AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 17, 1997.
REGISTRATION NO. 33-97908-D
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 3
ON FORM S-3 TO FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ACT TELECONFERENCING, INC.
(Exact name of Registrant as specified in its charter)
COLORADO 84-1132665
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1658 COLE BOULEVARD, SUITE 162
GOLDEN, COLORADO 80401
(303) 233-3500
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
GERALD D. VAN EECKHOUT
1658 COLE BOULEVARD, SUITE 162
GOLDEN, COLORADO 80401
(303) 233-3500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
WILLIAM J. CAMPBELL, ESQ.
FAEGRE & BENSON LLP
2500 REPUBLIC PLAZA
370 SEVENTEENTH STREET
DENVER, COLORADO 80202
(303) 820-0630
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Approximate date of commencement of proposed sale to the public:
FROM TIME TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
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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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ACT TELECONFERENCING, INC.
CROSS-REFERENCE SHEET BETWEEN ITEMS OF FORM S-3 AND PROSPECTUS
ITEM IN FORM S-3 LOCATION IN PROSPECTUS
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<S> <C> <C>
1. Front of Registration Statement and Outside Front
Cover of Prospectus................................. Facing Page; Cross-Reference Sheet; Outside Front
Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus.......................................... Inside Front Cover Page; Outside Back Cover Page
3. Summary Information, Risk Factors, and Ratio of
Earnings to Fixed Charges........................... The Company; Selected Financial Information; Risk
Factors
4. Use of Proceeds..................................... Use of Proceeds
5. Determination of Offering Price..................... Risk Factors
6. Dilution............................................ Not Applicable
7. Selling Security Holders............................ Not Applicable
8. Plan of Distribution................................ Outside Front Cover Page
9. Description of Securities........................... Outside Front Cover Page; Description of Securities
10. Interests of Named Experts and Counsel.............. Experts
11. Material Changes.................................... Not Applicable
12. Incorporation of Certain Information by Reference... Incorporation of Documents by Reference; Additional
Information
13. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities...... Description of Securities
</TABLE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JULY 17, 1997
712,497 SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF WARRANTS
ACT TELECONFERENCING, INC.
This Prospectus relates to the registration of 712,497 shares of common
stock, no par value (the "Common Stock") of ACT Teleconferencing, Inc. (the
"Company"), which are issuable upon exercise of the outstanding redeemable
warrants (the "Warrants") issued by the Company as part of units ("Units") in
the Company's initial public offering (the "February 1996 Offering") pursuant to
a Prospectus dated February 2, 1996. The issuance of Common Stock on exercise of
the Warrants was registered pursuant to a Registration Statement on Form SB-2
filed on February 2, 1996, File No. 33-97908-D (the "Registration Statement").
This Prospectus is a part of Post-Effective Amendment No. 3 to the Registration
Statement, filed for the purpose of updating the Registration Statement. The
Company will receive proceeds of $5.00 per share for each share of Common Stock
issued upon exercise of the Warrants. Shares issued upon exercise of Warrants
shall be called herein "Warrant Shares." Warrant Shares will be distributed
directly by the Company through its transfer agent to the persons who exercise
the Warrants.
The Warrants are exercisable until 5:00 p.m., Mountain Standard Time,
on February 2, 1999 (unless earlier redeemed). Each Warrant will entitle the
holder to purchase, at an exercise price of $5.00 per share (the "Exercise
Price"), one Warrant Share (subject to adjustment in certain circumstances). The
Company has reserved 712,497 shares of Common Stock for issuance upon exercise
of the Warrants, being the maximum number of shares that will be issuable upon
exercise of the Warrants. The Exercise Price is also subject to adjustment upon
the occurrence of certain events. See "Description of Securities -- Warrants
Covering the Warrant Shares."
The Common Stock and the Warrants were traded as Units on the Nasdaq
SmallCap Market under the symbol ACTTU from March 11, 1996 until April 17, 1996.
On that date, the Units were delisted; thereafter, the Common Stock and the
Warrants have traded separately on the Nasdaq SmallCap Market under the symbols
ACTT and ACTTW, respectively. On July 3, 1997, the closing bid price of the
Common Stock on Nasdaq was $11.50 per share and the closing bid price of the
Warrants was $5.25 per Warrant.
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THE COMMON STOCK OFFERED HEREBY IS SPECULATIVE AND INVOLVES A
HIGH DEGREE OF RISK AND IMMEDIATE AND SUBSTANTIAL DILUTION.
SEE "RISK FACTORS" BEGINNING ON PAGE 4.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------------
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION BY ANYONE TO ANY
PERSON IN ANY STATE, TERRITORY, OR POSSESSION OF THE UNITED STATES IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED BY THE LAWS THEREOF, OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
THE DATE OF THIS PROSPECTUS IS JULY 17, 1997
THE COMPANY
ACT Teleconferencing, Inc. (the "Company") provides and markets a broad
range of high-quality audio, data, and video teleconferencing services and
assembles and distributes related products to businesses and other organizations
in the United States, Europe, and Australia. The Company maintains operations
centers in the United States, the United Kingdom, the Netherlands, and
Australia, where it has installed and operates computer-managed telephone
equipment known as "bridges" for conducting multiparty teleconferences.
The Company's audio teleconferencing services accommodate multiparty
conferences with a number of participants at levels of audio volume and clarity
that are not available on most office telephones. Teleconferencing facilitates
routine meetings, training services, and information distribution where travel
would make it impractical, inconvenient, or expensive to assemble a large group
on short notice or with regular frequency. The Company offers a variety of
services at different price levels depending on customer needs and business
volume. The Company's customers include small businesses, Fortune 500 companies,
law firms, accounting firms, banks, and a variety of other businesses and
entities.
The Company markets data teleconferencing services and software, as an
adjunct to its audio teleconferencing services. The Company also distributes
data teleconferencing software that permits clients to interconnect desktop
computers by standard modem and simultaneously conduct audio and data
teleconferences in which each participant may at once communicate verbally and
view, modify, and retrieve data appearing on the computer screen.
The Company offers a video teleconferencing product line known as
ActionViewTM. ActionView products are competitively priced, stand-alone systems
that permit individuals or small groups to send and receive video and audio
signals through use of a video camera, computer, and a data
compression/decompression ("Codec") device that allows video signals to be
transmitted over digital telephone systems. ActionView systems comply with
international standards and are connected primarily over an Integrated Services
Digital Network ("ISDN") service, which is available in most major metropolitan
markets. The Company's audio and data teleconferencing services can be provided
over any telephone network.
The Company markets its services and certain products through its North
American, European, and Australian marketing operations and through
commission-based sales representatives. The Company opened its Australian office
in May 1997 and is actively seeking opportunities for further expansion through
the establishment of additional North American, European, and Australasian sales
offices and operations centers.
The Company operates as a holding company for its four wholly owned
domestic and foreign subsidiaries and for its majority owned United Kingdom
subsidiary. The Company was incorporated in Colorado in 1989. The Company's
principal executive offices are located at 1658 Cole Boulevard, Suite 162,
Golden, Colorado 80401, and its telephone number is (303) 233-3500.
SELECTED FINANCIAL INFORMATION
The following table sets forth selected financial information
concerning the Company and is qualified by reference to the financial statements
(both prior to and subsequent to the date of this Prospectus) and notes thereto
incorporated by reference into this Prospectus.
<TABLE>
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CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31 MARCH 31
---------------------------- ----------------------------
1996 1995 1997 1996
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Net Revenues $ 6,219,946 $ 3,461,204 $ 2,117,654 $ 1,372,440
Income (Loss) Before
Taxes and Minority Interest (923,649) (187,006) 110,965 (78,909)
Taxes on Income and Minority Interest 284,458 237,054 97,805 75,688
Net Income (loss) (1,208,107) (424,060) 13,160 (154,597)
Net Income (loss) Per Share (0.41) (0.21) 0.01 (0.06)
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET DATA
MARCH 31, 1997 DECEMBER 31, 1996
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<S> <C> <C>
Net Working Capital $ 559,622 $ 697,151
Total Assets 4,524,712 4,085,269
Total Liabilities and Minority Interest 2,753,091 2,317,312
Shareholders' Equity 1,771,621 1,767,957
</TABLE>
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE AND INVOLVE
IMMEDIATE SUBSTANTIAL DILUTION AND A HIGH DEGREE OF RISK. IN EVALUATING THE
COMPANY AND ITS BUSINESS, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS IN ADDITION TO OTHER INFORMATION PRESENTED IN THIS
PROSPECTUS.
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, PROSPECTIVE
INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS IN EVALUATING AN
INVESTMENT IN THE WARRANT SHARES OFFERED HEREBY. ALL STATEMENTS, TREND ANALYSIS,
AND OTHER INFORMATION, WHETHER CONTAINED IN THIS PROSPECTUS OR INCORPORATED BY
REFERENCE TO PAST OR FUTURE DOCUMENTS, RELATIVE TO MARKETS FOR THE COMPANY'S
PRODUCTS AND TRENDS IN THE COMPANY'S OPERATIONS OR FINANCIAL RESULTS, AS WELL AS
OTHER STATEMENTS INCLUDING WORDS SUCH AS "ANTICIPATE," "BELIEVE," "PLAN,"
"ESTIMATE," "EXPECT," AND "INTEND" AND OTHER SIMILAR EXPRESSIONS, CONSTITUTE
FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO
BUSINESS AND ECONOMIC RISKS, INCLUDING BUT NOT LIMITED TO THOSE DISCUSSED IN
"RISK FACTORS," AND ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTEMPLATED
BY FORWARD-LOOKING STATEMENTS.
HIGHLY COMPETITIVE MARKET; EASE OF MARKET ENTRY
The teleconferencing industry is highly competitive. Competition in the
Company's markets is based primarily on quality, service, and price. In order to
compete successfully against other teleconferencing providers, the Company must
be able to maintain competitive pricing while at the same time offer high
quality services and related products. Competition in the Company's markets may
result in pricing pressures that may adversely affect the prices and sales
levels of the Company's teleconferencing services and related products.
Teleconferencing equipment and bridges are widely available at relatively
affordable prices. There are few regulatory barriers to competition in the
United States. Until recently, local exchange carriers ("LECs"), including local
telephone companies, were prohibited from providing audio teleconferencing,
except in limited areas. Legislation recently passed by the United States
Congress permits LECs to offer teleconferencing services. This represents
additional competition if some or all of the LECs choose to enter or expand
their activities in the teleconferencing market in the United States. In
addition, existing competitors can be expected to expand their services and new
competitors are likely to be encountered. There are no significant regulatory
barriers to market entry in the United Kingdom, the Netherlands, or Australia.
Barriers to entry in certain other foreign markets vary, but may involve
governmental regulation or government-owned telephone systems resistant to
competition with independent teleconferencing companies. Many of the Company's
competitors have substantially greater capital resources and name recognition
than the Company. There is no assurance that the Company will be able to compete
against such competitors and potential competitors in terms of research and
development, manufacturing, marketing, and sales.
ACCEPTANCE OF VIDEO CONFERENCING; ISDN SERVICE
The Company has entered the video conferencing market with the offering
of a video conferencing and video bridging system ("ActionView") that the
Company believes is priced competitively to comparable small group systems that
are currently marketed. The ActionView system is intended to permit group video
teleconferencing based on personal computer technology and coder/decoder
("Codec") equipment for transmission of video signals. The ActionView system
requires Integrated Services Digital Network ("ISDN") telephone service. ISDN
telephone service is technically acceptable but is not yet universally available
in the United States and is generally higher priced than ordinary telephone
service. There can be no assurance that the ActionView system offered by the
Company will achieve significant market acceptance, that it will prove reliable
in commercial applications, that competitors with greater financial strength
will not market similar systems at prices more competitive than the Company's
product, or that potential customers for the ActionView system will have access
to ISDN telephone services at rates which permit their purchase and use of the
ActionView system. If ISDN service is not available to, not accepted by, or not
workable for, businesses and individuals, the Company's sales of ActionView
systems will be materially and adversely affected.
LIMITED REVENUES; HISTORY OF LOSSES
The Company has generated only limited revenues to date. Since
beginning operations in January 1990, the Company incurred net losses of
$111,576 for its fiscal year ended December 31, 1990, $100,902 for its fiscal
year ended December 31, 1991, and $88,759 for its fiscal year ended December 31,
1992. The Company had net earnings of $25,514 for its fiscal year ended December
31, 1993, a net loss of $253,120 for its fiscal year ended December 31, 1994, a
net loss of $424,060 for its fiscal year ended December 31, 1995, a net loss of
$1,208,107 for its fiscal year ended December 31, 1996, and net earnings of
$13,160 for the three months ended March 31, 1997. As of March 31, 1997, the
Company's accumulated deficit was $2,279,101, reflecting losses from operations
of its audio teleconferencing services business and startup costs of its
Netherlands teleconferencing subsidiary and its videoconferencing subsidiary.
The likelihood of success of the Company must be considered in light of the
problems, expenses, difficulties, complications, and delays encountered in
connection with the operation of a relatively new business, its expansion into
new markets and products, the financial strength and effectiveness of its
competitors, and the implementation of an expanded marketing strategy. The
Company's entry into the assembly and sale of video teleconferencing products is
a relatively new activity for the Company and has had a significant adverse
effect on the Company's earnings. Video conferencing will likely continue to
have an adverse effect on earnings while the Company attempts to develop this
business segment. There is no assurance that the Company will ever generate
substantial revenues or operate profitably for a sustained period. See "Selected
Financial Information."
POSSIBILITY OF REVENUE FLUCTUATIONS
The Company's ability to generate sufficient revenues to support its
fixed costs and its growth may be adversely affected by the mobility of its
customers. Teleconferencing customers can easily switch to a competing provider
or apportion their business among several vendors. The Company's relatively
small revenue base makes it susceptible to significant fluctuations in revenues
from any single customer. The Company's three largest customers accounted for
8.5 percent, 5.6 percent, and 5.1 percent of revenues, respectively in 1995; and
for 12.6 percent, 10.9 percent, and 6.9 percent of revenues, respectively, in
1996.
NEED TO EXPAND OPERATIONS; ACQUISITIONS; FINANCING; DILUTION
Many of the Company's current and prospective domestic and
international customers utilize teleconferencing services for both local and
long-distance teleconferencing, and for reasons of cost and convenience often
prefer to do business with a teleconferencing office that is available locally
to their central offices. In order to compete for such customers, the Company
may be required to establish a local presence and install bridge equipment in
additional North American, European, and Australasian cities. Since the Company
expects to experience startup losses from new installations until revenues
associated with such installations offset related costs, the Company's ability
to fund the costs of such expansions will depend in large part on the
availability of adequate financing. The Company presently has a term loan due in
August 1999 and a number of capitalized leases due at various times through
2000. The Company has no assurance that major long-term financing will be
available as and when needed. Rather than establishing a new office and
installing a new bridge in select cities, the Company may, in appropriate
circumstances, seek to acquire an existing provider of teleconferencing services
in such city, and may seek to do so by the issuance of common stock in lieu of,
or in combination with, a cash purchase or investment. While the Company has no
present agreements or arrangements for the acquisition of other teleconferencing
businesses, the Company continually explores the possibility of such
acquisitions. To the extent that all or any part of the consideration for such
acquisition consists of stock of the Company, such an acquisition could result
in substantial additional dilution to purchasers in this offering. Moreover,
were the Company to seek to raise additional capital through the sale of
additional Common Stock and/or warrants at some future date, it may be required
to do so at a price per share that is less than the price of the shares offered
hereby. Future sales of Common Stock could result in substantial additional
dilution to investors purchasing the Units offered hereby.
DEPENDENCE ON MANAGEMENT AND OTHER KEY PERSONNEL
The Company is dependent primarily upon the services of Gerald D. Van
Eeckhout and David Holden. Although the Company maintains a key-employee life
insurance policy on Mr. Van Eeckhout, the Company's Chairman, there is no
assurance the proceeds from such insurance would be adequate to identify and
employ his successor and to compensate the Company for the loss of his services.
A life insurance policy owned by the Company's United Kingdom subsidiary on Mr.
Holden, its Managing Director, is for the limited purpose of buying Mr. Holden's
shares in the subsidiary and will not be available to fund expenses associated
with the replacement of Mr. Holden in the event of his death.
TECHNICAL PERSONNEL NEEDS
The design, engineering, and repair of teleconferencing equipment and
networks are highly technical, and the Company must continue to locate and
employ technically qualified contractors and/or employees, who may command
premium compensation, to install, maintain, and repair such equipment and
networks. If sufficiently qualified persons cannot be found and employed on a
timely basis as the Company seeks to expand its operations, the Company's
expansion may be delayed or its operations otherwise adversely affected.
TECHNOLOGICAL OBSOLESCENCE
Technological innovations, such as computer-based bridging equipment,
have enabled the Company and others to engage in the teleconferencing services
business. These innovations are likely to continue and there can be no assurance
that the Company will be able to react and adapt to these changes should they
develop, that equipment or software innovations would be available to the
Company at a reasonable price in the future, or that developments by competitors
will not render the Company's services obsolete. Although the Company recently
upgraded its bridging equipment to provide state-of-the-art audio
teleconferencing technology, which may be augmented to provide data
teleconferencing and video teleconferencing, rapid technological changes in the
teleconferencing industry may render the Company's bridging or other
teleconferencing equipment obsolete or require substantial additional investment
by the Company to remain competitive. There can be no assurance such technical
innovations would be available to the Company at a reasonable price, if at all,
or that the Company would be able to respond adequately to such technical
innovations. Any such event could have a material adverse effect on the Company.
LIMITED INTELLECTUAL PROPERTY PROTECTION
The Company seeks to protect its proprietary information and business
practices as trade secrets. The Company believes its name and the "ACT" logo are
unique in the teleconferencing market, but common usage of the name "Act" or
"ACT" by a variety of other enterprises makes trademark protection in some
contexts either unavailable or so likely to generate litigation or the threat of
litigation as to make the pursuit of such protection prohibitively expensive.
The United Kingdom's Trade Marks Registry has issued trademark certificates to
the Company for ACT and ACTIONCALL, which the Company licenses to ACT
Teleconferencing Limited, and to ACT Teleconferencing Limited for CONFERCALL.
There can be no assurance that the Company will be able to protect its
proprietary information, business practices, or trademarks from use by
competitors, or that the Company would be successful in any litigation it might
bring to protect its proprietary information, business practices, or trademarks.
The Company holds no patents.
FOREIGN OPERATIONS; EXCHANGE RATE FLUCTUATIONS
The Company operates foreign subsidiaries in the United Kingdom, the
Netherlands, and Australia. Adverse political or economic developments may occur
in even the most stable political or economic climate, and there is always a
risk of changes, including dramatic changes, in currency values in foreign
markets. Fluctuations in the British, Dutch, or Australian currencies could
offset revenue gains from the sale of additional teleconferencing services
and/or products, or increase operating losses incurred, in the United Kingdom,
the Netherlands, or Australia. Any future expansion by the Company in other
foreign markets will necessarily increase the Company's exposure to such risks.
DILUTION
Purchasers of the Warrant Shares offered hereby will experience an
immediate, substantial dilution in net book value of the assets, the amount of
which will vary over time depending on the Company's earnings, the price and
amount of Common Stock sold in other transactions, and other factors that affect
the Company's net worth. For example, the effect of the exercise on July 17,
1997, would increase the present estimated net tangible book value from
approximately $0.88 per share before conversion to $1.62 per share after
conversion, assuming conversion of all of the Warrants; therefore, purchasers of
Warrant Shares would have experienced an estimated dilution of approximately
$3.38 per share, or approximately 67.6 percent of the exercise price at $5.00
per share, assuming exercise of all of the Warrants, and substantially greater
dilution if only a small percentage of the Warrants were exercised. The
estimated net book value of $0.88 has been calculated by adjusting the March 31,
1997 historical amount for the June 1997 exercise of private warrants to
purchase 329,670 shares at an exercise price of between $3.25 and $3.50.
EXERCISE PRICE; STOCK PRICE VOLATILITY
The exercise price of the Warrants was determined through negotiations
between the Company and Tuschner & Company, Inc. ("Tuschner"), the underwriter
of the February 1996 Offering, based on several factors, including
then-prevailing market conditions, estimates of the business potential of the
Company, and other factors deemed relevant, and does not necessarily bear any
relationship to net worth, earnings, or other financially based criteria of
valuation. The securities markets have from time to time experienced significant
price and volume fluctuations that may be unrelated to the operating performance
of particular companies. Announcements of new products by the Company or its
competitors, developments or disputes concerning patents or proprietary rights,
and economic and other external factors, as well as period-to-period
fluctuations in the Company's financial results, may have a significant impact
on the market price of the Common Stock. There can be no assurance that the
market price of the Common Stock will not decline below the exercise price of
the Warrants.
NASDAQ REQUIREMENTS; PENNY STOCK RULES
The Common Stock and Warrants are listed on the Nasdaq SmallCap Market;
however, if the Company fails to meet the continuing requirements necessary to
qualify for its Common Stock to be quoted on the Nasdaq SmallCap Market, the
shares will be subject to certain rules of the Securities and Exchange
Commission relating to "penny stocks," under the Penny Stock Reform Act of 1990.
Such rules require broker/dealers to make a suitability determination for
purchases and to obtain the purchaser's prior written consent for a purchase
transaction, thereby restricting the ability of purchasers of shares offered
hereby and of broker/dealers to sell shares of the Common Stock and Warrants in
the open market. Such restriction would likely affect adversely both the market
price and liquidity for such shares. The Company intends to maintain
qualification for the continued quotation of its Common Stock and Warrants on
the Nasdaq SmallCap Market subsequent to this offering; however, there can be no
assurance that it will be able to do so.
SHARES ELIGIBLE FOR FUTURE SALE
Increases in the amount of Common Stock in the public market as a
result of the exercise of the Warrants could adversely affect the market price
of the Common Stock. Of the 4,019,597 shares of Common Stock to be outstanding
following this offering (assuming exercise of all of the Warrants), the 712,497
shares sold in this offering pursuant to the exercise of the Warrants, the
712,497 shares sold in the February 1996 Offering, and 46,933 shares sold to
employees upon exercise of options will be eligible for immediate resale in the
public market. Of the remaining 2,547,670 shares of Common Stock, 2,218,000
shares are "restricted securities" as that term is defined in Rule 144 under the
Securities Act of 1933 (the "Securities Act"). However, all of such shares are
currently eligible for sale under Rule 144, including 2,041,750 shares eligible
for sale under Rule 144(k). The remaining 329,670 shares were issued in June
1997 upon exercise of warrants issued in a 1995 private offering. Those shares
were issued pursuant to Regulation S of the Securities Act, and may not be sold
in the United States except in accordance with the provisions of Regulation S.
In addition, in private placements between 1993 and 1995, the Company issued
warrants to purchase 633,340 shares of Common Stock, 199,920 of which remain
outstanding, expiring between August 31, 1997 and December 31, 1998. Upon
exercise of those warrants, 169,950 of the shares issued thereunder will be
restricted securities as that term is defined in Rule 144, and the remaining
29,970 will be salable only in accordance with Regulation S. Also, Tuschner
holds a Unit Purchase Option to purchase up to 71,250 Units (each Unit comprised
of one share of Common Stock and one warrant) at $4.20 per Unit. At a future
date, the Company may register the resale of some or all of the shares of Common
Stock issued by the Company pursuant to the exercise of the Company's
outstanding warrants other than the Warrants, making such shares eligible for
immediate resale. See "Description of Securities -- Stock Options; Other
Warrants; Unit Purchase Option."
OPTIONS AND WARRANTS TO BE OUTSTANDING
In addition to the Warrants, as of July 17, 1997, certain persons,
including officers of the Company or its subsidiaries and directors of the
Company, hold options and warrants to purchase a total of 758,320 shares of
Common Stock, and Tuschner holds a Unit Purchase Option to purchase up to 71,250
Units. The price which the Company may receive for issuance of its Common Stock
upon exercise of such options and warrants may be less than the value of, or
market price for, the Company's Common Stock at the time such options and
warrants are exercised. While such options and warrants are outstanding, the
holders thereof are given, at little or no cost, the opportunity to profit from
any increase in the market price of the Company's Common Stock without assuming
the risk of ownership. So long as such options and warrants remain unexercised,
the terms under which the Company could obtain equity capital from other sources
may be adversely affected. Moreover, the holders of such options and warrants
may be expected to exercise them at a time when the Company would, in all
likelihood, be able to obtain needed capital from offering its securities on
terms more favorable than those provided by the outstanding options and
warrants. To the extent that any such options or warrants are exercised, the
interests of the Company's shareholders may be diluted proportionately. See
"Description of Securities -- Stock Options; Other Warrants; Unit Purchase
Option."
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is obligated to indemnify its directors, officers, and
other persons for expenses and liabilities incurred in their corporate
capacities. See "Description of Securities -- Indemnification." While such
indemnification is limited to expenses and liabilities incurred in the
indemnified person's official capacity and indemnification for improper personal
benefits is prohibited, the prospect of any indemnification presents a financial
risk to the Company. Liability insurance for directors' and officers' exposure
is generally not available at an acceptable cost for companies of the size and
type of the Company; currently, the Company has limited insurance of this type.
LIMITATIONS ON DIRECTOR LIABILITY
Directors have no personal monetary liability to the Company or its
shareholders for a breach of fiduciary duty, with certain exceptions. See
"Description of Securities -- Elimination of Director Liability." Limitations on
directors' liability may pose a risk to the Company to the extent the absence of
liability exposure may make a director less diligent in fulfilling his or her
duties. However, the Board believes these limitations enable it to attract
directors who would be unwilling to serve otherwise.
ISSUANCE OF UNDESIGNATED PREFERRED STOCK
The Board of Directors, without any action by the Company's
shareholders, has the authority to issue up to 1,000,000 shares of authorized
but undesignated preferred stock and to fix the powers, preferences, rights, and
limitations of any such preferred shares or any class or series thereof, without
shareholder approval. Persons acquiring preferred stock could have preferential
rights with respect to voting, liquidation, dissolution, or dividends over
existing shareholders, and the issuance of such shares could discourage a change
in control. See "Description of Securities -- Preferred Stock".
ANTI-TAKEOVER PROVISIONS
The Company's Articles of Incorporation include provisions designed to
discourage hostile takeover attempts and to strengthen the Board's influence in
negotiating with possible acquirers. These anti-takeover provisions include the
election of the Board by classes elected for three-year terms and provisions
discouraging two-tier bidding where the control group receives a more favorable
price than minority stockholders. Such provisions could have the effect of
deterring or delaying a takeover or other change in control of the Company,
could deny shareholders the receipt of a premium on their Common Stock, and
could have a depressive effect on the market price of the Company's Common
Stock. See "Description of Securities -- Certain Provisions Having Anti-takeover
Considerations."
CONTROL BY EXISTING SHAREHOLDERS
As of July 17, 1997, directors, executive officers, and principal
shareholders of the Company own beneficially approximately 32 percent of the
Company's outstanding Common Stock. Such persons would own 26 percent of the
outstanding Common Stock if all of the Warrants were exercised. Accordingly,
these shareholders may be able to control or significantly influence the outcome
of shareholder votes, including the election of directors, even after the
exercise of the Warrants. This concentration of ownership also may have the
effect of delaying, deferring, or preventing a change in control of the Company.
NO DIVIDENDS
The Company has never paid cash dividends and does not intend to pay
any in the foreseeable future. There is no assurance that the Company will
achieve a profitable level of operations that would allow dividends to be paid.
Moreover, the Company intends to use any earnings which may be generated to
finance further growth of the Company's business.
USE OF PROCEEDS
The net proceeds received by the Company from the sale of Units in the
February 2, 1996 public offering were approximately $1,900,000. Additional
proceeds to be received by the Company from the sale of Common Stock offered
hereby after deducting estimated offering expenses are estimated to be
approximately $3,500,000 if all of the Warrants are exercised. The Company
intends to use these proceeds for general working capital purposes, and in
particular, to fund the ongoing startup costs of its videoconferencing and
international subsidiaries.
In the short term, pending utilization of the proceeds of this
offering, the Company intends to invest the net proceeds of this offering in
interest-bearing, investment grade securities or other short-term debt
instruments.
DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 10,000,000
shares of Common Stock, no par value. As of July 3, 1997, there were 3,290,100
shares outstanding and held of record by approximately 114 shareholders. The
Company believes these shares are held of record for approximately 450
beneficial shareholders. The Common Stock and Warrants are currently traded on
the Nasdaq SmallCap Market under the symbols "ACTT" and "ACTTW," respectively.
COMMON STOCK
The holders of shares of Common Stock are entitled to one vote for each
share held of record on all matters on which shareholders are entitled or
permitted to vote. There is no cumulative voting for the election of directors.
Subject to preferences that may be applicable to any outstanding preferred
stock, holders of Common Stock are entitled to receive ratably such dividends as
may lawfully be declared by the Board of Directors out of funds legally
available therefor and in liquidation and to share pro rata in any other
distribution to the holders of Common Stock, although no such dividends have
ever been paid and none are expected to be paid in the future. Holders of Common
Stock have no preemptive or subscription rights. There are no conversion rights,
redemption rights, sinking fund provisions, or fixed dividend rights with
respect to the Common Stock.
The Company will at all times reserve a sufficient number of shares of
Common Stock for issuance upon exercise of the Warrants, the Unit Purchase
Option, and other warrants and options currently outstanding. All currently
outstanding shares of Common Stock are, and any Common Stock issued in this
offering or in connection with the future exercise of options or Warrants will
be, fully paid and non-assessable.
WARRANTS COVERING THE WARRANT SHARES
The Warrants covering the Warrant Shares offered hereby were issued
under and are governed by the provisions of a Warrant Agreement between the
Company and its transfer agent. Although the following discussion is not a
complete discussion of all terms of the Warrant Agreement, the Company believes
it contains all material provisions of the Warrant Agreement.
Each Warrant entitles the holder thereof to purchase one share of
Common Stock during a three-year period commencing February 2, 1996 at an
exercise price of $5.00 per share, subject to adjustment in certain events. The
Company may at any time redeem the Warrants at $.10 per Warrant on 30 days
written notice, provided that the average closing bid price per share of Common
Stock has been at least 120% of the exercise price of the Warrant (i.e., an
average closing bid price of at least $6.00), subject to adjustment, for the ten
consecutive trading days prior to the notice of redemption. Holders of these
Warrants will forfeit all rights upon such redemption except the right to
receive the $.10 redemption price per Warrant and the right to exercise the
Warrants during the 30-day notice period.
Holders of these Warrants are not entitled to vote, receive dividends,
or exercise any of the rights of shareholders of Common Stock for any purpose
until the Warrants have been duly exercised; the Warrants may be presented for
transfer, exchange, or exercise at the office of the Company's transfer agent
acting as Warrant Agent.
The Warrants provide for adjustment of the exercise price and of the
number of underlying shares of Common Stock to protect their holders against
dilution in certain events, including stock dividends, stock splits,
reclassifications, consolidations, mergers, and other business combinations.
Unless the exercise of the Warrants qualifies for an exemption from
registration, the Company must have effective registration statements on file
with the Securities and Exchange Commission and relevant state securities
commissions or agencies, in order for these Warrants to be exercised. Although
the Company will use its best efforts to maintain effective registrations during
the three-year exercise period of the Warrants, there can be no assurance that
any such registrations or qualifications will be effective at the time holders
of the Warrants desire to exercise them. If for any reasons there are not
effective registrations or qualifications for the shares of Common Stock
underlying these Warrants under all federal and state securities laws pertaining
to the holder's exercise, or an appropriate exemption therefrom is not
available, these Warrants may not be exercisable and, accordingly, would lose
their value.
For the term of these redeemable Warrants, the holders thereof are
given the opportunity to benefit from a rise in the market price of the
Company's Common Stock with a resulting dilution in the ownership interest of
the Company's shareholders. Since holders of these redeemable Warrants would be
expected to exercise their Warrants only when the market price of the Common
Stock exceeds the exercise price of the Warrants, such exercise, in all
likelihood, would occur when the Company would be able to obtain equity capital
through a new offering on terms more favorable to the Company than the terms to
which it is obligated under the redeemable Warrants.
PREFERRED STOCK
The Company's Board of Directors is authorized to establish by
resolution different classes or series of stock and to fix the rights,
preferences and privileges, including dividend rights, dividend rates,
conversion rights, voting rights, terms of redemption, redemption prices,
liquidation preferences and the number of shares constituting any class or
series or the designation of such class or series without any further vote or
action by the shareholders. Although there is no current intention to do so, the
issuance of a class or series of preferred stock with certain special rights or
privileges could have the effect of delaying, deferring or preventing a change
in control of the Company which may adversely affect the voting and other rights
of the holders of Common Stock. See "Risk Factors -- Issuance of Undesignated
Preferred Stock; Anti-takeover Provisions."
STOCK OPTIONS
The Company adopted the Stock Option Plan of 1991 (the "1991 Plan") in
order to attract, retain, and motivate key employees and consultants by
providing them a means of acquiring an ownership interest in the Company. The
1991 Plan covers incentive stock options within the meaning of section 422 of
the Internal Revenue Code, as amended, and nonstatutory (sometimes called
nonqualified) stock options. The 1991 Plan provides that the purchase price of
the shares covered by an incentive stock option may not be less than the fair
market value of the shares on the date the option is granted. The term of the
options may not exceed ten years from the date of grant. This plan was amended
as of April 28, 1995, and reserves 400,000 shares of Common Stock for this
purpose. As of July 17, 1997, options to purchase 326,400 shares were
outstanding under the 1991 Plan, and options to purchase 63,600 shares had been
exercised. Of these outstanding shares incentive stock options for 256,400
shares had been granted to certain employees of the Company with prices ranging
from $1.00 to $5.00 per share expiring on various dates between August 15, 2002,
and June 18, 2007 and nonqualified options for 70,000 shares had been granted to
certain nonemployee officers or directors of the Company with prices ranging
from $1.00 to $2.00 per share expiring on various dates between December 31,
2002, and April 28, 2005. As of July 17, 1997, options for 10,000 shares remain
available for issuance pursuant to the 1991 Plan. As a general rule, options
vest at the rate of 25 percent per year. The Plan Administrator determines the
length of each option at the time of grant with the 1991 Plan providing a
maximum term of ten years. Options granted under the 1991 Plan to employees are
exercisable by the employee only during his or her employment and, under certain
circumstances, for three months following termination of employment. In the
event the employee dies while holding options, the employee's personal
representative has twelve months, or until the expiration date of the options,
whichever is earlier, to exercise the options. The number of shares purchasable
and the purchase price under the 1991 Plan are subject to antidilution
provisions and adjustments upon certain events. Pursuant to the 1991 Plan, the
Plan Administrator has power to establish the exercise price of nonstatutory
options granted under the 1991 Plan. The exercise price of options granted in
the future under the 1991 Plan will not be less than 85 percent of the market
value of the underlying stock on the date of the grant.
The Company adopted the Stock Option Plan of 1996 (the "1996 Plan") at
the annual meeting of shareholders on June 18, 1997. The 1996 Plan was adopted
for the same purposes as was the 1991 Plan, and likewise covers incentive stock
options and nonstatutory stock options. This plan is administered by the
Personnel and Compensation Committee of the Board of Directors (the
"Committee"). The 1996 Plan provides that the purchase price of the shares
covered by an incentive stock option may not be less than the fair market value
of the shares on the date the option is granted and that the exercise price of a
nonstatutory option shall not be less than 85 percent of such fair market value.
This plan also reserves 400,000 shares of Common Stock for issuance. As of July
3, 1997, options to purchase 215,000 shares were outstanding under the 1996
Plan, none of which had been exercised. Incentive stock options for 200,000
shares had been granted to certain employees of the Company with prices ranging
from $3.00 to $5.00 per share expiring on various dates between November 1, 2006
and June 18, 2007. Nonqualified options for 15,000 shares had been granted to
certain nonemployee service providers of the Company at a price of $5.00 per
share expiring on June 18, 2007. As of July 3, 1997, options for 185,000 shares
remain available for issuance pursuant to the 1996 Plan. The Committee
determines the length and vesting schedule of each option at the time of grant
with the 1996 Plan providing a maximum term of ten years. Options granted under
the 1996 Plan to employees are exercisable by the employee only during his or
her employment and, under certain circumstances, for three months following
termination of employment. In the event the employee dies while holding options,
the employee's personal representative has twelve months, or until the
expiration date of the options, whichever is earlier, to exercise the options.
The number of shares purchasable and the purchase price under the 1996 Plan are
subject to antidilution provisions and adjustments upon certain events.
OTHER WARRANTS
Common stock purchase warrants (other than the Warrants) outstanding as
of July 3, 1997 cover (i) the purchase of 8,750 shares of Common Stock held by
three persons exercisable at $4.00 per share expiring December 31, 1998; (ii)
the purchase of 178,570 shares of Common Stock held by 43 persons and
exercisable at $3.50 per share until August 31, 1997; and (iii) the purchase of
12,600 units of one share of Common Stock and one warrant to purchase one share
of Common Stock (exercisable at $3.50 per share until August 31, 1997) held by 8
persons and exercisable at $3.25 per unit. Holders of these warrants to purchase
shares and units having the right to purchase an aggregate of 199,920 shares of
Common Stock issuable upon exercise of said warrants, and holders of an
additional 329,670 shares of Common Stock previously issued upon exercise of
such warrants have registration rights pursuant to an agreement with the
Company. Under this agreement, if the Company proposes to register any of its
securities under the Securities Act, and if the majority of the holders of the
warrants or the shares issuable upon exercise of the warrants (collectively
"Warrant Holders") so desire, the Warrant Holders are entitled, subject to
certain limitations and exceptions, to include such warrants or shares of Common
Stock in such registration. The underwriters of any such offering have the
right, in certain circumstances, to limit the number of shares included in the
offering. The Company is required to bear all registration and selling expenses
(other than underwriters' discounts and commissions and fees of special counsel
to the Warrant Holders) in such offering. In addition, under the registration
rights agreements between the Company and the Warrant Holders, Warrant Holders
are entitled, on one occasion only, to demand that the Company prepare and file
a registration statement under the Securities Act at the Company's expense and
to require the Company to use its best efforts to effect such registration,
subject to certain conditions and limitations.
UNIT PURCHASE OPTION
The Company has sold to Tuschner and for the account of selected
dealers who affiliated with Tuschner in the February 1996 Offering, a Unit
Purchase Option to purchase an aggregate of 71,250 Units, each consisting of one
share of Common Stock and one warrant to purchase Common Stock at $5.00 per
share. This Unit Purchase Option is exercisable at $4.20 per Unit commencing
February 2, 1997 and expiring February 2, 2001. The Unit Purchase Option
includes customary antidilution provisions, one-time demand registration rights,
and unlimited "piggy-back" registration rights.
CERTAIN PROVISIONS HAVING ANTI-TAKEOVER CONSIDERATIONS
STAGGERED TERMS FOR DIRECTORS. The Articles of Incorporation, as
amended, set the maximum number of directors at nine with the exact number
within the limitation of nine to be determined from time to time by the Board.
Each class is elected for a term expiring at the annual meeting of shareholders
in the third year after the election. The Board has established the size of the
Board at six members (i.e., three classes of two members each). Currently, there
are five members and one vacancy. Election of the Board by classes strengthens
the position of the Board in dealing with takeover attempts. By making it
difficult to unseat the entire Board at one Annual Meeting, it is intended that
the Board as a whole will have more bargaining power in the event a potential
acquirer proposes a takeover.
BUSINESS COMBINATIONS. A provision of the Articles of Incorporation
regarding business combinations imposes substantial conditions on third parties
who might attempt to acquire control of the Company through a "two-tiered
pricing" strategy in which a premium price is paid to obtain a majority of the
voting stock and a less desirable consideration (sometimes in the form of bonds
or other securities) is paid to other shareholders. These conditions include
approval of such proposals by holders of two-thirds of the outstanding shares
unless (i) approved by the Board of Directors as constituted prior to receipt of
the proposals or (ii) the proposal involves a merger, consolidation, exchange of
shares, or sale of all or substantially all assets of the Company and the cash
per share to be received by the shareholders is not less than the highest per
share price paid by any person, including the person's affiliates, whose
beneficial ownership of the Common Stock, in the aggregate, equals or exceeds 20
percent of the outstanding voting power. The effect of these conditions is to
discourage new shareholders from replacing incumbent directors with new
directors solely for the purpose of obtaining approval of a tender offer; and to
require that the same consideration per share be paid to all shareholders as was
paid by an acquirer who paid a premium to obtain a 20 percent or more position
in the Company's Common Stock. The amendment discourages two-tiered pricing
proposals and strengthens the Board of Directors' position in dealing with
potential takeover proposals.
However, the conditions imposed on third parties attempting to takeover
the Company and the potential benefits of the classification of directors are
offset, in part, by the possibility that a suitor might be discouraged from
making a takeover offer, thereby depriving shareholders of an opportunity to
sell their shares at an attractive price. On balance, it is management's belief
that its strengthened position in dealing with suitors will enable it to bargain
more effectively with all potential business partners, including those desiring
a takeover.
PREFERRED STOCK. In addition, the Articles of Incorporation authorize
the issuance by the Board of Directors of 1,000,000 shares of Preferred Stock,
no par value, the rights and limitations of which are to be determined by the
Board of Directors. Shareholder approval will not be required for the issuance
of such shares. Such shares of Preferred Stock could have rights that are senior
to the rights of the holders of shares of Common Stock, e.g., preferred
liquidation rights, cumulative dividends, or voting and conversion rights that
could adversely affect the voting power or dividend rights of the holders of
Common Stock and delay, defer, or prevent a change in control of the Company.
The Board of Directors has no current intention to take any such action.
ELIMINATION OF DIRECTOR LIABILITY
The Company's Articles eliminate the personal liability of the
Company's directors to the Company and to its shareholders for monetary damages
for breach of fiduciary duty, except in the instances described below. The
provision is authorized by Section 7-108-402 of the Colorado Business
Corporation Act and is designed, among other things, to encourage qualified
individuals to serve as directors of Colorado corporations by permitting
Colorado corporations to limit or eliminate directors' liability for monetary
damages for breach of the duty of care.
Nonetheless, directors remain liable for breaches of their duty of
loyalty to the Company and its shareholders, as well as for acts or omissions
not in good faith or that involve intentional misconduct or a knowing violation
of law and for transactions from which a director derives improper personal
benefit. The Articles do not eliminate director liability under a separate
provision of the Colorado Business Corporation Act that makes directors
personally liable for unlawful payments of dividends, unlawful stock repurchases
or redemptions, unlawful distributions of assets during liquidation, and
unlawful loans or guarantees to a director. The Colorado Business Corporation
Act expressly sets forth a negligence standard with respect to such liability.
The provisions that eliminate liability as described above will apply
to officers of the Company only if they are directors of the Company and are
acting in their capacity as directors and will not apply to officers of the
Company who are not directors.
INDEMNIFICATION
The Colorado Business Corporation Act contains provisions permitting
and, in some situations, requiring Colorado corporations to provide
indemnification to their officers and directors for losses and litigation
expense incurred in connection with their service to the corporation. The
Company's Articles and Bylaws contain provisions requiring indemnification by
the Company of its directors and officers and other persons acting in their
corporate capacities.
The Colorado Business Corporation Act permits indemnification of a
director of a Colorado corporation, in the case of a third-party action, if the
director (i) conducted himself in good faith, (ii) reasonably believed that (a)
in the case of conduct in his official capacity, his conduct was in the
corporation's best interest, or (b) in all other cases, his conduct was not
opposed to the corporation's best interest, and (iii) in the case of any
criminal proceeding, had no reasonable cause to believe that his conduct was
unlawful. The Act further provides for mandatory indemnification of directors
and officers who are successful on the merits or otherwise in litigation. The
statute limits the indemnification that a corporation may provide to its
directors in a derivative action in which the director is held liable to the
corporation, or in any proceeding in which the director is held liable on the
basis of his improper receipt of a personal benefit.
In addition, the Company may enter into agreements with its directors
providing contractually for indemnification consistent with the Articles and
Bylaws; currently, the Company has no such agreements. The Colorado Business
Corporation Act also authorizes the Company to purchase insurance for its
directors and officers insuring them against certain risks as to which the
Company may be unable lawfully to indemnify them. The Company has obtained
limited insurance coverage for its officers and directors as well as insurance
coverage to reimburse the Company for potential costs of its corporate
indemnification of officers and directors.
Insofar as exculpation or indemnification for liabilities arising under
the Securities Act of 1933 may be permitted for directors and officers and
controlling persons pursuant to the foregoing provisions, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
exculpation or indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
TRANSFER AGENT AND WARRANT AGENT
The Company's stock transfer agent and warrant agent is American
Securities Transfer and Trust, Inc., 1825 Lawrence Street, Suite 444, Denver,
Colorado 80202.
LEGAL MATTERS
Certain legal matters in connection with the sale of the Warrant Shares
offered hereby will be passed upon for the Company by Faegre & Benson LLP, 2500
Republic Plaza, 370 Seventeenth Street, Denver, Colorado.
EXPERTS
The consolidated financial statements ACT Teleconferencing, Inc.
appearing in the ACT Teleconferencing, Inc.'s Annual Report (Form 10-KSB) for
the year ended December 31, 1996, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements of ACT Teleconferencing, Inc. for
the year ended December 31, 1995, incorporated herein by reference, have been
audited by Van Dorn & Bossi, Boulder, Colorado, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), are incorporated in and made a part of
this Prospectus by reference:
(a) The Company's Annual Report on Form 10-KSB for the year
ended December 31, 1996 (which incorporates by reference certain
portions of the Company's definitive Notice and Proxy Statement for the
Company's Annual Meeting of Stockholders held on June 18, 1997)
(File No. 0-27560).
(b) The Company's Quarterly Report on Form 10-QSB for the
quarter ended March 31, 1997, as amended (File No. 0-27560).
(c) The Company's definitive Notice and Proxy Statement for
the Company's Annual Meeting of Stockholders held on June 18, 1997
(File No. 0-27560).
(d) The description of the Company's Common Stock which is
contained in Registration Statements and reports filed under the
Exchange Act.
All reports and any definitive proxy or information statements 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 offering of the shares offered hereby shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated herein by reference 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 herein by reference modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, on the written
or oral request of any such person, a copy of any or all of the documents
incorporated herein by reference (other than exhibits not specifically
incorporated in such documents). Requests for such copies should be directed to
the Secretary, ACT Teleconferencing, Inc., 1658 Cole Boulevard, Suite 162,
Golden, Colorado 80401 (telephone number 303/233-3500).
ADDITIONAL 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 Commission. Such reports, proxy statements and other
information may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549. Copies of such material may be obtained at prescribed rates from the
public reference facilities of the Commission at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549. The Commission also maintains a Web site that
contains reports, proxy statements, and other information filed by the Company
at: http://www.sec.gov.
Additional information regarding the Company and the shares offered
hereby is contained in the Registration Statement, and exhibits thereto, filed
with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"). For further information regarding the Company and the shares
offered hereby reference is made to the Registration Statement, and exhibits
thereto, which may be inspected without charge at the office of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies thereof may be
obtained from the Commission at prescribed rates.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION IN CONNECTION WITH THE OFFERING BEING MADE HEREBY NOT CONTAINED
IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
Page
The Company 3
Selected Financial Information 4
Risk Factors 4
Use of Proceeds 9
Description of Securities 9
Legal Matters 14
Experts 14
Incorporation of Documents by Reference 14
Additional Information 15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Other expenses in connection with this Post-Effective Amendment No. 3
that will be paid by ACT Teleconferencing, Inc. (hereinafter in this Part II,
the "Company") are estimated to be substantially as follows:
APPROXIMATE
EXPENSE
ITEM
Nasdaq Listing Fees $7,125
State Securities (Blue Sky) Filing Fees and Expenses 10,000*
Printing 3,000*
Company's Legal Fees 18,000*
Accounting Fees and Expenses 5,000*
Transfer Agent's Fees 1,000*
Miscellaneous Expenses 2,000*
---------
Total 46,125
* Indicates estimate for the purpose of this filing.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Colorado Business Corporation Act permits a corporation organized
thereunder to indemnify its directors, officers, employees, and agents for
certain of their acts. The Articles of Incorporation of the Company have been
framed so as to conform to the Colorado Business Corporation Act. (Reference is
made to the Articles of Incorporation, as amended, incorporated by reference as
Exhibit 3.1 to this Registration Statement.)
In general, the Company may indemnify any officer, director, employee,
or agent against expenses, fines, penalties, settlements or judgments arising in
connection with a legal proceeding to which such person is a party, if that
person's actions were in good faith, were believed to be in the Company's best
interest, and were not unlawful. Indemnification is mandatory with respect to a
director or officer who was wholly successful in defense of a proceeding. In all
other cases, indemnification of a director, officer, employee, or agent requires
a determination by independent decision of the Board of Directors, by
independent legal counsel, or by a vote of the shareholders that the applicable
standard of conduct was met by the person to be indemnified.
The circumstances under which indemnification is granted in connection
with an action brought on behalf of the Company are generally the same as those
set forth above; however, with respect to such actions against directors,
indemnification is granted only with respect to reasonable expenses actually
incurred in connection with the defense or settlement of the action. In such
actions, the person to be indemnified must have acted in good faith and in a
manner the person reasonably believed was in the Company's best interest; the
person must not have been adjudged liable to the Company; and the person must
not have received an improper personal benefit.
Indemnification may also be granted pursuant to the terms of agreements
which may be entered into in the future pursuant to a vote of shareholders or
directors. In addition, the Company is authorized to purchase and maintain
insurance which protects its officers and directors against any liabilities
incurred in connection with their services in such a position, and such a policy
may be obtained by the Company in the future.
ITEM 16. EXHIBITS.
Exhibit
No. Description
- --- -----------
1.1(1) Form of Underwriting Agreement, as amended
1.2(1) Form of Selected Dealer Agreement, as amended
1.3(1) Form of Warrant Agreement
3.1(2) Restated Articles of Incorporation of the Company dated April 15,
1996
3.2(2) Bylaws of the Company, amended as of April 15, 1996
4.1(1) Form of specimen certificate for Common Stock of the Company
4.2(1) Form of Unit Purchase Option to be issued by the Company to the
Underwriter
4.3(1) Impound Agreement
4.4(1) Lock-up Letter Agreement
5 Opinion of Faegre & Benson LLP
10.1(1) Stock Option Plan of 1991, as amended, authorizing 400,000 shares of
Common Stock for issuance pursuant to the Plan
10.2(1) Form of Stock Option Agreement
10.3(1) Form of Common Stock Purchase Warrant
10.4(1) Form of Placement Agent Warrant
10.5(1) Denver West Office Building Lease dated April 1, 1993, by and between
Denver West Office Building No. 6 Venture and the Company, as amended
10.6(1) Leases for United Kingdom facilities (First floor of Howard House)
dated September 29, 1993 and April 17, 1995, between Garfunkel &
Wanderer Limited and Reichwald Brothers Limited, Landlord, and ACT
Teleconferencing Limited, Tenant
10.7(1) Letter agreement dated May 31, 1995 with Worldcom regarding lease of
Amsterdam facilities
10.8(1) Sublease Agreement with Integraf Corporation dated August 1995 for
ACT VideoConferencing, Inc. premises
10.9(1) Term Loan Agreement dated August 11, 1994, between the Company and
Norwest Bank, N.A., Boulder, Colorado
10.10(1) Split Dollar Insurance Agreement dated March 1, 1990, between the
Company and Gerald D. Van Eeckhout
10.11(1) Service Agreement dated April 10, 1992 between David Holden and ACT
Teleconferencing Limited
10.12(1) Stock Purchase Agreement dated July 13, 1995, between the Company and
Paul Clifford for acquisition of NBS, Inc.
10.13(1) Employment Agreement dated July 14, 1995, between the Company and
Paul Clifford
10.14(1) Agreement between Company and Gerald D. Van Eeckhout limiting his
compensation in 1996 and 1997
10.15(1) Memorandum dated December 22, 1995 from director Seifert amending Mr.
Van Eeckhout's compensation
10.16(1) Terms of employment of Harry Walls, president-designate of ACT
Teleconferencing Services, Inc. per Company's letter dated December
13, 1995
10.17(1) Agreement to Exchange Stock between Apogee Robotics, Inc. and Company
10.18(1) Agreement between Company and Ronald J. Bach to borrow proceeds from
sale of Apogee Robotics common stock
16.1(3) Letter from Van Dorn & Bossi to the SEC dated June 14, 1996.
16.2(3) Letter from Van Dorn & Bossi to the SEC dated June 18, 1996.
21 Subsidiaries of the Company
23.1 The consent of Faegre & Benson to the use of its opinion with respect
to the legality of the securities covered by this Registration
Statement and to the references to such firm in the Prospectus filed
as part of this Registration Statement is included in Exhibit 5
23.2 Consent of Ernst & Young LLP
23.3 Consent of Van Dorn & Bossi
24 Power of Attorney included in signature page of registration
statement filed October 10, 1995
(1) Previously filed. (2) Incorporated by reference to the exhibit of the same
number to the Company's Form 10-QSB for the Quarter ended March 31, 1996,
File No. 0-27560. (3) Incorporated by reference to the exhibits to the
Company's Form 8-K filed with the Securities and Exchange Commission on June
18, 1996, File No. 0-27560.
ITEM 17. UNDERTAKINGS.
(a) RULE 415 OFFERING.
The undersigned small business issuer undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act.
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information 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) Include any additional or changed material information on the
plan of distribution.
(b) INDEMNIFICATION.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers, and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act, and is therefore unenforceable.
(c) RULE 430A.
The undersigned small business issuer hereby undertakes that it will:
(1) For determining any liability under the Securities Act of 1933,
treat the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the small business issuer under Rule 424(b)(1) or (4) or
497(h) under the Securities Act as part of this Registration Statement as of the
time the Commission declared it effective.
(2) For determining any liability under the Securities Act of 1933,
treat each post-effective amendment that contains a form of prospectus as a new
registration statement, and that offering of the securities at that time as the
initial bona fide offering of those securities.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
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 or Amendment to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Golden, State of Colorado, on July 17, 1997.
ACT TELECONFERENCING, INC.
Date: July 17, 1997 By /s/ Gerald D. Van Eeckhout
------------------------------------
Gerald D. Van Eeckhout
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendment was signed by the following persons in the
capacities and on the dates stated.
Signature Title
- --------- -----
/s/ Gerald D. Van Eeckhout Chief Executive Officer
- ----------------------------- and Director
Gerald D. Van Eeckhout (Principal Executive Officer)
/s/ Gavin Thomson Chief Financial Officer
- ----------------------------- (Principal Financial & Accounting Officer)
Gavin Thomson
* Director
- -----------------------------
Ronald J. Bach
* Director
- -----------------------------
James F. Seifert
* Director
- -----------------------------
Carolyn R. Van Eeckhout
/s/ Donald Sturtevant Director
- -----------------------------
Donald Sturtevant
* Gerald D. Van Eeckhout by signing his name hereto, does hereby sign this
document on behalf of each of the above named directors of the Registrant
pursuant to power of attorney duly executed by such persons.
/s/ Gerald D. Van Eeckhout
----------------------------------------
Gerald D. Van Eeckhout, Attorney in fact
INDEX TO EXHIBITS
Exhibit No. Description Page
- ----------- ----------- ----
1.1(1) Form of Underwriting Agreement, as amended All exhibits
filed
electronically
or incorporated
by reference
1.2(1) Form of Selected Dealer Agreement, as amended
1.3(1) Form of Warrant Agreement
3.1(2) Restated Articles of Incorporation of the Company
dated April 15, 1996
3.2(2) Bylaws of the Company, amended as of April 15, 1996
4.1(1) Form of specimen certificate for Common Stock of
the Company
4.2(1) Form of Unit Purchase Option to be issued by the
Company to the Underwriter
4.3(1) Impound Agreement
4.4(1) Lock-up Letter Agreement
5 Opinion of Faegre & Benson LLP
10.1(1) Stock Option Plan of 1991, as amended, authorizing
400,000 shares of Common Stock for issuance
pursuant to the Plan
10.2(1) Form of Stock Option Agreement
10.3(1) Form of Common Stock Purchase Warrant
10.4(1) Form of Placement Agent Warrant
10.5(1) Denver West Office Building Lease dated April 1,
1993, by and between Denver West Office Building
No. 6 Venture and the Company, as amended
10.6(1) Leases for United Kingdom facilities (First floor
of Howard House) dated September 29, 1993 and April
17, 1995, between Garfunkel & Wanderer Limited and
Reichwald Brothers Limited, Landlord, and ACT
Teleconferencing Limited, Tenant
10.7(1) Letter agreement dated May 31, 1995 with Worldcom
regarding lease of Amsterdam facilities
10.8(1) Sublease Agreement with Integraf Corporation dated
August 1995 for ACT VideoConferencing, Inc.
premises
10.9(1) Term Loan Agreement dated August 11, 1994, between
the Company and Norwest Bank, N.A., Boulder,
Colorado
10.10(1) Split Dollar Insurance Agreement dated March 1,
1990, between the Company and Gerald D. Van
Eeckhout
10.11(1) Service Agreement dated April 10, 1992 between
David Holden and ACT Teleconferencing Limited
10.12(1) Stock Purchase Agreement dated July 13, 1995,
between the Company and Paul Clifford for
acquisition of NBS, Inc.
10.13(1) Employment Agreement dated July 14, 1995, between
the Company and Paul Clifford
10.14(1) Agreement between Company and Gerald D. Van
Eeckhout limiting his compensation in 1996 and 1997
10.15(1) Memorandum dated December 22, 1995 from director
Seifert amending Mr. Van Eeckhout's compensation
10.16(1) Terms of employment of Harry Walls,
president-designate of ACT Teleconferencing
Services, Inc. per Company's letter dated December
13, 1995
10.17(1) Agreement to Exchange Stock between Apogee
Robotics, Inc. and Company
10.18(1) Agreement between Company and Ronald J. Bach to
borrow proceeds from sale of Apogee Robotics common
stock
16.1(3) Letter from Van Dorn & Bossi to the SEC dated June
14, 1996.
16.2(3) Letter from Van Dorn & Bossi to the SEC dated June
18, 1996.
21 Subsidiaries of the Company
23.1 The consent of Faegre & Benson to the use of its
opinion with respect to the legality of the
securities covered by this Registration Statement
and to the references to such firm in the
Prospectus filed as part of this Registration
Statement is included in Exhibit 5
23.2 Consent of Ernst & Young LLP
23.3 Consent of Van Dorn & Bossi
24 Power of Attorney included in signature page of
registration statement filed October 10, 1995
(1) Previously filed.
(2) Incorporated by reference to the exhibit of the same number to the Company's
Form 10-QSB for the Quarter ended March 31, 1996, File No. 0-27560.
(3) Incorporated by reference to the exhibits to the Company's Form 8-K filed
with the Securities and Exchange Commission on June 18, 1996, File No.
0-27560.
Exhibit 5
OPINION OF COUNSEL
July 17, 1997
ACT Teleconferencing, Inc.
Suite 162
1658 Cole Boulevard
Golden, Colorado 80401
Ladies and Gentlemen:
You have requested our opinion as counsel for ACT Teleconferencing,
Inc. (the "Company"), a Colorado corporation, in connection with the
registration statement under the Securities Act of 1933 (the "Securities Act"),
as amended, and the rules and regulations promulgated thereunder, of an offering
by the Company of 712,497 shares of common stock, no par value (the "Common
Stock"), offered upon exercise of warrants (the "Warrants") that were sold as
part of Units in the Company's February 1996 public offering.
We have examined the Company's Post-Effective Amendment No. 3 on Form
S-3 to its Registration Statement on Form SB-2 filed with the Securities and
Exchange Commission on July 16, 1997 (the "Registration Statement"). We have
also examined the Amended and Restated Articles of Incorporation of the Company,
as on file with the Secretary of State of the State of Colorado, the Amended and
Restated Bylaws and the minute book of the Company, various exhibits filed in
connection with the Registration Statement and such other documents as we have
deemed necessary in order to provide a basis for the opinion expressed herein.
We have also consulted with officers and directors of the Company to clarify,
confirm, or supplement the foregoing documentation.
Based on the foregoing, it is our opinion all of the necessary
corporate action on the part of the Company has been taken to authorize the
issuance and sale of the Common Stock upon exercise of the Warrants and, when
sold and issued as contemplated by the Registration Statement, such Common Stock
will be legally and validly issued and outstanding, fully paid, and
nonassessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and consent to the use of our name under the caption
"Legal Matters" in the prospectus which is a part thereof.
Very truly yours,
Faegre & Benson LLP
Exhibit 21
SUBSIDIARIES OF THE SMALL BUSINESS ISSUER
NAME JURISDICTION OF INCORPORATION
---- -----------------------------
ACT Teleconferencing Services, Inc. Minnesota, USA
(formerly ACT Capital, Inc.)
ACT Research, Inc. Colorado, USA
ACT Teleconferencing Limited United Kingdom
(60 percent owned)
ACT VideoConferencing, Inc. Minnesota, USA
(formerly NBS, Inc.)
ACT Teleconferencing B.V. Netherlands
ACT Teleconferencing (Proprietary) Limited Australia
(80 percent owned)
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus of ACT
Teleconferencing, Inc. for the registration of 712,497 shares of common stock
and to the incorporation by reference therein of our report dated March 18, 1997
with respect to the consolidated financial statements of ACT Teleconferencing,
Inc. included in its Annual Report (Form 10-KSB) for the year ended December 31,
1996, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Denver, Colorado
July 16, 1997
Exhibit 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus of ACT
Teleconferencing, Inc. for the registration of 712,497 shares of common stock
and to the incorporation by reference therein of our report dated April 5, 1996
with respect to the consolidated financial statements of ACT Teleconferencing,
Inc. included in its Form 10-KSB for the year ended December 31, 1995, filed
with the Securities and Exchange Commission.
VAN DORN & BOSSI
Boulder, Colorado
July 14, 1997
