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SUBJECT TO COMPLETION, DATED JANUARY 9, 1997
P R O S P E C T U S
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120,000 WARRANTS
120,000 SHARES
WORLDCORP, INC.
WARRANTS
COMMON STOCK
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This Prospectus relates to 120,000 warrants (the "Warrants") of WorldCorp,
Inc., a Delaware corporation (the "Company" or "WorldCorp"), held by seven
holders (the "Selling Securityholders"), and the 120,000 shares (the "Shares")
of the Company's common stock, par value $.001 per share (the "Common Stock"),
issuable upon the exercise of such Warrants. The Warrants held by the Selling
Securityholders together with the Shares are sometimes referred to herein as the
"Selling Securityholder Securities." The Warrants were issued to the Selling
Securityholders in connection with the issuance by WorldCorp of its 10.00%
Senior Subordinated Notes due September 30, 2000 (the "Notes") to the Selling
Securityholders. The Notes and Warrants are completely detached and separately
transferable. The Shares are being registered in connection with the possible
resale of those Shares. Registration of the Warrants and the underlying Shares
enables the Selling Securityholders to sell publicly all or a portion of the
Warrants or the underlying Shares. The Warrants and the underlying Shares
offered by the Selling Securityholders by this Prospectus may be sold from time
to time by the Selling Securityholders or by their transferees. The distribution
of the Warrants and the underlying Shares offered hereby by the Selling
Securityholders may be effected in one or more transactions that may take place
on the over-the-counter market, including ordinary brokers' transactions,
privately negotiated transactions or through sales to one or more dealers for
resale of such securities as principals, at market prices prevailing at the time
of sale or at negotiated prices. Usual and customary or specifically negotiated
brokerage fees, underwriting discounts or commissions may be paid by the Selling
Securityholders. Resales of the Shares may, from time to time, be made on the
New York Stock Exchange (the "NYSE"), or other stock exchanges, in privately
negotiated transactions or otherwise. See "Selling Securityholders" and "Plan of
Distribution." Each Warrant may be exercised, in whole or in part, for shares of
Common Stock at an exercise price of $6.00 per share, subject to adjustment, at
any time, and from time to time, from the date of issue, September 30, 1996, and
ending on September 30, 2000.
The Company will not receive any of the proceeds from the sale of the
Selling Securityholder Securities offered hereby by the Selling Securityholders.
In the event all of the Warrants are exercised, the Company will receive gross
proceeds of approximately $720,000. See "Selling Securityholders" and "Plan of
Distribution."
The Common Stock is listed on the NYSE under the trading symbol "WOA." The
reported closing price on the NYSE on January 7, 1997 was $4.25 per share.
SEE "RISK FACTORS" ON PAGE 7 FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE WARRANTS AND THE
UNDERLYING SHARES OFFERED HEREBY.
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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.
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The date of this Prospectus is January __, 1997.
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AVAILABLE INFORMATION
The Company is subject to the information 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 with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Regional Offices of the Commission at Suite 1400, Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661 and Seven World Trade
Center, Suite 1300, New York, New York 10048. In addition, copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission maintains a Web Site on the Internet that contains reports, proxy and
information statements and other information regarding the Company. The
Commission's Web Site address is http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933 (the "Securities
Act") with respect to the securities offered hereby (the Shares and the
Warrants). For further information with respect to the Company and the Warrants
and the Shares, reference is hereby made to such Registration Statement.
Statements contained herein concerning the provisions of certain documents are
not necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are hereby incorporated by reference into this
Prospectus: (i) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, and (ii) the Company's Quarterly Reports on Form 10-Q
for the fiscal quarters ended March 31, 1996, June 30, 1996 and September 30,
1996 and (iii) the Company's Current Reports on Form 8-K filed on August 5,
1996, November 22, 1996 and December 17, 1996, respectively, all filed pursuant
to Section 13 or 15(d) of the Exchange Act. All documents filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this Prospectus and prior to the termination of
the offering made hereby shall be deemed to be incorporated by reference into
this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein or in any Prospectus Supplement modifies or
supersedes such statement. Any 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 each person to whom a copy
of this Prospectus is delivered, on the written or oral request of such person,
a copy of any or all of the documents referred to above which have been or may
be incorporated by reference into this Prospectus, other than certain exhibits
to such documents. Requests for such copies should be directed to Investor
Relations, WorldCorp, Inc., 13873 Park Center Road, Suite 490, Herndon, Virginia
20171 (telephone: (703) 834-9200).
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PROSPECTUS SUMMARY
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995:
WorldCorp desires to take advantage of the new "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. WorldCorp wishes to
caution readers that this Prospectus contains forward looking statements that
are subject to risks and uncertainties, including, but not limited to, the
impact of competitive products, product demand and market acceptance risks,
reliance on key strategic alliances, fluctuations in operating results and other
risks detailed from time to time in the Company's filings with the Securities
and Exchange Commission, including risk factors disclosed in the Company's Form
10-K for the fiscal year ended December 31, 1995 and those discussed in "Risk
Factors." See "Risk Factors." These risks could cause the Company's actual
results for 1996 and beyond to differ materially from those expressed in any
forward looking statements made by, or on behalf of, the Company.
THE COMPANY
WorldCorp was organized in March 1987 to serve as the holding company for
World Airways, Inc., a Delaware corporation ("World Airways"), which was
organized in March 1948 and is the predecessor to WorldCorp. WorldCorp owns
significant positions in companies that operate in two distinct business areas:
air transportation (through World Airways) and electronic commerce, consumer
telecommunications and on-line services (through InteliData Technologies
Corporation ("InteliData"), a newly-formed Delaware corporation and successor by
merger to US Order, Inc., a Delaware corporation ("US Order") and Colonial Data
Technologies Corporation, a Delaware corporation ("Colonial Data")). WorldCorp
owns its stock in InteliData through WorldCorp Investments, Inc., a Delaware
corporation and wholly owned subsidiary of WorldCorp ("WorldCorp Investments"
and, together with WorldCorp, "WorldCorp").
In February 1994, pursuant to an October 1993 agreement, WorldCorp sold
24.9% of its ownership in World Airways to MHS Berhad ("MHS"), a Malaysian
aviation company. Effective December 31, 1994, WorldCorp increased its ownership
in World Airways to 80.1% through the purchase of 5% of World Airways common
stock held by MHS. In October 1995, World Airways completed an initial public
offering in which 2,000,000 shares of its common stock were issued and sold by
World Airways and 900,000 shares were sold by WorldCorp. As of November 7, 1996,
WorldCorp and MHS owned approximately 61.2% and 17.6%, respectively, of the
outstanding common stock of World Airways. In June 1995, US Order completed an
initial public offering whereby 3,062,500 shares of its common stock were issued
and sold by US Order, and 1,365,000 shares were sold by WorldCorp. On November
7, 1996, US Order and Colonial Data were each merged (the "Mergers") with and
into InteliData. As a result of the Mergers, as of November 7, 1996, WorldCorp
owned approximately 28.9% of the outstanding common stock of InteliData.
The principal executive offices of WorldCorp are located at Washington
Dulles International Airport in The Hallmark Building, 13873 Park Center Road,
Herndon, Virginia 20171. WorldCorp's telephone number is (703) 834-9200.
WORLD AIRWAYS
World Airways earns revenue primarily in three distinct markets within the
air transportation industry: passenger and cargo services to major
international air carriers; passenger and cargo services, on a fixed and ad hoc
basis, to the U.S. Government; and international tour operators in leisure
passenger markets.
In May 1996, World Airways commenced scheduled charter operations between
the United States and Germany, Switzerland, Ireland, and the United Kingdom.
For its scheduled service operations, World Airways commenced service between
Tel Aviv and New York in July 1995 and commenced service between the U.S. and
South Africa in June 1996. However, World Airways was unable to operate these
markets profitably. Based on
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disappointing results from its scheduled charter operations and scheduled
service operations and a decision to refocus World Airways' strategic direction
on its core business, World Airways announced in July 1996 its decision to exit
its scheduled charter operations and scheduled service operations by October
1996. World Airways will focus on operating aircraft under contracts with
international carriers, the U.S. government, and international tour operators.
World Airways is a contract air carrier that generally charges customers
based on a block hour basis rather than a per seat or per pound basis. A "block
hour" is defined as the elapsed time computed from the moment the aircraft moves
at its point of origin to the time it comes to rest at its destination.
Fluctuations in flight revenues are not necessarily indicative of true growth
because of shifts in the mix between full service contracts and basic contracts.
Under the terms of full service contracts, World Airways is responsible for all
costs associated with operating these contracts and receives a higher rate per
hour. Under the terms of basic contracts, World Airways provides only certain
services associated with the contract including aircraft, crews, insurance, and
maintenance ("Basic Contracts"). World Airways typically charges a lower rate
per hour for Basic Contracts since the customer is responsible for other
operating costs. For this reason, it is important to measure pure growth
through block hours flown rather than actual revenues earned. Typically, U.S.
military contracts are full service contracts where the rate paid is set
annually and consists of all flying costs, including fuel and ground handling of
the aircraft and cargo. World Airways currently operates nine wide-body MD-11
and six DC10-30 aircraft in long-range international markets. Airline
operations accounted for 100% of WorldCorp's operating revenue and operating
income in 1986 through 1991. In 1992 through 1995, revenue from other business
areas represented less than 1% of WorldCorp's total operating revenues.
INTELIDATA
On November 7, 1996, the mergers of US Order and Colonial Data with and
into InteliData were consummated (the "Mergers"). As a result, InteliData has
succeeded to the businesses of US Order and Colonial Data.
InteliData intends to concentrate on three markets: (1) electronic
commerce; (2) consumer telecommunications devices; and (3) on-line services. In
the electronic commerce business, InteliData markets its bill payment and home
banking products to financial institutions. Home banking allows consumers to pay
bills, check account balances and receive other bank information from their
homes. InteliData currently receives its home banking revenue largely from the
sale of products and services to Visa member banks. InteliData has entered into
an agreement with Visa Interactive, Inc. ("Visa Interactive") in the home
banking market. In the consumer telecommunications device business, InteliData
offers a revolutionary smart telephone and an integrated line of caller
identification products through both telephone companies and retailers. Smart
telephones are telephones with a central processing unit, an integrated display
screen and memory which allow consumers to send and receive text information.
InteliData designs, develops, manufactures and markets the smart telephones,
which is available under the Intelifone/TM/ brand name in over 2,000 retail
stores nationwide and under the Telesmart 4000 brand name through telephone
companies. The InteliData smart telephone is the first telephone available at a
mass market price that combines the power of an on-line service, a personal
organizer and caller identification deluxe technology in one package. InteliData
currently offers a line of Caller ID adjunct units and telephones with
integrated Caller ID, small business telecommunications systems with the
Landmark(R) trademark and high-end consumer telecommunications equipment. In the
on-line services business, InteliData delivers information services to users of
smart telephones, digital PCS telephones, alphanumeric pagers and personal
digital assistants. InteliData also repairs and refurbishes telecommunications
products for commercial customers and provides other services that support the
development and implementation of intelligent network services.
RECENT EVENTS
On August 29, 1996, WorldCorp entered into a credit agreement (the "First
Union Credit Agreement") with First Union National Bank of Virginia ("First
Union"), pursuant to which WorldCorp borrowed $25.0 million at an interest rate
equal to the London Interbank Offered Rate plus 2.50%. All borrowings under the
First Union
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Credit Agreement initially were collateralized by $15.0 million in cash, all of
the common stock of InteliData and World Airways beneficially owned by WorldCorp
and a first priority security interest in the Company's assets. Using the
proceeds from the First Union loan, on September 30, 1996, WorldCorp redeemed
all of the remaining outstanding principal amount of approximately $25.0 million
of its 137/8% Subordinated Notes due August 15, 1997 (the "137/8% Notes"). In
October 1996, the cash collateralization was reduced to $7.0 million as a result
of a $10.0 million repayment of the monies borrowed under the First Union Credit
Agreement. On December 31, 1996, the Company successfully renegotiated the
terms of the First Union Credit Agreement (the "Renegotiated First Union Credit
Agreement"). Pursuant to the Renegotiated First Union Credit Agreement, all
borrowings are now collateralized by $1.0 million in cash, all of the common
stock of InteliData and World Airways beneficially owned by WorldCorp and a
first priority security interest in the Company's assets. In addition, certain
financial covenants have been released.
On September 30, 1996, WorldCorp sold the $10,000,000 in original aggregate
principal amount of its outstanding 10.00% senior subordinated notes due
September 30, 2000 (the "Old Notes") pursuant to a purchase agreement, dated as
of September 30, 1996, among WorldCorp and the purchasers named therein (the
"Purchase Agreement"). The initial purchasers of the Notes also received the
Warrants, additional warrants, issuable to such purchasers on October 1, 1997
and expiring on September 30, 2001, to acquire 40,000 shares of Common Stock and
additional warrants, issuable to such purchasers on October 1, 1998 and expiring
on September 30, 2002, to acquire 40,000 shares of Common Stock, which
additional warrants will be issued only if certain market conditions are met
(collectively, the "Warrants"). The Warrants have an exercise price of $6.00
per share, subject to adjustments as set forth therein. Proceeds from the sale
of the Notes were used to repay $10.0 million aggregate principal amount
outstanding under the First Union loan. As of December 1, 1996, the outstanding
principal balance under the First Union Credit Agreement was $15.0 million, and
there was $10.0 million in aggregate principal amount outstanding under the
Notes.
The Purchase Agreement and the First Union Credit Agreement generally
restrict stock repurchases by WorldCorp and its subsidiaries, except under
certain limited circumstances. Pursuant to the First Union Credit Agreement,
WorldCorp may retire or otherwise acquire up to $10.0 million worth of WorldCorp
Common Stock. In addition, WorldCorp was permitted to exchange with the
WorldCorp Employee Savings and Stock Ownership Plan, in a non-cash transaction,
Common Stock held by the trust for common stock of World Airways, provided,
WorldCorp retained a 50.1% ownership of World Airways. Pursuant to the Purchase
Agreement, WorldCorp is permitted to purchase, redeem, retire or otherwise
acquire for value (i) at any time, Common Stock for up to $25.0 million in cash
and up to 650,000 shares of Common Stock using shares of common stock of World
Airways of which WorldCorp is the beneficial owner, and (ii) up to $5.0 million
worth of additional shares of Common Stock for every $15.0 million increase in
Asset Value (as defined herein) at such time compared to such Asset Value as of
September 12, 1996. As of September 30, 1996, the Asset Value was $185.7
million. WorldCorp currently intends, if favorable market conditions exist, to
use available cash and borrowing capacity to make stock repurchases subject to
the limitations imposed by the Purchase Agreement and the First Union Credit
Agreement.
RISK FACTORS
See "Risk Factors" for a discussion of certain risk factors that should be
considered in connection with an investment in the Common Stock offered hereby.
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RISK FACTORS
The following risk factors should be considered carefully by prospective
investors in evaluating an investment in the Selling Securityholder Securities.
Set forth below are certain risk factors with respect to WorldCorp, World
Airways, InteliData and InteliData's predecessor companies, US Order and
Colonial Data.
RISK FACTORS WITH RESPECT TO WORLDCORP:
Holding Company Structure and Liquidity
WorldCorp conducts its operations through its direct and indirect
subsidiaries and has no operations of its own. WorldCorp is highly leveraged and
therefore requires substantial funds to cover debt service each year. As a
result of WorldCorp's cash requirements, it will be required to issue new debt
or equity or to sell additional shares of World Airways' or InteliData's common
stock from time to time. In addition, the payment of dividends and certain loans
and advances to WorldCorp by such subsidiaries are subject to certain statutory
or contractual restrictions, are contingent upon the earnings of such
subsidiaries and are subject to various business considerations. Neither World
Airways nor InteliData is expected to pay dividends in the foreseeable future.
Under the terms of the First Union Credit Agreement, however, WorldCorp has
pledged all of its shares of World Airways and InteliData as collateral for the
loan and has granted First Union a first priority security interest in the
Company's assets, and as of September 30, 1996, $15.0 million of its cash was
collateralized under the First Union Credit Agreement. In October 1996, the cash
restriction was reduced to $7.0 million as a result of a $10.0 million repayment
of the First Union Credit Agreement. On December 31, 1996, the Company
successfully renegotiated the terms of the First Union Credit Agreement (the
"Renegotiated First Union Credit Agreement"). Pursuant to the Renegotiated First
Union Credit Agreement, all borrowings are now collateralized by $1.0 million in
cash, all of the common stock of InteliData and World Airways beneficially owned
by WorldCorp and a first priority security interest in the Company's assets. In
addition, certain financial covenants have been released. WorldCorp also has
announced its intention to purchase up to 2.5 million shares of its publicly-
traded Common Stock pursuant to open market transactions. As of December 1,
1996, WorldCorp had purchased 1.1 million shares of its Common Stock for an
aggregate cost of approximately $6.8 million pursuant to such purchases. There
can be no assurances, however, that WorldCorp will purchase any additional
shares.
Proposed Restructuring of World Airways
The managements of WorldCorp and World Airways are currently exploring ways
to maximize value for the stockholders of each company. WorldCorp is evaluating
the feasibility of a disposition of its interest in World Airways to a third
party or parties. There can be no assurances, however, that any such
transactions will ultimately be consummated.
Mandatory Prepayment
Pursuant to the Indenture, WorldCorp is obligated under certain conditions
to make certain mandatory prepayments of the Notes. If the Asset Value at the
end of any fiscal quarter is less than $70.0 million, then WorldCorp must prepay
50% of each of the then outstanding Notes within 60 days. If the Asset Value at
the end of any fiscal quarter is less than $50.0 million, then WorldCorp must
prepay all of the then outstanding Notes within 60 days. If WorldCorp sells any
shares of common stock of InteliData, 20% of the net proceeds (i.e., gross
proceeds less direct costs associated with such sales) received by WorldCorp
upon such sale will be used to prepay the then outstanding Notes within 30 days.
There can be no assurance that WorldCorp will not be required to make such
mandatory prepayments and if so, such prepayments could have an adverse effect
on WorldCorp's financial conditions and results of operations.
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RISK FACTORS WITH RESPECT TO WORLD AIRWAYS:
Customers
World Airways' business relies heavily on its contracts with Malaysian
Airline System Berhad ("Malaysian Airlines"), P.T. Garuda Indonesia ("Garuda")
and the U.S. Air Force's Air Mobility Command (the "U.S. Air Force"). These
customers provided approximately 39%, 10%, and 20%, respectively, of World
Airways' revenues and 46%, 10%, and 13%, respectively, of the total block hours
during 1995. For the first nine months of 1996, these customers provided
approximately 30%, 14% and 21%, respectively, of World Airways' revenues and
38%, 16%, and 14%, respectively, of total block hours. In addition to these
customers, World Airways recently entered into an agreement with Philippine
Airlines, Inc. ("Philippine Airlines") to provide four MD-11 aircraft under
year-round wet lease contracts. As a result, World Airways expects that the
agreement with Philippine Airlines will have a substantial impact on its
revenues and block hours for 1997. The loss of any of these contracts or a
substantial reduction in business from any of these key customers, if not
replaced, would have a material adverse effect on World Airways' financial
condition and results of operations.
World Airways has provided service to Malaysian Airlines since 1981,
providing wet lease services for Malaysian Airlines' scheduled passenger and
cargo operations as well as transporting passengers for the annual Hadj
pilgrimage. In 1996, World Airways provided three aircraft for Hadj operations.
World Airways recently entered into a new 32-month agreement for year-round
operations (including the Hadj) with Malaysian Airlines whereby World Airways
will provide two aircraft with cockpit crews, maintenance and insurance to
Malaysian Airlines' newly-formed charter division through May 1999.
As a means of improving aircraft utilization, World Airways entered into a
series of multi-year contracts, with expiration dates running from 1997 through
2000, to provide basic services to Malaysian Airlines. The contracts provide
for World Airways' operation of five MD-11 aircraft in passenger and cargo
configurations. Beginning in July 1996, and as mutually agreed between the
parties, World Airways redeployed two aircraft operating under the contract into
other operations. The parties are currently in discussions regarding the future
redeployment of these aircraft into Malaysian Airlines' operations to meet the
contracts' original obligations. For 1995 and the first nine months of 1996,
29% and 24%, respectively, of the World Airways' revenues and 37% and 32%,
respectively, of the World Airways' block hours flown resulted from these new
multi-year contracts with Malaysian Airlines.
World Airways has provided international air transportation to the U.S. Air
Force since 1956. As compensation for pledges of aircraft to the Civil Reserve
Air Fleet ("CRAF") for use in times of national emergency, the U.S. Air Force
awards contracts to CRAF participants for peacetime transportation of personnel
and cargo. The U.S. Air Force awards contracts to air carriers acting alone or
through teaming arrangements in proportion to the number and type of aircraft
that the carriers make available to CRAF. As a result of World Airways'
increasingly effective use of teaming arrangements, World Airways' fixed awards
have grown in recent years and World Airways has one of the largest U.S. Air
Force fixed award under the CRAF program for the U.S. Government's 1996-97
fiscal year. The current annual contract commenced on October 1, 1996 and
expires on September 30, 1997. These contracts provide for a fixed level of
scheduled business from the U.S. Air Force with opportunities for additional
short-term expansion business on an ad hoc basis as needs arise. World Airways'
fixed award for the current contract is $52.8 million compared to the $55.4
million fixed award for the prior contract. Due to the utilization of a
significant number of World Airways' aircraft under multi-year contracts and
other contractual commitments, it is unlikely that World Airways will be able to
accept all of the available expansion business. Although overall Defense
Department spending is being reduced, the level of U.S. Air Force contract
awards has remained relatively constant in recent years. World Airways,
however, cannot determine how future cuts in military spending may affect future
operations with the U.S. Air Force.
World Airways has provided wet lease services to Garuda since 1973
(operating under an annual Hadj contract since 1988). World Airways operated
seven aircraft in the 1996 Garuda Hadj.
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As mentioned above, World Airways recently entered into an agreement with
Philippine Airlines to provide four MD-11 aircraft under year-round wet lease
contracts. The first two aircraft began flying for Philippine Airlines in June
and July 1996, with the remaining two aircraft commencing operations in October
1996. Under the agreement, each aircraft will operate for an 18-month term. In
addition, Philippine Airlines has an option, beginning late in 1996, for World
Airways to operate a DC10-30 cargo aircraft.
Competition
The air transportation industry is highly competitive and susceptible to
price discounting. Certain of the passenger and cargo air carriers against which
World Airways competes possess substantially greater financial resources and
more extensive facilities and equipment than those which are now, or will in the
foreseeable future become, available to World Airways.
World Airways' ability to provide service in certain foreign markets in the
future may depend in part on the willingness of the U.S. Department of
Transportation to allocate limited traffic rights to World Airways rather than
to competing U.S. airlines, including major scheduled passenger carriers capable
of carrying greater passenger traffic, and the approval of the applicable
foreign regulators. There can be no assurance that World Airways will be able to
obtain the traffic rights it seeks in expanding its business.
The allocation of military air transportation contracts by the U.S. Air
Force is based upon the number and type of aircraft a carrier, alone or through
a teaming arrangement, makes available for use in times of national emergencies.
The formation of competing teaming arrangements that have larger partners than
those sponsored by World Airways, an increase by other air carriers in their
commitment of aircraft to the emergency program, or the withdrawal of World
Airways' current partners, could adversely affect the size of the U.S. Air Force
contracts, if any, which are awarded to World Airways in future years.
World Airways believes that the most important bases for competition in the
air cargo business are the payload and cubic capacities of the aircraft, and the
price, flexibility, quality and reliability of the cargo transportation service.
Competitors in the cargo market include all-cargo carriers, such as Atlas Air,
Inc. and Polar Air Cargo, and scheduled and non-scheduled passenger carriers
which have substantial belly capacity.
Cyclical Nature of Air Carrier Business
World Airways operates in a challenging business environment. The air
transportation industry is highly sensitive to general economic conditions.
Since a substantial portion of passenger airline travel (both business and
personal) is discretionary, the industry tends to experience severe adverse
financial results during general economic downturns. The airline industry may
also be adversely affected by unexpected global political developments. The
financial results of air cargo carriers are also adversely affected by general
economic downturns due to the reduced demand for air cargo transportation. In
1993 and 1994, the combination of a generally weak global economy and the
depressed state of the air transportation industry adversely affected World
Airways' operating performance. Although World Airways has experienced a growth
in demand, such that World Airways has increased block hours from continuing
operations flown by 15% in the first nine months of 1996 over the comparable
1995 period and by 41% in 1995 over 1994, there can be no assurance that this
growth will continue.
Seasonality
Historically, World Airways' business has been significantly affected by
seasonal factors. During the first quarter, World Airways typically experiences
lower levels of utilization and yields as demand for passenger and cargo
services is lower relative to other times of the year. World Airways
experiences higher levels of utilization in the second quarter, principally due
to peak demand for commercial passenger services associated with the annual Hadj
pilgrimage. During 1996, World Airways' flight operations associated with the
Hadj pilgrimage occurred from March 22 to June 1. Because the Hadj occurs
approximately 10 to 12 days earlier each year, revenues resulting from future
Hadj contracts are beginning to shift from the second quarter to the first
quarter over the next several
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years. Historically, fourth quarter utilization depended primarily on the
demand for air cargo services in connection with the shipment of merchandise in
advance of the U.S. holiday season.
As discussed above, World Airways exited its scheduled service operations
in October 1996 to focus on its core business: operating aircraft under
contracts with international carriers, the U.S. Government, and international
tour operators. World Airways believes that its contracts with Malaysian
Airlines, Philippine Airlines and the U.S. Air Force should lessen the effect of
these seasonal factors.
Operating Losses
While World Airways was profitable each year from 1987 through 1992 and in
1995, it sustained operating losses in 1993 and 1994 of $7.3 million and $5.2
million, respectively, and net losses of $9.0 million in each of these two
years. During the first nine months of 1996, World Airways reported a net loss
of $18.8 million, which resulted from operating losses incurred in World
Airways' scheduled service operations and the related estimated loss on
disposal. Earnings from continuing operations were $13.7 million for the first
nine months ended September 30, 1996. While World Airways expects its
continuing operations to remain profitable, there can be no assurance that World
Airways will be able to maintain this profitability for the remainder of 1996
and future years.
Discontinued Operations
Based on disappointing results from its scheduled service operations and a
decision to refocus World Airways' strategic direction on its core business,
World Airways announced in July 1996 its decision to exit its scheduled service
operations by October 1996. Consistent with this decision, World Airways ceased
all scheduled operations as of October 27, 1996. As a result, World Airways'
scheduled service operations were reflected as discontinued operations as of
June 30, 1996, and prior period results were restated to reflect scheduled
service operations as discontinued operations. Loss from discontinued
operations (net of income tax effect) approximated $11.7 million for the first
and second quarters of 1996. In addition, an estimated loss on disposal of
$21.0 million (net of income tax effect), which was recorded as of June 30,
1996, included the following: estimated operating losses during the phase-out
period; lease costs on unutilized aircraft; passenger reprotection expenses; and
the writeoff of certain leasehold improvements. World Airways incurred
approximately $13.2 million of the costs during the quarter ended September 30,
1996 and believes that its remaining accrual for estimated losses on disposal
will be adequate to meet the remaining costs to be incurred during the phase-out
period. As of November 8, 1996, World Airways believes that it has met
substantially all of its cash obligations of the phase-out period. As a result
of this decision, World Airways will reduce its fixed overhead costs, primarily
through the elimination of costs related to discontinued operations.
Liquidity and Capital Resources
World Airways' cash and cash equivalents at September 30, 1996 and December
31, 1995 were $11.1 million and $25.3 million, respectively. At September 30,
1996, World Airways' current assets were $43.3 million and current liabilities
were $74.7 million. World Airways believes that the combination of the
financings consummated to date and income from continuing operations will be
sufficient to allow World Airways to meet its cash requirements related to the
phase-out of its discontinued operations and the operating and capital
requirements for its continuing operations for at least the next 12 months.
Maintenance
World Airways outsources major airframe maintenance and power plant work to
several suppliers. World Airways has a 10-year contract ending in August 2003
with United Technologies Corporation's Pratt & Whitney Group for all off-wing
maintenance on the PW 4462 engines that power its MD-11 aircraft. Under this
contract, the manufacturer agreed to provide such maintenance services at a cost
not to exceed a specified rate per hour during the term of the contract. The
specified rate per hour is subject to annual escalation, and increases
substantially in 1998. Accordingly, while World Airways believes the terms of
this agreement will result in lower
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engine maintenance costs than it otherwise would incur during the first five
years of the agreement, these costs will increase substantially during the last
seven years of the agreement.
World Airways' maintenance costs associated with the MD-11 aircraft and PW
4462 engines have been significantly reduced due in part to manufacturer
guarantees and warranties, which guarantees and warranties began to expire in
1995 and will fully expire by 1998. Therefore, World Airways expects that
maintenance expenses will increase as these guarantees and warranties expire.
Aviation Fuel
The air transportation industry in general is affected by the price and
availability of aviation fuel. Both the cost and availability of aviation fuel
are subject to many economic and political factors and events occurring
throughout the world and remain subject to the various unpredictable economic
and market factors that affect the supply of all petroleum products.
Fluctuations in the price of fuel have not had a significant impact on World
Airways' operations in recent years, because, in general, World Airways'
contracts with its customers limit World Airways' exposure to increases in fuel
prices. However, a substantial increase in the price or the unavailability of
aviation fuel could have a material adverse effect on the air transportation
industry in general and on the financial condition and results of operations of
World Airways in particular.
Legal and Administrative Proceedings
World Airways and WorldCorp (the "World Defendants") are defendants in
litigation brought by the Committee of Unsecured Creditors of Washington
Bancorporation (the "Committee") in August 1992, captioned Washington
Bancorporation v. Boster, et. al., Adv. Proc. 92-0133 (Bankr. D.D.C.) (the
"Boster Litigation"). The complaint asserts that the World Defendants received
preferential transfers or fraudulent conveyances from Washington Bancorporation
when the World Defendants received payment at maturity on May 4, 1990 of
Washington Bancorporation commercial paper purchased on May 3, 1990. Washington
Bancorporation filed for relief under the Federal Bankruptcy Code on August 1,
1990. The Committee seeks recovery of approximately $4.8 million from World
Airways and approximately $2.0 million from WorldCorp, which are alleged to be
the amounts paid to each of World Airways and WorldCorp by Washington
Bancorporation. On the motion of the World Defendants, among others, the Boster
Litigation was removed from the Bankruptcy Court to the District Court for the
District of Columbia on May 10, 1993. The World Defendants filed a motion to
dismiss the Boster Litigation as it pertains to them on June 9, 1993, and intend
to vigorously contest liability. On September 20, 1995, the District Court for
the District of Columbia granted the motion to dismiss filed by the World
Defendants with respect to three of the four counts alleged in the litigation,
but declined to grant a motion to dismiss the remaining claim regarding
fraudulent transfers. The District Court's ruling is subject to appeal in
certain cases. The World Defendants filed a summary motion with respect to the
remaining claim on October 19, 1995, which remains pending. On November 6,
1996, the plaintiff in the Boster Litigation filed a "Motion for Stay of
Litigation Pending Settlement Become Effective" (the "Stay Motion"). The Stay
Motion recites that a settlement agreement has been reached involving the
plaintiff, the Federal Deposit Insurance Corporation, and an individual
resolving other litigation involving Washington Bancorp (the "FDIC Settlement").
If the FDIC Settlement becomes final, the Plaintiff has agreed to dismiss with
prejudice the Boster Litigation against all defendants, including the World
Defendants, with each party to bear its own costs. In that event, the World
Defendants would not have any further liability in the Boster Litigation. The
final resolution of the FDIC Settlement depends upon certain contingencies,
including a request for certain treatment from the Internal Revenue Service.
The FDIC Settlement provides that if all of the conditions to that settlement
are not satisfied by June 30, 1997, either party may elect to terminate that
settlement. The Stay Motion requests an indefinite stay of the Boster
Litigation pending the resolution of the FDIC Settlement. In any event, World
Airways believes it has substantial defenses to this action, although no
assurance can be given of the eventual outcome of this litigation. Depending
upon the timing of the resolution of this claim, if the Committee were
successful in recovering the full amount claimed, the resolution could have a
material adverse effect on the World Airways' financial condition and results of
operations.
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In connection with the discontinuance of World Airways' scheduled service
operations, World Airways may be subject to claims by third parties. One claim
has been filed in connection with World Airways discontinuance of scheduled
service to South Africa, seeking approximately $13.8 million in compensatory and
punitive damages. World Airways believes it has substantial defenses to this
action, although no assurance can be given of the eventual outcome of this
litigation. Depending upon the timing of the resolution of this claim, if the
plaintiff were successful in recovering the full amount claimed, the resolution
could have a material adverse effect on the World Airways' financial condition
and results of operations. Although only one claim has been filed against World
Airways, there can be no assurance that additional claims will not be filed in
the future.
In addition, World Airways is party to routine litigation and
administrative proceedings incidental to its business, none of which is believed
by World Airways to be likely to have a material adverse effect on the financial
condition of World Airways.
Proposed Restructuring of World Airways and World Airways Common Stock
Repurchases
The managements of WorldCorp and World Airways are currently exploring ways
to maximize their value for the stockholders of each company, including actively
exploring the feasibility of WorldCorp disposing of a substantial portion of its
ownership position in World Airways. There can be no assurances, however, that
any transaction will ultimately be consummated. In addition, World Airways has
announced its intention to purchase up to one million shares of its publicly-
traded Common Stock pursuant to open market transactions. As of December 1,
1996, World Airways had purchased shares of its Common Stock for an aggregate
cost of $7.4 million pursuant to such purchases. There can be no assurances,
however, that World Airways will purchase any additional shares.
Employees
World Airways' flight attendants continue to challenge the use of foreign
flight attendant crews on World Airways' flights for Malaysian Airlines and
Garuda Indonesia which has historically been World Airways' operating procedure.
World Airways is contractually obligated to permit its Southeast Asian customers
to deploy their own flight attendants. While World Airways intends to contest
this matter vigorously in an upcoming arbitration, an unfavorable ruling for
World Airways could have a material adverse effect on World Airways.
RISK FACTORS WITH RESPECT TO INTELIDATA:
Uncertainty as to Future Financial Results
US Order and Colonial Data believe that the Mergers will offer
opportunities for long-term efficiencies in operations that should positively
affect future operating results of the combined companies. However, the
combined companies will be more complex and diverse than either US Order or
Colonial Data individually, and the combination and continued operation of their
distinct business operations will present difficult challenges for each
company's management due to the increased time and resources required in the
management effort. While managements of both US Order and Colonial Data, and
their respective Boards of Directors, believe that the combination can be
effected in a manner that will realize the potential value of the two companies,
neither management group has experience in combinations of this size.
Accordingly, there can be no assurance that the process of effecting the
business combination can be effectively managed to realize the operational
efficiencies anticipated to result from the Mergers.
In order to maintain and increase profitability, the combined companies
will need to successfully integrate and streamline overlapping functions
following the Mergers. US Order and Colonial Data have different systems and
procedures in many operational areas that must be rationalized and integrated.
There can be no assurances that integration will be accomplished smoothly or
successfully. The difficulties of such integration may be increased by the
necessity of coordinating geographically separated organizations. The
integration of certain operations following the Mergers will require the
dedication of management resources that may temporarily distract attention
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from the day-to-day business of the combined companies. Failure to effectively
accomplish the integration of the two companies' operations could have an
adverse effect on InteliData's results of operation and financial condition.
History of Operating Losses
The Mergers were accounted for using the purchase method of accounting with
US Order being deemed the acquiror for financial reporting purposes. Because US
Order as the acquiror has a financial history of operating losses, InteliData
will have a financial history of operating losses. For income tax purposes, use
of US Order's net operating loss carryforwards in future years may be limited as
a result of the change in control that resulted from the Mergers. In the
future, there can be no assurance that InteliData will be able to achieve
profitability and, if achieved, sustain such profitability.
Market Acceptance of Smart Telephones
InteliData's future growth and profitability also will depend upon the
consumer's acceptance of smart telephone technologies and a significant
expansion in the consumer market for telephone-based interactive applications
technologies. Even if these markets experience substantial growth, there can be
no assurance that InteliData's products or services will be successful or
benefit from such growth. InteliData's smart telephone is designed to support
Analog Display Services Interface-based intelligent network services such as
integrated Caller ID and Call Waiting with call disposition features, as well as
new applications such as home banking and national directory assistance. After
the Mergers, much of InteliData's success in the smart telephone market depends
on InteliData's ability to meet design specifications and delivery requirements
for its products and services. There can be no assurance of the timing of the
introduction of, necessary regulatory approvals for, or market acceptance of,
these services and applications. InteliData faces competition in these markets
from other emerging interactive applications delivered through personal
computers, cable television and Integrated Service Digital Network.
Fluctuations in Operating Results
Historically, US Order and Colonial Data have experienced fluctuations in
quarterly operating results, and InteliData may experience fluctuations in
quarterly operating results due to a variety of factors, some of which are
beyond InteliData's control. These include the size and timing of customer
orders or the royalty payments from Visa InterActive, if any, changes in
InteliData's pricing policies or those of its competitors, new product
introductions or enhancements by competitors, delays in the introduction of new
products or product enhancements by InteliData or by its competitors, customer
order deferrals in anticipation of upgrades and new products, market acceptance
of new products, the timing and nature of sales, marketing, and research and
development expenses by InteliData and its competitors, the timing of payments
affecting Caller ID or other intelligent network services by a telco,
disruptions in sources of supply, the effects of regulation on Caller ID and
other intelligent network services, the timing and extent of promotional
activities by a telco, changes in service charges by a telco, other changes in
operating expenses, personnel changes and general economic conditions. No
assurance can be given that such quarterly variations will not occur in the
future and, accordingly, the results of any one quarter may not be indicative of
the operating results for future quarters.
Technological Considerations
US Order's and Colonial Data's business activities are concentrated in
fields characterized by rapid and significant technological advances. There can
be no assurance that InteliData will remain competitive technologically or that
InteliData's products, processes or services will continue to be reflective of
such advances. Failure to introduce new products or product enhancements that
achieve market acceptance on a timely basis could materially and adversely
affect InteliData's business, operating results and financial condition. There
can be no assurance that InteliData will not encounter unanticipated technical,
marketing or other problems or delays relating to new products, features or
services which US Order and Colonial Data have recently introduced or which
InteliData may introduce in the future. Moreover, there can be no assurance
that InteliData's new products, features or services will be successful, that
the introduction of new products, features or services by InteliData's
competitors will not materially and adversely affect the sales of InteliData's
existing products or that InteliData will be able to
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adapt to future changes in the telecommunications industry. Most of US Order's
and Colonial Data's competitors and potential competitors have significantly
greater financial, technological and research and development resources than
InteliData has.
Dependence on Foreign Production
Colonial Data's Caller ID units and certain other products, including the
smart phone jointly developed by US Order and Colonial Data, the Telesmart
4000/Intelifone 2000, are manufactured by a company with facilities in Hong
Kong, Taiwan, and the People's Republic of China. These facilities are
supplemented, in part, by other manufacturers in Asia for certain integrated
telephone and small business system products and by limited manufacturing
facilities in Connecticut and Canada. The availability or cost of these Caller
ID Units and smart telephones may be adversely affected by political, economic
or labor conditions in Hong Kong, Taiwan or the People's Republic of China,
including the 1997 return of Hong Kong to China, and by fluctuations in currency
exchange rates. In addition, a change in the tariff structure or other trade
policies of the United States or countries from which InteliData will import
products could adversely affect InteliData's foreign manufacturing strategies.
Dependence on Key Employees
InteliData will be highly dependent on certain key executive officers and
technical employees to fully integrate the operations and business of US Order
and Colonial Data as well as to implement the business plans of InteliData on an
ongoing basis. The loss of any such key employees could have an adverse impact
on the future operations of InteliData.
Regulation
In the United States, Caller ID and other intelligent network services are
subject to federal and state regulation. Caller ID and other intelligent
network services may in the future be subject to further regulation by the
federal government, state public utility commissions and other regulatory
authorities, as well as court challenges, including possible challenges due to
protests from special interest groups that object to such services on the basis
of privacy concerns. An order issued by the Federal Communications Commission
("FCC") effective December 1, 1995, requires all United States telephone service
providers with Signaling System 7 switching architecture to transmit to each
other without charge Caller ID number information on interstate calls within the
United States (except for public pay phones and party lines). The FCC's order
also requires that telcos that offer Caller ID service must provide to their
telephone subscribers without charge a per-call blocking mechanism to block the
transmission of their Caller ID information on interstate calls and must inform
subscribers that their telephone numbers may be identified to a called party and
how to use this blocking capability.
In addition, the Telecommunications Act of 1996 and regulations or orders
promulgated thereunder may result in or accelerate changes in various aspects of
the telecommunications industry, including the competitive environment, the
delivery and pricing of various telecommunications services and possible
consolidation. Although InteliData is unable to predict what effect, if any,
the Telecommunications Act of 1996 or other regulatory developments may have
upon the telecommunications industry or InteliData's business, any such effects
could have a material adverse impact on the future operations of InteliData.
In Canada, the Canadian Radio-television and Telecommunications Commission
regulates Caller ID and intelligent network services. InteliData believes that
Canadian regulation of telecommunications devices for intelligent network
services is not more burdensome than regulation in the United States.
Volatility of Stock Price
The market price of both the US Order common stock and the Colonial Data
common stock experienced significant volatility. There can be no assurance that
the InteliData common stock will not also experience significant volatility.
The stock market has experienced volatility that has particularly affected the
market prices of equity securities of many high technology and developmental
stage companies and that has often been unrelated
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to the operating performance of such companies. Factors such as announcements
of the introduction of new products or services by InteliData or its
competitors, announcements of joint development efforts or corporate
partnerships in the interactive applications industry, market conditions in the
banking, telecommunications and other emerging growth company sectors and rumors
relating to InteliData or its competitors may have a significant impact on the
market price of InteliData common stock.
RISK FACTORS WITH RESPECT TO US ORDER:
Minimal Revenue; History of Losses
US Order did not introduce its first commercial product until 1991 and
accordingly has a limited operating history. To date, US Order has generated
limited revenue from the sale of its products and services, has incurred
significant losses and has experienced a substantial negative cash flow. US
Order expects to incur operating losses during 1996. There can be no assurance
that US Order will be able to achieve profitability and, if achieved, sustain
such profitability, nor can there be any assurance as to when such profitability
might be achieved. US Order is subject to all of the risks inherent in the
establishment of a new business enterprise.
Developing Marketplace
Home banking and smart telephones are developing markets. Consumer
preferences in interactive technologies are difficult to predict. US Order's
future growth and profitability will depend, in part, upon consumer acceptance
of electronic home banking and smart telephone technologies and a significant
expansion in the consumer market for telephone-based interactive applications
technologies. Even if these markets experience substantial growth, there can be
no assurance that US Order's products and services will be commercially
successful or benefit from such growth.
Early Stage Products and Services
The continued development of the marketplace for US Order's products and
services will depend in part upon US Order's ability to create and develop
additional applications for US Order's technologies. Many of US Order's
products and services, including its smart telephones, are in the early stages
of development or marketing, and are subject to the risks inherent in the
development and marketing of new products and services.
Restrictions from the Visa Agreement
As a condition of Visa's acquisition of US Order's bill payment operations
and technology (the "Visa Bill-Pay System"), US Order has agreed to work
exclusively with Visa in certain areas and to refrain from certain activities
that are in competition with Visa and its affiliates. These covenants may
increase US Order's reliance upon Visa. US Order's dependence on Visa, and the
terms of the agreement between the parties, may have a material adverse effect
on US Order.
Dependence on Strategic Alliances
US Order's business strategy has been to sell its products and services
through strategic alliances, primarily through a strategic alliance with Visa
InterActive in addition to the alliance with Colonial Data. US Order's primary
success will depend both on the ultimate success of its strategic partners as
well as on the ability of its partners to successfully market US Order's
products, services and interactive applications. There can be no assurance that
these alliance partners will view their alliance with US Order as significant
for their own businesses, that they will be successful in achieving their own
business objectives, or that they will not reassess their commitment to US Order
at any time in the future.
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Competition
The market for interactive products and services is highly competitive and
subject to rapid innovation and technological change, shifting consumer
preferences and frequent new product introductions. US Order's home banking
products and services compete with services offered by a number of competitors
and competition may intensify as a result of new market entrants. Banks have
developed home banking products for their own customers and, in the future, may
offer these services to other banks. Non-banks also may develop home banking
products to offer to banks. Computer software and data processing companies also
offer home banking services. Visa competes with other organizations, including
MasterCard International, Inc., which offers its Masterbanking home banking
service through CheckFree Corporation. Many competitors exist for US Order's
various banking products including other manufacturers of touch-tone response
systems, other financial software companies and financial services software and
service companies. US Order believes that its primary competition for its
customer support services will come from financial institutions and third
parties that choose to offer customer support services either directly through
Visa's customer support messaging standard ("CSMS") product or on their own. US
Order expects that competition in all of these areas will increase in the near
future.
The market for US Order's smart telephone products and services is highly
competitive and subject to rapid technological change. At present, US Order's
principal competitors in the market for smart telephones are or will be Philips
Home Services, Inc. ("Philips"), Northern Telecom Ltd. ("Northern Telecom") and
CIDCO Incorporated ("CIDCO"). US Order expects competition to increase in the
future from existing and new competitors and expects new competitors to include
electronics manufacturers. US Order's competitors, including Philips and
Northern Telecom, have already introduced smart telephones that include
technological features incorporated in US Order's Telesmart 4000/Intelifone 2000
smart phone product. US Order expects that as the market for smart telephones
grows, it will face competition from traditional personal computer on-line
service providers, as well as from personal computer software companies.
Reliance on Visa Royalty Payments
US Order sold the Visa Bill-Pay System to Visa on August 1, 1994, for
approximately $15 million in cash, the assumption of certain liabilities and
rights to a 72-month royalty period commencing January 1, 1995 and ending
December 31, 2000 (the "Royalty Period"). Visa subsequently transferred these
assets to Visa InterActive, its wholly owned subsidiary. The royalty obligation
is based on the number of customers who use the Visa Bill-Pay System during the
Royalty Period. The agreement with Visa expressly provides that the royalty will
apply only if the means by which a customer makes an electronic bill payment
involves the use of a "significant portion" of the Visa Bill-Pay System.
Royalties to US Order are calculated and paid by Visa InterActive quarterly
during the Royalty Period. Because the amount of the royalties to US Order is
dependent upon the number of customers that use the Visa Bill-Pay System on a
monthly basis during the Royalty Period, US Order cannot provide any assurances
of the amount of royalties, if any, that will be payable by Visa InterActive to
US Order. The royalty payment will be reduced for each quarter through December
31, 1997, by an offset amount (the "Visa Offset") which is initially set at
$73,315. If the royalty payment that would otherwise be due in respect of a
quarter is smaller than the offset amount for that quarter, no royalty payment
will be made to US Order, and the difference between $73,315 and the royalty
otherwise due will increase the size of the Visa Offset for the next quarter.
The aggregate amount of the Visa Offset for the Royalty Period is $879,780. US
Order did not receive any royalty revenue from Visa in 1995 or 1996 due to the
Visa Offset and does not expect to receive any royalty revenue after application
of the Visa Offset until sometime in 1997.
In addition, under the terms of its agreement with Visa, Visa InterActive
is not obligated to pay royalties to US Order for active bank customers who
utilize home banking and bill payment technology independently developed by Visa
InterActive. If Visa InterActive independently develops or acquires its own home
banking and bill payment technology which does not use or build upon US Order's
technology, this could have a material adverse effect on the amount of royalties
payable by Visa InterActive to US Order. As a condition of Visa's acquisition of
the Visa Bill-Pay System, US Order has agreed to work exclusively with Visa in
certain areas and to refrain from
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certain activities that are in competition with Visa and its affiliates. These
covenants may increase US Order's reliance upon Visa.
RISK FACTORS WITH RESPECT TO COLONIAL DATA:
Reliance on Caller ID Revenues
During the year ended December 31, 1995 and the nine months ended September
30, 1996, substantially all of Colonial Data's revenues were derived from sales
and leases of its Caller ID products. The sale or lease of these products is
directly linked to the implementation and promotion of Caller ID service by
telcos. The timing of such implementation may be affected by government
regulation, by changes in the telecommunications industry resulting from changes
in the regulatory and competitive environment, by switch and software upgrades
and by other factors. There can be no assurance that telcos will continue to
introduce and promote this service successfully or that it will gain widespread
market acceptance. Delays in the introduction of Caller ID service in local
markets or failure of this service to gain widespread market acceptance would
materially and adversely affect Colonial Data's business, operating results and
financial condition.
Competition
The market for Colonial Data's products is highly competitive and subject
to rapid technological change. At present, Colonial Data's principal competitors
are CIDCO, Lucent Technologies, Inc., formerly part of AT&T Corp. ("Lucent"),
Northern Telecom and US Electronics, Inc. ("US Electronics") products. Colonial
Data's Caller ID products also compete with Caller ID telephones offered by
Panasonic Co., Sony Corp. and Thomson Consumer Electronics, Inc.
The smart telephone marketed by Colonial Data through its alliance with US
Order is subject to competition from smart telephones marketed or developed by
Philips, Northern Telecom and CIDCO as well as other emerging platforms for
interactive applications delivered through personal computers and cable
television. Colonial Data expects competition to increase in the future from
existing and new competitors, possibly including telcos or other current
customers, from network switch-based services and from the increased application
of cellular technology. Colonial Data's primary current and potential
competitors in the market for products that support intelligent network services
have substantially greater financial, marketing and technical resources than
Colonial Data. Competition could materially and adversely affect Colonial Data's
results of operations through price reductions and loss of market share.
Colonial Data competes with a large number of competitors for its repair
services and other services supporting the development and implementation of
intelligent network services. Several of Colonial Data's competitors in the
market for such services have substantially greater financial, marketing and
technological resources than Colonial Data. There can be no assurance that
Colonial Data will be able to continue to compete successfully against its
existing competitors or that it will be able to compete successfully against new
competitors.
Concentration of Distribution of Products and Services
Colonial Data sells its products and services to telcos, individual
telephone subscribers, other equipment manufacturers on a private label basis
and retail chains. In addition, Colonial Data leases its products to individual
telco subscribers. Sales and leases to individual telco subscribers are largely
dependent on direct fulfillment distribution arrangements with certain Regional
Bell Operating Companies ("RBOCs") and other telcos. Since Colonial Data views
the telcos with which it maintains direct fulfillment relationships as its
customers, it considers its customer base to be highly concentrated. In 1995,
Colonial Data's three largest customers (including telcos with which Colonial
Data maintains direct fulfillment relationships) accounted for 59%, of which the
top two accounted for 48%, of its revenues. In the six months ended June 30,
1996, the three largest customers accounted for 51%, of which the top two
accounted for 38%, of Colonial Data's revenues. Colonial Data's current telco
fulfillment arrangements are not exclusive and may be terminated by either
party. The loss of any one or more of Colonial Data's major customers or the
termination of its distribution arrangements with any telco or the failure to be
selected
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for significant orders or programs by a telco could materially and adversely
affect Colonial Data's business, operating results, and financial condition. In
addition, consolidation in the telecommunications industry could result in the
loss of such customers or business.
Management of Growth
During recent periods, Colonial Data has experienced a rapid rate of
growth. Colonial Data has responded to the growth in its business by
significantly increasing its service, support and administrative facilities and
staff. However, there can be no assurance that Colonial Data will be able on a
timely basis to anticipate its future requirements for personnel, facilities or
systems or to maintain the levels of customer service that it has provided in
the past. The inability of Colonial Data to anticipate and meet these
requirements, or a decline in the quality of Colonial Data's customer service or
delays in the delivery of Colonial Data's products could materially and
adversely affect Colonial Data's business.
Limited Proprietary Protection
Colonial Data possesses limited patent or registered intellectual property
rights with respect to its technology. Colonial Data depends in part upon its
proprietary technology and know-how to differentiate its products from those of
its competitors. Colonial Data has relied on US Order for the design of a new
smart telephone. Colonial Data also works independently and from time to time
with third parties with respect to the design and engineering of its own
products. Colonial Data also relies on a combination of contractual rights and
trade secret laws to protect its proprietary technology. There can be no
assurance, however, that Colonial Data will be able to protect its technology or
successfully develop new technology or gain access to such technology or that
third parties will not be able to develop similar technology independently or
that competitors will not obtain unauthorized access to Colonial Data's
proprietary technology, that third parties will not misuse the technology to
which Colonial Data has granted access, or that Colonial Data's contractual or
legal remedies will be sufficient to protect Colonial Data's interests in its
proprietary technology.
A portion of the messaging technology used in Colonial Data's Caller ID
products is licensed on an exclusive basis from Lucent. However, Lucent has
reserved for itself and its subsidiaries the right to use that technology for
all purposes relating to its and its subsidiaries' businesses. Certain of
Lucent's Caller ID patents are licensed by Lucent to Colonial Data and others,
including Colonial Data's competitors. If the Lucent license were terminated and
Colonial Data were unable to negotiate a new patent license agreement with
Lucent, Colonial Data would no longer be authorized to manufacture or sell
Caller ID products in the United States other than to the RBOCs and to Lucent,
and Colonial Data's business would be materially and adversely affected.
Limited Sources of Supply
The key components used in Colonial Data's products are currently being
purchased from multiple sources, except for its application specific integrated
circuit ("ASIC") chips, which are purchased from a single source. The only
supply contract to which Colonial Data is a party is with the maker of its ASIC
chips. Colonial Data has no other supply contracts for its components. Although
Colonial Data believes it could develop other sources for each of the components
for its products, the process could take several months, and the inability or
refusal of any such source to continue to supply components could have a
material adverse effect on Colonial Data pending the development of an
alternative source.
USE OF PROCEEDS
Proceeds from the sale of the Warrants and the underlying Shares will be
received directly by the Selling Securityholders. However, to the extent that
the Warrants are exercised, the Company will receive proceeds equal to the
exercise price thereof multiplied by the number of Warrants exercised. If all of
the Warrants are exercised, the Company will receive gross proceeds of
approximately $720,000 (based on an exercise price of $6.00 per
18
<PAGE>
share). The Company presently intends to use such proceeds, if any, for working
capital and general corporate purposes. See "Selling Securityholders."
PLAN OF DISTRIBUTION
The Warrants and the underlying Shares offered by the Selling
Securityholders by this Prospectus may be sold from time to time by the Selling
Securityholders or by their transferees. The distribution of the Warrants and
the underlying Shares offered hereby by the Selling Securityholders may be
effected in one or more transactions that may take place on the over-the-counter
market, including ordinary brokers' transactions, privately negotiated
transactions or through sales to one or more dealers for resale of such
securities as principals, at market prices prevailing at the time of sale or at
negotiated prices. Usual and customary or specifically negotiated brokerage
fees, underwriting discounts or commissions may be paid by the Selling
Securityholders. Resales of the Shares may, from time to time, be made on the
NYSE, or other stock exchanges, in privately negotiated transactions or
otherwise. For example, the Selling Securityholder Securities may be sold by one
or more of the following without limitation: (a) a block trade in which the
broker or dealer so engaged will attempt to sell the Selling Securityholder
Securities as agent but may position and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a broker or dealer as
principal and resale by such broker or dealer for its account pursuant to this
Prospectus; (c) ordinary brokerage transactions in which the broker solicits
purchasers; and (d) face to face transactions between sellers and purchasers
without a broker-dealer. In effecting sales, brokers or dealers engaged by the
Selling Securityholders may arrange for other brokers or dealers to participate
in the resales.
The Selling Securityholders and any broker-dealers that participate in the
distribution may under certain circumstances be deemed to be "underwriters"
within the meaning of the Securities Act, and any commissions received by such
broker-dealers and any profits realized on the resale of shares by them may be
deemed to be underwriting discounts and commissions under the Securities Act. To
the extent required under the Securities Act, a supplemental prospectus will be
filed disclosing (a) the name of any such broker-dealers, (b) the number of
Selling Securityholder Securities involved, (c) the price at which such Selling
Securityholder Securities are to be sold, (d) the commissions paid or discounts
or concessions allowed to such broker-dealers, where applicable, (e) that such
broker-dealers did not conduct any investigation to verify the information set
out or incorporated by reference in this Prospectus, as supplemented, and (f)
other facts material to the transaction.
The Company and the Selling Securityholders may agree to indemnify such
broker-dealers against certain liabilities, including liabilities under the
Securities Act. In addition, the Company has agreed to indemnify the Selling
Securityholders with respect to the Selling Securityholder Securities against
certain liabilities, including, without limitation, certain liabilities under
the Securities Act, or, if such indemnity is unavailable, to contribute toward
amounts required to be paid in respect of such liabilities.
The Company has agreed to pay certain costs and expenses incurred in
connection with the registration of the Selling Securityholder Securities,
except that the Selling Securityholders shall be responsible for all selling
commissions, transfer taxes and related charges in connection with the offer and
sale of such Selling Securityholder Securities.
There is no assurance that any of the Selling Securityholders will sell any
or all of the Selling Securityholder Securities. The Company has agreed to keep
the registration statement relating to the offering and sale by the Selling
Securityholders of the Selling Securityholder Securities continuously effective
for a period of 48 months from the date of this Prospectus; provided, however,
that the Company shall not be required to maintain the registration statement
once the Warrants and the underlying Shares may be sold pursuant to Rule 144(k)
under the Securities Act. In addition, the Selling Securityholders have agreed
not to sell any of the Selling Securityholder Securities for a period of 90 days
after receiving notice that the Company intends to commence a registered public
offering of its Common Stock .
19
<PAGE>
SELLING SECURITYHOLDERS
The following table sets forth the number of Warrants and underlying
Shares beneficially owned by each of the Selling Securityholders and included
herein. Because the Selling Securityholders may offer all or some of the Selling
Securityholder Securities which they own pursuant to the offering contemplated
by this Prospectus, and because there are currently no agreements, arrangements
or understandings with respect to the sale of any of the Securityholder
Securities, no estimate can be given as to the amount of Selling Securityholder
Securities that will be held by the Selling Securityholders after completion of
this offering. The Selling Securityholder Securities offered by this Prospectus
may be offered from time to time by the Selling Securityholders named below. All
of the Selling Securityholders own less than 1% of the outstanding shares of
Common Stock.
<TABLE>
<CAPTION>
Number of
Shares of
Number of Common Stock
Warrants Beneficially
Beneficially Held Held and Maximum
Names of Selling and Maximum Amount to be
Securityholders Amount to be Sold Sold(1)
- --------------- ----------------- ----------------
<S> <C> <C>
Hoechst Celanese Employee Master Benefit Trust........... 86,400 86,400
20/20 Short Term High Yield Fund......................... 12,000 12,000
Rectors and Visitors of the University of Virginia....... 6,000 6,000
Riverside Income Fund Ltd. LP............................ 6,000 6,000
Riverside Specialty Income Fund Trust.................... 3,600 3,600
North Broward Radiologists P.A. Profit Sharing Plan FBO
Carl C. Peterson M.D. and Walter F. Ciceric M.D.......... 3,000 3,000
Warwick Fund-Ansbacher Bahamas........................... 3,000 3,000
</TABLE>
______________
(1) Represents Shares to be issued upon exercise of the Warrants.
LEGAL MATTERS
The validity of the Warrants and the Common Stock offered hereby will
be passed upon for the Company by Hunton & Williams, Richmond, Virginia.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1995
and 1994, and the related consolidated statements of operations, changes in
common stockholders' deficit and cash flows for each of the years in the three
year period ended December 31, 1995, and the related financial statement
schedules, included in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995, incorporated by reference herein, have been
incorporated herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated herein by reference, and
upon the authority of that firm as experts in accounting and auditing.
The consolidated financial statements of Colonial Data as of December
31, 1995 and 1994, and for each of the fiscal years in the three-year period
ended December 31, 1995, incorporated by reference herein and in the
Registration Statement, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report incorporated herein by reference, and have
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
20
<PAGE>
================================================================================
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained in this Prospectus and,
if given or made, such information or representation must not be relied on as
having been authorized by the Company, the Selling Stockholders or any other
person. This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any of the securities offered hereby in any jurisdiction to
any person to whom it is unlawful to make such offer in such jurisdiction.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that the information herein is correct
as of any time subsequent to the date hereof or that there has been no change in
the affairs of the Company since such date.
____________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information................................................ 3
Incorporation of Certain Documents By Reference...................... 3
Prospectus Summary................................................... 4
Risk Factors......................................................... 7
Use of Proceeds...................................................... 18
Plan of Distribution................................................. 18
Selling Securityholders.............................................. 19
Legal Matters........................................................ 19
Experts.............................................................. 19
</TABLE>
____________
WORLDCORP, INC.
120,000 WARRANTS
120,000 SHARES
COMMON STOCK
_________________________
PROSPECTUS
_________________________
January __, 1997
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses/*/ in connection with the Offerings are as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee....... $ 155
Blue Sky fees............................................. 2,000
Legal fees................................................ 15,000
Accounting fees........................................... 5,000
Printing, engraving and postage expenses.................. 3,000
Miscellaneous............................................. 5,845
Total..................................................... $31,000
=======
</TABLE>
____________________
/*/The Company will pay these expenses.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
WorldCorp, Inc., a Delaware corporation (the "Company"), is empowered by
Section 145 of the Delaware General Corporation Law, subject to the procedures
and limitations stated therein, to indemnify any person against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred in the defense of any threatened, pending or
completed action, suit or proceeding in which such person is made a party by
reason of his or her being or having been a director or officer of WorldCorp.
The statute provides that such indemnification is not exclusive of other rights
or indemnification to which a person may be entitled under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise. The Certificate
of Incorporation and Bylaws of WorldCorp provide that WorldCorp shall indemnify
its directors and officers to the full extent permitted by the Delaware General
Corporation Law.
WorldCorp is also empowered by Section 102(b) of the Delaware General
Corporation Law to include a provision in its Certificate of Incorporation that
limits a director's liability to WorldCorp or its stockholders for monetary
damages for breaches of his or her fiduciary duty except for (i) a breach of the
director's duty of loyalty to WorldCorp or its stockholders; (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) improper dividend payments, stock repurchases or
redemptions; and (iv) any transaction from which the director derived an
improper personal benefit. Article 10 of WorldCorp's Certificate of
Incorporation includes such a provision.
Policies of insurance are maintained by the Company under which directors
and officers are insured, within the limits and subject to the limitations of
the policies, against certain expenses in connection with the defense of
actions, suits or proceedings, and certain liabilities that might be imposed as
a result of such actions, suits or proceedings, to which they are parties by
reason of being or having been directors or officers of the Company.
The Company has entered into indemnification agreements with its officers
and directors that indemnify such officers and directors to the full extent
permitted by law against all expenses, judgments, fines or settlement amounts
incurred or paid by them in any action or proceeding, including any action by or
in the right of the Company on account of their service as a director or officer
of the Company.
II-1
<PAGE>
ITEM 16. EXHIBITS
4.1 Article 10 of the Company's Certificate of Incorporation, incorporated by
reference to Exhibit 3.1 to the Company's Registration Statement on Form S-
4, as amended, (Commission File No. 33-012735) filed on March 19, 1987, and
Article VIII of the Company's Bylaws, incorporated by reference to Exhibit
3.2 to the Company's Registration Statement on Form S-4, as amended,
(Commission File No. 33-012735) filed on March 19, 1987.
5.1 Opinion of Hunton & Williams.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Hunton & Williams (included in Exhibit 5.1).
24.1 Power of Attorney (included on the signature pages of the Registration
Statement).
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 in the information set forth in the 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 to such
information 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 section 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 Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
II-2
<PAGE>
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be a part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Herndon, Commonwealth
of Virginia on January 9, 1997.
WORLDCORP, INC.
By: /s/ T. Coleman Andrews, III
--------------------------------------------
T. Coleman Andrews, III
President and Chief Executive Officer
II-4
<PAGE>
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on January 9, 1997. Each of the directors and/or officers
of WorldCorp, Inc. whose signature appears below hereby appoints T. Coleman
Andrews, III, William F. Gorog and Andrew M. Paalborg as his attorney-in-fact to
sign in his name and behalf, in any and all capacities stated below and to file
with the Securities and Exchange Commission, any and all amendments, including
post-effective amendments to this registration statement, making such changes in
the registration statement as appropriate, and generally to do all such things
in their behalf in their capacities as officers and directors to enable
WorldCorp, Inc. to comply with the provisions of the Securities Act of 1933, and
all requirements of the Securities and Exchange Commission.
SIGNATURE TITLE
--------- -----
/s/ T. Coleman Andrews, III Chief Executive Officer, President
- -----------------------------------
T. COLEMAN ANDREWS, III and Director
/s/ William F. Gorog Director and Chairman of the Board
- -----------------------------------
WILLIAM F. GOROG (Principal Executive Officer)
/s/ Mark S. Lynch Vice President and Chief Financial
- -----------------------------------
MARK S. LYNCH Officer (Principal Financial Officer
and Principal Accounting Officer)
/s/ Gideon Argov Director
- -----------------------------------
GIDEON ARGOV
/s/ John C. Backus, Jr. Director
- -----------------------------------
JOHN C. BACKUS, JR.
/s/ James E. Colburn Director
- -----------------------------------
JAMES E. COLBURN
/s/ Patrick F. Graham Director
- -----------------------------------
PATRICK F. GRAHAM
/s/ Geoffrey S. Rehnert Director
- -----------------------------------
GEOFFREY S. REHNERT
II-5
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
4.1 Article 10 of the Company's Certificate of Incorporation,
incorporated by reference to Exhibit 3.1 to the Company's
Registration Statement on Form S-4, as amended, (Commission File
No. 33-012735) filed on March 19, 1987, and Article VIII of the
Company's Bylaws, incorporated by reference to Exhibit 3.2 to the
Company's Registration Statement on Form S-4, as amended,
(Commission File No. 33-012735) filed on March 19, 1987.
5.1 Opinion of Hunton & Williams.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Hunton & Williams (included in Exhibit 5.1).
24.1 Power of Attorney (included on the signature pages of the
Registration Statement) .
<PAGE>
EXHIBIT 5.1
File No.: 50078.000007
January 9, 1997
Board of Directors
WorldCorp, Inc.
The Hallmark Building
13873 Park Center Road
Suite 490
Herndon, Virginia 22071
WORLDCORP, INC.
REGISTRATION STATEMENT ON FORM S-3
----------------------------------
Ladies & Gentlemen:
We are acting as counsel for WorldCorp, Inc. (the "Company") in connection
with its Registration Statement on Form S-3, as filed with the Securities and
Exchange Commission, with respect to 120,000 warrants (the "Warrants") of the
Company and the 120,000 shares of the Company's Common Stock issuable upon the
exercise of such Warrants (the "Shares"). In connection with the filing of the
Registration Statement, you have requested our opinion concerning certain
corporate matters.
In rendering this opinion, we have relied upon, among other things, our
examination of such records of the Company and certificates of its officers and
of public officials as we have deemed necessary.
Based upon the foregoing and the further qualifications stated below, we
are of the opinion that:
1. The Company has been duly incorporated and is validly existing and in
good standing under the laws of the State of Delaware.
2. The Warrants have been (and the Shares, when issued and sold in the
manner described in the Registration Statement, will be) duly authorized,
legally issued, fully paid and nonassessable.
We consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Form S-3. In giving this consent, we do not
admit that we are within the category of persons whose consent is required by
section 7 of the Securities Act of 1933 or the rules and regulations promulgated
thereunder by the Securities and Exchange Commission.
Very truly yours,
Hunton & Williams
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
WorldCorp,Inc.:
We consent to the incorporation by reference in the registration statement on
Form S-3 of WorldCorp, Inc. of our report dated March 18, 1996, relating to the
consolidated balance sheets of WorldCorp, Inc. and subsidiaries as of December
31, 1995 and 1994, and the related consolidated statements of operations,
changes in common stockholders' deficit and cash flows for each of the years in
the three-year period ended December 31, 1995, and the related financial
statement schedules, which report appears in the December 31, 1995 annual report
on Form 10-K of WorldCorp, Inc., incorporated by reference herein, and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Washington, D.C.
January 8, 1997
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Form S-3 filing of
WorldCorp, Inc. of our report dated January 26, 1996, appearing in the Annual
Report on Form 10-K of Colonial Data Technologies Corp. for the year ended
December 31, 1995 incorporated by reference in WorldCorp, Inc.'s Form 8-K dated
December 13, 1996 which is incorporated by reference in this Form S-3 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
/s/ Deloitte & Touche LLP
Hartford, Connecticut
January 8, 1997
