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As filed with the Securities and Exchange Commission on May 6, 1999
Registration No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REGISTRATION STATEMENT ON
FORM S-3
UNDER
THE SECURITIES ACT OF 1933
------------------------------------
VIEWCAST.COM, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
DELAWARE 75-2528700
-------- ----------
(State of Incorporation) (I.R.S. Employer Identification No.)
2665 Villa Creek Drive, Suite 200
Dallas, Texas 75234
(972) 488-7200
(Address including zip code, area code and telephone number of
Registrant's executive offices.)
------------------------------------
William S. Leftwich
Chief Financial Officer
2665 Villa Creek Drive, Suite 200
Dallas, Texas 75234
(972) 488-7200
(Name, address and telephone number of agent for service)
------------------------------------
COPIES TO:
V. Gerard Comizio
Thacher Proffitt & Wood
1700 Pennsylvania Avenue NW, Suite 800
Washington, DC 20006
(202) 347-8400
------------------------------------
Approximate date of proposed commencement of sale to public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), please check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462 (b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier
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,
check the following box. [ ]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Title of each class of securities Amount to be Proposed maximum Proposed maximum Amount of
to be registered registered offering price per unit aggregate offering price registration fee
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 707,000 $1.00 $ 707,000 $ 197.00
- -------------------------------------------------------------------------------------------------------------------------
Common Stock 2,567,798 $3.00 7,703,394 2,142.00
- -------------------------------------------------------------------------------------------------------------------------
Common Stock 108,108 $3.625 391,892 109.00
- -------------------------------------------------------------------------------------------------------------------------
Common Stock 30,000 $4.00 120,000 33.00
- -------------------------------------------------------------------------------------------------------------------------
Common Stock 4,788,580 $4.19 20,064,149 5,578.00
- -------------------------------------------------------------------------------------------------------------------------
Common Stock 135,333 $4.50 608,999 169.00
- -------------------------------------------------------------------------------------------------------------------------
Common Stock 140,000 $6.30 882,000 245.00
- -------------------------------------------------------------------------------------------------------------------------
Total 8,476,819 -- $ 30,477,434 $ 8,473.00
=========================================================================================================================
</TABLE>
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VIEWCAST.COM, INC.
Cross Reference Sheet showing location in the Prospectus of information
required by Items of Form S-3:
<TABLE>
<S> <C>
REGISTRATION STATEMENT ITEM AND CAPTION LOCATION OR HEADINGS IN PROSPECTUS
1. Forepart of the Registration Statement and Outside Front Cover Page
Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages Inside Front and Outside Back Cover Pages
of Prospectus
3. Summary Information and Risk Factors Summary; Risk Factors
4. Use of Proceeds How We Intend to Use the Proceeds From the Offering
5. Determination of Offering Price Determination of Offering Price
6. Dilution Dilution
7. Selling Security Holders Selling Security Holders and Plan of Distribution
8. Plan of Distribution Selling Security Holders and Plan of Distribution
9. Description of Securities to be Registered Description of Securities to Be Registered
10. Legal Matters Legal Matters
11. Interests of Named Experts and Counsel Experts
</TABLE>
ii
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PROSPECTUS
[LOGO]
VIEWCAST.COM, INC.
8,476,819 SHARES OF COMMON STOCK
ViewCast.com, Inc. (formerly MultiMedia Access Corporation) is registering
7,933,463 shares of common stock, par value $.0001 per share, underlying
non-redeemable common stock purchase warrants and publicly traded redeemable
common stock purchase warrants for offer and sale by the persons holding these
warrants. ViewCast is also registering 290,360 shares of common stock
underlying warrants held by Network 1 Financial Securities, Inc. received as
compensation for Network 1's service as managing underwriter of ViewCast's
initial public offering in 1997, 69,888 shares of common stock held by RP&C
International, Ltd. and 183,108 shares of common stock underlying redeemable
and non-redeemable warrants held by RP&C International and Rauscher, Pierce &
Resfnes. The common stock may be offered by its holders or their successors in
interest from time to time in transactions on the Nasdaq SmallCap Market
("Nasdaq") or in privately negotiated transactions at current market prices or
at negotiated prices. ViewCast will not receive the proceeds of sales of the
common stock by its holders, but will receive proceeds from the exercise of
warrants. Our common stock is listed on the Nasdaq SmallCap Market under the
symbol "VCST."
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TERMS OF THE OFFERING
<TABLE>
<S> <C>
Number of shares................................................. $ 8,476,819
Underwriting commissions and expenses............................ $ 686,703
Net proceeds to ViewCast......................................... $ 29,790,731
Net proceeds per share to ViewCast............................... $ 3.51
</TABLE>
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PLEASE READ THE RISK FACTORS BEGINNING ON PAGE 5.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES REGULATOR HAS APPROVED OR DISAPPROVED THESE SECURITIES
OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR
COMPLETE. IT IS ILLEGAL FOR ANYONE TO TELL YOU OTHERWISE.
[ ], 1999
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WHERE YOU CAN FIND ADDITIONAL INFORMATION
We are subject to the informational requirements of the Exchange Act
and must file reports and other information with the SEC.
We have filed with the SEC a registration statement on Form S-3 under
the Securities Act of 1933, as amended, with respect to the common stock
offered in this document. As permitted by the rules and regulations of the SEC,
this document does not contain all the information set forth in the
registration statement. You may examine this information without charge at the
public reference facilities of the SEC located at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may obtain copies of this material from the SEC at
prescribed rates. You may obtain information on the operations of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an
internet address ("web site") that contains reports, proxy and information
statements and other information regarding registrants, including ViewCast,
that file electronically with the SEC. The address for this web site is
"http://www.sec.gov."
The statements contained in this document as to the contents of any
contract or other document filed as an exhibit to the Form S-3 are, of
necessity, brief descriptions and are not necessarily complete; each such
statement is qualified by reference to such contract or document.
Copies of ViewCast's Certificate of Incorporation and Bylaws are
available without charge from ViewCast.
The common stock is listed on the Nasdaq SmallCap under the symbol
"VCST". Certain information, reports and proxy statements of ViewCast are also
available for inspection at the offices of the Nasdaq Reports Section, 1735 K
Street, N.W., Washington, D.C. 20006.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the SEC (File No. 000-29020) under
the Exchange Act are deemed to be part of this prospectus:
1. ViewCast's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1998, including any documents or portions thereof incorporated by
reference therein and all amendments thereto;
2. ViewCast's Current Report on Form 8-K dated March 15, 1999,
including any documents or portions thereof incorporated by reference therein
and all amendments thereto; and
3. All other documents filed after the date of this prospectus by
ViewCast, pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act,
including any amendment to such documents.
Any statement contained in any document which is deemed to be part of
this prospectus is modified or superseded for purposes of this prospectus to
the extent that a statement contained in this prospectus or in any documents
filed with the SEC after this prospectus which also is or is deemed to be part
of this prospectus modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as modified or superseded,
to be a part of this prospectus. ViewCast will provide without charge to each
recipient of this prospectus a copy of any or all of the documents incorporated
herein by reference (other than exhibits to documents) upon their written or
oral request. Requests for such documents should be directed to ViewCast.com,
Inc., 2665 Villa Creek Drive, Suite 200, Dallas, Texas 75234, Attention: Chief
Financial Officer, telephone: (972) 488-7200.
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SUMMARY
To more fully understand the offering, you should read this entire
document carefully, including the financial statements and the notes to the
financial statements included in our Annual Report on Form 10-KSB for the
period ended December 31, 1998, and other documents incorporated by reference
in this prospectus.
VIEWCAST.COM, INC.
ViewCast designs, develops, manufactures and markets advanced,
standards-based video communications (videocom) systems that provide
enterprise-wide solutions for business customers. ViewCast's Viewpoint VBX(TM)
(VBX) video distribution and switching system, Osprey(R) line of video
peripheral products and video compression-decompression (Codec) cards and the
ViewCast(R) line of Internet streaming-video servers deliver videocom
applications, including video conferencing, video broadcasting, video-based
training, distance learning, telemedicine, surveillance and Internet and
intranet video communications.
ViewCast's products and systems are marketed, installed and supported
by resellers, system integrators, Original Equipment Manufacturers ("OEMs") and
custom application developers. Many of these resellers are the same entities
that market, install and support a customer's telephone private branch exchange
("PBX"), Local Area Network ("LAN"), e-mail servers and other communication
systems. ViewCast's products are compatible with existing communications
equipment and infrastructure. ViewCast currently has distribution and reseller
agreements with over 70 companies worldwide.
ViewCast believes that the convergence of multimedia personal
computers, the establishment of new standards-based audio and video
technologies, and increased utilization of the Internet and corporate
intranets, combined with lower price levels for such capabilities, will
generate a rapid adoption of videocom products and services.
ViewCast believes it has developed products which position it to
benefit from the growth of these markets and which will have functions,
performance and prices to compete successfully in the rapidly-emerging video
communications industry.
ViewCast is involved in discussions with owners of broadcast
properties and content regarding potential joint ventures and other business
opportunities for the use of its video streaming and systems integration
products. As of the date of this prospectus, ViewCast has no agreements or
understandings with respect to such business opportunities.
ViewCast was incorporated in Delaware in February 1994 under the name
MultiMedia Access Corporation. ViewCast's principal executive offices are
located at 2665 Villa Creek Drive, Suite 200, Dallas, Texas 75234, its
telephone number is (972) 488-7200 and its fax number is (972) 488-7299.
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For further information regarding ViewCast, its business, operations
and management, see ViewCast's Annual Report and proxy statement, each of which
is a part hereof for all purposes.
RISK FACTORS
You should consider carefully the following risk factors before
deciding whether to invest in our common stock.
VIEWCAST MAY NOT BE ABLE TO SUCCESSFULLY COMMERCIALIZE ITS PRODUCTS. IF IT
CANNOT DO SO, LOSSES WILL INCREASE.
ViewCast's ability to reduce its losses or make profits is dependent
upon the successful commercialization of its products. ViewCast may encounter
the risks, expenses, delays, problems and difficulties frequently experienced
by companies which are shifting from the development to the commercialization
of its products. If unanticipated expenses, problems or difficulties, technical
or otherwise, prevent ViewCast from successfully commercializing its products,
ViewCast will experience reduced profits or increased losses.
VIEWCAST HAS GENERATED LIMITED REVENUE AND HAS EXPERIENCED SIGNIFICANT LOSSES.
THESE TRENDS MAY CONTINUE FOR THE FORESEEABLE FUTURE.
ViewCast has in the past generated limited revenue, including revenues
of $8,027,948, $3,360,703 and $1,095,012 and incurred significant losses,
including losses of $9,366,693, $5,827,405 and $4,393,965 for the years ended
December 31, 1998, 1997 and 1996, respectively. We anticipate that losses will
continue for the foreseeable future and until such time as we are able to
effectively market our products. In addition, our future revenues and profits
or losses could depend on factors beyond our control including technological
changes and developments, downturns in the economy or a decline in the desktop
video conferencing or PC industries or in targeted commercial markets. We may
not be able to successfully implement our marketing strategy, generate
significant revenues or become profitable.
VIEWCAST NEEDS SIGNIFICANT CAPITAL TO OPERATE ITS BUSINESS AND MAY REQUIRE
ADDITIONAL FINANCING. IF WE CANNOT OBTAIN SUCH ADDITIONAL FINANCING, WE MAY NOT
BE ABLE TO CONTINUE OUR OPERATIONS.
ViewCast needs significant capital to design, develop and
commercialize its products. We anticipate, based on currently proposed plans
and assumptions relating to operations, that currently available funds plus
anticipated proceeds from the exercise of the warrants will be sufficient to
satisfy our cash requirements through at least the first quarter of 2000. In
the event that our plans change or are inaccurate or if currently available
funds are insufficient to fund operations, we could be required to seek
additional financing sooner than currently anticipated or could be required to
curtail our activities.
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VIEWCAST'S PRODUCTS HAVE NOT BEEN TESTED BY WIDESPREAD COMMERCIAL USE AND ARE
SUBJECT TO SIGNIFICANT TECHNOLOGICAL AND OPERATIONAL RISKS WHICH COULD CAUSE
HIGHER LOSSES.
Our products have not yet been successfully used by a large number of
customers. Upon widespread commercial use, our products may not:
satisfactorily perform all of the functions for which they
have been designed or operate satisfactorily;
satisfy current price or performance objectives;
be sufficiently reliable or durable enough under actual
operating conditions to be sold successfully; or
avoid errors in the complex software and other technologies
used in our systems which are expensive to correct.
Any of these problems could result in abandonment or substantial
change in the marketability of our products which could cause increased losses.
VIEWCAST MAKES A LARGE PORTION OF ITS SALES TO A SMALL NUMBER OF CUSTOMERS. THE
LOSS OF THESE CUSTOMERS COULD RESULT IN LOWER REVENUES AND INCREASED LOSSES.
ViewCast makes a substantial portion of its sales to a small number of
customers. A loss of our sales to these customers could result in lower
revenues and increased losses.
VIEWCAST COULD EXPERIENCE INCREASED LOSSES DUE TO POTENTIAL CREDIT LOSSES.
ViewCast makes a large portion of its sales to customers on an open
account basis with no collateral required. We perform ongoing credit evaluation
of our customers and maintain reserves for potential credit losses. Potential
credit losses may from time to time exceed the amount reserved for such losses
and cause increased losses in the future.
THE CONCENTRATION OF CREDIT IN TWO FINANCIAL INSTITUTIONS MAY RESULT IN
INCREASED LOSSES IF EITHER INSTITUTION CEASES BUSINESS OPERATIONS.
ViewCast invests its cash and cash equivalents with two financial
institutions, one a Texas commercial bank and the other a major brokerage
house. Cash balances at the Texas commercial bank are insured by the Federal
Deposit Insurance Corporation up to $100,000 and the brokerage house maintains
accounts in several banks throughout the country and in government securities.
Should either the Texas commercial bank or the brokerage house cease business
operations, ViewCast may suffer increased losses.
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THE LIMITED MARKET ACCEPTANCE OF VIDEO COMMUNICATIONS SYSTEMS MAY REQUIRE US TO
SPEND SUBSTANTIAL TIME AND EXPENSE MARKETING OUR PRODUCTS. IF OUR PRODUCTS
CANNOT BE SUCCESSFULLY MARKETED, WE WILL INCUR ADDITIONAL LOSSES.
The relatively high cost and less than television broadcast quality
video of video communications systems have, to date, limited the market
acceptance of video communication systems. Potential customers may therefore
elect to utilize other products which they believe to be more efficient or have
other advantages over ViewCast's products. This may require us to spend
substantial time and effort and incur significant expense to create awareness
and demand by potential consumers as to the perceived benefits and distinctive
characters of our products in order to successfully market our products. If we
cannot successfully market our products, we will suffer additional losses.
OUR FUTURE PROFITS OR LOSSES DEPEND ON THE EFFORTS OF THIRD PARTY RESELLERS.
We intend to expand our existing network of resellers, consisting
primarily of value-added resellers (VARs), systems integrators and original
equipment manufacturers (OEMs) with established distribution channels to market
our products and to educate potential resellers to install and service our
systems. To date, we have contracts with more than 70 resellers to market and
sell our products. Our future profits or losses depend on our ability to develop
relationships with VARs, systems integrators and OEMs, on the marketing efforts
of such resellers and on the ability of such resellers to provide installation
and support services. A decline in the financial prospects of particular
resellers or any of their customers, inadequate installation and support
services by resellers or our inability, for financial or other reasons, to
contract with additional resellers could damage our profitability or cause
additional losses.
STRONG COMPETITION WITHIN OUR INDUSTRY MAY REDUCE OUR CUSTOMER BASE.
The market for video communications systems and products is highly
competitive. New products based upon innovative technologies are frequently
introduced. ViewCast competes with numerous well-established manufacturers and
suppliers of video conferencing, networking, telecommunications and multimedia
equipment and products. Most of ViewCast's competitors possess substantially
greater financial, marketing, personnel and other resources than ViewCast, have
established reputations relating to product design, development, manufacture,
marketing and service of networking, telecommunications and video products and
have significant budgets to permit them to implement extensive advertising and
promotional campaigns to market new products in response to competitors. Among
ViewCast's direct competitors are C-Phone Corporation, VIVO Software, Inc.,
Smith Microsystems, Inc., Zydacron, Inc., VCON, Ltd., Corel Computer
Corporation, Video LAN Technologies, Inc. and Objective Communications, Inc. In
addition, electronics manufacturers such as Intel actively compete for business
in this market. Our profitability depends upon our ability to successfully
compete in our market.
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THE MARKETS FOR OUR PRODUCTS ARE CHARACTERIZED BY RAPIDLY CHANGING TECHNOLOGY
AND EVOLVING INDUSTRY STANDARDS, OFTEN RESULTING IN PRODUCT OBSOLESCENCE OR
SHORT PRODUCT LIFECYCLES. OUR PROFITABILITY DEPENDS ON OUR ABILITY TO ADAPT TO
SUCH CHANGES.
The markets for ViewCast's products are characterized by rapidly
changing technology and evolving industry standards, often resulting in product
obsolescence or short product lifecycles. Our ability to compete will depend in
large part on our ability to:
introduce products in a timely manner;
continually enhance and improve our systems and software
products;
maintain development capabilities;
anticipate or adapt to technological changes and advances in
the video communication and PC industries; and
ensure continuing compatibility with evolving industry
standards.
If we are unable to successfully meet these challenges, we may have
to discontinue sales of our products until we can modify or redesign their
technology, which would harm our profitability.
OUR FUTURE PROFITS OR LOSSES DEPEND ON THE EFFORTS OF THIRD-PARTY MANUFACTURERS
AND SUPPLIERS.
ViewCast depends on contract manufacturers to supply its products in
limited quantities pursuant to purchase orders. Our products may not be able to
be manufactured reliably on a large-scale basis on commercially reasonable
terms. In addition, we have and will continue to be dependent on third-parties
for the supply and manufacture of all of our component and electronic parts,
including standard and custom-designed components. We purchase components and
electronic parts pursuant to purchase orders in the ordinary course of business
and do not maintain supply agreements with such third parties. We are
substantially dependent on the ability of third-party manufacturers and
suppliers to meet our design, performance and quality specifications. Failure
of manufacturers or suppliers to supply, or delays in supplying us with systems
or components, or allocations in the supply of certain high demand components
could make us unable to meet our delivery schedules on a timely and competitive
basis and harm our profitability.
INABILITY TO PROTECT OUR PATENTS, TRADEMARKS AND PROPRIETARY INFORMATION COULD
HARM OUR PROFITABILITY.
ViewCast holds a United States patent covering certain fundamental
aspects of the compressed packet video Codec incorporated into a discontinued
product. ViewCast may apply for additional patents relating to other aspects of
its products, has registered trademarks for the WorkFone(R), Osprey(R),
ViewCast(R), and SLIC-Video(R) names and has applied for trademark
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<PAGE> 11
registration for the FamilyFone and Viewpoint VBX names, among others. Our
profitability will be harmed if our current or future patents, trademarks or
proprietary information cannot be adequately protected or if competitors
develop similar or superior methods or products outside the protection of any
patent issued to ViewCast. If we infringe patents or proprietary rights of
others, we may be required to modify the design of our products, change the
name of our products or obtain a license for certain technology or become
liable for damages, all of which could harm our profitability.
IF WE CANNOT SUCCESSFULLY EXPAND OUR OPERATIONS, WE WILL CONTINUE TO INCUR
SIGNIFICANT LOSSES.
We intend to use the proceeds received from the exercise of the
warrants, if any, to seek to expand our current level of operations. Successful
expansion of ViewCast's operations will be dependent, among other things, on
ViewCast's ability to achieve significant market acceptance for its products,
hire and retain skilled management, marketing, technical and other personnel,
establish an effective sales organization and enter into satisfactory marketing
arrangements, secure adequate sources of supply on a timely basis and on
commercially reasonable terms and successfully manage growth (including
monitoring operations, controlling costs and maintaining effective quality
controls). ViewCast could also seek to expand its operations through
acquisitions. In such an event, you may not have an opportunity to evaluate
the specific merits or risks of any potential acquisition. If we cannot
successfully expand our operations or if we remain largely dependent on
non-recurring system sales to a limited customer base, we will continue to
incur significant losses.
FLUCTUATIONS IN OPERATING RESULTS COULD CONTINUE IN THE FUTURE.
ViewCast's operating results could vary from period to period as a
result of the length of ViewCast's sales cycle, purchasing patterns of
potential customers, the timing of introduction of new products, software
applications and product enhancements by ViewCast and its competitors,
technological factors, variations in sales by distribution channels, timing of
stocking orders by resellers, competitive pricing, and generally nonrecurring
system sales. ViewCast's sales order cycle ranges from one to eighteen months.
The period from the execution of a purchase order until delivery of system
components to ViewCast, assembly and shipment, at which time ViewCast
recognizes revenue, may range from approximately one to four months. These
factors may cause significant fluctuations in operating results in the future.
OUR ABILITY TO USE NET OPERATING LOSS CARRY FORWARDS IS LIMITED.
At December 31, 1998, ViewCast had substantial net operating loss
carry forwards for federal income tax purposes available to offset future
taxable income. Under Section 382 of the Internal Revenue Code of 1986, as
amended, utilization of prior net operating loss carry forwards is limited
after an ownership change, as defined in Section 382. In the event ViewCast
achieves profitable operations, any significant limitation on the utilization
of net operating loss carry forwards would have the effect of increasing
ViewCast's tax liability and reducing net income and available cash resources.
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<PAGE> 12
OUR SUCCESS IS DEPENDENT ON OUR ABILITY TO RETAIN KEY PERSONNEL. THE LOSS OF
KEY PERSONNEL COULD HARM OUR PROFITABILITY.
Our success is largely dependent on the personal efforts of our key
personnel. All key personnel, including William D. Jobe, President, CEO and
Chairman of the Board, William S. Leftwich, Chief Financial Officer of
ViewCast, David T. Stoner, Vice President of Operations of ViewCast, Neal S.
Page, Vice President and General Manager of Osprey and A. David Boomstein, Vice
President of Business Development of ViewCast are "at-will" employees by terms
of their employment agreements. The employment of each such key employee may
therefore be terminated by the officer or ViewCast at any time, for any reason
or no reason. The loss of the services of key employees or the inability to
hire and retain qualified operational, financial, technical, marketing, sales
and other personnel could harm our profitability.
THE EXERCISE OF OUTSTANDING WARRANTS AND OPTIONS OR THE CONVERSION OF PREFERRED
STOCK COULD SIGNIFICANTLY DILUTE THE OWNERSHIP INTERESTS OF CURRENT
STOCKHOLDERS AND PREVENT A CHANGE IN CONTROL OF VIEWCAST.
As of March 31, 1999, there were outstanding stock options to purchase
an aggregate of approximately 3,290,912 shares of Common Stock at exercise
prices ranging from $.10 to $5.84375 per share, redeemable warrants to purchase
an aggregate of 3,063,023 shares at $4.19 per share and non-redeemable warrants
to purchase an aggregate of 5,413,796 shares at exercise prices ranging from
$1.00 to $4.63 per share. To the extent that outstanding options and warrants
are exercised, the percentage ownership of common stock of ViewCast's
stockholders will be diluted.
In addition, our Certificate of Incorporation authorizes the issuance
of "blank check" preferred stock with such designations, rights and preferences
as may be determined from time to time by the Board of Directors. The preferred
stock could be utilized, under certain circumstances, as a method of
discouraging, delaying or preventing a change in control of ViewCast. ViewCast
has issued 340,000 shares of Series A Convertible Preferred Stock, convertible
at the holders' option into Common Stock at $3.625 per share of which 91,000
shares remained outstanding as of March 31, 1999, and 945,000 shares of Series B
Convertible Preferred Stock, also convertible at the holders' option into Common
Stock at $3.625 per share. Both series of preferred stock have certain
designations, rights and preferences which could adversely affect the voting
power or other rights of the holders of ViewCast's common stock and which could
be utilized to discourage, delay or prevent a change in control of ViewCast. To
the extent that the preferred stock is converted to common stock, the percentage
ownership of common stock of ViewCast's stockholders will be diluted.
THE YEAR 2000 PROBLEM COULD HURT OUR OPERATIONS AND OUR PROFITS AND COULD LOWER
THE VALUE OF YOUR STOCK.
We rely upon computers to conduct our daily business. Failure of any
of our computer systems, those of the parties we do business with or the public
infrastructure, including the electric and telephone companies, to process the
new year may disrupt our ability to do routine business and to service our
customers and could hurt our operating results.
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IF OUR COMMON STOCK IS DELISTED FROM NASDAQ, INVESTORS MAY NOT BE ABLE TO SELL
THEIR COMMON STOCK AT AN ACCEPTABLE PRICE, OR AT ALL.
Our common stock is quoted on the Nasdaq SmallCap Market. In order to
continue to be listed on Nasdaq, ViewCast must maintain, among other criteria,
$2,000,000 in net tangible assets or $35,000,000 market capitalization or
$500,000 in net income for two of the prior three years and a public float of
at least 500,000 shares, a market value of public float of at least $1 million
and at least 300 shareholders. In addition, continued listing on Nasdaq
requires two market-makers and a minimum bid price of $1.00 per share. The
failure of ViewCast to meet these maintenance criteria in the future may result
in the delisting of ViewCast securities from Nasdaq. In the event that ViewCast
securities were de-listed, any trading in the securities would be conducted in
the over-the-counter market in the so-called "pink sheets" or the "Electronic
Bulletin Board" of the National Association of Securities Dealers, Inc. As a
result of such delisting, an investor could find it more difficult to dispose
of, or to obtain accurate quotations as to the market value of, ViewCast's
securities.
RECENT VOLATILITY IN THE STOCK MARKET COULD ADVERSELY AFFECT THE TRADING PRICE
OF OUR COMMON STOCK.
Publicly traded stocks, including the common stock of ViewCast, have
recently experienced substantial market price volatility. These market
fluctuations may be unrelated to the operating performance of particular
companies whose shares are traded. The trading price of our common stock is
determined by the marketplace, and may be influenced by many factors, including
investor perceptions of the Company and general industry and economic
conditions. Due to possible continued market volatility and to other factors,
including certain risk factors discussed in this document, there can be no
assurance that the trading price of our common stock will be at or above its
current market price.
FORWARD LOOKING STATEMENTS
This prospectus contains certain "forward-looking statements" which
may be identified by the use of such words as "believe," "expect,"
"anticipate," "should," "planned," "estimated" and "potential." Examples of
forward-looking statements include, but are not limited to, estimates with
respect to our financial condition, results of operations and business that are
subject to various factors which could cause actual results to differ
materially from these estimates and most other statements that are not
historical in nature. These factors include, but are not limited to, general
and local economic conditions and competition; changes in accounting
principles, policies, or guidelines; changes in legislation or regulation; and
other economic, competitive, governmental, regulatory, and technological
factors affecting our operations, pricing, products and services.
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HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING
The net proceeds will depend on the total number of warrants
exercised, and the expenses incurred in connection with the offering. Any net
proceeds from the exercise of warrants will be used for working capital and
general corporate purposes, and possible future acquisitions. ViewCast will not
receive any proceeds from the sale of common stock by the persons holding the
common stock.
We anticipate that currently available funds plus anticipated proceeds
from the exercise of warrants will be sufficient to satisfy our cash
requirements through at least the first quarter of 2000. In the event that our
plans change or are inaccurate or if currently available funds are insufficient
to fund operations, we could be required to seek additional financing sooner
than currently anticipated or could be required to curtail our activities.
Additional equity financing may involve substantial dilution to the interests
of our existing stockholders.
DETERMINATION OF OFFERING PRICE
The exercise price of the warrants was determined by negotiation
between ViewCast and the holders of the warrants. In determining these prices,
ViewCast and the holders of the warrants considered, among other things,
estimates of the business potential of ViewCast, the management of ViewCast and
its plans for the expansion of its business base and did not bear any relation
to earnings per share, book value or the net worth of ViewCast. Prospective
investors should not consider the exercise price of the warrants as necessarily
indicative of the actual value of the common stock. The offering price of the
common stock after exercise of the warrants will be determined by the current
market price of the common stock on Nasdaq. See "Selling Securityholders and
Plan of Distribution."
DILUTION
The difference between the weighted average offering price per share
of common stock and the pro forma net tangible book value per share of common
stock after this offering constitutes the dilution to investors in this
offering. Net tangible book value per share on any given date is determined by
dividing the net tangible book value (total tangible assets less total
liabilities) of ViewCast on such date by the number of shares of common stock
outstanding on such date.
The net tangible book value of ViewCast at December 31, 1998 was
$3,042,508, or $.275 per share of common stock. After giving effect to the
exercise of all unexercised warrants for which the underlying common stock is
being offered by this prospectus, the pro forma net tangible book value of
ViewCast at December 31, 1998 would have been $28,927,565 or $1.62 per share,
representing an immediate increase in pro forma net tangible book value of $1.34
per share to existing stockholders and an immediate
12
<PAGE> 15
dilution of $2.31 per share (58.8%) to investors. The following table shows the
dilution to new investors on a per share basis:
<TABLE>
<S> <C> <C>
Weighed average offering price(1)............................................... $3.93
Net tangible book value before offering.................................... $ .28
Increase attribute to new investors........................................ 1.34
-----
Pro Forma net tangible book value after offering................................ 1.62
-----
Dilution to new investors....................................................... $2.31
=====
</TABLE>
- ----------
(1) Offering price before deduction of estimated expenses of the offering and
commissions.
The following table compares the number of shares of common stock acquired
from ViewCast by its stockholders as of December 31, 1998 and by investors in
this offering, the percentage ownership of such shares, the total consideration
paid, the percentage of total consideration paid, and the average price per
share:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
---------------- -------------------
AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------ ------- ------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders.................................. 11,063,477 62.1 $31,936,717 54.6 $2.89
New investors.......................................... 6,753,595 37.9 26,571,760 45.4 3.93
---------- ----- ----------- -----
Total......................................... 17,817,072 100.0 $58,508,477 100.0
========== ===== =========== =====
</TABLE>
The above table also assumes no exercise of outstanding stock options
or conversion of convertible debt and convertible preferred stock. As of the
date of this prospectus, there were:
o outstanding stock options to purchase 3,261,812 shares of common stock
at a weighted average price of $2.99 per share;
o 1,070,657 shares of common stock reserved for issuance upon exercise
of options available for future grant under the 1995 Option Plan;
o 205,405 shares of common stock reserved for issuance upon the
conversion of convertible debt;
o 251,034 shares of common stock reserved for issuance upon the
conversion of the Company's Series A Convertible Preferred Stock; and
o 2,606,896 shares of common stock reserved for issuance upon the
conversion of the Company's Series B Convertible Preferred Stock.
13
<PAGE> 16
DESCRIPTION OF SECURITIES TO BE REGISTERED
The Company is authorized to issue 30.0 million shares of common
stock, $.0001 par value per share, and 5.0 million shares of preferred stock,
par value $.0001 per share. As of March 31, 1999, there were 12,161,714 shares
of common stock outstanding held by approximately 850 beneficial holders, and
there were 1,036,000 shares of preferred stock outstanding.
COMMON STOCK
The holders of common stock are entitled to one vote for each share
held of record on all matters to be voted on by stockholders. There is no
cumulative voting with respect to the election of directors, with the result
that the holders of more than fifty percent (50%) of the shares of common stock
voting for the election of directors can elect all of the directors. Holders of
shares of common stock are entitled to receive dividends when, as and if
declared by the Board of Directors in its discretion, out of funds legally
available therefor. In the event of liquidation, dissolution or winding up of
ViewCast, the holders of common stock are entitled to share ratably in the
assets of ViewCast, if any, legally available for distribution to them after
payment of debts and liabilities of ViewCast and after provision has been made
for each class of stock, if any, having liquidation preference over the common
stock. Holders of shares of common stock have no conversion, preemptive or
other subscription rights, and there are no redemption or sinking fund
provisions applicable to the common stock. All of the outstanding shares of
common stock are fully paid and non-assessable.
REDEEMABLE WARRANTS
The following is a brief summary of certain provisions of our publicly
traded redeemable common stock purchase warrants, but such summary does not
purport to be complete and is qualified in all respects by reference to the
actual text of the Warrant Agreement among ViewCast and Continental Stock
Transfer & Trust Company. As of March 31, 1999, there were 2,851,977 redeemable
warrants outstanding convertible into 3,063,023 shares of common stock.
Exercise Price and Terms. Each redeemable warrant entitles the holder
thereof to purchase, at any time over a fifty-four (54) month period commencing
August 4, 1997, one share of common stock at $4.19 per share, subject to
adjustment in accordance with the anti-dilution and other provisions discussed
below. The holder of any redeemable warrant may exercise such redeemable
warrant by surrendering the certificate representing the redeemable warrant to
Continental Stock Transfer, with the subscription form properly completed and
signed, together with payment of the exercise price. The redeemable warrants
may be exercised at any time in whole or in part at the applicable exercise
price until expiration of the redeemable warrants. No fractional shares of
common stock will be issued upon the exercise of the redeemable warrants.
Adjustments. The holders of the redeemable warrants are protected
against dilution of their interests by adjustments of the exercise price and
the number of shares of common stock purchasable upon the exercise of the
redeemable warrants upon the occurrence of certain events. These events are set
forth in the Warrant Agreement and include stock dividends, stock splits,
14
<PAGE> 17
combinations or reclassification of the common stock, or sale by ViewCast of
shares of its common stock or other securities convertible into common stock at
a price below the exercise price of the redeemable warrants. Additionally, an
adjustment would be made in the case of a reclassification or exchange of
common stock, consolidation or merger of ViewCast with or into another
corporation (other than a consolidation or merger in which ViewCast is the
surviving corporation) or sale of all or substantially all of the assets of
ViewCast.
Redemption Provisions. ViewCast may redeem all, but not less than all,
of the redeemable warrants at $0.10 per redeemable warrant. In order to redeem
the warrants, ViewCast must provide at least thirty (30) days prior written
notice to the holders of the redeemable warrants and the per share closing
price or bid quotation of the common stock as reported on Nasdaq equals or
exceeds $6.75 (subject to adjustment) for any twenty (20) trading days within a
period of thirty (30) consecutive trading days ending on the fifth trading day
prior to the date on which ViewCast gives notice of redemption. The redeemable
warrants will be exercisable until the close of business on the trading day
immediately preceding the date fixed for redemption in such notice. If any
redeemable warrant called for redemption is not exercised by such time, it will
cease to be exercisable and the holder will be entitled only to the redemption
price.
Transfer, Exchange and Exercise. The redeemable warrants are in
registered form and may be presented to Continental Stock Transfer for
transfer, exchange or exercise at any time on or prior to February 4, 2002, at
which time the redeemable warrants become wholly void and of no value. The
holder may sell the redeemable warrants instead of exercising them. There can
be no assurance, however, that a market for the redeemable warrants will
continue.
The redeemable warrants are not exercisable unless, at the time of the
exercise, ViewCast has a current prospectus covering the shares of common stock
issuable upon exercise of the redeemable warrants, and such shares of common
stock have been registered, qualified or deemed to be exempt under the
securities laws of the state of residence of the exercising holder of the
redeemable warrants. Although ViewCast will use its best efforts to have all
the shares of common stock issuable upon exercise of the redeemable warrants
registered or qualified on or before the exercise date and to maintain a
current prospectus relating thereto until the expiration of the redeemable
warrants, there can be assurance that it will be able to do so.
Redeemable warrants were separately transferable immediately upon
issuance. Although the redeemable warrants were not knowingly sold to purchasers
in jurisdictions in which the redeemable warrants were not registered or
otherwise qualified for sale or exemption, purchasers may have bought redeemable
warrants in the after-market in, or may have moved to, jurisdictions in which
redeemable warrants and the common stock underlying the redeemable warrants are
not registered or qualified or exempt. In this event, ViewCast is unable
lawfully to issue common stock to those persons desiring to exercise their
redeemable warrants (and the redeemable warrants would not be exercisable by
those persons) unless and until the redeemable warrants and the underlying
common stock are registered, or qualified for sale in jurisdictions in which
such purchasers reside, or any exemption from registration or qualification
exists in such jurisdiction
15
<PAGE> 18
Warrantholder Not a Stockholder. The redeemable warrants do not confer
upon holders any voting, dividend or other rights as stockholders of ViewCast.
Modification of Redeemable Warrants. ViewCast and Continental Stock
Transfer may make such modifications to the redeemable warrants as they deem
necessary and desirable that do not adversely affect the interests of the
warrant holders. ViewCast may, in its sole discretion, lower the exercise price
of the redeemable warrants for a period of not less than thirty (30) calendar
days on not less than thirty (30) calendar days' prior written notice to the
warrant holders and Network 1 Financial Securities, Inc. Modification of the
number of securities purchasable upon the exercise of any redeemable warrant,
the exercise price and the expiration date with respect to any redeemable
warrant requires the consent of two-thirds of the warrant holders. No other
modifications may be made to the redeemable warrants without the consent of
two-thirds of the warrant holders.
In addition, at March 31, 1999, Network 1 Financial Securities, Inc.
held warrants to purchase 140,000 units at $6.30 per unit, each unit consisting
of one share of common stock and one redeemable common stock purchase warrant
exercisable at $4.19 per share through February 2002.
NON-REDEEMABLE WARRANTS
ViewCast has issued the non-redeemable warrants in connection with
certain notes payable and as compensation for services rendered by various
consultants and a financial consulting firm controlled by an officer, director,
and stockholder of ViewCast.
At March 31, 1999, non-redeemable warrants exercisable into 5,123,436
shares of common stock at prices ranging from $1.00 to $4.50 per share were
exercisable.
PREFERRED STOCK
ViewCast is authorized to issue preferred stock with such
designations, rights and preferences as may be determined from time to time by
the Board of Directors. Accordingly, the Board of Directors is empowered,
without stockholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights which could adversely affect
the voting power or other rights of the holders of the common stock. In the
event of issuance, the preferred stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control of ViewCast.
SERIES A PREFERRED STOCK
ViewCast is authorized to issue up to 500,000 shares of Series A
Convertible Preferred Stock, $.0001 par value of which 340,000 have been issued
and 91,000 were outstanding as of March 31, 1999. Continental Stock Transfer is
the registrar and transfer agent for the Series A Convertible Preferred Stock.
16
<PAGE> 19
Preferences. The Series A Convertible Preferred Stock ranks junior
to all claims of creditors, including holders of ViewCast's outstanding debt
securities (including the Notes and the New Credit Facility), senior to all
classes of common stock and on parity with the Series B Convertible Preferred
Stock as to dividend rights and rights on liquidation, winding-up and
dissolution of ViewCast.
Dividends. Holders of the outstanding shares of Series A Convertible
Preferred Stock are entitled to receive, when, as and if declared by the
Board of Directors of ViewCast, out of funds legally available therefor,
dividends on the Series A Convertible Preferred Stock equal to $0.85 payable
semi-annually in arrears in cash or, at the option of ViewCast, in shares of
common stock valued at the average of the trading price thereof for the twenty
(20) consecutive trading days ending ten (10) trading days prior to the
dividend payment date.
In the event that dividends on preferred stock are in arrears and
unpaid, whether in cash or shares of common stock, for any three (3)
semi-annual dividend periods, holders of Series A Convertible Preferred Stock
will be entitled to certain voting rights. See " -- Voting Rights" below. All
dividends will be cumulative, whether or not earned or declared, from the date
of issuance and will be payable semi-annually in arrears on June 15 and
December 15 of each year.
Under Delaware law, the law of the state of incorporation of ViewCast,
ViewCast may declare and pay dividends or make other distributions on its
capital stock only out of surplus, as defined in the Delaware General
Corporation Law, or, if no surplus is available, out of its net profits for the
fiscal year which the dividend or distribution is declared and the preceding
fiscal year. No dividends or distributions may be declared or paid if ViewCast
is or would be rendered insolvent by virtue of the dividend distribution, or if
the declaration, payment or distribution would contravene ViewCast's Amended
Certificate of Incorporation as then in effect.
Liquidation. Upon any voluntary or involuntary liquidation,
dissolution or winding up of ViewCast, holders of Series A Convertible
Preferred Stock are entitled to be paid, out of the assets of ViewCast
available for distribution to stockholders, the liquidation preference per
share of Series A Convertible Preferred Stock, plus, without duplication, an
amount in cash or shares of Common Stock, at ViewCast's option, equal to all
accumulated and unpaid dividends thereon to the date fixed for liquidation,
dissolution or winding-up (including an amount equal to a prorated dividend for
the period from the last dividend payment date to the date fixed for
liquidation, dissolution or winding-up), before any distribution is made on any
Junior Stock, including, without limitation, any class of common stock of
ViewCast. If, upon any voluntary or involuntary liquidation, dissolution or
winding-up of ViewCast, the amounts payable with respect to the Series A
Convertible Preferred Stock and all parity stock are not paid in full, the
holders of the Series A Convertible Preferred Stock and the Parity Stock will
share equally and ratably in any distribution of assets of ViewCast in
proportion to the full liquidation preference to which each is entitled. After
payment of the full amount of the liquidation preference and accumulated and
unpaid dividends to which they are entitled, the holders of shares of Series A
Convertible Preferred Stock will not be entitled to any further participation
in any distribution of assets of ViewCast. However, neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or
other consolidation) of all or substantially all of the property or
17
<PAGE> 20
assets of ViewCast nor the consolidation or merger of ViewCast with one or more
entities shall be deemed to be a liquidation, dissolution or winding-up of
ViewCast.
Voting Rights. If dividends on the Series A Convertible Preferred
Stock are in arrears and unpaid, whether in cash or shares of common stock, for
any three (3) semi-annual dividend periods then after ten (10) trading days
during which such default shall not have been cured, holders of a majority of
then outstanding shares of Series A Convertible Preferred Stock, voting
separately and as a class (together with the holders of any parity stock having
similar voting rights), will have the right to elect the lesser of two (2)
directors and that number of directors constituting 25% of the members of the
Board of Directors. The number of directors of ViewCast set in its bylaws will
automatically be increased to allow for the election of the new directors. Such
voting rights will continue and the new directors will serve until such time
as, in the case of a dividend default, all dividends in arrears on the Series A
Convertible Preferred Stock are paid in full and any failure, breach or default
giving rise to such voting rights is remedied or waived by the holders of at
least a majority of the shares of Series A Convertible Preferred Stock then
outstanding The voting rights provided herein shall be the holders' exclusive
remedy at law or in equity.
Under Delaware law, holders of the Series A Convertible Preferred
Stock are entitled to vote as a class upon a proposed amendment to the Amended
Certificate of Incorporation, whether or not entitled to vote thereon by
ViewCast's Amended Certificate of Incorporation, if the amendment would increase
or decrease the aggregate number of authorized shares of such class, increase or
decrease the par value of the shares of such class, or alter or change the
powers, preferences, or special rights of the shares of such class so as to
affect them adversely.
Conversion. Each holder of Series A Convertible Preferred Stock has the
right, subject as provided herein and to any applicable laws and regulations, at
any time at the holder's option to convert any or all shares of Series A
Convertible Preferred Stock into common stock at a conversion price (subject to
adjustment) of $3.625 per share of underlying common stock.
ViewCast may, at its option, cause the Series A Convertible Preferred
Stock to be converted into shares of common stock at $3.625 per share at any
time and from time to time after December 16, 1999, if the market price of the
common stock in any thirty (30) consecutive calendar day period commencing on or
after November 17, 1999, has equaled or exceeded $5.80 per share. ViewCast is
required to give notice that it has met the criteria for mandatory conversion
within thirty (30) calendar days of having met such criteria by publication in
the Luxembourg Wort and The Financial Times (European Edition) of London,
England. Upon any mandatory conversion of any Series A Convertible Preferred
Stock by ViewCast, payment will be made by ViewCast in either cash or shares of
Common Stock for dividend accrued during the period from the most recent
dividend payment date to the conversion date. If ViewCast elects to convert less
than all of the Series A Convertible Preferred Stock, Continental Stock Transfer
will select which shares of Series A Convertible Preferred Stock to convert by
lot or such other method as it shall deem fair and appropriate.
18
<PAGE> 21
SERIES B CONVERTIBLE PREFERRED STOCK
ViewCast is authorized to issue up to 1,000,000 shares of Series B
Convertible Preferred Stock, par value $.0001 per share and has issued 945,000
shares to date. ViewCast has filed a Certificate of Designation with respect
thereto with the Secretary of State of the State of Delaware as required by
Delaware law prior to the issuance of the Series B Convertible Preferred Stock.
The liquidation preference of the Series B Convertible Preferred Stock is
$10.00 per share.
Preferences. The Series B Preferred Stock ranks junior to all claims of
creditors, including holders of ViewCast's outstanding debt securities, rank
senior to all classes of common stock and on parity with the Series A
Convertible Preferred Stock as to dividend rights and rights on liquidation,
winding-up and dissolution.
Dividends. Holders of record of the outstanding shares of Series B
Preferred Stock are entitled to receive dividends on the Series B Preferred
Stock at an annual rate equal to $0.80 per share payable semi-annually in
arrears in cash or, at the option of ViewCast, in shares of common stock of
ViewCast, valued at the average trading price of the common stock for the
twenty (20) consecutive trading days ending ten (10) trading days prior to the
dividend payment date.
Voting Rights. The holders of Series B Preferred Stock have no voting
rights.
Conversion. Each holder of shares of Series B Preferred Stock has the
right, subject to any applicable laws and regulations, at any time commencing
one hundred twenty (120) calendar days after February 24, 1999 at the holder's
option to convert each share of Series B Preferred Stock into shares of common
stock at $3.625 per share of underlying common stock (subject to adjustment)
for each $10.00 liquidation value share of Series B Preferred Stock.
ViewCast has the right, at its sole discretion and upon thirty
calendar days written notice to each holder of Series B Preferred Stock, to
cause the Series B Preferred Stock to be converted into shares of common stock
at $3.625 per share of common stock (i) at any time after February 24, 1999, if
the average trading price of the common stock for any twenty (20) trading days
within a period of thirty (30) consecutive trading days has equaled or exceeded
$5.80 or (ii) at any time after February 15, 2002.
Pursuant to the subscription agreement signed by all purchasers of the
Series B Preferred Stock, the total number of shares of common stock into which
the Series B Preferred Stock may be converted may not exceed 20% of the issued
and outstanding common stock of ViewCast without the approval of its
shareholders. ViewCast will seek such approval at its 1999 Annual Meeting of
Shareholders.
Registration Rights. Within 180 calendar days of February 24, 1999,
ViewCast shall use its best efforts to register under the Securities Act of
1933 (the "1933 Act") the shares of common stock underlying the shares of the
Series B Preferred Stock. ViewCast shall use its best
19
<PAGE> 22
efforts to cause such registration to become effective and to keep such
registration current under the 1933 Act.
SELLING SECURITYHOLDERS AND PLAN OF DISTRIBUTION
ViewCast has filed a Registration Statement on Form S-3
registering 8,476,819 shares of common stock issuable upon exercise of the
warrants for offer and sale by persons who exercise the warrants. ViewCast is
paying all expenses in connection with this offering (other than brokerage
commissions and fees and expenses of counsel). Registration of the common stock
issuable upon exercise of the warrants permits the holders of the common stock
to sell their shares in the public secondary market from time to time after the
date of this prospectus. Other than Glenn A. Norem, H.T. Ardinger, Jr., M.
Douglas Adkins, Esq., Robert Moody, Jr., and the Estate of Fred Kassner, none
of the persons offering stock beneficially owns 5% or more of ViewCast's
outstanding common stock.
20
<PAGE> 23
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF COMMON STOCK
PRIOR TO SALE
-------------------------------------- BENEFICIAL
SHARES OWNERSHIP % OWNED
BEFORE SHARES TO BE OF C/S AFTER AFTER
SELLING SHAREHOLDER OFFERING OFFERED TOTAL SALE(1) OFFERING(1)
- ----------------------- -------- ------------ --------- ------------ -----------
<S> <C> <C> <C> <C> <C>
H. T. Ardinger 322,442 1,387,000 1,709,442 322,442 2.38%
Robert Gillings -- 597,650 597,650 -- *
Robert Moody, Jr. 497,251 475,000 972,251 497,251 3.94%
Anthony Bellissimo 6,194 5,000 11,194 6,194 *
Glenn A. Norem 659,017(2) 58,337 717,354 659,017 5.41%
Aileen Mandel -- 6,000 6,000 -- *
M. Douglas Adkins 24,000 627,166 651,166 24,000 *
Fred Kassner 752,397 1,201,666 1,954,063 752,397 5.64%
Catalyst Financial Group -- 5,005 5,005 -- *
Robert M. Sterling, Jr. 25,166(3) 110,869 136,035 25,166 *
Patrick J. Cozzone -- 2,879 2,879 -- *
Lance Murray 214 170 384 214 *
Mark A. Paine 429 339 768 429 *
Robert Rubin -- 61,500 61,500 -- *
A. Starke Taylor, Jr. 83,333 58,332 141,665 83,333 *
Joseph W. Geary 11,831 28,787 40,618 11,831 *
Henry Wendt 2,565 7,565 10,130 2,565 *
William Heim 200,000 50,000 250,000 200,000 1.64%
Greg Garcia -- 18,188 18,188 -- *
Gary Motley -- 9,188 9,188 -- *
June Hanson -- 18,375 18,375 -- *
Richard Pizitz -- 6,667 6,667 -- *
Michael Pizitz -- 10,000 10,000 -- *
John R. Whitman -- 20,000 20,000 -- *
Investor Resource Services -- 33,333 33,333 -- *
Joseph Serrano -- 20,000 20,000 -- *
Laidlaw Global Securities -- 30,000 30,000 -- *
RP&C International, Ltd. 69,888 161,486 231,374 69,888 *
Rauscher Pierce & Refsnes -- 21,622 21,622 -- *
Network 1 Financial -- 290,360 290,360 -- *
Securities, Inc.
Other redeemable warrant -- 3,045,802 3,045,802 -- *
holders
</TABLE>
*Less than 1%
- --------------
(1) Assumes sale of all common stock offered.
(2) Does not include options to purchase 700,000 shares of common stock of
ViewCast.
(3) Does not include options to purchase 100,000 shares of common stock of
ViewCast.
The 8,476,819 shares of common stock being offered pursuant to this
prospectus may be offered and sold from time to time through the Nasdaq
SmallCap Market or in the over-the-counter market, in privately negotiated
transactions, or in combinations of such transactions and may be sold at
current market prices or at negotiated prices. The common stock may be sold by
one or more of the following methods:
21
<PAGE> 24
o a block trade in which a broker or dealer so engaged will attempt to
sell the common stock as agent but may position and resell a portion
of the block as principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this prospectus; and
o face-to-face transactions between sellers and purchasers without a
broker/dealer.
In effecting sales, brokers or dealers engaged by the persons
exercising the warrants may arrange for other brokers or dealers to
participate. Such brokers and dealers and any other participating brokers and
dealers may be deemed to be "Underwriters" within the meaning of the Securities
Act in connection with such sales, and any commissions received by them and
profit on any resale of the common stock might be deemed underwriting discounts
and commissions under the Securities Act. In effecting sales, broker-dealers
engaged by the persons exercising the warrants may arrange for other
broker-dealers to participate. Any broker-dealer participating in any
distribution of the common stock may be required to deliver a copy of this
prospectus, including any supplement to this prospectus, to any person who
purchases any of the common stock from or through such broker or dealer.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for
ViewCast by Thacher Proffitt & Wood, Washington, DC.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-KSB for the year
ended December 31, 1998, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
22
<PAGE> 25
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses payable by the Registrant in connection with
the issuance and distribution of the securities being registered are as
follows:
<TABLE>
<S> <C>
SEC Registration Fee $ 8,473
Accounting Fees and Expenses 10,000
Legal Fees and Expenses 20,000
Miscellaneous Expenses 11,527
--------
Total $ 50,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Articles Seven and Ten of ViewCast's Certificate of Incorporation,
contain the following provisions with respect to indemnification of Directors
and Officers:
SEVENTH. The Corporation shall, to the fullest extent
permitted by Section 145 of the General Corporation Law of the State
of Delaware, as the same may be amended and supplemented, indemnify
any and all persons whom it shall have power to indemnify under said
section from and against any and all of the expenses, liabilities or
other matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of
any other rights to which those indemnified may be entitled under any
By-Law, agreement, vote of stockholders or disinterested Directors or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office, and shall continue as
to a person who has ceased to be director, officer, employee or agent
and shall inure to the benefit of the heirs, executors and
administrators of such a person.
TENTH. To the fullest extent permitted by Delaware General
Corporation Law, a director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director. Neither any amendment nor
repeal of this Article, nor the adopting of any provision of this
Certificate of Incorporation inconsistent with this Article shall
eliminate or reduce the effect of this Article in respect of any
matter occurring, or any cause of action, suite or claim that, but for
this Article would
II - 1
<PAGE> 26
accrue or arise, prior to such amendment, repeal or adoption of an
inconsistent provision.
Section 145 of the General Corporation Law of the State of Delaware
contains provisions entitling directors and officers of ViewCast to
indemnification from judgment, fines, amounts paid in settlement and reasonable
expenses, including attorney's fees, as the result of an action or proceeding
in which they may be involved by reason of being or having been a director or
officer of ViewCast provided said officers or directors acted in good faith.
ViewCast has also entered into indemnification agreements with Messrs.
Norem, Leftwich, Stoner, Oakes, Jobe, Johnson, Autem, Culp, Sterling and
Bernardi which provide for the indemnification of said officers and directors
(former directors in the case of Messrs. Culp, Sterling, Bernardi and Oakes) to
the fullest extent allowable under the laws of the State of Delaware.
ITEM 16. EXHIBITS
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF EXHIBIT SEQUENTIAL
PAGE NO. PAGE NO.
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
2 Agreement and Plan of Merger and Reorganization (1)
3(a) Certificate of Incorporation (1)
3(b) Amendment to Certificate of Incorporation (1)
3(c) Restated By-Laws (1)
3(d) Certificate of Designations of Series B Convertible Series A Convertible Preferred Stock (1)
4(a) Form of Common Stock Certificate (1)
4(b) Form of Warrant Certificate (1)
4(c) Form of Warrant Agreement between ViewCast and Continental Stock Transfer & Trust Company (1)
4(d) Form of Representative's Warrant Agreement (1)
4(e) Form of Trust Indenture - $5,000,000 8% Senior Convertible Notes Due 2002 (1)
4(f) Form of Lead Managers Warrant Agreement (1)
5(a) Form of Opinion of Thacher Proffit & Wood as to the legality of securities being registered.
9(a) Voting Trust Agreement between Robert M. Sterling, Jr. and Thomas E. Brown (1)
9(b) Voting Trust Agreement between Robert P. Bernardi and Richard Bernardi (1)
</TABLE>
II - 2
<PAGE> 27
<TABLE>
<S> <C> <C>
9(c) Form of Lock-Up Agreement (1)
9(d) Lock-Up Agreement with Robert Sterling Trust (1)
9(e) Lock-Up Agreement with Robert Bernardi Trust (1)
9(f) Lock-Up Agreement with Michael Nissenbaum (1)
10(a) Modified Employment Agreement between ViewCast and Glenn A. Norem (1)
10(b) Modified Consulting Agreement between ViewCast and Sterling Capital Group Inc. (1)
10(c) Form of Indemnification Agreement between ViewCast and Executive Officers and
Directors (1)
10(d) 1995 Stock Option Plan (1)
10(e) 1994 Stock Option Plan (1)
10(f) 1993 Viewpoint Stock Plan (1)
10(g) 1995 Director Option Plan (1)
10(h) Lease Agreement between ViewCast and Metro Squared, L P (1)
10(i) Employee Stock Purchase Plan (1)
10(j) Licensing Agreement between ViewCast and Boca Research, Inc. (1)
10(k) Agreement between ViewCast and Unisys(TM)(1)
10(l) Employment Agreement between ViewCast and Philip M. Colquhoun (1)
10(m) Employment Agreement between ViewCast and William S. Leftwich (1)
10(n) Employment Agreement between ViewCast and David T. Stoner (1)
10(o) Employment Agreement between ViewCast and Neal Page (1)
10(p) Employment Agreement between ViewCast and A. David Boomstein (1)
10(q) Lease between ViewCast and Burlingame Home Office, Inc. (1)
10(r) Lease between ViewCast and Family Funds Partnership (1)
10(s) Agreement between ViewCast and Catalyst Financial Corporation (1)
10(t) Promissory Note by ViewCast payable to Robert Rubin dated September 5, 1996. (1)
10(u) Promissory Note by ViewCast payable to M. Douglas Adkins dated November 15, 1996. (1)
10(v) Promissory Note by ViewCast payable to H.T. Ardinger dated November 15, 1996. (1)
10(w) Promissory Note by ViewCast payable to H.T. Ardinger dated January 15, 1997. (1)
10(x) Promissory Note by ViewCast payable to Adkins Family Partnership, Ltd. dated January
15, 1997. (1)
10(y) Lease between ViewCast and the Air Force Association. (1)
</TABLE>
II - 3
<PAGE> 28
<TABLE>
<S> <C>
10(z) Lease between ViewCast and Airport Boulevard Partners, LLC. (1)
10(aa) Stock Purchase Agreement between ViewCast and Tadeo Holdings, Inc. (1)
10(bb) Working Capital Line of Credit Loan Agreement by ViewCast payable to the Ardinger
Family Partnership, Ltd. (1)
21 List of Subsidiaries of ViewCast (1)
23 Consent of Ernst & Young LLP
27 Financial Data Schedule
</TABLE>
(1) Incorporated by reference to the Registration Statement on Form SB-2
and all amendments thereto as declared effective on February 4, 1997
and to Forms 10-KSB and Form 8-K filed March 31,1998 and November 30,
1998, respectively.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement to: (i) Include any
prospectus required by Section 10(a) (3) of the
Securities Act; (ii) Reflect in the prospectus any
facts or events which, individually or together,
represent a fundamental change in the information in
the registration statement and, (iii) Include any
additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act,
treat each post-effective amendment as a new
registration statement of the securities offered,
and the Offering of the securities at that time to
be the initial bona fide offering.
(3) File a post-effective amendment to remove from
registration any of the securities that remain
unsold at the end of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be
permitted to directors, officers and controlling persons of
the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful
defense of any action, suit or
II - 4
<PAGE> 29
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 Securities Act and will be governed by
the final adjudication of such issue.
II - 5
<PAGE> 30
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form S-3 and authorized this registration
statement to be signed on its behalf by the undersigned, in the County of
Dallas, in the State of Texas on the ___ day of May, 1999.
ViewCast.com, Inc.
By: /s/ William S. Leftwich
--------------------------
William S. Leftwich
Chief Financial Officer
KNOW ALL MEN BY THESE PRESENT, that each person whose signature
appears below constitutes and appoints William S. Leftwich, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign
any and all amendments (including 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, granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as full to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or either of them or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933,
this Registration Statement was signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
William D. Jobe Director, Chief Executive May 6, 1999
/s/ William D. Jobe Officer
William S. Leftwich Chief Financial Officer May 6, 1999
/s/ William S. Leftwich
Glenn A. Norem Director May 6, 1999
/s/ Glenn A. Norem
William Johnson Director May 6, 1999
/s/ William Johnson
Joseph Autem Director May 6, 1999
/s/ Joseph Autem
H.T. Ardinger, Jr. Chairman of the Board of May 6, 1999
/s/ H.T. Ardinger, Jr. Directors
</TABLE>
II - 6
<PAGE> 31
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF EXHIBIT SEQUENTIAL
PAGE NO. PAGE NO.
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
2 Agreement and Plan of Merger and Reorganization (1)
3(a) Certificate of Incorporation (1)
3(b) Amendment to Certificate of Incorporation (1)
3(c) Restated By-Laws (1)
3(d) Certificate of Designations of Series B Convertible Series A Convertible Preferred Stock (1)
4(a) Form of Common Stock Certificate (1)
4(b) Form of Warrant Certificate (1)
4(c) Form of Warrant Agreement between ViewCast and Continental Stock Transfer & Trust Company (1)
4(d) Form of Representative's Warrant Agreement (1)
4(e) Form of Trust Indenture - $5,000,000 8% Senior Convertible Notes Due 2002 (1)
4(f) Form of Lead Managers Warrant Agreement (1)
5(a) Form of Opinion of Thacher Proffit & Wood as to the legality of securities being registered.
9(a) Voting Trust Agreement between Robert M. Sterling, Jr. and Thomas E. Brown (1)
9(b) Voting Trust Agreement between Robert P. Bernardi and Richard Bernardi (1)
</TABLE>
<PAGE> 32
<TABLE>
<S> <C> <C>
9(c) Form of Lock-Up Agreement (1)
9(d) Lock-Up Agreement with Robert Sterling Trust (1)
9(e) Lock-Up Agreement with Robert Bernardi Trust (1)
9(f) Lock-Up Agreement with Michael Nissenbaum (1)
10(a) Modified Employment Agreement between ViewCast and Glenn A. Norem (1)
10(b) Modified Consulting Agreement between ViewCast and Sterling Capital Group Inc. (1)
10(c) Form of Indemnification Agreement between ViewCast and Executive Officers and
Directors (1)
10(d) 1995 Stock Option Plan (1)
10(e) 1994 Stock Option Plan (1)
10(f) 1993 Viewpoint Stock Plan (1)
10(g) 1995 Director Option Plan (1)
10(h) Lease Agreement between ViewCast and Metro Squared, L P (1)
10(i) Employee Stock Purchase Plan (1)
10(j) Licensing Agreement between ViewCast and Boca Research, Inc. (1)
10(k) Agreement between ViewCast and Unisys(TM)(1)
10(l) Employment Agreement between ViewCast and Philip M. Colquhoun (1)
10(m) Employment Agreement between ViewCast and William S. Leftwich (1)
10(n) Employment Agreement between ViewCast and David T. Stoner (1)
10(o) Employment Agreement between ViewCast and Neal Page (1)
10(p) Employment Agreement between ViewCast and A. David Boomstein (1)
10(q) Lease between ViewCast and Burlingame Home Office, Inc. (1)
10(r) Lease between ViewCast and Family Funds Partnership (1)
10(s) Agreement between ViewCast and Catalyst Financial Corporation (1)
10(t) Promissory Note by ViewCast payable to Robert Rubin dated September 5, 1996. (1)
10(u) Promissory Note by ViewCast payable to M. Douglas Adkins dated November 15, 1996. (1)
10(v) Promissory Note by ViewCast payable to H.T. Ardinger dated November 15, 1996. (1)
10(w) Promissory Note by ViewCast payable to H.T. Ardinger dated January 15, 1997. (1)
10(x) Promissory Note by ViewCast payable to Adkins Family Partnership, Ltd. dated January
15, 1997. (1)
10(y) Lease between ViewCast and the Air Force Association. (1)
</TABLE>
<PAGE> 33
<TABLE>
<S> <C> <C>
10(z) Lease between ViewCast and Airport Boulevard Partners, LLC. (1)
10(aa) Stock Purchase Agreement between ViewCast and Tadeo Holdings, Inc. (1)
10(bb) Working Capital Line of Credit Loan Agreement by ViewCast payable to the Ardinger
Family Partnership, Ltd. (1)
21 List of Subsidiaries of ViewCast (1)
23 Consent of Ernst & Young LLP
27 Financial Data Schedule
</TABLE>
(1) Incorporated by reference to the Registration Statement on Form SB-2
and all amendments thereto as declared effective on February 4, 1997
and to Forms 10-KSB and Form 8-K filed March 31,1998 and November 30,
1998, respectively.
<PAGE> 1
EXHIBIT 5(a)
May 5, 1999
ViewCast.com, Inc.
2665 Villa Creek Drive
Suite 200
Dallas, TX 75234
Re: Registration Statement on Form S-8
----------------------------------
Dear Sirs:
We have acted as counsel for ViewCast.com, Inc., a Delaware corporation
(the "Company"), in connection with the filing of a registration statement on
Form S-3 under the Securities Act of 1933, as amended ("Registration Statement")
with respect to shares of its common stock, par value $0.0001 per share, of
which 6,770,281 shares are authorized but unissued shares which have been
reserved for issuance upon the exercise of warrants issued by the Company (the
"Original Issue Shares") and 1,706,558 shares have been issued upon the exercise
of such warrants (the "Outstanding Shares").
We have examined originals or copies, certified or otherwise identified,
of such documents, corporate records and other instruments as we have deemed
necessary or advisable for purposes of this opinion. As to matters of fact, we
have examined and relied upon the warrants described above and, where we have
deemed appropriate, representations or certificates of officers of the Company
or public officials. We have assumed the authenticity of all documents
submitted to us as originals, the genuineness of all signatures, the legal
capacity of natural persons and the conformity to the originals of all
documents submitted to us as copies.
Based on the foregoing, we are of the opinion that (i) the Original Issue
Shares that are
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of ViewCast.com, Inc.
for the registration of 8,476,819 shares of its common stock and to the
incorporation by reference therein of our report dated February 25, 1999, with
respect to the consolidated financial statements of ViewCast.com, Inc. included
in its Annual Report (Form 10-KSB) for the year ended December 31, 1998, filed
with the Securities and Exchange Commission.
ERNST & YOUNG LLP
DALLAS, TEXAS
May 5, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF VIEWCAST.COM, INC. AND SUBSIDIARIES AS OF DECEMBER
31, 1998 AND THE RELATED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR THEN
ENDED, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 439,791
<SECURITIES> 0
<RECEIVABLES> 2,663,283
<ALLOWANCES> 823,500
<INVENTORY> 3,110,588
<CURRENT-ASSETS> 9,449,060
<PP&E> 2,313,706
<DEPRECIATION> 931,662
<TOTAL-ASSETS> 13,611,590
<CURRENT-LIABILITIES> 7,996,282
<BONDS> 0
0
73
<COMMON> 1,132
<OTHER-SE> 4,254,103
<TOTAL-LIABILITY-AND-EQUITY> 13,611,590
<SALES> 7,876,233
<TOTAL-REVENUES> 8,027,948
<CGS> 4,181,128
<TOTAL-COSTS> 4,181,128
<OTHER-EXPENSES> 4,017,329
<LOSS-PROVISION> 771,596
<INTEREST-EXPENSE> 877,873
<INCOME-PRETAX> (9,542,638)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,542,638)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,542,638)
<EPS-PRIMARY> (1.02)
<EPS-DILUTED> (1.02)
</TABLE>
