<PAGE> 1
File Pursuant to Rule 424(b)(3)
Registration No. 333-35662
VIEWCAST.COM, INC.
2,772,904 SHARES OF COMMON STOCK
ViewCast.com, Inc. is registering 2,606,896 shares of common stock, par value
$.0001 per share, underlying 945,000 shares of Series B Convertible Preferred
Stock ("Series B Preferred Stock"). Each share of Series B Preferred Stock is
convertible to common stock at a conversion price of $3.625 per share for each
$10.00 liquidation value of Series B Preferred Stock. ViewCast is also
registering 126,008 shares of common stock issued as dividends on the Series B
Preferred Stock as well as 10,000 shares of common stock underlying warrants
held by Damon Testaverde and 30,000 shares of common stock underlying warrants
held by W.R. Consulting, Inc. received as compensation for services rendered in
connection with the offering of Series B Preferred Stock. 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 any new proceeds from the conversion of the Series B Preferred Stock to
common stock, but received gross proceeds of $9,450,000 from the issuance of the
Series B Preferred Stock in December 1998 through February 1999. ViewCast will
receive proceeds of up to $145,000 from the exercise of warrants (to the extent
the warrants are exercised). Our common stock is listed on the Nasdaq SmallCap
Market under the symbol "VCST."
---------------------------------------------------------------
TERMS OF THE OFFERING
Number of Shares............................ 2,772,904
Underwriting commissions and expenses....... $ 109,500
Net proceeds to ViewCast.................... $ 10,158,377
Net proceeds per share to ViewCast.......... $ 3.66
---------------------------------------------------------------
PLEASE READ THE RISK FACTORS BEGINNING ON PAGE 7.
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.
THE DATE OF THIS PROSPECTUS IS MAY 23, 2000
<PAGE> 2
WHERE YOU CAN FIND ADDITIONAL INFORMATION
ViewCast.com, Inc. ("ViewCast") files annual, quarterly and other
special reports with the Securities and Exchange Commission (the "SEC"). 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."
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.
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.
Our 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.
2
<PAGE> 3
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, 1999, including any documents or portions thereof incorporated by
reference therein and all amendments thereto;
2. ViewCast's Quarterly Report on Form 10-Q for the quarter ended March
31, 2000, including any documents or portions thereof incorporated by reference
therein and all amendments thereto;
3. ViewCast's Current Report on 8-K dated May 5, 2000, including any
documents or portions thereof incorporated by reference therein and all
amendments thereto; and
4. 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.
3
<PAGE> 4
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, 1999, AND OTHER DOCUMENTS INCORPORATED BY REFERENCE IN THIS
PROSPECTUS.
OVERVIEW
ViewCast enables video communication over the Internet and other
networks through vertically-integrated components, systems, and turnkey solution
products and services. We are a leading global provider of enterprise-wide,
digital video communication solutions for both real-time and on-demand
applications. We deliver innovative networked video solutions, as well as
systems that can work with legacy video communication equipment. Our Osprey(R)
video capture cards and codecs, ViewCast(R) Encoding and Streaming Video System
and Viewpoint VBX(TM) System products deliver a wide array of video solutions
for both digital and analog video communication systems.
As a new initiative in the year 2000, we have added video content
hosting services and will be providing professional services to meet the growing
demand from public and private sector enterprises to add or extend video
communications internally and externally. One of our hosting services,
"YourVideoOnTheWeb(TM)", is a consumeR product designed to bring streaming media
capabilities to home users and small businesses enabling them to add video
content to their web sites.
Our customers acquire our solutions and products to enhance
communication and productivity, reduce costs and increase customer service
within corporations, educational networks, healthcare facilities, financial
institutions and government agencies, as well as between those entities, their
customers, vendors and others with whom they may communicate. Our customers use
our products to enable them to broadcast video over computer networks (streaming
video), deliver video from web sites (on-demand streaming video), provide
interactive video communication (video conferencing), and distribute video
within a network. We market, install and support our products either directly or
through arrangements with leading OEMs, system integrators, leading resellers
and application developers worldwide.
To reflect the growing importance of the Internet as a means of
transmitting video, on April 8, 1999, we changed our name to ViewCast.com, Inc.
from MultiMedia Access Corporation. As part of a strategic emphasis on sales,
marketing and strategic planning, we added three senior executives within the
last five months: President and Chief Executive Officer George C. Platt; Senior
Vice President of Sales and Marketing Harry E. Bruner; and Chief Financial
Officer Laurie L. Latham. These executives are now leading the organization
along with certain of our continuing executives, including Neal Page, Vice
President/General Manager of Osprey(R) Technologies Division and David T.
Stoner, Vice President of Operations. These management changes reflect our
commitment to the new strategies formulated for our existing and new markets.
4
<PAGE> 5
INDUSTRY BACKGROUND
Technology has merged with current business dynamics causing
unprecedented potential for growth and revenue, an increased likelihood for
confusion, and new challenges to compete and sustain position. As reported by
the 1999 Information Week Magazine Annual IT Survey, "Companies are more
aggressive than ever about adopting and deploying leading edge technologies --
based solely on the fear of being left behind."
Within this environment, we believe businesses will increasingly seek
expert support to reduce confusion and to present solutions to their business
challenges. We believe that to meet these business challenges, there will be
increased usage of video communication products and services.
OUR SOLUTION
As a vertically integrated provider, ViewCast provides video and media
solutions to our customers. We provide:
o TECHNOLOGY -- Our technology provides a competitive edge allowing us
to differentiate our products from those of our competitors and
increasing our ability to develop customer driven applications.
o PRODUCTS AND APPLICATIONS -- Our products consist of Video Subsystems,
such as capture cards and codecs for encoding, decoding and streaming,
and Video Systems solutions for digital and analog video applications.
We manufacture and distribute worldwide our Osprey(R) video capture
cards and codecs, ViewCast(R) Streaming Video solutions and Viewpoint
VBX(TM) Systems. YourVideoOnTheWeb(TM) is a consumer Product used to
encode video from a camcorder or VCR.
o EXPERTISE AND SERVICES -- Our comprehensive video expertise enables us
to assist customers in identifying their communication needs and
determine appropriate media mechanisms for their business
requirements. Once established, our professional service organization
will complement our sales engineering and training organization by
offering broader customer solutions and support services. A
significant addition will be our content hosting service (ViewCast
Online(TM)).
5
<PAGE> 6
BUSINESS STRATEGY
Our objective is to be the world's premier supplier of products,
services and solutions for networked video applications. Key elements of our
strategy include:
o EXTEND PRODUCT OFFERINGS BUILDING ON OUR LEADERSHIP IN THE STREAMING
VIDEO MARKET
o PROVIDE VIDEO COMMUNICATION SYSTEM AND APPLICATION SOLUTIONS
o ESTABLISH CONTENT HOSTING SERVICES
o PROVIDE PROFESSIONAL SERVICES
o EXPAND AND LEVERAGE OUR STRATEGIC PARTNERSHIPS
o EXPAND SALES, MARKETING, AND CHANNEL DEVELOPMENT EFFORTS
o DEVELOP WORLDWIDE BRAND RECOGNITION
OUR PRODUCTS AND SERVICES
We currently provide and intend to expand the following product
families:
VIDEO SUBSYSTEMS VIDEO SYSTEM SOLUTIONS
Osprey(R)video capture cards and codecs ViewCast(R)Streaming Video
Viewpoint VBX(TM)
We are in the process of establishing the following new services:
PROFESSIONAL SERVICES CONTENT HOSTING SERVICES
YourVideoOnTheWeb(TM)
ViewCast Online(TM)
---------------
We were incorporated in Delaware in February 1994. Unless otherwise
indicated, references in this Prospectus to us include our wholly-owned
subsidiaries. Our principal executive offices are located at 2665 Villa Creek
Drive, Suite 200, Dallas, Texas 75234, our telephone number is (972) 488-7200
and our fax number is (972) 488-7299.
For further information regarding ViewCast, its business, operations
and management, see ViewCast's 1999 Annual Report on Form 10-KSB, incorporated
herein by reference.
6
<PAGE> 7
RISK FACTORS
You should consider carefully the following risk factors before deciding
whether to invest in our common stock.
WE HAVE SIGNIFICANT DEBT AND MAY NOT BE ABLE TO MEET OUR OBLIGATIONS.
As of April 30, 2000, we had outstanding borrowings under a secured
line of credit in the aggregate principal amount of $2,408,827. This one-year
renewable line of credit for up to $9,000,000 is with an entity controlled by a
director and principal stockholder of ViewCast. The line of credit facility
bears interest at 12% and is due October 22, 2000 unless extended. In addition,
on April 28, 2000, we sold $4,450,000 aggregate principal amount of 7% Senior
Convertible Debentures due 2004 (the Debentures) in order to finance our
operations. We may incur additional indebtedness in the future to meet our
working capital needs.
Our indebtedness has several important consequences to our
stockholders, including, but not limited to, the following:
o we may be unable to obtain additional or replacement financing for
working capital, capital expenditures, acquisitions and general
corporate purposes;
o a significant portion of our cash flow from operations must be
dedicated to the repayment of the indebtedness, thereby reducing the
amount of cash we have available for other purposes;
o we may be disadvantaged as compared to our competitors as a result of
the significant amount of debt we now owe;
o our ability to adjust to changing market conditions and our ability to
withstand competition may be hampered by the amount of debt we now
owe, and it may also make us more vulnerable in a downtrend market;
o our debt position and the covenants contained in certain of our loan
documents could limit our ability to expand our business and take
advantage of certain business opportunities; and
o our debt position may make us more vulnerable to economic downturns,
limit our ability to withstand competitive pressures, and reduce our
flexibility in responding to changing business and economic
conditions.
Our ability to pay interest and principal on the secured line of credit
and the Debentures will depend upon our future operating performance, which will
be affected by prevailing
7
<PAGE> 8
economic conditions and financial, business and other factors, certain of which
are beyond our control. If we are unable to service our debt, we will be forced
to pursue one or more alternative strategies such as selling assets, curtailing
any expansion, restructuring or refinancing our indebtedness, or seeking
additional equity capital. We cannot assure you that any of these strategies
could be effected on terms satisfactory to us, if at all.
WE HAVE GENERATED LIMITED REVENUE AND HAVE EXPERIENCED SIGNIFICANT LOSSES. THESE
TRENDS MAY CONTINUE FOR THE FORESEEABLE FUTURE.
We have in the past generated limited revenue and significant losses.
For the years ended December 31, 1999 and 1998, respectively, we generated
revenues of $7,270,080 and $8,027,948 and incurred losses of $8,473,674 and
$9,366,693. We anticipate that losses will continue for the foreseeable future.
In addition, our future revenues and profits or losses could be influenced by
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.
At December 31, 1999, we 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
ownership changes, as defined in Section 382. In the event we achieve profitable
operations, any significant limitation on the utilization of net operating loss
carry forwards would have the effect of increasing our tax liability and
reducing net income and available cash resources.
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.
Since 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 ability to compete will depend in
large part on our ability to:
o introduce products in a timely manner;
o continually enhance and improve our systems and software products;
o maintain development capabilities;
8
<PAGE> 9
o anticipate or adapt to technological changes and advances in the video
communication and PC industries; and
o 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.
FLUCTUATIONS IN OPERATING RESULTS COULD CONTINUE IN THE FUTURE.
Our operating results may vary from period to period as a result of the
length of our sales cycle, purchasing patterns of potential customers, the
timing of the introduction of new products, software applications and product
enhancements by us and our competitors, technological factors, variations in
sales by distribution channels, timing of stocking orders by resellers,
competitive pricing, and generally nonrecurring system sales. Our sales order
cycle ranges from one to eighteen months, depending on the customer. The period
from the execution of a purchase order until delivery of system components to
us, assembly and shipment, at which time we recognize revenue, may range from
approximately one to four months. These factors may cause significant
fluctuations in operating results in the future.
WE NEED SIGNIFICANT CAPITAL TO OPERATE OUR BUSINESS AND MAY REQUIRE ADDITIONAL
FINANCING. IF WE CANNOT OBTAIN SUCH ADDITIONAL FINANCING, WE MAY NOT BE ABLE TO
CONTINUE OUR OPERATIONS.
We need significant capital to design, develop and commercialize our
products. Currently available funds may be insufficient to fund operations and
growth. We believe that we have cash, cash equivalents and marketable securities
on hand to meet our working capital requirements for the next twelve months.
During the remainder of 2000, we expect to significantly increase our sales,
marketing and public relations efforts to promote both our new and existing
product offerings. Depending on future business opportunities, product
development, marketing requirements and sales performance, our plans may change
or prove to be inaccurate. If we are unable to obtain additional financing, we
may be required to curtail our activities. Additional financing may involve
substantial dilution to the interests of our existing stockholders. Such
financing may include the issuance of convertible debt, convertible preferred
stock or other equity or debt securities in exchange for a cash investment in
us.
THERE ARE INHERENT RISKS AS WE CONTINUE TO DEVELOP AND MARKET OUR PRODUCTS.
Product development, commercialization and continued system refinement
and enhancement efforts remain subject to all risks inherent in the development
of new products
9
<PAGE> 10
based on innovative technologies, including unanticipated delays, expenses and
technical problems or difficulties, as well as the possible insufficiency of
funds to implement development efforts, any one of which could result in
abandonment or substantial change in product commercialization. Our success will
be largely dependent upon, among other things, our products meeting targeted
cost and performance objectives of large-scale production, our ability to adapt
our products to satisfy industry standards and the timely introduction of our
products into the marketplace. There can be no assurance that, upon wide-scale
commercial introduction, our new products and software applications will satisfy
current price or performance objectives, that unanticipated technical or other
problems resulting in increased costs or material delays in introduction and
commercialization will not occur, or that our current products and our future
products will prove to be sufficiently reliable or durable under actual
operating conditions or otherwise be commercially viable. Software and other
technologies as complex as those incorporated into our systems may contain
errors which become apparent subsequent to widespread commercial use. Remedying
such errors could delay our plans and cause us to incur additional costs, having
a material adverse impact on us.
WE MAY NOT BE ABLE TO COMMERCIALIZE SUCCESSFULLY ALL OF OUR PRODUCTS. IF WE
CANNOT DO SO, LOSSES WILL CONTINUE OR INCREASE.
Our ability to reduce our losses or make profits is dependent upon the
successful commercialization of our products. We 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 us from successfully commercializing our products, we will
experience continued or increased losses.
IF WE CANNOT SUCCESSFULLY EXPAND OUR OPERATIONS, WE WILL CONTINUE TO INCUR
SIGNIFICANT LOSSES.
Successful expansion of our operations will be dependent, among other
things, on our ability to develop and maintain significant market acceptance for
our products, hire and retain skilled management, marketing, technical and other
personnel, develop and maintain 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).
We may also seek to expand our 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 sales
and operations or if we remain largely dependent on a limited customer base, we
will continue to incur significant losses.
10
<PAGE> 11
WE COULD EXPERIENCE INCREASED LOSSES DUE TO POTENTIAL CREDIT LOSSES.
Most of our sales are made 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. Although such losses in the
aggregate have not exceeded management's expectations, potential credit losses
may exceed the amount reserved for such losses, harm our profitability and cause
increased losses in the future.
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. We compete with numerous well-established manufacturers and
suppliers of video conferencing, networking, telecommunications and multimedia
equipment and products. Most of our competitors possess substantially greater
financial, marketing, personnel and other resources than we do, 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 our direct competitors are Zydacron, Inc., VCON, Ltd., Winnov,
L.P., First Virtual Corporation, Picturetel Corporation, Video Network
Communications, Inc., VTEL Corporation, Pinnacle Systems, Inc., Tandberg Inc.,
and Polycom, Inc. In addition, electronics manufacturers such as Intel Corp. and
Cisco Systems, Inc. actively compete for business in this market. Our
profitability depends upon our ability to successfully compete in our market.
OUR FUTURE PROFITS OR LOSSES DEPEND ON THE EFFORTS OF THIRD PARTY RESELLERS,
MANUFACTURERS AND SUPPLIERS. THESE RELATIONSHIPS MAY NOT CONTINUE.
We use a network of resellers, consisting primarily of value-added
resellers (VARs), systems integrators and original equipment manufacturers
(OEMs) with established distribution channels to assist in the marketing of our
products and to educate potential resellers to install and service our systems.
Our future profits or losses depend on our ability to maintain and 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 to contract with additional resellers
could damage our profitability or cause additional losses.
We also depend on contract manufacturers to supply our 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 been and will continue
11
<PAGE> 12
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.
WE ARE SUBJECT TO GOVERNMENT REGULATION WHICH MAY IMPOSE ADVERSE COMPLIANCE
BURDENS.
We are subject to regulations relating to electromagnetic radiation
from our products, which impose compliance burdens on us. In the event we
redesign or otherwise modify our products or complete the development of new
products, we will be required to comply with Federal Communications Commission
regulations with respect to such products prior to their commercialization.
There can be no assurance that we will be able to comply with such regulations.
In addition, new legislation and regulations, as well as revisions to existing
laws and regulations at the federal, state and local levels may be proposed in
the future affecting the video communications industries. Such proposals could
affect our operations, result in material capital expenditures, affect the
marketability of our products and limit opportunities for us with respect to
modification of our products or with respect to the development and proposal of
new products or technologies. Our foreign markets require us to comply with
additional regulatory requirements.
The technology contained in our products may be subject to U.S. export
controls. There can be no assurance that such export controls, either in their
current form or as may be subsequently enacted, will not delay introduction of
new products or limit our ability to distribute products outside of the U.S.
Further, various countries may regulate the import of certain technologies
contained in our products. Such export or import restrictions, new legislation
or regulation or government enforcement of existing regulations could have a
material adverse effect on our business, operating results or financial
condition. There can be no assurance that we will be able to comply with
additional applicable laws and regulations without excessive cost or business
interruption, if at all, and failure to comply could have a similarly material
adverse effect.
THE LIMITED MARKET ACCEPTANCE OF VIDEO COMMUNICATIONS SYSTEMS MAY REQUIRE US TO
SPEND SUBSTANTIAL TIME AND EXPENSE MARKETING OUR PRODUCTS.
The relatively high cost and less than television broadcast quality of
video communications systems have historically limited the market acceptance of
video
12
<PAGE> 13
communication systems. Potential customers may therefore elect to utilize other
products which they believe to be more efficient or have other advantages over
our products. This may require us to spend substantial time and effort and incur
significant expense to increase awareness and generate demand by potential
consumers as to the perceived benefits and distinctive characters of our
products in order to market successfully our products. If we cannot market
successfully our products, we will suffer additional losses.
WE HAVE A SMALL CUSTOMER BASE.
We make a substantial portion of our sales to a small number of
customers. A loss of our sales to these customers may result in lower revenues
and increased losses.
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. Key personnel include George C. Platt-President and Chief Executive
Officer, Laurie L. Latham-Chief Financial Officer, Harry E. Bruner-Senior Vice
President of Sales and Marketing, Frederick B. Cowen-Vice President-Controller,
David T. Stoner-Vice President of Operations and Neal S. Page-Vice President and
General Manager of Osprey. All key employees, with the exception of Mr. Platt
who has executed an 18-month employment contract, are "at-will" employees. The
employment of each "at will" employee may therefore be terminated by the officer
or us 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.
OUR INABILITY TO PROTECT OUR PATENTS, TRADEMARKS AND PROPRIETARY INFORMATION
COULD HARM OUR PROFITABILITY.
We hold a U.S. patent covering certain aspects of our compressed packet
video codec. We have registered trademarks for the WorkFone(R), Osprey(R),
ViewCast(R), Viewpoint Pro(R), Personal Viewpoint(R), Multimedia Access
System(R), Call Wizard(R), Compressed Pocket Video (CPV)(R) and SLIC-Video(R)
names and have applied for trademark registration for the YourVideoOnTheWeb(TM),
Viewpoint VBX(TM), QVideo(TM), Mediapoint(TM), Conference Wizard(TM),
Envista(TM), and Viewport(TM) names.
Our profitability will be harmed if our current or any 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 us. 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.
13
<PAGE> 14
RECENT VOLATILITY IN THE STOCK MARKET COULD ADVERSELY AFFECT THE TRADING PRICE
OF OUR COMMON STOCK.
Publicly traded stocks, including our common stock, 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 us 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.
THE EXERCISE OF OUTSTANDING WARRANTS AND OPTIONS, THE CONVERSION OF SERIES B
PREFERRED STOCK OR CONVERSION OF DEBENTURES COULD SIGNIFICANTLY DILUTE THE
OWNERSHIP INTERESTS OF CURRENT STOCKHOLDERS AND PREVENT A CHANGE IN CONTROL.
As of April 30, 2000, there were outstanding:
o stock options to purchase an aggregate of approximately 2,851,480
shares of common stock at exercise prices ranging from $1.7656 to
$9.00 per share;
o redeemable warrants to purchase an aggregate of 4,097,859 common
shares at $4.19 per share;
o non-redeemable warrants to purchase an aggregate of 1,074,468 common
shares at exercise prices ranging from $3.00 to $6.30 per share;
o $9.45 million principal amount of Series B Preferred Stock convertible
into 2,606,896 common shares at $3.625 per share;
o $4.45 million principal amount of Debentures convertible into 890,000
common shares at $5.00 per share (subject to adjustment in certain
circumstances).
To the extent that outstanding options and warrants are exercised and
Series B Preferred Stock and Debentures are converted, the percentage ownership
of common stock of our stockholders will be diluted.
CERTAIN PROVISIONS OF OUR CHARTER AND DELAWARE LAW MAY HAVE ANTI-TAKEOVER
EFFECTS.
The terms of our Certificate of Incorporation, as amended, and our
ability to issue up to 5,000,000 shares of "blank check" preferred stock may
have the effect of discouraging proposals by third parties to acquire a
controlling interest in ViewCast, which could deprive stockholders of the
opportunity to consider an offer to acquire their shares at a premium. In
addition, under certain conditions, Section 203 of the Delaware General
Corporate Law would impose a three-year moratorium on certain business
combinations between us and an "interested stockholder" (in
14
<PAGE> 15
general, a stockholder owning 15% or more of a corporation's outstanding voting
stock). The existence of such provisions may have a depressive effect on the
market price of our common stock in certain situations.
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 Small Cap Market. In order to
continue to be listed on Nasdaq, we 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. Our failure to meet
these maintenance criteria in the future may result in the delisting of our
common stock from Nasdaq. In the event that our common stock were delisted, any
trading in the common stock 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, our common stock.
NO DIVIDENDS HAVE BEEN PAID OR ARE EXPECTED TO BE PAID ON OUR COMMON STOCK.
We have not paid any cash dividends on our common stock and do not
expect to declare or pay any cash dividends in the foreseeable future. Certain
of our debt agreements require the consent of the lender for the payment of
dividends. We cannot assure you that if we decide to pay cash dividends on our
common stock we will be able to obtain the necessary consents.
HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING
ViewCast will not receive any new proceeds from the conversion of the
Series B Preferred Stock to common stock, but received gross proceeds of
$9,450,000 from the issuance of the Series B Preferred Stock in December 1998
through February 1999. Proceeds from the exercise of warrants, to the extent
they are exercised, will be used for working capital and general corporate
purposes.
Dividends on the Series B Preferred Stock accrue at the annual rate of
$0.80 per share and are payable semi-annually in cash, or at the option of
ViewCast, in shares of common stock of ViewCast. To date ViewCast has opted to
issue common stock to offset accrued dividends on the Series B Preferred Stock
in the amount of $672,877.
15
<PAGE> 16
DETERMINATION OF OFFERING PRICE
The conversion price of the Series B Preferred Stock and exercise
price of the warrants were determined by negotiation between ViewCast and the
holders of the Series B Preferred Stock and warrant holders. In determining
these prices, ViewCast and the holders of the Series B Preferred Stock and
warrant holders considered, among other things, estimates of the business
potential of ViewCast, the management of ViewCast, its plans for the expansion
of its business base and the trading price of ViewCast common stock on Nasdaq.
Pricing did not necessarily bear any relation to earnings per share, book value
or the net worth of ViewCast. Prospective investors should not consider the
Series B Preferred Stock conversion price or 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 conversion of the Series B Preferred Stock and
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."
Common stock issued as dividends on the Series B Preferred Stock is valued at
the average of the market prices for twenty (20) consecutive business days
ending ten (10) business days prior to the dividend payment date.
DILUTION
The difference between the weighted average offering price per share of
common stock and the pro forma as adjusted 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 pro forma net tangible book value (deficiency) of ViewCast at
December 31, 1999 (excluding gross proceeds of $9,450,000 received from the
offering of Series B Preferred Stock in December 1998 through February 1999 and
excluding 126,008 common shares issued for payment of $672,877 of dividends on
Series B Preferred Stock) was $(471,888), or $(0.03) per share of common stock.
After giving effect to the conversion of Series B Preferred Stock, exercise of
warrants registered hereby and issuance of common stock for payment of Series B
Preferred dividends, the pro forma as adjusted net tangible book value of
ViewCast at December 31, 1999 would have been $9,123,112 or $0.54 per share,
representing an increase in pro forma as adjusted net tangible book value of
$0.57 per share to existing stockholders and an immediate dilution of $3.16 per
share (85.4%) to new investors. The following table shows the dilution to new
investors on a per share basis:
16
<PAGE> 17
<TABLE>
<S> <C> <C>
Weighed average offering price(1) ............................... $ 3.70
Pro forma net tangible book value before offering .......... $(0.03)
Increase attribute to new investors ........................ .57
------
Pro forma as adjusted net tangible book value after offering .... .54
------
Dilution to new investors ....................................... $ 3.16
======
</TABLE>
- ----------
(1) Offering price before deduction of estimated expenses of the offering and
commissions.
DESCRIPTION OF SECURITIES TO BE REGISTERED
We are authorized to issue 40,000,000 shares of common stock, $.0001
par value per share and 5,000,000 shares of preferred stock, par value $.0001
per share. As of April 30, 2000, the 15,540,630 shares of common stock
outstanding were held by approximately 7,500 beneficial holders, and 945,000
shares of Series B Preferred Stock outstanding were held by five beneficial
owners.
COMMON STOCK
Voting Rights -- 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. All of the outstanding shares of common stock are fully paid and
non-assessable.
Dividends -- 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. Any dividends we pay will be mailed to
the stockholders of record as reflected in the share transfer records maintained
by our transfer agent and registrar.
Liquidation Preference -- In the event of liquidation, dissolution or
winding up, the holders of common stock are entitled to share ratably in our
assets, if any, legally available for distribution to them after payment of
debts and liabilities 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.
Stockholder Meetings -- Our Bylaws provide that the stockholders shall
have annual meetings, called by the Board of Directors, and special meetings,
called by the President, or the President or Secretary upon the written request
of a majority of the Board of Directors, or at the request in writing of the
holders owning at least a majority in amount of the entire capital stock of the
corporation issued and outstanding and entitled to vote. The stockholders
entitled to vote at such meeting must be given written notice of each such
meeting of stockholders. In the case of special meetings, the purpose or
purposes for which the meeting is called shall be given to each
17
<PAGE> 18
stockholder entitled to vote, not less than ten or more than sixty days before
the meeting. Any notice of a stockholder meeting will be mailed to the
stockholders of record as reflected in the share transfer books maintained by
our transfer agent and registrar.
PREFERRED STOCK
We are 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 our 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.
Voting Rights of Series B Preferred Stock -- The holders of the Series
B Preferred Stock have no voting rights except for an amendment to our
Certificate of Incorporation to change the authorized shares, or par value, or
to alter or change the powers, preferences or special rights of the Series B
Preferred Stock.
Dividends on Series B Preferred Stock -- The holders of the Series B
Preferred Stock are entitled to receive a dividend of $0.80 per share per year
payable in cash or our common stock, at our option, when, as and if declared by
the Board of Directors, out of funds legally available therefor. Any dividends
we pay will be mailed to the holders of record of the Series B Preferred Stock
as of the record date. No dividends may be paid or set apart for payment in cash
for junior stock, including the common stock, and no junior stock, including the
common stock, and stock on parity with the Series B Preferred Stock may be
repurchased or otherwise retired for value nor may funds be set apart for
payment with respect thereto, if cumulative dividends have not been paid in full
on the Series B Preferred Stock in cash or shares of common stock.
Liquidation Preference of Series B Preferred Stock -- In the event of
our liquidation, dissolution or winding up, the holders of the Series B
Preferred Stock are entitled to be paid, out of our assets available for
distribution to stockholders, the liquidation preference of $10.00 per share,
plus, without duplication, an amount in cash or shares of common stock, at our
option, equal to all accumulated and unpaid dividends, before any distribution
is made to any holders of common stock or other class of preferred stock the
terms of which expressly provide that it ranks junior to the Series B Preferred
Stock. If upon our liquidation, dissolution or winding-up, the amount payable
with respect to the Series B Preferred Stock and all parity stock are not paid
in full, then our assets available for distribution among the holders of the
Series B Preferred Stock and any parity stock shall bear to each other the same
ratio that the full amounts payable on our liquidation, dissolution or
winding-up to the holders of Series B Preferred Stock and any parity stock bear
to each other.
18
<PAGE> 19
Conversion Rights of Series B Preferred Stock -- The holders of the
Series B Preferred Stock have the right to convert each share of Series B
Preferred Stock into shares of common stock at the conversion price of $3.625
per share. The conversion price may be adjusted upon a stock split or reverse
stock split of the common stock by the proportion by which the number of shares
of common stock are increased or decreased, as appropriate. Subject to specific
exceptions, if we issue common stock or equity or debt securities which are
convertible into or exercisable for shares of common stock at a price less than
the conversion price of the Series B Preferred Stock, the conversion price shall
be temporarily adjusted to the price at which such shares of common stock or
equity or debt securities convertible into or exercisable for shares of common
stock were issued for a period of ninety (90) calendar days. If we pay a
dividend or other distribution payable exclusively in common stock or pay or
make a dividend or other distribution, in whole or in part in common stock, on
any other class of capital stock, the conversion price shall be adjusted to that
price determined by multiplying the conversion price prior to the distribution
by a fraction (1) the numerator of which shall be the total number of shares of
common stock outstanding immediately prior to such dividend or other
distribution and (2) the denominator of which shall be the total number of
shares of common stock outstanding immediately after such dividend or other
distribution.
Optional Conversion by us of the Series B Preferred Stock -- We may
elect to cause the Series B Preferred Stock to be converted into common stock:
o at any time after February 24, 1999, if the average of the daily
closing sale price of the common stock for any twenty (20) trading
days within a period of thirty (30) consecutive trading days has
equaled or exceeded 160% of the conversion price; or
o at any time after February 23, 2002.
PUBLIC WARRANTS
The following is a brief summary of certain provisions of the
redeemable common stock purchase warrants ("public warrants"). This summary does
not purport to be complete and is qualified in all respects by reference to the
actual text of the warrant agreement among us, Continental Stock Transfer &
Trust Co., and the public warrant agent. As of April 30, 2000, there were
2,598,848 public warrants outstanding.
Exercise Price and Terms -- Each public warrant entitles the registered
holder thereof to purchase, at any time over a fifty-four (54) month period
commencing August 4, 1997, 1.074 shares of common stock at $4.19 per share,
subject to adjustment in accordance with the antidilution and other provisions
referred to below. The holder of any public warrant may exercise such public
warrant by surrendering the certificate representing the public warrant to the
public warrant agent, with the subscription form thereon properly completed and
executed, together with payment of the exercise price. The public warrants may
be exercised at any time in whole or in part at the applicable exercise price
until expiration of the public warrants. No fractional shares of common stock
will be issued upon the exercise of the public warrants.
19
<PAGE> 20
The exercise price of the public warrants bears no relationship to any
objective criteria of value and should in no event be regarded as an indication
of any future market price of the securities offered hereby.
Adjustments -- The holders of the public warrants are protected against
dilution of their interests by adjustments, as set forth in the public warrant
agreement, of the exercise price and the number of shares of common stock
purchasable upon the exercise of the public warrants upon the occurrence of
certain events, including stock dividends, stock splits, combinations or
reclassification of the common stock, or sale by us of shares of our common
stock or other securities convertible into common stock at a price below the
then-applicable exercise price of the public warrants. Additionally, an
adjustment would be made in the case of a reclassification or exchange of common
stock, consolidation or merger of us with or into another corporation (other
than a consolidation or merger in which we are the surviving corporation) or
sale of all or substantially all of our assets in order to enable warrantholders
to acquire the kind and number of shares of stock or other securities or
property receivable in such event by holder of the number of shares of common
stock that might otherwise have been purchased upon the exercise of the public
warrant.
Redemption Provisions -- Currently, all, but not less than all, of the
public warrants are subject to redemption at $0.10 per public warrant on not
less than thirty (30) days prior written notice to the holders of the public
warrants provided the per share closing price or bid quotation of the common
stock as reported on the 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 we give
notice of redemption. The public warrants will be exercisable until the close of
business on the day immediately preceding the date fixed for redemption in such
notice. If any public 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 public warrants are in
registered form and may be presented to the public warrant agent for transfer,
exchange or exercise at any time on or prior to their expiration date on
February 4, 2002, at which time the public warrants become wholly void and of no
value. The holder may sell the public warrants instead of exercising them. There
can be no assurance, however, that a market for the public warrants will
continue.
The public warrants are not exercisable unless, at the time of the
exercise, we have a current prospectus covering the shares of common stock
issuable upon exercise of the public 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 public warrants.
The public warrants were separately transferable immediately upon
issuance. Although the public warrants were not knowingly sold to purchasers in
jurisdictions in which the public warrants are not registered or otherwise
qualified for sale or exemption, purchasers may buy public warrants in the
after-market in, or may move to, jurisdictions in which public warrants and
20
<PAGE> 21
the common stock underlying the public warrants are not so registered or
qualified or exempt. In this event, we would be unable lawfully to issue common
stock to those persons desiring to exercise their public warrants (and the
public warrants would not be exercisable by those persons) unless and until the
public 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.
Warrantholder Not a Stockholder -- The public warrants do not confer
upon holders any voting, dividend or other rights as stockholders.
Modification of Public Warrants -- We and the public warrant agent may
make such modifications to the public warrants as we deem necessary and
desirable that do not adversely affect the interests of the warrantholders. We
may, in our sole discretion, lower the exercise price of the public warrants for
a period of not less than thirty (30) days on not less than thirty (30) days'
prior written notice to the warrantholders and Network 1 Financial Securities,
Inc., the representative of the underwriters for our initial public offering
(Network 1). Modification of the number of securities purchasable upon the
exercise of any public warrant, the exercise price and the expiration date with
respect to any public warrant requires the consent of two-thirds of the
warrantholders. No other modifications may be made to the public warrants,
without the consent of two-thirds of the warrantholders.
PRIVATE WARRANTS
We have issued the private warrants in connection with certain
debentures and as compensation for services rendered by various consultants and
a financial consulting firm controlled by a former officer, director, and
stockholder of ViewCast.
At April 30, 2000, 2,000,772 private warrants at exercise prices
ranging from $3.00 to $5.00 per share were exercisable into 2,090,805 shares of
common stock.
In addition, at April 30, 2000, Network 1 and assigns held warrants to
purchase 140,000 units at $6.44 per unit, each unit consisting of one share of
common stock and one warrant to purchase 1.074 shares at an exercise price of
$4.50 through February 2002.
DEBENTURES
On April 28, 2000, we sold $4,450,000 aggregate principal amount of the
Debentures pursuant to a placing agreement dated March 28, 2000, and amended on
April 28, 2000, by and among us and RP&C International Inc. and RP&C
International Limited (the Lead Managers) at an initial offering price of 100%
of the principal amount of the Debentures, less 8% gross commission. In
addition, we issued the Lead Managers a warrant (the Lead Managers Warrant) on
April 28, 2000, in the name of RP&C International (Guernsey) Limited, pursuant
to Regulation S, to purchase an aggregate of 89,000 shares of common stock, at
an exercise price of $5.00 per share, subject to adjustment in the event of
adjustment of the conversion price of the Debentures. The Lead Managers
21
<PAGE> 22
Warrant has a term of five (5) years and may be exercised as to all or any
lesser number of shares of common stock underlying it, commencing twelve (12)
months after the date of issuance.
Unless previously redeemed, the Debentures are convertible into shares
of our common stock at the option of the holder at any time at a fixed
conversion price of $5.00 per share of common stock, subject to adjustment in
certain circumstances. Upon voluntary conversion of any Debenture by its holder,
no payment will be made for interest accrued during the period (i) from the most
recent interest payment date preceding the applicable conversion date, or (ii)
from the date of issuance of the Debentures if the Debenture is converted before
the first interest payment (absent default by us, in which event interest shall
continue to accrue at a specified default rate). Debentures which are converted
prior to the first interest payment date of November 1, 2000 will be converted
at a ten percent (10%) discount from the then effective conversion price, and
Debentures which are converted prior to the second interest payment date of May
1, 2001 will be converted at a five percent (5%) discount from the then
effective conversion price.
The Debentures were sold outside the United States to non-U.S. persons
in reliance on Regulation S under the Securities Act of 1933, as amended. Each
purchaser certified that it was not a U.S. person (as defined in Regulation S
under the Act) and that it was not acquiring the Debentures for the account or
benefit of any U.S. person. Further each purchaser agreed that prior to the end
of the one-year distribution compliance period (as defined in Regulation S), the
Debentures may be resold, pledged or transferred only (i) to us, (ii) pursuant
to offers and sales outside the United States in a transaction meeting the
requirements of Rules 901 through 905 of Regulation S, or (iii) pursuant to an
effective registration statement, each in accordance with any applicable
securities laws of the United States.
We can cause the Debentures to be converted into shares of common stock
at the conversion price at any time and from time to time after October 28,
2001, if the closing sale price of the common stock on each day during any
twenty (20) consecutive trading day period commencing on or after October 1,
2001, has equaled or exceeded 160% of the conversion price. We can cause the
Debentures to be converted into shares of common stock at the conversion price
at any time and from time to time after April 28, 2002, if the closing sale
price of the common stock on each day during any twenty (20) consecutive trading
day period commencing on or after April 1, 2002, has equaled or exceeded 140% of
the conversion price.
We have agreed to file a registration statement with the Securities and
Exchange Commission (the "SEC") covering the resale of the common stock issuable
upon the conversion of the Debentures and the exercise of the Lead Managers
Warrant and to use all commercially reasonable efforts to cause such
registration statement to become effective with the SEC. If the registration
statement is not declared effective within four months of April 28, 2000, the
conversion price of the Debentures is subject to specified discounts; but in no
event will these discounts and the early conversion discounts described
previously cause the conversion price to be less than $4.20.
22
<PAGE> 23
We may redeem all outstanding Debentures at their principal amount,
together with accrued interest, in the event that prior to the redemption
notice, 85% or more in principal amount of the Debentures have been converted or
purchased by us.
DELAWARE LAW WITH RESPECT TO BUSINESS COMBINATIONS
As of the date of this prospectus, we are subject to the State of
Delaware's "business combination" statute, Section 203 of the Delaware General
Corporation Law. In general, such statute prohibits a publicly held Delaware
corporation from engaging in a "business combination" with a person who is an
"interested stockholder" for a period of three (3) years after the date of the
transaction in which that person became an interested stockholder, unless the
business combination is approved in a prescribed manner. A "business
combination" includes a merger, asset sale or other transaction resulting in a
financial benefit to the interested stockholder. An "interested stockholder" is
a person who, together with affiliates, owns (or, within three (3) years prior
to the proposed business combination, did own) fifteen percent (15%) or more of
the Delaware corporation's voting stock. The statute could prohibit or delay
mergers or other takeover or change in control attempts with respect to us and,
accordingly, may discourage attempts to acquire us.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Continental
Stock Transfer and Trust Company, 2 Broadway, New York, New York 10004.
REPORTS TO STOCKHOLDERS
We furnish our stockholders with annual reports containing audited
financial statements and such other periodic reports as we may determine to be
appropriate or as may be required by law.
We have registered our common stock and public warrants under the
provisions of Section 12(g) of the Securities Exchange Act of 1934, and we have
agreed that we will use our best efforts to continue to maintain such
registration for a minimum of five (5) years from February 4, 1997. Such
registration will require us to comply with periodic reporting, proxy
solicitation and certain other requirements of the Securities Exchange Act of
1934.
23
<PAGE> 24
SELLING SECURITYHOLDERS AND PLAN OF DISTRIBUTION
ViewCast has filed a Registration Statement on Form S-3 registering
2,772,904 shares of common stock issuable upon conversion of Series B Preferred
Stock and upon exercise of warrants for offer and sale by persons who exercise
the warrants. ViewCast is also registering shares of common stock issued as
payment of dividends on the Series B Preferred Stock. ViewCast is paying all
expenses in connection with this offering. Registration of the common stock
issuable upon conversion of Series B Preferred Stock, upon exercise of the
warrants and upon registration of common shares issued as dividends on the
Series B Preferred Stock, 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 H.T. Ardinger, Jr. and M. Douglas Adkins, Esq., none of
the persons offering stock beneficially owns 5% or more of ViewCast's
outstanding common stock.
BENEFICIAL OWNERSHIP OF COMMON
STOCK PRIOR TO SALE
<TABLE>
<CAPTION>
BENEFICIAL
OWNERSHIP
OF COMMON % OWNED
SHARES SHARES STOCK AFTER
BEFORE TO BE AFTER SALE OFFERING
SELLING SHAREHOLDER OFFERING OFFERED TOTAL (1) (1)
- ------------------------------------- ----------- --------- --------- ---------- --------
<S> <C> <C> <C> <C> <C>
H.T. Ardinger, Jr. (Director and
Chairman of the Board of
ViewCast) 1,766,442(2) 1,157,107 2,923,891 1,766,784 9.3%
- ------------------------------------- ----------- --------- --------- --------- ---
Adkins Family Partnership, LTD 667,939(3) 578,603 1,246,542 667,939 3.5%
- ------------------------------------- ----------- --------- --------- --------- ---
Baker Family Partnership, LTD -- 578,603 578,603 -- *
- ------------------------------------- ----------- --------- --------- --------- ---
H.J. Partnership -- 269,566 269,566 -- *
- ------------------------------------- ----------- --------- --------- --------- ---
William Heim -- 149,025 149,025 -- *
- ------------------------------------- ----------- --------- --------- --------- ---
W.R. Consulting, Inc. -- 30,000 30,000 -- *
- ------------------------------------- ----------- --------- --------- --------- ---
Damon Testaverde -- 10,000 10,000 -- *
- ------------------------------------- ----------- --------- --------- --------- ---
</TABLE>
*Less than 1%
- --------------
(1) Assumes sale of all common stock offered.
(2) Includes (i) warrants to purchase 795,280 shares of common stock of
ViewCast at exercise prices ranging from $4.19 to $4.50 per share, and (ii)
options to purchase 4,062 shares of common stock at $9.00 per share under
the 1995 Director Plan.
(3) Includes warrants to purchase 253,439 shares of common stock of ViewCast at
exercise prices ranging from $4.19 to $4.50 per share.
24
<PAGE> 25
The 2,772,904 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:
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
The consolidated financial statements of ViewCast.com, Inc. included in
ViewCast.com, Inc.'s Annual Report (Form 10-KSB) for the year ended December 31,
1999, have been audited by Ernst & Young, LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such financial statements are, and audited financial statements to be
included in subsequently filed documents will be, incorporated herein in
reliance upon the reports of Ernst & Young LLP pertaining to such financial
statements (to the extent covered by consents filed with the Securities and
Exchange Commission) given on the authority of such firm as experts in
accounting and auditing.
25
