AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 18, 1999
REGISTRATION NO. ____
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SECURITIES AND EXCHANGE COMMISSION
================================================================================
WASHINGTON, D.C. 20549
____________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________________
NETRIX CORPORATION
(Name of Small Business Issuer in its Charter)
DELAWARE 54-1345159
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
____________________
13595 DULLES TECHNOLOGY DRIVE
HERNDON, VIRGINIA 22071
(703) 742-6000
(Address and Telephone Number of Principal Executive Offices)
____________________
LYNN C. CHAPMAN
PRESIDENT
13595 DULLES TECHNOLOGY DRIVE
HERNDON, VIRGINIA 22071
(703) 742-6000
(Name, Address and Telephone Number of Agent for Service)
____________________
with a copy to:
JAY R. SCHIFFERLI, ESQ.
KELLEY DRYE & WARREN LLP
TWO STAMFORD PLAZA
281 TRESSER BOULEVARD
STAMFORD, CONNECTICUT 06901
(203) 324-1400
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective. If the
only securities being registered on this Form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box.
|_|
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering.
|_| ______________
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration
statement for the same offering. |_| ______________
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration
statement for the same offering. |_| ______________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------- ------------- ------------------ ---------------- ------------------
PROPOSED
MAXIMUM
AMOUNT TO PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF SECURITIES BE OFFERING PRICE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(2) REGISTRATION FEE
- --------------------------------------------------- ------------- ------------------ ---------------- ------------------
Common Stock, par value $.05 per share,
underlying Common Stock Purchase Warrants 242,000 $2.59 $626,780 $ 174.24
- --------------------------------------------------- ------------- ------------------ ---------------- ------------------
Common Stock, par value $.05 per share,
underlying Series A 8% Convertible Debentures 1,490,935 $2.59 $3,861,521.60 $1,073.50
- --------------------------------------------------- ------------- ------------------ ---------------- ------------------
Total 1,732,935 $1,247.74
- --------------------------------------------------- ------------- ------------------ ---------------- ------------------
(1) Based on the average of the high and the low prices of the common stock on
the Nasdaq Stock Market on June 11, 1999.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JUNE 18, 1999
PRELIMINARY PROSPECTUS
NETRIX CORPORATION
This prospectus relates to 1,732,935 shares of common stock of Netrix
Corporation that may be offered for sale by certain of our securityholders. The
shares of common stock covered by this prospectus include 1,490,935 shares
issuable upon conversion of our Series A 8% Convertible Preferred Stock and
242,000 shares issuable upon exercise of Warrants we have issued.
The selling securityholders may sell these shares from time to time on
the Nasdaq Stock Market at the then prevailing market prices. The
securityholders reserve the right, however, to offer and sell the common stock
on any other national securities exchange on which the common stock is or may
become listed or in the over-the-counter market, in each case at then prevailing
market prices, or in privately negotiated transactions each at a price then to
be negotiated. All offers and sales made on the Nasdaq Stock Market or any other
national securities exchange or in the over-the-counter market will be made
through or to licensed brokers and dealers.
Our common stock is currently traded on the Nasdaq National Market
under the trading symbol "NTRX." On June 17, 1999, the last sale price of the
common stock on that market was $3.375 per share.
------------
INVESTING IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 4.
------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful and complete. Any representation to the contrary is a
criminal offense.
------------
THE DATE OF THIS PROSPECTUS IS JUNE __, 1999.
YOU SHOULD RELY ONLY UPON THE INFORMATION IN THIS PROSPECTUS. WE HAVE
NOT, AND THE SELLING SECURITYHOLDERS HAVE NOT, AUTHORIZED ANY OTHER PERSON TO
PROVIDE YOU WITH DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR
INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON IT. WE ARE NOT, AND THE SELLING
SECURITYHOLDERS ARE NOT, MAKING AN OFFER TO SELL THESE SECURITIES IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. YOU SHOULD ASSUME THAT
THE INFORMATION APPEARING IN THIS PROSPECTUS IS ACCURATE AS OF THE DATE ON THE
FRONT COVER OF THIS PROSPECTUS ONLY. OUR BUSINESS, FINANCIAL CONDITION, RESULTS
OF OPERATIONS AND PROSPECTS MAY HAVE CHANGED SINCE THAT DATE.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934. As required by the Securities Exchange Act, we file
reports, proxy statements and other information with the SEC. The reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the SEC at Judiciary Plaza, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549 and at regional offices of the SEC at
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661 and at Seven
World Trade Center, 13th Floor, New York, New York 10048. In addition, we are
required to file electronic versions of these documents through the SEC's
Electronic Data Gathering, Analysis and Retrieval System (EDGAR). The SEC
maintains a World Wide Web site at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the SEC. Copies of such material may also be
obtained at prescribed rates from the Public Reference Section of the SEC, 450
Fifth Street, N.W., Judiciary Plaza, Room 1024, Washington, D.C. 20549. The
common stock is quoted on the Nasdaq National Market. Information regarding the
trading of our common stock on the Nasdaq National Market can be obtained from
the Nasdaq National Market, 9801 Washingtonian Boulevard, Gaithersburg, Maryland
20878 ((202) 496-2500).
We have filed with the SEC a Registration Statement on Form S-3 under
the Securities Act of 1933 with respect to the securities being offered by this
Prospectus. As permitted by the rules and regulations of the SEC, this
prospectus does not contain all the information set forth in the Registration
Statement. For further information with respect to us and the offer and sale of
the securities, reference is made to the Registration Statement. Statements
contained in this prospectus concerning the provisions of documents filed with
the Registration Statement as exhibits are necessarily summaries of those
documents, and each such statement is qualified in its entirety by reference to
the copy of the applicable document filed with the SEC. The Registration
Statement may be inspected without charge at the public reference facilities of
the SEC at the addresses contained in the preceding paragraph and copies of all
or any part thereof may be obtained from the SEC at prescribed rates.
Pursuant to the rules of the SEC, we are able to "incorporate by
reference" into this document the information that we have on file with the SEC.
This means that we may disclose important information to you by referring you to
other documents. The information incorporated by reference is considered to be
part of this prospectus. In addition, any later information we file with the SEC
and incorporated by reference will update and supersede the information referred
to or contained in this prospectus. We incorporate by reference the documents
listed below and any future filings we make with the SEC under section 13a,
13(c), 14 or 15(d) of the Exchange Act until this offering has been completed:
o Our Annual Report on Form 10-K for the year ending December 31, 1998; and
o Our Quarterly Report on Form 10-Q for the quarter ending March 31, 1999.
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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain information set forth in this statement includes "forward
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. In addition, from time to time, we may publish
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act or make oral statements that constitute
forward-looking statements. These forward-looking statements may relate to such
matters as anticipated financial performance, future revenues or earnings,
business prospectus, projected ventures, new products, anticipated market
performance and similar matters. The words "budgeted," "anticipate," "project,"
"estimate," "expect," "may," "believe," "potential" and similar statements are
intended to be among the statements that are forward looking statements. Because
these statements reflect the reality of risk and uncertainty that is inherent in
our business, actual results may differ materially from those expressed or
implied by such forward-looking statements. You are cautioned not to place undue
reliance on these forward looking statements, which are made as of the date
hereof.
The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements. In order to comply with the terms of the
safe harbor, we caution you that a variety of factors could cause our actual
results to differ materially from the anticipated results or other expectations
expressed in our forward-looking statements. These risks and uncertainties, many
of which are beyond our control, include, but are not limited to those set forth
under the caption "Risk Factors" on page 4 and in our filings with the SEC.
We undertake no obligation to release publicly any revisions to the
forward looking statements to reflect events or circumstances after the date
hereof or to reflect unanticipated events or developments.
3
NETRIX CORPORATION
We are a worldwide provider of voice and data networking products. We
develop, manufacture, market and support networking equipment for voice, data
and image networks. Our products are designed to transport voice over data
networks to enable its customers to realize significant cost savings.
We were incorporated in Virginia in October 1985, and we reincorporated
in Delaware in march 1987. Our principal executive offices are located at 13595
Dulles Technology Drive, Herndon, Virginia 20717; and our telephone number is
(703) 742-6000.
RISK FACTORS
This offering involves a high degree of risk. Before you invest in the
securities offered hereby, you should consider carefully the following factors,
in addition to the other information contained in this prospectus. Our business
and results of operations could be seriously harmed by any of the following
risks. The trading price of our common stock could decline due to any of these
risks, and you may lose part or all of your investment.
WE HAVE A HISTORY OF LOSSES AND MAY EXPERIENCE FUTURE LOSSES
We have incurred net losses of approximately $6.3 million and $8.6
million for the years ended December 31, 1998 and 1997, respectively. We
anticipate that we will continue to incur significant sales and marketing,
product development and general and administrative expenses and, as a result, we
will need to generate higher revenues to achieve and sustain profitability on an
annual basis. Although revenues from our new line of Network Exchange products
have grown in recent quarters, we cannot be certain that we will continue to
achieve revenue growth or realize sufficient revenues to achieve profitability.
WE NEED TO INCREASE OUR REVENUES TO GENERATE ADEQUATE CASH FOR OPERATIONS AND
CAPITAL NEEDS
Our success is dependent on our ability to generate adequate cash for
operations and capital needs. Our ability to generate adequate cash for these
purposes is in part dependent on our success in increasing sales of our
products. We have developed a plan to increase our revenues through our Network
Exchange product line; however, due to market conditions and other factors
beyond our control, sales of Network Exchange products have not been sufficient
to replace the decline in our mature product sales. There can be no assurance we
will be able to adequately increase our product sales to achieve sustained
periods of profitability.
WE MAY NEED TO SEEK ADDITIONAL CAPITAL TO FULFILL OUR BUSINESS PLAN
Our ability to implement our business plan is materially dependent upon
our ability to conserve our capital. Our capital requirements depend on several
factors, including the rate of expanded sales of our products, the ability to
expand our customer base, the growth of sales and marketing and several other
factors. If our capital requirements vary materially from what we anticipate, we
may require additional financing sooner than anticipated. There can be no
assurance that we will be able to obtain additional financing on terms favorable
to us, if at all. If additional funds are raised through the issuance of equity
securities, the percentage ownership of our stockholders will be reduced,
stockholders may experience additional dilution, or such equity securities may
have rights, preferences or privileges senior to the common stock. If adequate
funds are not available to us or available to us on satisfactory terms, we may
be required to reduce substantially, or eliminate, certain areas of our product
development activities, limit our operations significantly, or otherwise modify
our business strategy. Our failure to obtain acceptable financing would have a
material adverse effect on our results of operations.
4
WE ARE DEPENDENT ON A LIMITED NUMBER OF CUSTOMERS
A limited number of relatively large customers has accounted for and is
likely to continue to account for a substantial portion of our revenues in any
particular fiscal period. As a result, unless and until we diversify and expand
our customer base, our success will be tied to the timing and size of future
purchase orders from our largest customers. This is beyond our control and can
be affected by the financial and operational success of these customers, and, in
particular, their success using our products. In any period, the unexpected loss
or decline in revenues from a major customer, or the failure to generate
significant revenues from other customers, could have an adverse effect on our
business and operating results. Although most future expenses will be relatively
variable, we will have significant fixed costs that cannot be adjusted in the
short term. Accordingly, if revenue levels are below expectations, our operating
results could be adversely effected. In addition, our products are often a
significant capital expenditure for our customers and, for that reason, our
operating results may vary significantly depending upon general economic
conditions and customer's budgetary cycles.
OUR INDUSTRY IS CHARACTERIZED BY RAPID CHANGES IN TECHNOLOGY AND SERVICES.
The market for our products is characterized by rapidly changing
technology, frequent new product introductions, evolving industry standards and
changes in telecommunications services offered by public carriers. We believe
our future success will depend, in part, on our ability to anticipate or adapt
to these events and to develop and introduce, on a timely basis, new and
enhanced products and services responsive to the needs of our customers. If we
are unable, for technological, financial or other reasons to develop, introduce
and successfully market products in a timely manner in response to changes in
the industry, our business, financial condition and results of operations could
be materially and adversely affected. As standards and technologies evolve, we
will be required to modify our products or develop and support new versions of
our products. This may require us to make substantial expenditures on research
and development in order to develop new products or to maintain competitiveness
of our existing products. Announcements of planned or new product offerings by
us or our competitors may cause our customers to defer or cancel the purchase of
existing products. Also, the introduction of products embodying technologies and
the emergence of new industry standards or telecommunications services could
make it more difficult for us to market our existing products or may cause our
existing products to become obsolete. In the past we have experienced delays in
releasing certain of our products, and there can be no assurance that we will
not encounter technical or other difficulties that could delay the introduction
or release of new products in the future.
WE RELY TO A LARGE EXTENT ON INDEPENDENT DISTRIBUTION CHANNELS, AND THE LOSS OF
ANY OF OUR DISTRIBUTION CHANNELS COULD ADVERSELY EFFECT US
We rely on reseller channels, including distributors and systems
integrators, for a significant portion of our revenues. None of these resellers
are under our control, and there is no assurance that sales by resellers will
continue at present levels and not decline. The loss of one or more significant
resellers could adversely affect our business. In addition, we rely on resellers
to provide certain limited service and support to our products , and any
deficiencies in this service and support could have an adverse effect on us.
SOME COMPONENTS OF OUR PRODUCTS ARE AVAILABLE TO US ONLY FROM A LIMITED NUMBER
OF SUPPLIERS
Certain components used in our products are currently available from
only one source and other of the components are available from only a limited
number of suppliers. Although we have generally been able to obtain adequate
supplies of components to date, our inability to develop alternative sources if
and as required in the future, or to obtain sufficient sole source or limited
source components as required, could result in delays or reductions in product
shipments. Certain products that are or may in the future be marketed with or
5
incorporated into our products are supplied by or under development by third
parties These third parties may be the sole suppliers of such products. We also
currently rely on a single contract manufacturer to assemble and test most of
our products. While the Company believes there are a number of suitable
manufacturers, there can be no assurance that current or alternative sources
will be able to supply all of our demands on a timely basis. Also, an
unanticipated interruption in supply could have a short term effect on our
business. It will not be economically practical for the Company to develop its
own manufacturing capacity in the foreseeable future.
WE ARE ENGAGED IN A HIGHLY COMPETITIVE BUSINESS
The market for networking systems is extremely competitive. In most of
the markets in which we compete our competitors are more established, benefit
from greater market recognition and have greater financial, technological,
production and marketing resources than we do. Competition could become even
more intense if new companies enter the market or if our existing competitors
expand their product lines. We compete on the basis of product features and
capabilities, performance and price. An increase in competition could have an
adverse effect on our operating results, both in terms of lost market share and
revenues and required investments in research and development and sales and
marketing in order to remain competitive. There can be no assurance that we will
be able to make technological advances or that we will have sufficient resources
to fund the necessary research and development, marketing and sales efforts that
will enable us to profitably compete in our markets.
WE ARE SUBJECT TO POTENTIAL FLUCTUATIONS IN OPERATING RESULTS
Our future operating results are difficult to predict and may be
affected by a number of factors, many of which are outside of our control. Some
of these factors include, but are not limited to, the timing of new product
announcements or introductions by us and our competitors, competitive pricing
pressures and economic conditions in the United States and international markets
As a result of these and other factors, our quarterly and annual revenues,
expenses and results of operations could vary significantly in the future.
WE HAVE INTERNATIONAL SALES AND INTERNATIONAL OPERATIONS WHICH COULD ADVERSELY
AFFECT OUR PROFITABILITY
We sell a significant amount of our products and conduct significant
operations outside of the United States. A number of risks are inherent in
international transactions. Substantially all of our international sales have
been made through third-party distributors, and in many cases we rely on a
single distributor for a particular country. A reduction in sales by some or all
of these distributors or a termination of their relationships with us could have
a material adverse effect on our operations and financial performance.
In addition, international sales and operations may be limited or
disrupted by the imposition of government controls, export license requirements,
political instability, price controls, trade restrictions, changes in tariffs or
difficulties in staffing and managing international operations. Additionally,
the Company may be adversely affected by fluctuations in currency exchange rates
and duty rates, which could effect demand for our products.
WE RELY ON A LIMITED NUMBER OF KEY EMPLOYEES
Our success depends to a significant degree upon the continued
contributions of our management, marketing, engineering and technical personnel,
many of whom would be difficult to replace. In addition, as we continue to
develop the Network Exchange product line, we will need to attract and retain
6
additional qualified personnel. There is intense competition for qualified
personnel in our industry, and there can be no assurance that we will be able to
attract and retain the qualified personnel necessary for the development of our
business. Loss of the services of any of our key employees would be detrimental
to our development. We do not have employment contracts with our key employees
and we do not have "key man" life insurance on any of our officers or directors.
WE ARE DEPENDENT ON PATENTS AND PROPRIETARY RIGHTS TO PROTECT OUR POSITION IN
THE INDUSTRY
Our success and ability to compete is dependent in part upon our
proprietary technology. We rely on a combination of patents, trade secret,
copyright and trademark law, non-disclosure agreements and technical measures to
establish and protect our proprietary rights. We have numerous United States and
foreign patents and patent applications pending, all generally covering our core
voice technologies. We believe these patents have been and will continue to be
important in enabling us to effectively compete in our industry. However, there
can be no assurance that our patents will not be challenged or circumvented by
competitors or will provide us with any competitive advantages or that other
companies will not be able to market functionally similar products, systems or
processes without violating our patent rights or that any additional patents
will issue. We also rely on trade secrets that we seek to protect, in part,
through confidentiality agreements with employees and other parties. There can
be no assurance that these agreements will not be breached, that we will have
adequate remedies for any breach or that our trade secrets will not otherwise
become known to or independently developed by competitors.
Failure to obtain patent protection in certain foreign countries may
materially adversely affect our ability to compete effectively in these
countries. In addition, patent applications filed in foreign countries and
patents granted in such countries are subject to laws, rules and procedures
which differ from those in the United States. Patent protection in such
countries may be different from patent protection provided by United States laws
and may not be as favorable to us.
We intend to enforce our patents and protect our trade secrets, so we
may be involved from time to time in litigation to determine the enforceability,
scope and validity of these rights. This type of litigation could result in
substantial cost to us and diversion of effort by our management and technical
personnel. The need to commence any such litigation at a time when we do not
have available capital could preclude us from fully protecting our intellectual
property rights. Further, any adverse outcome in such litigation could have a
material adverse effect on us. If any of our products are found to infringe upon
the patents or proprietary rights of another party, we may be required to obtain
licenses under such patents or proprietary rights of such other party. No
assurance can be given that any such licenses would be made available on terms
acceptable to us, if at all. If required licenses were to be unavailable, we
could be prohibited from using, marketing or selling certain technology and
devices and such prohibition could have a material adverse effect on us.
WE COULD BE AFFECTED BY GOVERNMENTAL RESTRAINTS OR CHANGES IN GOVERNMENTAL
POLICY
A portion of our revenues results from sales to the United States
government, primarily through systems integrators. The revenues generated by
this government business, which is spread across a numerous agencies and
departments, could be adversely affected by governmental budgetary or fiscal
restraints or changes in governmental policy.
OUR CERTIFICATE OF INCORPORATION AND BY-LAWS CONTAIN PROVISIONS WHICH COULD
DELAY OR PREVENT A CHANGE IN CONTROL
Certain provisions of our Certificate of Incorporation and By-laws may
have the effect of discouraging, delaying or preventing a take-over attempt that
could be in the best interests of our stockholders. These provisions, among
others: (1) separate our Board of Directors into three classes; (2) limit the
7
ability of our stockholders to call special stockholder meetings; (3) require
advance notice of nominations for Directors and stockholder proposals to be
considered at stockholder meetings; and (4) require a vote greater than 2/3 to
remove Directors from office or amend many of the provisions of our Certificate
of Incorporation and By-laws. Our Board of Directors also has the right, without
further action of the stockholders, to issue and fix the terms of preferred
stock, which could have rights senior to the common stock. We are also subject
to the "business combination" provisions of the Delaware General Corporate Law,
which imposes procedures impeding business combinations with "interested
stockholders" that are not approved of by our Board of Directors.
WE MUST MAINTAIN COMPLIANCE WITH CERTAIN FINANCIAL COVENANTS IMPOSED BY OUR
LENDERS
During 1998, our line of credit agreement required us to maintain a
tangible net worth of at least $13.5 million. We were in violation of this
requirement at December 31, 1998 and at certain other periods during the year.
We have renegotiated this requirement to $9.0 million, and we believe that this
will be adequate for us to operate in the future. However, there can be no
assurance that we will not violate the new covenant or that the outstanding line
of credit balance will not be called if we were to violate the new covenant.
IF WE MAKE ACQUISITIONS TO ADVANCE OUR BUSINESS, WE MUST SUCCESSFULLY INTEGRATE
THE NEW BUSINESS
We may consider business acquisitions to acquire complementary
technologies and businesses. Business Acquisitions involve special risks,
including unanticipated liabilities and contingencies and difficulties related
to the integration of the acquired businesses. Any such unanticipated liability
or significant delay in, or increase in the cost of, integrating an acquired
business could have a material adverse effect on our business, financial
condition and results of operations. Although we are evaluating various
acquisition opportunities, we do not have any agreement or understanding
regarding any business acquisition. There can be no assurance that, even if we
did want to make a business acquisition, that we would be successful in doing
so. Acquisitions can involve significant transaction costs and management time,
and there could be adverse effects if we devote substantial resources to an
acquisition that is not consummated.
USE OF PROCEEDS
We will not receive any proceeds from the sale of common stock by the
selling securityholders. If the Warrants are exercised, we will receive up to
$____, reflecting the total exercise price.
8
SELLING SECURITYHOLDERS
This Prospectus relates to the resale of 1,732,935 shares of common
stock. The following table sets forth information with respect to this resale.
The following table sets forth, to our knowledge, (i) the number of shares of
common stock beneficially owned by each selling securityholder, (ii) the number
of shares of common stock to be offered and sold by such selling securityholder
and (iii) the number of shares of common stock and percentage of outstanding
shares of common stock to be beneficially owned by such selling securityholder
after such offering and sale, assuming that all the shares offered by such
selling securityholder are in fact sold. Unless otherwise indicated, to our
knowledge, each person has sole investment and voting power, if applicable (or
shares such powers with his or her spouse), with respect to the securities set
forth in the following table. As of June 17, 1999 we had 11,493,009 shares of
common stock issued and outstanding.
Beneficial Ownership
After the Offering (1)
--------------------------------
Number of Shares Number of
Beneficially Owned Shares to Number of
NAME AND ADDRESS Prior to the Offering be Sold Shares Percentage
---------------- --------------------- ------- ------ ----------
Charles Ziegler 45,455 45,455 --- ---
c/o LIT
220 Bush, Suite 580
San Francisco, CA 94104
Donald Abramson 67,275 67,275 --- ---
220 Bush Street, #545
San Francisco, CA 94104
The Advent Fund LLC 127,275 127,275 --- ---
440 South LaSalle, Suite 2500
Chicago, IL 60605
Downco Holdings, Ltd. 72,725 72,725 --- ---
c/o Robert Goodman
1013 Cove Road
Mamaroneck, NY 10543
Paul Johnson 18,185 18,185 --- ---
1112 Park Avenue
New York, NY 10128
Clifford T. Dirkes 36,365 36,365 --- ---
707 Golfview Road
Morrestown, NJ 08057
SoundShore Opportunity Holding Fund Ltd. 36,365 36,365 --- ---
c/o AIG
1281 East Main Street
Stamford, CT 06902
9
Beneficial Ownership
After the Offering (1)
--------------------------------
Number of Shares Number of
Beneficially Owned Shares to Number of
NAME AND ADDRESS Prior to the Offering be Sold Shares Percentage
---------------- --------------------- ------- ------ ----------
SoundShore Holdings Ltd. 90,910 90,910 --- ---
c/o AIG
1281 East Main Street
Stamford, CT 06902
Triton Capital Investments 90,910 90,910 --- ----
One Sansome, 39th Floor
San Francisco, CA 94104
Hull Overseas, Ltd. 90,910 90,910 --- ---
152 West 57th Street
New York, NY 10019
Richard A. Levy and Susan C. Levy, JTWROS 109,095 109,095 --- ---
1258 Linder Avenue
Highland Park, IL 60035
St. Claire International, Ltd. 36,365 36,365 --- ---
c/o Hedge Funds Services
(BVI) Ltd.
Box 23
Ellen L. Shelton Building
Road Town, Tortola
British Virgin Islands
Special Situations Fund III, L.P. 1,454,200(2) 109,090 1,294,200 9.8
153 East 53rd Street, 51st Floor
New York, NY 10022
Special Situations Cayman Fund, L.P. 1,454,200(2) 36,365 1,294,200 9.8
153 East 53rd Street, 51st Floor
New York, NY 10022
Special Situations Technology 1,454,200(2) 14,545 1,294,200 9.8
Fund, L.P.
153 East 53rd Street, 51st Floor
New York, NY 10022
363,340 363,340 --- ---
RKB Capital, L.P.
[address]
109,095 109,095 --- ---
Omicron Partners L.P.
[address]
363,340 363,640 --- ---
Abernathy Group
[address]
10
Beneficial Ownership
After the Offering (1)
--------------------------------
Number of Shares Number of
Beneficially Owned Shares to Number of
NAME AND ADDRESS Prior to the Offering be Sold Shares Percentage
---------------- --------------------- ------- ------ ----------
92,500 92,500 --- ---
Renwick Securities, Inc.
[address]
50,000 50,000 --- ---
Coast Business Credit
[address]
Kaufman Bros., L.P. 100,000 100,000 --- ---
800 Third Avenue, 25th Floor
New York, NY 10022
- -----------------------
(1) Beneficial ownership is determined in accordance with the rules and
regulations of the SEC and generally includes consideration of voting or
investment power with respect to the securities at issue. Information with
respect to beneficial ownership is based upon information as of June 15,
1999, and assumes that there is outstanding an aggregate of 11,493,009
shares of common stock, not including treasury shares. Except as otherwise
indicated in the footnotes below, and subject to community property laws
where applicable, we believe, based upon information furnished by selling
securityholders, that the persons named in this table have sole voting and
investment power with respect to all shares of common stock shown as
beneficially owned by them.
(2) Based on a Schedule 13G dated February 12, 1999. Special Situation Fund
III, L.P., Special Situations Cayman Fund, L.P. and Special Situations
Technology Funds, L.P. are affiliated. Includes a total of 1,294,200 shares
of common stock and 160,000 shares of common stock issuable upon conversion
of the Preferred Stock.
DESCRIPTION OF SECURITIES
Our authorized capital stock consists of 15,000,000 shares of common
stock, $.05 par value per share, of which 11,493,009 shares are outstanding,
fully paid and non-assessable prior to this offering, and 1,000,000 shares of
Preferred Stock, par value $.05 per share, of which 11,493,009 are outstanding
prior to this offering. An additional 2,925,000 shares of common stock are
reserved under the Company's stock option plans, and there are currently
1,457,888 options outstanding. In addition, since December 31, 1998, the Company
has issued warrants to acquire an aggregate of 75,000 shares of common stock and
it expects to issue options to the new Directors. We intend to increase our
authorize capital stock to 40 million shares of common stock and 5 million
shares of preferred stock. This proposal is being acted upon at our July 1999
annual meeting of stockholders.
PREFERRED STOCK
The Board of Directors is authorized, without further action by the
stockholders, to issue one million shares of preferred stock in one or more
series and to fix the rights, preferences, privileges and restrictions thereof,
including dividend rights, dividend rates, conversion rights, voting rights,
terms of redemption (including sinking fund provisions), redemption prices and
liquidation preferences and the number of shares constituting and the
designation of any such series.
11
The rights and terms relating to any new series of preferred stock
could adversely affect the voting power or other rights of the holders of common
stock or such preferred stock could be utilized, under certain circumstances, as
a method of discouraging, delaying or preventing a change in control of the
Company.
COMMON STOCK
The holders of common stock are entitled to one vote for each share
held of record in the election of directors and with respect to all other
matters to be voted on by stockholders. Holders of shares of common stock do not
have cumulative voting rights. Therefore, the holders of more than 50 percent of
such shares voting for the election of directors can elect all of the directors.
The holders of common stock are entitled to receive dividends when, as and if
declared by the Board of Directors out of legally available funds. In the event
of liquidation, dissolution or winding up of Netrix, the holders of common stock
are entitled to share ratably in all assets remaining available for distribution
after payment of liabilities and after provision has been made for each class of
stock, if any, having preference over the common stock. Holders of shares of
common stock, as such, have no conversion, preemptive or other subscription
rights, and there are no redemption provisions applicable to the common stock.
The rights of the holders of common stock are subject to any rights that may be
fixed for holders of preferred stock, when and if any preferred stock is issued.
All of the shares of common stock currently outstanding are duly authorized,
validly issued, fully paid and non-assessable.
WARRANTS
There are currently outstanding _______ warrants to purchase common
stock. Each warrant entitles the registered holder to purchase one share of our
common stock, $.05 par value, at exercise prices ranging from $___ to $___ per
share, exercisable at various times until __________.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is American Stock
Transfer & Trust Company, whose address is 40 Wall Street, New York, New York,
10005, telephone number (212) 936-5100.
PLAN OF DISTRIBUTION
The common stock may be offered and sold from time to time by one or
more of the selling securityholders, or by pledgees, donees, transferees or
other successors in interest. No selling securityholder is required to offer or
sell any of his common stock. The selling securityholders anticipate that, if
and when offered and sold, the common stock will be offered and sold in
transactions (which may include block transactions) effected on the Nasdaq Stock
Market at then prevailing market prices. The selling securityholders reserve the
right, however, to offer and sell the common stock on any other national
securities exchange on which the common stock is or may become listed or in the
over-the-counter market, in each case at then prevailing market prices, or in
privately negotiated transactions each at a price then to be negotiated. All
offers and sales made on the Nasdaq Stock Market or any other national
securities exchange or in the over-the-counter market will be made through or to
licensed brokers and dealers. No agreements, arrangements or understandings have
12
been entered into with any broker or dealer, and no brokers or dealers have been
selected, in connection with the offer and sale of the common stock. All
proceeds from the sale of the common stock will be paid directly to the selling
securityholders and will not be deposited in an escrow, trust or other similar
arrangement. We will not receive any of the proceeds from the sales of the
common stock by the selling securityholders. However, we will receive proceeds
from the exercise of the warrants by the selling securityholders. No discounts,
commissions or other compensation will be allowed or paid by the selling
securityholders or by us in connection with the offer and sale of the common
stock except that usual and customary brokers' commissions may be paid by the
selling securityholders.
The selling broker may act as agent or may acquire shares of common
stock or interests therein as principal or pledgee and may, from time to time,
effect distributions of shares of common stock or interests. If a dealer is
utilized in the sale of common stock in respect of which the prospectus is
delivered, the selling securityholders will sell common stock to the dealer, as
principal. The dealer may then resell the common stock to the public at varying
prices to be determined by such dealer at the time of resale.
We have agreed to indemnify the selling securityholders and the selling
securityholders have agreed to indemnify us, our officers, directors, employees,
agents and controlling persons from certain damages or liabilities arising out
of or based upon any untrue statement or alleged untrue statement of any
material fact contained in or material omission or alleged omission from the
Registration Statement, any preliminary, final or summary prospectus contained
therein, or any amendment or supplement thereto, to the extent such untrue
statement or omission was made in the Registration Statement or other document
in reliance upon information furnished by the indemnifying party.
The legal, accounting and other fees and expenses related to the offer
and sale of the common stock contemplated hereby are estimated to be $40,000 and
will be paid by us. We will pay all expenses incurred in connection with this
offering, excluding commissions charged by any broker or dealer acting on behalf
of a selling securityholder.
LEGAL MATTERS
The validity of the shares offered hereby will be passed upon for
Netrix by Kelley Drye & Warren LLP.
EXPERTS
The Audited Consolidated Financial Statements and Schedule incorporated
by reference in this prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
13
NO DEALER, SALES PERSON OR OTHER PERSON HAS BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY NETRIX CORPORATION
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE 1,732,935 HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY SHARES OF IMPLICATION 1,732,935
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS COMMON STOCK OF SHARES OF
THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION COMMON STOCK
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
----------------
_________________
PROSPECTUS
_________________
TABLE OF CONTENTS
PAGE
Where to Find Additional Information............2
Special Note Regarding Forward Looking
Statements.................................3
Netrix Corporation..............................4
Risk Factors....................................4
Use of Proceeds.................................8
Selling Securityholders.........................9
Description of the Securities...................11
Plan of Distribution............................12
Legal Matters...................................13
Experts.........................................13
_________, 1999
14
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses to be incurred in
connection with the distribution of the securities being registered. The
expenses shall be paid by the Company.
TYPE OR NATURE OF EXPENSE AMOUNT TO BE PAID
SEC registration fee............................................ $1,247.74
Accounting fees and expenses*...................................
Legal fees and expenses*........................................
Miscellaneous*..................................................
Total*.......................................................... $
=
- ---------------
*To be filed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL")
provides that a Delaware corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding") (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. A Delaware corporation may indemnify any person under such
Section who was, is or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure judgment in its favor, by reason of such fact as provided in the
preceding sentence, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit, except that no indemnification shall be made in respect thereof
unless he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and unless, and then only
to the extent that, a court of competent jurisdiction shall determine upon
application that such person is fairly and reasonably entitled to indemnity for
such expenses as the court shall deem proper. A Delaware corporation must
indemnify any person who was successful on the merits or otherwise in defense of
any action, suit or proceeding or in defense of any claim, issue or matter in
any proceeding, by reason of such fact as provided in the preceding two
sentences against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith. A Delaware corporation may pay for the
expenses (including attorneys' fees) incurred by an officer or director in
defending a proceeding in advance of the final disposition to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the corporation.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director shall not be personally liable to
the corporation or its stockholders for monetary damages for a breach of
fiduciary duty as a director, except for liability (i) for any breach of the
15
director's duty of loyalty to the corporation or its stockholders, (ii) for any
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) in respect of certain unlawful dividend payments
or stock redemptions or repurchases, or (iv) for any transaction from which the
director derived an improper personal benefit. The DGCL permits the purchase of
insurance on behalf of directors and officers against any liability asserted
against directors and officers and incurred by such persons in such capacity, or
arising out of their status as such, whether or not the corporation would have
the power to indemnify directors and officers against such liability. The
Company has acquired officers' and directors' liability insurance of $2 million
for members of its Board of Directors and executive officers.
At present, there is no pending litigation or other proceeding
involving a director or officer of the Company as to which indemnification is
being sought, nor is the Company aware of any threatened litigation that may
result in claims for indemnification by any officer or director.
Article Eighth of the Company's Certificate of Incorporation provides
for indemnification of all persons whom, and to the fullest extent permitted by,
the Company may indemnify as permitted by Delaware General Corporation Law.
ITEM 16. EXHIBITS
The exhibits listed below have been filed as part of this Registration
Statement.
4.1* Amended and Restated Certificate of Incorporation (incorporated herein
by reference to Exhibit 3.1 to the Registrant's registration of Form
S-1 filed on September 18, 1992, as amended (File No. 33-50464) (the
"1992 S-1").
4.2* Amended and Restated By-Laws of the Registrant (incorporated herein by
reference to Exhibit 3.2 of the 1992 S-1).
4.3* Specimen Certificate of Common Stock of the registrant (incorporated
herein by reference to Exhibit 4.2 to the 1992 S-1).
4.4**Certificate of Designations for the Form of Series A 8% Convertible
Preferred Stock
4.5**Supplemental Certificate of Designations for the Form of Series A 8%
Convertible Preferred Stock
4.6** Form of Warrant issued to Renwick Securities, Inc.*
4.7** Form of Warrant issued to Coast Business Credit*
4.8** Form of Warrant issued to Kaufman Bros., L.P.*
5.1** Opinion on Legality.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Kelley Drye & Warren LLP (contained in Exhibit 5.1).
24 Power of Attorney (included within signature page).
---------------
*Incorporated by reference
**To be filed by Amendment
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
A. To file, during any period in which offers or sales are being
made, a post-effective amendment of this registration statement:
(i) To include any Prospectus required by Section 10(a) (3)
of the Securities Act of 1933.
16
(ii) To include in the Prospectus any facts or events
arising after the effective date of the registration
statement (or most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the registration statement.
(iii)To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement:.
B. That, for the purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
C. To remove from registration by means of post-effective amendment
any of the securities registered which remain unsold at the
termination of the offering.
D. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to any charter
provisions, by-laws, contract, arrangements, statute or
otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in
the successful defense of any action, suit, or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by a controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
E. Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, as amended, the Registrant
hereby undertakes to file with the Securities and Exchange
Commission such supplementary and periodic information, documents
and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that Section.
17
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and authorizes this
registration statement to be signed on its behalf by the undersigned, in the
City of Herndon, State of Virginia, on June 18, 1999.
NETRIX CORPORATION
By: /S/ STEVEN T. FRANCESCO
Steven T. Francesco
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints Lynn C. Chapman and Steven T.
Francesco, and each of them, his true and lawful agent, proxy and
attorney-in-fact, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to (i) act on, sign
and file with the Securities and Exchange Commission any and all amendments
(including post-effective amendments) to this Registration Statement together
with all schedules and exhibits thereto, (ii) act on, sign and file such
certificates, instruments, agreements and other documents as may be necessary or
appropriate in connection therewith, (iii) act on and file any supplement to any
prospectus included in this Registration Statement or any such amendment, and
(iv) take any and all actions which may be necessary or appropriate in
connection therewith, granting unto such agents, proxies and attorneys-in-fact,
and each of them, full power and authority to do and perform each and every act
and thing necessary or appropriate to be done, as fully for all intents and
purposes as he might or could do in person, hereby approving, ratifying and
confirming all that such agents, proxies and attorneys-in-fact, any of them or
any of his or their substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
Chief Executive Officer and Chairman of the Board
/s/ Steven T. Francesco of Directors (Principal Executive
- ------------------------------------------- Officer) June 18, 1999
Steven T. Francesco
/s/ Lynn C. Chapman President, Chief Operating Officer
- ------------------------------------------- and Director June 18, 1999
Lynn C. Chapman
/s/ Norman F. Welsch Vice President-Finance and Administration
- ------------------------------------------- and Chief Financial Officer (Principal Financial June 18, 1999
Norman F. Welsch and Accounting Officer)
/s/ William T. Rooker Director June 18, 1999
- -------------------------------------------
William T. Rooker
/s/ John M. Faccibene Director June 18, 1999
- -------------------------------------------
John M. Faccibene
19
/s/ Richard Yalen Director June 18, 1999
- -------------------------------------------
Richard Yalen
/s/ Douglas J. Mello Director June 18, 1999
- -------------------------------------------
Douglas J. Mello
19
ITEM 27. EXHIBITS
(a) The exhibits listed below have been filed as part of this
Registration Statement.
EXHIBIT NO. DESCRIPTION
The exhibits listed below have been filed as part of this Registration
Statement.
4.1* Amended and Restated Certificate of Incorporation (incorporated herein
by reference to Exhibit 3.1 to the Registrant's registration of Form
S-1 filed on September 18, 1992, as amended (File No. 33-50464) (the
"1992 S-1").
4.2* Amended and Restated By-Laws of the Registrant (incorporated herein by
reference to Exhibit 3.2 of the 1992 S-1).
4.3* Specimen Certificate of Common Stock of the registrant (incorporated
herein by reference to Exhibit 4.2 to the 1992 S-1).
4.4**Certificate of Designations for the Form of Series A 8% Convertible
Preferred Stock
4.5**Supplemental Certificate of Designations for the Form of Series A 8%
Convertible Preferred Stock
4.6** Form of Warrant issued to Renwick Securities, Inc.*
4.7** Form of Warrant issued to Coast Business Credit*
4.8** Form of Warrant issued to Kaufman Bros., L.P.*
5.1** Opinion on Legality.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Kelley Drye & Warren LLP (contained in Exhibit 5).
24 Power of Attorney (included within signature page).
---------------
*Incorporated by reference
**To be filed by Amendment
20