As
filed with the Securities and Exchange Commission on April 28,
2010
Registration
No. 333-165258
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
AMENDMENT
NUMBER 2 TO THE
FORM
S-3
REGISTRATION
STATEMENT UNDER
THE
SECURITIES ACT OF 1933
ONSTREAM MEDIA
CORPORATION
(Exact
name of registrant as specified in its charter)
Florida
(State or
other jurisdiction of incorporation or organization)
65-0420146
(I.R.S.
Employer Identification No.)
1291 SW
29 Avenue
Pompano
Beach, Florida 33069
(954)
917-6655
(Address,
including zip code, and telephone number, including area code,
of
registrant's principal executive offices)
Randy S.
Selman, CEO
Onstream
Media Corporation
1291 SW
29th Avenue
Pompano
Beach, Florida 33069
(954)
917-6655
(Name,
address, including zip code, and telephone number,
including
area code, of agent for service)
Copies
to:
Joel D.
Mayersohn, Esq.
Roetzel
& Andress, LPA
350 East
Las Olas Boulevard
Las Olas
Centre II, Suite 1150
Fort
Lauderdale, Florida 33301
(954) 462-4150
telephone
(954) 462-4260
telecopier
From time to time after this
registration statement becomes effective
(Approximate
date of commencement of proposed sale to public)
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 registration statement pursuant to General Instruction 1.D. or a
post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box.
¨
If this
Form is a post effective amendment to a registration statement filed pursuant to
General Instruction 1.D. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check
the following box.
¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of “large accelerated filer”, “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
|
Large
accelerated filer
|
¨
|
|
|
Accelerated
filer
|
|
¨
|
|
Non-accelerated
filer
|
¨
|
|
(Do
not check if a smaller reporting company)
|
Smaller
reporting company
|
|
x
|
Calculation
of Registration Fee
|
|
|
|
|
|
Proposed
|
|
|
Proposed
|
|
|
|
|
|
Title of each
|
|
|
|
|
maximum
|
|
|
maximum
|
|
|
Amount of
|
|
|
class of securities
|
|
Amount to be
|
|
|
offering price
|
|
|
aggregate
|
|
|
registration
|
|
|
to be registered (1)
|
|
registered
|
|
|
per unit (2)
|
|
|
offering price (2)
|
|
|
fee (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock
|
|
|
|
(4)
|
|
|
|
(4)
|
|
|
|
(4)
|
|
|
|
(4)
|
|
Preferred
stock
|
|
|
|
(4)
|
|
|
|
(4)
|
|
|
|
(4)
|
|
|
|
(4)
|
|
Warrants
|
|
|
|
(4)
|
|
|
|
(4)
|
|
|
|
(4)
|
|
|
|
(4)
|
|
Units
|
|
|
|
(4)
|
|
|
|
(4)
|
|
|
|
(4)
|
|
|
|
(4)
|
|
Totals
|
|
|
|
|
|
|
|
|
|
$
|
6,600,000
|
|
|
$
|
357
|
|
|
(1)
|
We
are registering such indeterminate number of shares of common stock and
such indeterminate number of units consisting of combinations of the
foregoing plus an indeterminate number of options and warrants to purchase
common stock as we may offer and sell from time to time, which together
will have an aggregate initial offering price not to exceed $6,600,000.
The securities registered hereunder also include such indeterminate number
of shares of common stock as may be issued upon exercise of such options
or warrants or pursuant to the antidilution provisions of any of such
securities. In addition, pursuant to Rule 416 under the Securities
Act of 1933, as amended (the "Securities Act"), the shares of common stock
being registered hereunder include such indeterminate number of shares as
may be issuable as a result of stock splits, stock dividends or similar
transactions.
|
|
(2)
|
The
proposed maximum offering price per unit and aggregate offering prices per
class of security will be determined from time to time by the registrant
in connection with the issuance by the registrant of the securities
registered hereunder. At no time will the maximum aggregate offering
price of all securities issues in any given 12-month period exceed the
amount allowed for in General Instruction I.B.6 of
Form S-3.
|
|
(3)
|
Estimated
solely for purposes of calculating the registration fee pursuant to Rule
457 under the Securities Act.
|
|
(4)
|
Not
required to be included in accordance with General Instruction II.D. of
Form S-3.
|
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, or until the registration statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
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 it is not soliciting an offer to buy these securities in
any state where the offer or sale is not
permitted
.
Subject
to Completion, dated April 28, 2010
ONSTREAM
MEDIA CORPORATION
PROSPECTUS
$6,600,000
Common
Stock
Preferred
Stock
Warrants
Units
We may
offer and sell from time to time up to $6,600,000 in total of any combination of
the securities described in this prospectus, either individually or in
units. We also may offer common stock upon the exercise of warrants or
upon the conversion of preferred stock. This prospectus provides a general
description of the securities we may offer. Each time we offer securities,
we will provide a prospectus supplement containing more information about the
particular offering together with this prospectus. The prospectus
supplement also may add, update or change information contained in this
prospectus. This prospectus may not be used to offer and sell securities
without a prospectus supplement.
The
securities may be sold directly by us to investors, through agents designated
from time to time or to or through underwriters or dealers. For additional
information on the methods of sale, you should refer to the section entitled
“Plan of Distribution” in this prospectus. If any agents or underwriters are
involved in the sale of any securities, the names of such agents or underwriters
and any applicable fees, commissions, discounts and over-allotment options will
be set forth in the applicable prospectus supplement.
Our
common stock is traded on The NASDAQ Capital Market under the trading symbol
"ONSM", although as a result of our recently effected reverse split the trading
symbol will be “ONSMD” through May 4, 2010. On April 26, 2010 the
last sale price for our common stock was $2.09. As of April 26, 2010, the
aggregate market value of our outstanding common stock held by non-affiliates
was approximately $15.4 million, based on approximately 7.7 million shares of
outstanding common stock, of which approximately 7.4 million shares were held by
non-affiliates, and a per share price of $2.09 based on the closing sale price
of our common stock as reported by The NASDAQ Capital Market on such date.
As of the date of this prospectus, we have not offered any securities pursuant
to General Instruction I.B.6. of Form S-3 during the prior 12 calendar
month period that ends on and includes the date of this
prospectus.
Investment
in our common stock involves a high degree of risk. See "Risk Factors" beginning
on page 5 of this prospectus to read about risks of investing in our common
stock.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal
offense.
The date
of this Prospectus is _________________, 2010.
PROSPECTUS
SUMMARY
This
summary highlights important features of this offering and the information
included in this prospectus. This summary does not contain all of the
information that you should consider before investing in our common stock. You
should read the entire prospectus carefully, especially the risks of investing
in our common stock discussed under "Risk Factors."
A 1-for-6
reverse stock split of the outstanding shares of our common stock was effective
at 5PM on April 5, 2010. Accordingly, trading of our common stock on The NASDAQ
Capital Market began on a split-adjusted basis at the open of trading on April
6, 2010. Except as otherwise indicated, the effect of this reverse stock split
has been reflected in all amounts reported in this registration statement on
Form S-3.
TABLE
OF CONTENTS
|
|
|
Page
|
|
|
|
|
|
ABOUT
THIS PROSPECTUS
|
|
2
|
|
ABOUT
OUR COMPANY
|
|
3
|
|
RISK
FACTORS
|
|
5
|
|
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING INFORMATION
|
|
10
|
|
USE
OF PROCEEDS
|
|
11
|
|
DESCRIPTION
OF COMMON STOCK
|
|
11
|
|
DESCRIPTION
OF PREFERRED STOCK
|
|
13
|
|
DESCRIPTION
OF WARRANTS
|
|
14
|
|
DESCRIPTION
OF UNITS
|
|
16
|
|
ANTI-TAKEOVER
EFFECTS OF PROVISIONS OF OUR ARTICLES OF INCORPORATION, OUR BYLAWS AND
FLORIDA LAW
|
|
20
|
|
PLAN
OF DISTRIBUTION
|
|
20
|
|
LEGAL
MATTERS
|
|
23
|
|
EXPERTS
|
|
24
|
|
INDEMNIFICATION
MATTERS
|
|
24
|
|
WHERE
YOU CAN FIND MORE INFORMATION
|
|
24
|
|
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
|
|
25
|
|
MATERIAL
CHANGE
|
|
25
|
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the Securities
and Exchange Commission, or SEC, using a “shelf” registration process. Under
this shelf registration process, we may offer to sell the securities described
in this prospectus in one or more offerings up to a total dollar amount of
$6,600,000. We have provided to you in this prospectus a general description of
the securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. We also may add, update or change in the prospectus supplement
any of the information contained in this prospectus. If there is an
inconsistency between the information in this prospectus and a prospectus
supplement, you should rely on the information in the prospectus
supplement. You should read carefully both this prospectus and the
applicable prospectus supplement together with the documents we incorporate by
reference into this prospectus as described under the heading “Incorporation of
Certain Documents By Reference” before making an investment decision. This
prospectus may not be used to offer and sell securities without a prospectus
supplement.
The
registration statement that contains this prospectus, including the exhibits to
the registration statement and the information incorporated by reference,
provides additional information about the securities offered under this
prospectus. That registration statement can be read at the SEC web site or at
the SEC public reference room as discussed under the heading “Where You Can Find
More Information.”
You
should rely only on the information provided in the registration statement, this
prospectus and in any prospectus supplement, including the information
incorporated by reference. We have not authorized anyone to provide you with
different information. You should not assume that the information in this
prospectus or any supplement to this prospectus is accurate at any date other
than the date indicated on the cover page of these documents. We are
not making an offer to sell these securities in any jurisdiction where the offer
or sale is not permitted.
ABOUT
OUR COMPANY
Our
Business, Products and Services
We are a
leading online service provider of live and on-demand Internet video, corporate
audio and web communications and content management applications. We
had approximately 95 full time employees as of February 5, 2010, with operations
organized in two main operating groups:
|
|
·
|
Digital
Media Services Group
|
|
|
·
|
Audio
and Web Conferencing Services Group
|
Products
and services provided by each of the groups are:
Digital
Media Services Group
Our
Digital Media Services Group consists of our Webcasting division, our DMSP
(Digital Media Services Platform) division, our UGC (User Generated Content)
division and our Smart Encoding division. This group represented
approximately 45.7% and 44.6% of our revenues for the years ended September 30,
2009 and 2008, respectively. These revenues are comprised primarily of fees for
hosting/storage, search/retrieval and distribution/streaming of digital assets
as well as encoding and production fees.
Our
Webcasting division, which operates primarily from Pompano Beach, Florida,
provides an array of corporate-oriented, web-based media services to the
corporate market including live audio and video webcasting and on-demand audio
and video streaming for any business, government or educational
entity. This includes online webcasting services, a cost effective
means for corporations to broadcast conference calls live, making them available
to the investing public, the media and to anyone worldwide with Internet access.
The Webcasting division also has a sales and production support office in New
York City as well as additional production and back-up webcasting facilities in
our San Francisco office. We market the webcasting services through a direct
sales force and through channel partners, also known as
resellers. Each webcast can be heard and/or viewed live, and then
archived for replay, with an option for accessing the archived material through
a company's own web site. These webcasts primarily communicate corporate
earnings and other financial information; product launches and other marketing
information; training, emergency or other information directed to employees; and
corporate or other special events.
Our DMSP
division, which operates primarily from Colorado Springs, Colorado, provides an
online, subscription based service that includes access to enabling technologies
and features for our clients to acquire, store, index, secure, manage,
distribute and transform these digital assets into saleable commodities. In
December 2004 we completed our acquisition of an entity formerly named Onstream
Media Corporation that we now identify as Acquired Onstream. Acquired Onstream
was a development stage company founded in 2001 with the business objective of
developing a feature rich digital asset management service and offering the
service on a subscription basis over the Internet. This service was the initial
version of what became the DMSP, which is comprised of four separate products -
encoding, storage, search/retrieval and distribution. Although a limited version
of the DMSP was released in November 2005, the first complete version was made
available to our customers in October 2006. This initial version of the DMSP
offered for sale to the general public since October 2006 is known as the “Store
and Stream” version. In February 2009, we launched “Streaming
Publisher”, an additional version of the DMSP platform. Streaming Publisher is
designed to provide enhanced capabilities for advanced users such as publishers,
media companies and other content developers. The new Streaming Publisher
upgrade to the DMSP is a key step in our objective to address the developing
online video advertising market and includes features such as automated
transcoding (the ability to convert media files into multiple file formats),
player gallery (the ability to create various video players and detailed usage
reports), as well as advanced permissions, security and syndication features.
Users of the basic Store and Stream version of the DMSP may easily upgrade to
the Streaming Publisher version for a higher monthly fee.
Our UGC
division, which also operates as Auction Video, provides a video ingestion and
flash encoder that can be used by our clients on a stand-alone basis or in
conjunction with the DMSP. In March 2007 we completed the acquisition of Auction
Video. The primary assets acquired included the video ingestion and flash
transcoder as well as related technology and patents pending.
Our Smart
Encoding division, which operates primarily from San Francisco, California,
provides both automated and manual encoding and editorial services for
processing digital media, using a set of coordinated technologies and processes
that allow the quick and efficient online search, retrieval and streaming of
this media, which can include photos, videos, audio, engineering specs,
architectural plans, web pages, and many other pieces of business
collateral.
Audio
and Web Conferencing Services Group
Our Audio
and Web Conferencing Services Group includes our Infinite Conferencing
(Infinite) division, which operates primarily from the New York City area and
provides “reservationless” and operator-assisted audio and web conferencing
services and our EDNet division, which operates primarily from San Francisco,
California and provides connectivity within the entertainment and advertising
industries through its managed network, which encompasses production and
post-production companies, advertisers, producers, directors, and
talent.
This
group represented approximately 54.3% and 55.4% of our revenues for the years
ended September 30, 2009 and 2008, respectively. These revenues are comprised
primarily of network access and usage fees as well as the sale and rental of
communication equipment.
Sales
and Marketing
We use a variety of marketing methods,
including our internal sales force and channel partners, also known as
resellers, to market our products and services. One key element of our marketing
strategy has been to enter into distribution agreements with recognized leaders
in each of the markets for our products and services. By offering our products
and services in conjunction with the distributors’ products, we believe these
distribution agreements enable us to take advantage of the particular
distributors' existing marketing programs, sales forces and business
relationships. Contracts with these distributors generally range from one to two
years and may be terminable earlier based on certain contractual
provisions.
We have
expanded our marketing efforts during the past year to include: targeted e-mail
campaigns, trade show participation, advanced search engine
optimization, pay-per-click, a public relations byline program and selected
trade magazine advertising. We intend to continue these actions during the
coming year.
No single
customer has represented more than 10% of our consolidated revenues during the
years ended September 30, 2009 or 2008.
Our
executive offices
Our
executive offices are located at 1291 SW 29th Avenue, Pompano Beach, Florida
33069. Our telephone number at that location is (954) 917-6655.
RISK
FACTORS
Before
you invest in our securities, you should be aware that there are various risks.
Additional risks and uncertainties not presently known to us or that we
currently believe to be immaterial may also adversely affect our business. You
should consider carefully these risk factors, together with all of the other
information included in or incorporated by reference into this prospectus before
you decide to purchase our securities. If any of the following risks and
uncertainties develops into actual events, our business, financial condition or
results of operations could be materially adversely affected.
We
have a working capital deficit as well as an accumulated deficit and we
anticipate continuing losses that will result in continuation of significant
liquidity and cash flow problems absent a material increase in our revenues
and/or a material cash infusion.
Our
financial statements for the year ended September 30, 2009 reflect a net loss of
approximately $11.8 million and our working capital was a deficit of
approximately $2.4 million at that date. Our financial statements for the three
months ended December 31, 2009 reflect a net loss of approximately $4.3 million
and our working capital was a deficit of approximately $2.1 million at that
date.
Our
accumulated deficit was approximately $118.5 million at December 31, 2009. We
have incurred losses since our inception and our operations have been financed
primarily through the issuance of equity and debt. Cash used for operations will
be affected by numerous known and unknown risks and uncertainties including, but
not limited to, our ability to successfully market and sell the DMSP, iEncode
and MarketPlace365, market our other existing products and services, the degree
to which competitive products and services are introduced to the market, and our
ability to control overhead expenses as we grow.
Subsequent
to December 31, 2009 we have obtained approximately $690,000 of incremental
financing proceeds, net of debt repayments. We have estimated that, absent any
further reductions in our current and planned expenditure levels, and after
considering the effects of the above noted incremental financing, we would
require an approximately 2% increase in our consolidated revenues starting in
fiscal 2010, as compared to fiscal 2009, in order to adequately fund our minimum
anticipated expenditures (including debt service and a basic level of capital
expenditures). We have estimated that, in addition to this ongoing revenue
increase, we will also require aggregate financing of approximately $500,000
(funded over several months starting in May 2010 and in addition to the $690,000
net loan proceeds we already received since December 31, 2009), to adequately
address our current working capital deficit to the extent past due vendor and
other payments are believed by us to be necessary for us to continue our
operations.
During
December 2009, we received funding commitment letters executed by two (2)
entities agreeing to provide us, within twenty (20) days after our notice given
on or before December 31, 2010, aggregate cash funding of $500,000. The funding
under the commitment letters would be in exchange for our equity under mutually
agreeable terms to be negotiated at the time of funding, or in the event such
terms could not be reached, in the form of repayable debt. Terms of the
repayable debt would also be subject to negotiation at the time of funding,
provided that the debt (i) would be unsecured and subordinated to the Company’s
other debts, (ii) would be subject to approval by our other creditors having the
right of such pre-approval, (iii) would provide for no principal or interest
payments in cash prior to December 31, 2010, although, at our option,
consideration may be given in the form of equity issued before that date and
(iv) would provide that any cash repayment of principal after that date would be
in equal monthly installments over at least one year but no greater than four
years. The rate of return on such debt, including cash and equity consideration
given, would be negotiable based on market values at the time of funding but in
any event would be not be greater than (i) a cash coupon rate of fifteen percent
(15%) per annum and a (ii) total effective interest rate of thirty percent (30%)
per annum (such rate including the cash coupon rate plus the fair value of our
shares given and/or the Black-Scholes valuation of debt conversion features
and/or issuance of options and/or warrants).
Other than working capital which may
become available to us from further borrowing or sales of equity (including but
not limited to proceeds from the funding commitment letters as discussed above
as well as the sale of securities under this registration statement), we do not
presently have any additional sources of working capital other than cash on hand
and cash, if any, generated from operations. There are no assurances whatsoever
that the issuers of the funding commitment letters will be willing and/or able
to provide cash upon our request and/or that we will be able to borrow further
funds and/or sell other forms of equity (including the sale of securities under
this registration statement) or that we will increase our revenues and/or
control our expenses to a level sufficient to continue and/or provide positive
cash flow. We cannot assure that our revenues will continue at their present
levels, nor can we assure that they will not decrease.
As long
as our cash flow from sales remains insufficient to completely fund operating
expenses, financing costs and capital expenditures, we will continue depleting
our cash and other financial resources. As a result of the uncertainty as to our
available working capital over the upcoming months, we may be required to delay
or cancel certain of the projected capital expenditures, some of the planned
marketing expenditures, or other planned expenses. It is possible that we will
need to seek additional capital through equity and/or debt
financing. If we raise additional capital through the issuance of
debt, this will result in increased interest expense. If we raise additional
funds through the issuance of equity or convertible debt securities, the
percentage ownership of our company held by existing shareholders will be
reduced and those shareholders may experience significant dilution.
There can
be no assurance that acceptable financing, if needed to fund our ongoing
operations, can be obtained on suitable terms, if at all. Our ability to
continue our existing operations and/or to continue to implement our growth
strategy could suffer if we are unable to raise additional funds on acceptable
terms, which will have an adverse impact on our financial condition and results
of operations.
A
substantial portion of our assets are comprised of goodwill and other
unamortized intangible assets, which may be subject to future impairment and
result in financial statement write-offs.
Our prior
acquisitions of several businesses, including Acquired Onstream and Infinite,
have resulted in significant increases in goodwill and other unamortized
intangible assets. Goodwill and other unamortized intangible assets, which
include acquired customer lists, were approximately $15.7 million at December
31, 2009, representing approximately 70% of our total assets and 106% of the
book value of shareholder equity. In addition, property and equipment as of
December 31, 2009 included approximately $1.8 million (net of depreciation)
related to the DMSP and other capitalized internal use software, representing
approximately 8% of our total assets and 12% of the book value of shareholder
equity.
In
accordance with GAAP, we periodically test these assets for potential
impairment. As part of our testing, we rely on both historical
operating performance as well as anticipated future operating performance of the
entities that have generated these intangibles. Factors that could
indicate potential impairment include a significant change in projected
operating results and cash flow, a new technology developed and other external
market factors that may affect our customer base. If there is a material adverse
and ongoing change in our business operations (or
if
an adverse change initially considered temporary is determined to be ongoing),
the value of our intangible assets
,
including those of our DMSP or Infinite divisions, could decrease
significantly. In the event that it is determined that we will be unable to
successfully market or sell our DMSP or audio and web conferencing services, an
impairment charge to our statement of operations could result. Any future
determination requiring the write-off of a significant portion of unamortized
intangible assets, although not requiring any additional cash outlay, could have
a material adverse effect on our financial condition and results of
operations.
We follow
a two step process for impairment testing of goodwill. The first step of this
test, used to identify potential impairment and described above, compares the
fair value of a reporting unit with its carrying amount, including goodwill. The
second step, if necessary, measures the amount of the impairment, including a
comparison and reconciliation of the carrying value of all of our reporting
units to our market capitalization, after appropriate adjustments for control
premium and other considerations. If our market capitalization, after
appropriate adjustments for control premium and other considerations, is
determined to be less than our net book value (i.e., stockholders’ equity as
reflected in our financial statements), that condition might indicate an
impairment requiring the write-off of a significant portion of unamortized
intangible assets, although not requiring any additional cash outlay, could have
a material adverse effect on our financial condition and results of operations.
We will closely monitor and evaluate all such factors as of March 31, 2010 and
subsequent periods, in order to determine whether to record future non-cash
impairment charges.
We
might incur costs in excess of amounts accrued on our financial statements as a
result of ongoing litigation.
On May
29, 2008, we entered into a merger agreement (Merger Agreement) to acquire
Narrowstep, Inc. (Narrowstep). The terms of the Merger Agreement, as amended,
provided that if the merger did not occur on or prior to November 30, 2008, the
Merger Agreement could be terminated by either us or Narrowstep at any time
after that date provided that the terminating party was not responsible for the
delay. On March 18, 2009, we terminated the Merger Agreement and the acquisition
of Narrowstep.
On
December 1, 2009, Narrowstep filed a complaint against us in the Court of
Chancery of the State of Delaware, alleging breach of contract, fraud and three
additional counts and seeking (i) $14 million in damages, (ii) reimbursement of
an unspecified amount for all of its costs associated with the negotiation and
drafting of the Merger Agreement, including but not limited to attorney and
consulting fees, (iii) the return of Narrowstep’s equipment alleged to be in our
possession, (iv) reimbursement of an unspecified amount for all of its attorneys
fees, costs and interest associated with this action and (v) any further relief
determined as fair by the court. After reviewing the complaint document, we
determined that Narrowstep has no basis in fact or in law for any claim and
accordingly, this matter has not been reflected as a liability on our financial
statements. On December 18, 2009, we were served with a summons and on February
1, 2010 we filed a motion requesting dismissal of the breach of contract and
fraud counts as well as two of the other three counts, as well as our brief in
support of the motion filed on February 18, 2010. Narrowstep’s response was
filed on March 29, 2010 and we filed our reply on April 13, 2010. The
Court’s decision, which may be preceded by a hearing at the Court’s
discretion, is pending. Regardless of the ultimate decision with regard to the
motion to dismiss, we intend to vigorously defend against all claims.
Furthermore, we do not expect the ultimate resolution of this matter to have a
material impact on our financial position or results of
operations.
The
value of our common stock may be adversely affected by market volatility and
prevent sale of currently outstanding shares at a profit, or at
all.
Historically,
there has been volatility in the market price for our common stock, as well as
limited trading volume. The trading price and trading volume of our common stock
may continue to fluctuate in response to various factors, many of which are
beyond our control.
Our
quarterly operating results, changes in general conditions in the economy, the
financial markets or the marketing industry, or other developments affecting us
or our competitors, could cause the market price of our common stock to
fluctuate substantially. We expect to experience significant fluctuations in our
future quarterly operating results due to a variety of factors. Factors that may
adversely affect our quarterly operating results include:
|
|
·
|
the
announcement or introduction of new services and products by us and our
competitors,
|
|
|
·
|
our
ability to upgrade and develop our systems in a timely and effective
manner,
|
|
|
·
|
our
ability to retain existing clients and attract new clients at a steady
rate, and maintain client
satisfaction,
|
|
|
·
|
the
level of use of the Internet and online services and the rate of market
acceptance of the Internet and other online services for transacting
business,
|
|
|
·
|
technical
difficulties, system downtime, or Internet
brownouts,
|
|
|
·
|
the
amount and timing of operating costs and capital expenditures relating to
expansion of our business and
operations,
|
|
|
·
|
changes
in accounting rules, particularly those related to the expensing of stock
options, accounting for uncertainty in income taxes, fair value accounting
and business combinations,
|
|
|
·
|
government
regulation, and
|
|
|
·
|
general
economic conditions and economic conditions specific to the
Internet.
|
As a
result of these factors, in one or more future quarters, our operating results
may fall below the expectations of securities analysts and investors. In this
event, the market price of our common stock would likely be materially adversely
affected. In addition, the stock market in general and the market
prices for Internet-related companies in particular, have experienced extreme
volatility that often has been unrelated to the operating performance of those
companies. These broad market and industry fluctuations may adversely affect the
price and trading volume of our common stock, regardless of our operating
performance. Many factors other than our operating performance could influence
the price and volume, including:
|
|
·
|
future
announcements concerning our competitors or principal customers, such as
quarterly operating results, changes in earnings estimates by analysts,
technological innovations, new product introductions, governmental
regulations, or litigation,
|
|
|
·
|
the
liquidity within the market for our common
stock,
|
|
|
·
|
sales
or purchases by us or by our officers, directors, other insiders and large
stockholders,
|
|
|
·
|
investor
perceptions concerning the prospects of our business and the digital media
and webcasting services industry,
|
|
|
·
|
market
conditions and investor sentiment affecting market prices of equity
securities of high technology and/or Internet related companies,
and
|
|
|
·
|
general
economic, political and market conditions, such as recessions or
international currency
fluctuations.
|
The exercise of options and warrants,
the conversion into common shares of our Series A-13 Convertible Preferred Stock
and our convertible debt, as well as the exercise of certain rights to receive
our common shares, would be dilutive to our existing common
shareholders.
There are
currently outstanding (or committed) options and warrants to purchase a total of
1,992,775
shares
of our common stock, with exercise prices ranging from $3.00 to $20.256 per
share. However, the following commitment exists that may result in the issuance
of additional options not included in the above total. In conjunction with the
employment agreements we entered into on September 27, 2007 (and amended on May
15, 2008 and August 11, 2009) with certain senior executives, some of which are
also members of our Board of Directors, we have agreed to extend their previous
performance bonus program for two years under substantially the same terms, with
certain defined exceptions, subject only to the approval by our shareholders of
a sufficient increase in the number of authorized 2007 Plan options, at which
time an estimated aggregate 183,333 performance bonus options will be granted
and priced – such shareholder authorization was obtained at the annual
Shareholder Meeting held on March 25, 2010.
In
addition, there are 35,000 shares of our Series A-13 Convertible Preferred Stock
outstanding, which have an assigned value of $10.00 per preferred share and are
convertible at $3.00 per common share into 116,667 shares of our common stock
and if not converted sooner will be automatically converted on December 31,
2011. The closing ONSM share price was $2.09 per share on April 26,
2010.
There
is also outstanding (i) $1,898,000 of convertible notes which in aggregate could
potentially convert into up to 538,226 shares of our common stock and (ii) a
$500,000 convertible portion of another note with Rockridge Capital Holdings,
LLC (“Rockridge”) which could potentially convert into a minimum of 208,333
shares of our common stock. The latter note also includes terms which could
result in the conversion of the currently remaining $1,178,339 balance into a
minimum of 490,975 shares of our common stock. Our agreement with Rockridge
entered into in connection with this note also provides that Rockridge may
receive an origination fee upon not less than sixty-one (61) days written notice
to us, which fee would be satisfied by our issuance of 366,667 shares of our
common stock.
We have
entered into various agreements for financial consulting and advisory services
which if not terminated as allowed by the terms of such agreements will require
the issuance of up to 41,667 additional common shares.
We
may be exposed to potential risks relating to our internal controls over
financial reporting and our ability to have those controls attested to by our
independent auditors.
As
directed by Section 404 of the Sarbanes-Oxley Act of 2002, the Securities and
Exchange Commission adopted rules requiring public companies to include a report
of management on the company's internal controls over financial reporting in
their annual reports, including Form 10-K. In addition, the independent
registered public accounting firm auditing a company's financial statements must
also attest to the operating effectiveness of the company's internal controls.
We were subject to these requirements for the first time for the fiscal year
ended September 30, 2008 and as a result, we evaluated our internal control
systems in order to allow our management to report on our internal controls, as
a required part of our Annual Report on Form 10-KSB for that year. We made a
similar evaluation and report as part of our Annual Report on Form 10-K for the
fiscal year ended September 30, 2009. In addition to this requirement, our
independent registered public accounting firm will be required to attest to the
operating effectiveness of the company's internal controls, as a required part
of our Annual Report on Form 10-K beginning with our report for the fiscal year
ended September 30, 2010.
While we
have expended significant resources in developing the necessary documentation
and testing procedures required by Section 404 of the Sarbanes-Oxley Act of
2002, and expect to continue such expenditures, there is a risk that we will not
comply with all of the requirements imposed thereby. At present, there is no
precedent available with which to measure compliance adequacy. Accordingly,
there can be no positive assurance that we will receive a positive attestation
from our independent auditors.
In the
event we identify significant deficiencies or material weaknesses in our
internal controls that we cannot remediate in a timely manner or we are unable
to receive a positive attestation from our independent auditors with respect to
our internal controls, investors and others may lose confidence in the
reliability of our financial statements and our ability to obtain equity or debt
financing could suffer.
In
addition to the above, in the event that our independent registered public
accounting firm is unable to rely on our internal controls in connection with
their audit of our financial statements, and in the further event that they are
unable to devise alternative procedures in order to satisfy themselves as to the
material accuracy of our financial statements and related disclosures, it is
possible that we would receive a qualified or adverse audit opinion on those
financial statements. In that event, the quotation of our common stock on The
NASDAQ Capital Market could be adversely affected. In addition, investors and
others may lose confidence in the reliability of our financial statements and
our ability to obtain equity or debt financing could suffer.
Provisions
of our articles of incorporation and bylaws may delay or prevent a take-over,
which may not be in the best interests of our shareholders.
Provisions
of our articles of incorporation and bylaws may be deemed to have anti-takeover
effects, which govern when and by whom special meetings of our shareholders may
be called, and which provisions may delay, defer or prevent a takeover attempt.
In addition, certain provisions of the Florida Business Corporation Act also may
be deemed to have certain anti-takeover effects which include that control of
shares acquired in excess of certain specified thresholds will not possess any
voting rights unless these voting rights are approved by a majority of a
corporation's disinterested shareholders. As a result of such anti-takeover
provisions, it may be more difficult to implement a change in control even if
the shareholders desire a change in control.
In
addition, our articles of incorporation authorize the issuance of up to 700,000
shares of preferred stock with such rights and preferences as may be determined
from time to time by our board of directors, of which 170,000 shares of our
Series A-13 Convertible Preferred Stock are authorized and 35,000 shares
currently issued and outstanding. Our Board of Directors may, without
shareholder approval, issue preferred stock with dividends, liquidation,
conversion, voting or other rights that could adversely affect the voting power
or other rights of the holders of our common stock.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain
statements in this prospectus contain or may contain forward-looking statements
that are subject to known and unknown risks, uncertainties and other factors
which may cause actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. These forward-looking statements
were based on various factors and were derived utilizing numerous assumptions
and other factors that could cause our actual results to differ materially from
those in the forward-looking statements. These factors include, but are not
limited to, our ability to implement our strategic initiatives, economic,
political and market conditions and fluctuations, government and industry
regulation, interest rate risk, U.S. and global competition, and other factors.
Most of these factors are difficult to predict accurately and are generally
beyond our control. You should consider the areas of risk described in
connection with any forward-looking statements that may be made herein. Readers
are cautioned not to place undue reliance on these forward-looking statements
and readers should carefully review this prospectus in its entirety, including
the risks described in "Risk Factors." Except for our ongoing obligations to
disclose material information under the Federal securities laws, we undertake no
obligation to release publicly any revisions to any forward-looking statements,
to report events or to report the occurrence of unanticipated events. These
forward-looking statements speak only as of the date of this prospectus, and you
should not rely on these statements without also considering the risks and
uncertainties associated with these statements and our
business.
USE
OF PROCEEDS
Unless we
otherwise indicate in the applicable prospectus supplement, we currently intend
to use the net proceeds from the sale of our securities, if such sale occurs, to
finance our product development and for working capital and other general
corporate purposes. We also may use a portion of the proceeds to acquire
or invest in complementary businesses or products, although we have no
commitments with respect to any such acquisitions or investments. The
amounts and timing of our actual expenditures will depend on numerous factors,
including the timing of our operating revenues, our cash position from time to
time and our working capital requirements. We therefore cannot estimate
the amount of proceeds to be used for all of the purposes described above.
We may find it necessary or advisable to use the net proceeds for other
purposes, and we will have broad discretion in the application of the
proceeds. Pending utilization of the proceeds as described above, the
net proceeds of the offering will be deposited in interest bearing accounts or
invested in money market instruments, government obligations, certificates of
deposits or similar short-term investment grade interest bearing
investments. We also may set forth additional information on the use
of net proceeds from the sale of the securities we offer under this prospectus
in a prospectus supplement relating to the specific offering.
DESCRIPTION
OF COMMON STOCK
The
following description of our common stock, together with the additional
information we include in any applicable prospectus supplements, summarizes the
material terms and provisions of our common stock that we may offer under this
prospectus. For the complete terms of our common stock, please refer to
our certificate of incorporation and bylaws, which are incorporated by reference
into the registration statement which includes this prospectus. Copies of our
certificate of incorporation and bylaws are on file with the SEC as exhibits to
registration statements previously filed by us. See “Where You Can Find More
Information.” The terms of our common stock also may be affected by
Florida law.
Authorized
and Outstanding Capital Stock
We are
authorized to issue 75,000,000 shares of common stock, $0.0001 par value per
share, and 700,000 shares of undesignated preferred stock, $0.0001 par value per
share.
As of
April 26, 2010, we had 7,717,125 shares of common stock outstanding as well as
an aggregate of 3,754,657 shares of common stock reserved for the
following:
|
|
·
|
1,992,775
shares of common stock reserved for issuance upon the exercise of
outstanding (or committed) warrants and stock
options,
|
|
|
·
|
116,667
shares of common stock reserved for issuance upon the conversion of
outstanding preferred stock,
|
|
|
·
|
1,237,534
shares of common stock reserved for issuance upon the conversion of
outstanding convertible notes and
debentures,
|
|
|
·
|
366,667
shares of common stock reserved for issuance upon the exercise of certain
rights in connection with outstanding convertible notes and debentures,
and
|
|
|
·
|
41,667
shares of common stock reserved for issuance in connection with various
agreements for financial consulting and advisory services, if not
terminated as allowed by the terms of such
agreements.
|
During
March and April 2007, we sold an aggregate of 4,888,889 (pre-reverse split)
restricted common shares at $2.25 per share (pre-reverse split) for total gross
proceeds of approximately $11.0 million. This private equity financing was
arranged by us to partially fund the Infinite Merger. These shares were included
in a registration statement declared effective by the SEC on June 15,
2007. We are required to maintain the effectiveness of this
registration statement until the earlier of the date that (i) all of the shares
have been sold, (ii) all the shares have been transferred to persons who may
trade such shares without restriction (including our delivery of a new
certificate or other evidence of ownership for such securities not bearing a
restrictive legend) or (iii) all of the shares may be sold at any time, without
volume or manner of sale limitations pursuant to Rule 144(k) or any similar
provision (in the opinion of our counsel). In the event such effectiveness is
not maintained or trading in the shares is suspended or if the shares are
delisted for more than five (5) consecutive trading days then we are liable for
a compensatory payment (pro rated on a daily basis) of one and one-half percent
(1.5%) per month until the situation is cured, such payment based on the
purchase price of the shares still held and provided that such payments may not
exceed ten percent (10%) of the initial purchase price of the shares with
respect to any one purchaser. Regardless of the above, we believe that the
applicability of these provisions would be limited by equity and/or by statute
to a certain timeframe after the original security purchase.
As of
March 1, 2010, we had 35,000 shares of preferred stock outstanding.
Voting
Rights
For all
matters submitted to a vote of stockholders, each holder of common stock is
entitled to one vote for each share registered in the holder’s name on our
books. Our common stock does not have cumulative voting rights. The
holders of a majority of the shares of our common stock entitled to vote in any
election of directors, voting together as a single class, can elect all of the
directors standing for election, if they so choose.
Dividends
Subject
to limitations under Florida law and preferences that may be applicable to any
then outstanding preferred stock, holders of common stock are entitled to
receive ratably those dividends, if any, as may be declared by our board of
directors out of legally available funds.
Liquidation
Upon our
liquidation, dissolution or winding up, the holders of common stock will be
entitled to share ratably in the net assets legally available for distribution
to stockholders after the payment of all of our debts and other liabilities of
our company, subject to the prior rights of any preferred stock then
outstanding.
Fully
Paid and Nonassessable
All
shares of our outstanding common stock are fully paid and nonassessable and any
additional shares of common stock that we issue will be fully paid and
nonassessable.
Other
Rights and Restrictions
Holders
of our common stock do not have preemptive or subscription rights, and they have
no right to convert their common stock into any other securities. There are no
redemption or sinking fund provisions applicable to the common stock. The
rights, preferences and privileges of common stockholders are subject to the
rights of the stockholders of any series of preferred stock now existing or
which we may designate in the future. Our certificate of incorporation and
bylaws do not restrict the ability of a holder of common stock to transfer the
holder’s shares of common stock.
Listing
Our
common stock is listed on The NASDAQ Capital Market under the symbol “ONSM”,
although as a result of our recently effected reverse split the trading symbol
will be “ONSMD” through May 4, 2010.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is Interwest Transfer Co.,
Inc., 1981 East 4800 South, Suite 100, Salt Lake City, Utah
84117.
DESCRIPTION
OF PREFERRED STOCK
The
following description of our preferred stock, together with the additional
information we include in any applicable prospectus supplements, summarizes the
material terms and provisions of our preferred stock. For the complete
terms of our preferred stock, please refer to our certificate of incorporation
and bylaws, which are incorporated by reference into the registration statement
which includes this prospectus. Copies of our certificate of incorporation and
bylaws are on file with the SEC as exhibits to registration statements
previously filed by us. See “Where You Can Find More Information.” The
terms of our preferred stock also may be affected by Florida
law.
Authorized
and Outstanding Shares
We
currently have authorized 700,000 shares of preferred stock, $0.0001 par value
per share. As of the date of this prospectus, there were 35,000 shares of Series
A-13 Convertible Preferred Stock outstanding.
Series
A-13 Convertible Preferred Stock
Effective
December 7, 2009, our Board of Directors authorized the sale and issuance of up
to 170,000 shares of Series A-13 Convertible Preferred Stock (“Series A-13”). On
December 23, 2009, we filed a Certificate of Designation, Preferences and Rights
for the Series A-13 with the Florida Secretary of State. The Series A-13 has a
coupon of 8% per annum, an assigned value of $10.00 per preferred share and a
conversion rate of $3.00 per common share. Series A-13 dividends are cumulative
and must be fully paid by us prior to the payment of any dividend on our common
shares. Series A-13 dividends are declared quarterly but are payable at the time
of any conversion of A-13, in cash or at our option in the form of ONSM common
shares, using the greater of (i) $3.00 per share or (ii) the average closing bid
price of a common share for the five trading days immediately preceding the
conversion. Any shares of Series A-13 that are still outstanding as of December
31, 2011 will automatically convert into ONSM common shares. Series A-13 may
also be converted before that date at our option, provided that the closing bid
price of our common shares has been at least $9.00 per share, on each of the
twenty (20) trading days ending on the third business day prior to the date on
which the notice of conversion is given. Series A-13 is subordinate to Series
A-12 preferred shares but senior to all other preferred share classes that may
be issued by us. Except as explicitly required by applicable law, the holders of
Series A-13 shall not be entitled to vote on any matters as to which holders of
ONSM common shares are entitled to vote. Holders of Series A-13 are not entitled
to registration rights.
As of the
date of this registration statement, we had issued one (1) investor an aggregate
of 35,000 shares of Series A-13.
Designations,
Powers, Preferences, Rights, Qualifications, Limitations and
Restrictions
Prior to
issuance of shares of each series of our undesignated preferred stock, our board
of directors is required by the Florida Business Corporation Act, or FBCA, and
our certificate of incorporation to adopt resolutions and file a Certificate of
Designations with the Secretary of State of the State of Florida, fixing for
each such series the designations, powers, preferences, rights, qualifications,
limitations and restrictions of the shares of such series.
Our board
of directors could authorize the issuance of shares of preferred stock with
terms and conditions more favorable than our common stock and with rights that
could adversely affect the voting power or other rights of holders of our common
stock. In addition, our board of directors could authorize the issuance of
shares of preferred stock with terms and conditions which could have the effect
of discouraging a takeover or other transaction which holders of some, or a
majority, of such shares might believe to be in their best interests or in which
holders of some, or a majority, of such shares might receive a premium for their
shares over the then-market price of such shares.
Subject
to limitations prescribed by the FBCA, our certificate of incorporation and our
bylaws, our board of directors is authorized to fix the number of shares
constituting each series of preferred stock and the designations, powers,
preferences, rights, qualifications, limitations and restrictions of the shares
of such series, including such provisions as may be desired concerning voting,
redemption, dividends, dissolution or the distribution of assets, conversion or
exchange, and such other subjects or matters as may be fixed by resolution of
the board of directors. Each series of preferred stock that we offer under this
prospectus will, when issued, be fully paid and nonassessable and will not have,
or be subject to, any preemptive or similar rights.
The
applicable prospectus supplement(s) will describe the following terms of
the series of preferred stock in respect of which this prospectus is being
delivered:
|
|
·
|
the
title and stated value of the preferred
stock;
|
|
|
·
|
the
number of shares of the preferred stock offered, the liquidation
preference per share and the purchase price of the preferred
stock;
|
|
|
·
|
the
dividend rate(s), period(s) and/or payment date(s) or the
method(s) of calculation for
dividends;
|
|
|
·
|
whether
dividends shall be cumulative or non-cumulative and, if cumulative, the
date from which dividends on the preferred stock shall
accumulate;
|
|
|
·
|
the
procedures for any auction and remarketing, if any, for the preferred
stock;
|
|
|
·
|
the
provisions for a sinking fund, if any, for the preferred
stock;
|
|
|
·
|
the
provisions for redemption, if applicable, of the preferred
stock;
|
|
|
·
|
any
listing of the preferred stock on any securities exchange or
market;
|
|
|
·
|
the
terms and conditions, if applicable, upon which the preferred stock will
be convertible into common stock, including the conversion price (or its
manner of calculation) and conversion
period;
|
|
|
·
|
voting
rights, if any, of the preferred
stock;
|
|
|
·
|
a
discussion of any material and/or special U.S. federal income tax
considerations applicable to the preferred
stock;
|
|
|
·
|
whether
interests in the preferred stock will be represented by depositary
shares;
|
|
|
·
|
the
relative ranking and preferences of the preferred stock as to dividend
rights and rights upon liquidation, dissolution or winding up of our
affairs;
|
|
|
·
|
any
limitations on issuance of any class or series of preferred stock ranking
senior to or on a parity with the preferred stock as to dividend rights
and rights upon liquidation, dissolution or winding up of our affairs;
and
|
|
|
·
|
any
other specific terms, preferences, rights, limitations or restrictions on
the preferred stock.
|
DESCRIPTION
OF WARRANTS
The
following description, together with the additional information we may include
in any applicable prospectus supplements, summarizes the material terms and
provisions of the warrants exercisable for the common shares that we may offer
under this prospectus. While the terms summarized below will apply generally to
any warrants exercisable for the common shares that we may offer, we will
describe the particular terms of any series of warrants in more detail in the
applicable prospectus supplement. If we indicate in the prospectus supplement,
the terms of any warrants offered under that prospectus supplement may differ
from the terms described below.
We will
file as exhibits to the registration statement of which this prospectus is a
part, or will incorporate by reference from reports that we file with the SEC,
the form of warrant agreement, including a form of warrant certificate, that
describes the terms of the series of warrants we are offering, and any
supplemental agreements, before the issuance of the related series of warrants.
The following summaries of material terms and provisions of the warrant
agreement and warrant certificate are subject to, and qualified in their
entirety by reference to, all the provisions of the warrant agreement and
warrant certificate applicable to the particular series of warrants that we may
offer under this prospectus. We urge you to read the applicable prospectus
supplements related to the particular series of warrants that we may offer under
this prospectus and the complete warrant agreements and warrant certificates
that contain the terms of the warrants.
We may
issue warrants for the purchase of common stock in one or more series. We may
issue warrants independently or together with common stock, and the warrants may
be attached to or separate from these securities.
We will
evidence each series of warrants by certificates that we will issue under a
separate agreement. We may enter into a warrant agreement with a warrant agent.
If we elect to do so, the warrant agent will act solely as our agent in
connection with the warrants and will not assume any obligation or relationship
of agency or trust for or with any registered holders of warrants or beneficial
owners of warrants. We will indicate the name and address and other
information regarding the warrant agent in the applicable prospectus supplement
relating to a particular series of warrants if we elect to use a warrant
agent.
We will
describe in the applicable prospectus supplement the terms of the series of
warrants, including:
|
|
·
|
the
offering price and aggregate number of warrants
offered;
|
|
|
·
|
the
currency for which the warrants may be
purchased;
|
|
|
·
|
if
applicable, the designation and terms of the securities with which the
warrants are issued and the number of warrants issued with each such
security or each principal amount of such
security;
|
|
|
·
|
if
applicable, the date on and after which the warrants and the related
securities will be separately
transferable;
|
|
|
·
|
the
number of shares of common stock or preferred stock, as the case may be,
purchasable upon the exercise of one warrant and the price at which these
shares may be purchased upon such
exercise;
|
|
|
·
|
the
effect of any merger, consolidation, sale or other disposition of our
business on the warrant agreement and the
warrants;
|
|
|
·
|
the
terms of any rights to redeem or call the
warrants;
|
|
|
·
|
any
provisions for changes to or adjustments in the exercise price or number
of securities issuable upon exercise of the
warrants;
|
|
|
·
|
the
dates on which the right to exercise the warrants will commence and
expire;
|
|
|
·
|
the
manner in which the warrant agreement and warrants may be
modified;
|
|
|
·
|
material
U.S. federal income tax consequences of holding or exercising the
warrants;
|
|
|
·
|
the
terms of the securities issuable upon exercise of the
warrants;
|
|
|
·
|
the
identify of the warrant agent for the warrants and of any other
depositaries, execution or paying agents, transfer agents, registrars or
other agents;
|
|
|
·
|
the
proposed listing, if any, of the warrants or any securities purchasable
upon exercise of the warrants on any securities
exchange;
|
|
|
·
|
the
anti-dilution provisions of the warrants, if
any;
|
|
|
·
|
any
redemption or call provisions; and
|
|
|
·
|
any
other specific terms, preferences, rights or limitations of or
restrictions on the warrants.
|
Before
exercising their warrants, holders of warrants will not have any of the rights
of holders of the securities purchasable upon such exercise, including the right
to receive dividends, if any, or, payments upon our liquidation, dissolution or
winding up or to exercise voting rights, if any.
Exercise
of Warrants
Each
warrant will entitle the holder to purchase the securities that we specify in
the applicable prospectus supplement at the exercise price that we describe in
the applicable prospectus supplement. Unless we otherwise specify in the
applicable prospectus supplement, holders of the warrants may exercise the
warrants at any time up to 5:00 p.m., New York City time, on the expiration
date that we set forth in the applicable prospectus supplement. After the close
of business on the expiration date, unexercised warrants will become
void.
Holders
of the warrants may exercise the warrants by delivering the certificate
representing the warrants to be exercised together with specified information,
and paying the required amount to us or to the warrant agent in immediately
available funds, as provided in the applicable prospectus supplement. We will
set forth on the reverse side of the certificate and in the applicable
prospectus supplement the information that the holder of the warrant will be
required to deliver to us or to the warrant agent.
Upon
receipt of the required payment and the certificate properly completed and duly
executed at the corporate trust office of the warrant agent or any other office
indicated in the applicable prospectus supplement, we will issue and deliver the
securities purchasable upon such exercise. If fewer than all of the warrants
represented by the certificate are exercised, then we will issue a new
certificate for the remaining amount of warrants. If we so indicate in the
applicable prospectus supplement, holders of the warrants may surrender
securities as all or part of the exercise price for warrants.
Enforceability
of Rights by Holders of Warrants
Each
warrant agent will act solely as our agent under the applicable warrant
agreement and will not assume any obligation or relationship of agency or trust
with any holder of any warrant. A single bank or trust company may act as
warrant agent for more than one issue of warrants. A warrant agent will have no
duty or responsibility in case of any default by us under the applicable warrant
agreement or warrant, including any duty or responsibility to initiate any
proceedings at law or otherwise, or to make any demand upon us. Any holder of a
warrant may, without the consent of the related warrant agent or the holder of
any other option and warrant, enforce by appropriate legal action its right to
exercise, and receive the securities purchasable upon exercise of, its
warrants.
DESCRIPTION
OF UNITS
The
following description, together with the additional information we may include
in any applicable prospectus supplements, summarizes the material terms and
provisions of the units that we may offer under this prospectus and any related
unit agreements and unit certificates. While the terms summarized below will
apply generally to any units that we may offer, we will describe the particular
terms of any series of units in more detail in the applicable prospectus
supplement. If we indicate in the prospectus supplement, the terms of any units
offered under that prospectus supplement may differ from the terms described
below.
We will
file as exhibits to the registration statement of which this prospectus is a
part, or will incorporate by reference from reports that we file with the SEC,
any form of unit agreement that describes the terms of the series of units we
are offering, and any supplemental agreements, before the issuance of the
related series of units. The following summaries of material terms and
provisions of the units are subject to, and qualified in their entirety by
reference to, all the provisions of such unit agreements and any supplemental
agreements applicable to a particular series of units. We urge you to read the
applicable prospectus supplements related to the particular series of units that
we may offer under this prospectus and the complete unit agreement and any
supplemental agreements that contain the terms of the units.
General
We may
issue, in one or more series, units comprised of shares of our common stock,
preferred stock, and/or warrants to purchase common stock or any
combination. Each unit will be issued so that the holder of the unit is
also the holder of each security included in the unit. Thus, the holder of a
unit will have the rights and obligations of a holder of each included security.
The unit agreement under which a unit is issued may provide that the securities
included in the unit may not be held or transferred separately, at any time or
at any time before a specified date.
We may
evidence units by unit certificates that we issue under a separate
agreement. We may issue the units under a unit agreement between us and
one or more unit agents. If we elect to enter into a unit agreement with a
unit agent, the unit agent will act solely as our agent in connection with the
units and will not assume any obligation or relationship of agency or trust for
or with any registered holders of units or beneficial owners of units. We
will indicate the name and address and other information regarding the unit
agent in the applicable prospectus supplement relating to a particular series of
units if we elect to use a unit agent.
We will
describe in the applicable prospectus supplement the terms of the series of
units being offered, including:
|
|
·
|
the
designation and terms of the units and of the securities comprising the
units, including whether and under what circumstances those securities may
be held or transferred separately;
|
|
|
·
|
any
provisions of the governing unit agreement that differ from those
described below; and
|
|
|
·
|
any
provisions for the issuance, payment, settlement, transfer or exchange of
the units or of the securities comprising the
units.
|
The other
provisions regarding our common stock, preferred stock and warrants as described
in this section will apply to each unit to the extent such unit consists of
shares of our common stock, preferred stock, and/or warrants to purchase our
common stock.
Enforceability
of Rights by Holders of Units
Each unit
agent will act solely as our agent under the applicable unit agreement and will
not assume any obligation or relationship of agency or trust with any holder of
any unit. A single bank or trust company may act as unit agent for more than one
series of units. A unit agent will have no duty or responsibility in case of any
default by us under the applicable unit agreement or unit, including any duty or
responsibility to initiate any proceedings at law or otherwise, or to make any
demand upon us. Any holder of a unit may, without the consent of the related
unit agent or the holder of any other unit, enforce by appropriate legal action
its rights as holder under any security included in the unit.
LEGAL
OWNERSHIP OF SECURITIES
We can
issue securities in registered form or in the form of one or more global
securities. We refer to those persons who have securities registered in their
own names on the books that we or any applicable trustee, depositary or warrant
agent maintain for this purpose as the “holders” of those securities. These
persons are the legal holders of the securities. We refer to those persons who,
indirectly through others, own beneficial interests in securities that are not
registered in their own names, as “indirect holders” of those securities. As we
discuss below, indirect holders are not legal holders, and investors in
securities issued in book-entry form or in street name will be indirect
holders.
Book-Entry
Holders.
We may issue securities in book-entry form only. This means that
securities may be represented by one or more global securities registered in the
name of a financial institution that holds them as depositary on behalf of other
financial institutions that participate in the depositary’s book-entry system.
These participating institutions, which are referred to as participants, in
turn, hold beneficial interests in the securities on behalf of themselves or
their customers.
Only the
person in whose name a security is registered is recognized as the holder of
that security. Securities issued in global form will be registered in the name
of the depositary or its participants. Consequently, for securities issued in
global form, we will recognize only the depositary as the holder of the
securities, and we will make all payments on the securities to the depositary.
The depositary passes along the payments it receives to its participants, which
in turn pass the payments along to their customers who are the beneficial
owners. The depositary and its participants do so under agreements they have
made with one another or with their customers, and not under the terms of the
securities.
As a
result, investors in a book-entry security will not own securities directly.
Instead, they will own beneficial interests in a global security, through a
financial institution that participates in the depositary’s book-entry system or
holds an interest through a participant. As long as the securities are issued in
global form, investors will be indirect holders, and not holders, of the
securities.
Street Name
Holders.
We may terminate a global security or issue securities in
non-global form. In these cases, investors may choose to hold their securities
in their own names or in “street name.” Securities held by an investor in street
name would be registered in the name of a financial institution that the
investor chooses, and the investor would hold only a beneficial interest in
those securities through an account he or she maintains at that
institution.
For
securities held in street name, we will recognize only the intermediary
financial institutions in whose names the securities are registered as the
holders of those securities, and we will make all payments on those securities
to them. These institutions pass along the payments they receive to their
customers who are the beneficial owners as provided in customer agreements or
applicable legal requirements. Investors who hold securities in street name will
be indirect holders.
Legal Holders.
Our obligations, as well as the obligations of any applicable trustee and
of any third parties employed by us or a trustee, run only to the legal holders
of the securities. We do not have obligations to investors who hold beneficial
interests in global securities, in street name or by any other indirect means,
regardless of investor choice.
For
example, once we make a payment or give a notice to the holder, we have no
further responsibility for the payment or notice even if that holder is
required, under agreements with depositary participants or customers or by law,
to pass it along to the indirect holders but does not do so. Similarly, we may
want to obtain the approval of the holders to amend an indenture, to relieve us
of the consequences of a default or of our obligation to comply with a
particular provision of the indenture or for other purposes. In such an event,
we would seek approval only from the holders, and not the indirect holders, of
the securities.
Special
Considerations For Indirect Holders.
If you hold securities through a
financial institution, either in book-entry form or in street name, you should
check with your own institution to find out:
|
|
•
|
how it handles securities
payments and notices;
|
|
|
•
|
whether it imposes fees or
charges;
|
|
|
•
|
how it would handle a request for
the holders’ consent, if ever
required;
|
|
|
•
|
whether and how you can instruct
it to send you securities registered in your own name so you can be a
holder, if that is permitted in the
future;
|
|
|
•
|
how it would exercise rights
under the securities if there were a default or other event triggering the
need for holders to act to protect their interests;
and
|
|
|
•
|
if the securities are in
book-entry form, how the depositary’s rules and procedures will affect
these matters.
|
Global
Securities.
A global security is a security that represents one or any
other number of individual securities held by a depositary. Generally, all
securities represented by the same global securities will have the same
terms.
Each
security issued in book-entry form will be represented by a global security that
we deposit with and register in the name of a financial institution or its
nominee that we select. The financial institution that we select for this
purpose is called the depositary. Unless we specify otherwise in the applicable
prospectus supplement, The Depository Trust Company, New York, New York, known
as DTC, will be the depositary for all securities issued in book-entry
form.
A global
security may not be transferred to or registered in the name of anyone other
than the depositary, its nominee or a successor depositary, unless special
termination situations arise. We describe those situations below under “Special
Situations When a Global Security Will Be Terminated.” As a result of these
arrangements, the depositary, or its nominee, will be the sole registered owner
and holder of all securities represented by a global security, and investors
will be permitted to own only beneficial interests in a global security.
Beneficial interests must be held by means of an account with a broker, bank or
other financial institution that in turn has an account with the depositary or
with another institution that does. Thus, an investor whose security is
represented by a global security will not be a holder of the security, but only
an indirect holder of a beneficial interest in the global security.
If the
prospectus supplement for a particular security indicates that the security will
be issued in global form only, then the security will be represented by a global
security at all times unless and until the global security is terminated. If
termination occurs, we may issue the securities through another book-entry
clearing system or decide that the securities may no longer be held through any
book-entry clearing system.
Special
Considerations For Global Securities.
The rights of an indirect holder
relating to a global security will be governed by the account rules of the
investor’s financial institution and of the depositary, as well as general laws
relating to securities transfers.
If
securities are issued only in the form of a global security, an investor should
be aware of the following:
|
|
•
|
an investor cannot cause the
securities to be registered in his or her name, and cannot obtain
non-global certificates for his or her interest in the securities, except
in the special situations we describe
below;
|
|
|
•
|
an investor will be an indirect
holder and must look to his or her own bank or broker for payments on the
securities and protection of his or her legal rights relating to the
securities, as described
above;
|
|
|
•
|
an investor may not be able to
sell interests in the securities to some insurance companies and to other
institutions that are required by law to own their securities in
non-book-entry form;
|
|
|
•
|
an investor may not be able to
pledge his or her interest in a global security in circumstances where
certificates representing the securities must be delivered to the lender
or other beneficiary of the pledge in order for the pledge to be
effective;
|
|
|
•
|
the depositary’s policies, which
may change from time to time, will govern payments, transfers, exchanges
and other matters relating to an investor’s interest in a global
security;
|
|
|
•
|
we and any applicable trustee
have no responsibility for any aspect of the depositary’s actions or for
its records of ownership interests in a global security, nor do we or any
applicable trustee supervise the depositary in any
way;
|
|
|
•
|
the depositary may, and we
understand that DTC will, require that those who purchase and sell
interests in a global security within its book-entry system use
immediately available funds, and your broker or bank may require you to do
so as well; and
|
|
|
•
|
financial institutions that
participate in the depositary’s book-entry system, and through which an
investor holds its interest in a global security, may also have their own
policies affecting payments, notices and other matters relating to the
securities.
|
There may
be more than one financial intermediary in the chain of ownership for an
investor. We do not monitor and are not responsible for the actions of any of
those intermediaries.
Special
Situations When a Global Security Will Be Terminated.
In a few special
situations described below, the global security will terminate and interests in
it will be exchanged for physical certificates representing those interests.
After that exchange, the choice of whether to hold securities directly or in
street name will be up to the investor. Investors must consult their own banks
or brokers to find out how to have their interests in securities transferred to
their own name, so that they will be direct holders. We have described the
rights of holders and street name investors above.
Unless
listed or provided otherwise in the applicable prospectus supplement, the global
security will terminate when the following special situations
occur:
|
|
•
|
if the depositary notifies us
that it is unwilling, unable or no longer qualified to continue as
depositary for that global security and we do not appoint another
institution to act as depositary within
90 days;
|
|
|
•
|
if we notify any applicable
trustee that we wish to terminate that global security;
or
|
|
|
•
|
if an event of default has
occurred with regard to securities represented by that global security and
has not been cured or
waived.
|
When a
global security terminates, the depositary, and not we or any applicable
trustee, is responsible for deciding the names of the institutions that will be
the initial direct holders.
ANTI-TAKEOVER
EFFECTS OF PROVISIONS OF OUR ARTICLES OF INCORPORATION, OUR BYLAWS AND FLORIDA
LAW
Provisions
of our articles of incorporation and bylaws and Florida law (including the
Florida Business Corporation Act) could discourage potential acquisition
proposals and could delay or prevent a change in control of us. These provisions
could diminish the opportunities for a shareholder to participate in tender
offers, including tender offers at a price above the then current market value
of our common stock. These provisions may also inhibit fluctuations in the
market price of our common stock that could result from takeover attempts. In
addition, the Board of Directors, without further shareholder approval, may
issue additional series of preferred stock that could have the effect of
delaying, deterring or preventing a change in control. The issuance of
additional series of preferred stock could also adversely affect the voting
power of the holders of common stock, including the loss of voting control to
others.
PLAN
OF DISTRIBUTION
We may
sell the securities offered by this prospectus in one or more of the following
ways from time to time:
|
|
·
|
to
or through underwriters or dealers;
or
|
|
|
·
|
directly
to purchasers, including our affiliates, or to a single
purchaser.
|
|
|
·
|
through
one or more agents;
|
|
|
·
|
through
a block trade in which the broker or dealer engaged to handle the block
will attempt to sell the securities as agent, but may position and resell
a portion of the block as principal to facilitate the transaction;
or
|
|
|
·
|
through
a combination of any of these methods of
sale.
|
In
addition, we may issue the securities being offered by this prospectus as a
dividend or distribution.
We may
effect the distribution of the securities from time to time in one or more
transactions at a fixed price or prices, which may be changed from time to time,
at market prices prevailing at the time of sale, at prices related to prevailing
market prices or at negotiated prices.
We will
set forth in a prospectus supplement the terms of the offering of our
securities, including:
|
|
·
|
the
type and amount of securities we are
offering;
|
|
|
·
|
the
purchase price of our securities being offered and the net proceeds we
will receive from the sale;
|
|
|
·
|
the
method of distribution of the securities we are
offering;
|
|
|
·
|
the
name or names of any agents, underwriters or
dealers;
|
|
|
·
|
any
over-allotment options under which underwriters may purchase additional
securities from us;
|
|
|
·
|
any
underwriting discounts and commissions or agency fees and commissions and
other items constituting underwriters’ or agents’
compensation;
|
|
|
·
|
any
discounts or concessions allowed or reallowed or paid to dealers;
and
|
|
|
·
|
any
securities exchanges on which such securities may be
listed.
|
Sale
Through Underwriters or Dealers
If we use
an underwriter or underwriters in the sale of securities offered by this
prospectus, the underwriters will acquire the securities for their own account,
including through underwriting, purchase, security lending or repurchase
agreements with us. The underwriters may resell the securities from time to time
in one or more transactions, including negotiated transactions. Underwriters may
sell the securities in order to facilitate transactions in any of our other
securities (described in this prospectus or otherwise), including other public
or private transactions and short sales. Underwriters may offer securities to
the public either through underwriting syndicates represented by one or more
managing underwriters or directly by one or more firms acting as underwriters.
Unless otherwise indicated in the prospectus supplement, the obligations of the
underwriters to purchase the securities will be subject to certain conditions,
and the underwriters will be obligated to purchase all the offered securities if
they purchase any of them. The underwriters may change from time to time any
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers.
If we use
an underwriter or underwriters in the sale of securities, we will execute an
underwriting agreement with the underwriter or underwriters at the time we reach
an agreement for sale. We will set forth in the applicable prospectus supplement
the names of the specific managing underwriter or underwriters, as well as any
other underwriters, and the terms of the transactions, including compensation of
the underwriters and dealers. This compensation may be in the form of discounts,
concessions or commissions.
We may
grant to the underwriters options to purchase additional securities to cover
over-allotments, if any, at the public offering price with additional
underwriting discounts or commissions. If we grant any over-allotment option,
the terms of any over-allotment option will be set forth in the prospectus
supplement relating to those securities.
Sale
Through Dealers
If we use
dealers in the sale of the securities offered by this prospectus, we or an
underwriter will sell the securities to them as principals. The dealers may then
resell those securities to the public at varying prices to be determined by the
dealers at the time of resale. The applicable prospectus supplement will set
forth the names of the dealers and the terms of the transactions.
Direct
Sales
We may
directly solicit offers to purchase the securities offered by this prospectus.
In this case, no underwriters or agents would be involved. We may sell the
securities directly to institutional investors or others who may be deemed to be
underwriters within the meaning of the Securities Act with respect to any sale
of those securities. The terms of any such sales will be described in the
prospectus supplement.
Sales
Through Agents
Securities
also may be offered and sold through agents designated from time to time. The
prospectus supplement will name any agent involved in the offer or sale of the
securities and will describe any commissions payable to the agent. Unless
otherwise indicated in the applicable prospectus supplement, any agent will
agree to use its reasonable best efforts to solicit purchases for the period of
its appointment. Any agent may be deemed to be an underwriter within the
meaning of the Securities Act with respect to any sale of those
securities.
Delayed
Delivery Contracts
If the
applicable prospectus supplement indicates, we may authorize agents,
underwriters or dealers to solicit offers from institutions to purchase
securities at the public offering price under delayed delivery contracts. These
contracts would provide for payment and delivery on a specified date in the
future. Institutions with which contracts of this type may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions, but in all cases those
institutions must be approved by us. The obligations of any purchaser
under any contract of this type will be subject to the condition that the
purchase of the securities shall not at the time of delivery be prohibited under
the laws of the jurisdiction to which the purchaser is subject. The
applicable prospectus supplement will describe the commission payable for
solicitation of those contracts.
Market
Making, Stabilization and Other Transactions
Our
common stock is listed on The NASDAQ Capital Market. Any common stock sold
pursuant to a prospectus supplement will be eligible for listing and trading on
The NASDAQ Capital Market, subject to official notice of issuance. Unless the
applicable prospectus supplement states otherwise, each other class or series of
securities issued will be a new issue and will have no established trading
market. We may elect to list any other class or series of securities on an
exchange, but we are not currently obligated to do so. Any underwriters that we
use in the sale of offered securities may make a market in such securities, but
may discontinue such market making at any time without notice. Therefore, we
cannot assure you that the securities will have a liquid trading
market.
Any
underwriter may also engage in stabilizing transactions, syndicate covering
transactions and penalty bids in accordance with Regulation M under the
Securities Exchange Act of 1934, as amended. Stabilizing transactions involve
bids to purchase the underlying security in the open market for the purpose of
pegging, fixing or maintaining the price of the securities. Syndicate covering
transactions involve purchases of the securities in the open market after the
distribution has been completed in order to cover syndicate short
positions.
Penalty
bids permit the underwriters to reclaim a selling concession from a syndicate
member when the securities originally sold by the syndicate member are purchased
in a syndicate covering transaction to cover syndicate short positions.
Stabilizing transactions, syndicate covering transactions and penalty bids may
cause the price of the securities to be higher than it would be in the absence
of the transactions. The underwriters may, if they commence these transactions,
discontinue them at any time.
The
effect of these transactions may be to stabilize or maintain the market price of
the securities at a level above that which might otherwise prevail in the open
market. Such transactions, if commenced, may be discontinued at any time. We
make no representation or prediction as to the direction or magnitude of any
effect that the transactions described above, if implemented, may have on the
price of our securities.
Derivative
Transactions and Hedging
We, the
underwriters or other agents may engage in derivative transactions involving the
securities. These derivatives may consist of short sale transactions and other
hedging activities. The underwriters or agents may acquire a long or short
position in the securities, hold or resell securities acquired and purchase
options or futures on the securities and other derivative instruments with
returns linked to or related to changes in the price of the securities. In order
to facilitate these derivative transactions, we may enter into security lending
or repurchase agreements with the underwriters or agents. The underwriters or
agents may effect the derivative transactions through sales of the securities to
the public, including short sales, or by lending the securities in order to
facilitate short sale transactions by others. The underwriters or agents may
also use the securities purchased or borrowed from us or others (or, in the case
of derivatives, securities received from us in settlement of those derivatives)
to directly or indirectly settle sales of the securities or close out any
related open borrowings of the securities.
Electronic
Auctions
We also
may make sales through the Internet or through other electronic means. Since we
may from time to time elect to offer securities directly to the public, with or
without the involvement of agents, underwriters or dealers, utilizing the
Internet or other forms of electronic bidding or ordering systems for the
pricing and allocation of such securities, you will want to pay particular
attention to the description of that system we will provide in a prospectus
supplement.
Such
electronic system may allow bidders to directly participate, through electronic
access to an auction site, by submitting conditional offers to buy that are
subject to acceptance by us, and which may directly affect the price or other
terms and conditions at which such securities are sold. These bidding or
ordering systems may present to each bidder, on a so-called “real-time” basis,
relevant information to assist in making a bid, such as the clearing spread at
which the offering would be sold, based on the bids submitted, and whether a
bidder’s individual bids would be accepted, prorated or rejected. Of course,
many pricing methods can and may also be used.
Upon
completion of such an electronic auction process, securities will be allocated
based on prices bid, terms of bid or other factors. The final offering price at
which securities would be sold and the allocation of securities among bidders
would be based in whole or in part on the results of the Internet or other
electronic bidding process or auction.
General
Information
Agents,
underwriters, and dealers may be entitled, under agreements entered into with
us, to indemnification by us against specified liabilities, including
liabilities under the Securities Act, or to contribution by us to payments they
may be required to make in respect to such liabilities. The applicable
prospectus supplement will describe the terms and conditions of indemnification
or contribution. Some of our agents, underwriters, and dealers, or their
affiliates, may be customers of, engage in transactions with or perform services
for us, in the ordinary course of business. We will describe in the
prospectus supplement the nature of any such relationship and the name of the
parties involved. Any lockup arrangements will be set forth in the
applicable prospectus supplement.
LEGAL
MATTERS
The
validity of the issuance of the securities offered hereby will be passed upon
for us by Roetzel & Andress, LPA, Fort Lauderdale, Florida.
EXPERTS
The
consolidated financial statements of Onstream Media Corporation and subsidiaries
as of and for the years ended September 30, 2009 and 2008 incorporated by
reference in this prospectus have been audited by Goldstein Lewin & Co.,
independent registered public accounting firm, as indicated in their report with
respect thereto, and are incorporated herein in reliance upon the authority of
said firm as experts in giving said report.
INDEMNIFICATION
MATTERS
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to our directors, officers and controlling persons according to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the SEC such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable.
No
dealer, sales representative or any other person has been 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 representation must not be
relied upon as having been authorized by the company or any of the underwriters.
This prospectus does not constitute an offer of any securities other than those
to which it relates or an offer to sell, or a solicitation of any offer to buy,
to any person in any jurisdiction where such an offer or solicitation would be
unlawful. Neither the delivery of this prospectus nor any sale made hereunder
shall, under any circumstances, create an implication that the information set
forth herein is correct as of any time subsequent to the date
hereof.
Until
June 12, 2010 (45 days after the date of this prospectus), all dealers that
effect transactions these securities, whether or not participating in this
offering, may be required to deliver a prospectus. This delivery requirement is
in addition to the dealers' obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or
subscriptions.
WHERE
YOU CAN FIND MORE INFORMATION
Upon your
written or oral request, we will provide at no cost to you a copy of any and all
of the information that is incorporated by reference in this prospectus, not
including exhibits to such information unless those exhibits are specifically
incorporated herein by reference.
Requests
for such documents should be directed to Corporate Secretary, Onstream Media
Corporation, 1291 SW 29 Avenue, Pompano Beach, Florida 33069, telephone number
(954) 917-6655. Please note that additional information can be obtained from our
website at
www.onsm.com
.
We file
annual, quarterly and current reports, proxy statements and other information
with the SEC. Our reports, proxy statements and other information may be
accessed over the Internet at a site maintained by the SEC at
http://www.sec.gov
.
You may also read and copy any materials we file with the SEC at the following
public SEC reference room:
Public
Reference Room
100 F
Street, N.E.
Washington,
D.C. 20549
You may
obtain further information about the operation of the SEC's public reference
room by calling the SEC at 1-800-SEC-0330.
We have
filed a registration statement under the Securities Act with the SEC with
respect to the securities to be sold hereunder. This prospectus has been filed
as part of the registration statement. This prospectus does not contain all of
the information set forth in the registration statement because certain parts of
the registration statement are omitted in accordance with the rules and
regulations of the SEC. The registration statement is available for inspection
and copying as set forth above.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The SEC
allows us to "incorporate by reference" the information we file with them, which
means that we can disclose important information to you by referring you to
those documents. The information incorporated by reference is considered to be
part of this prospectus, and later information filed with the SEC will update
and supersede this information. We incorporate by reference the documents listed
below, any of such documents filed since the date this registration statement
was filed and any future filings with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 until the offering is
completed.
|
|
-
|
our
annual report on Form 10-K for the fiscal year ended September 30,
2009,
|
|
|
-
|
our
quarterly report on Form 10-Q for the three months ended December 31, 2009
and
|
|
|
-
|
reports
on Form 8-K filed on October 23, 2009, December 4, 2009, December 10,
2009, December 23, 2009, December 30, 2009, January 7, 2010, January 20,
2010, February 10, 2010, February 17, 2010, March 29, 2010, April 6, 2010
and April 27, 2010.
|
This
prospectus may contain information that updates, modifies or is contrary to
information in one or more of the documents incorporated by reference in this
prospectus. Reports we file with the SEC after the date of this prospectus may
also contain information that updates, modifies or is contrary to information in
this prospectus or in documents incorporated by reference in this prospectus.
Investors should review these reports as they may disclose a change in our
business, prospects, financial condition or other affairs after the date of this
prospectus.
MATERIAL
CHANGE
There has
been no material change in our affairs since our fiscal year ended September 30,
2009 which were not described in our Annual Report on Form 10-K for that period
or our Quarterly Report on Form 10-Q for the three months ended December 31,
2009.
TABLE
OF CONTENTS
|
|
Page
|
|
|
|
|
|
About
this Prospectus
|
2
|
|
|
About
our Company
|
3
|
|
|
Risk
Factors
|
5
|
|
|
Cautionary
Statement Regarding
|
|
|
|
Forward-Looking
Information
|
10
|
|
|
Use
of Proceeds
|
11
|
|
|
Description
Of Common Stock
|
11
|
|
|
Description
Of Preferred Stock
|
13
|
|
|
Description
Of Warrants
|
14
|
|
|
Description
Of Units
|
16
|
|
|
Anti-Takeover
Effects of Provisions of
|
|
|
|
Our
Articles of Incorporation, Our
|
|
|
|
Bylaws
and Florida Law
|
20
|
|
|
Plan
of Distribution
|
20
|
|
|
Legal
Matters
|
23
|
|
|
Experts
|
24
|
|
|
Indemnification
Matters
|
24
|
|
|
Where
You Can Find More Information
|
24
|
|
|
Incorporation
of Certain Information
|
|
|
|
By
Reference
|
25
|
|
|
Material
Change
|
25
|
|
ONSTREAM
MEDIA
CORPORATION
PROSPECTUS
$6,600,000
Common
Stock
Preferred Stock
Warrants
Units
_____________,
2010
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
|
Item
14.
|
Other
Expenses of Issuance and
Distribution
|
|
|
|
|
|
|
Registration
Fees - Securities and Exchange Commission
|
|
$
|
357
|
|
|
Listing
of Additional Shares - The NASDAQ Stock Market*
|
|
|
40,300
|
|
|
Cost
of Printing
|
|
|
1,000
|
|
|
Legal
Fees and Expenses
|
|
|
5,000
|
|
|
Accounting
Fees and Expenses
|
|
|
10,000
|
|
|
Blue
Sky Fees and Expenses
|
|
|
5,000
|
|
|
Miscellaneous
|
|
|
1,343
|
|
|
Total
|
|
$
|
63,000
|
|
*Estimated
maximum incremental fees – NASDAQ listing fees of $0.01 per share are assessed
at the time the common shares are issued, up to the quarterly and/or annual
maximum fee, which is currently $5,000 and $65,000, respectively. Through the
date of this S-3 filing, we have incurred NASDAQ listing fees for the fiscal
year in progress of approximately $24,700.
|
Item
15.
|
Indemnification
of Directors and Officers
|
The
Florida Business Corporation Act permits the indemnification of directors,
employees, officers and agents of a Florida corporation. Our articles of
incorporation and bylaws provide that we shall indemnify to the fullest extent
permitted by the Florida Business Corporation Act any person whom we may
indemnify under the act.
The
provisions of Florida law that authorize indemnification do not eliminate the
duty of care of a director, and in appropriate circumstances equitable remedies
including injunctive or other forms of non-monetary relief will remain
available. In addition, each director will continue to be subject to liability
for:
- violations
of criminal laws, unless the director has reasonable cause to believe that his
or her conduct was lawful or had no reasonable cause to believe his conduct was
unlawful,
- deriving
an improper personal benefit from a transaction,
- voting
for or assenting to an unlawful distribution, and
- willful
misconduct or conscious disregard for our best interests in a proceeding by or
in our right to procure a judgment in its favor or in a proceeding by or in the
right of a shareholder.
The
statute does not affect a director's responsibilities under any other law,
including federal securities laws.
The
effect of Florida law, our articles of incorporation and our bylaws is to
require us to indemnify our officers and directors for any claim arising against
those persons in their official capacities if the person acted in good faith and
in a manner that he or she 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 or her conduct was
unlawful.
To the
extent indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers or control persons, we have been informed
that in the opinion of the SEC, this indemnification is against public policy as
expressed in the Securities Act and is unenforceable.
|
Item
16.
|
Exhibits
and Consolidated Financial Statement
Schedules
|
|
5.1
|
Opinion
of Roetzel & Andress, LPA
(1)
|
|
23.1
|
Consent
of Goldstein Lewin &
Co.
|
|
23.2
|
Consent
of Roetzel & Andress, LPA (included in Exhibit 5.1)
(1)
|
|
24.1
|
Power
of Attorney (2)
|
|
|
(1)
|
Incorporated
by reference to the exhibit of the same number filed with Form S-3/A on
April 8, 2010.
|
|
|
(2)
|
Incorporated
by reference to the power of attorney included on the signature page of
Form S-3 filed on March 5,
2010.
|
Onstream
Media will:
1. File,
during any period in which it offers or sells securities, a post-effective
amendment to this registration statement to:
i.
Include any prospectus required by Section 10(a)(3) of
the Securities Act;
ii.
Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the registration
statement; and 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 end of
the estimated maximum offering range may be reflected in the form of prospects
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in the volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
iii.
Include any additional or changed material information on the plan of
distribution.
2. For
determining liability under the Securities Act, treat each post-effective
amendment as a new registration statement of the securities offered, and the
offering of the securities at that time to be the initial bona fide
offering.
3. File
a post-effective amendment to remove from registration any of the securities
that remain unsold at the end of the offering.
4.
That, for the purpose of determining
liability of the registrant under the Securities Act of 1933 to any purchaser in
the initial distribution of the securities, the undersigned registrant
undertakes that any primary offering of securities of the registrant pursuant to
this registration statement, regardless of the underwriting method used to sell
the securities to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the registrant will
be a seller to the purchaser and will be considered to offer or sell such
securities to such purchaser:
i. Any
preliminary prospectus or prospectus of the registrant relating to the offering
required to be filed pursuant to Rule 424;
ii. Any
free writing prospectus relating to the offering prepared by or on behalf of the
registrant or used or referred to by the registrant;
iii. The
portion of any other free writing prospectus relating to the offering containing
material information about the registrant or its securities provided by or on
behalf of the registrant; and
iv. Any
other communication that is an offer in the offering made by the registrant to
the purchaser.
5. The
registrant herby undertakes that, for the purpose of determining any liability
under the Securities Act of 1933, each filing of the registrant’s annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and,
were applicable, each filing of an employee benefit plan, annual report pursuant
to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in this 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
bonfide offering thereof.
6. Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by 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.
7. That,
for the purpose of determining liability under the Securities Act of 1933 to any
purchaser, each prospectus filed pursuant to Rule 424(b) as part of a
registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in reliance on
Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a
registration statement or prospectus that is part of the registration statement
or made in a document incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration statement or
prospectus that was part of the registration statement or made in any such
document immediately prior to such date of first use.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant certifies that
it has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this amendment number two to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Pompano Beach and the State of Florida, on the
28th day of April, 2010.
|
|
ONSTREAM
MEDIA CORPORATION
|
|
|
|
|
|
|
By:
|
/s/ Randy S. Selman
|
|
|
|
|
|
|
|
|
Randy
S. Selman
|
|
|
|
Chairman
of the Board,
|
|
|
|
Chief
Executive Officer and President,
|
|
|
|
Principal
Executive Officer
|
Pursuant
to the requirements of the Securities Act of 1933, this amendment number two to
the registration statement has been signed by the following persons in the
capacities and on the dates indicated.
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/ Randy S. Selman
|
|
Director,
President,
|
|
April
28, 2010
|
|
Randy
S. Selman
|
|
and
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
/s/ Robert E.
Tomlinson*
|
|
Chief
Financial Officer and
|
|
|
|
Robert
E. Tomlinson
|
|
Principal
Accounting Officer
|
|
|
|
|
|
|
|
|
|
/s/ Clifford
Friedland*
|
|
Director
and Senior Vice President
|
|
|
|
Clifford
Friedland
|
|
Business
Development
|
|
|
|
|
|
|
|
|
|
/s/ Alan Saperstein*
|
|
Director
and Chief Operating Officer
|
|
|
|
Alan
Saperstein
|
|
|
|
|
|
|
|
|
|
|
|
/
s/ Leon Nowalsky*
|
|
Director
|
|
|
|
Leon
Nowalsky
|
|
|
|
|
|
|
|
|
|
|
|
/
s/ Robert J. Wussler*
|
|
Director
|
|
|
|
Robert
J. Wussler
|
|
|
|
|
|
|
|
|
|
|
|
/
s/ Charles C. Johnston*
|
|
Director
|
|
|
|
Charles
C. Johnston
|
|
|
|
|
|
|
|
|
|
|
|
/
s/ Carl Silva*
|
|
Director
|
|
|
|
Carl
Silva
|
|
|
|
|
* By
Randy Selman pursuant to a Power of Attorney which was previously filed with the
initial registration statement on March 5, 2010.
Onstream Media (MM) (NASDAQ:ONSMD)
Historical Stock Chart
From Apr 2024 to May 2024
Onstream Media (MM) (NASDAQ:ONSMD)
Historical Stock Chart
From May 2023 to May 2024
