SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NETCURRENTS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 95-4233050
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9720 WILSHIRE BOULEVARD, SUITE 700, LOS ANGELES, CA 90212 (310) 860-0200
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
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IRWIN MEYER
CHIEF EXECUTIVE OFFICER
NETCURRENTS, INC.
9720 WILSHIRE BOULEVARD, SUITE 700, LOS ANGELES, CA 90212
(310) 860-0200
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
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Copies to:
LINDA GIUNTA MICHAELSON, ESQ.
TROOP STEUBER PASICH REDDICK & TOBEY, LLP
2029 CENTURY PARK EAST, 24TH FLOOR
LOS ANGELES, CALIFORNIA 90067
(310) 728-3316
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
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 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. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=============================================================================================
Proposed Maximum Proposed Maximum
Title Of Shares Amount To Be Aggregate Price Aggregate Amount Of
to be Registered Registered Per Share(1) Offering Price(1) Registration Fee
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 4,270,000 $7.078 $30,223,060 $7,978.89
=============================================================================================
<FN>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) on the basis of the average high and low prices
of Registrant's Common Stock reported on the Nasdaq SmallCap Market on
March 16, 2000.
</FN>
</TABLE>
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PROSPECTUS
4,270,000 SHARES
NETCURRENTS, INC.
COMMON STOCK
The parties listed in this prospectus under the caption "Selling
Security Holders" may from time to time offer and sell up to 4,270,000 shares
of our common stock.
The selling security holders may offer their shares through public or
private transactions, on or off the Nasdaq SmallCap Market, at prevailing market
prices or at privately negotiated prices. We will not receive any proceeds from
this offering.
Our common stock is publicly traded on the Nasdaq SmallCap Market under
the symbol "NTCS." On March 15, 2000, the closing bid price for the common
stock on the Nasdaq SmallCap Market was $7.34375.
AN INVESTMENT IN THESE SECURITIES IS RISKY. YOU SHOULD ONLY PURCHASE
THESE SHARES IF YOU CAN AFFORD TO LOSE YOUR ENTIRE INVESTMENT. SEE "RISK
FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS THAT YOU SHOULD
CONSIDER BEFORE YOU INVEST IN THE COMMON STOCK BEING SOLD WITH THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The information in this prospectus is not complete and may be changed.
The Selling Security Holders may not sell these securities until the
registration statement filed with the SEC is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
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WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a Registration Statement on Form S-3 with
respect to this offering of our common stock. This prospectus only constitutes
part of the Registration Statement and does not contain all of the information
set forth in the Registration Statement, its exhibits and its schedules.
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. Our SEC filings are available to the public over
the Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for additional information on the public reference rooms. We are
also listed on the Nasdaq SmallCap Market. Our periodic reports, proxy
statements and other information can be inspected at the offices of Nasdaq at
1735 K Street, NW, Washington, DC, 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them. This prospectus incorporates important business and financial
information about us, which is not included in or delivered with this
prospectus. The information incorporated by reference is an important part of
this prospectus, and information that we file later with the SEC will
automatically update and supersede this information.
We incorporate by reference:
(1) Our Annual Report on Form 10-KSB for the fiscal year ended June
30, 1999;
(2) Our Quarterly Report on Form 10-QSB, as amended, for the quarter
ended September 30, 1999;
(3) Our Definitive Proxy Statement filed on November 17, 1999;
(4) Our Current Report on Form 8-K, filed on December 29, 1999
(reporting Item 2);
(5) Our Current Report on Form 8-K, filed on December 30, 1999
(reporting Item 5);
(6) Our Current Report on Form 8-K, filed on February 4, 2000
(reporting Item 8);
(7) Our Current Report Form 8-K/A, filed on March 6, 2000 (reporting
Item 7);
(8) Our Current Report on Form 8-K, filed on March 9, 2000 (reporting
Item 5);
(9) The description of our common stock contained in our Registration
Statement on Form 8-A filed on September 9, 1996; and
(10) Future filings we make with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act until all of the
shares offered by the Selling Security Holders have been sold.
You may obtain a copy of these filings without charge by writing or
calling us at:
NetCurrents, Inc.
9720 Wilshire Boulevard, Suite 700, Los Angeles, CA 90212
Attention: Arthur Bernstein, Executive Vice President
(310) 860-0200
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with different information. We are not making an offer to sell these securities
or soliciting an offer to buy these securities in any state where the offer or
sale is not permitted. You should not assume that the information in this
prospectus or the documents we have incorporated by reference is accurate as of
any date other than the date on the front of those documents.
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CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks
and uncertainties that address:
- trends affecting our financial condition or results of
operations;
- the impact competition has on our business;
- our strategies concerning the expansion of our operations; and
- our plans to integrate our most recent acquisition and grow the
business we acquired.
These forward-looking statements may be found in "Prospectus Summary,"
"Risk Factors," "Use of Proceeds" and elsewhere in this prospectus. In some
cases you can identify forward-looking statements by terminology including
"believes," "anticipates," "expects," "estimates," "may," "will," "should,"
"could," "plans," "predicts," "potential," "continue," or similar terms.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. The forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause
actual results to be materially different from any future results expressed or
implied by the forward-looking statements. These factors include those listed
under "Risk Factors" and elsewhere in this prospectus. We undertake no duty to
update any of the forward-looking statements after the date of this prospectus,
even if new information becomes available or other events occur in the future.
All forward-looking statements contained in this prospectus are expressly
qualified in their entirety by this cautionary notice.
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PROSPECTUS SUMMARY
THIS SUMMARY IS NOT COMPLETE AND DOES NOT CONTAIN ALL OF THE
INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE DETAILED
INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS, INCLUDING THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS AND THE NOTES TO THOSE STATEMENTS CONTAINED
IN THE DOCUMENTS WE HAVE INCORPORATED BY REFERENCE.
OUR COMPANY
We are a highly specialized company providing services designed to
assist corporations in the management of Internet information.
In December 1999, our shareholders approved the change in our company's
name from "IAT Resources Corporation" to "NetCurrents, Inc." ("NetCurrents")
(NASDAQ:NTCS) and also approved the merger (the "Merger") of NetCurrents
Services, Inc. ("NC Services") (previously known as Infolocity, Inc.) with and
into us, pursuant to an Amended and Restated Agreement and Plan of Merger dated
as of November 1, 1999. The Effective Date of the Merger was December 22, 1999.
Through our wholly-owned NC Services subsidiary, we have developed a proprietary
search technology designed to search for, identify, extract, analyze and deliver
specific information derived form the Internet. This information is obtained
using NC Services' proprietary real-time search engine and includes data from a
wide range of sources on the Internet including: portals, web sites, discussion
groups and message boards. Once the data is delivered, it is analyzed, formatted
and made available in a variety of digital and graphical forms to our clients.
The data has significant value to our clients in their decision-making processes
and business planning. In September 1999, NC Services filed business application
patents for its FIRST (Fast Internet Real Time Search Technology).
Our existing clients include public and private companies. We believe
our prospective clients may also include stock exchanges, government agencies
and other organizations. We are focusing on the business-to-business segment,
which we believe to be the fastest growing Internet market.
OUR INTERNET SERVICES PROVIDED THROUGH NC SERVICES
Using proprietary, real-time technology, NC Services scans thousands of
targeted Internet locations in minutes. Our staff of trained Internet
Strategists provides clients with comprehensive qualitative analysis and
professional counsel. Designed to meet their specific criteria, our products
assist clients in the critical management of information found on the Internet.
INVESTORFACTS
Our InvestorFacts service provides clients up to the minute, real-time
notification of an extensive range of online information to assist them in
minimizing the negative impact of fraudulent data or misinformation. Our
proprietary search technology constantly monitors over 50,000 targeted Internet
locations, message boards, e-publications and newsgroups based on specifically
defined search terms selected by each client. Clients receive alert
notifications indicating that a specified event has occurred whenever specific
criteria have been met. We provide this information on a secure MyNetCurrents
Portal available only to the client. InvestorFacts is designed to provide
clients with an understanding of how the online community perceives their
company, stock, executives, products and services.
CYBERFACTS
As with InvestorFacts, CyberFacts tracks and monitors more than 50,000
message boards, e-publications, newsgroups and Internet locations. Our
CyberFacts program includes a limited alert service. Our Internet Strategists
filter and prioritize the information and assemble the postings to meet the
clients' predetermined requirements. Internet Strategists identify and
categorize information, and this information is used by the Company's clients as
needed.
CYBERPERCEPTIONS
CyberPerceptions is our most sophisticated service to date, which
includes unique features and extensive reporting. Our CyberPerceptions' service
permits clients to select five notification criteria for alerts, customize the
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frequency and range of their regular reporting, participate in a monthly
strategy session with key our Internet Strategists, and receive monthly
Competitive Intelligence reporting on two of the client's competitors or topics
or interest, all in addition to the basic CyberFacts features. Our Internet
Strategists track the overall reach of the client's company, products, or brands
compared to competitors. CyberPerceptions clients have the added option of
subscribing to Strategic Information Dissemination, Emergency Task Force
services, or additional Competitive Intelligence reporting at special rates as
needed.
SPECIAL SERVICES
The Company offers clients additional services on an "as needed" basis.
OUR OTHER SERVICES AND PRODUCTS
In addition, as part of our expansion into Internet technology
development and integration, we have identified and made small investments in
early and expansion stage companies which we believe have unique Internet-based
hardware and/or software applications and which show promise as catalysts in the
Internet and online commerce industries. For example, in early 1999, we
purchased 150,000 shares of common stock of flowersandgifts.com, and 100,000
shares of common stock of Pacific Softworks, Inc. (43,000 shares of which we
subsequently sold), a licensor of Internet-related software and related software
development tools, which completed an initial public offering in June, 1999. We
also have warrants to purchase up to an additional 100,000 shares of Pacific
Softworks' common stock.
In 1999, we changed our name to IAT Resources Corporation, after having
previously operated under the name The Producers Entertainment Group Ltd. for
approximately eight years. In December 1999, we changed our name to NetCurrents,
Inc. Historically, we acquired, developed, produced and distributed dramatic,
comedy, documentary and instructional television series and movies and
theatrical motion pictures. However, in 1999 we redirected our core business
toward the Internet and technology industry.
While operating as The Producers Entertainment Group, in July 1998, we
acquired MWI Distribution, Inc., which does business under the name MediaWorks
International. MediaWorks International continues to distribute television and
video programming in the international market, concentrating on children's and
family programming and animation.
OUR STRATEGY
Our long-term strategic plan is to become the acknowledged global
authority and pre-eminent supplier of Internet-based information, analysis and
stategic support. We will also evaluate horizontal and vertical acquisitions
that have synergistic benefits to our strategic plan.
The underlying concept of our strategic plan is to offer
business-to-business services that will be driven by our proprietary
technologies and whose functionality is a product of the search for,
identification, extraction, analysis and delivery of specific information
derived from thousands of targeted Internet locations in real time, 24 hours a
day, seven days a week. Our Internet strategists use this data to create
confidential reports and analyses that are integrated and made available on a
customized, secure portal on a regular basis, as well as in the provision of
strategic support services. In addition, we intend to explore various vertical
markets where our combined technology, analytical tool set and strategic support
can provide incremental value to prospective clients. We will continue to obtain
search information by utilizing our proprietary search engine, and any
enhancements or new software will be developed by our research and development
team.
CORPORATE INFORMATION
Our executive offices are located at 9720 Wilshire Boulevard, Suite
700, Beverly Hills, California 90212. Our telephone number is (310) 860-0200.
Our NC Services subsidiary's offices are located at 1350 Old Bayshore Highway,
Suite 30, Burlingame, California 94010. NC Services' phone number is
650-401-3200. Information on our web site does not constitute part of this
prospectus.
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RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS BEFORE YOU DECIDE TO
BUY OUR COMMON STOCK. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR
BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS WOULD LIKELY SUFFER. AS A
RESULT, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU MAY LOSE
ALL OR PART OF THE MONEY YOU PAID TO BUY OUR COMMON STOCK.
RISKS RELATED TO OUR BUSINESS
WE RECENTLY MERGED WITH NC SERVICES. IF WE FAIL TO GROW THE NC SERVICES BUSINESS
OR IF WE CANNOT SUCCESSFULLY INTEGRATE NC SERVICES' BUSINESS INTO OURS, OUR
BUSINESS AND FINANCIAL CONDITION COULD SUFFER.
On December 22, 1999, we completed the acquisition of NC Services
(previously known as Infolocity, Inc.), a privately held Internet company which,
through its proprietary search technology, helps publicly traded companies
minimize the impact of negative information posted on the Internet. This merger
will necessarily involve the integration of two businesses that have previously
operated independently. We merged with NC Services with the expectation that
this merger would help us execute our plan to expand our core business into the
Internet industry and provide us with further opportunities to promote
synergistic business relationships among other Internet companies. However, we
cannot be certain that our acquisition of NC Services will enable our business
to realize a higher rate of growth. In addition, there can be no assurance that
we will be able to successfully integrate the operations of NC Services into our
existing operations or that we will realize all of the benefits expected from
this integration. In order to achieve these anticipated benefits, we must
efficiently, effectively and timely integrate NC Services' operations into ours.
The combination of these businesses requires, among other things:
- integration of management staffs and necessary support staffing
to meet the combined entity's business growth opportunities;
- coordination of operations and marketing efforts; and
- location of adequate sources of additional funding.
Full integration of these businesses requires considerable effort on
the part of our management, who will need to dedicate considerable time toward
integrating the financial and information systems, management staffs and
organizational cultures of the separate businesses. We could experience problems
associated with the integration, and the integration itself may not proceed
efficiently or be successful. Any delay in completing the integration may
negatively impact the combined entity's ability to provide ongoing quality
products and services, which in turn may negatively impact the future revenues,
net income and earnings per share of the combined entity. Additionally,
unexpected costs incurred in connection with the integration could decrease
operating margins and negatively impact net income and earnings per share of the
combined entity. In addition, there can be no assurance that the operations,
management and personnel of the businesses will be compatible or that NC
Services will not experience the loss of key personnel, notwithstanding the fact
that we have employment agreements with a number of these key employees.
Furthermore, even if we successfully integrate NC Services' operations into
ours, the combination may nevertheless adversely affect our business and results
of operations by interrupting or interfering with our pre-existing business
operations, diverting management's attention and resulting in additional
management expenses.
ALTHOUGH WE CONTINUE TO OPERATE IN THE ENTERTAINMENT BUSINESS ON A SIGNIFICANTLY
REDUCED SCALE, OUR PROSPECTS IN THE INTERNET SECTOR ARE DIFFICULT TO FORECAST
BECAUSE WE HAVE ONLY BEEN TRANSITIONING TO THE INTERNET AND ONLINE COMMERCE
INDUSTRIES SINCE FEBRUARY 1999.
We announced our intention to expand our business in the Internet and
electronic commerce industries in February 1999, and we have changed our core
television production business to Internet technology services and integration.
These industries are new, highly speculative and involve a substantial degree of
risk. Since we are in an early stage of development in these rapidly evolving
industries, our prospects are difficult to predict and could change rapidly and
without warning. You must consider our prospects in light of the risks, expenses
and difficulties frequently encountered by companies in the early stages of
developing and expanding their business, particularly companies in the new and
rapidly evolving Internet technology and online commerce markets. These risks
include, but are not limited to, the inability to attract key personnel
knowledgeable in the Internet markets, the inability to respond promptly to
changes
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in a rapidly evolving and unpredictable business environment and the inability
to manage potential growth. To address these risks, we must, among other things:
- successfully implement new business and marketing strategies;
- respond to competitive developments;
- expand our funding of early and expansion-stage companies; and
- attract and retain qualified personnel.
WE MAY NOT BE SUCCESSFUL IN ENTERING INTO THE INTERNET AND ONLINE COMMERCE
FIELDS SINCE WE HISTORICALLY NEVER HAVE OPERATED IN THESE BUSINESSES. OPERATING
IN THESE BUSINESSES WILL ALSO REQUIRE SUBSTANTIAL WORKING CAPITAL.
The Internet and online commerce industries are relatively new business
ventures for us, and are businesses in which we have not historically operated.
Except for a limited number of officers, none of our current executives have
experience operating Internet-related companies. Although we believe that our
experience in the entertainment business lends itself well to these industries,
we may not be able to operate successfully in them.
In addition, our new business strategy, investment and acquisition
activities will require substantial working capital. We spent substantial funds
to acquire NC Services and will continue to spend substantial funds to market
and expand our new business and to establish an effective management team with
experience in the Internet and online commerce industries. We cannot assure you
that we will be successful in any of these areas.
FUTURE ACQUISITIONS INVOLVE RISKS FOR US.
We intend to evaluate future acquisitions of complementary product
lines and businesses as part of our business strategy. Any future acquisitions
may result in potentially dilutive issuances of equity securities, the use of
our cash resources, the incurrence of additional debt and increased goodwill,
intangible assets and amortization expense, which could negatively impact our
profitability. In addition, acquisitions involve numerous risks, including
difficulties in the assimilation of the operations and products of the acquired
companies, the diversion of management's attention from other business concerns,
risks of entering markets in which we have no or limited direct prior
experience, and the potential loss of key employees of the acquired company.
OUR GROWTH AND OPERATING RESULTS COULD BE IMPAIRED IF WE ARE UNABLE TO MEET OUR
CURRENT LIQUIDITY AND CAPITAL RESOURCES REQUIREMENTS.
We estimate that, as of December 31, 1999, taking into account our
acquisition of NC Services, our cash commitments for the next twelve months will
be approximately $12,500,000; a significant portion of this amount is allocated
for requirements associated with the business of NC Services.
We incur expenses associated with base compensation to key officers,
independent contractors and consultants as well as expenses related to our
principal executive office lease and the lease of the NC Services facilities. We
incur other general and administrative costs such as:
- staff salaries;
- employee benefits;
- employer taxes;
- premiums on insurance policies;
- marketing costs;
- office expenses;
- professional fees;
- consulting fees; and
- other expenses.
With the acquisition of NC Services, we expect our expenses to increase
significantly. In addition to general and administrative expenses, the required
dividends on the shares of Series A Preferred Stock are $425,000 annually. The
dividends on the Series A Preferred Stock may be paid either in shares of our
common stock or in cash.
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In addition, while we believe the cash generated from operations will
be sufficient to fund our business for the next 12 months, we cannot anticipate
all of our future requirements. We may need to raise additional funding for the
expansion of our business and marketing efforts, for example. However, if we
must raise additional funds by issuing equity or convertible debt securities,
the percentage ownership of our stockholders will be diluted. Any new securities
could have rights, preferences and privileges senior to those of our common
stock. Furthermore, we cannot be certain that additional financing will be
available when and to the extent required or that, if available, it will be on
acceptable terms. If adequate funds are not available on acceptable terms, we
may not be able to fund our expansion of our business into the Internet and
online commerce sectors.
WE HAVE A HISTORY OF LOSSES AND MAY NOT BE PROFITABLE IN THE FUTURE.
For the fiscal years ended June 30, 1997, 1998 and 1999, and the three
months ended September 30, 1999, we generated revenues of $5,521,441,
$22,369,511, $2,936,718 and $120,251, respectively, and incurred net losses of
$4,592,145, $1,411,916, $2,665,052 and $919,551, respectively (without giving
effect to the payment in 1997, 1998 and 1999 of dividends of $425,000 annually,
on the Series A Preferred Stock and payment in 1999 of dividends of $66,250 on
the Series E Preferred Stock). As of September 30, 1999, we had an accumulated
deficit of ($24,356,205). If the cash we generate from our operations cannot
sufficiently fund possible future operating losses, we may need to raise
additional funds. Additional financing may not be available in amounts or on
terms acceptable to us, if at all.
OUR FUTURE OPERATING RESULTS MAY FLUCTUATE AND ARE UNPREDICTABLE. IF WE FAIL TO
MEET THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS AND INVESTORS, THE MARKET PRICE
OF OUR COMMON STOCK MAY DECLINE SIGNIFICANTLY.
Our limited operating history in the Internet and online commerce
industries makes it difficult to forecast accurately our revenues, operating
expenses and operating results. As a result, we may be unable to adjust our
spending in these areas in a timely manner to compensate for any unexpected
revenue shortfall.
BECAUSE OF THE LIMITED BARRIERS TO ENTRY IN THE INTERNET AND ONLINE COMMERCE
BUSINESSES, COMPETITION IN THESE MARKETS IS INTENSE. IF WE ARE UNABLE TO COMPETE
SUCCESSFULLY AGAINST CURRENT AND FUTURE COMPETITORS THAT ENTER THESE MARKETS,
OUR REVENUES AND OPERATING RESULTS COULD BE IMPAIRED.
The Internet and online commerce markets are new, rapidly evolving and
intensely competitive, and we expect that competition could further intensify in
the future. Barriers to entry are limited, and current and new competitors can
launch web sites and other similar businesses at a relatively low cost. Many of
our current and potential competitors have longer operating histories and
significantly greater financial, marketing and other resources than us.
Increased competition may result in reduced operating margins and loss of market
share.
We have not yet determined whether we will be able to compete
successfully against our current and future competitors. Further, as a strategic
response to changes in the competitive environment, we may from time to time
make marketing decisions or acquisitions that could adversely affect our
business, prospects, financial condition and results of operations.
OUR GROWTH AND OPERATING RESULTS WILL BE IMPAIRED IF THE INTERNET AND ONLINE
COMMERCE INDUSTRIES DO NOT CONTINUE TO GROW.
Our growth and operating results depend in part on widespread
acceptance and use of the Internet as a point of convergence in the
telecommunications, entertainment and technology industries, as well as on
continued consumer acceptance and use of the Internet for purposes of chat rooms
and other forms of communication. These practices are at an early stage of
development, and demand and market acceptance are uncertain.
The Internet may not become a viable medium for telecommunications,
entertainment and technology convergence or a healthy commercial marketplace due
to inadequate development of network infrastructure and enabling technologies
that address the public's concerns about:
- network performance;
- reliability;
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- speed of access;
- ease of use; and
- bandwidth availability.
In addition, the Internet's overall viability could be adversely
affected by increased government regulation. Changes in or insufficient
availability of telecommunications or other services to support the Internet
could also result in slower response times and adversely affect general usage of
the Internet. Also, negative publicity and consumer concern about the security
of transactions conducted on the Internet and the privacy of users may also
inhibit the growth of commerce on the Internet.
BURDENSOME GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES COULD IMPAIR OUR
RESULTS OF OPERATIONS.
It is possible that a number of laws and regulations may be adopted
concerning the Internet, relating to, among other things:
- user privacy;
- content;
- copyrights;
- distribution;
- telecommunications; and
- characteristics and quality of products and services.
The adoption of any additional laws or regulations may decrease the
popularity or expansion of the Internet. A decline in the growth of the Internet
could decrease demand for our services and increase our cost of doing business.
The application of laws and regulations from jurisdictions whose laws do not
currently apply to our business, or the application of existing laws and
regulations to the Internet and other online services could also harm our
business.
OUR OUTSTANDING OPTIONS AND WARRANTS MAY DILUTE OUR STOCKHOLDERS' INTERESTS AND
COULD HINDER US FROM OBTAINING ADDITIONAL FINANCING.
As of December 31, 1999, we have granted options and warrants to
purchase a total of 7,432,310 shares of common stock that have not been
exercised. To the extent that these outstanding options and warrants are
exercised, our stockholders' interests will be diluted. Also, we may not be able
to obtain additional equity capital on terms we like, since the holders of the
outstanding options and warrants will likely exercise them at a time when we may
be able to obtain such capital on better terms than those in the options and
warrants.
THE CONVERSION OF OUR CONVERTIBLE PREFERRED STOCK MAY DILUTE OUR STOCKHOLDERS'
INTERESTS AND COULD HINDER US FROM OBTAINING ADDITIONAL FINANCING.
As of December 31, 1999, we have issued and outstanding 1,000,000
shares of our Series A Preferred Stock, 2,500,000 shares of our Series C
Preferred Stock, 225,000 shares of our Series F Preferred Stock and 970 shares
of our Series G Preferred Stock. At our option, we can pay the dividends on our
Series A Preferred Stock in cash or in shares of common stock. No dividends are
currently due on the Series C Preferred Stock. We are not required to pay
dividends on the Series F Preferred Stock; however, we are required to pay
dividends on our Series G Preferred Stock.
Holders of our convertible preferred stock could convert their shares
into common stock at any time in the future. To the extent all of the shares of
our outstanding convertible preferred stock are converted into common stock, our
common stockholders' interests will be diluted. Since these shares of common
stock will be registered for sale in the marketplace, future offers to sell such
shares could potentially depress the price of our common stock. In the future,
this could make it difficult for us or our stockholders to sell the common
stock. Also, we may have problems obtaining additional equity capital on terms
we like, since we can expect the holders of our convertible preferred stock to
convert their shares into common stock at a time when we would be able to obtain
any needed capital on more favorable terms than those of the convertible
preferred stock.
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<PAGE>
STOCK PRICES OF INTERNET-RELATED COMPANIES HAVE FLUCTUATED WIDELY IN RECENT
MONTHS AND THE TRADING PRICE OF OUR COMMON STOCK IS LIKELY TO BE VOLATILE, WHICH
COULD RESULT IN SUBSTANTIAL LOSSES TO INVESTORS.
As a result of our recent expansion into Internet and online commerce,
the trading price of our common stock could become more volatile and could
fluctuate widely in response to factors including the following, some of which
are beyond our control:
- variations in our operating results;
- announcements of technological innovations or new services by us
or our competitors;
- changes in expectations of our future financial performance,
including financial estimates by securities analysts and
investors;
- changes in operating and stock price performance of other
Internet-related companies similar to us;
- conditions or trends in the Internet and technology industries;
- additions or departures of key personnel;
- future sales of our common stock; and
- acceptance by the market of our acquisition of NC Services.
Domestic and international stock markets often experience significant
price and volume fluctuations. These fluctuations, as well as general economic
and political conditions unrelated to our performance, may adversely affect the
price of our common stock.
TAKEOVER EFFORTS COULD BE DETERRED AS A RESULT OF OUR RIGHT TO ISSUE PREFERRED
STOCK IN THE FUTURE AND CERTAIN PROVISIONS IN OUR CERTIFICATE OF INCORPORATION.
Our Certificate of Incorporation permits our Board of Directors to
issue up to 20,000,000 shares of "blank check" Preferred Stock. Our Board of
Directors also has the authority to determine the price, rights, preferences,
privileges and restrictions of those shares without any further vote or action
by our stockholders. We have issued and outstanding 1,000,000 shares of Series A
Preferred Stock, 2,500,000 shares of Series C Preferred Stock, 225,000 shares of
Series F Preferred Stock and 970 shares of Series G Preferred Stock. If we issue
additional preferred stock with voting and conversion rights, the rights of our
common stockholders could be adversely affected by, among other things, the loss
of their voting control to others. Any additional issuances could also delay,
defer or prevent a change in our control, even if these actions would benefit
our stockholders.
Additionally, provisions of Delaware law and our Certificate of
Incorporation could make it more difficult for a third party to acquire us, even
if doing so would be beneficial to our stockholders.
WE HAVE NEVER PAID DIVIDENDS ON OUR COMMON STOCK. WE PAY ANNUAL CASH OR STOCK
DIVIDENDS ON SOME OF OUR PREFERRED STOCK.
We have never paid cash dividends on our common stock and we do not
expect to pay these dividends in the foreseeable future. Holders of our Series A
Preferred Stock are entitled to annual dividends of 8 1/2% (aggregating $425,000
annually, in cash or stock at our option, assuming no conversion). Holders of
our Series C Preferred Stock are entitled to dividends of 8% annually, so long
as we have net income in excess of $1,000,000 in the applicable fiscal year. We
pay these dividends quarterly, in cash or in shares of our common stock.
Beginning January 1, 2000, holders of our Series G Preferred Stock were entitled
to dividends of $60 per year per share of Series G Preferred Stock, payable
quarterly. For the foreseeable future, we anticipate that we will retain all of
our cash resources and earnings, if any, for the operation and expansion of our
business, except to the extent required to satisfy our obligations under the
terms of the Series A Preferred Stock, Series C Preferred Stock and Series G
Preferred Stock.
SALES OF ADDITIONAL SHARES OF OUR COMMON STOCK INTO THE PUBLIC MARKET MAY CAUSE
OUR STOCK PRICE TO FALL.
If we or our stockholders sell substantial amounts of our common stock
(including shares issued upon the exercise of outstanding options and warrants
or upon the conversion of shares of our convertible preferred stock) in the
public market, the market price of our common stock could fall. As of March 17,
2000, we had outstanding 28,615,102 shares of our common stock. The unregistered
common stock and the common stock held by our
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<PAGE>
officers and directors are "restricted" securities, as that term is defined by
Rule 144 under the Securities Act. In the future, these restricted securities
may be sold only in compliance with Rule 144 or if they are registered under the
Securities Act or under an exemption. Generally, under Rule 144, each person who
holds restricted securities for a period of one year may, every three months,
sell in ordinary brokerage transactions an amount of shares which does not
exceed the greater of 1% of our then-outstanding shares of common stock, or the
average weekly volume of trading of our common stock as reported during the
preceding four calendar weeks. A person who has not been an affiliate of ours
for at least the three months immediately preceding the sale and who has
beneficially owned shares of common stock for at least two years can sell such
shares under Rule 144 without regard to any of the limitations described above.
Sales of substantial amounts of common stock in the public market, or the
perception that such sales could occur, may adversely affect the prevailing
market price for our common stock and could impair our ability to raise capital
through a public offering of equity securities.
In addition, as of December 31, 1999 holders of options and warrants
may acquire approximately 7,432,310 shares of Common Stock and holders of shares
of our Series A Preferred Stock, Series C Preferred Stock, Series F Preferred
Stock and Series G Preferred Stock may acquire shares of Common Stock at various
conversion rates.
NASDAQ COULD DELIST OUR COMMON STOCK, WHICH COULD MAKE IT MORE DIFFICULT FOR YOU
TO SELL OR OBTAIN QUOTATIONS AS TO THE PRICE OF OUR COMMON STOCK.
In order to continue to be listed on Nasdaq, we must meet the following
requirements:
o net tangible assets of at least $2,000,000, or a market
capitalization of $35,000,000 or $500,000 in net income for two
of the last three years;
o a minimum bid price of $1.00;
o two market makers;
o 300 stockholders;
o at least 500,000 shares in the public float or a minimum market
value for the public float of $1,000,000; and
o compliance with certain corporate governance standards.
If we cannot satisfy Nasdaq's maintenance criteria in the future,
Nasdaq could delist our common stock. In the event of delisting, trading, if
any, would be conducted only in the over-the-counter market in the so-called
"pink sheets" or the NASD's Electronic Bulletin Board. As a result of any
delisting, an investor would likely find it more difficult to sell or obtain
quotations as to the price of our common stock.
IF THE SOFTWARE, HARDWARE, COMPUTER TECHNOLOGY AND OTHER SYSTEMS AND SERVICES
THAT WE USE ARE NOT YEAR 2000 COMPLIANT, OUR OPERATING RESULTS COULD BE
IMPAIRED.
Many existing computer programs use only two digits to identify a year.
These programs were designed and developed without addressing the impact of the
recent change in the century. If not corrected, many computer software
applications could fail or create erroneous results by, at or beyond the year
2000. This could result in system failures or miscalculations causing
disruptions of operations, including, among others, a temporary inability to
process transactions, send invoices or engage in similar normal business
activities.
We have assessed our hardware and software systems and we believe that
our systems correctly define the year 2000. We have also assessed the embedded
system contained in our leased equipment, which we believe to be Year 2000
compliant.
In addition, we have received information from our key vendors and
customers with respect to their significant Year 2000 exposures that would have
a material effect on us. The financial impact on us of such third parties not
achieving high levels of Year 2000 readiness cannot be estimated with any degree
of accuracy. In the area of business continuity, technological operations
dependent in some way on one or more third parties, the situation is much less
in our ability to predict or control. In some cases, third party dependence is
on vendors who are themselves working toward solutions to Year 2000 problems. In
other cases, third party dependence is on suppliers of products and services to
ascertain the state of Year 2000 readiness of significant third parties. We are
taking steps to attempt to ensure that the third parties on which we are heavily
reliant are Year 2000 ready, but cannot predict the likelihood of such
compliance nor the direct and indirect costs of non-readiness by those third
parties or of securing such services from alternate third
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<PAGE>
parties. We are not yet aware of any Year 2000 issues relating to third parties
with which we have a material relationship. If such critical third party
providers experience difficulties resulting in disruption of service to us, a
shutdown of our operations at individual facilities could occur for the duration
of the disruption.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the Selling Security
Holders' shares in this offering. All proceeds from the sale of these shares
will be for the accounts of the Selling Security Holders described below. See
"Selling Security Holders."
SELLING SECURITY HOLDERS
The following table sets forth the names of the Selling Security
Holders and the maximum amount of Common Stock which may be offered for the
accounts of the Selling Security Holders under this prospectus. The addresses of
the Selling Security Holders are in our care unless identified otherwise.
<TABLE>
<CAPTION>
Number of Number of Number of
Number of Shares of Shares of Shares of Percentage of
Name of Selling Security Shares of Common Stock Common Stock Common Stock Common Outstanding
Holders Common Stock Underlying Underlying Underlying Stock Offered Common
Owned Options Debentures(1) Warrants Hereby Stock (2)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Britannica Associates 748,000 140,250 888,250(3) 3.1%
Limited
c/o Wickhams Cay #2, 3rd
Floor
Omar Hodge Bldg.,
Road Town
Tortola, B.V.I.
Target Growth Fund Ltd. 56,000 10,500 66,500 (4) (*)
c/o Bermuda Commercial
Bank Builiding
44 Church St.
Hamilton HM12 Bermuda
Spiga Limited 120,000 22,500 142,500(5) (*)
c/o Europa Management
Limited
Skelton Bldg.,
Road Town
Tortola, B.V.I.
E&K Trust 24,000 4,500 28,500(6) (*)
P.O. Box 762
Beverly Hills, CA 90213
Lina Abballe 352,000 66,000 418,000(7) 1.5%
Apt. #7, Via Mecenate, 77
Rome, Italy 00184
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<PAGE>
George Heisel 20,000 3,750 23,750(8) (*)
300 Admiral Cove Blvd.
Jupiter, FL 33477
Arnold Fonseca 40,000 7,500 47,500(9) (*)
3416 La Shan Dr.
Murrysville, PA 15668
Christopher Briggs 8,000 1,500 9,500(10) (*)
2010 Vista del Mar
Los Angeles, CA 90068
Frank Khadiri 12,000 2,250 14,250(11) (*)
1167 Hillsboro Mile #305
Hillsboro Beach, FL 33062
Alain Salem 8,000 1,500 9,500(12) (*)
16350 Ventura Blvd. #173
Encino, CA
Didier Salem 12,000 2,250 14,250(13) (*)
3278 Masters Dr.
Clearwater, FL 33761
Yousef Ebrahimian 16,000 3,000 19,000(14) (*)
610 N. Camden Drive
Beverly Hills, CA 90210
Gabriel Cerrone 160,000 30,000 190,000(15) (*)
33 Phaeton Drive
West Hills, NY 11747
JRT Holdings, Inc. 24,000 4,500 28,500(16) (*)
120 North Swall Drive #207
Los Angeles, CA 90048
Astor Capital 170,000 170,000(17) (*)
9300 Wilshire Blvd.
Suite 308
Beverly Hills, CA 90212
Alison Meyer Marcus 1,583,333 650,000(18) 5.5%
Mountaingate Productions,
LLC
12610 Promotory Rd.
Los Angeles, CA 90049
Patricia Meyer 1,583,333 650,000(18) 5.5%
Mountaingate Productions,
LLC
12610 Promotory Rd.
Los Angeles, CA 90049
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<PAGE>
Salvatore Grasso 250,000 250,000(19) (*)
Grasso/Jacobson
Productions
757 Third Ave., 27th Floor
New York, NY 10017
Lawrence Jacobson 250,000 250,000(19) (*)
1801 Avenue of the Stars
Los Angeles, CA 90067
Delta Partners Limited 200,000 200,000(20) (*)
c/o Hambrecht & Quist
1100 Newport Center Drive,
2nd Floor
Newport Beach, CA 92660
Bibicoff & Associates 200,000 200,000(21) (*)
1990 Westwood Blvd.
Los Angeles, CA 90025
<FN>
(*) Less than one percent.
(1) The number of shares of common stock underlying the debentures assumes
conversion into common stock at a conversion rate of 1.25. The conversion
rate and the number of shares of common stock issuable upon conversion of
the debentures is subject to further adjustment under certain
circumstances. Accordingly, the number of shares of common stock issuable
upon conversion of the debentures may increase or decrease from time to
time. See "Plan of Distribution."
(2) Based on 28,615,102 shares outstanding as of March 17, 2000.
(3) On November 2, 1999, we issued and sold to Brittanica a convertible
debenture in the principal amount of $250,000. On that date, we also
granted Brittanica warrants to acquire an aggregate of 37,500 shares of
common stock. This registration statement includes 200,000 shares of common
stock to be issued upon conversion of this debenture. On December 8, 1999,
we issued and sold to Brittanica a convertible debenture in the principal
amount of $75,000. On that date, we also granted Brittanica warrants to
acquire an aggregate of 11,250 shares of common stock. This registration
statement includes 60,000 shares of common stock to be issued upon
conversion of this debenture. On December 14, 1999, we issued and sold to
Brittanica a convertible debenture in the principal amount of $200,000. On
that date, we also granted Brittanica warrants to acquire an aggregate of
30,000 shares of common stock. This registration statement includes 160,000
shares of common stock to be issued upon conversion of this debenture. On
January 25, 2000, we issued and sold to Brittanica a convertible debenture
in the principal amount of $300,000. On that date, we also granted
Brittanica warrants to acquire an aggregate of 45,000 shares of common
stock. This registration statement includes 240,000 shares of common stock
to be issued upon conversion of this debenture. On February 7, 2000, we
issued and sold to Brittanica a convertible debenture in the principal
amount of $110,000. On that date, we also granted Brittanica warrants to
acquire an aggregate of 16,500 shares of common stock. This registration
statement includes 88,000 shares of common stock to be issued upon
conversion of this debenture.
(4) On February 7, 2000, we issued and sold to Target Growth Fund Ltd. a
convertible debenture in the principal amount of $70,000. On that date, we
also granted Target Growth Fund Ltd. warrants to acquire an aggregate of
10,500 shares of common stock. This registration statement includes 56,000
shares of common stock to be issued upon conversion of this debenture.
(5) On December 8, 1999, we issued and sold to Spiga a convertible debenture in
the principal amount of $100,000. On that date, we also granted Spiga
warrants to acquire an aggregate of 15,000 shares of common stock. This
registration statement includes 80,000 shares of common stock to be issued
upon conversion of this debenture. On February 7, 2000, we issued and sold
to Spiga a convertible debenture in the principal amount of $50,000. On
that date, we also granted Spiga warrants to acquire an aggregate of 7,500
shares of common stock. This registration statement includes 40,000 shares
of common stock to be issued upon conversion of this debenture.
(6) On February 7, 2000, we issued and sold to E&K Trust a convertible
debenture in the principal amount of $30,000. On that date, we also granted
E&K Trust warrants to acquire an aggregate of 4,500 shares of common stock.
This registration statement includes 24,000 shares of common stock to be
issued upon conversion of this debenture.
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<PAGE>
(7) On January 18, 2000, we issued and sold to Lina Abballe a convertible
debenture in the principal amount of $400,000. On that date, we also
granted Ms. Abballe warrants to acquire an aggregate of 60,000 shares of
common stock. This registration statement includes 320,000 shares of common
stock to be issued upon conversion of this debenture. On February 7, 2000,
we issued and sold to Ms. Abballe a convertible debenture in the principal
amount of $40,000. On that date, we also granted Ms. Abballe warrants to
acquire an aggregate of 6,000 shares of common stock. This registration
statement includes 32,000 shares of common stock to be issued upon
conversion of this debenture.
(8) On December 1, 1999, we issued and sold to George Heisel a convertible
debenture in the principal amount of $25,000. On that date, we also granted
Mr. Hesiel warrants to acquire an aggregate of 3,750 shares of common
stock. This registration statement includes 20,000 shares of common stock
to be issued upon conversion of this debenture.
(9) On December 8, 1999, we issued and sold to Arnold Fonseca a convertible
debenture in the principal amount of $50,000. On that date, we also granted
Mr. Fonseca warrants to acquire an aggregate of 7,500 shares of common
stock. This registration statement includes 40,000 shares of common stock
to be issued upon conversion of this debenture.
(10) On February 7, 2000, we issued and sold to Christopher Briggs a convertible
debenture in the principal amount of $10,000. On that date, we also granted
Mr. Briggs warrants to acquire an aggregate of 1,500 shares of common
stock. This registration statement includes 8,000 shares of common stock to
be issued upon conversion of this debenture.
(11) On February 7, 2000, we issued and sold to Frank Khadiri a convertible
debenture in the principal amount of $15,000. On that date, we also granted
Mr. Khadiri warrants to acquire an aggregate of 2,250 shares of common
stock. This registration statement includes 12,000 shares of common stock
to be issued upon conversion of this debenture.
(12) On February 7, 2000, we issued and sold to Alain Salem a convertible
debenture in the principal amount of $10,000. On that date, we also granted
Alain Salem warrants to acquire an aggregate of 1,500 shares of common
stock. This registration statement includes 8,000 shares of common stock to
be issued upon conversion of this debenture.
(13) On February 7, 2000, we issued and sold to Didier Salem a convertible
debenture in the principal amount of $15,000. On that date, we also granted
Didier Salem warrants to acquire an aggregate of 2,250 shares of common
stock. This registration statement includes 12,000 shares of common stock
to be issued upon conversion of this debenture.
(14) On February 7, 2000, we issued and sold to Yousef Ebrahimian a convertible
debenture in the principal amount of $20,000. On that date, we also granted
Mr. Ebrahimian warrants to acquire an aggregate of 3,000 shares of common
stock. This registration statement includes 16,000 shares of common stock
to be issued upon conversion of this debenture.
(15) On November 2, 1999, we issued and sold to Gabriel Cerrone a convertible
debenture in the principal amount of $100,000. On that date, we also
granted Mr. Cerrone warrants to acquire an aggregate of 15,000 shares of
common stock. This registration statement includes 80,000 shares of common
stock to be issued upon conversion of this debenture. On December 14, 1999,
we issued and sold to Mr. Cerrone a convertible debenture in the principal
amount of $100,000. On that date, we also granted Mr. Cerrone warrants to
acquire an aggregate of 15,000 shares of common stock. This registration
statement includes 80,000 shares of common stock to be issued upon
conversion of this debenture.
(16) On February 7, 2000, we issued and sold to JRT Holdings, Inc. a convertible
debenture in the principal amount of $30,000. On that date, we also granted
JRT Holdings, Inc. warrants to acquire an aggregate of 4,500 shares of
common stock. This registration statement includes 24,000 shares of common
stock to be issued upon conversion of this debenture.
(17) On January 7, 2000, we granted Astor Capital options to acquire an
aggregate of 170,000 shares of common stock as compensation for consulting
services.
(18) Alison Meyer Marcus and Patricia Meyer acquired their common stock through
the conversion of 1,300,000 shares of our Series C Convertible Preferred
Stock.
(19) Salvatore Grosso and Lawrence Jacobson acquired their options pursuant to
a grant made on January 14, 1999.
(20) On January 7, 2000, we entered into an agreement with Delta Partners
Limited for the offer and sale of 200,000 shares of our common stock for
$250,000 pursuant to a Private Placement Agreement.
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<PAGE>
(21) On January 7, 2000, we granted Bibicoff & Associates options to acquire
200,000 shares of common stock. Of the 200,000 options, 100,000 vest when
our common stock reaches a closing bid price of $10.00 or more for 10
consecutive trading days and the remaining 100,000 options vest when our
common stock reaches a closing bid price of $15.00 or more for 10
consecutive trading days.
</FN>
</TABLE>
The Selling Security Holders may offer all or some portion of the
common stock that they have the right to acquire upon conversion of the
convertible debentures and the preferred stock and/or upon exercise of the
warrants. Accordingly, no estimate can be given as to the amount of the common
stock that will be held by the Selling Security Holders upon termination of any
such sales. See "Plan of Distribution."
The term Selling Security Holders includes the holders listed in any
supplement to this prospectus and any beneficial owners of the common stock and
their transferees, pledgees, donees or other successors. Any supplement will
contain certain information about the Selling Security Holders and the number of
shares of common stock beneficially owned by the Selling Security Holders that
may be offered pursuant to this prospectus. Such information will be obtained
from the Selling Security Holders.
Under the Securities Exchange Act of 1934, as amended and its rules and
regulations, any person distributing the common stock offered by this prospectus
may not simultaneously engage in market making activities with respect to our
common stock during the applicable "cooling off" periods prior to beginning the
distribution. In addition, the Selling Security Holders will need to comply with
applicable provisions of the Exchange Act and its rules and regulations
including, without limitation, Regulation M, which may limit the timing of
purchases and sales of shares of common stock by the Selling Security Holders.
Regulation M contains certain limitations and prohibitions intended to prevent
issuers, selling security holders and other participants in a distribution of
securities from conditioning the market through manipulative or deceptive
devices to facilitate the distribution.
We will bear all costs, expenses and fees in connection with the
registration of the Selling Security Holders' shares. All brokerage commissions,
if any, attributable to the sale of the Selling Security Holders' shares will be
borne by them.
PLAN OF DISTRIBUTION
In August, 1999, we authorized the issuance and sale of (i) up to
$4,000,000 principal amount of our 6% Convertible Subordinated Debentures Due
2001 (the "Debentures") convertible into shares of common stock; (ii) Series A
Stock Purchase Warrants (the "Series A Warrants") to purchase up to 400,000
shares of common stock at an exercise price of $1.25625 per share and (iii)
Series B Stock Purchase Warrants (the "Series B Warrants" and together with the
Series A Warrants, the "Warrants," and collectively with the Debentures, the
"Securities") to purchase up to 300,000 shares of common stock at an exercise
price of $1.361 per share. We issued and sold an aggregate of $4,000,000
principal amount of the Debentures, 300,000 Series A Warrants and 300,000 Series
B Warrants in units (the "Units") each consisting of $10,000 principal amount of
Debentures, 750 Series A Warrants and 750 Series B Warrants.
We pay interest on the unpaid principal balance of the Debentures at a
rate of six percent (6%) per annum, payable quarterly in arrears on each March
31, June 30, September 30 and December 31. The Debentures are convertible into
shares of common stock. The number of shares issued upon conversion of the
Debentures is that number of shares of common stock as equals the principal
amount of the Debentures converted, divided by the lesser of (a) one dollar and
twenty-five and three-eighths cents ($1.25375) or (b) eighty-five percent (85%)
of the Market Price (as hereinafter defined) of a share of common stock on the
date of conversion. The Market Price shall mean the average of the two lowest
closing bid prices for a share of common stock in the principal market on which
it trades during the ten (10) trading days preceding, but not including, the
date as of which the Market Price is being determined. With respect to the
payment of principal of, interest on and any other amounts due under the
Debentures, the Debentures are subordinated to Senior Indebtedness (as
hereinafter defined) until all Senior Indebtedness is paid in full upon the
occurrence of (a) our dissolution, liquidation, or reorganization or (b) any
event of default with respect to any Senior Indebtedness. Senior Indebtedness
shall mean all present and future (a) indebtedness from a bank or other
financial institution for money borrowed, (b) indebtedness from a bank or other
financial institutions consisting of reimbursement obligations due and owing
with respect to letters of credit; (c) indebtedness consisting of obligations
payable to banks and other financial institutions under interest rate and
currency swaps, floors, caps or other similar arrangements intended to fix
interest rate obligations; (d) all indebtedness and obligations of others of the
kinds described in the preceding clauses (a), (b) and (c) assumed or guaranteed
in any manner by us; and (e) all renewals, extensions, refundings, deferrals,
amendments or modifications of indebtedness or obligations of the kinds
described in any of the preceding clauses (a) through (d).
Page 17
<PAGE>
On November 2, 1999, we sold a 6% Convertible Subordinated Debenture in
the principal amount of $250,000 to Brittanica Associates Limited
("Brittanica"). We also granted Brittanica warrants to purchase an aggregate of
37,500 shares of common stock. On December 8, 1999, we sold a 6% Convertible
Subordinated Debenture in the principal amount of $75,000 to Brittanica. We also
granted Brittanica warrants to purchase an aggregate of 11,250 shares of common
stock. On December 14, 1999, we sold a 6% Convertible Subordinated Debenture in
the principal amount of $200,000 to Brittanica. We also granted Brittanica
warrants to purchase an aggregate of 30,000 shares of common stock. On January
25, 2000, we sold a 6% Convertible Subordinated Debenture in the principal
amount of $300,000 to Brittanica. We also granted Brittanica warrants to
purchase an aggregate of 45,000 shares of common stock. On February 7, 2000, we
sold a 6% Convertible Subordinated Debenture in the principal amount of $110,000
to Brittanica. We also granted Brittanica warrants to purchase an aggregate of
16,500 shares of common stock.
On November 2, 1999, we sold a 6% Convertible Subordinated Debenture in
the principal amount of $100,000 to Gabriel Cerrone. We also granted Mr. Cerrone
warrants to purchase an aggregate of 15,000 shares of common stock. On December
14, 1999, we sold a 6% Convertible Subordinated Debenture in the principal
amount of $100,000 to Mr. Cerrone. We also granted Mr. Cerrone warrants to
purchase an aggregate of 15,000 shares of common stock.
On December 1, 1999, we sold a 6% Convertible Subordinated Debenture in
the principal amount of $25,000 to George Heisel. We also granted Mr. Heisel
warrants to purchase an aggregate of 3,750 shares of common stock.
On December 8, 1999, we sold a 6% Convertible Subordinated Debenture in
the principal amount of $100,000 Spiga Limited ("Spiga"). We also granted Spiga
warrants to purchase an aggregate of 15,000 shares of common stock. On February
7, 2000, we sold a 6% Convertible Subordinated Debenture in the principal amount
of $50,000 to Spiga. We also granted Spiga warrants to purchase an aggregate of
7,500 shares of common stock.
On December 8, 1999, we sold a 6% Convertible Subordinated Debenture in
the principal amount of $50,000 to Arnold Fonseca. We also granted Mr. Fonseca
warrants to purchase an aggregate of 7,500 shares of common stock.
On January 18, 2000, we sold a 6% Convertible Subordinated Debenture in
the principal amount of $400,000 to Lina Abballe. We also granted Ms. Abballe
warrants to purchase an aggregate of 60,000 shares of common stock. On February
7, 2000, we sold a 6% Convertible Subordinated Debenture in the principal amount
of $40,000 to Ms. Abballe. We also granted Ms. Abballe warrants to purchase an
aggregate of 6,000 shares of common stock.
On February 7, 2000, we sold a 6% Convertible Subordinated Debenture in
the principal amount of $70,000 to Target Growth Fund Ltd. ("Target"). We also
granted Target warrants to purchase an aggregate of 10,500 shares of common
stock.
On February 7, 2000, we sold a 6% Convertible Subordinated Debenture in
the principal amount of $30,000 to E&K Trust. We also granted E&K Trust warrants
to purchase an aggregate of 4,500 shares of common stock.
On February 7, 2000, we sold a 6% Convertible Subordinated Debenture in
the principal amount of $10,000 to Christopher Briggs. We also granted Mr.
Briggs warrants to purchase an aggregate of 1,500 shares of common stock.
On February 7, 2000, we sold a 6% Convertible Subordinated Debenture in
the principal amount of $15,000 to Frank Khadiri. We also granted Mr. Khadiri
warrants to purchase an aggregate of 2,250 shares of common stock.
On February 7, 2000, we sold a 6% Convertible Subordinated Debenture in
the principal amount of $10,000 to Alain Salem. We also granted Alain Salem
warrants to purchase an aggregate of 1,500 shares of common stock.
On February 7, 2000, we sold a 6% Convertible Subordinated Debenture in
the principal amount of $15,000 to Didier Salem. We also granted Didier Salem
warrants to purchase an aggregate of 2,250 shares of common stock.
On February 7, 2000, we sold a 6% Convertible Subordinated Debenture in
the principal amount of $20,000 to Yousef Ebrahimian. We also granted Mr.
Ebrahimian warrants to purchase an aggregate of 3,000 shares of common stock.
On February 7, 2000, we sold a 6% Convertible Subordinated Debenture in
the principal amount of $30,000 to JRT Holdings, Inc. ("JRT"). We also granted
JRT warrants to purchase an aggregate of 4,500 shares of common stock.
Page 18
<PAGE>
Our gross proceeds from the offer and sale of Debentures in the
aggregate principal amount of $4,000,000 was $4,000,000 and our net proceeds
were approximately $3,982,000.
The Selling Security Holders have advised us that the sale or
distribution of the common stock may be effected directly to purchasers by the
Selling Security Holders as a principal or through one or more underwriters,
brokers, dealers or agents from time to time in one or more transactions (which
may involve crosses or block transactions) (i) on the Nasdaq SmallCap market, or
in the over-the-counter market, (ii) in transactions otherwise than on any stock
exchange or in the over-the-counter market, or (iii) through the writing of
options (whether such options are listed on an options exchange or otherwise)
on, or settlement of short sales of, the Common Stock. Any of such transactions
may be effected at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, at varying prices determined at the
time of sale or at negotiated or fixed prices, in each case as determined by the
Selling Security Holders or by agreements between the Selling Security Holders
and underwriters, brokers, dealers or agents or purchasers. If the Selling
Security Holders effect such transactions by selling common stock to or through
underwriters, brokers, dealers or agents, such underwriters, brokers, dealers or
agents may receive compensation in the form of discounts, concessions or
commissions from the Selling Security Holders or commissions from purchasers of
common stock for whom they may act as agent (which discounts, concessions or
commissions as to particular underwriters, brokers, dealers or agents may be in
excess of those customary in the types of transactions involved). The Selling
Security Holders and any brokers, dealers or agents that participate in the
distribution of the common stock may be deemed to be underwriters, and any
profit on the sale of common stock by them and any discounts, concessions or
commissions received by any such underwriters, brokers, dealers or agents may be
deemed to be underwriting discounts and commissions under the Securities Act.
Because each of the Selling Security Holders may be deemed to be an
"underwriter" within the meaning of Section 2(11) of the Securities Act, the
Selling Security Holders will be subject to prospectus delivery requirements
under the Securities Act. Furthermore, in the event of a "distribution" of their
shares, the Selling Security Holders, any selling broker or dealer and any
"affiliated purchasers" may be subject to Regulation M under the Exchange Act
until its participation in the distribution is completed.
To comply with the securities laws of certain jurisdictions, if
applicable, the shares of common stock will be offered or sold in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain jurisdictions the shares of common stock may not be offered
or sold unless they have been registered or qualified for sale in such
jurisdictions or an exemption from registration or qualification is available
and is complied with. Upon request of the Selling Security Holders, we will make
all applicable filings under state securities or blue sky laws.
The Selling Security Holders 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 of common stock
by the Selling Security Holders. The foregoing may affect the marketability of
the shares of common stock.
We will pay all expenses of the registration of the shares, including,
without limitation, Commission filing fees and expenses of compliance with state
securities or "blue sky" laws; provided, however, that the Selling Security
Holders will pay all underwriting discounts and selling commissions, if any. We
will indemnify the Selling Security Holders against certain civil liabilities,
including certain liabilities under the Securities Act, or the Selling Security
Holders will be entitled to contribution from us relating to these liabilities.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our Bylaws provide that we will indemnify our directors and executive
officers and any of our other officers, employees and agents to the fullest
extent permitted by Delaware law. Our Bylaws also empower us to enter into
indemnification agreements with any such persons and to purchase insurance on
behalf of any person whom we are required or permitted to indemnify.
Our Certificate of Incorporation provides that, pursuant to Delaware
law, our directors shall not be liable for monetary damages for breach of the
director's fiduciary duty of care to us and to our stockholders. Such provision
does not eliminate the duty of care and, in appropriate circumstances, equitable
remedies such as injunctive or other forms of non-monetary relief will remain
available under Delaware law. Each director continues to be subject to liability
for breach of the director's duty of loyalty, for acts or omissions not in good
faith or involving intentional misconduct, for knowing violations of law, for
actions leading to improper personal benefit to the director, and for payment of
dividends
Page 19
<PAGE>
or approval of stock repurchases or redemptions that are unlawful under Delaware
law. The provision also does not affect a director's responsibilities under any
other law, such as the federal securities laws or federal environmental laws.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling us pursuant
to the foregoing provisions, we have been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
us by Troop Steuber Pasich Reddick & Tobey, LLP.
EXPERTS
The financial statements included in our Annual Report on Form 10-KSB
for our fiscal year ended June 30, 1999 and incorporated by reference in this
Prospectus and the Registration Statement of which this prospectus is a part
have been audited by Singer Lewak Greenbaum & Goldstein, LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing and giving said reports.
Page 20
<PAGE>
YOU MAY RELY ONLY ON THE INFORMATION CONTAINED
IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED
ANYONE TO PROVIDE INFORMATION DIFFERENT FROM
THAT CONTAINED IN THIS PROSPECTUS. NEITHER 4,270,000 SHARES
THE DELIVERY OF THIS PROSPECTUS NOR SALE OF
COMMON STOCK MEANS THAT INFORMATION CONTAINED NETCURRENTS, INC.
IN THIS PROSPECTUS IS CORRECT AFTER THE DATE
OF THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN COMMON STOCK
OFFER TO SELL OR SOLICITATION OF AN OFFER TO
BUY THESE SHARES OF COMMON STOCK IN ANY
CIRCUMSTANCES UNDER WHICH THE OFFER OR
SOLICITATION IS UNLAWFUL.
TABLE OF CONTENTS
Page
WHERE YOU CAN FIND MORE INFORMATION...........3
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE..................................3
CAUTIONARY NOTICE REGARDING FORWARD-
LOOKING STATEMENTS............................4
PROSPECTUS SUMMARY............................5 PROSPECTUS
RISK FACTORS..................................7
USE OF PROCEEDS..............................13 March 20, 2000
SELLING SECURITY HOLDERS.....................14
PLAN OF DISTRIBUTION.........................17
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES............................20
LEGAL MATTERS................................20
EXPERTS......................................20
Page 21
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14 OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by us in connection with the
sale of common stock being registered. All amounts are estimates except the SEC
registration fee.
SEC registration fee.............................. $ 8,172.78
Nasdaq filing fee................................. 17,500.00
Legal fees and expenses........................... 3,500.00
Accounting fees and expenses...................... 2,500.00
Miscellaneous expenses............................ 0
--------------
Total.................. $ 31,672.78
==============
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits a
corporation to include in its charter documents, and in agreements between the
corporation and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.
Article VI of our Restated Certificate of Incorporation provides for
the indemnification of directors to the fullest extent permissible under
Delaware law.
Article VII of our Bylaws provides for the indemnification of officers,
directors and third parties acting on our behalf if such person acted in good
faith and in a manner reasonably believed to be in and not opposed to our best
interests, and, with respect to any criminal action or proceeding, the
indemnified party had no reason to believe his or her conduct was unlawful.
We have entered into indemnification agreements with our directors and
executive officers, in addition to indemnification provided for in our Bylaws,
and we intend to enter into indemnification agreements with any new directors
and executive officers in the future.
ITEM 16. EXHIBITS
2.1 Agreement and Plan of Merger, dated September 15, 1997, by and
among The Producers Entertainment Group Ltd., TPEG Acquisition I
Corp., The Grosso-Jacobson Entertainment Corporation, Salvatore
Grosso and Lawrence S. Jacobson. (2)
2.2 Agreement and Plan of Merger, dated September 15, 1997, by and
among The Producers Entertainment Group Ltd., TPEG Acquisition II
Corp., The Grosso-Jacobson Productions, Inc., Salvatore Grosso
and Lawrence S. Jacobson. (2)
2.3 Agreement and Plan of Merger, dated September 15, 1997, by and
among The Producers Entertainment Group Ltd., TPEG Acquisition
III Corp., Grosso-Jacobson Music Company, Inc., Salvatore Grosso
and Lawrence S. Jacobson. (2)
2.4 Agreement of Merger, dated as of July 15, 1998, by and among The
Producers Entertainment Group Ltd., TPEG Merger Company, MWI
Distribution, Inc. and Tom Daniels and Craig Sussman. (3)
2.5 Amended and Restated Agreement and Plan of Merger, dated November
1, 1999, by and among IAT Resources Corporation, Infolocity,
Inc., Infolocity Merger Sub, Inc., Victor A. Holtorf and James J.
Cerna, Jr. (7)
Page 22
<PAGE>
4.1 Securities Purchase Agreement, dated July 31, 1998, between the
Company and the Augustine Fund, L.P. (1)
4.2 Registration Rights Agreement, dated July 31, 1998, between the
Company and the Augustine Fund, L.P.(1)
4.3 Escrow Agreement, dated as of July 31, 1998, among the Augustine
Fund, L.P., the Company and H. Glenn Bagwell, Jr., as Escrow
Agent. (1)
4.4 Securities Purchase Agreement, dated January 14, 1999, between
the Company and Strategic Capital Consultants. (4)
4.5 Securities Purchase Agreement, dated January 14, 1999, between
the Company and Mountaingate Productions, LLC. (4)
4.6 Certificate of Designations for Series A Preferred Stock, dated
December 13, 1994. (8)
4.7 Certificate of Designations for Series B Preferred Stock, dated
July 15, 1998. (5)
4.8 Certificate of Designations for Series C Preferred Stock, dated
March 26, 1999. (5)
4.9 Certificate of Designations for Series D Preferred Stock, dated
July 31, 1998. (1)
4.10 Certificate of Designations for Series E Preferred Stock, dated
July 31, 1998. (1)
4.11 Certificate of Designations for Series F Preferred Stock, dated
July 31, 1998. (1)
4.12 Certificate of Designations for Series G Convertible Preferred
Stock, dated November 15, 1999 (6).
5.1 Opinion of Troop Steuber Pasich Reddick & Tobey LLP.
23.1 Consent of Singer Lewak Greenbaum & Goldstein, LLP, Independent
Accountants.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (included on signature page).
- -----------------------------------
(1) Incorporated by reference to our Registration Statement on Form S-3 filed
September 1, 1998
(2) Incorporated by reference to our Report on Form 8-K filed November 4, 1997
(as amended on December 29, 1997). (3) Incorporated by reference to our
Report on Form 8-K filed July 31, 1998.
(4) Incorporated by reference to our Report on Form 10-QSB, as filed on May 24,
1999 (as amended on June 10, 1999).
(5) Incorporated by reference to our Report on Form 10-KSB, as filed on October
13, 1999.
(6) Incorporated by reference to our Registration Statement on Form S-3 filed
November 17, 1999.
(7) Incorporated by reference to our Definitive Proxy Statement filed on
November 17, 1999.
(8) Incorporated by reference to our Report on Form 8-K filed June 19, 1996.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have 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 us of expenses incurred or paid by any of
our directors, officers or controlling persons 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, we will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of the appropriate jurisdiction the question 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.
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
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 liability under the
Securities Act, 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;
Page 23
<PAGE>
(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; and
(4) That, for purposes of determining any liability under the
Securities Act, each filing of our annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) 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.
Page 24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Los
Angeles, State of California, on the 20th day of March, 2000.
NETCURRENTS, INC.
By /S/ IRWIN MEYER
---------------------------
Irwin Meyer
Chief Executive Officer
Page 25
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Irwin Meyer and Arthur Bernstein and each
of them, his attorneys-in-fact, each with the power of substitution, for him and
in his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and sign any registration statement for the same offering covered by this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) promulgated under the Securities Act of 1933, as amended, and all
post-effective amendments thereto, and to file the same, with all exhibits
thereto and all documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents or any of them, or his or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------ ------------------------------------ -----------------
<S> <C> <C>
/S/ IRWIN MEYER Chief Executive Officer and Director March 20, 2000
- ------------------------ (Principal Executive Officer)
Irwin Meyer
/S/ MICHAEL ISCOVE Director (Principal Financial March 20, 2000
- ------------------------ and Accounting Officer)
Michael Iscove
/S/ ARTHUR BERNSTEIN Executive Vice President and Director March 20, 2000
- ------------------------
Arthur Bernstein
/S/ IVAN BERKOWITZ Director March 20, 2000
- ------------------------
Ivan Berkowitz
/S/ THOMAS A. DANIELS Director March 20, 2000
- ------------------------
Thomas A. Daniels
Chief Operating Officer and Director
- ------------------------
Victor A. Holtorf
Executive Vice President of
Strategic Planning and Director
- ------------------------
James J. Cerna, Jr.
</TABLE>
Page 26
March 20, 2000
NetCurrents, Inc.
9720 Wilshire Boulevard
Suite 700
Beverly Hills, CA 90212
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on Form S-3
(the "Registration Statement") to which this letter is attached as Exhibit 5.1
filed by NetCurrents, Inc., a Delaware corporation (the "Company"), in order to
register under the Securities Act of 1933, as amended (the "Act"), up to
4,270,000 shares of the Common Stock, par value $0.001 per share being
registered for resale (the "Shares") or issuable upon conversion or exercise
(the "Underlying Shares"), as applicable of (i) up to $2,000,000 principal
amount of the Company's 6% Convertible Subordinated Debentures Due 2001 (the
"Debentures"); (ii) the Company's Series A Stock Purchase Warrants (the "Series
A Warrants") to purchase up to 150,000 shares of common stock at an exercise
price of $1.25625 per share; (iii) the Company's Series B Stock Purchase
Warrants to purchase up to 150,000 shares of common stock at an exercise price
of $1.361 per share; and (iv) the options to purchase 870,000 shares of common
stock.
We are of the opinion that the Shares being registered for resale have been
duly authorized and are legally and validly issued, fully paid and
non-assessable. We are also of the opinion that the Underlying Shares being
registered pursuant to the Debentures, Warrants and options have been duly
authorized and, upon issuance and sale pursuant to the terms of the Debenture,
the Warrants and options, as applicable, will be legally and validly issued,
fully paid and non-assessable.
We consent to the use of this opinion as an Exhibit to the Registration
Statement and to the reference to our firm under the caption "Legal Matters."
Respectfully submitted,
/S/ TROOP STEUBER PASICH REDDICK & TOBEY, LLP
---------------------------------------------
TROOP STEUBER PASICH REDDICK & TOBEY, LLP
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report, dated October 8, 1999, which appears on the
Annual Report on Form 10-KSB of NetCurrents, Inc. (formally IAT Resources
Corporation) and subsidiaries for the year ended June 30, 1999. We also consent
to the reference to our Firm under the caption "Experts" in the aforementioned
Registration Statement.
/S/ SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
--------------------------------------
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Los Angeles, California
March 17, 2000
