PROSPECTUS
INTELECT COMMUNICATIONS, INC.
24,155,613 SHARES OF COMMON STOCK
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The Selling Stockholders listed on page 11 may offer and resell up to
24,155,613 shares of Intelect Communications, Inc. ("Intelect" or the
"Company") common stock under this Prospectus, for each of their own accounts.
The number of shares the Selling Stockholders may sell includes
o shares of common stock that currently are issued and outstanding;
o shares of common stock that they have received in exchange for the
Company's Series D Convertible Preferred Stock ("Series D Preferred
Shares") and Series E Convertible Preferred Stock ("Series E Preferred
Shares") in accordance with the Citadel Settlement Agreement (as defined
herein);
o shares of common stock issued or issuable upon the exchange of certain
outstanding indebtedness for shares of common stock; and
o shares of common stock issuable upon exercise of warrants.
We will not receive any proceeds from the sales covered by this Prospectus.
We issued the Series D Preferred Shares in a private placement transaction
on June 26, 1998 and the Series E Preferred Shares in private placement
transactions on March 5 and April 22, 1999 (the Series D Preferred Shares and
the Series E Preferred Shares are collectively referred to as the "Preferred
Shares"). Pursuant to a Settlement Agreement and Mutual Release (the "Citadel
Settlement Agreement") by and among the Company and Citadel Investment Group,
L.L.C. ("Citadel") and certain of Citadel's affiliates, including Wingate
Capital Ltd., Fisher Capital, Ltd., CCG Investment Fund Ltd., CCG Capital Ltd.
and Midway Capital Ltd. (collectively the "Citadel Entities"), the Citadel
Entities have agreed to exchange their remaining Preferred Shares for 5,515,563
shares of common stock of the Company (the "Exchange Shares"). We issued
1,988,341 Exchange Shares on July 1, 1999 upon exchange of a portion of the
Preferred Shares. We issued an additional 3,526,822 Exchange Shares as of the
date hereof, effective upon exchange of the Citadel Entities remaining Preferred
Shares. Pursuant to an agreement dated as of August 13, 1999, we issued
2,777,778 shares of common stock to The Coastal Corporation Second Pension Trust
("Coastal") in repayment of debt owed by the Company to Coastal. Pursuant to a
Repayment and Exchange Agreement dated as of August 13, 1999, we agreed to issue
shares of common stock to St. James Capital Partners, L.P. ("SJCP") and SJMB,
L.P. ("SJMB")(SJCP and SJMB collectively "St. James") in repayment of debt
owed by the Company. We issued additional common stock in a series of unrelated
private placements to accredited investors. For further information on the
Selling Stockholders and each of these transactions see "Selling Stockholders"
in this Prospectus.
Our common stock is quoted on the Nasdaq SmallCap Market under the symbol
"ICOM." On September 17, 1999, the last sale price of our common stock was
$1.031.
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. PLEASE SEE
"RISK FACTORS" BEGINNING ON PAGE 2.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY
STATE SECURITIES COMMISSION, NOR HAVE THESE ORGANIZATIONS DETERMINED THAT THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS SEPTEMBER 20, 1999.
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ABOUT INTELECT
We design, develop, manufacture, market and sell products and services for
converging voice, data and video networks. We established our current operations
through a series of mergers in 1995 and 1996, at which time we defined four
communications product platforms to respond to the increasing demands of speed
and complexity in communications networks.
We strategically focus our product lines and services to take advantage of
the convergence of telecommunications and data communications. This convergence
arises from the explosive growth in communication services (such as high-speed
Internet, video and countless voice services), which is driving the demand for
expansion of network capacities. These industry trends require today's network
integrators and managers to manage multiple applications at multiple locations
within available bandwidth resources while balancing the need for network
reliability. We designed our product lines to meet these evolving markets and
applications.
We intend to develop and bring to market a new generation of intelligent
flexible and scalable communications platform to allow customers to combine
their current voice, data and video networks (telephone, computers,
surveillance, etc.) into a single communications network, which would also
upgrade their communications into the latest generation of high-speed
technologies under a single network management system. More information about
our products, markets and operations may be found in our Form 10-K annual
report, filed on April 2, 1999, and our Form 10-Q quarterly reports, filed on
May 17, and August 16, 1999.
Our executive offices are located at 1100 Executive Drive, Richardson,
Texas 75081; telephone (972) 367-2100.
RISK FACTORS
This prospectus and the documents it incorporates by reference contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
statements accurately reflect our current view with respect to future events and
financial performance. The future events we describe in these risk factors
involve risks and uncertainties related to:
o general economic conditions in our product markets;
o our continuing development of our products;
o the market acceptance of our products;
o dependence on our suppliers;
o dependence on channels of distribution;
o competition;
o fluctuations in customer demand for our products;
o access to external sources of capital;
o execution of our margin improvement and cost control plans; and
o management of our corporate expansion.
In this prospectus, the words "anticipate ," "believe," "expect,"
"intend," "plan," "future," and similar expressions identify
forward-looking statements. Our actual results could differ materially from
those that we project in the forward-looking statements as a result of factors
that we have set forth throughout this document as well as factors of which we
are currently not aware.
Your investment in the shares offered by the Selling Stockholders in this
Prospectus involves a high degree of risk and should not be made by you if you
cannot afford the loss of your entire investment. In addition to the other
information in this prospectus, or incorporated in this prospectus
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by reference, you should consider carefully the following risk factors before
investing in the common stock offered by the Prospectus:
OUR STOCK PRICE MAY DROP DUE TO MARKET FLUCTUATIONS AND SALES OF LARGE NUMBERS
OF OUR SHARES
Intelect stock is quoted on the Nasdaq SmallCap Market. Based on historical
trends in the market for our stock and for other similar technology company
stocks, we anticipate that the trading price of our common stock may be subject
to wide fluctuations in response to:
o quarterly variations in operating results;
o changes in actual earnings or in earnings estimates by analysts;
o our announcements of technological developments;
o our competitors' announcements of technological developments;
o general market conditions; or
o other events largely outside our control.
In addition, extreme price and volume fluctuations in the stock market have
particularly affected the market prices of "high technology" stocks. These
fluctuations were often disproportionate to or unrelated to the operating
performance of these companies. These broad market fluctuations, general
economic conditions or other factors outside our control may adversely affect
the market price of our common stock.
Large numbers of the shares offered under this Prospectus could be sold at
the same time. Such sales, or the possibility of such sales, could significantly
depress the market price of the common stock.
WE MAY BE DELISTED BY NASDAQ
Intelect's common stock was transferred to the Nasdaq SmallCap Market
effective August 26, 1999 from the Nasdaq National Market. Intelect's continued
listing with the Nasdaq SmallCap Market will involve the successful completion
of an application and review process. This process will require the Company to
file an application for new listing, to pay all fees for initial listing and to
demonstrate compliance with all requirements for continued listing on the Nasdaq
SmallCap Market, including compliance with the Nasdaq Notifications of Listing
of Additional Shares program. If the Company fails to comply with any of the
provisions of the Nasdaq decision, Intelect's securities will be delisted from
Nasdaq. If during the course of Nasdaq's review process for the Company's
listing on the Nasdaq SmallCap Market, the Company's stock price falls below a
minimum $1.00 bid price, the Company will be placed under a 90 day exception to
the minimum bid price requirement. If after such 90 day period, the Company
falls below the minimum bid price requirement, the Company will be required to
comply with minimum bid price requirement for at least ten consecutive trading
days or be delisted from Nasdaq.
There can be no assurance that the Nasdaq procedures will result in a
determination favorable to Intelect or that Intelect's common stock will
continue to be listed on the Nasdaq SmallCap Market. The inability to maintain
the listing could adversely affect the liquidity of Intelect common stock and
could materially adversely affect our operating results and financial condition.
WE ARE NOT PROFITABLE; ABILITY TO CONTINUE AS GOING CONCERN
We have incurred operating losses in 1998, 1997, and 1996 of $45,878,000,
$20,241,000 and $43,039,000. Negative cash flows from operations in the same
periods were, respectively, $23,129,000, $24,852,000 and $23,050,000. During the
first six months of 1999 we incurred operating losses of $11,151,000 and
negative cash flow from operations of $8,548,000. We funded the negative cash
flows by proceeds from borrowings under credit facilities and sales of preferred
stock and common stock in the first six months of 1999, and during 1998 and 1997
and by proceeds from issuance of convertible debentures in 1996. It is uncertain
when, if ever, the Company will report operating income or positive cash flow
from operations. If cash needs exceed available resources, there also can
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be no assurance that additional capital will be available through public or
private equity or debt financing.
The reports of Grant Thornton LLP and KPMG Peat Marwick on the consolidated
financial statements which are incorporated by reference into this Prospectus
contain an explanatory paragraph that states that we have suffered recurring
losses from continuing operations and are dependent upon the successful
development and commercialization of our products and our ability to secure
adequate sources of capital until we operate profitably. These matters raise
substantial doubt about our ability to continue as a going concern. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
OUR ABILITY TO BECOME PROFITABLE DEPENDS ON INCREASED SALES OF OUR PRODUCTS
Our ability to become profitable will depend, in part, on the sales volume
of our products. Increasing the sales volume will depend on our ability to:
o continue to develop our products;
o increase our sales and marketing activities;
o increase our manufacturing activities; and
o effectively compete against current and future competitors.
We cannot assure you that we will be able to successfully increase the
sales volumes of our products to achieve profitability. We also cannot assure
that profitability and positive cash flow will be achieved when expected. If our
sales plans are not achieved, operating losses and negative cash flows exceed
our estimates, or capital requirements in connection with the design,
development, and commercialization of our principal products are higher than
estimated, we will need to raise additional capital. See page 5 regarding
additional funding.
WE ARE NOT ABLE TO PREDICT SALES IN THE FUTURE AND A NUMBER OF FACTORS MAY CAUSE
OUR PERIODIC RESULTS TO FLUCTUATE
We are not able to accurately predict our sales in future quarters. In any
quarter, a number of factors could affect our sales volumes and our ability to
fill orders. Our periodic results have varied in the past. In the future, we
expect our periodic operating results to vary significantly depending on, but
not limited to, a number of factors, including:
o the market acceptance of our current and new products;
o engineering and development requirements;
o the size, timing and recognition of revenue from significant orders;
o increased competition;
o new product introductions or enhancements by competitors;
o the proportion of revenues derived from distributors, value added
resellers and other sales channels;
o changes in our pricing policies or those of our competitors;
o the financial stability of major customers;
o delays in the introduction of our products or product enhancements;
o customer order deferrals in anticipation of upgrades and new products;
o customer concerns about our financial condition;
o the costs and possible supply constraints of components we use to
build our products;
o changes in regulation of our product markets;
o the timing and nature of expenses; and
o general economic conditions.
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Our expense levels are based, in part, on our expectations of future orders
and sales, and we may be unable to adjust spending in a timely manner to
compensate for any sales shortfall. If sales are below expectations, operating
results are likely to be materially and adversely affected. Net income may be
disproportionately affected by a reduction in sales because a significant
portion of our expenses do not vary with revenues. We may also choose to reduce
prices or increase spending in response to competition or to pursue new market
opportunities. If new competitors, technological advances by existing
competitors or other competitive factors require us to invest significantly
greater resources in engineering and development efforts, the spending could
materially and adversely affect our operating results and financial condition.
Because our marketing strategy targets relatively large potential
customers, we anticipate that a small number of large orders may comprise a
significant portion of our future product sales. None of our significant
customers have entered into a long-term supply agreement requiring them to
purchase a minimum amount of our products. Historically, sales to a relatively
small number of customers have accounted for a significant portion of our total
revenues, particularly with respect to our SONETLYNX products. We cannot assure
that our principal customers will continue to purchase our products at current
levels, if at all. Also, we cannot assure that we will be able to replace such
purchases with sales to other customers. Any significant deferral of purchases
of our products or the reduction, delay or cancellation of orders from one or
more significant customers could materially and adversely affect our business,
results of operations, and financial condition.
WE MAY NEED ADDITIONAL FUNDING IN THE FUTURE AND THESE FUNDS MAY NOT BE
AVAILABLE TO US
If our sales plans are not achieved, if operating losses and negative cash
flows exceed our estimates, or if capital requirements of the design,
development, and commercialization of our principal products are higher than
estimated, we will need to raise additional capital. Although we believe we
could raise additional capital through public or private equity or debt
financings, if necessary, we cannot assure that such financings will be
available, or available on acceptable terms. If such financing is needed but is
not available, we have determined that a significant reduction of engineering,
development, selling, and administrative costs would allow us to continue as a
going concern through the end of 1999. After such time, we will need to increase
revenues over current levels to continue to operate in our current form.
OUR ABILITY TO GROW AND REMAIN COMPETITIVE DEPENDS ON OUR ABILITY TO FORESEE AND
RESPOND TO RAPID TECHNOLOGICAL CHANGE WITH NEW PRODUCTS AND KEY PRODUCT
ENHANCEMENTS
Rapid technological change, evolving industry standards and frequent new
product introductions and enhancements shape and can quickly change our current
and planned product markets. New technologies or the emergence of new industry
standards can render existing products or products under development obsolete or
unmarketable. Our ability to grow and remain competitive depends, in large part,
on our ability to anticipate changes in our product markets and to successfully
develop and introduce new products on a timely basis. New product development
often requires long-term forecasting of market trends, development and
implementation of new technologies and processes and a substantial capital
commitment. In particular, we recently invested substantial resources toward the
development of new products such as our SONETLYNX / FIBRETRAX product line and
the CS4. We have not yet completed development of the CS4 or of planned
enhancements to the SONETLYNX / FIBRETRAX product line and may require
additional testing of the LANscape product. Development and customer acceptance
of new products is inherently uncertain, and we cannot assure that we will
complete developments on a timely basis or that products will be commercially
successful. We compete or will be competing with established companies with
greater financial resources and more developed channels of distribution. We
cannot assure that we will complete the CS4 on schedule, that we will be
competitive in this environment or that we will be able to sell sufficient
quantities of the CS4 to recover our investment or realize profits. We cannot
assure that customers will accept SONETLYNX / FIBRETRAX enhancements or that the
LANscape product will meet standards and expectations of the videoconferencing
industry. Any failure to anticipate or respond on a cost-effective and timely
basis to technological developments, changes in industry standards or customer
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requirements, or any significant delays in product development or introduction,
could materially adversely effect our business, operating results and financial
condition.
COMPETITION FROM LARGER, BETTER ESTABLISHED ENTITIES IS INTENSE
Competition in the converging voice and data communications industry is
intense, and we believe that competition will increase substantially with the
development of multimedia communications products, rapid technological changes,
industry consolidations, new industry entrants, and potential regulatory
changes. Many of our current and potential competitors have longer operating
histories, significantly greater financial, technical and marketing resources,
greater name recognition, and a larger installed customer base than we have. In
addition, many of these competitors may be able to respond more quickly to new
or emerging technologies and changes in customer requirements, and to devote
greater resources to the development, promotion and sale of their products than
we can. Our current or potential competitors may develop products and services
comparable or superior to ours or adapt more quickly than we can to new
technologies, evolving industry trends, or changing customer requirements. The
videoconferencing market may present lower barriers to entry than other markets
and may therefore be subject to greater competition in the future. Increased
competition as to any of our products or services could result in price
reductions, reduced margins, and loss our market share, which could materially
and adversely affect our business, results of operations, and financial
condition.
WE DEPEND ON KEY MEMBERS OF OUR MANAGEMENT AND ENGINEERING STAFF, AND WE MUST
RETAIN AND RECRUIT QUALIFIED INDIVIDUALS TO BE COMPETITIVE
Our success depends in large part on the continued service of key creative,
technical, marketing, sales and management personnel and our ability to attract,
motivate and retain highly qualified employees. Because of the multifaceted
nature of interactive media, key personnel often require a unique combination of
creative and technical talents. Such personnel are in short supply, and the
competition for their services is intense. Recruitment of such personnel can be
a lengthy process. We have at-will employment arrangements with management and
other personnel, meaning they may terminate their employment at any time. The
loss of key personnel or failure to attract additional qualified employees could
materially adversely affect our business, the results of operations and new
product development efforts.
WE DEPEND ON THE SUPPLY OF PRODUCT COMPONENTS FROM OUTSIDE SUPPLIERS AND, IN
SOME CASES, SINGLE SOURCES OF SUPPLY. WE DEPEND ON A SINGLE MANUFACTURING
FACILITY
The majority of the components required to assemble our products come from
outside sources. The supply level of and the lead time in delivering certain key
components changes and is difficult to predict with any certainty. Occasional
unexpected shortages of or significant increases in the price of components
could materially and adversely affect our business, results of operations, and
financial condition.
We rely on a single source for certain key components and do not have
supply commitments for those components. If we lose the ability to obtain these
components from our current suppliers, we will have difficulty replacing this
supply of components in a short time frame. Many of our vendors extend us credit
for the components they supply. Poor credit terms would materially adversely
affect our business, results of operations, and financial condition.
We buy a fiber optic interface card for the SONETLYNX OC-3 product from a
small company which is the sole source for this component. We also buy a video
codec card used in SONETLYNX video applications from another small company which
is the sole source. Delays in delivery of either component would restrict our
ability to increase sales. If either vendor fails to meet commitments, we intend
to rely on its in-house manufacturing capabilities. However, the conversion to
in-house backup supply would involve some interruption in our production and
could materially adversely affect our business, results of operations, and
financial condition.
We use fiber optic connectors made by a single vendor in the SONETLYNX OC-3
product. Equivalent components are available from other vendors, but their use
would require a redesign of the method of connecting to the fiber. This would
cause significant delays in delivery of the product and
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could materially adversely effect our business, results of operations, and
financial condition. Our strategy is to forecast requirements and build
inventories that comprehend vendor lead times.
We have one manufacturing facility for SONETLYNX and LANscape products, and
our revenues depend on its continued operation. Operational problems at the
facility could materially adversely affect our business, results of operations,
and financial condition.
WE DEPEND ON THIRD PARTIES TO MARKET AND SERVICE OUR PRODUCTS
Although we expect to continue to market our products directly to certain
accounts, we intend to maintain a network of resellers, consisting primarily of
distributors, value-added resellers, and systems integrators with established
distribution channels for communications products, to market our products and
educate potential end-users and service providers about our products. Our future
prospects depend in large part on our development of relationships with third
parties and their marketing and product service efforts. We cannot assure that
we will be able, for financial or other reasons, to finalize third-party
distribution or marketing agreements or that such arrangements will result in
the successful commercialization of any of our products. Failure to develop
third party marketing and service arrangements or failure of third parties to
effectively market and service our products could materially adversely affect
our business or our financial condition.
WE RELY ON PATENTS AND OTHER PROPRIETARY INFORMATION. THE LOSS OF, OR A DISPUTE
REGARDING, PROPRIETARY INFORMATION OR INTELLECTUAL PROPERTY RIGHTS WOULD
NEGATIVELY AFFECT OUR BUSINESS
Our success depends, in part, on our ability to maintain trade secret
protection, obtain patents and operate without infringing the proprietary rights
of third parties or having third parties circumvent our intellectual property
rights. We have three issued U.S. patents. Fifteen additional patents are
pending. We cannot assure that the patents will provide us with any competitive
advantages or will not be challenged by any third parties. Likewise, the
intellectual property rights of others could impede our ability to do business.
Additionally, third parties may be able to circumvent our patents. Our patent
applications may be denied. Furthermore, it is possible that others could
independently develop similar products, duplicate our products, or design around
our patented products.
We have received notice that we may be infringing on certain intellectual
property rights of others. We have asked legal counsel to evaluate these claims.
We may have to obtain licenses from third parties to avoid infringing patents or
other proprietary rights. We cannot assure that any licenses required under any
such patents or proprietary rights would be made available, if at all, on
acceptable terms. Failure to obtain these licenses could delay product
introductions, or prohibit our development, manufacture or sale of products
requiring such licenses. In addition, we could incur substantial costs in
defending or prosecuting lawsuits to protect our patents or other proprietary
rights. Intellectual property plaintiffs could obtain injunctive or other
equitable relief which could effectively block our ability to sell our products
in the United States and abroad, and could obtain an award of substantial
damages. Either result could materially and adversely affect our business,
results of operations, and financial condition.
Much of our know-how and technology may not be patentable. To protect our
rights, we require many employees, consultants, advisors and collaborators to
enter into confidentiality agreements. We cannot assure that these agreements
will provide meaningful protection of our trade secrets, know-how or other
proprietary information in the event of any unauthorized use or disclosure.
Furthermore, independent development by competitors of competing technologies
could materially adversely affect our business, results of operations and
financial condition, especially if we do not obtain patent protection or if our
patent protection is narrowly defined.
NUMEROUS GOVERNMENTAL REGULATIONS AFFECT OUR BUSINESS AND OUR PRODUCTS
While most of our operations are not directly regulated, some of our
customers are telecommunications service providers who are heavily regulated at
both the federal and state levels. Such regulation may limit the number of
potential customers for our services or impede our ability to offer competitive
services to the market, or otherwise materially adversely affect our business,
results of operations, and financial condition. At the same time, recent
deregulation of the telecommunications
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industry may facilitate the entrance of new competitors or industry
consolidation. This could subject us to additional competitors, increased
pricing pressures, decreased demand for our products or services, increased cost
of doing business or other factors that could materially adversely affect our
business, results of operations, and financial condition.
WE MAY BE SUBJECT TO SIGNIFICANT CONTINGENT LIABILITIES
In connection with the sale of former operations in November 1995, our
subsidiary Intelect Communications Systems Limited agreed to indemnify Savage
Sports Corporation, the purchaser of Savage Arms, Inc. (a manufacturer of fire
arms) for potential losses associated with product liability, environmental
matters, employee matters and other similar items. Certain of these indemnity
obligations survive indefinitely. A finding of liability against Intelect
Communications Systems Limited could materially and adversely affect our
business, results of operations, and financial condition. Furthermore, we could
incur substantial costs (including the diversion of the attention of management)
in defending lawsuits relating to these indemnity obligations.
One of the liabilities assumed in the 1995 sale involves a firearms product
liability lawsuit which one defendant, Western Auto Supply Co., settled for $5
million and, in turn, has asserted a third-party claim against Savage Arms, Inc.
for indemnification in the amount of the settlement plus attorneys' fees and
related costs. Savage Arms has asserted defenses to the claims and we believe
additional defenses may be available. Based on the information available to
date, it is impossible to predict the outcome of this litigation or to assess
the probability of any verdict.
Savage Sports Corporation also seeks indemnification for certain other
products liability claims. Intelect Communications Systems Limited has
undertaken the defense of a lawsuit filed against Savage Arms, Inc. by Emhart
Industries, Inc. in the United States District Court for the District of
Massachusetts, in which Emhart requests indemnification from Savage Arms (to
date, approximately $2.2 million). We have asserted additional defenses. The
parties are in discovery and we cannot at this time predict the outcome of the
litigation.
An adverse outcome in the Taylor or Emhart litigation would materially
adversely affect our financial condition and the results of operation.
OUR CHARTER, BYLAWS AND THE DELAWARE CORPORATE LAWS DISCOURAGE, DELAY OR PREVENT
A CHANGE IN CONTROL OF INTELECT
Certain provisions of our certificate of incorporation, by-laws and
Delaware law could discourage potential acquisition proposals, delay or prevent
a change in control of the company and limit the price that certain investors
might be willing to pay in the future for shares of common stock. These
provisions include:
o a classified Board of Directors;
o provisions that the Board of Directors have exclusive authority to amend
or change the By-laws;
o the ability of the Board of Directors to authorize the issuance, without
further stockholder approval, of preferred stock with rights and
privileges which could be senior to the common stock;
o eliminating the stockholders' ability to take any action without a
meeting;
o eliminating the ability of stockholders to call special meetings without
the required consent of the Board of Directors; and
o establishment of certain advance notice procedures for nomination of
candidates for election as directors and for stockholder proposals to be
considered at stockholders' meetings.
We are also subject to Section 203 of the Delaware General Corporation Laws
which, subject to certain exceptions, prohibits a Delaware corporation from
engaging in any of a broad range of business combinations with any "interested
stockholder" for a period of three years following the date that such
stockholder became an "interested stockholder."
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
public reference facilities of the SEC in Washington, D.C., Chicago, Illinois
and New York, New York. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
the public from the SEC's web site at http:\\www.sec.gov. Intelect common stock
is traded on the Nasdaq Stock Market.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we have
filed with them, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered to be part of this Prospectus and any later information that we
file with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any additional documents
we file with the SEC until this offering of common stock is terminated. This
Prospectus is part of a registration statement on Form S-3 that we filed with
the SEC. The documents that we incorporate by reference are:
(1) Our Annual Report on Form 10-K for the fiscal year ended December
31, 1998.
(2) Our Form 10-Q filed on May 17, 1999.
(3) Our Form 8-K's filed on July 2, and July 8, 1999.
(4) Our Form 10-Q filed on August 16, 1999.
(5) Our Form 8-K's filed on August 18, and August 25, 1999.
(6) Our definitive Proxy Statement filed on April 30, 1999.
(7) The description of our common stock contained in our Registration
Statement on Form S-4 declared effective on October 30, 1997 (File
No. 333-39063) and our Form 8-K filed on December 5, 1997.
(8) All documents we file with the SEC under Sections 13(a), 13(c), 14,
or 15(d) of the Exchange Act after the date of this Prospectus and
before the termination of the offering of the common stock
registered under this registration statement.
To the extent that prior filings listed in numbers (1) - (7) above conflict
with this Prospectus, those prior filings are modified by this Prospectus and
included herein only as modified. To the extent that statements in this
Prospectus or in the prior filings listed in numbers (1) - (7) above conflict
with statements in future filings referenced in number (8) above, this
Prospectus and the prior filings are modified by the future filings listed in
number (8) above.
For information on the consolidated financial statements see "Experts" in
this Prospectus.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
ROBERT P. CAPPS
CHIEF FINANCIAL OFFICER
INTELECT COMMUNICATIONS, INC.
1100 EXECUTIVE DRIVE
RICHARDSON, TEXAS 75081
(972) 367-2100.
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USE OF PROCEEDS
We will not receive any proceeds from the sale of common stock offered in
this Prospectus.
SELLING STOCKHOLDERS
The Selling Stockholders were issued the common stock covered by this
Prospectus in a series of transactions exempt from registration under the
Securities Act of 1933 as summarized below:
Of the 24,155,613 shares of Common Stock being registered:
(i) Pursuant to the Citadel Settlement Agreement, on June 27, 1999, the
Citadel Entities agreed to exchange all of their remaining Preferred
Shares for 5,515,563 shares of common stock of the Company (the
"Exchange Shares"). Of the 5,515,563 Exchange Shares which are
covered by this Prospectus, Intelect issued 1,988,341 Exchange
Shares on July 1, 1999 upon exchange of Preferred Shares and
Intelect issued an additional 3,526,822 Exchange Shares on or about
September 20, 1999, effective upon exchange of the Citadel Entities'
remaining Preferred Shares.
(ii) We issued 1,762,499 common shares to certain accredited investors in
a private placement which closed on June 30, 1999. Such shares are
registerable under registration rights agreements dated June 3,
1999.
(iii) We issued 106,263 shares of common stock to AJC Equities, Inc.
("AJC") in a private placement for certain advisory services
performed by AJC in connection with Intelect's June 30, 1999 private
placement to accredited investors.
(iv) We issued 84,000 shares of common stock in a private placement to
Sanders Morris Mundy in satisfaction of certain investment banking
and consulting services performed by Sanders Morris Mundy.
(v) We issued 142,719 shares of common stock to The Coastal Corporation
Second Pension Trust ("Coastal") as dividends on the Company's
$2.0145, 10% Cumulative Convertible Preferred Stock, Series A (the
"Series A Preferred Stock") for the second quarter of 1999. We
issued to Coastal 2,777,778 shares of common stock in exchange for
$3 million of indebtedness which the Company owed to Coastal in a
transaction exempt from registration under the Securities Act of
1933. In addition, in connection with an amendment to our credit
facility with Coastal, we issued in a private placement a warrant to
purchase 1,067,308 shares of common stock and a replacement warrant
to purchase 450,000 shares of common stock, each at an exercise
price of $1.30 per share.
(vi) The Company presently owes indebtedness to St. James under certain
Convertible Promissory Notes issued to St. James (the "St. James
Notes"). In connection with a recapitalization of the indebtedness
which the Company owes to St. James under the St. James Notes, we
issued 2,364,346 shares to SJCP in repayment of $2 million of the
indebtedness (the "Initial Repayment Amount"), and agreed to issue
an amount of additional shares to SJCP and SJMB to effect the
repayment of $1 million of additional indebtedness (the "Mandatory
Repayment Amount") upon the effective date of the Registration
Statement which covers this Prospectus (the "Mandatory Repayment
Shares"). The number of Mandatory Repayment Shares which the
Company agreed to issue is equal to the Mandatory Repayment Amount
divided by $0.6667, which price represents 66 2/3% of the "Market
Price" (as defined) of the common stock on the date of the
effectiveness of the Registration Statement. Under a Registration
Rights Agreement with St. James, we agreed to register 150% of the
number of shares issuable upon the exchange of the Mandatory
Repayment Amount divided by 66 2/3% of the Market Price as
determined on the date of the filing of the Registration Statement,
or 2,236,136 shares, based on a price of $0.6708. In addition, we
also agreed that St. James would be allowed, after giving effect to
the repayment of the Initial Repayment Amount and the Mandatory
Repayment Amount, at its option, to exchange the remaining balance
of principal and interest under the St. James Notes for common stock
at a price equal to the greater of $1.08 or 66 2/3% of the Market
Price of the common stock on the date of the exchange (the
"Optional
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<PAGE>
Exchange Shares"). The Company has agreed to register 7,649,433
Optional Exchange Shares, which number is based on the balance on
the St. James Notes as of the maturity date of such notes, after
giving effect to the repayment of the Initial Repayment Amount on
August 13, 1999 and the Mandatory Repayment Amount as of September
30, 1999, divided by $1.08. The maximum number of shares issuable to
St. James is subject to Nasdaq Rule 4460(i), which prohibits the
Company, absent stockholder approval, from issuing shares at less
than book or market value if the total number of shares equals or
exceeds 20% of the shares outstanding on the transaction date (the
"Nasdaq 20% Rule"). Pursuant to the Repayment Agreement with St.
James, if the Company were unable to issue any additional shares due
to the Nasdaq 20% Rule, then it would be required to use its best
efforts to obtain stockholder approval within 75 days of such date.
In each case, the issuance of Intelect common stock to each of the Selling
Stockholders was undertaken pursuant to exemptions from registration under the
Securities Act of 1933.
Except as otherwise indicated, the table below sets forth the number of
shares of Intelect common stock beneficially owned by each of the Selling
Stockholders as of August 18, 1999, the number of shares of common stock to be
offered by each Selling Stockholder under this Prospectus, and the number of
shares of common stock to be beneficially owned by each Selling Stockholder if
all of the shares of common stock offered hereby are sold as described herein.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF NUMBER OF SHARES
COMMON STOCK OF COMMON STOCK
BENEFICIALLY OWNED NUMBER OF SHARES BENEFICIALLY
AS OF AUGUST 18, OF COMMON STOCK X OWNED AFTER
NAME OF SELLING STOCKHOLDER 1999(1) OFFERED HEREBY OFFERING(6)
- ------------------------------------- ------------------- ---------------- ----------------
<S> <C> <C> <C>
Wingate Capital Ltd.................. 1,824,635(2) 1,776,631 0
Fisher Capital Ltd................... 3,517,515(2) 3,333,710 0
CCG Capital Ltd...................... 193,199(2) 159,992 0
CCG Investment Fund, Ltd............. 192,346(2) 159,139 0
Midway Capital Ltd................... 118,932(2) 85,691 0
The Coastal Corp. Second Pension
Trust.............................. 8,898,782(3) 4,437,805 0
Sanders Morris Mundy................. 84,000 84,000 0
Rodney Jones......................... 234,526 210,526 24,000
Robert Ted Lyons IRA................. 49,700 31,000 18,700
Joel A. Ruth......................... 107,000 55,000 52,000
John H. Northcutt.................... 34,280 25,000 9,280
Legg Mason Wood Walker, Custodian FBO
William P. Byers IRA............... 25,000 25,000 0
BMF, L.L.C........................... 60,000 60,000 0
Richard G. Trevino................... 8,000 5,500 2,500
Robert Marvin........................ 230,000 100,000 130,000
Louis Falletta....................... 200,000 171,000 29,000
Eric Larson.......................... 145,000 80,000 65,000
Crown Texas Realty, Inc. Profit
Sharing Plan....................... 155,000 100,000 55,000
Bonnie Ligon Dickens................. 507,000 300,000 207,000
Philip C. Bird, M.D.................. 25,000 25,000 0
Jeffrey Rabin........................ 280,000 200,000 80,000
Fred B. Dulock....................... 100,000 35,000 65,000
Tim W. Lowell........................ 61,315 26,315 35,000
Fred & Melissa Roesch................ 100,000 50,000 50,000
Richard E. Bean...................... 263,158 263,158 0
AJC, Inc............................. 556,231 106,231 0
St. James Capital Partners, L.P...... 3,556,487(4) 2,861,808 694,679
SJMB, L.P............................ 12,235,551(5) 9,388,107 2,847,444
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
11
<PAGE>
- ------------
(1) Beneficial ownership is determined under SEC rules and generally includes
voting or investment power with respect to securities and includes any
securities the person has the right to acquire within 60 days of August 18,
1999 through the conversion or exercise of any security or other right.
(2) Beneficial ownership based on Citadel's Schedule 13-G, filed on July 16,
1999. Also includes the following amounts of shares of common stock
issuable upon exercise of warrants: Wingate Capital Ltd. -- 48,004 shares;
Fisher Capital Ltd. -- 183,805 shares; CCG Capital Ltd. -- 3,900 shares;
CCG Investment Fund, Ltd. -- 3,900 shares. Does not include the following
shares issuable upon exercise of warrants: NP Partners -- 68,800 shares;
Olympus Securities, Ltd. -- 122,800 shares. All such warrant shares are
subject to the following restrictions: none of the holders has the right to
exercise warrants for a number of shares of common stock (i) in excess of
the number of shares that, upon giving effect to such exercise would cause
the aggregate number of shares of common stock beneficially owned (as
defined in the applicable warrants) by the holder and its affiliates to
exceed 5% of the outstanding shares of Intelect common stock following the
exercise, or (ii) to the extent that, after giving effect to such exercise,
such holder would have acquired beneficial ownership (as defined in the
applicable warrants) of a number of shares of common stock during the
60-day period ending on and including the date such exercise was
implemented (the "60-Day Period") which, when added to the number of
shares beneficially owned at the beginning of the 60-Day Period, is in
excess of 10% of the shares of common stock outstanding immediately after
giving effect to such conversion or exercise. Citadel Limited Partnership
is the trading manager of Wingate Capital Ltd., Fisher Capital Ltd., CCG
Investment Fund Ltd., CCG Capital Ltd., Midway Capital Ltd., Olympus
Securities, Ltd. and NP Partners (the "Citadel Entities") and
consequently has voting control and investment discretion over securities
held by the Citadel Entities. Citadel Limited Partnership and each of the
Citadel Entities disclaims beneficial ownership of the shares of Common
Stock held by the other Citadel Entities.
(3) Based solely on information supplied to the Company as of August 18, 1999
by Coastal. Includes 3,719,409 shares of Common Stock issuable upon
conversion of the Company's Series A Preferred Stock and 1,517,308 shares
of Common Stock issuable upon exercise of currently exercisable warrants.
(4) Includes (i) 331,641 shares of common stock issuable upon conversion of
convertible debt, (ii) 750,500 shares of common stock issuable upon
exercise of warrants, which represents 300,000 shares of common stock
issuable upon exercise of warrants issued on April 2, 1998 and an
additional 450,500 shares pursuant to anti-dilution provisions in such
warrants as of November 10, 1998 and (iii) 110,000 shares issuable upon
exercise of that certain warrant dated January 13, 1999. Except as set
forth herein, does not include any additional shares which may be acquired
pursuant to anti-dilution provisions in the warrants.
(5) Includes (i) 8,808,549 shares of common stock issuable upon conversion of
convertible debt, (ii) 3,002,001 shares of common stock issuable upon
exercise of warrants, which represents 1,200,000 shares of common stock
issuable upon exercise of warrants issued on April 2, 1998 and an
additional 1,802,001 shares pursuant to anti-dilution provisions in such
warrants as of November 10, 1998 and (iii) 425,000 shares issuable upon
exercise of that certain warrant dated January 13, 1999. Except as set
forth herein, does not include any additional shares which may be acquired
pursuant to anti-dilution provisions in the warrants.
(6) With respect to Coastal, assumes the sale of all of the shares of common
stock issuable upon conversion of the Company's Series A Preferred Stock
and shares of common stock issuable or issued upon exercise of warrants
held by Coastal, or issued to Coastal as dividends on the Company's Series
A Preferred Stock and covered in previous registration statements of the
Company on Form S-3 filed on December 30, 1997, May 22, 1998 and April 2,
1999 (File Nos. 333-35851, 333-53451 and 333-75651). With respect to CCG
Capital Ltd., CCG Investment
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<PAGE>
Fund, Ltd., Wingate Capital, Ltd., Fisher Capital, Ltd., and Midway Capital
assumes the sale of the shares of Common Stock issued upon conversion of
the Series D Preferred Shares and Series E Preferred Shares, and any shares
issuable upon exercise of related warrants, included in the registration
statements of the Company on Form S-3 filed on May 22, 1998 and April 2,
1999 and which are not included as Exchange Shares registered in this
Registration Statement. With respect to AJC, Inc., assumes the sale of all
of the shares issuable upon the exercise of the warrants covered by the
registration statement filed on April 2, 1999. With respect to SJMB, L.P.,
assumes the sale of 1,200,000 shares of common stock issuable upon the
exercise of warrants covered by the registration statement filed on May 22,
1998 and 425,000 shares of common stock issuable upon exercise of warrants
covered by the registration statement filed on April 2, 1999. With respect
to St. James Capital Partners, L.P., assumes the sale of 300,000 shares of
common stock issuable upon the exercise of warrants covered by the
registration statement filed on May 22, 1998 and 110,000 shares of common
stock issuable upon exercise of warrants and covered by the registration
statement filed on April 2, 1999. Upon completion of the offering, and
after giving effect the sale of all of the shares of common stock referred
to herein, each Selling Stockholder will own less than 1% of the common
stock of the Company except as follows: SJMB, L.P. 4.3% and SJCP 1.3%.
Since the date on which they provided the information regarding their
common stock, the Selling Stockholders identified above may have sold,
transferred or otherwise disposed of all or a portion of their common stock in
transactions exempt from the registration requirements of the Securities Act.
Additional information concerning the above listed Selling Stockholders may be
set forth from time to time in Prospectus supplements to this Prospectus. See
"Plan of Distribution."
PLAN OF DISTRIBUTION
The common stock is offered on behalf of the Selling Stockholders. The
common stock may be sold or distributed from time to time by the Selling
Stockholders, or by donees or transferees of, or other successors in interest
to, the Selling Stockholders, directly to one or more purchasers or through
brokers, dealers or underwriters who may act solely as agents or may acquire
common stock as principals, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, at negotiated prices, or at
fixed prices, which may be changed. The sale of Intelect common stock may occur
in one or more of the following methods:
(i) ordinary brokers' transactions;
(ii) transactions involving cross or block trades or otherwise on the
Nasdaq National Market;
(iii) purchases by brokers, dealers or underwriters as principal and
resale by such purchasers for their own accounts pursuant to this
Prospectus;
(iv) "at the market" to or through market makers or into an existing
market for the Common Stock;
(v) in other ways not involving market makers or established trading
markets, including direct sales to purchases or sales effected
through agents;
(vi) through transactions in options, swaps or other derivatives (whether
exchange-listed or otherwise);
(vii) in privately negotiated transactions; or
(viii) any combination of the foregoing.
From time to time, one or more of the Selling Stockholders may pledge,
hypothecate or grant a security interest in some or all of their conversion
shares, and the pledges, secured parties or persons to whom such securities have
been hypothecated shall, upon foreclosure in the event of default, be deemed to
be Selling Stockholders hereunder. In addition, subject to certain restrictions
on the Citadel Entities as set forth in the Citadel Settlement Agreement and St.
James in the Repayment Agreement (which prohibit them from engaging in short
selling, purchasing puts, selling calls, or similar transactions pursuant to
which they could benefit from the decrease in the price of Intelect Common
Stock), a Selling Stockholder may, from time to time, sell short Intelect common
stock. In such
13
<PAGE>
instances, this Prospectus may be delivered in connection with such short sales
and the conversion shares offered hereby may be used to cover such short sales.
From time to time one or more of the Selling Stockholders may transfer,
pledge, donate or assign such Selling Stockholders' conversion shares to lenders
or others and each of such persons will be deemed to be a Selling Stockholder
for purposes of this Prospectus. The number of Selling Stockholders' conversion
shares beneficially owned by those Selling Stockholders who so transfer, pledge,
donate or assign Selling Stockholders' conversion shares will decrease as and
when they take such actions. The plan of distribution for Selling Stockholders'
conversion shares sold hereunder will otherwise remain unchanged, except that
the transferees, pledges, donees or other successors will be Selling
Stockholders hereunder.
Subject to certain restrictions on the Citadel Entities as set forth in the
Citadel Settlement Agreement and St. James in the Repayment Agreement (which
prohibit them from engaging in short selling, purchasing of puts, selling calls,
or similar transactions pursuant to which they could benefit from the decrease
in the price of Intelect Common Stock), a Selling Stockholder may enter into
hedging transactions with broker-dealers and the broker-dealers may engage in
short sales of the common stock in the course of hedging the positions they
assume with such Selling Stockholder, including, without limitation, in
connection with distributions of the common stock by such broker-dealers; a
Selling Stockholder may also enter into option or other transactions with
broker-dealers that involve the delivery of the common stock to the
broker-dealers, who may then resell or otherwise transfer such common stock; a
Selling Stockholder may also loan or pledge the common stock to a broker-dealer
and the broker-dealer may sell the common stock so loaned or upon a default may
sell or otherwise transfer the pledged common stock.
Brokers, dealers, underwriters or agents participating in the distribution
of the common stock as agents may receive compensation in the form of
commissions, discounts or concessions from the Selling Stockholders and/or
purchasers of the common stock for whom such broker-dealers may act as agent, or
to whom they may sell as principal, or both (which compensation as to a
particular broker-dealer may be less than or in excess of customary
commissions). The Selling Stockholders and any broker-dealers who act in
connection with the sale of common stock covered by this Prospectus may be
deemed to be "Underwriters" within the meaning of the Securities Act, and any
commissions they receive and proceeds of any sale of common stock may be deemed
to be underwriting discounts and commissions under the Securities Act. Neither
Intelect nor any Selling Stockholders can presently estimate the amount of such
compensation. We know of no existing arrangements between any Selling
Stockholders, any other stockholder, broker, dealer, underwriter or agent
relating to the sale or distribution of the common stock.
We will pay substantially all of the expenses incident to the registration,
offering and sale of the common stock to the public other than commissions or
discounts of underwriters, broker-dealers or agents. We have also agreed to
indemnify certain of the Selling Stockholders and certain related persons
against certain liabilities, including liabilities under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of Intelect,
Intelect has been advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
The Citadel Entities have agreed to refrain from selling on any trading day
a number of Exchange Shares or shares of common stock issued pursuant to the
conversion of the Preferred Shares in excess of that number of shares of common
stock equal to 5% of the daily trading volume of the common stock for the ten
trading days prior to such date of determination, excluding sales by the Citadel
Entities.
We have advised the Selling Stockholders that during such time as they may
be engaged in a distribution of the common stock included herein they are
required to comply with Regulation M promulgated under the Exchange Act. With
certain exceptions, Regulation M precludes any Selling Stockholder, any
affiliated purchasers, and any broker-dealer or other person who participates in
such
14
<PAGE>
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase any security which is the subject of the distribution
until the entire distribution is complete. Regulation M also prohibits any bids
or purchases made in order to stabilize the price of a security in connection
with the distribution of that security. All of the foregoing may affect the
marketability of the common stock.
Because it is possible that a significant number of shares of the common
stock could be sold at the same time hereunder, such sales, or the possibility
thereof, may have a significant depressive effect on the market price of
Intelect common stock.
This offering will terminate on the earlier of (a) the date on which the
shares are eligible for resale without restriction pursuant to Rule 144(k) under
the Securities Act or (b) the date on which all shares offered hereby have been
sold by the Selling Stockholders.
LEGAL MATTERS
The validity of the common stock offered by the Selling Stockholders hereby
will be passed upon by Ryan & Sudan, L.L.P., Houston, Texas. Philip P. Sudan,
Jr. is a partner of Ryan & Sudan, L.L.P and a director of Intelect. Mr. Sudan
beneficially owns 386,395 shares of common stock. Mr. James W. Ryan, a partner
in Ryan & Sudan, L.L.P., beneficially owns 104,561 shares of common stock. In
addition, Messrs. Ryan and Sudan are holders of certain amended and restated
promissory notes (the "Promissory Note") issued by the Company which have an
aggregate principal balance of $200,000. The Promissory Notes are payable on
demand in cash or in Common Stock. If a holder elects to convert his Promissory
Note into Common Stock, the number of shares to which the holder would be
entitled is equal to the aggregate principal and interest outstanding under the
Promissory Note divided by $2.00. The Promissory Notes were originally issued on
December 5, 1997 and bear interest at the prime rate plus 3%.
EXPERTS
Our financial statements and schedules as of December 31, 1998, and for the
year then ended, incorporated by reference in this Prospectus and elsewhere in
the registration statement have been audited by Grant Thornton LLP, independent
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports. The report of Grant Thornton LLP
on the consolidated financial statements contains an explanatory paragraph that
states that we have suffered recurring losses from continuing operations and are
dependent upon the successful development and commercialization of our products
and our ability to secure adequate sources of capital until we operate
profitably. These matters raise substantial doubt about our ability to continue
as a going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Our financial statements and schedules as of December 31, 1997, and for the
year then ended, incorporated by reference in this Prospectus and elsewhere in
the registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.
Our consolidated statements of operations, stockholders' equity and cash
flows for the year ended December 31, 1996, the related schedule and the report
of KPMG Peat Marwick, independent chartered accountants, all contained in our
1998 annual report, are incorporated herein by reference. The KPMG Peat Marwick
report on the aforementioned consolidated financial statements contains an
explanatory paragraph that states that we have suffered recurring losses from
continuing operations and are dependent upon the successful development and
commercialization of our products and our ability to secure adequate sources of
capital until we operate profitably. These matters raise substantial doubt about
our ability to continue as a going concern. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
15
<PAGE>
PROSPECTUS
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING 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 BY INTELECT COMMUNICATIONS, INC. (THE "COMPANY") OR ANY OTHER
PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SHARES OF COMMON STOCK TO WHICH
IT RELATES OR AN OFFER TO, OR A SOLICITATION OF, ANY PERSON IN ANY JURISDICTION
WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY OR THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
PAGE
----
About Intelect ..................................................... 2
Risk Factors ....................................................... 2
Where You Can Find More Information About Intelect ................. 9
Incorporation of Certain Documents by Reference .................... 9
Use of Proceeds .................................................... 10
Selling Stockholders ............................................... 10
Plan of Distribution ............................................... 13
Legal Matters ...................................................... 15
Experts ............................................................ 15
