AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 24, 2002.
REGISTRATION NO. 333-86100
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CELLPOINT INC.
(Exact name of registrant as specified in its charter)
NEVADA 3000 HILLSWOOD DRIVE 52-2032380
(State or other jurisdiction of HILLSWOOD BUSINESS PARK (I.R.S. Employer
incorporation or organization) CHERTSEY, SURREY, KT16 0RS ENGLAND Identification No.)
+44 1932 895 310
(Address of principal executive offices)
3000 HILLSWOOD DRIVE
HILLSWOOD BUSINESS PARK
CHERTSEY, SURREY, KT16 0RS ENGLAND
+44 1932 895 310
ATTENTION: LYNN DUPLESSIS
(Name and address of agent for service)
With a copy to:
MICHAEL PAIGE, ESQ.
JACKSON & Campbell, P.C.
1120 20th Street, N.W., South Tower
Washington, D.C. 20036
(202) 457-1600 Facsimilie: (202) 457-1678
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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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
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.9
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CALCULATION OF REGISTRATION FEE
TITLE OF SECURITIES TO BE REGISTERED AMOUNT TO PRICE PER SHARE(2) AGGREGATE PRICE AMOUNT OF
BE REGISTERED (1) REGISTRATION FEE
Common Stock, par value $0.001 848,939 (3) $.55 $466,916.45 $ 42.96
per share
Common Stock, par value $0.001 424,472 (4) $.55 $233,459.60 $ 21.48
per share
Common Stock, par value 50,937(5) $.55 $ 28,015.35 $ 2.57
$0.001 per share
TOTAL 1,324,348 $.55 $728,391.40 $67.01(6)
(1) An indeterminate number of additional shares of common stock are
registered hereunder in accordance with Rule 416 under the Securities
Act that may be issued as provided in the warrants in the event that
the provisions against dilution in such warrants become operative.
(2) Estimated solely for the purposes of calculating the registration fee,
pursuant to Rule 457(c), based on the closing price of the Registrant's
Common Stock as reported on the NASDAQ National Market on April 4,
2002, of $.55.
(3) Shares registered hereunder were issued by the Registrant in an
offering made pursuant to Regulation D under the Securities Act.
(4) Shares registered hereunder will become issuable upon the exercise of
warrants issued by the Registrant in an offering made pursuant to
Regulation D under the Securities Act. The warrants have an exercise
price of $1.50 per share.
(5) Shares registered hereunder will become issuable upon the exercise of
warrants issued by the Registrant in an offering made pursuant to
Regulation D under the Securities Act. The Warrants have an exercise
price of $.98.
(6) The Registrant has previously paid a registration fee of $64.44 with
the initial filing of this Registration Statement.
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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 that 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.
CELLPOINT INC.
CROSS REFERENCE SHEET
Item Number of Caption Location or Heading in Prospectus
---------------------- ---------------------------------
1. Forepart of the Registration Statement and Outside Front Forepart of the Registration Statement and Outside Front
Cover Page of Prospectus Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of Prospectus Inside Front and Outside Back Cover Pages of Prospectus
3. Summary Information, Risk Factors and Ratio of Earnings to Summary Information, Risk Factors
Fixed Charges
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price *
6. Dilution *
7. Selling Security Holders Selling Stockholders
8. Plan of Distribution Plan of Distribution
9. Description of Securities Being Registered Description of Securities
10. Interest of Named Experts and Counsel *
11. Material Changes Summary Information, Business, Pending Legal Proceeding
12. Incorporation of Certain Information by Reference Incorporation of Information We File with the SEC
13. Disclosure of Commission Position on Indemnification for Indemnification
Securities Act Liabilities
14. Other Expenses of Issuance and Distribution Other Expenses of Issuance and Distribution
15. Indemnification of Directors and Officers Indemnification of Directors and Officers
16. Exhibits Exhibits
17. Undertakings Undertakings
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* Omitted from Prospectus because item is inapplicable or answer is in the
negative.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE
SECURITIES MAY NOT BE SOLD 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 MAY 24, 2002
CELLPOINT INC.
1,324,348 SHARES OF COMMON STOCK
This Prospectus is being used by certain stockholders (the "Selling
Stockholders") of CellPoint Inc. to sell an aggregate of up to 1,324,348 shares
(the "Shares") of our Common Stock, par value $.001 per share ("Common Stock").
The Selling Stockholders will sell the Common Stock, from time to time, at
prices then attainable, less ordinary brokers' commissions and dealers'
discounts, as applicable. The Shares were offered and sold to the Selling
Stockholders pursuant to private offerings in which the Shares were not
registered with the Securities and Exchange Commission. The Shares are being
offered solely for the account of the Selling Stockholders. For more information
about the Selling Stockholders, please refer to the sections entitled "Summary
Information" and "The Selling Stockholders".
Our Common Stock trades on the NASDAQ National Market ("NASDAQ") under
the symbol CLPT. On May 20, 2002, the last reported sale price per share of
Common Stock was $.20.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS THAT ARE DESCRIBED IN THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 9 OF THIS PROSPECTUS.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is _________, 2002.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING OR SOLICITATION WITH RESPECT TO
THESE SECURITIES BY THE COMPANY TO ANY PERSON WHO MAY BE CONSIDERED TO BE AN
UNDERWRITER OR TO ANY PERSON IN ANY STATE IN WHICH SAID OFFERING OR SOLICITATION
IS NOT AUTHORIZED BY THE LAWS THEREOF OR IN WHICH THE PERSON MAKING SAID
OFFERING OR SOLICITATION IS NOT QUALIFIED TO ACT AS DEALER OR BROKER OR
OTHERWISE TO MAKE SUCH OFFERING OR SOLICITATION.
WE HAVE AGREED TO FILE AMENDMENTS TO THE REGISTRATION STATEMENT OF
WHICH THIS PROSPECTUS IS A PART IN ORDER TO INFORM POTENTIAL PURCHASERS OF THE
COMMON STOCK OF ANY FACTS OR EVENTS ARISING AFTER THE DATE OF THIS PROSPECTUS
WHICH ARE MATERIAL TO SUCH PURCHASER'S INVESTMENT DECISION. WE WILL DISTRIBUTE
ANY SUCH AMENDMENTS TO THIS PROSPECTUS TO THE SELLING STOCKHOLDERS AFTER SUCH
AMENDMENT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
FORWARD-LOOKING STATEMENTS
Certain statement contained in this Prospectus contain "forward looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). These are statements that do not
relate strictly to historical or current facts. Although we believes that our
plans, intentions and expectations reflected in such forward looking statements
are reasonable, we can give no assurance that such plans, intentions or
expectations will be achieved. Such forward-looking statements involve known and
unknown risks and uncertainties. Our actual actions or results may differ
materially from those discussed in the forward-looking statements. These risk
factors are summarized below and are set forth in more detail in this Prospectus
under "Risk Factors". All forward looking statements attributable to the Company
or persons acting on its behalf are expressly qualified in their entirety by the
cautionary statements set forth below:
[ ] Our limited operating history makes evaluation of our
business and prospects difficult;
[ ] We have concluded preliminary agreements to restructure
short-term debt held by Castle Creek Technology Partners and
all other debt holders, and half of the principal and interest
on each outstanding debt, which equates to $5.5 million, will
be converted to equity at 78 cents per share, the remaining
$5.5 million in debt having been restructured as long-term
debt and not due until March 2004. Following the Loan
Restructuring Agreement, we and our Swedish subsidiary,
CellPoint Systems AB, entered into `voluntary composition' for
settlement payments with all existing creditors. On April 3,
2002 we proceeded with 'official composition' to complete the
financial reconstruction of CellPoint Systems AB, under the
Swedish Company Reconstruction Act. The voluntary composition
agreements were completed in CellPoint Inc. on April 21, 2002.
On April 29, 2002, the subsidiary's voluntary composition was
inadvertently converted to a formal bankruptcy in the District
Court of Stockholm, Sweden, by the apparent failure of a
consultant to file a notice with the Court relating to the
ongoing reconstruction. Negotiations are ongoing with the
Trustee in bankruptcy, and a definitive agreement with the
Trustee is expected to be reached by the end of May, 2002.
There is no assurance that we will be able to secure the
necessary investments to make the payments to be required
under the definitive agreement with the Trustee so as to
permit us to purchase the assets of the subsidiary (which
include all of our patents and technology) from this
bankruptcy proceeding. Therefore, our survival as a company is
dependent on our ability to raise additional capital in the
short term.
[ ] Our business and prospects must be considered in light of the
risks, uncertainties, expenses and difficulties frequently
encountered by companies in their early stages of development,
particularly companies in new and rapidly evolving markets,
such as the market for location services;
[ ] Our sales cycles are long and our revenue is unpredictable;
[ ] Our ability to secure additional financing on acceptable terms
to carry on our business and meet current liabilities and
ongoing expenses as and when necessary;
[ ] Our ability to improve our technology to keep up with customer
demand for new services may be limited;
[ ] The development cycle for new products may be significantly
longer than expected, resulting in higher than anticipated
development costs;
[ ] Our systems and operations may be required to connect and
manage a substantially larger number of customers while
maintaining adequate performance, which could place a strain
on managerial and operational resources;
[ ] Our ability to expand customer service, billing and other
related support systems may be limited;
[ ] Our ability to retain the services of our key management and
to attract new members of our management team may be limited;
[ ] Our ability to effect and retain appropriate patent, copyright
and trademark protection of our products may be limited;
[ ] Despite the implementation of security measures, our computer
networks and web sites may be vulnerable to unauthorized
access, computer viruses and other disruptive problems, and
any such occurrence could result in the expenditure of
additional resources necessary to protect our assets;
[ ] We may be susceptible to increased competition in the field of
location services;
[ ] Our ability to continue to meet the listing requirements of
the The Nasdaq Stock Market, Inc. ("Nasdaq"), particularly
with Nasdaq's minimum net tangible assets and stockholders
equity requirements and minimum bid price requirements. We
currently do not meet the requirements for minimum bid price
and have until June 10, 2002, to rectify or we may be moved to
the Nasdaq Small Cap Market, where we would have an additional
90 days to rectify. On April 1, 2002, we received a staff
delisting notice from The Nasdaq National Market, as to which
a hearing was held May 16, 2002, in response to our appeal of
the delisting notice. We expect a decision on the issues
raised in the delisting notice and considered at the hearing
by the end of May 2002 or early June 2002. The open issues
being considered by the hearing panel are the price of our
common stock, our stockholders' equity (as to which we believe
we are now in compliance following our financial restructuring
initiated in March 2002), and our alleged failure to obtain
stockholder approval for two financing transactions in
December 2000 and July 2001 (as to which we do not believe the
Nasdaq Marketplace Rules require such approval).
We undertake no obligation to update publicly or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions, the
forward-looking events contained or incorporated by reference in this Prospectus
might not occur.
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We have not authorized any other person to provide you with different
information. If anyone provides you with different or inconsistent information,
you should not rely on it. We are not making an offer to sell these securities
in any jurisdiction where the offer or sale is not permitted. You should assume
that the information appearing in this Prospectus, as well as information we
previously filed with the SEC, is accurate as of the date on the front cover of
this Prospectus only. Our business, financial condition, results of operations
and prospects may have changed since that date.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC") (our SEC file number is
000-25205). Our SEC filings are also available over the Internet at the SEC's
website at http://www.sec.gov. You may also read and copy any document we file
at the public reference facilities maintained by the SEC at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
more information on the Public Reference Room and their copy charges. We
maintain a website at http://www.cellpoint.com.
IN CONNECTION WITH THIS OFFERING, CERTAIN SELLING STOCKHOLDERS MAY
ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK OF THE COMPANY
ON NASDAQ IN ACCORDANCE WITH RULE 103 OF REGULATION M. SEE "PLAN OF
DISTRIBUTION".
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to "incorporate by reference" the information we file
with it, which means:
[ ] Incorporated documents are considered part of this prospectus;
[ ] We can disclose important information to you by referring you
to those documents; and
[ ] Information that we file with the SEC will automatically
update and supersede this prospectus.
We incorporate by reference the documents listed below that have been
previously filed with the SEC under the Exchange Act:
[ ] Annual Report on Form 10-KSB for the fiscal year ended June
30, 2001, and the amendment thereto filed on October 17, 2001;
[ ] Our current reports on Form 8-K filed on July 31, October 5
and December 21, 2001, and on March 14, 2002;
[ ] Our definitive proxy statements filed on August 31 and
November 8, 2001;
[ ] Our quarterly report on Form 10-QSB for the quarter ended
September 30, 2001, filed on November 19, 2001, and amended on
January 18, 2002; and our quarterly report on Form 10-QSB for
the quarter ended December 31, 2001, filed on February 14,
2002; and our quarterly report on Form 10-QSB for the quarter
ended March 31, 2002, filed on May 20, 2002.
[ ] Description of our Common Stock set forth in our Registration
Statement on Form 10SB, as amended, including any subsequent
amendment or report filed for the purpose of updating such
description.
We also incorporate by reference each of the following documents that
we will file with the SEC after the date of this prospectus but before all the
common stock offered by this prospectus has been sold:
[ ] Reports filed under Sections 13(a) and (c) and 15(d) of the
Exchange Act; and
[ ] Definitive proxy or information statements filed under Section
14 of the Exchange Act in connection with any subsequent
stockholders' meeting.
You may request a copy of any filings referred to above, at no cost, by
contacting us at the following address:
CellPoint Inc.
3000 Hillswood Drive
Hillswood Business Park
Chertsey, Surrey KT16 0RS
England
Attn: Investor Relations
SUMMARY INFORMATION
The following summary contains basic information about our business and
this offering. It may not contain all the information that is important to you.
You should read this entire Prospectus, including "Risk Factors" and our
consolidated financial statements and related notes incorporated by reference
into this Prospectus, before deciding to invest in shares of Common Stock.
OUR BUSINESS
We focus on the worldwide development, marketing, distribution, sales,
implementation and support of mobile location software technology and platforms
for digital cellular networks. Our positioning technology, location services
platform and the applications of the technology are collectively marketed under
the name the "CellPoint System" and CellPoint Mobile Location System ("MLS").
Our applications are marketed under the names "Resource Manager", "Finder!" and,
"iMate" in addition to a variety of partner applications.
The CellPoint System enables users to determine the position of a
cellular telephone or mobile device, such as a Personal Digital Assistant (PDA),
for use in a broad range of consumer and business applications. The primary
location service application areas today include resource management of mobile
workforce personnel, friend finding relative to one's own location, personal
security services, information and entertainment services. In the resource and
fleet management application, companies can view and track their mobile service
personnel over the Internet. Information and entertainment services include
location- sensitive traffic reports, weather, and concierge information services
such as the location of the nearest hotel, cinema, restaurant, bank machine or
repair shop. Emergency applications could include locating persons making
emergency calls, roadside assistance in the event of vehicle breakdown or
location of a disabled or impaired person who may be lost or missing.
Friend-finding allows users to maintain buddy lists and view the location of
pre-defined, consenting individuals relative to their own location, send
messages to these people or call them. Personal security services offer added
security to people in higher risk occupations such as night security guards,
chauffeurs, tax collectors, health care personnel, postal delivery persons and
couriers.
We were originally organized on February 28, 1997, as Technor
International, Inc., a corporation organized under the laws of the State of
Nevada, pursuant to the provisions of Private Corporation Law of the State of
Nevada. On October 4, 1999, we changed our corporate name to "CellPoint Inc." in
order to generate wider name recognition in the business and financial
communities. Our Common Stock trades on the NASDAQ National Market under the
symbol CLPT. As used herein, "we", "us", "our", "the Company" and "CellPoint"
refer to CellPoint Inc. and its subsidiaries
OUR ADDRESS
Our principal business address and telephone numbers are Kronborgsgrand
7, 164 46 Kista, Sweden, telephone +46 (0)8 633 2700, facsimile +46 (0)8 35 87
90. We also maintain executive offices at 3000 Hillswood Drive, Hillswood
Business Park, Chertsey, Surrey, KT16 0RS, England, telephone +44 1932 895 310.
The Company maintains a website at www.cellpoint.com. Information contained in
our website is not a part of this Prospectus.
RECENT DEVELOPMENTS
On November 8, 2001, we announced results of an extensive performance
testing program for our network-based location services platform, Mobile
Location System (MLS). Stringent tests were carried out on an entry-level
location platform configuration to measure and capture the performance data that
is most important to GSM carriers. MLS was loaded to simulate 2,500 users doing
504,000 requests over a 60-minute period. This load reflects a capacity of 140
location transactions per second. We also announced we were ready to accept
challenges by any location platform vendor in any GSM environment.
On November 26, 2001, we announced that E-Plus had ordered CellPoint's
Mobile Location Broker (MLB) as its location middleware platform. The MLB will
be used for external access to location data, empowering Mobile Virtual Network
Operators, independent Service Providers, and other partners when creating value
added services. MLB is an integral component enabling new revenue streams for
mobile operators and their Service Provider partners to deliver
location-specific mobile Internet services. CellPoint's Mobile Location Server
(MLS) was already installed at E-Plus and can position users irrespective of
whether they are actively engaged in a call or not; MLB completes the full
solution for location service provision.
On February 20, 2002, we announced Mobile Location System 6.0, which
supports a centralized location platform concept with Enhanced-Cell-ID and
Assisted-GPS and is compliant with the ETSI/3GPP Location Services standard.
On March 4, 2002, we announced that Mobile Location Broker had been
selected and installed for the European i-mode portal architecture. The
combination of the mobile location capability provided by CellPoint's location
platforms coupled with the new European i-mode Portal, with its more than 60
major content providers, is expected to open new revenue streams for mobile
operators throughout Europe.
CHANGE IN OUR MANAGEMENT
On March 18, 2002, we announced changes in our management and Board of
Directors. Jan Rynning replaces Peter Henricsson as Chairman of the Board. Mr.
Rynning is a Swedish lawyer, specializing in company reconstructions and has
extensive experience in working as a board member in turn-around situations. Mr.
Henricsson, who has been the Chairman and CEO since inception in 1997, will
continue as a working board member full time and concentrate his work over the
next period on the Swiss financing and new strategic partners. Stephen Childs,
President of CellPoint, will take on the role as Chief Executive Officer. Mr.
Childs has been a member of the board of CellPoint since May 2000 and the
President since October 2001.
Restructuring with Castle Creek and Other Creditors.
On February 28, 2002, we entered into an agreement with Castle Creek
Technology Partners, LLC ("Castle Creek"), pursuant to which we issued Castle
Creek 705,128 shares of our common stock in lieu of the $550,000 cash principal
payment due on our outstanding convertible notes with Castle Creek, and Castle
Creek withdrew its lawsuit without prejudice that it had filed in November 2001
on issues relating to these notes and the warrants issued in connection
therewith. On March 13, 2002, as a part of our restructuring with our creditors,
we are issuing shares of our common stock for one half of the amount of
short-term debt held by each holder of our short-term debt (for Castle Creek we
would be required to authorize a new class of convertible preferred stock to
effectuate this aspect of their settlement). The remaining $5.5 million in
short-term debt (including Castle Creek's debt) has been restructured as
long-term debt and is not due until March 2004. Castle Creek, as the senior debt
holder, will have the right to match any financing we would do at a price
significantly below 78 cents by converting that same portion of their notes,
dollar for dollar, into common stock at the same time and at the same price, but
with no warrant coverage. These agreements with the debt holders are subject to
a settlement being negotiated in parallel with the rest of our creditors,
discussed below, and our ability to raise additional capital in the short term.
Following our restructuring with Castle Creek, we and our Swedish
subsidiary, CellPoint Systems AB, entered into `voluntary composition' for
settlement payments with all existing creditors. On April 3, 2002 we proceeded
with 'official composition' to complete the financial reconstruction of
CellPoint Systems AB, under the Swedish Company Reconstruction Act. The
voluntary composition agreements were completed in CellPoint Inc. on April 21,
2002. On April 29, 2002, the subsidiary's voluntary composition was
inadvertently converted to a formal bankruptcy in the District Court of
Stockholm, Sweden, by the apparent failure of a consultant to file a notice with
the Court relating to the ongoing reconstruction. Negotiations are ongoing with
the Trustee in bankruptcy, and a definitive agreement with the Trustee is
expected to be reached by the end of May, 2002. There is no assurance that we
will be able to secure the necessary investments to make the payments to be
required under the definitive agreement with the Trustee so as to permit us to
purchase the assets of the subsidiary (which include all of our patents and
technology) from this bankruptcy proceeding.
Claim Filed Against Our Former Legal Counsel. We had filed a $100 million
malpractice claim against our former legal counsel in December 2001, which suit
was settled in April 2002.
Additional Financings. In September 2001, we closed a private placement for
$3.25 million, pursuant to which we issued 3,250,000 shares of Common Stock plus
1,625,000 warrants to purchase shares of Common Stock at an exercise price of
$2.25 per share, exercisable for two years. The units were sold to accredited
investors pursuant to Regulation 506 under the Securities Act of 1933, as
amended (the "Securities Act"). The proceeds from the sale of these units were
used to repurchase a portion of the convertible notes held by Castle Creek.
In September and October, 2001, we also completed an offering pursuant
to Regulation S under the Securities Act, in which non-U.S. Persons (as such
term is defined in Regulation S) purchased 917,573 shares of Common Stock and
458,786 warrants to purchase shares of Common Stock, exercisable at $2.36 per
share for two years (including the Micronet transaction described below). The
proceeds from the Regulation S offering aggregated $1,211,838
In October 2001, we completed the initial closing of a private
placement of shares of Common Stock and warrants to purchase Common Stock for
$1,300,000. We made such offering to accredited investors pursuant to Regulation
506 under the Securities Act. In connection with such offering, we issued
1,238,096 shares of Common Stock, and 619,048 warrants to purchase shares of
Common Stock, half of which are exercisable at $3.50 per share for twelve months
and the other half of which are exercisable at $5.00 per share for twenty-four
months.
On January 31, 2002, we completed the initial closing of a private
placement of shares of Common Stock and warrants to purchase Common Stock for
$665,000. We made such offering to accredited investors pursuant to Regulation
506 under the Securities Act. In connection with such offering, we issued
848,939 shares of Common Stock, and 424,472 warrants to purchase shares of
Common Stock, which are exercisable at $1.50 per share for twenty-four months.
Discontinued Operations. On February 29, 2000, we acquired all of the capital
stock of Unwire AB. Unwire develops systems and equipment for GSM positioning
and telematics. We paid the purchase price by issuing to the stockholders of
Unwire an aggregate of 1,075,000 shares of Common Stock with a market value of
approximately $70.7 million. In the fourth quarter of Fiscal 2001, our Board of
Directors determined that the investment required to operate the telematics
business segment did not fit in with our longer-term strategic goals. We intend
to concentrate all of our efforts and resources in developing and promoting
location-based services. We were unable to identify a purchaser for Unwire.
On October 9, 2001, Unwire filed for bankruptcy in Sweden. As a result
of the filing, we have effectively ceased all funding of Unwire operations. The
bankruptcy courts have appointed a trustee to oversee the disbursement of
Unwire's assets and we have effectively lost control of our management and
decision making capabilities over Unwire operations.
CellPoint Systems SA ("Systems SA"), our South African subsidiary,
filed for bankruptcy protection in South Africa in October 2001. Systems SA
operated a research and development facility for the Company. For financial
reporting purposes, the telematics portion of Systems SA was already included as
part of the discontinued operations reported in our Form 10-KSB, as amended, for
our fiscal year ended June 30, 2001. The location services portion of Systems SA
was not included in discontinued operations, as those functions will continue to
be performed by our Swedish subsidiary. Costs of closing this subsidiary,
primarily the write-off of the net receivable from Systems SA, have been accrued
in the June 30, 2001 financial statements. The assets, liabilities and results
of operations of Systems SA were immaterial to the financial statements of the
Company for all periods presented.
THE OFFERING
The Shares offered pursuant to this Prospectus are shares of our Common
Stock beneficially owned by the Selling Stockholders. We will not receive any
proceeds from the sale of the Shares by the Selling Stockholders, except tothe
extent that any of the Selling Stockholders exercise their warrants and elect to
pay the exercise price in cash.
THE SELLING STOCKHOLDERS
This Prospectus relates to the registration of the resale of 1,324,348
shares of our Common Stock, beneficially owned by certain of our stockholders
(the "Selling Stockholders"). The shares covered by this Prospectus were part of
a private placement under Regulation D, which closed on January 31, 2002.
We do not know whether the Selling Stockholders will sell any of the
Shares or when or if the Selling Stockholders will exercise their warrants. See
"The Selling Stockholders" and "Plan of Distribution".
RISK FACTORS
This offering involves a high degree of risk. You should carefully
consider the risks described below before you decide to buy our Shares. If any
of the following risks actually occur, our business, results of operations and
financial condition would be likely to suffer. In that case, the market price of
our Common Stock could decline, and you could lose all or part of your
investment.
RISKS RELATED TO OUR BUSINESS
Our limited operating history makes evaluation of our business and prospects
difficult.
We have only a limited operating history on which prospective investors
can base an evaluation of our business and prospects. While we have generated
limited revenues since July 1999 and substantially increased our revenues during
the current fiscal year, we cannot assure prospective investors that we will
generate sufficient revenues to fund our operations or that we will be
profitable at such level of operations. Our business and prospects must be
considered in light of the risks, uncertainties, expenses and difficulties
frequently encountered by companies in their early stages of development,
particularly companies in new and rapidly evolving markets, such as the market
for location services.
We have a history of losses and we anticipate significant future losses.
For the year ended June 30, 2001 ("Fiscal 2001"), our gross revenues
from continuing operations increased almost five-fold to $4,111,804, as compared
to revenues from continuing operations of $839,003 for the fiscal year ended
June 30, 2000 ("Fiscal 2000"). Virtually all of the Company's revenues came from
the European market. For the first nine months ending March 31, 2002, revenues
reported were $1,065,420. The revenue from the comparable period in 2001 was
$$3,620,632. All of our revenues came from the European market.
Loss from continuing operations for Fiscal 2001 was
($16,501,365) versus ($8,164,617) in Fiscal 2000. The loss from continuing
operations was larger in Fiscal 2001 because the Company greatly expanded its
infrastructure, increased the number of its full-time employees and increased
its marketing and selling expenses as the Company sought to commercialize its
products and obtain contracts for the sale of its services and products. The
Company believes that as a result of the economic downturn in the second half of
last year, generally, and in the telecom sector, anticipated orders from network
operators may have been delayed. The loss from continuing operations for the
nine months ended March 31, 2002, was ($($12,194,504) versus ($($10,341,734) in
the comparable nine months in fiscal 2001. Excluding the non-cash item related
to the Castle Creek amortization of the debt discount, the increase in loss from
continuing operations in the current period was mainly a result of the
restructuring of the Company.
The net loss for the nine months ended March 31, 2002, was
($($10,010,430) and included income of $658,404 from discontinued operations
compared to a net loss in the comparable nine months of ($20,026,376) which
included a loss from discontinued operations of ($9,684,642).
On July 25, 2001, the Company publicly announced its intention to sell
its telematics division. On October 9, 2001, Unwire, our telematics subsidiary,
filed for bankruptcy protection under the laws of Sweden. Under accounting
principles generally accepted in the United States of America, the results of
operations for the telematics division are presented under "Loss from
Discontinued Operation" for both Fiscal 2001 and Fiscal 2000. A write off of
intangible assets within Unwire resulted in a loss of $52,258,545
attributed to the disposal of "discontinued operations" in Fiscal 2001. The
intangible assets were valued initially based on the Company's stock price when
Unwire was acquired in February 2000 for 1,075,000 shares and no cash. The
majority of the loss on disposal of the "discontinued operations" results from a
write-down of these intangibles to their expected net realizable value. The loss
from "discontinued operations" of $10,876,197 represents the operating losses of
the telematics division for the fiscal year through May 19, 2001, the date of
the Board approval for the sale of Unwire. This amount includes depreciation and
amortization of $8,067,016.
Net loss was ($79,636,107) for Fiscal 2001, a majority of which was
attributable to the loss on disposal of and loss from discontinued operations of
($52,258,545) and ($10,876,197), respectively. Loss per share from continuing
operations was ($1.57), loss per share from discontinued operations was ($5.99)
and net loss per share was ($7.56), based on weighted average shares outstanding
of 10,532,913, while the Fiscal 2000 loss per share from continuing operations
was ($0.93), loss per share from discontinued operations was ($0.42) and the net
loss per share was ($1.35)based upon a weighted average of 8,743,630 shares
outstanding. The net loss for Fiscal 2000 was ($11,831,260) including the loss
from discontinued operations of ($3,666,643).
Although we have restructured our short-term debt, we may not be able to
complete our restructuring with Castle Creek.
On March 13, 2002, as a part of our restructuring with our creditors,
we agreed to issue shares of our common stock for one half of the amount of
short-term debt held by each holder of our short-term debt. However, to
restructure one-half of Castle Creek's short-term debt into equity, we would be
required to authorize a new class of convertible preferred stock to effectuate
this aspect of their settlement. There is no assurance that we will be able to
obtain authorization from our stockholders for this new class of convertible
preferred stock. At our annual meeting of stockholders, held on December 12,
2001, our proposal to authorize a new class of preferred stock did not receive
the necessary number of stockholder votes for authorization.
We will need additional financing in the next twelve months.
We will require additional financing to purchase our technology and
intellectual property assets from the bankruptcy proceeding of our subsidiary in
Sweden, CellPoint Systems AB, and to carry on our business and meet current
liabilities and ongoing expenses as and when necessary for our future capital
needs, which may not be available on favorable terms, if at all. If we are
unable to secure sufficient additional financing, we may be forced to suspend
our business strategy and/or curtail our operations.
We may raise such additional capital through additional public or
private financings, as well as borrowings and other resources. To the extent
that additional capital is raised through the sale of equity or equity-related
securities, the issuance of such securities could result in dilution to our
stockholders. We cannot be assured that we will have access to the capital
markets in the future, or that financing will be available to us on acceptable
terms to satisfy our immediate or future cash requirements. If we cannot obtain
the necessary capital, our business and financial condition will be materially
adversely affected, and we would be forced to file for bankruptcy.
Under the MarketPlace Rules of the NASDAQ, if we propose to issue a
number of shares in excess of 20% of our outstanding Common Stock and the
offering price is less than the market value of our Common Stock as traded on
NASDAQ, we are required to obtain prior stockholder approval of such offering.
If we are unable to obtain such stockholder approval and are unable to complete
the necessary financings, our financial condition will be materially adversely
affected.
Our recurring losses from operations and operating cash constraints
raise substantial doubt about our ability to continue as a going concern. Our
ability to continue as a going concern is dependent on our ability to generate
sufficient cash flow to meet our obligations on a timely basis and to raise
additional financing to pay current liabilities. There can be no assurances that
we will be successful in these efforts.
We depend heavily on our key personnel, and our inability to retain them could
materially adversely affect our business.
Our success will depend, in part, on the continued availability of our
senior management team, particularly Jan Rynning, Chairman, Peter Henricsson,
Executive Director, Stephen Childs, President and CEO, and Lynn Duplessis,
Executive Vice President. We have employment agreements with each of our
executive officers. Mr. Henricsson and Ms. Duplessis are husband and wife. The
loss of any of these key employees could have a material adverse effect on our
future business and prospects. We believe that all commercially reasonable
efforts have been made to minimize the risks that might arise should any of our
key personnel depart from the Company. We do not maintain any key man life
insurance with respect to any of our executive employees.
We depend heavily on our board of directors, and our inability to retain them
could materially adversely affect our business.
Our success will depend, in part, on the continued availability of our
board of directors. We have had officers and directors liability insurance in
effect in the past. Current financial markets and the business climate affecting
the insurance industry have made it difficult to obtain adequate insurance. If
we cannot secure adequate directors' and officers' liability insurance, one or
more of our directors may resign. Thus, we may not be able to maintain our
current level of expertise on our board, and the resignation of one or more
members of our board could have a material adverse effect on our business,
prospects, financial condition and results of operations.
An investment in the Company must be considered speculative.
We cannot assure prospective investors that they will realize a return
on their investment or that our stockholders will not lose their investments in
the Company in their entirety. In the event we are forced to dissolve or
commence insolvency proceedings, any proceeds from the liquidation of our assets
will be distributed to our stockholders only after the satisfaction of the
claims of our creditors. An investor's ability to recover all or any portion of
an investment in our capital stock will depend upon the amount of the
dissolution proceeds.
We have not paid any dividends on our Common Stock and do not anticipate paying
any dividends in the foreseeable future.
We have not paid any dividends on our Common Stock. For the foreseeable
future, we anticipate that all earnings, if any, that may be generated from our
operations will be used to finance the growth of the Company and that cash
dividends will not be paid to holders of the Common Stock.
Our stock price may be volatile.
The trading price of our Common Stock is likely to be highly volatile
and could be subject to wide fluctuations for reasons including; (i) thin
trading volume; (ii) variations in quarterly operating results; (iii)
technological innovations; (iv) new sales formats, services by the Company or
its competitors; (v) forecasts by securities analysts; (vi) market conditions;
(vii) market valuations of other new technology and Internet companies; (viii)
significant acquisitions, strategic partnerships, joint ventures, capital
commitments by the Company or its competitors; (ix) changes in key personnel,
and other events or factors
beyond the Company's control. In addition, the market for Internet-related and
technology companies has experienced extreme price and volume fluctuations often
unrelated or disproportionate to the operating performance of such companies.
These broad market and industry factors may materially adversely affect the
market price of the Common Stock, regardless of our operating performance.
To the extent that outstanding warrants and options are exercised, there will be
an increase in the number of shares of our Common Stock which may have an
adverse effect on our stock price.
As of January 31, 2002, we had outstanding an aggregate of 5,112,372
warrants with exercise prices ranging from $0.78 to $7.75. The shares issuable
pursuant to 475,409 additional warrants are included in this Prospectus; the
shares issuable pursuant to the remaining warrants were previously registered
with the SEC. In addition, there are 590,000 options outstanding under our Stock
Incentive Plan and 921,300 warrants outstanding under our Stock Warrant Plan.
These warrants have anti-dilution adjustments as set forth in the terms of the
warrants. The exercise of these warrants and options, in part or in full, will
significantly increase the number of shares of our Common Stock in the public
float, and may, as a consequence, have an adverse effect on the price of our
Common Stock.
We may not be able to manage our expanding operations effectively.
Due to the limited deployment of our services to date, the ability of
our systems and operations to connect and manage expanding operations with a
substantially larger number of customers while maintaining adequate performance
is unproven. In addition, rapid growth is likely to place a strain on managerial
and operational resources. To accommodate expanding operations, we must
accomplish the following:
[ ] implement new or upgraded operating and financial systems,
procedures and controls in many different locations;
[ ] expand customer service, billing and other related support
systems;
[ ] devise and implement new advertising and marketing campaigns
focused on the CellPoint brand and certain of new products and
services; and
[ ] obtain sufficient resources or additional capacity from network
operators.
We may not succeed with these efforts. Our failure to accomplish these
goals in an efficient manner could cause expenses to grow and revenues to
decline or grow more slowly than expected, and could otherwise have a material
adverse effect on our business, financial condition and results of operations.
The development cycle for new products may be significantly larger than expected
resulting in higher than anticipated development costs.
The development cycle for our new products may be significantly longer
than expected, resulting in higher than anticipated development costs. The
complexity of our technology, development difficulties or a shortage of
qualified personnel may result in delays to our introduction of new products or
services and product or service enhancements. We cannot assure you that (i) we
will be able to counter challenges to our current products or services; (ii) our
future product and service offerings will keep pace with technological changes
implemented by competitors; (iii) our products and services will satisfy
evolving preferences of customers and prospects; or (iv) we will be successful
in developing and marketing products and services in a timely fashion. Failure
to develop and introduce new products and product enhancements in a timely
fashion could have a material adverse effect on our business, prospects,
financial condition and results of operations.
We have not yet achieved full market acceptance of our products.
We are currently implementing commercial operations of the CellPoint
System for mobile location technology and services. We have commercial
agreements in operation in Sweden (Tele2), France (France Telecom), Czech
Republic (EuroTel) and Germany (E-Plus). Though we are marketing the CellPoint
System throughout Europe, Asia and North America, we cannot assure prospective
investors that we will be successful in procuring additional contracts, or that
the contracts obtained will be profitable. We also cooperate with numerous
technology and telecommunications industry suppliers including application
developers and systems integrators. We are seeking additional strategic
alliances for distribution and marketing channels to sell the mobile location
services to mobile operators and large end-users respectively. We cannot assure
prospective investors that the CellPoint System will achieve significant degrees
of market acceptance, and that acceptance, if achieved, will be sustained for
any significant period or that product life cycles will be sufficient (or
substitute products developed) to permit the Company to recover start-up and
other associated costs. Failure of the CellPoint System to achieve or sustain
market acceptance could have a material adverse effect on our future business,
future financial conditions, and future results of operations.
Our sales cycles are long and our revenue is unpredictable.
CellPoint's products and services are complex and it typically takes a
cellular network operator a significant amount of time to reach a decision to
purchase them. We may spend a significant amount of time, effort and expense
during a particular period that does not yield any orders during that period or
at all. If orders or payments are delayed, then it may be difficult to meet cash
flow requirements or obtain credit. Furthermore, deployment of location services
by a network operator may take several months and manufacturing delays of our
WAS can delay installation. A delay in sales of our products could cause
operating results to vary significantly from projected results. The sales of
services by the network operators will depend on how quickly the network
operator is able to roll-out mobile location services. Since we have no control
over the purchase decision or the timing of the roll-out and since we have
limited revenue history, it is particularly difficult to predict future revenue
and operating results. If the timing and magnitude of future sales are not
accurately predicted, then it may be difficult to meet customers' delivery
requirements. These problems could impede our growth, restrict our ability to
take advantage of new opportunities, and ultimately have a material adverse
effect on our financial condition.
We may have difficulty identifying and financing suitable acquisitions, joint
ventures or strategic alliances, and those that we do complete could adversely
affect operating results.
As part of our business strategy, senior management reviews potential
acquisitions, joint ventures and strategic alliances that may complement or
expand existing business or increase revenues. We may not be able to identify
appropriate joint ventures, acquisitions or alliances or be able to finance
these transactions successfully once identified. Any failure to identify or
finance future transactions may impede our growth.
Any acquisitions that are completed will be accompanied by the risks
commonly encountered with acquisitions of companies, such as the difficulty of
integrating the operations and personnel of the acquired businesses, the
potential disruption of our business, the assumption of unexpected liabilities
relating to the acquired assets, the imposition and maintenance of common
standards, controls, procedures and policies and the impairment of relationships
with employees and customers as a result of difficulties arising out of
integration. Furthermore, the value of any business acquired may be less than
the amount paid for it if, for example, there is a decline in the position of
that business in the relevant market in which it operates or there is a decline
in that market generally.
We may encounter difficulties in implementing our business strategy.
Although we intend to pursue a strategy of aggressive product
marketing, development and distribution, implementation of this strategy will
depend in large part on our ability to (i) establish a significant customer base
and maintain favorable relationships with those customers, (ii) effectively
introduce acceptable products to our customers, (iii) obtain adequate financing
on favorable terms to fund our business strategy, (iv) maintain appropriate
procedures, policies, and systems, (v) hire, train, and retain skilled
employees, and (vi) continue to operate in the face of increasing competition.
If we are unable to achieve any or all of these goals, we will not be able to
successfully implement our business strategy, which could have a material
adverse effect on our results of operations and financial condition.
The performance of our products could result in product liability for our
business or product recalls.
We are responsible for product performance and liabilities of our
products based on our core technology. We currently have $1.5 million of product
liability insurance, but there can be no assurance that we will be able to
obtain additional insurance or maintain such insurance on acceptable terms that
such insurance will provide adequate coverage against potential liabilities. We
face a business risk of exposure to product liability, claims for consequential
damages and other claims in the event that the use of our technology and
services or the failure of our technology to perform in accordance with
specifications is alleged to result in material adverse effects. We cannot
assure prospective investors that we will avoid significant product liability
exposure or that insurance coverage will be available in the future on
commercially reasonable terms, or at all. A loss of insurance coverage or the
assertion of a product liability claim or claims would likely materially
adversely affect our business, financial condition and results of operations.
While we have taken, and will continue to take, what we believe are appropriate
precautions, there can be no assurance that we will avoid significant liability
exposure. An inability to obtain product liability insurance at acceptable cost
or to otherwise protect against potential product liability claims could prevent
or inhibit the marketing and distribution of the CellPoint System.
We may be unable to adequately protect our intellectual property rights and may
be subject to claims alleging infringement of the intellectual property rights
of others.
We cannot be certain that the steps we have taken to protect our
intellectual property rights will be adequate to deter misappropriation of
proprietary information or prevent others from independently developing or
offering similar products or services. Given the global reach of mobile
communications, trademarks and other forms of intellectual property could be
displayed in countries that offer less intellectual property protection than the
United States, Sweden, South Africa and the United Kingdom. Furthermore,
although we have and expect to have confidentiality and non- competition
agreements with our employees, suppliers and manufacturers, no assurances can be
made that such arrangements will be adequate to protect our trade secrets and
intellectual property rights.
We are not aware of any infringement by our technology on the
proprietary rights of others and have not received any notice of claimed
infringement. However, we have not conducted any investigation as to possible
infringement. In addition, we cannot be sure that a third party will not assert
an infringement claim in the future, or if asserted, that we will be able to
successfully defend against any such claim. Any such misappropriation or claim
could have a material adverse effect on our future financial results and/or our
ability to operate the business.
Our computer systems may be subject to disruption.
Despite the implementation of security measures, our computer networks
and web sites may be vulnerable to unauthorized access, computer viruses and
other disruptive problems. A party who is able to circumvent security measures
could misappropriate proprietary information or cause interruptions in our
Internet operations. Significant capital and other resources to protect against
the threat of security breaches or to alleviate problems caused by such breaches
may have to be expended. There can be no assurance that such security measures
implemented by the Company will not be circumvented causing viruses,
interruptions, delays or a cessation of service to users which could have a
material adverse effect on our business, prospects, results of operations and
financial condition.
RISKS RELATED TO OUR INDUSTRY
E-commerce businesses are subject to significant uncertainties.
Use of the Internet by consumers is in a relatively early state, and
market acceptance of the Internet as a medium for telephone service is subject
to uncertainty. The rapid growth of global commerce and the exchange of
information on the Internet and other online networks is relatively new and
still evolving, making it difficult to predict whether the Internet will prove
to be a viable commercial marketplace generally. The Company believes that its
future success will depend on its ability to significantly increase revenues,
which, in turn, will be materially dependent upon the development and widespread
acceptance of the mobile devices as a means to access the Internet and online
services. The Internet may not prove to be a viable commercial marketplace
because of inadequate development of the necessary infrastructure, such as
reliable network backbones, or complementary services, such as high-speed modems
and security procedures. The Internet has experienced, and is expected to
continue to experience, significant growth in the number of users and amount of
traffic. There can be no assurance that the Internet infrastructure will
continue to be able to support the demands placed on it by sustained growth. In
addition, the viability of the Internet may prove uncertain due to delays in the
development and adoption of new standards and protocols, the inability to handle
increased levels of Internet activity or due to increased government regulation.
If use of the Internet does not continue to grow, or if the necessary Internet
infrastructure or complementary services are not developed to effectively
support growth that may occur, the Company's business, results of operations and
financial condition would be materially adversely affected. New laws and
regulations that impact our industry could increase costs or reduce
opportunities to earn revenue.
We are currently subject to certain regulations specifically aimed at
e-commerce and Internet-related services in addition to regulations applicable
to businesses in general. In the future, however, we may become subject to
additional regulation by local or national regulatory authorities including,
among other issues, e-commerce and taxation. Concerns about personal privacy
could also result in regulations limiting the use of mobile location services.
For example, the European Union (the "EU") has issued a revised
telecommunications data protection directive that covers advanced location
systems such as the CellPoint System. The revised directive provides that
location data may only be used with the consent of the subscriber and that
subscribers and users must be provided with a simple means of temporarily
denying the processing of their location data. The revised directive, which is
not expected to take effect in the EU until 2002, may affect the extent to which
network operators are able to use the CellPoint System. If the use of the
CellPoint System by network operators is significantly curtailed, we expect a
significant adverse impact in our ability to generate revenue.
In addition to regulations covering CellPoint, the network operators
that supply us with capacity are subject to laws and regulations that could
cause them to increase our costs or reduce our ability to continue selling and
supporting our services.
If we do not respond effectively and on a timely basis to rapid technological
changes and changes in customer needs, we may lose sales.
The wireless industry is characterized by rapidly changing
technologies, industry standards, customer needs and competition, as well as
frequent new product and service introductions. We will need to maintain
technological competitiveness, achieve market acceptance and meet an expanding
range of customer requirements in order to attract and retain customers and
manage customer data effectively.
Our services are integrated with mobile devices and must also be
compatible with the networks of mobile network operators. We may not be
successful in developing and marketing, on a timely and cost-effective basis,
new services that respond to technological changes, evolving industry standards
including GPRS and UMTS, or changing customer requirements. Our ability to grow
and achieve profitability will depend, in part, on our ability to accomplish the
following in a timely and cost-effective manner:
[ ] effectively use and integrate new mobile technologies;
[ ] continue to develop and maintain technical expertise;
[ ] develop applications to adapt to new mobile systems and personal
devices;
[ ] influence and respond to emerging industry standards and other
industry developments;
[ ] effectively market our services; and
[ ] develop innovative services that continue to satisfy the needs of
our customers.
We cannot assure prospective investors that we will be able to achieve these
goals and our failure to do so could have a material adverse effect on our
future financial results and/or ability to operate the business.
There is no established market for location services.
The success of our business depends heavily on the development of a
market for mobile location products and services. Since this market is new, and
its potential is uncertain, there can be no assurances that it will develop or
be sustained for a period sufficient to recover start-up and other associated
costs. In order to be successful, we need mobile network operators to launch and
maintain mobile location services utilizing our location services platform and
location applications. Although we intend to market our products aggressively,
we cannot assure prospective investors that network operators will accept our
products or that consumers will purchase mobile location services from their
network operators. If significant sales of location services do not develop, our
future financial condition and results of operations may suffer. Our success
depends on establishing and maintaining relationships with mobile network
operators.
The primary source of our location services revenue is based on the
volume of subscribers using our services through a mobile network operator. Our
success depends heavily on the success of mobile network operators in pricing
and marketing new location services to their customers. If one or more network
operators are unable to gain location services subscribers, then our future
earnings may suffer. We also depend on mobile network operators to provide
uninterrupted service and we will not be able to satisfy our customers' needs if
the network operators fail to provide the required level of service, including
bandwidth. In addition, our expenses may increase and profitability could be
materially adversely affected if network operators were to increase the prices
of their services. Some network operators are, or could become, competitors and,
if they become competitors, they may refuse to provide their services to us or
only provide them to us on less advantageous terms. This could have a material
adverse effect on our future financial results and/or our ability to operate the
business.
Our business could suffer if mobile devices are not widely adopted for
Internet-based services.
The success of our business depends in part on the acceptance by the
market of mobile devices as a method of accessing the Internet. There are a
number of technological and market barriers to the widespread use of mobile
devices for this purpose. These barriers include limited display capability,
difficulty of data input, slower connection speeds, lack of acceptable security
technologies, concerns over privacy and inconsistent quality of service.
Actual or perceived health risks associated with the use of mobile phones could
reduce the number of mobile users.
We are aware of recent concerns expressed that there may be risks
associated with the effects of electromagnetic signals from mobile handsets and
transmission masts, which serve as antennae for transmitting radio signals. The
actual or perceived health risk associated with mobile communications devices
and masts could adversely affect us through a reduction in the number of mobile
handset users or a reduction in the average usage per mobile subscriber.
Competition could harm our business.
The markets for the location services offered by us are becoming
increasingly competitive. If we are unable to either respond adequately to the
competitive challenges we face or establish a sustainable competitive advantage,
we may lose market share or be forced to lower prices to unprofitable levels. In
addition, we have a number of existing and potential competitors, located in
various service categories, and may be unable to predict or plan adequately for
the strategies of competitors. Accordingly, we may be unable to respond quickly
or adequately to the changes in the marketplace brought on by new service
offerings and the marketing and promotional efforts of existing or new
competitors.
As many of our agreements with mobile network operators and industrial
customers are non-exclusive, competitors may use the same networks in
competition with us. It may be possible for competitors to develop technologies,
products and services that are more effective than our technologies, products
and services or that could render our technology, products and services obsolete
and non-competitive. Competitors could include mobile network operators,
software developers, systems integrators, media companies, telecommunications
manufacturers and Internet portals. Many potential competitors have
significantly greater financial, technical, marketing and other resources than
we have. No assurances can be made that existing competitors or other companies
will not provide services that could be more attractive to consumers or
companies than those provided by us or that we will be able to respond
adequately to the competitive challenges we face.
We are dependent on international sales, and our business is subject to the
local business risks in each country in which we do business.
The majority of the revenue from the sale of our location services will
be derived from customers located outside of the United States. Our sales and
operations could be subject to certain risks of international trade, including
tariffs and other barriers, difficulties in staffing and managing foreign
subsidiary and branch operations, currency exchange risks and exchange controls,
potentially adverse tax consequences and the possibility of difficulty in
accounts receivable collection. Any of these factors could adversely affect our
business, financial condition and results of operations.
Our products may be subject to foreign government standards and
regulations that are continually being amended and may vary from country to
country. Although we will endeavor to satisfy foreign technical and regulatory
standards, there can be no assurance that the CellPoint System terminals will
comply in all respects with such government standards and regulations, or
changes thereto, or that it will be cost effective for us to redesign our
products to comply with such standards or regulations. Our inability to design
or redesign products to comply with foreign standards could have a material
adverse effect on our business, financial condition and results of operations.
Fluctuations in the value of foreign currencies could result in currency
exchange losses.
Our products and services are sold in currencies other than the U.S.
Dollar, which makes the management of currency fluctuations difficult and
exposes us to risks. Fluctuations in the value of foreign currencies relative to
the U.S. Dollar could cause us to incur currency exchange losses. The risk will
increase to the extent international revenue increases. The effect of exchange
rate fluctuations on future operating results cannot be predicted. We have no
experience in entering into currency hedging contracts, and if we use hedging to
try to manage any future foreign currency exposure, we may incur hedging-related
losses.
RISKS RELATED TO THIS OFFERING
Our shares may experience extreme price and volume fluctuations.
The market price for our common stock may fluctuate significantly in
response to a variety of influences, including the following, some of which are
beyond our control:
[ ] variations in quarterly operating results;
[ ] changes in financial estimates by securities analysts;
[ ] changes in market valuation of our competitors or perceived
competitors;
[ ] changes in market valuation of companies in the telecommunications
industry;
[ ] announcements by us of significant contracts, acquisitions,
strategic partnerships, joint ventures or capital commitments;
[ ] additions or departures of key personnel;
[ ] our ability to secure adequate directors' and officers' liability
insurance and the ability to maintain the number of directors
currently on our board and the level of expertise they provide in
the event no liability insurance, or inadequate insurance only,
can be obtained;
[ ] sales of Common Stock, including short sales, or termination of
stock transfer restrictions;
[ ] exercise of outstanding warrants; and
[ ] fluctuations in trading volume, which are particularly common
among high technology companies.
Sales of substantial amounts of our Common Stock in the public market could
reduce the value of investors' investment.
The sale of a substantial number of shares of our Common Stock in the
public market could cause a reduction in the market price of our Common Stock.
In addition, the stock market has, from time to time, experienced significant
price and volume fluctuations that have affected the market prices for
securities generally.
As a result of the limited trading market for our Common Stock, sales
by our stockholders of our Common Stock in the public market could materially
adversely affect the prevailing market price for our Common Stock and could
impair our ability to raise capital through offerings of our equity securities.
Any such sales could materially adversely affect the then-prevailing market
price for our Common Stock or the ability of our stockholders to sell their
shares.
We may not be able to maintain our listing on the NASDAQ National Market.
Our common stock is currently traded on the NASDAQ National Market and
our Swedish Depositary Receipts (evidencing shares of our Common Stock) are
traded on the Stockholm OM Exchange. There can be no assurance that we will be
able to continue to meet the listing requirements of The Nasdaq National Market,
particularly with regard to the criterea relating to minimum net tangible assets
and stockholders' equity and minimum bid price requirements. We currently do not
meet the requirements for minimum bid price and have until June 10, 2002 to
rectify or we may be moved to the Nasdaq Small Cap Market, where we would have
an additional 90 days to rectify. On April 1, 2002, we received a staff
delisting notice from The Nasdaq National Market, as to which a hearing was held
May 16, 2002, in response to our appeal of the delisting notice. We expect a
decision on the issues raised in the delisting notice and considered at the
hearing by the end of May or early in June 2002. The open issues being
considered by the hearing panel are the price of our common stock, our
stockholders' equity (as to which we believe we are now in compliance following
our financial restructuring initiated in March 2002), and our alleged failure to
obtain stockholder approval for two financing transactions in December 2000 and
July 2001 (as to which we do not believe the Nasdaq Marketplace Rules require
such approval).
To the extent that we do not maintain such listings, our stockholders
could find it more difficult to dispose of, or to obtain accurate quotations as
to the market value of, our Common Stock. In addition, failure to maintain a
listing for our Common Stock may constitute an event of default under the
outstanding convertible notes and may make our Common Stock ineligible for use
as, or make our Common Stock substantially less attractive as, collateral for
margin and purpose loans, for investment by financial institutions under their
internal policies or state legal investment laws, as consideration in the
financing of future acquisitions of businesses or assets by us, and for issuance
by us in future capital raising transactions.
Certain anti-takeover provisions may produce results disfavored by our
stockholders.
Our Articles of Incorporation permit us, without further stockholder
action, to issue up to 3,000,000 shares of preferred stock, having such rights
and preferences as our Board of Directors may determine. In addition, our
Articles and Amended and Restated By-laws contain various provisions that, under
certain circumstances, could make it more difficult for a third party to gain
control of the Company (e.g., by means of a tender offer), prevent or
substantially delay such a change of control, discourage bids for our Common
Stock at a premium, or otherwise adversely affect the market price of our Common
Stock.
USE OF PROCEEDS
We will not receive any proceeds from the sale of any of the Shares by
the Selling Stockholders. Some of the Shares included in this Prospectus have
not yet been issued, but are issuable upon the exercise of warrants held by
certain of the Selling Stockholders, which warrants have an exercise prices
ranging from $.98 to $1.50.
In connection with the exercise of such warrants, each warrant holder
may elect to pay the exercise price by (i) cash or check or (ii) net issuance;
i.e., cashless exercise. To the extent that a warrant holder elects the net
issuance method, we would not receive any cash as a result of such exercise. To
the extent that all of the warrant holders pay the exercise price by cash or
check, we would receive an aggregate of $686,626. Additional proceeds, if any,
that we receive from the exercise of the warrants will be used for working
capital.
BUSINESS
CONTINUING OPERATIONS
LOCATION SERVICES
We focus on the worldwide development, marketing, distribution, sales,
implementation and support of mobile location software technology and platforms
for digital cellular networks. Our positioning technology, location services
platform and the applications of the technology are collectively marketed under
the name the "CellPoint System", CellPoint Mobile Location System ("MLS") and
Mobile Location Broker ("MLB"). Our applications are marketed under the names
"Resource Manager", "Finder!" and, "iMate" in addition to a variety of partner
applications.
The CellPoint System enables users to determine the position of a
cellular telephone or mobile device, such as a Personal Digital Assistant (PDA),
for use in a broad range of consumer and business applications. The primary
location service application areas today include resource management of mobile
workforce personnel, friend finding relative to one's own location, personal
security services, information and entertainment services. In the resource and
fleet management application, companies can view and track their mobile service
personnel over the Internet. Information and entertainment services include
location-sensitive traffic reports, weather, and concierge information services
such as the location of the nearest hotel, cinema, restaurant, bank machine or
repair shop. Emergency applications could include locating persons making
emergency calls, roadside assistance in the event of vehicle breakdown or
location of a disabled or impaired person who may be lost or missing.
Friend-finding allows users to maintain buddy lists and view the location of
pre-defined, consenting individuals relative to their own location, send
messages to these people or call them. Personal security services offer added
security to people in higher risk occupations such as night security guards,
chauffeurs, tax collectors, health care personnel, postal delivery persons and
couriers.
Industry Overview
We believe that location services will play a key role in the mobile
Internet and mobile commerce, and that the location component will be a
cornerstone in the majority of mobile Internet use. There has been an explosive
growth of wireless communications and the Internet, with mobile telephony being
the fastest growing technology of all time. Mobile Internet access will offer
corporate and mass-market utility in saving time and money. Merrill Lynch
(Wireless Internet, June 5, 2000) projects 1.5 billion people will have wireless
access to the Internet by 2005. Most experts agree that more people will access
the Internet from mobile devices than from fixed computers before 2005.
Location-based services are projected to be worth US$38 billion in consumer
spending in 2005 and location services are projected to represent 9% of all
mobile operator revenues in Western Europe in 2005 (Interactive Entertainment:
Delivering Revenues in the Broadband Era, Schema, July 2001).
Mobile operators are facing increased competition, lower revenues per
user through falling prices and churn among subscribers from one operator to
another. Voice services alone have become a commodity
service. The key to unlocking further value in the operators' investments in
network infrastructure is through offering unique value-added services to
attract more customers and more airtime use per customer, improve subscriber
loyalty and reduce churn of subscribers. Services such as voice mail, pre-paid
subscriptions and short message service (SMS) are value-added service offerings
beyond voice that have become commonplace. Location services can offer operators
new value-added services to unlock new revenue potential and differentiate
operators from their competitors.
The industry for mobile location services is still very much in its
infancy, but new wireless services are an explosive growth area. It has taken
longer than we expected for this industry to "take off', but most experts agree
that growth is about to accelerate to massive proportions. We believe that 70% -
80% of mobile phone users will employ location services by 2005, and that the
location component is key to using the Internet from mobile devices. Location
services for mobile users offer broad utility, and can be grouped into four
categories: management and tracking, information, entertainment and security.
While the industry is very new, we expect that commercial services with a strong
business case for management and service applications will be the first to enter
the market, but the mass-market services including information and entertainment
services will be much larger over time.
Company History
Effective February 28, 1999, CellPoint acquired technology and
intellectual property rights from Novel Electronic Systems & Technologies
("Novel") for the core GSM positioning technology originally developed in South
Africa. We own the original core positioning technology, and have the right to
use it worldwide, with the exception of sub-Saharan Africa for vehicle tracking
applications which are owned by Matrix Vehicle Tracking (Pty) Ltd., a
corporation organized under the laws of South Africa ("Matrix"). The GSM
positioning technology was originally commercialized by Wasp and Matrix, and has
been in commercial use in South Africa for more than four years. There are more
than 28,000 commercial users of the original technology in South Africa. We have
entered into a cooperation agreement with Matrix whereby Matrix has made
available to us its knowledge and know-how regarding GSM positioning
applications, strategies and service delivery.
CellPoint has subsequently developed Mobile Location System ("MLS") and
Mobile Location Broker ("MLB"), third generation location platforms that work
with all GSM phones in all GSM, GPRS and UMTS networks regardless of network
infrastructure, and without overlays or modifications to the network. MLB is an
Internet Protocol-based platform and as such can work in TDMA and CDMA networks
as well.
Core Business
CellPoint's mission is to be the global leader in providing
location-enabling solutions toward GSM/UMTS operators and service providers.
CellPoint's core business is to provide location system software,
including location platforms, selective location technology and selective
location applications. Core operations are Product Portfolio Management, Systems
Management, Product/Systems Development, Systems Verification, 2nd and 3rd line
support, marketing and direct touch/partner sales and sales support. Non-core
operations are supply and support of hardware (e.g. computer platforms), 1st
line support, volume sales, development of applications, and systems
integration. CellPoint provides open interfaces for third party development
through our Location Developers' Zone ("LDZ").
TECHNOLOGY AND PRODUCTS
CellPoint's core technologies are network-based solutions that work across
multi-vendor infrastructures based on GSM, the dominant digital cellular
standard in the world, with more than 600 million users in over 170 countries
representing 70% of digital wireless users worldwide.
Location Technology and Middleware
Mobile Location System. The foundation of our technology offering is Mobile
Location System, a scaleable and fault-tolerant carrier-grade location platform
designed to support hundreds of simultaneous requests per second and capable of
supporting millions of users on a network. MLS incorporates location
determination technology that retrieves position measurement data from the
wireless network and computes a location estimate for a subscriber. MLS is the
first commercial mobile location platform capable of locating any subscriber in
any GSM network without requiring costly infrastructure add-ons and overlays.
MLS integrates high-security location technologies with applications, services,
mapping content, mobile devices and browsers. MLS also provides billing,
customer care, operations, and administration and maintenance functions. MLS
supports voice and data messaging and roaming capabilities and interfaces
seamlessly with third-party location determination technologies.
MLS also provides open APIs for third-party application development, allowing
third-party applications to communicate securely with wireless networks and to
locate a subscriber independently of the location determination technology used
by the wireless carrier. A number of companies have developed or are developing
applications for the MLS platform.
Mobile Location Broker. The second key component of our technology offering is
Mobile Location Broker, a middleware platform that interfaces between MLS and
location-based applications, handling authentication, authorization and privacy
management functions and providing secure and efficient delivery of location
information. MLB enables operators, service providers and portals to link
internal and externally-hosted location applications securely with location
determination platforms, allowing for the development and proliferation of a
multitude of location-based services. MLB is an IP-based platform which is
compatible with all wireless standards, including GSM, TDMA and CDMA, and
enables international roaming, a key requirement for mobile carriers.
Absolute subscriber control of privacy is essential to the success of
location-based applications. We believe that the implementation by carriers of
dependable privacy and security solutions protecting customers' location
information is a prerequisite to the wide scale adoption of location-based
services. MLB allows carriers, MVNOs and location service providers to
communicate with various location platforms on third-party operators' networks
while preserving subscriber privacy and anonymity.
Location Developers' Zone. CellPoint's Location Developers' Zone is a collection
of online information and resources on our Web site designed for developers of
location products, services and applications, as well as operators and content
providers. LDZ provides a wealth of unique information specific to location
application developers' business needs. These resources include open APIs and
other software modules, first-line product support and mentoring, and a unique
GSM network simulator that offers developers the ability to test potential
applications in a live environment.
Our first commercial agreement was signed in April 1999 with Tele2, a
GSM network operator in Sweden, for positioning services for GSM mobile phones.
A similar system was delivered to France Telecom Mobiles and announced on July
13, 2000 where France Telecom Mobiles licensed CellPoint's location platform and
one location services application, Resource Manager.
On October 9, 2000, we announced a commercial agreement with EuroTel
Praha spol sro. of the Czech Republic for our MLS platform and applications.
EuroTel, using CellPoint's latest location-based service technology, is able to
offer its customers our Resource Manager service based on their current mobile
phones and SIM cards.
On March 21, 2001, we announced that E-Plus of Germany had installed
our network-based Mobile Location System that supports location-based services
for all GSM phones and mobile GSM devices in an operator's network.
On July 3, 2001, we announced the frame agreement for a group license
of our Mobile Location System for operators within the KPN-Group. The contract
covers the German operator E-Plus Mobilfunk GmbH & Co. KG and has an option for
all operators in the KPN Mobile N.V. group.
On November 26, 2001, we announced that E-Plus had ordered CellPoint's
Mobile Location Broker (MLB) as its location middleware platform. The MLB will
be used for external access to location data, empowering Mobile Virtual Network
Operators, independent Service Providers, and other partners when creating value
added services. MLB is an integral component enabling new revenue streams for
mobile operators and their Service Provider partners to deliver
location-specific mobile Internet services. CellPoint's Mobile Location Server
(MLS) was already installed at E-Plus and can position users irrespective of
whether they are actively engaged in a call or not; MLB completes the full
solution for location service provision.
On November 8, 2001, we announced results of an extensive performance
testing program for our network-based location services platform, Mobile
Location System (MLS). Stringent tests were carried out on an entry-level
location platform configuration to measure and capture the performance data that
is most important to GSM carriers. MLS was loaded to simulate 2,500 users doing
504,000 requests over a 60-minute period. This load reflects a capacity of 140
location transactions per second. We also announced we were ready to accept
challenges by any location platform vendor in any GSM environment.
On February 20, 2002, we announced Mobile Location System 6.0, which
supports a centralized location platform concept with Enhanced-Cell-ID and
Assisted-GPS and is compliant with the ETSI/3GPP Location Services standard.
On March 4, 2002, we announced that Mobile Location Broker had been
selected and installed for the European i-mode portal architecture. The
combination of the mobile location capability provided by CellPoint's location
platforms coupled with the new European i-mode Portal, with its more than 60
major content providers, is expected to open new revenue streams for mobile
operators throughout Europe.
Standards
All GSM phones support the CellPoint MLS technology today. As GSM
standards open up for competition between system layers in location-based
systems, a clear division between location platforms and location applications
will develop over time. CellPoint provides systems in all layers-the positioning
technology, the middleware and the location applications-and provides open
interfaces for third party development. Operating entirely within GSM, Internet
and WAP standards, CellPoint's location technology and services platform require
no network add on or overlay and work in any GSM network regardless of
infrastructure vendor or vendors, allowing for worldwide roaming capabilities.
We contribute to the setting of standards through our membership and
participation in the WAP Forum (we also hold the Secretary position for Location
Services), ETSI (European Telecommunications Standards Institute, "ETSI") and
the Location Interoperability Forum ("LIF") where we chair the Mobile Location
Protocol/Application Programming Interface (MLP/API) definition group.
The United States Federal Communications Commission (the "FCC") adopted
a ruling in June 1996 (Docket No. 94-102) that mandates all cellular telephone
carriers to provide location information on all 911 calls by October 2001;
however no carriers were in compliance with the mandate as of October 1, 2001.
We believe that other countries may mandate similar requirements in the future.
Even without such additional regulations, we believe that many cellular carriers
are interested in providing new value-added services incorporating cellular
location such as the services available from CellPoint.
System Components
CellPoint is an end-to-end developer, supplier and enabler of mobile
location software technology and platforms. CellPoint's location technologies
utilize standard GSM functionality that is already supported by all major GSM
infrastructure suppliers today. The main components of the technology are the
CellPoint
Mobile Location System and the Mobile Location Broker. These third generation
location platforms support our location technology, provides open interfaces
aligned with third generation standards and is designed to support all or most
location technologies expected to reach commercial success in the future. It is
through the platforms that all operations and services run.
The Mobile Location System provides a generic location and messaging
platform that can be shared by several different applications, such as Finder!,
iMate or Resource Manager. In order to support third party applications as well
as trusted applications, CellPoint offers a middleware platform, Mobile Location
Broker, which handles anonymity, end-user privacy management and geo-server
support with centralized map rendering, routing, geo-coding and reverse
geo-coding. This platform can be placed in a separate security zone to the MLS
positioning platform, giving flexible support for operator security
requirements. The application servers utilize the Mobile Location System through
an Application Programmers Interface (APIs), which enables location of a mobile
terminal using a uniform protocol that is independent of the type of location
provider used. CellPoint also makes the API available to other application
developers who can then deliver their location-based services through
CellPoint's platform. There are a number of third party developers already doing
this, which will provide us with even more applications which the GSM operators
can offer their subscribers. A positioning server is attached to the Mobile
Location System, as are the map servers, dedicated terminal servers and other
databases.
The CellPoint System utilizes:
[ ] A standard, unmodified GSM, GPRS or UMTS cellular network;
[ ] Proprietary server system, the CellPoint Mobile Location System,
(server hardware and software) interacting with the GSM cellular
network operator's system, placed at the operator's site, at
CellPoint's premises or third party premises;
[ ] A standard GSM cellular phone, WAP phone other GSM mobile device;
[ ] Application software; and
[ ] The Internet.
The server consists of a number of computers that manage the traffic
between the GSM network and the application software. It is designed to handle
large quantities of messages used in complex applications. The Mobile Location
System manages the communication processes, including routing of messages,
calculation of positions, database management and bi-directional message
confirmation. Remote billing features are also integrated. The CellPoint Mobile
Location System is a high-capacity platform that is fully scaleable and provides
carrier-grade availability.
Business Strategy
Our business strategy is to provide mobile location software technology
and platforms enabling location service applications in target markets around
the world. We begin with installing the CellPoint location services platform
with a GSM cellular network operator. The network operator, or a third party,
will then market selected location services as value-added services offered to
the end-users of the cellular network. We can potentially earn revenues through
(i) sale of functionality licenses to network operators for our platforms with a
fixed price for the first capacity level and subsequent increases for additional
capacity, (ii) percentage or fixed price participation in the revenue streams
resulting from the new services offered by the network operator, (iii) usage
revenues from service providers, based on transaction volumes or time frames,
(iv) sale of the CellPoint System to strategic partners where partners are
licensed to operate the technology in a specified geographic area, (v)
maintenance and upgrade fees, (vi) consulting and professional services, and
(vii) programming interfaces.
We are currently running pilot projects and technology evaluations with
cellular network providers for mobile location services throughout Europe and
other parts of the world. We cannot assure our
stockholders that any of these pilot projects will result in the execution of
definitive contracts for our products and services. We cannot rely on the
anticipated revenue from these projects to meet our current growth and expense
projections. There can be no assurance that the CellPoint System will achieve a
significant degree of market share, and that such acceptance, if achieved, will
be sustained for any significant period or that life cycles of that technology
will be sufficient (or substitute products available) to permit us to recover
start-up and other associated costs.
We are also cooperating with numerous companies of all sizes in the
areas of marketing and sales, distribution, application development, standards
setting, systems integration and installation and support.
Competition
The wireless industry continues to undergo rapid change, and
competition is intense and is expected to increase. We are aware that other
companies and businesses market, promote and develop technologies and products
that could be competitive with or are functionally equivalent to those that we
have. We expect that companies or businesses that may have developed or are
developing such technologies and products, as well as other companies and
businesses that have the expertise which could encourage them to develop and
market competitive products and technologies, may attempt to develop
technologies and products directly competitive with ours. Many of these
competitors have greater financial and other resources than we have.
Although we believe that the CellPoint System is unique, there can be
no assurances that other companies will not introduce similar or more advanced
technologies. The location services market can be divided into three parts, (i)
the location technology, (ii) the location platform and (iii) the applications.
We are active in all three areas.
Technology. There are two different types of positioning technologies:
handset-based and network-based. Our technology was originally handset-based
positioning technology, but we have also developed MLS which is a unique
integrated network-based solution. Our positioning technologies are all
software-based with no need for hardware overlays or add-ons to an operator's
network.
Network-based solutions can be divided into overlay systems and
integrated solutions. Most competitors have pursued overlay systems. These
systems are very costly and time-consuming to implement, since they require
hardware changes and/or add-ons to the network. We are not aware of the
implementation of a commercial overlay system to date. Most companies in the
industry pursued network-based overlay system location technology solutions
subsequent to a mandate by the FCC in the United States in 1996. The FCC mandate
required that all mobile phones be positioned by October 2001, irrespective of
the type or vintage of phone. This led companies to pursue network-based overlay
location technologies. As of October 1, 2001, no US carriers were in compliance
with the FCC's mandate.
In September 2000, we announced a network-based solution to position
any cellular phone in a GSM network, regardless of age of the phone or network
infrastructure supplier. This new technology developed by us is called MLS and
is an integrated software-only solution for network-based positioning and now
extends our location service applications to all mobile GSM users.
Handset-based technologies can require new model phones, programmed SIM
cards or use of WAP phones to be positioned. Our positioning technology was
originally developed out of the need to track stolen cars. The concept was to
utilize information that was already in existence in a GSM network and have a
"smart terminal" that could gather sufficient information from the network and
allow a server system to calculate the location very quickly.
In November 1998, we announced the capability to position normal
cellular phones. The technology from the special terminals could now be utilized
in normal mobile phones with a standard SIM card containing a program developed
by CellPoint, which opened up a vast market for us for new location services.
Location services for normal mobile phones are the focus of our developments and
service offerings today.
We believe that the technology and applications offered by CellPoint
have distinct advantages over other systems currently being marketed by other
companies. For instance, another handset-based solution is built on Global
Positioning System (GPS), which uses satellites to determine an X,Y position.
GPS requires free line of sight to a minimum of three satellites. We view GPS
not as a competing technology but rather complementary to our offerings. GPS
provides excellent location coordinates, but our engineers' research has shown
that it is insufficient as a stand-alone solution for location services for
mobile phones.
A-GPS is a new technology is a relatively new system that improves the
functionality and performance of GPS by integrating the classic GPS information
with sophisticated geographic software and mobile/cellular network information.
We believe network operators will implement A-GPS solutions over time as the
technology becomes commercially available. A-GPS is a complementary positioning
technology to today's enhanced Cell-identification technology and our MLS
platform is designed to work with A-GPS when it is commercially available. In
August 2001, we announced a strategic partnership with SiRF Technology, Inc., a
leading developer of location technology based on GPS, to deliver a platform to
GSM operators that provides highly accurate location information to mobile users
in any environment.
Network-assisted GPS enhances GPS availability but it is widely
accepted that it will not be not sufficient for mass commercial location
services because users demand location functionality 100% of the time.
GPS-equipped mobile phones have started limited commercial availability in 2001,
albeit as a very limited percentage of the total mobile device market and more
of a niche offering. We support GPS and A-GPS today and we view A-GPS as an
excellent complement to the CellPoint System. We believe that a roadmap that
involves CellPoint's enhanced Cell-ID solution in the short-term, and then when
A-GPS handsets are widely available, a combination of enhanced Cell-ID/A-GPS
will be the ideal solution for mobile operators and end-users of location-based
services.
Location Services Platform. We view ourselves primarily as enablers of location
technology and services. Our location services platforms are the "middleware" in
the total solution. MLS and MLB are fully GSM-compliant, thus work with all GSM
networks, regardless of infrastructure supplier, and also work in multi-vendor
infrastructure environments. We believe that there will be multiple positioning
technologies available in the future and no single one will be most suitable in
all cases. Consequently, our Location Services Platform will support all or most
positioning technologies expected to reach commercial success. Middleware
vendors, such as SignalSoft and Ericsson have begun to market location platform
solutions. Many others are expected to come to market in the future, but we
believe that our ability to offer an end-to-end solution to GSM operators will
give us a significant time advantage in deploying our platform. We also intend
to cooperate with these companies to increase the number of applications being
offered to the operators.
Applications. Today, we are focusing on mobile location software technology and
platforms. We have open APIs (Application Programmers Interface) available to
partners that are developing location-based applications through our Location
Developers' Zone. We expect that, in the next few years, hundreds of
applications will be delivered via our platform, with the majority being
developed by other companies using our APIs.
Research and Development
In the first nine months of Fiscal 2002, we spent approximately
$2,400,000 on research and development with an additional approximately
$1,023,000 being capitalized in the nine months ended March 31, 2002 primarily
related to the MLS 6.0 and MLB 1.0 projects. The projects reached technological
feasibility during the three months ended March 31, 2002 and thus have been
capitalized in accordance with Statement of Financial Accounting Standards No.
86. In Fiscal 2001, we spent approximately $5,000,000 on development activity,
of which approximately $790,000 has been capitalized. We spent approximately
$2,431,000 on research and development activities in Fiscal 2000, of which none
was capitalized. Our personnel have substantial experience in the areas of GSM
and UMTS architecture, SS7 signaling, positioning technologies, WAP, Mobile
Internet, Unix and Windows.
Development projects are carried out in-line with the time-to-market
process that span from pre-studies to first customer application and roll-out.
The process provides activity and documentation guidelines, management decision
points, configuration management, testing and release control. No product or
application development is finalized without a commitment from at least one
operator or customer.
Employees
At May 15, 2002, we had 80 full-time employees and three consultants.
None of our employees is represented by a labor union. We consider our relations
with our employees to be very good.
Trademarks and Patents
CellPoint is maintaining and building a patent portfolio within its
defined target markets in order to maximize competitiveness and to avoid
infringements on other parties' technical solutions. The existing portfolio
consists of approved location technology patents and a number of filed location
technology, middleware and application patents. Since 1997, the Company has
applied for several patents for the CellPoint System; most of which are
currently pending; three of which have been accepted. In addition, we have
applied for more than 20 additional patents with respect to our technologies.
We believe that the complexity involved in developing these
technologies offers considerable protection against similar developments. Our
technologies have been under development for more than five years and are
continually being refined and improved.
DISCONTINUED OPERATIONS
UNWIRE AB AND TELEMATICS OPERATIONS IN CELLPOINT SOUTH AFRICA
On February 29, 2000, we acquired all of the capital stock of Unwire
AB. Unwire develops systems and equipment for GSM positioning and telematics. We
paid the purchase price by issuing to the stockholders of Unwire an aggregate of
1,075,000 shares of Common Stock with a market value of approximately $70.7
million. In the fourth quarter of Fiscal 2001, our Board of Directors determined
that the investment required to operate the telematics business segment did not
fit in with the Company's longer-term strategic goals. We intend to concentrate
all of our efforts and resources in developing and promoting location-based
services. We were unable to identify a purchaser for Unwire.
On October 9, 2001, our subsidiary, Unwire, filed for bankruptcy in
Sweden. As a result of the filing we have effectively ceased all funding of
Unwire operations. The bankruptcy courts have appointed a trustee to oversee the
disbursement of Unwire's assets and we have effectively lost control of its
management and decision making capabilities over Unwire operations.
CellPoint Systems SA ("Systems SA"), its South African subsidiary also
filed for bankruptcy in October 2001. Systems SA operated a research and
development facility for the Company. The telematics portion of Systems SA has
already been included in the discontinued operations. The location services
portion of Systems SA is not included in discontinued operations, and those
functions will continue to be performed by the Company's Swedish subsidiary.
Costs of closing this subsidiary, primarily the write-off of the net receivable
from Systems SA, have been accrued in the June 30, 2001 financial statements.
The assets, liabilities and results of operations of Systems SA were immaterial
to the financial statements of the Company for all periods presented. At
September 30, 2001, there were 40 full-time employees in the business area of
telematics, of which 25 were employees of Unwire and 15 were employees in
CellPoint South Africa.
DESCRIPTION OF SECURITIES
We are authorized to issue 50,000,000 shares of Common Stock and
3,000,000 shares of preferred stock, par value $0.001 per share ("Preferred
Stock"). As of May 15, 2002, 18,605,924 shares of our Common Stock were issued
and outstanding and no shares of preferred stock were outstanding.
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 those stockholders. There is no
cumulative voting with respect to the election of directors of the Company, with
the result that the holders of more than 50% of our Common Stock voted for the
election of directors can elect all of those directors. The holders of our
Common Stock are entitled to receive dividends when, as, and if declared by the
Company's Board of Directors from funds legally available therefor. In the event
of liquidation, dissolution, or winding up of the Company, the holders of our
Common Stock are entitled to share ratably in all assets remaining available for
distribution to them after payment of the Company's liabilities and after
provision has been made for each class of stock, if any, having preference over
our Common Stock. Holders of shares of our Common Stock, as such, have no
conversion, preemptive or other subscription rights, and there are no redemption
provisions applicable to our common stock. All of the outstanding shares of our
Common Stock are fully paid and non-assessable.
Noncumulative Voting
The holders of shares of our Common Stock will not have cumulative
voting rights, which means that the holders of more than 50% of our outstanding
Common Stock, voting for the election of directors of the Company, may elect all
of the directors of the Company to be elected, if they so desire, and, in such
event, the holders of our remaining Common Stock may not be able to elect any of
the Company's directors.
Registration Rights
Holders of shares of our Common Stock are not entitled to rights with
respect to the registration of such shares under the Securities Act. The Shares
being sold by the Selling Stockholders pursuant to this Prospectus have been
registered pursuant to registration rights granted by the Company to the Selling
Stockholders.
Dividends
Whether or not we pay any dividends in the future will be determined by
our Board of Directors, in its discretion, and will depend among other things,
upon our earnings, our capital requirements, and our financial condition, as
well as other relevant factors. We have not paid or declared any dividends to
date. We intend to retain any earnings for the operation and expansion of its
business and do not anticipate paying cash dividends in the foreseeable future.
PREFERRED STOCK
We are authorized to issue preferred stock with such designations,
rights and preferences as may be determined from time to time by our Board of
Directors. Or Articles of Incorporation currently provide that shares of
Preferred Stock must be non-voting. Accordingly, our Board of Directors is
empowered, without stockholder approval, to issue preferred stock with
liquidation privileges, dividend, conversion, or other rights that could
adversely affect the rights of the holders of our Common Stock.
STOCK INCENTIVE PLAN
We have adopted a stock incentive plan (the "Plan"). Pursuant to the
provisions of the Plan, 2,000,000 shares of the Company's Common Stock are
reserved for issuance upon exercise of options. The Plan is designed to retain
qualified and competent officers, employees, and directors of the Company.
The Company's Board of Directors, or a committee thereof, shall
administer the Plan and is authorized, in its sole and absolute discretion, to
grant options thereunder to all eligible employees of the Company, including
officers and directors (whether or not employees) of the Company. Options will
be granted pursuant to the provisions of the Plan on such terms and at such
prices as determined by the Company's Board of Directors. The exercise price
will not be lower than the closing price on the date the options are issued, or
if such prices are not available, at the fair market value as determined by the
Board of
Directors. Options granted under the Plan will be exercisable after the
period specified in the option agreement. Options granted under the Plan will
not be exercisable after the expiration of ten years from the date of grant. The
Plan will also authorize the Company to make loans to optionees to enable them
to exercise their options. During our fiscal year ended June 30, 2001, 192,600
options were exercised, 250,300 were cancelled, and 244,900 options were
granted. There were 696,000 options outstanding as of May 15, 2002. To date, the
Company has not issued any stock appreciation rights.
STOCK WARRANT PLAN
We have adopted a stock warrant plan (the "Warrant Plan"). Pursuant to
the provisions of the Warrant Plan, eligible employees, consultants and
affiliates will be given the opportunity to purchase warrants, which warrants
can be exercised, upon vesting, to purchase shares of the Company's Common
Stock. An aggregate of 1,500,000 shares of the Company's Common Stock have been
reserved for issuance pursuant to the Warrant Plan. The Plan is designed
primarily to retain qualified and competent officers and employees.
The Board of Directors of the Company, or a committee thereof, shall
administer the Plan and is authorized, in its sole and absolute discretion, to
grant options thereunder to all eligible employees, consultants and affiliates
including the Company's officers and directors (whether or not employees).
Warrants will be sold to eligible persons at prices determined by independent
appraisers to be fair market prices at the time of such sale. Each warrant will
have an exercise price equal to no less than either 125% or 150% of the closing
price of the Company's Common Stock on the date immediately preceding the date
of sale. Each warrant sold pursuant to the Warrant Plan will be subject to a
vesting period as determined by the Board of Directors, and will expire no later
than five years from the date of issuance. To date, warrants with respect to an
aggregate of 921,300 shares have been sold.
TRANSFER AGENT
The Transfer Agent for our Common Stock is U.S. Stock Transfer
Corporation, 1745 Gardena Avenue, Suite 200, Glendale, California 91204,
telephone 818-502-1404.
THE SELLING STOCKHOLDERS
The persons listed below are the Selling Stockholders:
AMOUNT OF
COMMON STOCK
NUMBER OF PERCENTAGE OF TO BE AMOUNT OF
SHARES OF BENEFICIAL SOLD COMMON STOCK
COMMON STOCK OWNERSHIP PURSUANT TO BE HELD
BENEFICIALLY BEFORE TO THIS AFTER OFFERING
NAME OF SELLING STOCKHOLDER OWNED OFFERING PROSPECTUS IS COMPLETED(1)
--------------------------- ----- -------- ---------- ---------------
Bill Bernstein 28,724(2) * 28,724 0
Philippe Cochran 143,618(2) * 143,618 0
Money Purchase Plan for Philippe Cochran 47,873(2) * 47,873 0
Dan E. Massner Trust 47,873(2) * 47,873 0
Ronald W. Massner 95,745(2) * 95,745 0
James B. Michaelsen 95,745(2) * 95,745 0
Michael P. Moore 226,490(2) 1.2% 191,490 35,000
John P. Pruitt 95,745(2) * 95,745 0
James E. Rasmussen 191,490(2) 1.0% 191,490 0
John P. Shoffner 191,490(2) 1.0% 191,490 0
Richard H. Solem 95,745(2) * 95,745 0
James C. Tyrone 47,873(2) * 47,873 0
Jeffrey Moss 5,362(3) 5,362 0
Chris Capra 5,362(3) 5,362 0
Robert Marassa 10,532(3) 10,532 0
Shawn Rogers 10,532(3) 10,532 0
Curt Hein 11,489(3) 11,489 0
William Geaves 3,830(3) 3,830 0
David Trandel 3,830(3) 3,830 0
TOTAL 1,359,348 1,324,348 35,000
-----------
(1) Assumes all shares covered by this Prospectus are sold.
(2) Of the shares listed as beneficially owned, one-third are issuable upon
exercise of warrants with an exercise price of $1.50 per share and a
term of two years.
(3) Issuable upon the exercise of warrants with an exercise price of $.98
per share for a term of five years from January 31, 2002.
* Less than 1%.
PLAN OF DISTRIBUTION
We will not receive any of the proceeds of the sale of the Shares
offered hereby. Some of the Shares included in this Prospectus have not yet been
issued, but are issuable upon the exercise of warrants held by certain of the
Selling Stockholders, which warrants have exercised prices ranging from $.98 to
$1.50. In connection with the exercise of such warrants, each warrant holder may
elect to pay the exercise price by (i) cash or check or (ii) net issuance; i.e.,
cashless exercise. To the extent that a warrant holder elects the net issuance
method, we would not receive any cash as a result of such exercise. Additional
proceeds, if any, that we receive from the exercise of the warrants will be used
for working capital.
The Shares may be sold from time to time to purchasers directly by the
Selling Stockholders. Alternatively, the Selling Stockholders may from time to
time offer the Shares through brokers, dealers or agents who may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders and/or the purchasers of the Shares for whom they may act
as agent. The Selling Stockholders and any such brokers, dealers or agents that
participate in the distribution of the Shares may be deemed to be
"underwriters", and any profits on the sale of the Shares by them and any
discounts, commissions or concessions received by any such brokers, dealers or
agents might be deemed to be underwriting discounts and commissions under the
Securities Act. To the extent the Selling Stockholders may be deemed to be
underwriters, the Selling Stockholders may be subject to certain statutory
liabilities of the Securities Act, including, but not limited to, Sections 11,
12 and 17 of the Securities Act and Rule 10b-5 under the Exchange Act.
From time to time, the Selling Stockholders may be engaged in short
sales, short sales against the box, puts and calls and other hedging
transactions in our securities, and may sell and deliver the shares in
connection with such transactions or in settlement of securities loans. These
transactions may be entered into with broker-dealers or other financial
institutions. In addition, from time to time, a Selling Stockholder may pledge
its shares pursuant to the margin provisions of its customer agreements with its
broker-dealer. Upon delivery of the shares or a default by a Selling
Stockholder, the broker-dealer or financial institution may offer and sell the
pledged shares from time to time.
The Shares offered hereby may be sold from time to time in one or more
transactions at fixed prices, at prevailing market prices at the time of sale,
at varying prices determined at the time of sale or at negotiated prices. The
Shares may be sold by one or more of the following methods, without limitation:
(a) ordinary brokerage transactions and transactions in which the broker
solicits purchasers, (b) an exchange distribution in accordance with the rules
of such exchange, (c) face-to-face transactions between sellers and purchasers
without a broker-dealer, (d) through the writing of options, and (e) other. At
any time a particular offer of the Shares is made, a revised prospectus or
prospectus supplement, if required, will be distributed which will set forth the
aggregate amount and type of Shares being offered and the terms of the offering,
including the name or names of any underwriters, dealers or agents, any
discounts, commissions and other items constituting compensation from the
Selling Stockholders and any discounts, commissions or concessions allowed or
reallowed or paid to dealers. Such prospectus supplement and, if necessary, a
post-effective amendment to the Registration Statement of which this Prospectus
is a part, will be filed with the SEC to reflect the disclosure of additional
information with respect to the distribution of the Shares. In addition, the
Common Stock covered by this Prospectus may be sold in private transactions or
under Rule 144 rather than pursuant to this Prospectus.
To our knowledge, the Selling Stockholders do not currently have any
plans, arrangements or understandings with any broker, dealer, agent or
underwriter regarding the sale of the Shares. There is no assurance that any
Selling Stockholder will not sell any or all of the Shares offered by him, her
or it hereunder or that any such Selling Stockholder will not transfer, devise
or gift such Shares.
The Selling Stockholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M, which may limit the timing of purchases and sales of any of the Shares by the
Selling Stockholders and any other such person. All of the foregoing may affect
the marketability of the Shares and the ability of any person or entity to
engage in market activities with respect to the Shares.
Pursuant to the registration rights set forth in the various
subscription agreements between the Company and the Selling Stockholders, each
of the Company and the Selling Stockholders will be indemnified by the other
against certain liabilities, including certain liabilities under the Securities
Act, or will be entitled to contribution in connection therewith. We have agreed
to pay substantially all of the expenses incidental to the registration,
offering and sale of the Shares to the public other than commissions, fees and
discounts of underwriters, brokers, dealers and agents, transfer taxes and fees
and expenses of Selling Stockholders' counsels.
INDEMNIFICATION
We shall, to the fullest extent permitted by Section 78.7502 of the
Corporation Law of the State of Nevada, as the same may be amended and
supplemented, indemnify under said section any director, officer, employee or
agent from and against any and all expenses, liabilities or other matters
referred in or covered by said section, and the indemnification provided for
herein shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any By-Law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person. We will have the power to purchase and maintain officers' and
directors' liability insurance in order to insure against the liabilities for
which such officers and directors are indemnified pursuant to our Amended and
Restated By-Laws.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES
ACT MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE COMPANY
PURSUANT TO THE FOREGOING PROVISIONS, OR OTHERWISE, THE COMPANY HAS BEEN
INFORMED THAT IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION SUCH
INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE SECURITIES ACT OF
1933, AS AMENDED, AND IS THEREFORE UNENFORCEABLE. IN THE EVENT THAT A CLAIM FOR
INDEMNIFICATION AGAINST SUCH LIABILITIES (OTHER THAN THE PAYMENT BY THE COMPANY
OF EXPENSES INCURRED OR PAID BY A DIRECTOR, OFFICER OR CONTROLLING PERSON OF THE
COMPANY 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, WE WILL, UNLESS IN THE OPINION OF OUR COUNSEL THE
MATTER HAS BEEN SETTLED BY CONTROLLING PRECEDENT, SUBMIT TO A COURT OF
APPROPRIATE JURISDICTION THE QUESTION WHETHER SUCH INDEMNIFICATION IS AGAINST
PUBLIC POLICY AS EXPRESSED IN THE SECURITIES ACT OF 1933, AS AMENDED, AND WILL
BE GOVERNED BY THE FINAL ADJUDICATION OF SUCH ISSUE.
PENDING LEGAL PROCEEDING
The Company's subsidiary in Sweden, CellPoint Systems AB, is party to a
formal bankruptcy proceeding in the District Court, Stockholm, Sweden. We plan
to submit an offer to the Trustee for the purchase of the assets of this
subsidiary (which include all of our patents and technology) before the end of
May 2002.
In December 2001, CellPoint had filed a malpractice lawsuit against its
former legal counsel , which lawsuit was settled in April 2002.
LEGAL OPINIONS
The law firm of Jackson & Campbell, P.C., our counsel, 1120 20th
Street, N.W., South Tower, Washington, D.C. 20036, has rendered an opinion
regarding the validity of the Shares offered hereby.
EXPERTS
The consolidated financial statements included in our Annual Report on
Form 10-KSB for the fiscal year ended June 30, 2001, as amended, which are
incorporated by reference in this Prospectus, have been audited by BDO Seidman,
LLP, independent certified public accountants, a member firm of BDO
International ("BDO Seidman"), to the extent and for the periods set forth in
their report incorporated herein by reference, and are incorporated herein in
reliance upon such report given upon the authority of said firm as experts in
auditing and accounting.
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS ON BEHALF OF THE COMPANY NOT CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES
OR AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES IN
ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
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TABLE OF CONTENTS
Page
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CELLPOINT INC.
FORWARD-LOOKING STATEMENTS
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
SUMMARY INFORMATION
RISK FACTORS
USE OF PROCEEDS
BUSINESS
DESCRIPTION OF SECURITIES
THE SELLING STOCKHOLDERS
PLAN OF DISTRIBUTION
INDEMNIFICATION
PENDING LEGAL PROCEEDING
LEGAL OPINIONS
EXPERTS
1,324,348 SHARES
OF
COMMON STOCK
CELLPOINT INC.
COMMON STOCK
-----------
PROSPECTUS
-----------
__________, 2002
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Registration Fees $ 64.44
Transfer Agent Fees 1,000
Blue Sky Filing Fees 1,500
Printing and Mailing 10,000
Legal Fees 10,000
Accounting Fees 5,000
Listing Fees
Other 5,000
Total $32,564.44
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company shall, to the fullest extent permitted by Section 78.7502
of the Corporation Law of the State of Nevada, as the same may be amended and
supplemented, indemnify under said section any director, officer, employee or
agent from and against any and all expenses, liabilities or other matters
referred in or covered by said section, and the indemnification provided for
herein shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any By-Law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person. The Company will have the power to purchase and maintain
officers' and directors' liability insurance in order to insure against the
liabilities for which such officers and directors are indemnified pursuant to
its By-Laws.
ITEM 16. EXHIBITS
The following Exhibits are filed as part of this Registration
Statement:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
4.1 Registration Rights Agreement, dated as of February 29, 2000,
by and among CellPoint Inc., CellPoint Swedish Holdings Ltd.,
and the Sellers named therein (incorporated by reference to
the Company's Current Report on Form 8-K, filed on March 13,
2000, as amended by Form 8-K/A, filed on May 15, 2000).
4.2 Securities Purchase Agreement, dated as of December 6, 2000,
by and among CellPoint Inc. and the Purchaser set forth
therein (incorporated by reference to the Company's Current
Report on Form 8-K, filed on December 12, 2000).
4.3 Registration Rights Agreement, dated as of December 6, 2000,
by and among CellPoint Inc. and the Initial Investor (as such
term is defined therein) (incorporated by reference to the
Company's Current Report on Form 8-K, filed on December 12,
2000).
4.4 Convertible Note of CellPoint Inc., dated December 6, 2000,
payable to the order of Castle Creek Technology Partners LLC,
in the aggregate principal amount of $10,000,000
(incorporated by reference to the Company's Current Report on
Form 8-K, filed on December 12, 2000).
4.5 Stock Purchase Warrant of CellPoint Inc., dated December 6,
2000, with respect to the right of Castle Creek Technology
Partners LLC (incorporated by reference to the Company's
Current Report on Form 8-K, filed on December 12, 2000).
4.6 Stock Purchase Warrant of CellPoint Inc., dated July 25,
2001, with respect to the right of Castle Creek Technology
Partners LLC (incorporated by reference to the Company's
Current Report on Form 8-K, filed on July 31, 2001).
4.7 Form of Stock Purchase Warrant (filed as an Exhibit to the
Company's Registration Statement on Form S-3, filed on
October 31, 2001).
4.8 Stipulation and Order, dated December 19, 2001, between
Castle Creek Technology Partners LLC and CellPoint Inc.
(incorporated by reference to the Company's Current Report on
Form 8-K, filed on December 21, 2002).
4.9 Agreement, dated February 28, 2002, between Castle Creek
Technology Partners LLC and CellPoint Inc. (incorporated by
reference to the Company's Current Report on Form 8-K, filed
on March 14, 2002).
4.10 Term Sheet, dated March 13, 2002, between Castle Creek
Technology Partners LLC and CellPoint Inc. (incorporated by
reference to the Company's Current Report on Form 8-K, filed
on March 14, 2002).
5.1 Form of opinion of Jackson & Campbell, P.C..
10.9 Share and Asset Transfer Agreement, dated October 19, 2001,
between Micronet AB and CellPoint Systems AB (filed as an
Exhibit to the Company's Registration Statement on Form S-3,
filed on November 1, 2001).
10.17 Cooperation Agreement Regarding Telematics, by and between
Unwire AB and Ericsson Business Consulting (Malaysia), dated
April 5, 2000.
10.19 Contract, dated July 7, 2000, between France Telecom Mobiles
and CellPoint Systems AB.
23.1 Consent of Independent Accountants (filed herewith)
23.2 Consent of Jackson & Campbell, P.C. (included in their
opinion to be filed as Exhibit 5.1)
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 the registration statement: 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.
2. That, for the purpose of determining any liability under the Securities
Act of 1933, as amended (the "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.
Insofar as indemnification for liabilities arising under the 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 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.
The Company carries run-off directors' and officers' liability
insurance for the period ending March 3, 2002, covering losses up to $5,000,000
(subject to certain deductible amounts) for claims made prior to this period
ending. The Company is currently in the process of seeking directors' and
officers' liability insurance going forward.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and authorized this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly, authorized, in the City of London, England, on May 24, 2002.
CELLPOINT INC.
May 24, 2002 By:
Stephen T. Childs
President and Chief Executive Officer
(principal executive officer)
May 24, 2002 By:
Lynn Duplessis
Executive Vice President
(principal financial and accounting officer)
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
Jan Rynning Chairman and Director May 24, 2002
Stephen T. Childs President, Chief Executive Officer and May 24, 2002
Director
Lynn Duplessis Director May 24, 2002
Peter Henricsson Director May 24, 2002
Bengt Nordstrom Director May , 2002
Lars Persson Director May , 2002
Exhibit Index
5.1 Opinion of Jackson & Campbell, P.C..
10.17 Cooperation Agreement Regarding Telematics, by and between
Unwire AB and Ericsson Business Consulting (Malasia), dated
April 5, 2000.
10.19 Contract, dated July 7, 2000, between France Telecom Mobiles
and CellPoint Systems AB.
23.1 Consent of Independent Accountants (filed herewith)
23.2 Consent of Jackson & Campbell, P.C. (included in their
opinion filed as exhibit 5.1)