<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 28, 1996
Registration No. 333-5311
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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A+ NETWORK, INC.
(Exact name of registrant as specified in its charter)
TENNESSEE 62-1225322
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
40 SOUTH PALAFOX STREET CHARLES A. EMLING III
PENSACOLA, FL 32501 (904) 438-1653 40 SOUTH PALAFOX STREET
(Address, including zip code, and PENSACOLA, FL 32501 (904) 438-1653
telephone number, including area (Name, address, including zip code, and
code, of the registrant's prin- telephone number, including area code, of
cipal executive offices) agent for service)
Copies to:
William Waller, Jr., Esq.
Waller Lansden Dortch & Davis
Nashville City Center
511 Union Street, Suite 2100
Nashville, Tennessee 37219-1760
(615) 244-6380
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the Effective Date of this Registration Statement.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box: [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box: [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 3
A+ NETWORK, INC.
CROSS REFERENCE SHEET FOR REGISTRATION STATEMENT
ON FORM S-3
<TABLE>
<CAPTION>
Items of Form S-3 Prospectus Caption or Location
- ----------------- ------------------------------
<S> <C> <C>
1. Forepart of Registration
Statement and Outside Front
Cover Page of Prospectus . . . . . . . . . . . . Facing Page of Registration Statement; Outside Front Cover
of Prospectus.
2. Inside Front and Outside Back
Cover Pages of Prospectus . . . . . . . . . . . Inside Front Cover Page of Prospectus.
3. Summary Information, Risk
Factors and Ratio of Earnings
to Fixed Charges . . . . . . . . . . . . . . . . The Company; Risk Factors.
4. Use of Proceeds . . . . . . . . . . . . . . . . Use of Proceeds.
5. Determination of Offering
Price . . . . . . . . . . . . . . . . . . . . . Inapplicable.
6. Dilution . . . . . . . . . . . . . . . . . . . . Inapplicable.
7. Selling Security Holders . . . . . . . . . . . . Selling Shareholders.
8. Plan of Distribution . . . . . . . . . . . . . . Plan of Offering; Selling Shareholders; Outside Front Cover
Page of Prospectus.
9. Description of Securities to
be Registered . . . . . . . . . . . . . . . . . Information Incorporated by Reference.
10. Interests of Named Experts
and Counsel . . . . . . . . . . . . . . . . . . Experts.
11. Material Changes . . . . . . . . . . . . . . . . Inapplicable.
12. Incorporation of Certain
Information by Reference . . . . . . . . . . . . Information Incorporated by Reference.
13. Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities . . . . . . . . . . . . . . . . . . Inapplicable.
</TABLE>
<PAGE> 4
PROSPECTUS
364,311 SHARES
A+ NETWORK, INC.
COMMON STOCK
PAR VALUE $.01 PER SHARE
This Prospectus relates to the resale by Ray D. Russenberger
("Russenberger") of up to 315,203 shares of Common Stock, par value $.01 per
share ("Common Stock"), of A+ Network, Inc. ("A+" or the "Company") issued to
Russenberger without registration under the Securities Act of 1933, as amended
(the "Securities Act"), in connection with the merger of Network Paging
Corporation ("Network") into the Company (the "Merger"), a transaction not
involving a public offering.
This Prospectus also relates to the resale by Daniel R. Hiller
("Hiller") of up to 49,108 shares of Common Stock which may be purchased by
Hiller upon the exercise of options granted pursuant to a Non-Qualified Option
Agreement dated November 15, 1995 (the "Options") between Hiller and the
Company. The shares issuable upon the exercise of the Options have not been
registered under the Securities Act for sale by the Company. Messrs.
Russenberger and Hiller are collectively referred to herein as the "Selling
Shareholders."
Up to 299,375 of the shares of Common Stock may be sold by
Russenberger from time to time upon the exercise of options granted by
Russenberger to certain employees and directors of Network in connection with
the Merger and in consideration of their services to Network. All of such
options are exercisable at any time or from time to time prior to October 18,
2005 at exercise prices ranging from $6.00 per share to $14.00 per share. No
commissions or other remuneration is payable in connection with the exercise.
The (i) shares of Common Stock acquired by Hiller upon
exercise of the Options and (ii) 15,828 shares of Common Stock held by
Russenberger that are not subject to the options covering the 299,375 shares of
Common Stock referenced above, may be offered by Hiller and Russenberger,
respectively, from time to time in transactions on the Nasdaq Stock Market's
National Market (the "Nasdaq National Market"), in negotiated transactions,
through the writing of options on the shares, or a combination of such methods
of sale, at prices related to prevailing market prices or at negotiated
prices. The Selling Shareholders may effect such transactions by selling the
shares to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Shareholders and/or the purchasers of the shares for which such
broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation as to a particular broker-dealer might be in excess of
customary commissions). The Selling Shareholders may also pledge such Common
Stock as collateral for loans and the pledgees may sell the Common Stock in
accordance with the terms of the pledge agreements. See "Plan of Offering."
None of the proceeds from the sale of the shares by the
Selling Shareholders will be received by the Company. The Company has agreed
to bear all expenses (other than fees and expenses of counsel and other
advisers to the Selling Shareholders) in connection with the registration of
the Common Stock being offered by the Selling Shareholders.
SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF COMMON
STOCK OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
June ___, 1996
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
CAPTION PAGE
- ------- ----
<S> <C>
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
INFORMATION INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
PLAN OF OFFERING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SELLING SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Proxy statements, reports and other information
concerning the Company can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth St., N.W., Judiciary
Plaza, Washington, D.C. 20549, and at the following regional offices of the
Commission: Northwestern Atrium Center, Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661 and 7 World Trade Center, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.
The Common Stock is traded on the Nasdaq National Market.
Proxy statements, reports and other information concerning the Company can be
inspected and copied at the National Association of Securities Dealers, Inc.
offices located at 1735 K Street, N.W., Washington, D.C. 20006-1506.
This Prospectus does not contain all information set forth in
the Registration Statement of which this Prospectus forms a part and exhibits
thereto which the Company has filed with the Commission under the Securities
Act and to which reference is hereby made.
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INFORMATION INCORPORATED BY REFERENCE
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM
A COPY OF THIS PROSPECTUS IS DELIVERED, INCLUDING ANY BENEFICIAL OWNER, UPON
THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF THE
DOCUMENTS INCORPORATED BY REFERENCE HEREIN (OTHER THAN EXHIBITS TO SUCH
DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO
THE INFORMATION THAT THE PROSPECTUS INCORPORATES). REQUESTS SHOULD BE DIRECTED
TO:
A+ NETWORK, INC.
40 SOUTH PALAFOX STREET
PENSACOLA, FLORIDA 32501
TELEPHONE NUMBER (904) 438-1653
ATTN: RANDY K. SCHULTZ
CHIEF FINANCIAL OFFICER
The following documents filed with the Commission by the
Company (File Number 0-22238) are incorporated by reference into this
Prospectus:
(1) Annual Report on Form 10-K for the year ended
December 31, 1995;
(2) Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996;
(3) Current Reports on Forms 8-K dated May 20,
1996 and June 24, 1996;
(4) Proxy Statement for the Annual Meeting of
Shareholders held on May 29, 1996;
(5) The description of the Common Stock contained
in the Registration Statement on Form S-1 (File No. 33-65282),
and as incorporated by reference in the Registration Statement
on Form 8-A, filed on August 9, 1993, pursuant to Section 12
of the Exchange Act.
All documents filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent
to the date of this Prospectus and prior to the termination of the offerings
registered hereby shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of the filing of such
documents with the Commission.
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Any statement contained in a document incorporated by
reference herein shall be deemed to be modified or superseded for purposes
hereof to the extent that a statement contained herein (or in any other
subsequently filed document which is also incorporated by reference herein)
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed to constitute a part hereof except as so modified or
superseded.
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERINGS HEREIN CONTAINED AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING SHAREHOLDER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF ANY OFFER
TO BUY, THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT ANY INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE.
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THE COMPANY
The Company is a leading provider of paging services, operating
primarily in the southeastern United States. On October 24, 1995, the Company
consummated the merger of Network Paging Corporation ("Network") into the
Company (the "Merger"), resulting in an increase in the number of pagers in
service from approximately 248,000 to approximately 495,000. At December 31,
1995, the Company had 529,450 pagers and voicemail units in service, serviced
by a network of approximately 485 transmitters located in Alabama, Florida,
Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and
Texas. Through an interconnected network (the "USA Network") of approximately
120 independent local and regional paging companies (the "Network Affiliates")
throughout the United States, the Company augments its paging services in areas
where direct service through the Company's own transmission facilities is not
available.
Paging is a method of wireless communication which uses an assigned
radio frequency to contact a paging subscriber within a designated service
area. A subscriber carries a pager which receives messages by the broadcast of
a one-way radio signal. To contact a subscriber, a message is usually sent by
placing a telephone call to the subscriber's designated telephone number. The
telephone call is received by an electronic paging switch which generates a
signal that is sent to all radio transmitters in the subscriber's service area.
Where the designated service area is regional or national in scope,
transmitters in each of the specified localities transmit a simultaneous signal
to the subscriber's pager. The transmitters broadcast a coded signal that is
unique to the pager carried by the subscriber and alerts the subscriber through
a tone or vibration that there is a voice, numeric, alphanumeric or other
message. Depending upon the topography of the service area, the operating
radius of a radio transmitter typically ranges from three to twenty miles. A
subscriber's pager will only operate if it is within range of the
subscribed-for transmitters and the signal is sufficiently clear for the pager
to identify. When more than one paging company shares a common frequency,
their transmitters or systems are typically linked to avoid simultaneous paging
(interference) by different companies.
The Company currently provides four basic types of paging services:
numeric display, alphanumeric display, tone-only (all of which can be used in
conjunction with voicemail services) and tone-plus-voice. A numeric display
pager permits a caller to transmit to the subscriber a message that may consist
of an area code and telephone number, an account number or other numerical
information consisting of up to 12 digits. Alphanumeric display service allows
subscribers to receive and store messages consisting of both numbers and
letters. In the case of tone-only service, the subscriber's receiver, when
activated, produces an audible "beep" sound or vibration, alerting the
subscriber to call home, the office or some other predetermined location. With
tone-plus-voice service, the pager emits a beeping sound plus a brief voice
message. Numeric display paging, which was introduced around 1980, has in
recent years grown faster than alphanumeric pagers, tone-only or
tone-plus-voice, and a vast majority of the pagers currently in service are
numeric display.
5
<PAGE> 9
The Company also offers paging subscribers voicemail messaging
services. When a subscriber uses voicemail in conjunction with paging service
and a recorded message is left by a caller, the paging subscriber is
automatically notified through a page alert. Voicemail employs a sophisticated
computer technology that enables the customer to receive digitally recorded
voice messages 24 hours a day by accessing the voicemail system via any
touch-tone telephone. Voicemail systems provide complete message privacy,
allow for personalized message greetings and enable voice messages to be sent
to a large group of people simultaneously.
The Company markets its paging services and products through five
channels: a direct sales force, Company retail outlets, independent retail
outlets, resellers, and the Network Affiliates.
Since December 31, 1995, the Company has entered into agreements to
purchase three additional paging companies for an aggregate consideration of
$11.6 million, payable in cash in the amount of $7.5 million and in shares of
Company Common Stock having a value equal to $4.1 million.
On May 16, 1996, Metrocall, Inc. ("Metrocall") and the Company entered
into a definitive merger agreement, whereby the Company would merge into
Metrocall in a two-step transaction. Metrocall will commence a tender offer to
purchase approximately 2.1 million Company shares at $21.10 per share, which
combined with the direct purchase of approximately 2.2 million shares from
certain Company shareholders will result in Metrocall owning approximately 40%
of the outstanding Company shares upon completion of the tender offer. At the
time of the merger, each Company shareholder will receive shares of Metrocall
common stock having a value of $21.10, subject to certain adjustments based on
the future trading price of Metrocall common stock. Company shareholders will
also receive variable common rights ("VCRs") designed to provide additional
consideration to Company shareholders if Metrocall's stock trades below certain
targets over the next year.
The tender offer is expected to be completed in June 1996, and the
subsequent merger is expected to be completed during the fourth quarter of
1996. The merger is subject to customary state and federal regulatory
approvals and the respective shareholder approvals of Metrocall and the
Company. Major shareholders from each of Metrocall and the Company have agreed
to vote their shares for the merger. Two members of the Company's board of
directors, Elliott H. Singer and Ray D. Russenberger, will join a newly
constituted Metrocall board of directors upon the completion of the merger.
Charles (Chuck) A. Emling III, President and CEO of the Company, will become
the President of a newly-formed southeastern region.
This transaction, the sixth acquisition announced by Metrocall this
year, will make Metrocall the fourth largest paging company in the United
States with pro forma units in service approaching 2.5 million. Metrocall
expects to finance the tender offer and stock purchases through its existing
cash on hand and borrowings under its bank credit facilities. The 11 7/8%
senior subordinated debentures of the Company will be assumed by Metrocall upon
the completion of the merger.
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<PAGE> 10
Assuming completion of the A+ Network merger and other announced
acquisitions, Metrocall will be the nation's fourth largest wireless messaging
company, and would serve nearly 2.5 million subscribers.
The Company was incorporated under the laws of Tennessee in 1985 as A+
Communications Inc. Simultaneous with the Merger, the name was changed to A+
Network, Inc. The Company maintains its principal executive offices at 40
South Palafox Street, Pensacola, Florida 32501 where its telephone number is
(904) 438-1653 and at 2416 Hillsboro Road, Nashville, Tennessee 37212 where its
telephone number is (615) 385-4500.
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<PAGE> 11
RISK FACTORS
In addition to the other information in this Prospectus, prospective
investors should carefully consider the following risk factors in connection
with a purchase of the Common Stock offered hereby.
RISKS OF SUBSTANTIAL LEVERAGE; NO ASSURANCE AS TO ABILITY TO SERVICE
DEBT. The Company is highly leveraged. At December 31, 1995, the Company had
total assets of $211.0 million, stockholders' equity of $69.5 million and long-
term debt of $124.1 million. Additionally, the Company has established the New
Credit Facility of $25.0 million. Until it has achieved a substantial
improvement in its results of operations or completed a significant acquisition
of one or more other paging providers on favorable terms, the Company does not
anticipate being able to borrow under the New Credit Facility. The ability of
the Company to repay its indebtedness will depend upon future operating
performance, which is subject to the success of the Company's business
strategy, prevailing economic conditions, regulatory matters, levels of
interest rates and financial, business and other factors, many of which are
beyond the Company's control. The debt service obligations of the Company
could have important consequences, including the following: (i) the ability of
the Company to obtain additional financing for future working capital needs or
for possible future acquisitions or other purposes may be limited; (ii) a
substantial portion of the Company's cash flow from operations will be
dedicated to the payment of principal and interest on its indebtedness, thereby
reducing funds available for other purposes; (iii) the Company may be more
vulnerable to adverse economic conditions than some of its competitors and thus
may be limited in its ability to withstand competitive pressures; and (iv) the
Company may be more highly leveraged than certain of its competitors, which may
place it at a competitive disadvantage.
Since 1992, the Company's earnings have been inadequate to cover its
fixed charges, and the Company's EBITDA has been inadequate to meet its
interest payments and capital expenditures. For the years ended December 31,
1993, 1994 and 1995, the earnings shortfall was $1.3 million, $4.1 million and
$13.8 million, respectively. For the years ended December 31, 1993, 1994 and
1995, the Company's EBITDA has been inadequate to meet its interest expense and
capital expenditures by $4.4 million, $15.8 million and $12.0 million,
respectively. Management believes that the Company will have sufficient
capital to carry on its business and will be able to pay its debts as they
mature. However, there can be no assurance that future cash flows of the
Company will be sufficient to meet all of the Company's obligations and
commitments. If the Company is unable to generate sufficient cash flows from
operations in the future to pay interest on the Notes or to satisfy any other
debt service requirements, or to pay its debts as they mature and meet its
other commitments, the Company could be required to pursue one or more
alternatives, such as attempting to arrange a refinancing or restructuring of
its indebtedness, selling material assets or operations or seeking to obtain
additional debt or equity financing. There can be no assurance that any of
these actions could be effected on satisfactory terms, that they would enable
the Company to continue to satisfy its capital requirements or that they would
be permitted by the terms of applicable debt agreements. In addition, if the
Company were to encounter difficulty in covering its fixed charges, it would
have to consider reductions in its operations and deferrals of planned capital
expenditures and any potential acquisitions.
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<PAGE> 12
HISTORY OF LOSSES. The Company has experienced operating and net
losses each year since 1992. Such operating losses totaled $1.6 million in
1992, $463,000 in 1993, $3.5 million in 1994 and $10.1 million in 1995. Such
net losses totaled $1.8 million in 1992, $1.5 million in 1993, $4.1 million in
1994 and $14.5 million in 1995. In addition, Network had an operating loss of
$238,000 in 1995 and had net losses of $260,000 in 1995. At December 31, 1995,
the Company had an accumulated deficit of $21.2 million. After giving effect
to the Merger and the sale of the Notes as if each had occurred on January 1,
1994, the Company would have incurred operating and net losses on a pro forma
basis of $11.2 million and $26.4 million, respectively, for the year ended
December 31, 1994 and $13.6 million and $28.8 million, respectively, for the
year ended December 31, 1995. Such historical and pro forma losses of the
Company have resulted principally from (i) substantial depreciation and
amortization expense, primarily related to pagers and equipment, and
amortization of intangibles; (ii) selling expense associated with the rapid
expansion of the Company's subscriber base; (iii) operating expense associated
with the rapid growth of the Company's transmission networks and subscriber
base; and (iv) general and administrative expense associated with the
development of the Company's infrastructure to support its historical and
anticipated rapid growth in subscribers. Network's net loss in 1994 resulted
primarily from the income tax effect of converting from an S corporation to a C
corporation. There can be no assurance that the Company will be profitable.
CHALLENGES OF BUSINESS INTEGRATION. The full benefits of a business
combination of the Company and Network will require the integration of each
company's administrative, finance, sales and marketing organizations, the
coordination of each company's sales efforts and the implementation of
appropriate operational, financial and management systems and controls. This
will require substantial attention from the senior management teams of the
Company and Network, which have limited experience integrating the operations
of companies of the size of the Company and Network and whose members have not
worked together previously as one team. The diversion of management attention,
as well as any other difficulties which may be encountered in the transition
and integration process, could have an adverse impact on the revenues and
operating results of the Company. In addition, if the contemplated
organizational changes are not properly managed, there could be an adverse
effect on the Company's results of operations. There can be no assurance that
the Company will be able to integrate the operations of the Company and Network
successfully.
RISKS ASSOCIATED WITH GROWTH AND ACQUISITION STRATEGY. The Company
believes that the paging industry has experienced and will continue to
experience consolidation due to competitive factors that favor larger,
multi-market paging companies. The management of the Company intends to
implement various strategies in order to expand the Company and capitalize on
its strengths, including the acquisition of additional paging businesses or
assets and the internal growth of the Company's paging business. The Company
will be continuously engaged in seeking possible acquisition candidates.
The process of acquiring and integrating paging businesses or assets
may involve unforeseen difficulties and may require a disproportionate amount
of time and attention of the Company's management as well as the financial and
other resources of the Company. No assurance can be given that suitable
acquisitions can be identified, financed and completed on acceptable terms, or
that the Company's future acquisitions, if any, will be successful.
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<PAGE> 13
Implementation of the Company's growth strategies will be subject to
numerous other contingencies beyond the control of the management of the
Company. These contingencies will include general and regional economic
conditions, interest rates, competition for acquisition candidates, changes in
regulation or technology and the ability to attract and retain skilled
employees. Accordingly, no assurance can be given that any of these strategies
will prove effective or that the goals of the Company will be achieved.
In addition, the Company's business strategy will require the
availability of substantial funds to finance the continued development and
further expansion of its operations, including possible acquisitions. The
amount of funds required will depend on a number of factors, including
subscriber growth, technological developments, marketing and sales expenses,
competitive conditions and acquisition strategy. There can be no assurance
that such funds will be available to the Company on acceptable terms, if at
all.
POTENTIAL ADVERSE EFFECTS OF LOSS OF NETWORK AFFILIATES. The Company
is dependent on the Network Affiliates as a source of revenue and for the use
of their transmission facilities for providing nationwide and certain regional
coverage for paging subscribers, resellers and the Network Affiliates. From
time to time, Network Affiliates have been acquired by third parties. The
Company must compete with other paging companies to attract and retain Network
Affiliates. A number of the Network Affiliates are not parties to written
agreements requiring such Network Affiliates to participate in the USA Network.
Moreover, those Network Affiliates who have entered into such written
agreements are not required to update or improve their paging systems in
response to technological improvements or changes in government regulations.
There can be no assurance that the Company will be able to maintain or increase
the size of the USA Network or that the Network Affiliates will effectively
respond to technological changes or other competitive pressures. In the event
one or more Network Affiliates were to be acquired by a competitor, leave the
USA Network, lose their transmission capabilities, or fail to make capital
expenditures or take other actions required for the USA Network to remain
competitive in the industry, or if Network Affiliates were to deactivate their
subscribers from the USA Network, the USA Network, and therefore the Company,
could be adversely affected.
COMPETITION. The Company faces competition from one or more
competitors in all the locations in which it operates (i) for the provision of
services and products; (ii) in finding suitable acquisition candidates; and
(iii) in attracting and retaining Network Affiliates and resellers. Many of
the Company's competitors, which include local, regional and national paging
companies and certain regional telephone companies, possess significantly
greater financial, technical and other resources than the Company. The Company
believes that competition for paging subscribers is based on price, geographic
coverage and quality of service. Certain of the Company's competitors use a
low-price discount strategy to expand their market share and if any of such
companies were to focus their marketing efforts on the Company's regional or
product niches, the Company's results of operations could be adversely
affected. In recent years, the subscription rates that the Company and its
competitors have been able to charge their customers have decreased primarily
as a result of lower costs and greater competition in the industry. The
Company believes that significant price-based competition will continue to
exist in each of the Company's markets for the foreseeable future. Any
significant decrease in the prices that the Company can charge for its products
and services could adversely affect the Company's results of operations.
Further, in recent years there has been a trend in
10
<PAGE> 14
the paging and wireless communications industries towards increasing
consolidation which has led to competition from increasingly larger and better
capitalized competitors. There can be no assurance that the Company will be
competitive with larger paging companies in the future or that the Company will
maintain its size relative to its competitors.
TECHNOLOGICAL CHANGE. The telecommunications industry is
characterized by rapid technological changes. Future technological advances in
the telecommunications industry could lead to the introduction of new products
or services that compete with the paging services that will be provided by the
Company. In addition, technological changes could lower the cost of
competitive products and services (such as cellular telephone service) to the
extent that the Company's products and services become noncompetitive or the
Company is required to further reduce the price of its paging services.
Several wireless two-way communication technologies, including
cellular telephone service, specialized mobile radio, low-speed data networks
and mobile satellite services, are currently in use or under development.
Although these technologies are currently more expensive than paging services
or are not commercially available, future implementation and technological
improvements could result in increased competition for the Company. Some of
these service providers are combining paging services with two-way voice
service in a single handset. Large manufacturers dominate technological
development in the wireless communications industry, and changes in their
methods of distributing one-way wireless messaging products could reduce the
Company's access to technology and harm its growth prospects. There can be no
assurance that the Company will not be adversely affected by such technological
change.
SUBSCRIBER TURNOVER. The results of operations of wireless messaging
service providers can be significantly affected by subscriber cancellations.
The sales and marketing costs associated with attracting new subscribers are
substantial relative to the costs of providing service to existing customers.
Because the paging business is characterized by high fixed costs,
disconnections directly and adversely affect operating cash flow. The
Company's experience indicates that subscriber turnover in the retail consumer
distribution channel is generally higher than other distribution channels. A
disproportionate growth in this distribution channel may increase the Company's
overall subscriber turnover rate. An increase in its subscriber cancellation
rate, whether resulting from the Merger or otherwise, may adversely affect the
Company's results of operations.
GOVERNMENT REGULATION. The paging operations of the Company are
subject to regulation by the Federal Communications Commission ("FCC") under
the Communications Act of 1934 (the "Communications Act") and various state
regulatory agencies. The Communications Act was amended in 1993 so as to
materially change the regulation of the paging industry. On March 8, 1996, the
FCC initiated a major rulemaking proceeding to implement these changes.
Certain of the proposed rules, including the instituting of a "competitive
bidding" or auction process for the allocation of broadcasting spectrum, could
materially increase the cost of expanding the Company's networks and otherwise
make such expansion more difficult. Recent legislation and regulatory actions
are also aimed at encouraging technological advances, such as Personal
Communications Services which are
11
<PAGE> 15
expected to provide two-way wireless communication services in competition with
existing mobile services such as paging.
The Company cannot predict the outcome or effect of pending or future
regulatory changes, but there is no assurance that such changes will not have a
material adverse effect on the Company's results of operations.
12
<PAGE> 16
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of shares of
the Common Stock by the Selling Shareholder.
PLAN OF OFFERING
This Prospectus may be used by Russenberger in connection with the
resale of up to 299,375 shares of the Common Stock upon the exercise of options
granted by Russenberger to certain employees and directors of Network in
connection with the Merger and in consideration of their services to Network.
All of such options are exercisable at any time or from time to time prior to
October 18, 2005 at exercise prices ranging $6.00 per share to $14.00 per
share. No commissions or other remuneration is payable in connection with the
exercise.
This Prospectus may also be used (i) by Hiller in connection with the
resale of up to 49,108 shares of the Common Stock which may be acquired by
Hiller upon his exercise of the Options granted to him by the Company and (ii)
by Russenberger in connection with the resale of up to 15,828 shares of Common
Stock that are not subject to the options covering the 299,375 shares of Common
Stock referenced above. The sale of the shares by Hiller and Russenberger,
respectively, may be effected from time to time in transactions on the Nasdaq
National Market, in negotiated transactions, through the writing of options on
the shares, or through a combination of such methods of sale, at prices related
to market prices prevailing at the time of sale or at negotiated prices. The
Selling Shareholders may effect such transactions by selling the shares to or
through broker- dealers, and such broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the Selling Shareholders
and/or the purchasers of the shares for which such broker-dealers may act as
agent or to whom they sell as principal, or both (which compensation as to a
particular broker-dealer may be in excess of customary commissions). The
Selling Shareholders may also pledge such Common Stock as collateral for loans
and the pledgees may sell the Common Stock in accordance with the terms of the
pledge agreements.
13
<PAGE> 17
The Selling Shareholders and any broker-dealer who acts in connection
with the sale of the shares hereunder may be deemed to be an "underwriter"
within the meaning of Section 2(11) of the Securities Act, and any commissions
received by them and profit on any resale of the shares as principal may be
deemed to be underwriting discounts and commissions under the Securities Act.
14
<PAGE> 18
SELLING SHAREHOLDERS
The following table sets forth information regarding the Common Stock
owned as of June 5, 1996, by the Selling Shareholders. The shares of the
Common Stock were issued without registration under the Securities Act.
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to Offering After Offering
------------------------ -----------------------
Number of
Number of Shares Being Number of
Name of Shareholder Shares Percent Sold Shares Percent
- ------------------- ------------ ------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C>
Ray D. Russenberger(1) 3,010,833(2) 29.3%(2) 315,203 2,695,630(2) 26.3%(2)
Daniel R. Hiller(3) 49,108 * 49,108 -0- *
</TABLE>
- --------------------
(1) Mr. Russenberger has sole voting and investment power with respect
to all shares of Common Stock shown to be beneficially owned by
him.
(2) The Company has also registered 2,660,130 of the shares of Common
Stock held by Mr. Russenberger, or 29.3% of the outstanding
shares, for resale from time to time on the Nasdaq National
Market or in certain other transactions. The 315,203 shares of
Common Stock covered by this Prospectus were not registered under
that Registration Statement.
(3) Represents shares of Common Stock issuable to Mr. Hiller upon
exercise of outstanding stock options.
* Less than 1%.
Ray D. Russenberger has been Vice Chairman of the Company since October
24, 1995, and previously served as Chairman of the Board and Chief Executive
Officer of Network Paging Corporation since December 1988.
Daniel R. Hiller served as Vice President of the Mobile Communications
Division of the Company from 1989 until October 30, 1995. Mr. Hiller was General
Manager of the Company's operations in Nashville, Tennessee between 1985 and
1989.
15
<PAGE> 19
EXPERTS
The consolidated financial statements and the related financial statement
schedule incorporated in this prospectus by reference from the Company's Annual
Report on Form 10-K for the year ended December 31, 1995, have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports, which
are incorporated herein by reference, and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
LEGAL MATTERS
Certain legal matters in connection with the securities offered hereby
have been passed upon by Waller Lansden Dortch & Davis, Nashville City Center,
511 Union Street, Suite 2100, Nashville, Tennessee 37219-1760, counsel to the
Company.
16
<PAGE> 20
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses to be incurred in connection with this Registration Statement
are as follows:
<TABLE>
<S> <C>
Registration fee to the Securities
and Exchange Commission $ 1,396.08
Accounting fees and expenses * 5,000.00
Legal fees and expenses * 5,000.00
Miscellaneous expenses * 1,000.00
----------
Total * $12,396.08
==========
</TABLE>
--------------------
* Estimated
The registrant has agreed to bear all expenses (other than fees and
expenses of counsel and other advisors to the Selling Shareholder) in
connection with the registration and sale of the shares being offered by the
Selling Shareholder.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(1) Article 12 of the Registrant's Charter provides as follows:
"(a) The Corporation shall indemnify, and upon request shall
advance expenses to, in the manner and to the full extent permitted by law, any
officer or director (or the estate of any such person) who was or is a party
to, or is threatened to be made a party to, any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
investigative or otherwise, by reason of the fact that such person is or was a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, partner, trustee or employee of another
corporation, partnership, joint venture, trust or other enterprise (an
"indemnitee"). The Corporation may, to the full extent permitted by law,
purchase and maintain insurance on behalf of any such person against any
liability which may be asserted against him or her. To the full extent
permitted by law, the indemnification and advances provided for herein shall
include expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement. The indemnification provided herein shall not be deemed to
limit the right of the Corporation to indemnify any other person for any such
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement to the full extent permitted by law, both as to action in his
official capacity and as to action in another capacity
II-1
<PAGE> 21
while holding such office. Notwithstanding the foregoing, the Corporation
shall not indemnify any such indemnitee (1) in any proceeding by the
Corporation against such indemnitee; or (2) if a judgment or other final
adjudication adverse to the indemnitee establishes to the Corporation or its
stockholders, (i) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, or (ii) unlawful
distributions under Section 48-18-304 of the Act.
(b) The rights to indemnification and advancement of expenses set
forth in paragraph 12(a) above are intended to be greater than those which are
otherwise provided for in the Act, are contractual between the Corporation and
the person being indemnified, his heirs, executors and administrators, and,
with respect to paragraph 12(a), are mandatory, notwithstanding a person's
failure to meet the standard of conduct required for permissive indemnification
under the Act, as amended from time to time. The rights to indemnification and
advancement of expenses set forth in paragraph 12(a) above are nonexclusive of
other similar rights which may be granted by law, this Charter, the Bylaws, a
resolution of the Board of Directors or stockholders of the Corporation, or an
agreement with the Corporation, which means of indemnification and advancement
of expenses are hereby specifically authorized.
(c) Any repeal or modification of the provisions of this Article
12, either directly or by the adoption of an inconsistent provision of this
Charter, shall not adversely affect any right or protection set forth herein
existing in favor of a particular individual at the time of such repeal or
modification. In addition, if an amendment to the Act limits or restricts in
any way the indemnification rights permitted by law as of the date hereof, such
amendment shall apply only to the extent mandated by law and only to activities
of persons subject to indemnification under this Article 12 that occur
subsequent to the effective date of such amendment."
(2) In addition to the foregoing provisions of the Charter of the
Registrant, directors, officers, employees and agents of the Registrant may be
indemnified by the Registrant pursuant to the provisions of Section 48-18-501
et seq. of the Tennessee Code Annotated.
II-2
<PAGE> 22
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------ -----------------------
<S> <C> <C>
2.1 -- Agreement and Plan of Merger, dated as of June 4, 1995, among the
Registrant, Network Paging Corporation, Ray D. Russenberger and
Charles A. Emling III(1)
2.2 -- Agreement and Plan of Merger dated as of May 16, 1996, between
Metrocall, Inc. and A+ Network, Inc.(3)
2.3 -- Shareholders' Option and Sale Agreement dated as of May 16, 1996, between
Metrocall, Inc. and certain shareholders of A+ Network, Inc. listed
therein(3)
2.4 -- Non-Qualified Option Agreement dated November 15, 1995.(4)
4.1 -- Article 6 of the Amended and Restated Charter of the Registrant(2)
4.2 -- Rights Agreement, dated February 16, 1995, between Registrant and First
Union National Bank of North Carolina(2)
5.1 -- Opinion of Waller Lansden Dortch & Davis as to legality of securities(4)
23.1 -- Consent of Deloitte & Touche LLP
23.2 -- Consent of Waller Lansden Dortch & Davis (included in Exhibit 5.1)
24.1 -- Power of Attorney(4)
</TABLE>
- -----------------
(1) Incorporated by reference to exhibits filed with the
Registrant's Registration Statement on Form S-1, Registration
No. 33-95208.
(2) Incorporated by reference to Registrant's Current Report on
Form 8-K, dated February 16, 1995.
(3) Incorporated by reference to Registrant's Current Report on
Form 8-K, dated May 20, 1996.
(4) Previously filed.
II-3
<PAGE> 23
ITEM 17. UNDERTAKINGS.
A. 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
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% 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.
Provided, however, that paragraphs 1(i) and 1(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference 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.
B. The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where
II-4
<PAGE> 24
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.
C. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-5
<PAGE> 25
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 Nashville, State of Tennessee, on June 24, 1996.
A+ NETWORK, INC.
By: /s/ Randy K. Schultz
-------------------------------------
Randy K. Schultz
Vice President and Chief Financial
Officer
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>
Name Title Date
---- ----- ----
<S> <C> <C>
* President, Chief Executive June 24, 1996
- ------------------------------------------- Officer and Director
Charles A. Emling III (principal executive officer)
/s/ Randy K. Schultz Vice President and Chief June 24, 1996
- ------------------------------------------- Financial Officer (principal
Randy K. Schultz financial officer and principal
accounting officer)
</TABLE>
II-6
<PAGE> 26
<TABLE>
<S> <C> <C>
* Director June 24, 1996
- -------------------------------------------
Brownlee O. Currey, Jr.
Director __________, 1996
- -------------------------------------------
Bruce R. Evans
* Director June 24, 1996
- -------------------------------------------
Kevin P. Reilly
* Director June 24, 1996
- -------------------------------------------
Prentice I. Robinson
* Director June 24, 1996
- -------------------------------------------
Ray D. Russenberger
* Director June 24, 1996
- -------------------------------------------
Irby C. Simpkins, Jr.
* Director June 24, 1996
- -------------------------------------------
Elliott H. Singer
* Director June 24, 1996
- -------------------------------------------
Neil J. Weisman
Director __________, 1996
- -------------------------------------------
Harvey N. Weiss
By: /s/ Randy K. Schultz
----------------------
Randy K. Schultz
As Attorney-in-Fact June 24, 1996
</TABLE>
II-7
<PAGE> 27
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
- -------------- ----------------------
<S> <C> <C>
2.1 -- Agreement and Plan of Merger, dated as
of June 4, 1995, among the Registrant,
Network Paging Corporation, Ray D.
Russenberger and Charles A. Emling III(1)
2.2 -- Agreement and Plan of Merger dated as of
May 16, 1996, between Metrocall, Inc. and
A+ Network, Inc.(3)
2.3 -- Shareholders' Option and Sale Agreement
dated as of May 16, 1996, between
Metrocall, Inc. and certain shareholders
of A+ Network, Inc. listed therein(3)
2.4 -- Non-Qualified Option Agreement dated
November 15, 1995.(4)
4.1 -- Article 6 of the Amended and Restated
Charter of the Registrant(2)
4.2 -- Rights Agreement, dated February 16,
1995, between Registrant and First
Union National Bank of North
Carolina(2)
5.1 -- Opinion of Waller Lansden Dortch &
Davis as to legality of securities(4)
23.1 -- Consent of Deloitte & Touche LLP
23.2 -- Consent of Waller Lansden Dortch &
Davis (included in Exhibit 5.1)
24.1 -- Power of Attorney(4)
</TABLE>
_________________
(1) Incorporated by reference to exhibits filed with the
Registrant's Registration Statement on Form S-1, Registration
No. 33-95208.
(2) Incorporated by reference to Registrant's Current Report on
Form 8-K, dated February 16, 1995.
(3) Incorporated by reference to Registrant's Current Report on
Form 8-K, dated May 20, 1996.
(4) Previously filed.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-5311 of A+ Network, Inc. on Form S-3 of our
reports dated February 28, 1996, appearing in the Annual Report on Form 10-K of
A+ Network, Inc. for the year ended December 31, 1995 and to the reference to
us under the heading "Experts" in the Prospectus which is part of this
Registration Statement.
/s/ DELOITTE & TOUCHE LLP
- -------------------------
DELOITTE & TOUCHE LLP
Nashville, Tennessee
June 25, 1996
