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As filed with the Securities and Exchange Commission on February 12, 1997
Registration No. 333-17105
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
AMENDMENT NO. 1
____________________
SPATIALIGHT, INC.
(Exact name of registrant as specified in its charter)
___________________
<TABLE>
<CAPTION>
<S> <C> <C>
NEW YORK 3998 16-1360382
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.
incorporation or organization) Classification Code Number)
</TABLE>
WILLIAM E. HOLLIS, PRESIDENT
SPATIALIGHT, INC.
8-C COMMERCIAL BOULEVARD
NOVATO, CALIFORNIA 94949
(415) 883-3693
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices and name, address and telephone number
of agent for service)
________________
Copies to:
ALAN S. LOCKWOOD, ESQ.
BOYLAN, BROWN, CODE, FOWLER,
VIGDOR & WILSON, LLP
2400 CHASE SQUARE
ROCHESTER, NEW YORK 14604
(716) 232-5300
_____________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement
_______________
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /
_____________
If any of the securities being registered on this Form are to 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/
[cover page continues]
<PAGE>
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. / /
<TABLE>
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CALCULATION OF REGISTRATION FEE
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Title of each class Amount Proposed maximum Proposed Amount of
of securities to be to be offering price maximum registration
registered registered per share(1) aggregate offering fee
price
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<S> <C> <C> <C> <C>
Common Stock, par value 2,135,000 $.50 $1,067,500 323.48
$.01 per share
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Common Stock, par value 1,585,000(2) $.50 792,500 240.15
$.01 per share, representing
stock issuable upon
exercise of Warrants
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</TABLE>
(1) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(c), on the basis of the average high and low prices of the
Registrant Common Stock as reported on the Nasdaq issues on November 19,
1996.
(2) The number of shares of Common Stock specified above is the number which
may be acquired upon exercise of certain of the Company's warrants
described in the Prospectus forming a part of this Registration Statement
(the "Warrants"). This Registration Statement covers, pursuant to Rule
416, in addition, such indeterminable number of shares of Common Stock as
may be issued on exercise of the Warrants by reason of adjustments in the
number of shares of Common Stock issuable pursuant to antidilution
provisions contained in the Warrants. Since such additional Common Stock
will, if issued, be issued for no additional consideration, no registration
fee is required.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL REGISTRANT SHALL FILE A
FURTHER AMENDMENT THAT 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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ii
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PROSPECTUS
SPATIALIGHT, INC.
2,135,000 Shares of Common Stock
1,585,000 Shares of Common Stock
issuable upon exercise of Warrants
There are hereby offered 2,135,000 shares of common stock, $.01 par value
per share ("Common Stock") of Spatialight, Inc. (formerly known as Sayett Group,
Inc.)(the "Company") and 1,585,000 shares of Common Stock issuable upon exercise
of certain outstanding Warrants of the Company. The Common Stock is sometimes
hereinafter collectively referred to as the "Securities." The Company will
receive the proceeds of exercise of the Warrants, if any, and will use such
proceeds, if any, for working capital. The Warrants are exercisable at a price
of $1.00 per share through July 15, 1997, $1.25 through July 15, 1999, and $1.50
through July 15, 2001.
All of the 3,720,000 shares of Common Stock are being offered by selling
shareholders (the "Selling Shareholders"). See "SELLING SHAREHOLDERS." The
Company will not receive any of the proceeds from the sale of the shares being
offered by the Selling Shareholders. Such sales may be made in any one or more
transactions (which may involve block transactions) in the over-the-counter
market, on NASDAQ, and any exchange on which the Common Shares may then be
listed, or otherwise in negotiated transactions or a combination of such methods
of sale, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. The Selling Shareholders
may effect such transactions by selling Shares to or through broker-dealers, and
such broker-dealers may sell the shares as agent or may purchase such Shares as
principal and resell them for their own account pursuant to this Prospectus.
Any such participating broker-dealers may be deemed to be "underwriters" under
the Securities Act. Such broker-dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling Shareholders
and/or purchasers of Shares from whom they may act as agent (which compensation
may be in excess of customary commission).
____________________
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED
ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK
FACTORS" AT PAGE 4 HEREIN.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
__________________________
The date of this Prospectus is February 10, 1997
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AVAILABLE INFORMATION
The Company is a reporting company under the Securities Exchange Act of
1934. The reports and other information filed by the Company may be inspected
and copied at the public reference facilities of the Securities Exchange
Commission in Washington, D.C., and copies of such material can be obtained from
the Public Reference Section of the Commission, Washington, D.C. 20549 at
prescribed rates. The Commission also maintains a Web site that contains
reports, proxy and information statements and other information regarding
issuers (including the Company) that file electronically with the Commission.
The address of the Commission's Web site is http://www.sec.gov.
The Company's common stock is listed on the NASDAQ Small Cap Market;
reports and other information concerning the Company can be inspected at the
offices of NASD, 1735 K Street, N.W., Washington, D.C.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Commission file number with respect to its Exchange Act
reports is 000-19828. The following documents filed with the Commission by the
Company are incorporated as of their respective dates in the Prospectus by
reference:
(a) (i) The Company's Form 10-KSB (excluding item 7) for the fiscal year
end December 31, 1995, filed pursuant to Section 13(a) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), (ii) the
Company's Form 10-KSB/A dated November 22, 1996 and filed November 27,
1996 and (iii) The Company's Form 10-KSB/A (Amendment No. 2) dated
February 10, 1997 and filed February 12, 1997;
(b) All other reports, if any, filed by the Company pursuant to Section
13(a) or 15(d) of the Exchange Act since the end of the fiscal year
ended December 31, 1995; including
(i) The Company's Form 10-QSB and 10-QSB/A for the period ended
March 31, 1996;
(ii) The Company's Form 10-QSB and 10-QSB/A for the period ended
June 30, 1996;
(iii) The Company's Form 10-QSB for the period ended September 30,
1996;
(iv) The Company's Form 8-K, dated December 29, 1995 and filed
January 16, 1996;
(v) The Company's Form 8-K, dated July 10, 1996 and filed July
23, 1996, Form 8-K/A dated July 25, 1996 and filed July 25,
1996, Form 8-K/A (Amendment No. 2), relating thereto, dated
September 17, 1996 and filed September 24, 1996, and Form 8-
K/A (Amendment No. 3), relating thereto, dated November 20,
1996 and filed November 27, 1996;
(vi) The Company's Notice of Annual Meeting, Proxy Statement and
Form of Proxy dated April 15, 1996.
(c) The description of the Company's Common Stock contained in the
Registration Statement on Form 8-A filed with the Commission on
February 5, 1992, effective on February 7, 1992, under Section 12 of
the Exchange Act, including any amendment or description filed for the
purpose of updating such description.
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All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act after the date hereof and prior to the termination
of the offering of the shares offered hereby, shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the date of filing
of such documents.
The Company will provide without charge to each person, including any
beneficial owner, to whom as copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all documents
incorporated herein by reference (not including the exhibits to such documents
unless such exhibits are incorporated by reference in such documents). Requests
for such copies should be directed to William E. Hollis, President, Spatialight,
Inc., 8-C Commercial Boulevard, Novato, CA 94949, (415) 883-3693.
THE COMPANY
Spatialight, Inc. (together with its subsidiaries, the "Company") is in the
business of designing, producing and commercializing miniature (.75" diagonal),
high resolution active matrix liquid crystal displays ("LCDs"), also known as
spatial light modulators ("SLMs"). The SLMs are manufactured domestically and
provide high quality images at a significant reduction in costs over other types
of displays currently available in the market. The SLMs are capable of handling
computer and video output at very high speeds, clarity and contrast. The
Company has been producing SLMs in small volumes, which have been sold to
customers involved in the development of applications of this technology,
including computer monitors, head-mounted displays, optical computing and other
projection applications.
The Company has identified additional applications and markets for its SLM
devices, including light-weight, highly efficient, low-cost computer projection
systems, large computer monitors and head-mounted displays for use in defense
and aerospace applications and for computer training and gaming devices. In
addition, the Company believes that its SLMs will have applications in optical
computing systems and in high-speed, large-capacity optical data storage systems
and holographic imaging systems.
The address and telephone number of the Company's principal executive
offices are 8-C Commercial Boulevard, Novato, California 94949; (415) 883-
1693. The Company was organized under the laws of the State of New York in 1989
under the name of "Sayett Acquisition Company, Inc."; it subsequently changed
its name to Sayett Group, Inc. and, in June 1996, changed its name again to
Spatialight, Inc.
RECENT DEVELOPMENTS
On April 23, 1996, the Company received a purchase offer from Packard
Bell to produce a proof of concept engineering model for a computer monitor
utilizing the Company's LCD. The proof of concept device was completed on
December 18, 1996, and the Company is awaiting Packard Bell's evaluation
thereof. If approved by Packard Bell, the next plan would be to design and
produce manufacturing prototypes to enable Packard Bell to analyze design
issues, costing estimates and market volume projections. If ultimately
accepted by Packard Bell for production, the Company's ongoing role would be
volume production of LCD's for delivery to and inclusion in the Packard Bell
monitor product.
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On July 10, 1996, the Company executed definitive documents relating to the
sale of 1,585,000 shares of its common stock, par value $.01 to two (2) separate
investors for a per-share price of $1.125. Pursuant to the Agreement, the
Company also granted Warrants to purchase an additional 1,585,000 shares,
exercisable at any time prior to July 15, 2001 at a strike price of $1.00 before
July 15, 1997, $1.25 through July 15, 1999 and $1.50 thereafter. The closings
of the purchases and transfer of funds totaling $1,783,125 occurred on July 11,
1996. On November 11, 1996, in connection with the approval of the investors
for an additional offering of common stock, the Company entered into an
Amendment of the Agreement which re-priced the original offering to $.8352 per
share and issued an additional 550,000 shares to the original investors.
As of July 1, 1996, the Company entered into employment agreements with its
key employees, William E. Hollis and Dean Irwin. Mr. Hollis' contract is for
three years, provides a base salary of $120,000, certain benefits, and bonuses
as declared by the Board of Directors. Mr. Irwin's contract is for two years,
provides a base salary of $96,000, certain benefits and bonuses as declared by
the Board. Both contracts require the employee to maintain confidentiality of
Company information, turn all inventions over to the Company and refrain from
solicitation of customers for two years following termination. Each contract is
terminable if the Company ceases to do business.
RISK FACTORS
The purchase of the Securities offered hereby involves a high degree of
risk. Purchasers should carefully consider, among other information, the
information presented under the caption "RISK FACTORS" in this Prospectus,
including the Company's history of operating losses, uncertainty of successful
commercialization of product, rapid technology change and dependence on key
personnel.
As investment in the Securities offered hereby involves a high degree of
risk and the Securities should not be purchased by persons who cannot afford the
loss of their entire investment. In addition to the other information contained
in this Prospectus, the following information should be considered carefully by
potential purchasers in evaluating the Company, its business and the shares of
Common Stock offered hereby.
FINANCIAL RISKS
HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT; UNCERTAINTY OF FUTURE
FINANCIAL RESULTS. As of September 30, 1996, the Company had an accumulated
deficit of $7,066,697. The Company has realized significant losses in the
past; for fiscal 1995, its operating losses were $2,426,600 and its net losses
were $4,655,383; for the three quarters through September 30, 1996, its
operating losses were $804,802 and its net losses were $781,354. The Company
could have quarterly and annual losses in the future. The Company has generated
limited revenues and no profits from operations. The development,
commercialization and marketing of the Company's products will require
substantial expenditures for the foreseeable future. Consequently, the Company
may continue to operate at a loss for the foreseeable future and there can be no
assurance that the Company's business will operate on a profitable basis.
NEGATIVE CASH FLOW FROM OPERATING ACTIVITIES. The Company is experiencing
negative cash flow from operations resulting in the need to fund ongoing
operations from financing activities. The future existence and profitability of
the Company is dependent upon its ability to obtain additional funds
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to finance operations and expand operations in an effort to achieve
profitability from operations. No assurance can be given that the Company's
business will ultimately generate sufficient revenue to fund the Company's
operations on a continuing basis.
DEVELOPMENT STAGE OF PROTOTYPE PRODUCTS; NO COMMERCIALLY AVAILABLE PRODUCTS
INCORPORATING THE REGISTRANT'S SLM'S; UNCERTAINTY OF SUCCESSFUL
COMMERCIALIZATION. Most of the Company's revenue to date has been derived from
research and development contracts and limited sales of its high-end SLM
devices. Although the Company has demonstrated its SLM devices based on its
core technology, the Company has not yet produced any prototype SLM products
with quality and resolution sufficient to satisfy commercial end-use
applications. The Company recently entered into a contract to produce an
engineering prototype of a consumer product for mass production. However,
further development and testing will be necessary before this product or the
Company's other proposed products will be available for commercial end-use
applications. Delays in development may result in the Company's introduction of
its products later than anticipated, which may have an adverse effect on both
the Company's financial and competitive position. Moreover, there can be no
assurance that the Company will ever be successful in developing, manufacturing
or commercializing a commercially viable SLM device or any of its proposed
display products. In addition, there is no assurance that an SLM device or any
of the Company's display products will be technically or commercially successful
or that the Company will be able to manufacturer adequate quantities of its SLM
devices or any of its display products at commercially acceptable cost levels or
on a timely basis.
ADDITIONAL FINANCING REQUIREMENTS. The Company currently has the
financial resources to fund planned operations for approximately 12 months;
it is currently depleting financial resources at the rate of approximately
$100,000 per month. The Company's products being developed and that may be
developed in the future will require the investment of substantial additional
time as well as financial and other resources in order to become commercially
successful. Following the research and development period, the Company's
products will require market development. The Company's operating revenues
and cash resources may not be sufficient over the next several years for the
commercialization by itself of any of the products currently in development.
Consequently, the Company may require additional financing. The Company has
begun discussions with several potential investors to raise an additional $2
to $4 million during 1997. There can be no assurance, however, that the
Company can conclude such commercial arrangements or obtain additional
capital when needed on acceptable terms, if at all. Furthermore, the Company
has no bank line or credit or other working capital financing source. In the
event that the Company is unable to secure additional financing, it may be
forced to seek one or more strategic partners to develop its products to sell
the products outright, or to shut down operations. Any one of these actions
could cause the Company's shareholders to lose their investment.
GOING CONCERN UNCERTAINTY. The Company's recurring operating losses and
the continuing decline in stockholders' equity raise substantial doubt about
the Company's ability to continue as a going concern. The Company's
consolidated financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
POSSIBLE RESTRICTION ON ABILITY TO UTILIZE NET OPERATING LOSS CARRY
FORWARDS RESULTING FROM CHANGE IN EQUITY OWNERSHIP. At December 31, 1995, the
Company had net operating loss ("NOL")
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carry-forwards of approximately $4,000,000, available to offset United States
taxable income. The NOL carry-forwards will expire over a period of time
through 2010. The amount of these loss carry-forwards which can be used to
reduce future taxable income, if any, may be reduced by, among other things,
future changes in the ownership of the Company's Common Stock. Internal Revenue
Code Section 382 would limit the amount of future taxable income, if any, that
could be offset by the NOL carry forwards if, at any time, the percentage of the
stock of the Company owned by one or more 5 percent shareholder increases by
more than 50 percent over the lowest percent of the Company's stock owned by
such shareholder during the preceding three year period. In the event of a
significant change in ownership of the Company, the utilization of such net
operating loss carry-forwards could be substantially limited.
DISPOSITION OF DISCONTINUED OPERATIONS TO RELATED PARTIES. During 1995,
the Company disposed of its operating subsidiaries Surmotech, Inc. and Sayett
Technology, Inc. The assets of Surmotech were sold for cash to its manager;
the stock of Sayett Technology was sold to the former chief financial officer
of the Company and the former president of Sayett Technology for a promissory
note. Certain initial payments on the promissory note were made; the
subsequent poor performance of Sayett Technology has prevented additional
payments. In light of that performance, the Company wrote off half of the
value of the promissory note in 1996. Management believes the remaining
balance will be collected in full; however, there can be no assurance that
the note or any portion thereof can be collected.
The Company divested of Surmotech and Sayett Technology because each of
these entities was suffering significant losses which were dissipating the
Company's financial capital and inhibiting its ability to pursue the development
of the WAH-III LCD. The divestiture stopped the financial losses from these
entities. However, these subsidiaries were also the only significant revenue-
producing units of the Company. Until the Company can successfully develop and
market its LCD, it will be dependent on its existing financial resources and
third-party financing.
INVESTOR SUIT. By letter dated January 13, 1997, counsel for
Jalcanto, Ltd. and Sabotini, Ltd. (the "Investors") notified the Company that
these Investors were electing to rescind the Share Purchase Agreements dated
July 10, 1996, as amended (the "Purchase Agreements"), under which the
Investors purchased a total of 2,135,000 shares of common stock in the
Company, and were demanding a refund by January 17, 1997 of the purchase
price of such shares, or $1,783,125, plus interest. The alleged ground for
rescission is the fact that this registration statement on Form S-3
pertaining to the resale of such shares was not declared effective by the SEC
on or before December 31, 1996. Subsequently, by letter dated February 3,
1997, counsel for the Investors notified the Company that Jalcanto, Ltd. had
retracted its demand for rescission, with reservation of all rights. The letter
reiterated the rescission demand on behalf of Sabotini, Ltd., and the request
that the Company return $891,562.50.
On February 5, 1997, the Company was served notice that it has been sued by
each of the Investors in the Superior Court of the State of California for
the County of Marin. Each Investor filed a complaint for breach of contract,
specific performance and indemnification relating to the alleged failure to
timely complete this registration statement. In addition, each complaint
requests that the court issue a preliminary and permanent injunction against
future issuances of shares of the Company's common stock or securities
convertible into common stock without the Investor's consent. The complaint
filed by Sabotini Ltd. also requests rescission and the return of the full
purchase price of its shares.
Along with its complaint, Sabotini Ltd. has requested that the court
immediately issue a writ to attach approximately $920,000 of the Company's
assets as security for the ability to enforce any eventual judgement. A
hearing on the application for a writ of attachment is set for February 26,
1997. If the court issues a writ of attachment, the Company would be
deprived of substantially all of its working capital, which would have an
immediate material adverse effect on the Company's business and financial
position and its ability to fund ongoing operating expenses.
The Company intends to defend itself vigorously in both actions. The Company
may be required to expend substantial funds and management resources in
connection with the defense and any settlement or judgement, which could have
a material adverse effect on the Company's business and financial position.
BUSINESS RISKS
LACK OF SALES, MARKETING AND DISTRIBUTION EXPERIENCE. The Company
currently employs no full-time sales or marketing specialists. The Company
intends to form alliances with corporate partners for the marketing and
distribution of certain of its anticipated display products. There can be no
assurance that the Company will be successful in forming and maintaining such
alliances or that the Company's partners will devote adequate resources to
successfully market and distribute these anticipated products. There can be no
assurance that the Company will be able to attract and retain qualified
marketing and sales personnel, that the Company will be able to enter into
satisfactory agreements with marketing partners or that the Company or its
marketing partners will be successful in gaining market acceptance for its
anticipated products.
NO ASSURANCES OF SUCCESSFUL MANUFACTURING. The Company has no experience
manufacturing SLM devices or display products. The Company's facility is
designed principally for research and development and small scale assembly and
inventory storage, and the Company currently engages outside manufacturers to
produce its SLM devices. The Company is negotiating with several manufacturers
for establishment of full-scale integrated manufacturing capacity for its SLM
devices and has reached an agreement with one manufacturer for fabrication of
silicon wafers. However, no decision has been made by any such manufacturer to
establish such a capability and there can be no
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assurance that any of them will do so. In the event any such manufacturer
establishes a full-scale integrated manufacturing capability, the Company could
become dependent on such manufacturer for the manufacture of SLM devices. The
termination or cancellation of the Company's agreement with the manufacturer
could adversely affect the Company's ability to manufacture its products. In
such event, the Company could be required to establish an alternative
manufacturing relationship or establish its own manufacturing capability. There
can be no assurance that the Company would be able to establish such a
relationship on acceptable terms or its own capability; in any event the time
required to establish such a substitute relationship or capability could
substantially delay the commercialization of the Company's SLM devices and
display products, which, in turn, could have a substantial adverse impact on the
Company's results of operations and financial condition.
PATENTS AND PROTECTION OF PROPRIETARY TECHNOLOGY. The Company's ability to
compete effectively with other companies will depend, in part, on the ability of
the Company to maintain the proprietary nature of its technologies. Although
the Company has been awarded or has filed applications for several patents in
the United States, there can be no assurance as to the degree of protection
offered by these patents, or as to the likelihood that pending patents will be
issued. Furthermore, the Company has not yet applied for or obtained any
foreign patents. There can be no assurance that competitors, in both the United
States and foreign countries, many of which have substantially greater resources
and have made substantial investments in competing technologies, will not seek
to apply for and obtain patents that will prevent, limit or interfere with the
Company's ability to make and sell its products or intentionally infringe the
Company's patents. The defense and prosecution of patent suits is both costly
and time-consuming, even if the outcome is favorable to the Company. This is
particularly true in foreign countries because the expenses associated with such
proceedings can be prohibitive. In addition, there is an inherent
unpredictability regarding obtaining and enforcing patents in foreign countries.
An adverse outcome in the defense of a patent suit could subject the Company to
significant liabilities to third parties, require disputed rights to be licensed
from third parties, or require the Company to cease selling its products. The
Company also relies on unpatented proprietary technology and there can be no
assurance that others may not independently develop the same or similar
technology or otherwise obtain access to the Company's proprietary technology.
To protect its rights in these areas, the Company requires all employees and
most consultants, advisors and collaborators to enter into confidentiality
agreements. There can be no assurance, however, that these agreements will
provide meaningful protection for the Company's trade secrets, know-how or other
proprietary information in the event of any unauthorized use, misappropriation
or disclosure of such trade secrets, know-how or other proprietary information.
To date, the Company has no experience in enforcing its confidentiality
agreements.
RAPID TECHNOLOGY CHANGE; COMPETITION. The electronic imaging display
industry has undergone rapid and significant technological change. The Company
expects the technology to continue to develop rapidly, and the Company's success
will depend significantly on its ability to maintain a competitive position.
Rapid technological development may result in actual and proposed products or
processes becoming obsolete before the Company recoups a significant portion of
related research and development, acquisition and commercialization costs. If
the Company is successful in the development of a commercially viable SLM device
and its proposed display and other products, the Company's ability to compete
will depend in part upon the consistency of product quality and delivery, as
well as pricing, technical capability and servicing, in addition to factors
within and outside its control, including the success and timing of product
introductions by the Company and its competitors, product performance and price,
product distribution and customer support. There can be no assurance that the
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Company's competitors will not succeed in developing technologies and products
that are equally or more effective than any which are being developed by the
Company or which would render the Company's technology, SLM devices or display
and other products obsolete and non-competitive. In addition, certain
competitors have substantially greater financial, technical and other resources
than the Company. The Company may face an aggressive, well financed competitive
response that may include misappropriation of the Company's intellectual
property or predatory pricing.
The electronic imaging display industry has been characterized by rapid and
significant technological advances. There can be no assurance that the
Company's SLM devices and display products will be reflective of such advances
or that the Company will have sufficient funds to invest in new technologies or
products or processes. A number of companies in the United States assemble
workstation monitors using LCDs and cathode-ray tubes ("CRTs") purchased from
Japan. A number of Japanese companies build monitors around their LCDs and
CRTs. Korean companies are also entering the LCD and CRT monitor market.
Development of improved high-definition LCDs and CRTs continues to receive
significant attention by these and other companies. Although the Company
believes that its SLM products should improve LCD performance beyond that of
commercially available LCD- and CRT-based display products, there is no
assurance that manufacturers of LCDs or CRTs will not develop further
improvements of LCD or CRT technology that would eliminate or diminish the
Company's anticipated advantage.
PRODUCT LIABILITY. As a manufacturer and marketer of electronic equipment
and components, the Company may be subject to potential product liability
claims. There can be no assurance that the Company will carry sufficient
insurance to cover all possible liabilities. In the event of a successful suit
against the Company, such an insufficiency of insurance coverage could have a
material adverse impact on the financial condition of the Company. In addition,
the cost of defending or settling a product liability action and the negative
publicity arising therefrom could have a material adverse impact on the Company.
The Company is not aware of any current pending or threatened product liability
claim against it.
DEPENDENCE ON KEY PERSONNEL. The Company is dependent upon its key
scientific and management personnel, including its Chief Executive Officer,
William Hollis, and its Vice President, Dean Irwin. The Company does not
maintain key-man life insurance on Messrs. Hollis or Irwin. In 1996, the
Company entered into a three-year employment agreement with Mr. Hollis and a
two-year employment agreement with Mr. Irwin. The loss of the services of one
or more key individuals may have a material adverse impact on the Company. The
Company's success will also depend on its ability to attract and retain other
highly qualified scientific, marketing, manufacturing and other key management
personnel. The Company faces competition for such personnel and there can be no
assurance that the Company will be able to attract or retain such personnel.
DEPENDENCE ON THIRD PARTIES TO DEVELOP PRODUCTS INCORPORATING SLM. The
Company intends to develop its SLM to be a component for incorporation in
finished products to be developed, manufactured and marketed by third parties.
The Company does not plan, nor does it have the financial resources, to develop
or market any such end products itself. Therefore, the Company will be
completely dependent upon independent third parties for the development,
manufacturing and marketing of such products. No such products exist today, and
the Company does not have commitments from any third party for such development,
manufacturing or marketing. There can be no assurance that any
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third party will develop or market a product incorporating the Company's SLM's.
If not, there will be no market for the Company's SLM's.
DEPENDENCE ON FEW CUSTOMERS. All of the Company's sales in 1995 were to two
customers. The Company continues to be dependent on a few customers for its
sales. Loss of any one customer could have a material adverse impact on the
Company.
MARKET RISKS
RECENT DECLINE IN SHARE PRICE. The market price of the Company's shares
since its initial public offering in 1992 has been volatile, and has generally
declined in the two years prior to this offering. Factors such as announcements
of technological innovations or new commercial products by the Company or its
competitors, patent or proprietary rights, development, de-listing by NASDAQ or
other matters may have a significant impact on the market price of the Common
Stock.
LACK OF DIVIDENDS. The Company has not paid dividends on its Common Stock
since its inception and does not intend to pay any dividends on its Common Stock
in the foreseeable future.
POTENTIAL NON-COMPLIANCE WITH NASDAQ SMALL CAP LISTING STANDARDS. The
Company's common stock is currently listed for trading on the NASDAQ Small Cap
Market. To remain listed, the Company must meet certain maintenance
standards, including: two market makers; bid price of $1.00; public float of
100,000 shares; market value of public float of $250,000; total assets of
$2,000,000; Capital and surplus of $1,000,000. By letter dated January 29,
1997, the Company received notice from representatives of NASDAQ that it is
scheduled for imminent delisting from the Nasdaq Small Cap Market because the
Cmpany does not meet the $2 million minimum total asset requirement for
continued listing. The Company has requested a hearing to review that
determination with NASDAQ officials. A hearing date has not been set, but is
expected to occur within a few weeks. There can be no assurance that the
Company will continue to be listed on the NASDAQ Small Cap Market. If the
Company's stock were to be delisted from the NASDAQ Small Cap Market, trading
in its shares, and the trading price thereof, could be substantially
negatively impacted.
RISKS RELATING TO INVESTMENT IN "PENNY STOCKS". If the Company's common
stock were to be delisted from the NADAQ Small Cap Market, it could be
classified as a "penny stock" under the Penny Stock Reform Act and Exchange Act
Rules 15g-1 through 15g-8. The Penny Stock Reform Act contains a number of
stringent rules relating to trading in stocks which are classified as "penny
stocks." These rules were promulgated to restrict the ability of inappropriate
dealers to sell speculative or high risk stocks to unsuspecting investors.
These rules generally make it more difficult to trade such stocks; they may
have the effect of "chilling" the participation of reputable brokers and dealers
in the market for such stocks. Therefore, their application to the Company's
stock could result in a restricted trading market for the Company's stock, and
could have a material adverse effect on the price and the marketability of the
Company's stock.
USE OF PROCEEDS
All of the shares being offered hereunder are being offered by the Selling
Shareholders. The Company will incur certain expenses in connection with this
offering; however, it will not receive any
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of the proceeds hereof. All proceeds will go to the Selling Shareholders to be
used for their own purposes.
In the event that the holders of the Warrants exercise the Warrants, the
proceeds of the exercise would go to the Company. If all 1,585,000 Warrants are
exercised, the Company will receive $1,585,000 if exercised before July 15,
1997, $1,981,250 if exercised through July 15, 1999, and $2,377.500 if exercised
thereafter. Should the Company receive any such funds, it currently plans to
utilize those proceeds to further its technology development efforts and for
working capital.
SELLING SECURITY HOLDERS
All 3,720,000 shares of Common Stock offered hereunder are being offered by
Sabotini, Ltd., c/o Wychwood Trust Limited, 3 Castle Street, Castletown, Isle of
Man IM91LF, British Isles and Jalcanto, Ltd., c/o Wychwood Trust Limited, 3
Castle Street, Castletown, Isle of Man IM91LF, British Isles, and Michael Todd
McMahon, and Heidi Lyn McMahon, c/o McMahon & Associates, P.O. Box 1807,
Danville, CA 96520. Sabotini, Ltd. and Jalcanto, Ltd. each currently owns
1,067,500 shares of Common Stock; Sabotini, Ltd. currently owns Warrants to
acquire an additional 792,500 shares. Jalcanto, Ltd. has transferred the
Warrants to purchase 792,500 shares which it obtained at closing to Michael Todd
McMahon (396,250 Warrants) and Heidi Lyn McMahon (396,250 Warrants). Prior to
their purchase of the Company Common Stock which is the subject of this
offering, on July 11, 1996, and November 11, 1996 none of the Selling
Shareholder had any relationship to the Company, except that Michael Todd
McMahon served as a finder for the investment by the Selling Shareholders and
was paid a fee therefor by the Company. Following the offering, and assuming
that all shares offered hereunder are sold, the Selling Shareholders will own no
shares of the Company's Common Stock.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Shareholders or by
pledgees, donees, transferees or other successors in interest. Such sales may
be made in any one or more transactions (which may involve block transactions)
in the over-the-counter market, on NASDAQ, and any exchange in which the Common
Shares may then be listed, or otherwise in negotiated transactions or a
combination of such methods of sale, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Shareholders may effect such transactions by selling Shares
to or through broker-dealers, and such broker-dealers may sell the shares as
agent or may purchase such Shares as principal and resell them for their own
account pursuant to this Prospectus. Any such participating broker-dealers may
be deemed to be "underwriters" under the Securities Act. Such broker-dealers
may receive compensation in the form of underwriting discounts, concessions or
commissions from the Selling Shareholders and/or purchasers of Shares from whom
they may act as agent (which compensation may be in excess of customary
commission).
The Company has informed the Selling Shareholders that the
anti-manipulative rules under the Securities Exchange Act of 1934 (Rules 10b-6
and 10b-7) may apply to their sales of Shares in the Market. Also, the Company
has informed the Selling Shareholders of the need for delivery of copies of the
Prospectus in connection with any sale of securities registered hereunder in
accordance with applicable prospectus delivery requirements.
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In connection with such sales, the Selling Shareholders and any
participating brokers and dealers may be deemed to be "underwriters" as defined
in the Securities Act. In addition, any of the Shares that qualify for sale
pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this
Prospectus.
In order to comply with certain state securities laws, if applicable, the
Common Shares will not be sold in a particular state unless such securities have
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and complied with.
LEGAL MATTERS
The legality of the shares of Common Stock offered hereby will be passed
upon for the Company and the Selling Shareholders by the law firm of Boylan,
Brown, Code, Fowler, Vigdor &Wilson, LLP, 2400 Chase Square, Rochester, New York
14604.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference from the Company's Annual Report on Form 10-KSB/A (Amendment No. 2)
for the year ended December 31, 1995 have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report (which report expresses
an unqualified opinion and includes an explanatory paragraph relating to the
Company's recurring operating losses and the continuing decline in
stockholders' equity which raise substantial doubt about the Company's
ability to continue as a going concern), which is incorporated herein by
reference, and has been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission,
Washington, DC 20549, a Registration Statement on Form S-3 under the Act, with
respect to the securities offered hereby. This Prospectus, filed as a part of
the Registration Statement, does not contain certain information set forth in or
annexed as exhibits to the Registration Statement, as permitted by the Rules and
Regulations of the Commission. For further information with respect to the
Company and the securities offered hereby, reference is made to the Registration
Statement and to the Exhibits filed as part thereof, which may be inspected at
the office of the Securities and Exchange Commission without charge, or copies
thereof may be obtained therefrom upon payment of a fee prescribed by the
Securities and Exchange Commission.
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===============================================================================
No dealer, salesman or any other person has been authorized in connection
with this offering to give any information or to make any representations other
than those contained in this Prospectus. This Prospectus does not constitute an
offer or a solicitation in any jurisdiction to any person to whom it is unlawful
to make such an offer or solicitation. Neither the delivery of this Prospectus
nor any sale made hereunder shall under any circumstances, create an implication
that there has been no change in the circumstances of the Company or the Facts
herein set forth since the date hereof.
_______________
SPATIALIGHT, INC.
2,135,000 Shares of Common Stock
1,585,000 Share of Common Stock Issuable
upon Exercise of Certain Outstanding Warrants
Offering Price $____ Per Share
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses, other than selling
commissions, payable by the Registrant in connection with the sale of the shares
being registered. All of the amounts shown are estimates, except for the
registration fee and NASD filing fee.
Registration............................................... $563.63
NASD filing................................................ $7,500
Blue Sky fees and expenses................................. $5,000
Legal fees and expenses.................................... $20,000
Accounting fees and expenses............................... $30,000
Miscellaneous.............................................. $1,000
TOTAL...................................................... $64,063.63
___________________
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Restated Certificate of Incorporation of the Registrant, filed November
6, 1991 (the "Restated Certificate"), provides in relevant part at paragraph 7,
that
The directors of the corporation shall not be personally liable to the
corporation or its shareholders for damages for any breach of duty in such
capacity occurring after the adoption of the provisions authorized in this
certificate of incorporation, provided, however, that the provisions
contained herein shall not eliminate such directors' liability if a
judgment or other final adjudication adverse to the director establishes
that (i) the director's acts or omissions were in bad faith or involved
intentional misconduct or a knowing violation of the law; (ii) that the
director personally gained a financial profit or other advantage to which
the director was not legally entitled; or (iii) that the directors' acts
violated the provisions of Section 719 of the New York Business Corporation
Law.
Sections 721 through 726 of the Business Corporation Law of the State of
New York (the "BCL") provide the statutory basis for the indemnification by a
corporation of its officers and directors when such officers and directors have
acted in good faith, for a purpose reasonably believed to be in the best
interests of the corporation, and subject to specified limitations set forth in
the BCL.
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The BCL was also amended in 1986 to allow corporations to provide for
indemnification of corporate directors and officers on a broader basis than had
previously been permissible. Pursuant to this statutory authority, and as
authorized by Article V of the Registrant's By-Laws, directors and officers of
the Registrant, and certain Registrant employees, have been availed of the
broadest scope of permissible indemnification coverage consistent with the BCL
changes.
Article V of the Registrant's By-Laws provide as follows:
5.1 INDEMNIFICATION. The Corporation shall indemnify (a) any person
made or threatened to be made a party to any action or proceeding by reason
of the fact that he, his testator or intestate, is or was a director or
officer of the Corporation and (b) any director or officer of the
Corporation who served any other company in any capacity at the request of
the Corporation, in the manner and to the maximum extent permitted by the
Business Corporation Law of New York, as amended from time to time; and
the Corporation may, in the discretion of the Board of Directors, indemnify
all other corporate personnel to the extent permitted by laws.
5.2 AUTHORIZATION. The provisions for indemnification set forth in
Section 5.1 hereof shall not be deemed to be exclusive. The Corporation is
hereby authorized to further indemnify its directors or officers in the
manner and to the extent set forth in (i) a resolution of the shareholders,
(ii) a resolution of the directors, or (iii) an agreement providing for
such indemnification, so long as such indemnification shall not be
expressly prohibited by the provisions of the Business Corporation Law of
New York.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES
(a) THE FOLLOWING EXHIBITS ARE FILED AS PART OF THIS REGISTRATION
STATEMENT:
EXHIBIT NUMBER
4.1(1) Specimen Common Stock Certificate incorporated by reference from the
Company's registration statement on Form S-1 filed with the Commission
on November 27, 1991 and declared effective February 5, 1992
4.2(2) Form of Warrant incorporated by reference from the Company's Form
8-K/A filed September 24, 1996.
5.1 Opinion of Boylan, Brown, Code, Fowler, Vigdor & Wilson
23.1 Independent Auditors' Consent - Deloitte & Touche LLP
23.2 Consent of Boylan, Brown, Code, Fowler, Vigdor & Wilson is included
in its Opinion filed as Exhibit 5.1
24.1 Power of Attorney is included on signature page to this amendment.
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The remaining schedules have been omitted, either because they are not
applicable to the Registrant or because the information required has been shown
in the Financial Statements or in the notes thereto without making such
statement unclear or confusing.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 14 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 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, unit 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 by the Act and will be governed by the final adjudication of
such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement;
(i) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, 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 of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Spatialight, Inc., a corporation organized and existing under the laws of the
State of New York 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
Amendment No. 1 to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Novato, State of
California, on the 10th day of February, 1997.
SPATIALIGHT, INC.
By: /s/ William e. Hollis
-------------------------------------
William E. Hollis
President, Chief Executive Officer,
Chief Financial Officer and
Chief Accounting Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints William E. Hollis as true and lawful
attorney-in-fact, with full power and authority to act as such without the
other, and with full power of substitution, for him and in any and all
capacities, to sign any further amendments to this Registration Statement, and
to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, the undersigned hereby
ratifying and confirming all that said attorney-in-fact, or his substitute or
substitutes, shall 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 dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Lawrence J. Matteson Chairman of the Board February 10, 1997
- ------------------------
Lawrence J. Matteson
/s/ William E. Hollis President & CEO, February 10, 1997
- ------------------------ Chief Financial Officer,
William E. Hollis Chief Accounting Officer,
and Director
Director February __, 1997
- ------------------------
Edward J. Kelly
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/s/ Thomas D. Stahl Director February 10, 1997
- ------------------------
Thomas D. Stahl
/s/ Michael H. Burney Director February 10, 1997
- ------------------------
Michael H. Burney
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EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-17105 of Spatialight, Inc. on Form S-3 of our
report dated February 29, 1996 (November 11, 1996 as to Notes 5 and 10 and
February 10, 1997 as to Note 11) which report expresses an unqualified opinion
and includes an explanatory paragraph relating to the Company's recurring
operating losses and the continuing decline in stockholders' equity which raise
substantial doubt about the Company's ability to continue as a going concern,
appearing in the Annual Report on Form 10-KSB/A (Amendment No. 2) of
Spatialight, Inc. for the year ended December 31, 1995 and to the reference to
us under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
San Francisco, California
February 10, 1997
