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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3/A3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
(Amendment No. 3)
___________________
CHEQUEMATE INTERNATIONAL, INC. DBA C-3D DIGITAL, INC.
(Exact name of registrant as specified in its charter)
___________________
Utah 3663 76-0279816
(State or other jurisdiction of (Primary Industrial (I.R.S. Employer
incorporation or organization) Classification Code) Identification No.)
330 Washington Boulevard, Suite 507
Marina del Rey, CA 90292
(310) 305-3659
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
___________________
J. Michael Heil
CEO
Chequemate International, Inc.
330 Washington Boulevard, Suite 507
Marina del Rey, CA 90292
(310) 305-3659
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
It is respectfully requested that the Commission send copies of all notices,
orders and communications to:
Bruce L. Dibb
Jensen, Duffin, Carman, Dibb & Jackson
311 South State Street, Suite 380
Salt Lake City, Utah 84111
(801) 531-6600
___________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS PROMPTLY AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [_]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock 2,600,000(1) $2.84(2) $7,384,000 $2,053
Augustine Fund LP
- ---------------------------------------------------------------------------------------------------------
Common stock issuable upon
exercise of warrants 209,503 $1.50(3) $314,255 $87
- ---------------------------------------------------------------------------------------------------------
Coleman Capital Shares 200,000 $2.84(4) $568,000 $158
- ---------------------------------------------------------------------------------------------------------
TOTAL 3,009,503 $8,266,255 $2,298
=========================================================================================================
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(1) Estimated pursuant to the provisions of paragraph 7(a) of the 1999
Subscription Agreements, which require the registrant to register 200% of
the number of shares issuable upon the conversion of the debentures based
upon the lowest closing bid price of the registrant's stock for the 60
trading days prior to the date of the execution of the February 9, 1999
Subscription Agreement. The lowest closing bid price for the stated period
was $2.50 per share.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended.
Although the conversion of the debentures may take place at any time during
the three year period following the dates of the subscription agreements
entered into by the registrant, this estimated amount is the average of the
bid and asked price as of February 18, 1999 (which is within 5 business
days prior to the date of the original filing of this registration
statement).
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(3) The exercise price of the warrants is used for the purpose of calculating
the amount of the registration fee in accordance with Rule 457(g) under the
Securities Act.
(4) Employing estimated 1999 valuation as set-out in note 2 above for Rule 457
(c) computation proposes.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH A DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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SELLING SECURITY HOLDER PROSPECTUS
CHEQUEMATE INTERNATIONAL, INC.
DOING BUSINESS AS
C-3D DIGITAL, INC.
531,272 Shares of Common Stock
[After Giving Effect to a 4:1 Reverse Stock Split
as of February, 2000]
This prospectus is intended only for the sale of shares issued
- to a shareholder of C-3D in a private placement, and
- to another selling security holder who received its shares from the
conversion of debentures and the exercise of warrants.
Except for the proceeds that may be derived from the discretionary exercise
by one of the security holders of warrants for 27,337 shares of common stock
of C-3D, the sale of the shares mentioned in this prospectus is not intended
to raise new capital for C-3D.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is a
criminal offense.
The common stock offered hereby involves a high degree of risk.
SEE "RISK FACTORS" BEGINNING ON PAGE 3.
The common stock of C-3D is traded on the AMEX under the symbol DDD. On
February 16, 2000, the last price for the common stock was $14.75 per share.
The date of this prospectus is March ___, 2000.
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SUMMARY OF THE OFFERING
C-3D has sold convertible debentures to raise capital for its operations.
The total amount of the purchase price for the debentures was $3,250,000.
The holder of the debentures may exercise the conversion rights described in
the debentures and obtain C-3D common stock upon the cancellation of the
debentures.
The purchaser of the debentures also received warrants which, if exercised,
entitle the holder of the warrants to an additional 27,377 shares of common
stock. If all of the warrants are exercised, an additional $390,134 will be
paid to the Company by the owner of the warrants.
The number of shares which may be issued upon conversion of the debentures will
depend upon the market price of the stock of C-3D on the five trading days prior
to a conversion of a debenture.
The sale of the debentures and the warrants was facilitated by a company that
has also provided other services to C-3D pursuant to a written agreement. A
portion of the compensation exchanged by C-3D for these services consisted of
common stock of C-3D. The contract also provided that C-3D would register these
shares for sale to the public.
The shares that are being offered to you for purchase with this prospectus are
shares which are being sold by the two companies described above, or by
individuals or companies who have purchased the debentures, warrants or shares
from the two described companies.
Because the sale of the shares offered to you by this prospectus are owned by
the selling shareholders, the selling shareholders will receive the proceeds
of the sale. The sale of these shares is not intended to raise new capital
for C-3D. However, C-3D will receive proceeds from the exercise of warrants
owned by one of the selling security holders. If all warrants are exercised,
C-3D will receive $390,134. The proceeds generated upon an exercise of the
warrants will be used to pay general operating expenses of C-3D.
Your purchase price for the shares is not fixed, but will typically be
determined by the market price of the stock of C-3D at the time of your
purchase, or as a result of your negotiations with the selling shareholder.
C-3D does not intend to employ any sales representatives in this offering or
pay any commissions. Estimated costs of the offering are $61,000 and include
attorney fees, accounting, registration, printing and distribution costs. C-3D
will pay these costs of the offering.
C-3D's executive offices are located at 330 Washington Boulevard, Suite 507;
Marina del Rey, California 90292. Telephone numbers for the executive offices
are (310) 305-3659 and (801) 322-1111.
ALL SHARE AMOUNTS CONTAINED IN THIS PROSPECTUS ARE EXPRESSED AFTER GIVING EFFECT
TO A FOUR-TO-ONE REVERSE STOCK SPLIT OCCURRING FEBRUARY 2, 2000.
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
ABOUT THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS RELATES ONLY TO THE SECURITIES OFFERED IN AND
DESCRIBED IN THIS DOCUMENT. ADDITIONALLY, THE SECURITIES ARE NOT OFFERED FOR
SALE IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE BY IT WILL, UNDER ANY
CIRCUMSTANCES, CREATE ANY SUGGESTION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS AT THE COMPANY SINCE THE DATE OF THIS DOCUMENT, OR THAT THE INFORMATION
CONTAINED IN THIS PROSPECTUS REMAINS CORRECT.
RISK FACTORS
Before making an investment, you should carefully consider the following risks
and speculative factors, as well as the other information contained in this
prospectus.
1. UNCERTAIN ACCEPTANCE OF 3-D BROADCAST PRODUCTS AND SERVICES. Among
the products offered by C-3D, our current efforts to broadcast television
programs in three dimensional format must be considered novel and experimental.
Particular risks of this business segment would include the narrow range of
broadcast programming available in 3D and the fact that consumers may not be
willing to incur the added expense and effort of subscribing to this programming
on a long term basis.
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To view a 3D broadcast, viewers watch 3D television programming using special
glasses. This unique product must be considered experimental and there may
not be long term acceptance of this novel concept. You should consider, as a
risk factor, the possibility that you could invest in this offering and not
receive any return of investment, or lose your entire investment if the
products and services are not successfully marketed or are otherwise not
commercially accepted.
2. CHALLENGES IN CAPTURING AND EXPANDING STRATA SOFTWARE MARKET.
The Strata assets and technology, which are sold or licensed by the 3D.COM
division of C-3D, were acquired through the foreclosure of purchased secured
positions in such assets and technology. The effect of the business
disruption by this acquisition process and the ability of C-3D to solidify
relationships with the prior customer base or to expand the customer base has
yet to be fully determined.
3. DIFFICULTIES IN INTEGRATING ACQUIRED PAY-PER-VIEW ASSETS. Although
management of C-3D has extensive experience in the hotel pay-per-view
business, C-3D has only been conducting the pay-per-view business since
December 1998. The pay-per-view assets and contracts of C-3D have been
acquired in two separate asset acquisitions. These purchases were not
acquisitions of complete businesses with established operating histories, but
were acquisitions of certain assets only. Although the pay-per-view business
is generally comprised of self-contained operations at each hotel location,
C-3D must yet be considered to be in a formative phase of managing the newly
acquired assets as a cohesive business unit, and gaining the acceptance and
confidence of the various hotel site owners.
4. LACK OF SIGNIFICANT REVENUES AND ANTICIPATED CONTINUING LOSSES. In
the nine months ending December 31, 1999, C-3D had revenues of $2,644,478,
with net losses of $6,709,758. Losses have also been incurred in all prior
reporting periods as set-out in the attached financial statements. While
revenues have increased, so have operating expenses. C-3D cannot make any
projection of when or if profitable operations will be obtained.
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5. COMPETITION. There is substantial competition, both nationally and
internationally, in the electronics and media industries in which C-3D
operates. Essentially all major television manufacturers are pursuing research
and development projects with 3D television. Virtually all major United States
TV channels have experimented with or have offered some 3D programming on a
trial basis. Each of these companies has assets, and research and development
budgets, greater than that of C-3D. No assurance can be made, despite the best
efforts of management, that other companies may not produce competitive
products, services, or devices at a lower price or that are a better product,
which could cause C-3D to be commercially unprofitable. In the rapidly
developing field of 3D video products, we can give no assurance that the
copyrights, patents or pending patent applications of C-3D will be able to
protect us from direct competition in the area of C-3D's high tech 3D products.
6. C-3D NEEDS MORE CAPITAL TO GROW AND TO SUSTAIN CURRENT OPERATIONS.
C-3D's cash requirements have been and will continue to be significant. We
expect we will need to raise additional funds through private debt or equity
financing in order to continue to support current operations and develop our
business plan. No assurance can be made that C-3D will be able to raise
sufficient capital to sustain operations or to meet its growth projections.
If additional funds are raised through the issuance of equity securities, the
percentage ownership of our stockholders at that time will be reduced. We
currently have incurred debt with private lenders and anticipate incurring
additional loan obligations to sustain current operations
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7. MANAGEMENT STOCK OPTIONS. The company has a significant number of
shares, approximately 256,000, which are subject to management options. Since
these options may be exercised at prices lower than most previously issued
shares or the current market price, their issuance will most likely result in
dilution, as well as a diminution of control to existing shareholders. None of
these options were created by arms-length transactions.
8. LITIGATION. As disclosed in our incorporated SEC reports, C-3D or
its subsidiaries have been engaged in certain law suits which have
resulted in ongoing expenditures and may result in financial obligations for
the subsidiaries of C-3D. The former Chairman of C-3D is also named as a
defendant in one of the suits. The most significant suit has been settled
and requires C-3D to make monthly payments of ten thousand dollars each
through July 2000.
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9. DILUTION. The exercise of the conversion rights of the debentures
which we have sold and the options which we have granted will substantially
reduce or dilute the net worth of the stock of the shareholders of C-3D,
including the shares which you purchase.
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FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. This Act provides a
"safe harbor" for such statements to encourage companies to provide
prospective information about themselves so long as such information is
identified as forward-looking and is accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those projected in the information. All statements
other than statements of historical fact made in this prospectus or
incorporated by reference are forward-looking and are beliefs, estimates,
intentions and strategies about the future. Words such as "anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates," "projects",
"predicts" or variations of such words and similar expressions are intended
to identify such forward-looking statements, but their absence does not mean
the statement is not forward-looking. In particular, the statements
regarding the availability of adequate funding and progress in the
development of our various business segments are forward-looking statements.
Forward-looking statements represent management's current expectations and
are inherently uncertain. The failure of any forward-looking event to occur
can cause all forward-looking predictions to fail. Investors are warned that
C-3D's actual results may differ significantly from management's expectations
and, therefore, from the results discussed in such forward-looking
statements. Factors that might cause such differences include, but are not
limited to, the "Risk Factors".
AVAILABLE INFORMATION
C-3D has filed with the Securities and Exchange Commission (the "Commission") a
registration statement on Form S-3 (together with all amendments and exhibits
filed with the "registration statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities offered pursuant
to this prospectus. For further information, reference is made to the
registration statement. In addition, C-3D is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files quarterly, annual and periodic reports
and other information with the Commission. The registration statement, such
reports and other information may be inspected and copies may be obtained, at
prescribed rates, at the Commission's Public Reference Section, Judiciary Plaza,
450 Fifth Street, NW, Washington, D.C. 20549, as well as the following regional
offices: 7 World Trade Center, New York, New York 10048 and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. The Commission maintains a Website
that contains reports and other information regarding reporting companies under
the Exchange Act, including C-3D, at http:// www.sec.gov.
This prospectus constitutes a part of the registration statement. This
prospectus omits certain of the information contained in the registration
statement. Reference is hereby made to the registration statement and to the
exhibits attached to that document as containing further information with
respect to C-3D and the common stock. Any statements contained in the
prospectus concerning the provisions of any documents are not necessarily
complete, and
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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 have been filed by C-3D with the Commission and are
hereby incorporated by reference into this prospectus:
- C-3D's Annual Report filed July 15, 1999 for the fiscal year ended March
31, 1999;
- C-3D's amended Annual Report filed January 13, 2000 on Form 10-KSB for the
fiscal year ended March 31, 1999;
- C-3D's Form 8-A registration statement filed May 27, 1999;
- C-3D's Quarterly Report filed August 19, 1999 on Form 10-QSB for the three
months ended June 30, 1999;
- C-3D's amended Quarterly Report filed January 13, 2000 on Form 10-QSB for
the three months ended June 30, 1999;
- C-3D's second amended Quarterly Report filed March 2, 2000 on Form 10-QSB
for the three months ended June 30, 1999.
- C-3D's Quarterly Report filed November 15, 1999 on Form 10-QSB for the six
months ended September 30, 1999;
- C-3D's amended Quarterly Report filed March 2, 2000 on Form 10-QSB for the
six months ended September 30 1999;
- C-3D's amended Quarterly Report filed July 9, 1999 on Form 10-QSB for the
nine months ended December 31, 1998;
- C-3D's Quarterly Report filed February 14, 2000 on Form 10-QSB for the nine
months ended December 31, 1999.
- C-3D's amended Annual Report filed July 9, 1999 on Form 10-KSB for the
fiscal year ended March 31, 1998;
- C-3D's Form 8-K report filed on April 14, 1999 relating to the acquisition
of secured interests in the Strata technology and other matters; and
- C-3D's Form 8-K report filed on July 22, 1999 regarding certain changes in
management of C-3D and the acquisition of certain hotel pay-per-view
assets and contracts.
All other documents and reports filed pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this prospectus and prior to
the termination of this offering shall be
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deemed to be incorporated by reference in this prospectus and to be made a
part hereof from the date of the filing of such reports and documents.
Any statement contained in a document incorporated or deemed to be incorporated
in this prospectus by reference shall be deemed to be modified or superseded for
purposes of this prospectus to the extent that a statement contained in the
prospectus, or in any subsequently filed document,is deemed to be incorporated
by reference or modifies or supersedes the statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
C-3D will provide without charge to each person to whom a copy of this
prospectus is delivered, upon the written or oral request of such person, a copy
of any or all documents which are incorporated by reference (not including
exhibits to such documents, unless such exhibits are specifically incorporated
by reference in the document which this prospectus incorporates). Requests
should be directed to Mr. Brad Stolba at C-3D's principal executive offices
located at 330 Washington Boulevard, Suite 507; Marina del Rey, California
90292; telephone numbers (310) 305-3659 and (801) 322-1111.
C-3D DIGITAL, INC.
C-3D is a pioneer in bringing virtual reality to computer and television
screens. C-3D is pursuing activities in four divisions designated as C-3D
Digital III, 3D.Com, C-3D Realeyes, and C-3D Strata. C-3D Digital III is
believed to be the first television network to exclusively offer 3D programming
to satellite dish owners, cable TV subscribers and the patrons of the lodging
industry through a pay-per-view delivery system. 3D.Com is establishing new
entertainment and e-commerce paradigms on the internet. C-3D Realeyes is the
patented hardware technology that turns any TV into a 3D virtual reality
station. The Strata division is based upon the work of a ten year pioneer in
3D software, providing technologies for content creation and internet delivery.
These four interconnected components - television, the web, hardware and
software - provide C-3D with the critical links between 3D technology and the
consumer. The principal executive offices of C-3D are located at 330
Washington Boulevard, Suite 507; Marina del Rey, California 90292 , and its
telephone numbers are (310) 305-3659 and (801) 322-1111.
RECENT DEVELOPMENTS
CORPORATE NAME CHANGE
The Company has filed in the state of Utah an application to conduct business
under the assumed name of C-3D Digital, Inc. This name is more in keeping with
C-3D's focus on its entertainment and communications business related to 3D
technology. At the time of the next meeting of shareholders of C-3D, management
contemplates submitting a proposal to amend the Articles of Incorporation to
reflect this new name.
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AMEX LISTING
On June 9, 1999, the common stock of C-3D began trading on AMEX. The new
trading symbol for the stock of C-3D is DDD, reflective of C-3D's focus on 3D
products and services.
RETIREMENT OF CHAIRMAN; APPOINTMENT OF NEW CHAIRMAN AND ADDITIONAL BOARD MEMBER
On August 17, 1999, C-3D announced the retirement of its Chairman, Blaine
Harris. Mr. Harris, age 60, is retiring from his position as Chairman of the
Board of Directors after eight years with Chequemate International, which he
helped establish in 1991.
Succeeding Mr. Harris as Chairman is Mr. J. Michael Heil, who has been the
Company's CEO since September, 1998. Mr. Heil was elected to serve as Chairman
by the board of directors at its meeting on August 16, 1999, and will retain his
position as Chief Executive Officer. J. Michael Heil has over 17 years of
experience in the satellite and broadcast television industry. Prior to joining
C-3D digital, he was President of Skylink America, Inc. and Satellite Cinema.
On September 22, 1999, the board of directors of C-3D approved the appointment
of media marketing expert Daniel R. Thompson as a member of the C-3D Digital
board. Thompson is the founder and head of the influential Hollywood
entertainment agency "A Creative Group" (ACG) which specializes in product
placement, promotional advertising, program sponsorships and distribution.
RELOCATION OF CORPORATE HEADQUARTERS
Effective Monday, September 20, 1999, C-3D relocated its corporate headquarters
to the Los Angeles metropolitan area in Marina del Rey. In conjunction with
this action, C-3D has streamlined its operations by closing its Salt Lake City,
Utah and Chatsworth, California offices. C-3D is retaining its Strata division
office in St. George, Utah, and its Gilbert, Arizona office. The Marina del Rey
corporate office is located in Suite 507 at 330 Washington Boulevard.
STRATA BUSINESS
During calendar year 1998, management of C-3D had been introduced to Strata,
Inc., a St. George, Utah corporation, engaged in software development.
Essentially all of the Strata products are complimentary to the 3-dimensional
business applications of C-3D. C-3D examined various strategies to either
license or acquire the Strata technology as described below. In calendar
year 1999, C-3D acquired ownership of the Strata technology. C-3D has begun
to incorporate the Strata technology into its current products and services,
and is marketing, in a new division called C-3D Strata, the principal
products formerly offered by Strata, Inc.
Strata, Inc. is one of the early pioneers in 3D software. The Strata tool line
has been used for such well-known projects as the game "MYST"-C-; television
shows like the "'98 MTV Movie Awards"-C-, "Hercules"-C- and "Xena"-C-; the NBC
dancing peacocks; the Warner Bro.'s and Blockbuster web sites; the films
"Contact"-C-, "5th Element"-C-, "Batman Forever"-C-, and many others.
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The Strata division is in the business of providing 3D centric graphical
software applications to professionals and non-professionals alike. The Strata
tools are used to create content for the web, television, feature films,
multimedia and print. Non-professionals use Strata applications for home video,
desktop publishing, visualization and recreation. The Strata division develops,
publishes, packages, markets, sells and supports these software applications.
The core products offered by the Strata division are the following:
STUDIOPRO. StudioPro is the primary Strata 3D product and is available for
Apple Macintosh, Windows 98 and NT. StudioPro has a retail price of $1,495
and is available in the US at the "street price" of approximately $950.
StudioPro is used for creating 3D images and animations for the web, video,
movies, print, games and multimedia. StudioPro is well known for being used to
create the graphics for the CD-Rom game Myst -C-. Recently StudioPro has
been used on projects such as the Blockbuster Video Web site, the NBC dancing
peacocks and the movie Contact. An upcoming release will add special
stereographic 3D features. StudioPro has an installed base of approximately
60,000.
VISION 3D. Vision 3D is an entry level 3D product and is based directly on
StudioPro. Vision 3D is presently available only on Apple Macintosh computers.
Vision 3D is priced at $395 retail with a $295 street price. Vision 3D is used
by professionals and non-professionals alike. Vision 3D is used for print, Web,
video and multimedia - as well as recreational purposes. Vision 3D has an
installed base of approximately 40,000.
VIDEOSHOP. VideoShop is a professional quality non-linear video editor and
presently runs only on Apple Macintosh computers. VideoShop is priced at $495
retail with a $395 street price. VideoShop is used primarily for multimedia,
web and desktop video tasks. VideoShop has been bundled on select Macintosh
computers for over five years and has developed an installed base of well over
one million customers through this process.
MEDIAPAINT. MediaPaint is a video painting and effects application. MediaPaint
is available for Apple Macintosh, Windows 98 and NT. MediaPaint is priced at
$695 retail with a $395 street price. MediaPaint is used for professional
projects on the Web, multimedia and broadcast video. MediaPaint has an
installed base of approximately 6,000 users.
On December 10, 1998, C-3D purchased for cash the secured position of Zions
Bank, NA in receivables, certain equipment and general intangibles of Strata,
Inc. The general intangibles collateral interest of Zions Bank would constitute
a first lien position in all or some of the Strata technology. The Company has
also purchased the secured positions of five additional creditors having secured
interests in the Strata technology, including the secured interests in the
registered copyrights of Strata, Inc. in its software intellectual property.
The total debt secured by the interests of these five secured creditors exceeded
$4.0 million. The positions of these secured creditors, other than Zions Bank,
were purchased by the issuance of 353,333 pre-split shares of restricted common
stock of C-3D. All of the described debt was delinquent and the collateral
was subject to foreclosure at the time the secured interests were purchased by
C-3D.
On May 5, 1999, C-3D obtained a judgement against Strata in the amount of
$4,798,810.71 and held a foreclosure sale on the collateral, including the
Strata technology, pledged to secure the debt owing on
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the promissory notes and leases acquired by C-3D. The judicial sale on the
judgement was completed on Wednesday, June 16, 1999 and C-3D acquired
ownership of the collateral.
One other creditor had a security interest junior to that of Zions Bank, and
possibly senior to some of the obligations of the other secured creditors whose
secured positions were purchased by C-3D. The claim of this single intervening
creditor does not exceed $35,000 and does not jeopardize the judicial sale.
Such creditor was advised of the sale and did not appear at the sale to bid
against the security interests acquired by C-3D. As a result of the events
which transpired at the June 16th judicial sale, the risk of adverse claims or
redemptive rights being asserted by other creditors of Strata are now considered
to be remote, and C-3D has successfully acquired ownership of the technology
previously owned by Strata .
REVERSE STOCK SPLIT
As of February 2, 2000, C-3D approved a four-to-one reverse stock split of
all issued and outstanding shares which reduced the outstanding shares from
24,541,964 to 6,135,491.
CURRENT FINANCING AND ACQUISITION DISCLOSURES
1. C-3D's cash requirements have been and will continue to be significant.
We expect we will need to raise additional funds through private debt or
equity financing in order to continue to support current operations and
develop our business plan. If additional funds are raised through the
issuance of equity securities, the percentage ownership of our stockholders
at that time will be reduced. We currently have incurred debt with private
lenders and anticipate incurring additional loan obligations to sustain
current operations as reflected in the Financial Statements. Management of
C-3D is negotiating the satisfaction of this debt by issuing shares of common
stock that would be restricted shares. As restricted shares, these shares
could not be traded publicly for a one year period of time. Because of the
restricted nature of the shares to be issued, the price per share at which
the stock will be exchanged for the cancellation of the debt will be
discounted from current market prices. Such discounts could be substantial.
2. Management is considering submitting to shareholder vote a proposal to
amend our Articles of Incorporation to authorize the issuance of preferred
stock. This action would make another source of funding available to C-3D.
The preferred stock which would be issued under the amended Articles of
Incorporation would have rights, preferences or privileges senior to those of
the holders of the common shares.
3. We cannot assure that additional financing will be available on terms
favorable to us, or at all. If adequate funds are not available or are not
available on acceptable terms, C-3D may not be able to
-- fund then existing operations;
-- develop new or enhanced services and related products;
-- continue to develop its business plan; and
-- otherwise respond to competitive pressures.
As a result, C-3D's business, operating results and financial condition could be
materially adversely affected.
15
<PAGE>
4. We are exploring and will continue to explore opportunities to add or
acquire;
-- technology or products consistent with our current 3D product lines;
and
-- additional hotel pay-per-view television assets and contracts.
If we acquire technology or products in the early stage of development or
growth, including technology or products that have not been fully tested or
marketed, we will be subject to numerous risks inherent in developmental
technology, plus the additional high level of risks associated with high
technology industries. Furthermore, these acquisitions may require us to obtain
additional financing, including debt or equity financing. We cannot assure you
that we will be able to obtain financing on commercially reasonable terms or at
all. Moreover, equity financing will result in a dilution to our existing
stockholders. The degree of dilution may be significant. In the case of debt
financing, we run the risks of interest rate fluctuations and insufficiency of
cash flow to pay principal and interest, along with other risks traditionally
associated with incurring indebtedness.
5. Shareholders should understand that C-3D may, and intends to, complete
future debt or equity financing as generally described in this section
without shareholder approval or ratification.
6. The sale of substantial amounts of our common stock in the public
market, or the prospect of such sales, could materially and adversely affect
the market price of the common stock. As of February 6, 2000, C-3D had
outstanding 6,135,491 shares of common stock, including shares which were
subject to paid subscription agreements, but not yet issued. In addition,
C-3D has issued the debentures, warrants, and options that are referred to in
this prospectus, and which may be exercised and result in the issuance of
common shares of C-3D.
Resales of these shares into public markets may cause the current stock
prices to decline. A substantial number of C-3D's presently outstanding
shares of common stock are "restricted" securities and may be sold in
compliance with Rule 144 or Regulation S adopted under the Securities Act, if
certain requirements are met. Rule 144 essentially provides that after one
year from the date of acquisition, a person, including affiliates of C-3D (or
persons whose shares are aggregated), may sell the greater of one percent
(1%) of the issued and outstanding shares of common stock of C-3D or the
average weekly trading volume for the four weeks prior to a sale of stock by
a shareholder within any three month period, provided that certain current
public information about C-3D is available. A person who has not been an
affiliate of C-3D (or persons whose shares are not to be aggregated for the
purpose of the resale of the securities), who has owned restricted shares of
common stock for at least two years is entitled to sell such shares under
Rule 144 without regard to any of the limitations described above.
Therefore, in each three month period after the date of this offering, a
significant number of shares of common stock could be sold under Rule 144.
Also, any shares of common stock currently held by non-residents of the
United States may be sold under Regulation S after a one-year holding period.
Investors should be aware of the possibility that sales under Rule 144 or
shares issued pursuant to Regulation S may, in the future, have a depressing
effect on the price of the common stock.
7. The owners of the convertible debentures have the right to require
C-3D to register their shares acquired in that offering. If the five
day average closing bid of the stock of C-3D ever drops below $5.00 per share
when conversion rights are exercised under the debentures, it will be
necessary for us to file another registration statement to register the
additional shares which may be issued upon conversion of the debentures. As
a result, C-3D will incur considerable expense in completing the
16
<PAGE>
registration of the additional shares as the debentures are converted.
Further, the registration of these shares will create more free trading stock
which could depress the future market price of our shares for investors in
this offering.
ORIGIN OF THE SECURITIES TO BE OFFERED
On December 21, 1998, February 9, 1999 and June 4,1999, C-3D entered into
subscription agreements with the Augustine Fund, LP, one of the selling
shareholders. Pursuant to these subscription agreements, C-3D issued a total
of thirteen units. Each unit is comprised of $250,000 in aggregate principal
amount of 8% Convertible Redeemable debentures and a warrant to purchase
shares of common stock of C-3D. Prior to March 1, 2000, the Augustine Fund
exercised its conversion rights under the December 21, 1998 and February 9,
1999 debentures and became entitled to receive a total of 562,541 shares of
common stock of C-3D. The warrants and the June 4, 1999 debentures had not
been exercised as of March 1, 2000. For purposes of clarity, the two
remaining debentures, which were issued on June 4, 1999, will be referred to
as the "June Debentures". The aggregate principal amount of the June
Debentures is $500,000.
Pursuant to the 1998 Subscription Agreement, C-3D sold to the Augustine Fund
three units as of December 21, 1998 consisting of $750,000 in principal amount
of the 1998 debentures and a warrant for 6,188 shares at an exercise price of
$14.56 per share. Pursuant to the 1999 Subscription Agreements, C-3D sold to
the Selling Shareholder eight units as of February 9, 1999 and two units as of
June 4, 1999, consisting of $2,500,000 in principal amount of the 1999
debentures. The total number of shares available under the warrants issued with
the 1999 Subscription Agreements is 21,188 at an exercise price of $14.16 per
share. As reflected above, the December 21, 1998 and February 9, 1999
debentures have all been converted into common stock of C-3D. Shares are
obtainable by the Augustine Fund on conversion of the June Debentures at a
conversion price equal to the lesser of eighty percent of the average closing
bid price of the common stock for the five trading days immediately preceding
the conversion date or $14.16 per share.
17
<PAGE>
Upon conversion of the remaining debentures or the exercise of the warrants, the
Augustine Fund may offer for sale, by use of this prospectus, the shares of
common stock issued under such debentures and warrants. The Augustine Fund
may also use this prospectus to sell any shares previously obtained from the
conversion of the other debentures.
The number of shares which may be issued upon conversion of any of the June
debentures will depend upon the market price of the stock of C-3D on the five
trading days prior to any conversion of the June Debentures. For example, a
range of shares which may be issued in a transaction described in this
prospectus is described in the table below. Because the number of shares is
dependent upon a fluctuating market price, it is not possible to state with
certainty the number of shares which will actually be issued. The table
provides a historical basis for a reasonable estimate of the total number of
shares which may be issued, based on past stock prices. Paragraph 7(a) of
the June 1999 Subscription Agreement requires C-3D to register in this
offering the number of shares which is twice the number of shares which would
be issuable upon conversion of the debentures in the event that the
conversion occurred at the lowest bid price of the C-3D stock for the sixty
trading days prior to February 9, 1999. In the 60 trading days prior to
February 9, 1999, the market price of the stock of C-3D achieved a high of
$3.60 and a low of $2.50 (or $14.40 and $10.00 on a post-split basis). Row
"C" has been included for this reason, and is the basis of including in this
prospectus an estimate of 100,000 shares for the exercise of the June
Debentures. It is anticipated that this estimate of 100,000 shares is
sufficient to satisfy the number of shares which may be obtained by the
Augustine Fund upon the conversion of the June Debentures, including shares
to be issued for accrued interest and for the registration payment required
under the terms of the June Debentures. The registration payment consists of
additional shares to be issued to Augustine Fund for each day from June 18,
1999 until the date of this prospectus. The number of registration payment
shares is also dependant upon the market price of the stock of C-3D at the
time of the conversion of the debentures. Assuming a conversion price of
$10.00, the registration payment shares under the June Debentures have
accrued at 33 shares per day, until the date of this prospectus.
The estimated 100,000 shares which may be issued pursuant to the June
Debentures, when added to the 562,541 shares which have been issued for the
conversion of the debentures prior to March 1, 2000, the 27,337 shares available
under the warrants and the 50,000 shares issued to Coleman Capital, total
739,878. The total shares reflected on the cover page of this prospectus is
derived from subtracting from 739,878 the 208,606 shares of stock which have
been sold under Rule 144 by the Augustine Fund prior to March 1, 2000. Because
the per share closing price of the stock has dropped below $2.50 ($10.00 on a
post-split basis) in calendar year 1999, C-3D has also included Row "D" in the
following table to reflect the number of shares that could be issued if the
conversion occurred at the lowest closing bid price in calendar year 1999.
Although the historical record of stock prices is no certain indicator of future
performance, it creates a reasonable basis for estimating a range of the
possible number of shares which may be issued pursuant to the convertible
debentures.
18
<PAGE>
<TABLE>
<CAPTION>
Assumed Estimated No. Total No. of No. of Estimated Total
Market of shares shares issued shares No. of shares
Price issued upon in conversions issued if which may be
conversion of of debentures all warrants issued
the June prior to are
Debentures March 1, 2000. exercised
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A $14.16 70,622 562,541 27,337 660,500
- -----------------------------------------------------------------------------------
B $12.81 78,064 562,541 27,337 667,942
- -----------------------------------------------------------------------------------
C $10.00 100,000 562,541 27,337 689,878
- -----------------------------------------------------------------------------------
D $4.00 250,000 562,541 27,337 839,878
- -----------------------------------------------------------------------------------
</TABLE>
-- The assumed market price in Row A of the table is the maximum conversion
price of $14.16 as provided in the June 1999 Subscription Agreement, and as
adjusted to reflect the reverse split of the stock. This number creates a
floor for the minimum number of shares which may be issued pursuant to the
debentures.
-- The assumed market price in Row B of the table is the closing price for
C-3D's stock on February 29, 2000.
-- The assumed market price in Row C of the table is the lowest closing bid
price for C-3D's stock for the 60 trading days prior to the date of the
February 9, 1999 Subscription Agreement, adjusted to reflect the reverse
split of the stock.
-- The assumed market price in Row D of the table is the lowest closing bid
price of the stock of C-3D for calendar year 1999, adjusted to reflect the
reverse split of the stock.
19
<PAGE>
The Coleman Capital shares may also be sold pursuant to this prospectus.
In addition to the debenture/warrant investor, Coleman Capital was sold 50,000
shares which are being registered by agreement with C-3D.
Securities which may be acquired by the Augustine Fund . . estimated at not more
than 739,878 shares
common stock
Securities acquired by Coleman Capital . . . . . .50,000 shares of common stock
Common Stock Outstanding or
Subscribed for as of February 6, 2000. . . . . . . . . . . . 6,135,491 shares
Risk Factors . . . . . . . . . . . . . . . . . . Any investment in the shares
offered hereby involves a high
degree of risk. See "Risk
Factors."
The 6,135,491 shares outstanding or subscribed for, as referenced above,
includes all of the Coleman Capital shares and 48,162 shares from the conversion
of a portion of the Augustine Fund debentures. The 6,135,491 shares do not
include: (a) the balance of the shares issued or issuable upon conversion of the
debentures which are the subject of the Subscription Agreements or the warrants;
(b) shares of common stock issuable upon exercise of stock options outstanding
as of February 6, 2000; or (c) shares of common stock that may be issued under
C-3D's Incentive Stock Option Plan.
USE OF PROCEEDS
The selling shareholders will receive all of the proceeds from the sale of the
common stock offered hereby. C-3D will not receive any of the proceeds from such
sale. However, C-3D may receive as much as $390,134 from the exercise of the
warrants issued to the owner of the debentures. These funds, if any, will be
used to satisfy the general operating expenses of C-3D.
This use of proceeds constitutes management's best present projection for the
use of the anticipated proceeds. However, management may alter the use of
proceeds, without further notice, in the exercise of its business judgement.
DETERMINATION OF OFFERING PRICE
The common stock offered by this prospectus may be offered for sale by the
selling shareholders from time to time in transactions on the American Stock
Exchange. Sales may also occur in negotiated transactions or otherwise, at
fixed prices or prices which may
20
<PAGE>
be changed based upon market or other conditions, or at other negotiated
prices. As such, the offering price is indeterminate as of the date of this
prospectus.
SELLING SHAREHOLDERS
The selling shareholders are the Coleman Capital Partners Ltd. and the
Augustine Fund L.P., the holder of the debentures and the warrants. The
following table contains certain information regarding ownership by Coleman and
by the Augustine Fund, including the number of shares that may be offered for
the account of the selling shareholders or their transferees or distributees,
from time to time, upon conversion of the debentures and exercise of the
warrants.
<TABLE>
<CAPTION>
Name Shares Beneficially Shares Offered Shares Beneficially
Owned Before Offering for Sale Owned After Offering
- --------------------------------------------------------------------------------
No. of Percent No. of Percent
Shares Shares
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Augustine Fund, 481,272 7.1% 481,272 -0- -0-
L.P.
Coleman Capital 50,000 0.8% 50,000 -0- -0-
Partners Ltd.
</TABLE>
- ----------------------------
The number of shares listed in the table above as beneficially owned by the
Augustine Fund prior to the offering is the total of (a) the 562,541 shares to
which the Augustine Fund was entitled to by reason of its conversion of certain
debentures prior to March 1, 2000, less the 208,606 shares sold by the Augustine
Fund pursuant to the Rule 144 transactions prior to March 1, 2000; (b) the
27,337 shares which may be acquired pursuant to the warrants, and (b) an
estimated 100,000 shares which may be acquired by the Augustine Fund pursuant to
the June Debentures. In addition to noting that the referenced number of shares
is an estimate, please also note that the Augustine Fund is contractually
precluded from exercising debentures at a time when the Augustine Fund would
become the beneficial owner of more than 9.9% of the stock of C-3D.
21
<PAGE>
Total shares of common stock outstanding for the purpose of this percentage
calculation includes the common stock into which the debentures have been or
are convertible, and the 27,377 shares issuable upon exercise of the
warrants, but does not include shares of common stock issuable on the
exercise of outstanding stock options or shares of common stock that may be
granted under C-3D's Incentive Stock Option Plan.
Coleman Capital has been engaged by C-3D to render certain services for C-3D.
The principal services renderedby Coleman included:
-- assisting C-3D in becoming listed on AMEX;
-- assisting C-3D in capital raising transactions;
-- assisting C-3D in listing its stock on one or more European stock
exchanges; and
-- introducing C-3D to U.S. and European brokers, institutional investors
and stock analysists.
The 50,000 shares of the common stock of C-3D to be sold by Coleman pursuant to
this prospectus constitute part of the consideration paid for such services.
Coleman also received a fee of 6% of the gross investment of the Augustine Fund,
and, for a twelve month period ending in December 1999, received an additional
payment of $3,000 per month. Except as disclosed in this paragraph, the selling
shareholders have not had any material relationship with C-3D, or any of its
affiliates, within the past three years.
The selling shareholders have represented to C-3D that they purchased the
shares or units for their own account for investment only and not with a view
towards the public sale or distribution thereof, except pursuant to sales
registered under the Securities Act or exemptions therefrom. In recognition
of the fact that the selling shareholders, even though purchasing the units
for investment, may wish to be legally permitted to sell their shares when
they deem appropriate, C-3D agreed with the selling shareholders to file with
the Commission under the Securities Act the registration statement with
respect to the sale of the shares from time to time in transactions on stock
exchanges, in privately negotiated transactions, or through a combination of
such methods of sale, and has agreed to prepare and file such amendments and
supplements to the registration statement as may be necessary to keep the
registration statement effective until the shares are no longer required to
be registered for the sale thereof by the selling shareholders. The natural
persons who control the Augustine Fund are John Porter, Brian Porter and
Thomas Duszynski. Coleman Capital Partners is controlled by Coleman &
Company Securities, a registered broker/dealer; Douglas Layton and Michael
Novielli. In the event the registration of additional shares is necessary,
C-3D has agreed to prepare and file such additional registration statements
as may be necessary to allow the Augustine Fund to sell all of its shares.
PLAN OF DISTRIBUTION
All of the shares offered may be sold from time to time by the selling
shareholders. Sometimes shares held by shareholders will be sold by their
pledgees, donees, distributees, transferees or other successors-in-interest.
The sale of the shares by the selling shareholders may be effected in
transactions on the American Stock Exchange, in privately negotiated
transactions, or through a combination of such methods of sale. Prices may be
fixed, tied to market prices prevailing at the time of sale, or otherwise
negotiated. The selling shareholders may effect the
22
<PAGE>
transactions by selling the shares directly to purchasers, acting as
principals for their own accounts, or by or through broker-dealers acting as
agents for the selling shareholders, or to broker-dealers who may purchase
shares as principals and thereafter sell such shares from their own account.
Subsequent sales may be on any exchange or market on which such securities are
listed or quoted, in negotiated transactions, through a combination of such
methods of sale, or otherwise. Such broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the selling shareholders
and/or the purchasers of the shares for whom such broker-dealer may act as
agents or to whom they may sell as principals, or both (which compensation as to
a particular broker-dealer may be in excess of customary commissions). Any
broker-dealer may act as a broker-dealer on behalf of the selling shareholders
in connection with the offering of certain of the shares by the selling
shareholders. None of the proceeds from the sale of the shares by the selling
shareholders will be received by C-3D. In addition, any of the shares that
qualify for sale pursuant to Rule 144 promulgated under the Securities Act may
be sold in transactions complying with such Rule, rather than pursuant to this
prospectus.
To the extent required, the amount of the shares to be sold, purchase prices,
public offering prices, the names of any agents, dealers or underwriters, and
any applicable commissions or discounts with respect to a particular offer will
be set forth by C-3D in a prospectus supplement accompanying this prospectus;
or, if appropriate, a post-effective amendment to this registration statement.
The selling shareholders may be deemed to be statutory underwriters under the
Securities Act. Also any broker-dealers who act in connection with the sale of
the shares hereunder may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, and any commissions received by them and
any profit on theresale of the shares as principal may be deemed to be
underwriting discounts and commissions under the Securities Act. C-3D has agreed
to bear all expenses (other than selling commissions and fees and stock transfer
taxes) in connection with the registration and sale of the shares being offered
by the selling shareholders. C-3D has agreed to indemnify the Augustine Fund
against certain liabilities, including liabilities under the Securities Act.
Offers or sales of the shares have not been registered or qualified under the
laws of any country, other than the United States. To comply with certain
states' securities laws, if applicable, the shares will be offered or sold in
such jurisdictions only through registered or licensed brokers or dealers.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the shares may be limited in its ability to engage
in market activities with respect to such shares. In addition and without
limiting the foregoing, the selling shareholders will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder, which
provisions may limit the timing of purchases and sales of any of the shares by
the selling shareholders. The foregoing may affect the marketability of the
shares.
There can be no assurance that the selling shareholders will sell any or all of
the shares offered by them hereunder.
23
<PAGE>
DESCRIPTION OF SECURITIES
COMMON STOCK
C-3D is presently authorized to issue 500,000,000 shares of its common stock. As
of February 6, 2000, and after giving account to the four-to-one reverse split,
there were 6,135,491 issued, outstanding and subscribed for shares. The holders
of common stock are entitled to one vote per share on each matter submitted to a
vote at any meeting of shareholders. Shares of common stock do not carry
cumulative voting rights and, therefore, a majority of the outstanding shares of
common stock will be able to elect the entire Board of Directors. If they do so,
minority shareholders would not be able to elect any members to the Board of
Directors.
Shareholders of C-3D have no preemptive rights to acquire additional shares of
common stock or other securities. The common stock is not subject to redemption
and carries no subscription or conversion rights. In the event of liquidation of
C-3D, the shares of common stock are entitled to share equally in corporate
assets after satisfaction of all liabilities. The shares, when issued, will be
fully paid and non-assessable.
WARRANTS
The warrants entitle the holder to purchase 6,188 shares of common stock of C-3D
at a price of $14.56 per share and 21,188 shares of common stock of C-3D at a
price of $14.16 per share. The shares of common stock underlying the warrants,
when issued upon exercise of the warrants, in whole or in part, will be fully
paid and nonassessable.
DEBENTURES
The outstanding 8% Redeemable Convertible Debentures were issued on June 4,
1999. The conversion price for the June 1999 Debentures is the lesser of eighty
percent of the average closing bid price of the common stock for the five
trading days prior to the date on which the debentures are presented for
conversion or $14.16 per share.
The debentures and the warrants contain provisions that protect the holder
against dilution by adjustment of the exercise price. Such adjustments will
occur in the event, among others, of a merger, stock split or reverse stock
split, stock dividend or recapitalization. The holder of the debentures and the
warrants will not possess any rights as a shareholder of C-3D until such holder
converts the debentures or exercises the warrants.
For the life of the debentures and the warrants, the holder thereof has the
opportunity to profit from a rise in the market price of the common stock
without assuming the risk of ownership of the shares of common stock issuable
upon conversion of the debentures or the exercise of the warrants. The warrant
holder may be expected to exercise the warrants at a time when C-3D would, in
all likelihood, be able to obtain any needed capital by an offering of common
stock on terms more favorable than those
24
<PAGE>
provided for by the warrants. Furthermore, the terms on which C-3D could
obtain additional capital during the life of the warrants may be adversely
affected.
LIMITATION ON LIABILITY AND DISCLOSURE OF COMMISSION'S POSITION
ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
The by-laws of C-3D provide for indemnification of C-3D's directors and officers
to the fullest extent permitted by law. Insofar as indemnification for
liabilities under the Securities Act may be permitted to directors, officers or
controlling persons of C-3D pursuant to C-3D's Articles of Incorporation, as
amended, by-laws and Utah law, C-3D has been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in such
Act and is, therefore, deemed to be unenforceable by the Commission.
LEGAL MATTERS
The validity of the common stock offered hereby has been passed upon for C-3D by
Bruce L. Dibb, P.C.; Salt Lake City, Utah.
EXPERTS
The consolidated financial statements of the Company incorporated for the year
ended March 31, 1999, have been audited by Jones, Jensen & Co. as set forth in
their report for that period. Such consolidated financial statements are
incorporated in this prospectus in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing. Quarterly
reports, as incorporated through December 31, 1999, are submitted upon an
unaudited basis.
25
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THIS OFFERING; AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY C-3D. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, THE SHARES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON
TO WHOM IT IS UNLAWFUL TO MAKE AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF C-3D SINCE
THE DATE HEREOF.
____________________
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
Summary of the Offering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Incorporation of Certain Documents by Reference. . . . . . . . . . . . . . . . . . 11
Recent Developments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Origin of The Securities to be Offered . . . . . . . . . . . . . . . . . . . . . . 17
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Determination of Offering Price . . . . . . . . . . . . . . . . . . . . . . . . . 20
Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Description of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Limitation on Liability and Disclosure of Commission Position on
Indemnification for Securities Act Liabilities. . . . . . . . . . . . . . . . 25
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
531,272 SHARES OF
COMMON STOCK
CHEQUEMATE INTERNATIONAL, INC.
P R O S P E C T U S
March ___, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
All expenses in connection with the issuance and distribution of the securities
being registered, other than underwriting discounts and commissions, will be
paid by C-3D. Such expenses are estimated as follows:
<TABLE>
<S> <C>
Registration fee . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,930
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . . . $ 40,000
Accounting fees and expenses . . . . . . . . . . . . . . . . . . . $ 13,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,070
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 61,000
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Restated Articles of Incorporation of C-3D provide that C-3D must indemnify
each of its directors and officers, to the fullest extent permitted under the
Utah Revised Business Corporation Act against all liabilities incurred by reason
of the fact that the person is or was a director or officer of C-3D or a
fiduciary of an employee benefit plan, or is or was serving at the request of
C-3D as a director or officer, or fiduciary of an employee benefit plan, of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise.
The effect of these provisions is potentially to indemnify C-3D's directors and
officers from all costs and expenses of liability incurred by them in connection
with any action, suit or proceeding in which they are involved by reason of
their affiliation with C-3D.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of C-3D pursuant to
the foregoing provisions, or otherwise, C-3D has been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<S> <C>
4.1 Subscription Agreement between C-3D and Augustine Fund, LP dated as of
December 21, 1998. (Incorporated by reference from Form 8-K (Film No.
98774706) filed by C-3D with the Commission on December 23, 1998).
4.2 Subscription Agreement between C-3D and Augustine Fund, LP dated as of
February 9, 1999. (Incorporated by reference from Form 10-QSB (Film
No. 99541584) filed by C-3D with the Commission on February 16, 1999).
4.3 Form of 1998 Debentures. (Incorporated by reference from Form 8-K
(Film No. 98774706) filed by C-3D with the Commission on December 23,
1998).
4.4 Form of 1998 warrant. (Incorporated by reference from Form 8-K (Film
No. 98774706) filed by C-3D with the Commission on December 23, 1998).
4.5 Form of 1999 Debentures. Incorporated by reference from Form 10-QSB
(Film No. 99541584) filed by C-3D with the Commission on February 16,
1999).
4.6 Form of 1999 Warrant. Incorporated by reference from Form 10-QSB
(Film No. 99541584) filed by C-3D with the Commission on February 16,
1999).
4.7 Subscription Agreement between C-3D and Augustine Fund, LP dated as of
June 4, 1999. (Incorporated by reference from Form S-3/A (Film No.
99659015) filed by C-3D with the Commission on July 2, 1999).
4.8 Amendment to Subscription Agreements and Warrants between C-3D and
Augustine Fund, LP dated as of December 1, 1999. (Incorporated by
reference from Form S-3/A2 (Film No. 507009) filed by C-3D with the
Commission on January 13, 2000).
4.9 Second Amendment to Subscription Agreements and Warrants
dated February 28, 2000.
5.1 Opinion of Bruce L. Dibb, P.C.(Incorporated by reference from initial
Form S-3
(Film No. 99547723) filed by C-3D with the Commission on February 23,
1999).
23.1 Consent of Jones, Jensen & Company
23.2 Consent of Bruce L. Dibb, P.C.(Incorporated by reference from initial
Form S-3
(Film No. 99547723) filed by C-3D with the Commission on February 23,
1999).
24.1 Powers of Attorney (Incorporated by reference from initial Form S-3
(Film No. 99547723) filed by C-3D with the Commission on February 23,
1999).
24.2 Powers of Attorney appointing J. Michael Heil and Brad Stolba.
(Incorporated by reference from Form S-3/A2 (Film No.507009) filed by
C-3D with the Commission on January 13, 2000).
</TABLE>
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
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, as amended (the "Securities Act");
(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, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered by this offering,
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 that remain unsold at the end of the
offering.
(4) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Salt Lake City, Utah, on February 29, 2000.
CHEQUEMATE INTERNATIONAL, INC.
By /s/ J. Michael Heil
----------------------------------------
J. Michael Heil
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C>
/s/ J. Michael Heil February 29, 2000
- ---------------------------------------
J. Michael Heil, Chairman of the Board
/s/ J. Michael Heil, for February 28, 2000
- ---------------------------------------
John Bartholomew, Director
February ___, 2000
- ---------------------------------------
Hal Glick, Director
/s/ J. Michael Heil, for February 29, 2000
- ---------------------------------------
Andre Peterson, Director
February ___, 2000
- ---------------------------------------
Robert E. Warfield, Director
/s/ Daniel R. Thompson February 25, 2000
- ---------------------------------------
Daniel R. Thompson, Director
/s/ Guy DeHart February 28, 2000
- ---------------------------------------
Guy DeHart
Principal Accounting Officer
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
<S> <C>
4.1 Subscription Agreement between C-3D and Augustine Fund, LP
dated as of December 21, 1998. (Incorporated by reference from Form
8-K (Film No. 98774706) filed by C-3D with the Commission on
December 23, 1998).
4.2 Subscription Agreement between C-3D and Augustine Fund, LP
dated as of February 9, 1999 (Incorporated by reference from
Form 10-QSB (Film No. 99541584) filed by C-3D with the
Commission on February 16, 1999).
4.3 Form of 1998 debentures (Incorporated by reference from Form 8-K
(Film No. 98774706) filed by C-3D with the Commission on
December 23, 1998).
4.4 Form of 1998 Warrant (Incorporated by reference from Form 8-K
(Film No. 98774706) filed by C-3D with the Commission on
December 23, 1998).
4.5 Form of 1999 debentures (Incorporated by reference from Form 10-QSB
(Film No. 99541584) filed by C-3D with the Commission on
February 16, 1999).
4.6 Form of 1999 Warrant (Incorporated by reference from Form 10-QSB
(Film No. 99541584) filed by C-3D with the Commission on
February 16, 1999).
4.7 Subscription Agreement between C-3D and Augustine Fund, LP dated
as of June 4, 1999 (Incorporated by reference from Form S-3/A
(Film No. 99659015) filed by C-3D with the Commission on July 2,
1999).
4.8 Amendment to Subscription Agreements and Warrants between C-3D and
Augustine Fund, LP dated as of December 1, 1999. (Incorporated by
reference from Form S-3/A2 (Film No. 507009) filed by C-3D with the
Commission on January 13, 2000).
4.9 Second Amendment to Subscription Agreements and Warrants
dated February 28, 2000. . . . . . . . . . . . . . . . . . . . . . . . II-7
5.1 Opinion of Bruce L. Dibb, P.C (Incorporated by reference from initial
Form S-3 (Film No. 99547723) filed by C-3D with the Commission on
</TABLE>
II-5
<PAGE>
<TABLE>
<S> <C>
February 23, 1999).
23.1 Consent of Jones, Jensen & Co. . . . . . . . . . . . . . . . . . . . . II-8
23.2 Consent of Bruce L. Dibb, P.C. (included in Exhibit 5.1) (Incorporated
by reference from initial Form S-3 (Film No. 99547723) filed by C-3D
with the Commission on February 23, 1999).
24.1 Powers of Attorney (Incorporated by reference from initial Form S-3
(Film No. 99547723) filed by C-3D with the Commission on February 23,
1999).
24.2 Powers of Attorney appointing J. Michael Heil and Brad Stolba
(Incorporated by reference from Form S-3/A2 (Film No. 507009) filed by
C-3D with the Commission on January 13, 2000).
</TABLE>
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<PAGE>
EXHIBIT 4.9
SECOND AMENDMENT TO SUBSCRIPTION AGREEMENTS AND WARRANTS
This agreement is made this 29th day of February, 2000, by and between
Chequemate International, Inc. dba C-3D Digital, Inc., a Utah corporation and
Augustine Fund, L.P., an Illinois limited partnership (the "Subscriber").
I. WHEREAS, the parties to this agreement have entered into subscription
agreements for 8% convertible redeemable debentures on December 21, 1998,
February 9, 1999 and June 4, 1999 ("the "Subscription Agreements"),
pursuant to which thirteen (13) debentures (the "Debentures") have been
issued;
II. WHEREAS, pursuant to the Subscription Agreements and an amendment thereto
dated December 1, 1999, C-3D has granted common stock purchase warrants to
the Subscriber (the "Warrants") on December 21, 1999, February 9, 1999,
June 4, 1999 and December 1, 1999; and
III. WHEREAS, C-3D and the Subscriber desire to modify its December 1, 1999
amendment agreement.
NOW, for good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
1. The defined terms of the referenced Subscription Agreements, Debentures and
Warrants shall have the same meaning in this Amended Agreement.
2. The parties agree to cancel paragraphs 2, 3, 4 and 5 of the December 1,
1999 amendment agreement. This contemplates (a) the cancellation of the
warrant for 100,000 pre-split shares of stock of C-3D granted pursuant to
the December 1, 1999 amendment agreement, (b) the reinstatement of the
previous exercised prices for the December 21, 1999, February 1, 1999 and
June 4, 1999 warrants (on a post-split basis $14.56, $14.16 and $14.16
respectively) and (c) the cancellation of any waiver of the Registration
Payment provided for in the Debentures.
Augustine Fund, L.P. C-3D Digital, Inc.
By Augustine Capital Management, L.L.C.
By /s/ John Porter By /s/ J. Michael Heil
--------------------------- ---------------------------
Its: President J. Michael Heil, CEO
II-7
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the prospectus
constituting part of this amended registration statement on Form S-3 of our
report dated June 30, 1999,on Form 10-KSB for Chequemate International, Inc. for
the year ended March 31, 1999. We also consent to the incorporation and to the
reference to us under the heading "Experts" in the registration statement.
/s/ Jones, Jensen & Company
- ---------------------------------------
Jones, Jensen & Company
Salt Lake City, Utah
February 29, 2000
II-8
