As filed with the Securities and Exchange Commission on April 13, 1999
Registration No. 333-71989
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-3/A-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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IMAGINON, INC.
(Exact name of Registrant specified in charter)
Delaware 84-1217733
(State or Jurisdiction of (IRS Employer
Incorporation or organization) Identification No.)
1313 LAUREL STREET, SUITE 1
SAN CARLOS, CALIFORNIA 94070
PHONE 650-596-9300
(Address, including zip code, and telephone number,
including area code, Registrant's principal
executive offices)
DAVID M. SCHWARTZ
1313 LAUREL STREET, SUITE 1
SAN CARLOS, CALIFORNIA 94070
PHONE 650-596-9300
(Name, address and telephone number, including area code, of agent for service)
Copies of communication, including all
communication sent to the agent for
service, should be sent to:
GERALD RASKIN, ESQ.
SETH WEISS, ESQ.
FRIEDLOB SANDERSON RASKIN PAULSON & TOURTILLOTT, LLC
1400 GLENARM PLACE, SUITE 300
DENVER, COLORADO 80202
(303) 571-1400
--------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement as determined by
market conditions.
<PAGE>
If the only securities being registered on this Form are to be offered pursuant
to dividend or interest reinvestment plans, please check the following box: |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: |X|
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check this following box and
list the Securities Act registration number of the earlier effective
registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
| CALCULATION OF REGISTRATION FEE |
|---------------------------------------------------------------------------------------------------------------------|
| Title of each class of | Amount to | Proposed | Proposed | Amount of |
| securities to be registered | be | Maximum | Maximum | Registration |
| | Registered | Offering Price | Aggregate | Fee |
| | | Per Share | Offering | |
| | | | Price | |
|---------------------------------------------------------------------------------------------------------------------|
<S> <C> <C> <C> <C>
|Common Stock issuable upon | 71,568 | $.05535 | $3,961 | $1 |
|exercise of warrants (Group E | | | | |
|warrants) | | | | |
|--------------------------------|---------------------|-----------------------|--------------------|-----------------|
|Common Stock issuable upon | 692,947 | $.46125 | $319,621 | $94 |
|exercise of warrants (Group F | | | | |
|warrants) | | | | |
|--------------------------------|---------------------|-----------------------|--------------------|-----------------|
|Common Stock issuable upon | 135,500 | $.1845 | $25,000 | $7 |
|exercise of warrants (Group G | | | | |
|warrants) | | | | |
|--------------------------------|---------------------|-----------------------|--------------------|-----------------|
|Common Stock issuable upon | 15,000 | $2.00 | $30,000 | $8 |
|exercise of warrants (Group I | | | | |
|warrants) | | | | |
|--------------------------------|---------------------|-----------------------|--------------------|-----------------|
|Common Stock issuable upon | 21,000 | $1.50 | $52,500 | $15 |
|exercise of warrants (Group A | | | | |
|warrants) | | | | |
|--------------------------------|---------------------|-----------------------|--------------------|-----------------|
|Common Stock issuable upon | 19,380 | $1.50 | $29,070 | $80 |
|exercise of warrants (Group B | | | | |
|warrants) | | | | |
|--------------------------------|---------------------|-----------------------|--------------------|-----------------|
|Common Stock issuable upon | 120,000 | $1.80 | $216,000 | $60 |
|exercise of warrants (Group C | | | | |
|warrants) | | | | |
|--------------------------------|---------------------|-----------------------|--------------------|-----------------|
|Common Stock issuable upon | 58,331 | $4.8125 | $280,718 | $78 |
|exercise of warrants (Group M | | | | |
|warrants) | | | | |
|--------------------------------|---------------------|-----------------------|--------------------|-----------------|
|Common Stock issuable upon | 221,400 | $1.00 | $221,400 | $62 |
|exercise of warrants (Group H, | | | | |
|J and K warrants) | | | | |
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
| CALCULATION OF REGISTRATION FEE |
|---------------------------------------------------------------------------------------------------------------------|
| Title of each class of | Amount to | Proposed | Proposed | Amount of |
| securities to be registered | be | Maximum | Maximum | Registration |
| | Registered | Offering Price | Aggregate | Fee |
| | | Per Share | Offering | |
| | | | Price | |
|---------------------------------------------------------------------------------------------------------------------|
<S> <C> <C> <C> <C>
|Common Stock | 888,295 | $5.75 (2) | $5,107,696 | $1,420 |
|--------------------------------|---------------------|-----------------------|--------------------|-----------------|
|Common Stock issuable upon | 1,870,000 | $1.50 | $2,805,000 | $780 |
|exercise of Publicly-held | | | | |
|Warrants (Group D warrants) | | | | |
|--------------------------------|---------------------|-----------------------|--------------------|-----------------|
|Common Stock issuable upon | | | | |
|conversion of Series D | 600,000 | $2.50 (3) | $1,500,000 | $417 |
|Convertible Preferred Stock | | | | |
|--------------------------------|---------------------|-----------------------|--------------------|-----------------|
|Common Stock issuable upon | | | | |
|exercise of Series D warrants | 150,000 | $6.424 (4) | $963,900 | $284 |
|(Group N warrants) | | | | |
|--------------------------------|---------------------|-----------------------|--------------------|-----------------|
|Common Stock issuable upon | | | | |
|conversion of Series E | 600,000 | $2.50 (3) | $1,500,000 | $417 |
|Convertible Preferred Stock | | | | |
|--------------------------------|---------------------|-----------------------|--------------------|-----------------|
|Common Stock issuable upon | | | | |
|exercise of Series E warrants | 150,000 | $6.424 (5) | $963,900 | $284 |
|(Group O warrants) | | | | |
|--------------------------------|---------------------|-----------------------|--------------------|-----------------|
|TOTAL $3,935 (6)|
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) This registration statement is being used to register 1,655,126 shares of
common stock underlying warrants owned by selling securityholders, 1,200,000
shares of common stock underlying convertible preferred stock owned by the
selling securityholders, 888,295 shares of common stock owned by selling
shareholders, 1,870,000 shares of common stock underlying publicly-held
warrants, plus an indeterminate number of shares of common stock as may be
issued by reason of the anti-dilution provisions of the warrants.
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<PAGE>
(2) Pursuant to Rule 457(c), the average of the high and low price of ImaginOn,
Inc. common stock as quoted on the Nasdaq SmallCap Market on Thursday, February
4, 1999.
(3) The per share proposed maximum offering price assumed to be $2.50 for
purposes of filing this registration statement.
(4) The per share proposed maximum offering price was calculated as follows:
$5.84, the closing bid price of ImaginOn's common stock on January 15, 1999
(closing date for the Series D Convertible Preferred Stock Private Placement)
was multiplied by 1.10.
(5) The per share proposed maximum offering price was calculated as follows:
$5.84, the closing bid price of ImaginOn's common stock on January 15, 1999
(closing date for the Series E Convertible Preferred Stock Private Placement)
was multiplied by 1.10.
(6) Includes $6,105 previously paid upon filing of the original and first
amended registration statement and $301 paid concurrently with the filing of
this amendment to cover the registration of additional shares of common stock.
These amounts do not total $3,935, the amount shown in the Calculation of
Registration Fee Table, because some shares included in the original
registration statement have been removed.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
Preliminary Prospectus, Subject to Completion dated April 13, 1999
PROSPECTUS
ImaginOn, Inc.
ImaginOn is offering:
* 1,870,000 shares of its common stock to holders of its
outstanding publicly-held warrants
The selling securityholders listed on pages 13-16 are offering:
* 1,655,126 shares of common stock underlying warrants
* 1,200,000 shares of common stock underlying convertible
preferred stock
* 888,295 shares of common stock
The publicly-held warrants trade on the Nasdaq SmallCap Market under
the symbol IMONW.
ImaginOn common stock trades on the Nasdaq SmallCap Market under the
symbol IMON.
- --------------------------------------------------------------------------------
| An investment in the stock of ImaginOn involves a high degree of risk. The |
| shares should only be purchased by persons who can afford a complete loss. |
| See "Risk Factors" beginning on page 3 |
- --------------------------------------------------------------------------------
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. A
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
The date of this prospectus is April 13, 1999
<PAGE>
TABLE OF CONTENTS
Risk Factors.................................................................-3-
Forward-Looking Statements...................................................-7-
Overview of ImaginOn's Business..............................................-8-
Where You can Find More Information..........................................-9-
Use of Proceeds.............................................................-11-
Description of the Offering.................................................-11-
Selling Securityholders and Holders of ImaginOn's Publicly-Held Warrants....-11-
Plan of Distribution........................................................-17-
Special Considerations to the Holders
of the Publicly-held Warrants......................................-18-
Exercise of Warrants........................................................-19-
Conversion of Convertible Preferred Stock...................................-19-
Indemnification Provided in Connection with the Offering
by the Selling Securityholders.............................................-19-
Legal Matters...............................................................-20-
Experts ...................................................................-20-
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<PAGE>
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS, AS
WELL AS THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, BEFORE MAKING AN
INVESTMENT IN THE COMMON STOCK. ANY ONE OR A COMBINATION OF THESE RISK FACTORS
MAY HAVE A MATERIAL ADVERSE EFFECT ON IMAGINON.
AS A DEVELOPMENT STAGE COMPANY IMAGINON.COM HAS NO RELEVANT HISTORY UPON WHICH
IT CAN EVALUATE ITS PERFORMANCE OR PROSPECTS
ImaginOn.com is a development stage company. As such, ImaginOn.com has
no relevant operating history upon which it can evaluate its performance and
prospects. Although ImaginOn.com's founders have experience in developing and
commercializing new products based on innovative technologies, unanticipated
expenses, problems or technical difficulties could occur which would result in
material delays in product commercialization. ImaginOn.com's efforts may not
result in successful product commercialization.
ImaginOn Will Need Additional Capital To Fund Its Operation; However, It is
Uncertain Whether Continued Financing Will Be Available.
In the future, ImaginOn will require additional financial resources to
fund its new product development and growth. Although ImaginOn is actively
exploring options for funding, it has received no commitment from any person or
source for that financing, and adequate financing may not be available on
reasonable terms. The failure to acquire additional funding when required could
impede new product development and growth and ultimately the performance and
prospects of ImaginOn.
IMAGINON'S EARNINGS GROWTH IS DEPENDENT UPON ACCEPTANCE OF IMAGINON.COM'S
PRODUCTS.
ImaginOn's earnings growth will now depend primarily upon market
acceptance of ImaginOn's software products. ImaginOn.com's products may not be
able to be successfully marketed or achieve customer acceptance.
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<PAGE>
* lower operating revenues
* lower net revenues
* lower cash flows
* less liquidity
Production Delays Could Inhibit ImaginOn.com's Success.
The process of developing software products such as those offered by
ImaginOn is extremely complex. A significant delay in the introduction of one or
more new products or enhancements could have a material adverse effect on the
ultimate success of such products and, additionally, ImaginOn.com may
experience:
* lower operating revenues
* lower net revenues
* lower cash flows
* less liquidity
ImaginOn.com Operates in a Developing Market with Ever-Increasing Participants.
The market for Internet products and computer software is rapidly
evolving and is characterized by an increasing number of market entrants who
have introduced or developed products and services. Although ImaginOn.com
believes that the diverse segments of the Internet market will provide
opportunities for more than one supplier of products and services similar to
those it possesses, it is possible that a single supplier may dominate one or
more market segments. In addition, because the market for Internet products and
computer software is rapidly changing, there may be insufficient market
acceptance of ImaginOn.com's products for it to succeed.
IMAGINON FACES SIGNIFICANT COMPETITION FROM OTHER PROVIDERS OF INTERNET PRODUCTS
AND COMPUTER SOFTWARE.
The markets that ImaginOn.com intends to enter for its Internet
products and computer software are characterized by intense competition and an
increasing number of new market entrants who have developed or are developing
potentially competitive products. Further, the cost barriers to these markets
are relatively low, which means ImaginOn.com's competitors range from small
companies with limited resources to large, more established companies. Some
competitors, regardless of size, have substantially greater financial,
technical, marketing, distribution, personnel and other resources. For example,
current and future competitors with greater financial resources than
ImaginOn.com may be able to carry larger inventories, undertake more extensive
marketing campaigns, adopt more aggressive pricing policies and make higher
offers or guarantees to software developers and co-development partners than
ImaginOn.com. It is possible that ImaginOn.com may not have the resources to
withstand these and other competitive forces.
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<PAGE>
IMAGINON.COM MAY BECOME SUBJECT TO GOVERNMENT REGULATION.
ImaginOn.com is not currently subject to direct regulation by any
government agency in the United States, other than regulations applicable to
conduct businesses generally, and there are currently few laws or regulations
directly applicable to access to or commerce on the Internet. Due to the
increasing popularity and use of the Internet, it is possible that laws and
regulations may be adopted with respect to the Internet, covering issues such as
user privacy, pricing and characteristics and quality of products and services.
These laws or regulations, if adopted, could also limit the growth of the
Internet, which could in turn decrease the demand for ImaginOn.com's proposed
products and services and increase ImaginOn.com's cost of doing business.
Inasmuch as the applicability to the Internet of the existing laws governing
issues such as property ownership, libel and personal privacy is uncertain, any
new legislation or regulation or the application of existing laws and
regulations to the Internet could have an adverse effect on ImaginOn.com's
business and prospects.
IMAGINON'S SUCCESS IS HEAVILY DEPENDENT ON ITS CURRENT MANAGEMENT.
The success of ImaginOn will be dependent upon the personal efforts of
its President and Chief Executive Officer, David M. Schwartz, and its Vice
President, Engineering, Leonard W. Kain. The loss of the services of either
individual could have a material adverse effect on ImaginOn's business and
prospects. ImaginOn has not obtained "key-person" life insurance on Messrs.
Schwartz or Kain.
IMAGINON.COM'S SUCCESS IS LINKED TO ITS ABILITY TO HIRE AND MAINTAIN PERSONNEL.
The success of ImaginOn.com is linked to its ability to hire and retain
additional qualified management, marketing, technical, financial and other
personnel. Competition for qualified personnel is intense and ImaginOn.com may
not be able to hire or retain qualified personnel.
CONTRACTS WITH OTHER COMPANIES ARE IMPORTANT TO THE PROMOTION OF IMAGINON.COM'S
PRODUCTS AND REPUTATION.
ImaginOn.com has entered into agreements and informal relationships
with other software and computer companies under which the companies will use
ImaginOn.com's products. ImaginOn.com believes these arrangements are important
to the promotion of ImaginOn.com's products and the public recognition of the
"ImaginOn" name. These arrangements typically are not exclusive, and may be
terminable upon little or no notice. Termination or alteration of these
agreements could have any of the following effects on ImaginOn.com:
* limit or eliminate the market for ImaginOn's products
* limit or eliminate public recognition of the "ImaginOn" name
* reduce revenues
* lower cash flows
* impair liquidity
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<PAGE>
IMAGINON.COM REGARDS ITS TECHNOLOGY AS PROPRIETARY WHICH MAY NOT BE SUFFICIENT
TO PROTECT ITS RIGHTS
ImaginOn's success and ability to compete is dependent in part on
ImaginOn.com's proprietary technology. ImaginOn.com regards its technology as
proprietary and relies primarily on a combination of U.S. patents, trademarks,
copyrights, trade secret laws, third-party non- disclosure agreements and other
methods to protect its proprietary rights. The steps taken by ImaginOn.com to
protect its proprietary rights may not be adequate and third parties may
infringe or misappropriate ImaginOn.com's copyrights, trademarks, and similar
proprietary rights. Additionally, effective trademark, patent, copyright and
trade secret protection may not be available in every country in which
ImaginOn.com's products and media properties will be distributed or made
available through the Internet.
IMAGINON OR IMAGINON.COM COULD BE HELD LIABLE FOR SOME OF THE SERVICES THEY
PROVIDE.
Because materials may be downloaded by the online or Internet services
operated or facilitated by ImaginOn.com and may be subsequently distributed to
others, there is a potential that claims will be made against ImaginOn and/or
ImaginOn.com for defamation, negligence, copyright or trademark infringement,
personal injury or other theories based on the nature and content of these
materials. These types of claims have been brought, and sometimes successfully
pressed, against online service providers in the past. Although ImaginOn and
ImaginOn.com carry general liability insurance, their insurance may not cover
potential claims of this type or may not be adequate to indemnify them for all
liability that may be imposed. Any impositions of liability or legal defense
expenses are not covered by insurance or in excess of insurance coverage could
effect ImaginOn and/or ImaginOn.com's revenues, cash-flow and/or liquidity.
IMAGINON'S PUBLICLY-HELD WARRANTS CAN ONLY BE EXERCISED WHEN A CURRENT
PROSPECTUS IS IN EFFECT AND THE UNDERLYING COMMON STOCK IS QUALIFIED FOR SALE
UNDER STATE SECURITIES LAWS.
By law, the publicly-held warrants can be exercised only at a time when
a current prospectus is in effect and only if the underlying common stock is
qualified for sale under applicable securities laws of the states in which the
holders of the publicly-held warrants reside. ImaginOn intends to use its best
efforts to keep this prospectus current during the publicly-held warrant
exercise period, although there is no guarantee that it will be able to do so.
SUBSTANTIAL DILUTION OCCURRED TO IMAGINON STOCKHOLDERS UPON COMPLETION OF THE
MERGER WITH IMAGINON.COM.
As a result of the merger with ImaginOn.com, approximately 21 million
shares of ImaginOn were authorized to be issued to ImaginOn.com shareholders. At
this time, ImaginOn had approximately 15.8 million shares outstanding.
Consequently, ImaginOn's pre-merger stockholders experienced a 60% dilution as a
result of the merger.
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<PAGE>
INTEGRATION OF IMAGINON OPERATIONS MAY PROVE TO BE DIFFICULT.
The merger of ImaginOn, Inc. with ImaginOn.com significantly altered
ImaginOn's business. There can be no assurance that ImaginOn can realize the
expected benefits of the merger. However, as a result of the merger, the
companies expect to derive the following benefits:
* attract additional investors
* access to greater financial resources
* improved potential for long term appreciation
* reduce exposure to regional economic risk
* attract additional financial analyst and industry
coverage
FORWARD-LOOKING STATEMENTS
Statements contained in this prospectus and in the documents
incorporated by reference to this prospectus, may constitute
forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. These forward-
looking statements can be identified by the use of predictive,
future-tense or forward- looking terminology, such as "believes,"
"anticipates," "expects," "estimates," "may," "will" or similar terms.
Forward-looking statements also include projections of financial
performance, statements regarding management's plans and objectives and
statements concerning any assumption relating to the foregoing.
Important factors regarding ImaginOn's business, operations and
competitive environment which may cause actual results to vary
materially from these forward-looking statements are discussed above
under the caption Risk Factors.
OVERVIEW OF IMAGINON'S BUSINESS
In 1997, ImaginOn, operating under its then name California Pro Sports,
Inc., had limited operating revenue from its in-line skate and snowboard
businesses. In September 1997, ImaginOn sold substantially all of the assets of
its ice and street/roller hockey business. Also in 1997, due to continuing
operating losses, management decided to restructure ImaginOn and reduce its
debt. During 1998, ImaginOn had no operating revenues, but did have nominal
income from sub-licensing agreements.
On October 2, 1997, ImaginOn signed a letter of intent to merge a
wholly-owned subsidiary corporation with ImaginOn.com, a privately-held
California software company. When the letter of intent was signed ImaginOn.com
was known as ImaginOn, Inc. and has since changed its name to ImaginOn.com.
ImaginOn and ImaginOn.com entered into an agreement and plan of merger with
ImaginOn.com that was effective on January 30, 1998.
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<PAGE>
The stockholders of both companies approved the merger in December1998.
The stockholders of ImaginOn also approved changing the name of ImaginOn from
California Pro Sports, Inc. to ImaginOn, Inc. The name change was filed with the
state of Delaware on December 18, 1998.
On January 20, 1999, the merger was completed and the shareholders of
ImaginOn.com became stockholders of ImaginOn, Inc. As a result of the merger,
ImaginOn conducts all of its active business through ImaginOn.com.
ImaginOn.com engineers, produces and sells:
o business and consumer software products for the infotainment and
edutainment compact disc and digital video disc markets; and
o Internet software.
ImaginOn.com's newly patented core proprietary technology is called
transformational database processing and playback. Transformational database
processing and playback transforms data from a spatial domain, where objects are
arranged in space geometrically, to a temporal domain where objects are arranged
in time sequentially. This provides an efficient way to automatically gather a
wide range of data, of different types, from far flung chaotic sources, and then
process and present it in real time.
From a user's perspective, ImaginOn.com's technology means access and
viewing from vast networks like the world wide web will become easier and
faster. ImaginOn.com's technology is used in a set of 12 software tools
developed and used by ImaginOn.com. New products created with ImaginOn.com tools
are characterized by seamless real-time access to video, audio, graphics, text,
hypertext mark-up language and three dimensional objects from multiple remote or
local databases. ImaginOn.com is packaging its tool set as an internet data
management system.
Taking advantage of its own tool set to build innovative and unique
Internet and software products quickly and at low cost, ImaginOn.com is
producing a series of interactive travelogues for distribution on compact disc
and digital video disc. ImaginOn.com's first general-purpose software
application, WebZinger(TM), is an automated productivity tool that searches the
World Wide Web, then formats its results into a graphic PowerPoint(TM)-like
slideshow.
ImaginOn's principal executive offices are located at 1313 Laurel
Street, Suite 1, San Carlos, California 94070. Its telephone number is (650)
596-9300. Its World Wide Web homepage can be found at www.imaginon.com.
-8-
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Federal securities law requires ImaginOn to file information with the
Securities and Exchange Commission concerning its business and operations.
Accordingly, ImaginOn files annual, quarterly, and special reports, proxy
statements and other information with the Commission. You can inspect and copy
of this information at the Public Reference Facility maintained by the
Commission at Judiciary Plaza, 450 5th Street, N.W., Room 1024, Washington, D.C.
20549. You can also do so at the following regional offices of the Commission:
* New York Regional Office, 7 World Trade Center, Suite
1300, New York, New York 10048
* Chicago Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661.
You can receive additional information about the operation of the
Commission's Public Reference Facilities by calling the Commission at 1-(800)
SEC-0330. The Commission also maintains a website at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding companies that, like ImaginOn, file information electronically with
the Commission.
The Commission allows ImaginOn to incorporate by reference information
that has been filed with them, which means that ImaginOn can disclose important
information to you by referring you to the other information we have filed with
the Commission. The information that we incorporate by reference is considered
to be part of this prospectus, and related information that we file with the
Commission will automatically update and supersede information we have included
in this prospectus. We also incorporate by reference any future filings we make
with the Commission under Sections 13(a), 13(c) or 15(d) of the Securities
Exchange Act of 1934, until the selling securityholders sell all of their shares
or until the registration rights of the selling securityholders expire. This
prospectus is part of a registration statement that we filed with the Commission
(Registration No. 333-71989).
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<PAGE>
Filing Period
Annual Report on Form 10-KSB..................... Year ended December 31, 1998,
Form 10-KSB
filed on April 1, 1999
Current reports on Form 8-K.......................Dated:
April 5, 1999
Description of ImaginOn's common stock............See ImaginOn's Registration
Statement on Form 8-A, File
No. 0-25114.
You can request a free copy of the above filings or any filings
subsequently incorporated by reference into this prospectus by writing or
calling us at the following address:
Investor Relations
ImaginOn, Inc.
1313 Laurel Street, Suite #1
San Carlos, California 94070
Telephone: (650) 596-9300
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement or amendment to this prospectus.
We have not authorized anyone else to provide you with different information or
additional information. Selling securityholders will not make an offer of
ImaginOn's common stock in any state where the offer is not permitted. You
should not assume that the information in this prospectus, or any supplement or
amendment to this prospectus, is accurate at any date other than the date
indicated on the cover page of these documents.
USE OF PROCEEDS
If all the warrants are exercised at their current exercise prices,
ImaginOn will receive net proceeds of approximately $6 million. The proceeds of
any warrant exercises will be used for working capital purposes.
-10-
<PAGE>
DESCRIPTION OF THE OFFERING
An aggregate of 5,613,421 shares of ImaginOn's common stock are
included in this prospectus. The following is a breakdown of these shares:
* 1,870,000 shares to be issued upon exercise of
publicly-held warrants
* 1,655,126 shares to be issued upon exercise of warrants
* 1,200,000 shares to be issued upon conversion of
convertible preferred stock
* 888,295 shares to be resold by the selling
securityholders
SELLING SECURITYHOLDERS AND HOLDERS OF IMAGINON'S PUBLICLY-HELD WARRANTS
The following tables show the total number of shares to be registered
by this registration statement. Table I lists each warrant issuance to the
selling securityholders and holders of ImaginOn's publicly-held warrants. Table
II lists the securities to be registered and offered for sale by the selling
securityholders and holders of ImaginOn's publicly-held warrants. Table II also
names each of the selling shareholders individually. Except as indicated, the
selling securityholders and holders of ImaginOn's publicly-held warrants are
offering all of the shares of common stock and warrants owned by them or
received by them upon the exercise of the warrants. The term "selling
securityholders" include donees, pledgees, transferees and other successors in
interest selling shares received from the selling shareholder after the date of
this prospectus.
Because the selling securityholders and holders of ImaginOn's
publicly-held warrants may offer all or part of the shares of common stock
received upon exercise of the warrants included in this prospectus, and because
their offering is not being underwritten on a firm commitment basis, no estimate
can be given as to the amount of warrants that will be held upon termination of
this offering. The shares of common stock received upon exercise of the warrants
offered by this prospectus may be offered from time to time by the selling
securityholders and holders of ImaginOn's publicly-held warrants.
-11-
<PAGE>
TABLE I
WARRANT ISSUANCES TO THE SELLING SECURITYHOLDERS
<TABLE>
<CAPTION>
|===============================================================================================================|
| | | | | | Common Stock |
| | Warrants | Grant | Exercise | Expiration | Issuable Upon |
| Title | Outstanding | Date | Price | Date | Exercise |
|===============================================================================================================|
|<S> | <C> | <C> | <C> | <C> | <C> |
|Group A warrants | 21,000 | 9/8/1994 | $1.50 | 9/7/1999 | 21,000 |
|---------------------|---------------------|-------------|----------------|-----------------|------------------|
|Group B warrants | 19,380 | 1/17/1995 | $1.50 | 1/17/2000 | 19,380 |
|---------------------|---------------------|-------------|----------------|-----------------|------------------|
|Group C warrants | 120,000 | 1/17/1995 | $1.80 | 1/17/2000 | 120,000 |
|---------------------|---------------------|-------------|----------------|-----------------|------------------|
|Group D warrants | 1,870,000 | 1995 IPO | $1.50 | 6/30/1999 | 1,870,000 |
|---------------------|---------------------|-------------|----------------|-----------------|------------------|
|Group E warrants | 71,568 | 5/1/1997- | $.05535 | 9/22/2000 | 71,568 |
| | | 10/14/1997 | | | |
|---------------------|---------------------|-------------|----------------|-----------------|------------------|
|Group F warrants | 692,947 | 12/27/1997- | $.46125 | 1/20/2000 | 692,947 |
| | | 1/20/1999 | | | |
|---------------------|---------------------|-------------|----------------|-----------------|------------------|
|Group G warrants | 135,500 | 11/27/1997 | $.1845 | 11/25/2000 | 135,500 |
|---------------------|---------------------|-------------|----------------|-----------------|------------------|
|Group H warrants | 20,000 | 4/15/1997 | $1.00 | 4/15/2000 | 20,000 |
|---------------------|---------------------|-------------|----------------|-----------------|------------------|
|Group I warrants | 15,000 | 9/7/1997 | $2.00 | 9/7/2000 | 15,000 |
|---------------------|---------------------|-------------|----------------|-----------------|------------------|
|Group J warrants | 51,400 | 4/15/1994 | $1.00 | 4/14/2002 | 51,400 |
|---------------------|---------------------|-------------|----------------|-----------------|------------------|
|Group K warrants | 150,000 | 8/2/1995 | $1.00 | 8/1/2003 | 150,000 |
|---------------------|---------------------|-------------|----------------|-----------------|------------------|
|Group M warrants | 58,331 | 7/25/1995 | $4.8125 | 7/25/2000 | 58,331 |
|---------------------------------------------------------------------------------------------------------------|
|Group N warrants | 150,000 | 1/15/1999 | $6.424 | 1/15/2004 | 150,000 |
|---------------------------------------------------------------------------------------------------------------|
|Group O warrants | 150,000 | 1/15/1999 | $6.424 | 1/15/2004 | 150,000 |
|===============================================================================================================|
</TABLE>
-12-
<PAGE>
Table II: Shares and Shares Underlying
Warrants and Convertible Preferred Stock to Be Registered and
Offered by the Selling Securityholders and
Holders of ImaginOn's Publicly-Held Warrants
<TABLE>
<CAPTION>
========================================================================================================
| | Amount of common | Common Stock to | Amount of common |
| | stock owned before | be Offered by the | stock Owned after |
| Name | this Offering | Selling | the Offering is |
| | | Securityholder | Complete |
|======================================================================================================|
|GROUP A WARRANTS | |
|-------------------------------|-----------------------|------------------------|---------------------|
<S> <C> <C> <C>
|Tom Curtis | 0 | 6,300 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Charles F. Kirby | 0 3,640 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Mike Kirby | 0 4,060 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|David F. Lutz | 0 7,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|GROUP B WARRANTS | |
|-------------------------------|-----------------------|------------------------|---------------------|
|Fred Birner | 0 | 10,830 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Dennis Genty | 0 | 7,410 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Rike Wootten | 0 | 1,140 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|GROUP C WARRANTS | |
|-------------------------------|-----------------------|------------------------|---------------------|
|Steven M. Bathgate | 0 | 11,400 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Fred Birner | 0 | 10,830 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Cohig & Associates | 0 | 46,740 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|David H. Drennen | 0 | 2,280 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Dennis Genty | 0 | 7,410 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Steven R. Hinkle | 0 | 9,120 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|James Hosch | 0 | 5,700 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Ed Larkin | 0 | 4,560 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Eugene C. McColley | 0 | 14,820 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|David C. Olson | 0 | 6,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Rike Wootten | 0 | 1,140 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
|GROUP D WARRANTS |
|-------------------------------|-----------------------|------------------------|---------------------|
|Warrant Holders | 0 | 1,870,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|GROUP E WARRANTS |
|-------------------------------|-----------------------|------------------------|---------------------|
|Thomas Olson | 0 | 17,368 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|David Schaper | 0 | 54,200 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|GROUP F WARRANTS |
|-------------------------------|-----------------------|------------------------|---------------------|
|Mark Kroeger | 0 | 28,997 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Henry Fong | 0 | 8,400 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Joseph Maenza | 0 | 54,200 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|John Stapleton | 0 | 67,750 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|John Kubinski | 0 | 27,100 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Wayne Mills | 0 | 271,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Infinity Advisors, Inc. | 0 | 40,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Gary Tice | 0 | 60,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Regis Dahl | 0 | 135,500 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|GROUP G WARRANTS |
|-------------------------------|-----------------------|------------------------|---------------------|
|Regis Dahl | 0 | 135,500 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|GROUP H WARRANTS |
|-------------------------------|-----------------------|------------------------|---------------------|
|Regis Dahl | 0 | 20,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|GROUP I WARRANTS |
|-------------------------------|-----------------------|------------------------|---------------------|
|Regis Dahl | 0 | 15,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|GROUP J WARRANTS |
|-------------------------------|-----------------------|------------------------|---------------------|
|Gary Altman | 0 | 51,400 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|GROUP K WARRANTS |
|-------------------------------|-----------------------|------------------------|---------------------|
|Gary Altman | 0 | 150,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|GROUP M WARRANTS |
|-------------------------------|-----------------------|------------------------|---------------------|
|Univest Management | 0 | 58,331 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|GROUP N WARRANTS |
|-------------------------------|-----------------------|------------------------|---------------------|
|The Shaar Fund, Ltd. | 0 | 150,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
|GROUP O WARRANTS |
|-------------------------------|-----------------------|------------------------|---------------------|
<S> <C> <C> <C>
|World Capital Funding, LLC | 0 | 150,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|IMAGINON COMMON STOCK ISSUANCES |
|-------------------------------|-----------------------|------------------------|---------------------|
|Regis Dahl | 0 | 67,750 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Generation Capital | 0 | 142,750 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Wayne Mills | 0 | 154,573 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Larry Katz | 0 | 54,200 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|GA Partnership | 0 | 2,500 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Russell Casement | 0 | 2,500 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Ralph Grills | 0 | 100,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|IMAGINON COMMON STOCK ISSUANCES |
|-------------------------------|-----------------------|------------------------|---------------------|
|John Ballard | 0 | 35,180 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Cambridge Holdings, Ltd. | 0 | 15,830 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Russell Casement | 0 | 25,329 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Russell Casement, DDS, P.C. | 0 | 8,014 | 0 |
|Employee Profit Sharing Plan | | | |
|-------------------------------|-----------------------|------------------------|---------------------|
|CLFS Equities, Ltd. | 0 | 3,954 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Arthur N. and Helen S. | 0 | 6,330 | 0 |
|Converse | | | |
|-------------------------------|-----------------------|------------------------|---------------------|
|Cord Investment Co. | 0 | 15,830 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Growth Ventures, Inc. Pension | 0 | 3,954 | 0 |
|Plan & Trust | | | |
|-------------------------------|-----------------------|------------------------|---------------------|
|DeJure, Ltd. | 0 | 74,413 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|William G. Field, MD | 0 | 3,954 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|FBO Freberg & Company, Inc. | 0 | 3,954 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|GA Partnership | 0 | 12,646 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Darryl L. and Sharon Getman | 0 | 4,429 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|R. Andrew Girardot, Jr. DDS | 0 | 15,830 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Carl W. Hefton | 0 | 3,954 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Ming Hsu | 0 | 15,830 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|James A. and Ada L. Jones | 0 | 3,954 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Michael Leiter | 0 | 7,913 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
|Charles David Luther | 0 | 3,954 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Rudy Luther | 0 | 3,954 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Gary Magness | 0 | 7,913 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|James H. O'Keefe | 0 | 3,954 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Rons Family Living Trust | 0 | 7,913 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|William L. Schuetz | 0 | 7,913 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Glen E. Sibley | 0 | 3,954 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Ralph C. Wintrode | 0 | 7,913 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Stephen J. Tierschel | 0 | 3,954 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Trican Developments, Inc. | 0 | 45,767 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Kenneth L. Weiner | 0 | 2,967 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Paine Webber CF - Penelope | 0 | 2,568 | 0 |
|Avery Jones | | | |
|-------------------------------|-----------------------|------------------------|---------------------|
|IMAGINON COMMON STOCK UNDERLYING SERIES D PREFERRED STOCK |
|-------------------------------|-----------------------|------------------------|---------------------|
|The Shaar Fund, Ltd. | 0 | 600,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|IMAGINON COMMON STOCK UNDERLYING SERIES E PREFERRED STOCK |
|-------------------------------|-----------------------|------------------------|---------------------|
|The Augustine Fund | 0 | 160,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|The Four Corporation Defined | 0 | 28,000 | 0 |
|Benefit Pension Trust | | | |
|-------------------------------|-----------------------|------------------------|---------------------|
|Philip M. Holstein, Jr. | 0 | 20,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Russell G. Kraus | 0 | 10,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Joseph Sloves | 0 | 20,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Dale N. Steen | 0 | 20,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Tabacalera Ltd. | 0 | 120,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Taurus Enterprise, LLC | 0 | 30,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Teth Limited Liability | 0 | 32,000 | 0 |
|Company | | | |
|-------------------------------|-----------------------|------------------------|---------------------|
|World Capital Funding LLC | 0 | 40,000 | 0 |
|-------------------------------|-----------------------|------------------------|---------------------|
|Zakeni Limited | 0 | 120,000 | 0 |
- --------------------------------------------------------------------------------------------------------
</TABLE>
-16-
<PAGE>
PLAN OF DISTRIBUTION
The shares of common stock issuable upon the exercise of the
publicly-held warrants will be offered solely by ImaginOn, and no underwriters
are participating in this offering.
ImaginOn is also registering the shares offered by the selling
securityholders.
ImaginOn will pay all costs and expenses in connection with the
preparation of this prospectus and the registration of the shares. Brokerage
commissions and similar selling expenses, if any, attributable to the sale of
shares will be borne by the selling securityholders. Selling securityholders may
sell their shares from time to time in one or more types of transactions, which
may include block transactions, on the Nasdaq SmallCap Market. The type of
transactions include:
* negotiated transactions
* put or call option transactions;
* short sales; or
* a combination of the above transaction at market prices
at the time of sale or at negotiated prices.
These transactions may or may not involve brokers or dealers. The
selling securityholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of the shares, nor is there an underwriter or
coordinating broker acting in connection with the proposed sale of shares by the
selling securityholders.
ImaginOn has agreed to indemnify the selling securityholders and their
officers, directors and each person who controls any selling securityholder
against all losses, claims, damages, liabilities and expenses caused by:
* any untrue or alleged untrue statement of material fact
contained in the registration statement, this
prospectus or any amendment or supplement to these
documents; or
* any omission or alleged omission to state a material
fact in the registration statement, this prospectus or
any amendment or supplement to these documents that is
required to be stated or necessary to ensure that the
documents are not misleading.
-17-
<PAGE>
A selling securityholder will not be indemnified if the claims relating
to or arising from untrue statements or omissions if:
* the statements or omissions are based on written
information provided by the selling securityholder for
use in the preparation of the registration statement,
this prospectus or any amendments or supplements to
these documents; or
* the selling securityholder fails to deliver a copy of
this prospectus to a buyer.
The selling securityholders and any broker-dealers that act in
connection with the sale of securities might be deemed to be underwriters within
the meaning of Section 2(a)(11) of the Securities Act, and any commissions
received by those broker-dealers and any profit on the resale of the securities
sold by them while acting as principals might be deemed to be underwriting
discounts or commissions under the Securities Act.
Because selling securityholders may be deemed to be underwriters within
the meaning of Section 2(a)(11) of the Securities Act, the selling
securityholders will be subject to the prospectus delivery requirements of the
Securities Act. ImaginOn has informed the selling securityholders that the
anti-manipulative provisions of Regulation M promulgated under the Exchange Act
may apply to their sales in the market.
Selling securityholders also may resell all or a portion of the Shares
in open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of that Rule.
SPECIAL CONSIDERATIONS TO THE HOLDERS
OF THE PUBLICLY-HELD WARRANTS
The shares of common stock issuable upon the exercise of the
publicly-held warrants will be offered solely by ImaginOn, and no underwriters
are participating in this offering.
For a holder of the publicly-held warrants to exercise the warrants,
there must be a current registration statement covering the common stock
underlying the warrants on file with the Securities and Exchange Commission and
various state securities commissions.
ImaginOn intends to maintain a current registration statement while the
publicly-held warrants are exercisable. The publicly-held warrants are currently
due to expire on June 30, 1999.
-18-
<PAGE>
ImaginOn has requested from its warrant agent a list of record holders
of the publicly-held warrants and the states in which the beneficial holders of
the publicly-held warrants reside, and is researching the blue sky laws of those
states to determine if exercise of these warrants is permitted in those states.
ImaginOn will have its warrant agent verify the residence of an exercising
warrantholder before allowing the exercise of the publicly-held warrants to
prevent the exercise of publicly-held warrants in states which do not permit
the exercise. As of March 10, 1999, ImaginOn's records indicated that the
holders of its publicly-held warrants resided in the States of Colorado,
Florida, Hawaii, Illinois, Minnesota, New Jersey and New York. ImaginOn has
either registered or obtained an exception from registration requirements for
the exercise of the publicly-held warrants with respect to these states. The
publicly-held warrants may be deprived of any value if a current prospectus
covering the common stock issuable upon the exercise thereof is not kept
effective or if the underlying common stock is not qualified in the states in
which the holders of the publicly-held warrants reside.
EXERCISE OF WARRANTS
All warrants may be exercised on or before expiration of the
applicable warrant exercise period, by signing the Election to Purchase on the
reverse side of the warrant certificate. The Election to Purchase form together
with payment of the full exercise price for the number of warrants being
exercised should be delivered to the warrant agent if publicly-held warrants are
being exercised and to ImaginOn for all other warrants..
Payment must be by certified funds or cashier's check, payable to the
order of the warrant agent in the case of the publicly-held warrants, and to
ImaginOn, in the case of the selling securityholders warrants. The warrant agent
for the publicly-held warrants is Corporate Stock Transfer, Inc., 370 17th
Street, Suite 2350, Denver, Colorado 80202.
CONVERSION OF CONVERTIBLE PREFERRED STOCK
All preferred stock may be converted into common stock by submitting a
Notice of Conversion to ImaginOn.
INDEMNIFICATION PROVIDED IN CONNECTION WITH THE OFFERING BY THE SELLING
SECURITYHOLDERS
The selling securityholders have agreed to indemnify ImaginOn, its
directors, its officers and each person who controls ImaginOn against any
liabilities and expenses arising out of or based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in this
registration statement and prospectus in reliance upon written information
furnished by the selling securityholders to ImaginOn for use in either of these
documents.
-19-
<PAGE>
LEGAL MATTERS
The legality of the securities being offered will be passed on for
ImaginOn by Friedlob Sanderson Raskin Paulson & Tourtillott, LLC, Denver,
Colorado.
EXPERTS
The financial statements of ImaginOn as of December 31, 1998 and for
the years ended December 31, 1998 and 1997, incorporated by reference in this
prospectus from the Annual Report on Form 10-KSB, have been incorporated into
this prospectus in reliance on the report of Gelfond Hochstadt Pangburn & Co.,
independent certified public accountants, given on the authority of Gelfond
Hochstadt Pangburn & Co. as experts in accounting and auditing.
-20-
<PAGE>
IMAGINON, INC.
April 13, 1999
------------------------------------
PROSPECTUS
------------------------------------
-21-
<PAGE>
- --------------------------------------------------------------------------------
| No dealer, salesman or other person has been authorized to give any |
| information or to make any representations other than those contained in |
| this prospectus. Any information or representations not contained in this |
| prospectus, if given or made, must not be relied upon as having been |
| authorized by the company. This prospectus does not constitute an offer or |
| solicitation in respect to these securities in any jurisdiction in which an |
| offer or solicitation would be unlawful. The delivery of this prospectus |
| shall not under any circumstances, create any implication that there has |
| been no change in the affairs of ImaginOn or that the information contained |
| in this prospectus is correct as of any time subsequent to the date of this |
| prospectus. However, in the event of a material change, this prospectus |
| will be amended or supplemented accordingly. |
- --------------------------------------------------------------------------------
-22-
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14 - OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemization of all expenses (subject to future
contingencies) incurred or to be incurred by the Registrant in connection with
the issuance and distribution of the securities being offered. All expenses are
estimated except the registration fee and NASD filing fee.
Registration and filing fee $5,613
NASD filing fee 56,134
Printing 2,000
Accounting fees and expenses 3,000
Legal fees and expenses 20,000
Blue sky fees and expenses 500
Transfer and Warrant Agent 5,000
Other 7,753
-----
Total $100,000
===== ========
ITEM 15 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
INDEMNIFICATION PROVIDED UNDER IMAGINON'S CERTIFICATE OF
INCORPORATION
Section 145 of the Delaware General Corporation Law and Article Ninth
of the Registrant's Certificate of Incorporation provides for, under certain
circumstances, the indemnification of the Registrant's officers, directors,
employees and agents against liabilities which they may incur in such
capacities. A summarization of the circumstances in which such indemnifications
provided for is contained herein, but that description is qualified in its
entirety by reference to Article Ninth of the Registrant's Certificate of
Incorporation and the relevant Section of the Delaware General Corporation Law.
In general, the statute provides that any director, officer, employee
or agent of a corporation may be indemnified against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement, actually and
reasonably incurred in a proceeding (including any civil, criminal,
administrative or investigative proceeding) to which the individual was a party
by reason of such status. Such indemnity may be provided if the indemnified
person's actions resulting in the liabilities: (i) were taken in good faith;
(ii) were reasonably believed to have been in or not opposed to the Registrant's
best interest; and (iii) with respect to any criminal action, such person had no
reasonable cause to believe the actions were unlawful. Unless ordered by a
court, indemnification generally may be awarded only after a determination of
independent members of the Board of Directors or committee thereof, by
independent legal counsel or by vote of the stockholders that the applicable
standard of conduct was met by the individual to be indemnified.
-23-
<PAGE>
The statutory provisions further provide that to the extent a director,
officer, employee or agent is wholly successful on the merits or otherwise in
defense of any proceeding to which he was a party, he is entitled to receive
indemnification against expenses, including attorneys' fees, actually and
reasonably incurred in connection with the proceeding.
Indemnification in connection with a proceeding by or in the right of
ImaginOn in which the director, officer, employee or agent is successful is
permitted only with respect to expenses, including attorneys' fees actually and
reasonably incurred in connection with the defense. In such actions, the person
to be indemnified must have acted in good faith, in a manner believed to have
been in ImaginOn's best interest and must not have been adjudged liable to
ImaginOn unless and only to the extent that the Court of Chancery or the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability, in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expense which the Court of Chancery or such other court shall deem proper.
Indemnification is otherwise prohibited in connection with a proceeding brought
on behalf of the Registrant in which a director is adjudged liable to the
Registrant, or in connection with any proceeding charging improper personal
benefit to the director in which the director is adjudged liable for receipt of
an improper personal benefit.
Delaware law authorizes the Registrant to reimburse or pay reasonable
expenses incurred by a director, officer, employee or agent in connection with a
proceeding in advance of a final disposition of the matter. Such advances of
expenses are permitted if the person furnishes to the ImaginOn a written
agreement to repay such advances if it is determined that he is not entitled to
be indemnified by ImaginOn.
The statutory section cited above further specifies that any provisions
for indemnification of or advances for expenses does not exclude other rights
under the Registrant's Certificate of Incorporation, Bylaws, resolutions of its
stockholders or disinterested directors, or otherwise. These indemnification
provisions continue for a person who has ceased to be a director, officer,
employee or agent of ImaginOn and inure to the benefit of the heirs, executors
and administrators of such persons.
The statutory provision cited above also grants the power to the
Registrant to purchase and maintain insurance policies which protect any
director, officer, employee or agent against any liability asserted against or
incurred by him in such capacity arising out of his status as such. Such
policies may provide for indemnification whether or not ImaginOn would otherwise
have the power to provide for it. No such policies providing protection against
liabilities imposed under the securities laws have been obtained by the
Registrant.
Article VIII of the Registrant's Bylaws provides that the Registrant
shall indemnify its directors, officers, employees and agents to the fullest
extent permitted by the Delaware General Corporation Law. In addition, the
Registrant has entered into agreements with its directors indemnifying them to
the fullest extent permitted by the Delaware General Corporation Law.
-24-
<PAGE>
ITEM 16 - EXHIBITS
The following is a complete list of exhibits filed as part of this
registration statement:
No. Description
3(i).1 Certificate of Incorporation of the Registrant. (Incorporated by
reference to Exhibit 3.1 to the registrant's registration
statement on Form SB-2, Registration No. 33- 85108 as filed with
the Securities and Exchange Commission "SEC" on October 13, 1994
(the "1994 Registration Statement").)
3(i).2 Certificate of Designations for Series B 4% Convertible Preferred
Stock. (Incorporated by reference to Exhibit 3.(I).1 of the
registrant's June 30, 1998 10- QSB.)
3(i).3 Certificate of Designations for Series C 4% Convertible Preferred
registrant's December 21, 1998 Form S-3/A
3(i).4 Certificate of Designations for Series D 4% Convertible Preferred
Stock. Previously filed.
3(i).5 Certificate of Designations for Series E 4% Convertible Preferred
Stock. (Incorporated by reference to Exhibit 3(i).5 of the
registrant's annual report on Form 10-KSB, for the fiscal year
ended December 31, 1999.)
3(i).6 Amendment to Certificate of Incorporation of the Registrant dated
July 22, 1998. Previously filed.
3(i).7 Amendment to Certificate of Incorporation of the Registrant dated
December 17, 1998. Previously filed.
3(ii).1 Bylaws as currently in effect. (Incorporated by reference to
Exhibit 3.2 to the 1994 Registration Statement.)
4.1 Specimen of common stock certificate. (Incorporated by reference
to Exhibit 4.1 to Amendment No. 4 to the 1994 Registration
Statement, filed with the SEC on December 22, 1994 ("1994
Amendment #4).)
5.1 Opinion of Friedlob Sanderson Raskin Paulson & Tourtillott, LLC.
Previously filed.
23.1 Consent of Independent Certified Public Accountants. Previously
filed.
23.2 Consent of Friedlob Sanderson Raskin Paulson & Tourtillott, LLC.
Previously filed.
-25-
<PAGE>
ITEM 17 - UNDERTAKINGS
The undersigned Registrant hereby undertakes:
15. To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
16. 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.
17. 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.
18. 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 the initial bona fide offering
thereof.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets the
requirements for filing on Form S-3 and has duly caused this amendment to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Carlos, State of California, on April 13,
1999.
IMAGINON, INC.
By: /s/ David M. Schwartz
--------------------------------------------
David M. Schwartz, Chairman,
CEO and President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURES TITLE DATE
- ---------- ----- ----
/s/ David M. Schwartz Chief Executive Officer, Chief April 13, 1999
- --------------------- Financial Officer, Chief Accounting
David M. Schwartz Officer, President and Director
* Director April 13, 1999
- ----------------------
Leonard W. Kain
* Director April 13, 1999
- ----------------------
Mary E. Finn
/s/ David M. Schwartz
- ---------------------- April 13, 1999
*David M. Schwartz,
Attorney-in fact
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