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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 12, 2000
REGISTRATION NO. 333-____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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REGISTRATION STATEMENT
ON FORM S-3
UNDER
THE SECURITIES ACT OF 1933
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OBJECTSOFT CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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DELAWARE 22-3091075
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation Identification No.)
or Organization)
DAVID E. Y. SARNA, CHAIRMAN
OBJECTSOFT CORPORATION
CONTINENTAL PLAZA III CONTINENTAL PLAZA III
433 HACKENSACK AVENUE 433 HACKENSACK AVENUE
HACKENSACK, NEW JERSEY 07601 HACKENSACK, NEW JERSEY 07601
(201) 343-9100 (201) 343-9100
(Address, Including Zip Code, and (Name, Address, Including Zip Code, and
Telephone Number, Telephone Number
Including Area Code, of Registrant's Including Area Code, of Agent For Service)
Principal Executive Offices)
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Copy to:
MELVIN WEINBERG, ESQ.
PARKER CHAPIN LLP
THE CHRYSLER BUILDING
405 LEXINGTON AVENUE
NEW YORK, NEW YORK 10174
(212) 704-6000
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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, please check the
following box.
|X| 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.
|_| 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.
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|_| 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.
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|_| 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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Proposed Proposed
Title of each class of Amount to Maximum maximum Amount of
securities be registered Aggregate price Aggregate registration
to be registered Per share offering price fee
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Common Stock, $.0001 par value
per share 1,138,575(2) $1.99(1) $2,265,764 $599.00(3)
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and (g); based on the average of the bid
($1.96875) and asked price ($2.00) on the Nasdaq SmallCap Market
(NASDAQ) on May 11, 2000.
(2) Represents shares of our common stock issuable upon exercise of our
redeemable class A warrants and upon exercise of certain warrants held
by selling securityholders.
(3) Pursuant to Rule 429 under the Securities Act of 1933, as amended, this
registration statement also relates to the shares of common stock
issuable upon exercise of our class A warrants and certain warrants
held by the selling securityholders named herein, registered under the
Registration Statement on Form SB-2 (Registration No. 333-10519). The
registrant paid a fee of $3,095.88 with respect to the registration of
such securities.
Pursuant to Rule 429 of the Securities Act of 1933, as amended, this
registration statement is a new registration statement and also constitutes
Post-Effective Amendment No. 4 to the Registration Statement on Form SB-2
(Registration No. 333-10519), and such Post-Effective Registration Statement
shall become effective concurrently with the effectiveness of this registration
statement and in accordance with Section 8(c) of the Securities Act of 1933.
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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE HAVE
NOT AUTHORIZED ANY DEALER, SALESPERSON OR ANY OTHER PERSON TO GIVE ANY
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. THESE
SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SEEKING AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS
OBJECTSOFT CORPORATION
1,366,250 Shares of Common Stock
1,366,250 Redeemable Warrants
This prospectus is being delivered to the holders of 1,366,050
redeemable class A warrants that were issued by ObjectSoft Corporation, in its
initial public offering of certain units that became effective on November 12,
1996.
Each class A warrant:
o entitles the registered holder of the warrant to purchase one share of
common stock at an exercise price of $6.50, subject to adjustment, until
November 12, 2001;
o may be redeemed by us at a redemption price of $.10 per warrant on 30 days'
prior written notice to the warrant holder provided that the average
closing bid quotation of the common stock has been at least 130% of the
then current exercise price of the class A warrants, for a period of 20
consecutive trading days ending within 15 days of the date on which we give
notice of redemption;
o will be exercisable until the close of business on the day immediately
preceding the date fixed for redemption. See "Description of Securities --
Class A Warrants."
On May 1, 2000, we amended the warrant agreement to increase to one
share, from one-sixth of one share, the amount of our common stock a holder may
receive for $6.50, upon exercise of each class A warrant, but we will not issue
the additional shares until they are registered with the Securities and Exchange
Commission. We may reduce the exercise price of the class A warrants for a
temporary time period (but no less than 62 days) or permanently. If made, we
will communicate the exercise price decrease to warrantholders and we will
appropriately supplement this prospectus.
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NASDAQ SmallCap Market Symbol for:
Common Stock: "OSFT"
Class A Warrants: "OSFTW"
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On May 11, 2000, the closing bid price for the common stock and the
class A warrants were $2.3125 and $0.34375, respectively.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD
CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE CAPTION "RISK FACTORS" ON
PAGE 3 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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Concurrently with this offering, we registered the offering of 612,704
shares of common stock and 412,500 class A warrants pursuant to a selling
securityholder prospectus, which prospectus includes the placement agent
warrants. That prospectus is included within the registration statement of which
this prospectus forms a part.
THE DATE OF THIS PROSPECTUS IS MAY __, 2000
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TABLE OF CONTENTS
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RISK FACTORS......................................................................................................3
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS.................................................................10
WHERE YOU CAN FIND MORE INFORMATION ABOUT US.....................................................................10
USE OF PROCEEDS..................................................................................................11
DIVIDEND POLICY..................................................................................................11
DESCRIPTION OF SECURITIES........................................................................................11
CONCURRENT OFFERING..............................................................................................15
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES...................................................................15
LEGAL MATTERS....................................................................................................16
EXPERTS..........................................................................................................16
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RISK FACTORS
BEFORE YOU BUY SHARES OF OUR COMMON STOCK, YOU SHOULD BE AWARE THAT THERE ARE
VARIOUS RISKS ASSOCIATED WITH SUCH PURCHASE, INCLUDING THOSE DESCRIBED BELOW.
YOU SHOULD CONSIDER CAREFULLY THESE RISK FACTORS, TOGETHER WITH ALL OF THE OTHER
INFORMATION IN THIS PROSPECTUS, AND THE DOCUMENTS WE HAVE INCORPORATED BY
REFERENCE IN THE SECTION "WHERE YOU CAN FIND MORE INFORMATION ABOUT US" BEFORE
YOU DECIDE TO PURCHASE SHARES OF OUR COMMON STOCK.
UNLESS OTHERWISE INDICATED, ALL SUBSEQUENT REFERENCES IN THIS PROSPECTUS TO OUR
COMMON STOCK AND THE CLASS A WARRANTS GIVE EFFECT TO THE ONE-FOR-SIX REVERSE
STOCK SPLIT EFFECTED ON OCTOBER 13, 1999.
WE HAVE A HISTORY AND EXPECTATION OF FUTURE LOSSES AND AN ACCUMULATED DEFICIT
AND IF WE DO NOT ACHIEVE PROFITABILITY WE MAY NOT BE ABLE TO CONTINUE OUR
BUSINESS IN THE FUTURE
Although we have generated revenues from operations, we have
experienced substantial operating losses. We have incurred, and will continue to
incur, significant costs developing our interactive public access terminals and
Internet operations. We anticipate incurring additional losses until we can
successfully market and distribute our products and develop new technologies and
commercially viable future products. If we are unable to do so, we will continue
to have losses and might not be able to continue our operations.
We have incurred the following losses since 1996:
Fiscal year ended:
o December 31, 1996 ............... $1,241,000
o December 31, 1997 ............... $2,520,000
o December 31, 1998 ............... $2,515,000
o December 31, 1999............... $3,920,000
As of December 31, 1999 we had accumulated losses of $11,073,000.
WE COULD BE REQUIRED TO CUT BACK OR STOP OPERATIONS IF WE ARE UNABLE TO RAISE OR
OBTAIN NEEDED FUNDING
Our current policy is generally to own and operate our public access
terminals, which may require substantial capital investment. We intend to enter
into one or more lease financing arrangements for these terminals.
We may need to raise additional funds through public or private debt or
sale of debt or equity in order to respond to unanticipated competitive
pressures or take advantage of unanticipated opportunities, including
acquisitions of complementary businesses or technologies and the development of
new products, and to finance the purchase of kiosks. In addition, if we
experience rapid growth, we may require additional funds to expand our
operations or enlarge our organization.
Our ability to continue operations will depend on our positive cash
flow from future operations and on our ability to raise additional funds through
equity or debt financing. We do not know if we will be able to raise additional
funding or if additional funding will be available on favorable terms. Also, if
we were to issue any additional equity securities or debt securities which are
convertible into equity, such issuance could substantially dilute the interests
of our security holders existing at the time of such issuance. We could be
required to cut back or stop operations if we are unable to raise or obtain
needed funding.
WE DON'T KNOW IF OUR NEW PRODUCT "FASTAKE(R)" WILL BE PROFITABLE
In October 1998 we first demonstrated a new product based on our
SmartStreet(TM) technology called FastTake(R), which is designed for the video
industry. Deliveries of this product (in many cases on a trial basis) began in
March 1999.
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Revenue from FastTake(R) depend on placement of kiosks, usage and
especially advertiser support. We cannot assure you that customers will continue
to use the Fastake(R) kiosks as additional kiosks are added. Although we have
entered in advertising arrangements, we cannot assure you that sponsorship by
advertisers will continue at present levels to attain the level needed to cover
our costs and to be profitable.
WE HAVE 5,458,638 SHARES OF OUR COMMON STOCK RESERVED FOR FURTHER ISSUANCES
WHICH CAN SUBSTANTIALLY DILUTE THE VALUE OF YOUR OBJECTSOFT COMMON STOCK
The issuance of reserved shares would dilute the equity interest of
existing stockholders and could have a significant adverse effect on the market
price of our common stock. As of April 4, 2000, we had 5,458,638 shares of
common stock reserved for possible future issuances upon conversion of the
series G preferred stock, options and warrants.
The conversion terms of our outstanding series G preferred stock may
cause substantial dilution in the book value per share of our common stock.
Because of the conversion features in the series G preferred stock, the
preferred stockholders will receive a greater number of shares of common stock
if our common stock price decreases.
We have also issued certain options and warrants, including class A
warrants and warrants owned by the selling stockholders, which entitle their
holders to acquire our common stock at prices which may represent discounts from
its future market prices. Such discounts could result in substantial dilution to
existing holders of our common stock.
If the series G preferred stockholders convert their preferred stock or
exercise their warrants and then sell our common stock, the common stock price
may decrease due to the additional shares in the market. This could allow the
series G preferred stockholders to convert remaining preferred stock into
greater amounts of common stock, the sales of which would further depress the
stock price.
The significant downward pressure on the price of the common stock
could encourage short sales and consequently place further downward pressure on
the price of our common stock.
IF WE CANNOT MEET THE NASDAQ SMALLCAP MARKET MAINTENANCE REQUIREMENTS, NASDAQ
MAY DELIST THE COMMON STOCK WHICH COULD NEGATIVELY AFFECT THE PRICE OF THE
COMMON STOCK AND YOUR ABILITY TO SELL THE COMMON STOCK
In the future, we may not be able to meet the listing maintenance
requirements of the Nasdaq SmallCap Market and Nasdaq rules, which require,
among other things, minimum net tangible assets of $2 million, a minimum bid
price for our common stock of $1.00, and stockholder approval prior to the
issuance of securities in connection with a transaction involving the sale or
issuance of common stock equal to 20 percent or more of a company's outstanding
common stock before the issuance for less than the greater of book or market
value of the stock.
Although we currently comply with Nasdaq's listing maintenance
requirements, it is possible we may not meet the requirements in the future as
in the past we have not always been in compliance. For example, the dilution
resulting from the issuance of the convertible preferred stock discussed above
and subsequent conversion and sale of common stock could have a substantial
depressive effect on the common stock bid price causing it to decrease below
$1.00. If we were no longer in compliance with Nasdaq rules and were unable to
receive a waiver or achieve compliance, and if our common stock were to be
delisted from the SmallCap market, an investor in our company may find it more
difficult to sell our common stock. This lack of liquidity also may make it more
difficult for us to raise capital in the future.
IF NASDAQ DELISTS OUR COMMON STOCK BROKERS WOULD NEED TO COMPLY WITH THE PENNY
STOCK REGULATIONS WHICH COULD MAKE IT MORE DIFFICULT TO SELL YOUR COMMON STOCK
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In the event that our securities are not listed on the Nasdaq SmallCap
Market, trading of the common stock would be conducted in the "pink sheets" or
through the NASD's Electronic Bulletin Board and covered by Rule 15g-9 under the
Securities Exchange Act of 1934. Under this rule, broker/dealers who recommend
these securities to persons other than established customers and accredited
investors must make a special written suitability determination for the
purchaser and receive the purchaser's written agreement to a transaction prior
to sale. Securities are exempt from this rule if the market price is at least
$5.00 per share.
Although the Securities and Exchange Commission adopted regulations
that generally define a penny stock as any equity security that has a market
price of less than $5.00 per share, our common stock, albeit currently less than
$5.00 per share, does not constitute penny stock because our common stock is
quoted on Nasdaq and our net tangible assets currently exceed $2.0 million. If
in the future our common stock falls within the definition of penny stock, these
regulations would require the delivery, prior to any transaction involving our
common stock, of a disclosure schedule explaining the penny stock market and the
risks associated with it. Furthermore, the ability of broker/dealers to sell the
common stock and the ability of purchasers in this offering to sell their
securities in the secondary market would be limited. As a result, the market
liquidity for the common stock would be severely and adversely affected. These
or other regulations in the future could negatively affect the market for these
securities.
SINCE WE DEPEND ON CERTAIN LICENSES, AND INSTALLATION AND MAINTENANCE SERVICES,
OUR PRODUCT MAY BE AFFECTED IF THE SERVICES ARE CANCELED
FastTake(R) uses databases and film trailers licensed from third
parties. If these licenses were canceled for any reason, it may be difficult or
expensive to license similar data bases from other providers. We also rely on
installation and maintenance services for our FastTake(R) public access
terminals which we receive from International Business Machines (IBM). These
contracts could be canceled on short notice. If such contracts were canceled by
IBM, this could have a negative effect on our sales as well as on the quality of
service which we could provide to our customers.
"BUGS" IN OUR HARDWARE AND SOFTWARE AND THAT OF THIRD PARTIES, "VIRUSES", AND
OTHER DISRUPTIONS COULD BE COSTLY AND RETARD OUR COMPETITIVE EDGE
The hardware and software that we use us in our public access terminals
commonly experience errors, or "bugs," both during development and subsequent to
commercial introduction. We don't know if all the potential problems will be
identified, and that any bugs that are located can be corrected on a timely
basis. Any such errors could delay the commercial introduction or use of
existing or new products and require modifications in systems that have already
been installed. Remedying such errors could be costly and time consuming.
Furthermore, bugs involving the proprietary software of third parties could
require the redesign of our proprietary software. Delays in debugging or
modifying our products could affect our competitive edge with respect to
existing and new technologies and products offered by our competitors.
Despite the security measures, the core of the infrastructure of our
network is vulnerable to computer virus attacks and other disruptive problems.
In the past, we and our Internet access providers have experienced, and may in
the future experience, interruptions in service as a result of the accidental or
intentional actions of Internet users, employees or others. Eliminating computer
viruses may require interruptions, delays or cessation of service to our
customers which could have a material negative effect on our financial condition
and results of operations.
WE COULD BE LIABLE FOR THE UNAUTHORIZED USE OF OUR INFORMATION AND INJURIES TO
KIOSK USERS AND COULD LOSE BUSINESS WHILE TRYING TO REMEDY THE PROBLEMS
Unauthorized use could jeopardize the security of confidential
information stored in our computer systems and in the computer systems of our
customers, which may result in us being liable to our customers and also may
deter potential users. Although we intend to continue to implement
industry-standard security measures, such measures have been circumvented in the
past, and we cannot assure you that measures we implement will not be
circumvented in the future. Alleviating other security problems may require
interruptions, delays or cessation of service to our customers which could have
a material negative effect on our financial condition and results of operations.
Although we believe it is unlikely, users of our kiosks may seek to hold us
liable for injuries allegedly incurred in connection with using them.
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IF OUR EXISTING TECHNICAL AND OPERATIONAL SYSTEMS FAIL, WE COULD EXPERIENCE
INTERRUPTIONS OR DELAYS IN OUR SERVICE OR DATA LOSS WHICH COULD NEGATIVELY
AFFECT OUR BUSINESS
Our systems and operations are vulnerable to damage or interruption
from telecommunications failure, power loss, break-ins, vandalism, fire, flood,
earthquakes and similar events. Despite the precautions we take, the occurrence
of a natural disaster or other unanticipated problems at our network operations
center or public access terminals could cause interruptions in the services we
provide. In addition, there could be interruptions in the services we provide if
our telecommunications providers fail to provide the data communications
capacity we require as a result of a natural disaster, operational disruption or
for any other reason. Any damage or failure that causes interruptions in our
operations could have a material negative effect on our business, financial
condition and results of operations. Our public access terminals are designed to
operate with reduced functionality even without connection to telecommunication
lines. However, a substantial failure could negatively affect our business.
While we maintain insurance covering, among other things, losses
resulting from business interruptions caused by system failures, damages to
public access terminals or claims by users of the public access terminals, with
an annual limit of $2,000,000, and a $5,000,000 umbrella policy, we cannot
assure you that such insurance will provide sufficient coverage or that if there
are multiple claims, such insurance will not be terminated or will be available
for terms affordable to us.
THE MARKETS ARE CONTINUOUSLY AND RAPIDLY CHANGING AND IF WE DON'T KEEP UP, IT
WOULD ADVERSELY AFFECT OUR BUSINESS
The markets we serve experience rapid technological change, changing
customer requirements, frequent new product introductions and evolving industry
standards that may render existing products and services obsolete. As a result,
more advanced products produced by our competitors could erode our position in
our markets. It is difficult to estimate the life cycles of our products and
services. Our future success will depend, in part, upon our ability to enhance
existing products and services and to develop new products and services on a
timely basis. Also, our products and services must keep pace with technological
developments, and conform to evolving industry standards, particularly
client/server and Internet communication and security protocols and publishing
formats. We also must address increasingly sophisticated customer needs. We
might experience difficulties that could delay or prevent the successful
development, introduction and marketing of new products and services. If this
happens, it would materially and negatively affect our financial condition and
results of operations.
WE HAVE MANY COMPETITORS WHICH HAVE SIGNIFICANTLY GREATER FINANCIAL, TECHNICAL
SALES AND MARKETING RESOURCES THAN WE DO AND THESE COMPETITORS MAY NEGATIVELY
AFFECT OUR BUSINESS
We experience significant competition from different sources for our
different services. For example, our Internet public access terminal business
competes with numerous companies, including IBM, North Communications, Golden
Screens and ATCOM/INFO. Our FastTake(R) business competes with a number of
companies, principally Muze, Inc., Entertainment Decisions, Inc. (Clair-V) and
Advanced Communication Design Inc., which have been in the video field for far
longer than us. Many of such competitors have resources far greater than ours.
Although we believe that FastTake(R) is a competitive product, we
cannot assure you that these or other companies with far greater resources than
ours might enter the field and negatively affect our FastTake(R) business
prospects in this market.
WE MAY HAVE DIFFICULTY COMPLYING WITH GOVERNMENT CONTRACT REQUIREMENTS AND
GOVERNMENT REGULATION
We initially marketed our SmartSign(TM) public access terminals to
entities including municipalities, states and other government agencies, among
others. Governmental agencies and authorities are subject to public contract
requirements and regulations which vary from one jurisdiction to another. Some
of the issues which these requirements and regulations relate to are listed
below:
o bidding procedures;
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o audits;
o guarantees;
o insurance coverage;
o non-discrimination in hiring practices;
o access to the disabled;
o record-keeping.
In San Francisco, we were requested to make the SmartSign(TM) public
access terminals accessible to blind persons. Other jurisdictions may impose
similar requirements. We are currently attempting to develop a program to make
our SmartSign(TM) public access terminals accessible to blind persons, with the
aid and cooperation of various organizations for the blind, and until we succeed
in making our terminals accessible to blind persons, we have been required to
remove our terminals in San Fransisco.
Some public contract requirements may be onerous or even impossible for
us to satisfy, such as requirements for large guarantees, and we may not be able
to make sales in these jurisdictions. In addition, public contracts frequently
require a formal competitive bidding process, which is generally a long process.
WE RELY ON OUR RELATIONSHIP WITH MICROSOFT IN MARKETING OUR PRODUCT AND
TERMINATION OF THIS RELATIONSHIP COULD RESULT IN REDUCED REVENUES
We have established a strategic relationship with Microsoft that we
believe is important to our sales, marketing and support activities as well as
to our product development efforts, relating to our SmartSign(TM) public access
terminals. Microsoft supports us in marketing our public assets and services and
has agreed to exhibit our public access terminals in Microsoft displays at
various trade shows. It has also issued public statements that included
favorable references relating to our products. Additionally, Microsoft currently
advertises on SmartSign(TM) public access terminals in New York City. If
Microsoft terminates this relationship with us, we may lose many customers which
could result in a loss of revenue.
WE DEPEND UPON MICROSOFT'S WINDOWS OPERATING SYSTEM AND ANY NEGATIVE EFFECT ON
MICROSOFT'S OPERATING SYSTEM COULD AFFECT US
We have invested in software built on certain of Microsoft's operating
systems. Any factor negatively affecting the demand for, or use of, Microsoft's
windows operating system could have an impact on the demand for our products or
services which in turn would have a material negative effect on our business,
results of operations and financial condition. Additionally, any changes to the
windows operating system that require us to make changes to our products would
negatively affect us if we were unable to develop or implement such changes in a
timely fashion.
SINCE WE DEPEND UPON COMMON CARRIERS AND INTERNET ACCESS PROVIDERS, OUR
PROFITABILITY MAY BE NEGATIVELY AFFECTED IF THEY FAIL TO PROVIDE THE REQUIRED
SERVICE
We depend on various regulated common carriers and unregulated Internet
access providers, such as AT&T, Bell Atlantic, Global Crossing and PSI. Our
service or profitability could be materially and negatively affected if such
carriers or providers cannot timely respond to our requirements for service,
fail to provide reliable service or increase their rates substantially.
PROBLEMS WITH THE INTERNET MAY ADVERSELY AFFECT OUR INTERNET-RELATED PRODUCT
Sales of our Internet-related products and services will depend in
large part upon the growth of the Internet industry. We depend on a robust
Internet industry and infrastructure for providing commercial Internet access
and carrying Internet traffic, and we depend on increased commercial use of the
Internet.
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THE TERMINATION OF OUR RELATIONSHIP WITH A CUSTOMER THAT ACCOUNTS FOR A
SIGNIFICANT PORTION OF OUR REVENUES COULD NEGATIVELY AFFECT OUR BUSINESS
During 1999, one customer accounted for approximately 75% of our
revenues. During 1998, one customer accounted for approximately 86% of our
revenues. During 1997, one customer accounted for approximately 84% of our
revenues. The services provided to such customers were consulting and related
services and, more recently, services related to the development of Intranet and
public access terminal technology. Since we have derived only limited revenue
from FastTake(R), which we began shipping in March 1999, if our relationship
with a customer that accounts for a significant portion of revenues terminates,
it could affect our business.
OUR FAILURE TO RETAIN SUBCONTRACTORS WOULD RESULT IN COSTS AND DELAYS AND WOULD
ADVERSELY AFFECT OUR BUSINESS
We are responsible for the design of our public access terminals.
Subcontractors are responsible for the engineering and manufacturing of their
hardware and graphical components. Only a limited number of public access
terminals have been built, so it is difficult for us to predict if our current
subcontractors will be able to engineer and produce such terminals on a
satisfactory basis. While we believe that we could arrange to have public access
terminals built by other subcontractors on comparable terms, we would experience
costs and delays if we needed to do so. Our future success will depend in part
on our ability to retain subcontractors and maintain good relationships with
them, because we need to assure the timelines and quality of the manufacture of
our public access terminals.
OUR STOCK PRICE MAY BE ADVERSELY AFFECTED BY FLUCTUATING QUARTERLY OPERATING
RESULTS
Our quarterly operating results have in the past and may in the future
vary significantly. These variations depend upon factors such as the placement
of kiosks, customer use of the kiosks, entering into advertising contracts,
revenue produced from advertising, which depends in part on customer usage, and
the timing of significant orders, which in the past have been, and may be in the
future, delayed from time to time due to delays in the contracting process.
Other factors which contribute to our varying operating results include:
o the pricing and mix of services and products which we sell;
o terminations of our service;
o new products which we or our competitors introduce;
o market acceptance of new and enhanced versions of our products and
services;
o changes in pricing or marketing policies by our competitors and our
responses thereto;
o our ability to obtain sufficient vendors;
o our ability to obtain supplies of sole or limited source components;
o our ability to make changes in our network infrastructure costs, as a
result of demand variation or otherwise;
o and the lengthening of our sales cycle due to expansion and the timing
of the expansion of our network infrastructure.
Variations in the timing and amounts of revenues and costs could have a
materially negative effect on our quarterly operating results.
SINCE OUR SUCCESS DEPENDS UPON THE EFFORTS OF KEY MEMBERS OF OUR MANAGEMENT AND
OUR EMPLOYEES, OUR FAILURE TO RETAIN MANAGEMENT MEMBERS OR EMPLOYEES WILL
NEGATIVELY AFFECT OUR BUSINESS
Our business is greatly dependent on the efforts of our executive
officers and key employees, and on our ability to attract key personnel. In
particular, our future success is dependent upon the personal efforts of our
founders, David E. Y. Sarna, our Chairman, Co-Chief Executive Officer, Secretary
and Director, and George J. Febish, our President, Co-Chief Executive Officer,
Treasurer and Director.
Also, success will depend in large part upon our ability to attract,
develop, motivate and retain highly skilled technical employees. Competition for
qualified personnel is intense and we may not be able to hire or retain
qualified personnel. The loss of some or all of our project managers and other
senior personnel could have a
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materially adverse impact on us. Other than Messrs. Sarna and Febish, no other
senior personnel have entered into employment agreements obligating them to
remain employed by us for any specific term.
We have in place key person life insurance policies, of which we are
the beneficiary, on the lives of Messrs. Sarna and Febish in the amount of
$1,000,000 each. However, the loss of the services of our executive officers or
other key employees could delay our ability to fully implement our operating
strategy, which could have a negative effect on our business, operating results
and financial condition.
IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY ADEQUATELY, WE COULD LOSE
OUR COMPETITIVE ADVANTAGE
Our success and ability to compete is dependent on our proprietary
technology. We regard our technology as proprietary and we rely primarily on
U.S. patent, trademark, copyright, trade secret laws, third-party non-disclosure
agreements and other methods to protect our proprietary rights.
We presently have several patents or patent applications pending. There
can be no assurance that such patent applications will be allowed or even if
such applications are allowed that others will not develop technologies that are
similar or superior to our technology. The steps taken by us to protect our
other proprietary rights may not be adequate and third parties may infringe or
misappropriate our copyrights, trade marks, and similar proprietary rights.
Additionally, effective trademark, patent, copyright and trade secret protection
may not be available in every country in which our products and media will be
distributed or made available through the Internet.
Litigation may be necessary in the future to enforce our proprietary
rights, or to defend against claims of infringement or invalidity. Such
litigation could result in substantial costs and diversion of resources and
could have a material negative effect on our business, operating results or
financial condition.
Certain technology used in our products or services is licensed or
leased from third parties, generally on a nonexclusive basis. While the licenses
involved are primarily "shrink wrap licenses" -- that is, licenses available to
anyone who purchases publicly available software programs -- in the event any of
these licenses or leases is terminated or in the event the underlying programs
are discontinued, our operations may be materially negatively affected.
Replacement of certain technologies which we license or lease could be costly
and could result in product delays which would materially and negatively affect
our operating results.
WE FACE POTENTIAL RISK OF LIABILITY DUE TO FUTURE REGULATION OF THE INTERNET
ACCESS INDUSTRY
We are currently not subject to direct regulation by the Federal
Communications Commission or any other agency, other than regulations applicable
to businesses generally and businesses doing business with governmental agencies
(see "Risk Factors -- We may have difficulties complying with government
contract requirements and government regulation").
Changes in the regulatory environment relating to the Internet access
industry could have a negative effect on our business. Due to the increase in
Internet use and publicity, it is possible that laws and regulations may be
adopted with respect to the Internet, including with respect to privacy, pricing
and characteristics of products or services. We cannot predict the impact, if
any, that future laws and regulations or legal or regulatory changes may have on
our business.
The law relating to the liability of on-line services companies and
Internet access providers for information carried on or disseminated through
their systems is currently unsettled. Parties have instituted several private
lawsuits seeking to impose such liability upon on-line services companies and
Internet access providers. In addition, there is proposed legislation which
would impose liability for or prohibit the transmission on the Internet of
certain types of information and content. We may be exposed to such potential
liability in the event we were to make services such as the one offered through
our public access terminals available over the Internet. Although we carry
insurance, it may not be adequate to compensate us in the event we become liable
for information carried on or disseminated through our systems.
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WE DO NOT EXPECT TO PAY DIVIDENDS AND INVESTORS SHOULD NOT BUY OUR COMMON STOCK
EXPECTING TO RECEIVE DIVIDENDS
Other than distributions made prior to 1993, when we were a
closely-held "S corporation," we have not paid any dividends on our common stock
in the past, and do not anticipate that we will declare or pay any dividends in
the foreseeable future. Consequently, you will only realize an economic gain on
your investment in our common stock if the price appreciates. You should not
purchase our common stock with the expectation of receiving cash dividends.
ANTI-TAKEOVER MEASURES IN OUR CERTIFICATE OF INCORPORATION COULD ADVERSELY
AFFECT THE VOTING POWER OF THE HOLDERS OF THE COMMON STOCK.
Our certificate of incorporation authorizes anti-takeover measures like
the authority to issue "blank check" preferred stock and the staggered terms of
the members of our board of directors. Those measures could have the effect of
delaying, deterring or preventing a change in control without any action by the
stockholders. In addition, issuance of preferred stock, without stockholder
approval, on those terms as the board of directors may determine, could
adversely affect the voting power of the holders of the common stock, including
the loss of voting control to others. See "Description of Securities."
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus and in the documents we have
incorporated by reference may contain forward-looking statements. Such
statements can be generally identified by the use of forward-looking words such
as "may," "will," "expect," "anticipate," "intend," "estimate," "continue,"
"believe," or other similar words. These statements discuss future expectations,
or state other "forward-looking" information. When considering such statements,
you should keep in mind the risk factors and other cautionary statements in this
prospectus. The risk factors noted in the previous section and other factors
noted in this prospectus could cause our actual results to differ materially
from those contained in any forward-looking statements.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
over the Internet at the SEC's Website at "http://www.sec.gov."
We have filed with the SEC a registration statement on Form S-3 to
register the shares being offered. This prospectus is part of that registration
statement and, although we believe that the information contained in this
prospectus is materially complete, as permitted by the SEC's rules, this
prospectus does not contain all the information included in the registration
statement. For further information with respect to us and our common stock, you
should refer to the registration statement and to the exhibits and schedules
filed as part of that registration statement, as well as the documents we have
incorporated by reference which are discussed below. You can review and copy the
registration statement, its exhibits and schedules, as well as the documents we
have incorporated by reference, at the public reference facilities maintained by
the SEC as described above. The registration statement, including its exhibits
and schedules, are also available on the SEC's web site.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be a part of this prospectus, and information that we file later
with the SEC will automatically update or supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:
1. Annual Report on Form 10-KSB for the year ended December 31,
1999;
2. Proxy Statements for the 2000 Annual Meeting of Stockholders
to be held on June 6, 2000 and for the Special Meeting of
Stockholders which occurred on October 12, 1999;
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3. Current Reports on Form 8-K dated (date of earliest event
reported) December 31, 1998 (as filed on January 15, 1999),
March 17, 1999 (as filed on March 23, 1999) and December 30,
1999 (as filed on January 4, 2000); and
4, The description of our common stock and class A warrants
contained in the Registration Statement on Form 8-A filed on
October 16, 1996.
You may request a copy of these filings, at no cost, by writing or
telephoning us at Continental Plaza III, 433 Hackensack Avenue Hackensack, New
Jersey 07601 (201) 343-9100. Attention: Lauren Zinman.
USE OF PROCEEDS
The net proceeds which we may realize upon the exercise of all of the
class A warrants which were issued in connection with our initial public
offering in November 1996, taking into account a possible five percent warrant
solicitation fee of five percent and deduction of expenses of this offering,
will be approximately $8,400,000 or, if we reduce the warrant exercise price, a
lower amount. Inasmuch as, as of the date of this prospectus, we have received
no firm commitments for the exercise of such class A warrants and the exercise
price of the class A warrants is well above the market price of our common
stock, no assurance can be given that any such class A warrants will be
exercised.
Any net proceeds received from the exercise of the class A warrants
offered hereby are intended to be used for general corporate purposes and
working capital.
DIVIDEND POLICY
We have never declared or paid cash dividends on our common stock. We
currently anticipate that we will retain all available funds for use in the
operation of our business. As such, we do not anticipate paying any cash
dividends on our common stock in the foreseeable future.
DESCRIPTION OF SECURITIES
GENERAL
We are authorized to issue up to 50,000,000 shares of common stock, par
value $.0001 per share, and up to 5,000,000 shares of preferred stock, par value
$.0001 per share. We effected a one-for-six reverse stock split of our
outstanding common stock effective as of October 13, 1999. Unless otherwise
indicated, all subsequent references to our shares of common stock and class A
warrants give effect to the stock split. As of April 4, 2000 we had 5,548,638
shares of our common stock issued and outstanding.
COMMON STOCK
Voting
The holders of our common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of stockholders. Our
certificate of incorporation and by-laws do not provide for cumulative voting
rights in the election of directors. Accordingly, holders of a majority of the
shares of common stock entitled to vote in any election of directors may elect
all of the directors standing for election.
Dividends
Subject to the senior rights of our preferred stock, holders of common
stock are entitled to receive ratably those dividends as may be declared by our
board of directors out of funds legally available for that purpose.
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Rights on liquidation
In the event of our liquidation, dissolution or winding up, holders of
our common stock are entitled to share ratably in the assets remaining after
payment of liabilities and payment to the holders of our preferred stock.
Pre-emptive or redemption rights
Holders of common stock have no preemptive, conversion or redemption
rights. All of the outstanding shares of common stock are fully-paid and
nonassessable.
PREFERRED STOCK
Our preferred stock may be issued from time to time by our board of
directors without the approval of our stockholders. Our board is authorized to
issue these shares in different classes and series and, with respect to each
class or series, to determine the dividend rights, the redemption provisions,
conversion provisions, liquidation preferences and other rights and preferences
not in conflict with our certificate of incorporation or with Delaware law. Our
board of directors, without stockholder approval, could issue preferred stock
which would negatively affect the voting and other rights of the holders of our
common stock.
As of the date of this prospectus, our board has designated series A-G
preferred stock. Only the series G preferred stock has not been fully converted.
SERIES G PREFERRED STOCK
Our Board of Directors has authorized the issuance of a series of
preferred stock, designated as series G preferred stock, and consisting of
30,000 shares. Each share of series G preferred stock has a stated value of
$100. A certificate of designation filed with the secretary of state of Delaware
governs the terms and conditions of the series G preferred stock. The following
is a brief description of key terms of the series G preferred stock.
Dividends
o The holders of the shares of our series G preferred stock are
entitled to receive, when and as declared by our Board,
dividends at the yearly rate of six percent of the purchase
price, payable, at the discretion of our Board, in common
stock or cash.
o Dividends will accrue on each share of the series G preferred
stock from the date of initial issuance and be cumulative,
whether or not we have profits, surplus or other funds legally
available for the payment of dividends.
o All accrued dividends shall be immediately due and payable on
the date of conversion of such shares of series G preferred
stock into our common stock.
Preferences on liquidation
o In the event of our voluntary or involuntary liquidation,
dissolution or winding up, the holders of shares of our series
G preferred stock then outstanding shall be entitled to be
paid, out of our assets available for distribution to our
stockholders, an amount per share of series G preferred stock
as would have been payable had each such share been converted
into common stock immediately prior to such event of
liquidation, dissolution or winding up plus all accrued
dividends and liquidated damages, if any ("Liquidation
Preference").
o If upon our liquidation, dissolution, or winding up, our
assets available for distribution to our stockholders shall be
insufficient to pay the holders of the series G preferred
stock the full Liquidation Preference, the holders of the
series G preferred stock shall all share in any distribution
of assets, each
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getting a relative share of the distribution based on their
relative holdings of the series G preferred stock.
Conversion rights
o The holders of the shares of our series G preferred stock may
convert each share of preferred stock into shares of our
common stock at a conversion rate determined by dividing $100,
by the lesser of:
(a) 2.6875; or
(b) the average of the two lowest closing bid prices of
our common stock for the lookback period (i.e. the 20
trading days preceding the date on which the holder
of the series G preferred stock has sent us a notice
of conversion, increased by two trading days on the
last trading day of each month, beginning at the end
of April 2000, up to a maximum of 30 trading days).
o The shares of preferred stock first become convertible on
March 30, 2000, and thereafter only one-third of a holder's
acquired shares of preferred stock may be converted, on a
cumulative basis, during each 30 day period.
o The certificate of designation of the series G preferred stock
provides that on each conversion date of the series G
preferred stock, the number of shares of common stock to be
issued to each holder, when added to other shares owned by the
holder, will not exceed 4.99% of the shares of our common
stock outstanding on that conversion date (more than 9.99%
with respect to each holder which owned more than 4.99% of the
company's outstanding common stock on December 29, 1999).
o No fractional shares of our common stock shall be issued upon
conversion of the series G preferred stock. In lieu of any
fractional shares to which the holder would otherwise be
entitled, we shall pay cash.
Forced conversion
o On December 29, 2001, all outstanding shares of the series G
preferred stock shall be automatically converted into shares
of common stock.
o We may force a conversion of the series G preferred stock if
we sell our common stock in a pubic offering.
Redemption
o We may redeem any or all of the outstanding shares of our
series G preferred stock on any date set for such redemption
by our board.
o The redemption price for each share of series G preferred
stock, to be paid in cash on the date of redemption, is set
forth in the certificate of designation for the series G
preferred stock.
o We will give written notice to the holder of series G
preferred stock at least 5 days prior to the date specified
for redemption. If we fail to pay the redemption price on the
date of redemption, the redemption notice shall be null and
void and we will lose our rights to serve a notice of
redemption in the future.
No voting rights
Unless required by law, the holders of the series G preferred stock
will not be entitled to vote upon any matter relating to our business or affairs
or for any other purpose.
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So long as any shares of series G preferred stock are outstanding, we will
not
(a) alter or change any of the powers preferences,
privileges, or rights of the series G preferred
stock; or
(b) amend the provisions of the certificate of
designation changing the seniority, liquidation,
conversion or other rights of the series G preferred
stock,
without first obtaining the approval of the holders of at least a majority of
the outstanding shares of series G preferred stock.
CLASS A WARRANTS
Each class A warrant entitles the registered holder of the warrant to
purchase one share of common stock at an exercise price of $6.50, subject to
adjustment, until November 12, 2001. Prior to the date of this prospectus, each
class A warrant was exercisable for one-six of one share at the same price. On
May 1, 2000 we amended the warrant agreement to increase to one share, from
one-sixth of one share, the amount of common stock a holder may receive for
$6.50 upon exercise of each class A warrant, but we will not issue the
additional shares unless they are registered with the SEC. Each class A warrant
may be redeemed by us at a redemption price of $.10 per warrant on 30 days'
prior written notice to the warrant holder provided that the average closing bid
quotation of the common stock has been at least 130% of the then current
exercise price of the class A warrants, for a period of 20 consecutive trading
days ending within 15 days of the date on which we give notice of redemption.
Each class A warrant will be exercisable until the close of business on the day
immediately preceding the date fixed for redemption.
The class A warrants may be exercised upon surrender of the class A
warrant certificate on or prior to the expiration date at the offices of the
warrant agent, with the exercise form on the reverse side of the class A warrant
certificate completed and executed as indicated. Exercise of the class A
warrants must be accompanied by full payment of the exercise price (by certified
check or bank draft payable to us) to the warrant agent for the number of class
A warrants being exercised. Holders of class A warrants do not have the rights
or privileges of holders of common stock.
No class A warrant will be exercisable unless at the time of exercise
we have filed a current registration statement with the Commission covering the
shares of our common stock issuable upon exercise of such class A warrant and
such shares have been registered or qualified or deemed to be exempt from
registration or qualification under the securities laws of the state of
residence of the holder of such class A warrant.
No fractional shares will be issued upon exercise of the class A
warrants. However, if a warrant holder exercises all class A warrants then owned
of record by him, we will pay to such holder, in lieu of the issuance of any
fractional share which is otherwise issuable, an amount in cash based on the
market value of the common stock on the last trading day prior to the exercise
date.
In the warrant agreement between the Company, Renaissance and
Continental Stock Transfer & Trust Company, we agreed to pay Renaissance a fee
of 5% of the exercise price of each class A warrant exercised until the
expiration of the exercise period of the class A warrants, subject to certain
conditions. We understand that Renaissance has ceased operating and has given up
its NASD license. It is therefore unclear as to whether, under the warrant
agreement, any such warrant solicitation fee will be paid.
TRANSFER AGENT AND WARRANT AGENT
Continental Stock Transfer & Trust Company, New York, New York is the
transfer agent for our common stock and warrant agent for our class A warrants.
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DELAWARE TAKEOVER STATUTE AND CERTAIN CHARTER PROVISIONS
We are subject to section 203 of the Delaware General Corporation Law
which, subject to certain exceptions, prohibits a Delaware corporation from
engaging in any business combination with any interested stockholder for a
period of three years following the date that such stockholder became an
interested stockholder.
Our certificate of incorporation that vacancies on the board of
directors may be filled only with the approval of a majority of the board then
in office.
Our certificate of incorporation and bylaws provide that any action
required or permitted to be taken by our stockholders may be taken only at an
annual or special meeting of the stockholders. These provisions could have the
effect of delaying until the next stockholders meeting stockholder actions which
are favored by the holders of a majority of our outstanding voting securities,
since special meetings of stockholders may be called only by the board or upon
written request by the holders of at least 50% of the voting power of all the
shares entitled to vote or the chairman or the president.
These provisions, which may be amended only by a 75% vote of the
stockholders, could make it more difficult for a third party to change the
board. Also, these provisions could make it more difficult for a third party to
acquire, or could discourage a third party from attempting to acquire an
interest in the company which is less than a majority of the stock of the
company and may make more difficult or discourage a takeover of the company.
CONCURRENT OFFERING
Concurrently, we have registered the offering of 612,704 shares of our
common stock and 412,500 class A warrants under the Securities Act on behalf of
the selling securityholders pursuant to a selling securityholder prospectus
included within the registration statement of which this prospectus forms a
part. The securities of the selling securityholder are outstanding or issuable
upon the exercise of immediately exercisable warrants. We will not receive any
of the proceeds from the sale of the selling securityholder securities, but will
receive the proceeds of the exercise, if any, of the various warrants. It is
anticipated that the securities of the selling securityholder will be offered
and sold from time to time in the over-the-counter market, or otherwise, at
prices and terms then prevailing or at prices related to the then current market
price, or in negotiated transactions.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 145 of the Delaware General Corporation Law allows companies to
indemnify their directors and officers against expenses, judgments, fines and
amounts paid in settlement under the conditions and limitations described in the
law. Our certificate of incorporation authorizes us to indemnify our officers,
directors and other agent to the fullest extent permitted under Delaware law.
Our certificate of incorporation provides that a director is not
personally liable for monetary damages to us or our stockholders for breach of
his or her fiduciary duties as a director. A director will be held liable for a
breach of his or her duty of loyalty to us or our stockholders, his or her
intentional misconduct or willful violation of law, actions or in actions not in
good faith, an unlawful stock purchase or payment of a dividend under Delaware
law, or transactions from which the director derives an improper personal
benefit. This limitation of liability does not affect the availability of
equitable remedies against the director including injunctive relief or
rescission.
We have purchased a directors and officers liability and reimbursement
policy that covers liabilities of our directors and officers arising out of
claims based upon acts or omissions in their capacities as directors and
officers.
We maintain a directors and officers liability policy with National
Union Fire Insurance that contains a combined limit of liability of $5,000,000
per policy year.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that in the
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opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
LEGAL MATTERS
Parker Chapin LLP, New York, New York reviewed and confirmed for us the
validity of the securities being registered in this prospectus. Melvin Weinberg,
Esq., a member of Parker Chapin LLP, may be deemed the beneficial owner of
50,000 shares of our common stock as a result of his being a trustee of each of
the two family trusts formed by our Co-Chief Executive Officers.
EXPERTS
Our financial statements incorporated in this prospectus by reference
to the our Annual Report on Form 10-KSB as of December 31, 1999 and for each of
the years in the two-year period ended December 31, 1999 have been audited by
Richard A. Eisner & Company, LLP, independent auditors, as set forth in their
report dated February 23, 2000 accompanying such financial statements, and are
incorporated herein by reference in reliance upon the report given on the
authority of Richard A Eisner & Company, LLP, as experts in accounting and
auditing.
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[ALTERNATE PROSPECTUS PAGE]
PROSPECTUS
OBJECTSOFT CORPORATION
412,500 class A warrants and
612,704 shares of common stock issuabe upon the exercise of certain warrants
-------------------
The securityholders of our Company listed on page A4-A5 of this
Prospectus hold warrants to acquire our common stock and/or class A warrants.
They are offering for sale up to 412,500 class A warrants and 612,704 shares of
common stock issuable upon exercise of the class A warrants and certain other
warrants. Under this prospectus selling securityholders may pledge, donate or
transfer their shares, and their pledgees, donees, transferees other subsequent
owners may also use this prospectus. The selling securityholders may offer their
shares through public or private transactions, at prevailing market prices, or
at privately negotiated prices.
The selling securityholders, and intermediaries through whom such
securities are sold, may be deemed underwriters within the meaning of the
Securities Act of 1933 with respect to the securities offered, and any profits
realized or commissions received may be deemed underwriting compensation. We
have agreed to indemnify the selling securityholders against certain
liabilities.
The selling securityholders will receive all of the net proceeds from
the resale of the shares. Accordingly, we will not receive any proceeds from the
resale of the shares. We may however receive proceeds from the exercise of the
warrants. We will use such net proceeds for general corporate purposes. We have
agreed to bear the expenses relating to the registration of the securities,
other than brokerage commissions and expenses, if any, which will be paid by the
selling securityholders.
Although we effected a one-for-six consolidation of our common stock on
October 13, 1999, we waived the effect of the consolidation on the warrants of
the selling securityholders. As a result, the one-for-six consolidation had no
effect on the number of shares available for resale under this prospectus.
-------------------------------------------------
NASDAQ SmallCap Market Symbol for:
Common Stock: "OSFT"
Class A Warrants: "OSFTW"
-------------------------------------------------
On May 11, 2000, the closing bid price for the common stock and the class A
warrants were $2.3125 and $0.34375, respectively.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD
CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE CAPTION "RISK FACTORS" ON
PAGE 3 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MAY __, 2000
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[ALTERNATE PROSPECTUS PAGE]
----------------------
TABLE OF CONTENTS
----------------------
Page
Risk Factors 3
Information Regarding
Forward-Looking Statements 10
Where You Can Find More
Information About Us 10
Use of Proceeds 11
Dividend Policy 11
Dilution 11
Description of Securities 12
Concurrent Offering 16
Legal Matters 17
Experts 17
Selling Securityholders A-3
Plan of Distribution A-7
Concurrent Public Offering A-7
A-2
<PAGE>
[ALTERNATE PROSPECTUS PAGE]
SELLING SECURITYHOLDERS
Up to an aggregate of 612,704 shares of common stock and 412,500 class
A warrants may be offered for resale by the selling securityholders.
412,500 class A warrants and 412,500 of the shares of common stock are
issuable, in the form of units, each unit consisting of one share of common
stock and one class A warrant.
The units are issuable upon the exercise of:
o 375,000 warrants issued by Objectsoft in connection with a
bridge loan to investors in a private placement in April
through June, 1996 and
o 37,500 warrants issued to Renaissance Financial Securities
Corporation in its capacity as placement agent of the bridge
loan offering.
Renaissance subsequently assigned it's placement warrant to two of its
executive officers.
Of the other 200,204 shares of common stock to which this Prospectus is
related:
o 182,004 shares are issuable upon the exercise of warrants
issued to the investors in a July 1996 private placement,
o 18,200 shares are issuable upon the exercise of a warrant (and
certain warrants issuable upon the exercise thereof) issued to
Win Capital Corporation in its capacity as placement agent of
the July 1996 offering.
The following table sets forth certain information with respect to each
selling securityholder for whom we are registering securities for resale to the
public. We will not receive any of the proceeds from the sale of such
securities. In the event all of the warrants exercisable to acquire shares of
common stock are exercised in full, we will receive gross proceeds of
$5,025,918. Renaissance acted as the underwriter of our initial public offering
in November 1996. We understand that Renaissance has ceased operating and has
given up its NASD license. Other than as described with respect to Renaissance
and Win Capital, to the our knowledge, there are no material relationships
between any of the selling securityholders and us, nor have any such material
relationships existed within the past three years.
A-3
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[ALTERNATE PROSPECTUS PAGE]
Other than Adam J. Cohen and Todd M. Spehler (former executive officers
of Renaissance), who individually own options for an aggregate of 37,500 shares
of our common stock and 37,500 class A warrants which were originally issued to
Renaissance, no selling securityholder currently owns our securities other than
as indicated below. Assuming all of the selling securityholder securities are
issued and sold, and based on our securities currently owned by the selling
securityholders, no selling securityholder, with the possible exception of Win
Capital, will beneficially own 1% or more of our common stock.
<TABLE>
<CAPTION>
MAXIMUM MAXIMUM
NUMBER OF NUMBER OF CLASS A WARRANTS
BRIDGE OFFERING SHARES TO BE SOLD (1) TO BE SOLD (1)
<S> <C> <C>
Adam J. Cohen 25,000(2) 25,000(2)
Todd M. Spehler 12,500(2) 12,500(2)
Nathan Eisen 7,500 7,500
Richard, Steven and Kenneth Etra 15,000 15,000
William J. Ludwig 15,000 15,000
Joseph W. And Ann G. Schantz 7,500 7,500
Gregg Gallant 7,500 7,500
Mary and Mark Albritton 15,000 15,000
Sydney Katz 7,500 7,500
Louis Falletta 7,500 7,500
Phillip Levien 7,500 7,500
Pamda Retirement Trust 15,000 15,000
Eric W. Larson 15,000 15,000
Herbert M. Reichlin and Diane J. Reichlin (3) 37,500 37,500
Peter S. Morford 7,500 7,500
Robert E. Coomes 7,500 7,500
Gary G. Hammon 7,500 7,500
Sheldon Sisken 7,500 7,500
Abraham David 7,500 7,500
Bay N. Sayegh 7,500 7,500
American Waste Oil Services Corp. 15,000 15,000
Gastroenterology Associates 30,000 30,000
Servesting Investment Co. 7,500 7,500
Martin Hodas 15,000 15,000
Richard Someck 15,000 15,000
Roger Testa 30,000 30,000
Cyril J. Galagan 15,000 15,000
Jack P. Conlon 15,000 15,000
Joseph Schanne and Theresa Schanne 15,000 15,000
Anthony Quarranta 15,000 15,000
-------- --------
TOTAL 412,500 412,500
======= =======
</TABLE>
A-4
<PAGE>
MAXIMUM
NUMBER OF SHARES
ISSUABLE ON EXERCISE
OF JULY 1996
JULY 1996 OFFERING WARRANTS TO BE SOLD
Win Capital Corporation (4) 18,200
Lawrence Dell Aquila 2,381
David Barron 6,667
Louis Chapman and Elaine Chapman 2,000
Michael Damiani and Beverly Damiani 3,333
Seymour Fertig 4,762
Theodore Kaplan & Selma Kaplan 5,334
Edgar Lindblom 6,667
Thomas J. Luisi 6,000
Donald Markowitz 8,000
Gary O'Leary 6,667
PAMCO General Contracting Corp. 3,334
Pension Solutions 6,667
Nicholas Ponzio 4,762
Jeffrey Reizner 3,334
Samuel Richman 2,000
Charles Ruppman 16,667
Rose Salvato 10,667
James R. Smith 14,667
John H. Smith 3,333
Stourbridge Investment Ltd. (5) 33,810
Harold Brandwein (5) 7,619
Suan Investments Inc. 20,000
Faye Zelmanovicz 3,333
---------
TOTAL 200,204
=======
---------
(1) Except as to Adam J. Cohen and Todd M. Spehler, consists of common
stock and class A warrants comprising units issuable upon the exercise
of the bridge warrants.
(2) Consists of common stock and class A warrants comprising units issuable
upon the exercise of a warrant issued to Renaissance as placement
agent. In March 1998, the placement agent's warrant and Renaissance's
underwriter option were assigned to Messrs. Cohen and Spehler,
individually.
(3) A warrant was originally issued to each of HRIS Associates, Inc.,
Program Advisors Corporation, Program Resource Organization, Inc. and
Association of Independent Employers, Inc. to acquire 15,000 shares of
common stock and class A warrants, 7,500 shares of common stock and
class A warrants, 7,500 shares of common stock and class A warrants and
7,500 shares of common stock and class A warrants, respectively. On
December 30, 1997, these warrants were assigned to Herbert M. Reichlin
and Diane J. Reichlin.
(4) Consists of shares issuable upon the exercise of the placement warrant
issued to the placement agent and upon the exercise of warrants
issuable upon such exercise of the placement agent warrant. Does not
include 222,500 shares of common stock.
A-5
<PAGE>
[ALTERNATE PROSPECTUS PAGE]
(5) A warrant was originally issued to Stourbridge Investments, Ltd. to
acquire 41,429 shares of common stock. Stoubridge assigned the right to
purchase 7,619 share of common stock to Harold Brandwein.
A-6
<PAGE>
[ALTERNATE PROSPECTUS PAGE]
PLAN OF DISTRIBUTION
The selling stockholders and their pledgees, donees, transferees and
other subsequent owners, may offer their shares of our common stock at various
times in one or more of the following transactions:
o on any U.S. securities exchange on which our common stock may
be listed at the time of such sale;
o in the over-the-counter market;
o in privately negotiated transactions;
o in connection with short sales; and
o in a combination of any of the above transactions.
The selling stockholders may offer their shares of common stock at
prevailing market prices at the time of sale, at prices related to such
prevailing market prices, at negotiated prices or at fixed prices.
The selling stockholders may also sell the shares under Rule 144
instead of under this prospectus, if Rule 144 is available for those sales.
The transactions in the shares covered by this prospectus may be
effected by one or more of the following methods:
o ordinary brokerage transactions and transactions in which the
broker solicits purchasers;
o purchases by a broker or dealer as principal, and the resale
by that broker or dealer for its account under this
prospectus, including resale to another broker or dealer;
o block trades in which the broker or dealer will attempt to
sell the shares as agent but may position and resell a portion
of the block as principal in order to facilitate the
transaction; or
o negotiated transactions between selling stockholders and
purchasers without a broker or dealer.
The selling stockholders and any broker-dealers or other persons acting
on the behalf of parties that participate in the distribution of the shares may
be deemed to be underwriters. Any commissions or profits they receive on the
resale of the shares may be deemed to be underwriting discounts and commissions
under the Securities Act.
As of the date of this prospectus, we are not aware of any agreement,
arrangement or understanding between any broker or dealer and any of the selling
stockholders with respect to the offer or sale of the shares under this
prospectus.
We have advised the selling stockholders that during the time each is
engaged in distributing shares covered by this prospectus, each must comply with
the requirements of the Securities Act and Rule 10b-5 and Regulation M under the
Exchange Act. Under those rules and regulations, they:
o may not engage in any stabilization activity in connection
with our securities;
o must furnish each broker which offers common stock covered by
this prospectus with the number of copies of this prospectus
which are required by each broker; and
o may not bid for or purchase any of our securities or attempt
to induce any person to purchase any of our securities other
than as permitted under the Exchange Act.
CONCURRENT PUBLIC OFFERING
On the date of this prospectus, a registration statement was declared
effective under the Securities Act with respect to an offering by us of
1,366,050 shares of common stock and 1,366,050 class A warrants.
A-7
<PAGE>
Renaissance acted as underwriter of our initial public offering in
November, 1996 and, in connection therewith, was granted an option to purchase
up to 87,500 units at an exercise price equal to 160% of the initial price of
the units sold in our initial public offering in November, 1996, consisting of
one share of common stock and one class A warrant. The class A warrants included
in the units issuable upon the exercise of the underwriter's option will not be
redeemable by us and will be exercisable at a price an exercise price of $8.00.
The underwriter's option was assigned to two executive officers of the
underwriter.
A-8
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses payable in
connection with the issuance and distribution of the securities being registered
under this Registration Statement which will be paid by the company. The Selling
Stockholders will not incur any of the expenses set forth below. All amounts
shown are estimates.
<TABLE>
<CAPTION>
<S> <C>
Filing fee for registration statement........................$ 0.00
Legal fees and expenses......................................$ 15,000.00
Miscellaneous expenses.......................................$ 500.00
------------
TOTAL...................................................$ 15,500.00
===========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides, in
general, that a corporation incorporated under the laws of the State of
Delaware, such as our company, may 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 (other than a derivative action by or in the right of the
corporation) by reason of the fact that such person 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
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe such person's conduct was
unlawful. In the case of a derivative action, a Delaware corporation may
indemnify any such person against expenses (including attorneys' fees) actually
and reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery of the State of Delaware or any other court in which such
action was brought determines such person is fairly and reasonably entitled to
indemnity for such expenses.
Our Certificate of Incorporation provides that directors shall not be
personally liable for monetary damages to us or our stockholders for breach of
fiduciary duty as a director, except for liability resulting from a breach of
the director's duty of loyalty to our stockholders, intentional misconduct or
wilful violation of law, actions or inactions not in good faith, an unlawful
stock purchase or payment of a dividend under Delaware law, or transactions from
which the director derives improper personal benefit. Such limitation of
liability does not affect the availability of equitable remedies such as
injunctive relief or rescission. Our Certificate of Incorporation also
authorizes us to indemnify our officers, directors and other agents, by bylaws,
agreements or otherwise, to the fullest extent permitted under Delaware law. We
have entered into an Indemnification Agreement (the "Indemnification Agreement")
with each of our directors and officers which may, in some cases, be broader
than the specific indemnification provisions contained in our Certificate of
Incorporation or as otherwise permitted under Delaware law. Each Indemnification
Agreement may require us, among other things, to indemnify such officers and
directors against certain liabilities that may arise by reason of their status
or service as a director or officer, against liabilities arising from willful
misconduct of a culpable nature, and to obtain directors' and officers'
liability insurance if available on reasonable terms.
We maintain a directors and officers liability policy with Lloyds and
Agriculture Insurance Companies that contains a combined limit of liability of
$5,000,000 per policy year.
II-1
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the small
business issuer pursuant to the foregoing provisions, or otherwise, the small
business issuer 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.
ITEM 16. EXHIBITS.
The following exhibits are filed as part of this registration
statement:
EXHIBIT NUMBER DESCRIPTION
10.1 Amendment to Warrant Agreement, dated May 1, 2000
23.1 Consent of Richard A. Eisner & Company, LLP.
------------------
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. 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 and 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;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer 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 small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
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 small business issuer 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 the issue.
II-2
<PAGE>
The undersigned small business issuer 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 section
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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Hackensack, State of New Jersey on May 11, 2000.
OBJECTSOFT CORPORATION
By: /s/ David E. Y. Sarna
-------------------------------------
David E.Y. Sarna
Chairman of the Board, Co-Chief
Executive Officer, Secretary and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C>
/s/ David E.Y. Sarna Chairman of the Board, Co-Chief May 11, 2000
- ------------------------------------ Executive Officer, Secretary and
David E.Y. Sarna Director
(Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer)
/s/ George J. Febish President, Co-Chief Executive May 11, 2000
- ------------------------------------ Officer, Treasurer and Director
George J. Febish (Principal Executive Officer)
/s/ Michael A. Burak Director May 11, 2000
- ------------------------------------
Michael A. Burak
/s/ Stanley A. Hirschman Director May 11, 2000
- ------------------------------------
Stanley A. Hirschman
/s/ Daniel E. Ryan Director May 11, 2000
- ------------------------------------
Daniel E. Ryan
</TABLE>
II-4
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
EXHIBITS TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------
OBJECTSOFT CORPORATION
(EXACT NAME OF ISSUER AS SPECIFIED
IN ITS CHARTER)
II-5
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
10.1 Amendment to Warrant Agreement, dated May 1, 2000.
23.1 Consent of Richard A. Eisner & Company, LLP.
------------------
PRIVILEGED AND CONFIDENTIAL
- ---------------------------
OBJECTSOFT CORPORATION
CONTINENTAL PLAZA III
433 HACKENSACK AVENUE
HACKENSACK, NEW JERSEY 07601
May 1, 2000
Continental Stock Transfer & Trust Company
2 Broadway
New York, New York 10004
Attention: William Seegraber
RE: WARRANT AGREEMENT DATED AS OF NOVEMBER 11, 1996
-----------------------------------------------
Dear Mr. Seegraber:
As of the date hereof, each of the Redeemable Class A Common Stock
Purchase Warrants (the "Warrants") of ObjectSoft Corporation, a Delaware
corporation (the "Company") represents the right of the holder thereof to
purchase, at the Exercise Price of $6.50, one-sixth of one share of the
Company's Common Stock. Please be advised that the Company's board of directors
has resolved that it is in the best interests of the Company to increase to one
share the amount of Common Stock which a holder may acquire upon exercise of
each Warrant.
Therefore, the Company desires to amend the warrant agreement dated as
of November 11, 1996, between the Company, Continental Stock Transfer & Trust
Company and Renaissance Financial Securities Corporation (the "Warrant
Agreement") by increasing to one full share of Common Stock the amount of Common
Stock which the registered holder of each Warrant may purchase at the Exercise
Price upon exercise of such Warrant; provided, however, that the increased
amount of shares will not be issuable until the Securities and Exchange
Commission declares effective a registration statement with respect to the
additional shares issuable as a result of this amendment. Except with respect to
this increase, the provisions of the Warrant Agreement shall remain unaltered
and in full force and effect and the Exercise Price and the number of shares of
Common Stock issuable upon exercise of each Warrant (as amended hereby) shall be
subject to adjustment as provided in the Warrant Agreement.
<PAGE>
If the foregoing amendment to the Warrant Agreement is acceptable to
you, please so indicate by having your authorized representative sign and return
to us the enclosed copy of this letter agreement.
Very truly yours,
OBJECTSOFT CORPORATION
By: /s/ David E.Y. Sarna
-------------------------
David E.Y. Sarna
Chairman
AGREED AND ACCEPTED THIS 1st
DAY OF MAY, 2000:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By: /s/ Steven Nelson
------------------------
Name: Steven Nelson
Title: Chairman
-2-
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Form S-3
Registration Statement of our report dated February 23, 2000, with respect to
our audit of the financial statements included in ObjectSoft Corporation's
Annual Report (Form 10-KSB) for the year ended December 31, 1999. We also
consent to the reference to our firm under the caption "Experts".
/s/ Richard A. Eisner & Company, LLP
Richard A. Eisner & Company, LLP
Florham Park, New Jersey
May 11, 2000
