As filed with the Securities and Exchange Commission on February 13, 2002
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PROTOSOURCE CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
California
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(State or Other Jurisdiction of Incorporation or Organization)
77-0190772
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(I.R.S. Employer Identification Number)
2300 Tulare Street, Suite 210
Fresno, CA 93721
(559) 490-8600
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(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
Mr. William Conis, President
2300 Tulare Street, Suite 210
Fresno, CA 93721
(559) 490-8600
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(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
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Copies To:
Gregory Sichenzia, Esq.
Thomas A. Rose, Esq.
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
New York, New York 10018
(212) 930-9700
Approximate date of commencement of proposed sale to the public: As soon as
practicable 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 ("Securities Act"), 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. |_|
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum
Title of Each Class of Amount to be Offering Price Aggregate Amount of
Securities to be Registered Registered Per Unit(1) Offering Price Registration Fee
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Common Stock, no par value 1,331,230 $0.95 $1,264,669 $303
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(1) Based upon the closing price of the common stock as reported on The Nasdaq
Stock Market, on February 11, 2002.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted
Subject to Completion, Dated February 13, 2002
PROTOSOURCE CORPORATION
1,331,230 shares of common stock
This prospectus relates to the sale of up to 1,331,230 shares of common
stock of ProtoSource Corporation, offered by certain selling stockholders. The
shares may be offered by the selling stockholders from time to time in regular
brokerage transactions, in transactions directly with market makers or in
privately negotiated transactions. For additional information on the methods of
sale, you should refer to the section entitled "Plan of Distribution." We will
not receive any of the proceeds from the sale of the shares by the selling
stockholders.
Each of the selling stockholders may be deemed to be an "underwriter," as
such term is defined in the Securities Act of 1933.
On February 11, 2002, the closing sale price of the common stock on The
Nasdaq SmallCap Market was $0.95. See "Certain Market Information."
The securities offered hereby are speculative and involve a high degree of
risk and substantial dilution. Only investors who can bear the risk of loss of
their entire investment should invest. See "Risk Factors" beginning on page 6.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is ____________ , 2002.
TABLE OF CONTENTS
Page
----
Company..................................................................... 1
Risk Factors................................................................ 2
Incorporation of Certain Documents by Reference............................. 7
Available Information....................................................... 7
Use of Proceeds............................................................. 8
Certain Market Information.................................................. 8
Dividend Policy............................................................. 8
Issuance of Common Stock to Selling Stockholders............................ 9
Selling Stockholders........................................................ 9
Plan of Distribution........................................................ 11
Legal Matters............................................................... 11
Experts..................................................................... 11
*
PROSPECTUS SUMMARY
ProtoSource Corporation
Our Business............. ProtoSource Corporation's operations are
conducted through it's psnw.com division, which
is an Internet Service Provider based in Fresno,
California. In 2001, the division refocused its
strategy away from dial-up access into three new
services:
o high-speed Internet access reselling
ADSL/SDSL;
o web design, development and hosting for
small and medium-sized businesses; and
o outsourced technical support for other
ISPs.
On December 18, 2001, we announced that we had
signed a binding Term Sheet to acquire Agence
21, a development-stage high-end photography
distribution company. The acquisition is subject
to a number of conditions, including the
approval by stockholders of each of the
companies.
Our Products............. Through our psnw.com division, we offer Internet
access to residential customers through dial-up
and ADSL connections and to business customers
via SDSL and private lines. We also offer Web
design, development, and hosting services.
Our Customers............ psnw.com currently has over 6,000 dial-up
customers, over 200 customers for web hosting,
over 10 customers for web design and
development, and over 60 for ADSL/SDSL.
Additionally, we provide technical support for
over 6,500 dial-up customers for 9 other ISP's.
Our Industry............. According to Dataquest, the worldwide help desk
market is growing at over 25% per year.
According to Telechoice, the DSL market is
expected to grow from 500,000 subscribers in
1999, to over 9.5 million by 2003.According to
Zona Research, the market for outsourced web
development services will grow from $4 billion
in 1998 to over $15.8 billion in 2002.
Our Principal Offices.... Our principal executive offices are located at
2300 Tulare Street, Suite 210, Fresno, CA 93721
and our telephone number is (559) 490-8600. We
are a California corporation.
RISK FACTORS
Investing in our securities will provide you with an equity ownership
interest in ProtoSource. As one of our shareholders, your investment will be
subject to risks inherent in our business. If any of the following risks
actually occur, our business could be harmed. In that event, the trading price
of our shares might decline, and you could lose all or part of your investment.
You should carefully consider the following factors as well as other information
contained in this prospectus before deciding to invest in shares of our
securities. An investment in our securities involves a high degree of risk.
Risks Related To Our Business And Industry
We have a history of operating losses and we expect these losses to continue.
We have experienced significant losses. We expect to continue to incur
significant losses for the foreseeable future. For the past five years, we have
funded our operations with the proceeds from three public offerings and various
private placements. We incurred net losses of approximately $1,293,640 and
$5,206,198 for the years ended December 31, 1999 and 2000, respectively, and
$9,860,312 for the nine months ended September 30, 2001. We have an accumulated
deficit of $23,123,284 at September 30, 2001. We expect our expenses to increase
as we expand our business. We cannot assure you that our revenues will increase
as a result of our increased spending. If revenues grow more slowly than we
anticipate, or if operating expenses exceed our expectations, we may not become
profitable. Even if we become profitable, we may not be able to sustain our
profitability.
We have a limited history of owning and operating our acquired businesses on a
consolidated basis, which could result in ineffective management of these
businesses.
There can be no assurance that we will be able to meet performance
expectations or successfully integrate our acquired businesses on a timely basis
without disrupting the quality and reliability of service to our customers or
diverting management resources. If we complete our proposed acquisition of
Agence 21, our business will change dramatically and we will face additional
challenges. Our growth has placed and will continue to place a significant
strain on management, our financial resources, and on our information, operating
and financial systems. If we are unable to manage this growth effectively, it
may have an adverse effect on our business, financial condition and results of
operations.
Our efforts to concentrate our psnw.com business in commercial accounts may be
unsuccessful resulting in significant financial losses.
Because acquisition of monthly residential accounts has required excessive
marketing costs in relation to revenue expectations, we have elected to cease
advertising and other marketing expenses directed towards that business. As a
consequence, we are concentrating our efforts to obtain commercial accounts,
which we believe can be profitable. If we are unable to obtain a sufficient
number of commercial accounts or that business is not profitable as we project,
our business, financial conditions and results of operations.
If we are unable to respond to rapidly changing technology and process
development, we may not be able to compete effectively.
Rapidly changing technology and continuing process development characterize
the market for our products and services. The future success of our business
will depend in large part upon our ability to maintain and enhance our
technological capabilities, to develop and market products and services that
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meet changing customer needs, and to successfully anticipate or respond to
technological changes on a cost-effective and timely basis. In addition, the
Internet industry could in the future encounter competition from new or revised
technologies that render existing technology less competitive or obsolete or
that reduce the demand for our services. There can be no assurance that we will
effectively respond to the technological requirements of the changing market. To
the extent we determine that new technologies and equipment are required to
remain competitive, the development, acquisition and implementation of such
technologies and equipment may require us to make significant capital
investments. There can be no assurance that capital will be available for these
purposes in the future or that investments in new technologies will result in
commercially viable technological processes.
Our future indebtedness could adversely affect our financial health and severely
limit our ability to plan for or respond to changes in our business.
We plan to incur indebtedness from time to time to finance acquisitions or
capital expenditures or for other purposes. This debt could have adverse
consequences for our business, including:
o We will be more vulnerable to adverse general economic conditions;
o We will be required to dedicate a substantial portion of our cash flow
from operations to repayment of debt, limiting the availability of
cash for other purposes;
o We may have difficulty obtaining additional financing in the future
for working capital, capital expenditures, acquisitions, general
corporate purposes or other purposes;
o We may have limited flexibility in planning for, or reacting to,
changes in our business and industry;
o We could be limited by financial and other restrictive covenants in
our credit arrangements in our borrowing of additional funds; and
o We may fail to comply with the covenants under which we borrowed our
indebtedness, which could result in an event of default. If an event
of default occurs and is not cured or waived, it could result in all
amounts outstanding, together with accrued interest, becoming
immediately due and payable. If we were unable to repay such amounts,
the lenders could proceed against any collateral granted to them to
secure that indebtedness.
If Internet usage does not continue to grow, we may not be able to continue our
business plan resulting in a curtailment or cessation of operations.
Widespread use of the Internet is a relatively recent phenomenon. Our
future success depends on continued growth in the use of the Internet and the
continued development of the Internet as a viable commercial medium. We cannot
be certain that Internet usage will continue to grow at or above its historical
rates or that extensive Internet content will continue to be developed or be
accessible at no or nominal cost to users. If Internet use does not continue to
grow or users do not accept our products and services, our business could be
adversely affected and as a result the price of our common stock may decline.
3
We face risks of claims from third parties for intellectual property
infringement and other matters that could adversely affect our business.
Our services operate in part by making Internet content and cable TV
programming available to our users. This creates the potential for claims to be
made against us, either directly or through contractual indemnification
provisions with third parties. Claims might, for example, be made for
defamation, negligence, copyright, trademark or patent infringement, personal
injury, invasion of privacy or upon other legal theories. Any claims could
result in costly litigation and be time consuming to defend, divert management's
attention and resources, cause delays in releasing new or upgraded existing
services or require us to enter into royalty or licensing agreements. Royalty or
licensing agreements, if required, may not be available on acceptable terms, if
at all.
Litigation regarding intellectual property rights is common in the Internet
and software industries. We expect that Internet technologies and software
products and services may be increasingly subject to third-party infringement
claims as the number of competitors in our industry segment grows and the
functionality of products in different industry segments overlaps.
There can be no assurance that our services do not infringe the
intellectual property rights of third parties. A successful claim of
infringement against us and our failure or inability to license the infringed or
similar technology could adversely affect our business, financial condition and
results of operations.
We may incur liabilities for the activities of users of our service resulting in
unanticipated expenses.
The law relating to the liability of providers of online services for
activities of their users is currently unsettled and could damage our business.
We do not carry insurance that will indemnify us for all liability for
activities of our users. Our advertisers' Websites may contain text, images or
information that could infringe third-party copyrights, trademarks or other
intellectual property rights. We cannot assure you that we will successfully
avoid civil or criminal liability for unlawful activities carried out by users
of our service. The imposition upon us of potential liability for unlawful
activities of users of our service could require us to implement measures to
reduce our exposure to such liability, which may require us, among other things,
to spend substantial resources or to discontinue certain service offerings. Any
costs incurred as a result of such liability or asserted liability could damage
our business.
Risks Related To This Offering and Our Common Stock
Sales of our shares by the selling stockholders may depress our stock price.
Our selling stockholders may offer, from time to time, up to 1,331,230
shares of our common stock for sale by this prospectus. Sale of a substantial
number of shares of our common stock in the public market by our selling
stockholders could depress the market price of our common stock and could impair
our ability to raise capital through the sale of additional equity securities.
The exercise of our outstanding warrants and options may depress our stock
price.
We currently have 3,511,000 warrants and options to purchase shares of our
common stock outstanding. The exercise of warrants and/or options by a
substantial number of holders within a relatively short period of time could
have the effect of depressing the market price of our common stock and could
impair our ability to raise capital through the sale of additional equity
securities.
4
We may experience variability in our operating results, which could negatively
impact the price of our shares.
Our annual and quarterly results have fluctuated in the past. The reasons
for these fluctuations may similarly affect us in the future. Prospective
investors should not rely on results of operations in any past period to
indicate what our results will be for any future period. Our operating results
may fluctuate in the future as a result of many factors, including:
o variations in the timing and volume of customer orders;
o introduction and market acceptance of our new products;
o changes in demand for our existing products;
o the accuracy of our forecasts of future requirements;
o changes in competitive and economic conditions generally or in our
markets; and
o the timing of, and the price we pay for, acquisitions and related
integration costs.
Any of these factors or a combination of these factors could have a
material adverse effect on our business, financial condition and results of
operations.
We may need additional capital that could dilute the ownership interest of
investors.
We require substantial working capital to fund our business. If we raise
additional funds through the issuance of equity, equity-related or convertible
debt securities, these securities may have rights, preferences or privileges
senior to those of the rights of holders of our common stock and they may
experience additional dilution. We cannot predict whether additional financing
will be available to us on favorable terms when required, or at all. Since our
inception, we have experienced negative cash flow from operations and expect to
experience significant negative cash flow from operations in the future. The
issuance of additional common stock by our management, may have the effect of
further diluting the proportionate equity interest and voting power of holders
of our common stock, including investors in this offering.
Our securities are thinly traded and the limited liquidity in our securities
could be adversely affected with resulting decreases in the price of our shares.
The trading market price of our common stock may decline below its current
price. Our common stock is currently very thinly traded on The Nasdaq SmallCap
Market. An active public market for our common stock may not develop or be
sustained during or after this offering. The additional shares made available
for sale in the market as a result of this offering may depress the price of our
common stock.
We have been notified by The Nasdaq Stock Market that our common stock will be
delisted from trading on the Nasdaq SmallCap Market. We have appealed this
decision, but the delisitng of our common stock from trading on the Nasdaq
SmallCap Market will have a depressive effect on the price of the stock.
On December 5, 2001, we received a Nasdaq Staff Determination that we fail
to comply with either the net tangible assets or stockholders' equity
requirements for continued listing on the Nasdaq SmallCap Stock Market, as set
forth in Marketplace Rule 4310(c)(2)(b) and that our securities are, therefore,
5
subject to delisting from the Nasdaq SmallCap market. We requested an oral
hearing before the Nasdaq Listing Qualifications Panel to review the Staff
Determination, which hearing took place on January 17, 2002. There can be no
assurance the Panel will grant our request for continued listing. If our
securities are delisted, quotations for our common stock will be available on
the Over-The-Counter Electronic Bulletin Board. In the absence of at least
$5,000,000 of net tangible assets or a stock price in excess of $5.00 per share,
trading in our common stock would be subject to Rule 15c2-6 and Rules 15g-2
through 15g-9 under the Securities Exchange Act of 1934, requiring additional
pricing and compensation disclosures to be made to customers. These rules
require, among other things, that any broker engaging in a transaction in our
securities provide its customers with a risk disclosure document, disclosure of
market quotations, if any, disclosure of the compensation of the broker and its
salespersons in the transaction, and monthly account statements showing the
market values of our securities held in the customer's accounts. The brokers
must provide bid and offer quotations and compensation information before making
any purchase or sale of a penny stock and also provide this information in the
customer's confirmation. Generally, brokers may be less willing to execute
transactions in securities subject to the "penny stock" rules. This may make it
more difficult for investors to dispose of our common stock and cause a decline
in the market value of our stock.
6
INFORMATION INCORPORATED BY REFERENCE
The Securities and Exchange Commission allows us to "incorporate by
reference" certain of our publicly-filed documents into this prospectus, which
means that information is considered part of this prospectus. Information that
we file with the Commission subsequent to the date of this prospectus will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the Commission under
all documents subsequently filed by us pursuant to Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 until the selling stockholders have
sold all the shares.
The following documents filed with the Commission are incorporated herein
by reference:
1. Our Annual Report on Form 10-KSB for the fiscal year ended December
31, 2000.
2. Our Quarterly Reports on Form 10-QSB for the quarters ended March 31,
2001, June 30, 2001 and September 30, 2001.
We will provide without charge to each person to whom a copy of this
prospectus has been delivered, on written or oral request a copy of any or all
of the documents incorporated by reference in this prospectus, other than
exhibits to such documents. Written or oral requests for such copies should be
directed to William Conis, ProtoSource Corporation, 2300 Tulare Street, Suite
210, Fresno, California 93721, phone (559) 490-8600 .
ADDITIONAL INFORMATION AVAILABLE TO YOU
This prospectus is part of a Registration Statement on Form S-3 that we
filed with the Commission. Certain information in the Registration Statement has
been omitted from this prospectus in accordance with the rules of the
Commission. We file the annual, quarterly and special reports, proxy statements
and other information with the Commission. You can inspect and copy the
Registration Statement as well as reports, proxy statements and other
information we have filed with the Commission at the public reference room
maintained by the Commission at 450 Fifth Street, NW, Washington, D.C. 20549,
and at the following Regional Offices of the Commission: Northwest Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661. You can obtain copies
from the public reference room of the Commission at 450 Fifth Street, NW,
Washington, D.C. 20549, upon payment of certain fees. You can call the
Commission at 1-800-732-0330 for further information about the public reference
room. We are also required to file electronic versions of these documents with
the Commission, which may be accessed through the Commission's World Wide Web
site at http://www.sec.gov. Our common stock is quoted on The Nasdaq National
Market Reports, proxy and information statements and other information
concerning ProtoSource may be inspected at The Nasdaq Stock Market at 9600
Blackwell Road, Rockville, Maryland 20850.
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USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares offered
hereunder by the selling stockholders. The offering is made to fulfill our
contractual obligations to the selling stockholders to register the common stock
held by or which are issuable to the selling stockholders.
CERTAIN MARKET INFORMATION
Our common stock trades on the Nasdaq SmallCap Market under the symbol
"PSCO". The range of high and low reported closing sales prices for the common
stock as reported by the Nasdaq SmallCap Market for the previous two fiscal
years, are as follows:
High Low
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2000
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First Quarter $7.18 $5.75
Second Quarter $6.12 $4.25
Third Quarter $6.31 $5.25
Fourth Quarter $5.50 $1.56
2001
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First Quarter $3.62 $0.94
Second Quarter $2.34 $1.00
Third Quarter $1.74 $0.75
Fourth Quarter $1.15 $0.75
2002
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First Quarter (through February 8, 2002) $1.05 $0.80
The prices set forth above reflect inter dealer prices, without retail
mark-up, mark-down or commission and may not necessarily represent actual
transactions.
On February 8, 2002, shares of our common stock were held by approximately
1,440 stockholders of record.
DIVIDEND POLICY
We intend to retain future earnings, if any, that may be generated from our
operations to finance the operations and expansion of ProtoSource Corporation.
We do not plan to pay dividends to holders of the common stock for the
reasonably foreseeable future. Any decision as to the future payment of
dividends will depend on the results of our operations and financial position
and such other factors as our Board of Directors, in its discretion, deems
relevant.
8
ISSUANCE OF COMMON STOCK TO SELLING STOCKHOLDERS
The shares covered by this prospectus include:
(1) 940,713 shares of common stock issued to 13 people in connection with
our acquisition of Suncoast Automation, Inc., in August 2000;
(2) 214,915 shares of common stock issued to 14 employees or consultants in
payment of services performed for or expenses incurred on behalf of ProtoSource;
and
(3) 175,602 shares of common stock issued to three people in payment of
loans made to ProtoSource.
SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the common stock as of February 6, 2002 by each of the selling
stockholders. Unless otherwise indicated below, to the knowledge of ProtoSource,
all persons listed below have sole voting and investment power with respect to
the shares of common stock, except to the extent authority is shared by spouses
under applicable law.
The information included below is based upon information provided by the
selling stockholders. Because the selling stockholders may offer all, some or
none of their shares, no definitive estimate as to the number of shares that
will be held by the selling stockholders after the offering can be provided and
the following table has been prepared on the assumption that all shares offered
under this prospectus will be sold.
Common Stock to be
Common Stock Beneficially Owned
Beneficially Owned on if All Shares Offered
February 6, 2002 Hereunder Are Sold
---------------- ------------------
Shares That May
be Offered
Name Shares Percent(2) Hereunder Shares Percent
- ---- ------ ---------- --------- ------ -------
James Sette 12,308 * 12,308 -- --
John W. Feyl 5,335 * 5,335 -- --
Colleen B. Forcey 4,308 * 4,308 -- --
Kent Spears 383,927 6.7% 383,927 -- --
Mark Blanchard 434,898 7.6% 434,898 -- --
Robert Bradley 10,942 * 10,942 -- --
Theodore Triantafilu 119,783 2.1% 119,783 -- --
William Cawley 58,995 * 58,995 -- --
David Jennings 94,474 1.7% 3,529 90,945 --
SHA Cable Holdings 188,283 3.3% 11,687 176,596
Jeffrey Beekhoo 28,187 * 28,187 -- --
Glen & Lisa Viera 49,462 * 49,462 -- --
John T. Jones 9,094 * 9,094 -- --
Rickey Becker 6,821 * 6,821 -- --
John Hood 100,100 1.8% 100,100 -- --
Andrew, Alexander, 32,740 * 32,740 -- --
Wise & Company
Virginia Blanchard 45,472 * 45,472 -- --
Michael Quale 13,642 * 13,642 -- --
- ----------
* Less than one percent (1%).
9
The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rule, beneficial ownership includes any shares as to which
the selling stockholder has sole or shared voting power or investment power and
also any shares which the selling stockholder has the right to acquire within 60
days.
The percentage interest of each selling stockholder is based on the number of
shares of common stock beneficially owned by such stockholder divided by the sum
of the outstanding shares of common stock (as of February 8, 2002).
10
PLAN OF DISTRIBUTION
Sales of the shares may be effected by or for the account of the selling
stockholders from time to time in transactions (which may include block
transactions) on the Nasdaq SmallCap Market, in negotiated transactions, through
a combination of such methods of sale, or otherwise, at fixed prices that may be
changed, at market prices prevailing at the time of sale or at negotiated
prices. The selling stockholders may effect such transactions by selling the
shares directly to purchasers, through broker-dealers acting as agents of the
selling stockholders, or to broker-dealers acting as agents for the selling
stockholders, or to broker-dealers who may purchase shares as principals and
thereafter sell the shares from time to time in transactions (which may include
block transactions) on the Nasdaq SmallCap Market, in negotiated transactions,
through a combination of such methods of sale, or otherwise. In effecting sales,
broker-dealers engaged by a selling stockholder may arrange for other
broker-dealers to participate. Such broker-dealers, if any, may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholders and/or the purchasers of the shares for whom such
broker-dealers may act as agents or to whom they may sell as principals, or both
(which compensation as to a particular broker-dealer might be in excess of
customary commissions).
The selling stockholders and any broker-dealers or agents that participate
with the selling stockholders in the distribution of the shares may be deemed to
be "underwriters" within the meaning of the Securities Act of 1933. Any
commissions paid or any discounts or concessions allowed to any such persons,
and any profits received on the resale of the shares purchased by them may be
deemed to be underwriting commission or discounts under the Securities Act of
1933.
We have agreed to bear all expenses of registration of the shares other
than legal fees and expenses, if any, of counsel or other advisors of the
selling stockholders. The selling stockholders will bear any commissions,
discounts, concessions or other fees, if any, payable to broker-dealers in
connection with any sale of their shares.
LEGAL MATTERS
The valid issuance of the shares of common stock offered hereby has been
passed upon for ProtoSource by Sichenzia Ross Friedman Ference LLP, New York,
New York.
EXPERTS
Our financial statements as of December 31, 2000 and for the years ended
December 31, 2000 and 1999 have been incorporated in this prospectus in reliance
on the report of Angell & Deering, independent certified public accountants, as
given upon the authority of said firm as experts in accounting and auditing.
11
No dealer, salesperson or other person is authorized to give any information or
to make any representations other than those contained in this prospectus, and,
if given or made, such information or representations must not be relied upon as
having been authorized by ProtoSource Corporation. This prospectus does not
constitute an offer to buy any security other than the securities offered by
this prospectus, or an offer to sell or a solicitation of an offer to buy any
securities by any person in any jurisdiction where such offer or solicitation is
not authorized or is unlawful. Neither delivery of this prospectus nor any sale
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of ProtoSource Corporation since the date hereof.
-------------------------
PROTOSOURCE CORPORATION
1,331,230 SHARES OF COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
____________ , 2002
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table shows the estimated expenses of the issuance and
distribution of the securities offered hereby (all such expenses will be borne
by ProtoSource Corporation):
Registration fee....................................... $ 303.00
Legal fees and expenses................................ 2,500.00
Accounting fees and expenses........................... 1,500.00
Miscellaneous, including Nasdaq listing fees....... 697.00
Total......................................... $ 5,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Articles of Incorporation provide that liability of directors to us for
monetary damages is eliminated to the full extent provided by California law.
Under California law, a director is not personally liable to us or our
stockholders for monetary damages for breach of fiduciary duty as a director
except for liability arising from (i) any breach of the director's duty of
loyalty to us or our shareholders; (ii) acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law; (iii)
authorizing the unlawful payment of a dividend or other distribution on our
capital stock or the unlawful purchases of our capital stock, or (iv) any
transaction from which the director derived any improper personal benefit.
The effect of this provision in the Articles of Incorporation is to
eliminate the rights of us and our stockholders (through stockholders'
derivative suits on behalf of us) to recover monetary damages from a director
for breach of the fiduciary duty of care as a director (including breaches
resulting from negligent or grossly negligent behavior) except in the situations
described above. This provision does not limit or eliminate the rights of any
stockholder or us to seek non-monetary relief such as an injunction or
rescission in the event of a breach of a director's duty of care or any
liability for violation of the federal securities laws.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling ProtoSource
Corporation pursuant to the foregoing provisions, ProtoSource Corporation has
been advised that in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
ITEM 16. EXHIBITS
The exhibits filed as part of this Registration Statement are as follows:
Number Description
------ -----------
5.1 Opinion of Sichenzia Ross Friedman Ference LLP regarding legality
of securities being registered.
23.1 Consent of Sichenzia Ross Friedman Ference LLP (included in its
opinion filed as Exhibit 5.1).
23.2 Consent of Angell & Deering.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
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 its Certificate of Incorporation, its Bylaws, or
otherwise, the Registrant has been advised that in the opinion of the Securities
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. If a claim for
indemnification against such liabilities (other than the payment 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 controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against a public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
II-2
(iii) Include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraph (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is incorporated
by reference from periodic reports filed by the registrant pursuant to section
13 or section 15(d) of the Securities Exchange Act of 1934.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Fresno, California on the 11th day of February, 2002.
PROTOSOURCE CORPORATION
By: /s/ WILLIAM CONIS
----------------------------------------
William Conis, Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints William
Conis his true and lawful attorney-in-fact and agent, acting alone, with full
powers of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, any Amendments
thereto and any Registration Statement of the same offering which is effective
upon filing pursuant to Rule 462(b) under the Securities Act, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Commission, granting unto said attorney-in-fact and agent, each acting
alone, full powers and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intends and purposes as he might or could do in person, hereby ratifying and
confirming all said attorney-in-fact and agent, acting alone, or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act, this
Registration Statement has been signed below by the following persons on behalf
of us in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
--------- --------- ----
/s/ WILLIAM CONIS Chief Executive Officer, Chief February 11, 2002
- ------------------------- Financial Officer, President,
William Conis Director (Principal Executive and
Accounting Officer)
/s/ PETER WARDLE Director February 11, 2002
- -------------------------
Peter Wardle
/s/ THEODORE TRIANTAFILU Director February 11, 2002
- -------------------------
Theodore Triantafilu
/s/ STUART KALTER Director February 11, 2002
- -------------------------
Stuart Kalter
EXHIBIT INDEX
The exhibits filed as part of this Registration Statement are as follows:
Number Description
------ -----------
5.1 Opinion of Sichenzia Ross Friedman Ference LLP regarding legality
of securities being registered.
23.1 Consent of Sichenzia Ross Friedman Ference LLP (included in its
opinion filed as Exhibit 5.1).
23.2 Consent of Angell & Deering