Filed pursuant to Rule 424(b)(3) under the Securities Act of 1933
Registration Statement on Form S-3 (No. 333-25273)
PROSPECTUS SUPPLEMENT
(to the Prospectus, dated June 25, 1997)
C-PHONE CORPORATION
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3,684,668 Shares
Common Stock
THIS PROSPECTUS SUPPLEMENT CONSTITUTES AN ESSENTIAL PART OF THE PROSPECTUS,
DATED JUNE 25, 1997, OF C-PHONE CORPORATION (THE "PROSPECTUS") AND SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS.
The information set forth below supersedes the information contained under
"Selling Shareholders" in the Prospectus. All capitalized terms used herein have
the meanings given such terms in the Prospectus.
SELLING SHAREHOLDERS
The Selling Shareholders are the investors in the 1997 Placement (the
"Investors"), the holders of the 1994 Warrants and the holders of the 1997
Warrants. The holders of the 1994 Warrants consist of employees (including
controlling persons) of Josephthal, a former director of Josephthal and the
estate of a former officer, director and principal shareholder of Josephthal.
The holders of the 1997 Warrants consist of employees (including controlling
persons) of Josephthal. The Investors include, among others, Josephthal and most
of the holders of the 1994 Warrants. Josephthal was the representative of the
underwriters for the 1994 Public Offering and the placement agent for the 1997
Placement. Josephthal also is a market maker for the Common Stock.
Pursuant to the 1997 Placement, the Company issued to the Investors
833,667 shares of Common Stock (the "Original Shares") plus the right, under
certain circumstances and without any additional consideration, to receive
additional shares of Common Stock pursuant to the terms of "contingent value
rights" (the "Rights"). The Rights are automatically exercised at the time that,
and from time to time as, the Original Shares are first publicly sold through a
broker dealer during the one-year period commencing June 25, 1997. The Rights,
to the extent not exercised, expire June 25, 1998. The terms of the Rights
provide that, upon any such initial sale of any Original Shares at a price of
less than $8.00 per share, the seller of the Original Shares will automatically
receive, for each such Original Share sold, without the payment of any
additional consideration, such additional number of shares of Common Stock (the
"Rights Shares") as equals (i) $8.00 divided by the Adjusted Price, minus (ii)
one; where the Adjusted Price will equal the greater of (x) the average closing
bid price per share of Common Stock on The Nasdaq National Market for the ten
trading days immediately preceding the date of sale of the Original Shares, or
(y) $2.00. The Original Shares and the Rights Shares are included in the
Prospectus pursuant to certain registration rights granted to the Investors; the
Company has agreed to maintain the effectiveness of the Registration Statement
which contains the Prospectus until June 25, 1998. As of October 31, 1997, all
of the Investors, except one Investor who holds 30,000 Original Shares, have
sold all of their Original Shares and have been issued all of the Rights Shares,
if any, to which each such Investor was entitled.
In connection with the 1997 Placement, in addition to other
consideration paid to Josephthal, the Company issued to WBM LLC, an Investor in
the 1997 Placement and an affiliate of Josephthal, the 1997 Warrants to acquire
an aggregate of 150,000 shares of Common Stock at an exercise price of $9.60 per
share. The 1997 Warrants expire December 22, 1997. Substantially all of the 1997
Warrants have been transferred by WBM LLC to certain of the Selling
Shareholders. The shares of Common Stock issuable upon exercise of the 1997
Warrants are included in the Prospectus.
In connection with the 1994 Public Offering, the Company entered into
the Representative's Warrant Agreement with Josephthal providing for the
issuance to Josephthal of the 1994 Warrants to purchase 200,000 shares of Common
Stock and also providing certain registration rights with respect to the shares
issuable upon exercise of the 1994 Warrants. The 1994 Warrants have been
transferred by Josephthal to certain of the Selling Shareholders. The shares of
Common Stock issuable upon exercise of the 1994 Warrants are included in the
Prospectus.
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<PAGE>
The following table sets forth certain information relating to the
security ownership of the Selling Shareholders as of November 10, 1997 and as
adjusted to reflect the sale of the Common Stock in the offering covered by the
Prospectus. Except as set forth above, none of the Selling Shareholders has had
a material relationship with the Company or any of its predecessors or
affiliates within the past three years.
<TABLE>
<CAPTION>
SHARES OF COMMON
SHARES OF COMMON STOCK BENEFICIALLY
STOCK BENEFICIALLY OWNED AFTER THE
OWNED AS OF SHARES OF COMMON SALE OF SHARES
NAME OF SELLING SHAREHOLDER OCTOBER 31, 1997 STOCK TO BE SOLD COVERED HEREBY13
- ------------------------------------------------------- ------------------ ------------------ -----------------
<S> <C> <C> <C>
Balk, Matthew 64,613(1,2) 64,613(9) 0
Berger, Franklin 101(1) 101(9) 0
Borgman, Larry 101(1) 101(9) 0
Burke, Dennis 101(1) 101(9) 0
Cerruto, Kenneth 1,000(1) 1,000(9) 0
Corday, Brian 12,055(1) 12,055(9) 0
Fitzgerald, Paul 7,037(1,2) 7,037(9) 0
Guzzi, Anthony 43(1) 43(9) 0
Holistica International Ltd 714(3) 714(10) 0
Josephthal Lyon & Ross Incorporated 11,028(3) 11,028(10) 0
Kowitski, Steven 101(1) 101(9) 0
Larkin, Sherwood P 7,896(1,2) 7,896(9) 0
Loew, Michael 7,747(2,4) 7,560(9) 187
Majumdar, Swatick 1,000(1) 1,000(9) 0
Mando, Raymond 29(1) 29(9) 0
Masagung, Made Oka 120,000(5) 120,000(11) 0
Omotsu Holdings Ltd. 4,596(3) 4,596(10) 0
Paneco SA 5,651(3) 5,562(10) 0
Purjes, Esther 2,350(3) 2,350(10) 0
Purjes, Dan 177,752(6) 177,752(12) 0
Rice, Lawrence R 14,256(1,2) 14,256(9) 0
Roden, Charles 10,515(1,2) 10,515(9) 0
Satloff, Averell 1,793(1) 1,793(9) 0
Sheikh, Elahi 1,000(1) 1,000(9) 0
Shieb, Estate of Peter 22,467(1) 22,467(9) 0
Sobhy, Hisham 3,980(1) 3,980(9) 0
Syed, Saleem 35,000(3) 35,000(10) 0
The FK 1997 Grat 13,793(7) 3,793(10) 10,000
WBM LLC 4,645(8) 4,645(9) 0
Weisman, Scott 16,600(1,2) 16,600(9) 0
</TABLE>
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<PAGE>
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(1) Consists of shares of Common Stock issuable upon exercise of the 1994
Warrants and/or 1997 Warrants.
(2) Does not include any shares of Common Stock issued or issuable to WBM
LLC, a limited liability company in which such Selling Shareholder is a member.
See footnote (8) to this table. Such Selling Shareholder disclaims beneficial
ownership in any of such shares, since such Selling Shareholder has no voting
power or investment power with respect to such shares.
(3) Consists of Rights Shares issued to such Selling Shareholder in
connection with the sale of Original Shares.
(4) Consists of (a) 7,560 shares of Common Stock issuable upon exercise of
the 1994 Warrants and 1997 Warrants, and (b) 187 shares of Common Stock
previously purchased by Mr. Loew.
(5) Consists of (a) 30,000 Original Shares, and (b) 90,000 Rights Shares
(the maximum number of Rights Shares which may be issued to such Selling
Shareholder in connection with the sale of such Original Shares).
(6) Consists of (a) 173,107 shares of Common Stock issuable upon exercise
of the 1994 Warrants and 1997 Warrants, and (b) 4,645 shares issuable to WBM LLC
(see footnote (8) to this table), with respect to which Mr. Purjes is the
managing member. Does not include any shares of Common Stock beneficially owned
by Josephthal, of which Mr. Purjes is the Chairman and Chief Executive Officer.
(7) Consists of (a) 3,793 Rights Shares issued to the FK 1997 Grat of which
Felix Kaufman is the trustee, in connection with the sale of Original Shares,
and (b) 10,000 shares of Common Stock purchased by Mr. Kaufman prior to the 1994
Public Offering.
(8) Consists of shares of Common Stock issuable upon exercise of the 1997
Warrants. Dan Purjes is the managing member of WBM LLC and the shares
attributable to WBM LLC also are included in the security ownership of Mr.
Purjes (see footnote (6) to this table).
(9) Consists of shares of Common Stock issuable upon exercise of the 1994
Warrants and/or 1997 Warrants and assumes the sale of all Shares covered by the
Prospectus.
(10) Consists of Rights Shares issued to such Selling Shareholder in
connection with the sale of such Original Shares, and assumes the sale of all
Shares covered by the Prospectus.
(11) Consists of (a) 30,000 Original Shares, and (b) 90,000 Rights Shares
(the maximum number of Rights Shares issuable to such Selling Shareholder in
connection with the sale of such Original Shares), and assumes the sale of all
Shares covered by the Prospectus.
(12) Consists of (a) 173,107 shares of Common Stock issuable upon exercise
of the 1994 Warrants and 1997 Warrants, and (b) 4,645 shares issuable to WBM LLC
(see footnote (8) to this table), with respect to which Mr. Purjes is the
managing member, and assumes the sale of all Shares covered by the Prospectus.
(13) Assumes the sale of all Shares covered by the Prospectus.
The date of this Prospectus Supplement is November 12, 1997
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