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As Filed With The Securities and Exchange Commission On June 6, 2000
Registration Statement No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WAVO CORPORATION
(Exact name of registrant as specified in its Charter)
INDIANA 86-0491428
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3131 E. CAMELBACK RD., SUITE 320
PHOENIX, ARIZONA 85016
(602) 952-5500
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
DAVID E. DEEDS, CHIEF EXECUTIVE OFFICER
WAVO CORPORATION
3131 E. CAMELBACK RD., SUITE 320
PHOENIX, ARIZONA 85016
(602) 952-5500
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
COPY TO: COPY TO:
DOUGLAS J. REICH, ESQ. STEVEN D. PIDGEON, ESQ.
WAVO CORPORATION SNELL & WILMER L.L.P.
3131 E. CAMELBACK RD., SUITE 320 PHOENIX, ONE ARIZONA CENTER
ARIZONA 85016 PHOENIX, ARIZONA 85004-0001
(602) 952-5500 (602) 382-6000
FAX (602) 952-5517 FAX (602) 382-6070
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box. / /
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If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
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CALCULATION OF REGISTRATION FEE
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AMOUNT
PROPOSED MAXIMUM PROPOSED MAXIMUM OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED (1) PER SHARE (2) OFFERING PRICE FEE
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Common Shares Issuable Upon
Conversion of Preferred Stock and 12,271,425 Shares $1.0313 $12,655,521 $3,341
as Dividends Thereon
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Total 12,271,425 Shares $12,655,521 $3,341
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(1) The shares of common stock that may be offered pursuant to this Registration
Statement consist of 12,271,425 shares issuable upon conversion of and as
dividends upon 1,041 shares of Series D Convertible Preferred Stock. For
purposes of estimating the number of shares of common stock to be included in
this Registration Statement, we included (i) 15,516,609 shares, representing
150% of the number of shares of common stock issuable upon conversion of
currently outstanding Series D Convertible Preferred Stock, determined as if the
Series D Convertible Preferred Stock were converted in full at the conversion
price of $1.006341 as of June 5, 2000 (without regard to any limitations on
conversions); plus (ii) 1,054,279 shares, representing 100% of the number of
shares of common stock issuable in lieu of cash dividends payable on currently
outstanding Series D Convertible Preferred Stock, assuming the price used in
calculating such number of shares was $1.006341 per share, the applicable
conversion price as of June 5, 2000.
7,218,289 shares of common stock were previously registered on Form S-3 (file
number 333-90181), filed with the Securities and Exchange Commission on November
2, 1999, as amended by Amendment No. 1 to Form S-3 filed on December 23, 1999,
Amendment No. 2 to Form S-3 filed on January 14, 2000 and Amendment No. 3 to
Form S-3 filed on January 25, 2000. Of the 7,218,289 shares of common stock
previously registered, 2,918,826 shares have been sold. Due to a recent decrease
in the market price of the common stock, the Company is required by the
Registration Rights Agreement dated as of September 30, 1999 to register an
additional 12,271,425 shares of common stock. In accordance with Rule 429 of
Regulation C of the Securities Act of 1933, the Company is presenting a combined
prospectus. The Company previously paid a filing fee of $7,538.39 with the
earlier registration statement.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based upon the average of the high and low prices of
the common stock on June 2, 2000, as reported by the Nasdaq National Market.
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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Subject to Completion, dated June 6, 2000
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING SHAREHOLDERS MAY NOT SELL THE SECURITIES OFFERED BY THIS PROSPECTUS
UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION 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.
PROSPECTUS
Wavo Corporation
16,570,888 Common Shares
This prospectus relates to 16,570,888 shares of common stock of Wavo
Corporation which may be sold from time to time by the selling shareholders
named herein, or their transferees, pledgees, donees or successors. Included in
this amount are 4,299,463 shares of common stock previously covered by an
earlier registration statement.
The shares are being registered to permit the selling shareholders to
sell the shares from time to time in the public market. The shareholders may
sell the common stock through ordinary brokerage transactions, directly to
market makers of our shares, or through any other means described in the section
entitled "Plan of Distribution" beginning on page 17. We cannot assure you that
the selling shareholders will sell all or any portion of the common stock
offered hereby.
We will not receive any of the proceeds from the sale of these shares,
although we have paid the expenses of preparing this prospectus and the related
registration statement.
Our common stock is traded on the Nasdaq National Market under the
symbol "WAVO."
We are an Indiana corporation formed on November 13, 1990. Our
principal executive offices are located at 3131 E. Camelback Rd., Suite 320,
Phoenix, Arizona and our telephone number is (602) 952-5500.
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BEFORE PURCHASING ANY OF THE SHARES COVERED BY THIS PROSPECTUS, CAREFULLY READ
AND CONSIDER THE RISK FACTORS INCLUDED IN THE SECTION ENTITLED "RISK FACTORS"
BEGINNING ON PAGE 3. YOU SHOULD BE PREPARED TO ACCEPT ANY AND ALL OF THE RISKS
ASSOCIATED WITH PURCHASING THE SHARES, INCLUDING A LOSS OF ALL OF YOUR
INVESTMENT.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE SALE OF THE COMMON STOCK OR DETERMINED THAT THE
INFORMATION IN THIS PROSPECTUS IS ACCURATE OR COMPLETE. IT IS ILLEGAL FOR ANY
PERSON TO TELL YOU OTHERWISE.
The date of this prospectus is___________, 2000.
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TABLE OF CONTENTS
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PAGE
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WAVO Corporation.................................................... 1
Recent Developments................................................. 2
Risk Factors........................................................ 3
Use of Proceeds..................................................... 9
Selling Shareholders................................................ 10
Description of Securities........................................... 12
Plan of Distribution................................................ 17
Legal Opinions...................................................... 19
Experts............................................................. 19
Where You Can Find More Information................................. 19
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS AND IN ANY ACCOMPANYING PROSPECTUS SUPPLEMENT. NO ONE HAS
BEEN AUTHORIZED TO PROVIDE YOU WITH DIFFERENT INFORMATION.
THE COMMON STOCK IS NOT BEING OFFERED IN ANY JURISDICTION WHERE THE OFFER IS NOT
PERMITTED.
YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT PAGE OF
THE PROSPECTUS OR PROSPECTUS SUPPLEMENT.
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WAVO CORPORATION
We are a digital media services company, connecting media providers
with media consumers. We partner with prominent providers of news, business
data, consumer content and multimedia programming to deliver value added digital
media services to businesses and consumers. Our technologies and services
aggregate, filter, customize and distribute digital media (text, music, graphics
and video), using a variety of delivery systems, including the Internet,
satellite broadcast systems, television and FM radio. Our recently launched
MediaXpress(TM) service leverages our established relationships with over 1,800
prominent news, business information and multimedia content providers, and
delivers that content in a customized, Extensible Markup Language ("XML")-based
format to businesses and consumers. Our most recent product offering, Virgin
JamCast(TM), a music portal, is a collaboration with Virgin Entertainment Group
that uses our proprietary multicast "push" technology to deliver digital music
to consumers.
MEDIAXPRESS: Our MediaXpress service (formerly "NewsPak") delivers
pre-licensed, filtered, real-time news, information and entertainment to any Web
server, wherever located. MediaXpress aggregates content from our extensive base
of content providers of more than 1,800 sources, who are leaders in their
respective markets. These content providers include such well-known companies as
Reuters, Dow Jones & Company, Standard & Poors and Associated Press, among many
others. MediaXpress aggregates the content by collecting digital media from the
content providers and translating it from its original format into richly
marked-up XML documents. Using our advanced technologies, and employing
proprietary hardware and software schemes, MediaXpress personalizes the digital
media for each customer. Only the content desired by the customer, defined by
the user via topic and key word selection, is delivered to that customer.
MediaXpress allows Web site operators to access and integrate our digital media
offerings into their Web sites without the burden of license negotiations,
dedicated lines and special hardware. MediaXpress enables any user, from the
largest commercial portals to small Web sites, to go to the MediaXpress Web
site, complete the online subscription transaction, download a server
application and immediately begin to receive and publish streaming digital media
on their Web site.
Our proprietary WAVO Internet Delivery System ("WINDS") and our
satellite broadcast network are utilized to transport the MediaXpress digital
media to client Web sites. The WINDS protocol creates a virtual private network
on the Internet that allows us to move digital media securely and with assured
delivery. The MediaXpress feed distribution system enforces publisher-dictated
policies with regard to usage, embargos, re-distribution and syndication.
Our MediaXpress Digital Media Delivery service provides wireless
digital media delivery, digital media network services and related equipment to
providers of financial data, news, and other information, such as Reuters
America, Inc., Dow Jones & Company, Inc., the Associated Press, Knight-Ridder,
Inc., S & P Comstock and Thompson Financial Services. Our broadcast networks
utilize established technologies, such as FM subcarrier and small dish satellite
broadcasting technologies, which are well-suited to the economical one-way
transmission of time-sensitive data from one central location to many remote
sites. Our FM subcarrier transmission operations are established in 10 major
United States markets that, combined with our small dish satellite coverage,
enable us to serve the continental United States and the major population
centers in Canada. In response to increased customer requirements, we commenced
operation of a European satellite data network based in London, England in 1998.
This network enables us to provide similar digital media delivery services for a
wide variety of information companies throughout Europe, North Africa and parts
of the Middle East.
VIRGIN JAMCAST: In September 1999, we formed JamCast.com, Inc., and
partnered with Virgin Entertainment Group, Inc., to offer "Virgin JamCast(TM)",
a digital music Internet service. Wavo Corporation and Virgin Entertainment
Group own 75% and 25%, respectively, of JamCast.com, Inc. Virgin JamCast is an
innovative digital music Web portal that uses our proprietary multicast "push"
technology to deliver digital music to an Internet-wide audience. Virgin JamCast
proactively distributes digital music to consumers by delivering it in the
background on the customer's existing connection to the Internet. Customers can
register to download the Virgin JamCast software and receive the Virgin JamCast
service for free. Registered customers of Virgin JamCast can select from a
choice of 13 musical genres that will be delivered each week to the member's PC.
Each week, Virgin JamCast will send to the consumer a package of 20-30 songs
from well-known and independent artists within the respective genres.
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Virgin JamCast offers thousands of selections of digital music for
downloading, storing to play at a later time, or purchasing. The Virgin JamCast
member is permitted to listen to the selection three times, or to hold the
selection for three days to sample it before buying a download of the digital
music. Because Virgin JamCast delivers digital music to the customer's PC in the
background, utilizing our proprietary technology, it eliminates the wait
generally associated with traditional music downloads on the Internet.
Virgin JamCast will also permit the customer to purchase CDs and tapes
through its Web site. Virgin JamCast customers will be able to purchase music
online from the Virgin Mega Store, an affiliate of Virgin Entertainment Group.
Virgin JamCast will also offer the opportunity to purchase physical goods from
the library of Liquid Audio and other major music distributors.
RECENT DEVELOPMENTS
In January 2000, we sold our eWatch Internet monitoring business to
PRNnet, an affiliate of PR Newswire, as a result of our decision to focus our
Internet efforts on MediaXpress and Virgin JamCast.
In addition, during the first quarter of 2000, we decided to
discontinue our WaveTop service over the Vertical Blanking Interval of the PBS
television network. We are seeking to partner with third parties for the use of
this broadcast capacity. See "Risk Factors -- Risks Relating to Agreement with
PBS National Datacast, Inc."
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RISK FACTORS
Before purchasing any of the shares covered by this prospectus, you should
carefully read and consider the risk factors set forth below. You should be
prepared to accept any and all of the risks associated with purchasing the
shares, including a loss of all of your investment.
RISKS RELATED TO THE SERIES D PREFERRED SHARES
THE CONVERSION OF THE SERIES D PREFERRED SHARES AND THE EXERCISE OF THE RELATED
WARRANTS COULD RESULT IN SUBSTANTIAL NUMBERS OF ADDITIONAL SHARES BEING ISSUED
IF OUR MARKET PRICE DECLINES
The Series D Preferred Shares convert at a floating rate based on the
market price of our common stock, provided the conversion price may not exceed
$10.00. As a result, the lower the price of our common stock at the time of
conversion, the greater the number of shares the holder will receive. For
additional information regarding the number of additional shares that may be
issued at various assumed conversion prices, see the table on page 14 under
"Description of Securities."
To the extent the Series D Preferred Shares are converted or dividends
on the Series D Preferred Shares are paid in shares of common stock rather than
cash, a significant number of additional shares of common stock may be sold into
the market, which could decrease the price of our common stock. In that case, we
could be required to issue an increasingly greater number of shares of our
common stock upon future conversions of the Series D Preferred Shares, sales of
which could further depress the price of our common stock.
If the sale of a large amount of shares of our common stock upon
conversion of or the payment of dividends in lieu of cash on the Series D
Preferred Shares results in a decline in the price of our common stock, this
event could encourage short sales by the selling shareholders or others. Short
sales could place further downward pressure on the price of our common stock.
The conversion of and the payment of dividends in shares of common
stock in lieu of cash on the Series D Preferred Shares may result in substantial
dilution to the interests of other holders of our common stock. Even though no
selling shareholder may convert its Series D Preferred Shares into more than
4.99% of our then outstanding common stock (excluding for purposes of such
determination shares of common stock issuable upon conversion of Series D
Preferred Shares which have not been converted and upon exercise of warrants
which have not been exercised), this restriction does not prevent a selling
shareholder from selling a substantial number of shares in the market. By
periodically selling shares into the market, an individual selling shareholder
could eventually sell more than 4.99% of our outstanding common stock while
never holding more than 4.99% at any specific time.
WE MAY ISSUE ADDITIONAL SHARES AND DILUTE YOUR OWNERSHIP PERCENTAGE
Certain events over which you have no control could result in the
issuance of additional shares of our common stock, which would dilute your
ownership percentage in Wavo Corporation. We may issue additional shares of
common stock or preferred stock:
- to raise additional capital or finance acquisitions;
- upon the exercise or conversion of outstanding options,
warrants and shares of convertible preferred stock; or
- in lieu of cash payment of dividends.
As of June 5, 2000, there were outstanding convertible preferred
shares, warrants, and options to acquire up to approximately 22,698,353
additional shares of common stock at prices ranging from $1.006 to $13.51 per
share. If converted or exercised, these securities will dilute your percentage
ownership of common stock. These securities,
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unlike the common stock, provide for antidilution protection upon the occurrence
of stock splits, redemptions, mergers, reclassifications, reorganizations and
other similar corporate transactions, and, in some cases, major corporate
announcements. If one or more of these events occurs, the number of shares of
common stock that may be acquired upon conversion or exercise would increase. In
addition, as disclosed in the preceding risk factor, the number of shares that
may be issued upon conversion of or payment of dividends in lieu of cash on the
Series D Preferred Shares could increase substantially if the market price of
our common stock decreases during the period the Series D Preferred Shares are
outstanding.
For example, the number of shares that we would be required to issue
upon conversion of all 1,041 Series D Preferred Shares currently outstanding
(excluding shares issued as accrued dividends) would increase from 10,344,406
shares, based on the applicable conversion price of $1.006341 per share as of
June 5, 2000, to:
- 13,792,541 shares if the applicable conversion price decreased
25%;
- 20,688,812 shares if the applicable conversion price decreased
50%; or
- 41,377,624 shares if the applicable conversion price decreased
75%.
On May 15, 2000, the holders of our common stock approved the issuance of the
Series D Preferred Shares and the shares of common stock shares that may be
issued upon conversion of, or as dividends on, the Series D Preferred Shares,
and upon exercise of the related warrants. Because of this shareholder approval,
there is no limit on the amount of shares of common stock that could be issued
upon conversion or the payment of dividends in lieu of cash on the Series D
Preferred Shares. For additional information regarding the number of additional
shares of common stock that may be issued at various assumed conversion prices,
see the table on page 14 under "Description of Securities."
RISKS RELATED TO OUR BUSINESS
WE HAVE A HISTORY OF LOSSES AND MAY NEVER BECOME PROFITABLE
We have generated relatively limited revenues from operations and
incurred significant expenses in developing our products and services. As a
result, we have realized net losses each year since our inception in November
1990. We incurred net losses of approximately $19.8 million in 1997,
approximately $28.5 million in 1998, and approximately $31.1 million in 1999. As
of December 31, 1999, we had an accumulated deficit of approximately $128.5
million. We expect to incur significant operating losses for 2000 and may
continue to incur operating losses after 2000. Given our history of losses,
limited revenues from operations and significant expenses, we may never become
profitable.
IF WE DO NOT GENERATE WIDESPREAD DEMAND FOR OUR MEDIAXPRESS AND VIRGIN JAMCAST
SERVICES WE MAY NEVER BECOME PROFITABLE
To become profitable, we need to generate broad-based market acceptance
for our MediaXpress and Virgin JamCast services. In addition to achieving
widespread consumer demand, the success of our various services depends on our
ability to meet the following objectives, none of which we may achieve.
- attracting and retaining the most popular information
providers;
- including our software and technology in products manufactured
by others, including personal computers, set top boxes and
other consumer products; and
- generating significant revenues through e-commerce, technology
licensing and other opportunities.
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IF WE DO NOT SIGNIFICANTLY EXPAND THE MARKETS FOR OUR MEDIAXPRESS DIGITAL MEDIA
DELIVERY SERVICES WE MAY NEVER BECOME PROFITABLE
Our profitability also depends on expanding the market for our
MediaXpress Digital Media Delivery services. The markets for these services also
are relatively new and evolving. Increasing our share of this market depends on
meeting the following objectives, none of which we may achieve.
- demonstrating a technological or economic advantage over our
competitors;
- providing strong customer service to support these services;
- attracting and retaining information providers; and
- increasing sales through our direct sales force.
OUR PRODUCTS AND SERVICES MAY BECOME OBSOLETE UNLESS WE ADAPT TO RAPID
TECHNOLOGICAL CHANGE AND FREQUENT NEW PRODUCT INTRODUCTIONS BY OUR COMPETITORS
The markets for our products and services experience rapid
technological change, frequent new product introductions, and evolving industry
standards. Rapid technological change and new product introduction could render
one or more of our products or services obsolete or place us at a competitive
disadvantage. Accordingly, we believe that our success depends upon our ability
to anticipate changes in consumer preferences, develop and market products and
services that incorporate new technologies, and enhance and expand our existing
product lines and services to keep pace with competing products. We will need to
spend significant amounts of capital to develop, market and enhance our products
and services to meet and take advantage of technological changes. Our failure to
anticipate or adapt to technological change or evolving industry standards, and
to successfully introduce new products and services, could materially and
adversely affect our business.
WE MAY NOT SUCCEED UNLESS WE ARE ABLE TO SUCCESSFULLY ADDRESS THE DIFFERENT
COMPETITIVE CHALLENGES IN EACH OF OUR MARKETS
Each of the markets in which we compete presents different competitive
challenges. For example, we currently offer our Virgin JamCast services
primarily to PC users at home and provide our MediaXpress and Digital Media
Delivery services primarily to business users. We must respond to different
competitive challenges and compete with a different set of competitors in each
of our markets. In addition, with the rapid expansion of the Internet, the
number of companies that can provide similar products and services in each of
our markets is growing significantly. As a result, we expect that more
competitors will enter the markets in which we operate. Increased competition
may result in price reductions, reduced gross margins and loss of market share.
The Internet, content aggregation and digital medial delivery industry
is intensely competitive, rapidly changing and significantly affected by new
product introductions and other market activities. Each of the markets in which
we operate includes numerous competitors with well recognized brand names that
provide products and services that compete with those we offer, including, but
not limited to:
- content providers and content delivery providers, such as
Screaming Media.net, Isyndicate.com, Tibco, Starburst,
Globalcast, Harmonic Data Systems, Digital Island, Akamai,
Loral Space and Communications, Cidera, Moreover.com and
Trapezo;
- digital music providers and deliverers, such as A2B Music,
Crunch Music, Digital on Demand/Red Hot, Direct Audio,
Emusic.com, Epitonic, Liquid Audio, Mjuice, MP3.com,
MusicMaker, NEW (Nordic Equipment Worldwide), Riffage,
TechnoMusic and Tunes.com;
- digital media delivery services providers, such as News Edge
Corporation, Data Broadcasting Corporation, AP SatNet,
Sandpiper Networks, Fantastic Corporation, MicroSpace Corp.,
EchoStar and Hughes DirectPC; and
- digital media delivery equipment providers, such as Wegener
Communications, Radyne ComStream Inc., International
Datacasting Corporation and Scientific-Atlanta, Inc.
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Many of our competitors have longer operating histories and greater
presence in key markets, greater name recognition, access to larger customer
bases and significantly greater financial, sales, marketing, distribution,
technical and other resources. Given these competitive disadvantages, we may not
be able to compete effectively against these competitors. Our inability to
compete would have a material adverse effect on our business. These competitors
may be able to adapt to new or emerging technologies and changes in customer
requirements more quickly than we can. They might also be able to devote greater
resources to the development, promotion and sale of competing products and
services.
THIRD PARTY INFORMATION PROVIDERS MAY TERMINATE OR CHOOSE NOT TO RENEW
AGREEMENTS TO PROVIDE CONTENT WHICH WOULD ADVERSELY AFFECT OUR SERVICE OFFERINGS
We currently rely on a number of content and information providers to
supply entertainment, news, and other information we offer through our various
services. Our agreements with information providers are generally for a term of
one or more years. The termination of or failure to renew one or more
significant information provider agreements would decrease the available
entertainment, news and information that we can offer our customers. Many of the
agreements automatically renew unless notice of termination is provided before
the end of the term by either party. However, most of these agreements may be
terminated by the information provider if we fail to fulfill our obligations
under the agreement and some agreements are terminable at will. We cannot
guarantee that an information provider will not terminate its agreement with us
or that it will choose to renew the agreement at the end of its term.
RISKS RELATING TO AGREEMENT WITH PBS NATIONAL DATACAST, INC.
We are a party to an agreement with PBS National Datacast, Inc. ("PBS")
under which we may broadcast information through television signals transmitted
by PBS member stations. We currently use the Internet and satellites, and to a
lesser extent radio, to deliver digital media. We are seeking partners to
utilize the broadcast transmission facility provided under the PBS agreement. We
have advised PBS that we would like to restructure the agreement and have made a
proposal to PBS. There can be no assurance that PBS will accept our proposal or
that any other resolution of this agreement will occur. If we fail to reach an
accommodation with PBS, we will continue to be obligated to make payments to PBS
totalling $5.7 million over the remaining two years of the existing agreement,
which could have a material adverse effect on our future financial results.
FAILURE OR DISRUPTION OF OUR TELECOMMUNICATIONS SYSTEMS MAY DISRUPT OUR
OPERATIONS AND SERVICE OFFERINGS TO OUR CUSTOMERS
Our customers rely on our ability to provide and distribute information
24 hours a day seven days a week without failures. As a result, our business
depends to a significant extent on our ability to maintain continuous operation
of our computer and telecommunications systems. Any damage to or loss of our
computer and telecommunications networks, including our network operations
centers, or damage to or loss of any third party controlled systems, including
satellites or those operated by Internet service providers, could have a
material adverse effect on our business. Our systems may suffer damage or
disruption from fire, natural disaster, power loss, telecommunications failure,
or similar events. Our operations also depend in significant part on our network
operations centers in Phoenix, Arizona, Dallas, Texas, and Salt Lake City, Utah.
Although we have arranged for off-site back-up for our network control, this
arrangement does not eliminate the significant risk to our operations from a
natural disaster or system failure. In addition, growth of our customer base may
strain the capacity of our computer and telecommunications systems or lead to
degradations in performance or system failure.
ANY DISRUPTION IN RECEIVING INFORMATION FROM THIRD PARTY INFORMATION PROVIDERS
WILL DISRUPT OUR ABILITY TO PROVIDE TIMELY INFORMATION TO OUR CUSTOMERS
We depend on the timely receipt of information feeds and computer
downloads from third parties. Any loss, interruption or disruption of the
transmission of this information to our news consolidation facility would result
in delay, loss, interruption or disruption of the transmission to the end users.
In addition to affecting customers of our information providers, these events
would adversely affect customers of our services. These disruptions could result
in those customers terminating, or failing to renew, their contracts with us. In
either case, our business could be materially and adversely affected.
We also depend largely on the integrity, capability, and maintenance of
third party controlled systems, including satellites and the Internet. The loss
or disruption of any facility or equipment, or the interruption of any
facility's or equipment's transmission capabilities, could adversely affect our
ability to broadcast services and information. It could also cause one or more
of our customers to terminate their contracts with us or fail to renew their
contracts. Our Digital Media Delivery services use a third party shared
satellite uplink facility in Raleigh, North Carolina, as well as third party FM
radio transmission facilities. We do not control any of these facilities or
equipment.
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THE FCC MAY REVOKE OR NOT RENEW LICENSES UPON WHICH WE DEPEND TO PROVIDE OUR
SERVICES TO CUSTOMERS
We must comply with regulations issued by the Federal Communications
Commission. Specifically, the FCC requires broadcasters in television, radio and
other media to obtain and maintain licenses to transmit information. As
described below, the FCC has the right to revoke a license and may elect not to
renew a license after its expiration. If we or any third party broadcaster on
which we rely fails to maintain any required FCC licenses, our ability to
provide our services may be disrupted.
TELEVISION. In the United States, broadcast television transmissions
are subject to regulation by the FCC. Although we are not currently required to
hold an FCC license to provide our broadcasting services, third parties on which
we rely are or may be required to obtain or maintain FCC licenses to provide
their services to us. In addition, the services we provide may require us to
obtain an FCC license in the future. If we or a third party on which we rely
fails to obtain or maintain any required FCC license, we may be unable to
provide our broadcast services on a continuous basis.
FM SUBCARRIERS. We have entered into contracts with various FM
licensees to lease their subcarriers to broadcast data. An FM license is granted
for a period of seven years and may be renewed by the FCC for like terms.
However, there is no guarantee that the licenses for the FM stations we use will
be renewed. Although we believe that adequate alternative FM stations would be
available for our use, any delay in finding alternative stations, or the terms
upon which they would be willing to supply their services, could adversely
affect our business. We are not currently required to hold an FCC license to act
as a private carrier to use FM subcarrier channels. If in the future we are
required to hold an FCC license in order to use these FM subcarriers, there is
no assurance we will be granted one.
SATELLITE UPLINKS. We currently hold two FCC licenses for satellite
uplinks in Salt Lake City, Utah. Our satellite uplink licenses are subject to
renewal. There can be no assurance that these licenses will be renewed upon
their expiration on October 23, 2002, and January 16, 2008. These licenses may
be revoked for cause. Failure to renew, or revocation of, either or both of our
FCC licenses for satellite uplinks could have a material adverse affect on our
business. We also share a satellite uplink facility in Raleigh, North Carolina.
This facility is required to hold a license from the Federal Communications
Commission in order to broadcast information via satellite transmission. If this
transmission facility were to fail to obtain any required license from the FCC,
fail to maintain its license, or fail to have a required license renewed by the
FCC, we would be unable to transmit information using this facility.
ADVANCED TELEVISION SYSTEM FORMAT. While Congress specifically
authorized the use of the advanced television system format in the legislation
adopting the format, the FCC has not issued final regulations regarding the
transmission of non-programming related content in the format. If we provide
broadcasting services in the new digital format in the future, we will become
subject to any regulations adopted by the FCC governing transmission of content
in that format.
WE MAY NOT BE ABLE TO RAISE THE SUBSTANTIAL ADDITIONAL CAPITAL REQUIRED TO
EXECUTE OUR BUSINESS PLAN
We expect to continue to incur significant operating expenses in
continuing to develop and market our products and services. Although we believe
currently available funds and capital resources will be sufficient to meet
anticipated needs for capital through mid 2000, we expect that we will need
substantial additional capital to fully implement our business plan beyond mid
2000. We also may need to raise additional funds in order to acquire
complementary businesses, products, or technology. Additional financing may not
be available on terms favorable to us, or at all. If adequate funds are not
available or are not available on acceptable terms, we may not be able to
execute our business plan or take advantage of our business opportunities. In
addition, if we elect to raise capital by issuing additional shares of stock,
existing shareholders may incur dilution.
7
<PAGE> 14
OUR BUSINESS IS LIKELY TO BE HURT IF WE ARE UNABLE TO KEEP OUR SENIOR EXECUTIVE
OFFICERS AND KEY EMPLOYEES
We rely considerably on the abilities of our founder and Chief
Executive Officer, David E. Deeds. We also depend to a significant extent upon
the performance of our other senior executive officers. We have not entered into
employment agreements with any of our senior executive officers other than our
President, Peter M. White, and are not the beneficiary of life insurance on any
of them. Although we have agreements with some members of management not to
compete with us, there can be no assurance that these agreements will be
enforceable or effective in retaining these individuals. As a result, we may
lose one or more key individuals to resignation or death and may be unable to
adequately replace these individuals. In addition, our products and services are
highly technical and require key employees with high levels of technical
expertise. Demand for these individuals, particularly in the locations where we
operate, is very high. The loss of the services of any of our key employees, or
the failure to attract and retain qualified personnel to replace them, could
have a material adverse effect on our business.
A LARGE PORTION OF OUR REVENUE COMES FROM A SMALL NUMBER OF CUSTOMERS, THE LOSS
OF WHICH COULD MATERIALLY AND ADVERSELY AFFECT OUR OPERATING RESULTS
A significant percentage of our revenue comes from a relatively small
group of customers. Although we believe that our current relationships with our
customers are generally good, the loss of one or more of our major customers
could have a material adverse effect on our operating results.
AS AN INTERNET-BASED COMPANY OUR COMMON STOCK PRICE IS UNUSUALLY VOLATILE, WHICH
MAY IMPEDE OUR ABILITY TO RAISE CAPITAL, AND CAUSE OUR INVESTORS TO LOSE MONEY
The market price of our common stock, like the stock of many other
technology companies, particularly those involved in Internet-related businesses
and e-commerce, has been highly volatile. In addition, we have experienced, and
may continue to experience, significant fluctuations in revenues and operating
results from period to period, which tends to increase the volatility of our
common stock price. Factors that affect volatility include:
- unexpected fluctuations in our operating results;
- announcements of technological innovations and new products by
us or our competitors;
- increases in governmental regulation;
- developments or changes in legislation affecting the
industries in which we operate;
- developments in our patent or other proprietary rights or
those of our competitors;
- analyst reports, media stories, news broadcasts, and
interviews; and
- market conditions for technology and Internet-related stocks
in general.
OUR GOVERNING DOCUMENTS AND INDIANA LAW CONTAIN PROVISIONS THAT COULD PREVENT
TRANSACTIONS IN WHICH YOU WOULD RECEIVE A PREMIUM FOR YOUR STOCK
Our Articles of Incorporation and the Indiana Business Corporation Law
contain provisions that could have the effect of delaying, deferring, or
preventing a change in control and the opportunity to sell your shares at a
premium over current market prices. Although intended to protect Wavo
Corporation and its shareholders from unwanted takeovers, their effect could
hinder or prevent transactions in which you might otherwise receive a premium
for your common stock over then-current market prices, and may limit your
ability to approve transactions which may be in your best interests. As a
result, the mere existence of these provisions could adversely affect the price
of our common stock.
8
<PAGE> 15
WE ARE SUBJECT TO RESTRICTIONS ON DIVIDENDS AND REDEMPTIONS AND DO NOT INTEND TO
PAY ANY DIVIDENDS
We have not paid any dividends on the common stock, and do not plan to
pay any dividends on the common stock for the foreseeable future. The provisions
of the Series 1994 Preferred Shares and the Series D Preferred Shares prohibit
the payment of dividends on the common stock unless the dividends on those
preferred shares are first paid and we get the consent of the holders of the
Series D Preferred Shares. In addition, although our credit facility does not
include any specific prohibitions on the payment of dividends, it does include
various financial covenants that could have the effect of limiting cash dividend
or redemption payments. The Indiana Business Corporation Law includes
limitations on the ability of corporations to pay dividends on or to purchase or
redeem their own stock. Accordingly, you should not expect that dividends will
be paid on your common stock.
WE MAY ISSUE ADDITIONAL SHARES OF PREFERRED STOCK WITHOUT SHAREHOLDER APPROVAL
THAT HAVE RIGHTS SENIOR TO THOSE OF COMMON SHAREHOLDERS
Our Board of Directors has the authority to issue a total of up to
25,000,000 shares of preferred stock and to fix the rates, preferences,
privileges, and restrictions, including voting rights, of the preferred stock,
which typically are senior to the rights of the common shareholders, without any
further vote or action by you and the other common shareholders. Your rights
will be subject to, and may be adversely affected by, the rights of the holders
of the preferred stock that have been issued, or might be issued in the future.
Preferred stock also could have the effect of making it more difficult for a
third party to acquire a majority of the outstanding voting stock of Wavo
Corporation. This could delay, defer, or prevent a change in control.
Furthermore, holders of preferred stock may have other rights, including
economic rights, senior to the common stock. As a result, their existence and
issuance could have a material adverse effect on the market value of the common
stock. We have in the past issued, and, may from time to time in the future
issue, preferred stock for financing or other purposes with rights, preferences,
or privileges senior to the common stock.
WE MAKE FORWARD-LOOKING STATEMENTS IN THIS PROSPECTUS THAT MAY NOT PROVE TO BE
ACCURATE
This prospectus contains or incorporates forward-looking statements
including statements regarding, among other items, our business strategy, growth
strategy, and anticipated trends in our business. We may make additional written
or oral forward-looking statements from time to time in filings with the
Securities and Exchange Commission or otherwise. When we use the words
"believe," "expect," "anticipate," "project" and similar expressions, this
should alert you that this is a forward-looking statement. Forward-looking
statements speak only as of the date the statement is made. These
forward-looking statements are based largely on our expectations. They are
subject to a number of risks and uncertainties, some of which cannot be
predicted or quantified and are beyond our control. Future events and actual
results could differ materially from those set forth in, contemplated by, or
underlying the forward-looking statements. Statements in this prospectus, and in
documents incorporated into this prospectus, including those set forth in "Risk
Factors" and "WAVO Corporation", describe factors, among others, that could
contribute to or cause these differences. In light of these risks and
uncertainties, there can be no assurance that the forward-looking information
contained in this prospectus will in fact transpire or prove to be accurate. All
subsequent written and oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by this
section.
USE OF PROCEEDS
The selling shareholders will receive all of the proceeds from the sale
of the common stock offered under this prospectus, although we may receive up to
$4,176,900 upon exercise of the warrants issued in connection with the Series D
Preferred Shares.
9
<PAGE> 16
SELLING SHAREHOLDERS
The shares of common stock being offered by the selling shareholders
are issuable (1) upon conversion of the Series D Preferred Shares; (2) as
dividends on the Series D Preferred Shares, or (3) upon exercise of the related
warrants. For additional information about the Series D Preferred Shares, see
"Description of Securities - Series D Preferred Shares." We are registering the
shares in order to permit the selling shareholders to offer these shares for
resale from time to time. Except for the ownership of the Series D Preferred
Shares and related warrants, the selling shareholders have not had any material
relationship with us within the past three years.
The table below lists the selling shareholders and other information
regarding the beneficial ownership of the common stock by each of the selling
shareholders. The second column lists, for each selling shareholder, the number
of shares of common stock (based on its ownership of Series D Preferred Shares
and related warrants) that would have been issuable to the selling shareholders
on June 5, 2000 assuming conversion of all 1,041 Series D Preferred Shares
currently outstanding and the exercise of all warrants held by such selling
shareholder on that date, without regard to any limitations on conversions or
exercise. Because conversion of the Series D Preferred Shares is based on a
formula that depends on the market price of our common stock, the numbers listed
in the second column may fluctuate from time to time. The third column lists
each selling shareholder's pro rata portion (based on its ownership of Series D
Preferred Shares) of the 16,570,888 shares of common stock being offered by this
prospectus.
We determined the number of shares of common stock to be offered for
resale by this prospectus by agreement with the selling shareholders and in
order to adequately cover a reasonable increase in the number of shares
required. Our calculation of the number of shares to be offered for resale
assumes a conversion price of $1.006341, which represents the lowest
dollar-volume weighted average price during the six consecutive trading days
through and including June 5, 2000, the second trading date immediately
preceding the filing of the registration statement of which this prospectus
forms a part. In accordance with the terms of a Registration Rights Agreement
with the holders of the Series D Preferred Shares, this prospectus covers the
resale of 150% of the number of shares of common stock issuable upon conversion
of all 1,041 Series D Preferred Shares currently outstanding, determined as if
such Series D Preferred Shares were converted in full at the assumed conversion
price of $1.006341, plus 100% of the number of shares of common stock issuable
in lieu of cash dividends payable on the Series D Preferred Shares, plus 100% of
the number of shares of common stock issuable upon exercise of the related
warrants. Because the conversion of the Series D Preferred Shares into common
stock is based on a formula that depends upon the market price of our common
stock, the number of shares that will actually be issued upon conversion may be
more or less than the 16,570,888 shares being offered by this prospectus. The
fourth and fifth columns assume the sale of all of the shares offered by each
selling shareholder.
Under the Articles of Amendment of our Articles of Incorporation for
the Series D Preferred Shares and under the terms of the warrants, no selling
shareholder may convert Series D Preferred Shares or exercise the warrants,
respectively, to the extent such conversion or exercise would cause such selling
shareholder's beneficial ownership of our common stock (other than shares deemed
beneficially owned through ownership of unconverted shares of the Series D
Preferred Shares or unexercised warrants) to exceed 4.99% of the outstanding
shares of our common stock. The number of shares in the second column does not
reflect this limitation. The selling shareholders may sell all, some or none of
their shares in this offering. See "Plan of Distribution."
Of the shares being sold by this prospectus, 7,218,289 shares were
previously registered on Form S-3 (file number 333-90181), filed with the
Securities and Exchange Commission on November 2, 1999, as amended by Amendment
No. 1 to Form S-3 filed on December 23, 1999, Amendment No. 2 to Form S-3 filed
on January 14, 2000 and Amendment No. 3 to Form S-3 filed on January 25, 2000.
Of the 7,218,289 shares of common stock previously registered, 2,918,826 shares
have been sold. Due to a recent decrease in the market price of our common
stock, we are required by the Registration Rights Agreement to register an
additional 12,271,425 shares of common stock. In accordance with Rule 429 of
Regulation C of the Securities Act of 1933, we are presenting a combined
prospectus.
10
<PAGE> 17
<TABLE>
<CAPTION>
COMMON SHARES COMMON SHARES COMMON SHARES
BENEFICIALLY OWNED OFFERED OWNED AFTER PERCENTAGE
NAME OF SELLING SHAREHOLDER PRIOR TO OFFERING BY THIS PROSPECTUS OFFERING OF CLASS
--------------------------- ------------------ ------------------ ------------- ----------
<S> <C> <C> <C> <C>
HFTP Investment, L.L.C. (1) 5,538,686 (3) 8,564,013 0 0%
Leonardo, L.P. (2) 5,892,769 (4) 8,006,875 0 0%
</TABLE>
(1) Promethean Investment Group, LLC, a New York limited liability company
("Promethean"), serves as investment advisor to HFTP Investment, L.L.C.
("HFTP") and may be deemed to share beneficial ownership of the shares
beneficially owned by HFTP by reason of shared power to vote and to
dispose of the shares beneficially owned by HFTP. Promethean disclaims
beneficial ownership of the shares beneficially owned by HFTP. Mr.
James F. O'Brien, Jr. indirectly controls Promethean. Mr. O'Brien
disclaims beneficial ownership of the shares beneficially owned by
Promethean and HFTP. HFTP is not a registered broker-dealer. HFTP,
however, is under common control with, and therefore an affiliate of, a
registered broker-dealer.
(2) Angelo, Gordon & Co., L.P. ("Angelo Gordon") is a general partner of
Leonardo, L.P. and consequently has voting control and investment
discretion over securities held by Leonardo, L.P. Angelo Gordon
disclaims beneficial ownership of the shares held by Leonardo, L.P. Mr.
John M. Angelo, the Chief Executive Officer of Angelo Gordon, and Mr.
Michael R. Gordon, the Chief Operating Officer of Angelo Gordon, are
the sole general partners of A.G. Partners, L.P., the sole general
partner of Angelo Gordon. As a result, Mr. Angelo and Mr. Gordon may be
considered beneficial owners of any shares deemed to be beneficially
owned by Angelo Gordon. Angelo Gordon is not a registered
broker-dealer. Angelo Gordon, however, is under common control with,
and therefore an affiliate of, a registered broker-dealer.
(3) Includes up to 5,088,686 shares of Common Stock issuable on June 5,
2000 (including accrued dividends but without regard to any limitations
on conversions), upon conversion of 503 Series D Preferred Shares at an
assumed conversion price of $1.006341 and up to 450,000 shares of
common stock issuable upon the exercise of the warrant issued in
connection therewith held of record by HFTP Investment, L.L.C.
(4) Includes up to 5,442,769 shares of Common Stock issuable on June 5,
2000 (including accrued dividends but without regard to any limitations
on conversions), upon conversion of 538 Series D Preferred Shares at an
assumed conversion price of $1.006341 and up to 450,000 shares of
common stock issuable upon exercise of the warrant issued in connection
therewith held of record by Leonardo, L.P.
11
<PAGE> 18
DESCRIPTION OF SECURITIES
We are authorized to issue up to 100,000,000 shares of common stock and
25,000,000 preferred shares. As of June 5, 2000, 32,186,257 shares of common
stock were issued and outstanding, and a total of 503,004 preferred shares were
issued and outstanding.
The 32,186,257 shares of common stock outstanding on June 5, 2000 does
not include 11,664,934 shares of common stock issuable upon exercise of
currently outstanding warrants and stock options.
The following summary of certain provisions of the common stock and
preferred shares does not purport to be complete and is subject to, and is
qualified by, our amended Articles of Incorporation, Restated Code of Bylaws,
and by the provisions of applicable law.
COMMON STOCK
The holders of our common stock are entitled to one vote per share on
all matters on which shareholders are entitled to vote. Subject to the rights of
holders of any class or series of shares, including preferred shares, having a
preference over the common stock as to dividends or upon liquidation, the
holders of our common stock are also entitled to dividends as may be declared by
our Board of Directors out of funds that are lawfully available, and are
entitled upon liquidation to receive pro rata the assets that are available for
distribution to holders of common stock. Holders of the common stock have no
preemptive, subscription, or conversion rights. The common stock is not subject
to assessment and has no redemption provisions.
PREFERRED STOCK
Our Board of Directors has the authority, without further action by the
shareholders, to issue a total of up to 25,000,000 preferred shares in one or
more series and to fix the rights, preferences, privileges and restrictions
granted to or imposed upon any series of unissued preferred shares and to
determine the number of shares constituting any series and the designation of
the series, without any further vote or action by the shareholders.
SERIES D PREFERRED SHARES
GENERAL.
On October 4, 1999, we issued 1,500 shares of our Series D Convertible
Preferred Stock, $10,000 stated value per share, and warrants to purchase
900,000 shares of our common stock in a private placement to institutional
investors. The net proceeds of the offering, after expenses, were approximately
$13,758,000. Donaldson, Lufkin & Jenrette served as our placement agent for this
transaction. As of the date of this prospectus, there are 1,041 Series D
Preferred Shares outstanding.
DIVIDENDS.
The Series D Preferred Shares carry a dividend rate of 10% per annum,
payable quarterly or upon conversion or redemption. At our option, the quarterly
dividend may be paid in cash or shares of common stock, subject to satisfaction
of certain conditions described below. If we choose to pay dividends in shares
of our common stock, the number of shares to be issued in payment of the
dividend on the Series D Preferred Shares will be equal to the accrued dividends
divided by the applicable conversion price as described below.
For purposes of this calculation, the applicable conversion price will
be equal to the lowest weighted average price of our common stock during the six
consecutive trading days ending on and including the second trading day prior to
the date of determination. For example, we elected to pay dividends in shares of
our common stock as of April 3, 2000. The lowest weighted average price of our
common stock during the six trading days ending on the second trading day prior
to April 3, 2000 was $4.855978 per share, and we issued 66,744 shares of common
stock in lieu of a cash dividend, calculated as follows:
12
<PAGE> 19
(.10) (91/365) ($13,000,000) = 66,744
---------------------------- ------
$4.855978
We will not have the right to pay dividends in shares of our common
stock if a triggering event (as defined in Section 3(b) of the Articles of
Amendment relating to the Series D Preferred Shares) has occurred and is
continuing or the registration statement covering the shares of common stock
underlying the Series D Preferred Shares is not effective and available for
resale of all shares required to be registered. Triggering events include the
following:
- the suspension or delisting from trading of our common stock
on the Nasdaq National Market, the New York Stock Exchange, or
the American Stock Exchange for a period of at least five
consecutive trading days or for more than ten trading days in
any 365 day period;
- our notice to any holder of Series D Preferred Shares of our
intent not to comply with a request for conversion tendered in
accordance with the terms of the Series D Preferred Shares;
- our failure to issue shares of common stock upon conversion
prior to the 10th business day after the required date of
delivery;
- our failure to issue shares of common stock after a proper
request from a holder of the Series D Preferred Shares due to
the limitation on the number of shares we may issue to comply
with NASD rules; or
- the breach of any representation, warranty, covenant or other
term or condition of the documents governing the issuance of
the Series D Preferred Shares unless the breach would not have
a material adverse effect or is cured within 20 days after it
occurs.
MATURITY DATE.
The Series D Preferred Shares mature on April 6, 2001, subject to
extension in certain circumstances, at which time the Series D Preferred Shares
must be redeemed or converted at our option. If we elect to redeem any Series D
Preferred Shares outstanding on April 6, 2001, the amount required to be paid
will be equal to the liquidation preference of the Series D Preferred Shares,
which equals the price originally paid for such shares plus accrued and unpaid
dividends. If we elect to convert any Series D Preferred Shares outstanding on
April 6, 2001, we will be required to issue shares in an amount determined as
described below under "Description of Securities - Series D Preferred Shares -
Conversion."
CONVERSION.
Subject to certain conditions described below, we may require the
selling shareholders to convert the Series D Preferred Shares into shares of our
common stock. In addition and subject to certain conditions described below, the
selling shareholders will have the right to convert the Series D Preferred
Shares into shares of our common stock. Regardless of whether the selling
shareholders elect to convert or we require conversion, the number of shares of
common stock to be issued upon conversion of a Series D Preferred Share is
determined by dividing the sum of $10,000 (the amount paid for that share) plus
accrued and unpaid dividends by the applicable conversion price as described
below. The applicable conversion price will be 100% of the lowest dollar-volume
weighted average price of our common stock for any day during the six trading
days ending on and including the conversion date, provided that the conversion
price may not exceed $10.00 per share. The lowest dollar-volume weighted average
of our common stock as of June 5, 2000 was $1.006341. The dollar-volume weighted
average price is a calculated number which reflects an average of the prices at
which the common stock trades during a trading day, giving weight to the prices
at which the common stock trades based upon the number of shares which trade at
such prices. Thus, the larger the number of shares which trade at a particular
price, the greater the weight that will be given to that price in calculating
the average price for that day. The dollar-volume weighted average price of the
common stock for a trading day will not necessarily equate to other frequently
used measures of a stock's price, such as the bid, ask, high, low or close
prices.
13
<PAGE> 20
The following table sets forth the number of shares of common stock we
would be required to issue upon conversion of all 1,041 Series D Preferred
Shares currently outstanding at an assumed conversion price of $1.006341 per
share of common stock as of June 5, 2000, and the resulting percentage of our
total shares of common stock outstanding after such a conversion. The table also
sets forth the number of shares of common stock we would be required to issue
assuming (i) increases of 25%, 50% and 75% in the assumed conversion price; (ii)
decreases of 25%, 50% and 75% in the assumed conversion price; and (iii) the
fixed conversion price of $10.00, which is the maximum permitted conversion
price.
<TABLE>
<CAPTION>
ASSUMED CONVERSION NO. OF SHARES OF PERCENTAGE OF
PRICE PER SHARE COMMON STOCK OUTSTANDING COMMON
OF COMMON STOCK ISSUABLE UPON CONVERSION(1) STOCK AFTER CONVERSION(1)
------------------------ --------------------------- -------------------------
<S> <C> <C>
$ 1.006341 10,344,406 24.3%
$ 1.257926 (+25%) 8,275,525 20.5%
$ 1.509512 (+50%) 6,896,271 17.6%
$ 1.761097 (+75%) 5,911,089 15.5%
$ 10.000000 (Maximum) 1,041,000 3.1%
$ 0.754756 (-25%) 13,792,541 30.0%
$ 0.503171 (-50%) 20,688,812 39.1%
$ 0.251585 (-75%) 41,377,624 56.2%
</TABLE>
----------------
1) The number of shares of common stock issuable upon conversion and the
percentage of outstanding common stock after such conversion set forth above do
not take into account any shares of common stock that may be issuable as
dividends on the Series D Preferred Shares or upon exercise of the warrants
issued in connection with the sale of the Series D Preferred Shares. If the
1,041 Series D Preferred Shares had been converted in full and the related
warrants had been fully exercised as of June 5, 2000, we would have been
required to issue an additional 187,050 shares as payment for accrued dividends
and an additional 900,000 shares upon the exercise of the related warrants.
Subject to certain limitations discussed below, at any time from the
date of issuance of the Series D Preferred Shares through October 4, 2000, we
have the right to require conversion of any or all of the outstanding Series D
Preferred Shares. Among the conditions to our ability to require conversion of
the Series D Preferred Shares are the following:
- a registration statement has been effective for at least ten
business days covering the resale of at least 16,570,888
shares of common stock issued and issuable upon conversion of
the Series D Preferred Shares, payment of dividends on the
Series D Preferred Shares, and the exercise of the related
warrants;
- the common stock has been listed on a national market or
exchange since the Series D Preferred Shares were issued and
no delisting or suspension is threatened;
- from October 4, 1999 through the required conversion date, we
have timely delivered shares of common stock upon conversion
of the Series D Preferred Shares and exercise of the related
warrants and we have been in compliance in all material
respects with and have not breached in any material respects
the terms of the Series D Preferred Shares or the warrants;
- we have not made any public announcement of a pending change
of control; and
- we have given written notice to the holders of the Series D
Preferred Shares of our election to require conversion of a
certain number of Series D Preferred Shares during the period
beginning on the date of our notice and ending between 10 and
60 business days after the date or our notice.
14
<PAGE> 21
As of the date of this prospectus, we satisfied all conditions to elect
conversion other than the ten business day waiting period following the
declaration of effectiveness of the registration statement of which this
prospectus forms a part and the delivery of notice to the holders of the Series
D Preferred Shares of our election to require conversion.
In addition, no holder may convert any Series D Preferred Shares
exceeding the number of shares which, upon giving effect to such conversion,
would cause the holder's beneficial ownership to exceed 4.99% of the common
stock then outstanding (excluding any shares of common stock underlying Series D
Preferred Shares that have not been converted and warrants that have not been
exercised).
REDEMPTION.
We also have the right, provided certain conditions are satisfied, to
redeem any outstanding Series D Preferred Shares prior to October 5, 2000 for
cash, in whole or in part, at 110% of par plus accrued dividends.
The conditions to our right to redeem Series D Preferred Shares
include, among others:
- a registration statement has been effective for at least 30
days covering the resale of at least 16,570,888 shares issued
or issuable upon conversion of the Series D Preferred Shares,
payment of dividends in lieu of cash, and the exercise of the
related warrants;
- the common stock has been listed on a national market or
exchange for at least 30 days prior to such redemption; and
- from October 4, 1999 through the redemption date, we have
timely delivered shares of common stock upon conversion of the
Series D Preferred Shares and exercise of the related
warrants; and
- we have been in compliance in all material respects with and
have not breached in any material respects the terms of the
Series D Preferred Shares and the related warrants.
If a triggering event as described under "Description of Securities -
Series B Preferred Shares - Dividends" occurs, or we fail to meet certain other
obligations imposed by the terms of the Series D Preferred Shares and the
related warrants, the holders of the Series D Preferred Shares will have the
right to require us to redeem all or a portion of any outstanding Series D
Preferred Shares for cash at 120% of par plus accrued dividends.
LIQUIDATION PREFERENCE.
In the event of our liquidation, the holders of the Series D Preferred
Shares will be entitled to a liquidation preference before any amounts are paid
to the holders of our common stock. The liquidation preference is equal to the
amount originally paid for the Series D Preferred Shares, or $10,000 per share,
plus accrued and unpaid dividends on any outstanding Series D Preferred Shares.
The holders' right to any assets available following a liquidation are equal to
the rights of the holders of our Series 1994 Preferred Shares.
WARRANTS.
The warrants to purchase the 900,000 shares of our common stock are
exercisable at the price of $4.641 per share, subject to certain antidilution
adjustments. We intend to use the proceeds from any warrant exercises for
working capital and to grow our business.
VOTING RIGHTS.
Other than as required by law, the holders of the Series D Preferred
Shares have no voting rights except that consent of holders of at least
two-thirds of the outstanding Series D Preferred Shares will be required to
effect any change in our articles of incorporation that would change any of the
rights of the Series D Preferred Shares or to issue any other series of
preferred shares.
15
<PAGE> 22
SERIES 1994 PREFERRED SHARES
We have authorized, issued and outstanding 501,963 of our Series 1994
Cumulative Convertible Preferred Shares. These shares have a stated value of
$11.00 per share and are convertible at any time into common stock at $11.00 per
share. The conversion provisions are subject to adjustment if there is a stock
split, dividend, distribution, reorganization, reclassification, merger,
consolidation, share exchange, or other similar corporate transaction.
Cumulative dividends on the shares accrue at the rate of 10% per annum and are
payable when declared by the Board of Directors. We may not pay dividends on the
common stock or other series junior to these preferred shares unless all accrued
dividends have been paid on the latter. On liquidation, the holder of the
preferred shares will be entitled to receive, before any distribution to holders
of our common stock or other series junior to the preferred shares, liquidation
distributions equal to the stated value of $11.00 per preferred share, plus
accrued and unpaid dividends. We may redeem the preferred shares at any time, on
at least 30 days written notice, at the redemption price of $11.00 per share,
plus accrued and unpaid dividends, provided that the redemption has been
approved by a majority of the Board of Directors who are not holders of the
preferred shares. The preferred shares have no voting rights except as otherwise
provided by law or the Articles of Incorporation. David E. Deeds, the Chairman
and Chief Executive Officer, owns all of the Series 1994 Preferred Shares.
SERIES A, SERIES B, AND SERIES C PREFERRED SHARES
We were authorized to issue, and in the past did issue, three separate
series of convertible preferred shares called the Series A, Series B, and Series
C Convertible Preferred Shares, all with varying provisions. All of these
preferred shares have been converted into common stock and are no longer
outstanding.
WARRANTS
As of the date of this prospectus, we have the following warrants
outstanding:
- We issued warrants to purchasers of our Series C Preferred
Shares. Warrants to purchase up to 545,454 shares of common
stock remain outstanding. The exercise price of these warrants
is $8.80 per share, which is equal to 115% of the average of
the closing sale prices of the common stock for the five
trading days immediately preceding the date we issued the
Series C Preferred Shares. These warrants expire on July 24,
2000.
- In connection with the sale of our Series D Preferred Shares,
we issued warrants to purchase up to 900,000 shares of common
stock. The exercise price of these warrants is $4.641 per
share. These warrants expire on October 4, 2004. The exercise
price and number of shares purchasable upon exercise of the
warrants are subject to adjustment upon the occurrence of
certain dilution events.
- We issued a warrant to Castle Creek Technology Partners, LLC
in connection with a private placement. This warrant enables
Castle Creek to purchase an aggregate of 250,000 shares of
common stock at a purchase price of $10.66 per share. The
exercise price and number of shares purchasable upon exercise
of the warrants are subject to adjustment upon the occurrence
of a stock split, reverse stock split, or distribution to
shareholders. The warrants expire on March 25, 2004.
- In connection with the formation of JamCast.com, we issued to
Virgin Entertainment Group, Inc. warrants to purchase an
aggregate of 1,000,000 shares of our common stock. Warrants to
purchase 500,000 shares are exercisable at $4.00 per share and
expire on September 14, 2001. Warrants to purchase the
remaining 500,000 shares are exercisable at $5.00 per share
and expire on September 14, 2004.
- In connection with a loan modification agreement with Silicon
Valley Bank, we issued to Silicon Valley Bank a warrant to
purchase 7,500 shares of our common stock. The warrants are
exercisable at $5.42 per share. The Warrants expire on
September 24, 2002. The exercise price and number of shares
purchasable upon exercise of the warrants are subject to
adjustment upon the occurrence of certain dilution events.
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<PAGE> 23
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for our common stock is American
Securities Transfer & Trust, Inc.
CHARTER PROVISIONS AND EFFECTS OF INDIANA LAW
Our Articles of Incorporation require that proposals for consideration
at a meeting of shareholders must be submitted to the Secretary not later than
the earlier of:
- 270 days after the adjournment of the previous annual meeting;
or
- the close of business on the seventh day following the date on
which notice of the meeting is given to shareholders.
Under the Indiana Business Corporation Law, any person who acquires 10%
of the voting power of the common stock of a corporation is considered an
"interested shareholder." For a period of five (5) years after an acquisition,
certain business combinations between Wavo Corporation and the interested
shareholder are prohibited, unless prior to the acquisition of that common stock
by the interested shareholder, the Board of Directors approves the acquisition
of common stock or the business combination. After the five-year period, only
the following three types of business combinations between Wavo Corporation and
the interested shareholder are permitted:
- a business combination approved by the Board of Directors
before the acquisition of common stock by the interested
shareholder;
- a business combination approved by holders of a majority of
the common stock not owned by the interested shareholder; and
- a business combination in which the shareholders receive a
price for their common stock at least equal to a formula price
based on the highest price per share paid by the interested
shareholder.
In addition, under Indiana law, a party acquiring Wavo Corporation common stock
may lose the right to vote some or all of those shares if the acquisition
results in that party holding greater than 20%, 33%, or 50% of the outstanding
shares of Wavo Corporation. An acquiring party can avoid the loss of the right
to vote these shares if the right to vote is approved by shareholders holding a
majority of the "disinterested" common stock, and, if authorized by a provision
of our Articles of Incorporation or Bylaws adopted before the time that party
became an interested shareholder, permit the redemption of the acquiring party's
common stock. We have not adopted this kind of a redemption provision.
PLAN OF DISTRIBUTION
The selling shareholders (or, subject to applicable law, their
pledgees, donees, distributees, transferees, or successors in interest) are
offering shares of our common stock, which are issuable to them upon conversion
of the Series D Preferred Shares, in lieu of cash dividends on the Series D
Preferred Shares, and upon exercise of warrants that they acquired from us in a
private placement transaction. This prospectus covers the selling shareholders'
resale of up to 16,570,888 shares of our common stock that we may issue to them
upon conversion of the Series D Preferred Shares, as payments of dividends
thereon and upon exercise of the related warrants, as well as any additional
shares that may become issuable upon conversion of the Series D Preferred Shares
or exercise of the warrants because of stock splits, stock dividends and other
similar transactions.
The selling shareholders may sell the shares of common stock described
in this prospectus directly or through underwriters, broker-dealers or agents.
The selling shareholders may also transfer, devise or gift their shares by other
means not described in this prospectus. As a result, pledgees, donees,
transferees or other successors in interest that receive such shares as a gift,
partnership distribution or other non-sale related transfer may offer shares of
common stock. In addition, if any shares covered by this prospectus qualify for
sale pursuant to Rule 144
17
<PAGE> 24
under the Securities Act, the selling shareholders may sell such shares under
Rule 144 rather than pursuant to this prospectus.
The selling shareholders may sell shares of common stock from time to
time in one or more transactions:
- at fixed prices that may be changed,
- at market prices prevailing at the time of sale, or
- at prices related to such prevailing market prices or at
negotiated prices.
The selling shareholders may offer their shares of common stock in one
or more of the following transactions:
- on any national securities exchange or quotation service on
which the common stock may be listed or quoted at the time of
sale, including the Nasdaq National Market,
- in the over-the-counter market,
- in privately negotiated transactions,
- through options,
- by pledge to secure debts and other obligations,
- by a combination of the above methods of sale, or
- to cover short sales made pursuant to this prospectus.
In effecting sales, broker or dealers engaged by the selling
shareholders may arrange for other brokers or dealers to participate in the
resales. The selling shareholders may enter into hedging transactions with
broker-dealers, and in connection with those transactions, broker-dealers may
engage in short sales of the shares. The selling shareholders also may sell
shares short and deliver the shares to close out such short positions, provided
that the short sale is made after the registration statement has been declared
effective and a copy of this prospectus is delivered in connection with the
short sale. The selling shareholders also may enter into option or other
transactions with broker-dealers that require the delivery to the broker-dealer
of the shares, which the broker-dealer may resell pursuant to this prospectus.
The selling shareholders also may pledge the shares to a broker or dealer, and
upon a default, the broker or dealer may effect sales of the pledged shares
pursuant to this prospectus.
The SEC may deem the selling shareholders and any underwriters,
broker-dealers or agents that participate in the distribution of the shares of
common stock to be "underwriters" within the meaning of the Securities Act. The
SEC may deem any profits on the resale of the shares of common stock and any
compensation received by any underwriter, broker-dealer or agent to be
underwriting discounts and commissions under the Securities Act. Each selling
shareholder has purchased the Series D Preferred Shares in the ordinary course
of its business, and at the time the selling shareholder purchased the Series D
Preferred Shares, it was not a party to any agreement or other understanding to
distribute the securities, directly or indirectly.
Under the Exchange Act, any person engaged in the distribution of the
shares of common stock may not simultaneously engage in market-making activities
with respect to the common stock for five business days prior to the start of
the distribution. In addition, each selling shareholder and any other person
participating in a distribution will be subject to the Exchange Act, which may
limit the timing of purchases and sales of common stock by the selling
shareholder or any such other person.
18
<PAGE> 25
LEGAL OPINIONS
Barnes & Thornburg, of Indianapolis, Indiana, will pass upon the
validity of the common stock offered under this prospectus.
EXPERTS
The consolidated financial statements incorporated in this prospectus
by reference from Wavo Corporation's Annual Report on Form 10-K for the year
ended December 31, 1999 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
The consolidated financial statements of Wavo Corporation (formerly
known as WavePhore Corporation) appearing in our Annual Report (Form 10-K) for
the year ended December 31, 1998 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. These consolidated financial statements are
incorporated herein by reference in reliance upon the report given upon the
authority of Ernst & Young LLP, as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
GOVERNMENT FILINGS: We file annual, quarterly and special reports and
other information with the Securities and Exchange Commission. You may read and
copy any document that we file at the Commission's Public Reference Room at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at its regional
offices located at 7 World Trade Center, 13th Floor, New York, New York 10048,
and at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Please call the Commission at 1-800-SEC-0330 for more
information about the Public Reference Rooms. Most of our filings are also
available to you free of charge at the Commission's web site at
http://www.sec.gov.
STOCK MARKET: Our common stock is listed on the Nasdaq National Market
and similar information can be inspected and copied at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
REGISTRATION STATEMENT: We have filed a registration statement under
the Securities Act with the Commission with respect to the common stock offered
under this prospectus. This prospectus is a part of the registration statement.
However, it does not contain all of the information contained in the
registration statement and its exhibits. You should refer to the registration
statement and its exhibits for further information about Wavo Corporation and
the common stock offered under this prospectus.
INFORMATION INCORPORATED BY REFERENCE: The Commission allows us to
"incorporate by reference" the information we file with it, which means that we
can disclose important information to you by referring you to those documents.
The information incorporated by reference is an important part of this
prospectus, and information that we file later with the Commission will
automatically update and supersede this information. We have filed the following
documents with the Commission and they are incorporated by reference into this
prospectus:
- our Annual Report on Form 10-K for the fiscal year ended
December 31, 1999;
- our Quarterly Report on Form 10-Q for the quarter ended March
31, 2000;
- our Proxy Statement for the 2000 Annual Meeting of Security
Holders, dated April 6, 2000;
- our Current Report on Form 8-K, including Exhibits, filed
February 1, 2000; and
19
<PAGE> 26
- the description of our capital stock contained in our
registration statement on Form 8-A, including all amendments
or reports filed for the purpose of updating the description.
Please note that all other documents and reports filed under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act following the date of this prospectus and
prior to the termination of this offering will be deemed to be incorporated by
reference into this prospectus and to be made a part of it from the date of the
filing of our reports and documents.
You may request free copies of these filings by writing or telephoning
us at the following address:
Investor Relations
Wavo Corporation
3131 E. Camelback Road, Suite 320
Phoenix, Arizona 85016
(602) 952-5500.
20
<PAGE> 27
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF INSURANCE AND DISTRIBUTION
The following are the estimated expenses in connection with the
issuance and distribution of the securities being registered, all of which will
be paid by Wavo Corporation:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee $ 3,578
Nasdaq Listing Fee $ 17,500
Legal Fees and Expenses $ 5,000
Accounting Fees and Expenses $ 7,500
Transfer Agent Fees and Expenses $ 500
Miscellaneous $ 1,000
--------
TOTAL $ 35,078
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Unless limited by the Articles of Incorporation, the Indiana Business
Corporation Law (the "IBCL") requires that a corporation indemnify a director
who was successful, on the merits or otherwise, in the defense of any proceeding
to which the director was a party because the director is or was a director of
the corporation, against reasonable expenses incurred by the director in
connection with the proceeding. The IBCL permits a corporation to indemnify an
individual, made a party to a proceeding because the individual is or was a
director, against liability incurred in the proceeding if: (1) the individual's
conduct was in good faith; and (2) the individual reasonably believed: (A) in
the case of conduct in the individual's official capacity with the corporation,
that the individual's conduct was in its best interest; and (B) in all other
cases, that the individual's conduct was at least not opposed to its best
interests; and (3) in the case of any criminal proceeding, the individual
either: (A) had reasonable cause to believe the individual's conduct was lawful;
or (B) had no reasonable cause to believe the individual's conduct was unlawful.
Unless a corporation's articles of incorporation provide otherwise, an officer
of the corporation, whether or not a director, is entitled to mandatory and
court-ordered indemnification to the same extent as a director; and the
corporation may indemnify an officer, employee or agent of the corporation,
whether or not a director, to the same extent as a director, and to the extent,
consistent with public policy, that may be provided by its articles of
incorporation, bylaws, general or specific action of its board of directors, or
contract. The indemnification provisions of the IBCL are not exclusive of any
other rights to indemnification that a person may have under the corporation's
articles of incorporation or bylaws, a resolution of the board of directors or
of the shareholders, or any other authorization, whenever adopted, after notice,
by a majority vote of all of the voting shares then issued and outstanding.
The IBCL provides that a director is not liable for any action taken as
a director, or any failure to take any action, unless: (1) the director has
breached or failed to perform the duties of the director's office in compliance
with Section 23-1-35-1 of the IBCL; and (2) the breach or failure to perform
constitutes willful misconduct or recklessness. Section 23-1-35-1 of the IBCL
provides that a director shall, based upon the facts then known to the director,
discharge the duties as a director, including the director's duties as a member
of a committee: (a) in good faith; (b) with the care an ordinarily prudent
person in a like position would exercise under similar circumstances; and (c) in
a manner the director reasonably believes to be in the best interests of the
corporation. In discharging the director's duties, a director is entitled to
rely upon information, opinions, reports, or statements, including financial
statements and other financial data, if prepared or presented by: (1) one or
more officers or employees of the
i
<PAGE> 28
corporation whom a director reasonably believes to be reliable and competent in
the matters presented; (2) legal counsel, public accountants, or other persons
as to matters the director reasonably believes are within the person's
professional or expert competence; or (3) a committee of the board of directors
of which the director is not a member if the director reasonably believes the
committee merits confidence. A director is not acting in good faith if the
director has knowledge concerning the matter in question that makes reliance
otherwise permitted by the foregoing provisions unwarranted. A director may, in
considering the best interests of a corporation, consider the effects of any
action on shareholders, employees, suppliers, and customers of the corporation,
and communities in which offices or other facilities of the corporation are
located, and any other factors the director considers pertinent.
Wavo Corporation's Articles of Incorporation provide that the
corporation must indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (including
any action or suit by or in the right of the corporation) by reason of the fact
that he is or was a director, officer, employee or agent of the corporation or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, to the maximum extent permitted under the IBCL. Such
indemnification shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any statute, bylaw, agreement, vote of
shareholders or disinterested directors, or otherwise.
Wavo Corporation's Restated Code of Bylaws provide that the corporation
must indemnify any individual who is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director, officer, partner or trustee of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan or
enterprise whether or not for profit, against liability and expenses, including
attorneys fees, incurred by him in any action, suit or proceeding, whether
civil, criminal, administrative, investigative, and whether formal or informal,
in which he has been made or threatened to be made a party by reason of being or
having been in any such capacity, or arising out of his status as such, except
- in the case of any action, suit, or proceeding terminated by
judgment, order or conviction, in relation to matters as to
which he is adjudged to have breached or failed to perform the
duties of his office and the breach or failure to perform
constituted a willful misconduct or recklessness; and
- in any other situation, in relation to matters as to which it
is found by a majority of a committee composed of all
directors not involved in the matter in controversy (whether
or not a quorum) that the person breached or failed to perform
the duties of his office and the breach or failure to perform
constituted willful misconduct or recklessness.
The directors and officers of Wavo Corporation are covered by an
insurance policy indemnifying against certain liabilities which arise from their
activities performed on behalf of Wavo Corporation, including liabilities under
the Securities Act of 1933 in certain circumstances.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that, in the opinion of the SEC, such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
ITEM 16. EXHIBITS
EXHIBIT NO. EXHIBIT
3.1 Amended and Restated Articles of Incorporation (incorporated
by reference to Exhibit 3.1 to WAVO Corporation's Current
Report on Form 8-K dated June 4, 1999).*
ii
<PAGE> 29
3.2 Articles of Amendment to the Company's Articles of
Incorporation dated September 30, 1999 (incorporated by
reference to Exhibit 3.1 to WAVO Corporation's Current Report
on Form 8-K filed as of October 5, 1999).*
3.3 Restated Code of Bylaws (incorporated by reference to Exhibit
4.2 to the Company's Registration Statement No. 33-80343 on
Form S-8).*
4.1 Form of Warrant issued to Selling Shareholders (incorporated
by reference to Exhibit 4.1 to WAVO Corporation's Current
Report on Form 8-K filed as of October 5, 1999).*
4.2 Registration Rights Agreement (incorporated by reference to
Exhibit 4.2 to WAVO Corporation's Current Report on Form 8-K
filed as of October 5, 1999).*
5 Opinion of Barnes & Thornburg regarding legality.
10.1 Securities Purchase Agreement (incorporated by reference to
Exhibit 10.1 to WAVO Corporation's Current Report on Form 8-K
filed as of October 5, 1999).*
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Barnes & Thornburg (included in Exhibit 5).
24 Power of Attorney (included on signature page of registration
statement).
*Previously filed.
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. 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. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective 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;
iii
<PAGE> 30
(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 therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's Annual Report under Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report under Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
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 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.
iv
<PAGE> 31
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Phoenix, State of Arizona, on June 5, 2000.
WAVO CORPORATION
/s/ David E. Deeds
----------------------------------------------------
David E. Deeds, Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints David E. Deeds, Peter M. White and
Kenneth D. Swenson 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, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ David E. Deeds Chairman of the Board and Chief Executive Officer June 5, 2000
---------------------------------------- (Principal Executive Officer)
David E. Deeds
/s/ Peter M. White President and Director June 5, 2000
----------------------------------------
Peter M. White
/s/ Kenneth D. Swenson Executive Vice President, Chief Financial Officer, June 5, 2000
---------------------------------------- Treasurer (Principal Financial Officer and
Kenneth D. Swenson Principal Accounting Officer) and Director
/s/ Glenn Scolnik Director June 5, 2000
----------------------------------------
Glenn Scolnik
/s/ J. Robert Collins Director June 5, 2000
----------------------------------------
J. Robert Collins
</TABLE>
v
<PAGE> 32
INDEX TO EXHIBITS
EXHIBIT NO. EXHIBIT
3.1 Amended and Restated Articles of Incorporation (incorporated
by reference to Exhibit 3.1 to WAVO Corporation's Current
Report on Form 8-K dated June 4, 1999).*
3.2 Articles of Amendment to the Company's Articles of
Incorporation dated September 30, 1999 (incorporated by
reference to Exhibit 3.1 to WAVO Corporation's Current Report
on Form 8-K filed as of October 5, 1999).*
3.3 Restated Code of Bylaws (incorporated by reference to Exhibit
4.2 to the Company's Registration Statement No. 33-80343 on
Form S-8).*
4.1 Form of Warrant issued to Selling Shareholders (incorporated
by reference to Exhibit 4.1 to WAVO Corporation's Current
Report on Form 8-K filed as of October 5, 1999).*
4.2 Registration Rights Agreement (incorporated by reference to
Exhibit 4.2 to WAVO Corporation's Current Report on Form 8-K
filed as of October 5, 1999).*
5 Opinion of Barnes & Thornburg regarding legality.
10.1 Securities Purchase Agreement (incorporated by reference to
Exhibit 10.1 to WAVO Corporation's Current Report on Form 8-K
filed as of October 5, 1999).*
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Barnes & Thornburg (included in Exhibit 5).
24 Power of Attorney (included on signature page of registration
statement).
*Previously filed.
vi
