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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 12, 2000
REGISTRATION NO. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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VIDEO NETWORK COMMUNICATIONS, INC.
(FORMERLY OBJECTIVE COMMUNICATIONS, INC.)
(Exact Name of Registrant as Specified in Its Charter)
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DELAWARE 3669 54-1707962
(State or Other Jurisdiction of (Primary Standard Industrial (IRS Employer
Incorporation or Organization) Classification Code Number) Identification Number)
-------------------------------
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VIDEO NETWORK COMMUNICATIONS, INC. ROBERT H. EMERY
50 INTERNATIONAL DRIVE 50 INTERNATIONAL DRIVE
PORTSMOUTH, NEW HAMPSHIRE 03801 PORTSMOUTH, NEW HAMPSHIRE 03801
(603) 334-6700 (603) 334-6700
(Address, including Zip Code, and Telephone Number, (Name, Address, including Zip Code, and Telephone Number
including Area Code, of Registrant's Principal Executive of Agent for Service)
Offices)
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COPY TO:
ELLEN C. GRADY, ESQ.
SHAW PITTMAN
1676 INTERNATIONAL DRIVE
MCLEAN, VIRGINIA 22102
(703) 790-7946
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CALCULATION OF REGISTRATION FEE
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TITLE OF SECURITIES TO AMOUNT TO BE REGISTERED PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
BE REGISTERED (1) AGGREGATE PRICE PER AGGREGATE OFFERING REGISTRATION FEE
UNIT PRICE
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Common Stock, par value 1,760,000 shares $1.8906 (3) $3,327,456 (3) $878.45
$.01 per share (2)
Warrants to purchase one 1,760,000 $ 0.875 (5) $1,540,000 (5) $406.56
share of Common Stock (4)
Shares of Common Stock 1,760,000 shares $4.00 (6) $7,040,000 (6) $1,858.56
underlying Warrants
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Units underlying
placement agent's 264,000 $2.125 $561,000 $148.11
purchase option (7)(8)
Shares of Common stock
included as part of the
units underlying 264,000 shares Not applicable Not applicable Not applicable
placement agent's
purchase option (8)
Warrants included as
part of the units 264,000 Not applicable Not applicable Not applicable
underlying placement
agent's purchase option
(8)
Shares underlying
warrants included as 264,000 shares $4.00(6) $1,056,000 (6) $278.79
part of units underlying
placement agent's
purchase option
Total Not applicable Not applicable Not applicable $3,570.47
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(1) This registration statement is to register certain securities issued or
issuable in connection with a private placement (the "Private Placement")
of 1,760,000 units, each unit consisting of one share of common stock, par
value $.01 per share (the "Common Stock"), of the Registrant, and one
warrant to purchase one share of Common Stock of the Registrant at an
initial exercise price of $4.00 per share, that was completed in August
2000.
(2) Consists of 1,760,000 shares (the "Shares") of Common Stock issued in the
Private Placement that may be offered and sold by certain stockholders of
the Company on a delayed or continuous basis.
(3) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933, as amended (the
"Securities Act"), based on the average of the high and low prices for the
Registrant's Common Stock on the Nasdaq SmallCap Market on October 10,
2000.
(4) Consists of warrants to purchase 1,760,000 shares of Common Stock of the
Registrant at an initial purchase price of $4.00 per share (the "Public
Warrants") issued by the Registrant in the Private Placement that may be
offered and sold by certain stockholders of the Company on a delayed or
continuous basis.
(5) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act based on the average of the high
and low prices for the Registrant's Public Warrants on the Nasdaq SmallCap
Market on October 10, 2000.
(6) Pursuant to Rule 457(g) under the Securities Act, calculated based on the
initial exercise price to be paid to the Company by the holders upon
exercise of the Public Warrants.
(7) Consists of units issuable upon the exercise of an option to purchase (the
"Purchase Option") that was issued by the Registrant as partial
compensation to the placement agent of the Private Placement. Each unit
consists of one share of Common Stock and one Public Warrant. The Purchase
Option has an initial exercise price of $2.125 per unit.
(8) Pursuant to Rule 416 under the Securities Act, there are also being
registered such additional securities as may be issued pursuant to the
anti-dilution provisions of the Public Warrants and the Purchase Option.
-----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as possible after the effective date of this Registration Statement.
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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 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, please 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. [ ]
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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EXPLANATORY NOTE
This Registration Statement is to register certain securities issued or
issuable in connection with a private placement by Video Network
Communications, Inc. ("VNCI" or the "Company") completed in August 2000 (the
"Private Placement") of 1,760,000 units, each unit consisting of one share of
common stock, par value $.01 per share (the "Common Stock"), and one redeemable
warrant to purchase one share of Common Stock at an initial exercise price of
$4.00 per share (the "Public Warrants"). The Public Warrants issued in the
Private Placement are exercisable during the period from February 26, 2001 to
June 15, 2004, subject to prior redemption by the Company.
This Registration Statement registers the following securities for public
resale by certain selling stockholders: (1) 1,760,000 shares of Common Stock
issued in the Private Placement, (2) Public Warrants to purchase 1,760,000
shares of our Common Stock issued in the Private Placement, and (3) up to an
additional 1,760,000 shares of Common Stock underlying the Public Warrants. The
securities that are covered by this Registration Statement that may be offered
and sold by certain selling stockholders may be offered and sold on a delayed
or continuous basis from time to time.
This Registration Statement also registers the following securities for
issuance and sale by the Company: (1) the 1,760,000 shares of Common Stock
underlying the Public Warrants, (2) the 264,000 shares of Common Stock and the
Public Warrants to purchase 264,000 shares of Common Stock that comprise the
units issuable upon exercise of the purchase option (the "Purchase Option")
issued by VNCI to the placement agent of the Private Placement, and (3) the
264,000 shares of Common Stock underlying the Public Warrants included in the
units underlying the Purchase Option. The Purchase Option is exercisable at an
initial exercise price of $2.125 per unit, subject to adjustment, and is
exercisable between February 26, 2001 and August 25, 2005.
All of the securities to be offered and sold in this offering by the selling
stockholders are subject to a lock-up arrangement that expires on August 25,
2001, except that such securities may be transferred earlier with the prior
written consent of the placement agent of our Private Placement. All of the
equity securities covered by this registration statement to be offered and sold
by the selling stockholders will be sold for their own accounts, and we will
not receive any proceeds from the sale of such securities. If the Public
Warrants are exercised in full, we will receive gross proceeds of $7,040,000.
If the Purchase Option is exercised in full for cash, we would receive gross
proceeds of $561,000, and if the Public Warrants issuable upon exercise of the
Purchase Option are exercised in full, then we will receive additional gross
proceeds of $1,056,000. We intend to use any net proceeds from the exercise of
the Public Warrants and the exercise of the Purchase Option and the underlying
Public Warrants for general corporate purposes and to provide working capital.
<PAGE> 5
PROSPECTUS
VIDEO NETWORK COMMUNICATIONS, INC. [VNCI LOGO]
---------------
This prospectus relates to the offering and sale of the following
equity securities of Video Network Communications, Inc., by the persons
indicated.
Certain selling stockholders of VNCI are offering and reselling the
following securities:
- 1,760,000 outstanding shares of our common stock,
- our outstanding redeemable publicly traded warrants to purchase
1,760,000 shares of our common stock at an initial exercise price
of $4.00 per share (the "Public Warrants"), and
- up to an additional 1,760,000 shares of our common stock that
they may acquire upon exercise of our Public Warrants.
VNCI is offering the following securities for sale:
- up to 1,760,000 shares of our common stock for issuance upon
exercise of our outstanding Public Warrants,
- 264,000 shares of our common stock that may be issued as part of
units issuable upon exercise of a purchase option (the "Purchase
Option") issued to the placement agent of the private placement
that we completed in August 2000 as partial compensation for its
services,
- Public Warrants to purchase an additional 264,000 shares of
common stock that may be issued as part of units issuable upon
exercise of the Purchase Option, and
- the 264,000 shares of common stock underlying the Public Warrants
issuable as part of units issuable upon exercise of the Purchase
Option.
Each outstanding Public Warrant entitles the holder to purchase one
share of our common stock at an initial exercise price of $4.00 per share
during the period from February 26, 2001 to June 15, 2004. We may, with the
consent of the representative of our June 1999 public offering, redeem the
Public Warrants at any time after they become exercisable at a price of $.01
per warrant upon not less than 30 days' notice if the last sale price of the
common stock has been at least 200% of the then exercise price per warrant
(initially $8.00 per share) for the 20 consecutive trading days ending on the
third day prior to the day on which notice is given. The Public Warrants
issuable upon exercise of the Purchase Option will be part of the class of our
outstanding publicly traded warrants.
The outstanding Purchase Option is exercisable during a period
beginning on February 26, 2001 and ending on August 25, 2005, and is
exercisable in cash at an initial exercise price of $2.125 per unit. In lieu of
paying the exercise price in cash, holders of the purchase option also have the
right to convert any exercisable but unexercised portion of the Purchase Option
into securities using a conversion formula based on the value of the options
being converted. Upon exercise of the Purchase Option, each holder is entitled
to receive, for each Purchase Option exercised, one share of our common stock
and one Public Warrant.
All of the securities to be offered and sold in this offering by the
selling stockholders are subject to a lock-up arrangement that expires on
August 25, 2001, except that such securities may be transferred earlier with
the prior written consent of the placement agent of our Private Placement.
All of the equity securities covered by this registration statement to
be offered and sold by the selling stockholders will be sold for their own
accounts, and we will not receive any proceeds from the sale of such
securities. If the Public Warrants are exercised in full, we will receive gross
proceeds of $7,040,000. If the Purchase Option is exercised in full for cash,
we would receive gross proceeds of $561,000, and if the Public Warrants
issuable as part of the units upon exercise of the Purchase Option are
exercised in full, then we will receive
<PAGE> 6
additional gross proceeds of $1,056,000. We intend to use any net proceeds from
the exercise of the Public Warrants, or the exercise of the Purchase Option and
the underlying Public Warrants for general corporate purposes and to provide
working capital. We may pay certain solicitation fees in connection with the
exercise of the publicly traded warrants. At the time we completed our June
1999 public offering, we agreed to pay EarlyBirdCapital, Inc., the
representative of the underwriters of that offering and the placement agent for
our Private Placement, a fee equal to 5% of the exercise price of each Warrant
exercised if EarlyBirdCapital, Inc. solicited the exercise of such Warrant. The
payment of the solicitation fee is subject to certain conditions, including,
among others, limitations imposed by the National Association of Securities
Dealers, Inc. on the payment and scope of such fees.
The shares of common stock issuable upon exercise of our outstanding
Public Warrants, and the securities that are issuable by us upon exercise of
the outstanding Purchase Option, are offered solely by us and no underwriters
are participating in the offering. The securities offered by the selling
stockholders may be offered by them for sale from time to time in one or more
transactions, including block trades, on the Nasdaq SmallCap market, in the
over-the-counter market, in privately negotiated transactions, in other methods
of sale described under "Plan of Distribution" later in this prospectus. The
selling stockholders may sell the securities offered by this prospectus in
amounts and at times determined by them.
The selling stockholders and any broker-dealer or agent that
participates with the selling stockholders in the distribution of the equity
securities may be deemed to be "underwriters" within the meaning of section
2(11) of the Securities Act of 1933, as amended, in which case any commissions
or profits on the resale of the securities may be deemed underwriting
commissions or discounts under the Securities Act.
We will pay all of the costs and fees relating to the registration of
the securities covered by this prospectus. We will not pay, however, any
discounts, concessions or commissions payable to underwriters, dealers or
agents incident to the offering of the securities.
Our common stock and Public Warrants trade on the Nasdaq SmallCap
Market under the symbols VNCI and VNCIW, respectively. On October 10, 2000, the
last sales prices of the common stock and Public Warrants as reported on The
Nasdaq SmallCap Market was $2.00 per share and $0.875 per Public Warrant.
INVESTING IN OUR EQUITY SECURITIES INVOLVES A HIGH DEGREE OF RISK. YOU
SHOULD INVEST IN THE SECURITIES ONLY IF YOU CAN AFFORD TO LOSE YOUR ENTIRE
INVESTMENT. SEE "RISK FACTORS" BEGINNING ON PAGE 6 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 7
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We are subject to the information requirements of the Securities
Exchange Act of 1934, and, in accordance with those requirements, we file
reports and other information with the SEC. Our reports, proxy statements, and
other information can be inspected without charge at the public reference rooms
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549; Seven
World Trade Center, 13th Floor, New York, New York 10048; and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of those materials also may
be obtained from the public reference section of the SEC, 450 Fifth Street,
N.W., Washington, D.C., 20549, at prescribed rates. You may obtain additional
information about the operation of the public reference rooms by calling the
SEC at 1-800-SEC-0330. Information is also publicly available through the SEC's
web site located at http://www.sec.gov. Our common stock and publicly traded
warrants are quoted on the Nasdaq SmallCap Market and information concerning us
also can be inspected at the office of the Nasdaq Stock Market, 1735 K Street,
N.W., Washington, D.C. 20006-1500.
The SEC maintains an Internet site at http://www.sec.gov that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC, including VNCI. We maintain a
Web site that includes our SEC reports as well as other information about us at
http://www.vnci.net. Other than the information that we specifically
incorporate by reference in this prospectus as set forth below, none of the
other information referred to above should be considered part of this
prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we
file with them, 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 that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings with
the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), until the selling stockholders sell all of the securities covered by
this prospectus. This prospectus is part of a registration statement we filed
with the SEC.
1. Our registration statement on Form 8-A filed with the SEC on
March 13, 1997, registering our common stock under Section 12(g)
of the Exchange Act;
2. Our registration statement on Form 8-A filed with the SEC on
June 18, 1999, registering units and the Public Warrants under
Section 12(g) of the Exchange Act;
3. Our Annual Report on Form 10-KSB for the year ended December 31,
1999, as filed with the SEC on March 30, 2000;
4. Our Quarterly Report on Form 10-QSB for the quarter ended March
31, 2000, as filed with the SEC on May 14, 2000;
5. Our Quarterly Report on Form 10-QSB for the quarter ended June
30, 2000, as filed with the SEC on August 16, 2000;
6. Our Current Report on Form 8-K, as filed with the SEC on August
28, 2000;
7. Our Current Report on Form 8-K, as filed with the SEC on
September 1, 2000; and
8. All documents filed by VNCI pursuant to Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended,
subsequent to the date of this Prospectus.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address: Video Network Communications, Inc.,
50 International Drive, Portsmouth, New Hampshire 03801, Attention: Robert H.
Emery, Chief Financial Officer and Vice President, Administration, telephone
number 603-334-6700.
We have filed with the SEC a registration statement on Form S-3 under
the Securities Act with respect to the equity securities offered under this
prospectus. This prospectus, which constitutes a part of the registration
statement, does not contain all of the information set forth in the
registration statement, certain terms of which are omitted in accordance with
the rules and regulations of the SEC. Statements contained in this prospectus
as to the contents of any contract or other documents are not necessarily
complete, and in each instance, reference is made to the copy of such contract
or documents filed as an exhibit to the registration statement, each such
statement being qualified in all respects by such reference and the exhibits
and schedules thereto. For further information regarding VNCI and the equity
securities offered under this prospectus, we refer you to the registration
statement and the exhibits and schedules which may be obtained from the SEC at
its principal office in Washington, D.C. upon payment of the fees prescribed by
the SEC.
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TABLE OF CONTENTS
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PAGE
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Where to Find Additional Information....................... 3
Incorporation of Certain Documents By Reference ........... 3
Table of Contents.......................................... 4
Summary.................................................... 5
Risk Factors............................................... 6
Use of Proceeds............................................ 11
Price Range of Common Stock................................ 11
Beneficial Ownership of Selling Stockholders.............. 13
Certain Transactions With Selling Stockholders............. 15
Our Relationship With EarlyBirdCapital, Inc. .............. 15
Description of Securities.................................. 16
Plan of Distribution....................................... 17
Legal Matters.............................................. 18
Experts.................................................... 18
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Video Network Communications, Inc. was incorporated in 1993 under the
corporate name "Objective Communications, Inc." We changed our name to Video
Network Communications, Inc. in September of 1999. Our executive offices are
located at 50 International Drive, Portsmouth, New Hampshire 03801, and our
telephone number is (603) 334-6700.
Unless otherwise indicated in this prospectus, all information in this
prospectus gives effect to a one share for seven shares reverse stock split of
our issued and outstanding common stock effective on April 14, 1999, gives
effect to the conversion to common stock of our issued and outstanding Series B
5% Cumulative Convertible Preferred Stock on June 18, 1999, and gives effect to
the conversion to common stock of our outstanding 5% Convertible Debentures due
2003 on June 18, 1999.
Some of the statements contained in this prospectus including
statements under "Prospectus Summary" and "Risk Factors" are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 and may involve a number of risks and uncertainties. Actual results and
future events may differ significantly based upon a number of factors,
including:
- risks in product and technology development;
- customer and market acceptance of new products;
- demand for our products; and
- the impact of competitive products and pricing.
Additional information about these and other risks and uncertainties that may
affect VNCI and our business is included in "Risk Factors" beginning on page 6
of this prospectus.
In this prospectus, we refer to Video Network Communications, Inc., a
Delaware corporation, as we, the Company or VNCI. We refer to the stockholders
who beneficially own securities being offered and sold using this prospectus as
the selling stockholders. We refer to prospective investors as you or the
investor(s).
VidPhone(R) and VidModem(R) are registered trademarks of VNCI, and we
have an application pending to register VNCI(R). This prospectus also contains
trademarks and trade names of other companies.
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<PAGE> 9
SUMMARY
Video Network Communications is a Delaware corporation formed in 1993
to design, develop and market video network systems to deliver full motion,
high resolution video to the business user's desktop on a cost-effective basis.
Users of the VidPhone video network system can view broadcast video,
participate in multi-party video conferences and retrieve stored video on
demand. Our VidPhone system distributes video to and from desktop and laptop
personal computers and conference rooms configured with VidPhone stations, over
the same wiring used by the telephone without interfering with normal telephone
usage. We believe that the VidPhone system offers greater functionality and
compatibility with existing infrastructure and delivers higher quality than
other video network or conferencing systems available today.
We are a relatively new company offering a new technology product. We
first introduced our technology and initial products in late 1998 and
demonstrated our first commercial product during the first half of 1999.
We reported revenues of $1,793,000 for the quarter ended June 30,
2000, an increase of 174% when compared with revenues reported for the first
quarter of 2000 and an increase of 117% compared to the second quarter of 1999.
Our operating expenses for the quarter ended June 30, 2000 of $2,291,000 were
approximately 15% higher than our operating expenses in the first quarter of
2000 and 8% higher than our operating expenses in the second quarter of 1999.
At this stage of development it is difficult for us to predict with accuracy
the level of our sales in future periods, or when our marketing initiatives
will result in sales. Each sale of our equipment continues to account for a
significant portion of our revenues. Accordingly, we expect to continue to
experience significant, material fluctuations in our revenues on a quarterly
basis for the foreseeable future.
Our VidPhone enterprise video system utilizes patented technology to
distribute TV-quality video, FM-quality stereo audio and data to laptop or
personal computers using the telephone wiring connecting telephones to the PBX
or CENTREX and bypasses the enterprise's local area network. We are continuing
to invest a significant amount of our resources in research and development,
because we consider the commercialization of our products to be fundamental to
our future success. In April, we announced our implementation of Java
technology, V 2.0, which will enable us to offer customers a
platform-independent video network solution. In addition to V 2.0, we are
currently developing an interface to support Internet protocol (IP)-based local
area network applications. We currently expect that this interface will be
available at the end of 2000.
We have completed the restructuring of our sales and marketing
team that began in November 1999. As part of this effort, we have recently
concentrated our sales and marketing efforts in five vertical markets and, as
discussed in detail below in the Sales and Marketing portion of the Business
section, we have experienced some success in each of these markets. We have
targeted the finance, medicine, education, video broadcast and government
sectors of the market. We have also recently had significant sales to resellers
internationally in Europe and Asia. Several of our recent sales have been to
key reference accounts such as the Inter-American Development Bank (IADB), the
Cole Eye Institute of the Cleveland Clinic, and the First District of the
Federal Court System in Concord, New Hampshire. We believe that further
development of these and additional reference accounts will shorten our sales
cycle in the future, while promoting relationships with resellers.
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<PAGE> 10
RISK FACTORS
Investing in our equity securities is very risky. You should be able
to bear a complete loss of your investment. You should consider carefully the
following factors, among others.
WE WILL REQUIRE ADDITIONAL FINANCING
We estimate that our cash on hand will fund and anticipated receipts
from operations will fund our operations for the foreseeable future. However,
changes in the market in which we operate, in our business, or in our business
plan could increase our need for additional capital. Our future capital
requirements could exceed our current expectations as a result of increases in
the cost of manufacturing and marketing activities, the size of our research
and development programs, the length of time required to collect accounts
receivable, and competing technological and market developments.
After our current cash is exhausted, we will need additional cash to
continue operating. To date, the cash generated from operations has not been
sufficient to fund our business and we have been dependent on financings to
continue operating. We expect that we will continue to require outside debt or
equity financing for the foreseeable future. We do not currently have any lines
of credit or bank financing, and we do not anticipate having access to bank
financing for the foreseeable future. We may not be able to raise any
additional money through equity or debt financings on acceptable terms or at
all. If we were to raise additional funds through the issuance of equity or
convertible debt securities, your investment in VNCI could be substantially
diluted and those securities could have preferences and privileges that your
securities do not have. If we are not able to complete additional financings
when capital is needed, we will not be able to continue operating.
WE MAY BE UNABLE TO MEET THE PAYMENT SCHEDULE ON NOTES PAYABLE
We currently have an outstanding note to a trade creditor, Sanmina
Corp., in the original principal amount of $4.3 million, relating to 1998
accounts payable due Sanmina which were reduced to a note in January 1999. In
January 2000, we defaulted on the interest payment due to Sanmina and have not
made subsequent interest and principal payments to Sanmina in 2000 when due. In
August 2000, we renegotiated the terms of the note to Sanmina. Under the
current terms of the note, we paid Sanmina $150,000 on the closing date of the
Private Placement, and we are obligated to pay Sanmina (i) $150,000 on or
before November 15, 2000 and (ii) an amount each month equal to a percentage of
the accounts receivable that we collected in the previous calendar month, with
the percentage ranging from 0% to 5%, based upon the net amount of accounts
receivable that we collect. The Sanmina note is secured by our personal
property and certain of our other assets. At September 30, 2000, we owed
Sanmina approximately $3.3 million in principal and interest on this note.
We also have a note outstanding to our legal counsel for legal fees
that were incurred prior to 1999. Under the terms of the note, we are obligated
to make monthly principal and interest payments to our legal counsel of
approximately $26,000 per month. In January 2000, we did not make the required
interest payment to our counsel, and we did not make subsequent interest and
principal payments to legal counsel in 2000 when due. Subsequently, we paid our
legal counsel $77,874 on the note. On August 25, 2000 we paid legal counsel a
lump sum payment of approximately $51,000 and have agreed to pay legal counsel
$20,000 each month until the note is paid in full. At September 30, 2000, we
owed our legal counsel approximately $167,000 in principal and interest on this
note.
We cannot assure you that we will be able to make the required
principal and interest payments on these notes when due. If we default on these
notes, we may lose those assets that serve as security or we may not be able to
continue to receive legal services from our attorneys and we could be found
liable to pay immediately in one payment all of the aggregate outstanding
principal and interest on the notes.
CUSTOMERS MAY NOT BUY OUR PRODUCTS DUE TO CONCERNS OVER OUR VIABILITY
Due to our recurring losses from operations and lack of cash, some
potential customers may decide not to purchase our video network system because
of concerns that we may be unable to service, enhance or upgrade the systems.
If we are not able to alleviate concerns about our long-term viability, we may
not be able to market and sell our video network system successfully and
continue operations.
- 6 -
<PAGE> 11
WE HAVE A HISTORY OF SIGNIFICANT LOSSES AND EXPECT LOSSES TO CONTINUE
We have incurred substantial losses from operations to date and had an
accumulated deficit of approximately $56.1 million through June 30, 2000. Our
financial statements for the year ended and as of December 31, 1999, indicate
that there is substantial doubt about our ability to continue as a going
concern. We expect to continue to lose money for the foreseeable future.
We recognized only $2.4 million in revenues during the first 6 months
of 2000, recognized only $2.4 million in revenues during 1999, and recognized
only $766,000 in revenues from the sale of products during 1998. We did not
recognize any revenues in 1997. Accordingly, there is no historical basis for
you to expect that we will be able to realize operating revenues or profits in
the future. We have a limited number of orders for delivery during the
remainder of 2000 and we cannot predict with accuracy what our revenues will be
in the future. Our ability to generate sales and to recognize operating
revenues in the future will depend on a number of factors, certain of which are
beyond our control, including:
- customer acceptance of products shipped and installed to date
and in the future;
- our ability to generate new sales of products and secure
customer acceptance; and
- customer payments
WE HAVE A LIMITED OPERATING HISTORY
Although we were incorporated in 1993, we focused on research and
development until we shipped our first commercial VidPhone system in the third
quarter of 1998. James F. Bunker, our Chairman, has been with us since July
1998 and Carl Muscari, our President and Chief Executive Officer, joined us in
September 1999. In January 2000, we hired Stephen A. LaMarche as Vice
President, Sales and Marketing. Because of our limited operating history and
the relatively short tenure of several of our key senior managers, you have
limited information on which to assess our ability to realize operating
revenues or profits in the future.
WE MAY NOT BE ABLE TO MARKET OUR PRODUCTS EFFECTIVELY
We Are Dependent on Resellers. We distribute our products primarily
through major sellers of telephony products, system integrators and Value Added
Resellers ("VARs"). Currently, we have agreements with approximately twelve
resellers. These arrangements are for relatively short contractual periods and
may be terminated under certain circumstances. We cannot assure you that we
will be able to maintain existing reseller relationships or establish new ones.
We compete for relationships against third-party resellers with larger,
better-established companies with substantially greater financial resources. If
we cannot maintain our current reseller relationships and cannot develop new
relationships, we may not be able to sell our video network system.
Resellers May Not Be Effective Distributors. Sales to third party
resellers are expected to generate a significant part of our future revenues.
However, we have sold only a limited number of video network systems and
components under our reseller arrangements, and to date have recognized minimal
revenues from those sales. We currently have limited orders from our resellers
for additional sales of VidPhone systems. If our resellers fail to market and
sell our products, or our products fail to become an accepted part of the
resellers' product offerings, the value of your investment could be reduced.
We May Not Be Able To Develop Direct Sales and Marketing Capabilities.
We expect to depend on the marketing efforts of our resellers for the
foreseeable future. However, we are developing a small direct marketing
capability to promote our video network system and to support our resellers. We
cannot assure you that we will be able to create awareness of, and demand for,
our products through our marketing efforts, or that the development of our
direct marketing capabilities will lead to sales of our products and services.
If we cannot successfully develop our own sales and marketing capabilities, we
may not succeed in building brand-name recognition of the VidPhone system, and
we will remain solely dependent on reseller efforts.
- 7 -
<PAGE> 12
THE MARKET FOR VIDEO COMMUNICATIONS PRODUCTS MAY NOT DEVELOP
The market for video communications products is new and is rapidly
evolving. As is typical for a new technology, demand for and market acceptance
of new products is unpredictable. If the market for video communications
products fails to develop or develops more slowly than expected, our business
and financial condition could be materially and adversely affected.
UNCERTAIN PROTECTION OF INTELLECTUAL PROPERTY
Our success will depend, in part, on our ability to protect our
intellectual property rights to our proprietary hardware products. Toward that
end, we rely in part on trademark, copyright and trade secret law to protect
our intellectual property in the U.S. and abroad. The degree of protection
provided by patents is uncertain and involves largely unresolved complex legal
and factual questions.
The process of seeking patent and trademark protection can be long and
expensive, and there is no assurance that any pending or future applications
will result in patents and/or registered trademarks. Further, although we have
some patents on our technology, we cannot assure you that these or any other
proprietary rights granted will provide meaningful protection or any commercial
advantage to us. We also cannot assure you that claims for infringement will
not be asserted or prosecuted against us in the future, although we are not
presently aware of any basis for claims. A number of companies have developed
and received proprietary rights to technologies that may be competitive with
our technologies. Most of these entities are larger and have significantly
greater resources than we do. Given the rapid development of technology in the
telecommunications industry, we cannot assure you that our products do not or
will not infringe upon the proprietary rights of others.
WE ARE DEPENDENT ON THIRD PARTIES FOR MANUFACTURING
We outsource the manufacturing and assembly of many of the components
of our products. We cannot assure you that our subcontractors will continue to
perform under our agreements with them or that we will be able to negotiate
continuing arrangements with these manufacturers on acceptable terms and
conditions, or at all. In particular, our failure to pay these manufacturers
when due could affect their willingness to continue working with us. If we
cannot maintain relationships with our current subcontractors, we may not be
able to find other suitable manufacturers. Any difficulties encountered with
these manufacturers could cause product defects and/or delays and cost overruns
and may cause us to be unable to fulfill orders on a timely basis. Any of these
difficulties could materially and adversely affect us.
GOVERNMENT REGULATION
Several components of our video network system, including the VidModem
and VidPhone Switch, must comply with certain regulations of the Federal
Communications Commission ("FCC"). Under FCC regulations, we will be required
to follow a verification procedure consisting of a self-certification that the
VidModem complies with applicable regulations pertaining to radio frequency
devices. A qualified, independent testing facility tested the VidModem, and it
was found to comply with FCC regulations. We obtained equipment registrations
from the FCC for certain VidPhone system components, including the VidPhone
switch that is connected to the public switched telephone network.
Although we believe that at present the VidPhone system complies with
all applicable government regulations, future government regulations could
increase the cost of bringing products to market or adversely affect our
ability to market and sell our products and technology.
- 8 -
<PAGE> 13
WE MAY REDEEM THE PUBLIC WARRANTS
Beginning on February 26, 2001, we may redeem the Public Warrants at a
price of $.01 per warrant upon 30 days' prior written notice after our common
stock has traded at a closing bid price equal to or greater than 200% of the
then exercise price of the Public Warrants (initially $8.00 per share) for a
period of at least 20 consecutive trading days, provided that the shares of
common stock underlying the Public Warrants are then the subject of an
effective registration statement filed with the SEC. If the Public Warrants are
redeemed, holders of the Public Warrants will lose their rights to exercise the
Public Warrants upon the expiration of the 30-day notice period. Upon receipt
of a notice of redemption, holders would be required to (a) exercise the Public
Warrants and pay the exercise price at a time when it may be disadvantageous
for them to do so, (b) sell the Public Warrants at the then current market
price, if any, when they might otherwise wish to hold the Public Warrants, or
(c) accept the redemption price which is likely to be substantially less than
the market value of the Public Warrants prior to the notice of redemption.
OUR MARKET VALUE IS HIGHLY VOLATILE
The market price of our common stock has been highly volatile and may
continue to fluctuate in the future. We completed an initial public offering of
295,714 shares of our common stock at a price of $38.50 per share in April
1997. Subsequently, in November 1997 we completed a follow-on public offering
of 142,857 shares of common stock at a price of $161.875 per share. In June of
1999, we completed a public offering of 2,300,000 units, each unit consisting
of three shares of common stock and two Public Warrants with an exercise price
of $4.00. The units were sold at a price of $7.50 per unit. In August of 2000,
we completed the private placement of 1,760,000 units, each unit consisting of
one share of common stock and one Public Warrant with an exercise price of
$4.00. The units were sold at a price of $1.50 per unit. On October 10, 2000,
the last sales prices of our common stock and the Public Warrants as reported
on the Nasdaq SmallCap Market was $2.00 per share and $0.875 per Public
Warrant. As a result of our stock price volatility, it is difficult to
determine the market value of our company. We have no way of ascertaining the
prices of our equity securities in the future.
THE EXERCISABILITY OF THE PUBLIC WARRANTS IS SUBSTANTIALLY LIMITED
The Public Warrants sold in the Private Placement are not exercisable
unless, at the time of exercise, we have an effective registration statement
(the "Registration Statement") on file with the SEC containing a current
prospectus covering the shares of common stock issuable upon exercise of the
Public Warrants, or there is an available exemption from registration
applicable to their issuances under the Securities Act and, if required, the
shares are registered, qualified or exempt from registration or qualification
under applicable securities or "blue sky" laws. Although the Registration
Statement of which this prospectus constitutes a part registers all of the
shares of common stock issuable upon exercise of the Public Warrants, we may
not be able to maintain the effectiveness of the Registration Statement until
the expiration of the Public Warrants, and there is no assurance that we will
be able to do so. The value of the Public Warrants may be greatly reduced if a
Registration Statement covering the shares of common stock issuable upon
exercise of the Public Warrants is not declared and kept effective or if such
common stock is not qualified or registered under state securities laws.
SUBSTANTIAL NUMBERS OF SHARES OF OUR COMMON STOCK WILL BECOME AVAILABLE FOR
FUTURE SALE IN THE PUBLIC MARKET
We have a substantial number of shares of our common stock, including
shares issuable upon exercise of certain outstanding options and warrants, that
will soon become available for sale in the public market. We cannot predict the
effect that any future sales of shares of common stock, or the availability of
such shares for sale, will have on the market price of the common stock from
time to time. We believe that sales of substantial numbers of shares of common
stock, or the perception that such sales could occur, could adversely affect
prevailing market prices of the common stock and our ability to raise capital
in the future through the sale of additional securities.
Certain shares of our common stock held by existing stockholders
constitute "restricted shares" as defined in Rule 144 under the Securities Act.
These shares may only be sold if they are registered under the Securities Act
or sold under Rule 144 or another exemption from registration under the
Securities Act. Sales under Rule 144 are
- 9 -
<PAGE> 14
subject to the satisfaction of certain holding periods, volume limitations,
manner of sale requirements, and the availability of current public information
about us.
A substantial portion of all of our restricted shares of common stock
either will soon be eligible for sale pursuant to Rule 144 or have been
registered under the Securities Act for resale by the holders. This will permit
the sale of registered shares of common stock in the open market or in
privately negotiated transactions without compliance with the requirements of
Rule 144. We are unable to estimate the amount, timing or nature of future
sales of outstanding common stock.
In addition to the restricted shares of common stock, we have reserved
shares of common stock for issuance upon exercise of outstanding warrants and
options. Shares of common stock issuable in the future upon exercise of these
options and warrants could hinder future financings. In addition, the holders
of some of these options and warrants, and the holders of certain restricted
shares of common stock, have registration rights, and the sale of shares of
common stock upon exercise of those rights or the availability of such shares
for sale could adversely affect the market price of our common stock.
- 10 -
<PAGE> 15
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock
offered by the selling stockholders covered by this prospectus, which are being
offered for sale by the selling stockholders for their own account.
If the Purchase Option is exercised in full for cash, we would receive
gross proceeds of $561,000, and if the Public Warrants issuable as part of the
units upon exercise of the Purchase Option are exercised in full, then we will
receive additional gross proceeds of $1,056,000. We intend to use any net
proceeds from the exercise of the Public Warrants or the exercise of the
Purchase Option and the underlying Public Warrants for general corporate
purposes and to provide working capital. We may pay certain solicitation fees
in connection with the exercise of the Public Warrants. At the time we
completed our June 1999 public offering, we agreed to pay EarlyBirdCapital,
Inc., the representative of the underwriters of that offering and the placement
agent of our Private Placement, a fee equal to 5% of the exercise price of each
Warrant exercised if EarlyBirdCapital solicited the exercise of such Public
Warrants. The payment of the solicitation fee is subject to certain conditions,
including, among others, limitations imposed by the National Association of
Securities Dealers, Inc. on the payment and scope of such fees.
PRICE RANGE OF COMMON STOCK AND PUBLIC WARRANTS
Our common stock traded on the Nasdaq SmallCap Market from April 3,
1997 to October 30, 1997 and traded on the Nasdaq National Market from October
31, 1997 to April 30, 1999. Since May 3, 1999, our common stock traded on the
Nasdaq SmallCap Market. The following table sets forth, for the periods
indicated, the range of high and low sales prices per share reported on such
quotation systems as adjusted to reflect the one share for seven shares reverse
split in the common stock that occurred on April 14, 1999.
<TABLE>
<CAPTION>
AS ADJUSTED
--------------------
PERIOD ENDING HIGH LOW
--------- ---------
<S> <C> <C>
June 30, 1997 (from April 3, 1997).... $ 99.750 $ 41.125
September 30, 1997.................... 267.750 77.875
December 31, 1997..................... 257.250 89.250
March 31, 1998........................ 173.250 101.066
June 30, 1998......................... 141.750 46.375
September 30, 1998.................... 67.375 18.375
December 31, 1998..................... 38.500 12.250
March 31, 1999........................ 24.941 5.908
June 30, 1999......................... 7.658 2.438
September 30, 1999.................... 5.469 2.031
December 31, 1999..................... 4.313 1.625
March 31, 2000........................ 8.875 2.656
June 30, 2000......................... 4.344 1.688
September 30, 2000.................... 2.688 1.438
</TABLE>
The market price of our common stock historically has been highly
volatile. We completed an initial public offering of 295,714 shares of our
common stock at a price of $38.50 per share in April 1997. Subsequently, in
November 1997 we completed a follow-on public offering of 142,857 shares of
common stock at a price of $161.875 per share. In June 1999, we completed a
public offering of our units consisting of three shares of common stock and two
redeemable common stock purchase options. In the June 1999 offering, we sold a
total of 2,300,000 units at $7.50 per unit, comprised of an aggregate of
6,900,000 shares of our common stock and an aggregate of 4,600,000 redeemable
common stock purchase options. In our August 2000 Private Placement, we sold
1,760,000 units at a purchase price of $1.50 per unit, which each unit
consisting of one share of our common stock and one Public Warrant. On October
10, 2000, the last sale price per share of our common stock as reported on the
Nasdaq SmallCap Market was $2.00 per share. It is difficult to predict the
future market price per share of our common stock.
Our Public Warrants have traded on the Nasdaq SmallCap Market since
September 1, 1999. The following table sets forth, for the periods indicated,
the range of high and low sales prices per warrant reported on the Nasdaq
SmallCap Market since September 30, 1999.
- 11 -
<PAGE> 16
<TABLE>
<CAPTION>
PERIOD ENDING HIGH LOW
-------- --------
<S> <C> <C>
September 30, 1999.................... $0.563 $0.500
December 31, 1999..................... 1.125 0.375
March 31, 2000........................ 4.125 0.844
June 30, 2000......................... 2.375 0.563
September 30, 2000.................... 1.031 0.766
</TABLE>
On October 10, 2000, the last sale price of our Public Warrants as reported on
the Nasdaq SmallCap Market was $0.875 per warrant.
- 12 -
<PAGE> 17
BENEFICIAL OWNERSHIP OF
SELLING STOCKHOLDERS
The following table sets forth certain information provided to us by
the selling stockholders regarding their beneficial ownership of our common
stock and the Public Warrants as of the date of this prospectus, unless
otherwise indicated. Unless otherwise noted, each security holder named has
sole voting and investment power with respect to such shares and warrants,
subject to community property laws where applicable.
Selling stockholders may sell the shares of common stock and Public
Warrants covered by this prospectus at such times and in such amounts as they
may determine. For purposes of preparing this table, we have assumed that each
selling stockholder will sell all of the shares of common stock and Public
Warrants offered pursuant to this prospectus. However, we have not been advised
by any selling stockholder whether they have any present intention to sell such
securities.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF AFTER THE OFFERING (1)
COMMON STOCK NUMBER OF ----------------------
NAME NUMBER OF NUMBER OF UNDERLYING NUMBER OF PUBLIC NUMBER
----- SHARES OF PUBLIC PUBLIC SHARES TO WARRANTS ------
COMMON STOCK WARRANTS WARRANTS BE SOLD TO BE SOLD OF SHARES PERCENT
------------ -------- -------- ------- ---------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Narinda Arora............ 33,333 33,333 33,333 66,666 33,333 -- -- %
Judith Barclay.......... 233,333 233,333 233,333 466,666 233,333 -- --
Clearview International
Investment.............. 233,333 233,333 233,333 466,666 233,333 -- --
Steven Cohen............ 16,667 16,667 16,667 33,334 16,667 -- --
Dalewood Associates LP.. 519,166 519,166 519,166 1,038,332 519,166 -- --
Robert Gladstone........ 16,667 41,667 (2) 41,667 33,334 16,667 25,000 *
Roger Gladstone......... 16,667 21,667 (3) 21,667 33,334 16,667 5,000 *
James Krantz............ 20,000 20,000 20,000 40,000 20,000 -- --
David Nussbaum.......... 16,667 41,667 (4) 41,667 33,334 41,667 25,000 *
Renberg Revocable Trust. 25,000 25,000 25,000 50,000 25,000 -- --
Richard J. Rosenstock,
Rev. Lvg. Trust DTD 3/5/96 66,667 66,667 66,667 133,334 66,667 -- --
RT Enterprises, L.P..... 66,667 66,667 66,667 133,334 66,667 -- --
The Marilyn and Barry
Rubenstein Family
Foundation ............. 623,000 (5) 50,000 50,000 100,000 50,000 573,000 5.4
Wayne Saker............. 33,333 33,333 33,333 66,666 33,333 -- --
Seneca Ventures......... 673,000 (6) 100,000 100,000 200,000 100,000 573,000 5.4
Mark Shnitkin........... 16,667 16,667 16,667 33,334 16,667 -- --
Stourbridge Investments
Ltd..................... 12,500 12,500 12,500 25,000 12,500 -- --
David Thalheim Revocable
Living Trust DTD 3/5/96. 83,333 83,333 83,333 166,666 83,333 -- --
Woodland Venture Fund... 773,000 (7) 200,000 200,000 400,000 200,000 573,000 5.4
</TABLE>
----------
* Less than one percent.
- 13 -
<PAGE> 18
(1) Applicable percentage of common stock is based on 10,667,970 shares of
common stock outstanding as of the date of this prospectus. Beneficial
ownership is determined in accordance with rules of the SEC and for
each beneficial owner is based on information provided to us by such
selling security holder. Beneficial ownership generally includes
voting or investment power with respect to securities. Unless
otherwise indicated in the footnotes below, the persons and entities
named in the table have sole voting and investment power with respect
to all shares of common stock shown as beneficially owned by them. For
each beneficial owner, shares of common stock subject to options or
warrants exercisable within 60 days of the date of this prospectus are
deemed outstanding.
(2) Includes 25,000 shares of common stock that may be acquired upon
exercise of an outstanding option issued in connection with the June
1999 public offering.
(3) Includes 5,000 shares of common stock that may be acquired upon
exercise of an outstanding option issued in connection with the June
1999 public offering.
(4) Includes 25,000 shares of common stock that may be acquired upon
exercise of an outstanding option issued in connection with the June
1999 public offering.
(5) Includes (i) 50,000 shares of common stock purchased in the Private
Placement; (ii) 162,000 shares of common stock held by the Barry
Rubenstein Rollover IRA; (iii) 200,000 shares of common stock owned by
Seneca Ventures, of which Mr. Barry Rubenstein is a general partner;
(iv) 345,000 shares of common stock owned by Woodland Venture Fund, of
which Mr. Rubenstein is a general partner; (v) 256,000 shares of
common stock owned by Woodland Partners, of which Mr. Rubenstein is a
general partner; and (vi) 50,000 shares of common stock owned by The
Marilyn and Barry Rubenstein Family Foundation, as to which the
Foundation has sole power to vote and dispose of such shares. Mr.
Rubenstein is a trustee of the Foundation. The Marilyn and Barry
Rubenstein Family Foundation disclaims beneficial ownership of these
securities except to the extent of its equity interest therein.
(6) Includes (i) 100,000 shares of common stock purchased in the Private
Placement; (ii) 162,000 shares of common stock held by the Barry
Rubenstein Rollover IRA; (iii) 200,000 shares of common stock owned by
Seneca Ventures, as to which Seneca Ventures has sole power to vote
and dispose of such shares; (iv) 345,000 shares of common stock owned
by Woodland Venture Fund; (v) 256,000 shares of common stock owned by
Woodland Partners; and (vi) 50,000 shares of common stock owned by The
Marilyn and Barry Rubenstein Family Foundation. Seneca Ventures
disclaims beneficial ownership of these securities except to the
extent of its equity interest therein.
(7) Includes (i) 200,000 shares of common stock purchased in the Private
Placement; (ii) 162,000 shares of common stock held by the Barry
Rubenstein Rollover IRA; (iii) 200,000 shares of common stock owned by
Seneca Ventures; (iv) 345,000 shares of common stock owned by Woodland
Venture Fund, as to which Woodland Venture Fund has sole power to vote
and dispose of such shares; (v) 256,000 shares of common stock owned
by Woodland Partners; and (vi) 50,000 shares of common stock owned by
The Marilyn and Barry Rubenstein Family Foundation. Woodland Venture
Fund disclaims beneficial ownership of these securities except to the
extent of its equity interest therein.
- 14 -
<PAGE> 19
CERTAIN TRANSACTIONS WITH SELLING STOCKHOLDERS
We have not had any material transactions with the selling
stockholders listed above during the past three years.
OUR RELATIONSHIP WITH EARLYBIRDCAPITAL, INC.
EarlyBirdCapital (formerly known as Southeast Research Partners) acted
as placement agent in the Private Placement, for which it received an 8%
commission and a 2% non-accountable expense allowance. In connection with the
Private Placement, we also issued to EarlyBirdCapital an option (the "Purchase
Option") to purchase 264,000 units at a price per unit equal to the greater of
(i) $1.625 or (ii) $0.125 above the closing sales price of a share of common
stock on the day prior to August 25, 2000 (i.e., $2.125), the closing date of
the Private Placement (the "Closing Date"). We have also granted to
EarlyBirdCapital a 30-day right of first refusal to underwrite or place future
offerings for which we engage the services of an investment banker exercisable
until August 2003. In addition, we have agreed until August 2003 to either
appoint to our Board of Directors (the "Board") a person designated by
EarlyBirdCapital or to permit EarlyBirdCapital to send a representative to
observe each meeting of the Board. We will also pay "source fees" to
EarlyBirdCapital, until August 2002, if EarlyBirdCapital introduces potential
investors to us and those investors make subsequent investments in us.
EarlyBirdCapital also acted as an underwriter and the representative
of our June 1999 public offering of 2,300,000 units, for which it received
underwriting discounts and commissions of approximately $1,380,000. We also
paid EarlyBirdCapital a non-accountable expense allowance of $517,500. In
addition, in connection with the June 1999 public offering, we sold to certain
affiliates of EarlyBirdCapital, for an aggregate of $100, purchase options to
purchase 200,000 units comprised of 600,000 shares of common stock and 400,000
redeemable common stock purchase warrants with an initial exercise price of
$12.375 per unit. The purchase options are exercisable during a period that
began on June 15, 2000 and ends on June 15, 2004. The warrants issuable upon
exercise of the purchase options are the same as our Public Warrants, except
that the initial exercise price of the Public Warrants included in the purchase
options is $6.60 per share of common stock. In addition, under the terms of the
underwriting agreement entered into in connection with the June 1999 public
offering, we have agreed to use our best efforts to appoint or elect a designee
of EarlyBirdCapital as a member of our Board for a period of three years
beginning June 15, 1999. Our Board nominated Ms. Cheryl Snyder as a nominee for
election to our Board, and at our Annual Meeting of Stockholders held in 1999,
she was elected as a director to serve for a term expiring in 2002. Ms. Snyder
served in that capacity until September 2000.
In connection with the June 1999 public offering, we also engaged
EarlyBirdCapital, on a non-exclusive basis, to act as our agent for the
solicitation of the exercise of our Public Warrants. To the extent not
inconsistent with the guidelines of the National Association of Securities
Dealers, Inc., and the rules and regulations of the SEC, we have agreed to pay
EarlyBirdCapital for bona fide services rendered a commission of 5% of the
exercise price of each Public Warrant exercised after one year from June 15,
1999. In addition to soliciting, either orally or in writing, the exercise of
the, such services may also include disseminating information, either orally or
in writing, to warrant holders about us or the market for our securities and
assisting in the processing of the exercise of the Public Warrants.
EarlyBirdCapital also acted as one of the placement agents for our
February 1999 private placement of securities, for which it received aggregate
commissions of $228,000 and a non-accountable expense allowance of $85,500.
Mr. David Nussbaum, one of the selling stockholders, is an officer and
director of Dalewood Associates, Inc., the manager of Dalewood Associates LP,
another selling stockholder. Mr. Nussbaum, Mr. Robert Gladstone and Mr. Roger
Gladstone are each minority stockholders of Firebrand Financial Group, Inc.
(formerly Research Partners International, Inc.), which is the majority
stockholder of the parent company of EarlyBirdCapital.
- 15 -
<PAGE> 20
DESCRIPTION OF SECURITIES
COMMON STOCK
Our Certificate of Incorporation authorizes us to issue up to
30,000,000 shares of common stock, par value $.01 per share. Of the 30,000,000
shares of common stock authorized, 8,907,970 shares are issued and outstanding
as of the date of this prospectus (including the shares of common stock issued
as part of our outstanding units, which are described below). We also have
reserved an additional 4,600,000 shares of common stock for issuance upon
exercise of our outstanding Public Warrants, and an additional 157,056 shares
of common stock for issuance upon exercise of our other outstanding warrants.
We provide you with additional information about our outstanding warrants
below.
Holders of common stock are entitled to receive such dividends as may
be declared by the Board from funds legally available for such dividends. Upon
liquidation, holders of shares of common stock are entitled to a pro rata share
in any distribution available to holders of common stock. The holders of common
stock have one vote per share on each matter to be voted on by stockholders,
but are not entitled to vote cumulatively. Holders of common stock have no
preemptive rights. All of the outstanding shares of common stock are, and all
of the shares of common stock to be issued in connection with this offering
will be, validly issued, fully paid and non-assessable.
OUTSTANDING PUBLIC WARRANTS AND PUBLIC WARRANTS ISSUABLE UPON EXERCISE OF THE
PURCHASE OPTION
The outstanding Public Warrants and Public Warrants issuable as part
of units issuable upon exercise of the Purchase Option that are offered hereby
are identical to our outstanding publicly traded warrants, except that the
Public Warrants that are offered hereby may not be exercised until February 26,
2001. The outstanding Public Warrants currently trade on the Nasdaq SmallCap
market under the symbol "VNCIW." Each Public Warrant offered pursuant to this
Prospectus entitles the holder to purchase one share of common stock for an
initial exercise price of $4.00 from February 26, 2001 to June 15, 2004,
subject to prior redemption.
No fractional shares of common stock will be issued in connection with
the exercise of Public Warrants. Upon exercise, we will pay the holder the
value of any such fractional shares in cash, based upon the market value of the
common stock at the time of exercise.
The Public Warrants will expire at 5:00 p.m., New York time, on June
15, 2004. In the event that a holder of Public Warrants fails to exercise the
Public Warrants prior to their expiration, the Public Warrants will expire and
the holder thereof will have no further rights with respect to the Public
Warrants.
We may redeem the Public Warrants beginning on February 26, 2001 so
long as they are the subject of an effective registration statement filed with
the SEC, at a price of $.01 per warrant upon not less than 30 days' prior
written notice if the last sale price of the common stock has been at least
200% of the then exercise price of the Public Warrants (initially $8.00 per
share) for the 20 consecutive trading days ending on the third day prior to the
day on which notice is given.
A holder of Public Warrants will not have any rights, privileges or
liabilities as a stockholder of VNCI prior to the exercise of the Public
Warrants. We are required to keep available a sufficient number of authorized
shares of common stock to permit exercise of the Public Warrants. The exercise
price of the Public Warrants and the number of shares issuable upon exercise of
the Public Warrants will be subject to adjustment to protect against dilution
in the event of stock dividends, stock splits, combinations, subdivisions and
reclassifications. No assurance can be given that the market price of our
common stock will exceed the exercise price of the Public Warrants at any time
during the exercise period.
LOCK-UP AGREEMENTS
All of the securities to be offered and sold in this offering by the
selling stockholders are subject to a lock-up arrangement that expires on
August 25, 2001, except that such securities may be transferred earlier with
the prior written consent of EarlyBirdCapital, the placement agent of our
Private Placement.
- 16 -
<PAGE> 21
PLAN OF DISTRIBUTION
The shares of common stock issuable by us upon exercise of the Public
Warrants, the shares of common stock and Public Warrants issuable upon
exercise of the Purchase Option and the shares of common stock issuable upon
exercise of the Public Warrants underlying the Purchase Option are offered
solely by us, and no underwriters are participating in this offering. However,
at the time of our June 1999 public offering, we agreed to pay
EarlyBirdCapital, which acted as the representative of the underwriters of that
offering, 5% of the exercise price of each such warrant the exercise of which
is solicited by EarlyBirdCapital. The payment of that solicitation fee is
subject to several conditions including, among others, limitations imposed by
the National Association of Securities Dealers on the payment and scope of such
fees. No Public Warrants will be exercisable unless at the time of exercise
there is a current prospectus covering the shares of common stock issuable upon
exercise of such Public Warrants under an effective registration statement
filed with the SEC and such shares have been qualified for sale or are exempt
from qualification under the securities laws of the state of residence of the
holder of such warrants. This prospectus is a part of the registration
statement that we have filed relating to the shares of common stock issuable
upon exercise of the Public Warrants, and the shares of common stock and Public
Warrants issuable upon exercise of the outstanding purchase options and the
Public Warrants underlying the purchase options. We have undertaken to keep
this prospectus current, which will permit the purchase and sale of the common
stock underlying the Public Warrants, but there can be no assurance that we
will be able to do so. Although we intend to seek to qualify for sale the
shares of common stock underlying the Public Warrants in various states, there
can be no assurance that we will be able to do so. The exercise period of the
Public Warrants expires on June 15, 2004, subject to prior redemption.
This prospectus also registers shares of common stock and Public
Warrants for resale by certain selling stockholders. The distribution of the
securities by the selling stockholders, or by pledgees, donees, transferees or
other successors in interest, may be effected from time to time in transactions
on the Nasdaq SmallCap Market, other exchanges or in the over-the-counter
market, or in negotiated transactions or otherwise at prices and at terms then
prevailing or at prices related to the then current market price, or in
negotiated transactions. The selling stockholders may sell their shares of
common stock from time to time by one or more of the following methods:
- a block trade in which the broker or dealer engaged will attempt to
sell the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
- purchases by a broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this prospectus;
- an exchange distribution in accordance with the rules of such
exchange; or
- ordinary brokerage transactions and transactions in which the
broker solicits purchasers.
In addition, any selling stockholder may sell any shares of common
stock covered by this prospectus which qualify pursuant to Rule 144 rather than
under this prospectus. Broker-dealers through which transactions involving the
common stock are effected may receive compensation in the form of discounts,
concessions or commissions from the selling stockholders and/or the purchasers
of the securities for whom such broker-dealers may act as agent or to whom they
may sell as principal, or both. Usual and customary or specifically negotiated
brokerage fees or commissions may be paid by the selling stockholders in
connection with sales of the common stock. The selling stockholders have
advised us that they have not entered into any underwriting arrangements or
understandings relating to the sale of their shares and there is no underwriter
or coordinating broker acting in connection with the sale of the shares of
common stock by the selling stockholders.
In effecting sales, brokers or dealers engaged by the selling
stockholders may arrange for other brokers or dealers to participate. Brokers
or dealers will receive commissions or discounts from selling stockholders in
amounts to be negotiated immediately prior to the sale. The selling
stockholders and agents who execute orders on their behalf may be deemed to be
underwriters as that term is defined in Section 2(11) of the Securities Act and
may be required to comply with the prospectus delivery requirements of the
Securities Act. In addition, a portion of any proceeds of sales and discounts,
commissions or other compensation may be deemed to be underwriting compensation
for purposes of the Securities Act. The selling stockholders also may be
subject to the anti-manipulation requirements of the Securities Act. We have
agreed to indemnify the selling stockholders against certain liabilities,
including liabilities under the Securities Act.
- 17 -
<PAGE> 22
LEGAL MATTERS
The validity of the equity securities offered hereby and legal matters
will be passed upon for us by Shaw Pittman, Washington, D.C., a partnership
including professional corporations. Shaw Pittman holds a warrant to purchase
5,714 shares of our common stock at an exercise price of $18.59 per share.
EXPERTS
The financial statements incorporated in this prospectus by reference
to the Annual Report on Form 10-KSB for the year ended December 31, 1999 have
been so incorporated in reliance on the report (which contains an explanatory
paragraph relating to the Company's ability to continue as a going concern as
described in Note 1 to the financial statements) of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
- 18 -
<PAGE> 23
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY
INFORMATION OR REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST
NOT RELY ON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT OFFER TO
SELL OR BUY ANY SHARES IN ANY JURISDICTION WHERE IT IS UNLAWFUL. THE
INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF OCTOBER 12, 2000.
SHARES OF COMMON STOCK
AND
REDEEMABLE COMMON STOCK PURCHASE WARRANTS
[VNCI LOGO]
VNCI
VIDEO NETWORK COMMUNICATIONS, INC.
__________ __, 2000
<PAGE> 24
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses incurred or to be incurred
by the Registrant in connection with the issuance and distribution of the
securities to be offered and sold pursuant to this Registration Statement. All
of the information set forth below constitutes good faith estimates of the
expenses indicated, other than the SEC registration fee and the NASD filing fee.
<TABLE>
<CAPTION>
DESCRIPTION AMOUNT
------------------------------------------------ ---------
<S> <C>
SEC registration fee............................ $ 3,570.47
NASD filing fee................................. 1,857.95
Blue Sky fees and expenses (including fees of
counsel)........................................ 5,000.00
Printing expenses............................... 3,000.00
Transfer agent and registrar's fee.............. 1,000.00
Legal fees and expenses (other than Blue Sky)... 15,000.00
Accounting fees and expenses.................... 14,000.00
Miscellaneous................................... 3,571.58
Total...................................... $ 47,000.00
============
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The General Corporation Law of the State of Delaware (the "GCL")
provides that a corporation may limit the liability of each director to the
corporation or its stockholders for monetary damages, except for liability (i)
for any breach of the director's duty of loyalty to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) in respect of
certain unlawful dividend payments or stock redemptions or repurchases; and
(iv) for any transaction from which the director derived an improper personal
benefit. The Fourth Amended and Restated Certificate of Incorporation (the
"Certificate") of the Registrant provides for the elimination and limitation of
the personal liability of directors of the Registrant for monetary damages to
the fullest extent permitted by the GCL.
In addition, the Certificate provides that if the GCL is amended to
authorize the further elimination or limitation of the liability of a director,
then the liability of the directors of the Registrant shall be eliminated or
limited to the fullest extent permitted by the GCL, as so amended. The effect
of this provision is to eliminate the right of the Registrant and its
stockholders (through stockholders' derivative suits on behalf of the
Registrant) to recover monetary damages against a director for breach of the
fiduciary duty of care as a director (including breaches resulting from
negligent or grossly negligent behavior) except in the situations described in
clauses (i) through (iv) above. The provision does not limit or eliminate the
rights of the Registrant or any stockholder to seek non-monetary relief such as
an injunction or rescission in the event of a breach of a director's duty of
care. In addition, the Certificate provides that the Registrant shall, to the
fullest extent permitted by the GCL, as amended from time to time, indemnify
each of its currently acting and former directors, officers, employees and
agents.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBITS
------------------------------------------
<S> <C>
4.1 Fourth Amended and Restated Certificate of
Incorporation of the Registrant (Incorporated by
reference to Exhibit 3.1 of the Registrant's
Quarterly Report on Form 10-QSB for the quarter
ended September 30, 1999 filed with the Securities
and Exchange Commission under the Securities Act of
1933, as amended).
4.2 Amended and Restated Bylaws of the Registrant
(Incorporated by reference to Exhibit 3.2 to the
Registrant's Registration Statement on Form SB-2
(File No. 333-20625) filed with the Securities and
Exchange Commission under the Securities Act of
1933, as amended).
</TABLE>
II-1
<PAGE> 25
<TABLE>
<S> <C>
4.3 Amendment to Amended and Restated Bylaws of the
Company effective June 8th, 1999 (Incorporated by
reference to Exhibit 3.4 of the Registrant's Amended
Quarterly Report on Form 10-QSB/A for the quarter
ended June 30, 1999 filed with the Securities and
Exchange Commission under the Securities Act of 1933,
as amended).
4.4 Specimen certificate evidencing shares of common stock
of the Registrant (Incorporated by reference to
Exhibit 4.5 to the Registrant's Registration Statement
on Form S-3 (File No. 333-72429) filed with the
Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "1999 Form
S-3")).
4.5 Specimen certificate evidencing Redeemable Common Stock
Purchase Warrant (Incorporated by reference to Exhibit
4.13 to the 1999 Form S-3).
4.6 Form of Warrant Agreement (Incorporated by reference to
Exhibit 4.14 to the 1999 Form S-3).
4.7 Form of First Amendment to Warrant Agreement dated
August 2000 by and among the Registrant,
EarlyBirdCapital, Inc. and Continental Stock Transfer &
Trust Company (Incorporated by reference to Exhibit 4.2
to the Registrant's Current Report on Form 8-K dated
August 25, 2000 and filed with the Securities and
Exchange Commission on August 28, 2000 under the
Securities Exchange Act of 1934, as amended (the "August
2000 8-K")).
4.8 Specimen certificate, as supplemented, evidencing
Redeemable Stock Purchase Warrant (Incorporated by
reference to Exhibit 4.4 to the August 2000 8-K).
4.9 Form of Placement Agent's Purchase Option (Incorporated by
reference to Exhibit 4.5 to the August 2000 8-K).
5.1* Opinion of Shaw Pittman.
10.1 Form of Agency Agreement dated August 2000 by and between
the Registrant and EarlyBirdCapital, Inc. (Incorporated by
reference to Exhibit 4.0 to the August 2000 8-K).
10.2 Form of Subscription Agreement/Investor Information
Statement dated August 2000 by and among the Registrant and
certain Investors (Incorporated by reference to Exhibit 4.1
to the August 2000 8-K).
10.3 Form of Escrow Agreement dated August 2000 by and among the
Registrant, EarlyBirdCapital, Inc. and Continental Stock
Transfer & Trust Company (Incorporated by reference to
Exhibit 4.3 to the August 2000 8-K).
23.1* Consent of Shaw Pittman (included in Exhibit 5.1).
23.2* Consent of PricewaterhouseCoopers LLP.
24 Power of Attorney (included on the signature page of this
registration statement).
</TABLE>
----------
* Filed herewith.
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;
(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 in the aggregate,
represent a fundamental change in the
information set forth in the registration
statement. Notwithstanding the foregoing,
any increase or decrease in volume of
securities offered (if the total dollar
value of securities offered would not
exceed that which was registered)
II-2
<PAGE> 26
and any deviation from the low or high and
of the estimated maximum offering range may
be reflected in the form of prospectus
filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in
volume and price represent no more than 20
percent change in maximum aggregate
offering price set forth in the
"Calculation of Registration Fee" table in
the effective 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 1(i) and 1(ii)
do not apply if the registration statement is on
Form S-3 or Form S-8, and 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 l934 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.
4. 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
(and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section
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.
5. Insofar as indemnification for 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 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 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.
II-3
<PAGE> 27
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the Registrant certifies it has reasonable grounds to believe it meets
all 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 County of Rockingham, New Hampshire, on October 12,
2000.
VIDEO NETWORK COMMUNICATIONS, INC.
By: /s/ CARL MUSCARI
----------------
Carl Muscari
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Carl Muscari and Robert H. Emery and
each of them, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for and in his name, place and stead, in
any and all capacities to sign any and all amendments (including post-effective
amendments) to this Registration Statement and any or all other documents in
connection therewith, and to file the same, with all exhibits thereto, with the
Securities and Exchange Commission, granting unto said authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as might or could be
done in person, hereby ratifying and confirming all said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons
in the capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
----------------------------- -------------------------- ------------
<S> <C> <C>
/s/ CARL MUSCARI President and Chief Executive October 12, 2000
---------------- Officer and Director
Carl Muscari (Principal Executive Officer)
/s/ ROBERT H. EMERY Chief Financial Officer and Vice October 12, 2000
------------------- President, Administration
Robert H. Emery and Secretary (Principal
Financial and Accounting Officer)
Officer)
/s/ JAMES F. BUNKER Chairman of the Board of Directors October 12, 2000
-------------------
James F. Bunker
/s/ EUGENE R. CACCIAMANI Director October 12, 2000
------------------------
Eugene R. Cacciamani
/s/ RICHARD S. FRIEDLAND Director October 12, 2000
------------------------
Richard S. Friedland
/s/ QUENTIN R. LAWSON Director October 12, 2000
---------------------
Quentin R. Lawson
/s/ STEVEN A. ROGERS Director October 12, 2000
--------------------
Steven A. Rogers
</TABLE>
II-4
<PAGE> 28
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS
---------------------------------------------
<S> <C>
4.1 Fourth Amended and Restated Certificate of Incorporation
of the Registrant (Incorporated by reference to Exhibit
3.1 of the Registrant's Quarterly Report on Form 10-QSB
for the quarter ended September 30, 1999 filed with the
Securities and Exchange Commission under the Securities
Act of 1933, as amended).
4.2 Amended and Restated Bylaws of the Registrant
(Incorporated by reference to Exhibit 3.2 to the
Registrant's Registration Statement on Form SB-2 (File
No. 333-20625) filed with the Securities and Exchange
Commission under the Securities Act of 1933, as
amended).
4.3 Amendment to Amended and Restated Bylaws of the
Company effective June 8th, 1999 (Incorporated by
reference to Exhibit 3.4 of the Registrant's Amended
Quarterly Report on Form 10-QSB/A for the quarter
ended June 30, 1999 filed with the Securities and
Exchange Commission under the Securities Act of 1933,
as amended).
4.4 Specimen certificate evidencing shares of common stock
of the Registrant (Incorporated by reference to
Exhibit 4.5 to the Registrant's Registration Statement
on Form S-3 (File No. 333-72429) filed with the
Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "1999 Form
S-3")).
4.5 Specimen certificate evidencing Redeemable Common Stock
Purchase Warrant (Incorporated by reference to Exhibit
4.13 to the 1999 Form S-3).
4.6 Form of Warrant Agreement (Incorporated by reference to
Exhibit 4.14 to the 1999 Form S-3).
4.7 Form of First Amendment to Warrant Agreement dated
August 2000 by and among the Registrant,
EarlyBirdCapital, Inc. and Continental Stock Transfer &
Trust Company (Incorporated by reference to Exhibit 4.2
to the Registrant's Current Report on Form 8-K dated
August 25, 2000 and filed with the Securities and
Exchange Commission on August 28, 2000 under the
Securities Exchange Act of 1934, as amended (the "August
2000 8-K")).
4.8 Specimen certificate, as supplemented, evidencing
Redeemable Stock Purchase Warrant (Incorporated by
reference to Exhibit 4.4 to the August 2000 8-K).
4.9 Form of Placement Agent's Purchase Option (Incorporated
by reference to Exhibit 4.5 to the August 2000 8-K).
5.1* Opinion of Shaw Pittman.
10.1 Form of Agency Agreement dated August 2000 by and
between the Registrant and EarlyBirdCapital, Inc.
(Incorporated by reference to Exhibit 4.0 to the August
2000 8-K).
10.2 Form of Subscription Agreement/Investor Information
Statement dated August 2000 by and among the Registrant
and certain Investors (Incorporated by reference to
Exhibit 4.1 to the August 2000 8-K).
10.3 Form of Escrow Agreement dated August 2000 by and
among the Registrant, EarlyBirdCapital, Inc. and
Continental Stock Transfer & Trust Company
(Incorporated by reference to Exhibit 4.3 to the
August 2000 8-K).
23.1* Consent of Shaw Pittman (included in Exhibit 5.1).
23.2* Consent of PricewaterhouseCoopers LLP.
24 Power of Attorney (included on the signature page of
this registration statement).
</TABLE>
----------
* Filed herewith.
