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As filed with the Securities and Exchange Commission on November 12, 1999
Registration No. 333-
========================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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LEARN2.COM, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-2480669
(State or other jurisdiction of (I.R.S. Employer
incorporation organization) Identification No.)
1311 Mamaroneck Avenue
White Plains, New York 10605
(914) 682-4300
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
STEPHEN P. GOTT
President and Chief Executive Officer
Learn2.com, Inc.
1311 Mamaroneck Avenue
White Plains, New York 10605
(914) 682-4300
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
COPIES TO:
GERALD ADLER, ESQ.
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, New York 10022
(212) 758-9500
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this registration
statement. If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. |_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_| _________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_| _________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================
Title of Proposed Proposed Maximum
Shares to Amount to Maximum Offering Aggregate Amount of
be Registered be Registered Price Per Share Offering Price Registration Fee (2)
------------- ------------- --------------- -------------- --------------------
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par 1,135,709 shares (1) $3.09 $3,509,340.81 $975.60
value $0.01 per share
====================================================================================================
</TABLE>
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(1) Pursuant to Rule 416, this Registration Statement also covers such
additional securities as may become issuable to prevent dilution resulting
from stock splits, stock dividends or similar transactions.
(2) The Registration Fee has been calculated pursuant to Rule 457 as follows:
1,135,709 multiplied by .000278 multiplied by $3.09, the average of the
bid and asked sales prices of the Registrant's Common Stock as included
on The Nasdaq Stock Market on November 9, 1999.
-----------------------------------------
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 an amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PROSPECTUS
LEARN2.COM, INC.
1,135,709 SHARES OF
COMMON STOCK
We are furnishing this document to you to allow the selling stockholders
to sell up to 1,135,709 shares of our common stock. The selling stockholders may
sell these shares from time to time in regular brokerage transactions, in
transactions directly with market makers or in certain privately negotiated
transactions.
Our common stock is quoted on The Nasdaq Stock Market under the symbol
"LTWO". On November 9, 1999, the closing price of our common stock as reported
by The Nasdaq Stock Market was $3.09 per share.
WE URGE YOU TO READ CAREFULLY THE "RISK FACTORS" SECTION BEGINNING ON PAGE
3 WHERE WE DESCRIBE SPECIFIC RISKS ASSOCIATED WITH LEARN2.COM, INC. AND THESE
SECURITIES BEFORE YOU MAKE YOUR INVESTMENT DECISION.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is November __, 1999.
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LEARN2.COM, INC.
We develop and distribute online advanced learning and training products
and technologies. To strengthen our position in the marketplace, we have
acquired three companies. Street Technologies, Inc., now known as Learn2, Inc.,
which we acquired in February 1999, markets and distributes multimedia tutorials
over the Internet and corporate intranets utilizing its internally developed
technologies. Panmedia Corporation, which we acquired in May 1999, offers a wide
spectrum of step-by-step instructions on skills, activities and tasks through
www.learn2.com. ViaGrafix Corporation, which we acquired in August 1999, is a
leading provider of multimedia tutorials on a wide variety of computer
software topics.
Our goal is to become the world's leading provider of engaging learning
products and services. Our mission is to provide our customers, including
consumers, corporations, government agencies and educational organizations,
with a complete solution for learning.
Our products provide an engaging learning experience to consumer and
corporate customers by allowing interactive multimedia and animated courseware
to be accessed instantly on the Internet. Through our website,
www.learn2.com, we are also an Internet learning community that offers
consumers tips and step-by-step instructions on a broad spectrum of skills,
activities and tasks, as well as immediately accessible multimedia consumer
training courses and tutorials. Corporations have access to the same high
quality tutorials through Learn2University, which includes additional
features such as reporting and administration.
Learn2.com was incorporated on April 28, 1993 under the laws of the State
of Delaware. Our principal executive offices are located at 1311 Mamaroneck
Avenue, White Plains, New York 10605. Our telephone number is (914) 682-4300.
Our Website is at www.learn2.com. Information contained on our Website is not
part of this Prospectus.
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RISK FACTORS
WE HAVE A LIMITED OPERATING HISTORY.
We have an evolving and unpredictable business model. In addition, we face
intense competition and we must effectively manage our growth and respond
quickly to rapid changes in customer demands and industry standards. We may not
succeed in addressing these challenges and risks.
WE HAVE A HISTORY OF LOSSES AND AN ACCUMULATED DEFICIT.
As of December 31, 1998, we had an accumulated deficit of approximately $83
million. We expect to incur net losses through at least the end of 2000 and may
continue to incur net losses thereafter.
SIMILAR TO OTHER INTERNET COMPANIES, WE ARE MAKING A SUBSTANTIAL INVESTMENT IN
OUR BUSINESS AND MAY NEED TO RAISE ADDITIONAL FUNDS.
Additional funds may be raised through joint ventures, the sale of assets,
the incurrence of debt, or the issuance of securities. If additional funds
are raised through the issuance of equity or convertible securities, your
percentage ownership in Learn2.com will be reduced. Also, these securities
may have rights, preferences or privileges senior to common stock. However,
it is possible that additional financing may not be available on terms
favorable to us, or at all. If adequate funds are not available or are not
available on acceptable terms, we may not be able to realize our business
plan.
DUE TO OUR LIMITED OPERATING HISTORY AND THE UNPREDICTABILITY OF OUR INDUSTRY,
WE CANNOT ACCURATELY FORECAST OUR REVENUES.
Our quarterly operating results will fluctuate for many reasons, including:
o Seasonal buying patterns by our customers.
o Our ability to retain existing customers, attract new customers and
satisfy our customers' demand.
o Changes in gross margins of our current and future products and services.
o Introduction of our new web sites, services and products or those of our
competitors.
o Changes in usage of the Internet and online services and consumer
acceptance of the Internet and electronic commerce.
o Timing of upgrades and developments in our systems and infrastructure.
o The level of traffic on our web sites.
o The effects of acquisitions and other business combinations, and related
integration.
o Technical difficulties, system downtime or Internet brownouts.
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You should not rely on period-to-period comparisons of our financial results to
forecast our future performance. Our future operating results may fall below the
expectations of securities analysts or investors, which would likely cause the
trading price of our common stock to decline.
WE FACE RAPID TECHNOLOGICAL CHANGE AND FREQUENT NEW PRODUCT INTRODUCTIONS.
The markets for our products and services are characterized by rapid
technological change, frequent new product introductions and evolving industry
standards. We believe that our future success depends upon our ability to
develop and market products and services that incorporate and apply new
technologies, and our ability to enhance and expand our existing product lines
and services. We will need to spend significant amounts of capital to develop,
market and enhance our products and services to meet and take advantage of
technological changes. We may not be:
o Able to develop or market new products or services successfully
o Successful in commercially developing new products and services
o Able to respond effectively to technological changes, new industry
standards, or new products or services offered by our competitors
o Able to raise sufficient capital when required to implement our strategies
Our future success will depend upon, among other factors, the extent to which
companies continue to adopt web based learning programs, the proliferation of
multimedia PCs inside corporations and the acceptance of the Internet as a
viable distribution medium. If our solutions do not become widespread or we do
not achieve market acceptance, or are unable to anticipate technological change
or evolving industry standards and successfully introduce new products our
business, results of operations, and financial condition could be adversely
affected. The Internet may not prove to be a viable commercial marketplace for a
number of reasons, including the lack of acceptable security technologies,
potentially inadequate development of the necessary infrastructure, or the lack
of timely development and commercialization of performance improvements. If the
market develops more slowly than expected or becomes saturated with competitors,
or if our products and services do not sustain market acceptance, our business,
operating results and financial condition could be materially and adversely
affected.
WE FACE A RISK OF SYSTEM FAILURE.
Our operations depend to a significant extent on our ability to maintain our
computer and telecommunications systems. We must also protect our systems
against damage from fire, natural disaster, power loss, telecommunications
failure or similar events. Although we have arranged for back-up for our network
control, this measure does not eliminate the risk to our operations from a
natural disaster or system failure. In addition, growth of our customer base may
strain the capacity of our computer operations center and telecommunications
systems and/or lead to degradations in performance or system failure. Any damage
to or loss of our computer and telecommunications networks including our
operations center could adversely affect the performance of our business.
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CERTAIN EVENTS COULD RESULT IN A DILUTION OF YOUR OWNERSHIP OF OUR COMMON STOCK.
As of September 30, 1999, we had 50,993,030 shares of common stock
outstanding and 11,247,153 common stock equivalents including convertible
notes, warrants and stock options. The exercise prices and conversion prices,
as the case may be, of the common stock equivalents range from $.01 and
$11.50 per share. These common stock equivalents also provide for
antidilution protection upon the occurrence of stock splits, redemptions,
mergers and other similar transactions. If one or more of these events occurs
the number of shares of our common stock that may be acquired upon conversion
or exercise would increase. If converted or exercised these securities will
result in a dilution to your percentage ownership of our common stock. If we
continue to acquire new companies through the issuance of common or preferred
stock your percentage of ownership may be diluted.
WE ANTICIPATE INCREASED OPERATING EXPENSES AND MAY EXPERIENCE LOSSES.
We expect our operating expenses to continue to increase significantly as we
expand our sales and marketing operations, continue to develop and extend our
products and services, and develop and acquire complementary businesses and
technologies. As a result, we may experience significant losses on a quarterly
and annual basis.
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WE HAVE A SUBSTANTIAL INVESTMENT IN PURSUING CORPORATE SALES.
We recently began major efforts to sell directly to corporate customers, and
have incurred costs and made investments in a direct corporate sales force and
the infrastructure to support this sales force. We expect to incur significant
additional costs as we continue to pursue corporate sales. Direct sales to
corporate customers have long sales cycles which can be in excess of one year.
The sales and timing of licensing agreements to corporate customers could cause
volatility in, and materially adversely affect, our quarterly operating results.
If this strategy is unsuccessful, we may not be able to recover the significant
costs of pursuing this strategy. Further, we could be at a competitive
disadvantage by not having allocated our resources to other sales opportunities.
WE WILL CONTINUE TO EXPAND INTO INTERNATIONAL MARKETS IN WHICH WE HAVE LIMITED
EXPERIENCE.
A part of our strategy is to develop international markets. We have entered
into distribution arrangements in the United Kingdom, France, Germany, Japan,
Australia, Turkey and Canada. We or our partners may not be able to successfully
market our products and services in foreign markets.
We have limited experience in developing localized versions of our products and
marketing our products and services internationally. We rely on the efforts and
abilities of our international business partners in those activities.
In addition to uncertainty about our ability to continue to generate revenues
and expand our international presence, there are certain risks inherent in doing
business internationally, including:
o local economic and market conditions.
o difficulties in enforcing intellectual property and contractual
rights.
o the need for compliance with a variety of international and United
States export regulations.
o unexpected changes in regulatory requirements.
o trade barriers.
o difficulties in staffing and managing international operations
because of distance, language and cultural differences.
o longer payment cycles.
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o currency exchange rate fluctuations.
o problems in collecting accounts receivable.
o political and economic instability.
o export restrictions.
o seasonal fluctuations in business activity.
o potentially adverse tax consequences.
One or more of theses factors could have a material adverse effect on our future
international presence and, consequently, on our business, operating results and
financial condition.
WE MUST MANAGE OUR RECENT GROWTH AND SUCCESSFULLY INTEGRATE RECENTLY ACQUIRED
COMPANIES IN ORDER TO ACHIEVE DESIRED RESULTS.
As part of our business strategies, we have completed several acquisitions
including our recent acquisitions of Street Technologies, Panmedia and
ViaGrafix. We may enter into additional business combinations and
acquisitions. However, each acquisition brings challenges associated with
integrating acquired businesses, services, product lines or technologies.
Among risks associated even with successful acquisitions are:
o the difficulty of assimilating the operations and personnel of the
acquired companies.
o the potential disruption of the ongoing business and distraction of
management.
o the difficulty of incorporating acquired or licensed technology or
content into our products and services.
o the impairment of relationships with employees and customers as a
result of integration of new management personnel.
o the potential unknown liabilities associated with acquired
businesses.
OUR EXPECTED BENEFITS OF THE VIAGRAFIX ACQUISITION MAY NOT BE REALIZED.
If we are not able to effectively integrate our operations and personnel in a
timely and efficient manner, then the benefits of the merger will not be
realized. In particular, if the integration is not successful:
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o Our operating results may be adversely affected
o We may lose key personnel
In addition, the market price of Learn2.com common stock may decline as a result
of the merger if:
o We do not achieve the perceived benefits of the merger as rapidly or to
the extent we anticipate.
o The effect of the merger on our financial results is not consistent with
the expectations of securities analysts.
o The dilution of Learn2.com common stock negatively affects our stock
price.
o The attention and effort devoted to the integration of the two companies
diverts management's attention from other important issues.
WE MAY NOT BE ABLE TO IMPLEMENT OUR GROWTH STRATEGY.
Successfully achieving our growth plan depends on our ability to:
o Continue to develop and market our products and services.
o Maintain and increase our customer base.
o Effectively integrate businesses and technologies.
o Continue to identify, attract, retain and motivate qualified personnel.
THE ACQUISITION OF VIAGRAFIX COULD ADVERSELY AFFECT COMBINED FINANCIAL RESULTS.
If the benefits of the merger do not exceed the costs associated with the
merger, including the dilution to our stockholders resulting from the issuance
of our common stock in connection with the merger, then our financial results,
including earnings per share, could be adversely affected.
THE FAILURE OF OUR MERGER WITH PANMEDIA OR VIAGRAFIX TO QUALIFY AS A POOLING OF
INTERESTS COULD NEGATIVELY AFFECT OUR COMBINED FINANCIAL RESULTS.
The failure of our merger with Panmedia or ViaGrafix to qualify as a pooling of
interests could materially and adversely affect our reported earnings and could
also adversely affect the market price of our common stock. The eligibility to
qualify as a pooling of interests depends upon circumstances and events
occurring after the effective time of the Panmedia or ViaGrafix merger, some of
which are outside of our control.
OUR STOCK PRICE HAS HISTORICALLY BEEN VOLATILE, WHICH MAY MAKE IT MORE DIFFICULT
FOR YOU TO RESELL SHARES WHEN YOU WANT AT PRICES YOU FIND ATTRACTIVE.
The trading price of our common stock can fluctuate significantly. For example,
during the
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52- week period ended September 30, 1999, the market price of our common
stock ranged from $1.81 to $10.00. The stock price may fluctuate in response
to a number of events and factors, including:
o quarterly variations in operating results.
o announcements of technological innovations or new products and
services by us or our competitors.
o changes in financial estimates and recommendations by securities
analysts.
o the operating and stock price performance of other companies that
investors may deem comparable.
o news reports relating to trends in our markets.
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 those companies.
These broad market and industry fluctuations may adversely affect the price of
our common stock, regardless of operating performance. A drop in the market
price of our common stock may adversely affect our business and financial
opportunities.
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WE EXPECT TO RELY ON RESELLERS, INCLUDING INTERNET MERCHANTS, TO ENHANCE SALES.
Our resellers may not devote the resources necessary to provide effective
sales and marketing to support us. A significant portion of our growth
strategy is to increase sales of our products and services over the Internet.
We currently have relationships with online services and Internet content
providers. Additionally, we have relationships with authorized resellers. Our
distribution agreements are not exclusive and may be terminated upon certain
conditions. Certain agreements with our distribution partners do not require
minimum purchase commitments or have payment terms for periods up to one year
and allows them to return products. These contracts may not result in
revenues. We may not be successful in either expanding our current
relationships, or attracting new Internet merchants. The failure to do so
could significantly impact our ability to increase sales.
Some of our resellers are small organizations with limited capital. Accordingly,
if a significant number of these resellers were to experience financial
difficulties, or otherwise become unable or unwilling to promote, sell or pay
for our products, our results of operations could be adversely affected.
OUR PRODUCTS ARE DESIGNED FOR MICROSOFT TECHNOLOGIES.
Our products are designed primarily for Microsoft technologies. We believe that
Microsoft technologies are, and will continue to be, widely utilized by our
customers. However, if these customers do not actually adopt and continue to
utilize these technologies as anticipated or in the future migrate to other
computing technologies that we do not support, we may have to spend significant
capital and other resources including personnel to adapt our products to these
alternative technologies.
WE DEPEND ON OUR ABILITY TO RETAIN KEY PERSONNEL AND ATTRACT NEW QUALIFIED
PERSONNEL.
We are substantially dependent on the continued services of Stephen P. Gott,
President, Chief Executive Officer of Learn2.com and a Director, Jason R.
Roberts, a Director, and Michael A. Webster, a Director. If any of them
were to leave our employ, we could face substantial difficulty in hiring a
qualified successor and could experience a loss in productivity while any
successor obtains the necessary training and experience.
We expect that we will need to hire additional personnel in all areas. The
competition for qualified personnel is intense. At times, we have experienced
difficulties in hiring personnel with the right training or experience. If we do
not succeed in attracting new personnel, or retaining and motivating existing
personnel, our business may be adversely affected.
WE MAY BE SUBJECT TO INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS, WHICH ARE COSTLY
TO DEFEND AND COULD LIMIT OUR ABILITY TO USE CERTAIN TECHNOLOGIES IN THE FUTURE.
Many parties are actively developing and improving technologies which compete
with our proprietary technologies and patents. We believe that these parties
will continue to take steps to
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protect these technologies, including seeking patent protection. As a result, we
believe that disputes regarding the ownership of these technologies could arise
in the future.
Third parties may assert claims against us alleging infringement of patents,
copyrights, trademark rights, trade secret rights or other proprietary rights or
alleging unfair competition. In the event that we determine that licensing
patents or other proprietary rights is appropriate, we may not be able to
license proprietary rights on reasonable terms or at all. As the number of
products in our target markets increase and the functionality of these products
further overlap, we may become increasingly subject to infringement claims. We
may incur substantial expenses in defending against third-party infringement
claims regardless of the merit of those claims. In the event that there is a
determination that we have infringed third-party proprietary rights, we could
incur substantial monetary liability and be prevented from using the rights in
the future.
OUR INTELLECTUAL PROPERTY RIGHTS ARE COSTLY AND DIFFICULT TO PROTECT.
We rely on a combination of the following to protect our intellectual property
rights:
o patents.
o trade secrets.
o copyright and trademark laws.
o nondisclosure agreement.
o other contractual provisions and technical measures.
None of these protections may be adequate to prevent our competitors from
copying or reverse-engineering our products, concepts, tradenames and trade
dress. Further, none of these protections prohibit our competitors from
independently developing technologies that are substantially equivalent or
superior to our technologies.
We license certain products under shrink-wrap licenses that are not signed by
our licensees. These shrink-wrap licenses may be unenforceable under the laws of
certain jurisdictions. In addition, the laws of certain countries in which our
products are or may be licensed do not protect us to the same extent as the laws
of the United States.
WE MAY BE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS AND WE MAY BE
LIABLE FOR INFRINGING THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS.
Third parties may infringe or misappropriate our patents, trademarks or other
proprietary rights, which could have a material adverse effect on our
business, results of operations or financial condition. While we enter into
confidentiality agreements with our material employees, guides, consultants
and strategic partners, and generally control access to and distribution of
our proprietary information, the steps we have taken to protect our
proprietary rights may not prevent misappropriation. We also attempt to
register our trademarks and service marks. However, we cannot assure you that
any of trademark registrations or patent applications will be approved. Even
if they are approved, such trademarks or patents may be successfully
challenged by others or invalidated. In addition, we do not know whether we
will be able to defend our proprietary rights since the validity,
enforceability and scope of protection of proprietary rights in
Internet-related industries is uncertain and still evolving.
Third parties may assert infringement claims against us. From time to time in
the ordinary course of business we have been, and we expect to continue to
be, subject to claims of alleged infringement of the trademarks and other
intellectual property rights of third parties. These claims and any resultant
litigation, should it occur, could subject us to significant liability for
damages. In addition, even if we prevail, litigation could be time-consuming
and expensive to defend, and could result in the diversion of our time and
attention. Any claims from third parties may also result in limitations on
our ability to use the intellectual property subject to these claims unless
we are able to enter into agreements with the third parties making these
claims.
WE MAY BE EXPOSED TO PRODUCT LIABILITY CLAIMS.
Our license agreements with customers typically contain provisions designed to
limit our exposure to potential product liability claims. It is possible,
however, that the limitation of liability provisions contained in our license
agreements may not be effective under the laws of certain state and foreign
jurisdictions.
<PAGE>
THE SUCCESSFUL OPERATION OF OUR BUSINESS DEPENDS UPON THE SUPPLY OF CONTENT
OTHER THAN RELATED TO OUR CURRENT LIBRARY.
Our inability in the future to obtain content from third parties or to develop
our own content could result in delays in products introductions or shipments.
We depend on the quality and reliability of the content licensed and timely
delivery of this content by our sources. Although we have agreements specifying
the terms of the licenses, these agreements may not be enforceable. We believe
that we can arrange alternate sources for some or all of our content, but the
inability of any of these content providers to provide content to us on a timely
basis could affect the performance of our business.
NET OPERATING LOSS CARRYFORWARDS MAY BE SEVERELY LIMITED.
Our net operating loss carryforwards were approximately $80 million as of
December 31, 1998. These net operating loss carryforwards expire at various
dates through 2018 and under Section 382 of the Internal Revenue Code may be
limited due to ownership changes. Future stock issuances may result in an
ownership change of Learn2.com under Section 382. Section 382 contains rules
that limit the ability of a company to offset pre-ownership change net
operating losses and credit carryovers against post-ownership change taxable
income. As a result, our net operating loss carryforwards could be severely
limited in the future for use to offset any income of ours in any particular
year.
THE DEVELOPMENT OF OUR GRAPHICS SOFTWARE PRODUCTS AND STREAMING TECHNOLOGIES IS
COMPLEX.
The development of our graphics software products and streaming technologies is
a complex process. This can result in lengthy development cycles, extended
testing periods and undetected errors or bugs in the software programs. These
factors can result in loss of market acceptance, loss of reputation, and loss of
market share if products of competitors either are available on the market
first, or are viewed as more reliable than our products.
A SIGNIFICANT PORTION OF OUR PRODUCTS ARE SOLD TO MAJOR DISTRIBUTORS.
Historically, we have relied upon sales to Ingram Micro, Inc., a distributor
that supplies resellers, including major retailers. Recently, we have begun to
rely on sales to both Ingram and Tech Data Corporation, another major
distributor. We do not have a written agreement with Ingram, and neither Ingram
nor Tech Data are required to make any minimum purchases. If either or both of
these distributors do not actively market our products or if they fail to
maintain their relationships with major retailers, our sales could be materially
adversely impacted. Also, both Ingram and Tech Data do and may continue to sell
competitors' products.
WE ALSO DEPEND ON MAJOR RETAILERS TO MARKET OUR PRODUCTS.
<PAGE>
We rely on certain retailers to market our products to end-users. The major
retailers selling our products are:
o America Online, Inc.
o Best Buy Company, Inc.
o CompUSA Inc.
o Fry's Electronics, Inc.
o Hastings Entertainment, Inc.
o Micro Center, trade name of Micro Electronics, Inc.
o Office Max, Inc.
o Staples, Inc.
Our direct and indirect sales to our six top retailers accounted for
approximately 41% of our 1998 revenues. Indirect sales of products are
supplied to certain retailers through distributors including Ingram and Tech
Data.
We will continue to invest significant resources to expand our relationships
with these retailers and to develop relationships with new retailers. However,
these retailers or other retailers may not continue to provide shelf space and
marketing for our products. The failure of retailers to effectively market our
products could have a material adverse effect on our business and financial
condition.
THE YEAR 2000 PROBLEM COULD CAUSE OUR SOFTWARE PRODUCTS AND THOSE OF OUR
SUPPLIERS TO MALFUNCTION.
Many currently installed computer systems and software products are coded to
accept only two-digit entries in the date code field and cannot distinguish
twenty-first century dates from twentieth century dates. To function properly,
these date-code fields must distinguish twenty-first century dates from
twentieth century dates and as a result, many companies' software and computer
systems may need to be upgraded or replaced in order to comply with those "Year
2000" requirements.
We are dependent on the operation of numerous systems that may be adversely
affected by the Year 2000 problem, including:
o our internal systems.
o equipment, software and content supplied to us by third-party
vendors including outside providers of web-hosting services.
<PAGE>
In addition, our future business depends on the successful operation of the
Internet following the commencement of the Year 2000. If the Internet is
inaccessible for an appreciable period of time, or if customers and users are
unable to access our web sites, our business and revenues could be materially
and adversely affected. We are also subject to external factors that might
generally affect industry and commerce, including Year 2000 compliance failures
in the telecommunications, banking, utilities and transportation industries.
CLASS ACTION.
On May 22, 1998, a lawsuit was filed in the United States District Court for the
Northern District of Texas by Jonathan L. Gordon, as a punitive class
action against ViaGrafix Corporation and certain of its officers and directors
claiming violations of the Securities Act for alleged misrepresentations and
omissions in ViaGrafix's prospectus issued in connection with its initial public
offering made in March 1998. Mr. Gordon and certain others have sought
designation as lead plaintiffs in the action. We believe the lawsuit is without
merit. Our response is not yet due.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the common stock
described in this document. The selling stockholders will receive all of the
proceeds from the sale of the common stock described in this prospectus.
<PAGE>
DIVIDEND POLICY
We have never declared cash dividends on our common stock. We intend to
retain any earnings to finance the development and growth of our business.
Accordingly, we do not anticipate that we will declare any cash dividends on our
common stock for the foreseeable future. Our payment of cash dividends, if any,
will depend upon our general financial condition and other factors deemed
relevant by our board of directors.
SELLING STOCKHOLDERS
FLETCHER INTERNATIONAL LIMITED
On December 15, 1998, Fletcher purchased 1,666,667 shares of our common
stock and rights to purchase an additional 750,000 shares of our common
stock. Fletcher has exercised 100,000 shares of the 750,000 shares and with
this 100,000 shares consequently they are left with a warrant to purchase
650,000 shares at $4.50 per share plus the direct ownership of 250,000
shares. On March 16, 1999, we granted Fletcher the right to purchase an
additional 100,000 shares of our common stock for $.01 per share. Fletcher
was also entitled to obtain additional shares of our common stock because of
the late effectiveness of the Registration Statement dated May 5, 1999.
On November 12, 1999, we entered into another agreement with Fletcher
pursuant to which we sold 50,000 shares of our common stock for $.01 per share
as payment for our obligations incurred due to the late effectiveness of the
Registration Statement. In addition, Fletcher is no longer entitled to any
adjustment to obtain additional shares of our common stock and we no longer
have a right to require Fletcher to obtain additional shares of our common
stock. Fletcher has not held any position of office or had any material
relationship with us during the past three years. We have been informed by
Fletcher that Alphonse Fletcher, Jr. will exercise the voting and investment
authority over the shares of our common stock owned by Fletcher.
SCOTT NEAR, SAFA ALAI AND WARD BITTER
Messrs. Near, Alai and Bitter were founding employees and stockholders
of Street and received their shares of our common stock and Series D
Preferred Stock as payment for their shares of Street's common stock. Their
Series D Preferred Stock was converted into shares of our common stock
upon our stockholders' approval. Messrs. Near and Alai are scheduled to leave
the employ of Learn2, Inc. on December 31, 1999.
TOM RANDOLPH
On September 28, 1999, we entered into a settlement agreement with Tom
Randolph pursuant to which, among other things, we issued 90,000 shares of our
common stock to Mr. Randolph.
<PAGE>
JILL CHERNIN-MARKS
Ms. Chernin-Marks received 17 shares of our Series D Preferred Stock
when she exercised stock options under the Street Stock Option Plan. Ms.
Chernin-Marks' Series D Preferred Stock was converted into 5,667 shares of
our common stock.
The following table provides information regarding the selling
stockholders' beneficial ownership of our common stock as of August 31, 1999 and
as adjusted to reflect the sale of the shares of common stock offered under this
prospectus. Beneficial ownership as defined in the Exchange Act includes options
and other convertible securities which are exercisable within 60 days.
Unless we have indicated otherwise, to our knowledge, each of the selling
stockholders has sole voting and investment power with respect to its
securities. On September 30, 1999, we had 50,993,030 shares of common stock
outstanding.
<TABLE>
<CAPTION>
NUMBER OF
BENEFICIAL OWNERSHIP SHARES TO BENEFICIAL OWNERSHIP
OF COMMON STOCK BE SOLD IN OF COMMON STOCK
PRIOR TO OFFERING OFFERING AFTER OFFERING
STOCKHOLDER NUMBER PERCENT NUMBER PERCENT
- ----------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Fletcher International 900,000 1.76% 150,000 750,000(1) 1.47%
Limited
Scott Near 442,521 * 442,521 -- 0%
Safa Alai 442,521 * 442,521 -- 0%
Ward Bitter 545,336 1.07% 5,000 540,336 1.06%
Tom Randolph 90,000 * 90,000 - 0%
Jill Chernin-Marks 5,667 * 5,667 - 0%
</TABLE>
- ----------
* Less Than 1%
(1) Registered under the Registration Statement dated May 5, 1999 and
includes a warrant to purchase 650,000 shares of our common stock at $4.50
per share.
PLAN OF DISTRIBUTION
We are registering the shares of our common stock covered by this
prospectus.
As used in this prospectus, the selling stockholders include donees,
pledgees, transferees or other successors in interest who will hold the selling
stockholders' shares after the date of this prospectus. We are paying the costs,
expenses and fees of registering the common stock, but the selling stockholders
will pay any underwriting or brokerage commissions and similar selling expenses
relating to the sale of the shares of common stock.
The selling stockholders may sell our common stock at market prices
prevailing at the time of the sale, at prices related to the prevailing market
prices, at negotiated prices or at fixed prices, which may be changed. The
selling stockholders may sell some or all of their common stock through:
<PAGE>
o ordinary brokers' transactions which may include long or short sales;
o transactions involving cross or block trades or otherwise on the Nasdaq
National Market;
o purchases by brokers, dealers or underwriters as principal and resale by
those purchasers for their own accounts under this prospectus;
o market makers or into an existing market for the common stock;
o other ways not involving market makers or established trading markets,
including direct sales to purchasers or sales effected through agents;
o transactions in options, swaps or other derivatives; or
o any combination of the selling options described in this prospectus, or by
any other legally available means.
The selling stockholders may enter into hedging transactions with
broker-dealers who may engage in short sales of our common stock in the course
of hedging the positions they assume. The selling stockholders also may enter
into option or other transactions with broker-dealers that require the delivery
by those broker-dealers of the common stock. Thereafter, the shares may be
resold under this prospectus.
In their selling activities, the selling stockholders will be subject to
applicable provisions of the Exchange Act and the Exchange Act's rules and
regulations, including Regulation M, which may limit the selling stockholders'
timing of purchases and sales of our common stock.
The selling stockholders and any broker-dealers involved in the sale or
resale of our common stock may qualify as "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933, as amended. In addition, the
broker-dealers' commissions, discounts or concessions may qualify as
underwriters' compensation under the Securities Act. If the selling stockholders
or any broker-dealer qualifies as an "underwriter," then they will be subject to
the prospectus delivery requirements of Rule 153 of the Securities Act, which
may include delivery through the facilities of the NASD.
In conjunction with sales to or through brokers, dealers or agents, the
selling stockholders may agree to indemnify them against liabilities arising
under the Securities Act. We know of no existing arrangements between the
selling stockholders, any other stockholder, broker, dealer, underwriter or
agent relating to the sale or distribution of our common stock. We have also
agreed to indemnify the selling stockholders and certain related persons against
certain liabilities, including liabilities under the Securities Act.
In addition to selling its common stock under this prospectus, the selling
stockholders may:
<PAGE>
o Transfer their common stock in other ways not involving market makers or
established trading markets, including by gift, distribution, or other
transfer; or
o Sell their common stock under Rule 144 of the Securities Act, if the
transaction meets the requirements of Rule 144.
We will amend or supplement this prospectus if required under the
Securities Act. We have agreed to keep the Registration Statement effective
until certain events occur which are described in the relevant Registration
Rights Agreement.
If the selling stockholders sell their shares of common stock in
accordance with this prospectus, then the legends that restrict the
transferability of their common stock will no longer be necessary. Accordingly,
the new certificates will be issued to the transferee without restrictive
legends.
Under the securities law of certain states, the common stock offered by
the selling stockholders may only be sold in those states using registered or
licensed brokers or dealers.
EXPERTS
The consolidated financial statements of Learn2.com, Inc. (formerly
known as 7th Level, Inc.) incorporated by reference in this registration
statement, have been audited by Arthur Andersen LLP, independent public
accountants, as of December 31, 1998 and for the year ended December 31, 1998,
as indicated in their report (dated June 28, 1999) with respect thereto, and
are incorporated by reference herein in reliance upon the authority of said
firm as experts in accounting and auditing in giving said report. Our report
dated March 17, 1999 included in the Learn2.com, Inc. Form 10-K/A for the year
ended December 31, 1998 is no longer appropriate since restated financial
statements have been presented giving effect to the business combination with
Panmedia Corporation accounted for as a pooling-of-interests.
The supplementary consolidated financial statements of Learn2.com, Inc.
incorporated by reference in this registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as of December 31, 1998
and 1997 and for the two years then ended, and the adjustments that were
applied to restate the 1996 consolidated financial statements, as indicated
in their report with respect thereto, and are included herein in reliance
upon the authority of said firm as experts in accounting and auditing in
giving said report.
The consolidated financial statements and financial statement schedule
of 7th Level, Inc. (currently Learn2.com, Inc.), as of December 31, 1997 and
for each of the years in the two-year period then ended have been
incorporated by reference herein and in the Registration Statement in
reliance upon the report of KPMG LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
<PAGE>
The financial statements of Learn2, Inc. (formerly known as 7th
Street.com, Inc. and Street Technologies, Inc.) as of and for the year ended
December 31, 1997, have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
<PAGE>
ADDITIONAL INFORMATION MADE AVAILABLE TO YOU
This prospectus is part of a Registration Statement on Form S-3 that we
are filing with the SEC. Certain information in the Registration Statement has
been omitted from this prospectus in accordance with the rules of the SEC.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our file number is 0-24936.
You may read and copy materials that we have filed with the SEC, including
the registration statement, at the following SEC public reference rooms:
450 Fifth Street, N.W. Northwest Atrium Center 7 World Trade Center
Room 1024 500 West Madison Street Suite 1300
Washington, D.C. 20549 Suite 1400 New York, New York 10048
Chicago, Illinois 60661
You may call the SEC at 1-800-732-0330 for further information about the
public reference room.
We are also required to file electronic versions of these documents with
the SEC, which may be accessed through the SEC's World Wide Web site at
HTTP://WWW.SEC.GOV. Our common stock is quoted on the Nasdaq National Market.
Reports, proxy and information statements and other information concerning
Learn2.com may be inspected at The Nasdaq Stock Market at 1735 K Street, NW,
Washington, D.C. 20006.
We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You should
not rely on any unauthorized information. This prospectus does not offer to sell
or buy any shares in any jurisdiction in which it is unlawful. The information
in this prospectus is current as of the date on the cover.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" certain of our
publicly-filed documents into this prospectus, which means that information
included in these documents is considered part of this prospectus. Information
that we file with the SEC subsequent to the date of this prospectus will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended, until the selling stockholders have sold all the shares of common stock
described in this prospectus.
The following documents filed with the SEC are incorporated by reference
in this prospectus:
<PAGE>
1. Our Annual Report on Form 10-K/A for the year ended December 31,
1998.
2. Our Quarterly Report on Form 10-Q/A for the quarter ended March 31,
1999 and Form 10-Q for the quarter ended June 30, 1999.
3. Our Current Reports on Form 8-K dated January 15, 1999, February 16,
1999 and May 13, 1999, June 1, 1999, July 19, 1999, July 23, 1999
and November 11, 1999 and Form 8-K/A filed with the SEC on April 16,
1999 and June 30, 1999.
4. The description of our common stock contained in our Registration
Statement on Form 8-A filed with the SEC under the Exchange Act.
We will furnish without charge to you, on written or oral request, a copy
of any or all of the documents incorporated by reference, other than exhibits to
those documents. You should direct any requests for documents to: Learn2.com,
Inc., 1311 Mamaroneck, White Plains, New York 10605, Attention: Chief Executive
Officer, or by telephone (914) 682-4300.
FORWARD-LOOKING STATEMENTS IN THIS PROSPECTUS
MAY NOT PROVE TO BE ACCURATE
This prospectus contains or incorporates forward-looking statements
including statements regarding, among other items, our business strategy, growth
strategy, and anticipated trends in our business. We may make additional written
or oral forward-looking statements from time to time in filings with the SEC or
otherwise. When we use the words "believe," "expect," "anticipate," "project"
and similar expressions, this should alert you that this is a forward-looking
statement. Forward-looking statements speak only as of the date the statement is
made.
These forward-looking statements are based largely on our expectations.
They are subject to a number of risks and uncertainties, some of which cannot be
predicted or quantified and are beyond our control. Future events and actual
results could differ materially from those set forth in, contemplated by, or
underlying the forward-looking statements. Statements in this prospectus or made
in documents incorporated into this prospectus, describe factors that could
contribute to or cause differences between our expectations and actual results.
We have described many of these factors in "Risk Factors" and "Learn2.com,
Inc." Because of these risks and uncertainties, the forward-looking information
contained in this prospectus may not in fact occur or prove to be accurate. All
subsequent written and oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by this
section.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee $ 975.60
Printing and Engraving 6,000.00
Legal Fees and Expenses 10,000.00
Accounting Fees and Expenses 10,000.00
Miscellaneous 1,500.00
Total $28,475.60
</TABLE>
All of the above items, except the registration fee, are estimated. All
expenses incurred in connection with this offering will be borne by Learn2.com.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The indemnification of officers and directors of the Registrant is
governed by Section 145 of the General Corporation Law of the State of Delaware
(the "DGCL") and the Restated Certificate of Incorporation and By-Laws of the
Registrant. Subsection (a) of DGCL Section 145 empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
such action, suit or proceeding if the person acted in good faith and in a
manner the person 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 the person's conduct was
unlawful.
Subsection (b) of DGCL Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that the
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by the person in connection with the defense or settlement
of such action or suit if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Delaware Court
of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the
<PAGE>
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
DGCL Section 145 further provides that to the extent that a present or
former director or officer is successful, on the merits or otherwise, in the
defense of any action, suit or proceeding referred to in subsections (a) and (b)
of Section 145, or in defense of any claim, issue or matter therein, such person
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith. In all cases in
which indemnification is permitted under subsections (a) and (b) of Section 145
(unless ordered by a court), it shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
present or former director, officer, employee or agent is proper in the
circumstances because the applicable standard of conduct has been met by the
party to be indemnified. Such determination must be made, with respect to a
person who is a director or officer at the time of such determination, (1) by a
majority vote of the directors who are not parties to such action, suit or
proceeding, even though less than a quorum, or (2) by a committee of such
directors designated by majority vote of such directors, even though less than a
quorum, or (3) if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (4) by the stockholders.
The statute authorizes the corporation to pay expenses incurred by an officer or
director in advance of the final disposition of a proceeding upon receipt of an
undertaking by or on behalf of the person to whom the advance will be made, to
repay the advances if it shall ultimately be determined that he was not entitled
to indemnification. DGCL Section 145 also provides that indemnification and
advancement of expenses permitted thereunder are not to be exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under any By-law, agreement, vote of stockholders or
disinterested directors, or otherwise. DGCL Section 145 also authorizes the
corporation to purchase and maintain liability insurance on behalf of its
directors, officers, employees and agents regardless of whether the corporation
would have the statutory power to indemnify such persons against the liabilities
insured.
Article Eighth of the Restated Certificate of Incorporation of the
Registrant, as amended (the "Certificate"), provides that no director of the
Registrant shall be personally liable to the Registrant or its stockholders for
monetary damages for breach of fiduciary duty as a director except for liability
(i) for any breach of the director's duty of loyalty to the Registrant or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the DGCL (involving certain unlawful dividends or stock purchases or
redemptions), or (iv) for any transaction from which the director derived an
improper personal benefit.
Article Tenth of the Registrant's Certificate entitles directors and
officers of the Registrant to indemnification to the fullest extent permitted by
Section 145 of the DGCL, as the same may be supplemented from time to time. The
Certificate further provides that the Registrant may, to the fullest extent
authorized by the Board of Directors, indemnify any employee or agent of the
Registrant.
Pursuant to Section 145(g) of the DGCL, the Registrant's By-Laws, as
amended, authorize the Registrant to obtain insurance to protect officers and
directors from certain
<PAGE>
liabilities, including liabilities against which the Registration cannot
indemnify its officers and directors. The Registrant maintains a primary
directors and officers liability and company reimbursement policy which, among
other things, provides for payment up to $3 million on behalf of any of the
Registrant's past, present or future directors or officers against Loss (as
defined in such policy). The Registrant also maintains a supplemental insurance
and company reimbursement policy providing for, among other things, payment up
to $2 million on behalf of any of the Registrant past, present or future
directors or officers against Loss (as defined in such policy).
ITEM 16. EXHIBITS
The following exhibits are filed as part of this Registration Statement.
EXHIBIT
NUMBER DESCRIPTION
------ -----------
5.1 Opinion of Swidler Berlin Shereff Friedman, LLP
23.1 Consent of KPMG LLP
23.2 Consent of KPMG LLP
23.3 Consent of Arthur Andersen LLP
23.4 Consent of Arthur Andersen LLP
23.5 Consent of Ernst & Young LLP
23.6 Consent of Swidler Berlin Shereff Friedman, LLP (included in
Exhibit 5.1)
24.1 Power of Attorney (appears on signature page)
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement. 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 SEC pursuant to Rule 424(b)
promulgated under the Securities Act of 1933 if, in the
aggregate,
<PAGE>
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
this Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in this Registration Statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (ii) shall not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by Learn2.com pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
<PAGE>
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, hereunto duly
authorized, in the City of White Plains, State of New York, on this 12th day of
November, 1999.
LEARN2.COM, INC.
By: /s/ MARC E. LANDY
------------------------------------------
Name: Marc E. Landy
Title: Vice President, Chief Financial
Officer and Secretary
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned whose
signature appears below constitutes and appoints Stephen P. Gott and Marc E.
Landy, and each of them (with full power of each of them to act alone), his true
and lawful attorneys-in-fact, with full power of substitution and resubstitution
for him and on his behalf, and in his name, place and stead, in any and all
capacities to execute and sign any and all amendments or post-effective
amendments to this registration statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact or any of them or their or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof and the Registrant hereby
confers like authority on its behalf.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Stephen P. Gott
- -------------------------- President, Chief Executive Officer and Director November 12, 1999
Stephen P. Gott (Principal Executive Officer)
/s/ Marc E. Landy
- -------------------------- Vice President, Chief Financial Officer and Secretary November 12, 1999
Marc E. Landy (Principal Financial and Accounting Officer)
/s/ Donald Schupak
- -------------------------- Chairman of the Board of Directors and Director November 12, 1999
Donald Schupak
/s/ Robert Alan Ezrin
- -------------------------- Vice Chairman of the Board of Directors and Director November 12, 1999
Robert Alan Ezrin
/s/ James A. Cannavino
- -------------------------- Director November 12, 1999
James A. Cannavino
/s/ Jason R. Roberts
- -------------------------- Director November 12, 1999
Jason R. Roberts
/s/ Michael A. Webster
- -------------------------- Director November 12, 1999
Michael A. Webster
</TABLE>
<PAGE>
LEARN2.COM, INC.
FORM S-3
REGISTRATION STATEMENT
EXHIBIT INDEX
Exhibit
-------
5.1 Opinion of Swidler Berlin Shereff Friedman, LLP
23.1 Consent of KPMG LLP
23.2 Consent of KPMG LLP
23.3 Consent of Arthur Andersen LLP
23.4 Consent of Arthur Andersen LLP
23.5 Consent of Ernst & Young LLP
23.6 Consent of Swidler Berlin Shereff Friedman, LLP (included
in Exhibit 5.1)
24.1 Power of Attorney (appears on signature page)
<PAGE>
Exhibit 5.1
November 12, 1999
Learn2.com, Inc. (formerly known as 7th Level, Inc.)
1311 Mamaroneck Avenue
White Plains, New York 10605
Ladies and Gentlemen:
On the date hereof, Learn2.com, Inc. (formerly known as 7th Level, Inc.),
a Delaware corporation (the "Company"), intends to transmit to the Securities
and Exchange Commission a Registration Statement, on Form S-3 (the "Registration
Statement") relating to 1,135,709 shares (the "Shares") of common stock, par
value $.01 per share (the "Common Stock"), of the Company. This opinion is an
exhibit to the Registration Statement.
We have at times acted as special counsel to the Company with respect to
certain corporate and securities matters, and in such capacity we are familiar
with the various corporate and other proceedings taken by or on behalf of the
Company in connection with the proposed offer and sale of the Shares as
contemplated by the Registration Statement. However, we are not general counsel
to the Company and would not ordinarily be familiar with or aware of matters
relating to the Company unless they are brought to our attention by
representatives of the Company.
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Company's Restated Certificate of Incorporation as presently in effect,
(ii) its By-Laws as presently in effect, (iii) minutes and other instruments
evidencing actions taken by its directors and stockholders, (iv) the Agreement
and Plan of Merger, dated as of February 16, 1999, by and among Learn2.com, Inc.
(formerly known as 7th Level, Inc.), 7th Level Merger Corporation, Street
Technologies, Inc. ("Street") and the stockholders of Street named therein (the
"Street Agreement"), (v) the Certificate of Designations, Preferences and Rights
of Series D Preferred Stock (the "Certificate of Designations") and such other
documents and instruments relating to the Company and the proposed offering as
we have deemed necessary under the circumstances. In our examination of all such
agreements, documents, certificates and instruments, we have assumed the
genuineness of all signatures and the authenticity of all agreements, documents,
certificates and instruments submitted to us as originals and the conformity
with the originals of all agreements, documents, certificates and instruments
submitted to us as certified, conformed or photostatic copies. Insofar
<PAGE>
as this opinion relates to securities to be issued in the future, we have
assumed that all applicable laws, rules and regulations in effect at the time of
such issuance are the same as such laws, rules and regulations in effect as of
the date hereof.
Except as provided in the next sentence, we express no opinion as to the
laws of any jurisdiction other than the laws of the State of New York and the
federal laws of the United States of America. To the extent that matters
concerning the Delaware General Corporation Law are involved in the opinions
expressed below our opinions are based solely upon our reasonable familiarity
with the Delaware General Corporation Law and based on our reading of standard
published compilations of such laws. We express no opinion as to the application
of the securities or "Blue Sky" laws of any state, including the State of
Delaware and the State of New York, to the offer and/or sale of the Shares.
Based on the foregoing, and subject to and in reliance on the accuracy and
completeness of the information relevant thereto provided to us, it is our
opinion that the Shares have been duly authorized and, subject to the
effectiveness of the Registration Statement and compliance with applicable state
securities laws, are, or when issued and paid for in accordance with the terms
set forth in the Street Agreement and the Certificate of Designations, as the
case may be, will be, legally and validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and as an exhibit to any filing made by the Company under
the securities or "Blue Sky" laws of any state of the United States which
related to the offer and/or sale of the Shares.
This opinion is furnished to you in connection with the filing of the
Registration Statement, and is not to be used, circulated, quoted or otherwise
relied upon for any other purpose, except as expressly provided in the preceding
paragraph, without our express written consent, and no party other than you is
entitled to rely on it. This opinion is rendered to you as of the date hereof
and we undertake no obligation to advise you of any change, whether legal or
factual, after the date hereof.
Very truly yours,
/s/ SWIDLER BERLIN SHEREFF FRIEDMAN, LLP
SWIDLER BERLIN SHEREFF FRIEDMAN, LLP
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors of Learn2.com, Inc. (formerly known as 7th Level, Inc.):
We consent to the incorporation by reference herein of our report,
dated January 30, 1998, related to the consolidated balance sheet of 7th
Level, Inc. (currently Learn2.com, Inc.) and subsidiaries as of December 31,
1997 and the related consolidated statements of operations, stockholders'
equity and cash flows and the financial statement schedule for each of the
years in the two-year period then ended, which report appears in the December
31, 1998 Annual Report on Form 10-K/A of 7th Level, Inc. (currently
Learn2.com, Inc.), and our report, dated February 7, 1997, relating to the
consolidated statements of operations, stockholders' equity, and cash flows
of Learn2.com, Inc. (formerly known as 7th Level, Inc.) and subsidiaries for
the year ended December 31, 1996, before restatement for the pooling of
interests transaction discussed in note 1 to the supplementary consolidated
financial statements, which report appears in the Current Report on Form 8-K
of the Learn2.com, Inc. dated November 9, 1999, and to the reference to our
firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
----------------------------------
KPMG LLP
Dallas, Texas
November 12, 1999
<PAGE>
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors of Learn2.com, Inc. (formerly known as 7th Level, Inc.):
We consent to the incorporation by reference in this Registration
Statement on Form S-3 of Learn2.com, Inc. (formerly known as 7th Level, Inc.)
of our report dated June 5, 1998, with respect to the balance sheet of
Learn2, Inc. (formerly known as 7th Street.com, Inc. and Street Technologies,
Inc.) as of December 31, 1997, and the related statements of operations,
stockholders' equity (deficit), and cash flows for the year then ended, which
report appears in the Form 8-K/A of 7th Level, Inc. (currently Learn2.com,
Inc.) filed with the Securities and Exchange Commission on April 16, 1999. We
also consent to the reference to our firm under the heading "Experts" in the
prospectus.
/s/ KPMG LLP
----------------------------------
KPMG LLP
Stamford, Connecticut
November 12, 1999
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
June 28, 1999 and to all references to our Firm included in this registration
statement. Our report dated March 17, 1999 included in Learn2.com, Inc.'s
(formerly known as 7th Level, Inc.) Form 10-K/A for the year ended December
31, 1998 is no longer appropriate since restated financial statements have
been presented giving effect to the business combination with Panmedia
Corporation accounted for as a pooling-of-interests.
/s/ ARTHUR ANDERSEN LLP
--------------------------------
ARTHUR ANDERSEN LLP
New York, New York
November 12, 1999
<PAGE>
Exhibit 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report on
the supplementary consolidated financial statements dated November 2, 1999
included in Learn2.com Inc.'s (formerly known as 7th Level, Inc.) Form 8-K
for the years ended December 31, 1998 and 1997 and to all references to our
Firm included in this registration statement filed on Form S-3 registering
1,135,709 shares of Learn2.com, Inc. common stock.
/s/ ARTHUR ANDERSEN LLP
-------------------------------
ARTHUR ANDERSEN LLP
New York, New York
November 12, 1999
<PAGE>
Exhibit 23.5
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this registration statement
and related Prospectus of Learn2.com, Inc. for the registration of 1,135,709
shares of its common stock of our report dated March 19, 1999, with respect
to the consolidated financial statements and schedule of ViaGrafix
Corporation, for the year ended December 31, 1998 included in Learn2.com
Inc.'s Current Report on Form 8-K dated November 12, 1999, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
--------------------------
Ernst & Young LLP
Tulsa, Oklahoma
November 15, 1999
