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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
Information to be Included in Statements Filed Pursuant to Rule
13d-1(a) and Amendments Thereto Filed Pursuant to Rule 13d-2(a)
(Amendment No. 1)*
The Network Connection, Inc.
----------------------------
(Name of Issuer)
Common Stock par value $.001 per Share
(Title of Class of Securities)
64120Q103
---------
(CUSIP Number)
Steven B. King, Esquire
Mesirov Gelman Jaffe Cramer & Jamieson, LLP
1735 Market Street
Philadelphia, PA 19103
(215) 994-1037
--------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
July 16, 1999 and August 12, 1999
--------------------------------------------------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [_]
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
- ----------------
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP NO. 64120Q103 SCHEDULE 13D
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)*
Interactive Flight Technologies, Inc.
IRS ID No. 11-3197148
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
7 SOLE VOTING POWER 3,011,764*
-----------------------------------------
8 SHARED VOTING POWER 0
NUMBER OF SHARES
BENEFICIALLY OWNED -----------------------------------------
BY EACH REPORTING
PERSON WITH 9 SOLE DISPOSITIVE POWER 2,521,644*
-----------------------------------------
10 SHARED DISPOSITIVE POWER 0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON 3,011,764*
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 38.6%*
14 TYPE OF REPORTING PERSON CO
- ---------------
* Upon the approval of the shareholders of The Network Connection, Inc. (as
outlined in this Amendment 1 to Schedule 13D), the number of authorized
shares of Common Stock could be increased, thus allowing Interactive Flight
Technologies, Inc. ("IFT") the ability to convert its shares of the
Company's Series C Shares (as defined below) and the Company's Series D
Shares (as defined below) into 3,268,801 and 15,097,170 shares of the
Company's Common Stock, respectively. Upon the approval of such
shareholders and the conversion of all of the Series C Shares and all of
the Series D Shares, IFT would have the sole voting power over and be the
beneficial owner of 21,398,306 shares of the Company's Common Stock, or
81.8 % of the then outstanding Common Stock of the Company, and sole
dispositive power over 20,908,186 shares, or 79.9%. All Series C Share
conversion calculations are made as if convertible shares were converted on
July 21, 1999, at an Average Price of $1.80 (as defined in the Articles of
Amendment to the Articles of Incorporation of the Company dated as of April
30, 1999). Finally, there are not enough authorized shares to convert all
Series B Shares. Currently, 20,572 Shares of Series B cannot be converted.
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Item 1. Security and Issuer
Common Stock, par value $.001 per share, of The Network Connection,
Inc. (the "Company"), 222 N. 44th Street, Phoenix, AZ 85034.
Item 2. Identity and Background
Name: Interactive Flight Technologies, Inc. ("IFT")
State of Incorporation: Delaware
Principal Business: Interactive electronic entertainment devices, and
holding company
Address of Principal Business and Principal Office: 222 N. 44th
Street, Phoenix, AZ 85034
Prior Criminal Convictions or Proceedings: None
Prior Civil (Securities) Convictions or Proceedings: None
Item 3. Source and Amount of Funds and Other Consideration:
On July 16, 1999, IFT acquired from third parties certain notes issued
by the Company (collectively, the "Series A and E Notes"). The Series
A and E Notes had a principal balance of $1,254,082, and interest,
redemption premiums, and other charges incurred but unpaid thereon to
the date of acquisition totaling $640,925, for a total of $1,895,007.
IFT agreed to cancel the Series A and E Notes in exchange for which
the Company increased the balance due under the already existing
promissory note made by the Company and payable to the order of IFT,
in a corresponding amount (the "Note").
On August 12, 1999, IFT acquired from third parties certain notes
issued by the Company (collectively, the "Series D Notes"). The Series
D Notes had a principal balance of $350,000, and interest, redemption
premiums, and other charges incurred but unpaid thereon to the date of
acquisition totaling $127,750. IFT agreed to cancel the Series D Notes
in exchange for which the Company increased the balance due under the
Note.
The Note, now in the aggregate principal amount of $3,122,757, is
convertible into 3,123 shares of Series C 8% Convertible Preferred
Shares of the Company, par value $.01 per share, Stated Value $1,000
per share (the "Series C Shares"). The Series C Shares, in turn, are
convertible into the Common Stock of the Company at a conversion price
equal to the lowest of (a) $2.6875, (b) 66.67% of the Average Price
(as defined in the Articles of Amendment to the Articles of
Incorporation of The Network Connection, Inc., dated as of April 30,
1999) or (c) if the Company (i) issues and sells pursuant to an
exemption from registration under the Securities Act
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(A) its Common Stock at a purchase price on the date of issuance
thereof that is lower than the then applicable conversion price, (B)
warrants or options with an exercise price calculated as a percentage
(less than 100%) of the Current Market Price (however defined) or (C)
convertible, exchangeable or exercisable securities with a right to
exchange at lower than the Current Market Price on the date of
issuance or conversion, as applicable, of such convertible,
exchangeable or exercisable securities, except for stock option
agreements or stock incentive agreements, and (ii) grants the right to
the purchaser(s) thereof to demand that the Company register under the
Securities Act such Common Stock issued or the Common Stock for which
such warrants or options may be exercised or such convertible,
exchangeable or exercisable securities may be converted, exercised or
exchanged, then the conversion price shall, at the option of the
holder be reduced to equal the lowest of any such lower rates.
Based on the foregoing, and subject to shareholder approval of an
increase in the number of authorized shares of the Common Stock and of
the Series C Shares of the Company, the Series C Shares owned by IFT,
and those which may be obtained by IFT upon conversion of the Note is
no fewer than 3,268,801 shares of Common Stock of the Company.
The Series B Shares are convertible into the Common Stock of the
Company at a conversion price equal to the lower of (a) 75% of the
Average Price of the Company's Common Stock calculated at the time of
conversion; or (b) 75% of such Average Price calculated as if April
29, 1999 were the conversion date. Because 75% of the Average Price
calculated as if April 29, 1999, were the conversion date is 1,176,471
shares of the Common Stock of the Company.
Each Series D Share is Convertible into 6.05 shares of Common Stock of
the Company.
Based on the foregoing, and subject to shareholder approval of an
increase in the number of authorized shares of Common Stock of the
Company, the Series B Shares owned by IFT are convertible into
1,176,471, and the Series D Shares are convertible into 15,097,170
shares of the Common Stock of the Company.
Item 4. Purpose of Transaction: IFT's purpose in engaging in this transaction
was to remedy the Company's default under the Series A and E Notes and
Series D, recapitalize the Company, and increase IFT's interest in the
Company.
Item 5. Interest in Securities of the Issuer:
(a) The following table sets forth the aggregate number and percentage
of outstanding shares of the Company's common stock beneficially owned
by the undersigned as of the date of this report:
Number of Shares Percentage of Outstanding Shares
---------------- --------------------------------
3,011,764 38.6%
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The Company has not authorized an adequate number of shares of Common
Stock to permit the conversion of the Series B Shares, Series C Shares
and the Series D Shares. Moreover, the Company has not authorized an
adequate number of Series C Shares to permit conversion of the Note.
Upon the approval of the shareholders of the Company, the number of
shares of Common Stock and Series C Shares would be increased,
allowing IFT to convert its shares of the Series C Shares and the
Series D Shares into 3,268,801 and 15,097,170 shares of the Company's
Common Stock, respectively. Upon the conversion of all of the Series C
Shares, Series D Shares, and all of the Series B Shares, IFT would be
the beneficial owner of 21,389,306 shares of the Company's Common
Stock, or 81.8% of the outstanding Common Stock of the Company.
(b) Voting Power and Dispositive Power*
Sole Power to Vote: 3,011,764
Shared Power to Vote: 0
Sole Power to Dispose: 2,521,644
Shared Power to Dispose: 0
The Series C Shares, in combination with the Series B Shares, are now
entitle to cast that number of votes at any duly called meeting of the
shareholders of the Company which, when added to the shares of Common
Stock held by any of the holders of the Series B Shares and the Series
C Shares on the record date for such shareholder meeting, shall be
necessary to equal a majority of the number of votes entitled to be
cast at such shareholder meeting by the holders of all voting shares
of the Company. Each Series D Share is entitled to 6.05 votes.
The Company has not authorized an adequate number of shares of Common
Stock to permit the conversion of the Series B Shares, Series C Shares
and the Series D Shares. Upon the approval of the shareholders of the
Company, the number of shares of Common Stock could be increased,
allowing IFT to convert its shares of the Series B Shares, Series C
Shares and the Series D Shares into 1,176,471, 3,268,801 and
15,097,170 shares of the Company's Common Stock, respectively. Upon
the conversion of all of the Series B Shares, Series C Shares and all
of the Series D Shares, IFT would have the sole voting and over
21,398,306 shares of the Company's Common Stock, or 81.8% of the
outstanding Common Stock of the Company, and sole dispositive power
over 20,908,186 shares of the Company's Common Stock, or 79.9%.
(c) The following table reflects IFT's transactions in the Company's
Stock in the past 60 days:
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Total Shares
Date Description of Transaction Beneficially Held
---- -------------------------- -----------------
July 16, 1999 Cancellation of Series A 2,941,764
and E Notes and Increase of
Note by same amount
($1,895,007) to $2,645,007
principal and interest.
August 12, 1999 Cancellation of Series D Notes 3,011,764
and Increase of Note by same
amount ($477,750) to $3,122,757
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer:
Irrevocable Proxy executed by Barbara L. Riner on May 14, 1999, in
favor of Morris C. Aaron or Irwin L. Gross, Chief Financial Officer
and Chief Executive Officer of IFT, for all of her shares of Company
Common Stock (490,120 at present time).
Item 7. Material to be filed as Exhibit:
None
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: August 19, 1999 INTERACTIVE FLIGHT TECHNOLOGIES, INC.
By: /s/ Irwin L. Gross
--------------------------------
Irwin L. Gross, Chief Executive Officer
