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As filed with the Securities and Exchange Commission on October 30, 1998
Registration No. 333-63119
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
to
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
3DX TECHNOLOGIES INC.
(Exact name of registrant as specified in charter)
Delaware 76-0386601
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
12012 Wickchester, Suite 250
Houston, Texas 77079
(281) 579-3398
(Address, including zip code, and telephone
number, including area code, of
registrant's principal executive
offices)
Ronald P. Nowak
President and Chief Executive Officer
12012 Wickchester, Suite 250
Houston, Texas 77079
(281) 579-3398
(Name and address, including zip code and telephone number,
including area code, of agent for service)
with a copy to:
Jay R. Schifferli, Esq.
Kelley Drye & Warren LLP
Two Stamford Plaza
281 Tresser Boulevard
Stamford, Connecticut 06901
(203) 324-1400
Approximate date of commencement of proposed sale of the securities to the
public: From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
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. |_|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------ ----------------------- --------------------------- ------------------------ -----------------
Title of shares Amount to be Proposed maximum offering Proposed maximum Amount of
to be registered registered price per share(1) aggregate offering registration fee
price(1)
- ------------------------------------ ----------------------- --------------------------- ------------------------ -----------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per 4,515,114 $.375 $1,693,167.75 $470.70
share
- ------------------------------------ ----------------------- --------------------------- ------------------------ -----------------
</TABLE>
(1) Estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457. $516.87 was previously paid.
(2) Based on the average of the high and the low prices of the Common
Stock on the Nasdaq National Market on October 28, 1998.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
Subject to completion, dated October 30, 1998
PROSPECTUS
4,515,114 Shares
3DX TECHNOLOGIES INC.
Common Stock ($.01 par value)
This Prospectus relates to the offer and sale of 4,515,114 shares (the
"Shares") of common stock, par value $.01 per share ("Common Stock"), of 3DX
Technologies Inc. ("3DX" or the "Company") by or on behalf of certain
stockholders of the Company ("Selling Stockholders").
The Shares may be offered and sold from time to time by one or more of
the Selling Stockholders, however, no Selling Stockholder is required to offer
or sell any of his or its Shares. The Selling Stockholders anticipate that, if
and when offered and sold, the Shares will be offered and sold in transactions
(which may include block transactions) effected on the Nasdaq National Market at
the then prevailing market prices. The Selling Stockholders reserve the right,
however, to offer and sell the Shares on any other national securities exchange
on which the Common Stock is or may become listed or in the over-the-counter
market, in each case at then prevailing market prices, or in privately
negotiated transactions as a price then to be negotiated. All offers and sales
made on the Nasdaq National Market or any other national securities exchange or
in the over-the-counter market will be made through or to licensed brokers and
dealers. All proceeds from the sale of the Shares will be paid directly to the
Selling Stockholders and will not be deposited in an escrow, trust or other
similar arrangement. The Company will not receive any of the proceeds from the
sales by the Selling Stockholders. No discounts, commissions or other
compensation will be allowed or paid by the Selling Stockholders or the Company
in connection with the offer and sale of the Shares, except that usual and
customary brokers' commissions may be paid by the Selling Stockholders. Upon any
sale of the Shares offered hereby, the Selling Stockholders and participating
agents, brokers or dealers may be deemed to be underwriters as that term is
defined in the Securities Act of 1933, as amended (the "Securities Act"), and
commissions or discounts or any profit realized on the resale of such securities
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
The Company has agreed to indemnify the Selling Stockholders, and the
Selling Stockholders have agreed to indemnify the Company, its officers,
directors, employees, agents and controlling persons against certain liabilities
arising in connection with this offering, including liabilities under the
Securities Act. The Company will pay all expenses incurred in connection with
this offering, excluding commissions charged by any broker or dealer acting on
behalf of a Selling Stockholder. The legal, accounting and other fees and
expenses to be paid by the Company related to the offer and sale of the Shares
contemplated hereby are estimated to be $55,000.
The Common Stock is quoted on the Nasdaq National Market under the
symbol "TDXT". On October 28, 1998, the last reported sale price of the Common
Stock on the Nasdaq National Market was $.375.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 4.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is October __, 1998.
<PAGE>
No person is authorized in connection with the offering made hereby to
give any information or to make any representation not contained in this
Prospectus. If given or made, such information or representation must not be
relied upon as having been authorized by the Company. Neither the delivery of
this Prospectus nor any offer or sale made hereunder shall under any
circumstances create any implication that the information contained herein is
correct as of any time subsequent to the date hereof. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities
in any jurisdiction to any person to whom it would be unlawful to make such an
offer or solicitation in such jurisdiction.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act and in accordance therewith files reports, proxy statements and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549; at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and at Seven World Trade Center, 13th Floor, New York, New York
10048. In addition, the Company is required to file electronic versions of these
documents through the Commission's Electronic Data Gathering, Analysis and
Retrieval system (EDGAR). The Commission maintains a World Wide Web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. Copies of such material may also be obtained at prescribed rates
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Judiciary Plaza, Room 1024, Washington, D.C. 20549. The Common Stock is quoted
on the Nasdaq National Market.
The Company has filed with the Commission a Registration Statement on
Form S-3, as amended (the "Registration Statement"), under the Securities Act
with respect to the securities being offered by this Prospectus. As permitted by
the rules and regulations of the Commission, this Prospectus does not contain
all the information set forth in the Registration Statement and the exhibits
thereto. For further information with respect to the Company and the offer and
sale of the securities, reference is made to the Registration Statement and the
exhibits thereto. Statements contained in this Prospectus concerning the
provisions of documents filed with the Registration Statement as exhibits are
necessarily summaries of such documents, and each such statement is qualified in
its entirety by reference to the copy of the applicable document filed with the
Commission. The Registration Statement may be inspected without charge at the
office of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies of all or any part thereof may be obtained from the Commission at
prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act") are hereby incorporated by reference in this Prospectus:
(a) Annual Report on Form 10-K for the fiscal year ended December 31,
1997, as amended;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31,
1998 and June 30, 1998;
(c) Current Report on Form 8-K dated September 9, 1998; and
(d) The description of the Common Stock offered hereby contained in
the Company's Registration Statement on Form 8-A which was
declared effective by the Commission on December 9, 1996.
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All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 (other than, in the case of the Company's Proxy Statement, portions thereof
not deemed to be "filed" for the purposes of Section 18 of the Exchange Act) and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the securities to be made hereunder shall be
deemed to be incorporated herein by reference and shall be a part hereof from
the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of the
Registration Statement or this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of such
person, a copy of the documents incorporated herein or in the Registration
Statement by reference (other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference into the information the
Registration Statement so incorporates). Written or telephone requests for such
documents should be directed to Investor Relations Department, 3DX Technologies
Inc., 12012 Wickchester, Suite 250, Houston, Texas 77079, telephone (281)
579-3398.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
Certain statements in the materials given to the Purchasers including
statements regarding anticipated capital expenditures, estimates of proved
reserves, future rates of production, future growth, future exploration, future
seismic data (including timing and results), future reserves, revenues, future
drilling (including the timing and results thereof), expansion of operations,
generation of additional prospects and results of current or future prospects,
future reserves and future leases, and other land rights, timing of capital
expenditures and regulatory reform, and other statements contained herein
regarding matters that are not historical facts, are forward-looking statements
(as such term is defined in the Private Securities Litigation Reform Act of
1995). The words "budgeted", "anticipate," "project," "estimate," "expect,"
"may," "believe," "potential" and similar statements are intended to be among
the statements that are forward looking statements. Because such statements
include risks and uncertainties, actual results may differ materially from those
expressed or implied by such forward-looking statements. Factors that could
cause actual results to differ materially include, but are not limited to, those
discussed under "Risk Factors" and in the Company's filings with the SEC.
THE COMPANY
3DX Technologies Inc. ("the Company") is a knowledge-based oil and gas
exploration company whose core competence and strategic focus is the utilization
of 3-D seismic imaging and other advanced technologies in the search for
commercial quantities of hydrocarbons. The Company enters into partnerships that
enable it to combine its expertise and exploration capabilities with the
operating skills of other oil and gas companies. The Company participates in
selected exploration projects as a non-operating working interest owner, sharing
both risks and rewards with its partners. The Company commenced operations in
January 1993 to take advantage of perceived opportunities emerging from changes
in the domestic oil and gas industry, including the divestiture of domestic oil
and gas properties, advances in technology and the outsourcing of specialized
technical capabilities. By reducing drilling risk through 3-D imaging and
analysis, the Company seeks to improve the expected return on investment in its
oil and gas projects. In mid 1998, the Company changed its business model for
entering new 3-D projects. The Company has begun to form strategic relationships
with knowledge based generators and to fund potential projects earlier in the
process of the project generation. By providing 3-D seismic design, management
of data acquisition and processing and interpretation of the data, the Company
3
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generally has had the opportunity to acquire a 15% to 25% working interest
(often on a promoted basis) in an individual project at the time of seismic
acquisitions.
In the past, new project opportunities have always focused on
externally generated projects, not internally generated ideas. To provide the
continuous source of projects for the drilling program and future growth, the
Company's intent is to blend the previous business methodology with a more
pro-active internal generating capability. The Company believes that the
benefits of this approach are a more independent and stronger internal
generating expertise and the ability to maintain a larger interest level in
projects on a non-promoted basis. To accomplish this in a timely manner the
Company is currently in discussion with two private companies that should
generate the potential 3-D projects that the Company requires.
The ability to bring additional opportunities into the Company at a
much earlier stage and on a non-promoted basis allows the Company to modify and
improve on its business model. The intent of the Company is not simply to become
a promoter of oil and gas prospects to the industry but to use promotion as a
resource to recover technical overhead costs associated with 3D seismic
projects. The intent is growth with a focus on drilling and better management of
costs. As of August 1998, the Company's portfolio included 45 prospects
identified on 12 separate 3-D projects primarily located onshore within the Gulf
Coast region from South Texas to Louisiana.
The Company was incorporated under the laws of the State of Delaware in
1992. Its offices are located at 12012 Wickchester, Suite 250, Houston, Texas
77079 and its telephone number is (281) 579-3398.
RISK FACTORS
In addition to the other information and financial data set forth
elsewhere in this Prospectus, the following risk factors should be considered
carefully in evaluating the Company and its business before purchasing the
shares of Common Stock offered hereby.
Limited Operating History
The Company commenced its operations in 1993 and has only a limited
operating history. Potential investors, therefore, have limited historical
financial and operating information upon which to base an evaluation of the
Company's performance and an investment in shares of Common Stock. For example,
the producing wells within exploration projects in which the Company is
participating have been on production only for a short period of time.
Therefore, estimations with respect to the proved reserves and level of future
production attributable to these wells are difficult to determine and there can
be no assurance as to the volume of recoverable reserves that will be realized
from such wells. The Company's prospects must be considered in light of the
risks, expenses and difficulties frequently encountered by companies in the
early stages of their development.
Significant Historical Operating Losses
The Company has incurred significant operating and net losses to date.
Net losses for 1995, 1996 and 1997 were approximately $2.5 million, $2.7 million
and $11 million, respectively. At June 30, 1998, the Company had an accumulated
deficit of $26.2 million. The development of the Company's business and its
participation in an increasingly larger number of projects has required and will
continue to require substantial expenditures. The Company's future financial
results will depend primarily on its ability to economically locate hydrocarbons
in commercial quantities, to provide drilling site and target depth
recommendations resulting in profitable productive wells and on the market
prices for oil and gas. There can be no assurance that the Company will achieve
or sustain profitability or positive cash flows from operating activities in the
future.
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Future Capital Requirements
Management of the Company continues to be actively engaged in
soliciting new equity investors to provide funding for its capital program.
Management of the Company understands that the Company's business requires
substantial oil and gas expenditures and that additional financing will be
required to completely fund its capital program, which includes two additional
exploration wells and one development well in 1998 and up to 17 exploration and
development wells in 1999 as well as a lease acquisition and seismic
expenditures. As of June 30, 1998, the Company had a deficit in working capital
of approximately $2.8 million. The lack of firm commitments for additional
equity financing at this time, combined with a deficit in working capital, raise
uncertainty about the ability of the Company to continue as a going concern. In
September 1998, the Company's independent public accountants included a fourth
paragraph in their report on the 1997 financial statements of the Company
related to the Company's uncertain ability to continue as a going concern. The
Company's continuation as a going concern is dependent upon its ability to
generate sufficient cash flow to meet its obligations on a timely basis and to
comply with the terms of its financing agreement. Based on current economic
conditions, the Company will require sources of capital in addition to projected
cash generated from operations to fund its future capital expenditures. In the
absence of additional funding, the Company may be required to reduce its planned
level of capital expenditures or pursue other financial alternatives, which
could include a sale or merger of the Company.
Volatility of Oil and Gas Prices
The Company's revenues, profitability, cash flow and future growth are
affected by changes in prevailing oil and gas prices. Oil and gas prices have
been subject to wide fluctuations in recent years in response to relatively
minor changes in the supply and demand for oil and gas, market uncertainty and a
variety of additional factors that are beyond the control of the Company,
including economic, political and regulatory developments and competition from
other sources of energy. It is impossible to predict future oil and gas price
movements. Currently, the Company does not engage in hedging activities. As a
result, the Company may be more adversely affected by fluctuations in oil and
gas prices than other industry participants that do engage in such activities.
No assurances can be given as to the future level of activity in the oil and gas
exploration and development industry and its relationship to the future demand
for the expertise offered by the Company. An extended or substantial decline in
oil and gas prices could have a material adverse effect on the Company's
financial position and results of operations, the volume of oil and gas that may
be economically produced by operations of projects in which the Company
participates and the Company's access to capital.
Non-Operator Status
The Company relies upon other project partners to provide certain
project operations including land acquisition, drilling, marketing and project
administration. As a result, the Company has only a limited ability to exercise
control over a significant number of a project's operations or the associated
costs of such operations. While the Company monitors the activities of the
operator, the Company does not engage in any other activities to protect itself
against its inability to control project costs. The success of a project is
dependent upon a number of factors which are outside of the Company's area of
expertise and project responsibilities. Such factors include: (i) the
availability of favorable lease terms and required permitting for projects, (ii)
the availability of future capital resources by the Company and the other
participants for the purchasing of leases and the drilling of wells, (iii) the
approval of other participants to the purchasing of leases and the drilling of
wells on the projects, (iv) the economic conditions at the time of drilling,
including the prevailing and anticipated prices for oil and gas and (v) the
ability of the operator to successfully and adequately perform its tasks. The
Company's reliance on other project partners and its limited ability to directly
control certain project costs could have a material adverse effect on the
realization of expected rates of return on the Company's investment in projects.
5
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Ability to Discover Additional Reserves
The Company's future success is dependent upon its ability to
economically locate additional oil and gas reserves in commercial quantities.
The Company's ability to do so is dependent upon a number of factors, including
its participation in multiple exploration projects and its technological
capability to locate oil and gas in commercial quantities. The Company does not
yet generate or develop its own projects and no assurances can be given that the
Company will have the opportunity to participate in projects which economically
produce commercial quantities of hydrocarbons in amounts necessary to meet its
business plan or that the projects in which it elects to participate will be
successful. Except to the extent that the Company successfully locates
commercial quantities of economically recoverable oil and gas, the Company's
proved reserves will decline as reserves are produced. There can be no assurance
that the Company will be able to discover additional commercial quantities of
oil and gas or that the Company's project partners will have success drilling
productive wells and acquiring properties at low finding costs.
Substantial Capital Requirements and Liquidity
To date, net cash provided by operating activities has been limited and
the Company has funded its oil and gas exploration activities principally
through cash provided by the sale of equity securities and long-term debt. The
Company's business requires substantial oil and gas capital expenditures. To
achieve its near-term goals, the Company has been and will be required to make
oil and gas capital expenditures substantially in excess of its net cash flow
from operations in order to acquire, explore and develop oil and gas properties.
The level of capital spending in the future will be dependent upon the Company's
ability to obtain additional sources of funding.
The Company will require additional sources of financing to fund
drilling expenditures on properties currently owned by the Company and, to a
lesser extent, to fund leasehold costs and geological and geophysical costs on
its active exploration projects. The Company generally has the right, but not
the obligation, to participate for its percentage interest in drilling wells and
can decline to participate if it does not have sufficient capital resources at
the time such drilling operations are proposed. The Company can also potentially
transfer its right to participate in drilling wells in exchange for cash, a
reversionary interest, or some combination thereof. To recover its investment in
unevaluated properties, it is necessary for the Company to either participate in
drilling which finds commercial oil and gas production and produce such reserves
or receive sufficient value through the sale or transfer of its interests.
The Company expects that its projected cash flows from currently
producing properties will be sufficient to fund its cash general and
administrative costs for the remainder of 1998 as well as the first six months
of 1999, including technical employee and related costs which are capitalized
under full-cost accounting, however, these cash flows are not projected to be
sufficient to fund the current deficit in working capital. The Company's
projections of cash flows from currently producing properties could be adversely
affected by declines in oil and gas prices below current levels or anticipated
seasonal lows and unanticipated declines in oil and gas production from existing
properties.
The Company intends to seek additional financing to satisfy its capital
requirements. The Company is currently evaluating alternatives to obtain
additional equity financing, which include sales of common or preferred stock.
In the absence of additional financing, the Company anticipates that it will be
required to modify the implementation and timing of its oil and gas exploration
and development capital spending for 1998 and 1999, which modification could
have a material adverse effect on the Company. No assurance can be given that
the Company will be able to obtain additional financing on terms which would be
acceptable to the Company, if at all. The Company's inability to obtain
additional financing would have a material adverse effect on the Company. The
lack of firm commitments for equity financing at this time, combined with the
deficit in working capital, raises uncertainty about the ability of the Company
6
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to continue as a going concern. In the absence of additional funding, the
Company may be required to reduce its planned level of capital expenditures or
pursue other financial alternatives, which could include a sale or merger of the
Company.
Credit Agreement Non-Compliance
As of June 30, 1998, the Company had a deficit in working capital of
approximately $2.8 million. On December 18, 1997, the Company executed a credit
agreement with a commercial bank, the borrowing capacity of which was set at
$2.0 million in April 1998. During the quarter ended June 30, 1998, the Company
borrowed $2.0 million under the credit agreement. Such amount is the maximum
amount currently available for borrowing under the credit facility. The
borrowing capacity is a function of the value of the Company's proved oil and
gas reserves, and is redetermined on a semi-annual basis. In April 1998, the
bank, based on its assessment of the Company's proved resources at December 31,
1997 and related cash flow estimates, reduced the Company's available borrowing
to $2 million. The credit agreement is secured by substantially all of the
Company's oil and gas properties and contains restrictions on dividends and
additional liens and indebtedness and requires the maintenance of a minimum
current ratio and net worth, each as defined in the credit agreement. As of June
30, 1998, the Company was not in compliance with certain covenants of the credit
agreement pertaining to minimum working capital and aging of accounts payable.
The bank waived these instances of non-compliance through September 30, 1998.
The Company has contacted the bank to secure an additional waiver of
non-compliance through December 31, 1998. In the absence of an improvement in
the Company's working capital accounts payable aging, future waivers from the
bank will be necessary.
Potential Sales of Certain Properties
As a result of the Company's periodic review of each of its oil and gas
exploration and development properties and its available capital, the Company
has occasionally sold partial interests in specific oil and gas projects to
other investors to reduce its total investment commitment to such projects. No
gain or loss has been recognized on these transactions. In September 1998, the
Company sold one of its properties located in Cove Field, Texas for
approximately $440,000. In accordance with full cost accounting rules, no gain
or loss was recorded on this sale of an oil and gas property. The Company is
currently reviewing its portfolio to identify properties to be marketed to
industry partners for cash consideration, reversionary working interests or some
combination thereof. Such interests may consist of both producing wells and
future drilling locations.
As of the date hereof, there were three probable property sales with
proceeds aggregating approximately $3.7 million, each of which is expected to
close in the fourth quarter of 1998. The Company intends to utilize all the
proceeds from these property sales to reduce the balance of borrowings on the
Company's bank credit agreement and current payables. Because none of the sales
are expected to have a significant effect on the oil and gas property depletion
rate, no gain or loss is expected to be recognized in income on these sales
transactions. The properties' discounted future net cash flows as of September
30, 1998 totaled approximately $3.2 million. Net revenues from these properties
for the year ended December 31, 1997 and the six-month period ended June 30,
1998 approximated $0.2 million and $0.8 million, respectively. There can be no
assurance, however, that the Company will be able to sell any other such
interests, or that the terms of such other potential sales would be acceptable
to the Company.
Uncertainty of Estimates of Oil and Gas Reserves
There are numerous uncertainties inherent in estimating oil and gas
reserves and in projecting future rates of production. Petroleum engineering is
a subjective process of estimating underground accumulations of oil and gas that
cannot be measured in an exact manner. Estimates of economically recoverable oil
and gas reserves and of future net cash flows depend upon a number of variable
factors and assumptions, such as historical production from the area compared
with production from other producing areas, the assumed effects of regulations
by governmental agencies, and assumptions concerning future oil and gas prices,
future operating costs, severance and excise taxes, development costs and
workover and remedial costs, all which may in fact vary considerably from actual
results. For these reasons, estimates of the economically recoverable quantities
of oil and gas attributable to any particular group of properties,
classifications of such reserves based on risk of recovery and estimates of the
future net cash flows expected therefrom prepared by different engineers or by
the same engineers. at different times may vary substantially. Actual
production, revenues and expenditures with respect to the Company's reserves
will likely vary from estimates, and such variances may be material.
7
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Risk of Exploratory Drilling Activities
The success of the Company will be materially dependent upon the
continued success of its exploratory drilling program. Exploratory drilling
involves numerous risks, including the risk that no commercially productive oil
or natural gas reservoirs will be encountered. The cost of drilling, completing
and operating wells is often uncertain, and drilling operations may be
curtailed, delayed or cancelled as a result of a variety of factors, including
unexpected drilling conditions, pressure or irregularities in formations,
equipment failures or accidents, adverse weather conditions, compliance with
governmental requirements and shortages or delays in the availability of
drilling rigs or delivery crews and the delivery of equipment. Although the
Company believes that its use of 3-D seismic data and other advanced technology
should increase the probability of success of its exploratory wells through
elimination of prospects that might otherwise be drilled solely on the basis of
2-D seismic data and other traditional methods, exploratory drilling remains a
speculative activity. Even when fully utilized and properly interpreted, 3-D
seismic data and advanced techniques only assist geoscientists in identifying
subsurface structures and do not allow the interpreter to know if hydrocarbons
will in fact be present in such structures if they are drilled. In addition, the
use of 3-D seismic data and such technologies requires greater pre-drilling
expenditures than traditional drilling strategies and the Company could incur
losses as a result of such expenditures. The Company's future drilling
activities may not be successful and, if unsuccessful, such failure will have an
adverse effect on the Company's future results of operations and financial
condition. There can be no assurance that the Company's overall drilling success
rate or its drilling success rate for activity within a particular project area
will not decline. Although the Company has identified or budgeted for numerous
drilling prospects, there can be no assurance that such prospects will be leased
or drilled (or drilled within the scheduled or budgeted time frame) or that
natural gas or oil will be produced from any such identified prospects or any
other prospects. Prospects may initially be identified through a number of
methods, some of which do not include interpretation of 3-D or other seismic
data.
Competition
The exploration for and production of oil and gas are highly
competitive. Many companies and individuals are engaged in the business of
acquiring interests in and developing onshore and near onshore oil and gas
properties in the United States. The industry is not dominated by any single
competitor or a small number of competitors. The Company competes with a large
number of technology-driven major and independent oil and gas companies for the
acquisition of desirable oil and gas properties, as well as for the equipment
and expertise required to operate and develop such properties. Many of these
competitors have financial and other resources substantially in excess of those
available to the Company. Such competitive disadvantages could adversely affect
the Company's ability to participate in projects with favorable rates of return.
Technological Changes
The oil and gas industry is characterized by rapid and significant
technological advancements and introductions of new products and services
utilizing new technologies. As new technologies develop, the Company may be
placed at a competitive disadvantage, and competitive pressures may force the
Company to implement such new technologies at substantial cost. There can be no
assurance that the Company will be able to respond to such competitive pressures
and implement such technologies on a timely basis or at an acceptable cost. One
or more of the technologies currently utilized by the Company or implemented in
the future may become obsolete. In such case, the Company's business, financial
condition and results of operations could be materially adversely affected. If
the Company is unable to utilize the most advanced commercially available
technology, the Company's business, financial condition and results of
operations could be materially and adversely affected.
8
<PAGE>
Operating Risks of Oil and Natural Gas Operations; Limited Insurance Coverage
The oil and natural gas business involves certain operating hazards such
as well blowouts, craterings, explosions, uncontrollable flows of oil, natural
gas or well fluids, fires, formations with abnormal pressures, pollution,
releases of toxic gas and other environmental hazards and risks, any of which
could result in substantial losses to the Company. In addition, offshore
projects are subject to the additional hazards of marine operations, such as
capsizing, collision and damage or loss from severe weather. The Company
maintains insurance, which is subject to policy conditions and exclusions, for
third party claims based on bodily injury and property damage, cost of well
control and workers' compensation.
The availability of a ready market for the Company's oil and natural gas
production also depends on the proximity of reserves to, and the capacity of,
oil and natural gas gathering systems, pipelines and trucking or terminal
facilities. In addition, the Company may be liable for environmental damages
caused by previous owners of property purchased and leased by the Company.
As a result, substantial liabilities to third parties or governmental
entities may be incurred, the payment of which could reduce or eliminate the
funds available for exploration, development or acquisitions or result in the
loss of the Company's properties. In accordance with customary industry
practices, the Company maintains insurance against some, but not all, of such
risks and losses. The occurrence of an event not fully covered by insurance
could have a material adverse effect on the financial condition and results of
operations of the Company.
Government Regulation and Environmental Matters
Oil and natural gas operations are subject to various federal, state and
local government regulations, which may be changed from time to time in response
to economic or political conditions. Matters subject to regulation include
discharge permits for drilling operations, drilling bonds, reports concerning
operations, the spacing of wells, unitization and pooling of properties and
taxation. From time to time, regulatory agencies have imposed price controls and
limitations on production by restricting the rate of flow of oil and natural
gas. In addition, the development, production, handling, storage, transportation
and disposal of oil and natural gas, by-products thereof and other substances
and materials produced or used in connection with oil and natural gas operations
are subject to regulation under federal, state and local laws and regulations
primarily relating to protection of human health and the environment. The
Company is also subject to changing and extensive tax laws, the effects of which
cannot be predicted. The implementation of new, or the modification of existing,
laws or regulations could have a material adverse effect on the Company.
Variability of Operating Results
The Company's operating results have in the past and may in the future
fluctuate significantly depending upon a number of factors including industry
conditions, prices of oil and gas, rate of drilling success, rates of production
from completed wells and the timing of capital expenditures. Such variability
could have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, any failure or delay in the
realization of expected cash flows from operating activities could limit the
Company's ability to invest and participate in economically attractive projects.
Dependence on Key Personnel
The Company has assembled a team of geologists, geophysicists and
engineers who have considerable experience effectively applying 3-D imaging
technologies. The Company is dependent upon the knowledge, skills and experience
of these experts to provide 3-D imaging and assist the Company in reducing the
risks associated with its participation in oil and gas exploration projects. In
addition, the success of the Company's business also depends to a significant
9
<PAGE>
extent upon the abilities and continued efforts of its management, particularly
Ronald P. Nowak, the Company's President and Chief Executive Officer. The
Company does not have employment agreements with any of its employees except Mr.
Nowak, which provides for an employment term of two years ending February 2000.
The loss of the services of key management personnel or the Company's technical
experts, or the inability to attract additional qualified personnel, could have
a material adverse effect on the Company's business, financial condition,
results of operations, development efforts and ability to expand. There can be
no assurance that the Company will be successful in attracting and retaining
such executives, geoscientists and engineers.
Possible Volatility of Stock Price
The market price of the Common Stock could be subject to significant
fluctuations in response to various factors and events, including the liquidity
of the market for the Common Stock, variations in the Company's quarterly
operating results, regulatory or other changes in the oil and gas industry
generally, announcements of business developments by the Company or its
competitors, changes in operating costs and changes in general market
conditions. See "-Variability of Operating Results."
Anti-Takeover Considerations
The Company's Restated Certificate of Incorporation (the "Certificate
of Incorporation") and Amended and Restated By-laws (the "Bylaws") include
certain provisions that are intended to enhance the likelihood of continuity and
stability in the composition of the Company's Board of Directors. These
provisions may have the effect of delaying, deterring or preventing a future
takeover or change in control of the Company unless such takeover or change in
control is approved by the Company's Board of Directors, even though such a
transaction may offer the holders of Common Stock the opportunity to sell their
stock at a price above the prevailing market price. Such provisions may also
render the removal of directors and management more difficult. Specifically, the
Certificate of Incorporation and Bylaws, as the case may be, have been amended
to provide for a classified Board of Directors serving staggered, three-year
terms and certain advance notice requirements for stockholder nominations of
candidates for election to the Company's Board of Directors and certain other
stockholder proposals. Such provisions could limit the price that certain
persons might be willing to pay in the future for shares of Common Stock. The
Certificate of Incorporation also authorizes the Board of Directors of the
Company to issue from time to time, without any further action of stockholders,
up to one million shares of Preferred Stock (as defined herein), on such terms
and with such rights, designations, preferences, qualifications, limitations and
restrictions as the Board of Directors may determine. The issuance of such
Preferred Stock, depending upon the rights, designations, preferences,
qualifications, limitations and restrictions thereof, may have the effect of
delaying, deterring or preventing a change in control of the Company or may
otherwise adversely affect the interests of holders of Common Stock. Further,
certain provisions of the Delaware General Corporation Law (the "DGCL") prevent
certain stockholders from engaging in business combinations with the Company,
subject to certain exceptions.
Continued Listing on Nasdaq
In September 1998, the Company received a letter from The Nasdaq Stock
Market, Inc. notifying the Company that it failed to maintain a closing bid
price of greater than or equal to $1.00 and that the Company's Common Stock
failed to maintain a market value of public float greater than or equal to $5
million, as required by Nasdaq rules. If the Company is unable to demonstrate
compliance with the $1.00 minimum bid price requirement on or before December
14, 1998, the Company's Common Stock will be delisted at the opening of business
on December 16, 1998. In such an event, trading on the Common Stock would be
conducted in the over-the-counter market on an electronic bulletin board
established for securities that do not meet the listing requirements for Nasdaq,
or in what are commonly referred to as the "pink sheets." As a result, a holder
of the Common Stock could find it more difficult to dispose of, or to obtain
accurate quotations of the price of the Common Stock. Such delisting could have
an adverse effect on the market price and overall marketability of the common
stock.
10
<PAGE>
Penny Stock Regulations
If the common stock is not listed on Nasdaq and has a market price of
less than $5.00 per share, it may be classified as a "penny stock." Commission
regulations define a "penny stock" to be any non-Nasdaq equity security that has
a market price of less than $5.00 per share, subject to certain exceptions. For
any transaction involving a penny stock, unless exempt, the rules require
delivery, prior to any transaction in a penny stock, of a disclosure schedule
prepared by the Commission relating to the penny stock market. Disclosure is
also required to be made about commissions payable to both the broker-dealer and
the registered representative and to provide current quotations for the
securities. Finally, monthly statements are required to be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stocks.
The foregoing required penny stock restrictions will not apply to the
common stock if such securities are quoted in Nasdaq and have certain price and
volume information provided on a current and continuing basis or meet certain
minimum net tangible assets or average revenue criteria. There can be no
assurance that the common stock will qualify for exemption from these
restrictions. In any event, even if shares of the common stock were exempt from
such restrictions, they would remain subject to Section 15(b)(6) of the Exchange
Act, which gives the SEC the authority to prohibit any person that is engaged in
unlawful conduct while participating in a distribution of a penny stock from
associating with a broker-dealer or participating in a distribution of a penny
stock, if the SEC finds that such a restriction would be in the public interest.
If the Common Stock were subject to the rules on penny stocks, the market
liquidity for the common stock could be severely adversely affected.
SELLING STOCKHOLDERS
The following table sets forth, to the knowledge of the Company, the
number of shares of Common Stock and the percentage of the outstanding shares of
Common Stock beneficially owned by each Selling Stockholder, and the number of
Shares to be offered and sold by such Selling Stockholder, and the number of
shares and percentage of outstanding shares to be beneficially owned by such
Selling Stockholder after such offering and sale, assuming that all the shares
offered by such Selling Stockholder are in fact sold. Unless otherwise
indicated, each person has sole investment and voting power (or shares such
powers with his or her spouse) with respect to the shares set forth in the
following table. As of October 26, 1998 the Company had 9,153,854 shares of
Common Stock issued and outstanding.
<TABLE>
<CAPTION>
------------------------------------ -----------------------------------
Beneficial Ownership Beneficial Ownership
Prior to the Offering After the Offering
------------------------------------ -----------------------------------
Shares of Shares to Shares of
Common Stock Percentage (1) Be Sold Common Stock Percentage
------------ -------------- ------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Altira Group LLC 16,667 *% 16,667 0 -
Andrew James McLeod Duncan * 15,000 0 -
Educational Trust 15,000
Barbara Oil Company 37,913 * 37,913 0 -
Alex B. Campbell 1,466 * 1,466
Centennial Associates L.P. 198,468 2.17 198,468 0 -
Centennial Energy Partners L.P. 113,595 1.24 113,595 0 -
Centennial Overseas Fund, LTD 20,000 * 20,000 0 -
CWS Limited Liability Company 877,228 9.58 877,228 0 -
11
<PAGE>
Jonathan T. Dawson 18,047 * 18,047 0 -
Dawson/Samberg Capital 90,237 1.0 90,237 0 -
Management
Peter M. Duncan(2) 345,592 3.78 345,592 20,144 *
Charles E. Edwards(3) 20,878 * 20,878 3,877 *
C. Eugene Ennis(4) 309,555 3.37 309,555 20,144 *
Evelyn Ennis 226,351 2.47 226,351 0 -
Paul D. Favret 7,333 * 7,333 0 -
Peter Gough 5,687 * 5,687 0 -
Investment 11, LLC 10,000 * 10,000 0 -
Jeffrey Alexander McLeod 15,000 * 15,000 0 -
Duncan Education Trust
Minnowburn Corporation 233,333 2.55 233,333 0 -
Susan Morrice 111,147 1.21 111,147 0 -
NationsBanc Capital Corporation 721,903 7.89 721,903 0 -
Douglas C. Nester(5) 377,592 4.12 377,592 20,144 *
James R. Newell 13,333 * 13,333 0 -
Deborah W. Pratt 18,047 * 18,047 0 -
Quadrennial Partners, L.P. 10,000 * 10,000 0 -
R. Chaney & Partners 1993 L.P. 340,825 3.72 340,825 0 -
Santa Fe Energy Resources, Inc. 240,000 2.66 240,000 0 -
Kenneth Strode 24,584 * 24,584 0 -
Tercentennial Energy Partners, L.P. 40,000 * 40,000 0 -
Wayne W. Williamson 22,000 * 22,000 0 -
Donald D. Wolf 33,333 * 33,333 0 -
</TABLE>
- ----------------------
* Represents holdings of less than one percent.
(1) Percent of class is calculated by assuming, for purposes of the number
of shares held by any Selling Stockholder that all options that are, or
will become within 60 days, exercisable to purchase Common Stock held by
such Selling Stockholder (and no others) had been exercised.
(2) Includes 20,144 shares subject to options which are, or will become within
60 days, vested and exercisable.
(3) Includes 3,877 shares subject to options which are, or will become within 60
days, vested and exercisable.
(4) Includes 20,144 shares subject to options which are, or will become
within 60 days, vested and exercisable.
(5) Includes 20,144 shares subject to options which are, or will become within
60 days, vested and exercisable.
Each of C. Eugene Ennis, Peter M. Duncan and Douglas C. Nester was
employed by the Company in various positions during the past three years. None
of the other Selling Stockholders who is an individual is currently employed by
the Company.
The Selling Stockholders (other than Santa Fe Energy Resources, Inc.
("Santa Fe")) acquired their Shares pursuant to one or more of (i) a Stock
Purchase Agreement dated as of November 3, 1993 between the Company and certain
investors, (ii) a Series C Preferred Stock Purchase Agreement dated as of July
26, 1995 between the Company and certain investors and (iii) a Common Stock
Subscription Agreement dated June 3, 1998 between the Company and certain
investors, or as permitted transferees of persons who so acquired such Shares.
Santa Fe acquired their Shares pursuant to a Common Stock Subscription Agreement
dated as of August 21, 1998. Pursuant to the Common Stock Subscription
Agreements, the Company agreed to effect the registration of the offering and
sale of the Shares issued thereunder on a delayed or continuous basis under the
Securities Act on certain terms and conditions. The Stock Purchase Agreement and
the Series C Preferred Stock Purchase Agreement provide for "piggy-back" and
other registration rights on certain terms and conditions.
PLAN OF DISTRIBUTION
The Shares may be offered and sold from time to time by one or more of
the Selling Stockholders, or by pledgees, donees, transferees or other
successors in interest. No Selling Stockholder is required to offer or sell any
of his or its Shares. The Selling Stockholders anticipate that, if and when
offered and sold, the Shares will be offered and sold in transactions (which may
include block transactions) effected on the Nasdaq National Market at then
12
<PAGE>
prevailing market prices. The Selling Stockholders reserve the right, however,
to offer and sell the Shares on any other national securities exchange on which
the Common Stock is or may become listed or in the over-the-counter market, in
each case at then prevailing market prices, or in privately negotiated
transactions each at a price then to be negotiated. All offers and sales made on
the Nasdaq National Market or any other national securities exchange or in the
over-the-counter market will be made through or to licensed brokers and dealers.
No agreements, arrangements or understandings have been entered into with any
broker or dealer, and no brokers or dealers have been selected, in connection
with the offer and sale of the Shares. No discounts, commissions or other
compensation will be allowed or paid by the Selling Stockholders or the Company
in connection with the offer and sale of the Shares, except that usual and
customary brokers' commissions may be paid by the Selling Stockholders. All
proceeds from the sale of the Shares will be paid directly to the Selling
Stockholders and will not be deposited in an escrow, trust or other similar
arrangement.
The selling broker may act as agent or may acquire the Shares or
interests therein as principal or pledgee and may, from time to time, effect
distributions of the Shares or interests. If a dealer is utilized in the sale of
the Shares in respect of which the Prospectus is delivered, the Selling
Stockholders will sell the Shares to the dealer, as principal. The dealer may
then resell the Shares to the public at varying prices to be determined by such
dealer at the time of resale.
The Company has agreed to indemnify the Selling Stockholders and the
Selling Stockholders have agreed to indemnify the Company, its officers,
directors, employees, agents and controlling persons from certain damages or
liabilities arising out of or based upon any untrue statement or alleged untrue
statement of any material fact contained in or material omission or alleged
omission from the Registration Statement, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement thereto, to the
extent such untrue statement or omission was made in the Registration Statement
or other document in reliance upon information furnished by the indemnifying
party.
The legal, accounting and other fees and expenses related to the offer
and sale of the Shares contemplated hereby are estimated to be $55,000 and will
be paid by the Company. The Company will pay all expenses incurred in connection
with this offering, excluding commissions charged by any broker or dealer acting
on behalf of a Selling Stockholder.
EXPERTS
The audited financial statements incorporated by reference in this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports. Reference is made to
said report included in the Company's Form 8-K dated September 9, 1998, which
contains an explanatory fourth paragraph with respect to the existence of
substantial doubt about the Company's ability to continue as a going concern, as
described more fully in Note 11 to the financial statements.
The reports of independent petroleum engineers, dated December 31, 1997
and June 30, 1998 incorporated by reference in this Prospectus and elsewhere in
this registration statement are incorporated by reference herein in reliance
upon the authority of said firm as experts in giving said reports.
LEGAL MATTERS
Certain legal matters in connection with the legality of the securities
offered hereby have been passed upon for the Company by Kelley Drye & Warren
LLP, 101 Park Avenue, New York, New York 10178, and Two Stamford Plaza, 281
Tresser Boulevard, Stamford, Connecticut 06901.
* * * * *
13
<PAGE>
No dealer, salesperson or other 3DX TECHNOLOGIES INC.
person has been authorized to give
any information or to make any
representation not contained in this
Prospectus, and, if given or made,
such information or representation
must not be relied upon as having 4,515,114
been authorized by the Company. This Shares
Prospectus does not constitute an
offer to sell or a solicitation of
an offer to buy any of the
securities offered hereby in any
jurisdiction to any person to whom
it is unlawful to make such offer in
such jurisdiction. Neither the Common Stock
delivery of this Prospectus nor any ($.01 par value)
sale made hereunder shall, under any
circumstances, create any
implication that there has been no
change in the affairs of the Company
since the date hereof or that the
information contained herein is
correct as of any time subsequent to ____________________
its date.
PROSPECTUS
_______________
____________________
TABLE OF CONTENTS
Page
Available Information.............................. 2
Incorporation of Certain Documents
by Reference.................................. 2
Special Note Regarding Forward-Looking
Information................................... 3
The Company........................................ 3
Risk Factors....................................... 4
Selling Stockholders............................... 11
Plan of Distribution............................... 12
Experts .......................................... 13
Legal Matters...................................... 13
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Amount To
Type or Nature of Expense be Paid
------------------------- ---------
SEC registration fee.................................... $ 470.70
Accounting fees and expenses............................ 25,000.00
Legal fees and expenses................................. 25,000.00
Miscellaneous . ....................................... 4,529.30
--------
Total ...................................... $55,000.00
========
Item 15. Indemnification of Officers and Directors
Section 145 of the Delaware General Corporation Law (the "DGCL")
provides that a Delaware corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding") (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such actin, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. A Delaware corporation may indemnify any person under such
Section in connection with a proceeding by or in the right of the corporation to
procure judgment in its favor, as provided in the preceding sentence, against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action, except that no
indemnification shall be made in respect thereof unless, and then only to the
extent that, a court of competent jurisdiction shall determine upon application
that such person is fairly and reasonably entitled to indemnity for such
expenses as the court shall deem proper. A Delaware corporation must indemnify
any person who was successful on the merits or otherwise in defense of any
action, suit or proceeding or in defense of any claim, issue or matter in any
proceeding, by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith. A Delaware corporation may
pay for the expenses (including attorneys' fees) incurred by an officer or
director in defending a proceeding in advance of the final disposition to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director shall not be personally liable to
the corporation or its stockholders for monetary damages for a breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for any
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) in respect of certain unlawful dividend payments
or stock redemptions or repurchases, or (iv) for any transaction from which the
director derived an improper personal benefit. Article Ninth of the Company's
Certificate of Incorporation eliminates the liability of directors to the
fullest extent permitted by Section 102(b)(7) of the DGCL. The DGCL permits the
purchase of insurance on behalf of directors and officers against any liability
II-1
asserted against directors and officers and incurred by such persons in such
capacity, or arising out of their status as such, whether or not the corporation
would have the power to indemnify directors and officers against such liability.
The Company has acquired officers' and directors' liability insurance of $5
million for members of its Board of Directors and executive officers. In
addition, the Company has entered into agreements to indemnify its directors and
officers.
At present, there is no pending litigation or other proceeding
involving a director or officer of the Company as to which indemnification is
being sought, nor is the Company aware of any threatened litigation that may
result in claims for indemnification by any officer or director.
Article Seventh of the Company's Restated Certificate of Incorporation
and Section 5 of Article V of the Company's By-laws provide for indemnification
of directors and officers to the fullest extent permitted by Section 145 of the
DGCL.
II-2
<PAGE>
Item 16. Exhibits
(a) The exhibits listed below have been filed as part of this
Registration Statement.
Exhibit No. Description of Exhibit
----------- ----------------------
3.1 - Sixth Restated Certificate of Incorporation. (1)
4.1 - Specimen common stock certificate of the
Registrant. (1)
4.2 - Stock Purchase Agreement among the Company, C. Eugene
Ennis, Douglas C. Nester, Peter M. Duncan and the
Investors named therein dated November 9, 1993. (1)
4.3 - Series C Stock Purchase Agreement among the Company,
C. Eugene Ennis, Douglas C. Nester, Peter M. Duncan
and the Investors named therein dated July 26, 1995.(1)
4.4 - Common Stock Subscription Agreement dated as of
June 3, 1998 by and among the Company and the
purchasers named therein. (2)
4.5* - Common Stock Subscription Agreement dated as of
August 21, 1998 by and among the Company and Santa Fe
Energy Resources, Inc.
5.1** - Opinion of Kelley Drye & Warren LLP regarding legality.
23.1 - Consent of Kelley Drye & Warren LLP (included in
Exhibit 5.1).
23.2** - Consent of Arthur Andersen LLP.
23.3** - Consent of Ryder Scott Company.
24.1*** - Powers of Attorney executed by certain officers and
directors of the Registrant.
- --------------
*To be filed by Amendment.
**Filed herewith.
***Previously filed.
(1) Previously filed as an exhibit to the Registrant's Registration
Statement on Form S-1 (File No. 333-14473) and incorporated herein by
reference.
(2) Previously filed as an exhibit to the Registrant's Current Report on
Form 8-K filed with the Commission on June 16, 1998 and incorporated
herein by reference.
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification for 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
II-3
<PAGE>
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to:
(a) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) Reflect in the prospectus any facts or events arising after
the effective date of this 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 this Registration
Statement; and
(c) Include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1933, as amended, the Registrant certifies that it has
reasonable ground to believe that it meets all of the requirements for filing
this amendment 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 Houston, State of Texas, on October 30, 1998.
3DX TECHNOLOGIES INC.
By:/s/ Ronald P. Nowak
Ronald P. Nowak
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons on behalf
of the Company and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title or Capacities Date
---------- ------------------- ----
<S> <C> <C>
* Chairman of the Board October 30, 1998
_____________________________
C. Eugene Ennis
/s/ Ronald P. Nowak President and Chief Executive, and October 30, 1998
Ronald P. Nowak Director (Principal Executive Officer)
/s/ Russell L. Allen Chief Financial Officer (Principal October 30, 1998
Russell L. Allen Financial Officer)
* Director October 30, 1998
______________________________
Jon W. Bayless
* Director October 30, 1998
______________________________
Charles E. Edwards
* Director October 30, 1998
______________________________
C.D. Gray
* Director October 30, 1998
______________________________
Douglas C. Williamson
/s/ Russell L. Allen
*By Russell L. Allen
Attorney-in-fact
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description of Exhibit Page
- ------- ---------------------- ----
<S> <C> <C>
3.1 Sixth Restated Certificate of Incorporation, as amended.(1)
4.1 Specimen common stock certificate of the Registrant.(1)
4.2 Stock Purchase Agreement among the Company, C. Eugene Ennis,
Douglas C. Nester, Peter M. Duncan and the Investors named
therein dated November 9, 1993. (1)
4.3 Series C Stock Purchase Agreement among the Company, C. Eugene Ennis, Douglas C.
Nester, Peter M. Duncan and the Investors named therein dated July 26, 1995. (1)
4.4 Common Stock Subscription Agreement dated as of June 3, 1998 by and among the Company
and the purchasers named therein. (2)
4.5* Common Stock Subscription Agreement dated as of August 21, 1998 by and among the
Company and the purchaser named therein.
5.1** Opinion of Kelley Drye & Warren LLP regarding the legality of the securities being
offered.
23.1 Consent of Kelley Drye & Warren LLP (included in Exhibit 5.1).
23.2** Consent of Arthur Andersen LLP.
23.3** Consent of Ryder Scott.
24.1*** Powers of Attorney executed by certain officers and directors of the Registrant.
</TABLE>
- -----------------
* To be filed by Amendment.
**Filed herewith.
***Previously filed.
(1) Previously filed as an exhibit to the Registrant's Registration
Statement on Form S-1 (File No. 333-14473) and incorporated herein by
reference.
(2) Previously filed as an exhibit to the Registrant's Current Report on
Form 8-K filed with the Commission on June 16, 1998 and incorporated
herein by reference.
<PAGE>
Kelley Drye & Warren LLP
281 Tresser Blvd.
Stamford, Connecticut 06901
WRITER'S DIRECT LINE
(203) 351-8023
WRITER'S E-MAIL
[email protected]
October 30, 1998
3DX Technologies Inc.
12012 Wickchester, Suite 250
Houston, TX 77079
Dear Ladies and Gentlemen:
We have acted as Counsel to 3DX Technologies, Inc., a Delaware
corporation (the "Company"), in connection with the proposed public offering of
shares (the "Shares") of the Company's common stock, $.01 per share (the "Common
Stock") as described in the Registration Statement on Form S-3, as amended,
Registration No. 333-63119 (the "Registration Statement") filed by the Company
with the Securities and Exchange Commission (the "Commission') pursuant to the
Securities Act of 1933, as amended (the "Act"), to which this opinion
constitutes an exhibit.
We have examined the Company's Certificate of Incorporation
and By-laws, each as amended to date; minutes of the Company's corporate
proceedings through the date hereof, as made available to us by officers of the
Company; the Stock Purchase Agreement dated as of November 3, 1993 between the
Company and certain investors; the Series C Preferred Stock Purchase Agreement
dated as of July 26, 1995 between the Company and certain investors; a Common
Stock Subscription Agreement dated June 3, 1998 between the Company and certain
investors; the Common Stock Purchase Agreement dated as of August 21, 1998
between the Company and Santa Fe Energy Resources, Inc., or as permitted
transferees of persons who so acquired such Shares; an executed copy of the
Registration Statement and all exhibits thereto in the form filed with the
Commission, and such matters of law deemed necessary by us to deliver the
opinions set forth herein. In the course of our examination, we have assumed the
genuineness of all signatures, the authority of all signatories to sign on
behalf of their principals, if any, the authenticity of all documents submitted
to us as original documents and the conformity to original documents of all
documents submitted to us as certified or photostatic copies. As to certain
factual matters, we have relied upon information furnished to us by officers of
the Company.
Based on the foregoing, and solely in reliance thereon, it is
our opinion that the Shares have been duly authorized and fully paid and are
non-assessable.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to our firm in the Prospectus
included therein under the caption "Legal Matters." In giving such consent, we
do not admit that we are in the category of persons whose consent is required
under Section 7 of the Act.
Very truly yours,
KELLEY DRYE & WARREN LLP
By:/s/ Jay R. Schifferli
A Member of the Firm
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports and to all references to our Firm included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
October 30, 1998
Houston, Texas
<PAGE>
[LETTERHEAD OF RYDER SCOTT]
EXHIBIT 23.3
CONSENT OF INDEPENDENT PETROLEUM ENGINEERS
We hereby consent to (a) the use of our name and references to our Firm
in this Amendment to Registration Statement on Form S-3 for 3DX Technologies
Inc. and (b) the incorporation by reference in this Amendment to Registration on
Form S-3 of all reports of our Firm included in or made part of this Amendment
to Registration Statement on Form S-3 for 3DX Technologies Inc.
RYDER SCOTT COMPANY
PETROLEUM ENGINEERS
Houston, Texas
October 30, 1998
