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As filed with the Securities and Exchange Commission on September 15, 2000
Registration No. 333-44958
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1 TO THE
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
VOXWARE, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-3934824
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
Lawrenceville Office Park
P.O. Box 5363
Princeton, New Jersey 08543-5363
(609) 514-4100
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Bathsheba J. Malsheen
President and Chief Executive Officer
Lawrenceville Office Park
P.O. Box 5363
Princeton, New Jersey 08543-5363
(609) 514-4100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of all communications, including all communications sent to the agent for
service, should be sent to:
Paul Jacobs, Esq.
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
(212) 318-3000
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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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 Commission, acting pursuant to said Section 8(a),
may determine.
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* THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH *
* THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD *
* NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE REGISTRATION STATEMENT BECOMES *
* EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL SECURITIES AND IS NOT *
* SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER *
* OR SALE IS NOT PERMITTED. *
********************************************************************************
SUBJECT TO COMPLETION DATED SEPTEMBER 15, 2000
VOXWARE, INC.
3,578,000 Shares of Common Stock
_________________________
The shares of our common stock may be offered and sold from time to
time by a stockholder of Voxware, Inc., as described in this prospectus.
The selling stockholder, Castle Creek Technology Partners LLC, acquired
shares of our series A convertible preferred stock and a warrant in a
private transaction on August 15, 2000.
The number of shares being offered consists of shares of common stock
as may be issued:
. upon conversion of 4,000 shares of our series A preferred stock;
. upon exercise of the warrant to purchase up to 727,273 shares of
common stock; and
. upon the payment of premiums, failures to satisfy certain obligations,
interest and anti-dilution adjustments on the series A preferred stock
and warrant issued in connection with the sale of such series A
preferred stock.
The selling stockholder will receive all of the proceeds from the sale
of the shares. The selling stockholder will pay all underwriting discounts
and selling commissions, if any, applicable to the sale of the shares. We
will not receive any proceeds from the sale of the shares other than the
exercise price payable to us upon the exercise of the warrant.
Our common stock trades on The Nasdaq National Market under the ticker
symbol "VOXW." On September 13, 2000, the last reported sale price of the
common stock on The Nasdaq National Market was $2.688 per share.
_________________________
The selling stockholder may offer the shares of common stock through
public or private transactions, on or off the United States exchanges, at
prevailing market prices, or at privately negotiated prices.
_________________________
Investing in our common stock involves risks. See "Risk Factors"
beginning on page 8 for a discussion of certain factors that you should
considered before you invest in any of the common stock being offered with this
prospectus.
_________________________
Neither the Securities and Exchange Commission nor any state
securities commission has 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 September ___, 2000.
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TABLE OF CONTENTS
Page
About This Prospectus.............................. 4
Where You Can Find More Information................ 4
Voxware, Inc....................................... 6
Risk Factors....................................... 8
Special Note Regarding Forward-Looking Statements.. 14
Use of Proceeds.................................... 14
Recent Developments................................ 15
Selling Stockholders............................... 22
Plan of Distribution............................... 25
Legal Matters...................................... 26
Experts............................................ 26
_________________________
ABOUT THIS PROSPECTUS
This prospectus is a part of a registration statement on Form S-3 filed by
us with the Securities and Exchange Commission to register 3,578,000 shares of
our common stock on behalf of the selling stockholder. This prospectus does not
contain all of the information set forth in the registration statement, certain
parts of which are omitted in accordance with the rules and regulations of the
SEC. Accordingly, you should refer to the registration statement and its
exhibits for further information about us and our common stock. Copies of the
registration statement and its exhibits are on file with the SEC. Statements
contained in this prospectus concerning the documents we have filed with the SEC
are not intended to be comprehensive, and in each instance we refer you to the
copy of the actual document filed as an exhibit to the registration statement or
otherwise filed with the SEC.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934. Therefore, we file reports, proxy statements and other information
with the SEC. You can read and copy all of our filings at the SEC's public
reference facilities in Washington, D.C., New York, New York and Chicago,
Illinois. You may obtain information on the operation of the SEC's public
reference facilities by calling the SEC at 1-800-SEC-0300. You can also read and
copy all of our filings at the offices of the Nasdaq Stock Market, 1735 K Street
N.W., Washington, D.C. 20006. Our common stock is traded on The Nasdaq National
Market under the symbol "VOXW." You may also obtain our SEC filings from the
SEC's Web site on the Internet that is located at http://www.sec.gov.
The SEC allows us to "incorporate by reference" much of the information we
file with them (File No. 0-021403), which means that we can disclose important
information to you by referring you to those publicly available documents. The
information that we incorporate by reference is considered to be part of this
prospectus. Because we are incorporating by reference our future filings with
the SEC, this prospectus is continually updated and those future filings may
modify or supersede some or all of the information included or incorporated in
this prospectus. This means that you must look at all of the SEC filings that we
incorporate by reference to determine if any of the
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statements in this prospectus or in any document previously incorporated by
reference have been modified or superseded. This prospectus incorporates by
reference the documents listed below and any future filings we will make with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934 until the selling stockholder sells all their shares of common stock:
. our annual report on Form 10-K for the fiscal year ended June 30, 2000,
filed on August 31, 2000;
. our current report on Form 8-K filed on October 6, 1999, August 11, 2000
and August 16, 2000;
. our proxy statement, filed on April 20, 2000; and
. our registration statement on Form 8-A, filed on September 20,
1996.
The information about us contained in this prospectus should be read
together with the information in the documents incorporated by reference. You
may request a copy of any or all of these filings, at no cost, by writing or
telephoning us at:
Voxware, Inc.
Lawrenceville Office Park
P.O. Box 5363
Princeton, New Jersey 08543-5363
(609) 514-4100
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. The selling stockholder will not
make an offer of these shares in any state where the offer is not permitted. You
should not assume that information in this prospectus or any supplement is
accurate as of any date other than the date on the front of these documents.
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VOXWARE, INC.
Voxware was formed in 1993. We design, develop, market and sell voice-based
products for the logistics, distribution and package sorting industries. Our
primary product is called VoiceLogistics, which we introduced in April 2000.
VoiceLogistics is a software and hardware based product which recognizes spoken
information and provides voice instructions. The purpose of our voice-based
systems is to provide large companies, which operate warehouses and distribution
centers, a more efficient way for their workers to perform a wide variety of
logistics tasks and enable them to enter information into the warehouse
management system. Prior to our introduction of VoiceLogistics, we sold older
generation speech recognition products. We currently offer VoiceLogistics in
different versions with numerous features.
Our products are designed specifically for use in warehouses, distribution
centers and other industrial settings. VoiceLogistics is designed primarily to
be used by workers performing such routine logistics tasks as order fulfillment,
known as picking, receiving, returns processing, cycle counting, cross-docking
and order entry. These workers can speak and hear voice instructions through a
headset that connects into the VoiceLogistics device. This enables them to enter
information related to the task they are performing into the warehouse
management system as they perform the task. Without the need to use paper forms
or hand-held scanners and other devices, the workers can freely use both hands
to complete their tasks. We believe that this enables workers to perform their
tasks faster and more accurately, as well as more efficiently and safely than
with alternative methods.
VoiceLogistics is designed to perform highly accurate speech recognition in
targeted noisy industrial environments. Therefore, the VoiceLogistics products
are not highly sensitive to noise typically found in industrial environments,
accurately taking in and translating the spoken information regardless of the
presence of operating machinery, personnel, conveyer belts and other sources of
random and non-random noise.
VoiceLogistics consists of software and hardware that is designed to work with
standard computer operating systems and programs which are used in warehouse
management. Our products operate with wireless networking, and web and speech
technology to provide a mobile, networked interface between the warehouse
management system, workers and management. VoiceLogistics is unique in the
industry today because we believe it is the first web-optimized speech
recognition system deployed in an industrial application that delivers a
networked interactive voice interface to computer systems.
VoiceLogistics is designed for use in most major industry sectors, including
consumer goods manufacturers, consumer packaged goods, direct to consumer, food
and grocery, retail, third-party logistics providers and wholesale distribution.
In addition, our older products continue to be deployed in package handling,
mail sorting, manufacturing, inspection and military combat applications.
We generate revenues primarily from product sales, licenses of technology, and
development services. Product sales consist of our VoiceLogistics product suite
described above, stationary voice-based devices primarily used for warehouse
receiving and package sorting applications, and accessories that complement our
products. Accessories include microphones, headsets and computer
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hardware. Development services consist of providing technical assistance to
customers in the custom design of their systems. License fees are generally
derived from licensing our voice-based software applications, as well as from
licensing our speech compression technologies to customers in the multimedia and
consumer devices market.
Our products are targeted primarily to be sold directly to large customers
with annual revenues in excess of $100 million. However, we also expect to
utilize other third parties such as consultants, value-added resellers, and
system integrators to also sell and/or assist us in selling our products to
these types of large customers. To date, we have signed agreements with several
of these third-party resellers. We expect our revenues from these third parties
to grow in the future as a percentage of our total revenue.
Until February 1999, our business was developing and licensing software for
speech compression to be used in multimedia Websites, Internet telephony and
consumer devices. In February 1999, we acquired from Verbex Voice Systems the
assets and technology on which VoiceLogistics is based. We have since largely
ceased our prior business, and in September 1999 we sold substantially all of
the assets related to that business. We still, however, continue to receive fees
from the licensing of our speech compression technologies to customers in the
multimedia and customer devices markets.
Our executive offices are located at 168 Franklin Corner Road, Lawrenceville,
New Jersey 08648, and our telephone number is (609) 514-4100.
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RISK FACTORS
Before you invest in our common stock, you should carefully consider the
following factors and cautionary statements, as well as the other information
set forth herein. If any of the following risks actually occur, our business,
financial condition or results of operations may suffer. As a result, the
trading price of our common stock could decline, and you could lose a
substantial portion of the money you paid to buy our common stock.
If we continue to incur operating losses, we may be unable to continue our
operations.
We have incurred losses since we started our company in August 1993. As of
June 30, 2000, we had an accumulated deficit of $22,548,000. If we continue to
incur operating losses and fail to become a profitable company, we may be unable
to continue our operations. We incurred net losses of approximately $2,867,000
in fiscal 1996, $6,859,000 in fiscal 1997, $4,894,000 in fiscal 1998, $4,286,000
in fiscal 1999 and $2,245,000 in fiscal 2000. In addition, we expect to continue
to incur net losses in at least the near term quarters. Our future profitability
depends on our ability to obtain significant customers for our products, to
respond to competition, to introduce new and enhanced products and to
successfully market and support our products. We cannot assure you that we will
achieve or sustain significant sales or profitability in the future.
If we are unsuccessful in managing our recently acquired business, we will
be unable to grow the business and generate revenues and profits.
In February 1999, we acquired from Verbex the assets and technology
relating to our business of selling speech recognition-based products for the
warehousing and manufacturing markets and other industrial markets. In September
1999, we also sold the assets relating to our prior business of licensing speech
coding and audio compression technologies. We therefore have very limited
operating history and experience in our primary line of business. In particular,
most of our senior management, including Dr. Bathsheba J. Malsheen, our
President and Chief Executive Officer, have been operating the Verbex business
only since February 1999. Accordingly, we cannot assure you that our management
will be effective in operating our business in order to generate substantial
revenues, or operating or net income.
If we don't develop or acquire and introduce new and enhanced products on a
timely basis, our products may be rendered obsolete.
The markets for our speech recognition products and technologies are
characterized by rapidly changing technology. The introduction of products by
others based on new or more advanced technologies could render our products
obsolete and unmarketable. Therefore, our ability to build on our existing
technologies and products to develop and introduce new and enhanced products in
a cost effective and timely manner will be a critical factor in our ability to
grow and compete. We cannot assure you that we will develop new or enhanced
products successfully and in a timely manner. Further, we cannot assure you that
new or enhanced products will be accepted by the market. Our failure to develop
new or enhanced products, including our failure to develop or acquire the
technology necessary to do so, would have a material, adverse effect on our
business.
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If our competitors introduce better or cheaper products, our products may
not be profitable to sell or to continue to develop.
The business in which we engage is highly competitive. Success is
influenced by advances in technology, product improvements and new product
introductions, as well as marketing and distribution capabilities, and price
competition. Failure to keep pace with product and technological advances could
adversely affect our competitive position and prospects for growth. Our products
compete with those being offered by larger, traditional computer industry
participants who have substantially greater financial, technical, marketing and
manufacturing resources than us. We cannot assure you that we will be able to
compete successfully against these competitors or that competitive pressures
faced by us would not adversely affect our business or operating results.
If we cannot integrate our speech recognition products with other
components of customer systems, we may not be able to sell our products.
Although state-of-the-art speech recognition technology is important to
generating sales in our target markets, other components of a voice-based system
are also necessary. Our products must be easily integrated with customers' asset
management and information systems. The ability to incorporate speech
recognition products into customers' systems quickly and without excessive cost
or disruption will be a key factor in our success. We do not now possess all the
necessary components. Acquisitions, joint ventures or other strategic
relationships may be required for us to develop or obtain access to the
necessary components to achieve market penetration. We cannot assure you that
our efforts will be successful and, to the extent we are unsuccessful, our
business may be materially, adversely affected.
If our third-party partners do not effectively market and service our
products, we will not generate significant revenues or profits from sales of our
products.
We expect to utilize third parties, such as consultants, value added
resellers, or VARs, and system integrators, to sell and/or assist us in selling
our products. To date, we have signed agreements with several of these third-
party partners. We believe that the establishment of a network of third-party
partners with extensive and specific knowledge of the various applications
critical in the industrial market is important for us to succeed in that market.
Some third-party partners also purchase products from us at a discount and
incorporate them into application systems for various target markets, and/or
consult us in the development of application systems for end users. For the
foreseeable future, we may sell fewer products if we cannot attract and retain
third-party partners to sell and service our products effectively and that
provide timely and cost-effective customer support. An increasing number of
companies compete for access to the types of partners we use. Our current
arrangements with third-party partners generally may be terminated by either
party at any time upon 30 days prior written notice. We cannot assure you that
our partners will continue to purchase and re-sell our products or provide us
with adequate levels of support. If our partner relationships are terminated or
otherwise disrupted our operating performance and financial results will be
adversely affected.
If our speech recognition products are not adopted for use in our target
markets, it will be difficult for us to generate revenues and profits.
The speech industry is relatively new and rapidly evolving. Accordingly, it
is difficult to accurately predict demand and market acceptance for our recently
introduced products. The speech industry currently has a limited number of
proven products and popular perceptions about the use of
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speech recognition products (including reliability, cost, ease-of-use and
quality) may impact the growth of the market for such products. While we believe
that speech recognition technology offers significant advantages over competing
products for a broad range of warehouse and industrial applications, we cannot
assure you that the market for voice-based products will grow significantly or
that our products will become widely accepted. Therefore, it is difficult to
predict the size and future growth rate, if any, of this market. If the market
for our products does not develop or if our new products do not achieve market
acceptance, our future financial results will be adversely affected.
If we are unable to raise additional capital in the future, we will be
unable to continue our product development, marketing and business generally.
In the future, we will need to raise substantial additional capital to fund
operations, including product development and marketing. Funding from any source
may not be available when needed or on favorable terms. If we cannot raise
adequate funds to satisfy our capital requirements, we may have to limit, delay,
scale-back or eliminate product development programs or marketing or other
activities. We might be forced to sell or license our technologies. Any of these
actions might harm our business. We cannot assure you that any additional
financing will be available or, if available, that the financing will be on
terms favorable to us. If financing is obtained, the financing may be dilutive
to our current stockholders.
If we cannot attract and retain management and other personnel with
experience in the areas of our business focus, we will not be able to manage and
grow our business.
We have been developing and selling our speech recognition products and
technologies only since February 1999. Since that time, we have been hiring
personnel with skills and experience relevant to the development and sale of
these products and technologies. If we cannot continue to hire such personnel
and to retain any personnel hired, our ability to operate our business
profitably will be materially adversely affected. Competition for qualified
personnel is intense and we cannot assure you that we will be able to attract,
assimilate or retain qualified personnel.
If our voicelogistics family of products is not successful in the market,
we will not be able to generate substantial revenues or achieve profitability.
Our success is substantially dependent on the success of our VoiceLogistics
family of products. Sales of our older generation voice-based products accounted
for approximately 28% of our net revenue in fiscal 1999 and approximately 47% of
our net revenue in fiscal 2000. If our VoiceLogistics products are accepted by
the market, these products will account for a large percentage of our net
revenue in the future. We do not currently have any other products which are
expected to generate significant revenues, other than our older generation
voice-based products and our VoiceLogistics products. If our products are
unsatisfactory, or if we are unable to generate significant demand for these
products, or we fail to develop other significant products, our business will be
materially and adversely affected.
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If we cannot protect our proprietary rights and trade secrets or if we are
found to be infringing on the patents and proprietary rights of others, our
business would be substantially harmed.
Our success depends in part on our ability to protect the proprietary
nature of our products, preserve our trade secrets and operate without
infringing the proprietary rights of others. If others obtain and copy our
technology or others claim that we are making unauthorized use of their
proprietary technology, we may get involved in lengthy and costly disputes to
resolve questions of ownership of the technology. If we are found to be
infringing on the proprietary rights of others, we could be required to seek
licenses to use necessary technology. We cannot assure you that licenses of
third-party patents or proprietary rights would be made available to us on
acceptable terms, if at all. In addition, the laws of certain countries may not
protect our intellectual property. To protect our proprietary rights, we seek
patents and we enter into confidentiality agreements with our employees and
consultants with respect to proprietary rights and unpatented trade secrets. We
cannot assure you that patent applications in which we hold rights will result
in the issuance of patents. We cannot assure you that any issued patents will
provide significant protection for our technology and products. In addition, we
cannot assure you that others will not independently develop competing
technologies which are not covered by our patents. We cannot assure you that
confidentiality agreements will provide adequate protection for our trade
secrets, know-how, or other proprietary information in the event of any
unauthorized use or disclosures. Any unauthorized disclosure and use of our
proprietary technology would have a material adverse effect on our business.
The price of our common stock has been highly volatile due to factors that
will continue to affect the price of our stock.
Our common stock closed as high as $12.50 and as low as $1.25 per share
between January 3, 2000 and August 15, 2000. Historically, the over-the-counter
markets for securities such as our common stock have experienced extreme price
fluctuations. Some of the factors leading to this volatility include:
. Fluctuations in our quarterly revenue and operating results;
. Announcements of product releases by us or our competitors;
. Announcements of acquisitions and/or partnerships by us or our
competitors; and
. Increases in outstanding shares of common stock upon exercise or
conversion of derivative securities.
These factors may continue to affect the price of our common stock in the
future.
If the trading price of our common stock falls, our stockholders could
experience substantial dilution as result of the terms of our series a preferred
stock and a warrant issued in a private placement in August 2000.
We issued 4,000 shares of our series A preferred stock and a common stock
purchase warrant to Castle Creek Technology Partners LLC in a private placement
on August 15, 2000. The number of shares of common stock issuable by us upon
conversion of the series A preferred stock and exercise of the warrant can
increase substantially in certain events. If these events were to occur, we
would not receive any additional payment from the holders of the series A
preferred stock and the
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warrant for the additional shares. Any increase in the number of shares of
common stock issuable may result in a decrease in the value of the outstanding
shares of common stock.
The series A preferred stock is initially convertible into 1,322,314 shares
of our common stock and the warrant is initially exercisable for 727,273 shares
of our common stock. The number of shares of common stock which we must issue
upon conversion of the series A preferred stock may increase substantially in
the following events:
. if the market prices of our common stock are generally lower during the
45 day period following the later of (i) 271 days after the effective
date of a registration statement covering the resale of the shares of
common stock and (ii) August 15, 2001, than the market price of our
common stock as of August 15, 2000;
. if we do not allow conversion of the shares of series A preferred stock
or we fail to deliver a stock certificate for common stock within the
required time periods after we receive notice of an intent to convert
the series A preferred stock;
. if a registration statement relating to the resale of the shares of
common stock has not been declared effective on or before February 10,
2001, or if we fail to maintain the effectiveness of such registration
statement or adequately update such registration statement; and
. if we issue securities at a price below the conversion price of the
series A preferred stock, which is initially $3.025, or at prices below
the prevailing market price at the time of issuance.
The number of shares of common stock which we must issue upon exercise of
the warrant may increase substantially in the following events:
. if the market price of our common stock on November 15, 2001 is lower
than the market price of our common stock as of August 15, 2000; and
. if we issue securities at a price below the exercise price of the
warrant, which is initially $3.4375, or at prices below prevailing
market price at the time of issuance.
The perceived risk of dilution or any actual dilution occasioned by
the series A preferred stock or the warrant may cause our stockholders to sell
their shares, which would contribute to the downward movement in stock price of
the common stock. In addition, the significant downward pressure on the trading
price of the common stock could encourage investors to engage in short sales,
which would further contribute to the downward spiraling price of the common
stock.
The perceived risk of dilution or any actual dilution occasioned by the
series A preferred stock or the warrant, could also make it difficult to obtain
additional financing. New investors could either decline to make an investment
in Voxware due to the potential negative effect of the dilution on a potential
investment or require that their investment be on terms at least as favorable as
the terms of the series A preferred stock and the warrant.
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Future sales of our common stock in the public market could adversely
affect the price of our common stock.
Sales of substantial amounts of our common stock in the public market that
is not currently freely tradable, or even the potential for such sales, could
impair the ability of our stockholders to recoup their investment or make a
profit. As of August 15, 2000, these shares consist of:
. approximately 128,718 shares of common stock owned by our executive
officers and directors;
. approximately 650,000 shares of common stock issued to a certain
stockholder;
. up to 2,850,412 shares of common stock issuable upon conversion of the
series A preferred stock; and
. approximately 1,115,273 shares issuable to warrant and option holders.
If the holder of the series A preferred stock and the warrant elects to
have the series a preferred stock and the warrant assumed by a potential
acquirer of Voxware, the acquirer could be deterred from completing the
acquisition.
The series A preferred stock and the warrant permit the holder to elect to
have their shares of series A preferred stock and the warrant remain outstanding
after an acquisition of Voxware, and to have the acquirer assume all of our
obligations to the holder. This could deter a potential acquirer from completing
an acquisition of Voxware.
Among our obligations which an acquirer might be forced to assume which
would act as a deterrent are:
. the price adjustment provisions which could have an adverse effect on
the market value of the acquirer's outstanding securities;
. the obligation to register the re-sale of the common stock issuable upon
conversion of the series A preferred stock and the warrant which could
result in the sale of a substantial number of shares in the market;
. the obligation to pay dividends on the series A preferred stock;
. the obligation to pay the holders of series A preferred stock the amount
invested plus accrued dividends before any other stockholder receives
any payment if we are liquidated; and
. the obligation to seek the consent of the holders of the series A
preferred stock before we can issue securities which have senior or
equal rights as the series A preferred stock, sell all or substantially
all of our assets, or take other actions with respect to the series A
preferred stock or securities which have less rights than the series A
preferred stock.
If our common stock is removed from the Nasdaq stock market, the
marketability of our common stock will be decreased substantially.
Our common stock is currently traded on the National Market segment of The
Nasdaq Stock Market. There can be no assurance that our common stock will
maintain the minimum bid price and continue to be listed on Nasdaq. In addition,
in order to maintain our Nasdaq listing, we are required
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to comply with the National Association of Securities Dealers, Inc.'s guidance
on "future priced securities." The guidance relates to Nasdaq listing
maintenance requirements which limit the number of shares of common stock that
may be issued and sold in a transaction or a series of related transactions,
without stockholder approval, at less than the market price of the common stock.
We believe that the series A preferred stock and the warrant to Castle Creek
contain the required limits and do not violate these criteria. The requirements
for continued listing on such market include, among other things, includes a
requirement that our common stock maintain a minimum bid price of $1.00 per
share. Our stock has traded at prices below $1.00 per share in the past. Any
removal from Nasdaq would have a material adverse effect on both the price and
the liquidity of our common stock.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains some "forward-looking statements" as defined in
the Private Securities Litigation Reform Act of 1995 and information relating to
us that are based on the beliefs of our management, as well as assumptions made
by and the information currently available to our management. When used in this
prospectus, the words "estimate, " "project," "believe," "anticipate," "intend,"
"expect" and similar expressions are intended to identify forward-looking
statements. These statements reflect our current views with respect to future
events and are subject to risks and uncertainties that could cause actual
results to differ materially from those contemplated in these forward-looking
statements, including those risks discussed in this prospectus.
You are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this prospectus. Except for
special circumstances in which a duty to update arises when prior disclosure
becomes materially misleading in light of subsequent circumstances, we do not
intend to update any of these forward-looking statements to reflect events or
circumstances after the date of this prospectus or to reflect the occurrence of
unanticipated events.
USE OF PROCEEDS
We will not receive any proceeds from the sale of common stock by the
selling stockholder. All of the net proceeds from the offer and sale of our
common stock will go to the selling stockholder.
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<PAGE>
RECENT DEVELOPMENTS
Private Placement of Series A Preferred Stock and Warrant to Selling Stockholder
On August 15, 2000, we completed a private placement pursuant to the terms
and conditions of the Securities Purchase Agreement with Castle Creek Technology
Partners, LLC. In the private placement, we offered and sold 4,000 shares of our
series A convertible preferred stock, having a stated value of $1,000 per share,
and a warrant to purchase 727,273 shares of our common stock for an aggregate
purchase price of $4 million. At the time of issuance, the shares of the series
A preferred stock are convertible into shares of our common stock. The shares of
the series A preferred stock and the warrant would have represented
approximately 9.3% and 5.1%, respectively, of the then outstanding shares of our
common stock if converted or exercised. The following is a summary of the
material terms of the series A preferred stock and the warrant:
Series A Preferred Stock
We filed a certificate of designations, preferences and rights, as amended,
for our series A preferred stock with the Delaware secretary of state on August
15, 2000. We issued all of the 4,000 shares of the series A preferred stock with
a stated value of $1,000 per share, authorized under the certificate of
designations to the selling stockholder. At present, other than the series A
preferred stock, we have no intention to issue any additional shares of
preferred stock.
Dividends. The holder of the series A preferred stock is entitled to
receive cumulative, non-compounded dividends on the shares of series A preferred
stock held by such selling stockholder at the annual rate per share of 7% of the
stated value of such shares, computed on the basis of a 360-day year of twelve
30-day months. Dividends shall be paid upon the sooner to occur of:
. the conversion or redemption of the shares of series A preferred stock;
or
. the liquidation of Voxware.
Upon our liquidation or upon the redemption (as described below) of the shares
of series A preferred stock, any accrued but undeclared dividends will be paid
to the holder of the outstanding shares of series A preferred stock in cash .
At the election of the holder of the series A preferred stock, dividends
shall be paid in shares of common stock or in cash. Dividends paid in shares of
common stock will be paid in full shares only.
Conversion. The series A preferred stock is convertible into common
stock so long as the conversion would not result in the holder being a
beneficial owner of more than 4.99% (9.99% in the case of a mandatory
conversion) of the outstanding shares of common stock. Additionally, at no time
would the series A preferred stock be convertible into a number of shares of
common stock which, when combined, with the number of shares issued or issuable
upon the exercise of the warrant or the conversion of the series A preferred
stock at an exercise or conversion price of less than $3.00 per share, would
represent more than 19.99% of the outstanding shares of
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<PAGE>
common stock on August 15, 2000 (2,850,413 shares of common stock, subject to
equitable adjustments for stock splits, stock, dividends, reclassifications or
similar events). Because of this limitation, we are not required to obtain
stockholder approval under the rules and regulations of the NASD for the
issuance of the series A preferred stock, the warrant or the shares of common
stock issuable upon the conversion or exercise thereof.
Optional Conversion. Each holder of series A preferred stock, at its
option, may convert any or all of its shares of series A preferred stock into a
number of fully paid and non-assessable shares of common stock determined, for
each share of series A preferred stock to be converted, in accordance with the
following formula:
$1000 + accrued but unpaid dividends (if elected by the holder)
---------------------------------------------------------------
Conversion Price
The conversion price is initially equal to $3.025. The conversion price
adjusts on and as of the first business day (for a 45 business day period)
following the later of:
. 271 days after the effective date of the registration statement, and
. August 15, 2001, to the lower of:
. 100% of the average of the closing bid prices for the shares of our
common stock on any five business days which constitute the lowest
five business day average closing bid price of the common stock for
any 10 consecutive business days during the 45 business day period, or
. $3.025.
Mandatory Conversion. Subject to the exchange cap described below and the
limitation on the number of shares on common stock that a holder may own (not
more than 9.99% of the common stock outstanding in the call of a mandatory
exercise) and assuming the following four conditions are met, we have the right
to require the mandatory conversion of all of the shares of series A preferred
stock. The four conditions are:
. the resale of all of the common stock issuable upon conversion of the
series A preferred stock must be covered by an effective registration
statement for at least 60 consecutive business days prior to the notice
of mandatory conversion to the holders and for a period of at least 60
consecutive business days prior to the effective time of the mandatory
conversion that is no less than five business days and more than 10
business days prior to the date on which such mandatory conversion is to
become effective;
. the closing bid price of the common stock must be greater than $11.00
per share (subject to equitable adjustment for stock splits, stock
dividends, reclassifications or similar events) for 10 consecutive
business days immediately prior to the delivery of notice of mandatory
conversion and for a period of 10 consecutive business days immediately
prior to the effective time of the mandatory conversion that is no less
than five business days and more than 10 business days prior to the date
on which such mandatory conversion is to become effective;
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. the common stock must be listed for trading on The Nasdaq National
Market or the New York Stock Exchange; and
. we must not have been in violation of any of its material obligations
under the agreements executed in connection with the private placement
at the time of the mandatory conversion and for a period of six months
prior to the mandatory conversion.
Adjustments to Conversion Price; Certain Protections. In addition to the
conversion price adjustment referred to above, if we fail to:
. allow conversion of shares of series A preferred stock, or
. fail to deliver a stock certificate representing common stock to be
issued to the holder within a period of days after notice of the
holder's intent to convert,
we will be required to pay such holder cash damages equal to the product of:
(A) the stated value of the series A preferred stock to be converted
times,
(B) the number of days the conversion is delayed times,
(C) $0.01.
In addition, if the conversion default continues, the conversion price adjusts
downward at least 1% per day until we cure our failure to deliver the
certificates or until the holder notifies us that it no longer wants to convert
the series A preferred stock.
The conversion price is also subject to adjustment on the occurrence of
the following events:
. Stock Splits, Dividends, Etc. If at any time on or after August 15,
2000, the number of outstanding shares of common stock is changed by
stock split, reverse stock split, stock dividend, combination,
reclassification or other similar event, the conversion price will be
proportionally adjusted.
. Major Transactions. If we complete a merger or other similar
transaction, or a sale of substantially all of its assets, the holder of
the series A preferred stock will be entitled, at its option, to:
. retain the series A preferred with all of its rights (subject
to our redemption of the series A transaction at 115% of the
stock with all of its rights preferred stock at the closing of
stated value plus accrued (subject to our the dividends); or
. receive transaction considerations, as if the holder had
converted the shares as of the day prior to the announcement of
the transaction.
. Adjustment Due to Distribution. If we declare or makes any distribution
of our assets (or rights to acquire our assets) to holders of any class
of common stock as a
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partial liquidating dividend or a distribution, each holder of the
series A preferred stock will be entitled to receive the amount of
assets that each holder could have acquired if the holder had converted
the series A preferred stock into shares of common stock on the day
prior to the date on which a record is taken to determine which
stockholders are entitled to a distribution, or if no such record is
taken, the date as of which holders of common stock are determined to be
entitled to a distribution.
. Issuance of Common Stock at a Price Below Conversion Price. Except as
stated above, if, at any time prior to August 15, 2001, we issue or sell
any shares of common stock for no consideration or for a consideration
per share less than the then current conversion price, then effective
immediately upon such issuance, the conversion price will be adjusted to
equal the consideration per share received in such issuance.
. Issuance of Common Stock at a Price Below Market Price. Except as
provided above, if, at any time, we issue or sell any shares of common
stock for no consideration or for a consideration per share less than
the then current market price or dilutive issuance, then effective
immediately upon the issuance, the conversion price will be adjusted in
accordance with the following formula:
E' = (E) (O + P/M) / (CSDO)
where:
E' = the adjusted conversion price
E = the then current conversion price;
M = the then current Market Price;
O = the number of shares of common stock outstanding
immediately prior to the issuance;
P = the aggregate consideration received by us upon such
issuance; and
CSDO = the total number of shares of outstanding immediately
after common stock deemed the issuance.
Exchange Cap. Our obligation to issue common stock upon the conversion or
otherwise, at a conversion price that is less than $3.00 per share, as adjusted,
pursuant to the conversion of series A preferred stock (including without
limitation a mandatory conversion) will be limited to the number of shares of
common stock equal to:
(A) 2,850,413 shares of common stock (as adjusted for stock splits, stock
dividends, reclassifications or similar events) minus,
(B) the sum of the shares of common stock previously issued upon the
exercise of the warrant at an exercise price (as described below) that
is less than $3.00 per share, as adjusted, plus,
(C) the number of shares of common stock previously issued upon the
conversion of series A preferred stock at a conversion price that is
less than $3.00 per share, as adjusted.
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No holder will be issued, upon conversion of such holder's shares of series A
preferred stock at a conversion price that is less than $3.00 per share, as
adjusted, shares of common stock in an amount greater than such holder's pro
rata portion of 2,850,413 shares of common stock.
Redemption at Maturity. We must redeem all shares of series A preferred
stock on February 15, 2003 for an amount per share equal to the stated value
plus accrued dividends plus unpaid conversion default payments.
Voting Rights. The holders of series A preferred stock have no voting
rights. The consent of the holders of the series A preferred stock is required,
however, to issue senior or pari passu securities or to sell substantially all
of the assets of Voxware. As a result, the issuance of the newly created series
A preferred stock with conversion rights may adversely affect the voting power
of the holders of our common stock, including loss of voting control to others
upon the conversion of the series A preferred stock into common stock.
Warrant
We also issued a four year warrant to the selling stockholder to purchase
727,273 shares of our common stock. The initial exercise price of the warrant is
$3.4375 per share, representing 125% of the market price of the common stock on
August 15, 2000.
On November 15, 2001, the exercise price of the warrant will be reset to
the lesser of $3.4375 and the market price of the common stock on such reset
date. The exercise price of the warrant is also subject to anti-dilution
adjustments in the same manner as the conversion price of the series A preferred
stock described in the section entitled "Recent Development" Private Placement
of Series A Preferred Stock and Warrant to Selling Stockholder; Series A
Preferred Stock; Conversion; Adjustments to Conversion Price; Certain
Protections" above.
If we complete a merger or other similar transaction, or a sale of
substantially all of its assets, and the common stock remains outstanding or our
stockholders receive any common stock or substantially similar equity interest,
the selling stockholder will be entitled, at its option, to:
. retain the warrant with all of its rights to such common stock under the
warrant; or
. receive the greater of, at the selling stockholder's sole discretion,
the:
. transaction consideration, as if the selling stockholder had exercised
the warrant as of the day prior to the announcement of the
transaction; or
. cash payment equal to the fair value of the warrant based on the
exercise price in effect on the date of the transaction.
We may not effect any such transaction unless prior to its consummation,
the successor corporation (if not us) assumes by written instrument the
obligations of the warrant and
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<PAGE>
the obligations to deliver to the selling stockholder such shares of stock,
securities, or assets as, in accordance with the provisions of the warrant.
We may cause the mandatory exercise of all or part of the warrant
after August 15, 2001, upon delivery of a mandatory exercise notice, if the
following conditions are met:
. the resale of all of the common stock issuable upon exercise of the
warrant and conversion of the series A preferred stock has been
registered by an effective registration statement for a period of at
least:
. 60 consecutive business days immediately prior to the date of
delivery of the mandatory exercise notice; and
. 60 consecutive business days immediately prior to the effective time
of the mandatory exercise that is no less than five business days
and more than 10 business days prior to the date on which such
mandatory exercise is to become effective,
. the closing bid price of the common stock was greater than $25.00 per
share for a period of at least the:
. 10 consecutive business days prior to the date of delivery of the
mandatory exercise notice; and
. 10 day period prior to the date of mandatory exercise,
. the common stock is listed on The Nasdaq National Market or the New York
Stock Exchange, and
. we are not on the date of delivery of mandatory exercise notice or at the
effective time of mandatory exercise (and have not been for the six
consecutive months prior to the date of delivery of the mandatory
exercise notice or the six consecutive months immediately prior to the
date of mandatory exercise) been in violation of any material obligations
under the operative agreements executed in connection with the private
placement.
The warrant is not exercisable by the selling stockholder or subject to the
mandatory exercise if such exercise would make the selling stockholder the
beneficial holder of more than 4.99% (9.99% in the case of a mandatory exercise
by us) of our total outstanding common stock.
Registration Rights
We entered into a registration rights agreement with the selling
stockholder on August 15, 2000. The registration rights agreement provides that
we must file a registration statement as soon as practicable, but in no event
later than August 31, 2000 covering the resale of all of the shares of common
stock issuable upon full conversion of the series A preferred stock and full
exercise of the warrant purchased and sold under the private placement. We are
required to register and keep registered, pursuant to an effective registration
statement, at least 175% of the aggregate number of shares of our common stock,
issued or issuable upon conversion of the series A
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<PAGE>
preferred stock and exercise of the warrant, without regard to any limitation on
any conversion or exercise. In the event the number of shares available under
the registration statement is, at any time, insufficient to cover the 175%
requirement, we must amend, if permissible, the registration statement, or file
a new registration statement (on the short form available therefor, if
applicable), or both, so as to cover 200% of the aggregate number of shares of
our common stock issued or issuable upon such exercise or conversion (in each
case, without giving effect to any limitation on conversion or exercise set
forth above), in each case, as soon as practicable, but in any event within five
days of the failure to meet the 175% requirement.
We must cause this registration statement to become effective as soon as
practicable, but in no event later than the 90th day, or 120 days if reviewed in
writing by the SEC, following August 31, 2000. If a registration statement
covering the shares of our common stock issued or issuable upon conversion of
the series A preferred stock and exercise of the warrant is not filed with the
SEC on or before August 31, 2000 or declared effective by the SEC on or before
the applicable 90 day, or 120 day, if applicable, registration deadline, or if
after such registration statement has been declared effective by the SEC, sales
of all the shares of common stock covered by the registration statement cannot
be made pursuant to such registration statement by:
. reason of a stop order;
. our failure to update the registration statement;
. the failure of any post-effective amendment to be declared effective; or
. any other reason outside the control of the selling stockholders,
then we are required to make payments to the selling stockholder in such amounts
and at such times as partial relief for the damages to the selling stockholder
by reason of any such delay in or reduction of their ability to sell the common
stock covered by the registration statement.
In the event of a registration failure occasioned by the failure to file
the registration statement (or, if applicable, an amendment) required to be
filed on or before August 31, 2000 (or, if applicable, the additional filing
deadline) or the failure of the registration statement to be declared effective
by the SEC on or before the applicable registration deadline, we will pay the
selling stockholders an amount equal to the product of:
(A) the multiplier (as described below) times,
(B) the funded amount (as described below) times,
(C) the number of months (prorated per day for partial months),
following August 31, 2000 (or, if applicable, the additional filing deadline)
and prior to the date the applicable registration statement required (or, if
applicable, the amendment) is filed with or declared effective by, the SEC.
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<PAGE>
For any given date, the multiplier is:
. during the first 30 days following the filing deadline, additional
filing deadline and/or the registration deadline, as applicable, during
which there is a registration failure or registration suspension, 1%,
. during the second 30 days following the applicable registration failure,
1 1/2%, and
. after the 60th day of a registration failure or registration suspension,
2%.
With respect to any given registration statement, the funded amount is the
aggregate purchase price of the series A preferred stock and the warrant
relating to the common stock registered (or to be registered) on such
registration statement.
In the event of a registration suspension, we will pay to the selling
stockholder an amount equal to the product of:
(A) the multiplier times,
(B) the funded amount times,
(C) the number of months (prorated per day for partial months),
from (x) the date on which sales of all the common stock first cannot be made to
(y) the date on which sales of all such common stock can again be made.
Payments shall be made within five days after the end of each period that
gives rise to such obligation, provided that, if any such period extends for
more than 30 days, payments will be made for each such 30 day period within five
days after the end of such 30 day period.
SELLING STOCKHOLDERS
The following table sets forth the common stock ownership of the selling
stockholder as of August 15, 2000, as adjusted to reflect the sale of the common
stock in this offering. Except as set forth below, the selling stockholder has
not held any position or office or had any other material relationship with us
or any of our predecessors or affiliates within the past three years.
We have chosen to register 3,578,000 shares of common stock on behalf of
the selling stockholder. The number of shares of common stock that we will
ultimately issue will be determined by the selling stockholder because:
. the selling stockholder may convert less than all of their shares of
series A preferred stock and exercise less than the face amount of
shares of common stock under the warrant;
. the conversion price of the series A preferred stock may vary with the
market price of our common stock;
. we may choose to pay dividends on the series A preferred stock in shares
of common stock;
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. we may be required to issue common stock upon our failure to satisfy
certain obligations; and
. the number of shares that we may issue upon conversion of the series A
preferred stock and exercise of the warrant is subject to certain anti-
dilution protections.
Because of these factors, we may not issue the entire 3,578,000 shares of
common stock covered by this prospectus. In fact, we may issue materially more
or materially less than 3,578,000 shares of common stock.
The 3,578,000 shares covered by this prospectus represent approximately 25.1% of
our outstanding shares of common stock as of August 15, 2000. Notwithstanding
the registration of the 3,578,000 shares of common stock covered by this
prospectus, the terms of the series A preferred stock prohibit us from issuing a
number of shares of common stock which, when combined with the number of shares
issued or issuable upon the exercise of the warrant or the conversion of the
series A preferred stock at an exercise or conversion price of less than $3.00
per share, would represent more than 19.99% of the outstanding shares of common
stock on August 15, 2000 (2,850,413 shares of common stock, subject to equitable
adjustments for stock splits, stock, dividends, reclassifications or similar
events). Because of this limitation, we are not required to obtain stockholder
approval under the rules and regulations of the NASD for the issuance of the
series A preferred stock, the warrant or the shares of common stock issuable
upon the conversion or exercise thereof. In addition, the series A preferred
stock and the warrant are not convertible or exercisable, as the case may be, at
any time that such conversion or exercise would result in the holder thereof
beneficially owning in excess of 4.99% (9.99% in the case of a mandatory
conversion of the series A preferred or a mandatory exercise of the warrant) of
our outstanding common stock.
The following table sets forth the aggregate number of shares of common
stock beneficially owned by the selling stockholder as of August 15, 2000 and
the percentage of all shares of common stock held by such selling stockholder
prior to and after giving effect to the offering based on 14,252,068 shares of
common stock outstanding as of August 11, 2000. We considered the following
factors and made the following assumptions regarding the table:
. beneficial ownership is determined under section 13(d) of the Securities
Exchange Act of 1934 and generally includes voting or investment power
with respect to securities and including any securities that grant the
selling stockholder the right to acquire common stock within 60 days of
August 15, 2000;
. the conversion price of the series A preferred stock in effect as of the
date of this prospectus, which is $3.025;
. the exercise price of the warrant in effect as of the date of this
prospectus, which is $3.4375;
. the selling stockholder may sell all of the securities offered by this
prospectus under certain circumstances;
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. the selling stockholder will not sell any other of our securities than
they may own; and
. the terms of the series A preferred stock and the warrant provide that
such securities are convertible or exercisable only to the extent that
the number of shares of common stock issuable upon such conversion and
exercise, together with the number of shares of common stock then owned
by the holder would not exceed 4.99% (9.99% in the case of a mandatory
conversion of the series A preferred stock or a mandatory exercise of
the warrant) of the then outstanding shares of our common stock as
determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934.
Accordingly the number of shares of common stock set forth in the third and
fourth columns in the table below for the selling stockholder exceeds the number
of shares of common stock that the selling stockholder beneficially owns in
accordance with Section 13(d) as of August 15, 2000. The 4.99% limitation may
not prevent any holder from converting all of its series A preferred stock or
exercise of the warrant into 4.99% of our outstanding common stock upon
subsequent conversions of series A preferred stock or exercise of the warrant.
Accordingly, the 4.99% limitation does not prevent the selling stockholder from
selling more than 4.99% of our common stock.
Notwithstanding these assumptions, the selling stockholder may sell less
than all of the shares listed on the table. In addition, the shares listed below
may be sold pursuant to this prospectus or in privately negotiated transactions.
Accordingly, we cannot estimate the number of shares of common stock that the
selling stockholder will sell under this prospectus.
The selling stockholder has advised us that it is the beneficial owners of
the shares being offered.
<TABLE>
<CAPTION>
Name of Selling Shares of common Shares of common stock Maximum number of shares Shares of common
Stockholder stock owned owned before offering of common stock offered stock owned
beneficially before plus maximum number of under this registration beneficially after
offering (%) (1) shares which may be statement (%) the offering (%)
acquired over the life of (3)
the securities owned (%)
(1)(2)
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Castle Creek 710,238 (4.99%) 2,049,587 (14.4%) 3,578,000 (25.1%) 0
Technology
Partners, LLC (4)
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
_________________
(1) Assumes a conversion price for the series A preferred stock of $3.025 and an
exercise price for each share of common stock underlying the warrant of
$3.4375, each as in effect on August 15, 2000. Under certain circumstances,
the conversion price for the series A preferred stock and the exercise price
for the warrant can fluctuate significantly. Thus, although 2,049,587 shares
of common stock are beneficially owned by the selling stockholder as of
August 15, 2000, such number could significantly increase over time in the
event of price adjustments to the conversion or exercise prices.
(2) Includes 1,322,314 shares of common stock issuable upon the conversion of
the series A preferred stock and 727,273 shares of common stock issuable
upon the exercise of the warrant without any price adjustments.
(3) The selling stockholder may offer and sell, all or a part, of the common
stock pursuant to this prospectus, no estimates can be made as to the amount
of shares of common stock that will be held by the selling stockholder after
the completion of this offering.
(4) Castle Creek Partners LLC, an Illinois limited liability company managed by
its members, is the investment manager of Castle Creek Technology Partners
LLC and has the ability to direct the voting and investment decisions of the
selling stockholder. Castle Creek Partners LLC and its members disclaim
beneficial ownership of the securities owned by the selling stockholder.
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PLAN OF DISTRIBUTION
We are registering the shares of common stock on behalf of Castle Creek
Technology Partners, LLC, the selling stockholder. We are paying all costs,
expenses and fees in connection with the registration of the shares offered by
this prospectus. Brokerage commissions, if any, attributable to the sale of
shares will be borne by the selling stockholder.
Sales or dispositions of shares of common stock may be effected from time
to time in transactions permitted by the Securities Act of 1933, including block
transactions, on the Nasdaq National Market or any other national securities
exchange or quotation service listing or quoting the common stock at the time of
sale, or in the over the counter market or in transactions other than on these
exchanges or systems, or in the over the counter market, or in negotiated
transactions, or a combination of these methods, at fixed prices which may be
changed, at market prices prevailing at the time of sale, or at negotiated
prices. The selling stockholder has advised us that they have not entered into
any agreements, understandings or arrangements with any underwriters or broker-
dealers regarding the sale of their shares of common stock. The selling
stockholder may effect transactions by selling common stock directly to
purchasers or to or through broker-dealers which may act as agents or
principals. Broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the selling stockholder and/or the purchasers of
common stock for whom the broker-dealers may act as agents or to whom they sell
as principal, or both. The compensation paid to a particular broker-dealer might
be in excess of customary commissions.
From time to time, the selling stockholder may be engaged in short sales,
short sales against the box, puts and calls and other hedging transactions in
our securities, and may sell and deliver the shares in connection with such
transactions or in settlement of securities loans. These transactions may be
entered into with broker-dealers or other financial institutions. In addition,
from time to time, a selling stockholder may pledge its shares pursuant to the
margin provisions of its customer agreements with its broker-dealer. Upon
delivery of the shares or a default by a selling stockholder, the broker-dealer
or financial institution may offer and sell the pledged shares form time to
time.
We have agreed not to, and some of our executive officers and all of our
directors have agreed that they will not:
(1) offer, sell, offer to sell, contract to sell, pledge, grant any option
to purchase or otherwise sell or dispose of (or announce any offer,
sale, offer of sale, contract of sale, pledge, grant an option to
purchase or other sale or disposition), directly or indirectly, any
shares of common stock or any warrant exercisable for common stock or
any options exercisable for common stock, or
(2) enter into any arrangement for the transfers to another, in whole or
in part, any securities beneficially owned (within the meaning of Rule
13d-3 under the Exchange Act) by such officer or director,
whether any transaction described in clause (1) or (2) above is to be settled by
delivery of our common stock or such other securities, in cash or otherwise, for
a 180 day period following the effectiveness of this registration statement,
without the prior written consent of the selling stockholder.
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The selling stockholder and any broker-dealers that act in connection with
the sale of the common stock may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933, and any commission
received by them and any profit on the resale of the shares of common stock as
principal might be deemed to be underwriting discounts and commissions under the
Securities Act of 1933. The selling stockholder may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions involving sales
of the shares against some liabilities, including liabilities arising under the
Securities Act of 1933. Liabilities under the federal securities laws cannot be
waived.
The selling stockholder will be subject to prospectus delivery requirements
under the Securities Act of 1933. In the event of a "distribution" of shares by
a selling stockholder, the selling stockholder, any selling broker or dealer and
any "affiliated purchasers" may be subject to Regulation M under the Securities
Exchange Act of 1934, which would generally prohibit these persons from bidding
for or purchasing any security that is the subject of the distribution until his
or her participation in that distribution is completed. In addition, Regulation
M generally prohibits any "stabilizing bid" or "stabilizing purchase" for the
purpose of pegging, fixing or stabilizing the price of common stock in
connection with this offering.
We have agreed to pay a finder's fee in the form of a warrant exercisable
into 50,000 shares of our common stock, to a party unrelated to the selling
stockholder in connection with this offering.
The securities were originally sold by us to the selling stockholder in
August 2000 in a private placement. We agree to indemnify and hold the selling
stockholder harmless against certain liabilities under the Securities Act that
could arise in connection with the sale of the securities by the selling
stockholder. The registration rights agreement dated August 15, 2000, by and
between us and the selling stockholder, provides that we and the selling
stockholder will indemnify each other against certain liabilities arising under
the Securities Act.
LEGAL MATTERS
The validity of the shares of common stock offered by this prospectus have
been passed upon for us by Fulbright & Jaworski L.L.P., New York, New York.
EXPERTS
The audited consolidated financial statements and schedules incorporated by
reference in this prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are incorporated by
reference in reliance upon the authority of said firm as experts in accounting
and auditing in giving said report.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
The expenses payable by the registrant in connection with the issuance and
distribution of the securities being registered hereby are as follows:
<TABLE>
<CAPTION>
Amount
------
<S> <C>
SEC Registration Fee.................................................................... $ 2,450.04
Nasdaq National Market Listing Fee...................................................... $ 17,500.00
Legal, Accounting and Printing Expenses................................................. $ 125,000.00
Miscellaneous Expenses.................................................................. $ 15,000.00
------------
Total................................................................................... $ 159,950.04*
============
</TABLE>
----------------
* Estimated.
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law (the "DGCL") empowers a
Delaware corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. A
corporation may, in advance of the final disposition of any civil, criminal,
administrative or investigative action, suit or proceeding, pay the expenses
(including attorneys' fees) incurred by any officer, director, employee or agent
in defending such action, provided that the director or officer undertakes to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the corporation. A corporation may indemnify such person
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
A Delaware corporation may indemnify officers and directors in an action by
or in the right of the corporation to procure a judgment in its favor under the
same conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or otherwise in the
defense of any action referred to above, the corporation must indemnify him
against the expenses (including attorneys fees) which he actually and reasonably
incurred in connection therewith. The indemnification provided is not deemed to
be exclusive of any other rights to which an officer or director may be entitled
under any corporation's by-law, agreement, vote or otherwise.
The Company's Certificate of Incorporation includes a provision that
eliminates the personal liability of its directors to the Company or its
stockholders for monetary damages for breach of their fiduciary duty to the
maximum extent permitted by the DGCL. The DGCL does not permit liability
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<PAGE>
to be eliminated (i) for any breach of a director's duty of loyalty to
the Company or its stockholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments of dividends or unlawful stock repurchases or redemptions, as
provided in Section 174 of the DGCL, or (iv) for any transaction from which the
director derived an improper personal benefit. In addition, as permitted in
Section 145 of the DGCL, the Certificate of Incorporation and By-Laws of the
Company provide that the Company shall indemnify its directors and officers to
the fullest extent permitted by the DGCL, including those circumstances in which
indemnification would otherwise be discretionary, subject to certain exceptions.
The By-Laws also provide that the Company shall advance expenses to directors
and officers incurred in connection with an action or proceeding as to which
they may be entitled to indemnification, subject to certain exceptions.
Each of the Employment Agreements with Bathsheba Malsheen and Nicholas
Narlis provides for indemnification to the maximum extent permitted by
applicable law. The Company has also indemnifies each of its directors and
executive officers with the maximum indemnification allowed to directors and
executive officers by the DGCL, subject to certain exceptions, as well as
certain additional procedural protections. In addition, the Company will
generally advance expenses incurred by directors and executive officers in any
action or proceeding as to which they may be entitled to indemnification,
subject to certain exceptions.
The indemnification provisions in the Company's Certificate of
Incorporation and By-Laws also permits indemnification for liabilities arising
under the Securities Act. Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
The Company currently carries director and officer liability insurance in
the amount of $5,000,000.
Item 16. Exhibits
3.1 -- Certificate of Designations, as amended, for the series A preferred
stock as filed with the Secretary of State of the State of Delaware
on August 14, 2000. (1)
5.1 -- Opinion of Fulbright & Jaworski L.L.P.*
10.1 -- Securities Purchase Agreement, dated as of August 10, 2000, by and
between Voxware, Inc. and Castle Creek Technology Partners, LLC. (1)
10.2 -- Registration Rights Agreement, dated as of August 15, 2000, by and
between Voxware, Inc. and
Castle Creek Technology Partners, LLC. (1)
10.3 -- Stock Purchase Warrant issued to Castle Creek Technology Partners,
LLC. (1)
10.4 -- Form of Warrant issued to Institutional Finance Group, Inc.*
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Fulbright & Jaworski L.L.P. (included in Exhibit 5.1)
24.1 -- Power of Attorney (included on signature page)*
----------------
*Previously filed on August 31, 2000.
(1) Incorporated by reference to the registrant's Current Report on Form 8-K
filed on August 16, 2000.
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<PAGE>
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or together, represent a
fundamental change in the information in the registration statement;
(iii) 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;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered 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.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission 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
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<PAGE>
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 of 1933 and will be governed by the final
adjudication of such issue.
-30-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
this registration statement No. 333-44958 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Princeton, State of New
Jersey, on September 14, 2000.
VOXWARE, INC.
(Registrant)
By: /s/ Bathsheba J. Malsheen
------------------------------------
Bathsheba J. Malsheen, President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Bathsheba J. Malsheen and Nicholas Narlis,
jointly and severally, his true and lawful attorneys-in-fact and agents, each
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments to
this registration statement, and to file the same, with exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that each of said attorneys-in-fact and agents, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------------------- --------------------- --------
<S> <C> <C>
President, Chief Executive September 15, 2000
Officer and Director
/s/ Bathsheba J. Malsheen (Principal Executive Officer
-------------------------------
Bathsheba J. Malsheen
Senior Vice President, Chief Financial September 15, 2000
Officer, Secretary and Treasurer
* (Principal Accounting Officer)
-------------------------------
Nicholas Narlis
* Director September 15, 2000
-------------------------------
David Levi
</TABLE>
-31-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
* Director September 15, 2000
-------------------------------
Eli Porat
</TABLE>
* By /s/ Bathsheba J. Malsheen [Bathsheba J. Malsheen] as attorney-in-fact
pursuant to power of attorney filed on August 31, 2000
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<PAGE>
INDEX TO EXHIBITS
3.1 -- Certificate of Designations, as amended, for the series A
preferred stock as filed with the Secretary of State of the State of
Delaware on August 14, 2000. (1)
5.1 -- Opinion of Fulbright & Jaworski L.L.P.*
10.1 -- Securities Purchase Agreement, dated as of August 10, 2000, by and
between Voxware, Inc. and Castle Creek Technology Partners, LLC. (1)
10.2 -- Registration Rights Agreement, dated as of August 15, 2000, by and
between Voxware, Inc. and Castle Creek Technology Partners, LLC. (1)
10.3 -- Stock Purchase Warrant issued to Castle Creek Technology Partners,
LLC. (1)
10.4 -- Form of Warrant issued to Institutional Finance Group, Inc.*
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Fulbright & Jaworski L.L.P. (included in Exhibit 5.1)
24.1 -- Power of Attorney (included on signature page)*
-----------------
*Previously filed on August 31, 2000.
(1) Incorporated by reference to the registrant's Current Report on Form 8-K
filed on August 16, 2000.
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