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SUBJECT TO COMPLETION
As filed with the Securities and Exchange Commission on November 30, 1998
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
PC QUOTE, INC.
(Exact name of registrant as specified in its charter)
Delaware 6200 36-3131704
(State or other jurisdiction (Primary Standard (I.R.S Employer
of incorporation or Industrial Classification Identification No.)
organization) Code Number)
300 South Wacker Drive, Suite 300
Chicago, Illinois 60606
(312) 913-2800
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Jim R. Porter
Chief Executive Officer
PC Quote, Inc.
300 South Wacker Drive, Suite 300
Chicago, Illinois 60606
(312) 913-2800
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
<PAGE>
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. / /
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------
Title of Each Class of Amount to be Proposed Proposed Amount of
Securities to be Registered Registered Maximum Maximum Registration
Offering Price Aggregate Fee
Per Share Offering Price
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
Common Stock,
$.001 par value 118,000 $1.6875(1) $199,125(1) $55.36
- -----------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for purposes of computing the registration fee in
accordance with Rule 457 of the Securities Act of 1933 and based upon the
average of the high and low sales prices for PC Quote, Inc. Common Stock on
November 24, 1998, a date within five (5) days prior to the date of initial
filing of this Registration Statement, as reported on the American Stock
Exchange.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
IF, AS A RESULT OF STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR TRANSACTIONS,
THE NUMBER OF SECURITIES PURPORTED TO BE REGISTERED ON THIS REGISTRATION
STATEMENT CHANGES, THE PROVISIONS OF RULE 416 SHALL APPLY TO THIS REGISTRATION
STATEMENT AND THIS REGISTRATION
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STATEMENT SHALL BE DEEMED TO COVER THE ADDITIONAL SECURITIES RESULTING FROM
THE SPLIT OF, OR THE DIVIDEND ON, THE SECURITIES COVERED BY THIS REGISTRATION
STATEMENT.
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SUBJECT TO COMPLETION, DATED November ___, 1998
PROSPECTUS
PC QUOTE, INC.
118,000 SHARES OF COMMON STOCK, $.001 PAR VALUE
_________________
This Prospectus relates to an aggregate of 118,000 shares (the "Shares")
of common stock, par value $.001 per share (the "Common Stock"), of PC Quote,
Inc., a Delaware corporation (the "Company"), that may be sold from time to
time by the shareholders named herein (the "Selling Shareholders"). See
"Selling Shareholders." The Company will not receive any proceeds from the
sale of the Shares. The Company has agreed to pay the expenses of
registration of the Shares, including certain legal and accounting fees.
The Common Stock is traded on the American Stock Exchange under the
symbol "PQT." On November 16, 1998, the closing market price of the Common
Stock on the American Stock Exchange was $1.375 per share.
The Selling Shareholders may sell, from time to time, in one or more
transactions (which may include block transactions), all or a portion of the
shares of Common Stock being registered hereby on the American Stock
Exchange, in special offerings, in the over-the-counter market, in negotiated
transactions, through underwriters or otherwise at market prices prevailing
at the time of sale or at negotiated prices. The Selling Shareholders may
effect such transactions by selling the shares of Common Stock directly to
purchasers or to or through broker-dealers which may act as agents or
principals. If any of the Common Stock offered hereby is sold through
underwriters, brokers or dealers, the Selling Shareholders may pay customary
underwriting discounts and brokerage commissions and charges. The Selling
Shareholders and any underwriters, brokers or dealers or other persons who
participate with them in the distribution of the shares offered hereby may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"), although the Selling Shareholders disclaim
such status. Any commission and discounts received by such underwriters,
brokers or dealers, and any profit on the resale of the stock by such
underwriters, brokers or dealers, may be deemed to be underwriting discounts
and commissions under the Securities Act. The shares of Common Stock being
offered hereby may also be sold by the Selling Shareholders pursuant to Rule
144 promulgated under the Securities Act. See "Plan of Distribution."
The Shares offered hereby have not been registered under the blue sky or
securities laws of any jurisdiction, and any broker or dealer should assure
the existence of an exemption from registration or effectuate such
registration in connection with the offer and sale of the Shares.
_________________
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FOR INFORMATION CONCERNING CERTAIN FACTORS RELATING TO THIS OFFERING,
SEE "RISK FACTORS" SECTION 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
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
_________________
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 ANY 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.
The date of this Prospectus is November __, 1998.
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AVAILABLE 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, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information filed by the Company can be
inspected and copied at the public reference facilities of the Commission at
450 Fifth Street, N.W., Washington, DC 20549, and at the Commission's
Regional Offices at 7 World Trade Center, Suite 1300, New York, New York
10048 and CitiCorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, DC
20549, at prescribed rates. The Commission also maintains a World Wide Web
site which provides on-line access to reports, proxy and information
statements and other information regarding registrants that file
electronically with the Commission at the address "http://www.sec.gov." In
addition, the Common Stock of PC Quote, Inc. is listed on the American Stock
Exchange, and reports, proxy statements and other information concerning the
Company can also be inspected at the offices of the American Stock Exchange,
86 Trinity Place, New York, New York 10006.
The Company has filed with the Commission a Registration Statement on
Form S-3 (herein, together with all exhibits, referred to as the
"Registration Statement") under the Securities Act with respect to the
Convertible Securities and the Common Stock being offered by this Prospectus.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information,
reference is hereby made to the Registration Statement, which may be
inspected and copied in the manner and at the sources described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of the Company which have been filed with the
Commission are hereby incorporated by reference in this Prospectus:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, as amended on April 30, 1998;
(b) the Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31, 1998, June 30, 1998, and September 30,1998;
(c) the Company's Current Report on Form 8-K dated October 6, 1998; and
(d) the description of the Company's Common Stock contained in the
Company's Registration Statement filed October 31, 1997, on Form S-2
under Section 12 of the Exchange Act and any amendment or report filed
for the purpose of updating any such description.
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All documents filed by the Company pursuant to Section 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 the offering of the Common Stock shall be deemed
to be incorporated by reference into this Prospectus and to be a part hereof
from the respective dates of filing of such documents. Any statement
contained herein or in a document all or part of which is 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 subsequently filed document which also is or 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 provide without charge to any person to whom this
Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than certain exhibits to such documents). Requests for such
copies should be directed to the Company's principal office: PC Quote, Inc.,
300 South Wacker Drive, Suite 300, Chicago, Illinois 60606, Attn: John
Juska, Tel. No. (312) 913-2800.
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THE COMPANY
GENERAL DEVELOPMENT OF BUSINESS
PC Quote, Inc. (the "Company" or the "Registrant") was incorporated in
the State of Illinois on June 23, 1980 as On-Line Response, Inc. and was
incorporated in Delaware on August 12, 1987. The Company provides real-time
and delayed securities quotations and news to professional and consumer
markets worldwide. Professional clients include brokerage firms, banks,
insurance companies, fund managers, institutional and professional traders.
The Company has expanded its service offerings to the individual investor,
application developers and businesses by offering its products through the
Internet. The Company's "web site" offers non-fee delayed quotes to all
visitors and real time subscription market data services to fee-based
subscribers.
The Company generates revenue from its securities quotations services,
individual investor subscriptions, Internet business services, software and
web site development services, OEM and redistributor services, and from
advertising sold on its web site. The Company classifies its data services
into two categories: real-time satellite broadcast or dedicated landline for
professional trading desktops and networks; and Internet services for
individual investors, developers, corporations and financial institutions.
The Company's executive offices are located in Chicago, Illinois. The
Company also maintains sales offices in New York, Dallas and Chicago.
GENERAL
The Company maintains a real-time database of last sale and bid/ask
prices of more than 250,000 issues that contains the most comprehensive
options data and has also been optimized for Level 2 NASDAQ market-maker
quotes. The database includes all North American equities and options, major
stock indices, Level 1 NASDAQ-quoted stocks, Level 2 NASDAQ market-maker
quotes, mutual funds, money market funds, futures contracts and options on
futures contracts. The Company creates its database by gathering ticker and
news feeds from stock, options and commodities exchanges and other sources
and processing such information into a single data feed. The Company's
primary processing plant is located in its executive offices in Chicago,
Illinois.
PC Quote software applications, running on the customer's computer,
process the data stream to allow the user to monitor securities on an
on-going real-time basis. They also create in the user's computer a complete
database of trading symbols, continuously updated by the data stream. This
database gives the user instant access to security prices. The same data
stream is used to create an equivalent database on the Company's computers,
accessible to its customers via the Internet.
The following is a description of the principal products and services
marketed by the Company.
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PRODUCTS AND SERVICES
HYPERFEED-TM-
HyperFeed, the cornerstone of the services provided by the Company, is
the Registrant's digital real-time market data feed. It is broadcast at 1024
kilobytes per second and 112 kilobytes per second and contains all North
American stock, options, and commodity exchange issues. HyperFeed also
carries:
- Dynamic Nasdaq Level II market maker quotes;
- Dow Jones Composite News Service (up to 90-day retrieval of nine wires
"Broadtape", Professional Investor Report, Capital Markets Report,
International News Wire, World Equities Report, European Corporate
Report, Electronic Wall Street Journal, International Petroleum
Reports, Federal Filings);
- Multiple levels of fundamental data;
- Fixed income pricing; and
- Other types of fixed and dynamic financial data.
HyperFeed underlies all of the Registrant's other products and services,
which capitalize on HyperFeed to access, view and utilize data in a variety
of ways. To produce and transmit HyperFeed, PC Quote uses multiple
redundant, high-speed data circuits to gather ticker and news feeds from
securities exchanges and other sources. At the Registrant's production
center in Chicago, these feeds are directed into multiple redundant dynamic
real-time databases from which HyperFeed is generated.
HyperFeed is transmitted to customer sites either over a satellite
communications network or by dedicated digital data circuits. At the
customer site HyperFeed is received by a Quote Server, an industry standard
PC which creates and maintains databases of real-time news and fundamental
information.
The Quote Server can reside on a local area network, where the data it
maintains is accessible to software applications running on workstations on a
network, or it can function as a stand-alone unit, in which case its data is
available to software applications running on the Quote Server itself. In
both instances the software applications accessing the data may be supplied
by the Registrant, by third parties, or by the customers themselves.
Third party or customer supplied software utilize the Registrant's
high-performance application program interfaces (APIs) to access the Quote
Server's data. In this way the Quote Server can supply data for virtually
any purpose, including proprietary order execution systems, analytical
modeling, internal risk management, order matching, or redistribution via
on-line systems, the Internet, or wide area networks. Third party developers
and customers
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using the APIs for their own development pay a monthly fee for the
interfaces, in addition to monthly HyperFeed licensing fees and per-user or
per-unit charges once the application is ready for distribution or
redistribution.
The Registrant also maintains Internet Quote Servers at its facility.
These Quote Servers function just like any other Quote Servers, supporting
applications developed by the Registrant, or by third parties or customers
using Internet-enabled versions of the Registrant's APIs. In this way the
Registrant and its customers are able to benefit from the Internet's
substantially lower costs for service, communications and startup, its ease
of access, and its worldwide availability.
SOFTWARE APPLICATIONS AND SERVICES MARKETED BY REGISTRANT
To complement the HyperFeed database, the Company has several high-end
applications and programming tools which it licenses to HyperFeed subscribers.
PC Quote 6.0 for Windows is a comprehensive suite of real-time
professional trading tools. Running under Microsoft-TM- Windows-TM- 3.1 or
Windows-TM- 95, or Windows NT-TM-, PC Quote 6.0 offers unlimited quote pages,
charting, technical analysis, searchable news, time of sale and quote, Nasdaq
Level II market maker screens, options analytical tools, dynamic data
exchange into Microsoft-TM- Excel-TM- , tickers, alerts, baskets and more.
PC Quote 6.0 can be fed by Quote Servers on the customer's local area
network or through a connection to the Internet. Monthly fees for Internet
service are lower than fees for local area network service; this makes PC
Quote 6.0 more affordable around the world for individual investors and
affords a wide range of options for the professional marketplace. The
software application for PC Quote 6.0 is licensed from an unaffiliated third
party pursuant to a Software Distributor Agreement.
Quote Server with Quote Tools - custom applications using robust and
easy-to-use APIs, the Quote Tools enable a customer to build anything from
real-time trading desktop interfaces to Web Sites with portfolio management
and the latest in Internet push technology. The Quote Server APIs are unique
in that they give a complete suite of programming interfaces, from Visual
Basic to CGI to C++ for all levels of programming in all environments.
In 1995 the Company established an Internet web site, and MarketSmart,
offering free delayed quotes and other information to all visitors.
Commencing in 1996 and continuing to build thereafter, the Company generated
revenue by selling advertising on its web site's free quote pages and
MarketSmart, providing market information for other web sites, offering
development tools for Internet-based applications, and forming strategic
relationships with other major Internet players. The Company's expanded web
site now offers, in addition to links to unlimited free delayed quote
information, subscription fee real-time quote information, corporate profiles
and press releases, information about PC Quote's products and services and
paths for learning about and signing up for subscription services available
on the site.
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The Company's Internet Business Services provide custom and template
web-site services and software development services--from basic tools to
complete turnkey installations--to software vendors, financial institutions,
corporations, and Internet content providers. All of the Company's Internet
services, including the web site, advertising, PC Quote 6.0 on the Internet,
and Quote Tools, can be wholesaled, private labeled, cloned or customized to
meet a customer's specific needs.
The Company has become a quote service for the major office applications
companies. In Microsoft Excel's 1997 version, Web Query technology features
the ability to access data from PC Quote. In February 1997 Lotus development
Corporation also featured PC Quote's data as the "in the box" feature for its
SmartSuite application.
PATENTS, TRADEMARKS AND LICENSES
The Company does not have patent or federal copyright protection for its
proprietary software products. Although applicable software is readily
duplicated illegally by anyone having access to appropriate hardware, the
Company attempts to protect its proprietary software through license
agreements with customers and common law trade secret protection and
non-disclosure contract provisions in its agreements with its employees. The
Company uses security measures, including a hardware key, which restricts
access to its on-line services unless proper password identification from a
PC Quote user is provided. As an additional safeguard, the Company provides
only the object code on its diskette and retains the source code.
The following products are registered trademarks:
BasketMaker-Registered Trademark-, QuoteWare-Registered Trademark-,
PriceWare-Registered Trademark- and QuoteBlaster-Registered Trademark-. The
HyperFeed-TM- product is a servicemark of the Company.
COMPETITION
The market for the on-line provision of financial information such as
equities, commodities, futures and options quotations and news through
services and software applications similar to those the Company provides
includes a large number of competitors and is subject to rapid change. The
Company believes its primary competitors includeBridge Information Systems,
Bloomberg, the Comstock unit of Standard & Poors, the ILX unit of Thomson
Corporation, Reuters, Quote.com and Data Broadcasting Corporation. Many of
these competitors have significantly greater financial, technical and
marketing resources and greater name recognition than the Company.
SEASONALITY
The Company has not experienced any material seasonal fluctuations in
its business. Barring any prolonged period of investor inactivity in trading
securities, the Company does not believe that seasonality is material to its
business activities.
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RESEARCH AND DEVELOPMENT
The Company's systems development personnel expend their time and effort
developing new software programs and high-speed data delivery systems and
expanding or enhancing existing ones. Development efforts focus on providing
a solution to the informational and analytical needs of both the professional
and private investors. Development activity has increased with the
implementation of high-level design and prototyping tools. The Company's
continuing investment in software development consists primarily of
enhancements to its existing Windows-based private network and Internet
products and services, development of new data analysis software and
programmer tools (application programming interfaces) designed to afford easy
access to its datafeed for data retrieval and analysis purposes, and
application of new technology to increase the data volume and delivery speed
of its distribution system and network.
ENVIRONMENT
Compliance with federal, state, and local provisions with respect to the
environment has not had a material adverse effect on the Company's capital
expenditures, earnings, or competitive position.
EMPLOYEES
As of October 31, 1998, the Company employed 136 people, none of whom
are represented by a collective bargaining unit. The Company believes it has
a satisfactory relationship with its employees. From time to time the
Company retains the services of outside consultants on an hourly basis.
GOVERNMENT CONTRACTS
The Company has no material contracts with the Government.
BACKLOGS
Due to the nature of the business, backlogs are not a typical occurrence
in the industry.
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RISK FACTORS
Prospective investors should carefully consider the following risk
factors in addition to other information set forth in this Prospectus before
making a decision to purchase any of the securities offered hereby.
RECENT OPERATING LOSSES AND DECLINING CASH. The Company incurred a loss
of approximately $5.16 million for the nine months ended September 30, 1998,
and as of September 30, 1998, had an accumulated deficit of approximately
$25.25 million and deficit working capital of approximately $10.44 million.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern. There can be no assurance that the Company will
operate profitably in the future. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and Note 14 of the Notes to
Financial Statements for the fiscal year ended December 31, 1997, as filed on
Form 10-K incorporated herein by reference. See also "Management's
Discussion and Analysis of Results of Operations and Financial Condition" for
the nine months ended September 30, 1998, as filed on Form 10-Q incorporated
herein by reference.
Net cash and cash equivalents declined $942,000 from year-end 1997 to
$171,000 at the end of the third quarter of 1998. Expenditures for new
equipment were $676,000, $149,000, or 28%, higher for the first nine months
of 1998 versus 1997 as operating cash was used to effect new purchases.
Capitalized software costs of $1,485,000 were $327,000, or 28%, higher for
the nine months ended September 30, 1998, compared to the same period for
1997. Although the Company decreased its overhead allocation to capitalizable
projects, there was an increase in development resources devoted to the
construction phase of new systems and products. The Company borrowed an
additional $1.0 million on a credit facility with its principal shareholder,
PICO Holdings, Inc. ("PICO"), during the period, and the Company repaid
$225,000 of the principal balance on its bank term loan.
The Company's $1.0 million line of credit with Lakeside Bank expired in
February 1997. The Company was experiencing, and continues to experience,
working capital constraints which has hindered operations. To lessen such
constraints, the Company entered into several financing transactions during
1997. On May 5, 1997, the Company entered into a loan and security agreement
with PICO to provide working capital loans of up to $1.0 million. In
connection with the extension by PICO of such $1.0 million facility, the
Company and Physicians Insurance Company of Ohio ("Physicians"), a
wholly-owned subsidiary of PICO, restructured the terms of its $2.5 million
subordinated convertible debenture (the "Debenture"). In August 1997, the
Company and PICO amended the loan and security agreement increasing the
facility by $1.0 million to $2.0 million. In September 1997, the Company and
PICO further amended the loan and security agreement increasing the facility
by $0.25 million to $2.25 million and extending the due date for all
borrowings on the facility, plus accrued interest to December 31, 1997. The
loan and security agreement was further amended in December 1997, February
1998, March 1998, May 1998, June 1998 and July 1998 to extend the due date to
January 31, 1998, February 28, 1998, April 30, 1998, May 31, 1998, August 31,
1998 and December 31, 1998, respectively. On July 31, 1998 the
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Company and PICO executed the ninth amendment to the Loan Agreement to
further increase the amount of the secured loan from PICO to the Company from
$2.25 million to $3.25 million (the loan and security agreement, as amended,
hereinafter referred to as the "Loan Agreement").
The Company received approximately $4.3 million in net proceeds from (i)
the sale of shares of Common Stock underlying rights exercised pursuant to
its rights offering, (ii) the purchase of Common Stock by PICO and Imprimis
Investors LLC and Wexford Spectrum Investors LLC (collectively the "Wexford
Affiliates") through exercise of previously issued warrants (iii) the sale of
shares of Common Stock to employees pursuant to the Company's Employee Stock
Purchase Plan (iv) the sale of shares of Common Stock to employees who
exercised options previously granted to them under the Company's Employee
Incentive Stock Option Plan, and (v) the issuance of shares to the Chairman
and CEO in lieu of cash payments for previously deferred and current
compensation. The Company repurchased 2,988,949 shares of its Common Stock,
at one dollar per share, from the Wexford Affiliates, fulfilling its
obligation under its October 1997 Stock and Warrant Purchase Agreement with
the Wexford Affiliates. Agreements were reached with various vendors to
extend payments under negotiated payment plans.
NEED FOR ADDITIONAL FINANCING. Due to the decline in cash flow to levels
expected to be insufficient for working capital, capital expenditures, and
debt services, the Company has explored multiple alternatives available to
the Company for the purposes of raising capital to fund operations and
enhancing shareholder value. On July 31, 1998, the Company increased its
borrowings under the Loan Agreement by $1.0 million pursuant to the Ninth
Amendment to the Loan Agreement. On September 23, 1998, the Company, PICO
and Holdings entered into a Securities Purchase Agreement (the "Purchase
Agreement") whereby, subject to shareholder approval at a special meeting on
December 15, 1998, the $2.5 million convertible subordinated debenture, the
$3.3 million in principal borrowings under the Loan Agreement (including the
$1.0 million borrowed on July 31, 1998) and related accrued interest of
approximately $800,000 would be converted into convertible preferred shares
and a warrant (the "Proposal"). If approved by the shareholders of the
Company, the Securities Agreement and proposed debt recapitalization would:
1. eliminate the Company's obligation to pay $3.8 million in principal
and accrued interest when due on December 31, 1998 and $3.1 million
(principal and accrued interest) when due on April 30, 1999;
2. represent a permanent $6.7 million equity infusion increasing
stockholders' equity from a negative $3.8 million at September 30,
1998 to a positive pro-forma $2.8 million (adjusted for interim
interest); and
3. increase September 30, 1998 working capital (current assets minus
current liabilities) by $6.6 million.
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There can be no assurances, however, that the Company will be successful
in obtaining shareholder approval.
The Company continues to explore additional alternatives to fund
operations and enhance shareholder value. Such alternatives include a
merger, a spin-off or sale of part of the Company's business, a strategic
relationship or joint venture with another technology or financial service
firm or other financing to further fund the Company's business. Any capital
raised may be costly to the Company and/or dilutive to stockholders. There
can be no assurances, however, that the Company will be successful in
concluding a transaction, or that if a transaction is concluded that such
transaction will result in alleviating the Company's present financial
situation. If the Company is not able to obtain shareholder approval for the
debt conversion and, in turn, secure additional capital to repay the debts,
when due, the lack of funds may significantly limit the Company's ability to
realize value from its assets and its product offerings, and its ability to
continue its business as currently conducted. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and Note 14 of
the Notes to Financial Statements for the Fiscal Year Ended December 31,
1997, as filed on Form 10-K incorporated herein by reference. See also
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" for the nine months ended September 30, 1998, as filed on Form
10-Q incorporated herein by reference.
REQUIREMENTS FOR LISTING SECURITIES ON THE AMERICAN STOCK EXCHANGE. The
Common Stock is currently listed with the American Stock Exchange. The
Company currently does not meet the standards for continued listing, however,
the Common Stock has not been de-listed from the American Stock Exchange. If
the Common Stock were to be de-listed, trading, if any, would thereafter be
conducted on an electronic bulletin board established for securities that do
not meet listing requirements or in what is commonly referred to as the "pink
sheets." As a result, an investor may find it more difficult to dispose of,
or to obtain accurate quotations as to the price of, the Company's securities.
CONTROL BY PRINCIPAL STOCKHOLDERS. As of the date of this prospectus,
PICO and its affiliate, Physicians, own approximately 18% of the outstanding
shares of Common Stock, and beneficially own approximately 32% of the
outstanding shares of Common Stock. If the Proposal is consummated, the
percentage ownership of each stockholder, other than PICO and Physicians,
will proportionately decrease, while the percentage of beneficial ownership
of the Common Stock by PICO and Physicians would increase to a minimum level
of 50.5% (assuming conversion of the convertible preferred shares and the
warrant issued pursuant to the Purchase Agreement, at the effective date of
the transaction). Pursuant to PICO's and Physicians' equity interest in the
Company and certain negative covenants contained in outstanding agreements
with the Company, PICO and Physicians are in a position to control the
outcome of matters requiring a stockholder vote, including the election of
directors. Such control could preclude any unsolicited acquisition of the
Company and, consequently, adversely affect the market price of the Common
Stock.
VARIABILITY OF QUARTERLY OPERATING RESULTS. The Company's revenue,
operating profits and earnings have fluctuated and, in the future, may
fluctuate from quarter to quarter based on
15
<PAGE>
such factors as the number, size and scope of services and software
applications which the Company provides, the contractual terms for the
provision of such services and software applications, any delays incurred in
connection with an agreement to provide services and software applications,
the adequacy of provisions for losses, the accuracy of estimates of resources
required to complete ongoing service offerings and general economic
conditions. Unanticipated variations in any of such factors may cause
significant variations in operating results in any particular quarter and
could result in losses for such quarter. An existing customer's
unanticipated termination of or failure to renew a major agreement for the
provision of services and software applications during a quarter could have a
material adverse effect on the Company's business, financial condition and
results of operations.
AGREEMENTS WITH EXCHANGES. The Company's ability to provide services
enabling its clients to access real-time and delayed financial data such as
equities, commodities, futures and options quotations and news is dependent
on its ability to gather ticker and news feeds from securities exchanges and
other sources. The Company has agreements in place with such exchanges and
other sources which permit the Company to gather the information it needs for
its services. The termination, expiration or non-renewal of any of these
agreements could inhibit the Company's ability to provide high quality
services to its clients and, accordingly, have a material adverse effect upon
the Company's business, financial condition and results of operations. See
"The Company."
SOFTWARE LICENSING AGREEMENT. A significant software application which
is offered to subscribers for the Company's financial data quotations and
news services, PC Quote 6.0, is licensed by the Company from an unaffiliated
third party pursuant to a Software Distributor Agreement dated December 4,
1995 (the "Distributor Agreement"). The Distributor Agreement is for a
three-year term but provides for automatic two-year renewals thereafter
unless terminated pursuant to ninety days' notice. The termination,
expiration or non-renewal of the Distributor Agreement could have a material
adverse effect on the Company's business, financial condition and results of
operations.
RELIANCE UPON EXECUTIVE OFFICERS AND KEY EMPLOYEES. The success of the
Company is highly dependent upon the efforts and abilities of its executive
officers, particularly Mr. Jim Porter, the Company's Chairman of the Board
and Chief Executive Officer. Although certain of its executive officers and
key employees have entered into agreements with the Company which contain,
nondisclosure covenants, such agreements do not guarantee that these
individuals will continue their employment with the Company. The loss of
services of certain executive officers or key employees for any reason could
have a material adverse effect upon the Company's business, financial
condition and results of operations.
COMPETITION. The market for the on-line provision of financial
information such as equities, commodities, futures and options quotations and
news through services and software applications similar to those the Company
provides includes a large number of competitors and is subject to rapid
change. The Company believes its primary competitors include Bridge
Information Systems, Bloomberg, the Comstock unit of Standard & Poors, the
ILX unit of Thomson Corporation, Reuters, Quote.com and Data Broadcasting
Corporation. Many of
16
<PAGE>
these competitors have significantly greater financial, technical and
marketing resources and greater name recognition than the Company. Such
competition may impose additional pricing pressures on the Company. There
can be no assurance that the Company can compete successfully with its
existing competitors or with any new competitors.
SUBSCRIPTION CONTRACT RISKS. Many of the Company's subscription
contracts are for services and software applications which are critical to
the operations of its customers' businesses. The Company's failure or
inability to deliver services and software to its customers' satisfaction
could have a material adverse effect on its customers' operations and could
consequently subject the Company to litigation or damage the Company's
reputation, which could have a material adverse effect on the Company's
business, financial condition and results of operations.
Substantially all of the Company's subscription contracts are of
relatively short duration, their maximum length is three years. Although
these contracts carry early termination penalties, the unexpected termination
or non-renewal by a client of a significant contract could have a material
adverse effect on the Company's business, financial condition and results of
operations.
CUSTOMER CONCENTRATION. The Company has derived a significant portion
of its revenue from a limited number of large customers. In 1995, 1996 and
1997, the Company's largest customer accounted for approximately 29%, 20% and
4% of its revenue, respectively, and its ten largest clients accounted for
approximately 43%, 39% and 14% of its revenue, respectively. The volume of
services provided to specific customers varies from year to year. There can
be no assurance that a large customer in one year will continue to use the
Company's services in a subsequent year. Furthermore, the Company is not
always the exclusive provider of securities quotations and news to its
customers. The loss of any large customer could have a material adverse
effect on the Company's business, financial condition and results of
operations.
TECHNOLOGICAL ADVANCES. The information technology industry has
experienced and is continuing to experience rapid technological advances and
developments. The Company's success will depend in part on its ability to
develop solutions which keep pace with continuing changes in information
processing technology, evolving industry standards and changing client
preferences. While the Company is actively engaged in research and
development activities to meet such client needs and preferences, there can
be no assurance that the Company will be successful in addressing these
developments on a timely basis or that, if addressed, the Company will be
successful in the marketplace. The Company's delay or failure to address
these developments could have a material adverse effect on the Company's
results of operations. In addition, there can be no assurance that
technologies developed by others will not render the Company's services
noncompetitive or obsolete.
INTELLECTUAL PROPERTY RIGHTS. Software developed by PC Quote in
connection with customer services typically is licensed for use by the
customers. The Company holds no patents or registered copyrights and has no
present intention of registering any copyrights or
17
<PAGE>
filing any patent applications. The following products are registered
trademarks: BasketMaker-Registered Trademark-, QuoteWare-Registered
Trademark-, PriceWare-Registered Trademark- and QuoteBlaster-Registered
Trademark-. The HyperFeed-TM- product is a servicemark of the Company.
Although the Company believes that its services and software
applications do not infringe upon the intellectual property rights of others
and that it has all rights necessary to utilize the intellectual property
employed in its business, the Company is subject to the risk of litigation
alleging infringement of third-party intellectual property rights. The
Company typically agrees to indemnify its clients against such claims. Any
such claims could require the Company to spend significant sums in
litigation, pay damages, develop non-infringing intellectual property or
acquire licenses to the intellectual property which is the subject of
asserted infringement.
The Company relies upon a combination of nondisclosure and other
contractual arrangements and trade secret, copyright and trademark laws to
protect its rights, the rights of third parties from whom the Company
licenses intellectual property and the proprietary rights of its clients.
There can be no assurance, however that the steps taken by the Company will
be adequate to deter misappropriation of proprietary information or that the
Company will be able to detect unauthorized use and take appropriate steps to
enforce its intellectual property rights.
RISKS OF LICENSING PROPRIETARY SOFTWARE APPLICATIONS. The Company does
not have patent or federal copyright protection for its proprietary software
products. Although applicable software is readily duplicated illegally by
anyone having access to appropriate hardware, the Company attempts to protect
its proprietary software through license agreements with customers and common
law trade secret protection and non-disclosure contract provisions in its
agreements with its employees. The Company uses security measures, including
a hardware key, which restricts access to its on-line services unless proper
password identification from a PC Quote user is provided. As an additional
safeguard, the Company provides only the object code on its diskette and
retains the source code. There can be no assurance that such licensees will
properly utilize the Company's software applications and services. The
failure by licensees to adhere strictly to the Company's standards could
subject the Company to litigation and harm the Company's reputation thereby
resulting in a material adverse effect on the Company's business, financial
condition and results of operations.
POSSIBLE VOLATILITY OF STOCK PRICE. The Company's Common Stock has been
thinly traded and may experience significant price and volume fluctuations
which could adversely affect the market price of the Common Stock without
regard to the operating performance of the Company.
ANTI-TAKEOVER PROVISIONS. The Company's Certificate of Incorporation
and By-laws, the Delaware General Corporation Law and the Securities Exchange
Act of 1934 contain certain provisions that could have the effect of
discouraging or making more difficult the acquisition of the Company by means
of a tender offer, a proxy contest or otherwise, even though such an
acquisition might be economically beneficial to the Company's stockholders.
These include provisions under which (i) only the Board of Directors or an
authorized special
18
<PAGE>
committee thereof may call meetings of stockholders, and (ii) stockholders
must comply with certain advance notice procedures to nominate candidates for
election as directors of the Company and to submit proposals for
consideration at stockholders' meetings. The ability of the Board of
Directors to issue up to 5,000,000 shares of preferred stock, in one or more
classes or series, and with such powers, designations, preferences and
relative, participating, optional or special rights, qualifications,
limitations or restrictions as may be determined by the Board of Directors of
the Company, also could make an acquisition of the Company more difficult.
In addition, these provisions may make the removal of management more
difficult, even in cases where such removal would be favorable to the
interests of the Company's stockholders.
DEPENDENCE UPON FINANCIAL MARKETS. A significant portion of the Company's
revenue is derived from supplying financial data and quotations related to U.S.
financial exchanges and markets. Any significant downturn or other negative
development with respect to those exchanges and markets could adversely effect
the Company's revenue.
USE OF PROCEEDS
The Shares offered hereby are being sold by the Selling Shareholders for
their own account. The Company will not receive any of the proceeds from the
sale of such Shares. Any proceeds received by the Company upon exercise of the
Convertible Securities will be used for general corporate purposes, including,
but not limited to, operating and working capital requirements. The Company has
agreed to pay the expenses of registration of the Common Stock, including a
certain amount of legal and accounting fees. See "Plan of Distribution."
19
<PAGE>
PRICE RANGE OF COMMON STOCK
The Company's shares of Common Stock are traded on the American Stock
Exchange under the symbol "PQT." The following tables show for 1998, 1997 and
1996 the high and low closing prices of the Company's Common Stock for the
periods indicated, as reported by the American Stock Exchange.
<TABLE>
<CAPTION>
1998 QUARTERLY INFORMATION HIGH LOW
-------------------------- ---- ---
<S> <C> <C>
First 1-1/8 11/16
Second 4-3/16 3/4
Third 2-7/8 15/16
Fourth (through November 16, 1998) 1-13/16 1
1997 QUARTERLY INFORMATION HIGH LOW
-------------------------- ---- ---
First 3-7/16 2-5/16
Second 2-7/16 1-1/8
Third 2-7/16 1-9/16
Fourth 2-3/16 15/16
1996 QUARTERLY INFORMATION
--------------------------
First 15-1/8 8-3/4
Second 13-3/8 7-1/8
Third 7-11/16 3-15/16
Fourth 5-5/16 2-3/8
</TABLE>
The closing market price for the shares of Common Stock as reported by
the American Stock Exchange on November 16, 1998 was $1.375.
As of September 30, 1998, the Company had 439 stockholders of record of
its Common Stock.
DIVIDEND POLICY
The Company has not paid dividends on its Common Stock and it does not
presently anticipate making any such payments in the near future. The
Company's agreement with a lender prohibits the payment of dividends without
the lender's prior consent.
20
<PAGE>
SELLING SHAREHOLDERS
This Prospectus covers offers from time to time by Wildman, Harrold,
Allen & Dixon, legal counsel to the Company, and High Ridge Partners
(collectively the "Selling Shareholders") of their previously acquired shares
of Common Stock. The following table sets forth certain information as to the
maximum number of Shares that may be sold by each of the Selling Shareholders
pursuant to this Prospectus is:
<TABLE>
<CAPTION>
Number of Shares
Owned Prior to
Name the Offering
---- ----------------
<S> <C>
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive, Suite 3000
Chicago, Illinois 60610 100,000
High Ridge Partners
140 S. Dearborn St., Suite 320
Chicago, Illinois 60603 18,000
-------
Totals 118,000
-------
-------
</TABLE>
PLAN OF DISTRIBUTION
This offering of 118,000 shares of Common Stock is being made by the
Selling Shareholders, who have indicated they are acting independently of the
Company in determining the manner and extent of sales of the shares of Common
Stock included herein. The Company will receive none of the proceeds from
the sale of the Shares.
Although all of the Shares are being registered for public sale, the
sale of any or all of such Shares by the Selling Shareholders may depend on
the sale price of such Shares and market conditions generally prevailing at
the time. The Selling Shareholders reserve the right to reject any order in
whole or in part.
The Selling Shareholders may sell the Shares being offered hereby in one
or more transactions (which may include block transactions) effected from
time to time on the American Stock Exchange, in special offerings, in the
over-the-counter market, in negotiated transactions, or through a combination
of such methods of sale, in each case at market prices prevailing at the time
of sale, at prices relating to such prevailing market prices, or at
negotiated prices. The shares of Common Stock may be sold by one or more of
the following methods: (i) a block trade in which the broker or dealer so
engaged will attempt to sell the Shares as agent but may position and resell
a portion of the block as principal to facilitate the transaction; (ii)
purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this Prospectus; (iii) an exchange
distribution and/or a
21
<PAGE>
security distribution in accordance with the rules of the American Stock
Exchange; (iv) directly to purchasers; and (v) ordinary brokerage
transactions and transactions in which the broker solicits purchasers. In
effecting sales, brokers or dealers engaged by the Selling Shareholders may
arrange for other brokers or dealers to participate.
Some or all of the Shares offered hereunder also may be sold to or
through an underwriter or underwriters. Any Shares sold in that manner will
be acquired by such underwriters for their own accounts and may be resold
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices
determined at the time of sale. Such Shares may be offered to the public
through underwriting syndicates represented by one or more managing
underwriters or may be offered to the public directly by one or more
underwriters. Any initial public offering price and any discounts or
concessions allowed or disallowed or paid to dealers may be changed from time
to time.
If any of the Common Stock offered hereby is sold through underwriters,
brokers or dealers, the Selling Shareholders may pay customary underwriting
discounts and brokerage commissions and charges. The Selling Shareholders
and any underwriters, brokers or dealers or other persons who participate
with them in the distribution of the Shares offered hereby may be deemed to
be "underwriters" within the meaning of the Securities Act, although the
Selling Shareholders disclaim such status. Any commissions and discounts
received by such underwriters, brokers or dealers, and any profit on the
resale of the stock by such underwriters, brokers or dealers, may be deemed
to be underwriting discounts and commissions under the Securities Act.
Neither the delivery of the Prospectus, or any Prospectus Supplement, nor any
other action taken by the Company, the Selling Shareholders or any purchaser
in connection with the purchase or sale of Shares offered hereby shall be
deemed or treated as an admission that any of them is an underwriter within
the meaning of the Securities Act in the connection with the sales of any
Shares.
The Selling Shareholders have agreed to indemnify and hold harmless the
Company, its officers and directors, with respect to any untrue statement in
or omission from, this Prospectus or the Registration Statement of which it
is a part, including amendments and supplements, if such statement or
omission was made in reliance upon information furnished to the Company by
such Selling Shareholder for use in the preparation of this Prospectus or
Registration Statement.
The Company will pay all expenses incidental to the registration of the
Shares, but will not pay selling or other expenses incurred in the offering,
including the discounts and commissions of broker-dealers. The Company has
agreed to indemnify the Selling Shareholders against certain civil
liabilities, including liabilities under the Securities Act, in connection
with the Shares offered hereby.
The shares of Common Stock being offered hereby may also be sold by the
Selling Shareholders pursuant to Rule 144 promulgated under the Securities
Act.
22
<PAGE>
EXPERTS
The financial statements and schedule of the Company included in the
Company's Annual Report on Form 10-K, for the year ended December 31, 1997,
incorporated by reference in this Prospectus and elsewhere in the
Registration Statement, have been audited by KPMG Peat Marwick LLP,
independent public accountants, as indicated in their reports with respect
thereto, and such financial statements and schedule are incorporated herein
by reference in reliance upon such reports given upon the authority of such
firm as experts in accounting and auditing. The report of KPMG Peat Marwick
LLP covering the December 31, 1997, financial statements contains an
explanatory paragraph that states that the Company has experienced
significant operating losses, which have adversely affected the Company's
current results of operations and liquidity. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
The financial statements and schedule of the Company as of December 31,
1996, and for each of the two years for the period then ended, included in
the Company's Annual Report on Form 10-K, for the year ended December 31,
1997, incorporated by reference in this Prospectus and elsewhere in the
Registration Statement, have been audited by McGladrey and Pullen, LLP,
independent public accountants, as indicated in their reports with respect
thereto, and such financial statements and schedule are incorporated herein
by reference in reliance upon such reports given upon the authority of such
firm as experts in accounting and auditing. The report of McGladrey and
Pullen, LLP contains an explanatory paragraph that states that the Company
has experienced significant operating losses, which have adversely affected
the Company's current results of operations and liquidity. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
LEGAL MATTERS
The validity of the Shares offered hereby has been passed upon for the
Company by Wildman, Harrold, Allen & Dixon, 225 West Wacker Drive, Suite
2800, Chicago, Illinois 60606-1229. Such firm is a selling shareholder of
up to 100,000 shares of Common Stock pursuant to this Prospectus.
No dealer, salesperson or any other 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 by the Company, any Selling
Shareholder or any other person. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy to any person in any
jurisdiction in which such offer or solicitation would be unlawful or to any
person to whom it is unlawful. Neither the delivery of this Prospectus nor
any offer or sale made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Company or
that the information contained herein is correct as of any time subsequent to
the date hereof.
23
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . 6
Incorporation of Certain Documents By Reference. . . . . . . . . . . . . 6
PC Quote, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
24
<PAGE>
PC QUOTE, INC.
118,000 SHARES OF COMMON STOCK, $.001 PAR VALUE
-------------
PROSPECTUS
-------------
__________, 1998
25
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
<TABLE>
<S> <C>
SEC Registration Fee . . . . . . $ 59
Accounting Fees and Expense . . . $6,000
Legal Fees and Expenses . . . . . $1,000
Miscellaneous . . . . . . . . . . $1,000
------
Total . . . . . . . . . . . . . . $8,059
</TABLE>
All fees and expenses other than the SEC registration fee are estimated.
The expenses listed above will be paid by the Company.
Item 15. Indemnification of Officers and Directors
Section 145(a) of the General Corporation Law of Delaware (the "DGCL")
empowers a corporation to indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, employee or agent of the
corporation or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation or enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
cause to believe his conduct was unlawful.
Subsection 145(b) of the DGCL empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that
such person acted in any of the capacities set forth above, against expenses
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted under similar standards, except
that no indemnification may be made in respect to any claim, issue or matter
as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine that despite
the adjudication of liability such person is fairly and reasonably entitled
to indemnity for such expenses which the court shall deem proper.
Section 145 further provides that to the extent a director or officer of
a corporation has been successful in the defense of any action, suit or
proceeding referred to in subsections (a)
26
<PAGE>
and (b) or in the defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith, and that indemnification
provided for by Section 145 shall not be deemed exclusive of any other rights
to which the indemnified party may be entitled. It empowers the corporation
to purchase and maintain insurance on behalf of a director or officer of the
corporation against any liability asserted against him or incurred by him in
any such capacity or arising out of his status as such whether or not the
corporation would have the power to indemnify him against such liabilities
under Section 145.
The Company's certification of incorporation provides that to the
fullest extent permitted by Delaware law, the Company shall indemnify and
advance indemnification expenses to all of its directors and officers. In
addition, the certificate to the fullest extent permitted by Delaware law, of
incorporation provides that a director shall not be liable to the Company or
its stockholders for breach of fiduciary duty as a director.
The Company has entered into indemnification agreements with each
director providing for indemnification to the fullest extent permitted by
Delaware law.
Item 16. List of Exhibits
<TABLE>
<S> <C>
5 Opinion of Wildman, Harrold, Allen & Dixon regarding
legality of the Shares
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of McGladrey & Pullen, LLP
23.3 Consent of Wildman, Harrold, Allen & Dixon (included in
Exhibit 5)
24 Power of Attorney
</TABLE>
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To 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 to such information in the
registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value
of securities offered would not exceed that which was registered) and
any deviation from the low or high end of the
27
<PAGE>
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) under
the Securities Act if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change in the information set forth 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-3 or 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 Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (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) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against 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 Act and will be governed by the final
adjudication of such issue.
28
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 Chicago, State of Illinois, on
November 24, 1998.
PC QUOTE, INC.
By /s/ JIM R. PORTER
--------------------
Jim R. Porter
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature
By: /s/ JIM R. PORTER Chairman of the Board and
----------------------- Chief Executive Officer
Jim R. Porter
November 24, 1998
By: /s/ JOHN E. JUSKA Chief Financial Officer
-----------------------
John E. Juska
November 24, 1998
By: /s/ JOHN R. HART Director
-----------------------
John R. Hart
November 24, 1998
By: /s/ TIMOTHY K. KRAUSKOPF Director
-----------------------
Timothy K. Krauskopf
November 24, 1998
By: /s/ RONALD LANGLEY Director
-----------------------
Ronald Langley
November 24, 1998
By: ----------------------- Director
Louis J. Morgan
29
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Page
<S> <C> <C>
5 Opinion of Wildman, Harrold, Allen & Dixon . . . . . .
23.1 Consent of KPMG Peat Marwick LLP . . . . . . . . . . .
23.2 Consent of McGladrey & Pullen, LLP . . . . . . . . . .
23.3 Consent of Wildman, Harrold, Allen & Dixon
(included in Exhibit 5). . . . . . . . . . . . . . . .
24 Power of Attorney. . . . . . . . . . . . . . . . . . .
</TABLE>
30
<PAGE>
EXHIBIT 5
[Wildman, Harrold, Allen & Dixon Letterhead]
PC Quote, Inc.
300 South Wacker Drive, Suite 300
Chicago, Illinois 60606
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to PC Quote, Inc., a Delaware corporation (the
"Company"), in connection with a registration statement on Form S-3 (the
"Registration Statement") to be filed with the Securities and Exchange
Commission relating to the registration under the Securities Act of 1933, as
amended, of 118,000 shares (the "Shares") of common stock, par value $.001
per share, of the Company. The Shares will be sold from time to time by the
selling shareholders (the "Selling Shareholders") named in the Registration
Statement, on the American Stock Exchange or otherwise, directly or through
underwriters, brokers or dealers.
We have examined such documents and have reviewed such questions of law
as we have considered necessary and appropriate for the purposes of our
opinions set forth below. In rendering our opinions set forth below, we have
assumed the authenticity of all documents submitted to us as originals, the
genuineness of all signatures and the conformity to authentic originals of
all documents submitted to us as copies. We have also assumed the legal
capacity for all purposes relevant hereto of all natural persons and, with
respect to all parties to agreements or instruments relevant hereto other
than the Company, that such parties had the requisite power and authority
(corporate or otherwise) to execute, deliver and perform such agreements or
instruments, that such agreements or instruments have been duly authorized by
all requisite action (corporate or otherwise), executed and delivered by such
parties and that such agreements or instruments are the valid, binding and
enforceable obligations of such parties. As to questions of fact material to
our opinions, we have relied upon certificates of officers of the Company and
of public officials.
Based on the foregoing, we are of the opinion that the Shares to be sold
by the Selling Shareholders pursuant to the Registration Statement have been
duly authorized by all requisite corporate action and are validly issued,
fully paid and nonassessable.
Our opinions expressed above are limited to the laws of the State of
Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the heading
"Legal Matters" in the Prospectus constituting part of the Registration
Statement.
31
<PAGE>
Dated: November 24, 1998 Very truly yours,
/s/ Wildman, Harrold, Allen & Dixon
32
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Stockholders
PC Quote, Inc.:
We consent to the use of our reports dated March 24, 1998, included in the PC
Quote, Inc. (the Company) 1997 Annual Report on Form 10-K, incorporated by
reference herein, and to the reference to our firm under the heading
"Experts" in the Prospectus.
Our report on the financial statements contains an explanatory paragraph that
states that the Company has experienced significant operating losses which
has adversely affected the Company's current results of operations and
liquidity. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. The financial statements and
financial statement schedule do not include any adjustments that might result
from the outcome of that uncertainty.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
November 24, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to incorporation by reference in the Registration Statement on
Form S-3 of PC Quote, Inc. of our report dated Mar ch 7, 1997, which includes
an emphasis paragraph relating to an uncertainty as to the Company's ability
to continue as a going concern, relating to the balance sheet of PC Quote,
Inc. as of December 31, 1996, and the related statements of operations,
stockholders' equity, and cash flows for each of the years in the two-year
period ended December 31, 1996, which report appears in the December 31,
1997, Annual Report on Form 10-K of PC Quote, Inc. and to the reference of
our firm under the heading "Experts" in the Registration Statement.
/s/ McGladrey & Pullen, LLP
November 24, 1998
Schaumburg, Illinois
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
The undersigned directors and officers of PC QUOTE, INC. hereby
constitute and appoint John E. Juska, their true and lawful attorney-in-fact
and agent, for each of them and in their name, place and stead, in any and
all capacities (including without limitation, as Director and/or principal
Executive Officer, principal Financial Officer, principal Accounting Officer
or any other officer of the Company), to sign and execute a registration
statement on Form S-3 and any amendment or amendments, including
post-effective amendments thereto, for the registration under the Securities
Act of 1933, as amended, of up to 118,000 Common Shares of PC Quote, Inc. and
do hereby grant unto said attorney-in-fact and agent full power and authority
to do and perform any and all acts and things requisite and necessary to be
done, and hereby ratifying and confirming all that said attorney-in-fact and
agent may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands this
24th day of November, 1998.
Signature
By: /s/ JIM R. PORTER Chairman of the Board and
------------------------------ Chief Executive Officer
Jim R. Porter
By: Director
------------------------------
Louis J. Morgan
By: /s/ RONALD LANGLEY Director
------------------------------
Ronald Langley
By: /s/ JOHN R. HART Director
------------------------------
John R. Hart
By: /s/ TIMOTHY K. KRAUSKOPF Director
------------------------------
Timothy K. Krauskopf
33
