<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 8, 2000
REGISTRATION NO. 333-47872
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
AMENDMENT NO. 1 TO FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
-------------------------------
VIDEO NETWORK COMMUNICATIONS, INC.
(FORMERLY OBJECTIVE COMMUNICATIONS, INC.)
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<CAPTION>
DELAWARE 3669 54-1707962
<S> <C> <C>
(State or Other Jurisdiction of (Primary Standard Industrial (IRS Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
-------------------------------
<TABLE>
<CAPTION>
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
<S> <C>
(Address, including Zip Code, and Telephone
Number, including Area Code, of Registrant's (Name, Address, including Zip Code, and
Principal Executive Offices) Telephone Number of Agent for Service)
</TABLE>
COPY TO:
ELLEN C. GRADY, ESQ.
SHAW PITTMAN
1676 INTERNATIONAL DRIVE
MCLEAN, VIRGINIA 22102
(703) 790-7946
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
TITLE OF AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED AGGREGATE PRICE AGGREGATE OFFERING REGISTRATION FEE
REGISTERED (1) PER UNIT PRICE
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par
value $.01 per share
(2) 1,760,000 shares $1.8906 $3,327,456 $878.45 (3)
Warrants to purchase
one share of Common
Stock (4) 1,760,000 $ 0.875 $1,540,000 $406.56 (3)
Shares of Common
Stock underlying
Warrants (5)(6) 1,760,000 shares $4.00 (7) $7,040,000 (7) $1,858.56 (3)
======================================================================================================
</TABLE>
<PAGE> 2
<TABLE>
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Common
Stock underlying
Warrants (6)(8) 1,760,000 shares $4.00 (7) $7,040,000 (7) $1,858.56
Shares of Common
stock underlying
placement agent's
purchase option
(6)(9)(10) 264,000 shares
$2.125 $561,000 $148.11 (3)
Warrants underlying
placement agent's
purchase option
(6)(9)(10) 264,000
Shares of Common
Stock issuable upon
exercise of
Warrants underlying
placement agent's
purchase option (10) 264,000 shares $4.00 (7) $1,056,000 (7) $278.79 (3)
Shares of Common
Stock issuable upon
exercise of
Warrants underlying
placement agent's
purchase option (11) 264,000 shares $4.00 (7) $1,056,000 (7) $278.79
Total Not applicable Not applicable Not applicable $5,707.82 (12)
======================================================================================================
</TABLE>
(1) The Registrant originally filed this registration statement on Form S-3
(Registration No. 333-47872) on October 13, 2000 to register certain offers
and sales of securities as set forth in this registration statement.
(2) Represents the offering and resale of 1,760,000 shares (the "Shares") of
common stock, par value $.01 per share (the "Common Stock"), of the
Registrant by certain stockholders on a delayed or continuous basis. The
Shares were issued by the Registrant in a private placement completed in
August 2000 (the "Private Placement").
(3) The registration fee for these securities totaling $3,570.47 was paid in
connection with the original filing of this registration statement. Pursuant
to Rule 457(a), no additional registration fee is required.
(4) Represents the offering and resale of warrants to purchase 1,760,000 shares
of Common Stock of the Registrant at an initial purchase price of $4.00 per
share ("Warrants") by certain stockholders of the Registrant on a delayed or
continuous basis. The Warrants were issued by the Registrant in the Private
Placement.
(5) Represents the offering and resale of 1,760,000 shares of Common Stock of
the Registrant underlying the Warrants by the holders of such Warrants on a
delayed or continuous basis.
(6) 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 Warrants and the Purchase Option (as defined
below).
(7) Pursuant to Rule 457(g) under the Securities Act, calculated based on the
initial exercise price to be paid to the Registrant by the holders upon
exercise of the Warrants.
(8) Represents the issuance of shares of common stock by the Registrant to
holders of the Warrants who purchase the Warrants from the original Warrant
holders (the "Transferees").
(9) In connection with the Private Placement, the Registrant issued to the
placement agent as partial compensation, an option to purchase (the
"Purchase Option") up to 264,000 shares of Common Stock and Warrants to
purchase 264,000 shares of Common Stock. The Purchase Option may be
exercised by the holder in whole or in part. Each share of Common Stock and
Warrant for which the Purchase Option is exercisable are issuable together
as a unit, although no separate unit certificates will be issued. Upon
exercise, the holder can purchase one share of Common Stock and one Warrant
for an initial exercise price of $2.125 per share of Common Stock and
Warrant purchased. The option exercise price is payable for both securities
issuable upon exercise of the
<PAGE> 3
Purchase Option and has not been allocated between the two securities.
Accordingly, the fee calculation is shown based on the initial option
exercise price for the two securities issuable upon exercise of the Purchase
Option.
(10)Represents the offering and resale of the following securities that may be
issued by the Registrant upon exercise of the Purchase Option by the holders
of such Purchase Option on a delayed or continuous basis: (i) 264,000 shares
of Common Stock; (ii) Warrants to purchase an additional 264,000 shares of
Common Stock; and (iii) the 264,000 shares of Common Stock issuable upon
exercise of the Warrants underlying the Purchase Option.
(11)Represents the issuance of shares of Common Stock of the Registrant to
holders of the Warrants issuable upon exercise of the Purchase Option who
purchase such Warrants from the original holders.
(12)The additional filing fee of $2,137.35 is paid with this filing.
-----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as possible 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 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.
================================================================================
<PAGE> 4
EXPLANATORY NOTE
This registration statement is to register the offering and sale of certain
securities of Video Network Communications, Inc. ("VNCI" or the "Company"). The
Company completed a private placement 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
"Warrants"). In the offering, the units were not separately certificated, and no
units were issued by the Company.
This registration statement registers the public resale by certain selling
stockholders of the following securities: (1) 1,760,000 shares of Common Stock
originally issued by the Company in the Private Placement, (2) Warrants to
purchase 1,760,000 shares of Common Stock originally issued by the Company in
the Private Placement, (3) up to an additional 1,760,000 shares of Common Stock
underlying the Warrants, (4) 264,000 shares of Common Stock and Warrants to
purchase 264,000 shares of Common Stock issuable upon exercise of a purchase
option (the "Purchase Option") issued to the placement agent of the Private
Placement, and (5) the 264,000 shares of Common Stock issuable upon exercise of
the Warrants underlying the Purchase Option. The Purchase Option is exercisable
at an initial exercise price of $2.125 per share of Common Stock and Warrant
purchased, subject to adjustment. The Purchase Option is exercisable between
February 26, 2001 and August 25, 2005. 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 offering and sale by the Company
of up to 1,760,000 shares of Common Stock to the holders of Warrants
("Transferees") who purchase such Warrants from the original holders of the
Warrants. In addition, this registration statement also registers the offering
and sale by the Company of up to an additional 264,000 shares of Common Stock to
the holders of Warrants that may be issued upon exercise of the Purchase Option
who purchase such Warrants from the original holders.
All of the securities to be offered and sold by the selling stockholders, other
than the Purchase Option and the securities issuable upon exercise of the
Purchase Option, 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 the 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 the Company
will not receive any proceeds from the sale of such securities. If the Warrants
are exercised in full, the Company will receive gross proceeds of $7,040,000. If
the Purchase Option is exercised in full for cash, the Company will receive
gross proceeds of $561,000, and if the Warrants issuable upon exercise of the
Purchase Option are exercised in full, then the Company will receive additional
gross proceeds of $1,056,000. The Company intends to use any net proceeds from
the exercise of the Warrants and the exercise of the Purchase Option and the
underlying Warrants for general corporate purposes and to provide working
capital.
<PAGE> 5
PROSPECTUS [VNCI LOGO]
VIDEO NETWORK COMMUNICATIONS, INC.
---------------
This prospectus relates to the offering and resale of the following
equity securities of Video Network Communications, Inc. by certain selling
stockholders:
- 1,760,000 outstanding shares of our common stock,
- outstanding redeemable warrants to purchase 1,760,000 shares of our
common stock (the "Warrants") at an initial exercise price of $4.00
per share,
- up to an additional 1,760,000 shares of our common stock that may be
purchased upon exercise of the Warrants,
- 264,000 shares of our common stock that may be issued upon exercise
of an outstanding purchase option (the "Purchase Option"),
- Warrants to purchase an additional 264,000 shares of common stock
that may be issued upon exercise of the Purchase Option, and
- the 264,000 shares of common stock underlying the Warrants that may
be issued upon exercise of the Purchase Option.
This prospectus also relates to the offering and sale of the following
securities by VNCI:
- up to 1,760,000 shares of common stock to the holders of Warrants who
purchase such Warrants from the original holders of the Warrants (the
"Warrant Transferees"); and
- up to 264,000 shares of common stock to the holders of Warrants that
may be issued upon exercise of the Purchase Option who purchase such
Warrants from the original holders (the "Purchase Option Warrant
Transferees").
All of the securities being offered and resold in this offering by the
selling stockholders, other than the securities that may be issued upon exercise
of the Purchase Option, 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, Inc., the placement agent of our
private placement of units completed in August 2000. All of the equity
securities covered by this prospectus that will be offered and resold by the
selling stockholders will be offered and resold for their own accounts, and we
will not receive any proceeds from the sale of such securities. We will,
however, receive gross proceeds of $7,040,000 if the Warrants are exercised in
full, gross proceeds of $561,000 if the Purchase Option is exercised in full for
cash and additional gross proceeds of $1,056,000 if the Warrants issuable upon
exercise of the Purchase Option are exercised in full.
The securities may be offered by the selling stockholders 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 or
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 certain outstanding publicly traded warrants (the
"Public Warrants") trade on The Nasdaq SmallCap Market under the symbols VNCI
and VNCIW, respectively. On December 7, 2000, the last sales prices of the
common stock and Public Warrants as reported on The Nasdaq SmallCap Market was
$1.844 per share and $0.750 per Public Warrant.
INVESTING IN OUR EQUITY SECURITIES INVOLVES RISKS THAT ARE DESCRIBED IN
THE "RISK FACTORS" SECTION 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> 6
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 Public 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;
8. Our Quarterly Report on Form 10-QSB for the quarter ended
September 30, 2000, as filed with the SEC on November 14, 2000;
9. Our Current Report on Form 8-K, as filed with the SEC on December
7, 2000; and
10. 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
-2-
<PAGE> 7
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.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Where You Can Find Additional Information....... 2
Incorporation of Certain Documents By Reference 2
Table of Contents............................... 3
Summary......................................... 4
Risk Factors.................................... 6
Use of Proceeds................................. 11
Price Range of Common Stock..................... 11
Beneficial Ownership of Selling Stockholders... 13
Certain Transactions With Selling Stockholders.. 17
Description of Securities....................... 19
Plan of Distribution............................ 21
Legal Matters................................... 22
Experts......................................... 22
</TABLE>
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 resold 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.
-3-
<PAGE> 8
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. The
price for our typical 30-user video network system is $132,250 including
installation, but this price can vary significantly based on configuration
options. We believe that we have shown revenue and sales growth over the past
year despite limited sales and marketing resources and our unstable financial
condition during the period. However, we believe that in order for our company
to be successful, we will need to achieve a significantly higher level of sales
in a relatively short time, which may require substantially higher sales and
marketing expenditures in the future.
We reported revenues of $2,712,000 for the quarter ended September 30,
2000, an increase of 51% when compared with revenues reported for the second
quarter of 2000 and an increase of 470% compared to the third quarter of 1999.
Our operating expenses for the quarter ended September 30, 2000 of $2,172,000
were approximately 5% lower than our operating expenses in the second quarter of
2000 and 35% lower than our operating expenses in the third 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, bypassing the enterprise's local area network ("LAN") and thereby
avoiding the issues associated with bandwidth limitations. We believe that
bandwidth limitations have been the major impediment to delivering full-motion
TV-quality video to the desktop on a cost-effective basis.
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 2000, we announced
our implementation of Java technology, V 2.0, which will enable us to offer
customers a platform-independent video network solution. In October 2000, we
announced the release of our IP/ISDN Gateway, offering customers the flexibility
of using H.323 (IP) and H.320 (ISDN) at their discretion for transporting high
quality, on-demand video communications from the desktop across the wide area
network.
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 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.
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, the First District of the Federal Court System in Concord, New
Hampshire, and Naval Air Systems Command. We believe that further development of
these and additional reference accounts will shorten our sales cycle in the
future, while promoting relationships with resellers. In October 2000, we
announced our VIP Partner Program, an innovative channel program offering
vertical market training and co-marketing to resellers of our products. We
entered into approximately five agreements with new resellers and sales
representatives during the quarter ended September 30, 2000.
For the remainder of 2000, we intend to focus on selling and marketing
our video network solutions and continuing product development to meet customer
demands for new functionality and to lower the cost of our
-4-
<PAGE> 9
systems. Specifically, our goals are to: (i) develop new strategic partnerships
committed to marketing our video network system as the video solution of choice
to business users, (ii) use our current strategic and reseller arrangements to
increase sales of our systems and create brand name recognition of our product,
(iii) significantly enhance our marketing and public relations programs to
create better awareness of our products among customers, industry analysts and
financial analysts, (iv) develop our direct sales, and (v) continue engineering
our video network system to refine and improve its functionality to meet new
customer requirements and to lower our costs and the price of our system through
improved design. Our ability to meet these objectives is subject to a number of
risks and uncertainties, including our ability to develop new strategic
relationships with significant potential resellers, our ability to sell and
market our product and develop market awareness of our video network system and
our ability to obtain financing when required. We cannot assure you that we will
be able to meet these objectives. We plan to continue to subcontract all major
manufacturing and production activities for the foreseeable future, but we will
continue to retain test and quality assurance functions until all subcontractors
are certified with respect to quality.
We expect to continue to incur significant operating expenses to support
our product development efforts and to enhance our sales and marketing
capabilities and organization, but we anticipate that our product development
expenditures will be lower than in prior years because we have introduced the
commercial version of our video network system. We expect that our results of
operations will vary significantly from quarter to quarter for the foreseeable
future.
THE PRIVATE PLACEMENT
On August 25, 2000, we completed the Private Placement of 1,760,000
units, each unit consisting of one share of common stock and one Warrant, at a
price of $1.50 per unit. The units were not separately certificated, and we did
not issue any separate units as securities in the Private Placement. The
Warrants entitle the holder to purchase one share of our common stock for an
initial exercise price of $4.00 during the period from February 26, 2001 to June
15, 2004, subject to prior redemption. The Warrants are identical to our
outstanding Public Warrants to purchase up to 4,600,000 shares of our common
stock at an initial exercise price of $4.00 per share, which are currently
trading on The Nasdaq SmallCap Market under the symbol "VNCIW," except that,
pursuant to the terms of the securities, the Warrants may not be exercised
until February 26, 2001. We may redeem the Warrants at any time after 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 on 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 per Warrant (initially $8.00) for the 20
consecutive trading days ending on the third day prior to the date on which the
notice is given.
We offered the units through EarlyBirdCapital, Inc. ("EBC"), as our
exclusive placement agent for the Private Placement, on a "best efforts, all or
none" basis. The units were offered and sold only to persons who qualified as
"accredited investors," as defined in Rule 501(a) under the Securities Act of
1933, as amended (the "Securities Act"). As compensation to EBC for its services
as placement agent, we paid EBC an 8% commission and a 2% non-accountable
expense allowance. We also issued to EBC the Purchase Option, which permits EBC
to purchase 264,000 shares of common stock and 264,000 Warrants (each share of
common stock and Warrant must be purchased together as a unit) at an exercise
price of $2.125 per share of common stock and Warrant purchased. We also granted
to EBC a 30-day right of first refusal to underwrite or place future offerings
for which we engage the services of an investment banker for a period of three
years after the closing of the Private Placement. In addition, we agreed for a
period of three years from the closing of the Private Placement to either
appoint to our Board of Directors (the "Board") a person designated by EBC or to
permit EBC to send a representative to observe each meeting of the Board. No
person has been designated by EBC for appointment to our Board. We also agreed
to pay "source fees" to EBC for a period of 24 months, if EBC introduces
potential investors to us and such investors make subsequent investments in our
company.
We have filed the registration statement of which this prospectus
constitutes a part in accordance with our contractual agreement with the
investors in the Private Placement to register the offering and resale of the
securities covered by this registration statement. We also agreed to use our
best efforts to have the registration statement declared effective by the SEC on
or before December 22, 2000.
-5-
<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.
RISKS RELATING TO OUR BUSINESS
WE HAVE LIMITED SOURCES OF FINANCING
We have in the past experienced short-term cash flow shortages and have
required cash to continue operations. We may experience cash flow shortages in
the future. We have exhausted the net proceeds from our private financing
completed in August 2000 and, accordingly, our operating needs are funded
principally from the receipt of cash from our operations. We undertook a number
of different initiatives to generate cash to fund our obligations, including the
sale of non-operating assets, the pursuit of outstanding customer accounts
receivable and the entrance into a factoring facility. As a result, at November
30, 2000, we had cash assets of approximately $2,800,000. We cannot assure you
that we will be successful in these initiatives or, if successful, the timing of
our receipt of the cash generated from these arrangements. We currently have no
other sources of financing.
While we continue to believe that in the future cash from our operations
will support our operations, each customer order and payment continues to
account for a relatively large portion of our commercial sales and, accordingly,
the timing and amounts of customer payments continue to be an important factor
in financing our business. We cannot control customer payments and, accordingly,
the failure to receive timely sufficient customer payments will continue to have
a serious impact on our business for the foreseeable future. Timely receipt of
that cash, however, is essential to continuing our operations. If we are unable
to raise cash in the near future, or if we fail to timely receive anticipated
customer payments, we may be unable to sustain operations. There can be no
guarantee that we will be able to generate sufficient customer payments on a
timely basis to fund ongoing operations. If we are unable to secure cash in the
near future, or if we are unable to secure future sufficient customer payments
on a timely basis to fund our operations, we may become insolvent and may have
to cease operations, declare bankruptcy or similar actions.
WE WILL REQUIRE ADDITIONAL FINANCING
After our available cash is exhausted, we will need additional funds 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. However, in the future, we believe that cash from operations
will support continuing operations. 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 do not have any other sources of financing in place,
and we do not believe it is feasible to return to the equity markets at this
time to support our cash flow requirements. There can be no guarantee that we
will be able to generate sufficient timely customer payments to fund ongoing
operations. If we are unable to do so, we may become insolvent and may have to
cease operations, declare bankruptcy or similar actions.
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 are obligated to pay Sanmina (i) $150,000 on or about
August 15, 2000, which we have done, (ii) $150,000 on or before November 15,
2000, which we have done, and (iii) 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
-6-
<PAGE> 11
the terms of the note, we are obligated to make two semi-annual interest only
payments and monthly principal and interest payments 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 but continue to owe legal counsel $83,200 in late principal and interest
payments. We have agreed to pay legal counsel a lump sum of approximately
$50,000, which we have done, and $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.
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 $57.5 million through September 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 $5.2 million in revenues during the first nine months of
2000, recognized $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 limited historical basis
for you to expect that we will be able to generate substantial 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.
-7-
<PAGE> 12
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.
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.
-8-
<PAGE> 13
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.
RISKS RELATING TO AN INVESTMENT IN OUR SECURITIES
WE MAY REDEEM THE WARRANTS
Beginning on February 26, 2001, we may redeem the 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 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 Warrants are then the subject of an effective registration statement filed
with the SEC. If the Warrants are redeemed, holders will lose their rights to
exercise the 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
Warrants and pay the exercise price at a time when it may be disadvantageous for
them to do so, (b) sell the Warrants at the then current market price, if any,
when they might otherwise wish to hold the Warrants, or (c) accept the
redemption price which is likely to be substantially less than the market value
of the 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 initial 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 Warrant with an exercise price
of $4.00. The units were sold at a price of $1.50 per unit. On December 7,
2000, the last sales prices of our common stock and the Public Warrants as
reported on The Nasdaq SmallCap Market was $1.844 per share and $0.750 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 WARRANTS IS SUBSTANTIALLY LIMITED
The Warrants sold in the Private Placement are not exercisable until
February 26, 2001. Further, the Warrants may not be exercised unless, at the
time of exercise, we have an effective registration statement on file with the
SEC containing a current prospectus covering the shares of common stock issuable
upon exercise of the Warrants, or there is an available exemption from
registration applicable to their issuances under the Securities Act and, if
required, the securities 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 Warrants, we may not
be able to maintain the effectiveness of the registration statement until the
expiration of the Warrants, and there is no assurance that we will be able to do
so. The value of the Warrants may be greatly reduced if a registration statement
covering the shares of common stock issuable upon exercise of the Warrants is
not declared and kept effective or if such common stock is not qualified or
registered under state securities laws.
-9-
<PAGE> 14
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 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 are 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 securities 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 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 will
receive gross proceeds of $561,000, and if the 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 Warrants or the exercise of the Purchase Option and the Warrants
underlying the Purchase Option for general corporate purposes and to provide
working capital.
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 has 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
December 7, 2000 ................ 2.469 1.641
</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 Warrant. On December 7,
2000, the last sale price per share of our common stock as reported on The
Nasdaq SmallCap Market was $1.844 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 Public 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
December 7, 2000 .............. 0.938 0.719
</TABLE>
On December 7, 2000, the last sale price of our Public Warrants as reported on
The Nasdaq SmallCap Market was $0.750 per Public 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 (a) shares of our
common stock (excluding the shares issuable upon exercise of the Purchase Option
and the shares issuable upon exercise of the Warrants underlying the Purchase
Option), (b) the Warrants (excluding the Warrants issuable upon exercise of the
Purchase Option), and (c) the securities issuable upon the exercise of
placement agent's Purchase Option (including the shares of common stock and
Warrants issuable upon exercise of the Purchase Option, but excluding shares of
common stock issuable upon exercise of the Warrants underlying the Purchase
Option) to be sold hereunder. The table also sets forth the beneficial
ownership of the selling stockholders after the offering, based on information
provided to us by the selling stockholders. This information is provided 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.
Subject to certain contractual restrictions which are described in this
prospectus, selling stockholders may sell the securities 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 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.
-13-
<PAGE> 18
<TABLE>
<CAPTION>
SECURITIES TO BE
----------------
SECURITIES BENEFICIALLY OWNED SECURITIES TO BE SOLD BENEFICIALLY OWNED
------------------------------ ---------------------- ------------------
BEFORE THE OFFERING (1) IN THE OFFERING (1) AFTER THE OFFERING (1)
----------------------- ------------------- ----------------------
NUMBER OF
NUMBER OF SECURITIES NUMBER OF
SHARES OF NUMBER ISSUABLE UPON SHARES OF NUMBER OF NUMBER
NAME COMMON OF EXERCISE OF COMMON STOCK WARRANTS OF
---- STOCK WARRANTS PURCHASE OPTION TO BE SOLD TO BE SOLD SHARES PERCENT
----- -------- --------------- ----------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Narinda Arora....... 33,333 33,333 -- 33,333 33,333 -- --
Judith Barclay...... 233,333 233,333 -- 233,333 233,333 -- --
Clearview
International
Investment
Corporation (2)..... 233,333 233,333 -- 233,333 233,333 -- --
Steven Cohen........ 16,667 16,667 -- 16,667 16,667 -- --
Dalewood Associates
L.P. (3)............ 519,166 519,166 -- 519,166 519,166 -- --
EarlyBirdCapital,
Inc. (4) ........... -- -- 264,000 (4) 264,000 (4) 264,000 (4) -- --
Robert Gladstone (4) 16,667 41,667 (5) -- 16,667 16,667 25,000 *
Roger Gladstone (4). 16,667 21,667 (6) -- 16,667 16,667 5,000 *
James Krantz........ 20,000 20,000 -- 20,000 20,000 -- --
David Nussbaum (4).. 16,667 41,667 (7) -- 16,667 16,667 25,000 *
Renberg Revocable
Trust (8)........... 25,000 25,000 -- 25,000 25,000 -- --
Richard J.
Rosenstock, Rev.
Lvg. Trust DTD
3/5/96 (9).......... 66,667 66,667 -- 66,667 66,667 -- --
RT Enterprises, L.P.
(10)................ 66,667 66,667 -- 66,667 66,667 -- --
The Marilyn and
Barry Rubenstein
Family Foundation
(11)................ 623,000 50,000 -- 50,000 (12) 50,000 (12) 573,000 5.4
Wayne Saker......... 33,333 33,333 -- 33,333 33,333 -- --
Seneca Ventures (11) 673,000 100,000 -- 100,000 100,000 573,000 5.4
Mark Shnitkin....... 16,667 16,667 -- 16,667 16,667 -- --
Stourbridge
Investments Ltd. (13) 12,500 12,500 -- 12,500 12,500 -- --
David Thalheim
Revocable Living
Trust DTD 3/5/96 (14) 83,333 83,333 -- 83,333 83,333 -- --
Woodland Venture
Fund (11)........... 773,000 200,000 -- 100,000 200,000 573,000 5.4
</TABLE>
----------
* Less than one percent.
(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
-14-
<PAGE> 19
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. For each beneficial
owner, common stock beneficially owned does not include (i) shares of
common stock issuable upon the exercise of the Warrants owned, (ii)
shares of common stock or Warrants issuable upon exercise of the
Purchase Option (except as otherwise indicated in footnote 4), or (iii)
shares of common stock issuable upon exercise of the Warrants underlying
the Purchase Option. In accordance with the rules of the SEC, the shares
underlying the Warrants and the securities underlying the Purchase
Option will be deemed to be beneficially owned by the holder beginning
on December 28, 2000, 60 days prior to the date on which such Warrants
are first exercisable.
(2) As the President of Clearview International Investment Corporation,
Mr. Jacob Abramsky may exercise voting or investment control over such
securities and may be deemed to be the beneficial owner of such
securities.
(3) Dalewood Associates, Inc. is the manager of Dalewood Associates, L.P.,
with authority to act on behalf of the limited partnership. Mr. David
Nussbaum, also a selling stockholder, is an officer and director of
Dalewood Associates, Inc. Because of his positions with Dalewood
Associates, Inc., Mr. Nussbaum may be deemed to be the beneficial owner
of the securities held by Dalewood Associates, L.P. Mr. Nussbaum
disclaims beneficial ownership of such securities because he cannot
exercise voting or investment power over the securities.
(4) Consists of 264,000 shares of common stock and Warrants to purchase
264,000 shares of common stock issuable upon exercise of the Purchase
Option as of December 28, 2000, which is 60 days prior to the date on
which the Purchase Option is first exercisable. Mr. David Nussbaum,
Mr. Robert Gladstone and Mr. Roger Gladstone, who also are selling
stockholders, are each minority stockholders of Firebrand Financial
Group, Inc. (formerly Research Partners International, Inc.), which is
the majority stockholder of the parent company of EBC. Mr. Nussbaum is
also the Chief Executive Officer of EBC. As a result of such positions,
Mr. Nussbaum may be deemed to be the beneficial owner of the securities
held by EBC. Mr. Nussbaum disclaims beneficial ownership of such shares
because he does not exercise voting or investment power over the
securities.
(5) Includes 25,000 shares of common stock that may be acquired upon
exercise of a warrant underlying an outstanding option issued in
connection with the June 1999 public offering.
(6) Includes 5,000 shares of common stock that may be acquired upon exercise
of a warrant underlying an outstanding option issued in connection with
the June 1999 public offering.
(7) Includes 25,000 shares of common stock that may be acquired upon
exercise of a warrant underlying an outstanding option issued in
connection with the June 1999 public offering.
(8) As trustee of the Renberg Revocable Trust, Kenneth Renberg may be
deemed to be the beneficial owner of the securities held by the trust,
with sole voting and investment power.
(9) As trustee of the Richard J. Rosenstock Revocable Living Trust Dated
3/5/96, Mr. Richard J. Rosenstock may be deemed to be the beneficial
owner of the securities held by the trust, with sole voting and
investment power.
(10) As President of R.T. Management, the general partner of Enterprises,
L.P., Mr. Robert Tills may be deemed to be the beneficial owner of the
securities held by the limited partnership with sole voting and
investment control.
(11) Consists of (i) 50,000 shares of common stock purchased by Mr. and Mrs.
Rubenstein in the Private Placement; (ii) 162,000 shares of common stock
held by the Barry Rubenstein Rollover IRA, for which Barry Rubenstein
is the Trustee; (iii) 200,000 shares of common stock owned by Seneca
Ventures, of which Mr. Barry Rubenstein is a general partner and with
respect to which he exercises voting and investment control; (iv)
345,000 shares of common stock owned by Woodland Venture Fund, of which
Mr. Rubenstein is a general partner and with respect to which he
exercises voting and investment control; (v)
-15-
<PAGE> 20
256,000 shares of common stock owned by Woodland Partners, of which Mr.
Rubenstein is a general partner and with respect to which he exercises
voting and investment control; and (vi) 50,000 shares of common stock
owned by The Marilyn and Barry Rubenstein Family Foundation, of which
Mr. and Mrs. Rubenstein act as the Trustees and with respect to which
Mr. and Mrs. Rubenstein exercise voting and investment control. The
holders of record of the securities being offered and resold pursuant to
this prospectus are as follows: (i) The Marilyn and Barry Rubenstein
Family Foundation is offering 50,000 shares of common stock and Warrants
to purchase 50,000 shares of common stock purchased in the Private
Placement and, upon exercise of the Warrants, the shares of common stock
underlying those Warrants; (ii) The Marilyn and Barry Rubenstein Family
Foundation is offering 100,000 shares of common stock and Warrants to
purchase 100,000 shares of common stock purchased in the Private
Placement and, upon exercise of the Warrants, the shares of common stock
underlying those Warrants; and (iii) Woodland Venture Fund is offering
200,000 shares of common stock and Warrants to purchase 200,000 shares
of common stock purchased in the Private Placement and, upon exercise of
the Warrants, the shares of common stock underlying those Warrants.
(12) As President and Portfolio Manager, respectively, of Stourbridge
Investment Ltd., Mr. Kalis Shuarcbir and Mr. Steve Schnipper may be
deemed to be the beneficial owners of the securities held by the
corporation.
(13) As Trustee of the David Thalheim Revocable Living Trust Dated 3/5/96,
Mr. David Thalheim may be deemed to be the beneficial owner of the
securities held by the trust, with sole voting and investment
control.
-16-
<PAGE> 21
CERTAIN TRANSACTIONS WITH SELLING STOCKHOLDERS
Except as described below, we have not had any material transactions
with the selling stockholders listed above during the past three years.
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 EBC the Purchase Option, which permits the
holder to purchase 264,000 shares of common stock and Warrants to purchase
264,000 shares of common stock. Each share of common stock and Warrant is
issuable together as a unit, and no separate unit certificates will be issued.
Each unit of one share of common stock and one Warrant can be purchased at a
price of $2.125 per unit. We also granted to EBC 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 a person designated by EBC or
to permit EBC to send a representative to observe each meeting of the Board. No
person has been designated by EBC for appointment to our Board. We will also pay
"source fees" to EBC, until August 2002, if EBC introduces potential investors
to us and those investors make subsequent investments in us.
EBC 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 EBC a non-accountable
expense allowance of $517,500. In addition, in connection with the June 1999
public offering, we sold to certain affiliates of EBC, for an aggregate of $100,
purchase options to purchase 200,000 units (each unit consisted of three shares
of our common stock and two Public Warrants), 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. Those 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 these 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 agreed to use our best efforts
to appoint or elect a designee of EBC 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 EBC,
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 EBC 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 Public Warrants, 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. EBC has agreed to forgo any
solicitation fee with respect to the Warrants being registered hereby.
EBC 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.
As disclosed in the selling stockholder table, EBC is a selling
stockholder in this offering. However, EBC has agreed that it will not
participate in this offering as it will not act on behalf of any other selling
securityholders as a broker-dealer selling securities as agent or principal.
Accordingly, EBC will not receive any fees in connection with any such sales.
EBC will sell its securities being registered hereby through another
broker-dealer.
Mr. David Nussbaum, one of the selling stockholders, is an officer and
director of EBC, and 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
-17-
<PAGE> 22
company of EBC.
RELATIONSHIP WITH BARRY RUBENSTEIN AND AFFILIATES
Mr. Barry Rubenstein has previously purchased equity securities in our
company in our public offering completed in June 1999 through certain affiliated
entities that he controls. Mr. Rubenstein purchased such securities on the same
terms and conditions as all other persons who invested in our company in such
offering.
-18-
<PAGE> 23
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, 10,667,970 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 the 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 certain of 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 upon exercise of outstanding options and
warrants will be, validly issued, fully paid and non-assessable.
OUTSTANDING WARRANTS AND WARRANTS ISSUABLE UPON EXERCISE OF THE PURCHASE OPTION
The outstanding Warrants and the Warrants issuable upon exercise of the
Purchase Option that are offered hereby by certain selling stockholders are
identical to our outstanding Public Warrants, except that the 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 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.
Pursuant to the terms of the Warrants and the Public Warrants, neither
the Warrants nor the Public Warrants may be exercised unless, at the time of
exercise, we have an effective registration statement on file with the SEC
containing a current prospectus covering the shares of common stock issuable
upon exercise of the Warrants and 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 for resale the offering of all of the shares of common stock issuable
upon exercise of the Warrants, we may not be able to maintain the effectiveness
of the registration statement until the expiration of the Warrants, and there is
no assurance that we will be able to do so. The value of the Warrants may be
greatly reduced if a registration statement covering the offering and resale of
shares of common stock issuable upon exercise of the Warrants is not declared
and kept effective, or if such securities are not qualified or registered under
state securities laws.
No fractional shares of common stock will be issued in connection with
the exercise of 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 Warrants will expire at 5:00 p.m., New York time, on June 15, 2004.
In the event that a holder of Warrants fails to exercise the Warrants prior to
their expiration, the Warrants will expire and the holder thereof will have no
further rights with respect to the Warrants.
We may redeem the 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 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.
-19-
<PAGE> 24
A holder of Warrants will not have any rights, privileges or liabilities
as a stockholder of VNCI prior to the exercise of the Warrants. We are required
to keep available a sufficient number of authorized shares of common stock to
permit exercise of the Warrants. The exercise price of the Warrants and the
number of shares issuable upon exercise of the Warrants will be subject to
adjustment to protect against dilution in the event of stock dividends, stock
splits, combinations, subdivisions and reclassifications. We cannot assure you
that the market price of our common stock will exceed the exercise price of the
Warrants at any time during the exercise period.
PURCHASE OPTION
The outstanding Purchase Option that we issued to EBC in connection with
the Private Placement is exercisable during the period beginning on February 26,
2001 and ending on August 25, 2005. The Purchase Option permits the holder to
purchase 264,000 shares of common stock and Warrants to purchase 264,000 shares
of common stock. The Purchase Option may be exercised by the holder in whole or
in part. However, each share of common stock and Warrant for which the Purchase
Option is exercised will be issued together as a unit, although no separate unit
certificates will be issued. The Purchase Option is exercisable in cash at an
initial exercise price of $2.125 for each share of common stock and Warrant for
which the Purchase Option is exercised. 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 Warrant.
REGISTRATION RIGHTS
The holders of the common stock and the Warrants issued in the Private
Placement are entitled to have such securities included in any registration
statement that we file with the SEC for an offering of securities (subject to
the right of the underwriters of that offering to require the holders to delay
the sale of their securities for a period of up to 90 days after that
registration statement is declared effective by the SEC), for any period of
time during which the registration statement of which this prospectus
constitutes a part is not effective.
LOCK-UP AGREEMENTS
All of the securities to be offered and sold in this offering by the
selling stockholders, other than the Purchase Option and the securities issuable
upon exercise of the Purchase Option, 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 EBC, the placement agent of our
Private Placement.
-20-
<PAGE> 25
PLAN OF DISTRIBUTION
This prospectus covers the offering and resale of shares of common stock
and Warrants 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 or
Warrants 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.
-21-
<PAGE> 26
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.
-22-
<PAGE> 27
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 DECEMBER 8, 2000.
SHARES OF COMMON STOCK
AND
REDEEMABLE COMMON STOCK PURCHASE WARRANTS
[VNCI LOGO]
VIDEO NETWORK COMMUNICATIONS, INC.
__________ __, 2000
<PAGE> 28
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 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).
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).
</TABLE>
II-1
<PAGE> 29
<TABLE>
<S> <C>
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.
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.
** Previously filed.
II-2
<PAGE> 30
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 this Amendment No. 1 to Form S-3 and has duly
caused this Amendment to be signed on its behalf by the undersigned, thereunto
duly authorized, in the County of Rockingham, New Hampshire, on December 8,
2000.
VIDEO NETWORK COMMUNICATIONS, INC.
By: /s/ CARL MUSCARI
-------------------------------
Carl Muscari
President and Chief Executive Officer
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 December 8, 2000
-------------------------
Carl Muscari Officer and Director
(Principal Executive Officer)
/s/ ROBERT H. EMERY Chief Financial Officer and Vice December 8, 2000
-------------------------
Robert H. Emery President, Administration
and Secretary (Principal
Financial and Accounting Officer)
Officer)
/s/ JAMES F. BUNKER *
-------------------------
James F. Bunker Chairman of the Board of Directors December 8, 2000
/s/ EUGENE R. CACCIAMANI * Director December 8, 2000
-------------------------
Eugene R. Cacciamani
/s/ RICHARD S. FRIEDLAND * Director December 8, 2000
-------------------------
Richard S. Friedland
/s/ QUENTIN R. LAWSON * Director December 8, 2000
-------------------------
Quentin R. Lawson
/s/ STEVEN A. ROGERS * Director December 8, 2000
-------------------------
Steven A. Rogers
*By: /s/ ROBERT H. EMERY Attorney-in-Fact December 8, 2000
----------------------------
Robert H. Emery
</TABLE>
II-3
<PAGE> 31
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.
23.1** Consent of Shaw Pittman (included in Exhibit 5.1).
23.2* Consent of PricewaterhouseCoopers LLP.
24** Power of Attorney.
</TABLE>
----------
* Filed herewith.
** Previously filed.
