As Filed with the Securities and Exchange Commission on March 4, 1999
Registration No. 333-__________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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VISUAL DATA CORPORATION
(Exact name of registrant as specified in its charter)
Florida 65-0420146
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1291 SW 29 Avenue
Pompano Beach, Florida 33069
(954) 917-6655
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(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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Randy S. Selman
Chief Executive Officer
1291 SW 29 Avenue
Pompano Beach, Florida 33069
(954) 917-6655
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(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
Joel D. Mayersohn, Esq.
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
(954) 763-1200
---------------------------------------------
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
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, as amended, 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 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 number of the earlier
effective registration statement for the 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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CALCULATION OF REGISTRATION FEE
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Title of Each Proposed Proposed
class of securities Amount maximum maximum Amount
to be registered to be registered(1) offering price aggregate of registration
per unit (2) offering price fee
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<S> <C> <C> <C> <C>
Common Stock,
par value $.0001
per share 1,631,604 $13.1875 $21,516,777 $5,982
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(1) The shares of Common Stock set forth in the Calculation of Registration
Fee Table, and which may be offered pursuant to this Registration
Statement, includes, pursuant to Rule 416 of the Securities Act of
1933, as amended, such additional number of shares of the Registrant's
Common Stock that may become issuable as a result of any stock splits,
stock dividends or similar events.
(2) Estimated solely for the purpose of computing the amount of the
registration fee, based on the average of the high and low prices for
the Registrant's Common Stock as reported on the Nasdaq SmallCap Market
(TM) on March 1, 1999 in accordance with Rule 457 of the Securities Act
of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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Subject to Completion, dated March 4, 1999
PROSPECTUS
1,631,604 Shares
VISUAL DATA CORPORATION
THE SHARES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK.
YOU SHOULD CAREFULLY CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 7, IN
DETERMINING WHETHER TO PURCHASE THE VISUAL DATA CORPORATION COMMON STOCK.
These shares of Common Stock are being offered by certain selling
security holders identified in this Prospectus. We issued an aggregate of
737,689 shares of Common Stock to certain of the selling security holders in
connection with sales by us of restricted securities to such selling security
holders, as well as in connection with certain other transactions. This
Prospectus also covers up to 893,915 shares of Common Stock issuable by us upon
the exercise of outstanding options and warrants held by certain of the selling
security holders (collectively, the "Selling Security Holder Options.") For
additional information on these transactions, you should refer to the section
entitled "Selling Security Holders" beginning on page 14. The selling security
holders may sell these shares from time to time on the over-the-counter market
in regular brokerage transactions, in transactions directly with market makers
or in certain privately negotiated transactions. For additional information on
the methods of sale, you should refer to the section entitled "Plan of
Distribution" on page 18. We will not receive any portion of the proceeds from
the sale of these shares, other than upon the exercise of the Selling Security
Holder Options.
Each of the selling security holders may be deemed to be an
"Underwriter," as such term is defined in the Securities Act of 1933, as amended
(the "Securities Act").
Our Common Stock and Warrants are quoted on the Nasdaq SmallCap Market
(TM) under the symbols "VDAT" and "VDATW."
On March 3, 1999 the last sale price of the Common Stock and the
Warrants on the Nasdaq SmallCap Market (TM) were $13.25 and $7.75,
respectively.
<TABLE>
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Price to Underwriting Proceeds to
the Public Discounts and Commissions the Selling Shareholders
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<S> <C> <C> <C>
Share..............................
Total.............................. SEE TEXT ABOVE SEE TEXT ABOVE SEE TEXT ABOVE
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</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
The date of this Prospectus is , 1999
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TABLE OF CONTENTS
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Page
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AVAILABLE INFORMATION................................................. 2
INFORMATION INCORPORATED BY REFERENCE................................. 2
BUSINESS OF THE COMPANY............................................... 3
RISK FACTORS.......................................................... 7
USE OF PROCEEDS....................................................... 14
SELLING SECURITY HOLDERS ............................................. 14
PLAN OF DISTRIBUTION.................................................. 18
LEGAL MATTERS......................................................... 19
EXPERTS............................................................... 19
We have not authorized any dealer, salesperson or other person to give
any information or to represent anything not contained in this Prospectus. You
should not rely on any unauthorized information. The information in this
Prospectus is current as of the date on the cover.
The information on our Web sites is not part of this Prospectus.
AVAILABLE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other documents with the Securities and Exchange Commission (the "Commission").
You may read and copy any document we file at the Commission's Public Reference
Room at Judiciary Plaza Building, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549. You should call 1-800-SEC-0330 for more information on the Public
Reference Room. The Commission maintains an Internet site at http://www.sec.gov
where certain information regarding issuers (including us) may be found.
This Prospectus is part of a Registration Statement on Form S-3 that we
filed with the Commission. The Registration Statement contains more information
than this Prospectus regarding Visual Data Corporation, including certain
exhibits and schedules. You can get a copy of the Registration Statement from
the Commission at the address listed above or from its Internet site at
http://www.sec.gov.
INFORMATION INCORPORATED BY REFERENCE
The Commission allows us to "incorporate by reference" into this
Prospectus information we file with the Commission in other documents. This
means that we can disclose important information to you by referring to other
documents that contain that information. The information may include documents
filed after the date of this Prospectus which update and supersede the
information you read in this Prospectus. We incorporate by reference the
documents listed below, except to the extent information in those documents is
different from the information contained in this Prospectus, and all future
documents filed with the Commission under Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act") until we terminate the
offering of these securities.
Commission Filing
File No. 0-22849 Period/Filing Date/Effective Date
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Annual Report on Form 10-KSB Fiscal year ended September 30, 1998
Quarterly Report on Form 10-QSB Quarter ended December 31, 1998
We will furnish you without charge, on written or oral request, a copy
of any or all of the documents incorporated by reference. You should direct any
requests for documents to:
Visual Data Corporation
1291 SW 29 Avenue
Pompano Beach, FL 33069
Attention: Corporate Secretary
Telephone: 954-917-6655
Telecopier: 954-917-6660
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BUSINESS OF THE COMPANY
General
We formed Visual Data Corporation (the "Company") as a Florida
corporation in May 1993. We produce, market, distribute and own rich media
content used for advertising products, and creating consumer based portfolio
libraries for use on the Internet and eventually, Interactive Television. Our
growing portfolio of full-motion video information libraries contain short
concise vignettes relating to consumer products, corporate information, hotels,
nursing homes, timeshare resorts and attractions. These multi-media information
libraries are designed to capture the interest of the general public in order to
generate revenues from advertising, subscriptions, viewership, E-Commerce
transactions and sponsorships. Using the latest technology in video editing,
combined with a global network of veteran camera crews, we are able to maintain
high quality and consistency in our video productions. We have developed
strategic partnerships in order to enhance our marketing efforts.
We believe the Company is positioned to take advantage of the
technological advancements concerning video on the Internet. Over the past year
streaming technology has made it possible for large video files to be viewed by
consumers without long download times and the quality was acceptable even if
using a 56K modem. During the first half of 1999, a new compression standard
(MPEG-4) will be available for consumer use that will not only provide "TV-like"
quality at speeds above 56K but will also improve the video quality on even
slower speed modems. This new technology is expected to boost consumer demand
for video content. We believe the Company will be positioned to offer its
production, marketing, and distribution services to all businesses looking to
enrich their presence on the Internet.
When we use the term the "Company," we mean it to include Visual Data
Corporation and our subsidiaries.
Products and Services
Our products and services are marketed through five wholly owned
independent business divisions, HotelView Corporation, Video News Wire
Corporation, ResortView Corporation (formerly CondoView Corporation), CareView
Corporation, MedicalView Corporation and TalentView, that provide
administration, marketing and sales for their respective brands. A sixth
division is majority (51%) owned EDnet, Inc., a Colorado corporation (OTCBB:
DNET).
HotelView (www.hotelview.com)
HotelView Corporation, a Florida corporation ("HotelView") provides
hotels and resorts the ability to promote their properties via the Internet
using a two to three minute video tour. Revenues are generated through contracts
ranging from one to three years, at approximately $4,500 per year, plus a
per-view charge of up to $0.25 each time the video advertisement is played. Some
of the hotels currently featured in the HotelView(R) library include Anaheim
Hilton & Towers, Hotel Baltschug Moscow Kempinski, Colony Hotel, Toronto,
Canada, Eden Roc Resort and Spa in Miami, Hilton at Walt Disney World Village,
Hotel Nikko San Francisco, the Mirage in Las Vegas, New Otani Kaimana Beach
Hotel in Hawaii, Ritz Carlton Laguna Niguel, California, Schlosshotel Vier
Jahreszeiten Berlin, Turnberry Isle Resort & Club, Miami and the Waldorf Astoria
in New York.
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The video tours can be accessed through HotelView's(R) own Web site
(www.hotelview.com) and hundreds of other travel sites, such as TravelWeb.com
(Pegasus Systems, Inc.). In addition, major hotel chains such as Hilton, Westin,
Nikko, and Doubletree have Web sites that are linked to the HotelView videos. By
clicking on the HotelView(R) icon, viewers are able to take a detailed look at
the prospective hotel's guestrooms, grounds, meeting space, recreational
facilities and dining venues.
HotelView (R) has focused its efforts on gaining major endorsements and
signing chain-wide agreements with major hotel companies. In June 1998,
HotelView(R) signed a chain-wide agreement with Nikko Hotels, a subsidiary of
Japan Airlines, with 47 hotels around the world. In September 1998, we signed a
flagship agreement with South Seas Resorts, a part of MeriStar Hospitality
Corporation (NYSE: MHX), one of the five largest hotel REIT's in the country,
with over 115 properties in the U.S. and Canada, for a minimum of nine
properties. HotelView(R) has been endorsed by the 27,000 member American Society
of Travel Agents (ASTA) and has won the "Best Hotel-Room Preview" award and a 4
Star rating from YAHOO! INTERNET LIFE.
HotelView(R) has also reached an agreement with Carlson Wagonlit Travel
Associates, the country's No. 1 travel agency franchisor, which enables
Carlson's more than 7,000 leisure agents to access the HotelView(R) library via
Carlson's proprietary network.
As part of our overall travel offering, we complement our HotelView(R)
product with video information on the destination (DestinationView(TM)) and
nearby attractions (AttractionView(TM)). These libraries allow the consumer to
experience all aspects of their travel decision prior to commitment. Existing
DestinationView(TM) clients include the Greater Boston Convention and Visitor
Bureau and the Greater Fort Lauderdale Convention and Visitor Bureau. Existing
AttractionView(TM) clients include the United Nations in New York, the Kennedy
Space Center in Florida and Busch Gardens in Tampa.
EDnet, Inc. (www.ednet.net)
On June 20, 1998, we acquired a 51% interest in EDnet, Inc., a Colorado
corporation ("EDnet") whose common stock is listed on the OTC Bulletin Board
under the symbol DNET. Based in California, EDnet develops and markets
integrated systems for the delivery, storage and management of professional
quality digital communications for media-based applications, including audio and
video production for the North American advertising and entertainment industry.
EDnet has established a private wide-area network through strategic alliances
with long distance carriers, regional telephone companies, satellite operators
and independent fiber optic telecommunications providers, which enables the
exchange of high quality audio, compressed video and multimedia data
communications. EDnet provides engineering services, application-specific
technical advice, and audio, video and networking hardware and software as part
of its business. EDnet's client base of more than 500 companies includes
LucasFilm's Skywalker division, Sony Entertainment, Disney, MGM, Capitol
Studios, Warner Brothers, NFL Films and PGA Tour Productions.
EDnet recently introduced its new video transmission product which it
is selling to its existing customer base as well as advertising agencies and
production companies. We believe that EDnet will continue to increase its
revenues through additional sales of audio and video equipment and increased
usage of its networks.
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Video News Wire (www.videonewswire.com)
In May 1998, we formed Video News Wire Corporation, a Florida
corporation ("Video News Wire") and signed an agreement with PR Newswire, Inc.
("PR Newswire"), the world's leading electronic distributor of corporate news
releases. Our wholly-owned subsidiary creates and distributes "TV-news-like"
video press releases via the Internet. Using our worldwide camera crew network,
Video News Wire(TM) also produces "About The Company" presentations and provides
coverage of corporate events. Revenues are generated through the production and
storage of basic and enhanced versions of video press releases, video corporate
profiles and video footage of events.
Video News Wire(TM) was officially launched in August 1998. Existing
clients include Chrysler Corporation, Delta Airlines, McDonald's Corporation,
Real Networks, Seagate Technologies, Subway Sandwiches and Salads, United News
and Media, and Warner Brothers.
Video News Wire(TM) and PR Newswire have a mutually exclusive agreement
covering the production and global marketing of Video News Wire's(TM) products.
PR Newswire has been transmitting full-text corporate news releases for more
than four decades and is the preferred method of disclosure by public companies.
Headquartered in New York, PR Newswire has approximately 130 salespeople and 27
bureaus nationwide as well as an office in London, handling approximately
300,000 press releases for approximately 33,000 business clients annually. We
estimate that two-thirds of these press releases are applicable to the Video
News Wire(TM) service.
In January 1999 Video News Wire(TM) launched a new product which offers
publicly-traded companies an inexpensive means to broadcast their analyst
conference calls live, via the Internet, making them available to the investing
public, the media and worldwide to anyone with Internet access. This new
service, which will be sold by PR Newswire, will be priced at approximately $600
per one-hour conference call. The webcast can also be archived for audio replay
for an additional fee and the archived material can be accessed through a
company's own Web site.
ResortView (www.resortview.com)
ResortView Corporation, a Florida corporation ("ResortView") commenced
operations in June of 1998 to service an agreement we signed in March 1998 with
Interval International, Inc. ("Interval International"), a leader in the
timeshare exchange business. Interval International, known as the Quality
Vacation Exchange Network, provides service to more than 860,000 timeshare
owners worldwide. The company's network features nearly 1,600 resorts. Interval
International maintains its world headquarters in Miami, Florida and has 31
other offices worldwide.
The timeshare industry is a rapidly growing segment of the
hospitality/travel/leisure market, with annual sales of over $6 billion and
annualized growth of over 16%. ResortView(TM) is designed to use video
advertising in conjunction with the Global Distribution System (GDS), the
electronic database that all 650,000 travel agents around the world use to
research and book rooms in hotels, to promote lead generation and rental income
for resort developers. ResortView (TM) provides the developer with the ability
to advertise its resort to a more targeted (and larger) prospect audience. As a
result of our strategic alliance with VIP International Corporation ("VIP
International"), a ResortView(TM) property can be booked by travel agencies
worldwide via the GDS, or by consumers at home or work via the Internet.
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Revenues are generated via a membership fee of approximately $10,000
per resort, plus ResortView(TM) receives a 3% commission on each booking
generated by the travel agents via the VIP International alliance. Clients
include Harbour Lights in Myrtle Beach, Newport Beachside Crown Plaza in Miami
Beach, Villas of Fairways and Treetops in Bushkill, PA and Villas of Izatys in
Minnetonka, MN.
The link via a relationship with VIP International enables travel
agents to book room nights in the timeshare facilities as easily as booking a
standard hotel room. This capability, along with the video, provides travel
agents and consumers an easy way to preview and book these types of facilities.
In the past, resort developers have incurred considerable advertising expense to
entice consumers to visit their facilities in order to sell them on purchasing a
timeshare apartment. ResortView(TM) enables them to introduce their properties
to an expanded group of potential buyers while earning incremental revenues from
the sale of excess room inventory.
CareView (www.careview.com)
In August 1997 we formed CareView Corporation, a Florida corporation
("CareView"). The CareView(TM) product has been designed to assist family
members with locating an appropriate Skilled Nursing Facility or an Assisted
Living Facility for the elderly or infirm. With dedicated computer "kiosks" in
major hospitals and other referral centers, as well as worldwide access via the
Internet, both the health care professional and the lay person can utilize
CareView(TM) to save time and effort in choosing the right facility.
Member facilities are featured with a full-motion, narrated video tour
as well as many other features such as a printable information sheet, e-mail
links for requesting more information, and a quick reference list of services
and amenities. Hospital case managers are able to access a real-time bed
availability database, and built-in e-mail paging functions to save time in
locating suitable facilities.
The CareView(TM) system is currently being offered in the South Florida
and New York City metro areas. Officially launched in September 1998,
CareView(TM) has enrolled 20 long-term care facilities and is being used in 33
hospitals and two senior resource centers.
Typical contracts with the long term care facility provide for an
annual fee of $5,000 - $8,000. It is expected that 60+ facilities will join the
program in each of the current regions and we will begin expanding into other
major metropolitan areas in 1999.
MedicalView Corp. (www.medicalview.com)
In November 1998 we formed MedicalView Corporation, a Florida
corporation ("MedicalView"), to provide a turnkey service for video and audio
production, broadcasting of live and taped events, medical and health related
content development and the distribution of content to targeted audiences
throughout the World Wide Web. In February 1999, MedicalView(TM) executed
distribution agreements for its video programming with Physicians Online
(www.po.com), which bills itself as the world's largest physician-exclusive Web
site, and Intelihealth (www.intelihealth.com), the nations's largest consumer
health Internet site which is a joint venture of Aetna US Healthcare and Johns
Hopkins University and Health System. Under these agreements, MedicalView(TM)
will create and distribute Internet-based video programs for physicians, health
care professionals and consumers.
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TalentView (www.talentview.com)
In March 1998, we entered into an agreement with Digital Criteria
Technologies to become the exclusive marketer of VoiceSelect, a multimedia
database and search technology for professional voice talent. Under the terms of
the agreement, we will act as the Internet host for VoiceSelect and will market
the product through our TalentView(TM) division to advertising agencies, talent
agencies and voice talent. We will earn a percentage of the gross revenues
generated by VoiceSelect. We were also given right of first refusal to purchase
the product.
TalentView(TM) was organized to develop Internet-based solutions
designed expressly for the entertainment, advertising and media industries. Its
initial online service, A* Cappella, is a searchable, multimedia talent library
of more than 1,500 professional voice performers working in film, television,
radio and other media applications. The service was made available to the
production community beginning March 1, 1999 via a secure, restricted Web site,
www.talentview.com. We believe that functioning as a virtual community on a
subscription basis ensures that only qualified professionals will be allowed
access to the service. It is anticipated that revenues will be produced through
the sale of memberships to qualified professional talent. The TalentView(TM)
service will be offered to the 500 EDnet affiliates and associates located in 42
states, six Canadian provinces and 30 countries around the world.
RISK FACTORS
The securities offered hereby are speculative and involve a high degree
of risk. Only those persons who are able to lose their entire investment should
purchase these securities. Prospective investors, prior to making an investment
decision, should carefully read this Prospectus and consider, along with other
matters referred to herein, the following risk factors.
SPECIAL NOTE ABOUT FORWARD LOOKING STATEMENTS
We make statements in this Prospectus and in the documents we
incorporate by reference that are considered "forward-looking statements" within
the meaning of the Securities Act and the Exchange Act. Sometimes these
statements contain words such as "may," "believe," "expect," "continue,"
"intend," or other similar words. These statements are not guarantees of our
future performance and are subject to risks, uncertainties, and other factors
that could cause our actual performance or achievements to be materially
different from those we project. The following factors, among others, could
cause materially different results from those anticipated or projects:
* heightened competition;
* problems integrating acquired companies;
* failure to identify, acquire or profitably manage additional
businesses;
* failure to obtain new customers or retain existing customers;
* inability to carry out marketing and sales plans;
* inability to obtain capital for future growth;
* loss of key executives; and
* general economic and business conditions.
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We do not have a policy of updating or revising forward-looking
statements and thus it should not be assumed that silence by us over time means
that actual events are bearing out as estimated in such forward looking
statements.
INTERNET-RELATED RISKS
We recognize the current demand for the Internet may not continue to
grow at the current rate or that it may change in the future as technology
continues to evolve. We produce and market video content and currently use the
Internet as the primary distribution network for our products. Changes in the
network infrastructure could impact the short-term marketing of our products and
there can be no assurance how expediently, if at all, we could respond if the
change or increase in distribution channels does not occur as part of our
internally developed plans.
ABSENCE OF PROFITABILITY; ACCUMULATED DEFICIT; PRIOR LOSS; FUTURE OPERATING
RESULTS
We continue to incur operating losses. For the years ended September
30, 1998 and 1997, we incurred losses of $3,434,595 and $3,573,962,
respectively. For the three months ended December 31, 1998, we reported a net
loss (unaudited) of $1,126,408. Our operating expenses have increased and can be
expected to increase significantly in connection with our recent acquisitions
and continued proposed expansion and, accordingly, our future profitability will
depend on continued corresponding increases in revenues from operations. Future
events, including unanticipated expenses, increased competition or inability to
effectively integrate our acquisitions, could have an adverse affect on our
operating margins and results of operations. As a result of our losses from
operations, together with the costs associated with acquisitions, we may
experience liquidity and cash flow problems if we are not able to raise
additional capital as needed. There can be no assurance that our rate of revenue
growth will continue in the future or that our future operations will be
profitable.
UNPROVEN ACCEPTANCE OF OUR PRODUCTS
The markets for our products and information libraries have only
recently begun to develop, are rapidly evolving and are increasingly
competitive. Demand and market acceptance for recently introduced products and
services are subject to high level of uncertainty and risk. It is difficult to
predict whether, or how fact, these markets will grow. We cannot guarantee
either that the demand for our products and information libraries will continue
to develop or that such demand will be sustainable. If the market develops more
slowly than expected or become saturated with competitors, or if our products
and information libraries do not sustain market acceptance, our business,
operating results, and financial condition will be materially and adversely
affected.
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UNCERTAINTY OF CONTENT DEVELOPMENT
A key element of our strategy involves the development of information
libraries targeted for specific interest areas, demographic groups and
geographic areas. We cannot guarantee that we will be successful in our efforts
to select and target particular areas of interest which have broad appeal. Any
failure by us to develop and maintain high-quality and successful information
libraries could materially and adversely affect our business, operating results
and financial condition.
RISKS RELATED TO OUR ACQUISITION STRATEGY
Our strategy is to increase revenues and the markets we serve through
the acquisition of media developers with emphasis on developers of video media.
In pursuing this strategy, we must address and overcome various factors,
including the following, some of which are beyond our control:
* We may be unable to identify, acquire or profitably manage
additional companies or successfully integrate the operations
of additional companies into ours without encountering
substantial costs, delays or other problems.
* Companies acquired by us in the future may not achieve
profitability that justifies our investment in them or these
acquired companies may have unknown liabilities that could
materially adversely affect our results of operations or
financial condition.
* We may compete for acquisition and expansion opportunities
with companies that have greater resources than ours and,
therefore, we may not be able to find suitable acquisition
candidates. Financing for these acquisitions, if needed, may
not be obtainable on terms acceptable to us.
* We may not be able to successfully and profitably integrate
these acquired companies into our operations.
* Our results of operations in fiscal quarters immediately
following a material acquisition may be materially adversely
affected while we integrate the acquired business into our
existing operations.
* We may acquire certain businesses that have either been
unprofitable or that have had inconsistent profitability prior
to their acquisition. Our inability to improve the
profitability of these acquired businesses could have a
material adverse effect us.
* Our acquisition strategy places significant demands on our
resources and there can be no assurance that our management,
operational systems and structure can be expanded to
effectively support the our continued acquisition strategy.
If we are unable to implement successfully our acquisition strategy,
this inability may have a material adverse effect on our business, results of
operations or financial condition.
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DEPENDENCE ON MANAGEMENT TO INTEGRATE THE ACQUISITIONS AND ABILITY TO MANAGE
GROWTH
Our business strategy includes growth through acquisition and internal
development. We are subject to various risks associated with our growth
strategy, including the risk that we will be unable to identify and recruit
suitable acquisition candidates in the future or to integrate and manage the
acquired companies.
We recently completed the acquisition of 51% of EDnet, as well as the
acquisition of certain other assets, and are in the process of integrating these
operations into ours. EDnet's history, geographical location, business model and
business culture are different from ours in many respects. Our directors and
senior management face a significant challenge in their efforts to integrate our
businesses and the business of the acquired companies or assets, and effectively
manage our continued growth. There can be no assurance that our efforts to
integrate the operations of EDnet and the acquired assets will be successful,
that we can manage our growth or that the anticipated benefits of the acquired
company or assets will be fully realized. The dedication of management resources
to such efforts may detract attention from our day-to-day business. There can be
no assurance that there will not be substantial costs associated with such
activities or the success of integration efforts, which could have a material
adverse effect on our operating results.
NEED FOR ADDITIONAL FINANCING
We currently intend to effect future acquisitions with cash, promissory
notes and future issuances of debt or equity securities. There can be no
assurance that we will be able to obtain financing if and when it is needed on
terms we deem acceptable. Our inability to obtain financing would have a
material adverse effect on our ability to implement our acquisition strategy,
and as a result, could require us to diminish or suspend our acquisition
strategy. These actions would negatively affect our growth rate.
RISKS RELATING TO CAPITAL REQUIREMENTS
Our acquisition and internal growth strategy requires substantial
capital investment. Capital is typically needed not only for the acquisition of
additional companies, but also for the effective integration, operation and
expansion of these businesses. Capital is also necessary for the start-up of
additional on-line multi-media libraries. The acquired businesses may require
capital for working capital and expansion. Therefore, we will need to raise
capital, possibly through the issuance of long-term or short-term indebtedness
or the issuance of our equity securities in private or public transactions in
order to complete further acquisitions and expansion. This will likely result in
dilution of existing equity positions or increased interest expense. There can
be no assurance that acceptable financing for future acquisitions or for the
integration and expansion of existing operations can be obtained on suitable
terms, if at all.
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COMPETITION
We are engaged in highly competitive segments of business. We may
compete directly or indirectly with many companies who provide specialized
information such as content concerning hotels, attractions, resorts and care
facilities. A number of these competitors, who include hotel chains, airlines
and other travel-related organizations, are larger, better capitalized, more
established and have greater access to the resources necessary to produce a
competitive advantage. There are no assurances that we will be able to compete
favorably in the future.
DEPENDENCE ON KEY PERSONNEL
Implementation of our acquisition strategy is largely dependent on the
efforts of a few senior officers. In particular, our operations are dependent to
a great degree on the continued efforts of our President and Chief Executive
Officer, Randy S. Selman, and our Executive Vice President, Alan M. Saperstein.
Furthermore, we will likely be dependent on the senior management of companies
that are acquired. Competition for highly qualified personnel is intense, and
the loss of any executive officer or other key employee, or the failure to
attract and retain other skilled employees, could have a material adverse effect
upon our business, results of operations or financial condition. We are parties
to employment agreements with each of Messrs. Selman and Saperstein which
terminate in January 2001, unless terminated earlier pursuant to the agreements,
and each contains confidentiality provisions and covenants not to compete. We
are the designated beneficiary of key man life insurance in the amount of
$1,000,000 on the life of Mr. Selman and $500,000 on the life of Mr. Saperstein.
There can be no assurance, however, that we can maintain the polices in effect
or that the coverage will be sufficient to compensate us for the loss of the
services of either Mr. Selman or Mr. Saperstein.
GOVERNMENT REGULATION AND REGULATORY UNCERTAINTIES
There are currently few laws or regulations directly attributable to
access to or commerce on the Internet. Due to the increasing popularity and use
of the Internet, it is possible that laws and regulations may be adopted,
covering issues such as privacy, defamation, pricing, taxation, content
regulation, quality of products and services, and intellectual property
ownership and infringement. Such legislation could dampen the growth in the use
of the Internet, decrease the acceptance of the Internet as a communications and
commercial medium, or require us to incur significant expense in complying with
any new regulation. Several telecommunications companies have petitioned the
Federal Communications Commission to regulate Internet Service Providers and
online service providers in a manner similar to long distance telephone carriers
and to impose access fees on these companies. This could increase the cost of
transmitting data over the Internet. Any new laws or regulations related to the
Internet could adversely affect our business.
TRADEMARKS AND PROPRIETARY RIGHTS
We regard our trademarks, trade secrets and similar intellectual
property as critical to our success. We rely upon trademark and copyright law,
trade secret protection and confidentiality or license agreements with our
employees, customers, partners and others to protect our proprietary rights. We
have applied for or obtained the registration of certain of our trademarks,
including HotelView, AttractionView, Video News Wire, ResortView, CareView,
FitnessView, ProductView, TalentView, ConventionView. Effective trademark and
trade secret protection may not yet available in every country in which our
products and services are distributed or made available through the Internet. We
have licensed in the past, and may license in the future, certain of our
proprietary rights to third parties. While we attempt to ensure that the quality
of our products is maintained by our licensees, our licensees may take actions
that could materially and adversely affect the value of our proprietary rights.
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EXERCISE OF WARRANTS WILL HAVE DILUTIVE EFFECT
As of February 26, 1999 we had outstanding options and warrants to
purchase a total of 4,043,742 shares of our Common Stock at prices ranging
between $.00016 and $8.40 per share, including 1,774,460 options issued to
directors and executive officers. The existence of such options and warrants may
adversely affect the terms under which we could obtain additional equity
capital. The exercise of these warrants and options may materially adversely
affect the market price of the Common Stock.
POSSIBLE APPLICABILITY OF RULES RELATING TO LOW-PRICED STOCKS; PENNY STOCK;
POSSIBLE FAILURE TO MAINTAIN CRITERIA FOR NASDAQ SECURITIES
Our Common Stock and Warrants are traded on The Nasdaq SmallCap
Market(TM) under the symbols "VDAT" and "VDATW", respectively. If, for any
reason, the Common Stock and/or Warrants do not remain accepted for inclusion on
The Nasdaq SmallCap Market(TM), then it would be expected that they would trade
in the over-the-counter markets through the "pink sheets" or on the NASD's OTC
Bulletin Board. In the event the Common Stock and/or Warrants were not included
on The Nasdaq SmallCap Market(TM), the Common Stock and/or Warrants would be
covered by a Commission rule that imposes additional sales practice requirements
on broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally institutions with assets in excess
of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse). For
transactions covered by the rule, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. Consequently, the rule may
affect the ability of broker-dealers to sell our securities and also may affect
the ability of existing shareholders to sell their shares in the secondary
market. Our ability to secure a symbol on The Nasdaq SmallCap Market(TM) does
not imply that a meaningful trading market in our Common Stock or Warrants will
ever develop, or, if developed, will be sustained.
SHARES ELIGIBLE FOR FUTURE SALE; EXPIRATION OF LOCK-UP PERIODS
As of February 26, 1999, there were 5,683,911 shares of our Common
Stock outstanding, of which approximately 2,802,615 were "restricted securities"
as that term is defined by Rule 144 under the Securities Act. Such shares will
be eligible for public sale only if registered under the Securities Act or if
sold in accordance with Rule 144. Under Rule 144, a person who is not our
affiliate and who has held restricted securities for a period of one year may
sell a limited number of shares to the public in ordinary brokerage
transactions. Sales under Rule 144 may have a depressive effect on the market
price of the Common Stock due to the potential increased number of publicly held
securities. The timing and amount of sales of Common Stock covered by the
Registration Statement of which this Prospectus is a part, as well as sales
pursuant to other filed registration statements, could also have a depressive
effect on the market price of the Common Stock.
Certain of our shareholders entered into "lock-up" agreements just
prior to our initial public offering (IPO). A lock-up agreement is an agreement
not to sell the securities owned by that person for some specific time frame. Of
the 1,032,681 shares subject to these lock-up agreements, 372,589 shares were
free to be sold after July 30, 1998, 180,624 shares were free to be sold after
January 30, 1999 and the remaining 479,468 shares remain subject to a lock-up
expiring July 30, 1999. In addition, an aggregate of 1,161,668 shares of Common
Stock offered by this Prospectus are subject to lock-up agreements. Of such
amount, 166,667 shares are free to be sold 15 days from the date of this
Prospectus, an additional 166,667 shares are free to be sold 45 days from the
date of this Prospectus, an additional 417,500 shares are free to be sold 90
days from the date of this Prospectus and the remaining 410,834 shares are free
to be sold 120 days from the date of this Prospectus. Any substantial sales of
these shares following the expiration of the lock-up periods may adversely
effect the market price of our Common Stock.
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ANTI-TAKEOVER PROVISIONS; POSSIBLE ISSUANCES OF PREFERRED STOCK
Certain provisions of our Articles of Incorporation and Bylaws may be
deemed to have anti-takeover effects and may delay, defer or prevent a takeover
attempt of the Company. In addition, certain provisions of the Florida Business
Corporation Act also may be deemed to have certain anti-takeover effects which
include that control of shares acquired in excess of certain specified
thresholds will not possess any voting rights unless these voting rights are
approved by a majority of a corporation's disinterested shareholders. Lastly,
our Articles of Incorporation authorize the issuance of up to 5,000,000 shares
of preferred stock with such rights and preferences as may be determined from
time to time by the Board of Directors, of which 4,999,850 shares remain without
designation as of February 26, 1999. We include such preferred stock in our
capitalization in order to enhance our financial flexibility. However, the
issuance of large blocks of preferred stock could possibly have a dilutive
effect with respect to existing holders of our Common Stock.
ABSENCE OF DIVIDENDS
Holders of our Common Stock are entitled to cash dividends when, as and
if declared by the Board of Directors out of funds legally available therefor.
We have never paid dividends and our management does not anticipate the
declaration or payments of any dividends in the foreseeable future. We intend to
retain earnings, if any, to finance the developments and expansion of our
business. Future dividend policy will be subject to the discretion of our Board
of Directors and will be contingent upon future earnings, if any, our financial
condition, capital requirements, general business conditions and other factors.
Therefore, there can be no assurance that cash dividends of any kind will ever
be paid.
VOLATILITY OF STOCK AND WARRANT PRICES
Historically there has been and there may continue to be volatility in
the market price for our Common Stock and Warrants. Our quarterly operating
results, changes in general conditions in the economy, the financial markets or
the marketing industry, or other developments affecting us or our competitors,
could cause the market price of our Common Stock and/or Warrants to fluctuate
substantially. In addition, the stock market in general, and the market prices
for Internet-related companies in particular, have experienced extreme
volatility that often has been unrelated to the operating performance of such
companies. These broad market and industry fluctuations may adversely affect the
price of our Common Stock and/or Warrants, regardless of our operating
performance.
YEAR 2000 COMPLIANCE
We are aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. The Year 2000 issue
relates to whether computer systems will properly recognize and process
information relating to dates in and after the year 2000. These systems could
fail or produce erroneous results if they cannot adequately process dates beyond
the year 1999 and are not corrected. Significant uncertainty exists in the
software industry concerning the potential consequences that may result from the
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failure of software to adequately address the Year 2000 issue. We have reviewed
all software and hardware used internally by us in all support systems to
determine whether they are Year 2000 compliant. Most of our software has already
been upgraded by the manufacturer or was recently purchased and is Year 2000
compliant. We expect to have our remaining Year 2000 compliant systems in place
by March 31 1999. We also intend to implement and test these solutions prior to
any anticipated impact of the Year 2000 issue on our systems. We do not believe
that the aggregate cost for the Year 2000 issue will be material. However, we
cannot predict the effect of the Year 2000 issue on entities with which we
transact business, and there can be no assurance that the effect of the Year
2000 issue on such entities will not have a material adverse effect on our
business, financial condition or results of operations. We will be formulating a
contingency plan with respect to such entities with which we do business.
In addition, we use third-party equipment, software and content,
including non-information technology systems, such as our security system,
building equipment and non-capital IT systems embedded micro controllers that
may not be Year 2000 compliant. We are in the process of development a plan to
assess whether these third parties are adequately addressing the Year 2000 issue
and whether any of our non-IT systems have material Year 2000 compliance
problems. Failure of such third-party equipment, software, or content to operate
properly with regard to the Year 2000 and thereafter could require us to incur
unanticipated expenses to remedy any problems, which could have a material
adverse effect on our business, results of operations, and financial condition.
Any new software, hardware or support systems implemented in the future
will be Year 2000 compliant or will have updates or upgrades or replacements
available before the Year 2000 to enable the system to be Year 2000 compliant.
We are currently assessing the Year 2000 compliance expense and related
potential effect on our earnings.
USE OF PROCEEDS
The sale of the shares of Common Stock offered pursuant to this
Prospectus are solely for the account of the selling security holders.
Accordingly, we will not receive any proceeds from the sale of such shares of
Common Stock by the selling security holders. In the event the Selling Security
Holder Options are exercised, we would receive gross proceeds of approximately
$2,942,855. It is anticipated that such proceeds, if any, will be used us for
working capital associated with continuing operations. While the intended use of
proceeds is consistent with our current business plan objectives, we reserve the
right to change the use of proceeds depending on working capital requirements
and opportunities afforded us.
SELLING SECURITY HOLDERS
The following table set forth the name of each selling security holder,
the number or shares of Common Stock beneficially owned by such selling security
holder as of February 26, 1999, and the number of shares being offered by each
selling security holder. The shares of Common Stock being offered hereby are
being registered to permit public secondary trading, and the selling security
holders may offer all or part of such shares for resale from time to time.
However, such selling security holders are under no obligation to sell all or
any portion of such shares immediately under this Prospectus. Likewise, no
holder of the Selling Security Holder Options is under any obligation to
exercise such options or warrants. All information with respect to share
ownership has been derived from the records of our transfer agent with respect
to shares of our Common Stock held of record by such selling security holders.
During the past three years no selling security holder has been an officer,
director or affiliate of our nor has any selling security holder had any
material relationship with us during such period, except as otherwise
specifically set forth herein. Because the selling security holders may sell all
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or a portion of their shares of Common Stock, no estimate can be given as to the
number of shares of Common Stock that will be held by any selling security
holder upon termination of any offering made hereby; accordingly, the following
table assumes (i) the exercise of all Selling Security Holder Options and (ii)
the sale of all shares of Common Stock by the selling security holders
immediately following the date of this Prospectus.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
No. of Shares No. of Shares %
of Common Stock No. of Shares of Common Stock Ownership
Name of Selling Beneficially Owned of Common Stock Beneficially Owned After
Security Holder As of Feb. 26, 1999 (1) Offered Hereby (2) After Offering (2) Offering (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Olive Investors LLC (3) (4) 222,222 222,222 - -
Cranshire Capital LP (3) (5) 83,334 83,334 - -
Gilford Partners, LP (3) (6) 27,778 27,778 - -
Arline Bonat (7) 25,000 25,000 - -
Hans Christian Donnerstag (7) 25,000 25,000 - -
Louis Gaudio Sr. & Louis Gaudio Jr. TEN (7) 25,000 25,000 - -
Natalie Harari (7) 5,000 5,000 - -
T. H. Holloway (7) 17,500 12,500 5,000 *
Investor Resource Services Inc. (7) (8) 25,000 25,000 - -
Neil Jones (7) 40,625 25,000 15,625 *
Christopher Leng-Smith (7) 5,000 5,000 - -
Michael Ostro (7) 12,500 12,500 - -
Gary Perrine (7) 25,000 25,000 - -
John Quackenbush (7) 12,500 12,500 - -
Hart Rotenberg (7) 32,125 12,500 19,625 *
Joseph Rotenberg (7) 34,125 12,500 21,625 *
Socrates Skiadas (7) 38,750 25,000 13,750 *
Charles Spinelli (7) 22,500 5,000 17,500 *
Edgar Udine (7) 12,500 12,500 - *
Glen Udine (7) 12,500 12,500 - *
Vace Partners Ltd. (7) (10) 10,000 5,000 5,000 *
Ronald Ameerali (7) 50,000 50,000 - *
Majors Harris (11) 14,000 14,000 - *
Heracles Fund (12) 17,855 17,855 - *
Harry Ragbir (13) 40,000 40,000 - *
Coleman & Co. Securities, Inc. (14) 288,334 288,334 - *
Trautman Kramer & Company, Inc. (15) 150,000 150,000 - *
Michael Sabeh (16) 10,000 10,000 - *
CLR Associates, Inc. (17) 223,929 100,000 123,929 2.1%
Hornblower & Weeks (18) 100,000 100,000 - -
Coral Investments (19) 175,000 50,000 125,000 2.1%
Krutchie, Inc. (20) 50,000 50,000 - -
Davis Hill, Inc. (21) 75,000 50,000 25,000 *
Jack Miller (22) 25,000 25,000 - -
WEC Investors IV, LLC (23) 50,000 40,000 10,000 *
Cardinal Capital Management, Inc. (24) 25,000 25,000 - -
Robert Zelinka (25) 81,261 4,186 77,07 1.4%
Herman Blank (26) 21,842 1,395 20,447 *
----------------- ------------------ -----------------
2,111,180 1,631,604 479,576
================= ================== =================
</TABLE>
* represents less than 1%
- --------------
(1) Beneficial ownership is determined in accordance with the rules of the
Commission and generally includes voting or investment power with
respect to securities and includes any securities which the person has
the right to acquire within 60 days through the conversion or exercise
of any security or other right.
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(2) Gives effect to the exercise of all Selling Security Holder Options
and the sale of the shares of Common Stock issuable upon such exercise.
(3) On February 10, 1999 we concluded a private placement of an aggregate
of 333,334 shares of our Common Stock to three institutional investors
in a private transaction exempt from registration under the Securities
Act in reliance upon Section 4(2) thereof. We received net proceeds of
approximately $2.6 million from this transaction. These investors were
granted piggy-back registration rights. In connection with the private
placement, Coleman & Co. Securities, Inc., an NASD member firm and one
of our investment bankers, received a 12 month warrant to purchase
8,334 shares of our Common Stock at an exercise price of $14.063 per
share, together with a five year warrant to purchase 105,000 shares of
our Common Stock at exercise prices ranging from $2.00 to $3.00 per
share. The 333,334 shares of our Common Stock sold to these three
institutional investors, together with the shares of Common Stock
underlying the warrant to purchase 8,334 shares we issued to Coleman &
Co. Securities, Inc. are included in this Prospectus.
(4) Messrs. Daniel J. Saks, Ethan Benovitz and Mark A. Nordlicht are the
managing partners and controlling persons of Olive Investors, L.L.C.
(5) Downsview Capital, Inc. is the general partner of Cranshire Capital LP.
Mitchell P. Kopin is the President and controlling person of Downsview
Capital, Inc.
(6) Gilbrooke Capital, Inc. is the general partner of Gilford Partners LP.
H. Robert Holmes is the President and controlling person of Gilbrooke
Capital, Inc.
(7) In November and December 1998 we sold an aggregate of 532,500 shares of
our Common Stock to 20 accredited investors in a private placement
exempt from registration pursuant to Section 4(2) of the Securities Act
and Rule 506 promulgated thereunder. The majority of these purchasers
had preexisting relationships with us. We received gross proceeds of
$1,040,000 and granted these investors piggy-back registration rights.
These 532,500 shares of Common Stock are included in this Prospectus.
We also granted Hornblower & Weeks, Inc. certain options in connection
with this private placement. See Footnote 18 below.
(8) Mr. Daniel Starczewski is the President and controlling person of
Investor Resources Services, Inc.
(9) Mr. Udine is an employee of ours.
(10) Messrs. Vincent Campitiello, Alfonso Campitiello and Anthony
Campitiello are the controlling persons of Vace Partners Ltd.
(11) Such shares are related to a license agreement. Includes such
number of shares as shall equal $140,000 in value, based upon the fair
market value of our Common Stock.
(12) Such shares were issued by us to Heracles Fund as consideration of a
waiver by it of a right of first refusal to purchase additional shares
of our securities granted in connection with the sale of our Series A
Preferred Stock in May 1998. Promethean Investment Group, L.L.C. is the
general partner of Heracles Fund and has voting control and investment
discretion of securities held by Heracles Fund. Promethean Investment
Group, L.L.C. is indirectly controlled by Mr. James F. O'Brien. Mr.
O'Brien disclaims beneficial ownership of the shares owned by
Promethean Investment Group, L.L.C. and Heracles Fund.
(13) Such shares were issued by us to Mr. Ragbir in May 1998 as
consideration for consulting services rendered by him in connection
with the development of our CareView(TM) library.
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(14) Includes shares of our Common Stock underlying options to purchase (i)
an aggregate of 130,000 shares at $2.00 per share, (ii) 55,000 shares
at $2.50 per share, and (iii) 95,000 shares at $3.00 per share. All
such options are for a five year period commencing November 21, 1998
and were granted in connection with the investment banking agreement we
entered into with Coleman & Co. Securities, Inc., an NASD member firm.
Also includes shares of our Common Stock underlying a one year warrant
to purchase 8,334 shares of our Common Stock at $14.063 per share which
we issued to Coleman & Co. Securities, Inc. in connection with the
institutional private placement we concluded in February 1999. See
Footnote 3 above.
(15) Includes shares of Common Stock underlying five year options to
purchase (i) 50,000 shares at $3.00 per share, (ii) 50,000 shares at
$3.50 per share, and (iii) 50,000 shares at $4.00 per share granted in
November 1998 pursuant to the agreement between us and Trautman Kramer
& Company, Inc. Trautman Kramer & Company, Inc., an NASD member firm,
serves as our co-investment banker with Coleman & Co. Securities, Inc.
See Footnote 14 above.
(16) Includes shares of our Common Stock underlying a three year warrant to
purchase 10,000 shares of Common Stock at an exercise price of $2.125
per share. Such warrant was transferred to Mr. Sabeh by C.L.R.
Associates, Inc. See Footnote 17 below.
(17) Includes shares of Common Stock underlying (i) a four year option
granted on September 30, 1998 to purchase 25,000 shares of Common Stock
at $2.125 per share and (ii) a three year warrant to purchase an
aggregate of 200,000 shares of Common Stock at $2.125 per share granted
on September 22, 1998. This Prospectus covers an aggregate of 85,000
shares issuable upon the exercise of the September 22, 1998 warrant,
including the 10,000 shares set forth in Footnote 16 above. Carole
Rhodes is the controlling person of C.L.R. Associates, Inc.
(18) Includes shares of Common Stock underlying a five year option granted
in November 1998 to purchase shares of Common Stock at $2.125 per share
granted in connection with the a private placement of our securities in
November and December 1998. See Footnote 7 above. Hornblower & Weeks,
Inc. is an NASD member firm.
(19) Includes shares of Common Stock underlying a four year option granted
in May 1998 to purchase such shares at $2.50 per share as partial
compensation for consulting services rendered to us. Susan Ribman and
Lauren Ribman are the controlling persons of Coral Investments.
(20) Includes shares of Common Stock underlying an option expiring in
December 2002 to purchase shares of our Common Stock at $4.00 per share
issued as compensation for consulting services rendered to us. Robert
Krutchie is the President and controlling person of Krutchie
Incorporated.
(21) Includes shares of Common Stock underlying three year options granted
to BlueStone Capital Partners, L.P., an NASD member firm, in January
1998 in connection with our engagement of such firm to perform
investment banking services for us. BlueStone Capital Partners, L.P.
assigned such options to Davis Hill Investments, Inc. in January 1999.
Of such options, 25,000 are exercisable at $2.438 per share and 25,000
are exercisable at $3.50 per share. Messrs. Maurice Emery and Stephen
Screech are the directors and controlling persons of Davis Hill
Investments, Inc.
(22) Includes shares of Common Stock underlying a four year option granted
in May 1998 to purchase 25,000 shares of our Common Stock at $6.00 per
share issued by us as compensation for consulting services rendered by
Mr. Miller.
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(23) Includes (i) a five year option granted in November 1998 to purchase
25,000 shares of Common Stock at $2.125 issued to WEC Investors IV, LLC
in connection with our sale to it in August 1998 of shares of our
Series A-1 Preferred Stock, and (ii) a one year option to purchase
15,000 shares of our Common Stock at $18.00 per share granted in
February 1999 as consideration for the its waiver of a right of first
refusal to purchase our equity securities. Messrs. Daniel J. Saks, Mark
A. Nordlicht and Ethan Benovitz are the officers, directors and
controlling persons of WEC Investors IV, LLC.
(24) Includes shares of Common Stock underlying a one year warrant granted
in February 1999 to purchase 25,000 shares at $14.063 per share as
consideration for consulting services rendered to us. Messrs. Rob
Rosenstein and Scott Koch are the officers and directors of Cardinal
Capital Management, Inc.
(25) Issued as additional consideration for loans in the aggregate
principal amount of $20,000 made to us in 1996.
(26) Issued as additional consideration for loans in the aggregate
principal amount of $30,000 made to us in 1996.
PLAN OF DISTRIBUTION
The Common Stock offered by this Prospectus is being offered on behalf
of the selling security holders. Such Common Stock may be sold or distributed
from time to time by the selling security holders, or by donees or transferees
or, or other successors in interest to, the selling security holders, directly
to one or more purchasers or through brokers, dealers or underwriters who may
act solely as agents or may acquire such Common Stock as principals, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, at negotiated prices, or at fixed prices, which may be changed.
The sale of the Common Stock offered hereby may be effected in one or more of
the following methods: (i) ordinary brokers' transactions; (ii) transactions
involving cross or block trades or otherwise on The Nasdaq SmallCap Market (TM);
(iii) purchases by brokers, dealers or underwriters as principal and resale by
such purchasers for their own accounts pursuant to this Prospectus; (iv) "at the
market" to or through market markers or into an existing market for the Common
Stock; (v) in other ways not involving market markers or established trading
markets, including direct sales to purchasers or sales effected through agents;
(vi) through transactions in options, swaps or other derivatives (whether
exchange-listed or otherwise); (vii) in privately negotiated transactions (viii)
to cover short sales; or (ix) any combination of the foregoing.
From time to time, one or more of the selling security holders may
pledge, hypothecate or grant a security interest in some or all of the shares of
Common Stock owned by them, and the pledgees, secured parties or persons to whom
such shares have been hypothecated shall, upon foreclosure in the event of
default, be deemed to be selling security holders hereunder. The number of
selling security holders' shares of Common Stock beneficially owned by those
selling security holders who so transfer, pledge, donate or assign such shares
will decrease as and when they take such actions. The plan of distribution for
selling security holders' shares of Common Stock sold hereunder will otherwise
remain unchanged, except that the transferees, pledgees, donees or other
successors will be selling security holders hereunder. In addition, a selling
security holder may, from time to time, sell short the Common Stock, and in such
instances, this Prospectus may be delivered in connection with such short sales
and the shares of Common Stock offered hereby may be used to cover such short
sales.
A selling security holder may enter into hedging transactions with
broker-dealers and the broker-dealers may engage in short sales of the Common
Stock in the course of hedging the positions they assume with such selling
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security holder, including, without limitation, in connection with distributions
of the Common Stock by such broker-dealers. A selling security holder may also
enter into option or other transactions with broker-dealers that involve the
delivery of the shares of Common Stock to the broker-dealers, who may then
resell or otherwise transfer such shares. A selling security holder may also
loan or pledge the shares of Common Stock to a broker-dealer and the
broker-dealer may sell such shares so loaned or upon a default may sell or
otherwise transfer the pledged shares of Common Stock.
Brokers, dealers, underwriters or agents participating in the
distribution of the shares of Common Stock as agents may receive compensation in
the form of commissions, discounts or concessions from the selling security
holders and/or purchasers of the Common Stock for whom such broker-dealers may
act as agent, or to whom they may sell as principal, or both (which compensation
as to a particular broker-dealer may be less than or in excess of customary
commissions). The selling security holders and any broker-dealers who act in
connection with the sale of the shares of Common Stock hereunder may be deemed
to be "underwriters" within the meaning of the Securities Act, and any
commission they receive and proceeds of any sale of the shares of Common Stock
may be deemed to be underwriting discounts and commissions under the Securities
Act. Neither we nor any selling security holder can presently estimate the
amount of such compensation. We know of no existing arrangements between any
selling security holder, any other stockholder, broker, dealer, underwriter or
agent relating to the sale or distribution of the shares of Common Stock
included in this Prospectus.
We will pay substantially all of the expenses incident to the
registration, offering and sale of the shares of Common Stock included in this
Prospectus to the public, other than commission or discounts of underwriters,
broker-dealers or agents. We have also agreed to indemnify certain of the
selling security holders and certain related persons against liabilities,
including liabilities under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons, we have
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
We have advised the selling security holders that during such time as
they may be engaged in a distribution of the shares of Common Stock included
herein they are required to comply with Regulation M promulgated under the
Exchange Act. With certain exceptions, Regulation M precludes any selling
security holder, any affiliated purchasers, and any broker-dealers or other
person who participates in such distribution from bidding for or purchasing, or
attempting to induce any person to bid for or purchase any security which is the
subject of the distribution until the entire distribution is complete.
Regulation M also prohibits any bids or purchases made in order to stabilize the
price of a security in connection with the distribution of that security. All of
the foregoing may affect the marketability of the shares of Common Stock.
LEGAL MATTERS
Certain legal matters in connection with the securities being offered
hereby have been passed upon for us by Atlas, Pearlman, Trop & Borkson, P.A.,
Fort Lauderdale, Florida.
EXPERTS
The consolidated financial statements as of and for the years ended
September 30, 1998 and 1997 incorporated by reference in this Prospectus have
been audited by Arthur Andersen LLP, independent certified public accountants,
as indicated in their report with respect thereto, and are incorporated by
reference upon the authority of said firm as experts in giving said report.
19
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
No dealer, salesperson or any other person has been authorized to give
any information or to make any representations not contained in this
Prospectus in connection with this offer made hereby. If given or made,
such information or representations must not be relied upon as having 1,631,604 shares
been authorized by the Company or any Underwriter. This Prospectus does of Common Stock
not constitute an offer to sell or a solicitation of any offer to buy
any of the securities offered hereby in any circumstance in which such
offer or solicitation would be unlawful. Neither the delivery of this
Prospectus nor any sale made hereunder shall under any circumstances
create an implication that information herein is correct at any time VISUAL DATA
subsequent to the date of this Prospectus. CORPORATION
-----------------
TABLE OF CONTENTS
-----------------
Page
----
AVAILABLE INFORMATION...................... 2
INFORMATION INCORPORATED
BY REFERENCE.......................... 2
____________
BUSINESS OF THE COMPANY.................... 3
PROSPECTUS
RISK FACTORS............................... 7 ____________
USE OF PROCEEDS............................ 14
SELLING SECURITY HOLDERS................... 14
PLAN OF DISTRIBUTION....................... 18
LEGAL MATTERS.............................. 19
EXPERTS.................................... 19
March ___, 1999
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses, all of which are
being paid by the Registrant, in connection with this offering.
Legal fees and expenses............................ $15,000
Accounting fees and expenses....................... 3,500
Printing expenses.................................. 2,000
Miscellaneous...................................... 1,500
--------
Total............................................ $22,000
========
Item 15. Indemnification of Directors and Officers.
The Company has authority under Section 607.0850 of the Florida
Business Corporation Act to indemnify its directors and officers to the extent
provided for in such statute. The Company's Articles of Incorporation provide
that the Company shall indemnify and may insure its officers and directors to
the fullest extent permitted by law.
The provisions of the Florida Business Corporation Act that authorize
indemnification do not eliminate the duty of care of a director, and in
appropriate circumstances equitable remedies such as injunctive or other forms
of non-monetary relief will remain available under Florida law. In addition,
each director will continue to be subject to liability for (i) violations of
criminal laws, unless the director had reasonable cause to believe his conduct
was lawful or had no reasonable cause to believe his conduct was unlawful; (ii)
deriving an improper personal benefit from a transaction; (iii) voting for or
assenting to an unlawful distribution; and (iv) willful misconduct or conscious
disregard for the best interests of the Company in a proceeding by or in the
right of the Company to procure a judgment in its favor or in a proceeding by or
in the right of a shareholder. The statute does not affect a director's
responsibilities under any other law, such as the Federal securities laws.
The effect of the foregoing is to require the Company to indemnify the
officers and directors of the Company for any claim arising against such persons
in their official capacities if such person acted in good faith and in a manner
that 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.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed 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.
II-1
<PAGE>
<TABLE>
<CAPTION>
Item 16. Exhibits.
Exhibit Description
- ------- -----------
<S> <C>
1(a) Form of Underwriting Agreement.(1)
1(b) Form of Selected Dealers Agreement.(1)
3(i)(a) Articles of Incorporation(1)
3(i)(b) Articles of Amendment dated July 26, 1993(1)
3(i)(c) Articles of Amendment dated January 17, 1994(1)
3(i)(d) Articles of Amendment dated October 11, 1994(1)
3(i)(e) Articles of Amendment dated March 25, 1995(1)
3(i)(f) Articles of Amendment dated October 31, 1995(1)
3(i)(g) Articles of Amendment dated May 23, 1996(1)
3(i)(h) Articles of Amendment dated May 5, 1998(2)
3(i)(i) Articles of Amendment dated August 11, 1998(6)
3(iii) By-laws(1)
4(a) Form of Underwriters' Warrant(1)
4(b) Warrant Agreement(1)
4(c) Specimen Common Stock Certificate(1)
4(d) Specimen Common Stock Purchase Warrant (issued
pursuant to the Company's initial public offering on
July 30, 1997) (1)
4(e) Securities Purchase Agreement for Series A Preferred(2)
4(f) Registration Rights Agreement for Series A Preferred (2)
4(g) Securities Purchase Agreement for Series A-1 Preferred(6)
4(h) Registration Rights Agreement for Series A-1 Preferred(6)
4(i) Form of Warrant to Purchase Common Stock(6)
10(a) Agreement between HotelView Corporation and Pegasus
Systems, Inc. dated January 14, 1997(1)
10(b) Form of Stock Option Plan(1)
10(c) Third Amended and Restated Employment Agreement
between the Company and Randy S. Selman(7)
10(d) Third Amended and Restated Employment Agreement
between the Company and Alan Saperstein(7)
10(e) Contract for Purchase and Sale of Real Property(3)
10(f) Asset Purchase Agreement between the Company and
Digital Criteria Technologies, Inc.(4)
10(g) Securities Purchase Agreement between the Company and
EDnet, Inc.(5)
10(h) Option Agreement between the Company and EDnet,
Inc.(5)
10(i) Agreement dated March 9, 1998 by and between Interval
International, Inc. and CondoView Corporation(8)
10(j) Agreement dated March 30, 1998 by and between Video
News Wire Corporation and P.R. Newswire, Inc.(8)
II-2
<PAGE>
10(k) Securities Purchase Agreement dated February 8, 1999
between the Company and certain scheduled investors
(9)
10(l) Registration Rights Agreement dated February 8, 1999
between the Company and certain scheduled investors
(9)
10(m) Securities Purchase Agreement dated February 8, 1999
between the Company and certain scheduled investors
(9)
10(n) Registration Rights Agreement dated February 8, 1999
between the Company and certain scheduled
investors(9)
21 Subsidiaries of the Company(10)
23.2 Consent of Arthur Andersen LLP
</TABLE>
- ----------------
(1) Incorporated by reference to the exhibit of the same number filed with
the Company's Registration Statement on Form SB-2, Registration No.
333-18819, as amended and declared effective by the Commission on July
30, 1997
(2) Incorporated by reference to the Company's Current Report on Form 8-K
dated May 8, 1998
(3) Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the year ended September 30, 1997
(4) Incorporated by reference to the Company's Current Report on Form
8-K dated May 20, 1998
(5) Incorporated by reference to the Company's Current Report on Form
8-K dated August 11, 1998
(6) Incorporated by reference to the Company's Current Report on Form
8-K dated August 21, 1998
(7) Incorporated by reference to the exhibit of the same number filed
with the Company's Registration Statement on Form S-3, Registration No.
333-62071, as amended and declared effective by the Commission on
November 3, 1998
(8) Incorporated by reference to the Company's Report on Form 10-QSB/A
for the period ended June 30, 1998 as filed with the Commission on
October 15, 1998
(9) Incorporated by reference to the Company's Report on Form 10-QSB
for the period ended December 31, 1998 as filed with the Commission on
February 17, 1999
(10) Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the fiscal year ended September 30, 1998 as filed with the
Commission on January 13, 1999
Item 17. Undertakings.
(1) The undersigned Registrant hereby undertakes:
(a) to file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration Statement to include
any additional or changed material information on the plan of distribution;
(b) that, for determining any liability under the Securities
Act, treat each such post-effective amendment as a new Registration Statement of
the securities offered at that time shall be deemed to be the initial bona fide
offering thereof; and
II-3
<PAGE>
(c) to file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
(2) Insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Director, officer of controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Pompano Beach and the State of Florida, on the
3rd day of March, 1999.
VISUAL DATA CORPORATION
<TABLE>
<CAPTION>
By /s/ Randy S. Selman
-------------------
Randy S. Selman
Chairman of the Board,
Chief Executive Officer and President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
<S> <C> <C>
President, Chief Executive
and Operating Officer
(Principal Executive
/s/ Randy S. Selman Operating Officer) and March 3, 1999
- --------------------------- Chairman of the Board
Randy S. Selman and Acting Chief
Financial Officer
Vice President,
/s/ Alan Saperstein Secretary and March 3, 1999
- --------------------------- Director
Alan Saperstein
___________________________ Director March 3, 1999
Ben Swirsky
Director March 3, 1999
___________________________
Brian K. Service
/s/ Eric Jacobs Director March 3, 1999
- ---------------------------
Eric Jacobs
</TABLE>
The foregoing represents a
majority of the Board of Directors
II-5
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description
- ---------- -----------
5 Opinion of Atlas, Pearlman, Trop & Borkson, P.A.
23.1 Consent of Atlas, Pearlman, Trop & Borkson, P.A.
(included in the opinion filed as Exhibit 5)
23.2 Consent of Arthur Andersen LLP
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
March 3, 1999
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Registration Statement on Form S-3: Visual Data Corporation (the "Company")
1,631,604 shares of Common Stock
Gentlemen:
This opinion is submitted pursuant to applicable rule of the Securities
and Exchange Commission (the "Commission") with respect to the resale of
1,631,604 shares of Common Stock, par value $.0001 per share (the "Common
Stock") to be sold by the selling security holders designated in the
Registration Statement. The shares of Common Stock to be sold consist of (i)
737,690 shares of Common Stock presently issued and outstanding and (iv) an
aggregate of 893,914 shares of Common Stock issuable upon exercise of
outstanding options and warrants, all as more fully described in the
Registration Statement.
In our capacity as counsel to the Company, we have examined the
original, certified, conformed, photostat or other copies of the Company's
Articles of Incorporation, as amended, By-Laws, instruments pertaining to the
issuance of the shares of Common Stock, options and warrants held by the selling
security holders, and related exhibits and corporate minutes provided to us by
the Company. In all such examinations, we have assumed the genuineness of all
signatures on original documents, and the conformity to originals or certified
documents of all copies submitted to us as conformed, photostat or other copies.
In passing upon certain corporate records and documents of the Company, we have
necessarily assumed the correctness and completeness of the statements made or
included therein by the Company and we express no opinion thereon.
Based upon and in reliance of the foregoing, we are of the opinion that
the Common Stock, when sold by the selling security holders in the manner
described in the Registration Statement, will be validly issued, fully paid and
non-assessable.
We hereby consent to the use of this opinion in the Registration
Statement on Form S-3 to be filed with the Commission.
Very truly yours,
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
December 4, 1998 included in Visual Data Corporation's Form 10-KSB for the year
ended September 30, 1998 and to all references to our firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Miami, Florida,
March 3, 1999.
