As filed with the Securities and Exchange Commission on October 27,November 24 , 1999.
Registration No. 333-_____
================================================================================333-89811
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1 TO FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
FRONTLINE COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware One Blue Hill Plaza, 7th Floor 13-3950283
(state or other Pearl River, New York 10965 (IRS employer
jurisdiction of (914) 623-8553 identification
incorporation (Address, including zip code, and telephone number)
number, including area code, number) or organization)
of registrant's principal executive offices)
------------------
Stephen J. Cole-Hatchard, Chief Executive Officer
Frontline Communications Corporation
One Blue Hill Plaza, 7th Floor
Pearl River, New York 10965
(914) 623-8553
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-------------------
Copies to:
Robert J. Mittman, Esq.
Tenzer Greenblatt LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Telephone No. (212) 885-5000
Telecopier No. (212) 885-5001
Approximate date of commencement of proposed sale to the public: As soon as
practicableFrom time
to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum
Title of each Class of Amount to be Offering Price Aggregate Offering Amount of
Securities to be Registered Registered Per Share(1) Price(1) Registration Fee
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Common Stock, par value $.01 per share 485,985(2)(3) $ 4.25 $2,065,436.25 $574.19
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Common Stock, par value $.01 per share
issuable upon exercise of warrants 13,625(4) $11.01 $ 150,011.25 $ 41.70
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Common Stock, par value $.01 per share
issuable upon exercise of warrants 14,354(4) $ 5.23 $ 75,071.42 $ 20.87
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Total $636.76
====================================================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee based
on the closing price of the common stock as reported on Nasdaq on October
18, 1999.
(2) Includes up to 280,822 additional shares of common stock as may become
issuable pursuant to certain repricing provisions.
(3) Pursuant to Rule 416 of the Securities Act, there are also being registered
hereunder additional shares as may be issued to the selling shareholders
because of any future stock dividends, stock distributions, stock splits or
similar capital readjustments.
(4) Pursuant to Rule 416 of Securities Act, there are also being registered
additional shares as may become issuable pursuant to the anti-dilution
provisions of the warrants.
-----------------------
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
513,964 SHARES
FRONTLINE COMMUNICATIONS CORPORATION
COMMON STOCK
This prospectus relates to an offering by certain selling stockholders of
an aggregate of up to 205,163 shares of the issued and outstanding common stock
of Frontline Communications Corporation. This prospectus also relates to the
offering by the selling stockholders of an aggregate of 27,979 shares issuable
upon exercise of outstanding warrants and up to 280,822 additional shares which
may be issuable upon repricing rights granted to certain of the selling
shareholdersstockholders in connection with Frontline's March 1999, July 1999 and October
1999 private placements. All of the shares of common stock covered by this
prospectus are being offered for resale by the selling shareholdersstockholders pursuant to
this prospectus.
The common stock may be offered from time to time by the selling
shareholdersstockholders through ordinary brokerage transactions in the over-the-counter
markets, in negotiated transactions or otherwise, at market prices prevailing at
the time of sale or at negotiated prices and in other ways as described in the
"Plan of Distribution." Frontline Communications Corporation will not receive
any of the proceeds from the sale of common stock by the selling stockholders.
The common stock is traded on the Nasdaq SmallCap Market under the symbol
"FCCN". On October 18,November 23, 1999, the closing sale price of the common stock as
reported by Nasdaq was $4.25.
----------------$5.9375.
An investment in the common stock is speculative and involves a high degree
of risk. See "Risk Factors" beginning on Page 5.
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is _____,November 24, 1999.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by Frontline Communications
Corporation with the Securities and Exchange Commission are incorporated herein
by reference and shall be deemed a part of this prospectus:
(1) Annual Report on Form 10-KSB for the fiscal year ended December 31,
1998;
(2) Quarterly Report on Form 10-QSB for the quarter ended March 31, 1999;
(3) Quarterly Report on Form 10-QSB for the quarter ended June 30, 1999;
(4) Quarterly Report on Form 10-QSB for the quarter ended September 30,
1999;
(5) Current Report on Form 8-K/A dated December 24, 1998;
(5)(6) Current Report on Form 8-K/A dated January 6, 1999;
(6)(7) Current Report on Form 8-K/A dated March 2, 1999; and
(7)(8) The description of our common stock contained in our Registration
Statement on Form 8-A declared effective May 5, 1998, together with
any amendment or report filed with the SEC for the purpose of updating
the description.
All documents we file pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, after the date of this prospectus and before
the termination of the offering of the securities hereby shall be deemed to be
incorporated by reference in this prospectus and to be a part of this prospectus
on the date of filing of the documents. Any statement incorporated in this
prospectus shall be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this prospectus or in any
other subsequently filed document which also is, or is deemed to be,
incorporated by reference in this prospectus modifies or supersedes the
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this prospectus or the
registration statement of which it is a part.
This prospectus incorporates documents by reference with respect to
Frontline Communications Corporation that are not presented herein or delivered
herewith. These documents are available without charge to any person, including
any beneficial owner of our securities, to whom this prospectus is delivered,
upon written or oral request to Amy Wagner-Mele, Esq., Frontline Communications
Corporation, One Blue Hill Plaza, 6th7th Floor, Pearl River, New York 10965,
telephone: (914) 623-8553.
Frontline Communications Corporation is subject to the informational
requirements of the Exchange Act. We file reports, proxy statements and other
information with the SEC. These reports and other information can be read and
copied at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549. You may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. Our electronic filings made through
the SEC's electronic data gathering, analysis and retrieval system are publicly
available through the SEC's worldwide web site (http://www.sec.gov).
-2-2
PROSPECTUS SUMMARY
This summary highlights certain information contained elsewhere in this
prospectus. You should read the entire prospectus carefully, including our
financial statements and related notes, and especially the risks described under
"Risk Factors."
The Company
Our Business
We are an Internet service provider offering Internet access to individual
and small business subscribers located in our target markets in the Northeast
United States. We provide subscribers with direct access to a wide range of
Internet applications and resources, including electronic mail, web site hosting
and design, dedicated circuits, e-commerce solutions, access to world wide web
sites and regional and local information and data services. We have recently
shifted our focus to marketing our services aggressively to small businesses.
Since our initial public offering in May 1998, we have increased our
subscribercustomer base from approximately 1,400 subscribers1,500 customers to approximately 14,00015,000
customers as of October 15,September 30, 1999. Our growth has been achieved primarily
through acquisitions of the customer bases of other Internet service providers.
We are now focusing our marketing efforts primarily on small business
subscribers.
We also acquired WOWFactor, Inc., which provides e-commerce information and
services to women. Approximately 1.2 million women business owners are currently
listed in WOWFactor's on-line directory. The WOWFactor web site, development of
which is ongoing, is expected to provide comprehensive e-commerce solutions,
advanced business searches, on-line requests for proposals and personal search
services for women-owned businesses.
Our wholly owned subsidiary, CLEC Communications Corp., was granted
competitive local exchange carrier status by the New York State Public Service
Commission in December 1998. Our subsidiary will have the ability to subscribe
to and resell all forms of local telephone service in New York. Before our
subsidiary canOn October 22,
1999, we entered into an Interconnection Agreement with Bell Atlantic - New York
to provide such services, it must enter into an interconnection
agreement with a local exchange carrier.services. We also have CLEC applications pending in New Jersey
and Pennsylvania.
We will seek to build our own network infrastructure, which we believe will
reduce our reliance on incumbent local exchange carriers. We believe that our
subsidiary's competitive local exchange carrier status, combined with the
efficiencies inherent in operating our own telecommunications network, should
benefit our customers by reducing costs and providing more predictable Internet
connections.
Our principal executive offices are located at One Blue Hill Plaza, Pearl
River, New York 10965, and our telephone number is (914) 623-8553. Our Internet
web site is located at www.fcc.net.www.frontline.net. WOWFactor's web site is located at
www.wowfactor.com.
-3-3
The Offering
Common stock offered...............offered .................... 513,964 shares, of which 27,979 are
issuable upon exercise of warrants
owned by the selling stockholders
and 280,822 are issuable upon
exercise of certain repricing
rights given to the selling
shareholders.stockholders.
Common stock outstanding .......................... 3,915,762 shares.
Use of Proceeds....................Proceeds ......................... Assuming that all of the warrants
held by the selling stockholders
are exercised, we will realize
gross proceeds of approximately
$225,082 which will be used for
working capital and potential
acquisitions. We will not receive
any of the proceeds from the sale
of common stock by the selling
stockholders.
Nasdaq SmallCap Market symbol......symbol ........... FCCN
Risk Factors.......................Factors ............................ You should read the "Risk Factors"
section beginning on page 5 and the
other cautionary statements in this
prospectus to ensure that you
understand the risks associated
with an investment in our common
stock.
Cautionary Note Regarding Forward-Looking Statements
This prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. We intend
the forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements in these sections. All statements regarding our
expected financial position and operating results, our business strategy and our
plans are forward-looking statements. These statements can sometimes be
identified by our use of words such as "may," "anticipate," "expect," "intend,"
"believe," "estimate" or similar expressions. Our expectations in any
forward-looking statements may not turn out to be correct. Our actual results
could be materially different from our expectations. Important factors that
could cause our actual results to be materially different from our expectations
include those discussed under "Risk Factors." We have no obligation to update
these statements to reflect events and circumstances after the date of this
prospectus.
-4-4
RISK FACTORS
The shares offered hereby involve a high degree of risk. Each prospective
investor should carefully consider the following risk factors before making an
investment decision.
We have a history of losses and anticipate that we will continue to incur losses
in the future.
Since our inception we have incurred significant losses. For the years
ended December 31, 1997 and 1998 and the sixnine months ended JuneSeptember 30, 1999
our net losses were $2,037,417, $1,744,099 and $2,883,883, respectively.$4,893,124. We had an accumulated
deficit of $6,727,530$8,736,771 and a working capital deficiency of $867,668 as of
JuneSeptember 30, 1999. We expect that our losses will continue as we incur
increased operating costs associated with expanding our subscriber base,
establishing additional points-of-presence and expanding our product offerings
to include e-commerce and web site design. We may not be able to achieve
profitability or, if achieved, maintain profitability for any extended period of time.
As an early stage company, we have a limited operating history upon which you
can make an investment decision.
We were organized in February 1997 and are in an early stage of
development. Accordingly, we have a limited operating history upon which you can
evaluate our performance and future prospects. In considering our prospects, you
should realize that, as a new business in a rapidly evolving industry, we may
encounter many expenses, delays, problems and difficulties which we lack the
experience to identify or quantify at this
time.
In order to become profitable, we will need to implement our business plan
successfully, including by attracting new subscribers to our Internet access
services and increasing the number and efficiency of our points-of-presence.
The success of our plan of operation depends upon our ability to attract
and retain significant numbers of subscribers, consolidate our
points-of-presence and establish and equip additional points-of-presence on a
timely and cost effective basis. At the same time, we will need to hire and
retain skilled management, technical, marketing and other personnel and expand
our product and service offerings. We have limited experience in commercializing
new Internet products and services. In addition, there is limited information
available concerning the potential performance or market acceptance of our
points-of-presence or other services. We may not be able to implement our
business plan successfully, and we may also encounter unanticipated expenses,
problems or technical difficulties which could materially delay the
implementation of our business plan.
We plan to change our marketing focus and to offer additional products and
services, both of which will place a significant strain on us.
Historically, we have marketed our Internet services to individual
subscribers and the majority of our revenues to date have been generated through
individual subscriptions. In electing to expand our target market, we have
decided to market our services aggressively to small businesses. We are also in
the process of increasing our product offerings. In addition to providing
Internet access services, we plan to offer small businesses e-commerce
solutions, including commerce-enabled Web sites, document securityweb site design and development services and -5-
Internet paymentweb
site presence services. We also intendAccordingly, we have a limited relevant operating
history which you can use in evaluating our performance and future prospects. As
a company with a relatively new focus in a rapidly evolving industry, we may
encounter many expenses, delays and problems which we lack the experience to
become a reseller of
telecommunications services in the near future.identify or quantify at this time.
The expansion of our target markets and product offerings will place
significant demands on the time and attention of our senior management and will
involve significant financial and other costs, including building necessary
network infrastructures, marketing and promoting our new products and services
and
5
hiring personnel to provide these new services. We may not be able to enter new
markets and offer new services successfully, and we may not be able to undertake
these activities while maintaining sufficient levels of customer service to
retain our existing subscribers. Any increase in subscriber attrition rate as a
result of our shift in business emphasis would have a material adverse effect on
us, our reputation and our operations.
We are pursuing a strategy of rapid growth through acquisitions, which may
strain our operations and which we may not be able to manage effectively.
We are pursuing aggressive and rapid growth through the acquisitions of
other Internet service providers and companies involved in related
Internet-based businesses such as web site design and e-commerce. Our rapid
growth has in the past placed, and may continue to place, a significant strain
on our business resources. Our growth strategy will create significant demands
on the time and attention of our senior management and will involve significant
financial and other costs, including identifying and investigating acquisition
candidates, negotiating acquisition agreements and integrating the acquired
businesses with our existing operations.
Future acquisitions and the hiring of necessary additional personnel will
result in higher capital expenditures and operating expenses for us. Employees
and customers of acquired businesses may terminate their relationships with
these businesses after we acquire them. We may not be able to successfully
consummate any attempted acquisitions or integrate any acquired businesses into
our operations.
Our ability to manage our planned future growth through acquisitions will
depend upon our success in:
o hiring and retaining qualified management, technical and marketing
personnel;
o effectively maintaining high levels of customer service required to
retain subscribers while undertaking expansion; and
o expanding our network infrastructure capacity to service a growing
subscriber base.
If we fail to achieve any of these factors, our business, financial
condition, results of operations and the market price of our securities could be
materially adversely affected.
We will require a significant amount of capital to carry out our business plan
and may need to seek additional financing soon.
Implementing our current business plan will require significant capital. In
the past, we have relied on the issuance of equity securities and borrowings to
finance our operations. Our available capital may not be sufficient to permit us
to implement our business plan, and our assumptions relating to our business
plan may prove to be flawed. If our business plan changes or if our assumptions
prove to be inaccurate, we may be forced either to seek additional financing
sooner than we currently anticipate or to curtail our expansion
-6-6
activities. Sources of financing may not be available to us on commercially
reasonable terms or at all, either of which could have a material adverse effect
on our business plan and proposed expansion.
We have no experience consolidating our points-of-presence and cannot predict
the effects of consolidation on our operations.
We currently operate eleven points-of-presence, which are located in New
York, New Jersey and Pennsylvania. In an attempt to reduce operating costs and
take advantage of economies of scale, we have decided to consolidate our
existing points-of-presence into three SuperPOPs which will be located in New
York, New Jersey and Pennsylvania and which will cover broader geographic areas.
The process of consolidating our points-of-presence will be lengthy and
will require network installations to complete. We may not be able to
consolidate our points-of-presence successfully. The consolidation process may
also encounter unforeseen delays and costs. Events such as failure to obtain and
install telephone lines and network equipment on a timely and cost-effective
basis could materially delay our consolidation plans. Even if we are able to
consolidate our points-of-presence, we may not realize savings in operating
expenses. We have limited operating experience and have limited financial and
other resources to rely on if our initial consolidation efforts fail.
The results achieved to date by our points-of-presence may not be
indicative of the prospects or market acceptance of three larger SuperPOPs
serving wider and more geographically dispersed areas. Our points-of-presence
are located in the Northeastern United States, making it difficult to predict
market reaction to our services outside of the Northeast. In addition, SuperPOPs
may not be able to provide the same service to subscribers as our existing
points-of-presence. Any disruption to our services and any problems encountered
by subscribers as a result of the consolidation could result in increased
subscriber attrition, damage our reputation and materially adversely affect our
operations and revenues.
We do not have contracts with the supplier that we rely on for our access to
telecommunications networks or with the manufacturers of our hardware
components.
We depend on one supplier to provide us with Internet access through leased
telecommunications lines, but we have not entered into an interconnect agreement
with this supplier. If this supplier increases the rates it charges us, it could
materially adversely affect our operating margins. If our relationship with this
supplier terminates or if we otherwise fail to obtain continuing access to
telecommunications networks on a cost-effective and continuous basis, we could
be required to significantly curtail or cease our operations. Our operations
require our points-of-presence and third-party telecommunications networks to
operate on a continuous basis. Any service interruptions or equipment failures
with our points-of-presence or third-party telecommunications networks would
diminish subscriber confidence and adversely affect our business operations and
reputation.
We also depend on third-party manufacturers of hardware components. We
acquire certain components that we use in providing networking services from
only one source, including high performance routers manufactured by Cisco
Systems, Inc. and remote access servers manufactured by U.S. Robotics, Inc. We
have not entered into agreements with any equipment manufacturer, and we
purchase equipment components pursuant to purchase orders placed from time to
time in the ordinary course of business. If these or other manufacturers fail to
deliver quality products to us on a timely basis, if we are not able to develop
alternative
-7-
manufacturing sources when we need them, or if we experience other delays in
receiving components, our business would be materially adversely affected, and
our ability to expand our operations would be limited.
The Internet services industry is relatively new and evolving, and any
significant changes in it may adversely affect us.
The Internet connectivity services industry is rapidly evolving, with
frequent introductions of new services and products, and it is characterized by
a high rate of business failures. We cannot predict the rate at which the market
for our products and services will grow, how quickly consumer tastes may change
or whether new products will result in market saturation. The novelty of the
market for Internet access services may adversely affect our ability to retain
new subscribers, some of whom may be unfamiliar with the Internet and may be
likely to discontinue our services after an initial trial period. Any
significant decline in demand for Internet connectivity services, in the
computer industry generally or in particular target markets, would have a
substantial adverse effect on our business and prospects.
Significant increases in subscriber attrition rates would adversely effect our
operating results.
Subscribers are permitted to discontinue our services without penalty for
any reason. From December 1997 through JuneSeptember 30, 1999 the number of
subscriberscustomers for our services increased from 1,4001,500 to approximately 15,000, which
may result in an increase in our subscriber attrition rate. A significant
increase in the subscriber attrition rate would have a material adverse effect
on our operating results.
Keeping pace with rapidly changing Internet technology may be time-consuming,
expensive or impossible for us.
The market for Internet access is characterized by rapidly changing
technology, evolving industry standards and frequent new software and service
introductions. Our business is also subject to fundamental changes in the way
Internet access services are delivered.
Currently, Internet services are accessed primarily by computers and are
delivered by telephone lines. If the Internet becomes widely accessible by
screen-based telephones, television or other consumer electronic devices, or if
customer requirements change the way Internet access is provided, we may have to
acquire or develop new technology or modify our existing technology to
accommodate these developments. Recent technological advances in Internet
services include data compression, full-motion video, and integration of video,
voice, data and graphics. Attempting to keep our services current with recent
technological advances may require substantial time and expense, and we may not
be able to adapt our Internet service business to alternate access devices and
conduits. We may not be able to identify new product and service opportunities
as they arise or develop or bring new products and services to market in a
timely manner. To the extent that high-speed Internet access is increasingly
delivered by large carriers and cable companies, our business could be
materially adversely effected.
7
We have limited experience in marketing our services and limited marketing and
customer support resources.
Our success depends to a significant degree on our ability to attract and
retain new subscribers and continually replace subscribers who terminate our
services and attract and retain new
subscribers.services. We have limited marketing experience and limited marketing, customer
support and other resources. Full-scale marketing of our services to individuals
-8-
and small businesses may require us to rely on third party distribution
channels, such as retail stores, catalogs, book publishers and computer hardware
and software vendors. We may not be able to develop or maintain relationships
with these parties. Our business plan will also require us to expand our
customer service and support capabilities in order to satisfy increasing
customer demands. We may not be able to successfully expand our customer service
or support capabilities, and our marketing efforts may not result in initial or
continued acceptance for our Internet access services.
We may not have the financial resources, technical expertise or marketing and
support capabilities to withstand intense competition in the Internet services
industry.
The market for Internet access services is intensely competitive, and we
expect that competition will intensify in the future. There are no substantial
barriers to entry, and this industry is characterized by rapidly increasing
numbers of new market entrants and new Internet products and services.
Our competitors for Internet access services include many large companies
that have significantly greater market presence and financial, technical,
marketing and other resources than we do, including international, national and
regional commercial Internet service providers; established online services
companies that currently offer Internet access; computer hardware and software
and other technology companies; national long distance carriers; and cable
operators. New competitors, including large computer hardware and software,
media, cable and telecommunications companies, have also increased their focus
on the Internet access market. We also compete with smaller Internet service
providers in the Northeastnortheast regional area of the U.S. that seek to provide
Internet access to individual and small business subscribers.
Our competition in the market for Internet professional services include
Internet service firms, technology integrators and strategic consulting firms.
In addition, as we enter the business of providing CLEC services, we will become
subject to competition from other CLECs and ILECs.
Increased competition has resulted and could continue to result in
significant price competition, which in turn could result in significant price
reductions. In addition, increased competition for new subscribers could result
in increased sales and marketing expenses and related subscriber acquisition
costs, which could materially adversely affect our operating results. We may not
be able to offset the effects of any such price reductions or increased expenses
through an increase in the number of our subscribers or higher revenue from
enhanced services. We may not have the financial resources, technical expertise
or marketing and support capabilities to compete successfully, and the software,
services or technologies developed by others may render our services or
technologies obsolete or less marketable.
Our operations require us to use significant resources in expanding and
protecting our network infrastructure and computer equipment.
8
Our operations depend upon the capacity, reliability and security of our
network infrastructure. We have limited network capacity and must continually
expand our network infrastructure to accommodate increasing numbers of users and
the range of information they may wish to access. Expanding our network
infrastructure will continue to demand significant financial, operational and
management resources, and we may not be able to expand our network
infrastructure to meet potential demand on a timely basis, at a commercially
reasonable cost, or at all.
The success of our operations also depends on our ability to protect our
computer equipment against damage from fire, power loss, telecommunications
failures and similar events. Our network infrastructure is vulnerable to
break-ins and similar disruptions from unauthorized tampering with our computer
systems. Computer viruses or problems caused by third parties could lead to
material interruptions, delays or interruptions in service to consumers.
-9-
We lack effective methods for protecting our proprietary information.
We have no registered copyrights or patents or patent applications pending.
We do not have any proprietary applications software. We rely on a combination
of copyright and trademark laws, trade secrets, software security measures,
license agreements and nondisclosure agreements to protect our proprietary
information. It may be possible for unauthorized third parties to copy aspects
of, or otherwise obtain and use, our proprietary information without
authorization. We employ confidentiality agreements with our employees and
license agreements with our customers, but these agreements may not provide
meaningful protection of our proprietary information in the event of any
unauthorized use or disclosure of such information.
ChangesThird parties could claim that we infringe upon their intellectual property.
Our products, services and brand names may be found to infringe valid
copyrights, trademarks or other intellectual property rights held by third
parties. Any claims of infringement, with or without merit, could be time
consuming to defend, result in regulationscostly litigation, divert management attention,
require us to enter into costly royalty or licensing arrangements, modify our
technologies or services or prevent us from using important technologies or
services, any of which could damage our business and legislationfinancial condition.
We may become subject to burdensome government regulation which could increase
our liability,costs of doing business and/or subject us to liability.
Uncertainty and new regulations relating to the dissemination of
information over the Internet could increase our expenses
and competition for our services.
Recently enacted federal, state and local legislation aimed at limitingcosts of doing business, slow
the usegrowth of the Internet or subject us to transmit certain contentliability, any of which could
adversely affect our business and materials could result in
significant potential liabilityprospects. There are currently few laws and
regulations directly governing access to Internet service providers for information
disseminated through their systems. The adoption or strict enforcement of these
or any other future laws or regulations could increase our cost of doing
business. The application of existing laws governing issues such as property
ownership, libelcommerce on the Internet. However,
the legal and personal privacyregulatory environment that pertains to the Internet is uncertain. Any new
legislation or regulation or the clarification of the application ofuncertain
and may change. New and existing laws may cover issues which include:
o user privacy;
9
o pricing controls;
o consumer protection;
o libel and regulations todefamation;
o copyright and trademark protection;
o characteristics and quality of services;
o sales and other taxes; and
o other claims based on the nature and control of Internet could have an adverse effect on our
business and prospects. Changesmaterials.
In addition, changes in the regulatory environment relating to the Internet
connectivityaccess industry, including regulatory changes which directly or
indirectly affect telecommunication
costs, could increase the likelihood or scope of competition from local and
regional telephone companies or others.
Computer viruses or software errors may disrupt operations, subject us to a risk
of loss or expose us to liability.
Computer viruses may cause our systems to incur delays or other service
interruptions. In addition, the inadvertent transmission of computer viruses or
software errors in new services or products not detected until after their
release could expose us to a material risk of loss or litigation and possible
liability. Moreover, if a computer virus affecting our systems is highly
publicized, our reputation could be materially damaged and we could lose
revenues.
We may experience reduced revenue, loss of clients and harm to our reputation in
the event of unexpected network interruptions caused by system failures.
Our servers and software must accommodate a high volume of traffic. We have
experienced minor system interruptions in the past and we believe that system
interruptions may occur from time to time in the future. Any substantial
increase in demands on our services will require us to spend capital and
resources to expand and adapt our network infrastructure. If we are unable to
add additional software and hardware to accommodate increased demand, we could
experience unanticipated system disruptions and slower response times. Our
business interruption insurance may not adequately compensate us for any losses
that may occur due to any failures in our system or interruptions in our
services.
Our acquisitions have resulted in a large amount of intangible assets on our
balance sheet.
Our acquisitions have resulted in our recording intangible assets of
approximately $3,596,347 at September 30, 1999 which are being amortized over a
period of three years. This will result in additional loss in each of the next
three years.
If we are unable to attract and retain qualified management and other personnel,
our business and operations could suffer.
Our success depends on the personal efforts of our key personnel. The loss
of the services of these individuals could have a material adverse effect on our
business and prospects.
10
Our success also depends on our ability to hire and retain additional
qualified management, marketing, technical, financial and other personnel.
Competition for qualified personnel is intense, and we may not be able to hire
or retain additional qualified personnel.
We are effectively controlled by members of our management, whose interests may
not be aligned with yours.
Members of our management beneficially own a significant number of shares
of our common stock. Accordingly, such persons, acting together, are in a
position to control us, elect all of our directors, cause an increase in the
authorized capital or the dissolution, merger or sale of our assets, and
generally direct our affairs.
The market price of our common stock may be highly volatile.
The market price of our common stock may be highly volatile, as has
recently been the case with the securities of other companies, particularly
internetInternet companies. Factors such as our operating results, announcements by us
or our competitors, introduction of new products or technologies by us or our
-10-
competitors and various factors affecting the securities industry generally may
have a significant impact on the market price of our common stock. Additionally,
in recent years the stock market has experienced a high level of price and
volume volatility, and market prices for the securities of many companies have
experienced wide price fluctuations which have not necessarily been related to
the operating performance of such companies.
We are subject to a recently commenced legal action.
In September 1999, the former principal stockholder of WOWFactor, Inc., who
also formerly served as our Vice President of Sales and Marketing, commenced
litigation against us in the United States District Court for the Southern
District of New York, seeking damages in the amount of $200,000 as well as
delivery of certain options and common stock certificates allegedly owed to her
by us pursuant to the terms of her Employment Agreementemployment agreement and the Stock Purchase
Agreementstock purchase
agreement relating to the purchase of WOWFactor, Inc. The shares that are the
subject of the stock certificate are shares of our common stock allegedly due to
her upon converisonconversion of shares of series A convertible preferred stock described
elsewhere in this Prospectus. We are currently consideringIn November 1999, we filed an answer to the
complaint in which we denied the plaintiff's claim
forallegations. We also filed a
counterclaim and third party complaint against all of WOWFactor's original
stockholders in which we seek reformation of the shares.stock purchase agreement and
the return of an unspecified portion of the consideration given in that
transaction. This litigation is in its early stages and we do not believe that
it will have a material impact on our operations.
We could be delisted from the Nasdaq SmallCap Market.
If, at any time, we become unable to maintain the requirements for
continued listing on Nasdaq, our common stock will no longer be traded on Nasdaq
and trading in our common stock would thereafter be conducted in the non-Nasdaq
over-the-counter market. If the common stock were not listed on Nasdaq and the
trading price of the common stock were to fall below $5.00 per share, trading in
the common stock would become subject to the Securities and Exchange
Commission's penny stock rules. The penny stock
11
rules require additional disclosure by broker-dealers in connection with any
trades involving penny stock. The additional burdens imposed upon broker-dealers
by such requirements could, if the common stock were deemed to be a penny stock,
discourage broker-dealers from effecting transactions in the common stock, which
could severely limit the market liquidity of the common stock and the ability of
purchasers of the common stock to sell the common stock in the secondary market.
The significant number of outstanding options and warrants could depress the
market price of our common shares and could interfere with our ability to raise
capital.
As of the date of this prospectus, there are outstanding options and
warrants to purchase an aggregate of approximately 3,474,7093,399,709 shares of our
common stock at exercise prices ranging from $2.00 to $13.85 per share. To the
extent that the outstanding options and warrants are exercised, dilution to the
percentage of ownership of our shareholdersstockholders will occur and anyoccur. Any sales in the public
market of the common shares underlying such options and warrants may adversely affect
prevailing market prices for our common shares.stock. Moreover, the terms upon which we
will be able to obtain additional equity capital may be adversely affected since
the holders of outstanding options and warrants can be expected to exercise them
at a time when we would, in all likelihood, be able to obtain any needed capital
on terms more favorable to us than those provided in the outstanding options and
warrants.
Certain of our suppliers may experience problems with the Year 2000.
We depend on third party telecommunications and hardware suppliers and upon
our access to and the uninterrupted operation of the Internet. Service
interruptions or supplier delays may result from year 2000 issues. Our business
would be materially adversely effected if there are any interruptions in service
resulting from an inability of such third-party systems to recognize the year
2000. -11-Our business would also be adversely affected if Year 2000 problems are
discovered in internal computer systems material to our operations. We have
employed redundant connections to diverse providers at our core locations to
minimize any service disruptions in the event of an outage. However, we are
currently unable to estimate the magnitude of the impact that material Year 2000
problems in our internal computer systems would have on us.
12
USE OF PROCEEDS
Assuming that all of the warrants held by selling stockholders are
exercised, we will realize proceeds of approximately $225,082. We have agreed to
pay certain expenses in connection with this offering, currently expected to be
approximately $35,000. Proceeds will be used for working capital and potential
acquisitions. We will not receive any of the proceeds from the sale of common
stock by the selling stockholders.
DESCRIPTION OF CAPITAL STOCK
General
We are authorized to issue 25,000,000 shares of common stock, par value
$.01 per share, and 1,000,000 shares of preferred stock, par value $.01 per
share. We are currently seeking stockholder approval to authorize us to issue an
additional 1,000,000 shares of preferred stock. As of the date of this
prospectus, there are 3,915,762 shares of common stock outstanding and ten
shares of preferred stock outstanding designated as series A convertible
preferred stock.
Common Stock
The holders of our common stock are entitled to one vote for each share
held of record on all matters to be voted on by stockholders. There is no
cumulative voting with respect to the election of directors, with the result
that the holders of more than 50% of the shares voting for the election of
directors can elect all of the directors then up for election. The holders of
common stock are entitled to receive dividends when, as and if declared by the
Board of Directors out of funds legally available therefor. In the event of
liquidation, dissolution or winding up of our company, the holders of common
stock are entitled to share in all assets remaining which are available for
distribution to them after payment of liabilities and after provision has been
made for each class of stock, if any, having preference over the common stock.
Holders of shares of common stock have no conversion, preemptive or other
subscription rights, and there are no redemption provisions applicable to the
common stock. All of the outstanding shares of common stock are, and the shares
of common stock issuable upon exercise of warrants held by selling stockholders
will be, fully paid and nonassessable.
Preferred Stock
We are authorized to issue 1,000,000 shares of preferred stock from time to
time in one or more series, in all cases ranking senior to the common stock with
respect to payment of dividends and in the event of the liquidation, dissolution
or winding-up of our company. There are currently ten shares of preferred stock
outstanding, designated as series A convertible preferred stock. The Board has
the power, without stockholder approval, to issue shares of one or more series
of preferred stock, at any time, for such consideration and with such relative
rights, privileges, preferences and other terms as the Board may determine,
including terms relating to dividend rates, redemption rates, liquidation
preferences and voting, sinking fund and conversion or other rights. The rights
and terms relating to any new series of preferred stock could adversely affect
the voting power or other rights of the holders of the common stock or could be
13
utilized, under certain circumstances, as a method of discouraging, delaying or
preventing a change in control of our company.
Series A Convertible Preferred Stock
The shares of series A convertible preferred stock are currently
convertible as of
July 15, 1999 into 98,218 shares of common stock having a market value of $1,000,000 on
the date of conversion, up to a maximum of 250,000 shares.stock. The convertibility of the shares
of series A convertible preferred stock is currently the subject of a dispute
between the Company and the holder thereof.holder. See "Risk Factors".
-12-
Public Warrants
There are currently outstanding public warrants to purchase 1,831,300
shares of our common stock at a price of $4.80 per share at any time until May
13, 2003.
We may redeem the public warrants at any time commencing June 13, 1999,
upon notice of not less than 30 days, at a price of $.10 per public warrant,
provided that the closing bid quotation of our common stock on all 20 trading
days ending on the third day prior to the day on which we give notice has been
at least $7.20 and we obtain written approval of the assignee of the underwriter
of our initial public offering to such redemption. The public warrant holders
shall have the right to exercise their public warrants until the close of
business on the date fixed for redemption.
The public warrants may be exercised upon surrender of the public warrant
certificate during the exercise period at the offices of the warrant agent, with
the exercise form on the reverse side of the public warrant certificate
completed and executed as indicated, accompanied by full payment of the exercise
price to the warrant agent for the number of public warrants being exercised.
The public warrant holders do not have the rights or privileges of holders of
common stock.
No public warrant will be exercisable unless at the time of exercise we
have filed a current registration statement with the Securities and Exchange
Commission covering the shares of common stock issuable upon exercise of such
public warrant and such shares have been registered or qualified or deemed to be
exempt from registration or qualification under state securities laws. We will
use our best efforts to have all such shares so registered or qualified on or
before the exercise date and to maintain a current prospectus relating thereto
until the expiration of the public warrants.
Underwriter's Warrants
We issued to the underwriter of our initial public offering and its
designees warrants to purchase 160,000 shares of Common Stock at an exercise
price of $6.60 per share and 160,000 warrants (each to purchase one share of
common stock at $7.92 per share) at an exercise price of $.165 per warrant. The
underwriter's warrants are exercisable at any time and from time to time, in
whole or in part, during the five-year period ending on May 13, 2003.
14
Private Placement Warrants
In December 1997, we issued warrants to purchase 300,000 shares of common
stock in a private transaction. Each such warrant entitles the holder to
purchase one share of common stock at a price of $5.00 per share subject to
adjustment in certain circumstances.
-13-
Repricing and Anti-Dilution Rights
In March 1999, July 1999 and October 1999, we issued 158,856 shares, 99,900
shares and 105,263 shares of common stock, respectively, and five-year warrants
to purchase an additional 21,662 shares of common stock at $13.85 per share,
13,625 shares of common stock at $11.01 per share, and 14,354 shares of common
stock at $5.23 per share, respectively, in private placements for consideration
of $2,000,000, $1,000,000 and $500,000, respectively. Each purchaser also
received one repricing right per share to receive additional shares of common
stock if the market price of our common stock falls to certain price levels. To
date, the purchasers exercised repricing rights relating to the March 1999
financing that resulted in our issuing an additional 173,808 shares of Common
Stock. We may be required to issue up to an additional 88,964 shares, 111,475
shares and 80,383 shares of common stock to satisfy the repricing rights issued
in March 1999, July 1999 and October 1999 described above. Repricing rights may
only be exercised on the date of the sale by the purchaser of shares of common
stock.
Transfer Agent and Warrant Agent
The transfer agent and registrar for our common stock and warrant agent for
the public warrants is American Securities Transfer & Trust, Inc., Lakewood,
Colorado.
-14-
SELLING STOCKHOLDERS
The following table sets forth certain information as of October 25, 1999,the date of this
Prospectus relating to the selling stockholders. None of the selling
stockholders has ever held any position or office with us or had any material
relationship with us.
Shares Beneficially Owned Shares Beneficially Owned
Prior to Offering Owned After Offering
------------------------- ------------------------------------- --------------
Shares
Being
Name of Beneficial Owner Number Percent Offered Number Percent
- -------------------------------------- ---------- ----------- ------------ -------- --------------------------------- ------ ------- ------- ------ -------
Canadian Advantage Limited Partnership 201,867 5.1% 113,774 88,093 2.2%
Aberdeen Avenue LLC 201,865 5.1% 113,772 88,093 2.2%
Merchant Bancorp of America 9,928 * 5,596 4,332 *
- ----------------------
* Less than one percent.
15
The number of shares beneficially owned and being offered by the entities
in the above table gives effect to (i) the Company's sale in July 1999 of 49,950
shares of common stock and warrants to purchase 5,450 additional shares of
common stock to each of Canadian Advantage Limited Partnership and Aberdeen
Avenue LLC in exchange for payments of $500,000 each, (ii) the Company's sale in
October 1999 of 52,632 shares of common stock and warrants to purchase 5,7415,742
additional shares of common stock to Canadian Advantage Limited Partnership, and
52,631 shares of common stock and warrants to purchase 5,7425,741 additional shares
of common stock to Aberdeen Avenue LLC, in exchange for payments of $250,000
each and (iii) the Company's issuance of warrants to purchase 2,725 shares of
common stock in July 1999, and warrants to purchase 2,871 shares of common stock
in October 1999, to Merchant Bancorp of America. This table does not give effect
to any shares of Common Stock that may be issuable upon exercise of certain
repricing rights granted to these the entities set forth in items (i) and (ii) and
which are offered hereby.
PLAN OF DISTRIBUTION
Sales of the shares may be made from time to time by the selling
stockholders. Such sales may be made on the Nasdaq SmallCap Market, in another
over-the-counter market, on a national securities exchange, any of which may
involve crosses and block transactions, in privately negotiated transactions or
otherwise or in a combination of such transactions at prices and at terms then
prevailing or at prices related to the then current market price, or at
privately negotiated prices. In addition, any shares covered by this prospectus
which qualify for sale pursuant to Section 4(1) of the Securities Act of 1933 or
Rule 144 promulgated thereunder may be sold under such provisions rather than
pursuant to this prospectus. Without limiting the generality of the foregoing,
the shares may be sold in one or more of the following types of transactions:
o a block trade in which the broker-dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this prospectus;
o an exchange distribution in accordance with the rules of such
exchange;
-15-
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o face-to-face transactions between sellers and purchasers without a
broker-dealer. In effecting sales, brokers or dealers engaged by the
selling stockholders may arrange for other brokers or dealers to
participate in the resale.
Brokers or dealers may receive compensation in the form of commissions,
discounts or concessions from selling stockholders in amounts to be negotiated
in connection with the sale. Such brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933 in connection
with such sales and any such commission, discount or concession may be deemed to
be underwriting discounts or commissions under
16
the Securities Act of 1933. Compensation to be received by broker-dealers
retained by the selling stockholders in excess of usual and customary
commissions, will, to the extent required, be set forth in a supplement to this
prospectus. Any dealer or broker participating in any distribution of the shares
may be required to deliver a copy of this prospectus, including a supplement, to
any person who purchases any of the shares from or through such dealer or
broker.
During such time as they may be engaged in a distribution of the shares the
selling stockholders are required to comply with Regulation M promulgated under
the Securities Exchange Act of 1934. With certain exceptions, Regulation M
precludes any selling stockholder, any affiliated purchasers and any
broker-dealer or other person who participates in such distribution from bidding
for or purchasing, or attempting to induce any person to bid for or purchase any
security which is the subject of the distribution until the entire distribution
is complete. Regulation M also prohibits any bids or purchases made in order to
stabilize the price of a security in connection with the distribution of that
security. All of the foregoing may affect the marketability of the common stock.
It is possible that a significant number of shares may be sold and,
accordingly, such sales or the possibility thereof may have a depressive effect
on the market price of our common stock.
LEGAL MATTERS
Tenzer Greenblatt LLP, New York, New York, will pass upon the validity of
the common stock.
EXPERTS
Our financial statements as of December 31, 1998 and for the two years then
ended incorporated by reference in this prospectus have been included in
reliance upon the report of BDO Seidman, LLP, independent accountants, given
upon the authority of that firm as experts in accounting and auditing.
The financial statements of WOWfactor, Inc. as of December 31, 1997 and for
the two years then ended incorporated by reference in this prospectus have been
included in reliance upon the report of BDO Seidman, LLP, independent
accountants, given upon the authority of that firm as experts in accounting and
auditing.
The financial statements of Roxy Systems, Inc. d/b/a Magic Carpet as of
December 31, 1997 and for the one year then ended incorporated by reference in
this prospectus have been included in reliance upon the report of BDO Seidman,
LLP, independent accountants, given upon the authority of that firm as experts
in accounting and auditing.
-16-
The financial statements of US Online, Inc. as of December 31, 1996 and
1997 and for the two years then ended incorporated by reference in this
prospectus have been included in reliance upon the reports of Joseph J. Repko,
CPA given upon his authority as expert in accounting and auditing.
The financial statements of Webspan, Inc. as of December 31, 1996 and 1997
and for the two years then ended incorporated by reference in this prospectus
have been included in reliance upon the reports of Steven H. Mermelstein, CPA,
given upon his authority as expert in accounting and auditing.
17
WHERE YOU CAN FIND ADDITIONAL INFORMATION
Frontline Communications Corporation has filed with the SEC, a Registration
Statement with respect to the securities offered by this prospectus. This
prospectus, filed as part of such Registration Statement, does not contain all
of the information set forth in, or annexed as exhibits to, the Registration
Statement, portions of which have been omitted in accordance with the rules and
regulations of the SEC. For further information with respect to Frontline
Communications Corporation and this offering, reference is made to the
Registration Statement, including exhibits filed therewith, which may be read
and copied at the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at its regional offices: 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511 and 7 World Trade Center, 13th Floor,
New York, New York 10048. You can obtain copies of these materials at prescribed
rates from the Public Reference Room of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. Our electronic
filings made through the SEC's electronic data gathering, analysis and retrieval
system are publicly available through the SEC's worldwide web site
(http://www.sec.gov).
-17-18
================================================================================
We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You must not
rely on any unauthorized information or representations. This prospectus does
not offer to sell or buy any shares in any jurisdiction where it is unlawful.
The information in this prospectus is current only as of its date.
---------------------------------------------
TABLE OF CONTENTS
Page
Incorporation of Certain Documents by Reference ................................................... 2
Prospectus Summary.........................................................Summary...................................................... 3
Risk Factors...............................................................Factors............................................................ 5
Use of Proceeds............................................................Proceeds......................................................... 13
Description of Capital Stock...............................................Stock........................................... 13
Selling Stockholders.......................................................Stockholders.................................................... 15
Plan of Distribution.......................................................Distribution.................................................... 16
Legal Matters..............................................................
Experts....................................................................Matters........................................................... 17
Experts................................................................. 17
Where You Can Find Information.............................................Additional Information............................... 18
----------------------------
================================================================================
================================================================================
513,964513, 964 Shares
FRONTLINE COMMUNICATIONS CORPORATION
Common Stock
-------------
PROSPECTUS
-------------
_________________________,November 23, 1999
================================================================================
19
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
SEC registration ......................................... $ 636.76
Printing and engraving costs ............................. 2,000.00
Legal fees and expenses .................................. 15,000.00
Accounting fees and expenses ............................. 15,000.00
Miscellaneous ............................................ $ 2,363.24
----------
Total ............................................ $35,000.00
==========
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law (the "DGCL") contains
the provisions entitling the Registrant's directors and officers to
indemnification from judgments, fines, amounts paid in settlement, and
reasonable expenses (including attorney's fees) as the result of an action or
proceeding in which they may be involved by reason of having been a director or
officer of the Registrant. In its Certificate of Incorporation, the Registrant
has included a provision that limits, to the fullest extent now or hereafter
permitted by the DGCL, the personal liability of its directors to the Registrant
or its stockholders for monetary damages arising from a breach of their
fiduciary duties as directors. Under the DGCL as currently in effect, this
provision limits a director's liability except where such director (i) breaches
his duty of loyalty to the Registrant or its stockholders, (ii) fails to act in
good faith or engages in intentional misconduct or a knowing violation of law,
(iii) authorizes payment of an unlawful dividend or stock purchase or redemption
as provided in Section 174 of the DGCL, or (iv) obtains an improper personal
benefit. This provision does not prevent the Registrant or its stockholders from
seeking equitable remedies, such as injunctive relief or rescission. If
equitable remedies are found not to be available to stockholders in any
particular case, stockholders may not have any effective remedy against actions
taken by directors that constitute negligence or gross negligence.
The Certificate of Incorporation also includes provisions to the effect
that (subject to certain exceptions) the Registrant shall, to the maximum extent
permitted from time to time under the law of the State of Delaware, indemnify,
and upon request shall advance expenses to, any director or officer to the
extent that such indemnification and advancement of expenses is permitted under
such law, as may from time to time be in effect. In addition, the By-Laws
require the Registrant to indemnify, to the full extent permitted by law, any
director, officer, employee or agent of the Registrant for acts which such
person reasonably believes are not in violation of the Registrant's corporate
purposes as set forth in the Certificate of Incorporation. At present, the DGCL
provides that, in order to be entitled to indemnification, an individual must
have acted in good faith and in a manner he or she reasonably believed to be in
or not opposed to the Registrant's best interests.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to any charter provision, by-law, contract, arrangement,
statute or otherwise, the Registrant has been advised that in the opinion of the
Securities and II-1
Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable.
Item 16. Exhibits
5 Opinion of Tenzer Greenblatt LLP*LLP
23.1 ConsentsConsent of BDO Seidman, LLP
23.2 Consent of Joseph J. Repko, CPA
23.3 Consent of Steven H. Mermelstein, CPA
23.4 Consent of Tenzer Greenblatt LLP (included in Exhibit 5)
24 Power of Attorney (included in the signature page of this registration
statement).
* To be filed by Amendment.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act; and
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 and Section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2) That, for purposes of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
II-2
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(5) That, insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, in the City of Pearl
River, State of New York, on October 26,November 22, 1999.
FRONTLINE COMMUNICATIONS CORPORATION
By: /s/ STEPHENStephen J. COLE-HATCHARD
-------------------------------------------------Cole-Hatchard
--------------------------------
Stephen J. Cole-Hatchard,
Chief Executive Officer
Each person whose signature appears below on this Registration Statement
hereby constitutes and appoints Stephen J. Cole-Hatchard, as his true and lawful
attorney-in-fact and agent, with full power of substitution for him and in his
name, place and stead, in any and all capacities (until revoked in writing) to
sign any and all amendments (including post-effective amendments and amendments
thereto) to this Registration Statement on Form S-3 of Frontline Communications
Corporation and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
- --------- ----- ----
/s/ Stephen J. Cole-Hatchard Chief Executive Officer, President and October 26,November 22, 1999
- ---------------------------------------------------- Director (Principal Executive Officer)
Stephen J. Cole-Hatchard
/s/ Nicko Feinberg Chief Information Officer, Executive Vice October 26,November 22, 1999
- ---------------------------------------------------- President of Technology and Director
Nicko Feinberg
/s/ Michael Olbermann Chief Operating Officer, Executive Vice October 26,November 22, 1999
- ---------------------------------------------------- President and Director
Michael Olbermann
/s/ Vasan Thatham Chief Financial Officer and Executive Vice October 26,November 22, 1999
- ---------------------------------------------------- President (Principal Accounting Officer)
Vasan Thatham
/s/ Ronald Signore Director October 26,November __, 1999
- ----------------------------------------------------
Ronald Signore
/s/ Ronald Shapss Director October 27,November 22, 1999
- ----------------------------------------------------
Ronald Shapss
II-4