As Filed with the Securities and Exchange Commission on June 15, 1999
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------------
PROTOSOURCE CORPORATION
(Exact name of Registrant
As specified in its charter)
California 7373 77-0190772
---------- ---- ----------
State or other jurisdiction of Primary Standard Industrial IRS Employer
incorporation or organization Classification Code Number I.D. Number
2800 28th Street, Suite 170
Santa Monica, California 90405
(310) 314-9801
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(Name, address, including zip code, and telephone
number, including area code,
of registrant's principal executive offices)
Raymond J. Meyers, Chief Executive Officer
ProtoSource Corporation
2800 28th Street, Suite 170
Santa Monica, California 90405
(310) 314-9801
------------------------------------------------
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
Gary A. Agron, Esq.
Law Office of Gary A. Agron
5445 DTC Parkway, Suite 520
Denver, Colorado 80111
(303) 770-7254
(303) 770-7257 (fax)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
<PAGE>
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [x]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under The Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
<TABLE>
<CAPTION>
CALCULATIONS OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------
Title of each Amount to be Proposed Proposed Amount of
class of registered maximum maximum registration fee
securities to be offering price aggregate
registered per unit (1) offering price (1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 1,568,667 $7.313 (1) $11,471,661 $3,384
no par value shares
underlying
common stock
purchase
warrants
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee, based on the closing price of the common stock as
reported on the Nasdaq SmallCap Market on June 8, 1999 in accordance with
Rule 457 under the Securities Act of 1933.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the SEC, acting pursuant to said Section 8(a), may
determine.
<PAGE>
Subject to Completion dated June 15, 1999
PROSPECTUS
1,568,667 Shares of Common Stock
underlying Common Stock Purchase Warrants
ProtoSource Corporation
-----------------------------
This prospectus relates to the public offering, which is not being
underwritten, of up to 1,568,667 shares of our common stock underlying common
stock purchase warrants held by some of our current security holders.
The prices at which our security holders may sell the shares of common
stock will be determined by the prevailing market price for the shares or in
negotiated transactions. We will not receive any of the proceeds from the sale
of the shares, although we will receive the exercise price of any common stock
purchase warrants exercised.
Our common stock is listed on the Nasdaq SmallCap Market under the symbol
"PSCO." On June 8, 1999, the closing price of our common stock was $7.31 per
share.
SEE "RISK FACTORS" BEGINNING AT PAGE 5 TO READ ABOUT CERTAIN FACTORS YOU
SHOULD CONSIDER BEFORE BUYING SHARES OF OUR COMMON STOCK.
----------------------------------
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE
NOT APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------------------
The date of this Prospectus is June 15, 1999.
The information in this prospectus is not complete and may be changed. The
selling stockholders named herein may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities, and the
selling stockholders are not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.
<PAGE>
TABLE OF CONTENTS
Page
----
Where You Can Find More Information.................................... 2
Forward-Looking Statements............................................. 3
Our Company............................................................ 4
Risk Factors........................................................... 5
Selling Stockholders................................................... 12
Plan of Distribution................................................... 12
Legal Matters.......................................................... 14
Experts................................................................ 14
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. The selling stockholders are offering to sell, and
seeking offers to buy shares of our common stock only in jurisdictions where
offers and sales are permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or of any sale of our common stock. In this
prospectus, "ProtoSource," "we," "us," and "our" refer to ProtoSource
Corporation.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until our
offering is completed.
(1) Our Annual Report on Form 10-KSB for the year ended December 31, 1998;
(2) Our Quarterly Report on Form 10-QSB for the quarter ended March 31,
1999;
(3) All documents filed by us under the Securities Exchange Act of 1934
(e.g. Forms 10-QSB and 8-K) after the date of this Prospectus; and
(4) The description of our common stock contained in our registration
statement on Form SB-2 declared effective by SEC on May 13, 1998,
including any amendments or reports filed for the purpose of updating
such description.
We have also filed a registration statement on Form S-3 with the SEC under
the Securities Act of 1933. This prospectus does not contain all of the
information set forth in the registration statement. You should read the
registration statement for further information about our company and the common
stock.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Attn: Investor Relations
ProtoSource Corporation
2800 28th Street, Suite 170
Santa Monica, California 90405
(310) 452-4478
You should rely on the information incorporated by reference or provided in
this prospectus or any prospectus supplement. We have authorized no one to
provide you with different information. We are not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information in this prospectus or the prospectus supplement is accurate
as of any date other than the date on the front of the document.
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NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements deal with our
current plans, intentions, beliefs and expectations and statements of future
economic performance. Statements containing terms such as "believes," "does not
believe," "plans," "expects," "intends," "estimates," "anticipates" and other
phrases of similar meaning are considered to contain uncertainty and are
forward-looking statements.
Forward-looking statements involve known and unknown risks and
uncertainties which may cause our actual results in future periods to differ
materially from what is currently anticipated. We make cautionary statements in
certain sections of this prospectus, including under "Risk Factors." You should
read these cautionary statements as being applicable to all related
forward-looking statements wherever they appear in this prospectus, in the
materials referred to in this prospectus, in the materials incorporated by
reference into this prospectus, or in our press releases.
No forward-looking statement is a guarantee of future performance, and you
should not place undue reliance on any forward-looking statement.
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OUR COMPANY
We provide Internet access, Web development, Web hosting and related
services to individuals, public agencies and businesses on a national level. We
operate our own Internet network facilities in Central California and offer
Internet access nationwide through two "backbone"providers with which we have
agreements. As of December 31, 1998, we had approximately 3,700 subscribers for
whom we provided Internet access. We seek to acquire other small Internet
Service Providers, or ISPs, in markets with populations less than 500,000. We
believe that certain of these local ISPs currently doing business in our target
markets may not be able to effectively manage the financial and administrative
burdens imposed by the continuing consumer demand for local Internet services,
unless these providers are integrated into larger, more diversified Internet
products and services companies. We have addressed these kinds of financial and
administrative burdens by (1) expanding our operations nationwide, (2)
developing diversified services similar to our larger competitors, such as
special access packages for business and high speed access, and (3) investing in
automated billing and administrative systems. We believe these resources will
not only allow us to compete effectively with larger access firms entering our
markets, but also will facilitate our efforts to attract small ISPs. We may also
acquire or invest in other small technology-oriented companies.
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RISK FACTORS
In addition to reviewing other information in this prospectus, our Annual
Report on Form 10-KSB and the other documents incorporated herein by reference,
you should consider carefully the following factors in evaluating us and our
business before purchasing shares of our common stock.
Our growth strategy and acquisitions may not be successful
Our growth strategy is largely dependent upon acquiring small ISPs and
acquiring or investing in other small technology oriented companies. We may not
be successful, however, in locating or acquiring these kinds of businesses. We
also may encounter substantial competition from other ISPs and
telecommunications providers which are seeking to consolidate operations within
our market area. Most of these competitors have larger subscriber bases and
greater financial resources. Our inability to acquire these businesses on
favorable terms in the future could have an adverse effect on our business,
financial conditions and results of operations.
Our continued success as a national Internet service provider will depend
in large part on our ability to successfully integrate the operations and
management of any ISP businesses that we may acquire.
Failure to integrate businesses we acquire may result in significant
operating inefficiencies, which may hurt our operating results. In addition, to
integrate acquired businesses, we may have to expend substantially more
managerial, operating, financial and other resources than we have planned, which
would have an adverse effect on our business. Any future acquisition could
result in the use of significant amounts of cash, potentially dilutive issuances
of equity securities, or the incurrence of debt, or amortization expenses
related to goodwill and other intangible assets, any of which would adversely
affect our business. In addition, acquisitions involve numerous risks,
including:
o difficulties in the assimilation of the operations, technologies,
products and personnel of the acquired company;
o the diversion of management's attention from other business concerns;
and
o risks of entering markets in which we have no or limited prior
experience; and the potential loss of key employees of the acquired
company.
We have a limited operating history and may face difficulties encountered by
companies operating in new and rapidly evolving markets.
We began offering Internet access in 1995. When making your investment
decision and evaluating our business and prospects, you should consider the
risks and difficulties we may encounter in the new and rapidly evolving Internet
service provider market, especially given our limited operating history. These
risks include our ability to:
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o expand our subscriber base and increase subscriber revenue;
o compete favorably in a highly competitive market;
o attract and retain qualified employees;
o develop strategic relationships;
o introduce new products and services; and
o continue to develop and upgrade our network systems and
infrastructure.
We cannot be certain that we will successfully address any of these risks.
We have a history of operating losses and expect future losses
We incurred net losses of approximately $1.5 million and $1.7 million in
the calendar years ended December 31, 1997 and 1998, respectively and $69,851
for the three months ended March 31, 1999. We expect to incur additional losses
in the future.
Our annual and quarterly operating results are subject to significant
fluctuations and, as a result, period-to-period comparisons of our results of
operations should not be relied upon as indicators of future performance.
We have experienced significant fluctuations in our results of operations
on a quarterly and annual basis. We expect to continue to experience significant
fluctuations in our future quarterly and annual results of operations due to a
variety of factors, many of which are outside of our control, including:
o demand for and market acceptance of our services;
o customer relations;
o increased competition in our markets;
o growth of Internet use and establishment of Internet operations by
mainstream enterprises;
o changes in our competitors' pricing policies; and
o general economic conditions affecting our industry.
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We face intense competition in our business from other ISPs and
telecommunications
providers
We face intense competition in conducting our business, and we expect the
competition to intensify as the Internet becomes more popular in the future. Our
competitors include national, regional and local ISPs, telecommunications
companies and cable television operators. Some of these competitors have much
larger subscriber bases than ours and in some cases greater financial, technical
and marketing resources. Furthermore, a number of our competitors offer a
broader variety of access and data services and may have done so for longer
periods of time. Every market in which we participate or intend to participate
is served by multiple ISPs of various type. As a result of increased competition
in our industry we expect to encounter significant pricing pressure. We cannot
be certain that we will be able to offset the effects of any required price
reductions through an increase in the number of our subscribers, higher revenues
from our enhanced business services, cost reductions or otherwise, or that we
will have the resources to continue to compete successfully.
We face the uncertainty of customer retention
We believe that our long-term success depends largely on our ability to
retain our existing customers while continuing to attract new customers. We
continue to invest significant resources in our network infrastructure and
customer and technical support capabilities to provide higher levels of services
to our customers. We cannot be certain that these investments will maintain or
improve our customer retention rate. We believe that intense competition from
our competitors, some of which offer free initial service or other enticements
for new customers, has caused, and may continue to cause, some of our customers
to switch to our competitors' services. In addition, some new subscribers use
the Internet only as a novelty and do not become consistent users of Internet
services, and therefore, may be more likely to discontinue their service. These
factors may adversely affect our subscriber retention rates, which would have an
adverse effect on our business.
We may be unable to obtain the additional capital required to grow our business
Our ability to grow depends significantly on our ability to expand our
operations through internal growth and by acquiring other ISPs or other small
technology oriented companies which require significant capital resources. We
anticipate that our cash requirements for 1999 will include disbursements for
some or all of the following purposes:
o potential acquisitions or investments in other technology-oriented
companies;
o expansion of our network infrastructure;
o development of enhanced services; and
o working capital and general corporate purposes.
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<PAGE>
We may need to seek additional capital from public or private equity or
debt sources to fund our growth and operating plans and respond to other
contingencies such as:
o shortfalls in anticipated revenues or increases in expenses;
o the development of new products and services; or
o the expansion of our customer service operations, including the
recruitment of additional customer service and support personnel.
We cannot be certain that we will be able to raise additional capital in
the future on terms acceptable to us or at all. If alternative sources of
financing are insufficient or unavailable, we may be required to modify our
growth and operating plans in accordance with the extent of available financing.
Disruptions of our services due to system failure could result in subscriber
cancellations
The occurrence of a natural disaster, the failure of one of our systems or
the occurrence of other unanticipated problems at our operating center could
cause interruptions in our services. Extensive or multiple interruptions in
providing customers with Internet access and other services are a primary reason
for customer decisions to cancel the use of Internet access services.
Accordingly, any disruption of our services due to system failure could have an
adverse effect on our business.
We must adapt to technology trends and evolving industry standards to remain
competitive
The Internet market is characterized by rapid changes due to technological
innovation, evolving industry standards, changes in customer needs and frequent
new service and product introductions. New services and products based on new
technologies or new industry standards exposes us to risk of equipment
obsolescence. We will need to use leading technologies effectively, continue to
develop our technical expertise and enhance our existing services on a timely
basis to compete successfully in the Internet access industry. We cannot be
certain that we will be successful in these efforts.
We are also at risk due to fundamental changes in the way that Internet
access may be delivered in the future. Currently, Internet access services are
accessed primarily by computers connected by phone lines. Recently, several
companies, began offering continuous, high speed Internet access through the use
of cable modems. These cable modems have the ability to transmit data at
substantially faster speeds than the modems currently used by our customers over
phone lines. As the Internet becomes accessible to broad segments of the U.S.
population through these cable modems and other consumer electronic devices,
such as Web-TV, or as customer requirements change the means by which Internet
access is provided, we will have to modify our technologies to accommodate these
developments and remain competitive. The continued development and
implementation of these technological advances may require substantial time and
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expense, and we cannot be certain that we will succeed in adapting our Internet
access services business to alternative access devices and conduits. Our failure
to respond in a timely and effective manner to these and other new and evolving
technologies could have a negative impact on our business, or our providers.
If Internet usage does not continue to grow, we may not be able to continue our
business plan
Widespread use of the Internet is a relatively recent phenomenon. Our
future success depends on continued growth in the use of the Internet and the
continued development of the Internet as a viable commercial medium. We cannot
be certain that Internet usage will continue to grow at or above its historical
rates or that extensive Internet content will continue to be developed or
accessible for free or at normal cost to users. If Internet use does not
continue to grow or users do not accept our products and services, our business
could be adversely affected.
State and federal government regulation could require us to change our business
We provide Internet access and other services, in part, using
telecommunications services provided by carriers that are subject to the
jurisdiction of state and federal regulators. Due to the increasing popularity
and use of the Internet, state and federal regulators may adopt additional laws
and regulations relating to content, user privacy, pricing, copyright
infringements and other matters. We cannot predict the impact, if any, that
future regulation or regulatory changes may have on our business.
We face potential liability for material transmitted through our network or
retrieved through our services
The law relating to the liability of ISPs for information carried on or
disseminated through their networks is unsettled. In addition, the Federal
Telecommunications Act of 1996 imposes fines on any entity that knowingly
permits any telecommunications facility under its control to be used to make
obscene or indecent material available to minors via an interactive computer
service. We cannot predict whether any claim under the federal statute, similar
state statutes or common law will be asserted against us, or if asserted,
whether it will be successful. As the law in this area develops, we may be
required to expend substantial resources or discontinue certain services to
reduce our exposure to the potential imposition of liability. Any costs that we
incur as a result of contesting any asserted claims or the consequent imposition
of liability could adversely affect our business.
In addition, because our users may download materials and subsequently
distribute them to others, persons may potentially make claims against us for
defamation, negligence, copyright or trademark infringement, personal injury or
other claims based on the nature, content, publication and distribution of such
materials. We also could be exposed to liability with respect to the offering of
third-party content that may be accessible through our services. It is also
possible that if any third-party content provided through our services contains
errors, third parties who access this material could make claims against us for
losses incurred in reliance on this information.
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Failure of Our Computer System or the Systems of Third Parties to Achieve Year
2000 Compliance Could Adversely Affect Our Business
Many currently installed computer systems and software products are coded
to accept only two-digit entries to represent years in the date code field.
Computer systems and products that do not accept four-digit entries will need to
be upgraded or replaced to accept four-digit entries to distinguish years
beginning with 2000 from prior years. We are currently evaluating the Year 2000
issue as it relates to our entire internal computer system as well as computer
systems operated by third parties. We are incurring internal staff costs and may
incur consulting and other expenses related to making our computer systems Year
2000 compliant. We will expense these costs as incurred. In addition, computer
systems operated by third parties with which our systems interface may not
continue to properly interface with our systems or be compliant on a timely
basis with Year 2000 requirements. Any failure of our computer system or the
systems of third parties to achieve Year 2000 compliance could adversely affect
our business.
We will not pay dividends
We do not intend to pay any cash dividends on our common stock in the
foreseeable future. Earnings, if any, will be used to finance growth.
All of our shares are eligible for future sales
All of our shares of common stock have either been registered for sale or
may be sold under Rule 144 of the Securities Act. The sale of a significant
number of our shares whether under Rule 144 or following registration could
materially reduce the market price of our common stock.
Our preferred stock may prevent a change in control
Our articles of incorporation authorize the issuance of up to 5,000,000
shares of preferred stock with such rights and preferences as may be determined
from time to time by our board of directors. Accordingly, under the articles of
incorporation, the board of directors may, without shareholder approval, issue
preferred stock with dividend, liquidation, conversion, voting, redemption or
other rights which could adversely affect the voting power of other rights of
the holders of the common stock. The issuance of any shares of preferred stock
having rights superior to those of the common stock may result in a decrease in
the value or market price of the common stock and could be used by the board of
directors as a device to prevent a change in control. We have no other
anti-takeover provision in our articles of incorporation or bylaws. Holders of
the preferred stock, if issued, may be granted the right to receive dividends,
certain preferences in liquidation, and conversion rights at the discretion of
the board of directors.
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We have eliminated most director liability
Our articles of incorporation contains a provision eliminating directors'
liability to us or to our stockholders for monetary damages for breach of
fiduciary duty, except in circumstances involving a financial benefit to a
director, intentional infliction of harm to us or other wrongful acts, such as
the breach of a director's duty of loyalty or acts or omissions which involve
intentional misconduct or a knowing violation of criminal law. Our bylaws
contain provisions obligating us to indemnify our directors and officers to the
fullest extent permitted under California law. These provisions could serve to
insulate our officers and directors against liability for actions which damage
us or our stockholders.
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SELLING STOCKHOLDERS
The shares of common stock to be sold by the selling stockholders pursuant
to this prospectus represent 1,137,000 shares underlying common stock purchase
warrants we sold in a May 13, 1998 public securities offering and 431,667 shares
underlying common stock purchase warrants issued to nine persons. The following
table sets forth the aggregate number of shares of common stock underlying
common stock purchase warrants held by each selling stockholder, other than the
public holders and the percentage of our outstanding shares registered by each.
<TABLE>
<CAPTION>
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Name of Selling stockholder Number of shares or Percentage Number
number of shares of of shares
underlying common outstanding for sale
stock purchase shares
warrants
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Steven Kriegsman 57,500 3.2% 57,500
Paul Sloan 57,500 3.2% 57,500
Andrew Chu 28,334 1.6% 28,334
Sara Binder 3,333 * 3,333
Andrew, Alexander Wise & Co., Inc. 224,045 11.2% 224,045
Howard Silverman 15,455 * 15,455
David Appell 15,500 * 15,500
William Conis 15,000 * 15,000
Andrew Stathapoulos 15,000 * 15,000
- ---------------------------------------------------------------------------------------------------------
TOTALS: 431,667 431,667
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* Represents less than 1%
PLAN OF DISTRIBUTION
The shares covered by this prospectus may be offered and sold from time to
time by the selling stockholders. The selling stockholders will act
independently of us in making decisions with respect to the timing, manner and
size of each sale. The selling stockholders may sell the shares being offered
hereby on the Nasdaq SmallCap Market, or otherwise, at prices and under terms
then prevailing or at prices related to the then current market price or at
negotiated prices. Shares may be sold by one or more of the following means of
distribution:
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o Block trades in which the broker-dealer so engaged will attempt to
sell such shares as agent, but may position and resell a portion of
the block as principal to facilitate the transaction;
o Purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to this prospectus;
o Over-the-counter distributions in accordance with the rules of the
Nasdaq SmallCap Market;
o Ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o Privately negotiated transactions.
To the extent required, this prospectus may be amended and supplemented
from time to time to describe a specific plan of distribution. In connection
with distributions of such shares or otherwise, the selling stockholders may
enter into hedging transactions with broker-dealers or other financial
institutions. In connection with such transactions, broker-dealers or other
financial institutions may engage in short sales of our common stock in the
course of hedging the positions they assume with the selling stockholders. The
selling stockholders may sell our common stock short and redeliver the shares to
close out such short positions. The selling stockholders may also enter into
option or other transactions with broker-dealers or other financial institutions
which require the delivery to such broker-dealer or other financial institution
of the shares offered hereby, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus as supplemented or amended to
reflect such transaction. The selling stockholders may also pledge such shares
to a broker-dealer or other financial institution, and, upon a default, such
broker-dealer or other financial institution, may effect sales of such pledged
shares pursuant to this prospectus, as supplemented or amended to reflect such
transaction. In addition, any such shares that qualify for sale pursuant to Rule
144 may be sold under Rule 144 rather than pursuant to this prospectus.
In effecting sales, brokers, dealers or agents engaged by the selling
stockholder may arrange for other brokers or dealers to participate. Brokers,
dealers or agents may receive commissions, discounts or concessions from the
selling stockholders in amounts to be negotiated prior to the sale. Such brokers
or dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933 in connection
with such sales, and any such commissions, discounts or concessions may be
deemed to be underwriting discounts or commissions under the Securities Act of
1933. We will pay all reasonable expenses incident to the registration of the
shares being offered hereby other than any commissions and discounts of
underwriters, dealers or agents.
In order to comply with the securities laws of certain states, if
applicable, the shares being offered hereby must be sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in certain
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states such shares may not be sold unless they have been registered or qualified
for sale in the applicable state or an exemption from the registration or
qualification requirement is available and there has been compliance thereof.
We have advised the selling stockholders that the anti-manipulation rules
of Regulation M under the Securities Exchange Act of 1934 may apply to sales of
shares in the market and to the activities of the selling stockholders and their
affiliates. In addition, we will make copies of this prospectus available to the
selling stockholder and have informed them of the need for delivery of copies of
this prospectus to purchasers at or prior to the time of any sale of the shares
offered hereby. The selling stockholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain
liabilities, including liabilities arising under the Securities Act of 1933.
At the time a particular offer of shares is made, if required, a prospectus
supplement will be distributed that will set forth the number of shares being
offered and the terms of the offering, including the name of any underwriter,
dealer or agent, the purchase price paid by any underwriter, any discount,
commission and other item constituting compensation, any discount, commission or
concession allowed or reallowed or paid to any dealer, and the proposed selling
price to the public.
We have agreed to indemnify the selling stockholder and any person
controlling the selling stockholder against certain liabilities, including
liabilities under the Securities Act of 1933. The selling stockholders have
agreed to indemnify us and certain related persons against certain liabilities,
including liabilities under the Securities Act of 1933.
LEGAL MATTERS
Certain legal matters relating to the validity of the securities offered
hereby will be passed upon for us by the Law Office of Gary A. Agron, Englewood,
Colorado.
EXPERTS
Our financial statements for the years ended December 31, 1998 and 1997
have been incorporated by reference herein and in the registration statement in
reliance upon the report of Angell & Deering, independent auditors, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing.
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PROTOSOURCE CORPORATION
REGISTRATION STATEMENT ON FORM S-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM
NUMBER
- ---------
Item 14 OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth costs and expenses of the sale and
distribution of the securities being registered. All amounts except SEC fees are
estimates.
Registration Statement-SEC................................... $ 3,384
Accounting fees.................................... $ 7,000
Legal fees......................................... $15,000
Miscellaneous...................................... $ 4,616
-------
Total.............................................. $30,000
=======
Item 15 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 5 of the Registrant's Restated Articles of Incorporation provide
that liability of directors for monetary damage is eliminated to the fullest
extent possible with California law. Section 6 provides for indemnification of
all of the Registrant's agents (including officers and directors) subject only
to limits imposed by California law.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to officers, directors, or persons
controlling to Company, the Company has been advised that, in the opinion of the
Securities and Exchange Commission, Washington, D.C. 20549, such indemnification
is against public policy as expressed in such 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 an officer, director or controlling person of the Registrant in the
successful defense of any action, suit or proceeding), is asserted by such
officer, director 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 such Act and will be governed by the final adjudication
of such issue.
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Item 16 EXHIBITS
Exhibit
Number
- -------
5.1 Opinion of Gary A. Agron
23.1 Consent of Angell & Deering, certified public accountants
23.2 Consent of Gary A. Agron (Included in Exhibit 5.1)
Item 17 UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material
change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
The undersigned hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
as that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
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reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the 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 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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
certifies that it has reasonable cause to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Santa Barbara, State of California, on the 9th day of
June, 1999.
PROTOSOURCE CORPORATION
/S/ Raymond J. Meyers
---------------------------------------
By: Raymond J. Meyers
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on June 9,
1999 in the capacities indicated.
SIGNATURE TITLE
/S/ Raymond J. Meyers Chief Executive Officer
- ------------------------------- (Principal Executive Officer)
Raymond J. Meyers Chief Financial Officer (Principal
Accounting Officer) And Director
/S/ Andrew Stathopoulos Director
- ------------------------------
Andrew Stathopoulos
/S/ William Conis Director
- ------------------------------
William Conis
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INDEX TO EXHIBITS
Exhibit
Number
- ------
5.1 Opinion of Gary A. Agron
23.1 Consent of Angell & Deering, certified public accountants
23.2 Consent of Gary A. Agron (Included in Exhibit 5.1)
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EXHIBIT 5.1
June 10, 1999
ProtoSource Corporation
2800 28th Street, Suite 170
Santa Monica, California 90405
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by you
with the Securities and Exchange Commission on or about June 11, 1999 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of a total of 1,568,667 shares underlying
common stock purchase warrants (the "Shares"), to be offered for sale by the
selling stockholders named therein. As legal counsel for ProtoSource Corporation
we have examined the proceedings taken in connection with the sale of the Shares
by the selling stockholders in the manner set forth in the Registration
Statement in the Section entitled "Plan of Distribution." It is our opinion that
the Shares are legally and validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, including the prospectus constituting a part thereof, and further
consent to the use of our name wherever it appears in the Registration Statement
and any amendments thereto.
Very truly yours,
Gary A. Agron
Attorney at Law
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EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
ProtoSource Corporation
As independent certified public accountants, we consent to the
incorporation by reference in the Registration Statement on Form S-3 of
ProtoSource Corporation ("Registration Statement") of our report dated February
18, 1999, which appears on page F-2 of ProtoSource Corporation's Annual Report
on Form 10-KSB for the year ended December 31, 1998, and to the reference to our
firm under the heading "Experts" in the prospectus contained in said
Registration Statement.
Angell & Deering
Denver, Colorado
June 9, 1999
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