facts herein set forth since the date hereof.
3
<PAGE>
PROSPECTUS SUMMARY
CERTAIN STATEMENTS SET FORTH IN THIS PROSPECTUS AND INCORPORATED HEREIN
BY REFERENCE THAT ARE NOT HISTORICAL FACT CONSTITUTE "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995. REFERENCE IS MADE IN PARTICULAR TO THE DISCUSSIONS SET FORTH
UNDER THE HEADINGS "BUSINESS" AND "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" IN THE COMPANY'S ANNUAL REPORT
ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE COMPANY'S QUARTERLY
REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997. SUCH
FORWARD-LOOKING STATEMENTS ARE BASED ON CURRENT EXPECTATIONS AND INVOLVE
KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS, INCLUDING THE
FACTORS DISCUSSED UNDER THE CAPTION "RISK FACTORS" BELOW, WHICH MAY CAUSE THE
ACTUAL RESULTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM HISTORICAL
RESULTS OR FROM ANY PROJECTED RESULTS EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH REFLECT MANAGEMENT'S
ANALYSIS ONLY AS OF THE DATE HEREOF. THE COMPANY UNDERTAKES NO OBLIGATION TO
PUBLICLY RELEASE THE RESULTS OF ANY REVISION TO THESE FORWARD-LOOKING
STATEMENTS THAT MAY BE MADE TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE
HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
THE COMPANY
The Company designs, markets and sells one-way and two-way video
networking products that form essential building blocks in the development of
broadband (high capacity) video networks. The Company's standards compliant
products allow its customers to compress and decompress digital video and to
transmit signals over many types of networks using different interfaces and
protocols. The Company's digital compression and decompression products are
sold under the trade names Highlander and RAVE and its network solutions are
sold under the trade name Intelligent Broadband Services Network ("IBSN").
The Company markets its products and network solutions for enterprise-wide
private networks and public networks offered by carriers such as telephone
companies, cable companies, satellite companies and microwave communications
companies.
The Company's products are comprised of codecs and multiplexors, which
enable video compression and decompression and network interfacing. Such
products enable a user to digitize analog signals and to encode, compress,
transmit, receive, decompress, decode and display multimedia data streams,
allowing the rapid and cost-effective communication of data from the point of
origin to remote locations.
The Company's Highlander products serve the one-way broadcast television
market and markets for corporate broadcasting and remote surveillance
applications. The Company has targeted its RAVE products at two-way video
conferencing, telemedicine, distance learning, remote arraignment and
post-production video editing. The Company sells its Highlander and RAVE
products separately and in combination as part of its IBSN integrated
platform. The Company intends to provide its IBSN customers with Highlander
and RAVE products, other standards compliant products, video network
consulting services and software to integrate the various pieces of the
network, creating a turnkey video network solution.
The Company's principal executive offices are located at 2391 Qume
Drive, San Jose, California 95131, and its telephone number is (408) 526-0288.
The Company was incorporated in 1968 under the laws of the State of New York
under the name Yondata Corporation. In January 1997, the Company
reincorporated under the laws of the State of Delaware. All references in
this Prospectus to the "Company" or "NUKO" mean NUKO Information Systems,
Inc., a Delaware corporation, and its predecessor corporation.
4
<PAGE>
THE OFFERING
<TABLE>
<CAPTION>
<S> <C>
Common Stock Offered by the Selling Stockholders. . . . 2,284,138 shares
Common Stock Outstanding. . . . . . . . . . . . . . . . 13,383,963 shares as of July 22, 1997(1)
Risk Factors. . . . . . . . . . . . . . . . . . . . . . An investment herein involves a high degree of
risk and should not be considered by investors
who cannot afford to lose their entire investment
Use of Proceeds . . . . . . . . . . . . . . . . . . . . The Company will receive no proceeds from the
sale of the Shares offered hereby by the Selling
Stockholders
Nasdaq National Market Symbol . . . . . . . . . . . . . NUKO
</TABLE>
__________
(1) Does not include (i) up to 2,385,143 shares issuable upon exercise of
outstanding options granted pursuant to the Company's stock option plans;
and (ii) up to 2,011,983 shares issuable upon exercise of outstanding
warrants. Also does not include shares issuable upon conversion of 6,000
shares of outstanding Series A Convertible Preferred Stock (at a value of
approximately $6,000,000), plus the 7% annual dividend premium, which are
convertible into Common Stock based on a conversion price that is the
lesser of $16 or a discount to the market price based on a ten-day trading
period preceding the date of conversion. The foregoing notwithstanding, as
of July 22, 1997, the holder of the Series A Convertible Preferred Stock
may only convert its outstanding Series A Preferred Stock into an aggregate
of 792,889 additional shares before reaching an aggregate ownership
percentage of 19.99% calculated as of the date of the issuance of the
Series A Preferred Stock. Any excess shares over 19.99% that are issuable
upon conversion of outstanding Series A Convertible Preferred Stock are
subject to mandatory redemption unless the Company obtains stockholder
approval of the additional conversions over 20%. In addition, upon
conversion of any additional shares of Series A Preferred Stock, the
Company will be required to issue warrants equal to one-half the number of
shares issued upon conversion, which will be exercisable at $15 per share.
5
<PAGE>
RECENT DEVELOPMENTS
On July 10, 1997, the Company completed a private financing which
resulted in the issuance of 1,318,027 shares of Common Stock for gross
proceeds of approximately $3,333,334. The shares were issued to two
institutional investors in separate transactions that were each conditioned
upon the concurrent closing of the other transaction.
Of the shares issued in these transactions, 297,619 shares were issued
to RGC International Investors, LDC ("RGC"), which purchased the shares at
$2.80 per share. These shares were issued upon exercise of outstanding
warrants, immediately following repricing of the warrants from $18 to $2.80
(equal to 100% of the average closing prices of the Company's Common Stock
for the five trading days preceding the date of exercise). Such warrants were
issued in connection with prior conversions of shares of Series A Convertible
Preferred Stock (the "Convertible Preferred"). As of July 22, 1997, a total
of 6,000 shares of Convertible Preferred remained outstanding. In connection
with the July financing, the exercise price on all unexercised warrants,
whether issued in connection with prior conversions of the Convertible
Preferred, or issuable upon future conversions, was reduced from $18 to $15
per share. All of the shares underlying the Convertible Preferred and the
warrants issued and issuable upon conversion or exercise thereof, as the case
may be, including the 297,619 shares issued on July 10, 1997, have been
registered for resale. In addition to the 297,619 shares issued to RGC on
July 10, 1997, RGC was issued a new three-year warrant to purchase 99,207
shares at an exercise price of $2.80.
The remaining 1,020,408 shares of Common Stock were issued to six
affiliated institutional trust accounts for which Altamira Management, Ltd.,
Toronto, Ontario ("Altamira") acts as agent, which purchased the shares at
$2.45 per share. Altamira was also issued three-year warrants to purchase an
additional 204,082 shares of Common Stock at $2.45 per share. Altamira also
has the right to receive warrants equal to 10% of the aggregate number of
warrants issuable to RGC, when additional warrants are issued to RGC.
The 1,318,027 shares issued and the shares issuable upon exercise of the
warrants issued in these transactions are being registered for resale on the
registration statement of which this Prospectus is a part.
In connection with the sale of the securities to Altamira, the placement
agent was issued an aggregate of warrants to purchase an aggregate of 102,041
shares at $2.45 per share and received cash commissions and a nonaccountable
expense allowance aggregating $225,000.
Since May 1997, the Company and certain of its present and former
executive officers have been named as defendants to two class action lawsuits
as follows:
On May 23, 1997, Lillian Levine filed a lawsuit in the United States
District Court for the Northern District of California against the Company
and its former Chief Financial Officer. The action was filed as a class
action on behalf of all persons who purchased the Company's Common Stock from
April 24, 1997 through May 20, 1997 or their successors in interest. The
Plaintiff
6
<PAGE>
alleges that during this period, the defendants disseminated materially false
and misleading press releases and public statements concerning the financial
results for the fiscal quarter ended March 31, 1997. Plaintiff alleges claims
under the federal securities laws and seek damages for all members of the
class. The Company intends to vigorously defend the action.
On June 24, 1997, Bruce and Carol Wolitarsky filed a lawsuit in the United
States District Court for the Northern District of California against the
Company, its President/Chief Executive Officer/Chairman of the Board and its
former Chief Financial Officer. The action was filed as a class action on behalf
of all persons who purchased the Company's Common Stock from April 24, 1997
through May 20, 1997. The Plaintiffs allege that during this period, the
defendants issued incorrect financial and business information about the
Company, its finances, performance and reporting of its revenues and financial
results for its first fiscal quarter of 1997. The Plaintiffs allege that this
caused the market price of the Company's Common Stock to be artificially
inflated and caused them and other purchasers to pay too much for their Common
Stock. Plaintiffs allege claims under the federal securities laws and seek
damages for all members of the class. The Company intends to vigorously defend
the action.
On May 6, 1997, the Company issued 157,532 shares of Common Stock to
Internext Compression, Inc. ("Internext") pursuant to that certain Series B
Preferred Stock and Warrant Purchase Agreement dated as of April 21, 1997
(the "Purchase Agreement"). As consideration for the issuance of the 157,532
shares of the Company's Common Stock, Internext issued to the Company
1,600,000 shares of its Series B Preferred Stock, no par value ("Series B
Preferred") and a warrant to purchase an additional 1,600,000 shares of
Series B Preferred at an exercise price of $0.625 per share (the "Warrant").
Pursuant to the Purchase Agreement, the Company has agreed to make a
post-closing adjustment payment to Internext in the amount of $593,371,
payable in cash 30 days after the effectiveness of a registration statement
covering the resale of the 157,532 shares. If such registration statement is
not declared effective by the SEC within 90 days after the closing, then the
Company shall, within 30 days, at its option, either redeem the common stock
for $1,000,000 cash or make or arrange an interest-free loan to Internext of
up to $1,000,000 in aggregate principal amount, which would be advanced in
increments of up to $250,000 per month until such registration statement
becomes effective. The loan would become due either 30 days after the
effective date of such registration statement or 12 months after the first
advance under the loan, whichever is earlier. The Company and Internext each
granted certain registration rights to the other with respect to the shares
it issued (or may issue pursuant to the Warrant) to the other.
7
<PAGE>
RISK FACTORS
THE PURCHASE OF THE SHARES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK, AND THE PURCHASE OF THESE SECURITIES SHOULD BE CONSIDERED ONLY BY
PERSONS WHO CAN AFFORD TO SUSTAIN A TOTAL LOSS OF THEIR INVESTMENT.
PROSPECTIVE PURCHASERS SHOULD CAREFULLY CONSIDER, AMONG OTHER FACTORS, THE
FOLLOWING:
HISTORY OF LOSSES. Since its decision to enter the video networking
market, the Company has operated at a loss because the Company's revenues
were insufficient to support the comparatively substantial expenses incurred
by the Company, primarily for research and development. The Company recorded
net losses of $703,225 in fiscal 1994, $1,743,862 in fiscal 1995, $1,957,645
for the eight months ended December 31, 1995 and $14,733,030 for the year
ended December 31, 1996 and a net loss of $3,874,378 for the three months
ended March 31, 1997. The Company's accumulated deficit at March 31, 1997 is
$22,981,023. The Company expects to continue to incur substantial losses in
future periods. There can be no assurance that the Company's products will be
widely accepted in the marketplace or to the extent sales are made, that the
volume, pricing and timing will be sufficient to permit the Company to
achieve profitability in the future. As of December 31, 1996, the Company has
net operating loss carry forwards of approximately $16,000,000 and $4,500,000
available to offset future federal and state taxable income, respectively,
which losses expire at various dates from 1997 to 2011. The utilization of
these losses is contingent upon the Company's ability to generate taxable
income in the future. Management does not believe, based upon available
evidence, that it is more likely than not that the Company will be able to
realize the deferred tax assets.
INDISPENSABLE NEED FOR CAPITAL/REPORT OF INDEPENDENT ACCOUNTANTS
REGARDING ABILITY TO CONTINUE AS A GOING CONCERN. Primarily because of the
Company's history of operating losses, there is substantial doubt about the
Company's ability to continue as a going concern unless the Company is able
to obtain additional financing. The Company anticipates that without
additional financing, it would likely run out of cash to fund its operations
during the third quarter of 1997. The Company currently does not have any
arrangements to obtain other sources of financing. If the Company were unable
to secure such financing, the Company would at a minimum be forced to revise
its plan of operations. The report of independent accountants on the
Company's financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996 includes an explanatory
paragraph to this effect.
SHORT OPERATING HISTORY; PREDECESSOR COMPANIES AND OPERATIONS. The
Company's operations are subject to all of the risks inherent in a new
business enterprise, including the absence of a substantial operating history
and the expense of new product development. Various problems, expenses,
complications and delays may be encountered in connection with the
development of the Company's products and business. Future growth beyond
present capacity will require significant expenditures for expansion,
marketing, research and development. These expenses must be paid out of
future equity or debt financings or out of generated revenues and Company
profits. The availability of funds from any of these sources cannot be
assured.
8
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The Company was incorporated in the State of New York in 1968 under the
name Yondata Corporation and, in October 1992, changed its name to Growers
Express Corporation. In May 1994, Growers Express Corporation merged with
NUKO Technologies, Inc., a California corporation, and following the merger,
Growers Express changed its name to NUKO Information Systems, Inc. and
commenced operations through NUKO Technologies, Inc., which survived the
merger as the Company's wholly owned subsidiary. In January 1997, the Company
reincorporated in Delaware. From 1970 to 1994, the Company had no operations
and no revenues. The Company's management, which had no affiliation with
Growers Express prior to the merger with NUKO Technologies in May 1994, has
almost no knowledge of the Company's activities between its incorporation in
1968 and the merger, and very few corporate records relating to the period
between 1970 and 1994 are available. As a result, while management believes
that there are no material liabilities related to the predecessor company,
there can be no assurance that there are no potential liabilities relating to
such period or that the Company always has conducted its corporate activities
during this period in accordance with the New York Business Corporations Law.
EARLY STAGE OF PRODUCT DEVELOPMENT. Since early 1994, the Company has
been primarily engaged in research and development of its technologies,
product design and establishment of strategic alliances on which the Company
expects to depend for manufacturing, sales and distribution of its potential
products. The Company has only recently begun to generate significant
revenues from the commercialization of products. The Company has to date sold
its initial products only in limited quantities, primarily for use in
development, demonstration and testing of prototypes. Certain contracts may
relate to new technologies that may not have been previously deployed on a
large-scale commercial basis. The Company's products are based on
technologies that have not been widely deployed, and there can be no
assurance that the Company will be able successfully to market its initial
products to generate the increased revenues necessary to sustain full scale
commercial production or that the Company's products will be well received
when introduced into the marketplace on a full commercial scale. The
Company's products also must interoperate effectively among a wide variety of
different equipment, different protocols and different transmission speeds.
While the Company believes its products interoperate effectively among the
principal configurations of equipment, protocols and transmission speeds that
are currently commercially deployed, there can be no assurances that the
Company's products will continue to interoperate effectively among other
configurations of equipment, protocols and transmissions which may be
developed or utilized in the future. Moreover, management of the Company has
limited experience with the distribution of technologically complex products
in commercial quantities and there can be no assurance that the Company will
be able to make necessary adaptations to successfully move from the research
and development stage to full commercial production and distribution.
COMPETITION. The segments of the telecommunications industry in which
the Company competes are intensely competitive and are characterized by
declining average selling prices and rapid technological change. The Company
competes with major domestic and international companies, virtually all of
which have substantially greater financial, technical, production and
marketing resources than the Company with which to pursue engineering,
manufacturing, sales, marketing and distribution of their products. For
example, in its compression and networking business, the Company competes
with vertically integrated system suppliers including General
9
<PAGE>
Instrument Corporation, Scientific-Atlanta, Inc. and Philips, as well as more
specialized suppliers including the DMV division of News Corp., C-Cube
Microsystems' DiviCom Inc. subsidiary, and the TV/COM subsidiary of Hyundai.
In addition, some of the Company's customers are actual or potential
competitors of the Company, competing against the Company with its own
products. The Company believes that the principal criteria for competition in
its market include cost competitiveness, flexibility, revenue generation
capability, compatibility with existing networks and upgradeability, as well
as customer support. There is no assurance that the Company will be able to
compete successfully with these other companies on these factors or
otherwise.
ADDITIONAL CAPITAL REQUIREMENT. In July 1997, the Company completed a
private financing through the exercise of certain warrants and the sale of
additional shares of Common Stock, which, in the aggregate raised
approximately $3,300,000 (the "July Financing"). See "Recent Developments."
The Company believes that its existing cash resources, its renewed line of
credit with Silicon Valley Bank (based on 60% of allowable accounts
receivable up to $6,000,000) and the proceeds of the July Financing, together
with cash generated from operations, if any, may not provide adequate funding
for its capital requirements through the third quarter of 1997. Therefore,
the Company expects it will need additional funds to support its operating
plan at sometime during the second half of 1997. The Company's capital
requirements will depend on many factors, including the progress of its
research and development efforts, its timely receipt of revenue from sales of
its products to large customers, the need to devote resources to
manufacturing operations, and the demand for the Company's products.
Additional future financing may occur through the sale of unregistered Common
Stock or convertible securities in exempt offerings or through the public
offering of registered stock or convertible debt. However, an institutional
investor has a right of first refusal until February 23, 1998 to purchase
securities on the same terms offered by potential investors during such
period, unless such financing is by way of a firm commitment underwriting,
the issuance of securities in connection with a merger, consolidation or sale
of assets or the issuance of securities in connection with a strategic
alliance. Such right of first refusal could impair the Company's ability to
obtain needed financing on acceptable terms or could prevent the Company from
obtaining such financing on any terms. There can be no assurance that new
financing will be available when needed by the Company or that the terms, if
available, will be satisfactory to the Company. If adequate funds are not
available, the Company may be required to delay, scale back or eliminate one
or more of its research and development or manufacturing programs or to
obtain funds through arrangements that may require the Company to relinquish
rights to certain of its technologies or potential products or other assets
that the Company would not otherwise relinquish. The inability of the Company
to raise needed funds would have a material adverse effect on the Company's
business, financial condition and results of operations.
MANAGEMENT OF GROWTH. During 1996, the Company began to experience
significant growth, which is expected to continue at a rapid pace for the
foreseeable future. Such growth has placed, and will continue to place,
significant strain on the Company's limited personnel and other resources.
The Company's ability to manage any further growth, should it occur, will
require it to implement and continually expand operational and financial
systems, recruit additional employees and train and manage both current and
new employees. There can be no assurance that the Company will be able to
find qualified personnel to fill needed positions or be able to successfully
10
<PAGE>
manage a broader organization. The failure of the Company to effectively
expand or manage these functions consistent with any growth that may occur
could have a material adverse effect on the Company's business and results of
operations.
DEPENDENCE ON CUSTOMER CAPITAL SPENDING REQUIREMENTS AND PURCHASING
TRENDS. The Company's business is directly impacted by capital spending
requirements and funding of the Regional Bell Operating Companies ("RBOCs")
and other major customers in the telecommunications industry. The capital
budgets of these customers or potential customers is beyond the control of
the Company and can be affected by numerous factors completely unrelated to
the performance, quality and price of the Company's products. Should the
Company's customers or potential customers suffer budgeting cutbacks
affecting their capital purchasing plans, the Company's results of operations
could be adversely affected. In addition, in recent years, the purchasing
behavior of the Company's customers has increasingly been characterized by
the use of large contracts with few suppliers. This trend is expected to
intensify and will contribute to the variability of the Company's results.
Such larger purchase contracts typically involve longer negotiating cycles,
require dedication of substantial amounts of working capital and other
resources and, in general, require investments that may substantially precede
recognition of associated revenues. Moreover, in return for larger,
longer-term purchase agreements, customers often demand more stringent
acceptance criteria, which may also cause revenue recognition delays. For
example, if customers ask the Company to price its products based on
estimates of such customers' future requirements, and such customers fail to
take delivery of an amount comparable to the estimated amount on which the
Company bases its prices, the Company may recognize lower margins on product
revenue.
RELIANCE ON TELCOS. Before purchasing products such as those of the
Company, telephone companies ("telcos") subject such products to lengthy
approval processes, which can take several years or more for complex products
based on new technologies. The Company expects to be required to submit each
successive generation of its products as well as new products to its telco
customers for approval. The length of the approval process will depend upon a
number of factors, including the complexity of the product involved,
development priorities of telcos, telcos' budgets and regulatory issues
affecting telcos. Moreover, the need for regulatory approval from the Federal
Communications Commission (the "FCC") for certain new telco services prior to
their implementation may delay the approval process. Any such delay would
have a material adverse effect on the Company's business, financial condition
and results of operations.
Historically, telcos have been cautious in implementing new
technologies. Telcos' deployment of the Company's compression and networking
technologies may be prevented or delayed by a number of factors, including
telcos' lengthy product approval and purchase processes, cost, regulatory
barriers that may prevent or restrict telcos from providing interactive
multimedia services, the lack of demand for Internet access and other
interactive multimedia services, the lack of sufficient programming content
for interactive multimedia services, the availability of alternative
technologies, and telcos' policies that favor the use of such alternative
technologies. In addition, telcos are generally reluctant to deploy new
technologies available only from a single source, especially when the
supplier is as small as the Company, and often require alternative sources
before deploying a new technology. This reluctance may put the Company at a
11
<PAGE>
competitive disadvantage relative to some of its competitors. Even if telcos
adopt policies favoring full-scale implementation of the Company's
compression and networking technologies, there can be no assurance that sales
of the Company's products will become significant or that the Company will be
able successfully to introduce its products on a timely basis or to sell
those products in material quantities. The failure of telcos to deploy the
Company's technologies would have a material adverse effect on the Company's
business, financial condition and results of operations. Even if demand for
the Company's products is high, telcos may have sufficient bargaining power
to demand low prices and other terms and conditions which may have a material
adverse effect on the Company's business, financial condition and results of
operations.
DEPENDENCE ON SUPPLIERS. The Company purchases certain of the chips and
chip sets needed in its products from single source suppliers. The Company is
dependent upon such suppliers to deliver parts and components as needed for
the manufacture of the Company's products, but there can be no assurance that
such suppliers will continue to be able to serve the Company's needs. While
there are alternative sources of supply for each of the components outsourced
by the Company, the Company would incur delays if required to switch to
another supplier. Any disruption of the Company's relationships with any of
its key single source suppliers or manufacturers or other limitations on the
availability of these products provided by such suppliers could have an
adverse effect on the Company's business and operating results.
PRICING PRESSURES. The markets into which the Company sells or will sell
its products are characterized by extreme price competition, and the Company
expects the average selling prices of its products will decrease over the
life of each product. In order to partially offset declines in the selling
price of its products, the Company will need to reduce the cost of its
products by implementing cost reduction design changes, obtaining cost
reductions as and if volumes increase and successfully managing manufacturing
and subcontracting relationships. Since the Company does not operate its own
manufacturing facilities and must make binding commitments to purchase
products, it may not be able to reduce its costs as rapidly as companies that
operate their own manufacturing facilities. The failure of the Company to
design and introduce lower cost versions of its products in a timely manner
or to successfully manage its manufacturing relationships would have a
material adverse effect on its business and results of operations.
DEPENDENCE ON SUBCONTRACTORS. The Company's reliance on subcontractors
to manufacture and assemble certain products involves significant risks,
including reduced control over delivery schedules, quality assurance,
manufacturing yields and cost, the potential lack of adequate capacity and
potential misappropriation of its intellectual property. Although the Company
has not experienced material disruptions in supply to date, there can be no
assurance that manufacturing or assembly problems will not occur in the
future or that any such disruptions will not have a material adverse effect
upon the Company's results of operations. Further, there can be no assurance
that suppliers who have committed to provide product will do so, or that the
Company will meet all conditions imposed by such suppliers. Failure to obtain
an adequate supply of products on a timely basis would delay product delivery
to the Company's customers, which would have a material adverse effect on the
Company's business and results of operations. In addition, the Company's
business could also be materially and adversely affected if the operations of
any supplier are interrupted for a substantial period of time, or if the
Company is required, as a
12
<PAGE>
result of capacity constraints in its industry or otherwise, to increase the
proportion of goods purchased from higher cost suppliers in order to obtain
adequate product volumes. The Company is currently in litigation with one of
its subcontractors; however, the subcontractor was not a sole source
contractor and such litigation has not impacted the Company's ability to
manufacture its products through other sources.
FLUCTUATIONS IN QUARTERLY RESULTS; LACK OF BACKLOG. The Company has
experienced, and expects to continue to experience, significant fluctuations
in its quarterly results of operations. Factors that have contributed or may
contribute to future fluctuations in the Company's quarterly results of
operations include the size and timing of customer orders and subsequent
shipments, customer order deferrals in anticipation of new products, timing
of product introductions or enhancements by the Company or its competitors,
market acceptance of new products, technological changes in the
telecommunications industry, competitive pricing pressures, accuracy of
customer forecasts of end-user demand, changes in the Company's operating
expenses, personnel changes, changes in the mix of product sales and contract
and consulting fees, quality control of products sold, disruption in sources
of supply, regulatory changes, capital spending, delays of payments by
customers and general economic conditions. The timing and volume of customer
orders are difficult to forecast. The Company does not have a material
backlog of orders for its products.
The Company intends to continue to make significant ongoing research and
development expenditures for new products and technologies, which may have a
material adverse effect on the Company's quarterly results of operations. The
Company's expense levels are based in part on expectations of future revenues
and are relatively fixed in the short term. The Company intends to increase
operating expenditures as the Company expands its operations to develop and
market its compression and networking products. Consequently, a shortfall in
quarterly revenues due to a lack of sales of the Company's products or
otherwise would adversely impact the Company's business, financial condition
and results of operations in a given quarter due to the Company's inability
to adjust expenses or inventory to match revenues for that quarter. In
addition, there can be no assurance that, as the Company increases sales of
its products, warranty returns will not become significant or that warranty
returns, if significant, will not have a material adverse effect on the
Company's business, financial condition and results of operations.
GOVERNMENT REGULATION. Although the extensive regulation of telcos by
Federal, state and foreign regulatory agencies, including the FCC and various
state public utility and service commissions, does not directly affect the
Company, the effects of such regulation on the Company's customers may have a
material adverse effect on the Company's business, financial condition and
results of operations. For example, FCC regulatory policies affecting the
availability of telco services, and other terms on which telcos conduct their
business, may impede the Company's penetration of certain markets. Although
the Telecommunications Act of 1996 eliminated or modified many FCC
restrictions on telcos' ability to provide interactive multimedia services,
the remaining or any future restrictions may have a material adverse effect
on telcos' demand for the Company's products. Cable operators, which may
become another market for the Company's products, are also subject to
extensive governmental regulations that may discourage them from deploying
the Company's compression and networking technology. In addition, rates
13
<PAGE>
for telecommunications services are generally governed by tariffs of licensed
carriers that are subject to regulatory approval. These tariffs could have a
material adverse effect on the demand for the Company's products. The
imposition of certain tariffs, duties and other import restrictions on
components which the Company intends to obtain from non-domestic suppliers,
the imposition of export restrictions on products which the Company intends
to sell internationally or other changes in laws or regulations in the United
States or elsewhere could also have a material adverse effect on the
Company's business, financial condition and results of operations.
POTENTIAL PRODUCT LIABILITIES. One or more of the Company's products may
contain undetected component, hardware, software or mechanical defects or
failures when first introduced or may develop defects or failures after
commencement of commercial production or shipments. Any such defects or
failures could cause loss of goodwill, if any, with distributors and with
customers, prevent or delay market acceptance of the Company's products,
result in cancellations or rescheduling of orders or shipments or product
recalls or returns and expose the Company to claims from customers. The
Company also could incur unexpected and significant costs, including product
redesign costs and costs associated with customer support. The Company
expects to sell its products with a limited warranty against defects in
materials and workmanship. If any of the Company's products are found within
the warranty period to contain such defects, the Company could be required to
repair or replace the defective products or refund the purchase price. The
occurrence of any such defect or failure could have a material adverse effect
on the Company's business, financial condition and results of operations. The
Company does not maintain insurance to protect against claims associated with
the use of its products and there can be no assurance that the Company will
be able to satisfy claims that may be asserted against the Company.
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS. The Company attempts to
protect its technology through a combination of patents, copyright and trade
secret laws, confidentiality procedures and licensing arrangements. While the
Company currently has no patents, the Company has applied for certain patents
and intends to continue to seek patents on its technology, when appropriate.
There can be no assurance that patents will issue from any of the pending
applications or that any claims allowed from pending patents will be
sufficiently broad to protect the Company's technology. While the Company
intends to protect its intellectual property rights vigorously, there can be
no assurance that any patents issued to the Company will not be challenged,
invalidated or circumvented, or that the rights granted thereunder will
provide competitive advantages to the Company. The Company will endeavor to
keep the results of its research and development program proprietary, but may
not be able to prevent others from using some or all of such information or
technology with or without compensation. The Company's ultimate success will
depend to some extent on its ability to avoid infringement of patent or other
proprietary rights of others. The Company is not aware that it is infringing
any such rights, nor is it aware of proprietary rights of others for which it
will be required to obtain a license in order to market its initial products.
However, there is no assurance that the Company is not infringing proprietary
rights of others or that it will be able to obtain any technology licenses it
may require in the future.
14
<PAGE>
DEPENDENCE ON EMERGING MARKETS. The markets into which the Company is
targeting its products is newly developing. The potential size of the market
opportunities and the timing of their development is uncertain. In addition,
the emergence of markets for certain digital video applications will be
affected by a variety of factors beyond the Company's control. In particular,
certain sectors of the communications market will require the development and
deployment of an extensive and costly communications infrastructure. There
can be no assurance that the communications providers will make the necessary
investment in such infrastructure or that the creation of this infrastructure
will occur in a timely manner. In addition, the deployment of such
infrastructure will be subject to governmental regulatory policies, taxes and
tariffs. The development of such markets could be delayed or otherwise
adversely affected by new governmental regulations or changes in taxes or
tariffs, or by the failure of government agencies to adopt changes to
existing regulations necessary to permit new technologies to enter the market.
POSSIBLE TECHNOLOGICAL ADVANCES. The market for the Company's initial
products is expected to be characterized by rapidly changing technology,
evolving industry standards and frequent new product introductions. The
Company's future success will depend in part upon its ability to successfully
bring to market and then enhance its existing products and to introduce new
products and features to meet changing customer requirements and emerging
industry standards. There can be no assurance that the Company will
successfully complete the development of its future products or that the
Company's initial or future products will achieve market acceptance. Any
delay or failure of these products to achieve market acceptance would
adversely affect the Company's business. In addition, there can be no
assurance that products or technologies developed by others will not render
the Company's initial or future products or technologies non-competitive or
obsolete.
ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER PROVISIONS. Certain provisions
of the Company's Amended and Restated Certificate of Incorporation and
By-laws could discourage potential acquisition proposals, could delay or
prevent a change in control of the Company and could make removal of
management more difficult. Such provisions could diminish the opportunities
for a stockholder to participate in tender offers, including tender offers
that are priced above the then current market value of the Common Stock. The
provisions also may inhibit increases in the market price of the Common Stock
that could result from takeover attempts. Additionally, the Board of
Directors of the Company, without further stockholder approval, may issue up
to 4,990,000 shares of Preferred Stock, in one or more series, with such
terms as the Board of Directors may determine, including rights such as
voting, dividend and conversion rights which could adversely affect the
voting power and other rights of the holders of Common Stock. Preferred Stock
may be issued quickly with terms which delay or prevent the change in control
of the Company or make removal of management more difficult. Also, the
issuance of Preferred Stock may have the effect of decreasing the market
price of the Common Stock.
DEPENDENCE ON KEY PERSONNEL; SEARCH FOR PERMANENT CHIEF FINANCIAL
OFFICER. The ability of the Company to build and maintain its competitive
technological position will depend, in large part, on the continued service
of its key technical and management personnel and on its ability to attract
and retain highly-skilled technical, marketing and management personnel.
Competition for such personnel is intense and there is no assurance that
qualified people will be
15
<PAGE>
available when required. The Company does not currently have employment
agreements with any of its key employees. The Company does not have, and is
not contemplating securing, key man life insurance on any of its executive
officers or other key personnel. There can be no assurance that any of these
individuals or any other key employee will not voluntarily terminate his or
her employment with the Company. The loss of certain key employees,
particularly the Company's President and Chief Executive Officer, Pratap
Kesav Kondamoori, would have a material adverse effect on the business of the
Company.
On May 21, 1997, John H. Gorman, the Company's then Chief Financial
Officer, Vice President - Finance, Treasurer and Secretary, left the Company.
The Company has appointed Thomas A. Spanier, a financial and management
consultant, as interim chief financial officer to serve until the Company
locates a permanent chief financial officer. There can be no assurance that
the Company will be successful in its search for a permanent chief financial
officer with the requisite qualifications and experience. The Company's
failure to locate and hire a permanent chief financial officer could have a
material adverse effect on the Company.
CONTROL BY OFFICERS AND DIRECTORS. As of July 22, 1997, the officers and
directors of the Company control, directly or indirectly, approximately 27%
of the voting power of the Company's voting stock, including options and
warrants immediately exercisable or exercisable within 60 days. Although
management does not control a majority of the outstanding voting stock, it
holds a sufficient amount to make it more difficult for an independent third
party to effect a change in control of the Company than would be the case if
the stock ownership were less concentrated among members of management.
STOCK MARKET VOLATILITY; VOLATILITY OF THE COMPANY'S COMMON STOCK. There
have been periods of extreme volatility in the stock market that, in many
cases, were unrelated to the operating performance of, or announcements
concerning, the issuers of the affected securities. General market price
declines or volatility in the future could adversely affect the price of the
Common Stock. There can be no assurance that the Common Stock will maintain
its current market price. Short-term trading strategies of certain investors
can have a significant effect on the price of specific securities. The price
of the Company's Common Stock, in particular, has been extremely volatile.
During the period from January 1, 1997 through August 6, 1997, the Company's
Common Stock has moved from a high of $14 to a low of $2-1/4.
ABSENCE OF DIVIDENDS. The Company does not expect to declare or pay any
cash or stock dividends in the foreseeable future, but instead intends to
retain all earnings, if any, to invest in the Company's operations. The
payment of future dividends is within the discretion of the Board of
Directors and will depend upon the Company's future earnings, if any, its
capital requirements, financial condition and other relevant factors.
CONVERTIBLE SECURITIES, WARRANTS AND OPTIONS; POTENTIAL DILUTION AND
ADVERSE IMPACT ON ADDITIONAL FINANCINGS. As of July 22, 1997, the Company had
outstanding options and warrants to purchase an aggregate of 4,247,126 shares
of Common Stock at a weighted average exercise price of $5.41 per share. The
Company also is obligated to issue additional Warrants to acquire 1,544,445
shares of Common Stock and 3,544,445 shares of Common Stock upon conversion of
16
<PAGE>
the Convertible Preferred Stock based on a conversion price of the
Convertible Preferred Stock at the time of such conversion of $2.02
(representing a 15% discount from $2-3/8, a recent closing price). Pursuant
to the terms of the Convertible Preferred Stock, the minimum number of shares
available for resale is 937,500 (including shares underlying Warrants), based
on a fixed maximum conversion price of $16.00 per share. Subject to such
minimum number, the exact number of shares of Common Stock issuable upon
conversion of Convertible Preferred Stock and exercise of Warrants issued
pursuant to such conversion cannot be estimated with certainty because such
issuances of Common Stock will vary inversely with the market price of the
Common Stock at the time of such conversion. The number of warrants and
shares of Common Stock issuable upon conversion of the Convertible Preferred
Stock is also subject to various adjustments to prevent dilution resulting
from stock splits, stock dividends or similar transactions. Under the terms
of the Convertible Preferred Stock and the Warrants, the maximum number of
shares currently issuable upon conversion of the Convertible Preferred Stock
and upon exercise of "in the money" warrants issuable upon such conversion is
792,889 shares (5.9% of the number of shares of the Company's Common Stock
outstanding on July 22, 1997). If the investor wishes to convert shares of
Convertible Preferred Stock or to exercise in the money warrants for more
than 792,889 shares of Common Stock and the Company has not received an
affirmative vote of its stockholders approving such issuance, then the
Company must redeem the outstanding shares of Convertible Preferred Stock, at
a premium, for cash or for a six-month note bearing interest at 12% per
annum. To the extent that such options and warrants are exercised or shares
of Convertible Preferred Stock are converted (and the warrants issuable upon
such conversion are exercised), substantial dilution of the interests of the
Company's stockholders is likely to result and the market price of the Common
Stock may be materially adversely affected. In the case of the Convertible
Preferred Stock, such dilution will be greater if the future market price of
the Common Stock decreases. To the extent that such options and warrants are
exercised or shares of Convertible Preferred Stock are converted (and the
Warrants issuable upon such conversion are exercised), substantial dilution
of the interests of the Company's stockholders is likely to result and the
market price of the Common Stock may be materially adversely affected. In the
case of the Convertible Preferred Stock, such dilution will be greater if the
future market price of the Common Stock decreases. For the life of such
warrants, options and convertible securities the holders will have the
opportunity to profit from a rise in the price of the underlying securities.
The existence of such warrants, options and convertible securities has in the
past, and is likely in the future, to affect materially and adversely the
terms on which the Company can obtain additional financing, and the holders
of warrants and options can be expected to exercise them at a time when the
Company would otherwise, in all likelihood, be able to obtain additional
capital by an offering of its unissued capital stock on terms more favorable
to the Company than those provided by such warrants, options and convertible
securities.
17
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE. Future sales of Common Stock by
existing stockholders under Rule 144 of the Act, pursuant to an effective
registration statement or otherwise could have an adverse effect on the price
of the Common Stock. As of July 22, 1997, there were more than 9,350,000
shares of Common Stock eligible for sale in the public market, subject to
compliance with Rule 144. In addition, the Company intends to register up to
2,700,000 shares for issuance under its 1996 Stock Option Plan and 1996
Director Stock Option Plan and 1,187,307 shares under its 1995 Stock Option
Plan. The possibility that substantial amounts of Common Stock may be sold in
the public market may adversely affect the prevailing market price for the
Common Stock and could impair the Company's ability to raise additional
capital through the sale of equity securities.
USE OF PROCEEDS
The Company will receive no part of the proceeds of any sales or
transactions made by the Selling Stockholders and/or their respective
pledgees, donees, transferees or other successors in interest hereunder. The
Company will pay substantially all of the expenses incident to the offering
of the Shares, other than any discounts, concessions or commissions payable
to any underwriters, dealers or agents, which expenses will be borne by the
respective Selling Stockholders.
18
<PAGE>
SELLING STOCKHOLDERS
An aggregate of 1,263,730 Shares of Common Stock issued or issuable upon
exercise of outstanding Warrants and an additional 1,020,408 Shares of
outstanding Common Stock may be offered by certain security holders of the
Company (collectively, the "Selling Stockholders") who acquired these
securities in private transactions. The Selling Stockholders holding Warrants
must exercise such Warrants prior to sale of the Shares of Common Stock
registered hereby, and after such exercise, all Selling Stockholders, or
their pledgees, donees, transferees or other successors in interests, may
offer the Shares of Common Stock owned by them for sale as principals for
their own accounts at any time and from time to time, in the over-the-counter
market at prices prevailing at the time of sale. The Selling Stockholders, or
their pledgees, donees, transferees or other successors in interests, may
also offer the Shares in private sales at prices to be negotiated. The
Company will not receive any of the proceeds from the sale of such
securities. Selling Stockholders are not obligated to reimburse the Company
any portion of the expenses incurred by the Company in this offering.
The following table sets forth the name of each such security holder for
whom the Company is registering Shares of Common Stock for resale to the
public and (ii) the number and percentage of shares of Common Stock
beneficially owned by each such holder as of July 22, 1997 and immediately
after the offering (assuming the sale of all of their Shares offered hereby).
Material relationships between certain of the Selling Stockholders and the
Company are set forth in the footnotes to the table. Except as indicated in
the footnotes to this table, the persons named in the table have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws, where
applicable.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING FOLLOWING OFFERING
-------------------------- SHARES -----------------------
NUMBER OF PERCENT TO BE NUMBER OF PERCENT
NAME SHARES OWNED SOLD(1) SHARES OWNED
- -------------------------------- --------- -------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
RGC International Investors,
LDC 3,869,484 (2) 24.7% 724,207 3,172,277 20.3%
Dekcrew & Co.(3) 1,224,490 (4) 9.0 120,000 0 0
Postagestamp & Co.(3) 1,224,490 (4) 9.0 241,680 0 0
Royal Trust Corporation
of Canada in Trust(3) 1,224,490 (4) 9.0 322,920 0 0
Gee & Co.(3) 1,224,490 (4) 9.0% 311,400 0 0
Canadian Imperial Bank
of Commerce
Gee & Co.(3) 1,224,490 (4) 9.0 171,360 0 0
Canadian Imperial Bank
of Commerce
Gee & Co.(3) 1,224,490 (4) 9.0 57,130 0 0
Canadian Imperial Bank
of Commerce
J. Winder Hughes 149,200 (5) 1.1* 120,000 29,200 *
(SEE FOOTNOTES ON FOLLOWING PAGE.)
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING FOLLOWING OFFERING
-------------------------- SHARES -----------------------
NUMBER OF PERCENT TO BE NUMBER OF PERCENT
NAME SHARES OWNED SOLD(1) SHARES OWNED
- -------------------------------- --------- -------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
Michael P. St. Clair 25,000 (6) * 25,000 0 0
Marc Dumont 46,039 (7) * 33,400 12,639 *
Ben Rispoli 0 (8) 0 25,000 0 0
Thomas A. Spanier 0 (8) 0 15,000 0 0
Jaiome Sambyal 0 (8) 0 15,000 0 0
Bailey & Company Inc. 0 (8) 0 102,041 0 0
</TABLE>
____________
* Less than 1%.
(1) Outstanding Warrants must be exercised by the Selling Security Holder
before sale of the underlying Shares pursuant to this Prospectus.
Accordingly, "Shares to be Sold" assumes exercise of the outstanding
Warrants.
(2) Includes (i) 1,078,572 shares issuable upon exercise of currently
exercisable warrants, (ii) 792,889 shares issuable upon conversion of
outstanding Series A Convertible Preferred Stock; and (iii) 396,445
shares issuable upon exercise of warrants issuable in connection with
the conversion of the outstanding Series A Preferred Stock referred to
in (ii). Pursuant to the terms of the Series A Convertible Preferred
Stock, RGC International Investors, LDC would have the right to
convert its outstanding Series A Convertible Preferred Stock into
additional shares of Common Stock, with additional warrants issued.
The conversion price is the lesser of $16 or a discount from the
average of the closing price for the ten-day period preceding the date
of conversion. The foregoing notwithstanding, as of July 22, 1997, the
holder of the Series A Convertible Preferred Stock may only convert
its outstanding Series A Preferred Stock into an aggregate of 792,889
additional shares before reaching an aggregate ownership percentage of
19.99% calculated as of the date of the issuance of the Series A
Preferred Stock. Any excess shares over 19.99% that are issuable upon
conversion of outstanding Series A Convertible Preferred Stock are
subject to mandatory redemption unless the Company obtains stockholder
approval of the additional conversions over 20%.
(3) The named Selling Stockholder is the registered holder of the
securities to be sold, holding such securities in nominee name for the
investor, Altamira Management Ltd. Altamira is a Toronto, Ontario
institutional investor, the beneficial ownership of which is widely
held. The various trust accounts holding the Altamira securities are
listed separately to differentiate between the named accounts under
which the securities were initially issued, but the beneficial
ownership interest of the accounts has been aggregated inasmuch as
they are under common control.
(4) The total includes ownership of securities attributable to Dekcrew &
Co. (100,000 shares outstanding and 20,000 shares issuable upon
exercise of currently exercisable warrants); Postagestamp & Co.
(201,400 shares outstanding and 40,280 shares issuable upon exercise
of currently exercisable warrants); Royal Trust Corporation of Canada
(269,100 shares outstanding and 53,820 shares issuable upon exercise
of currently exercisable warrants); Gee & Co., Canadian Imperial Bank
of Commerce (three separate accounts as follows: (i) 47,608 shares
outstanding and 9,522 shares issuable upon exercise of currently
exercisable warrants; (ii) 259,500 shares outstanding and 51,900
shares issuable upon exercise of currently exercisable warrants; and
(iii) 142,800 shares outstanding and 28,560 shares issuable upon
exercise of currently exercisable warrants). Altamira Management Ltd.,
in the aggregate, beneficially owns as of July 22, 1997 1,020,408
shares and 204,082 shares issuable upon exercise of currently
exercisable warrants.
(5) Includes (i) 120,000 shares issuable upon exercise of currently
exercisable warrants; (ii) 22,500 shares held by Capte Fear Trust, a
trust of which Mr. Hughes would be deemed to be the beneficial owner,
(iii) 1,700 shares held in an IRA account for the benefit of Mr.
Hughes and (iv) 5,000 shares held by Hughes Capital Investment Co., of
which Mr. Hughes would be deemed to be the beneficial owner.
(6) Includes 25,000 shares issuable upon exercise of currently exercisable
warrants.
(7) Mr. Dumont is a director of the Company. Includes 33,400 shares
issuable upon exercise of currently exercisable warrants.
(8) All of the shares registered for resale are issuable upon exercise of
outstanding warrants that are not exercisable until the earlier of
June 19, 1998 or the effective date of a registration statement
covering the resale of the shares issuable upon such exercise.
20
<PAGE>
PLAN OF DISTRIBUTION
This Prospectus covers the resale of the shares of Common Stock by
holders of Warrants and/or Common Stock (the "Selling Stockholders"), or
their pledgees, donees, transferees or other successors in interests
(collectively, the "Sellers"). The holder of Warrants must exercise the
Warrants prior to sale pursuant to this Prospectus. The Sellers may sell all
or a portion of the Common Stock offered hereby from time to time in
brokerage transactions (which may include block transactions) in the
over-the-counter market or, in negotiated transactions, at prices and on
terms prevailing at the times of such sales. The Sellers may effect such
transactions by selling their Common Stock directly to purchasers, through
broker-dealers acting as agents for the Sellers or to broker-dealers who may
purchase the Sellers' Common Stock as principals and thereafter sell the
Common Stock from time to time in the over-the-counter market, in negotiated
transactions or otherwise, or a combination of such methods. The Sellers may
individually pay customary brokerage commissions and expenses.
The Company will amend or supplement this Prospectus in the following
circumstances and to the following extent: (i) if the securities are to be
sold at a price other than the prevailing market price, to disclose such
price; (ii) if the securities are to be sold in block transactions and the
purchaser intends to resell, to disclose the nature and extent of such
arrangements; or (iii) if the compensation to be paid to broker-dealers is
other than usual and customary discounts, concessions or commissions, to
disclose the terms of such broker-dealer compensation. In the
above-circumstances, no offers or sales may be made by the Sellers until an
effective amendment or prospectus supplement is available.
The Selling Stockholders and broker-dealers, if any, acting in
connection with such sales, might be deemed to be "underwriters" within the
meaning of section 2(11) of the Act and any commission received by them and
any profit on the resale of such securities may be deemed to be underwriting
discounts and commissions under the Act. The Company will not receive any
part of the proceeds from the sale of the Shares by the Selling Stockholders.
21
<PAGE>
EXPERTS
The consolidated balance sheet as of December 31, 1996 and the
consolidated statements of operations, stockholders' equity (deficit) and
cash flows for the year then ended, incorporated by reference in this
Prospectus, have been incorporated by reference in this Prospectus in
reliance on the report, which includes an explanatory paragraph relating to
the Company's ability to continue as a going concern, of Coopers & Lybrand
L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
The consolidated balance sheet as of December 31, 1995 and the
consolidated statements of operations, stockholders' equity (deficit) and
cash flows for the eight months ended December 31, 1995 and for the year
ended April 30, 1995, incorporated by reference in this Prospectus, have been
incorporated by reference herein in reliance on the report of Grant Thornton
LLP, independent certified public accountants, given on the authority of such
firm as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters in connection with the sale of the securities
offered hereby will be passed upon for the Company by Grover T. Wickersham,
P.C., Palo Alto, California. A principal in the law firm of Grover T.
Wickersham, P.C. owns options to purchase an aggregate of 25,000 shares of
Common Stock.
22
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN
OR MADE MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THE SHARES OFFERED BY THIS PROSPECTUS OR AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY THE SHARES IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT THERE HAVE
BEEN NO CHANGES IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT
THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THIS DATE.
-----------------
TABLE OF CONTENTS
PAGE
Available Information . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Information
by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . 5
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . 6
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 18
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . 19
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . 21
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2,284,138 SHARES
NUKO INFORMATION
SYSTEMS, INC.
COMMON STOCK
--------------
PROSPECTUS
---------------
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses payable by the Registrant in connection with the issuance and
distribution of the securities being registered are estimated to be as follows:
SEC registration fee . . . . . . . $1,904
Accounting fees and expenses . . . 8,000 *
Legal fees and expenses . . . . . 35,000 *
Blue sky legal fees and expenses . 2,000 *
Miscellaneous expenses . . . . . . 3,096 *
---------
Total . . . . . . . . . . . $50,000 *
---------
---------
______________
* Estimated expenses
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The General Corporation Law of the State of Delaware (the "General
Corporation Law") provides for the indemnification of directors, officers,
employees and other agents of the corporation under certain circumstances as
set forth in section 145. Section 145 permits a corporation to indemnify its
agents, typically directors and officers, for expenses incurred or
settlements or judgments paid in connection with certain legal proceedings.
Only those legal proceedings arising out of such persons' actions as agents
of the corporation may be grounds for indemnification.
Whether or not indemnification may be paid in a particular case depends
upon whether the agent wins, loses or settles the suit and upon whether a
third party or the corporation itself is the plaintiff. The section provides
for mandatory indemnification, no matter who the plaintiff is, when an agent
is successful on the merits of a suit. In all other cases, indemnification is
permissive.
If the agent loses or settles a suit brought by a third party, he or she
may be indemnified for expenses incurred and settlements or judgments paid.
Such indemnification may be authorized upon a finding that the agent acted in
good faith and in a manner he or she reasonably believed to be in the best
interests of the corporation.
If the agent loses or settles a suit brought by or on behalf of the
corporation, his or her right to indemnification is more limited. If he or
she is adjudged liable to the corporation, the court in which such proceeding
was held must determine whether it would be fair and reasonable to indemnify
him or her for expenses which such court shall determine. If the agent
settles such a suit with court approval, he or she may be indemnified for
expenses incurred in connection with
II - 1
<PAGE>
the defense and settlement of the suit, upon a finding that the agent acted
in good faith and in a manner he or she reasonably believed to be in the best
interests of the corporation and its stockholders.
Under Section 145, the indemnification discussed above may be authorized
by a majority vote of the disinterested directors or stockholders (the person
to be indemnified is excluded from voting his or her shares) or the court in
which the proceeding was brought.
Under Section 145, a corporation may authorize, by by-law, agreement or
otherwise, the indemnification of its agents in excess of that expressly
permitted by Section 145. The Registrant's By-laws provide that
indemnification shall be mandatory in all cases where it is permitted by
Section 145.
Section 102(b) of the General Corporation Law permits corporations to
eliminate or limit the personal liability of a director to the corporation or
its stockholders for monetary damages for breach of the fiduciary duty as a
director. The Registrant's Certificate of Incorporation provides for
elimination of personal liability of directors for breach of fiduciary duty
as a director except for the following: (i) for any breach of such
director's duty of loyalty to the Corporation or its stockholders; (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law; (iii) under Section 174 of the General
Corporation Law; or (iv) for any transaction from which such director derived
an improper personal benefit. The Registrant's Certificate of Incorporation
further provides that modification or repeal of this provision may not affect
the elimination of liability therein provided with respect to a director's
personal liability for any act or omission that occurs prior to such
modification or repeal.
Finally, a corporation has the power to purchase indemnity insurance for
its agents, even if it would not have the power to indemnify them. The
Registrant has purchased such insurance.
Insofar as indemnification for liabilities under the Securities Act of
1933, as amended (the "Act") may be permitted to directors, officers or
persons controlling the Registrant pursuant to the foregoing provisions, the
Registrant has been informed that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
The Company's Amended and Restated Certificate of Incorporation and
By-laws provide that the Company will indemnify its directors and officers to
the fullest extent permitted by Delaware law. Delaware law permits, but does
not require, a corporation to indemnify officers, directors, employees or
agents and expressly provides that the indemnification provided for under
Delaware law shall not be deemed exclusive of any indemnification right under
any bylaw, vote of stockholders or disinterested directors, or otherwise.
Delaware law permits indemnification against expenses and certain other
liabilities arising out of legal actions brought or threatened against such
persons for their conduct on behalf of the Company, provided that each such
person acted in good faith and in a manner that he or she reasonably believed
was in or not opposed to the Company's best interests and in the case of a
criminal proceeding, had no reasonable cause to believe his or her conduct
was unlawful. Delaware law does not allow indemnification of directors
II - 2
<PAGE>
in the case of an action by or in the right of the Company (including
stockholder derivative suits) unless the directors successfully defend the
action or indemnification is ordered by the court.
The Company intends to enter into indemnification agreements with
certain officers and directors to effectuate these indemnity.
Item 16. EXHIBITS
5.1 Opinion of Grover T. Wickersham, P.C. re legality
23.1 Consent of Coopers & Lybrand L.L.P., independent accountants (see page
II-8 of the Registration Statement)
23.2 Consent of Grant Thornton LLP, independent certified public
accountants (see page II-9 of the Registration Statement)
23.3 Consent of Grover T. Wickersham, P.C. (included in Exhibit 5.1, above)
25.1 Power of Attorney (included on page II-6 of the Registration Statement)
II - 3
<PAGE>
ITEM 17. UNDERTAKINGS
(a) RULE 415 OFFERING
The Registrant hereby undertakes:
(1) To file during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the " Securities Act");
(ii) Reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) Include any material information with respect to the
plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-8, and 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 Section
15(d) of the Exchange Act that are incorporated by reference in the
registration statement.
(2) That for purposes of determining any liability under the
Securities Act of 1933, as amended, 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.
(b) FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY
REFERENCE
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934, as amended (and, where
applicable, each filing of an employee benefit plan's annual report pursuant
to section 15(d) of the Securities Exchange Act of 1934, as amended) that is
incorporated by reference in the registration statement shall be deemed to be
a new registration statement relating to the
II - 4
<PAGE>
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) REQUEST FOR ACCELERATION OF EFFECTIVE DATE OR FILING OF
REGISTRATION STATEMENT ON FORM S-8
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the 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 its 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.
///
///
II - 5
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, 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 San Jose, California,
on August 7, 1997.
NUKO INFORMATION SYSTEMS, INC.
By: /s/ Pratap Kesav Kondamoori
-------------------------------------
Pratap Kesav Kondamoori
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Pratap Kesav Kondamoori and Thomas A.
Spanier, and each of them, his attorneys-in-fact and agents, each with full
power of substitution, for him/her and in his/her name, place and stead, in
any and all capacities, to sign any or all amendments to this Registration
Statement on Form S-3, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in connection with this Registration Statement, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that any of said attorneys-in-fact and agents,
or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
<S> <C> <C>
(Principal Executive Officer)
/s/ Pratap Kesav Kondamoori President, Chief Executive Officer, August 7, 1997
- ---------------------------------- Chairman of the Board
Pratap Kesav Kondamoori
II - 6
<PAGE>
(Principal Financial and Accounting
Officer)
/s/ Thomas A. Spanier Chief Financial Officer August 7, 1997
- ----------------------------------
Thomas A. Spanier
- ---------------------------------- Director
Marc Dumont
/s/ Anders O. Field, Jr. Director August 7, 1997
- ----------------------------------
Anders O. Field, Jr.
/s/ H.R. Kedlaya Vice President, Strategic August 7, 1997
- ---------------------------------- Planning and Director
H. R. Kedlaya
- ---------------------------------- Director
Robert C. Marshall
</TABLE>
II-7
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement for 2,284,138 shares of common stock, $0.01 par value of NUKO
Information Systems, Inc. and subsidiary on Form S-3 of our report, which
includes an explanatory paragraph relating to the Company's ability to
continue as a going concern, dated March 21, 1997, on our audit of the
consolidated financial statements and financial statement schedule of NUKO
Information Systems, Inc. and subsidiary as of December 31, 1996 and for the
year then ended, which report is included in Form 10-K for the fiscal year
ended December 31, 1996. We also consent to the reference to our firm under
the caption "Experts."
COOPERS & LYBRAND L.L.P.
San Jose, California
August 6, 1997
II - 8
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated February 14, 1996 accompanying the
consolidated financial statements of NUKO Information Systems, Inc. and
subsidiary as of December 31, 1995 and the eight months ended December 31,
1995 and for the year ended April 30, 1995 appearing in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 which are
incorporated by reference in this Registration Statement. We consent to the
incorporation by reference in the Registration Statement of the
aforementioned report and to the use of our name as it appears under the
caption "Experts."
GRANT THORNTON LLP
San Jose, California
August 7, 1997
II - 9
<PAGE>
EXHIBIT INDEX
5.1 Opinion of Grover T. Wickersham, P.C. re legality
23.1 Consent of Coopers & Lybrand L.L.P., independent accountants
(see page II-8 of the Registration Statement)
23.2 Consent of Grant Thornton LLP, independent certified public
accountants (see page II-9 of the Registration Statement)
23.3 Consent of Grover T. Wickersham, P.C. (included in Exhibit 5.1, above)
25.1 Power of Attorney (included on page II-6 of the Registration Statement)
<PAGE>
EXHIBIT 5.1
[LETTERHEAD]
August 7, 1997
NUKO Information Systems, Inc.
2391 Qume Drive
San Jose, CA 95131
Gentlemen:
We refer to the Registration Statement on Form S-3 (the "Registration
Statement") of NUKO Information Systems, Inc., a Delaware corporation (the
"Company"), filed with the Securities and Exchange Commission (the
"Commission") covering the registration under the Securities Act of 1933, as
amended (the "Act") of 2,284,138 shares of common stock, $0.01 par value, of
the Company (the "Shares") for resale by certain selling stockholders of the
Company (the "Selling Stockholders").
We have examined the Registration Statement, the Certificate of
Incorporation and By-laws of the Company and such records, certificates and
other documents as we have considered necessary or appropriate for the
purposes of this opinion.
Based on the foregoing, it is our opinion that:
1. The Company is duly organized, validly existing and in good
standing under the laws of the State of Delaware; and
2. The Shares issued to the Selling Stockholders or issuable upon
exercise of the outstanding warrants as described in the Registration Statement
are duly authorized and are (or will be, when issued in accordance with the
terms of the respective instruments) validly issued, fully paid and
nonassessable.
We hereby consent to the use of our name in the Registration Statement
under the caption "Legal Matters," as counsel who will pass upon the legality
of the Shares for the Company and to the filing of this opinion as an exhibit
to the Registration Statement. In giving this consent, we do not admit that
we are in the category of persons whose consent is required under Section 7
of the Act or the Rules and Regulations promulgated thereunder.
This opinion is rendered solely for your benefit and for the benefit of
the purchasers of the Shares being registered on the Registration Statement
in connection with the subject
<PAGE>
transaction and is not to be otherwise used, circulated, quoted or referred
to without our prior written consent.
Very truly yours,
/s/ Grover T. Wickersham, P.C.
Grover T. Wickersham, P.C.
